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TABLE OF CONTENTS
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
                             As filed with the Securities and Exchange Commission on September 9, 2004

                                                                                                                                           Registration No. 333-118301




                                   SECURITIES AND EXCHANGE COMMISSION
                                                                    Washington, DC 20549

                                                                   AMENDMENT NO. 1
                                                                        TO

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

                                                                      TNS, INC.
                                                          (Exact name of Registrant as specified in its charter)


               Delaware                                                     7389                                                        36-4430020
     (State or other jurisdiction of                             (Primary Standard Industrial                                (I.R.S. Employer Identification No.)
    incorporation or organization)                                 Classification Number)

                                                       11480 Commerce Park Drive, Suite 600
                                                                   Reston, VA
                                                                   20191-1406
                                                                 (703) 453-8300
                          (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)


                                                          Michael Q. Keegan, Esq.
                                          Executive Vice President, General Counsel and Secretary
                                                                  TNS, Inc.
                                                  11480 Commerce Park Drive, Suite 600
                                                                 Reston, VA
                                                                 20191-1406
                                                               (703) 453-8300
                                 (Name, address, including zip code, and telephone number, including area code, of agent for service)


                                                                            Copies to:

                  Jeffrey E. Jordan, Esq.                                                                         Barbara L. Becker, Esq.
                     Arent Fox PLLC                                                                            Gibson, Dunn & Crutcher LLP
               1050 Connecticut Avenue, NW                                                                           200 Park Avenue
                  Washington, DC 20036                                                                                   47th Floor
                      (202) 857-6000                                                                            New York, New York 10166
                                                                                                                       (212) 351-4000

                                 Approximate date of commencement of proposed sale to the public:
                             As soon as practicable after the effective date of this Registration Statement.
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT
WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE
IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
                                               Subject to Completion, dated September 9, 2004

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

PROSPECTUS

                                                         5,815,203 Shares




                                                           TNS, INC.
                                                          Common Stock

This is an offering of shares of common stock of TNS, Inc. Of the 5,815,203 shares being offered, we are selling 1,200,000 shares and the
selling stockholders are selling 4,615,203 shares. We will not receive any of the proceeds from the sale of shares by the selling stockholders.

Our common stock is traded on the New York Stock Exchange under the symbol " TNS ". On September 8, 2004, the last reported sale price of
our common stock on the New York Stock Exchange was $20.64 per share.

Investing in our common stock involves risks. See "Risk Factors" beginning on page 8.
                                                                                   Per Share         Total

Public Offering Price                                                             $            $
Underwriting Discounts and Commissions                                            $            $
Proceeds to TNS (before expenses)                                                 $            $
Proceeds to Selling Stockholders (before expenses)                                $            $

We and the selling stockholders have granted the underwriters a 30-day option to purchase up to an aggregate of 872,280 additional shares of
common stock on the same terms as set forth above to cover over-allotments, if any.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on or about     , 2004.


LEHMAN BROTHERS                                                                                                           JPMORGAN

WILLIAM BLAIR & COMPANY                                                                 SUNTRUST ROBINSON HUMPHREY
               , 2004
                                                        TABLE OF CONTENTS

Prospectus Summary
Risk Factors
Special Note Regarding Forward-Looking Statements
Use of Proceeds
Price Range of Common Stock
Dividend Policy
Capitalization
Dilution
Selected Consolidated Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Business
Management
Certain Relationships and Related Party Transactions
Principal and Selling Stockholders
Description of Capital Stock
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find More Information
Index to the Consolidated Financial Statements


      You should rely only on the information contained in this prospectus. We and the selling stockholders have not authorized
anyone to provide you with different information. We and the selling stockholders are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any
date other than the date on the front of this prospectus.

                                                                    i
                                                         PROSPECTUS SUMMARY

      This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including
the section entitled "Risk Factors," our consolidated financial statements and the related notes included elsewhere in this prospectus, before
making an investment decision.

                                                                  TNS, Inc.

Company Overview

     We are a leading provider of business-critical data communications services to processors of credit card, debit card and ATM transactions.
We are also a leading provider of secure data and voice network services to the global financial services industry. We operate one of four
unaffiliated Signaling System No. 7 networks in the United States capable of providing services nationwide, and we utilize this network to
provide call signaling and database access services to the domestic telecommunications industry. Our data communications services enable
secure and reliable transmission of time-sensitive, transaction-related information critical to our customers' operations. Our customers
outsource their data communications requirements to us because of our substantial expertise, comprehensive customer support and
cost-effective services. We provide services to customers in the United States and increasingly to international customers in 12 countries,
including Canada and countries in Europe and the Asia-Pacific region.

      We provide services through our multiple data networks, each designed specifically for transaction applications. Our networks support a
variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods, including dial-up,
dedicated, wireless and Internet connections. In the twelve months ended June 30, 2004, we transported approximately 7.8 billion transactions
for more than 115 point-of-sale/point-of-service, or POS, processing customers in the United States and Canada, including nine of the ten
largest payment processors in the United States, making us, on the basis of total transactions transmitted, a leading provider of data
communications services to processors of credit card, debit card and ATM transactions. In addition, as of June 30, 2004, we provided network
services to more than 400 financial services companies. Based on the total number of connections these companies have to our networks and
the total messages transmitted among them using our services, we are a leading service provider to the financial services industry. Our revenues
are generally recurring in nature, as we typically enter into multi-year service contracts that require minimum transaction or revenue
commitments from our customers.

     Our business began operations in 1991 to address the needs of the POS industry in the United States. Although we reported a net loss in
1991, 1992, 1999 through 2003, and a net loss of $0.2 million for the six months ended June 30, 2004 and have an accumulated deficit of
$42.5 million as of June 30, 2004, the strong operating cash flows generated by our POS business have enabled us to invest in and deploy data
networks designed to make our data communications services more rapid, secure, reliable and cost efficient. We have leveraged these
investments and used our strong operating cash flows to expand our service offerings to related market opportunities in the telecommunication
and financial services industries in the United States and abroad. By implementing and executing this strategy, we have grown our revenues
every year, from $285,000 for the year ended December 31, 1991, to $223.4 million for the year ended December 31, 2003.

     We provide our services through four business divisions:

     •
            POS services . We provide fast, secure and reliable data communications services primarily to payment processors in the United
            States and Canada. These services enable the communication of transaction data between payment processors and POS or ATM
            terminals. Our POS division generates revenues primarily on a fixed fee, per-transaction basis. In the twelve months ended

                                                                       1
         June 30, 2004, we generated $119.9 million of revenue in the POS division, which represented 50.0% of our total revenues.

    •
           International services . We are one of the leading providers of data communications services to the POS industry in the United
           Kingdom on the basis of total transactions transmitted. We provide services to substantially all of the financial institutions in the
           United Kingdom which acquire and process credit and debit card transactions. We also provide our services in Australia, France,
           Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Spain and Sweden. Our international services division generates
           revenues from our POS and financial services offerings abroad. In the twelve months ended June 30, 2004, we generated
           $62.8 million of revenue in the international services division, which represented 26.2% of our total revenues.

    •
           Telecommunication services . We provide call signaling services that enable telecommunications carriers to establish and
           terminate telephone calls placed by their subscribers. We also provide database access services that enable our customers to
           provide intelligent network services, such as caller identification and local number portability, and credit card, calling card,
           third-party billing and collect calling. Our telecommunication services division generates revenues primarily from fixed monthly
           fees charged for our call signaling services and per-query fees charged for our database access and validation services. In the
           twelve months ended June 30, 2004, we generated $34.0 million of revenue in the telecommunication services division, which
           represented 14.2% of our total revenues.

    •
           Financial services . We provide fast, secure and reliable private data networking services that enable seamless communications
           and facilitate electronic trading among commercial banks, mutual funds, pension funds, broker-dealers, alternative trading systems,
           electronic communications networks, securities and commodities exchanges and other market participants. Our networks support
           multiple communications protocols including the Financial Information eXchange, or FIX, protocol. Our financial services
           division generates revenues from monthly fees based on the number of customer connections to and through our networks. In the
           twelve months ended June 30, 2004, we generated $23.0 million of revenue in the financial services division, which represented
           9.6% of our total revenues.

Our Market Opportunity

    We believe that the following industry factors are important in order to understand the growth potential of our businesses:

    •
           The growing adoption of credit and debit card based payments in the international marketplace is increasing the number of POS
           transactions abroad.

    •
           The continued growth, automation and globalization of financial markets are increasing the need for secure, fast and reliable data
           communications services.

    •
           The growing use of credit and debit cards in the United States is increasing the number of POS transactions.

    •
           The growing number of domestic ATMs is increasing the need for cost-effective data communications services.

    •
           The increase in competition and the introduction of new regulations in the telecommunications industry are causing service
           providers to outsource their requirements for specialized data communications services.

                                                                       2
Our Strengths

     We believe our competitive strengths include:

     •
            Recurring revenues and strong operating cash flows . Our established customer base enables us to generate high levels of
            recurring revenues and strong operating cash flows. We typically enter into multi-year service contracts that require minimum
            transaction or revenue commitments from our customers.

     •
            Established customer base . We have an established customer base of leading industry participants in each of our four operating
            divisions and have experienced minimal customer turnover.

     •
            Well positioned to continue international expansion . The network technology and data communications services we have
            developed to serve our customers in the United States are applicable to the data communications needs of the payment processing
            and financial services industries abroad.

     •
            Highly customized data networks . Our networks support multiple communication protocols and access methods and, as a result,
            are able to support a wide variety of transaction applications.

     •
            Proven acquisition strategy . Our management team has augmented the growth of our business by successfully identifying and
            integrating strategic acquisitions.

     •
            Substantial experience in our target markets . The extensive industry experience of our executive management team has enabled
            us to develop services addressing the specific, transaction-oriented needs of our target markets. This management team is led by
            John J. McDonnell, Jr., Chairman and Chief Executive Officer and the founder of our business.

Our Strategy

     Our strategy is to enhance our position as a leading provider of outsourced, business-critical data communications services for the
transmission of time-sensitive transaction data. In order to execute on this strategy we will endeavor to:

     •
            Continue to expand our customer base . We believe our experience, existing customer relationships and secure and reliable
            services will enable us to expand our customer base, particularly in the international and financial services markets.

     •
            Develop new service offerings . We will continue to expand our service offerings to address new markets for secure and reliable
            transmission of time-sensitive information. For example, we intend to offer services useful for emergency communications
            systems, wireless broadband local access networks and wireless POS transactions.

     •
            Increase sales to existing customers . We will continue our efforts to further develop our existing customer relationships to
            increase business domestically and abroad.

     •
            Pursue strategic acquisitions . We will continue to seek opportunities to acquire businesses that expand our range of services or
            provide opportunities to increase our customer base.



    We will use the net proceeds we receive from this offering to repay a portion of our existing debt. Accordingly, we will need to use
operating cash flows or additional financing to pursue our strategy.

Summary Risks

     You should consider carefully the following important risks:
•
    A substantial portion of our revenue is generated from a small number of customers. For the six months ended June 30, 2004, we
    derived approximately 29.1% of our total revenues from our five largest customers.

                                                             3
     •
            Our ability to sustain pricing for our data communications services is limited by pricing discounts sought by our customers during
            contract negotiations and the ability of our competitors to offer reduced pricing.

     •
            Our ability to sustain and increase revenues depends on the growth of the number of transactions processed by our customers and
            our ability to expand our business domestically and internationally.

     •
            Our business depends on the reliability, security and speed of our networks. If we are unable to maintain these network attributes at
            desired levels, our customers could decrease their use of our networks.

     •
            Following the offering, we will continue to be controlled by our controlling stockholder, GTCR Golder Rauner L.L.C. (which,
            along with its affiliated investment funds, we refer to as GTCR), which will limit your ability to influence our corporate actions.
            Upon completion of the offering, GTCR will own or control shares representing, in the aggregate, a 54.2% voting interest in the
            company, or 52.5% if the underwriters exercise their over-allotment option in full.

     •
            Three of our nine directors may be subject to conflicts of interest because they are also principals of our controlling stockholder.
            These potential conflicts include the controlling stockholder's investment in a company that competes with our telecommunications
            services division and the possibility that our controlling stockholder may invest in other competitors in the future.

     Please see the section entitled "Risk Factors" for information on these and other risks related to our business and this offering.

Company History and Information

     We were incorporated in March 2001 as TNS Holdings, Inc. under the laws of the State of Delaware by GTCR, John J. McDonnell, Jr.,
and several other members of our current management team. We changed our name to TNS, Inc. in October 2003. We completed our initial
public offering in March 2004.

     TNS, Inc. currently conducts its business operations through its wholly owned subsidiary, Transaction Network Services, Inc. (formerly
known as PSINet Transaction Solutions, Inc.), which we acquired from PSINet, Inc. in April 2001. Transaction Network Services, Inc. was
originally founded in 1990 by Mr. McDonnell and several other members of our current management team and began operations in 1991. In
1994, Transaction Network Services, Inc. completed an initial public offering of its common stock, and it remained publicly traded until late
1999, when it was acquired by PSINet, Inc.

     Our principal executive offices are located at 11480 Commerce Park Drive, Suite 600, Reston, Virginia, 20191-1406, and our telephone
number is (703) 453-8300. Our website address is www.tnsi.com. We do not intend the information on our website to constitute part of this
prospectus.

     TransXpress, LEConnect, CARD*TEL and the TNS logo are our registered trademarks, and Trader Voice and Secure Trading Extranet
are our service marks. This prospectus contains trade names, trademarks and service marks of other companies. We do not intend our use or
display of other parties' trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of, these other
parties.

     To ensure continuity of the information presented, we include data for Transaction Network Services, Inc. while it was a wholly owned
subsidiary of PSINet, Inc. between November 1999 and April 2001.

     In this prospectus, the "company," "TNS," "we," "us" and "our" refer to TNS, Inc. and, where appropriate, its subsidiaries.

                                                                         4
                                                                 The Offering

Common stock offered by:
  TNS, Inc.                                                                      1,200,000 shares
  Selling stockholders                                                           4,615,203 shares

Common stock outstanding after this offering                                   27,978,953 shares

Use of proceeds                                                                We intend to use the net proceeds we receive from the offering
                                                                               to repay a portion of our existing debt. See "Use of Proceeds."
                                                                               We will not receive any of the proceeds from the sale of shares
                                                                               by the selling stockholders.

New York Stock Exchange symbol                                                 "TNS"

     We base the number of shares outstanding after this offering on 26,778,953 shares outstanding as of June 30, 2004, including 650,110
shares of restricted common stock outstanding but subject to repurchase by us, and excluding:

     •
            1,140,536 shares of our common stock issuable upon exercise of options outstanding as of June 30, 2004 at a weighted average
            exercise price of $19.44 per share and 304,000 shares of common stock issuable to executives and employees upon vesting, and

     •
            520,186 shares of our common stock reserved for issuance pursuant to future grants under our stock option and incentive
            compensation plans.

     Except as otherwise indicated, all information in this prospectus assumes no exercise of the underwriters' over-allotment option and a
public offering price of $20.64 per share.

                                                                       5
                                                   Summary Consolidated Financial Data

      The summary consolidated financial data presented below should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Unaudited Pro Forma Consolidated Financial Information" and our consolidated financial
statements and related notes appearing elsewhere in this prospectus. The unaudited pro forma consolidated balance sheet data gives effect to
the transactions described in note 2 below.

     The consolidated statement of operations data for the period from April 3, 2001 through December 31, 2001 and the years ended
December 31, 2002 and 2003 is derived from our consolidated financial statements audited by Ernst & Young LLP, independent registered
public accounting firm, and are included elsewhere in this prospectus. The consolidated statement of operations data for the six months ended
June 30, 2003 and 2004 and the consolidated balance sheet data as of June 30, 2004 are derived from our unaudited consolidated interim
financial statements and are included elsewhere in this prospectus.

     The consolidated statement of operations data for Transaction Network Services, Inc., formerly PSINet Transaction Solutions, Inc.,
(Predecessor #1) for the period from January 1, 2001 through April 2, 2001 is derived from the consolidated financial statements of Transaction
Network Services, Inc., formerly PSINet Transaction Solutions, Inc., (Predecessor #1) which have been audited by Ernst & Young LLP,
independent registered public accounting firm, and is included elsewhere in this prospectus.

                                                                      6
                                                                  Summary Consolidated Financial Data
                                                          (In thousands, except per share and transaction data)

                                                      Transaction Network
                                                          Services, Inc.
                                                           (Formerly
                                                      PSINet Transaction
                                                         Solutions, Inc.)
                                                        (Predecessor #1)

                                                                                                                                  The Company

                                                                                                                                                                 Six months ended

                                                                                      April 3, 2001 -           Year ended             Year ended            June 30,                June 30,
                                                       January 1, 2001 -              December 31,             December 31,           December 31,            2003                    2004
                                                         April 2, 2001                    2001                     2002                   2003             (Unaudited)             (Unaudited)

Consolidated Statements of
Operations Data:
Revenues                                          $                    46,755 $                 144,994 $             202,180 $              223,353 $           104,750 $                121,096
Cost of network services                                               26,506                    73,650               108,392                119,990              57,413                   59,825
Engineering and development                                             2,857                     6,560                10,638                 11,560               5,969                    6,932
Selling, general and administrative                                    11,032                    18,795                33,063                 37,284              18,626                   23,825
Depreciation and amortization of property and
equipment                                                               3,749                     8,376                16,480                 20,220                 9,606                  9,756
Amortization of intangible assets                                      11,520                    15,601                23,150                 25,769                12,571                 14,705
Impairment of goodwill and other intangible
assets                                                                322,153                           —                  —                      —                      —                       —
In-process research & development                                          —                            —                  —                      —                      —                       —
Costs of terminated initial public offering                                —                            —               1,473                     —                      —                       —

Total operating expenses                                              377,817                   122,982               193,196                214,823             104,185                  115,043

(Loss) income from operations before taxes,
equity in net loss of unconsolidated affiliate,
and minority interest in net loss of
consolidated subsidiary                                              (331,062 )                  22,012                 8,984                  8,530                   565                   6,053
Interest expense                                                         (151 )                 (12,091 )             (11,917 )              (11,272 )              (5,821 )                (5,437 )
Interest and other income, net                                            250                       555                   915                  2,544                 1,458                     (82 )
Income tax benefit (provision)                                          1,125                    (4,562 )                 (45 )                 (838 )                 348                    (630 )
Equity in net loss of unconsolidated affiliate                             —                         —                   (364 )                  (64 )                  —                      (98 )
Minority interest in net loss of consolidated
subsidiary                                                                  156                     348                    —                      —                      —                       —

Net (loss) income (1)                                                (329,682 )                   6,262                (2,427 )               (1,100 )              (3,450 )                  (194 )
Dividends on preferred stock                                               —                    (11,934 )             (14,630 )              (15,060 )              (7,284 )                (3,428 )
Loss on early extinguishment of related party
debt, net of tax benefit of $1,428                                          —                    (2,238 )                  —                      —                      —                       —

Net loss attributable to common stockholders      $                  (329,682 ) $                (7,910 ) $           (17,057 ) $            (16,160 ) $          (10,734 ) $               (3,622 )

Per Share Information:
Basic and diluted net loss per common share                                       $                (0.64 ) $            (1.38 ) $              (1.31 ) $             (0.87 ) $               (0.17 )
Basic and diluted weighted average common
shares outstanding                                                                               12,371                12,372                 12,373                12,373                 20,842


                                                                                                                                              As of June 30, 2004


                                                                                                                                         Actual               Pro Forma
                                                                                                                                       (Unaudited)           (Unaudited) (2)

Consolidated Balance Sheet Data:
Cash and cash equivalents                                                                                                         $             12,413 $                  12,413
Working capital                                                                                                                                  7,974                     8,917
Total assets                                                                                                                                   344,298                   344,298
Total debt, including current portion                                                                                                           81,010                    58,557
Total stockholders' equity                                                                                                                     210,591                   233,044
                                                                                                                      Supplemental data


                                                                                                                                           Six months ended
                                                                                                                                                June 30
                                                                                                    Years ended December 31

                                                                                                     2001       2002       2003        2003       2004

Other Data:
Domestic POS transactions transmitted through our networks (in millions)                              6,706      7,567       7,916      3,845      3,721


(1)
         On January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets" which requires that goodwill no longer be amortized. If SFAS No. 142 had been effective
         for the period from April 3, 2001 through December 31, 2001, net income would have increased by approximately $0.5 million resulting in a net loss attributable to common
         stockholder of approximately $7.5 million. For periods ending prior to April 3, 2001, amortization of intangible assets includes amortization of goodwill.


(2)
         The unaudited pro forma consolidated balance sheet data gives effect to (i) the sale by us of 1,200,000 shares of common stock at an assumed public offering price of $20.64 per
         share, after deducting estimated underwriting discounts and commissions and estimated offering costs payable by us and (ii) the repayment of a portion of amounts outstanding under
         the senior secured credit facility from our net proceeds of this offering as if each of the transactions had occurred on June 30, 2004. See "Capitalization" and "Unaudited Pro Forma
         Consolidated Financial Information" for a detailed discussion of the unaudited pro forma consolidated balance sheet data.

                                                                                             7
                                                                 RISK FACTORS

      You should consider carefully the risks described below, together with all of the other information in this prospectus, before making a
decision to invest in our common stock. If any of the following risks actually occurs, our results of operations could suffer, the trading price of
our common stock could decline and you may lose all or part of your investment in our common stock.

Risks Relating to Our Business

We derive a substantial portion of our revenue from a small number of customers. If one or more of our top five customers were to cease
doing business with us, or to substantially reduce its dealings with us, our revenues and earnings could decline.

     For the six months ended June 30, 2004, we derived approximately 29.1% of our total revenues from our five largest customers. We
expect to continue to depend upon a relatively small number of customers for a significant percentage of our revenues. The loss of any of our
largest customers or a decision by one of them to purchase our services at a reduced level could harm our revenues and earnings.

     The contracts with our five largest customers contain minimum transaction or revenue commitments on an annual or contract term basis.
Upon meeting these commitments, the customers are no longer obligated to purchase services from us and may elect not to make further use of
our services. In addition, our customers may elect not to renew their contracts when they expire. Even if contracts are renewed, the renewal
terms may be less favorable to us than under the current contracts.

      The term of our contract with our largest customer expires in the fourth quarter of 2004. For the six months ended June 30, 2004, the
revenues from this customer constituted approximately 7.3% of our total revenues. Based on the current status of negotiations, we believe that
this customer will not renew or extend the term of this contract. Upon expiration of the term, this contract will continue on a month-to-month
basis without any minimum transaction or revenue commitments. Accordingly, we believe that revenues and related transaction volumes from
this customer may decline in the fourth quarter of 2004 and thereafter.

     The customer relationship intangible asset value attributable to our largest customer was approximately $25.9 million as of June 30, 2004.
We will continue to assess the recoverability of this customer relationship asset based upon anticipated future cash flows. If we estimate that
future cash flows from this largest customer will materially decline, we may determine that all or a portion of this customer relationship asset
may be impaired, and if so we will be required to record a charge to write-down the value of this asset, which would negatively impact our
earnings.

We face significant pressure on the prices for our services from our competitors and customers. Our failure to sustain pricing could impair
our ability to maintain profitability or positive cash flow.

     Our competitors and customers may cause us to reduce the prices we charge for services, the effects of which we may not be able to offset
by increasing the number of transactions we transport using our networks or by reducing our costs. The primary sources of pricing pressure
include:

     •
            Competitors offering our customers services at reduced prices. For example, telecommunications carriers may reduce the overall
            cost of their services by bundling their data networking services with other services such as voice communications.

     •
            POS and telecommunication services customers seeking greater pricing discounts during contract negotiations in exchange for
            maintaining or increasing their minimum transaction or revenue commitments.

                                                                         8
     •
            Consolidation of existing customers resulting in pricing reductions. For example, one of our customers with relatively lower
            contract prices may acquire another of our customers, enabling the acquired customer's transactions to receive the benefit of the
            lower prices. In addition, if an existing customer acquires another customer, the combined transaction volume may qualify for
            reduced pricing under our contract.

Our efforts to grow our POS business are highly dependent upon our customers generating greater transaction volumes and our ability to
expand into new markets.

     We already serve the largest payment processors in the United States. Accordingly, the rate of growth in our POS division is highly
dependent upon the rate of growth in the number of domestic transactions transmitted by our existing customers through our networks. Factors
which may reduce the rate of growth in the number of credit and debit card and ATM transactions include future economic downturns, acts of
war or terrorism and other events that reduce consumer spending.

      We may be unable to increase our business from state lottery operators, electronic benefits programs and healthcare industry participants
that we have identified as potential sources of future growth for our POS business. Factors that may interfere with our ability to expand further
into these areas include:

     •
            market participants' adoption of alternative technologies,

     •
            our potential inability to enter into commercial relationships with additional market participants, and

     •
            implementation of federal and state regulations.

Our strategy to expand internationally may fail, which may impede our growth and harm our operating results.

     As of June 30, 2004, we have yet to generate positive operating cash flows in four out of the 11 countries in which we operate outside the
United States and Canada. In addition, we are planning expansion in our existing international markets and into additional international
markets.

     Key challenges we will face in pursuing our international strategy include the need to:

     •
            secure commercial relationships to help establish our presence in international markets,

     •
            obtain telecommunications services from incumbent telecommunication service providers that may compete with us,

     •
            adapt our services to support varying telecommunications protocols that differ from those markets where we have established
            operations,

     •
            hire and train personnel capable of marketing, installing and integrating our data communications services, supporting customers
            and managing operations in foreign countries,

     •
            localize our products to target the specific needs and preferences of foreign customers, which may differ from our traditional
            customer base in the United States,

     •
            build our brand name and awareness of our services among foreign customers, and

     •
            implement new systems, procedures and controls to monitor our operations in new markets.

     In addition, we are subject to risks associated with operating in foreign countries, including:
•
    multiple, changing and often inconsistent enforcement of telecommunications and other laws and regulations,

•
    competition with existing market participants which have a longer history in and greater familiarity with the foreign markets we
    enter,

•
    laws and business practices that favor local competitors,

•
    fluctuations in currency exchange rates,

                                                                9
     •
            imposition of limitations on conversion of foreign currencies into U.S. dollars or remittance of dividends and other payments by
            foreign subsidiaries, and

     •
            changes in a specific country's or region's political or economic conditions.

      If we fail to address the challenges and risks associated with international expansion, we may encounter difficulties implementing our
strategy, which could impede our growth or harm our operating results.

Our customers may develop in-house networks and divert part or all of their data communications from our networks to their networks.

      As a payment processor's business grows larger and generates a greater number of credit card and debit card transactions, it could become
economically advantageous for the processor to develop its own network for transmitting transaction data, including credit card and debit card
transactions. Currently, some of the largest processors in the United States and some very large merchants, such as supermarkets, department
stores and major discount stores, operate their own networks to transmit some or all of their transactions. Also, as the number of outsourced
providers of network services has decreased, payment processors and large merchants have developed, and may continue to seek to develop,
their own networks in order to maintain multiple sources of supply. In addition, our telecommunication services division customers may elect
to connect their call signaling networks directly to the call signaling networks of other telecommunications carriers. As a result of any of these
events, we could experience lower revenues.

Our reliance on a limited number of telecommunication services providers exposes us to a number of risks over which we have no control,
including risks with respect to increased prices and termination of essential services.

      The operation of our networks depends upon the capacity, reliability and security of services provided to us by a limited number of
telecommunication services providers. We have no control over the operation, quality or maintenance of those services or whether the vendors
will improve their services or continue to provide services that are essential to our business. In addition, telecommunication services providers
may increase the prices at which they provide services, which would increase our costs. If one or more of our telecommunication services
providers were to cease to provide essential services or to significantly increase their prices, we could be required to find alternative vendors
for these services. With a limited number of vendors, we could experience significant delays in obtaining new or replacement services, which
could lead to slowdowns or failures of our networks. This could harm our reputation and could cause us to lose customers and revenues.

A slowdown or failure of our networks could cause us to lose customers and revenue .

    Our business is based upon our ability to rapidly and reliably receive and transmit data through our networks. One or more of our
networks could slow down significantly or fail for a variety of reasons, including:

     •
            undetected defects or errors in our software programs, especially when first integrated into a network,

     •
            unexpected problems encountered when integrating changes, enhancements or upgrades of third party equipment or software with
            our systems,

     •
            computer viruses,

     •
            natural or man-made disasters disrupting power or telecommunications systems generally, and

     •
            damage to, or failure of, our systems due to human error or intentional disruption.

                                                                        10
     We may not have sufficient redundant systems or backup telecommunications facilities to allow us to receive and transmit data in the
event of significant system failures. Any significant degradation or failure of one or more of our networks could cause our customers to suffer
delays in transaction processing, which could damage our reputation, increase our service costs, or cause us to lose customers and revenues.

We depend on a limited number of network equipment suppliers and do not have supply contracts. Our inability to obtain necessary
network equipment or technical support could harm our business.

     Some key components we use in our networks are available only from a limited number of suppliers. The number of available suppliers of
components and technical support for our X.25 networks are particularly limited. We do not have long-term supply contracts with these or any
other limited source vendors, and we purchase data network equipment on a purchase order basis. If we are unable to obtain sufficient
quantities of limited source equipment and required technical support, or to develop alternate sources as required in the future, our ability to
deploy equipment in our networks could be delayed or reduced, or we may be forced to pay higher prices for our network components. Delays
or reductions in supplies could lead to slowdowns or failures of our networks.

We may experience fluctuations in quarterly results because of the seasonal nature of our business and other factors outside of our control,
which could cause the market price of our common stock to decline.

     Credit card and debit card transactions account for a major percentage of the transaction volume processed by our customers. The volume
of these transactions on our networks generally is greater in the fourth quarter holiday season than during the rest of the year. Consequently,
revenues and earnings from credit card and debit card transactions in the first quarter generally are lower than revenues and earnings from
credit card and debit card transactions in the fourth quarter of the immediately preceding year. We expect that our operating results in the
foreseeable future will be significantly affected by seasonal trends in the credit card and debit card transaction market.

     In addition, a variety of other factors may cause our results to fluctuate from one quarter to the next, including:

     •
            varying costs incurred for network expansion,

     •
            the impact of quarterly variations in general economic conditions,

     •
            acquisitions made or customers acquired or lost during the quarter, and

     •
            changes in pricing policy by us, our competitors and our third party supplier and service providers during a particular quarter.

We may not be able to adapt to changing technology and our customers' technology needs.

     We face rapidly changing technology and frequent new service offerings by competitors that can render existing services obsolete or
unmarketable. Our future success depends on our ability to enhance existing services and to develop, introduce and market, on a timely and
cost effective basis, new services that keep pace with technological developments and customer requirements.

We may be unable to protect our proprietary technology, which would allow competitors to duplicate our services. This would make it more
difficult for us to compete with them.

     We may not be able to protect sufficiently our proprietary technology, which could make it easier for competitors to develop services that
compete with our services. We rely principally on copyright and trade secret laws and contractual provisions to protect our proprietary
technology. The laws of some countries in which we sell our services and products may not protect software and intellectual property

                                                                         11
rights to the same extent as the laws of the United States. If these measures do not adequately prevent misappropriation of our technology,
competitors may be able to use and adapt our technology. Our failure to protect our technology could diminish our competitive advantage and
cause us to lose customers to competitors.

We may face claims of infringement of proprietary rights, which could harm our business and operating results.

     Third parties may assert claims that we are infringing their proprietary rights. If infringement claims are asserted against us, we could
incur significant costs in defending those claims. We may be required to discontinue using and selling any infringing technology and services,
to expend resources to develop non-infringing technology or to purchase licenses or pay royalties for other technology. We may be unable to
acquire licenses for the other technology on reasonable commercial terms or at all. As a result, we may find that we are unable to continue to
offer the services and products upon which our business depends.

Future acquisitions could negatively affect our operating results and could dilute the interests of existing stockholders.

     We expect to continue to seek selective acquisitions as an element of our growth strategy. Future acquisitions could subject us to risks
including:

     •
            If we are not able to successfully integrate acquired businesses in a timely manner, our operating results may decline, particularly
            in the fiscal quarters immediately following the completion of such transactions while the operations of the acquired entities are
            being integrated into our operations. We also may incur substantial costs, delays or other operational or financial problems during
            the integration process.

     •
            Acquisitions could result in large, immediate write-offs and assumption of contingent liabilities, either of which could harm our
            operating results.

     •
            Acquisitions may divert the attention of senior management from our existing business.

     •
            If we issue additional equity to finance our acquisitions, it could result in dilution for our existing stockholders.

     •
            If we incur additional indebtedness to finance acquisitions, our interest expense could increase and new debt agreements might
            involve new restrictive covenants that could reduce our flexibility in managing our business.

We may not have adequate resources to meet demands resulting from growth.

     Growth may strain our management systems and resources. We may need to make additional investments in the following areas:

     •
            recruitment and training,

     •
            communications and information systems,

     •
            sales and marketing,

     •
            facilities and other infrastructure,

     •
            treasury and accounting functions,

     •
    licensing and acquisition of technology and rights, and

•
    employee and customer relations and management.

                                                              12
     If we fail to develop systems, procedures and controls to handle current and future growth on a timely basis, we may be less efficient in
the management of our business or encounter difficulties implementing our strategy, either of which could harm our results of operations.

We may lack the capital required to maintain our competitive position or to sustain our growth.

     We have historically relied on cash flow from operations and proceeds from equity and debt to fund our operations, capital expenditures
and expansion. If we are unable to obtain sufficient capital in the future, we may face the following risks:

     •
            We may not be able to continue to meet customer demand for service quality, availability and competitive pricing.

     •
            We may not be able to expand rapidly internationally or to acquire complementary businesses.

     •
            We may not be able to develop new services or otherwise respond to changing business conditions or unanticipated competitive
            pressures.

If we do not compete effectively, we may lose market share to competitors and suffer a decline in revenues.

    Many of our competitors have greater financial, technical, marketing and other resources than us. As a result, they may be able to support
lower pricing and margins and to devote greater resources to marketing their current and new products and services.

     We face competition in each of our four divisions as follows:

     •
            The primary competitors of our POS division are MCI, Inc. and AT&T Corp.

     •
            The primary competitors of our telecommunication services division include Southern New England Telephone Company,
            Syniverse Technologies, Inc. and Verisign, Inc.

     •
            The primary competitors of our financial services division include AT&T Corp., Bloomberg L.P., Reuters Group PLC, The
            Thompson Corporation (Thompson Financial), SAVVIS Communications Corporation and Radianz Inc.

     •
            The primary competitors of our international services division include British Telecom in the United Kingdom, France Telecom in
            France, Telefonica S.A. in Spain and Telstra Corporation Limited in Australia.



We depend on key personnel.

     Our success depends largely on the ability and experience of a number of key employees, including John J. McDonnell, Jr., our Chairman
and Chief Executive Officer, Brian J. Bates, our President and Chief Operating Officer, and Henry H. Graham, Jr., our Executive Vice
President and Chief Financial Officer. If we lose the services of any of our key employees, our business may be adversely affected.

Recently enacted and proposed changes in securities laws are likely to increase our costs.

     The Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the Securities and Exchange Commission, have
required changes in some of our corporate governance and accounting practices. In addition, the New York Stock Exchange has promulgated a
number of regulations. We expect these laws, rules and regulations to increase our legal and financial compliance costs and to make some
activities more difficult, time consuming and costly. We also expect these new rules and regulations to make it more difficult and more
expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur significantly
higher costs to obtain coverage. These new laws, rules and regulations could also make it more difficult for us to

                                                                       13
attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.

Regulatory changes may increase our costs or impair our growth.

     Federal and state regulations can affect the costs of business for us and our competitors by changing the rate structure for access services
purchased from local exchange carriers to originate and terminate calls by restricting access to dedicated connections available from local
exchange carriers, by changing the basis for computation of other charges, such as universal service charges, or by revising the basis for taxing
the services we purchase or provide. The Federal Communications Commission is currently considering changes to the rate structure for
services provided by local exchange carriers, including the rate structure for access services, and we currently cannot predict whether these rule
changes will be adopted or the impact these rule changes may have on our charges for access and other services if they are adopted. Recent and
pending decisions of the FCC may limit the availability and increase pricing of network elements used by our suppliers to provide
telecommunications services to us. We cannot predict whether these rule changes will increase the cost of services we purchase from our
suppliers. Further, the FCC is considering modifying the way in which universal service charges are calculated, including considering whether
to assess universal service charges on a flat-fee basis, such as a per-line or per-account charge. We cannot predict whether the FCC will adopt
changes in the calculation of universal service charges or whether these changes would increase our universal service charges. If the FCC
adopts any proposal that increases our universal service charges, our network operating costs will increase.

     The business of our telecommunication services division customers is or may become subject to regulation that indirectly affects our
business. Many of our telecommunication services division customers are subject to federal and state regulations applicable to the
telecommunications industry. Changes in these regulations could cause our customers to alter or decrease the services they purchase from us.

     We cannot predict when, or upon what terms and conditions, further regulation or deregulation might occur or the effect future regulation
or deregulation may have on our business. Our operating costs may be increased because our service providers and several services that we
offer may be indirectly affected by federal and state regulations. In addition, future services we may provide could become subject to direct
regulation.

Risks Related to this Offering

Future sales of our common stock may cause our stock price to decline.

     If our stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our
common stock could decline. Based on 26,778,953 shares outstanding as of June 30, 2004, upon completion of this offering we will have
27,978,953 shares of common stock outstanding, excluding 1,140,536 shares of common stock issuable upon the exercise of outstanding
options and 304,000 shares of common stock issuable to executives and employees upon vesting.

    All of the shares of our common stock sold in this offering will be freely tradable, without restriction, in the public market. Of the
remaining shares:

     •
            15,169,735 shares held by GTCR, our controlling stockholder, will be eligible for sale in the public market after the applicable
            lock-up period expires, subject to compliance with the volume limitations and other conditions of Rule 144, and

                                                                        14
     •
            2,274,419 shares held by our directors and executive officers will be eligible for sale in the public market after the applicable
            lock-up period expires, subject to compliance with the volume limitations and other conditions of Rule 144.

     Furthermore, an additional 1,964,722 shares may be issued in the future upon exercise of options granted, options to be granted or equity
awards to be granted under our stock option and incentive compensation plans. We have registered these shares under the Securities Act, and
therefore the shares will be freely tradable when issued, subject to compliance with the volume limitations and other conditions of Rule 144 in
the case of shares sold by persons deemed to be our affiliates.

      We, all of our directors and executive officers and the selling stockholders have agreed that, for a period of 90 days from the date of the
final prospectus, we and they, subject to some exceptions, will not, without the prior written consent of Lehman Brothers Inc., dispose of or
hedge any shares of our common stock or any securities convertible into or exchangeable for our common stock. Lehman Brothers Inc. may
release any of the securities subject to these lock-up agreements at any time without notice.

The trading price of our common stock is likely to be volatile, and you may not be able to sell your shares at or above the public offering
price.

     The trading prices of the securities of technology companies have been highly volatile. Accordingly, the trading price of our common
stock is likely to be subject to wide fluctuations. Factors affecting the trading price of our common stock include:

     •
            variations in operating results,

     •
            announcements of technological innovations, new services or service enhancements, strategic alliances or significant agreements
            by us or by our competitors,

     •
            the gain or loss of significant customers,

     •
            changes in the estimates of our operating results or changes in recommendations by any securities analysts that elect to follow our
            common stock,

     •
            terrorist acts and political instability, and

     •
            market conditions in our industry, the industries of our customers and the economy as a whole.

     In addition, if the market for technology stocks or the stock market in general experiences continued or increased loss of investor
confidence, the trading price of our common stock could decline for reasons unrelated to our business, operating results or financial condition.

As a new investor, you will incur substantial dilution as a result of this offering and future equity issuances.

     The public offering price will be substantially higher than the pro forma, net tangible book value per share of our outstanding common
stock. As a result, investors purchasing common stock in this offering will incur immediate dilution of $20.29 per share, based upon an
assumed public offering price of $20.64 per share. This dilution is due in large part to earlier investors in our company having paid
substantially less than the public offering price when they purchased their shares. The exercise of outstanding options and future equity
issuances, including any additional shares issued in connection with acquisitions, may result in further dilution to investors.

We will continue to be controlled by GTCR, which will limit your ability to influence corporate activities.

     Upon completion of the offering, GTCR will continue to have three representatives on our nine-member board of directors and will own
or control shares representing, in the aggregate, a 54.2% voting interest in the company, or 52.5% if the underwriters exercise their
over-allotment option in full.

                                                                        15
Accordingly, GTCR will exercise significant influence over our operations and business strategy and will be able to control the outcome of
votes on all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate
transactions, such as mergers or other business combinations. This concentration of ownership may also have the effect of delaying or
preventing a change in control of our company or discouraging others from making tender offers for our shares, which could prevent
stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them.

Conflicts of interest may arise because some of our directors are principals of our controlling stockholder.

      Three principals of GTCR Golder Rauner, L.L.C. serve on our nine-member board of directors. GTCR and its affiliates currently have
interests in other companies, one of which, Syniverse Technologies Inc., competes with our telecommunications services division. GTCR and
its affiliates collectively beneficially own approximately 76% of the common units and approximately 87% of the preferred units of Syniverse's
parent company, Syniverse Holdings, LLC. GTCR and its affiliates may continue to invest in entities that directly or indirectly compete with us
or companies in which they currently invest may begin competing with us. As a result of these relationships, when conflicts between the
interests of GTCR and the interests of our other stockholders arise, these directors may not be disinterested. Although our directors and officers
have a duty of loyalty to us, under Delaware law and our certificate of incorporation, transactions that we enter into in which a director or
officer has a conflict of interest are generally permissible so long as (1) the material facts relating to the director's or officer's relationship or
interest as to the transaction are disclosed to our board of directors and a majority of our disinterested directors approves the transaction, (2) the
material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our stockholders and a majority
of our disinterested stockholders approves the transaction, or (3) the transaction is otherwise fair to us.

     Our amended and restated certificate of incorporation also provides that any potential transaction opportunity that is offered to a GTCR
representative solely in his capacity as a director or officer of the company will be deemed to be a corporate opportunity of ours if we would be
permitted to undertake the opportunity under our amended and restated certificate of incorporation, we have sufficient financial resources to
undertake the transaction and the transaction would be in line with our business. GTCR's representatives are not required to offer any other
transaction opportunity of which they become aware to us and could take any such opportunity for themselves or offer it to other companies in
which they have an investment, including the company that competes with our telecommunication services division.

Our reported financial results may be adversely affected by changes in U.S. generally accepted accounting principles.

     We prepare our financial statements in conformity with U.S. generally accepted accounting principles. These accounting principles are
subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the Securities
and Exchange Commission and various bodies formed to interpret and create appropriate accounting principles. A change in these principles or
interpretations could have a significant effect on our reported financial results and could affect the reporting of transactions completed before
the announcement of a change.

Anti-takeover provisions in our organizational documents and Delaware law make any change in control more difficult.

    Our certificate of incorporation and bylaws contain provisions that may delay or prevent a change in control, may discourage bids at a
premium over the market price of our common stock and may

                                                                         16
affect adversely the market price of our common stock and the voting and other rights of the holders of our common stock. These provisions
include:

    •
            prohibiting our stockholders from calling a special meeting of stockholders,

    •
            our ability to issue additional shares of our common stock without stockholder approval,

    •
            our ability to issue preferred stock with voting or conversion rights that adversely affect the voting or other rights of holders of
            common stock without their approval,

    •
            prohibiting our stockholders from amending our certificate of incorporation or bylaws except with 66 2 / 3 % stockholder approval,

    •
            any vacancy on the board of directors, including any vacancy resulting from an expansion of the board, unless otherwise
            determined by the board of directors or required by law, may only be filled by a vote of the directors in office at the time of the
            vacancy, and

    •
            advance notice requirements for raising matters of business or making nominations at stockholders' meetings.

    We are also subject to provisions of the Delaware corporation law that, in general, prohibit any business combination with a beneficial
owner of 15% or more of our common stock for three years after the point in time that such stockholder acquired shares constituting 15% or
more of our shares unless the holder's acquisition of our stock was approved in advance by our board of directors.

                                                                        17
                                 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus, including the sections entitled "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business," contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future
events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. These risks and other factors include those listed under "Risk Factors"
and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other
comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements. We caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak only as of the date of this prospectus. We undertake no obligation to publicly update the
forward-looking statements to reflect subsequent events or circumstances.

                                                                        18
                                                              USE OF PROCEEDS

     We estimate that our net proceeds from this offering will be $22.5 million, assuming a public offering price of $20.64 per share, after
deducting estimated underwriting discounts and commissions and estimated offering expenses, which are payable by us. We will not receive
any of the proceeds from the sale of 4,615,203 shares by the selling stockholders. We intend to use our net proceeds from this offering to repay
a portion of the amounts outstanding under our existing senior secured credit facility, as follows: $1.0 million, or $11.9 million if the
underwriters exercise their over-allotment option in full, will be used for the repayment of principal and interest on our Term Loan and
$21.5 million will be used for the repayment of principal and interest on our Revolving Credit Facility. Our Term Loan and Revolving Credit
Facility bear interest at a floating rate, which was 3.78% at June 30, 2004, and mature on March 19, 2009.


                                                    PRICE RANGE OF COMMON STOCK

     Since March 16, 2004, our common stock has traded on the New York Stock Exchange under the symbol "TNS." The following table sets
forth the high and low closing sales prices of our common stock, as reported on the New York Stock Exchange, for each of the periods listed.

                                                                                                       High          Low

                      2004
                      First Quarter (commencing March 16, 2004)                                    $     19.15   $     18.00

                      Second Quarter                                                                     23.25         19.15

                      Third Quarter (through September 8, 2004)                                          22.39         19.47

     The last reported sale price of our common stock on New York Stock Exchange on September 8, 2004 was $20.64 per share. As of
June 30, 2004, we had approximately 18 holders of record of our common stock. The number of holders of record of our common stock is not
representative of the number of beneficial holders because many shares are held by depositories, brokers or other nominees.


                                                              DIVIDEND POLICY

     We have never declared or paid any cash dividends on our common stock. We do not expect to pay any cash dividends for the foreseeable
future. We currently intend to retain any future earnings to finance our operations and growth. Any future determination to pay cash dividends
will be at the discretion of our board of directors and will be dependent on earnings, financial condition, operating results, capital requirements,
any contractual restrictions and other factors that our board of directors deems relevant. In addition, our senior secured credit facility contains
limitations on our ability to declare and pay cash dividends.

                                                                        19
                                                              CAPITALIZATION

    The following table sets forth our cash, cash equivalents and capitalization as of June 30, 2004:

    •
             on an actual basis, and

    •
             on a pro forma basis to reflect the receipt of the estimated net proceeds we will receive from this offering, assuming a public
             offering price of $20.64 per share, after deducting estimated underwriting discounts and commissions and estimated offering
             expenses payable by us and the repayment of a portion of the senior secured credit facility.

     You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and the financial statements and the accompanying notes appearing elsewhere in this prospectus.

                                                                                               As of June 30, 2004

                                                                                           Actual             Pro forma

                                                                                       (In thousands, except per share and
                                                                                                 share amounts)
                                                                                                   (Unaudited)


Cash and cash equivalents                                                             $       12,413      $           12,413

Current portion of long-term debt                                                     $       11,500      $           10,557
Long-term debt                                                                                69,510                  48,000

Total debt                                                                            $       81,010      $           58,557

Stockholders' equity:
Common stock, par value $0.001 per share:
  130,000,000 shares authorized, actual and pro forma, 26,778,953 shares issued
  and outstanding actual and 27,978,953 shares issued and outstanding pro forma                   27                      28
Additional paid-in capital                                                                   259,032                 281,484
Accumulated deficit, deferred stock compensation and accumulated other
comprehensive loss                                                                           (48,468 )               (48,468 )

  Total stockholders' equity                                                                 210,591                 233,044

  Total capitalization                                                                $      291,601      $          291,601


                                                                        20
                                                                    DILUTION

     If you invest in our common stock through this offering, your interest will be diluted to the extent of the difference between the public
offering price per share of our common stock and the pro forma net tangible book value per share of common stock upon the completion of this
offering.

      Net tangible book deficit per share represents the amount of our total tangible assets less total liabilities, divided by the number of shares
of common stock outstanding. After giving effect to the sale of 1,200,000 shares of common stock offered by us in this offering, assuming a
public offering price of $20.64 per share and after deducting the underwriting discounts and commissions and estimated offering expenses
payable by us, our pro forma net tangible book value as of June 30, 2004 would have equaled approximately $0.35 per share of common stock.
This represents an immediate increase in net tangible book value of $0.82 per share to our existing stockholders and an immediate dilution in
net tangible book value of $20.29 per share to new investors of common stock in this offering.

     The following table summarizes this per share dilution:

Public offering price per share                                                                                 $     20.64
Pro forma net tangible book deficit per share as of June 30, 2004                                $     0.47
Increase per share attributable to this offering                                                       0.82

Pro forma net tangible book value per share after this offering                                                        0.35

Dilution per share to new investors                                                                             $     20.29

     The following table summarizes on a pro forma basis, as of June 30, 2004, the differences between our existing stockholders and new
investors with respect to the number of shares of common stock issued by us, the total consideration paid (in thousands) and the average price
per share paid:

                                                              Shares purchased                 Total consideration

                                                                                                                                 Average
                                                                                                                                 price per
                                                                                                                                  share

                                                          Number           Percentage        Amount           Percentage

Existing stockholders                                     26,778,953              95.7 % $     218,636                89.8 % $          8.57
New investors                                              1,200,000               4.3          24,768                10.2             20.64

Total                                                     27,978,953             100.0 % $     243,404               100.0 % $         11.08

     We base the foregoing discussions and tables on the number of shares of stock outstanding as of June 30, 2004, and exclude:

     •
            1,140,536 shares of common stock that will be subject to issuance upon exercise of the options we granted under our 2001
            Founders' Stock Option Plan and our 2004 Long-Term Incentive Plan and 304,000 shares of common stock that will be subject to
            issuance upon vesting of share grants to executives and employees under our 2004 Long-Term Incentive Plan.

     •
            520,186 additional shares of common stock reserved for future issuance under our 2004 Long-Term Incentive Plan.

     •
            555,470 shares of our common stock subject to issuance by us if the underwriters' exercise the over-allotment option in full.

     To the extent outstanding options, or options or warrants we may issue in the future with exercise prices below the public offering price,
are exercised, there will be further dilution to new public investors.

                                                                         21
                                            SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected consolidated financial data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this
prospectus. The consolidated statement of operations data for the period from April 3, 2001 through December 31, 2001 and the years ended
December 31, 2002 and 2003 and the consolidated balance sheet data as of December 31, 2002 and 2003 are derived from our consolidated
financial statements audited by Ernst & Young LLP, independent registered public accounting firm, and are included elsewhere in this
prospectus. The consolidated balance sheet data as of December 31, 2001 is derived from our consolidated financial statements audited by
Ernst & Young LLP, independent registered public accounting firm, and is not included in this prospectus. The consolidated statements of
operations data for the six months ended June 30, 2003 and 2004 and the consolidated balance sheet data as of June 30, 2004 are derived from
our unaudited consolidated interim financial statements and are included elsewhere in this prospectus.

     The consolidated statement of operations data for Transaction Network Services, Inc., formerly PSINet Transaction Solutions, Inc.,
(Predecessor #1) for the period from January 1, 2001 through April 2, 2001, is derived from the consolidated financial statements of
Transaction Network Services, Inc., formerly PSINet Transaction Solutions, Inc., (Predecessor #1) which have been audited by Ernst & Young
LLP, independent registered public accounting firm, and is included elsewhere in this prospectus. The consolidated statement of operations
data for Transaction Network Services, Inc., formerly PSINet Transaction Solutions, Inc., for the period from November 23, 1999 through
December 31, 1999 and for the year ended December 31, 2000 and the consolidated balance sheet data as of December 31, 1999 and 2000 are
derived from the consolidated financial statements of Transaction Network Services, Inc., formerly PSINet Transaction Solutions, Inc., which
have been audited by Ernst & Young LLP, independent registered public accounting firm, and are not included in this prospectus.

     The consolidated statement of operations data for Transaction Network Services, Inc. (Predecessor #2) for the period from January 1, 1999
through November 22, 1999 is derived from the consolidated financial statements of Transaction Network Services, Inc., which have been
audited by Ernst & Young LLP, independent registered public accounting firm, and is not included in this prospectus.

    The historical results are not necessarily indicative of the results to be expected for any future period.

                                                                        22
                                                                        Selected Consolidated Financial Data
                                                                (In thousands, except per share and transaction data)

                                                                                                                                    The Company

                               Transaction
                                 Network            Transaction Network Services, Inc.
                               Services, Inc.         (Formerly PSINet Transaction
                               (Predecessor                   Solutions, Inc.)
                                    #2)                      (Predecessor #1)

                                                                                                                                                                 Six months ended

                            January 1,             November                        January 1,
                              1999 -               23, 1999 -      Year ended        2001 -        April 3, 2001 -        Year ended        Year ended         June 30,          June 30,
                           November 22,            December        December         April 2,       December 31,          December 31,      December 31,         2003              2004
                               1999                 31, 1999        31, 2000          2001             2001                  2002              2003          (Unaudited)       (Unaudited)

Consolidated
Statements of
Operations Data:
Revenues                   $          151,251 $        20,858 $       190,773 $         46,755 $             144,994 $         202,180 $         223,353 $        104,750 $         121,096
Cost of network
services                                93,015           8,798         99,516           26,506                73,650           108,392           119,990           57,413            59,825
Engineering and
development                              6,656             814           8,966           2,857                 6,560            10,638            11,560            5,969             6,932
Selling, general and
administrative                          32,699           3,300         33,095           11,032                18,795            33,063            37,284           18,626            23,825
Depreciation and
amortization of
property and
equipment                                9,836           1,179         13,820            3,749                 8,376            16,480            20,220            9,606             9,756
Amortization of
intangible assets                        7,363           5,624         86,465           11,520                15,601            23,150            25,769           12,571            14,705
Impairment of
goodwill and other
intangible assets                          919              —               —          322,153                       —              —                 —                 —                 —
In-process research &
development                                 —          84,000               —               —                        —              —                 —                 —                 —
Costs of terminated
initial public offering                     —               —               —               —                        —           1,473                —                 —                 —

Total operating
expenses                              150,488         103,715         241,862          377,817               122,982           193,196           214,823          104,185           115,043

Income (loss) from
operations before
taxes, equity in
earnings (net loss) of
unconsolidated
affiliate, and minority
interest in net loss
(income) of
consolidated
subsidiary                                 763         (82,857 )       (51,089 )      (331,062 )              22,012             8,984             8,530               565             6,053
Interest expense                        (3,565 )           (57 )          (194 )          (151 )             (12,091 )         (11,917 )         (11,272 )          (5,821 )          (5,437 )
Interest and other
income, net                              1,367              74             199             250                   555               915             2,544            1,458                (82 )
Income tax (provision)
benefit                                 (3,128 )        (1,473 )       10,798            1,125                (4,562 )             (45 )            (838 )            348              (630 )
Equity in earnings (net
loss) of unconsolidated
affiliate                                   93              —               —               —                        —            (364 )             (64 )              —                (98 )
Minority interest in net
loss (income) of
consolidated
subsidiary                                (128 )            —              610             156                   348                —                 —                 —                 —

Net income (loss) (1)                   (4,598 )       (84,313 )       (39,676 )      (329,682 )               6,262            (2,427 )          (1,100 )          (3,450 )           (194 )
Dividends on preferred
stock                                       —               —               —               —                (11,934 )         (14,630 )         (15,060 )          (7,284 )          (3,428 )
Loss on early
extinguishment of
related party debt, net
of tax benefit of
$1,428                                      —               —               —               —                 (2,238 )              —                 —                 —                 —
Net income (loss)
attributable to
common stockholders      $          (4,598 ) $    (84,313 ) $    (39,676 ) $    (329,682 ) $               (7,910 ) $          (17,057 ) $           (16,160 ) $          (10,734 ) $         (3,622 )

Per Share
Information:
Basic and diluted net
loss per common share                                                                      $                (0.64 ) $              (1.38 ) $              (1.31 ) $         (0.87 ) $          (0.17 )
Basic and diluted
weighted average
common shares
outstanding                                                                                                12,371              12,372                    12,373            12,373            20,842

                                                                                                                                                                      As of June 30, 2004

                                                                                                            As of December 31,

                                                   As of December 31,

                                                                                                                                                               Actual                Pro Forma
                                                                                                                                                             (Unaudited)            (Unaudited) (2)

                                                  1999              2000                            2001                2002               2003

Consolidated Balance
Sheet Data:
Cash and cash equivalents                     $      19,425 $         16,298                   $        8,091 $            5,984 $              11,074 $               12,413 $                12,413
Working capital                                      36,777           30,151                           (5,080 )          (12,923 )             (18,102 )                7,974                   8,917
Total assets                                        804,967          726,248                          320,768            362,811               342,359                344,298                 344,298
Total debt, including current
portion                                                   —                —                          134,184            169,347               150,395                  81,010                 58,557
Class A redeemable
convertible
preferred stock                                           —                —                          146,780            161,410               176,470                     —                          —
Total stockholders' equity
(deficit)                                           615,159          573,979                           (4,445 )          (21,896 )      (37,512 )                     210,591                 233,044
                                                                                                                          Supplemental data

                                                                                                       Years ended December 31                  Six months ended

                                                                                                                                               June 30,      June 30,
                                                                                                        2001        2002        2003            2003          2004

Other Data:
Domestic POS transactions transmitted through our networks (in millions)                                 6,706       7,567         7,916           3,845          3,721


(1)
          On January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets" which requires that goodwill no longer be amortized. If SFAS No. 142 had been effective
          for the period from April 3, 2001 through December 31, 2001, net income would have increased by approximately $0.5 million resulting in a net loss attributable to common
          stockholder of approximately $7.5 million. For periods ending prior to April 3, 2001, amortization of intangible assets includes amortization of goodwill.


(2)
          The unaudited pro forma consolidated balance sheet data gives effect to (i) the sale by us of 1,200,000 shares of common stock at an assumed public offering price of $20.64 per
          share, after deducting estimated underwriting discounts and commissions and estimated offering costs payable by us and (ii) the repayment of a portion of amounts outstanding under
          the senior secured credit facility from our net proceeds of this offering as if each of the transactions had occurred on June 30, 2004. See "Capitalization" and "Unaudited Pro Forma
          Consolidated Financial Information" for a detailed discussion of the unaudited pro forma consolidated balance sheet data.

                                                                                               23
                           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                           AND RESULTS OF OPERATIONS

      You should read the following commentary in conjunction with our consolidated financial statements and related notes, our unaudited
pro forma consolidated financial information, "Selected Consolidated Financial Data" and "Risk Factors" included elsewhere in this
prospectus.

Overview

     We are a leading provider of business-critical data communications services to processors of credit card, debit card and ATM transactions.
We are also a leading provider of secure data and voice network services to the global financial services industry. We operate one of four
unaffiliated Signaling System No. 7 networks in the United States capable of providing services nationwide, and we utilize this network to
provide call signaling and database access services to the domestic telecommunications industry. Our data communications services enable
secure and reliable transmission of time-sensitive, transaction-related information critical to our customers' operations. Our customers
outsource their data communications requirements to us because of our substantial expertise, comprehensive customer support and
cost-effective services. We provide services to customers in the United States and increasingly to international customers in 12 countries,
including Canada and countries in Europe and the Asia-Pacific region.

     We provide our services through multiple data networks, each designed specifically for transaction applications. Our networks support a
variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods, including dial-up,
dedicated, wireless and Internet connections.

    We generate revenues through four business divisions:

    •
            POS services . We provide fast, secure and reliable data communications services primarily to payment processors in the United
            States and Canada. POS services revenue is derived primarily from per transaction fees paid by our customers for the transmission
            of transaction data through our networks between payment processors and POS or ATM terminals.

    •
            International services . We are one of the leading providers of data communications services to the POS industry in the United
            Kingdom. We also provide our services in Australia, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Spain
            and Sweden. Our international services division generates revenues from our POS and financial services offerings abroad.

    •
            Telecommunication services . We provide call signaling services that enable telecommunications carriers to establish and
            terminate telephone calls placed by their subscribers. We also provide database access services that enable our customers to
            provide intelligent network services, such as caller identification and local number portability, and credit card, calling card,
            third-party billing and collect calling. Our telecommunication services division generates revenues primarily from fixed monthly
            fees charged for our call signaling services and per-query fees charged for our database access and validation services.

    •
            Financial services. We provide fast, secure and reliable private data networking services that enable seamless communications and
            facilitate electronic trading among commercial banks, mutual funds, pension funds, broker-dealers, alternative trading systems,
            electronic communications networks, securities and commodities exchanges and other market participants. Our networks support
            multiple communications protocols including the Financial Information eXchange, or FIX, protocol. Our financial services
            division generates revenues from monthly recurring fees based on the number of customer connections to and through our
            networks.

                                                                      24
     Our most significant expense is cost of network services, which is comprised primarily of telecommunications charges, including data
transmission and database access, leased digital capacity charges, circuit installation charges and activation charges. The cost of data
transmission is based on a contract or tariff rate per minute of usage in addition to a prescribed rate per transaction for some vendors. The costs
of database access, circuits, installation charges and activation charges are based on fixed fee contracts with local exchange carriers and
interexchange carriers. The cost of network services also includes salaries, equipment maintenance and other costs related to the ongoing
operation of our data networks. Depreciation expense on our network equipment and amortization of developed technology are excluded from
our cost of network services and included in depreciation and amortization of property and equipment and amortization of intangible assets in
our consolidated statement of operations included elsewhere in this prospectus.

     Our engineering and development expenses include salaries and other costs related to product development, engineering and materials.
The majority of these costs are expensed as incurred, including costs related to the development of internal use software in the preliminary
project, the post-implementation and operation stages. Development costs we incur during the software application development stage are
capitalized and amortized over the estimated useful life of the developed software.

     Our selling, general and administrative expenses include costs related to sales, marketing, administrative and management personnel, as
well as outside legal, accounting and consulting services. We believe that selling, general and administrative expenses as a percentage of
revenues will remain constant or increase to support expansion of the international services division, as well as from the additional costs of
being a publicly traded company, including the legal, audit, insurance and board of directors compensation costs needed to establish and
maintain compliance with the Sarbanes-Oxley Act of 2002.

      In March 2004, we completed our initial public offering (IPO) of common stock issuing 4,420,000 shares of common stock at $18.00 per
share, which generated proceeds, net of offering costs, of approximately $71.5 million. The net proceeds of the IPO were used to repay a
portion of the outstanding debt under our then-existing senior secured credit facility. Concurrent with the closing of the IPO, we entered into a
new senior secured credit facility and used the net proceeds from borrowings under the new facility to repay the remaining debt outstanding
under our then-existing senior secured credit facility. In connection with the termination of our previous senior secured credit facility, we
recognized a charge of approximately $2.0 million related to the write-off of unamortized deferred financing costs. This write-off was included
in interest expense in the accompanying condensed consolidated statement of operations for the six months ended June 30, 2004.

     Upon the completion of the IPO, all of the outstanding shares of our Class A redeemable convertible preferred stock, including accrued
and unpaid dividends, converted into 9,984,711 shares of common stock.

Acquisitions

     On April 3, 2001, we completed the acquisition of our predecessor, Transaction Network Services, Inc., from PSINet, Inc. We acquired all
of the outstanding common stock of our predecessor for a purchase price, net of cash acquired, of $277.0 million, including transaction costs of
$3.4 million. We accounted for this acquisition under the purchase method, with the total consideration allocated to the fair value of assets
acquired and liabilities assumed, including identified intangibles of $247.9 million. We entered into long-term debt arrangements and issued
equity to finance the acquisition. The transaction costs included a severance liability of $2.0 million resulting from the elimination of 40
positions in management, operations, engineering and a number of other support functions. We paid this amount during the period ended
December 31, 2001.

                                                                        25
     On October 5, 2001, we acquired the remaining 49.9% interest in Transaction Network Services Australia PTY Limited for a purchase
price of $2.1 million in cash. We accounted for the acquisition under the purchase method for acquiring minority interests, and we allocated the
purchase price to the reduction of the minority interest liability of $0.6 million and to goodwill of $1.6 million.

     On May 13, 2002, we acquired from Sprint Communications Company L.P. the right to provide POS services under substantially all
customer contracts relating to Sprint's TranXact Service Operations, which we refer to as TranXact, as well as a two-year, non-compete
agreement. The consideration paid for these intangible assets was $40.0 million for the customer contracts, $5.0 million for the non-compete
agreement and transaction costs of $0.1 million. We obtained the funds used to acquire these assets from additional borrowings under our
senior secured credit facility. In connection with this transaction, we agreed to purchase transitional communication and other services from
Sprint until the TranXact customers were migrated from Sprint's network to our network. The total amount paid to Sprint for these transitional
services was approximately $4.0 million during the period from May 13, 2002 through December 31, 2002. Our consolidated statements of
operations included elsewhere in this prospectus include the results of the TranXact operations from May 13, 2002.

     On December 4, 2002, we completed the acquisition of a 50.1% interest in Openet S.r.l., an Italian provider of POS services, for a
purchase price of $1.8 million, plus transaction costs of $0.4 million. On January 24, 2003, we acquired the remaining 49.9% interest in Openet
for $2.0 million in cash. We accounted for this acquisition under the purchase method with the total consideration allocated to the fair value of
assets acquired and liabilities assumed, including identified intangibles of $3.4 million and goodwill of $0.5 million. Our consolidated
statements of operations included elsewhere in this prospectus include the operating results of Openet from December 4, 2002.

      On November 18, 2003, we acquired certain tangible and intangible assets of Transpoll Offline for a purchase price of $2.5 million
including direct acquisition costs of $0.4 million. The assets acquired included the right to provide POS services in the United Kingdom under
customer contracts, certain fixed assets and a non-compete agreement. We accounted for this acquisition under the purchase method with the
total consideration allocated to the fair value of assets acquired and liabilities assumed, including identified intangibles of $1.3 million. Our
consolidated statements of operations included elsewhere in this prospectus include operating results of Transpoll Offline from November 18,
2003.

     On May 21, 2004, we purchased two groups of tangible and intangible assets from the bankrupt U.S. Wireless Data, Inc. (USWD).
Pursuant to two separate asset purchase agreements, with the approval of the bankruptcy court, we (a) paid approximately $6.1 million,
including direct acquisition costs of approximately $0.1 million, for certain assets related to USWD's Synapse platform, which enables wireless
POS terminals to initiate transactions for mobile and other merchants and (b) paid approximately $3.7 million, including direct acquisition
costs of approximately $47,000, for USWD's vending assets, which support cashless transactions at vending machines. We purchased these
assets to advance our wireless capability to service existing customers as well as to penetrate new vertical markets. We accounted for the
acquisitions of the Synapse and vending assets under the purchase method with the total consideration allocated to the fair value of the assets
acquired and liabilities assumed, including identifiable intangibles of $5.9 million related to the Synapse assets and $3.7 million related to the
vending assets. Our consolidated results of operations for the six months ended June 30, 2004 include the operating results of these acquisitions
from May 21, 2004 through June 30, 2004.

                                                                        26
International Operations

     Although we generate revenues in each of the 11 countries included in our international services division, as of June 30, 2004 we have yet
to generate positive operating cash flows in four of these 11 countries. When establishing operations in a country, we typically incur personnel
and capital expenditures for an average of two to three years prior to establishing a customer base, recording revenues and generating positive
operating cash flows. On a consolidated basis as of June 30, 2004, our international services division generated positive operating cash flows.

Results of Operations

     For purposes of this management's discussion and analysis only, our revenues and cost of network services for the year ended
December 31, 2001, discussed below, represent the unaudited combined revenues and cost of network services of TNS, Inc. for the period from
April 3, 2001 through December 31, 2001, and our predecessor, Transaction Network Services, Inc. for the period from January 1, 2001
through April 2, 2001, which was formerly known as PSINet Transaction Solutions, Inc. Our operations and our predecessor's operations were
substantially the same during 2001 except for the effect on depreciation and amortization expense and impairment of goodwill by our
predecessor, both resulting from the higher price paid for the business by PSINet, Inc. in 1999. In addition to the different price paid for the
business, interest income and expense may not be comparable between periods due to different means of financing operations between us and
our predecessor. Although this approach is not consistent with accounting principles generally accepted in the United States, we believe it is the
most practical way to comment on the changes in our revenues and cost of network services. Our combined results may not be indicative of
results to be expected for future periods.

    The following tables set forth, for the periods indicated, the selected statements of operations data and the selected statements of
operations data expressed as a percentage of revenues:

                                                                                        Year Ended                                   Six Months           Six Months
                                            January 1, 2001-       April 3, 2001-       December 31,          Year Ended               Ended                Ended
                                              April 2, 2001      December 31, 2001          2002           December 31, 2003        June 30, 2003        June 30, 2004

                                            Predecessor #1           Historical          Historical            Historical            Historical           Historical

                                                                                              (In thousands)


Statements of Operations Data:
Revenues                                $             46,755 $           144,994 $           202,180 $             223,353 $              104,750 $            121,096
Cost of network services                              26,506              73,650             108,392               119,990                 57,413               59,825
Engineering and development                            2,857               6,560              10,638                11,560                  5,969                6,932
Selling, general and administrative                   11,032              18,795              33,063                37,284                 18,626               23,825
Depreciation and amortization of
property and equipment                                 3,749                8,376              16,480                20,220                 9,606                9,756
Amortization of intangible assets                     11,520               15,601              23,150                25,769                12,571               14,705
Impairment of
goodwill                                            322,153                        —                  —                     —                     —                    —
Costs of terminated initial public
offering                                                     —                     —            1,473                       —                     —                    —

Total operating expenses                            377,817              122,982             193,196               214,823                104,185              115,043

(Loss) income from operations
before taxes, equity in affiliate and
minority interest                                  (331,062 )              22,012               8,984                 8,530                    565                6,053
Interest expense                                       (151 )             (12,091 )           (11,917 )             (11,272 )               (5,821 )             (5,437 )
Interest and other income, net                          250                   555                 915                 2,544                  1,458                  (82 )
Income tax benefit (provision)                        1,125                (4,562 )               (45 )                (838 )                  348                 (630 )
Equity in net loss of unconsolidated
affiliate                                                    —                     —              (364 )                    (64 )                 —                    (98 )
Minority interest in net loss of
consolidated subsidiary                                  156                      348                 —                     —                     —                    —

Net (loss) income                       $          (329,682 ) $             6,262 $            (2,427 ) $            (1,100 ) $             (3,450 ) $             (194 )



                                                                                   27
                                                                                                              Six Months      Six Months
                                                     April 3, 2001-     Year Ended         Year Ended           Ended           Ended
                                January 1, 2001-     December 31,       December 31,       December 31,        June 30,        June 30,
                                  April 2, 2001          2001               2002               2003              2003            2004

                                Predecessor #1        Historical         Historical         Historical        Historical      Historical

Statements of Operations
Data:
Revenues                                  100.0 %           100.0 %           100.0 %            100.0 %          100.0 %         100.0 %
Cost of network services                   56.7              50.8              53.6               53.7             54.8            49.4
Engineering and
development                                  6.1                4.5               5.3                5.2             5.7             5.7
Selling, general and
administrative                             23.6               12.9              16.4               16.7             17.8            19.7
Depreciation and
amortization of property
and equipment                                8.0                5.8               8.2                9.1             9.2             8.1
Amortization of intangible
assets                                     24.7               10.8              11.4               11.5             12.0            12.1
Impairment of
goodwill                                  689.0                 —                 —                  —                —               —
Costs of terminated initial
public
offering                                     —                  —                 0.7                —                —               —

Total operating expenses                  808.1               84.8              95.6               96.2             99.5            95.0

(Loss) income from
operations before taxes,
equity in affiliate and
minority interest                        (708.1 )             15.2                4.4                3.8             0.5             5.0
Interest expense                           (0.3 )             (8.3 )             (5.9 )             (5.0 )          (5.6 )          (4.5 )
Interest and other income,
net                                          0.6                0.4               0.5                1.1             1.5            (0.1 )
Income tax benefit
(provision)                                  2.4               (3.2 )             —                 (0.4 )           0.3            (0.5 )
Equity in net loss of
unconsolidated affiliate                     —                  —                (0.2 )             (0.0 )            —             (0.1 )
Minority interest in net loss
of consolidated subsidiary                   0.3                0.2               —                  —                —               —

                                                                                                                                         )
Net (loss) income                        (705.1 )%           4.3%                (1.2 )%            (0.5 )%         (3.3 )%         (0.2 %


Six Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

    Revenues. Total revenues increased $16.3 million, or 15.6%, to $121.1 million for the six months ended June 30, 2004, from
$104.8 million for the six months ended June 30, 2003. We generate revenues through four operating divisions.

       POS division. Revenues from the POS division decreased $3.0 million, or 5.0%, to $57.5 million for the six months ended June 30, 2004,
from $60.5 million for the six months ended June 30, 2003. The $3.0 million decrease in POS revenues resulted from a decline in transaction
volumes and to a lesser extent a decrease in revenue per transaction as a result of negotiated price reductions upon renewal of certain contracts.
POS transaction volumes decreased 3.2% to 3.7 billion transactions for the six months ended June 30, 2004, from 3.8 billion transactions for
the six months ended June 30, 2003. We expect that in 2004 in connection with contract renewals some of our POS customers may seek to
negotiate greater pricing discounts in exchange for maintaining or increasing their minimum transaction or revenue commitments. As a result,
it is likely our revenue per transaction will decrease and, depending upon the number of transactions we transport, our POS revenues may
continue to decrease. In addition, based upon the current status of negotiations, we believe that revenues and related transaction volumes from
our largest customer may decline in the fourth quarter of 2004 and thereafter.

      International services division. Revenues from the international services division increased $14.3 million, or 70.5%, to $34.6 million for
the six months ended June 30, 2004, from $20.3 million for the six months ended June 30, 2003. The increase was primarily due to additional
revenues generated from our POS customers in the U.K., Australia, France and Spain and to a lesser extent we benefited from favorable foreign
exchange. Revenues from our U.K. subsidiary increased $7.0 million, or 46.6%, to $22.1 million for the six months ended June 30, 2004, from
$15.1 million for the six months ended June 30, 2003.

                                                                     28
     Telecommunication services division. Revenues from the telecommunication services division increased $2.8 million, or 19.9%, to
$16.9 million for the six months ended June 30, 2004, from $14.1 million for the six months ended June 30, 2003. The growth in revenues was
primarily due to increased usage of our call signaling services.

    Financial services division. Revenues from the financial services division increased $2.2 million, or 22.7%, to $12.2 million for the six
months ended June 30, 2004, from $9.9 million for the six months ended June 30, 2003. The increase in revenues was due to the growth in the
number of customer connections to and through our networks.

     Cost of network services. Cost of network services increased $2.4 million, or 4.2%, to $59.8 million for the six months ended June 30,
2004, from $57.4 million for the six months ended June 30, 2003. Cost of network services represented 49.4% of revenues for the six months
ended June 30, 2004, compared to 54.8% of revenues for the six months ended June 30, 2003. The increase in cost of network services resulted
primarily from higher usage charges from our TSD, FSD and ISD services, offset primarily by a decrease in usage-based vendor
telecommunications charges in our POS division, and to a lesser extent, lower usage charges from decreased POS transactions. Gross profit
represented 50.6% of total revenues for the six months ended June 30, 2004, compared to 45.2% for the six months ended June 30, 2003. The
increase in gross profit as a percentage of total revenues resulted primarily from increased contribution of our financial services division and
international services division, and to a lesser extent the decrease in usage-based vendor telecommunications charges.

     Future cost of network services depends on a number of factors including total transaction and query volume, the relative growth and
contribution to total transaction volume of each of our customers, the success of our new service offerings, the timing and extent of our
network expansion and the timing and extent of any network cost reductions. In addition, any significant loss or significant reduction in
transaction volumes could lead to a decline in gross margin since significant portions of our network costs are fixed costs.

     Engineering and development expense. Engineering and development expense increased $0.9 million, or 16.1%, to $6.9 million for the
six months ended June 30, 2004, from $6.0 million for the six months ended June 30, 2003. Engineering and development expense represented
5.7% of revenues for the six months ended June 30, 2004 and 2003. Engineering and development expense increased primarily from an
increase in engineering expenses required to support our international expansion.

     Selling, general and administrative expense. Selling, general and administrative expense increased $5.2 million, or 27.9%, to
$23.8 million for the six months ended June 30, 2004, from $18.6 million for the six months ended June 30, 2003. Selling, general and
administrative expense represented 20.0% of revenues for the six months ended June 30, 2004, compared to 17.8% of revenues for the six
months ended June 30, 2003. Selling, general and administrative expense increased primarily from the expenses required to support our
revenue growth, mainly within the international services division, and to a lesser extent, the incremental costs necessary to operate as a public
company.

     Depreciation and amortization of property and equipment. Depreciation and amortization of property and equipment increased
$0.2 million to $9.8 million for the six months ended June 30, 2004, from $9.6 million for the six months ended June 30, 2003. Depreciation
and amortization of property and equipment represented 8.1% of revenues for the six months ended June 30, 2004, compared to 9.2% of
revenues for the six months ended June 30, 2003.

    Amortization of intangible assets. Amortization of intangible assets increased $2.1 million, or 17.0%, to $14.7 million for the six months
ended June 30, 2004, from $12.6 million for the six months ended June 30, 2003. The amortization of intangible assets for the six months
ended June 30, 2004 and 2003 relates solely to the intangible assets resulting from acquisitions. The increase was attributable to the

                                                                        29
accelerated amortization of a portion of our customer relationship intangible asset in connection with the loss of two POS customers during the
first quarter of 2004. For purposes of measuring and recognizing impairment of long-lived assets including intangibles, we assess whether
separate cash flows can be attributed to the individual asset. For our customer relationship intangible assets, we recognize and measure
impairment upon the termination or loss of a customer that results in a loss of revenue. Based upon the current status of contract negotiations
with our largest customer, we believe that revenues and related transaction volumes from this customer may decline in the fourth quarter of
2004 and thereafter. The intangible asset value attributable to this customer relationship is approximately $25.9 million as of June 30, 2004. We
will continue to assess the recoverability of this customer relationship asset based upon anticipated future cash flows.

      Interest expense. Interest expense decreased $0.4 million to $5.4 million for the six months ended June 30, 2004, from $5.8 million for
the six months ended June 30, 2003. This decrease was primarily due to the repayment of a portion of our term debt with the net proceeds from
our initial public offering on March 16, 2004, partially offset by the write-off on March 19, 2004 of $2.0 million of deferred financing costs in
connection with the termination of our previous senior secured credit facility.

     Interest and other income (expense), net. Interest and other income (expense), net was $(0.1) million for the six months ended June 30,
2004 compared to $1.5 million for the six months ended June 30, 2003. Included in other income (expense), net for the six months ended
June 30, 2004 is a loss on foreign currency translation of $0.2 million due to fluctuations in the value of the U.S. dollar as compared with
foreign currencies, predominately, the euro, the British pound and the Australian dollar, versus a gain on foreign currency translation of
$0.7 million for the six months ended June 30, 2003. Also included in interest and other income, net for the six months ended June 30, 2003
was a gain of $0.6 million on the sale of our equity method investment in a related entity.

     Income tax (provision) benefit. For the six months ended June 30, 2004, our income tax provision was $0.6 million compared to a benefit
of $0.3 million for the six months ended June 30, 2003.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

    Revenues. Total revenues increased $21.2 million, or 10.5%, to $223.4 million for the year ended December 31, 2003, from
$202.2 million for the year ended December 31, 2002. We generate revenues through four operating divisions.

     POS division. Revenues from the POS division decreased $3.5 million, or 2.8%, to $122.9 million for the year ended December 31, 2003,
from $126.4 million for the year ended December 31, 2002. The $3.5 million decrease in POS revenues resulted from a decrease in revenue per
transaction as a result of negotiated price reductions upon renewal of certain contracts primarily in the fourth quarter of 2002, and to a lesser
extent in 2003, partially offset by an increase in transaction volumes primarily related to the TranXact acquisition. POS transaction volumes
increased 4.7% to 7.9 billion transactions for the year ended December 31, 2003, from 7.6 billion transactions for the year ended December 31,
2002.

     International services division. Revenues from the international services division increased $15.4 million, or 46.4%, to $48.5 million for
the year ended December 31, 2003, from $33.1 million for the year ended December 31, 2002. The increase was primarily due to additional
revenues generated by our U.K. subsidiary from its POS customers. Revenues from our U.K. subsidiary increased $6.6 million, or 24.6%, to
$33.3 million for the year ended December 31, 2003, from $26.7 million for the year ended December 31, 2002. The remaining increase in
division revenues of $8.8 million was attributable primarily to growth in our POS services in France, Australia, Spain and Italy.

                                                                       30
     Telecommunication services division. Revenues from the telecommunication services division increased $7.2 million, or 30.0%, to
$31.2 million for the year ended December 31, 2003, from $24.0 million for the year ended December 31, 2002. The growth in revenues was
primarily due to increased usage of our call signaling services.

    Financial services division. Revenues from the financial services division increased $2.2 million, or 11.7%, to $20.8 million for the year
ended December 31, 2003, from $18.6 million for the year ended December 31, 2002. The increase in revenues was due to the growth in the
number of customer connections to and through our networks.

     Cost of network services. Cost of network services increased $11.6 million, or 10.7%, to $120.0 million for the year ended December 31,
2003, from $108.4 million for the year ended December 31, 2002. Cost of network services represented 53.7% of revenues for the year ended
December 31, 2003, compared to 53.6% of revenues for the year ended December 31, 2002. The increase in cost of network services resulted
primarily from higher usage charges from increased transactions and other services, including transactions associated with the TranXact
acquisition. Gross profit represented 46.3% of total revenues for the year ended December 31, 2003, compared to 46.4% for the year ended
December 31, 2002. The decrease in gross profit as a percentage of total revenues is largely attributable to decreased POS revenues, partially
offset by decreased usage-based vendor telecommunication charges.

     Engineering and development expense. Engineering and development expense increased $0.9 million, or 8.7%, to $11.6 million for the
year ended December 31, 2003, from $10.6 million for the year ended December 31, 2002. Engineering and development expense represented
5.2% of revenues for the year ended December 31, 2003 compared to 5.3% for the year ended December 31, 2002. Engineering and
development expense increased primarily from an increase in engineering expenses required to support our international expansion. To a lesser
extent, this increase was also due to higher software and hardware maintenance fees.

     Selling, general and administrative expense. Selling, general and administrative expense increased $4.2 million, or 12.8%, to
$37.3 million for the year ended December 31, 2003, from $33.1 million for the year ended December 31, 2002. Selling, general and
administrative expense represented 16.7% of revenues for the year ended December 31, 2003, compared to 16.4% of revenues for the year
ended December 31, 2002. Selling, general and administrative expense increased primarily from the addition of an average of 26 employees
and related expenses required to support our revenue growth, mainly within the international services division.

     Depreciation and amortization of property and equipment. Depreciation and amortization of property and equipment increased
$3.7 million, or 22.7%, to $20.2 million for the year ended December 31, 2003, from $16.5 million for the year ended December 31, 2002.
Depreciation and amortization of property and equipment represented 9.1% of revenues for the year ended December 31, 2003, compared to
8.2% of revenues for the year ended December 31, 2002. Depreciation and amortization of property and equipment increased primarily due to
capital expenditures to support the growth in the international services division.

     Amortization of intangible assets. Amortization of intangible assets increased $2.6 million, or 11.3%, to $25.8 million for the year ended
December 31, 2003, from $23.2 million for the year ended December 31, 2002. The increase was attributable to the amortization of intangible
assets associated with the TranXact and Openet acquisitions. The amortization of intangible assets for the years ended December 31, 2003 and
2002 was related solely to the intangible assets resulting from acquisitions.

     Interest expense. Interest expense decreased $0.6 million to $11.3 million for the year ended December 31, 2003, from $11.9 million for
the year ended December 31, 2002. This decrease was

                                                                      31
attributable to the reduction of interest expense resulting from quarterly principal payments we made on our term borrowings partially offset by
the additional interest expense associated with borrowing $50.0 million in May 2002 in connection with the TranXact acquisition.

     Interest and other income, net. Interest and other income, net increased $1.6 million to $2.5 million for the year ended December 31,
2003, from $0.9 million for the year ended December 31, 2002. Of this increase, $0.6 million related to an increase in the gain on foreign
currency translation due to fluctuations in the value of the U.S. dollar as compared with foreign currencies, predominately the euro, the British
pound and the Australian dollar. Also included in interest and other income for the year ended December 31, 2003 was a gain of $0.6 million
on the sale of our equity method investment in a related entity.

    Income tax benefit. For the year ended December 31, 2003, our income tax provision was $0.8 million compared to $45,000 for the year
ended December 31, 2002.

Historical Year Ended December 31, 2002 Compared to Our Historical Results for the Period from April 3, 2001 Through
December 31, 2001 and the Results of Our Predecessor for the Period from January 1, 2001 Through April 2, 2001

      Revenues. Total revenues increased $10.4 million, or 5.4%, to $202.2 million for the year ended December 31, 2002, from $191.7 million
for the year ended December 31, 2001.

     POS division. Revenues from the POS division increased $2.5 million, or 2.0%, to $126.4 million for the year ended December 31, 2002,
from $123.9 million for the year ended December 31, 2001. POS transaction volumes increased 12.8% to 7.6 billion transactions for the year
ended December 31, 2002, from 6.7 billion transactions for the year ended December 31, 2001. The increase in transactions was primarily due
to the acquisition of the TranXact customer contracts. Our percentage growth in revenue was less than the percentage growth in transactions
primarily as a result of negotiated price reductions upon renewal of certain contracts, and to a lesser extent because our agreements with
customers typically provide for reduced transaction pricing for higher transaction volumes and multi-year commitments.

     International services division. Revenues from the international services division increased $6.0 million, or 22.1%, to $33.1 million for
the year ended December 31, 2002, from $27.1 million for the year ended December 31, 2001. The increase was primarily due to additional
revenues generated by our U.K. subsidiary from its POS customers. Revenues from our U.K. subsidiary increased $5.0 million, or 23.2%, to
$26.7 million for the year ended December 31, 2002, from $21.7 million for the year ended December 31, 2001.

     Telecommunication services division. Revenues from the telecommunication services division decreased $1.9 million, or 7.2%, to
$24.0 million for the year ended December 31, 2002, from $25.9 million for the year ended December 31, 2001. The decrease was primarily
due to a reduction in the use of our call validation services, partially offset by an increase in the use of our call signaling services.

    Financial services division. Revenues from the financial services division increased $3.8 million, or 25.6%, to $18.6 million for the year
ended December 31, 2002, from $14.8 million for the year ended December 31, 2001. This increase in revenues was due to the growth in the
number of customer connections to and through our networks.

    Cost of network services. Cost of network services increased $8.2 million, or 8.2%, to $108.4 million for the year ended December 31,
2002, from $100.2 million for the year ended December 31, 2001. Cost of network services represented 53.6% of revenues for the year ended
December 31, 2002, compared to 52.2% of revenues for the year ended December 31, 2001. The increase in cost of network

                                                                       32
services resulted primarily from higher usage charges from increased transactions and other services, including transactions associated with the
TranXact acquisition, and to a lesser extent due to a rate increase in certain of our usage-based telecommunication charges. Gross profit
represented 46.4% of total revenues for the year ended December 31, 2002, compared to 47.8% for the year ended December 31, 2001. The
decrease in gross profit as a percentage of total revenues was largely attributable to the fact that our cost of network services increased at a rate
greater than our POS division revenues.

     Engineering and development expense. Engineering and development expense was $10.6 million for the year ended December 31, 2002
as compared to $6.6 million for the period from April 3, 2001 through December 31, 2001 and $2.8 million for the period from January 1, 2001
through April 2, 2001. Our engineering and development initiatives and those of our predecessor were substantially the same during 2001.
Engineering and development expense increased $1.2 million, or 13.0%, from the combined periods ended April 2, 2001 and December 31,
2001 compared to the year ended December 31, 2002. This increase was primarily to support our international expansion.

     Selling, general and administrative expense. Selling, general and administrative expense was $33.1 million for the year ended December
31, 2002 as compared to $18.8 million for the period from April 3, 2001 through December 31, 2001 and $11.0 million for the period from
January 1, 2001 through April 2, 2001. Our selling, general and administrative initiatives and those of our predecessor were substantially the
same during 2001. Selling, general and administrative expense increased $3.2 million, or 10.8%, from the combined periods ended April 2,
2001 and December 31, 2001 compared to the year ended December 31, 2002. This increase was primarily from the addition of an average of
44 employees and related expenses required to support our revenue growth, mainly within the international services division.

      Depreciation and amortization of property and equipment. Depreciation and amortization of property and equipment was $16.5 million
for the year ended December 31, 2002 as compared to $8.4 million for the period from April 3, 2001 through December 31, 2001 and $3.7
million for the period from January 1, 2001 through April 2, 2001. Depreciation and amortization of property and equipment represented 8.2%
of revenues for the year ended December 31, 2002, compared to 5.8% of revenues for the period from April 3, 2001 through December 31,
2001 and 8.0% of revenues for the period from January 1, 2001 through April 2, 2001. Depreciation and amortization of property and
equipment increased in 2002 primarily due to capital expenditures necessary to support the growth in our international services division. To a
lesser extent, the increase was from capital expenditures necessary to support the growth in our telecommunication services division. We
purchased $21.6 million of equipment during the year ended December 31, 2002, and $10.4 million of equipment during the period from April
3, 2001 through December 31, 2001 and our predecessor purchased $3.9 million of equipment during the period from January 1, 2001 through
April 2, 2001.

     Amortization of intangible assets. Amortization of intangible assets was $23.2 million for the year ended December 31, 2002 as
compared to $15.6 million for the period from April 3, 2001 through December 31, 2001 and $11.5 million for the period from January 1, 2001
through April 2, 2001. The amortization of intangible assets in each of these periods was related solely to intangible assets resulting from
acquisitions.

     Impairment of goodwill. We incurred no charge for impairment of goodwill for the year ended December 31, 2002 or for the period from
April 3, 2001 through December 31, 2001. Impairment of goodwill totaled $322.2 million for the period from January 1, 2001 through April 2,
2001. Our predecessor recorded the impairment on March 12, 2001, when the board of directors of PSINet, Inc. approved a plan to sell our
predecessor to us for an aggregate purchase price of $282.9 million, excluding transaction costs. As of March 12, 2001, our predecessor's
goodwill with a carrying value of $450.5 million was written down to $128.3 million, its estimated fair value based upon the approximate sales
price of our predecessor.

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    Costs of terminated initial public offering. We incurred $1.5 million in costs of a terminated initial public offering during the year ended
December 31, 2002.

     Interest expense. Interest expense was $11.9 million for the year ended December 31, 2002 as compared to $12.1 million for the period
from April 3, 2001 through December 31, 2001 and $0.1 million for the period from January 1, 2001 through April 2, 2001. The decrease in
2002 was attributable to the repayment of our senior subordinated debt in December 2001. Interest expense on the senior subordinated debt for
the period from April 3, 2001 through December 31, 2001 was $3.2 million. This decrease was offset by $2.9 million of additional interest
expense associated with borrowing $50.0 million in connection with the TranXact acquisition in May 2002, as well as the additional
$20.0 million borrowed when we refinanced our senior secured credit facility and repaid our senior subordinated debt in December 2001.

     Interest and other income, net. Interest and other income, net was $0.9 million for the year ended December 31, 2002 as compared to
$0.6 million for the period from April 3, 2001 through December 31, 2001 and $0.3 million for the period from January 1, 2001 through April
2, 2001.

     Income tax provision. For the year ended December 31, 2002, our income tax provision was $45,000, compared to $4.6 million for the
period from April 3, 2001 through December 31, 2001 and a benefit of $1.1 million for the period from January 1, 2001 through April 2, 2001.

     Equity in net loss of unconsolidated affiliate. Equity in net loss of unconsolidated affiliate was $0.4 million for the year ended
December 31, 2002, which resulted from losses incurred from our equity method investment in a related entity. Our interest in this related
entity was sold in January 2003, resulting in a gain on sale of $0.6 million. There was no equity in net loss of unconsolidated affiliate for the
period from April 3, 2001 through December 31, 2001 or from January 1, 2001 through April 2, 2001.

     Minority interest in net loss of consolidated subsidiary. Minority interest in the net loss of consolidated subsidiary was $0.3 million for
the period from April 3, 2001 through December 31, 2001 and $0.2 million for the period from January 1, 2001 through April 2, 2001.
Minority losses were recorded until October 5, 2001, when we acquired the remaining 49.9% interest in Transaction Network Services
Australia PTY Limited for a purchase price of $2.1 million. There was no minority interest in net loss of consolidated subsidiary for the year
ended December 31, 2002.

Seasonality

     Credit card and debit card transactions account for a major percentage of the transaction volume processed by our customers. The volume
of these transactions on our networks generally is greater in the fourth quarter holiday season than during the rest of the year. Consequently,
revenues and earnings from credit card and debit card transactions in the first quarter generally are lower than revenues and earnings from
credit card and debit card transactions in the fourth quarter of the immediately preceding year. We expect that our operating results in the
foreseeable future will be significantly affected by seasonal trends in the credit card and debit card transaction market.

Liquidity and Capital Resources

     Our primary liquidity and capital resource needs are to finance the costs of our operations, to make capital expenditures and to service our
debt. The proceeds from our initial public offering in March 2004, along with the proceeds from borrowings under our new senior secured
credit facility, were used to repay the amounts outstanding under our previous senior secured credit facility. Based upon our current level of
operations, we expect that our cash flow from operations, together with the amounts we are able to borrow under our existing credit facility,
will be adequate to meet our anticipated needs for the foreseeable future. Although we have no specific plans to do so, to the extent

                                                                         34
we decide to pursue one or more significant strategic acquisitions, we will likely need to incur additional debt or sell additional equity to
finance those acquisitions.

     Our operations provided us cash of $19.6 million for the six months ended June 30, 2004, which was attributable to a net loss of
$0.2 million, depreciation, amortization and other non-cash charges of $26.0 million and an increase in working capital of $6.2 million. Our
operations provided us cash of $20.8 million for the six months ended June 30, 2003, which was attributable to a net loss of $3.4 million,
depreciation, amortization and other non-cash charges of $22.7 million and a decrease in working capital of $1.5 million.

      We used cash of $18.1 million in investing activities for the six months ended June 30, 2004, which includes capital expenditures of
$8.2 million. In addition, we spent $6.1 million and $3.7 million, respectively to purchase the Synapse and vending assets from USWD to
facilitate our objective to enhance our POS services. We used cash of $9.3 million in investing activities for the six months ended June 30,
2003, which consisted primarily of capital expenditures of $7.3 million, and in addition we spent $2.0 million in January 2003 to purchase the
remaining 49.9% interest of Openet S.r.l., an Italian provider of POS services. Significant portions of our capital expenditures in each period
were for network equipment, third-party software and capitalized software development costs we incurred to expand our network platforms and
service our customer requirements. Our remaining capital expenditures were for office equipment and leasehold improvements and for general
corporate purposes. We currently have no significant capital spending or purchase commitments but expect to continue to engage in capital
spending in the ordinary course of business.

      We used cash of $6,000 for financing activities for the six months ended June 30, 2004, which includes $5.5 million of long-term debt
repayments on our new senior secured credit facility and $150.4 million of long-term debt repayments under our previous senior secured credit
facility with the net proceeds generated from our IPO in March 2004 of $71.5 million and borrowings under our new credit facility, net of
financing costs, of $79.0 million. We also borrowed $5.5 million in May 2004 under our new credit facility, the proceeds of which were used to
fund the acquisition of the Synapse assets from USWD. We used cash of $7.6 million for financing activities for the six months ended June 30,
2003, which consisted primarily of $7.0 million of long-term debt repayments.

     Our operations provided us cash of $48.1 million for the year ended December 31, 2003, which was attributable to a net loss of
$1.1 million, depreciation, amortization and other non-cash charges of $46.8 million and a decrease in working capital of $2.4 million. Our
operations provided us cash of $34.9 million for the year ended December 31, 2002, which was attributable to a net loss of $2.4 million,
depreciation, amortization and other non-cash charges of $42.7 million and an increase in working capital of $5.4 million. Our operations and
our predecessor's operations provided us cash of $47.5 million for the year ended December 31, 2001, which was attributable to a combined net
loss of $323.4 million, depreciation, amortization and other non-cash charges of $359.3 million and a decrease in working capital of
$11.6 million.

     We used cash of $21.7 million in investing activities for the year ended December 31, 2003, which consisted primarily of capital
expenditures of $17.1 million. In addition, we spent $2.0 million in January 2003 to purchase the remaining 49.9% interest of Openet and
$2.5 million to purchase Transpoll Offline in November 2003 to facilitate our objective to expand our international services division. We used
cash of $68.3 million in investing activities for the year ended December 31, 2002, which consisted primarily of $45.1 million for the purchase
of the TranXact assets in May 2002, which expanded our POS division. In addition, we spent $1.5 million to purchase the initial 50.1% interest
in Openet in December 2002. During the year ended December 31, 2002, we made capital expenditures of $21.6 million. We and our
predecessor used cash of $292.8 million in investing activities during the year ended December 31, 2001, which consisted primarily of the
acquisition cost, net of cash acquired, of $277.0 million for the purchase of our predecessor, Transaction Network Services, Inc., from

                                                                         35
PSINet, Inc. In addition, we used $2.1 million to purchase the 49.9% minority interest in Transaction Network Services Australia PTY Limited
in October 2001. During the year ended December 31, 2001, we and our predecessor made capital expenditures of $14.3 million. Significant
portions of our capital expenditures in each period were for network equipment, third-party software and capitalized software development
costs we incurred to expand our network platforms and service our customer requirements. Our remaining capital expenditures were for office
equipment and leasehold improvements and for general corporate purposes. We currently have no significant capital spending or purchase
commitments but expect to continue to engage in capital spending in the ordinary course of business.

      We used cash of $19.5 million for financing activities for the year ended December 31, 2003, which consisted primarily of $19.0 million
of long-term debt repayments. We paid an additional $0.6 million of financing fees in April 2003 to secure an amendment to our senior secured
credit facility, which is described more fully in Note 5 to the consolidated financial statements. Our financing activities provided cash of
$33.6 million during the year ended December 31, 2002, which consisted of $48.4 million of borrowings under our senior secured credit
facility, net of financing costs of $1.6 million. We used the proceeds from these borrowings to finance the acquisition of the TranXact assets
and for general corporate purposes. For the year ended December 31, 2002, we made $14.8 million of long-term debt repayments. During the
year ended December 31, 2001, we and our predecessor obtained cash from financing activities of $246.0 million, which consisted primarily of
borrowings under our senior secured credit facility of $144.4 million, net of financing costs of $5.6 million, borrowings of senior subordinated
debt of $26.1 million, proceeds from the issuance of preferred stock of $134.8 million and proceeds from the issuance of common stock of
$4.2 million. We used the majority of the proceeds from the borrowings and stock issuances to acquire our predecessor from PSINet, Inc. For
the year ended December 31, 2001, we made $16.3 million in long-term debt repayments and repaid the $30.0 million senior subordinated debt
partially through $20.0 million of additional borrowings under our senior secured credit facility. Also, during the period from January 1, 2001
to April 2, 2001, our predecessor paid net cash of $17.2 million to its parent, PSINet, Inc.

Senior Secured Credit Facility

     On March 19, 2004, we entered into a new senior secured credit facility (the Credit Facility) with a syndicate of financial institutions led
by General Electric Capital Corporation to replace our prior senior secured credit facility. Transaction Network Services, Inc. is the borrower
under the Credit Facility, and we guaranteed its obligations under the facility and pledged substantially all of our assets as security for these
obligations. The Credit Facility consists of a $65.0 million term loan (Term Loan) and a revolving credit facility of $30.0 million (Revolving
Credit Facility). The Credit Facility matures March 19, 2009. Payments on the Term Loan are due in quarterly installments over the five-year
term, beginning on March 31, 2004. Total payments for each year are as follows (in thousands):

                        Year 1                                                                              $      11,000
                        Year 2                                                                                     12,000
                        Year 3                                                                                     13,000
                        Year 4                                                                                     14,000
                        Year 5                                                                                     15,000

                                                                                                            $      65,000

     For the period through June 30, 2004, borrowings on the Revolving Credit Facility and the Term Loan generally bore interest at a rate of
2.50 percent over the LIBOR rate (which was 3.78 percent as of June 30, 2004). Thereafter, if we achieve a leverage ratio of less than one, the
borrowings on the Revolving Credit Facility and the Term Loan will generally bear interest at a rate, at our option, of

                                                                        36
either 0.75 percent over the lender's base rate or 2.0 percent over the LIBOR rate. If we achieve a leverage ratio of less than 1.5 but more than
or equal to one, the borrowings on the Revolving Credit Facility and the Term Loan will generally bear interest at a rate, at our option, of either
1.0 percent over the lender's base rate or 2.25 percent over the LIBOR rate. If we achieve a leverage ratio of less than 2.2 but more than or
equal to 1.5, the borrowings on the Revolving Credit Facility and the Term Loan will generally bear interest at a rate, at our option, of either
1.25 percent over the lender's base rate or 2.5 percent over the LIBOR rate. Our leverage ratio as of June 30, 2004 was 1.3 to 1.0. The
Revolving Credit Facility is subject to an annual commitment fee in an amount equal to 0.5 percent per annum multiplied by the amount of
funds available for borrowing under the Revolving Credit Facility. Interest payments on the Credit Facility are due monthly, bimonthly, or
quarterly at the Company's option.

      The terms of the Credit Facility require us to comply with financial and nonfinancial covenants, including maintaining certain leverage,
interest and fixed charge coverage ratios at the end of each fiscal quarter. As of June 30, 2004, we are required to maintain a leverage ratio of
less than 2.2 to 1.0, an interest coverage ratio of greater than 5.0 to 1.0 and a fixed charge ratio of greater than 1.5 to 1.0. Certain of the
financial covenants will become more restrictive over the term of the Credit Facility. The Credit Facility also contains nonfinancial covenants
that restrict some of our corporate activities, including our ability to dispose of assets, incur additional debt, pay dividends, create liens, make
investments, make capital expenditures and engage in specified transactions with affiliates. Our future results of operations and our ability to
comply with the covenants could be adversely impacted by increases in the general level of interest rates since the interest on a majority of our
debt is variable. Noncompliance with any of the financial or nonfinancial covenants without cure or waiver would constitute an event of default
under the Credit Facility. An event of default resulting from a breach of a financial or nonfinancial covenant may result, at the option of the
lenders, in an acceleration of the principal and interest outstanding, and a termination of the Revolving Credit Facility. The Credit Facility also
contains other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and
insolvency, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of
representations and warranties. We are in compliance with our financial and nonfinancial covenants as of June 30, 2004.

      In connection with the closing of the Credit Facility in March 2004, we incurred approximately $2.0 million in financing costs. These
financing costs were deferred and are being amortized using the effective interest method over the life of the Credit Facility. In connection with
the termination of the prior credit facility, we wrote-off approximately $2.0 million of unamortized deferred financing costs related to the prior
credit facility. Such write-off has been included in interest expense in the accompanying condensed consolidated statement of operations for the
six months ended June 30, 2004.

Preferred stock

     On April 3, 2001, we issued 134,846 shares of Class A redeemable convertible preferred stock for $134.8 million. The preferred stock
accrued dividends at 11.5% for the first year and 9.0% for each year thereafter. Dividends were cumulative and compounded quarterly. The
preferred stock had a liquidation preference equal to its purchase price, plus accrued and unpaid dividends. The preferred stock plus accrued
and unpaid dividends was converted into 9,984,711 shares of our common stock upon the closing of our initial public offering in March 2004.

Related Party Transactions

Long-term investments

      In February 2002, we entered into an agreement to provide network connectivity services over a three-year period to BizTelOne, Inc. As
initial consideration for the services to be rendered, we

                                                                        37
received preferred stock valued at $0.5 million, representation on the entity's board of directors and 19.9% of the outstanding voting rights in
the related entity. In October 2002, we paid $0.2 million, which reduced the $0.5 million of services to be performed to $0.3 million. During
2002, we recognized $0.3 million of revenue under this transaction as the services were rendered. Our Chairman and Chief Executive Officer
separately invested in BizTelOne, Inc. through a partnership controlled by him.

     In January 2003, we sold our interest in BizTelOne, Inc. for $0.7 million plus the right to receive payments based upon BizTelOne, Inc.'s
future performance. Until the sale of our interest in BizTelOne, Inc. in January 2003, we accounted for our investment under the equity method
of accounting. For the year ended December 31, 2003, we recognized a net gain on the sale of an unconsolidated affiliate of $0.6 million. For
the year ended December 31, 2002, we recognized a net loss in the equity of an unconsolidated affiliate of $0.4 million.

     In April 2003, we made an investment in LinkSpot Networks, Inc., a company that provides wireless Internet access to recreational
vehicle parks. We purchased 3.2 percent of the company's common shares for $0.1 million and obtained representation on the company's board
of directors. In July 2003, we entered into an agreement to provide services to the company, and as consideration, received stock valued at
$0.3 million for an additional 7.9 percent of the company's common shares. In May 2004, our investment in common shares was converted into
13.1 percent of the company's Series A preferred shares. In May 2004, we also made an additional $0.1 million investment to purchase 3.7
percent of the company's Series A preferred shares and the company exercised its right under the existing services agreement to receive
additional services from us valued at $0.3 million in exchange for 9.4 percent of the company's Series A preferred shares. As of June 30, 2004,
we owned 26.2 percent of the company's Series A preferred shares and 20.9 percent of the company's total outstanding shares. We are
accounting for this investment under the equity method of accounting.

      On August 5, 2004, we made an investment in WAY Systems, Inc., a company that provides mobile POS transaction infrastructure and
solutions for mobile merchants. We purchased 5,952,381 shares or 38.5 percent of the company's Series B convertible preferred stock for
$2.5 million and obtained representation on the company's board of directors. As of August 5, 2004, we owned 20.2 percent of the company's
total outstanding shares.

Asset acquisition

     During the year ended December 31, 2001, we purchased a partial interest in an aircraft for $1.2 million from a company that is owned by
our Chairman and Chief Executive Officer. We obtained an independent appraisal to ascertain the fair value of the partial interest on the
purchase date and purchased it for the appraised fair value. During the period from April 3, 2001 to December 31, 2003, depreciation expense
on this asset was $0.3 million. During the year ended December 31, 2003, we sold this fixed asset for $0.9 million, for a net gain of $4,000.

Commitments

     The following table summarizes our contractual obligations as of June 30, 2004 that require us to make future cash payments (dollars in
thousands):

                                                                                                                    Year ending December 31,

                                                                             Six months
                                                                               ending
                                                                            December 31,
                                                                                2004

                                                                                                                                                           2009 and
                                                              Total                                  2005        2006        2007         2008            thereafter

Contractual Cash Obligations by Period:
Long-term debt under the senior secured credit facility   $      81,010 $                  5,500 $    12,000 $    13,000 $     14,000 $        15,000 $          21,510
Operating lease obligations                                      43,935                    3,135       6,008       5,099        4,540           4,019            21,134

                                                          $     124,945 $                  8,635 $    18,008 $    18,099 $     18,540 $        19,019 $          42,644

                                                                                  38
    We expect that we will be able to fund our remaining obligations and commitments with cash flow from operations. To the extent we are
unable to fund these obligations and commitments with cash flow from operations, we intend to fund these obligations and commitments with
proceeds from borrowings under our senior secured credit facility or future debt or equity financings.

Effects of Inflation

     Our monetary assets, consisting primarily of cash and receivables, and our non-monetary assets, consisting primarily of intangible assets
and goodwill, are not affected significantly by inflation. We believe that replacement costs of equipment, furniture and leasehold improvements
will not materially affect our operations. However, the rate of inflation affects our expenses, such as those for employee compensation and
costs of network services, which may not be readily recoverable in the price of services offered by us.

Quantitative and Qualitative Disclosures about Market Risk

Interest rates

      Our principal exposure to market risk relates to changes in interest rates. As of June 30, 2004, we had $81.0 million outstanding under our
senior secured credit facility with interest rates tied to changes in the lender's base rate or the LIBOR rate. Based upon the outstanding
borrowings on June 30, 2004 and assuming repayment of the Term Loan in accordance with scheduled maturities, each 1.0% increase in these
rates could add an additional $0.8 million to our annual interest expense.

    As of June 30, 2004, we did not hold derivative financial or commodity instruments and all of our cash and cash equivalents were held in
money market or commercial accounts.

Foreign currency risk

     Our earnings are affected by fluctuations in the value of the U.S. dollar as compared with foreign currencies, predominately the euro, the
British pound and the Australian dollar due to our operations in Europe and Australia.

      We provide services in 12 countries outside of the U.S., including the United Kingdom, Australia, Canada, France, Germany, Ireland,
Italy, Japan, The Netherlands, New Zealand, Spain and Sweden. We manage foreign exchange risk through the structure of our business. In the
substantial majority of our transactions, we receive payments denominated in the U.S. dollar, British pound, euro or Australian dollar.
Therefore, we do not rely on international currency markets to obtain and pay illiquid currencies. The foreign currency exposure that does exist
is limited by the fact that the majority of transactions are paid according to our standard payment terms, which are generally short-term in
nature. Our policy is not to speculate in foreign currencies, and we promptly buy and sell foreign currencies as necessary to cover our net
payables and receivables, which are denominated in foreign currencies. For the six months ended June 30, 2004, we recorded a loss on foreign
currency translation of approximately $0.2 million.

Critical Accounting Policies

     Our significant accounting policies are described in Note 2 to our consolidated financial statements included elsewhere in this prospectus.
We consider the accounting policies related to revenue and related cost recognition, valuation of goodwill and other intangible assets and
accounting for income taxes to be critical to the understanding of our results of operations. Critical accounting policies include the areas where
we have made what we consider to be particularly subjective or complex judgments in making estimates and where these estimates can
significantly impact our financial results under different assumptions and conditions. We prepare our financial statements in conformity with
U.S.

                                                                        39
generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions that we believe are
reasonable based upon the information available. These estimates, judgments and assumptions affect the reported amounts of assets and
liabilities at the date of the financial statement and the reported amounts of revenue and expenses during the periods presented. Actual results
could be different from these estimates.

Revenues and related cost recognition

     We recognize revenue when persuasive evidence of an agreement exists, the terms are fixed and determinable, services are performed, and
collection is probable. Cash received in advance of revenue recognition is recorded as deferred revenue. POS services revenue is derived
primarily from the transmission of transaction data through our networks between payment processors and POS or ATM terminals.
Telecommunication services revenue is derived primarily from fixed monthly recurring fees for our call signaling services and per query fees
charged for our database access and validation services. Financial services revenue is derived primarily from monthly recurring fees based on
the number of customer connections to and through our networks. Customer incentives granted to new customers or upon contract renewals are
deferred and recognized ratably as a reduction of revenue over the contract period to the extent that the incentives are recoverable against the
customers' minimum purchase commitments under the contract. In addition, we receive installation fees related to the configuration of the
customer's systems. Revenue from installation fees are deferred and recognized ratably over the customer's contractual service period, generally
three years. We perform periodic evaluations of our customer base and establish allowances for estimated credit losses.

      Cost of network services is comprised primarily of telecommunications charges, which include data transmission and database access,
leased digital capacity charges, circuit installation charges and activation charges. The cost of data transmission is based on a contract or tariff
rate per minute of usage in addition to a prescribed rate per transaction for certain vendors. The costs of database access, circuits, installation
charges and activation charges are based on fixed fee contracts with local exchange carriers and interexchange carriers. The cost of network
services also includes salaries, equipment maintenance and other costs related to the ongoing operation of our data networks. These costs are
expensed as incurred. We record our accrual for telecommunications charges based upon network services utilized at historical invoiced rates.

Goodwill and intangible assets

     Effective January 1, 2002, we adopted Statement of Financial Accounting Standard (SFAS) No. 142, Goodwill and Other Intangible
Assets . Under this standard, goodwill and intangible assets deemed to have indefinite lives are not amortized and are subject to annual
impairment tests. We have elected to perform the impairment test annually as of October 1 of each year. An interim goodwill impairment test is
performed if an event occurs or circumstances change between annual tests that would more likely than not reduce the fair value of a reporting
unit below its carrying amount. If facts and circumstances indicate goodwill may be impaired, we perform a recoverability evaluation based
upon a determination of fair value.

     In accordance with SFAS, No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , we review our long-lived assets
including property and equipment, capitalized software development costs and identifiable intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine the recoverability of our
long-lived assets, we evaluate the probability that future estimated undiscounted net cash flows will be less than the carrying amount of the
intangible assets. If we estimate that the assets are impaired, the assets are written down to their fair value.

                                                                         40
     For purposes of measuring and recognizing impairment of long-lived assets, we assess whether separate cash flows can be attributed to the
individual asset. We group our long-lived assets by business unit where separately identifiable cash flows are available. In the event that
long-lived assets, including intangibles are abandoned or otherwise disposed of, we recognize an impairment charge upon disposition. For our
customer relationship intangible assets, we measure and recognize impairment upon the termination or loss of a customer that results in a loss
of revenue.

     The calculation of fair value in accordance with SFAS Nos. 142 and 144 includes a number of estimates and assumptions, including
projections of future income and cash flows, the identification of appropriate market multiples and the choice of an appropriate discount rate.
Our estimates of anticipated future income and cash flows used in determining fair value could be reduced significantly in the future due to
changes in technologies, regulation, available financing, competition or other circumstances. As a result, the carrying amount of our long-lived
assets could be reduced through impairment charges in the future. Additionally, changes in estimated future cash flows could result in a
shortening of estimated useful lives for long-lived assets including intangibles.

Income taxes

     We account for income taxes pursuant to the provisions of SFAS No. 109, Accounting for Income Taxes . Under this method, deferred tax
assets and liabilities are recorded to reflect the future tax consequences attributable to the effects of differences between the carrying amounts
of existing assets and liabilities for financial reporting and for income tax purposes. As described more fully in Note 8 to our consolidated
financial statements, we have placed a valuation allowance on certain of our non-U.S. net operating loss carryforwards because realization of
these tax benefits through future taxable income cannot be reasonably assured. We have non-U.S. loss carryforwards of $19.7 million available
as of June 30, 2004, the majority of which never expire under local country tax rules.

New Accounting Pronouncements

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of . SFAS No. 144 retains
the basic requirements of SFAS No. 121 regarding when to record an impairment loss and provides additional guidance on how to measure an
impairment loss. SFAS No. 144 excludes goodwill and intangibles not being amortized from its scope. SFAS No. 144 also supersedes the
provisions of Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of Operations , pertaining to discontinued operations.
The provisions of SFAS No. 144 are effective for fiscal years beginning after December 31, 2001. The adoption of SFAS No. 144 did not have
a material effect on our financial position, results of operations or liquidity.

     In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires certain guarantees to be recorded at fair value. This is
different from prior practice, which was generally to record a liability only when a loss is probable and reasonably estimable, as those terms are
defined in SFAS No. 5, Accounting for Contingencies . FIN 45 also requires a guarantor to make new disclosures, even when the likelihood of
making any payments under the guarantee is remote. The initial recognition and measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. Currently, we do not believe that we have entered into any
guarantees that fall within the guidance of FIN 45.

     The Emerging Issues Task Force (EITF) issued EITF Issue 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
EITF 00-21 provides guidance on how to determine whether a revenue arrangement involving multiple deliverable items contains more than
one unit of accounting

                                                                        41
and, if so, requires that revenue be allocated amongst the different units based on fair value. EITF 00-21 also requires that revenue on any item
in a revenue arrangement with multiple deliverables not delivered completely must be deferred until delivery of the item is completed. The
guidance in EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The implementation
of EITF 00-21 did not have a material impact on our consolidated results of operations or financial position.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46), which clarifies the
application of Accounting Research Bulletin No. 51 "Consolidated Financial Statements," to certain entities in which equity investors do not
have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. Certain disclosure requirements of FIN 46 are effective for financial statements of
interim or annual periods issued after January 31, 2003. FIN 46 applies immediately to variable interest entities created, or in which an
enterprise obtains a variable interest, after January 31, 2003. For variable interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003, FIN 46 applies to the first interim reporting period ending after March 15, 2004. We do not believe that we
have invested in any variable interest entities for which we are the primary beneficiary.

      In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity . This statement establishes standards for classifying and measuring as liabilities certain financial instruments that have characteristics of
both liabilities and equity. This statement is effective immediately for instruments entered into or modified after May 31, 2003 and for all other
instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. However, the provisions
of SFAS No. 150 will be applied to mandatorily redeemable instruments of nonpublic companies in fiscal periods beginning after
December 15, 2003. Early adoption of SFAS No. 150 is not permitted. Application of this standard to pre-existing instruments will be
recognized as a cumulative effect of a change in accounting principle. The provisions of this statement require that any financial instruments
that are mandatorily redeemable on a fixed or determinable date or upon an event certain to occur be classified as liabilities. Our Class A
redeemable convertible preferred stock may be converted into common stock at the option of the stockholder, and therefore it will not be
classified as a liability under the provisions of SFAS No. 150.

                                                                          42
                                                                   BUSINESS

Overview

     We are a leading provider of business-critical data communications services to processors of credit card, debit card and ATM transactions.
We are also a leading provider of secure data and voice network services to the global financial services industry. We operate one of four
unaffiliated Signaling System No. 7 networks in the United States capable of providing services nationwide, and we utilize this network to
provide call signaling and database access services to the domestic telecommunications industry. Our data communications services enable
secure and reliable transmission of time-sensitive, transaction-related information critical to our customers' operations. Our customers
outsource their data communications requirements to us because of our substantial expertise, comprehensive customer support and
cost-effective services. We provide services to customers in the United States and increasingly to international customers in 12 countries,
including Canada and countries in Europe and the Asia-Pacific region.

      We provide services through our multiple data networks, each designed specifically for transaction applications. Our networks support a
variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods, including dial-up,
dedicated, wireless and Internet connections. In the twelve months ended June 30, 2004, we transported approximately 7.8 billion transactions
for more than 115 point-of-sale/point-of-service, or POS, processing customers in the United States and Canada, including nine of the ten
largest payment processors in the United States, making us, on the basis of total transactions transmitted, a leading provider of data
communications services to processors of credit card, debit card and ATM transactions. In addition, as of June 30, 2004, we provided network
services to more than 400 financial services companies. Based on the total number of connections these companies have to our networks and
the total messages transmitted among them using our services, we are a leading service provider to the financial services industry. Our revenues
are generally recurring in nature, as we typically enter into multi-year service contracts that require minimum transaction or revenue
commitments from our customers.

     Our business began operations in 1991 to address the needs of the POS industry in the United States. Although we reported a net loss in
1991, 1992, 1999 through 2003, and a net loss of $0.2 million for the six months ended June 30, 2004 and have an accumulated deficit of
$42.5 million as of June 30, 2004, the strong operating cash flows generated by our POS business have enabled us to invest in and deploy data
networks designed to make our data communications services more rapid, secure, reliable and cost efficient. We have leveraged these
investments and used our continued strong operating cash flows to expand our service offerings to related market opportunities in the
telecommunications and financial services industries in the United States and abroad. By implementing and executing this strategy, we have
grown our revenues every year, from $285,000 for the year ended December 31, 1991, to approximately $223.4 million for the year ended
December 31, 2003.

Business Overview

POS opportunity

     POS and off-premise ATM (an automated teller machine at a location other than a branch office of a financial institution) transactions
require the two-way transfer of information over a secure, reliable data network. Typically, at any POS or off-premise ATM location where a
credit, debit or ATM card is accepted, the customer's account information and transaction amount must be electronically transmitted to a
payment processor. The payment processor then electronically communicates with the financial institution that issued the card to determine
whether to authorize the transaction. After this determination is made, the processor returns an authorization or rejection response to the POS or
ATM terminal. Financial institutions in the United States and Canada increasingly outsource the processing of credit and debit card accounts to
payment processors who are able to leverage technical

                                                                       43
expertise and capitalize on economies of scale. Payment processors, in turn, typically have outsourced to third party service providers such as
TNS the data networking services used to transport transaction data between the processor's host computers and the POS or ATM terminal.

     According to The Nilson Report, the percentage of total United States consumer payment transactions in which card based payment
methods such as credit or debit cards were used increased from 22.2% of a total of 92 billion transactions in 1997, to 30.6% of a total of
121 billion transactions in 2002. This percentage is expected to increase to 41.4% of a total of an estimated 151 billion transactions by 2007. In
addition, total card based payment transactions are projected to grow at a compound annual growth rate of 11.1% from 2002 to 2007. We
believe these trends will apply to the transactions our customers process using our data communications services.

     POS or off-premise ATM terminals access data network connections to payment processors through a variety of methods, the most
common of which are dial-up and dedicated, or leased line, services. Dial-up access services allow merchants and off-premise ATMs to
connect to payment processors by dialing a telephone number each time a transaction is initiated. A leased line is a dedicated connection
provided to a merchant or ATM location for the exclusive purpose of connecting the POS terminal or ATM to the payment processor. Dial-up
services are less expensive than leased line services because leased line services impose greater fixed monthly communication service charges,
making a leased line economically viable only in high-volume merchant or off-premise ATM locations.

     According to ATM & Debit News, the number of ATMs in the United States has grown from 122,700 in 1995 to 352,000 in 2002, a
16.2% compound annual growth rate. The number of off-premises ATMs has grown from 37,800 in 1995 to 220,000 in 2002, a 28.6%
compound annual growth rate. However, the growth in the number of ATM terminals has been greater than the growth in ATM transactions.
As a result, the average monthly volume of transactions per ATM declined from 6,580 in 1995 to 2,509 in 2002. The trend of declining
transaction volume per ATM has reduced ATM profitability because the cost to own and operate an ATM is largely fixed. This trend in
declining transaction volume per ATM terminal is leading off-premise ATM operators to seek more cost-effective methods of operating their
ATMs, including the replacement of leased line service with dial-up services. We believe this trend will increase the number of ATM
transactions we transmit.

     In addition to the payment processing industry, other industries, such as electronic benefits transfer, healthcare and state lottery operators,
are expanding their use of electronic transaction processing in an attempt to reduce costs and to increase the reliability and efficiency of data
transmission. We believe we will be able to increase the number of transactions we transport as these and other industries look to outsource the
data communications requirements necessary to transmit transactions electronically.

Our POS services

     Our POS division markets our data communications services directly to payment processors in the United States and Canada. The
following chart illustrates the route of a typical POS transaction using our data communications services. The route of a typical off-premise
ATM transaction is similar except that the card associations are not involved.

                                                         POS Credit Card Transaction




                                                                         44
      We also market our POS communications services to entities responsible for the transmission of state lottery transactions, federal and state
electronic benefits transfers, purchases of programming from home satellite providers and healthcare transactions. We currently transport
lottery transactions for two states and data for electronic benefits transfer programs for 31 states.

     Our private, secure data networks were designed specifically to address the data communications requirements of the payment processing
industry. Our data communications services provide customized routing technology, built-in redundancy and geographic diversity and are
configured to provide fast and reliable call connection and efficient network utilization. Our data networks connect a merchant's POS terminal
or an off-premise ATM to the payment processor's host computer.

      We provide multiple means for the POS terminal or ATM to access our data networks. Merchant POS terminals and off-premise
ATMs can connect directly to our network using our TransXpress dial-up service, which utilizes telephone services obtained from
interexchange carriers and local exchange carriers. To complement our TransXpress service, we offer TNS Connect, a leased line service that
utilizes our secure Internet protocol, or IP, network. Leased line services are attractive to operators of off-premise ATMs and merchants that
either manage their own in-house networks or transmit large volumes of transactions. Our customers primarily choose to access our networks
using our dial-up and leased line services. However, we also provide alternative methods of connecting to our networks, including wireless and
Internet.

     In response to the declining transaction volume per off-premise ATM, we configure and provide modems that enable off-premise ATM
operators to convert leased line ATMs to ATMs that use dial-up connections. This allows the ATM operators to avoid the incurrence of
additional costs associated with the need to replace or refit the ATM. Because our modems allow the ATM and the payment processor's system
to operate as if they are connected by a leased line, off-premise ATM operators retain the functionality and speed of existing leased line
ATMs while reducing monthly recurring telecommunications expenses.

     We generally enter into multi-year contracts that require minimum transaction or revenue commitments from our POS customers. For
dial-up access services, we typically charge our customers a fixed fee per transaction plus a variable time-based charge for transactions that
exceed a specified period of time. Generally, our contracts provide for a reduction in the fixed fee per transaction as our customers achieve
higher monthly transaction volumes. We typically charge our customers fixed monthly fees for leased line services. We also generate POS
revenue from usage charges, circuit charges, charges for access to real-time transaction monitoring and charges for ancillary services. For the
twelve months ended June 30, 2004, we transmitted approximately 7.8 billion domestic POS transactions and generated $119.9 million of
revenue in the POS division, which represented 50.0% of our total revenues.

International opportunity

     Internationally there is a growing need for fast, reliable data communications services for transaction-oriented businesses. In markets
outside of the United States, financial institutions have historically performed their own processing services for ATM and credit and debit card
transactions. Recently, however, financial institutions in Europe have begun to outsource the processing of credit and debit card transactions to
payment processors in an effort to leverage technical expertise, reduce costs and capitalize on economies of scale. As part of this trend, several
of the largest domestic payment processors are increasing their international presence. As they expand into additional international markets,
these payment processors will require providers of outsourced data communications services.

    While credit and debit card payments are growing significantly in the United States, the international market for these payment methods is
expanding at a greater rate. According to The

                                                                        45
Nilson Report, in 2002 the international transaction volume for combined general purpose cards, such as American Express, MasterCard and
Visa, grew 15.0%, compared to United States transaction volume, which grew by 10.1%. In 2002, the combined transaction volume for these
general purpose cards experienced an annual increase of 13.8% in Europe and 18.2% in the Asia-Pacific region. In addition to the credit and
debit card industry, various other international industries have developed services that require the rapid, secure and reliable transmission of
business-critical transaction data. For example, in many European markets wireless telephone operators process transactions in which
customers increase the value of their prepaid wireless telephone account balances. According to the ©EMC World Cellular Database 2003, at
the end of September 2003, there were approximately 215 million prepaid wireless accounts in Western Europe, including 35 million in the
United Kingdom.

     The growth, automation and globalization of financial markets has led to increased demand for outsourced, secure, reliable data
communications services. Commercial banks, mutual funds, pension funds, broker-dealers, alternative trading systems, electronic
communications networks, securities and commodities exchanges and other market participants increasingly use data communications services
to exchange trading information, distribute research and review trading positions. According to the United States Treasury Department, foreign
gross trading activity in United States securities has increased from $4.2 trillion in 1990 to an estimated $22.9 trillion at the end of 2002. In
addition, the Federation of European Stock Exchanges has reported that since 2000 the value of electronic transactions on European exchanges
has increased from 43.0% to 53.9% of total equity value traded.

Our international services

     Through our international services division, we provide services in Australia, France, Germany, Ireland, Italy, Japan, the Netherlands,
New Zealand, Spain, Sweden and the United Kingdom using networks deployed in each country. The network technology and services we
have developed to serve our customers in the United States are applicable to the data communications needs of payment processing and
financial services industries in other countries. Internationally we also provide data communications services to payment processors that are not
used by payment processors in the United States, including offline polling services which enable merchants to store transaction data until the
payment processor retrieves the data after business hours. We increasingly provide our data communications services to international
customers.

     We consider a number of factors when evaluating opportunities in international markets, including the regulatory environment of the
telecommunications market, consumer use of credit and debit cards and the competitive landscape. We typically provide our services
internationally through a subsidiary located in the country identified for expansion. In some instances, we have elected to enter new markets
through strategic acquisitions. Continued expansion into international markets is an important part of our operating strategy.

     Our international services revenues are currently generated primarily through the sale of our POS services. We generate the majority of
our international revenues in the United Kingdom, where we are one of the leading providers of data communications services to the POS
industry. We provide services to substantially all of the financial institutions in the United Kingdom which acquire and process credit and debit
transactions in the United Kingdom. Recently, we have begun providing services to financial institutions operating ATMs and have also
entered into an agreement with one of the largest wireless service providers to provide data networking and processing services for prepaid
wireless and telephone card purchases. In addition, we provide our financial data transmission services to 48 financial services companies in
the United Kingdom. For the twelve months ended June 30, 2004, we generated $62.8 million of revenue in the international services division,
which represented 26.2% of our total revenues. Although we generate revenues in each of the 11 countries included in our international
services division, we have yet to generate positive operating cash flows in four of these 11 countries.

                                                                       46
     For financial information about geographic areas where we do business, please refer to note 8 on page F-11, note 9 on page F-41 and
note 5 on page F-58 of the consolidated financial statements and related notes included elsewhere in this prospectus.

Telecommunications opportunity

     Every wireless or wireline telephone call consists of the content of the call, such as the voice, data or video communication, and the
signaling information necessary to establish and close the transmission path over which the call is carried. Substantially all telecommunications
carriers in the United States and Canada use Signaling System No. 7, or SS7, as the signaling protocol to identify the network route to be used
to connect individual telephone calls. SS7 networks are data networks that transport call signaling information separate from the public
switched telecommunication network over which the call content is communicated. Telecommunications carriers require access to an SS7
network connected to the signaling networks of other carriers to be able to provide telecommunication services to their customers. According to
the FCC, at the end of 2002 there were 85 wireless carriers with a total of 136 million subscribers and over 540 wireline providers with a total
of 36 million access lines in the United States.

      SS7 networks also are used to retrieve information from centralized databases maintained by telecommunication services providers and
other third parties. By accessing this information, telecommunication services providers are able to offer services that enable intelligent
network services such as local number portability, line information database, caller identification and toll-free number services, and credit card,
calling card, third-party billing and collect calling. Wireless carriers also use SS7 networks to exchange and maintain subscription and location
data on subscribers to support wireless roaming services. Competitive pressures are also encouraging telecommunication services providers to
develop and offer additional services that utilize the signaling services provided by an SS7 network. For example, wireless carriers have
recently begun to offer content delivery such as video and ring tones, short message service and Internet browsing and commerce capabilities.

     The deployment, operation and maintenance of a nationwide SS7 network connected to all of the major signaling networks and database
providers require significant capital and specific technical expertise. For these reasons, many telecommunication services providers have
chosen not to build the networks necessary to satisfy all of their SS7 signaling requirements. Rather, they are increasingly turning to outsourced
telecommunication services providers such as TNS to obtain the call signaling and database access services critical to their business, yet remain
competitive on a cost-effective basis.

Our telecommunication services

     We operate one of four unaffiliated SS7 networks in the United States capable of providing call signaling and database access services
nationwide. Our SS7 network is connected with the signaling networks of all of the incumbent local exchange carriers and a significant number
of wireless carriers, competitive local exchange carriers and interexchange carriers. We believe that our independence and neutrality enhance
our attractiveness as a provider of outsourced SS7 services.

     We offer the following data communications services to wireless and wireline telecommunication services providers:

     •
            SS7 network services. We provide telecommunication services providers with SS7 connectivity, switching and transport services
            throughout the United States. Our SS7 network is connected to the SS7 networks of local exchange and wireless carriers through
            more than 25 mated pairs of signal transfer points deployed throughout the country. By connecting to our SS7 network, our
            customers eliminate their need to implement, operate and maintain numerous, complex connections linking their SS7 switches to
            the signaling networks of other telecommunications

                                                                        47
         carriers. We believe that our SS7 network enables us to offer our data communications services more cost-effectively and reliably
         than our competitors.

    •
           Database access services. We have combined our SS7 network services with our expertise in data transmission to offer our
           customers access to databases maintained by telecommunications carriers and other third parties. These databases are used to
           provide subscribers intelligent network services such as local number portability, line information database, caller identification
           and toll-free number services. Our SS7 network provides access in the United States to the following types of databases:


           –
                   Local number portability databases. Wireline telecommunications carriers are required to provide local number portability,
                   a service that enables a subscriber to change wireline service providers within a particular location and keep the same
                   phone number. The FCC has mandated that wireless local number portability be provided in some locations in the United
                   States beginning in November 2003. Our SS7 network will provide access to the wireless local number portability
                   databases as these databases become available.

           –
                   Line information databases. Telecommunications carriers develop and maintain databases that store subscriber information,
                   including names and addresses. This information is necessary to provide enhanced services such as validating subscriber
                   and billing information.

           –
                   Toll-free databases. Each time a subscriber calls a toll-free number, the telecommunication services provider must access a
                   national database of toll-free numbers in order to route the call.

           –
                   Calling name delivery databases. A telecommunication services provider must access a database containing the name and
                   other information about the subscriber for the telephone number placing the call in order to offer caller identification
                   services.

           –
                   Validation and fraud control services. Our CARD*TEL validation and fraud control services combine our access to line
                   information databases with our proprietary fraud control technology to provide interexchange carriers, operator services
                   providers and payphone service providers real-time telephone call billing validation and fraud control services for calling
                   card, credit card, third-party billing and collect calls. Our services assist our customers in determining whether telephone
                   company calling cards, credit cards, travel and entertainment cards and telephone numbers constitute valid accounts and
                   billable telephone numbers.


    •
           Other telecommunication services. Our LEConnect data services provide telecommunication services providers with a fast and
           reliable method of transmitting billing and collection data to and from local exchange carrier data centers over our secure IP
           networks. Our LEConnect data service minimizes the data transmission errors and time lags associated with a traditional billing
           and collection system, which requires numerous interexchange carriers and information service providers to send billing data on
           magnetic data tapes to local exchange carriers. We also offer short message service offload services, which allow
           telecommunication services providers to avoid the incurrence of additional costs, relieve message congestion and preserve network
           capacity by offloading short message traffic from SS7 signaling networks to our IP networks.



     We generally enter into multi-year contracts with our telecommunication services customers, many of which agree to minimum volume
commitments. We charge fixed monthly fees for SS7 network services and LEConnect services and per-query fees for our database access and
validation services. For the twelve months ended June 30, 2004, we generated $34.0 million of revenue in the telecommunication services
division, which represented 14.2% of our total revenues.

                                                                      48
Financial services opportunity

     The securities trading and investment management industry is increasingly requiring high-speed, reliable, secure data communications
services to communicate information among industry participants, including commercial banks, mutual funds, pension funds, broker-dealers,
alternative trading systems (ATS), electronic communications networks (ECN) and securities and commodities exchanges. Transaction volume
in the United States equity markets has increased rapidly over the past decade. For example, average daily shares traded of NYSE, AMEX and
Nasdaq securities has increased at a 21.9% compound annual rate, from approximately 302 million in 1990 to 3.3 billion in 2002. During the
same period, the emergence of new electronic trading venues such as ECN and ATS and regulatory requirements such as the shift to
decimalization have placed increasing emphasis on trading and cost efficiencies. To meet these needs, market participants are increasingly
using outsourced data communications services that provide industry participants with access to other participants through a single, managed
access point on the service provider's network. These services allow participants to cost-effectively connect to each other to conduct
time-sensitive transactions and communicate real-time information.

     The need for these financial communication services is being facilitated by the adoption of new technologies and standard transmission
protocols for the exchange of financial data, which has reduced the complexity associated with establishing communications between industry
participants. The Financial Information eXchange (FIX), protocol has become the industry standard electronic communication language.
According to the Tower Group's "The New FIX Networks: Adding Value Beyond Connectivity" report, 43% of small-sized brokers (less than
100 employees), 77% of medium-sized brokers (100-4,000 employees) and 100% of large-sized brokers (greater than 4,000 employees) were
FIX enabled at the end of 2001. This is compared to 3%, 26% and 62% for small, medium and large-sized brokers, respectively, in 1999.

Our financial services

     Our fast, private, secure and reliable IP data networks were designed specifically to address the data and voice communications
requirements of the financial services industry. Our IP network services allow our customers to access multiple financial services companies
through a single network connection, thereby eliminating the need for costly dedicated institution-to-institution leased line connections.
Additionally, these services facilitate secure and reliable communications between financial services companies by supporting multiple
communications standards and protocols, including FIX.

     Our primary financial service offerings are:

    •
            Secure Trading Extranet. Our Secure Trading Extranet service links more than 400 financial services companies through our IP
            network. Through a single network connection, a customer can communicate with any other entity connected to our IP network.
            Given the large number of industry participants connected to our network, including commercial banks, mutual funds, pension
            funds, broker-dealers, alternative trading systems, electronic communications networks and securities and commodities exchanges,
            a single customer can use its connection to our IP network to conduct seamless, real-time electronic trading and access a variety of
            content, including news, research and market data.

    •
            Trader Voice. Our specialized voice services provide secure, customized voice telecommunications between brokers, investment
            banking firms and securities and commodities exchanges. These services permit calls that originate over traditional phone lines to
            be connected over our secure, private IP network. The primary applications of our voice services are: a dedicated, always available
            voice link between specific domestic-to-domestic or domestic-to-international locations, which financial industry participants refer
            to as "hoot & holler"; an instant voice connection between two locations that is established as soon as a telephone receiver at either
            location is

                                                                       49
          lifted, which financial industry participants refer to as "automatic ring down"; and a direct voice connection between two locations
          which requires a manual signal, usually the push of a button, from the telephone at either location to initiate the call, which financial
          industry participants refer to as "manual ring down."

    As of June 30, 2004, we provided our financial services to more than 400 financial services companies. Our financial services customers
may have one or more access points to our IP network, depending on the location of their offices and other factors. For the twelve months
ended June 30, 2004, we generated $23.0 million of revenue in the financial services division, which represented 9.6% of our total revenues.

Our Strengths

     We believe our competitive strengths include:

     Recurring revenues and strong operating cash flows. Our established customer base enables us to generate high levels of recurring
revenues and strong operating cash flows. We principally operate a transaction-based business model and typically enter into multi-year service
contracts that require minimum transaction or revenue commitments from our customers. We believe that our recurring revenues and strong
operating cash flows will enable us to continue to invest in the development of new services and international expansion.

      Established customer base. We have an established customer base of leading industry participants in each division and have experienced
minimal customer turnover. As of June 30, 2004, we provided our POS services to more than 115 customers, including nine of the ten largest
payment processors in the United States. In addition, as of June 30, 2004, we provided services to more than 100 telecommunication services
providers and more than 400 financial services companies. Our international services division provides services in 11 countries to some of the
largest financial institutions and wireless and other telecommunication services providers. Through our established customer relationships, we
have developed an extensive knowledge of each of our customers' industries. We believe that our knowledge and experience enhance our
ability to deliver new and timely data communications services and solutions.

     Well positioned to continue international expansion. The network technology and data communications services we have developed to
serve customers in the United States are applicable to the data communications needs of the payment processing and financial services
industries in other countries. We believe that our domestic data communications services and technologies, our technical expertise and our
customer relationships with the largest domestic payment processors and financial institutions strategically position us to take advantage of the
substantial international opportunities.

     Highly customized data networks. We operate highly-customized networks designed and configured for the transmission of
transaction-related, time-sensitive data. Our networks support multiple communications protocols and access methods and, as a result, are able
to support a wide variety of transaction applications. The flexibility and scalability of our networks and our technical expertise allow us to
rapidly add new data communications services to our existing offerings in response to emerging technologies with limited service disruptions
or capital expenditures. We also believe our ability to leverage our fixed cost base provides us with significant economies of scale, resulting in
a significant competitive advantage.

      Proven acquisition strategy. Our management team has augmented the growth of our business by successfully identifying and integrating
strategic acquisitions. We acquired AT&T's Transaction Access Service business in September 1998 and Sprint's TranXact POS network
services business in 2002. Our ability to close these transactions and transition the acquired businesses to our networks has enabled us

                                                                        50
to significantly grow the revenues generated by our POS division. In addition, we have made a number of smaller acquisitions that have
accelerated the growth of each of our other service divisions.

     Substantial experience in our target markets. In 1990 our business was founded by John J. McDonnell, Jr., our Chairman and Chief
Executive Officer. The 13 members of our executive management team have on a combined basis more than 200 years experience in the
transaction services and telecommunications industry, and on average have been employees of the company for more than seven years. We
have focused on creating transaction-oriented data communications services for then developing and now established markets. We believe this
gives us an understanding of the unique needs and risks of our target markets and provides us a competitive advantage over larger service
providers that have a broader market perspective. We also believe our extensive experience provides us a competitive advantage over service
providers of similar or smaller size.

Our Strategy

     Our objective is to continue to grow our business and enhance our position as a leading provider of outsourced business-critical data
communications services enabling secure and reliable transmission of time-sensitive transaction-related information for transaction processing,
telecommunications and financial services. Key elements of our strategy include:

     Continue to expand our customer base. We believe our experience, existing customer relationships and secure and reliable data
communications services will enable us to expand our customer base, particularly in the international and financial services markets. For
example, in our financial services division, we intend to increase the scope of services and leverage our existing customer base of over 400
financial services companies to acquire new customers. We intend to leverage our customer relationships and technical expertise to provide our
POS and financial services offerings internationally.

     Develop new service offerings. We will continue to expand our service offerings to address new markets for secure and reliable
transmission of time-sensitive information. For example, we intend to leverage our networks to offer data communications services to public
and private entities as part of the emergency communication systems they are developing in response to acts of terrorism, natural disasters and
other events, and to offer our data communications services to wireless service providers so that they may deploy wireless broadband local
access network services without incurring the capital expenses of building a network. We also intend to offer wireless services for cashless
payment transactions such as vending.

     Increase sales to existing customers. We will continue our efforts to further expand our existing customer relationships to increase
business domestically and abroad. For example, we intend to encourage our POS customers to transmit a greater percentage of their transaction
volume with us, our telecommunication services customers to increase the number of signaling routes they establish through our SS7 network
and our financial services customers to connect more endpoints to our data network. Our longstanding relationships with our domestic
customers provide us a significant opportunity to increase the sales we make to these customers as they and we expand internationally. Within
each of our divisions we intend to continue our efforts to cross-sell our full range of services to our customers. For example, we believe we
have a significant opportunity to sell other components of our suite of telecommunication services, such as our LEConnect service, short
messaging services and database access services, to customers already using our SS7 network services. We also intend to work closely with our
customers to increase our knowledge of their business and technical requirements so that we may identify opportunities to provide them with
additional services.

    Pursue strategic acquisitions. We will continue to seek opportunities to acquire businesses that expand our range of services or provide
opportunities to increase our customer base.

                                                                       51
    We will use all of the net proceeds we receive from this offering to repay a portion of our existing debt. Accordingly, we will need to use
operating cash flows or additional financing to pursue our strategy.

Our Networks

     We operate multiple, highly-customized data networks specifically designed and configured for the transmission of transaction-related,
time-sensitive data. Our diverse data network architecture supports a variety of widely-accepted communications protocols and is accessible
through a variety of methods, including dial-up, leased line, wireless and Internet connections. Our data networks also are designed to be
scalable and to allow easy adoption of new access technologies. The hardware utilized in our networks is installed at 70 points of presence
worldwide, 42 of which are in the United States. We connect these points of presence with digital circuits leased from multiple
telecommunication services providers. In addition, our network control centers allow us to administer our network and enable us to monitor our
customers' transactions in real time.

     We believe that our networks provide the following important benefits to our customers:

    Our networks are designed specifically to address the data communications needs of our diverse customer base. Our data networks
support multiple communications protocols and include customized hardware, software and value-added features developed by us or by
vendors to our specifications. The following is a description of the data networks we operate:

     •
            X.25. X.25 is a communications protocol used to transmit packets of data. Our domestic and international X.25 networks transport
            our customers' POS transactions and are used to provide the validation services offered by our telecommunication services
            division. These networks are designed to provide fast call connection times, a high level of system redundancy, dynamic rerouting,
            wide geographic coverage and value-added features, at a low cost per transaction. Customers may access our X.25 networks using
            various methods, including dial-up services, leased line services, wireless services, satellite services and Internet connections.

     •
            IP. Internet protocol is a communications technology that routes outgoing data messages and recognizes incoming data messages.
            Our domestic and international IP networks provide the services offered by our financial services division, the leased line services
            offered by our POS division and the LEConnect data services offered by our telecommunication services division. We also use our
            IP networks for our internal processes, such as accounting functions and network monitoring and management. We have designed
            and implemented these networks with a high level of system redundancy, dynamic routing and sophisticated security and
            authorization technologies.

     •
            SS7. SS7 is a communications protocol used to transmit signaling information to establish and close the transmission path over
            which a telephone call is routed. Our domestic SS7 data network sets up, routes and terminates the transactions transmitted through
            the services offered by our POS division. It also provides the call signaling services and database access services offered by our
            telecommunication services division. Our SS7 network is accessed using dedicated SS7 links provided by local exchange carriers
            and interexchange carriers.



      Our networks are reliable, redundant and secure. We believe we have configured the major components of our networks to eliminate
any single point of failure. The reliability of our data networks is enhanced significantly because we have deployed our networks with
redundant hardware installed at geographically diverse facilities connected by multiple telecommunications carriers. Our facilities are deployed
with battery back-up and emergency generator power systems. We coordinate the physical routing of the digital circuits connecting our
facilities with multiple telecommunication service providers to ensure the availability of diverse paths for routing any transaction or data,
thereby

                                                                       52
enhancing network reliability. Due to such physical diversity, minor outages or failures typically do not require the immediate intervention of
our technicians. We are able to respond quickly to service problems because the network monitoring, management and troubleshooting systems
we use permit our network control centers to correct problems remotely. Our data networks contain industry standard firewalls and protections,
and their security is further enhanced by limiting access.

     Our X.25 and IP networks incorporate several customized, value-added features that distinguish our services and performance from
our competitors. We believe that various value-added features we have developed permit our POS customers accessing our data networks
through dial-up services to process a greater volume of transactions than other dial-up service providers. These features include:

    •
            the use of equipment that supports and converts transaction data delivered to our data networks in multiple protocols and message
            formats into the protocols employed by our data networks, thereby eliminating the need for our customers to incur the high costs
            associated with reprogramming POS terminals and host computers and performing continuous network enhancements and software
            upgrades,

    •
            real-time call tracking, which enables us to quickly resolve host, terminal or network problems experienced by our customers and
            to recommend to our customers ways to improve their systems, and

    •
            an Internet-based transaction monitoring system, which permits our customers to monitor the status of their transactions in
            real-time using the Internet.



     Our networks can accommodate growth in our business. Our networks are deployed with sufficient capacity to accommodate significant
growth in transaction volumes without incurring delays relating to the provisioning and deployment of additional hardware and
telecommunications circuits. We have also designed the networks so that we may easily increase capacity as necessary.

     Our network operations centers continuously monitor and manage our networks. We provide 24-hour, seven days a week network
control coverage domestically through our network control center located in Reston, Virginia and internationally through our network control
center located in Sheffield, England. Each of these network control centers serves as the backup network control center for the other control
center. Our network control centers are staffed with skilled technicians experienced with the services we offer. Our network control centers
remotely monitor the components of our data networks and manage our networks using sophisticated network management tools we have
either developed internally or licensed from others.

Customers

      As of June 30, 2004, we provided our POS services to more than 115 customers, including nine of the ten largest payment processors in
the United States. In addition, as of June 30, 2004, we provided services to more than 100 telecommunication services providers and more than
400 financial services companies. Historically we have experienced minimal customer turnover. We believe this is a result of our strong
relationships with our customers and is one of our strengths. Maintaining these relationships is critical to our long term success.

     For the six months ended June 30, 2004, we derived approximately 29.1% of our total revenues from our five largest customers. No
customer accounted for more than 10% of our total revenues for the year ended December 31, 2003 or the six months ended June 30, 2004. We
typically enter into multi-year service contracts with our customers with minimum commitments. Under some of our contracts, once the
customer has met its minimum commitment on an annual or contract term basis, the customer is no longer obligated to purchase services from
us. The contracts with our five largest customers contain minimum transaction or revenue commitments on an annual or contract term basis.

                                                                      53
     Currently, the contract with our largest customer expires in the fourth quarter of 2004, and the contracts with the other four of our five
largest customers expire between 2005 and 2008. Based on the current status of negotiations with our largest customer, we believe that this
customer will not renew or extend the term of our contract. Upon expiration of the term, this contract will continue on a month-to-month basis
without any minimum transaction or revenue commitments.

Sales and Marketing

     We sell our services directly to customers through geographically dispersed sales teams. In the United States and Canada, we have a
specialized sales team for each of our POS, telecommunication services and financial services divisions. In our international services division,
our sales teams are organized geographically with each team responsible for selling our services in the country in which the team is based and,
in some cases, proximate countries. Our international services division sales teams are based in Australia, France, Germany, Ireland, Italy,
Japan, Spain and the United Kingdom. Generally, each sales team includes a general manager or managing director, account representatives,
business development personnel, sales engineers and customer service representatives experienced in the industries of our customers and the
services we offer.

     Our sales teams work to establish and maintain relationships with customers by identifying a customer's need for our services and
promoting our secure, reliable, efficient, competitively priced services. We also pursue opportunities to customize our solutions to meet
requirements of large customers. When a customer initially purchases services from us, the customer typically purchases some, but not all, of
the services we offer. Our sales teams strive to increase the services purchased by existing customers and to expand the range of services we
provide to our customers. Our sales teams consult with customers in an attempt to identify new outsourced business-critical services we may
provide our customers.

Suppliers

      The operation of our networks depends upon the capacity, reliability and security of services provided to us by a limited number of
telecommunication services providers. We have no control over the operation, quality or maintenance of those services or whether the vendors
will improve their services or continue to provide services that are essential to our business. In addition, telecommunication services providers
may increase the prices at which they provide services. If one or more of our telecommunication services providers were to cease to provide
essential services or to significantly increase their prices, we believe we could find an alternative vendor that would provide these services at
comparable prices.

     In addition, some key components we use in our networks are available only from a limited number of suppliers. The number of available
suppliers of components for our X.25 networks is particularly limited. We do not have long-term supply contracts with these or any other
limited source vendors, and we purchase data network equipment on a purchase order basis. To the extent any of our current vendors were
unable to continue to provide any of the components needed for our networks, we believe we could purchase the components from other
vendors at comparable prices.

Competition

     POS division. Our POS division competes on the basis of industry expertise, network service quality and reliability, transaction speed,
value-added features, customer support and cost-efficiency. The primary competitors of our POS division are interexchange carriers such as
MCI, Inc. and AT&T Corp. These carriers typically do not aggressively pursue transaction-oriented business as a stand-alone service, but
rather offer it in conjunction with other products and services.

                                                                       54
     Telecommunication services division. Our telecommunication services division competes on the basis of industry expertise, network
service quality and reliability, transaction speed, customer support, cost-efficiency and value-added services. The primary competitors of our
telecommunication services division include Southern New England Telephone, Syniverse Technologies, Inc., Verisign and regional Bell
operating companies.

     Financial services division. Our financial services division competes on the basis of access to multiple financial services companies,
security, support services, cost-efficiency and discrete service offerings. The primary competitors of our financial services division are other
private communications networks, such as interexchange carriers including AT&T, providers of quote terminals and market data services such
as Bloomberg, Reuters and Thompson Financial and other network service providers such as SAVVIS and Radianz.

     International services division. Our international services division competes on a similar basis as our POS and financial services
divisions. Primary competitors of our international services division are incumbent telephone companies, including British Telecom in the
United Kingdom, France Telecom in France, Telefonica in Spain and Telstra in Australia.

Government Regulation

     Although the FCC retains general regulatory jurisdiction over the sale of interstate services, we, as a provider of enhanced or information
services, are not required to maintain a certificate of public convenience and necessity with the FCC or to file tariffs with the FCC covering our
services. State regulators may regulate purely intrastate enhanced services and may regulate mixed intrastate/interstate enhanced services to the
extent their regulation does not impede federal policies. Regulators at the state and federal levels are examining the treatment of information
services and their decisions may alter our regulatory obligations. We do not believe that we currently are subject to state regulations for our
existing services, and we believe that, even if we were subjected to state regulation, we could obtain all necessary approvals.

     Federal and state regulations can affect the costs of business for us and our competitors by changing the rate structure for access services
purchased from local exchange carriers to originate and terminate calls. Under the Telecommunications Act of 1996, the FCC implemented
rules and regulations known as Access Charge Reform to reform the system of interstate access charges. The FCC's implementation of these
rules increased some components of our costs for access while decreasing others. The FCC is currently considering additional rulemaking
proceedings concerning Access Charge Reform, and we currently cannot predict whether any rule changes will be adopted or the impact these
rule changes might have on our access charges if they are adopted. Recent and pending decisions of the FCC and state regulatory commissions
may limit the availability and increase pricing used by our suppliers to provide telecommunication services to us. We cannot predict whether
the rule changes will increase the cost or availability of services we purchase from our suppliers.

     In connection with some of our services, we are required to pay universal service charges. Universal service charges are used to help
provide affordable telecommunication services throughout the country, including to consumers in high-cost areas, low-income consumers,
eligible schools and libraries and rural healthcare providers. Universal service charges are currently assessed as a percentage of interstate and
international end-user telecommunications revenues. The FCC is considering modifying the way in which universal service charges are
calculated, including considering whether to assess universal service charges on a flat-fee basis, such as a per-line or per-account charge. We
currently cannot predict whether the FCC will adopt changes in the calculation of universal service charges or whether these changes, if
adopted, would increase our universal service charges. If the FCC adopts any proposal that increases our universal service charges, our network
operating costs will increase.

                                                                        55
     The 1996 Telecommunications Act also removed some restrictions on the ability of the incumbent local exchange carriers to provide long
distance enhanced services, specifically including data communications services that may be used to transport credit card, debit card and ATM
transactions, between local access transport areas. Under the legislation, the incumbent local exchange carriers will be permitted to provide
long distance telecommunications between local access transport areas, with out-of-region services currently permitted and in-region service
permitted after they satisfy network unbundling and related requirements. The incumbent local exchange carriers have met the legislative and
regulatory requirements to be able to offer these services in many states. To date, no incumbent local exchange carrier has elected to offer these
services nationwide, but if they choose to do so, we would face additional competition.

Intellectual Property

     Our success is dependent in part upon our proprietary technology. We rely principally upon trade secret and copyright law to protect our
technology, including our software and network design. We enter into confidentiality or license agreements with our employees, distributors,
customers and potential customers and limit access to and distribution of our software, documentation and other proprietary information. We
believe, however, that because of the rapid pace of technological change in the data communications industry, the legal protections for our
services are less significant factors in our success than the knowledge, ability and experience of our employees and the timeliness and quality
of services provided by us.

Employees

     As of June 30, 2004, we employed 505 persons worldwide, of whom 369 were engaged in systems operation, development and
engineering, 44 of whom were engaged in sales and marketing, 67 of whom were engaged in finance and administration and 25 comprised
executive management. Of our total employees, 310 are employed domestically and the balance are in other countries, including 134 in the
United Kingdom. None of our employees are currently represented by a labor union. We have not experienced any work stoppages and
consider our relationship with our employees to be good.

Facilities

     Our principal executive offices are located in Reston, Virginia and consist of approximately 40,980 square feet of office space under a
lease expiring in February 2013. Our primary network control center is also located in Reston, Virginia and consists of approximately 44,500
square feet of separate office space under a lease expiring in February 2008. In addition, we lease the following additional principal facilities:

                                                                                           Approximate                Lease
Use                                                                 Location              square footage         expiration date

European technology and marketing center                   Dublin, Ireland                   14,500                January 2022
United Kingdom headquarters and network
control center                                             Sheffield, England                16,000                   April 2015

      We also lease and occupy regional sales offices in various cities. We house our remote network switching equipment in facilities owned
and maintained by some of our digital telecommunications circuit providers and also in leased telecommunications point-of-presence facilities
located in various cities. These leases total approximately 23,000 square feet and expire on dates ranging from November 2004 to October
2013. All of our leases are with unaffiliated third parties. We believe that our existing facilities are adequate to meet current requirements and
that suitable additional space will be available as needed to accommodate the expansion of our operations and development.

                                                                         56
Legal Proceedings

     On August 26, 2002, MerchantWired, LLC and its six owners sued us in Superior Court of New Castle County, Delaware. We filed a
motion to dismiss the complaint in its entirety on October 30, 2002, which the court granted in part on July 16, 2003. Subsequently plaintiffs
amended their complaint on August 28, 2003. The amended complaint alleges that we are liable for, among other things, breach of contract and
fraud as a result of a failed acquisition. In June 2002, we terminated an agreement to purchase MerchantWired, LLC whereby we would have
been obligated to make up to $20 million in capital contributions to fund the on-going operations of the business and potentially to pay an
earn-out to the six owners. The amended complaint seeks unspecified damages, including punitive damages, costs and attorneys' fees.
Following examination of these claims, we filed a motion to dismiss the action in its entirety on September 26, 2003. On November 6, 2003,
the court provisionally denied our motion to dismiss and requested that we file a motion to limit discovery to a few case dispositive issues. On
December 12, 2003, the Court granted our motion and the parties commenced the limited discovery on February 4, 2004, which discovery was
concluded May 7, 2004. On June 7, 2004, we filed a motion for summary judgment, and the plaintiffs filed their opposition to our motion for
summary judgment on July 7, 2004. On July 27, 2004, we filed our reply memorandum in support of our motion for summary judgment. We
intend to vigorously defend against this lawsuit.

     Many states in which we operate assess sales taxes on services provided by us. We believe we have no financial exposure for sales taxes
because our customer contracts contain terms that stipulate that the customer is responsible for any sales tax liability. A few states have audited
us for the period from 1996 to early 2001 and have proposed assessments on the basis that sales taxes are owed on the services we provided
during this period. Along with our customers, we are vigorously defending the proposed assessments.

     We are from time to time a party to other legal proceedings, which arise in the normal course of business. Although we have been
involved in past litigation, we are not currently involved in any material litigation the outcome of which could, in management's judgment
based on information currently available, have a material adverse effect on our results of operations or financial condition. Management is not
aware of any material litigation threatened against us.

                                                                        57
                                                                      MANAGEMENT

Executive Officers and Directors

       Our executive officers and directors are as follows:

Name                                           Age            Title

John J. McDonnell, Jr.                         66             Chairman and Chief Executive Officer and Director

Brian J. Bates                                 43             President and Chief Operating Officer and Director

Henry H. Graham, Jr.                           54             Executive Vice President, Chief Financial Officer and Treasurer

Michael Q. Keegan                              37             Executive Vice President, General Counsel and Secretary

John J. McDonnell III                          38             Executive Vice President, Corporate Development and Director

Matthew M. Mudd                                40             Executive Vice President, Technology

James J. Mullen                                61             Executive Vice President and General Manager, International Services Division

Mark G. Cole                                   38             Senior Vice President, Network Operations

Larry A. Crompton                              47             Senior Vice President and General Manager, POS

Edward C. O'Brien                              56             Senior Vice President, Corporate Controller

Alan R. Schwartz                               43             Senior Vice President and General Manager, Financial Services Division

Barry S. Toser                                 45             Senior Vice President and General Manager, Telecommunication Services Division

Scott E. Ziegler                               46             Senior Vice President and Chief Systems Officer

Bruce V. Rauner                                47             Director

Philip A. Canfield                             36             Director

Collin E. Roche                                32             Director

John B. Benton                                 61             Director

Stephen X. Graham                              51             Director

George G. Moore                                52             Director

Management

      TNS, Inc. is a holding company, and Transaction Network Services, Inc. is our wholly owned subsidiary through which we conduct our
business operations. Following its organization in 1990, Transaction Network Services, Inc. completed an initial public offering of its common
stock in 1994. In November 1999, PSINet, Inc. acquired Transaction Network Services, Inc. Messrs. McDonnell, Jr., Bates, Graham and
McDonnell III resigned their positions with Transaction Network Services, Inc. following its acquisition by PSINet, Inc. They subsequently
joined with GTCR in November 2000 to pursue the acquisition of Transaction Network Services, Inc. from PSINet, Inc. TNS, Inc. was formed
for this purpose in March 2001, and we completed the acquisition of Transaction Network Services, Inc. in April 2001. In March 2004, we
completed our initial public offering.

                                                                            58
     John J. McDonnell, Jr. has served as our Chairman and Chief Executive Officer since April 2001. From February 2000 to
September 2000, Mr. McDonnell was Chairman and Chief Executive Officer of PaylinX Corporation. Prior to that, Mr. McDonnell was
President, Chief Executive Officer and a director of Transaction Network Services, Inc. since founding the company in 1990. Mr. McDonnell is
also a director of CyberSource Corp. Mr. McDonnell has a B.S. in Electrical Engineering from Manhattan College, an M.S.E.E. from
Rensselaer Polytechnic Institute and an Honorary Doctorate of Humane Letters from Marymount University.

     Brian J. Bates has served as our President and Chief Operating Officer and our director since April 2001. From April 2000 to
September 2000, Mr. Bates was President and Chief Operating Officer of PaylinX Corporation. From July 1999 to March 2000, Mr. Bates was
Executive Vice President and General Manager, POS Services Division of Transaction Network Services, Inc., and he was Senior Vice
President and General Manager, POS Services Division of Transaction Network Services, Inc. from 1996 to July 1999. Before that, Mr. Bates
served Transaction Network Services, Inc. in various positions, as Vice President, Sales from 1992 to 1996, and Director of Sales from 1990 to
1992. Mr. Bates is a son-in-law of John J. McDonnell, Jr. and is the brother-in-law of both John J. McDonnell III and Matthew M. Mudd.
Mr. Bates has a B.S. in Economics from The College of William and Mary.

     Henry H. Graham, Jr. has served as our Executive Vice President, Chief Financial Officer and Treasurer since April 2001. From
January 2000 to September 2000, Mr. Graham was Senior Vice President, Chief Financial Officer and Treasurer of PaylinX Corporation. From
April 1999 to January 2000, Mr. Graham was Senior Vice President, Chief Financial Officer and Treasurer of Transaction Network
Services, Inc. From July 1998 to April 1999, Mr. Graham was Senior Vice President and General Manager of the OmniLink Communications
division of Transaction Network Services, Inc. after the acquisition of substantially all of the assets of OmniLink Communications Corporation.
Before that, Mr. Graham served as OmniLink's Chief Financial Officer and Vice President of Administration from December 1996 to
July 1998. Mr. Graham has a B.S. in Business Administration from The Citadel.

     Michael Q. Keegan has served as our Executive Vice President, General Counsel and Secretary since September 2003. From April 2001 to
September 2003, Mr. Keegan was our Senior Vice President, General Counsel and Secretary. From November 2000 to April 2001, Mr. Keegan
was the Executive Vice President, General Counsel and Secretary of Internet Partnership Group (US), Inc. From February 2000 to
November 2000, Mr. Keegan was the Vice President and Assistant General Counsel of Internet Partnership Group. From May 1998 to
February 2000, Mr. Keegan was an independent consultant. From September 1992 to May 1998, Mr. Keegan was a corporate associate at the
law firm of LeBoeuf, Lamb, Greene and MacRae, L.L.P. Mr. Keegan has a B.A. from the University of Notre Dame and a J.D. from the
University of Virginia School of Law.

      John J. McDonnell III has served as our Executive Vice President, Corporate Development and our director since April 2001. From
December 1999 to September 2000, Mr. McDonnell was Senior Vice President of PaylinX Corporation. From January 1999 to December 1999,
Mr. McDonnell served as Senior Vice President, General Counsel and Secretary of Transaction Network Services, Inc., and he was Vice
President, General Counsel and Secretary of Transaction Network Services, Inc. from August 1993 through December 1998. He also served as
interim Treasurer of Transaction Network Services, Inc. from February 1997 to July 1997. Mr. McDonnell is the son of John J. McDonnell, Jr.
and is the brother-in-law of both Brian J. Bates and Matthew M. Mudd. Mr. McDonnell has a B.A. from Stanford University and a J.D. from
UCLA School of Law.

     Matthew M. Mudd has served as our Executive Vice President, Technology since April 2001. From September 2000 to March 2001,
Mr. Mudd was the Director of Long-Haul Networking of Cogent Communications. From April 2000 to September 2000, Mr. Mudd was Senior
Vice President and Chief

                                                                      59
Information Officer of PaylinX Corporation. Before that, Mr. Mudd served Transaction Network Services, Inc. in various positions, as Senior
Vice President, Operations from January 1997 to November 1999 and Vice President, Operations from 1993 through 1996. Mr. Mudd is a
son-in-law of John J. McDonnell, Jr. and is the brother-in-law of both John J. McDonnell III and Brian J. Bates. Mr. Mudd has a B.A. from
Boston College.

     James J. Mullen has served as our Executive Vice President and General Manager of the International Services Division since April 2001.
From September 2000 to April 2001, Mr. Mullen was Senior Vice President of Ecutel, Inc. From March 2000 to August 2000, Mr. Mullen was
Senior Vice President, International Division of PaylinX Corporation. From January 1998 to March 2000, Mr. Mullen was Senior Vice
President and General Manager of the International Services Division of Transaction Network Services, Inc. Before that, Mr. Mullen was the
founder and Chief Executive Officer of StarQuest Software, Inc. Mr. Mullen has a B.A. from the University of California at Berkeley.

     Mark G. Cole has served as our Senior Vice President, Network Operations since April 2001. From March 2000 to April 2001, Mr. Cole
was the Senior Vice President—Operations of Transaction Network Services, Inc. From July 1999 to March 2000, Mr. Cole was the Vice
President, Network Control Center of Transaction Network Services, Inc., and he was the Senior Director, Network Control Center of
Transaction Network Services, Inc. from February 1999 to July 1999. From March 1996 to February 1999, Mr. Cole was the Director, Network
Control Center of Transaction Network Services, Inc. Before that, Mr. Cole served Transaction Network Services, Inc. in various positions
since April 1992. Mr. Cole's communication training originated with the U.S. Army, where he held several supervisory and technical positions.

     Larry A. Crompton has served as our Senior Vice President and General Manager of the POS Division since April 2001. From February
2001 to March 2001, Mr Crompton was Vice President of Sales for iATMglobal. From March 2000 to November 2000, Mr. Crompton was
Senior Vice President and General Manager, POS Services Division of Transaction Network Services Inc. From April 1992 to March 2000, he
was Vice President of Sales for the POS Division of Transaction Network Services, Inc. Mr. Crompton has a B.A. from Augustina College.

     Edward C. O'Brien has served as our Senior Vice President and Corporate Controller since April 2001. From January 2000 to
September 2000, Mr. O'Brien was Vice President and Corporate Controller of PaylinX Corporation. Prior to that, Mr. O'Brien was Vice
President and Corporate Controller of Transaction Network Services, Inc. from June 1999 to January 2000. Mr. O'Brien was Vice President of
Accounting for World Dutyfree from July 1998 to June 1999. Prior to that, Mr. O'Brien worked in various positions at Trak Auto where he was
Vice President and Corporate Controller when he left in July 1998. Mr. O'Brien has a B.S. from the University of Baltimore.

     Alan R. Schwartz has served as our Senior Vice President and General Manager of the Financial Services Division since April 2001. From
November 1999 to April 2001, Mr. Schwartz was the Senior Vice President and General Manager of the Financial Services Division of
Transaction Network Services, Inc. From July 1998 to November 1999, Mr. Schwartz was Director of Sales of the Financial Services Division
of Transaction Network Services, Inc. Before that, Mr. Schwartz worked in various positions at Datastream International where he was the
Vice President and Country Manager (North America) when he left in July 1998. Mr. Schwartz has a M.B.A. from the Leonard N. Stern School
of Business at New York University and a B.S. in Business Administration from Boston University.

     Barry S. Toser has served as our Senior Vice President and General Manager of the Telecommunication Services Division since
July 2001. From January 2001 to June 2001, Mr. Toser was a partner at Paul-Tittle Search Group. From March 2000 to December 2000,
Mr. Toser was Executive Vice President of sales and marketing and a member of the Board of Directors at GlobalNet International. From
January 1999 to January 2000, Mr. Toser was Vice President of global carrier

                                                                     60
services at Destia/Viatel. From October 1997 to January 1999, Mr. Toser was Vice President of AlphaNet Telecom. Before that, Mr. Toser held
various positions in sales, sales management, and marketing management with Sprint Corp., Cable & Wireless Communications, Inc. and
Teleglobe, Inc. Mr. Toser is currently the President of TelecomHUB, a telecommunications industry networking group. Mr. Toser has a B.A.
from the University of Maryland.

     Scott E. Ziegler has served as our Senior Vice President and Chief Systems Officer since April 2001. From August 2000 to April 2001,
Mr. Ziegler was the Executive Vice President and Chief Systems Officer of Transaction Network Services, Inc. From April 1999 to
August 2000, Mr. Ziegler was Senior Vice President Systems Integration of Transaction Network Services, Inc., and he was the Vice President
Systems Integration from April 1996 to April 1999. Before that, Mr. Ziegler served Transaction Network Services, Inc. in various positions
since July 1992. Mr. Ziegler has a B.S. from the University of Maryland.

Directors

     Bruce V. Rauner has served as our director since March 2001. Mr. Rauner is chairman of GTCR Golder Rauner, L.L.C. and has been a
principal of GTCR since 1981. Mr. Rauner has a B.A. in Economics from Dartmouth College and a M.B.A. from Harvard University.
Mr. Rauner also serves as a board member of Coinmach Corporation, DigitalNet Holdings, Inc. and several private companies in GTCR's
portfolio.

     Philip A. Canfield has served as our director since October 2001. Mr. Canfield has been a principal at GTCR Golder Rauner, L.L.C. since
1997. Mr. Canfield has a B.S. in Finance from the Honors Business Program at the University of Texas at Austin and a M.B.A. from the
University of Chicago. Mr. Canfield also serves as a board member of DigitalNet Holdings, Inc. and several private companies in GTCR's
portfolio.

     Collin E. Roche has served as our director since April 2001. Mr. Roche is a principal at GTCR Golder Rauner, L.L.C., which he joined in
1996. Previously, Mr. Roche worked as an investment banking analyst at Goldman, Sachs & Co. and as an associate at Everen Securities. He
received a B.A. in Political Economy from Williams College. He also holds a M.B.A. from Harvard Business School. Mr. Roche serves as a
board member of Syniverse Technologies, Inc. and several private companies in GTCR's portfolio.

     John B. Benton has served as our director since July 2001. Mr. Benton is the Senior Vice President, Head, International Operations of
eFunds Corporation. Previously, Mr. Benton was the Managing Partner of Benton Consulting Partners, a firm Mr. Benton founded in
May 2002 and sold to eFunds Corporation in January 2004. From February 1997 until his retirement from Perot Systems Corporation in
April 2002, Mr. Benton held numerous senior management positions with Perot Systems, last holding the position of Deputy Head of the
company's global financial services group. Prior to that, Mr. Benton was the Chief Executive Officer of Benton International, Inc. until it was
acquired by Perot Systems in 1997. Before that, from 1976 to 1977, Mr. Benton served as the Executive Director of the United States National
Commission on Electronic Funds Transfers, a position to which he was appointed by President Gerald R. Ford and confirmed by the U.S.
Senate. Mr. Benton has a doctorate degree in Public Administration from the University of Southern California. Mr. Benton also has an A.B.
from the University of Southern California and a Masters in International Public Administration from Syracuse University.

    Stephen X. Graham has served as our director since February 2003. Mr. Graham is Managing Director of CrossHill Financial Group, Inc.,
which he founded in 1988, and has been a General Partner of CrossHill Georgetown Capital, LP since November 2000. Prior to that
Mr. Graham was a Principal with Kidder Peabody & Co., and held positions with Merrill, Lynch & Co. and Arthur Young & Co.

                                                                      61
Mr. Graham received a B.A. from Georgetown University and a M.B.A. from the University of Chicago Graduate School of Business. He is
currently a board member of several private companies.

     George G. Moore has served as our director since April 2002. Mr. Moore has been Chief Executive Officer and co-founder of TARGUS
Information Corp. since January 1993. He also has been chief executive officer of AMACAI Information Corporation since October 2001,
chairman of Performix Technologies since April 2000, chairman of Buyers Choice Media Inc. since October 1997, and chairman and owner of
Erne Heritage Holdings since March 1990. Prior to that, Mr. Moore was Executive Vice President of Equifax Marketing Decision Systems and
Senior Vice President of CACI-International. Mr. Moore has a D.B.A. from George Washington University, a M.B.A. from George
Washington University, a M.B.S. from University College, Dublin and a B.Comm. from University College, Dublin. He is currently a board
member of several private companies.

Board and Board Committee Composition

     Our board of directors consists of nine members. Our board of directors is elected annually, and each director holds office for a one-year
term.

     We are deemed to be a "controlled company" under the rules of the New York Stock Exchange, and we qualify for, and have elected to
rely on, the "controlled company" exception to the board of directors and committee composition requirements under the rules of the New York
Stock Exchange. Pursuant to this exception, we are exempt from the rule that requires that our board of directors be comprised of a majority of
"independent directors"; our compensation committee be comprised solely of "independent directors"; and our nominating committee be
comprised solely of "independent directors" as defined under the rules of the New York Stock Exchange. The "controlled company" exception
does not modify the independence requirements for the audit committee, and we comply with the requirements of the Sarbanes-Oxley Act and
the New York Stock Exchange rules which require that our audit committee be composed of three independent directors.

Board Committees

      Our board of directors has an audit committee, a compensation committee and governance and nominating committee. Upon completion
of our initial public offering we entered into an agreement with GTCR that provides that GTCR will retain representation on the compensation
committee and the governance and nominating committee for so long as GTCR owns at least 37.5% of the common stock it owns immediately
after our initial public offering.

     Audit committee. The audit committee of our board of directors appoints, determines the compensation for and supervises our independent
auditors, reviews our internal accounting procedures, systems of internal controls and financial statements, reviews and approves the services
provided by our internal and independent auditors, including the results and scope of their audit, and resolves disagreements between
management and our independent auditors. The audit committee consists of Messrs. Benton, S. Graham and Moore. Mr. Graham is chairman of
the committee and has been designated as the "audit committee financial expert" as that term is defined in the Securities Exchange Act rules.

      Compensation committee. The compensation committee of our board of directors reviews and recommends to the board of directors the
compensation and benefits of all of our executive officers, administers our equity incentive plans and establishes and reviews general policies
relating to compensation and benefits of our employees. The compensation committee currently consists of Messrs. S. Graham, Canfield and
Moore.

     Nominating and Corporate Governance Committee. The role of the nominating and corporate governance committee of our board of
directors is to identify individuals qualified to become members

                                                                       62
of the board of directors, to recommend that the board of directors select director nominees for the next annual meeting of stockholders, and to
develop and recommend to the board of directors a set of corporate governance principles applicable to the company. The nominating and
corporate governance committee consists of Messrs. Benton and Roche.

Compensation Committee Interlocks and Insider Participation

     None of the directors who are members of our compensation committee are, nor have they ever been at any time since our incorporation,
one of our officers or employees. None of the directors who are members of our compensation committee serve as a member of the board of
directors or compensation committee of any entity that has one or more of our executive officers serving as a member of its board of directors
or compensation committee.

Director Compensation

      The compensation committee of our board of directors determines the amount of any fees, whether payable in cash, shares of common
stock or options to purchase common stock, and expense reimbursements that directors receive for participating on, and for attending meetings
of, the board of directors and committees of the board. We pay each director who is not an employee of the company or a representative of
GTCR an annual retainer fee of $20,000. Additionally, we pay the chairman of our audit committee an additional annual retainer fee of $8,000
and the chairman of our compensation committee an additional annual retainer fee of $5,000. We also pay our directors who are not employees
of the company or a representative of GTCR $1,500 for each board meeting they attend and $1,000 for each committee meeting they attend to
the extent such committee meeting is not held on the same day as a meeting of the entire board of directors. We reimburse each director for
reasonable out-of-pocket expenses related to attending board and committee meetings.

Executive Compensation

     The following table sets forth all compensation paid by us during the years ended December 31, 2002 and 2003 to our Chief Executive
Officer and our four most highly compensated officers other than our Chief Executive Officer, whose total annual salary and bonus exceeded
$100,000 for the year ended December 31, 2003. We refer to these executives as the named executive officers elsewhere in this prospectus.

                                                                       63
                                                         Summary Compensation Table

                                                                                                           Long-Term
                                                                                                          Compensation
                                                                                                            Awards
                                                                              Annual compensation          Options(#)

                                                                                                                                       All other
Name and principal position                                                                                                         compensation($) (1)

                                                            Year           Salary($)        Bonus($)

John J. McDonnell, Jr.,                                      2003            447,604          450,888                     —                        3,212
Chairman and Chief Executive Officer                         2002            434,563          352,484                     —                        2,125

Brian J. Bates,
President and                                                2003            368,611          185,658                     —                        3,212
Chief Operating Officer                                      2002            357,875          145,141                     —                        1,749

Alan R. Schwartz,
Senior Vice President and General Manager,                   2003            226,600          224,657                    957                       3,212
Financial Services Division                                  2002            220,004          221,440                     —                        1,350

Henry H. Graham, Jr.,
Executive Vice President and                                 2003            240,875            93,682                    —                        3,212
Chief Financial Officer                                      2002            217,958            61,797                    —                        1,000

Matthew M. Mudd,                                             2003            240,875            90,682                    —                        3,212
Executive Vice President, Technology                         2002            208,583            61,797                    —                        1,000


(1)
        Represents our 401(k) matching contributions.


                                                         Option Grants in Last Fiscal Year

    The following table sets forth information with respect to stock options granted to the named executive officers during the year ended
December 31, 2003.

                                                                                                                                Potential Realizable
                                                                                                                                 Value at Assumed
                                                                                                                               Annual Rates of Stock
                                                                                                                                Price Appreciation
                                                              Individual Grants                                                 for Option Term (2)

                                            Number of               % of Total
                                             Shares                  Options
                                            Underlying              Granted to
                                             Options               Employees in
                                             Granted                  2003

                                                                                         Exercise Price   Expiration
Name                                                                                      Per Share        Date (1)

                                                                                                                               5%               10%

Alan R. Schwartz                               957                    1.3%                  $19.60        11/17/13         $9,302            $25,925


(1)
        The options have a term of 10 years, subject to earlier termination in certain events related to termination of employment.

(2)
        Potential realizable values are calculated by:


        •
       multiplying the number of shares of our common stock subject to a given option by the initial public offering price of $18.00 per
       share;

•
       assuming that the aggregate stock value derived from that calculation compounds at the annual 5% or 10% rates shown in the
       table for the entire ten-year term of the option; and

•
       subtracting from that result the total option exercise price.




The 5% and 10% assumed rates of appreciation are suggested by the rules of the Securities and Exchange Commission and do not
represent our estimate or projection of the future common stock price. There can be no assurance that any of the values reflected in the
table will be achieved.

                                                                 64
                          Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values

     None of our named executive officers exercised stock options during the year ended December 31, 2003. The following table sets forth
information on unexercised options to purchase our common stock held by the named executive officers as of December 31, 2003. There was
no public trading market for our common stock as of December 31, 2003. Accordingly, the values of the unexercised in-the-money options
have been calculated based on an initial public offering price of $18.00 per share of our common stock, less the per share exercise price,
multiplied by the number of shares underlying the options.

                                                                             Number of securities
                                                                                  underlying
                                                                              unexercised options
                                                                             at December 31, 2003

                                                                                                      Value of unexercised
                                                                                                    in-the-money options at
                                                                                                       December 31, 2003

                                               Shares
                                              acquired        Value
Name                                         on exercise     realized

                                                                             Vested      Unvested   Vested        Unvested

Alan R. Schwartz                                —              —             4,271        3,062      —               —

Employment Agreements

John J. McDonnell, Jr.

     TNS Holdings, L.L.C. and Transaction Network Services, Inc. entered into a senior management agreement with Mr. McDonnell dated
April 3, 2001, containing terms and conditions related to his employment and provisions related to securities ownership. Pursuant to his senior
management agreement, Mr. McDonnell purchased 400 common units of TNS Holdings, L.L.C., each at a price of $100 per unit, which units
were subject to vesting in equal monthly installments over 60 months. In connection with our initial public offering, TNS Holdings, L.L.C.
dissolved, and Mr. McDonnell received a distribution of 495,321 shares of our common stock in return for his common units. His senior
management agreement was amended and restated to add us as a party and to provide that substantially the same rights and restrictions apply to
the shares of our common stock that Mr. McDonnell received under the amended agreement as applied to the TNS Holdings, L.L.C. common
units that Mr. McDonnell surrendered upon the dissolution of TNS Holdings, L.L.C.

     The senior management agreement provides that Mr. McDonnell will serve as our Chairman and Chief Executive Officer until his
resignation, disability or death, or the decision by the board of directors to terminate his employment with or without cause. Mr. McDonnell's
annual base salary was initially set at $425,000, subject to any increase as determined by the board of directors based on the achievements of
budgetary or other objectives set by the board, and Mr. McDonnell is eligible for an annual bonus of up to 100% of his annual base salary,
based upon the achievement of budgetary and other objectives set by the board. If Mr. McDonnell's employment is terminated without cause or
he resigns for good reason, during the one year period following his termination (or any extension to that period which may apply),
Mr. McDonnell would be entitled to receive an amount equal to his annual base salary.

      Mr. McDonnell's senior management agreement requires him to protect the confidentiality of our proprietary and confidential information.
Mr. McDonnell has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is terminated
without cause or resigns for good reason, or for a period of two years if he is terminated for any other reason. Under the agreement, good
reason means that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. McDonnell that are
substantially inconsistent with his responsibilities as our Chairman and Chief Executive Officer or we make a substantial adverse alteration to
those responsibilities, we reduce Mr. McDonnell's annual base salary, or we materially reduce the benefits we provide Mr. McDonnell. We are
entitled to extend the non-competition and non-solicitation periods for

                                                                        65
an additional year upon written notice to Mr. McDonnell at least 90 days prior to the conclusion of the initial period.

     As of June 30, 2004, 321,959 shares of common stock were vested, and the remaining 173,362 shares will vest in 21 equal monthly
installments on the last day of each month, if as of the last day of such month Mr. McDonnell's employment has not been terminated. All of the
common stock which has not yet vested will vest upon a sale of the company, if Mr. McDonnell's employment has not been terminated at that
time. Additionally, if Mr. McDonnell is terminated without cause or resigns for good reason, the common stock that would have vested within
12 months following his termination will vest at the time of his termination. If Mr. McDonnell's employment is terminated, the unvested
common stock will be subject to repurchase by the company at the lesser of the price initially paid by Mr. McDonnell and the fair market value
of such stock.

      Mr. McDonnell is not permitted to transfer his unvested common stock except pursuant to the applicable laws of descent and distribution
or to the purchase rights of the company described above. The transfer restrictions on the unvested common stock survive until the
consummation of an approved sale of the company. Without the consent of GTCR Fund VII, L.P., Mr. McDonnell is not permitted to transfer
his vested common stock except pursuant to the applicable laws of descent and distribution, as part of an approved sale of the company or in
connection with an approved public sale. The transfer restrictions on the vested common stock continue until such shares are transferred in an
approved sale of the company or an approved public sale.

Brian J. Bates

     TNS Holdings, L.L.C. and Transaction Network Services, Inc. entered into a senior management agreement with Mr. Bates, dated April 3,
2001, containing terms and conditions related to his employment and provisions related to securities ownership. Pursuant to his senior
management agreement, Mr. Bates purchased 250 common units of TNS Holdings, L.L.C., each at a price of $100 per unit, which units were
subject to vesting in equal monthly installments over 60 months. In connection with our initial public offering, TNS Holdings, L.L.C.
dissolved, and Mr. Bates received a distribution of 309,576 shares of our common stock in return for his common units. His senior
management agreement was amended and restated to add us as a party and to provide that substantially the same rights and restrictions apply to
the shares of our common stock that Mr. Bates received under the amended agreement as applied to the TNS Holdings, L.L.C. common units
that Mr. Bates surrendered upon the dissolution of TNS Holdings, L.L.C.

     The senior management agreement provides that Mr. Bates will serve as our President and Chief Operating Officer until his resignation,
disability or death, or the decision by the board of directors to terminate his employment with or without cause. Mr. Bates's annual base salary
was initially set at $350,000, subject to any increase as determined by the board of directors based on the achievements of budgetary or other
objectives as set by the board, and Mr. Bates is eligible for an annual bonus of up to 50% of his annual base salary, based upon the achievement
of budgetary and other objectives set by the board. If Mr. Bates's employment is terminated without cause or he resigns for good reason, during
the one year period following his termination (or any extension to that period which may apply), Mr. Bates would be entitled to receive an
amount equal to his annual base salary.

      Mr. Bates's senior management agreement requires him to protect the confidentiality of our proprietary and confidential information.
Mr. Bates has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is terminated without
cause or resigns for good reason, or for a period of two years if he is terminated for any other reason. Under the agreement, good reason means
that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. Bates that are substantially inconsistent with
his responsibilities as our President and Chief Operating Officer or we make a substantial adverse alteration to those

                                                                        66
responsibilities, we reduce Mr. Bates' annual base salary, or we materially reduce the benefits we provide Mr. Bates. We are entitled to extend
the non-competition and non-solicitation periods for an additional year upon written notice to Mr. Bates at least 90 days prior to the conclusion
of the initial period.

     As of June 30, 2004, 201,224 shares of common stock were vested, and the remaining 108,352 shares will vest in 21 monthly installments
on the last day of each month. Mr. Bates' common stock is subject to the same conditions and restrictions as those described above for
Mr. McDonnell's common stock.

Henry H. Graham, Jr.

     TNS Holdings, L.L.C. and Transaction Network Services, Inc. entered into a senior management agreement with Mr. Graham, dated
April 3, 2001, containing terms and conditions related to his employment and provisions related to securities ownership. Pursuant to his senior
management agreement, Mr. Graham purchased 250 common units of TNS Holdings, L.L.C., each at a price of $100 per unit, which units were
subject to vesting in equal monthly installments over 60 months. In connection with our initial public offering, TNS Holdings, L.L.C.
dissolved, and Mr. Graham received a distribution of 309,576 shares of our common stock in return for his common units. His senior
management agreement was amended and restated to add us as a party and to provide that substantially the same rights and restrictions apply to
the shares of our common stock that Mr. Graham received under the amended agreement as applied to the TNS Holdings, L.L.C. common units
that Mr. Graham surrendered upon the dissolution of TNS Holdings, L.L.C.

      The senior management agreement provides that Mr. Graham will serve as our Executive Vice President and Chief Financial Officer until
his resignation, disability or death, or the decision by the board of directors to terminate his employment with or without cause. Mr. Graham's
annual base salary was initially set at $200,000, subject to any increase as determined by the board of directors based on the achievements of
budgetary or other objectives set by the board, and Mr. Graham is eligible for an annual bonus of up to 35% of his annual base salary, based
upon the achievement of budgetary and other objectives set by the board. If Mr. Graham's employment is terminated without cause or he
resigns for good reason, during the one year period following his termination (or any extension to the period which may apply), Mr. Graham
would be entitled to receive an amount equal to his annual base salary.

     Mr. Graham's senior management agreement requires him to protect the confidentiality of our proprietary and confidential information.
Mr. Graham has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is terminated without
cause or resigns for good reason, or for a period of two years if he is terminated for any other reason. Under the agreement, good reason means
that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. Graham that are substantially inconsistent
with his responsibilities as our Executive Vice President and Chief Financial Officer or we make a substantial adverse alteration to those
responsibilities, we reduce Mr. Graham's annual base salary, or we materially reduce the benefits we provide Mr. Graham. We are entitled to
extend the non-competition and non-solicitation periods for an additional year, upon written notice to Mr. Graham at least 90 days prior to the
conclusion of the initial period.

     As of June 30, 2004, 201,224 shares of common stock were vested, and the remaining 108,352 shares will vest in 21 monthly installments
on the last day of each month. Mr. Graham's common stock is subject to the same conditions and restrictions as those described above for
Mr. McDonnell's common stock.

                                                                       67
Alan R. Schwartz

    Transaction Network Services, Inc. entered into a senior management agreement with Mr. Schwartz dated April 24, 2001, containing
terms and conditions related to his employment.

     The management agreement provides for Mr. Schwartz to serve as Senior Vice President, General Manager—Financial Services Division
of Transaction Network Services, Inc. until his resignation, disability or death, or the decision by our Chief Executive Officer (CEO) or Chief
Operating Officer (COO) to terminate his employment with or without cause. Mr. Schwartz's annual base salary was initially set at $220,000,
subject to any increase as determined by the CEO or COO based on the achievements of budgetary or other objectives set out by the CEO or
COO. Mr. Schwartz received a quarterly bonus of $40,000 for each of the fiscal quarters ending September 30, 2001 and December 31, 2001.
Thereafter, Mr. Schwartz is eligible for an annual bonus (in an amount to be determined by Mr. Schwartz and us) based on the achievement of
objectives set forth by the CEO or COO or upon the achievement of certain sales quotas or other objectives mutually agreed between
Mr. Schwartz and us.

     If Mr. Schwartz's employment is terminated without cause or he resigns for good reason, during the one year period following his
termination, Mr. Schwartz would be entitled to receive an amount equal to his annual base salary, which includes the aggregate amount of any
bonuses paid to Mr. Schwartz during the four calendar quarters immediately preceding the termination date. Under the agreement, good reason
means that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. Schwartz that are substantially
inconsistent with his responsibilities as our Senior Vice President and General Manager, Financial Services Division, or we make a substantial
adverse alteration to those responsibilities, we reduce Mr. Schwartz's annual base salary, or we materially reduce the benefits we provide
Mr. Schwartz.

     Mr. Schwartz's management agreement contains provisions requiring him to protect the confidentiality of our proprietary and confidential
information. Mr. Schwartz has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is
terminated without cause or resigns for good reason, or for a period of 6 months if he is terminated or resigns for any other reason.

Matthew M. Mudd

     TNS Holdings, L.L.C. and Transaction Network Services, Inc. entered into a senior management agreement with Mr. Mudd, dated April 3,
2001, containing terms and conditions related to his employment and provisions related to securities ownership. Pursuant to his senior
management agreement, Mr. Mudd purchased 250 common units of TNS Holdings, L.L.C., each at a price of $100 per unit, which units are
subject to vesting in equal monthly installments over 60 months. In connection with our initial public offering, TNS Holdings, L.L.C.
dissolved, and Mr. Mudd received a distribution of 309,576 shares of our common stock in return for his common units. His senior
management agreement was amended and restated to add us as a party and to provide that substantially the same rights and restrictions apply to
the shares of our common stock that Mr. Mudd received under the amended agreement as applied to the TNS Holdings, L.L.C. common units
that Mr. Mudd surrendered upon the dissolution of TNS Holdings, L.L.C.

     The senior management agreement provides that Mr. Mudd will serve as our Executive Vice President, Technology until his resignation,
disability or death, or the decision by the board of directors to terminate his employment with or without cause. Mr. Mudd's annual base salary
was initially set at $200,000, subject to any increase as determined by the board of directors based on the achievements of budgetary or other
objectives set by the board, and Mr. Mudd is eligible for an annual bonus of up to 35% of his annual base salary, based upon the achievement
of budgetary and other objectives set by the board. If Mr. Mudd's employment is terminated without cause or he resigns for good reason,

                                                                      68
during the one year period following his termination (or any extension to the period which may apply), Mr. Mudd would be entitled to receive
an amount equal to his annual base salary.

      Mr. Mudd's senior management agreement requires him to protect the confidentiality of our proprietary and confidential information.
Mr. Mudd has also agreed not to compete with us or solicit our employees or customers for a period of one year if he is terminated without
cause or resigns for good reason, or for a period of two years if he is terminated for any other reason. Under the agreement, good reason means
that we move our offices to an area other than the Washington, D.C. area, we assign duties to Mr. Mudd that are substantially inconsistent with
his responsibilities as our Executive Vice President, Technology or we make a substantial adverse alteration to those responsibilities, we reduce
Mr. Mudd's annual base salary, or we materially reduce the benefits we provide Mr. Mudd. We are entitled to extend the non-competition and
non-solicitation periods for an additional year, upon written notice to Mr. Mudd at least 90 days prior to the conclusion of the initial period.

     As of June 30, 2004, 201,224 shares of common stock were vested, and the remaining 108,352 shares will vest in 21 monthly installments
on the last day of each month. Mr. Mudd's common stock is subject to the same conditions and restrictions as those described above for
Mr. McDonnell's common stock.

2004 Long-Term Incentive Plan

     Overview. The TNS, Inc. 2004 Long-Term Incentive Plan was adopted by our board of directors on February 12, 2004 and approved by
our stockholders on March 15, 2004. The purpose of the 2004 Plan is to attract and retain qualified employees, consultants and non-employee
directors and to motivate them to achieve long-term goals, to provide incentive compensation opportunities that are competitive with those of
similar companies and to further align participants' interests with those of our other stockholders.

     Types of Awards. Awards under the 2004 Plan may take the form of:

     •
            stock options (either incentive stock options that qualify under Section 422 of the Internal Revenue Code or non-qualified stock
            options),

     •
            stock appreciation rights,

     •
            stock bonuses,

     •
            restricted stock,

     •
            restricted stock units,

     •
            performance units or

     •
            performance shares.

     Eligibility. The persons eligible to receive awards under the 2004 Plan include all of our employees, the employees of our subsidiaries, our
non-employee directors and any of our consultants, independent contractors or advisors that the compensation committee identifies as having a
direct and significant effect on our performance.

     Share reserve/limitations. As of June 30, 2004, 1,584,383 shares of common stock are authorized and 520,186 shares are available for
issuance under the 2004 Plan. If the shares of stock that are subject to an award are not issued or cease to be issuable because the award is
terminated, forfeited or cancelled, those shares will then become available for additional awards. The number of shares authorized and
available for issuance under the 2004 Plan is subject to adjustment in the sole discretion of the

                                                                       69
compensation committee in the event of a stock split, stock dividend, recapitalization, spin-off or similar action.

    Administration. The 2004 Plan is administered by the compensation committee of our board of directors. Each member of the
compensation committee qualifies as an "outside director," as defined for purposes of Section 162(m) of the Internal Revenue Code, and two
members, serving as a subcommittee, qualify as "non-employee directors," as defined for purposes of Securities Exchange Act Rule 16b-3. The
compensation committee has complete and absolute authority to make any and all decisions regarding the administration of the 2004 Plan.

     Terms of Awards. Subject to certain restrictions and limitations that are set forth in the 2004 Plan, the compensation committee has
complete and absolute authority to set the terms, conditions and provisions of each award, including the size of the award, the exercise or base
price, the vesting and exercisability schedule (including provisions regarding acceleration of vesting and exercisability) and termination,
cancellation and forfeiture provisions.

     The compensation committee is subject to the following specific restrictions regarding the types and terms of awards:

     •
            No more than 1,110,469 shares may be issued pursuant to awards of stock bonuses, restricted stock, restricted stock units,
            performance shares or discounted stock options (that is, stock or stock options with an exercise price that is less than the fair
            market value of the stock on the date of grant). A discounted stock option is not included in this limitation if the recipient pays or
            otherwise foregoes value to us in an amount equal to the discount.

     •
            In addition, awards of stock bonuses, restricted stock, restricted stock units, performance shares and discounted stock options
            generally must either be subject to a vesting period of at least three years or subject to performance-based vesting over a period of
            at least one year, except that up to 20% of the total awards made in a fiscal year may be issued without this limitation.

     •
            No participant may receive in any fiscal year stock options covering more than 100,000 shares or awards other than stock options
            covering more than 75,000 shares.

     •
            No participant may receive in any year cash in payment for or settlement of a performance unit in excess of $500,000.

     •
            The exercise price for a stock option generally may not be less than 100% (in the case of an incentive stock option) or 85% (in the
            case of a non-qualified stock option) of the fair market value of the stock on the date of grant, and the base price for a stock
            appreciation right generally may not be less than 100% of the fair market value of the stock on the date of grant. The limitation on
            the amount of the discount in the case of non-qualified stock options will not apply if the recipient pays or otherwise foregoes
            value to us in an amount equal to the discount.

     •
            Generally, no award may expire more than ten years after the date of grant, except that the compensation committee may extend
            the expiration date to up to fifteen years after the date of grant if necessary or desirable under the particular rules applicable in
            foreign jurisdictions.

     •
            The aggregate fair market value of the stock with respect to which incentive stock options are exercisable for the first time by a
            participant during any calendar year may not exceed $100,000.

     •
            A participant's incentive stock options will terminate three months after termination of the participant's employment, except in the
            case of death or total and permanent disability, in which case the options will terminate twelve months after termination, and in the
            case of termination for cause, in which case the options will terminate immediately.

                                                                        70
     •
            Incentive stock options will not be transferable or assignable by the participant other than by will or by the laws of descent and
            distribution following the participant's death, and will be exercisable by the participant during the participant's lifetime.

     •
            Stock options may not be "repriced" if the effect of such repricing would be to decrease the exercise per share applicable to such
            option.

     Non-Employee Directors. The non-employee directors are eligible for non-qualified stock option and restricted stock awards under the
2004 Plan. The number of options or shares to be awarded is within the discretion of the compensation committee, except that (a) no
non-employee director may receive awards covering more than 30,000 shares of stock in any year (other than the year the director joins the
Board, when the limit is two times the normal annual limit) and (b) no more than 70% of the awards granted to a non-employee director during
any year may consist of restricted stock. The compensation committee also has the discretion to permit a non-employee director to elect to
receive stock options in lieu of the annual cash retainer fee. The number of options received in lieu of the annual retainer fee (or the method of
computing the number) shall be set by the committee. The compensation committee has the discretion to establish the terms and conditions of
awards to the non-employee directors, including vesting and exercisability schedules and termination provisions, subject to the following
limitations:

     •
            The exercise price of any option cannot be less than 100% of than the fair market value of the stock on the date of grant.

     •
            No option can be exercisable, and no share of restricted stock can become transferable, earlier than six months from the date of
            grant.

     Change in Control. The compensation committee has the express authority to include in any award terms that provide for the acceleration
of vesting and lapse of restrictions, as applicable, upon or following a change in control.

     Amendments and Termination. The board of directors or the compensation committee, without the consent or approval of any plan
participant, may amend, suspend or terminate the 2004 Plan or any award granted under the 2004 Plan, so long as that action does not
materially impair any award then outstanding. Without the approval of the stockholders, however, neither the board of directors nor the
compensation committee may amend the 2004 Plan to increase the number of shares available for issuance or to modify any of the limitations
described in the 2004 Plan in such a manner as to materially reduce the limitation. The board of directors can terminate the 2004 Plan at any
time. Nevertheless, no awards will be granted under the 2004 Plan after the tenth anniversary of its effective date.

2001 Founders' Stock Option Plan

      Overview. Our board of directors adopted the 2001 Founders' Stock Option Plan on July 19, 2001. The 2001 Plan was approved by the
stockholders on April 24, 2002 and amended by our board of directors on October 24, 2002. All references to the 2001 Plan in this discussion
are to the amended 2001 Plan. No further awards will be made under the 2001 Plan.

     Types of awards. The 2001 Plan permitted awards of stock options, including incentive stock options and non-qualified stock options.

     Eligibility. Our employees, officers, directors, consultants, independent contractors, and advisors, as well as those of our domestic and
international subsidiaries and affiliates, are eligible to participate in the 2001 Plan.

                                                                        71
     Options outstanding. As of June 30, 2004, options to purchase an aggregate of 380,339 shares of our common stock were outstanding.

     Administration. The 2001 Plan is administered by the compensation committee of our board of directors, which has the authority, among
other things to determine, the terms for treatment of options and awards upon a termination of employment or upon a change in control.

      Terms of options. The exercise price of non-incentive options issued under the 2001 Plan are not less than 85% of the fair market value of
the common stock on the date the option was granted, and the exercise price of incentive options issued under the 2001 Plan are not less than
the fair market value of the common stock on the date the option was granted, except that the exercise price of incentive options are not less
than 110% of the fair market value of the common stock on the grant date if the option was issued to a holder of 10% or more of our voting
stock or the voting stock of a subsidiary. The committee determined the expiration dates, within 10 years of the date of grant, for each option
granted under the 2001 Plan. Unexercised options expire if and when the holder no longer provides services to us or our subsidiaries or
affiliates.

     Amendment and termination. Our board of directors may amend or terminate the 2001 Plan at any time, as long as the amendment or
termination does not negatively affect any option that has been previously granted under the 2001 Plan without the consent of the holder, but
cannot increase the number of shares available for purchase pursuant to the exercise of options under the 2001 Plan, materially modify the
requirement for eligibility under the 2001 Plan, or materially increase the benefits to participants under the 2001 Plan without approval of a
majority of stockholders. If the board of directors does not terminate it earlier, the 2001 Plan will terminate on April 2, 2006.

Limitation of Liability and Indemnification of Officers and Directors

     As permitted by the Delaware General Corporation Law, we have adopted provisions in our certificate of incorporation that limit or
eliminate the personal liability of our directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that,
when acting on behalf of a corporation, directors exercise an informed business judgment based on all material information reasonably
available to them. Consequently, a director will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability for:

     •
             any breach of the director's duty of loyalty to us or our stockholders,

     •
             any act or omission not in good faith or that involve intentional misconduct or a knowing violation of law,

     •
             any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends, or

     •
             any transaction from which the director derived an improper personal benefit.

     The duty of loyalty generally requires that, when acting on behalf of a corporation, officers and directors act in the best interests of the
corporation and its stockholders. In circumstances where an officer or director owes fiduciary duties to more than one entity it can be difficult
for such person to satisfy duties of loyalty to both entities. Messrs. Rauner, Canfield and Roche are principals of our controlling stockholder
and also serve on our board of directors. Mr. Roche also serves on the board of directors of a company that competes with our
telecommunication services division. In order to address the potential conflicts presented by these relationships, our certificate of incorporation
provides that transactions that we enter into in which a director or officer has a conflict of interest are generally permissible so long as (1) the
material facts relating to the director's or officer's relationship or interest as to the transaction are disclosed to our board of directors and a
majority of our disinterested

                                                                          72
directors approves the transaction, (2) the material facts relating to the director's or officer's relationship or interest as to the transaction are
disclosed to our stockholders and a majority of our disinterested stockholders approves the transaction, or (3) the transaction is otherwise fair to
us.

     Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to
the corporation or its officers, directors our stockholders. Our amended and restated certificate of incorporation provides that any potential
transaction opportunity that is offered to Messrs. Rauner, Canfield or Roche solely in his capacity as a director or officer of the company will
be deemed to be a corporate opportunity of ours if we would be permitted to undertake the opportunity under our certificate of incorporation,
we have sufficient financial resources to undertake the transaction and the transaction would be in line with our business. Messrs. Rauner,
Canfield and Roche are not required to offer any other transaction opportunity of which they become aware to us and could take any such
opportunity for themselves or offer it to other companies in which they have an investment, including the company that competes with our
telecommunication services division.

     These limitations of liability do not affect the availability of equitable remedies such as injunctive relief or rescission.

     Additionally, as permitted by the Delaware General Corporation Law, our certificate of incorporation provides that:

     •
             we shall indemnify our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law,

     •
             we shall advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent
             permitted by the Delaware General Corporation Law, subject to limited exceptions, and

     •
             the rights provided in our certificate of incorporation are not exclusive.

     We have entered, and intend to continue to enter, into separate indemnification agreements with each of our directors and officers which
are broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification
agreements require us, among other things, to indemnify our officers and directors against liabilities that may arise by reason of their status or
service as directors or officers, other than liabilities arising from willful misconduct. These indemnification agreements also require us to
advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified and
to obtain directors' and officers' insurance if available on reasonable terms.

    At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which
indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification.

      We have purchased a policy of directors' and officers' liability insurance that insures our directors and officers against the cost of defense,
settlement or payment of a judgment in some circumstances.

                                                                          73
                               CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Limited Liability Company Agreement

     On April 3, 2001, GTCR Fund VII, L.P., GTCR Fund VII/A, L.P., GTCR Co-Invest, L.P. and GTCR Capital Partners, L.P. (collectively,
the "GTCR Funds"), Heller Financial, Inc., Dunluce Investors III, L.L.C. and six of our executive officers entered into a limited liability
company agreement governing the affairs of TNS Holdings, L.L.C., which held all of the outstanding shares of our Class A redeemable
convertible preferred stock and more than 99% of the outstanding shares of our common stock prior to our initial public offering on March 16,
2004. The six executive officers entering into the agreement were:

    •
            John J. McDonnell, Jr., our Chairman and Chief Executive Officer,

    •
            Brian J. Bates, our President and Chief Operating Officer,

    •
            Henry H. Graham, Jr., our Executive Vice President, Chief Financial Officer and Treasurer,

    •
            John J. McDonnell III, our Executive Vice President, Corporate Development,

    •
            Matthew M. Mudd, our Executive Vice President, Technology, and

    •
            Edward C. O'Brien, our Senior Vice President and Corporate Controller.

    Dunluce Investors III, L.L.C. was a limited liability company owned by the six executives listed above and:

    •
            McDonnell & Associates, L.P., a Delaware limited partnership controlled by John J. McDonnell, Jr.,

    •
            M. Jacqueline McDonnell, the wife of John J. McDonnell, Jr.,

    •
            Sheila M. Bates, the wife of Brian J. Bates,

    •
            Kerry M. Mudd, the wife of Matthew M. Mudd,

    •
            Kevin M. McDonnell, the son of John J. McDonnell, Jr.,

    •
            Michael Q. Keegan, our Executive Vice President, General Counsel and Secretary,

    •
            James J. Mullen, our Executive Vice President and General Manager, International Services Division,

    •
            Mark G. Cole, our Senior Vice President, Network Operations,

    •
            Larry A. Crompton, our Senior Vice President and General Manager, POS Division,

    •
    Scott E. Ziegler, our Senior Vice President and Chief Systems Officer,

•
    Peter M. Gorog, our Senior Vice President and General Manager, Priority Messenger,

•
    Raymond Low, the Senior Vice President and Managing Director of our subsidiary, Transaction Network Services (UK) Limited,

•
    Francis N. MacDonagh, the Senior Vice President for International Networks of our subsidiary, Transaction Network Services
    Limited,

•
    Alan Stephenson-Brown, the Vice President, Sales, Transaction Network Services (UK) Limited,

•
    Timothy J. Bell, the Chief Technology Officer, Transaction Network Services (UK) Limited,

•
    James T. McLaughlin, our Senior Vice President, Associate General Counsel and Assistant Secretary,

                                                             74
     •
              Jane Denise Low, the wife of Raymond Low, and

     •
              Karen Bell, the wife of Timothy J. Bell.

     Upon completion of our initial public offering, TNS Holdings, L.L.C. dissolved and its assets (which consisted entirely of our common
stock after our Class A redeemable convertible preferred stock plus accrued and unpaid dividends were converted into common stock in
connection with the initial public offering) were distributed to the GTCR Funds, Heller Financial, Inc., the members of Dunluce Investors III,
L.L.C. and the six executive officers named above in accordance with the limited liability company agreement and the dissolution agreement
described below.

     Pursuant to the limited liability company agreement, the assets of TNS Holdings, L.L.C. were distributed in the following order and
priority.

     •
              First, to the holders of preferred units, a proportionate amount equal to the total unpaid yield with respect to such securities;

     •
              Second , to the holders of preferred units, a proportionate amount equal to the total unreturned capital with respect to such
              securities; and

     •
              Third , to the holders of common units, all remaining amounts (pro rata according to such holder's ownership of common units
              immediately prior to such distribution).

      Upon this distribution, Messrs. McDonnell, Jr., Bates, H. Graham and Mudd received 1,122,609, 390,762, 346,479, and 372,310 shares of
our common stock, including shares held by them, their spouses and affiliates through Dunluce Investors III, L.L.C. and shares issued to them,
their spouses and affiliates through Dunluce III, L.L.C. upon conversion of Class A redeemable convertible preferred stock plus accrued and
unpaid dividends. Mr. Schwartz did not receive any shares of our common stock as part of this distribution.

    Presented below is the percentage ownership of preferred units and common units of the members of TNS Holdings L.L.C. as of
December 31, 2003.

                                                                                      % Ownership of         % Ownership of
Member of TNS Holdings L.L.C.                                                         Preferred Units        Common Units

GTCR Funds                                                                                         93.5 %                 79.5 %
Dunluce Investors III, L.L.C.                                                                       5.8                    4.9
John J. McDonnell, Jr.*                                                                              —                     4.0
Brian J. Bates*                                                                                      —                     2.5
Henry H. Graham, Jr.*                                                                                —                     2.5
John J. McDonnell III*                                                                               —                     2.5
Matthew M. Mudd*                                                                                     —                     2.5
Edward C. O'Brien*                                                                                   —                     1.0
Heller Financial, Inc.                                                                              0.7                    0.6


*
         excluding any shares beneficially held through their investments in Dunluce Investors III, L.L.C.



Dissolution Agreement

   On March 19, 2004, we entered into a dissolution agreement with TNS Holdings, L.L.C., the members of TNS Holdings, L.L.C. and the
members of Dunluce Investors III, L.L.C. relating to the:

     •
              conversion of our Class A redeemable convertible preferred stock plus accrued and unpaid dividends into shares of our common
              stock upon the closing of our initial public offering at the offering price,

                                                                          75
     •
            distribution of TNS Holdings, L.L.C.'s shares of our common stock to its members and the members of Dunluce Investors III,
            L.L.C., and

     •
            termination of the unit purchase agreement, the co-invest purchase agreement and the warrant agreement described below.

     Pursuant to the distribution priority provided for in the limited liability company agreement, as of December 31, 2003 the equity allocation
between the GTCR Funds on the one hand and the six executive officers named above and the members of Dunluce Investors III, L.L.C. on the
other hand was 85.7% and 13.6%.

Stock Purchase Agreement

     We entered into a stock purchase agreement dated as of April 3, 2001 with TNS Holdings, L.L.C. In connection with our initial public
offering and TNS Holdings, L.L.C.'s dissolution, we amended the stock purchase agreement to include the GTCR Funds.

     The stock purchase agreement provided that we were obligated to obtain the prior written consent of GTCR Fund VII, L.P. before taking
various actions, including:

     •
            subject to certain exceptions, issuing any equity securities or debt securities with equity features,

     •
            acquiring businesses, merging or consolidating with another entity,

     •
            selling, leasing or disposing of more than 15% of our consolidated assets (other than sales of inventory in the ordinary course of
            business),

     •
            liquidating, dissolving or effecting our recapitalization or reorganization,

     •
            entering into any transaction with any of our officers, directors, employees (or any of their relatives), affiliates or any entity in
            which any of the foregoing persons owns a beneficial interest,

     •
            amending our certificate of incorporation, bylaws or other agreements such that the number of authorized shares of our common
            stock would be increased or the rights of investors, including the GTCR Funds, would be impaired, or

     •
            taking any action with respect to the registration agreement described below.

      Prior to the completion of our initial public offering, the stock purchase agreement was amended to terminate the requirement that we
obtain the consent of GTCR Fund VII, L.P. before taking the various actions discussed immediately above. Pursuant to the amended stock
purchase agreement, the GTCR Funds are permitted to designate a representative to our governance and nominating committee and our
compensation committee so long as the GTCR Funds own at least 37.5% of the common stock that they owned immediately following our
initial public offering and there is no prohibition against a GTCR Fund designee serving on such committees under applicable law or under the
rules of the New York Stock Exchange. The amended stock purchase agreement also requires us to obtain the consent of the GTCR Funds
before issuing stock-based compensation to any of the six executive officers named above. The GTCR Funds' rights under this provision will
terminate when the GTCR Funds cease to own at least 37.5% of the common stock they owned immediately following our initial public
offering.

     The amended stock purchase agreement also obligates us to deliver to the GTCR Funds financial statements, reports by accountants and
an annual budget according to a specified schedule. The GTCR Funds may also inspect our properties, financial and corporate records as well
as question our directors, officers, key employees and independent accountants regarding our finances and affairs.

                                                                         76
Securityholders Agreement

   We were parties with the GTCR Funds, Heller Financial, Inc., Dunluce Investors III, L.L.C., the six executive officers named above, and
TNS Holdings, L.L.C. to a securityholders agreement dated as of April 3, 2001.

    The securityholders agreement provided:

    •
            that our board of directors will consist of three members designated by the GTCR Funds, three members of management and up to
            three members agreed upon by the GTCR Funds and management or, if agreement is not reached, by the GTCR Funds,

    •
            restrictions on the transferability of TNS Holdings, L.L.C. membership units,

    •
            TNS Holdings, L.L.C. unitholders with a right to participate in transfers by other unitholders,

    •
            rights of first refusal with respect to certain proposed sales by our officers who are a party to the agreement, first to the company,
            then to certain other parties to the agreement, and

    •
            that the parties to the securityholders agreement (and their transferees) agree to approve and, if requested, to sell their shares on the
            terms and conditions approved by our board of directors and the holders of a majority of our common stock.

    In connection with our initial public offering, the securityholders agreement was terminated.

Senior Management Agreements

     We have entered into senior management agreements with each of Messrs. McDonnell, Jr., Bates, H. Graham, McDonnell III, Mudd and
O'Brien. See "Management—Employment Contracts and Change of Control Arrangements" for a description of the senior management
agreements for Messrs. McDonnell, Jr., Bates, H. Graham and Mudd. Messrs. McDonnell III and O'Brien purchased 250 and 100 common
units of TNS Holdings, L.L.C., respectively, at a price of $100 per unit under substantially the same terms as those contained in the senior
management agreement of Mr. McDonnell, Jr. In connection with our initial public offering and the dissolution of TNS Holdings, L.L.C., the
senior management agreements were amended and restated, and Messrs. McDonnell III and O'Brien received a distribution of 309,576 and
123,830 shares of our common stock, all under substantially the same terms as described under "Management—Employment Contracts and
Change of Control Arrangements."

Purchase Agreements

     The following purchase agreements were entered into by TNS Holdings, L.L.C. on April 3, 2001. Each of these agreements were
terminated pursuant to the dissolution agreement.

     Pursuant to a unit purchase agreement, GTCR Fund VII, L.P., GTCR Fund VII/A, L.P., GTCR Co-Invest, L.P. and Heller Financial, Inc.
acquired preferred units and common units of TNS Holdings, L.L.C. for an aggregate purchase price of $126,222,632 and $777,468,
respectively, and GTCR Fund VII, L.P., GTCR Fund VII/A, L.P. and GTCR Co-Invest, L.P. committed, subject to certain conditions, to
purchase up to an additional $42,000,000 of equity securities of TNS Holdings, L.L.C. Heller Financial, Inc. committed to purchase up to an
additional $333,333 of equity securities of TNS Holdings, L.L.C. at such times as GTCR Fund VII, L.P., GTCR Fund VII/A, L.P. and GTCR
Co-Invest, L.P. made subsequent investments.

     Under the terms of a co-invest purchase agreement, Dunluce Investors III, L.L.C. acquired preferred units and common units of TNS
Holdings, L.L.C. for an aggregate purchase price of $7,951,032 and $48,968, respectively and committed to purchase up to an additional
$2,666,667 of

                                                                        77
equity securities of TNS Holdings, L.L.C. at such times as the GTCR Funds made subsequent investments pursuant to the unit purchase
agreement.

     Pursuant to a warrant agreement and in connection with loans made to TNS Holdings, L.L.C., GTCR Capital Partners, L.P. acquired
warrants, which were exercised, representing the right to purchase 3,842 preferred units and 235 common units of TNS Holdings, L.L.C., as
well as the right to purchase additional warrants for preferred units at such times that GTCR Capital Partners, L.P. made additional loans to
TNS Holdings, L.L.C.

     There were no subsequent purchases of securities under the unit purchase agreement, the co-invest purchase agreement or the warrant
agreement.

Registration Agreement

    We and the GTCR Funds, Heller Financial, Inc., the prior members of Dunluce Investors III, L.L.C. and Messrs. McDonnell, Jr., Bates,
H. Graham, McDonnell III, Mudd and O'Brien are parties to the Registration Agreement dated as of March 19, 2004. See "Description of
Capital Stock—Registration Rights."

Equity Sponsor's Investment in Syniverse Holdings, LLC

     Certain investment funds affiliated with GTCR Golder Rauner, L.L.C. are collectively the controlling stockholder of Syniverse
Technologies, Inc. We have done business with Syniverse in the past and expect to continue to do business with Syniverse in the future. For the
year ended December 31, 2003, we received approximately $2.2 million in payments from Syniverse and paid approximately $441,000 to
Syniverse for services received and provided in the ordinary course of business. Collin Roche, who serves as one of our directors, also serves
on the board of directors of Syniverse.

                                                                       78
                                                PRINCIPAL AND SELLING STOCKHOLDERS

     The following table sets forth, as of June 30, 2004, information with respect to the beneficial ownership of our common stock by:

     •
              each person known to us to beneficially own more than 5% of the outstanding shares of our common stock,

     •
              each director of TNS and each executive officer,

     •
              all directors and executive officers as a group, and

     •
              the selling stockholders.

     Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or
investment power with respect to the securities. Common stock subject to options that are currently exercisable or exercisable within 60 days of
June 30, 2004 are deemed to be outstanding and beneficially owned by the person holding such options. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of any other person.

   Percentage of beneficial ownership is based on shares of common stock outstanding as of June 30, 2004 and 27,978,953 shares of
common stock to be outstanding after the offering assuming no exercise of the underwriters' overallotment option.

     Unless otherwise indicated, each stockholder has sole voting and investment power with respect to the shares beneficially owned by the
stockholder and has the same address as TNS. Our address is 11480 Commerce Park Drive, Suite 600, Reston, Virginia 20191.

                                                     Shares Beneficially                             Shares Beneficially
                                                   Owned Prior to Offering                          Owned After Offering

                                                                                    Shares Being
                                                                                     Offered (3)

               Beneficial Owner                    Number            Percent                        Number           Percent

GTCR Fund VII, L.P. (1)(2)                         19,169,735                71.6      4,000,000    15,169,735             54.2
GTCR Fund VII/A, L.P. (1)(2)                       19,169,735                71.6      4,000,000    15,169,735             54.2
GTCR Co-Invest, L.P. (1)(2)                        19,169,735                71.6      4,000,000    15,169,735             54.2
GTCR Capital Partners, L.P. (1)(2)                 19,169,735                71.6      4,000,000    15,169,735             54.2
Heller Financial, Inc. (4)                            147,611                   *         30,801       116,810                *
John J. McDonnell, Jr. (5)                          1,122,609                 4.2        224,522       898,087              3.2
Brian J. Bates (6)                                    390,762                 1.5         78,152       312,610              1.1
Henry H. Graham, Jr. (7)                              346,479                 1.3         67,860       278,619              1.0
John J. McDonnell III (8)                             411,431                 1.5         82,286       329,145              1.2
Matthew M. Mudd (9)                                   372,310                 1.4         74,462       297,848              1.1
Alan R. Schwartz (10)                                   5,493                   *             —          5,493                *
Bruce V. Rauner (1)(2)                             19,169,735                71.6      4,000,000    15,169,735             54.2
Philip A. Canfield (1)(2)                          19,169,735                71.6      4,000,000    15,169,735             54.2
Collin E. Roche (1)(2)                             19,169,735                71.6      4,000,000    15,169,735             54.2
John B. Benton (10)(11)                                 5,442                   *             —          5,442                *
Stephen X. Graham (10)(12)                              4,911                   *             —          4,911                *
George G. Moore (10)(13)                                5,442                   *             —          5,442                *
Other selling stockholders as a group
(3 persons)                                           123,253                  *           24,238        99,015              *
Executive officers and directors as a
group (19 persons)                                 22,091,149                82.5      4,560,164    17,530,985             62.7


*
         Represents less than one percent.

                                                                              79
(1)
       Includes 12,901,227 shares of common stock held by GTCR Fund VII, L.P., 5,529,097 shares of common stock held by GTCR Fund
       VII/A, L.P., 168,734 shares of common stock held by GTCR Co-Invest, L.P. and 570,677 shares of common stock held by GTCR
       Capital Partners, L.P. Each of Messrs. Rauner, Canfield and Roche is a principal in GTCR Golder Rauner, L.L.C., which is the general
       partner of the general partner of GTCR Fund VII, L.P. and GTCR Fund VII/A, L.P., the general partner of GTCR Co-Invest, L.P. and
       the general partner of the general partner of the general partner of GTCR Capital Partners, L.P. Each of Messrs. Rauner, Canfield and
       Roche disclaim the beneficial ownership of the shares held by such entities except to the extent of his proportionate ownership interests
       therein.

(2)
       The address of each of GTCR Fund VII, L.P., GTCR Fund VII/A, L.P., GTCR Co-Invest, L.P., GTCR Capital Partners, L.P. and
       Messrs. Rauner, Canfield and Roche is c/o GTCR Golder Rauner, L.L.C., 6100 Sears Tower, Chicago, Illinois 60606.

(3)
       Excludes 316,810 shares of common stock subject to purchase by the underwriters under the over-allotment option.

(4)
       The address of Heller Financial, Inc. is 500 West Monroe Street, Chicago, Illinois 60661.

(5)
       Includes 55,354 shares of common stock owned by his spouse and 369,029 shares of common stock owned by McDonnell &
       Associates, L.P. Of the shares listed in the table, 173,362 shares are unvested under a senior management agreement between us and
       Mr. McDonnell, Jr.

(6)
       Includes 18,451 shares of common stock owned by his spouse. Of the shares listed in the table, 108,352 shares are unvested under a
       senior management agreement between us and Mr. Bates.

(7)
       Of the shares listed in the table, 108,352 shares are unvested under a senior management agreement between us and Mr. H. Graham.

(8)
       Of the shares listed in the table, 108,352 shares are unvested under a senior management agreement between us and Mr. McDonnell III.

(9)
       Includes 18,451 shares of common stock owned by his spouse. Of the shares listed in the table, 108,352 shares are unvested under a
       senior management agreement between us and Mr. Mudd.

(10)
       Represents shares issuable upon exercise of options currently exercisable or exercisable within 60 days.

(11)
       The address for Mr. Benton is c/o Benton Consulting Partners, 655 Deep Valley Drive, Suite 120, Rolling Hills Estates, California
       90274.

(12)
       The address for Mr. Stephen X. Graham is c/o Crosshill Financial Group, Inc., 1000 Wilson Blvd. Suite 1850, Arlington, Virginia
       22209.

(13)
       The address for Mr. Moore is c/o TARGUS Information Corporation, 8010 Towers Crescent Drive, 5th Floor, Vienna, Virginia 22182.

                                                                      80
                                                     DESCRIPTION OF CAPITAL STOCK

     Our authorized capital stock consists of 130,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of
preferred stock, $0.001 par value per share.

      The following is a summary of the rights of our common stock and preferred stock. This summary is not complete. For more detailed
information, please see our certificate of incorporation which is filed as an exhibit to the registration statement of which this prospectus is a
part.

Common Stock

     As of June 30, 2004, there were 26,778,953 shares of common stock outstanding held by stockholders and options outstanding to purchase
1,140,536 shares of common stock and 304,000 shares of common stock issuable to executives and employees upon vesting under our stock
compensation plans.

     Dividend rights. Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding
shares of common stock are entitled to receive dividends out of assets legally available at the times and in the amounts as our board of directors
may from time to time determine.

     Voting rights. Each common stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of
stockholders. Cumulative voting for the election of directors is not provided for in our certificate of incorporation, which means that the holders
of a majority of the shares voted can elect all of the directors then standing for election. Our first annual meeting of stockholders following the
offering will be held in 2005.

     No preemptive or similar rights. Our common stock is not entitled to preemptive rights and is not subject to conversion or redemption.

      Right to receive liquidation distributions. Upon our liquidation, dissolution or winding-up, the assets legally available for distribution to
our stockholders are distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time
after payment of liquidation preferences, if any, on any outstanding preferred stock and payment of other claims of creditors. Each outstanding
share of common stock is, and all shares of common stock to be outstanding upon completion of this offering will be, fully paid and
nonassessable.

Preferred Stock

     We are authorized, subject to the limits imposed by the Delaware General Corporation Law, to issue up to 5,000,000 shares of preferred
stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the rights, preferences and
privileges of the shares of each wholly unissued series and any of its qualifications, limitations and restrictions. Our board of directors can also
increase or decrease the number of shares of any series, but not below the number of shares of that series then outstanding, without any further
vote or action by our stockholders.

     Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that affect adversely the voting
power or other rights of our common stockholders. The issuance of preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of delaying, deferring or preventing our change in control and may cause the
market price of our common stock to decline or impair the voting and other rights of the holders of our common stock. We have no current
plans to issue any shares of preferred stock.

                                                                         81
Registration Rights

     In connection with our initial public offering and the dissolution of TNS Holdings, L.L.C, we entered into an amended and restated
registration agreement dated March 19, 2004 with the GTCR Funds, Heller Financial, Inc., the prior members of Dunluce Investors III, L.L.C.
and Messrs. McDonnell, Jr., Bates, H. Graham, McDonnell III, Mudd and O'Brien. The amended and restated registration agreement grants the
holders of a majority of the shares of our common stock that are registrable under the registration agreement, whom we refer to as the majority
stockholders, the right, at any time, to demand that we file a registration statement with the Securities and Exchange Commission to register all
or part of their shares of common stock. Subject to certain limitations, we are obligated to effect an unlimited number of long-form and
short-form registrations upon the majority stockholders' demand, for which we will be required to pay the registration expenses.

      In addition, if we propose to register securities for our own account, the stockholders who are parties to the registration agreement may be
entitled to include their shares in that registration. All of these registration rights are subject to conditions and limitations, which include our
right or the right of the underwriters of an offering to limit the number of shares included in a registration under some circumstances.

Antitakeover Effects of Delaware Law and Provisions of Our Certificate of Incorporation and Bylaws

Delaware takeover statute

    We are subject to Section 203 of the Delaware General Corporation Law. This statute regulating corporate takeovers prohibits a Delaware
corporation from engaging in any business combination with any interested stockholder for three years following the date that the stockholder
became an interested stockholder, unless:

     •
            prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the
            transaction which resulted in the stockholder becoming an interested stockholder,

     •
            the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction
            commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are
            directors and also officers and (b) shares owned by employee stock plans in which employee participants do not have the right to
            determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or

     •
            on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or
            special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the outstanding voting
            stock which is not owned by the interested stockholder.



     Section 203 defines a business combination to include:

     •
            any merger or consolidation involving the corporation and the interested stockholder,

     •
            any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation,

     •
            subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to
            the interested stockholder, or

     •
            the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits
            provided by or through the corporation.

                                                                         82
     In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding
voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

Certificate of incorporation and bylaw provisions

      Provisions of our certificate of incorporation and bylaws may have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of our company. These provisions could cause the price of our common stock to
decrease. Some of these provisions allow us to issue preferred stock without any vote or further action by the stockholders and eliminate the
right of stockholders to act by written consent without a meeting. These provisions may make it more difficult for stockholders to take specific
corporate actions and could have the effect of delaying or preventing a change in our control. The amendment of any of these provisions would
require approval by holders of at least two-thirds of the outstanding common stock.

Transfer Agent and Registrar

     The transfer agent and registrar for our common stock is Wachovia Bank, N.A.

New York Stock Exchange Listing

     Our common stock is listed on the New York Stock Exchange under the symbol "TNS."

                                                                        83
                                                    SHARES ELIGIBLE FOR FUTURE SALE

     Future sales of substantial amounts of common stock in the public market after the offering, or the perception that such sales could occur,
could adversely affect the market price of our common stock.

     Upon completion of this offering, we will have outstanding 27,978,953 shares of common stock, including the issuance of
1,200,000 shares of common stock offered by us and assuming no exercise of options outstanding after June 30, 2004. All of the
5,815,203 shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act.

     17,743,023 shares of common stock were issued and sold by us in reliance on exemptions from the registration requirements of the
Securities Act. Of these shares, 17,692,474 will be subject to lock-up agreements, described below, on the date of this prospectus. Upon
expiration of the lock-up agreements, these shares will be eligible for sale pursuant to Rule 144(k) and Rule 144.

                                                          Approximate
                                                        number of shares
                                                           eligible for
Relevant dates                                             future sale                          Comment

On the date of this prospectus                                 10,235,203       Freely tradeable shares sold in this
                                                                                offering and our initial public offering
90 days after the date of this prospectus                      27,978,953       All shares subject to lock-up agreements
                                                                                released; shares saleable under Rules 144
                                                                                and 144(k)

Rule 144

    In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of our common stock for at least one year
would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

     •
                 1% of the number of shares of common stock then outstanding, which will equal approximately 279,790 shares immediately after
                 this offering, or

     •
                 the average weekly trading volume of the common stock on the New York Stock Exchange during the four calendar weeks
                 preceding the filing of a notice on Form 144 with respect to such sale.

     Sales under Rule 144 are also subject to other requirements regarding the manner of sale, notice filing and the availability of current
public information about us.

Rule 144(k)

     Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale,
and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than
an affiliate, is entitled to sell such shares without complying with the manner of sale, notice filing, volume limitation or notice provisions of
Rule 144. Therefore, unless otherwise restricted, "144(k) shares" may be sold immediately upon the completion of this offering. The Securities
Act defines affiliates to be persons that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under
common control with, TNS, Inc. These persons typically include our executive officers and directors.

                                                                           84
Registration Agreement

     In connection with our initial public offering and the dissolution of TNS Holdings, L.L.C., we entered into an amended and restated
registration agreement with the GTCR Funds, Heller Financial, Inc., the members of Dunluce Investors III, L.L.C. and the six executive
officers. The amended and restated registration agreement grants the holders of a majority of our common stock that are registrable under the
registration agreement, whom we refer to as the majority shareholders, the right, at any time, to demand that we file a registration statement
with the Securities and Exchange Commission to register all or part of their shares of common stock. Subject to certain limitations, we are
obligated to effect an unlimited number of long-form and short-form registrations upon the majority shareholders' demand, for which we will
be required to pay the registration expenses.

      In addition, if we propose to register securities for our own account, the stockholders who are parties to the registration agreement may be
entitled to include their shares in that registration. All of these registration rights are subject to conditions and limitations, which include our
right or the right of the underwriters of an offering to limit the number of shares included in a registration under some circumstances.

Stock Options

      We have filed a registration statement under the Securities Act of 1933 covering the shares of common stock reserved for issuance upon
exercise of options under our 2001 Founders' Stock Option Plan and our 2004 Long-Term Incentive Plan. Accordingly, shares registered under
the registration statement are available for sale in the open market except with respect to Rule 144 volume limitations that apply to our
affiliates.

Lock-up Agreements

      We, all of our directors and executive officers and the selling stockholders have agreed that, without the prior written consent of Lehman
Brothers Inc., we and they will not, subject to some exceptions, directly or indirectly, offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of any common stock or any securities which may be converted into or exchanged for any common stock or enter
into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock for a
period of 90 days from the date of this prospectus other than permitted transfers.

                                                                          85
                                                               UNDERWRITING

     Under the terms of an underwriting agreement, which is filed as an exhibit to the registration statement relating to this prospectus, each of
the underwriters named below, for whom Lehman Brothers Inc., J.P. Morgan Securities Inc., William Blair & Company, L.L.C., and SunTrust
Capital Markets, Inc. are acting as representatives, have severally agreed to purchase from us and the selling stockholders the respective
number of shares of common stock opposite their names below:

                           Underwriters                                                                  Number of shares

                           Lehman Brothers Inc.                                                               2,907,602
                           J.P. Morgan Securities Inc.                                                        1,453,801
                           William Blair & Company, L.L.C.                                                      726,900
                           SunTrust Capital Markets, Inc.                                                       726,900

                           Total                                                                              5,815,203

     The underwriting agreement provides that the underwriters' obligations to purchase shares of common stock depends on the satisfaction of
the conditions contained in the underwriting agreement, including:

     •
            the representations and warranties made by us and the selling stockholders to the underwriters are true,

     •
            there is no material change in the financial markets, and

     •
            we deliver customary closing documents to the underwriters.

Over-Allotment Option

      We and the selling stockholders have granted to the underwriters an option to purchase up to an aggregate of 872,280 shares of common
stock (555,470 shares from us and 316,810 shares from the selling stockholders), exercisable to cover over-allotments, at the public offering
price less underwriting discounts shown on the cover page of this prospectus. The underwriters may exercise this option at any time, and from
time to time, until 30 days after the date of the underwriting agreement. To the extent that this option is exercised, each underwriter will be
committed, so long as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock
proportionate to that underwriter's initial commitment as indicated in the preceding table, and we and the selling stockholders will be obligated
to sell the additional shares of common stock to the underwriters.

Commissions and Expenses

     The following table summarizes the underwriting discounts and commissions to be paid to the underwriters by us and the selling
stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters' overallotment option to purchase
872,280 additional shares. The underwriting fee is the difference between the public offering price and the amount the underwriters pay to
purchase the shares from us.

                                                                                               No exercise   Full exercise

                           Paid by us
                           Paid by the selling stockholders

      The underwriters have advised us that they propose to offer the shares of common stock directly to the public at the public offering price
presented on the cover page of this prospectus, and to selected dealers, who may include the underwriters, at the public offering price less a
selling concession

                                                                        86
not in excess of $        per share. After the offering, the underwriters may change the offering price and other selling terms.

     We estimate that the total expenses of the offering, including registration, filing fees, printing fees and legal and accounting fees, but
excluding underwriting discounts, will be approximately $1.2 million. The expenses of the offering are payable by us.

Lock-Up Agreements

      We, all of our directors and executive officers and the selling stockholders have agreed that, without the prior written consent of Lehman
Brothers Inc., we and they will not, subject to some exceptions, directly or indirectly, offer, pledge, announce the intention to sell, sell, contract
to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of any common stock or any securities which may be converted into or exchanged for any common stock or enter
into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock for a
period of 90 days from the date of this prospectus other than permitted transfers.

Indemnification

      We and the selling stockholders have agreed to indemnify the underwriters against liabilities, including liabilities under the Securities Act,
and liabilities arising from breaches of representations and warranties contained in the underwriting agreement and to contribute to payments
that the underwriters may be required to make for these liabilities.

Stabilization, Short Positions and Penalty Bids

      The representatives may engage in over-allotment, stabilizing transactions, syndicate covering transactions, and penalty bids or purchases
for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Securities
Exchange Act of 1934:

     •
             Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to
             purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short
             position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of
             shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than
             the number of shares in the over-allotment option. The underwriters may close out any short position by either exercising their
             over-allotment option and/or purchasing shares in the open market;

     •
             Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
             maximum;

     •
             Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been
             completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the
             underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the
             price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be
             covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open
             market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward
             pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the
             offering; and

                                                                          87
     •
            Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the common stock originally
            sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

     These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market
price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common
stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the New York Stock
Exchange or otherwise and, if commenced, may be discontinued at any time.

     Neither we or the selling stockholders nor any of the underwriters make any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of the common stock. In addition, neither we or the selling
stockholders nor any of the underwriters make representation that the representatives will engage in these stabilizing transactions or that any
transaction, once commenced, will not be discontinued without notice.

Electronic Distribution

     A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more
of the underwriters and/or selling group members participating in this offering, or by their affiliates, including Lehman Brothers Inc. In those
cases, prospective investors may view the preliminary prospectus and the final prospectus online and, depending upon the particular
underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to
allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by
the representatives on the same basis as other allocations.

     Other than the prospectus in electronic format, the information on any underwriter's or selling group member's website and any
information contained in any other website maintained by an underwriter or selling group member is not part of the prospectus or the
registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter or selling group
member in its capacity as underwriter or selling group member and should not be relied upon by investors. The underwriters and selling group
members are not responsible for information contained in web sites that they do not maintain.

Stamp Taxes

     If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the
laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

Relationships

     The underwriters have performed and may in the future perform investment banking and advisory services for us from time to time for
which they have received or may in the future receive customary fees and expenses. The underwriters may, from time to time, engage in
transactions with or perform services for us in the ordinary course of their business.

                                                                       88
                                                              LEGAL MATTERS

      The validity of the common stock offered hereby will be passed upon for us by Arent Fox PLLC, Washington, D.C. Various legal matters
relating to the offering will be passed upon for the underwriters by Gibson, Dunn & Crutcher LLP, New York, New York.


                                                                   EXPERTS

     The consolidated financial statements of TNS, Inc. (formerly TNS Holdings, Inc.) at December 31, 2002 and 2003, and for the period
from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and 2003 and the consolidated financial statements of
Transaction Network Services, Inc. (formerly PSINet Transaction Solutions, Inc.) for the period from January 1, 2001 through April 2, 2001,
appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting
firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of
such firm as experts in accounting and auditing.

                                                                       89
                                             WHERE YOU CAN FIND MORE INFORMATION

      We have filed with the SEC a registration statement on Form S-1 under the Securities Act that registers the shares of our common stock to
be sold in this offering. The registration statement, including the attached exhibits and schedules, contain additional relevant information about
us and our capital stock. The rules and regulations of the SEC allow us to omit various information included in the registration statement from
this document.

     In addition, we are subject to the reporting and information requirements of the Securities Exchange Act of 1934 and, as a result, file
periodic reports, proxy statements and other information with the SEC. You may read and copy this information at the public reference room of
the SEC at 450 Fifth Street, N.W., Room 1024, Washington, DC 20549. You may also obtain copies of this information by mail from the
public reference section of the SEC, 450 Fifth St., N.W., Room 1024, Washington, DC 20549, at prescribed rates. You may obtain information
on the operation of the public reference rooms by calling the SEC at (800) SEC-0330.

     The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers like us who file
electronically with the SEC. The address of that website is http://www.sec.gov.

     Our common stock is listed on the New York Stock Exchange. You may also read our reports, proxy statements and other information at
the offices of the New York Stock Exchange, 20 Broad Street, New York, NY 10005.

                                                                        90
                                   INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

TNS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
As of December 31, 2003 and June 30, 2004
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the six months ended June 30, 2003 and 2004
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30, 2003 and 2004
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED BALANCE SHEETS
  As of December 31, 2002 and 2003

CONSOLIDATED STATEMENTS OF OPERATIONS
  For the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and
  2003

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
  For the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and
  2003

CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and
  2003

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TRANSACTION NETWORK SERVICES, INC. (Predecessor #1, Formerly PSINet Transaction
Solutions, Inc.)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

CONSOLIDATED STATEMENT OF OPERATIONS
  For the period from January 1, 2001 through April 2, 2001

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
  For the period from January 1, 2001 through April 2, 2001

CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from January 1, 2001 through April 2, 2001

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the six months ended June 30, 2004 and the year ended December 31, 2003

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of June 30, 2004

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

                                                                 F-1
                                                                     TNS, INC.
                                              CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (dollars in thousands, except share and per share amounts)

                                                                                                          December 31,              June 30,
                                                                                                              2003                   2004

                                                                                                                                   (unaudited)


ASSETS
Current assets:
  Cash and cash equivalents                                                                          $              11,074     $          12,413
  Accounts receivable, net of allowance for doubtful accounts of $4,313 and $4,503,
  respectively                                                                                                      41,490                46,553
  Other current assets                                                                                               7,457                 8,804

      Total current assets                                                                                          60,021                67,770

Property and equipment, net                                                                                         45,745                44,453
Identifiable intangible assets, net                                                                                223,919               218,764
Goodwill                                                                                                             4,453                 4,453
Other assets                                                                                                         8,221                 8,858

      Total assets                                                                                   $             342,359     $         344,298


LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
  Current portion of long-term debt                                                                  $              28,731     $          11,500
  Accounts payable, accrued expenses and other current liabilities                                                  42,072                38,495
  Deferred revenue                                                                                                   7,320                 9,801

      Total current liabilities                                                                                     78,123                59,796

Long-term debt, net of current portion                                                                             121,664                69,510
Other liabilities                                                                                                    3,614                 4,401

      Total liabilities                                                                                            203,401               133,707

Commitments and contingencies
Class A redeemable convertible preferred stock, $0.01 par value; 5,000,000 shares authorized;
134,846 shares issued and outstanding as of December 31, 2003, and no shares issued or
outstanding as of June 30, 2004                                                                                    176,470                       —
Stockholders' (deficit) equity:
   Common stock, $0.001 par value; 130,000,000 shares authorized; 12,373,370 and
   26,778,953 shares issued and outstanding, respectively                                                               12                    27
   Additional paid-in capital                                                                                        2,277               259,032
   Accumulated deficit                                                                                             (38,889 )             (42,513 )
   Deferred stock compensation                                                                                        (173 )              (5,248 )
   Accumulated other comprehensive loss                                                                               (739 )                (707 )

      Total stockholders' (deficit) equity                                                                         (37,512 )             210,591

      Total liabilities and stockholders' (deficit) equity                                           $             342,359     $         344,298


                                  See accompanying notes to condensed consolidated financial statements (unaudited).

                                                                         F-2
                                                           TNS, INC.
                         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                                  (dollars in thousands, except share and per share amounts)

                                                                                                 Six months ended
                                                                                                     June 30,

                                                                                          2003                      2004

Revenues                                                                           $          104,750 $                121,096
Operating expenses:
  Cost of network services, exclusive of the items shown separately below                        57,413                    59,825
  Engineering and development                                                                     5,969                     6,932
  Selling, general, and administrative                                                           18,626                    23,825
  Depreciation and amortization of property and equipment                                         9,606                     9,756
  Amortization of intangible assets                                                              12,571                    14,705

       Total operating expenses                                                               104,185                  115,043

Income from operations                                                                              565                     6,053
Interest expense                                                                                 (5,821 )                  (5,437 )
Interest income                                                                                      76                        86
Other income (expense), net                                                                       1,382                      (168 )

(Loss) income before income taxes and equity in net loss of unconsolidated
affiliate                                                                                        (3,798 )                    534
Income tax benefit (provision)                                                                      348                     (630 )
Equity in net loss of unconsolidated affiliate                                                       —                       (98 )

Net loss                                                                                         (3,450 )                    (194 )
Dividends on preferred stock                                                                     (7,284 )                  (3,428 )

Net loss attributable to common stockholders                                       $          (10,734 ) $                  (3,622 )

Basic and diluted net (loss) income per common share                               $              (0.87 ) $                 (0.17 )

Basic and diluted weighted average common shares outstanding                               12,373,316               20,842,355


                               See accompanying notes to condensed consolidated financial statements (unaudited).

                                                                      F-3
                                                    TNS, INC.
                        CONDENDSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                              (dollars in thousands)

                                                                                          Six months ended June 30,

                                                                                         2003                  2004

Cash flows from operating activities:
Net loss                                                                             $     (3,450 )     $             (194 )
Adjustments to reconcile net loss to net cash provided by operating activities:
  Depreciation and amortization of property and equipment                                  9,606                   9,756
  Amortization of intangible assets                                                       12,571                  14,705
  Deferred income tax benefit                                                               (526 )                (1,728 )
  Loss on disposal of property and equipment                                                  (4 )                    —
  Amortization and write-off of deferred financing costs                                   1,015                   2,723
  Equity in net loss of unconsolidated affiliate                                              —                       98
  Stock compensation                                                                          53                     438
Changes in operating assets and liabilities, net of effect of acquisitions:
  Accounts receivable, net                                                                  1,884                 (5,062 )
  Other current and noncurrent assets                                                      (2,827 )                 (438 )
  Accounts payable, accrued expenses and other current and noncurrent liabilities             118                 (2,947 )
  Deferred revenue                                                                          2,346                  2,231

     Net cash provided by operating activities:                                           20,786                  19,582

Cash flows from investing activities:
  Purchases of property and equipment                                                      (7,264 )               (8,204 )
  Purchase of Synapse assets from USWD                                                         —                  (6,077 )
  Purchase of vending assets from USWD                                                         —                  (3,748 )
  Investment in affiliated entity                                                            (100 )                 (100 )
  Purchase of Openet S.r.l., net of cash acquired                                          (1,985 )                   —

     Net cash used in investing activities:                                                (9,349 )              (18,129 )

Cash flows from financing activities:
  Proceeds from issuance of long-term debt, net of financing costs of $1,979                   —                 84,531
  Repayment of long-term debt                                                              (6,991 )            (155,896 )
  Payment of refinancing costs                                                               (588 )                  —
  Payment of dividends on preferred stock                                                      —                   (173 )
  Proceeds from stock option exercises                                                         14                    16
  Proceeds from issuance of common stock, net                                                  —                 71,516

     Net cash used in financing activities:                                                (7,565 )                      (6 )

Effect of exchange rates on cash and cash equivalents                                        (700 )                   (108 )

Net increase in cash and cash equivalents                                                   3,172                  1,339
Cash and cash equivalents, beginning of period                                              5,984                 11,074

Cash and cash equivalents, end of period                                             $      9,156       $         12,413

Supplemental disclosures of cash flow information:
  Cash paid for interest                                                             $      5,146       $             3,397

  Cash paid for income taxes                                                         $          159     $             2,832


                             See accompanying notes to condensed consolidated financial statements (unaudited).

                                                                     F-4
                      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   Description of Business and Basis of Presentation

      TNS, Inc. (TNS or the Company, formerly TNS Holdings, Inc.) is a Delaware corporation. On October 30, 2003, the Company changed
its name to TNS, Inc.

     TNS is a leading provider of business-critical data communications services to processors of credit card, debit card and automated teller
machine (ATM) transactions. TNS is also a leading provider of call signaling and database access services to the domestic telecommunications
industry and of secure data and voice network services to the global financial services industry. TNS' data communication services enable
secure and reliable transmission of time-sensitive, transaction-related information critical to its customers' operations. The Company's
customers outsource their data communication requirements to TNS because of the Company's expertise, comprehensive customer support, and
cost-effective services. TNS provides services to customers in the United States and increasingly to international customers in 12 countries,
including Canada and countries in Europe and the Asia-Pacific region.

     The Company provides its services through its multiple data networks, each designed specifically for transaction applications. These
networks support a variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods,
including dial-up, dedicated, wireless and Internet connections.

     The Company has four business divisions: (1) the point-of-sale/point-of-service (POS) division, which provides data communications
services to payment processors in the U.S. and Canada, (2) the telecommunication services division (TSD), which provides call signaling
services and database access services targeting primarily the telecommunications industry, (3) the financial services division (FSD), which
provides, primarily to the financial services community, data networking services in support of the Financial Information eXchange (FIX)
messaging protocol and other transaction-oriented trading applications, and (4) the international services division (ISD), which markets the
Company's POS and financial services in countries outside of the United States and Canada.

     On March 15, 2004, the Company declared a 1-for-7.84 reverse stock split. Accordingly, all share and per share amounts have been
retroactively adjusted to give effect to this event.

    The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted
accounting principles (GAAP) for interim financial information and in conjunction with the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and note disclosures normally included in the annual financial statements, required by
GAAP, have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading.

      In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all necessary adjustments
(all of which are of a normal and recurring nature) that are necessary for fair presentation for the periods presented. The results of operations
for the six months ended June 30, 2004 are not necessarily indicative of the results to be expected for any subsequent interim period or for the
fiscal year. It is suggested that these unaudited condensed consolidated financial statements be read in conjunction with the Company's
historical consolidated financial statements together with the related notes thereto, which are included elsewhere in this prospectus.

Use of Estimates

     The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of certain assets and liabilities and

                                                                       F-5
disclosure of contingent assets and liabilities at the date of the financial statements. Significant estimates affecting the consolidated financial
statements include management's judgments regarding the allowance for doubtful accounts, reserves for excess and obsolete inventories, future
cash flows from long-lived assets, and accrued expenses for probable losses. Actual results could differ from those estimates.

Revenue Recognition

      The Company recognizes revenue when persuasive evidence of an agreement exists, the terms are fixed and determinable, services are
performed, and collection is probable. Cash received in advance of revenue recognition is recorded as deferred revenue. POS services revenue
is derived primarily from per transaction fees paid by the Company's customers for the transmission of transaction data, through the Company's
networks, between payment processors and POS or ATM terminals. TSD revenue is derived primarily from fixed monthly fees for call
signaling services and per query fees charged for database access and validation services. FSD revenue is derived primarily from monthly
recurring fees based on the number of customer connections to and through the Company's networks. Incentives granted to new customers or
upon contract renewals are deferred and recognized ratably as a reduction of revenue over the contract period to the extent that the incentives
are recoverable against the customer's minimum purchase commitments under the contract. In addition, the Company receives installation fees
related to the configuration of the customers' systems. Revenue from installation fees is deferred and recognized ratably over the customer's
contractual service period, generally three years.

Cost of Network Services

      Cost of network services is comprised primarily of telecommunications charges, which include data transmission and database access
charges, leased digital capacity charges, circuit installation charges and activation charges. The cost of data transmission is based on a contract
or tariff rate per minute of usage in addition to a prescribed rate per transaction for certain vendors. The costs of database access, circuits,
installation and activation charges are based on fixed fee contracts with local exchange carriers and interexchange carriers. The cost of network
services also includes salaries, equipment maintenance and other costs related to the ongoing operation of the Company's data networks. These
costs are expensed by the Company as incurred. Direct costs of installations are deferred and amortized over three years. The Company records
its accrual for telecommunication charges based upon network services utilized at historical invoiced rates. Depreciation expense on network
equipment and amortization of developed technology are excluded from cost of network services and included in depreciation and amortization
of property and equipment and amortization of intangible assets in the condensed consolidated statements of operations.

2.   Initial Public Offering

     In March 2004, the Company completed its initial public offering (IPO) of common stock and issued 4,420,000 shares of common stock at
$18.00 per share, which generated proceeds, net of offering costs, of approximately $71.5 million. The net proceeds of the IPO were used to
repay a portion of the Company's long-term debt outstanding under its previous senior secured credit facility.

     Upon the completion of the IPO, all of the outstanding shares of the Company's Class A redeemable convertible preferred stock (Class A
Preferred Stock), including accrued and unpaid dividends, was converted into 9,984,711 shares of common stock.

                                                                        F-6
3.   Acquisitions and Long-term Investment

Acquisitions of Synapse and Vending Assets

     On May 21, 2004, the Company purchased two groups of tangible and intangible assets from the bankrupt U.S. Wireless Data, Inc.
(USWD). Pursuant to two separate asset purchase agreements, the Company, with the approval of the bankruptcy court, (a) paid cash of
approximately $6.1 million, including direct acquisition costs of approximately $0.1 million for certain assets related to USWD's Synapse
platform, which enables wireless POS terminals to initiate transactions for mobile and other merchants and (b) paid cash of approximately
$3.7 million, including direct acquisition costs of approximately $47,000 for USWD's vending assets, which support cashless transactions at
vending machines. The Company purchased these assets to advance the Company's wireless capability to service existing customers as well as
to penetrate new vertical markets.

     The purchase price for the Synapse assets was allocated as follows (in thousands):

                       Property and equipment                                                              $       214
                       Customer relationships                                                                    4,095
                       Developed technology                                                                      1,438
                       Trade name                                                                                  345
                       Other liabilities                                                                           (15 )

                            Net assets acquired                                                            $     6,077


     The purchase price for the vending assets was allocated as follows (in thousands):

                       Property and equipment                                                              $        82
                       Customer relationship                                                                       831
                       Developed technology                                                                      2,292
                       Trade name                                                                                  548
                       Other liabilities                                                                            (5 )

                           Net assets acquired                                                             $     3,748


    The amounts allocated to the Synapse and vending intangible assets are being amortized over their estimated useful lives of five years.
Unaudited pro forma results of operations are not provided because the historical operating results were not significant and pro forma results
would not be significantly different from reported results for the periods presented. The Company's results of operations for the six months
ended June 30, 2004 include the operating results of these acquisitions from May 21, 2004 through June 30, 2004.

Long-term Investment

     In April 2003, TNS made an investment in a company that provides wireless Internet access to recreational vehicle parks. TNS purchased
3.2 percent of the company's common shares for $0.1 million and obtained representation on the company's board of directors. In July 2003,
TNS entered into an agreement to provide services to the company and, as consideration, received stock valued at $0.3 million for an additional
7.9 percent of the company's common shares. In May 2004, TNS' investment in common shares was converted into 13.1 percent of the
company's Series A preferred shares. In May 2004, TNS also made an additional $0.1 million investment to purchase 3.7 percent of the
company's Series A preferred shares and the company exercised its right under the existing services agreement to receive additional services
from TNS valued at $0.3 million in exchange for 9.4 percent of the company's Series A preferred shares. As of June 30, 2004, TNS owns
26.2 percent of the company's Series A preferred shares and 20.9 percent of the company's total outstanding shares. The Series A

                                                                      F-7
preferred shares have voting rights on an as converted basis into the company's common shares. The Company is accounting for its investment
under the equity method of accounting. For the six months ended June 30, 2004, the Company recognized a net loss in the equity of an
unconsolidated affiliate of approximately $98,000.

4.   Long-term Debt

     Debt consists of the following (in thousands):

                                                                                          December 31,                June 30,
                                                                                              2003                     2004

                   Prior Term A Loan                                                  $            10,314         $           —
                   Prior Term B Loan                                                              140,081                     —
                   Term Loan                                                                           —                  59,500
                   Revolving Credit Facility                                                           —                  21,510

                                                                                                  150,395                 81,010
                   Less: Current portion                                                          (28,731 )              (11,500 )

                   Long-term portion                                                  $           121,664         $       69,510


    On March 19, 2004, the Company entered into a senior secured credit facility (the Credit Facility) to replace its prior credit facility. The
Credit Facility consists of a $65.0 million term loan (Term Loan) and a revolving credit facility of $30.0 million (Revolving Credit Facility).
The Credit Facility matures March 19, 2009. Payments on the Term Loan are due in quarterly installments over the five-year term, beginning
on March 31, 2004. Total payments for each year are as follows (in thousands):

                        Year 1                                                                                $        11,000
                        Year 2                                                                                         12,000
                        Year 3                                                                                         13,000
                        Year 4                                                                                         14,000
                        Year 5                                                                                         15,000

                                                                                                              $        65,000

      For the period through June 30, 2004, borrowings on the Revolving Credit Facility and the Term Loan bore interest at a rate of
2.50 percent over the LIBOR rate (3.78 percent as of June 30, 2004). Thereafter, if the Company achieves a leverage ratio of less than one, the
borrowings on the Revolving Credit Facility and the Term Loan generally will bear interest at a rate, at the Company's option, of either
0.75 percent over the lender's base rate or 2.0 percent over the LIBOR rate. If the Company achieves a leverage ratio of less than 1.5 but more
than or equal to one, the borrowings on the Revolving Credit Facility and the Term Loan generally will bear interest at a rate, at the Company's
option, of either 1.0 percent over the lender's base rate or 2.25 percent over the LIBOR rate. If the Company achieves a leverage ratio of less
than 2.2 but more than or equal to 1.5, the borrowings on the Revolving Credit Facility and the Term Loan generally will bear interest at a rate,
at the Company's option, of either 1.25 percent over the lender's base rate or 2.5 percent over the LIBOR rate. The Company's leverage ratio as
of June 30, 2004 was 1.3 to 1.0. The Revolving Credit Facility is subject to an annual commitment fee in an amount equal to 0.5 percent per
annum multiplied by the amount of funds available for borrowing under the Revolving Credit Facility. Interest payments on the Credit Facility
are due monthly, bimonthly, or quarterly at the Company's option.

     The terms of the Credit Facility require the Company to comply with financial and nonfinancial covenants, including maintaining certain
leverage, interest and fixed charge coverage ratios at the end of each fiscal quarter. As of June 30, 2004, the Company is required to maintain a
leverage ratio of less

                                                                       F-8
than 2.2 to 1.0, an interest coverage ratio of greater than 5.0 to 1.0 and a fixed charge ratio of greater than 1.5 to 1.0. Certain of the financial
covenants will become more restrictive over the term of the Credit Facility. The Credit Facility also contains nonfinancial covenants that
restrict some of the Company's corporate activities, including the Company's ability to dispose of assets, incur additional debt, pay dividends,
create liens, make investments, make capital expenditures and engage in specified transactions with affiliates. The Company's future results of
operations and its ability to comply with the covenants could be adversely impacted by increases in the general level of interest rates since the
interest on a majority of the Company's debt is variable. Noncompliance with any of the financial or nonfinancial covenants without cure or
waiver would constitute an event of default under the Credit Facility. An event of default resulting from a breach of a financial or nonfinancial
covenant may result, at the option of the lenders, in an acceleration of the principal and interest outstanding, and a termination of the Revolving
Credit Facility. The Credit Facility also contains other customary events of default (subject to specified grace periods), including defaults based
on events of bankruptcy and insolvency, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control
and material inaccuracy of representations and warranties. The Company was in compliance with the financial and nonfinancial covenants of
the Credit Facility as of June 30, 2004.

     In connection with the closing of the Credit Facility, the Company incurred approximately $2.0 million in financing costs. These financing
costs were deferred and are being amortized using the effective interest method over the life of the Credit Facility. In connection with the
termination of the prior credit facility in March 2004, the Company wrote-off approximately $2.0 million in unamortized deferred financing
costs related to the prior credit facility. Such write-off has been included in interest expense in the accompanying condensed consolidated
statement of operations for the six months ended June 30, 2004.

5.   Comprehensive Loss

     The components of comprehensive loss, net of tax effect are as follows (in thousands):

                                                                                                  Six months ended
                                                                                                      June 30,

                                                                                                 2003           2004

Net loss                                                                                     $     (3,450 ) $        (194 )
Change in market value of interest rate swap                                                         (380 )            —
Foreign currency translation adjustments                                                              715              31

Total comprehensive loss                                                                     $     (3,115 ) $        (163 )


6.   Net Loss Per Common Share

     Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, requires the presentation of basic and diluted earnings
per share. Basic earnings (loss) per common share is computed by dividing income (loss) attributable to common stockholders by the weighted
average number of common shares outstanding for the period. The diluted earnings (loss) per common share data is computed using the
weighted average number of common shares outstanding plus the dilutive effect of common stock equivalents, unless the common stock
equivalents are anti-dilutive. For the period prior to the IPO, the effect of the Class A Preferred Stock converting into shares of common stock
was not included in the computation of diluted net loss per common share as the effect would be anti-dilutive. In addition, options to purchase
316,721 and 1,140,536 shares of common stock that were outstanding as of June 30, 2003 and 2004, respectively, were excluded from the
computation of diluted net loss per common share for the six months ended June 30, 2003 and 2004 as their effect would be anti-dilutive. The
treasury stock effect of 304,000 shares of common stock issuable to executives and

                                                                        F-9
employees upon vesting as of June 30, 2004 was not included in the computation of diluted net loss per common share for the six months
ended June 30, 2004 as the effect would be anti-dilutive.

       The following details the computation of the net loss per common share (dollars in thousands, except share and per share data):

                                                                                                   Six months ended
                                                                                                       June 30,

                                                                                            2003                      2004

Net loss                                                                            $              (3,450 ) $                  (194 )
Dividends on preferred stock                                                                       (7,284 )                  (3,428 )

Net loss attributable to common stockholders                                        $          (10,734 ) $                   (3,622 )

Weighted average common share calculation:
 Basic weighted average common shares outstanding                                           12,373,316                20,842,355
    Conversion of Class A Preferred Stock                                                           —                         —
    Treasury stock effect of unvested common stock                                                  —                         —
    Treasury stock effect of options                                                                —                         —

     Diluted weighted average common shares outstanding                                     12,373,316                20,842,355

Basic and diluted net loss per common share                                         $               (0.87 ) $                 (0.17 )

    The pro forma net loss per common share is computed using the pro forma net loss attributable to common stockholders and the pro forma
weighted average common shares outstanding during the period. The pro forma weighted average common shares outstanding assume the
conversion of the Class A Preferred Stock plus accrued and unpaid dividends into common stock at the IPO price of $18.00 per share as if the
conversion had occurred at the beginning of each period presented.

                                                                                                   Six months ended
                                                                                                       June 30,

                                                                                            2003                      2004

Net loss                                                                            $              (3,450 ) $                 (194 )
Dividends on preferred stock                                                                           —                        —

Pro forma net loss attributable to common stockholders                              $              (3,450 ) $                 (194 )

Weighted average common share calculation:
 Basic weighted average common shares outstanding                                           12,373,316                20,842,355
    Conversion of Class A Preferred Stock                                                    9,371,907                 4,114,579

Pro forma basic weighted average common shares outstanding                                  21,745,223                24,956,934

       Treasury stock effect of unvested common stock                                                  —                         —
       Treasury stock effect of options                                                                —                         —

Pro forma diluted weighted average common shares outstanding                                21,745,223                24,956,934

Pro forma basic and diluted net loss per common share                               $               (0.16 ) $                 (0.01 )

7.     Stock Based Compensation

     In February 2004, the Board of Directors of the Company adopted the TNS, Inc. 2004 Long-Term Incentive Plan (the Plan) and the
Company's stockholders approved the Plan in March 2004. The Plan reserves 1,586,384 shares of common stock for grants of incentive stock
options, nonqualified stock options, restricted stock awards and performance shares to employees, non-employee directors and consultants
performing services for the Company. Options granted under the Plan have an exercise price equal to or greater than the fair market value of
the underlying common stock at the date of

                                                                       F-10
grant, and become exercisable based on a vesting schedule determined at the date of grant, generally in equal monthly installments over four
years. The options expire 10 years from the date of grant. Restricted stock awards and performance shares granted under the Plan are subject to
a vesting period determined at the date of grant, generally in equal annual installments over four years. As of June 30, 2004, the Company
granted 304,000 shares of restricted stock and recorded approximately $5.1 million of deferred compensation related to these shares of
restricted stock. The deferred compensation is being amortized over the four-year vesting period of the shares of restricted stock. For the six
months ended June 30, 2004, the Company recorded compensation expense of approximately $397,000 related to these shares of restricted
stock.

      The Company continues to account for employee stock options or similar equity instruments to employees under the intrinsic value
method prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees." Under the intrinsic value method, compensation cost
is the excess, if any, of the fair value of the stock at the grant date or other measurement date over the amount an employee must pay to acquire
the stock. SFAS No. 123, "Accounting for Stock-Based Compensation" defines a fair value method of accounting for employee stock options
or similar equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the value of the award and
is recognized over the service period. SFAS No. 123 allows an entity to continue to use the intrinsic value method. However, entities electing
to account for employee stock options or similar instruments pursuant to APB Opinion No. 25 must make pro forma disclosures of net income,
as if the fair value method of accounting had been applied.

      If stock compensation expense had been determined based upon the fair value method at the grant dates, the Company's net loss
attributable to common stockholders would have increased to the pro forma amounts indicated below (in thousands, except per share data):

                                                                                                 Six months ended
                                                                                                     June 30,

                                                                                               2003             2004

Net loss attributable to common stockholders, as reported                                  $    (10,734 ) $         (3,622 )
Add: Stock-based employee compensation expense included in reported net loss, net
of related tax effects                                                                                  32             263
Deduct: Total stock-based employee compensation expense determined under fair
value based method for all awards, net of related tax effects                                         (325 )         (942 )

Pro forma net loss attributable to common stockholders                                     $    (11,027 ) $         (4,301 )

Basic and diluted net loss per common share, as reported                                   $       (0.87 ) $         (0.17 )
Pro forma basic and diluted net loss per common share                                      $       (0.89 ) $         (0.21 )

8.   Segment Information

     The Company's reportable segments are strategic business units that offer different products and services. The Company classifies its
business into four segments: POS, TSD, FSD and ISD. However, the Company's management only evaluates revenues for these four segments.
A significant portion of the Company's North American operating expenses are shared between the POS, TSD and FSD segments, and
therefore, management analyzes operating results for these three segments on a combined basis.

     Management evaluates the North American and ISD performance on EBITDA before stock compensation expense because operating
expenses are distinguishable between North American and ISD operations. The Company defines EBITDA before stock compensation expense
as income from operations before depreciation, amortization and stock compensation expense. EBITDA before stock compensation expense is
not a generally accepted accounting principle measure, but rather a measure

                                                                      F-11
employed by management to view operating results adjusted for major noncash items. The Company's definition of EBITDA before stock
compensation expense may not be comparable to similarly titled measures used by other entities. Assets are not segregated between reportable
segments, and management does not use asset information by segments to evaluate segment performance. As such, no information is presented
related to fixed assets by reportable segment and capital expenditures for each segment.

     Revenue for the Company's four business units is presented below (in thousands):

                                                                                                   Six months ended
                                                                                                       June 30,

                                                                                                2003                    2004

Revenues:
POS                                                                                     $         60,490        $          57,471
TSD                                                                                               14,049                   16,851
FSD                                                                                                9,910                   12,158
ISD                                                                                               20,301                   34,616

Total revenues                                                                          $        104,750        $         121,096

     EBITDA before stock compensation expense for North American and ISD operations is reflected below (in thousands):

                                                                                                       Six months ended
                                                                                                           June 30,

                                                                                                  2003                  2004

EBITDA before stock compensation expense:
North America                                                                               $      20,879        $        21,118
ISD                                                                                                 1,916                  9,834

Total EBITDA before stock compensation expense                                              $      22,795        $        30,952

      EBITDA before stock compensation expense differs from (loss) income before income taxes and equity in net loss of unconsolidated
affiliate reported in the condensed consolidated statements of operations as follows (in thousands):

                                                                                                        Six months ended
                                                                                                            June 30,

                                                                                                  2003                    2004

EBITDA before stock compensation expense                                                    $          22,795       $          30,952
Reconciling items:
Depreciation and amortization of property and equipment and intangible assets                      (22,177 )               (24,461 )
Stock compensation                                                                                     (53 )                  (438 )
Interest expense                                                                                    (5,821 )                (5,437 )
Interest and other income (expense), net                                                             1,458                     (82 )

(Loss) income before income taxes and equity in net loss of unconsolidated affiliate        $          (3,798 ) $                534


                                                                     F-12
      Goodwill and intangible assets are located in the following reporting segments (in thousands):

                                                                                             December 31,             June 30,
                                                                                                 2003                  2004

POS                                                                                     $             160,271               157,793
TSD                                                                                                     3,305                 3,221
FSD                                                                                                    30,503                29,465
ISD                                                                                                    34,293                32,738

Total goodwill and intangible assets                                                    $             228,372   $           223,217

Geographic Information

     The Company sells its services through foreign subsidiaries in the United Kingdom, Australia, Canada, France, Germany, Ireland, Italy,
Japan, New Zealand, Spain, Sweden and The Netherlands. Information regarding revenues and long-lived assets attributable to each geographic
region is stated below.

      The Company's revenues were generated in the following geographic regions (in thousands):

                                                                                                  Six months ended
                                                                                                      June 30,

                                                                                               2003                  2004

North America                                                                            $        84,449    $          86,480
Europe                                                                                            19,260               30,700
Asia-Pacific                                                                                       1,041                3,916

Total revenues                                                                           $      104,750     $         121,096

      The Company's long-lived assets, including goodwill and intangible assets, were located as follows (in thousands):

                                                                                             December 31,             June 30,
                                                                                                 2003                  2004

North America                                                                           $             232,393   $           228,958
Europe                                                                                                 45,057                42,350
Asia-Pacific                                                                                            4,888                 5,220

Total long-lived assets                                                                 $             282,338   $           276,528

9.    Litigation and Claims

     The Company is periodically involved in disputes arising from normal business activities. In the opinion of management, resolution of
these matters will not have a material adverse effect upon the financial position or future operating results of the Company, and adequate
provision for any potential losses has been made in the accompanying consolidated financial statements.

     On August 26, 2002, an action was filed in the Superior Court of the State of Delaware by persons alleging that the Company breached an
agreement to purchase an unrelated entity. The plaintiffs are seeking unspecified damages. Management intends to vigorously contest this
action, although no assurance can be given as to the outcome of this lawsuit. Management cannot estimate a range of possible loss.
Management believes that it will prevail in this matter and that its loss will be limited to legal defense costs.

     Certain states in which the Company operates assess sales taxes on certain services provided by the Company. The Company believes it
has no liability because its customer contracts contain terms that

                                                                      F-13
stipulate the customer, not the Company, is responsible for any sales tax liability. In jurisdictions where the customer may be liable for sales
taxes, the Company either includes sales tax on its invoice or has obtained an exemption certificate from the customer. Certain states have
audited the Company from 1996 to early 2001 and have proposed $6.7 million in assessments on the basis that sales taxes are owed. Both the
Company and the customers involved are vigorously defending any proposed assessments by the sales tax authorities. In the opinion of
management, resolution of these matters will not have a material adverse effect upon the financial position or future operating results of the
Company.

10. Subsequent Event

     On August 5, 2004, TNS made an investment in a company that provides mobile POS transaction infrastructure and solutions for mobile
merchants. TNS purchased 5,952,381 shares or 38.5 percent of the company's Series B convertible preferred stock for $2.5 million and
obtained representation on the company's board of directors. As of August 5, 2004, TNS owns 20.2 percent of the company's total outstanding
shares. The Series B convertible preferred stock have voting rights on an as converted basis into the company's common shares.

                                                                      F-14
                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of TNS, Inc. (formerly TNS Holdings, Inc.):

     We have audited the accompanying consolidated balance sheets of TNS, Inc. (formerly TNS Holdings, Inc., the Company) as of
December 31, 2002 and 2003, and the related consolidated statements of operations, stockholders' deficit, and cash flows for the period from
April 3, 2001 through December 31, 2001, and for the years ended December 31, 2002 and 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of
TNS, Inc. (formerly TNS Holdings, Inc.) at December 31, 2002 and 2003, and the consolidated results of its operations and its cash flows for
the period from April 3, 2001 through December 31, 2001 and for the years ended December 31, 2002 and 2003, in conformity with U.S.
generally accepted accounting principles.

     As discussed in Note 2 to the financial statements, effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets."

                                                             /s/ Ernst & Young LLP

McLean, Virginia
February 6, 2004 (except with respect
to the matter discussed in paragraph 5 of Note 1,
as to which the date is March 15, 2004)

                                                                       F-15
                                                                                   TNS, INC.
                                                                         (formerly TNS Holdings, Inc.)

                                                                  CONSOLIDATED BALANCE SHEETS

                                                                                                                  December 31,            December 31,
                                                                                                                      2002                    2003

                                                                                                                  (in thousands, except per share and
                                                                                                                            share amounts)


ASSETS
Current assets:
   Cash and cash equivalents                                                                                  $             5,984     $           11,074
   Accounts receivable, net of allowance for doubtful accounts of $3,952 and $4,313, respectively                          42,236                 41,490
   Other current assets                                                                                                     5,048                   7,457

           Total current assets                                                                                            53,268                 60,021

Property and equipment, net                                                                                                45,469                 45,745
Identifiable intangible assets, net                                                                                       255,062                223,919
Goodwill                                                                                                                    4,519                  4,453
Other assets                                                                                                                4,493                  8,221

           Total assets                                                                                       $           362,811     $          342,359


LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
   Current portion of long-term debt                                                                          $            18,951     $           28,731
   Accounts payable and accrued expenses                                                                                   39,714                 39,872
   Deferred revenue                                                                                                         4,829                   7,320
   Other current liabilities                                                                                                2,697                   2,200

           Total current liabilities                                                                                       66,191                 78,123

Long-term debt, net of current portion                                                                                    150,396                121,664
Deferred tax liabilities                                                                                                    5,242                    214
Other liabilities                                                                                                           1,468                  3,400

           Total liabilities                                                                                              223,297                203,401

Commitments and contingencies (see Note 10)

Class A redeemable convertible preferred stock, $0.01 par value; 179,746 shares authorized; 134,846 shares
issued and outstanding as of December 31, 2002 and 2003 (aggregate liquidation preference of $176,470 as of
December 31, 2003)                                                                                                        161,410                176,470
Stockholders' deficit:
    Common stock, $0.001 par value; 132,298,445 shares authorized; 12,372,639 and 12,373,370 shares
    issued and outstanding as of December 31, 2002 and 2003, respectively                                                        12                      12
   Additional paid-in capital                                                                                               2,363                   2,277
   Accumulated deficit                                                                                                    (22,729 )               (38,889 )
   Deferred stock compensation                                                                                               (367 )                  (173 )
   Accumulated other comprehensive loss                                                                                    (1,175 )                  (739 )

           Total stockholders' (deficit) equity                                                                           (21,896 )               (37,512 )

           Total liabilities and stockholders' (deficit) equity                                               $           362,811     $          342,359



                                                                             See accompanying notes.

                                                                                           F-16
                                                                    TNS, INC.
                                                          (formerly TNS Holdings, Inc.)

                                            CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                              Period from
                                                                             April 3, 2001              Year ended                  Year ended
                                                                                through                December 31,                December 31,
                                                                           December 31, 2001               2002                        2003

                                                                                     (in thousands, except per share and share amounts)


Revenues                                                               $             144,994      $             202,180       $             223,353

Operating expenses:
  Cost of network services, exclusive of the items shown
  separately below                                                                    73,650                    108,392                     119,990
  Engineering and development                                                          6,560                     10,638                      11,560
  Selling, general, and administrative                                                18,795                     33,063                      37,284
  Depreciation and amortization of property and equipment                              8,376                     16,480                      20,220
  Amortization of intangible assets                                                   15,601                     23,150                      25,769
  Costs of terminated initial public offering                                             —                       1,473                          —

         Total operating expenses                                                    122,982                    193,196                     214,823

Income from operations                                                                22,012                       8,984                       8,530
Interest expense                                                                     (12,091 )                   (11,917 )                   (11,272 )
Interest income                                                                          215                         160                         154
Other income, net                                                                        340                         755                       2,390

Income (loss) before income taxes, equity in net loss of
unconsolidated affiliate and minority interest in net loss of
consolidated subsidiary                                                               10,476                      (2,018 )                        (198 )
Income tax provision                                                                  (4,562 )                       (45 )                        (838 )
Equity in net loss of unconsolidated affiliate                                            —                         (364 )                         (64 )
Minority interest in net loss of consolidated subsidiary                                 348                          —                             —

Net income (loss)                                                                      6,262                      (2,427 )                    (1,100 )
Dividends on preferred stock                                                         (11,934 )                   (14,630 )                   (15,060 )
Loss on early extinguishment of related party debt, net of tax
benefit of $1,428                                                                      (2,238 )                        —                            —

Net loss attributable to common stockholders                           $               (7,910 ) $                (17,057 ) $                 (16,160 )

Basic and diluted net loss per common share                            $                (0.64 ) $                   (1.38 ) $                  (1.31 )

Basic and diluted weighted average common shares outstanding                      12,370,979                12,371,913                    12,373,335


                                                                See accompanying notes.

                                                                           F-17
                                                                                TNS, INC.
                                                                      (formerly TNS Holdings, Inc.)

                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

                                                                                      Stockholders' deficit


                                            Common stock

                                                                                                                               Accumulated
                                                                    Additional                             Deferred               other                 Total
                                                                     paid-in        Accumulated             stock             comprehensive         stockholders'            Comprehensive
                                                                     capital           deficit           compensation              loss            (deficit) equity           income (loss)

                                           Shares       Amount

                                                                                 (in thousands, except per share and share amounts)


Balance, April 3, 2001                              — $      — $             — $                — $                  — $                   — $                    — $                      —
  Issuance of common stock                 12,370,979        12           4,158                 —                    —                     —                  4,170                        —
  Loss on early extinguishment of
  related party debt, net of tax benefit
  of $1,428                                         —        —           (2,238 )               —                    —                     —                  (2,238 )                     —
  Dividends on preferred stock                      —        —               —             (11,934 )                 —                     —                (11,934 )                      —
  Change in market value of
  derivative instruments                            —        —               —                  —                    —                  (858 )                  (858 )                  (858 )
  Foreign currency translation                      —        —               —                  —                    —                   153                    153                      153
  Net income                                        —        —               —               6,262                   —                     —                  6,262                    6,262

Balance, December 31, 2001                 12,370,979        12           1,920             (5,672 )                 —                  (705 )                (4,445 )
Total, December 31, 2001                                                                                                                                                 $             5,557

  Dividends on preferred stock                      —        —               —             (14,630 )                 —                     —                (14,630 ) $                    —
  Exercise of employee stock options           1,660         —               33                 —                    —                     —                      33                       —
  Stock compensation                                —        —              410                 —                  (367 )                  —                      43                       —
  Change in market value of
  derivative instruments                            —        —               —                  —                    —                   476                    476                      476
  Foreign currency translation                      —        —               —                  —                    —                  (946 )                  (946 )                  (946 )
  Net loss                                          —        —               —              (2,427 )                 —                     —                  (2,427 )                 (2,427 )

Balance, December 31, 2002                 12,372,639        12           2,363            (22,729 )               (367 )              (1,175 )             (21,896 )
Total, December 31, 2002                                                                                                                                                 $             (2,897 )

  Dividends on preferred stock                      —        —               —             (15,060 )                 —                     —                (15,060 ) $                    —
  Exercise of employee stock options             731         —               14                 —                    —                     —                      14                       —
  Revaluation of options                            —        —             (100 )               —                  100                     —                      —                        —
  Stock compensation expense                        —        —               —                  —                    94                    —                      94                       —
  Change in market value and
  expiration of derivative instruments              —        —               —                  —                    —                  (350 )                  (350 )                  (350 )
  Foreign currency translation                      —        —               —                  —                    —                   786                    786                      786
  Net loss                                          —        —               —              (1,100 )                 —                     —                  (1,100 )                 (1,100 )

Balance, December 31, 2003                 12,373,370 $      12 $         2,277 $          (38,889 ) $             (173 ) $             (739 ) $            (37,512 )

Total, December 31, 2003                                                                                                                                                 $              (664 )



                                                                          See accompanying notes.

                                                                                        F-18
                                                                                       TNS, INC.
                                                                             (formerly TNS Holdings, Inc.)

                                                            CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                        Period from
                                                                                                        April 3, 2001
                                                                                                          through            Year ended             Year ended
                                                                                                        December 31,        December 31,           December 31,
                                                                                                            2001                2002                   2003

                                                                                                                            (in thousands)


Cash flows from operating activities:
   Net income (loss)                                                                                $             6,262 $             (2,427 ) $            (1,100 )
   Adjustments to reconcile net income (loss) to net cash provided by operating activities:
           Depreciation and amortization of property and equipment                                                8,376               16,480               20,220
           Amortization of intangible assets                                                                     15,601               23,150               25,769
           Deferred income tax benefit                                                                             (473 )             (1,871 )              (1,345 )
           Loss (gain) on disposal of property and equipment                                                         —                 1,047                      29
           Amortization of deferred financing costs                                                               1,601                1,988                1,953
           Amortization of discount on senior subordinated debt                                                     200                      —                    —
           Costs of terminated initial public offering                                                               —                 1,473                      —
           Equity in net loss of unconsolidated affiliate                                                            —                   364                      64
           Stock compensation                                                                                        —                       43                   94
           Minority interest in net loss of consolidated subsidiary                                                (348 )                    —                    —
   Changes in operating assets and liabilities, net of effect of acquisitions:
           Accounts receivable, net                                                                               1,745              (13,155 )                862
           Other current and noncurrent assets                                                                      539                  256                (4,820 )
           Accounts payable and accrued expenses                                                                 (1,522 )              6,731                2,831
           Deferred revenue                                                                                        (185 )              1,437                2,191
           Other current and noncurrent liabilities                                                               1,857                 (587 )              1,329

               Net cash provided by operating activities:                                                        33,653               34,929               48,077

Cash flows from investing activities:
       Purchases of property and equipment                                                                      (10,394 )            (21,638 )            (17,114 )
       Investment in affiliated entity                                                                               —                       —               (100 )
       Purchase of Transaction Network Services, Inc., net of cash acquired                                    (276,955 )                    —                    —
       Purchase of TranXact assets                                                                                   —               (45,101 )                    —
       Purchase of Openet S.r.l., net of cash acquired                                                               —                (1,513 )              (1,985 )
       Minority investment in consolidated subsidiary                                                               500                      —                    —
       Purchase of minority interest in TNS Australia                                                            (2,050 )                    —                    —
       Purchase of Transpoll Offline                                                                                 —                       —              (2,523 )

               Net cash used in investing activities:                                                          (288,899 )            (68,252 )            (21,722 )

Cash flows from financing activities:
       Proceeds from issuance of long-term debt, net of financing costs of $5,626, $1,578 and $—,
       respectively                                                                                            144,374                48,422                      —
       Repayment of long-term debt                                                                              (16,340 )            (14,837 )            (18,952 )
       Payment of refinancing costs                                                                                  —                       —               (588 )
       Proceeds from issuance of senior subordinated debt                                                        26,134                      —                    —
       Repayment of senior subordinated debt                                                                    (30,000 )                    —                    —
       Proceeds from stock option exercises                                                                          —                       33                   14
       Proceeds from issuance of preferred stock                                                               134,846                       —                    —
       Proceeds from issuance of common stock                                                                     4,170                      —                    —

               Net cash provided by (used in) financing activities:                                            263,184                33,618              (19,526 )

Effect of exchange rates on cash and cash equivalents                                                               153               (2,402 )              (1,739 )

Net increase (decrease) in cash and cash equivalents                                                              8,091               (2,107 )              5,090
Cash and cash equivalents, beginning of period                                                                       —                 8,091                5,984
Cash and cash equivalents, end of period                                 $     8,091 $   5,984 $   11,074

Supplemental disclosures of cash flow information:
       Cash paid for interest                                            $     9,491 $   9,930 $    9,665

       Cash paid for income taxes                                        $      350 $    4,814 $    1,763



                                                     See accompanying notes.

                                                              F-19
                                                                  TNS, INC.
                                                        (formerly TNS Holdings, Inc.)

                                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                     December 31, 2003

1.   The Company:

Business Description

      TNS, Inc. (TNS or the Company, formerly TNS Holdings, Inc.) is a Delaware corporation. On October 30, 2003, the Company changed
its name to TNS, Inc. As of December 31, 2003, TNS Holdings, L.L.C. (TNS LLC) owns 100 percent of the outstanding preferred shares and
approximately 11.9 million common shares of TNS and does not hold any other investments. Immediately upon closing of the initial public
offering, TNS LLC will be dissolved and its shares of TNS will be distributed to its members.

     TNS is a leading provider of business-critical data communications services to processors of credit card, debit card and automated teller
machine (ATM) transactions. TNS is also a leading provider of call signaling and database access services to the domestic telecommunications
industry and of secure data and voice network services to the global financial services industry. TNS' data communication services enable
secure and reliable transmission of time-sensitive, transaction-related information critical to its customers' operations. The Company's
customers outsource their data communication requirements to TNS because of the Company's expertise, comprehensive customer support, and
cost-effective services. TNS provides services to customers in the United States and increasingly to international customers in 12 countries,
including Canada and countries in Europe and the Asia-Pacific region.

     The Company provides its services through its multiple data networks, each designed specifically for transaction applications. These
networks support a variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods,
including dial-up, dedicated, wireless and Internet connections.

     The Company has four business divisions: (1) the point-of-sale/point-of-service (POS) division, which provides data communications
services to payment processors in the U.S. and Canada, (2) the telecommunication services division (TSD), which provides call signaling
services and database access services targeting primarily the telecommunications industry, (3) the financial services division (FSD), which
provides, primarily to the financial services community, data networking services in support of the Financial Information eXchange (FIX)
messaging protocol and other transaction-oriented trading applications, and (4) the international services division (ISD), which markets the
Company's POS and financial services in countries outside of the United States and Canada.

     The Company declared a 1-for-7.84 reverse stock split on March 15, 2004. Accordingly, all share and per share amounts have been
retroactively adjusted to give effect to this event.

2.   Summary of Significant Accounting Policies:

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and
transactions are eliminated upon consolidation. The Company consolidates investments where it has a controlling financial interest as defined
by Accounting Research Bulletin (ARB) No. 51, "Consolidated Financial Statements" as amended by Statement of Financial Accounting
Standards (SFAS) No. 94, "Consolidation of all Majority-Owned Subsidiaries." The usual condition for controlling financial interest is
ownership of a majority of the voting interest and, therefore, as a general rule ownership, directly or indirectly, of over fifty percent of the
outstanding

                                                                      F-20
voting shares is a condition pointing towards consolidation. For investments in variable interest entities, as defined by Financial Statement
Accounting Board (FASB) Interpretation No. 46, "Consolidation of Variable Interest Entities," (FIN 46) the Company consolidates when it is
determined to be the primary beneficiary of the variable interest entity. For those investments in entities where the Company has significant
influence over operations, but where the Company neither has a controlling financial interest nor is the primary beneficiary of a variable
interest entity, the Company follows the equity-method of accounting pursuant to Accounting Principles Bulletin (APB) Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock."

Unaudited Pro Forma Financial Information

     The pro forma net loss per common share is computed using the pro forma weighted average number of common shares outstanding
during the period. Pro forma weighted average common shares reflects the conversion of the Class A redeemable convertible preferred stock
plus accrued and unpaid dividends into common stock upon the consummation of the initial public offering.

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. Significant estimates affecting the consolidated financial statements include
management's judgments regarding the allowance for doubtful accounts, reserves for excess and obsolete inventories, future cash flows from
long-lived assets, and accrued expenses for probable losses. Actual results could differ from those estimates.

Revenue Recognition

     The Company recognizes revenue when persuasive evidence of an agreement exists, the terms are fixed and determinable, services are
performed, and collection is probable. Cash received in advance of revenue recognition is recorded as deferred revenue. POS services revenue
is derived primarily from per transaction fees paid by the Company's customers for the transmission of transaction data, through the Company's
networks, between payment processors and POS or ATM terminals. Telecommunication services revenue is derived primarily from fixed
monthly fees for call signaling services and per query fees charged for database access and validation services. Financial services revenue is
derived primarily from monthly recurring fees based on the number of customer connections to and through the Company's networks.
Incentives granted to new customers or upon contract renewals are deferred and recognized ratably as a reduction of revenue over the contract
period to the extent that the incentives are recoverable against the customer's minimum purchase commitments under the contract. Deferred
customer incentives were approximately $526,000 and $2,000,000 as of December 31, 2002 and 2003, respectively, of which approximately
$274,000 and $721,000 was classified as other current assets as of December 31, 2002 and 2003, respectively, and the remaining balance was
classified as other assets in the accompanying consolidated balance sheets.

     In addition, the Company receives installation fees related to the configuration of the customers' systems. Revenue from installation fees is
being deferred and recognized ratably over the customer's contractual service period, generally three years. Installation fees were
approximately $128,000, $159,000 and $1,671,000 for the period from April 3, 2001 through December 31, 2001 and the years ended
December 31, 2002 and 2003, respectively. Approximately $218,000 and $1,477,000 of installation fees are included in deferred revenue as of
December 31, 2002 and 2003, respectively.

                                                                      F-21
Cost of Network Services

      Cost of network services is comprised primarily of telecommunications charges, which include data transmission and database access
charges, leased digital capacity charges, circuit installation charges and activation charges. The cost of data transmission is based on a contract
or tariff rate per minute of usage in addition to a prescribed rate per transaction for certain vendors. The costs of database access, circuits,
installation and activation charges are based on fixed fee contracts with local exchange carriers and interexchange carriers. The cost of network
services also includes salaries, equipment maintenance and other costs related to the ongoing operation of the Company's data networks. These
costs are expensed by the Company as incurred. Direct costs of installations are deferred and amortized over three years. Deferred installation
costs as of December 31, 2002 and 2003 were approximately $107,000 and $639,000, respectively, and are classified as other current assets
and other assets in the accompanying consolidated balance sheets. The Company records its accrual for telecommunication charges based upon
network services utilized at historical invoiced rates. Depreciation expense on network equipment was approximately $4.5 million, $9.0 million
and $11.4 million for the period from April 3, 2001 through December 31, 2001, and the years ended December 31, 2002 and 2003,
respectively, and is included in depreciation and amortization of property and equipment in the accompanying consolidated statements of
operations. Amortization expense on developed technology, an intangible asset recorded in the acquisition of Transaction Network Services,
Inc. (see Note 3), was approximately $9.0 million, $12.0 million and $11.7 million for the period from April 3, 2001 through December 31,
2001, and the years ended December 31, 2002 and 2003, respectively and is included in amortization of intangible assets in the accompanying
consolidated statements of operations.

Cash and Cash Equivalents

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

Concentrations of Credit Risk

     Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash
equivalents and accounts receivable. The Company does not, as a matter of policy, require collateral on credit granted to customers. The
Company performs periodic evaluations of its customer base and establishes allowances for estimated credit losses.

Fair Value of Financial Instruments

     SFAS No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosures of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Due to their short-term nature, the
carrying amounts reported in the consolidated financial statements approximate the fair value for cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses. The fair value of the Company's long-term debt is based upon quoted market prices for the
same and similar issues giving consideration to quality, interest rates, maturity and other characteristics. As of December 31, 2003, the
Company believes the carrying amount of its long-term debt approximates its fair value since the variable interest rate of the debt approximates
a market rate. The fair value of the Class A redeemable convertible preferred stock is not practicable to determine as no quoted market price
exists for the preferred stock nor have there been any recent transactions in the Company's preferred stock, The preferred stock will be
converted into common stock of the Company upon consummation of the initial public offering.

                                                                       F-22
Inventory

     Inventory is stated at the lower of cost or market, using the first-in, first-out method. Inventory consists primarily of network and computer
parts and equipment. The Company's products are subject to technological change and changes in the Company's respective competitive
markets. Management has provided reserves for excess and obsolete inventories, which were $0.8 million and $0.7 million as of December 31,
2002 and 2003, respectively. It is possible that new product launches or changes in customer demand could result in unforeseen changes in
inventory requirements for which no reserve has been provided. Inventory, net of reserves, as of December 31, 2002 and 2003, is
approximately $0.8 million and $0.5 million, respectively, and is included in other current assets in the accompanying consolidated balance
sheets.

Long-Lived Assets

     In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which supersedes
both 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 for the disposal of a segment of a business contained in APB 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." The Company adopted SFAS No. 144 on January 1, 2002.

     In accordance with SFAS No. 144, the Company reviews its long-lived assets, including property and equipment, capitalized software
development costs and identifiable intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount
of the assets may not be fully recoverable. To determine recoverability of its long-lived assets, the Company evaluates the probability that
future undiscounted net cash flows will be less than the carrying amount of the assets. If future estimated undiscounted cash flows are less than
the carrying amount of long-lived assets, then such assets are written down to their estimated fair value.

      For purposes of measuring and recognizing impairment of long-lived assets, the Company assesses whether separate cash flows can be
attributed to the individual asset. The Company groups its long-lived assets by business unit where separately identifiable cash flows are
available. In the event that long-lived assets, including intangibles are abandoned or otherwise disposed of, the Company recognizes an
impairment charge upon disposition. For the Company's customer relationship intangible assets, the Company recognizes and measures
impairment upon the termination or loss of a customer that results in a loss of revenue.

     The Company's estimates of anticipated cash flows could be reduced significantly in the future due to changes in technologies, regulation,
available financing, competition or other circumstances. As a result, the carrying amount of long-lived assets could be reduced through
impairment charges in the future. Additionally, changes in estimated future cash flows could result in a shortening of estimated useful lives for
long-lived assets including intangibles.

Property and Equipment

      Property and equipment is recorded at cost or fair value at the date of acquisition, net of accumulated depreciation and amortization.
Replacements and improvements that extend the useful life of property and equipment are capitalized. In accordance with AICPA Statement of
Position No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," costs for internal use software
that are incurred in the preliminary project stage and the post-implementation and operation stage are expensed as incurred. Costs incurred
during the application development stage are capitalized and amortized over the estimated useful life of the software.

                                                                       F-23
     Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives of the
assets as follows:

Network equipment and purchased software                 3 – 7 years
Office furniture and equipment                           3 – 5 years
Leasehold improvements                                   Shorter of the useful life or the lease term, generally
                                                         5 – 15 years
Capitalized software development                         3 – 5 years

Goodwill and Identifiable Intangible Assets

      Amortization of intangible assets is recorded on a straight-line basis over their expected useful lives. The Company evaluates the useful
lives assigned to intangible assets on a regular basis. Amortization periods are as follows:

Developed technology                                     4 or 15 years
Trade names                                              20 years
Customer relationships                                   5 or 20 years
Non-compete agreements                                   2 or 3 years

     Developed technology represents the Company's proprietary knowledge, including processes and procedures, used to configure its
networks. Network equipment and software, both purchased and internally developed, are components used to build the networks and are
separately identified assets classified within property and equipment.

     The Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets," on January 1, 2002. Under this standard, goodwill and
intangible assets deemed to have indefinite lives are not amortized and are subject to annual impairment tests. Other intangible assets are
amortized over their useful lives. As a result of the adoption of SFAS No. 142 on January 1, 2002, the Company reclassified approximately
$2.6 million of net book value allocated to assembled workforce to goodwill, and these assets are no longer amortized. The cost and net book
value of the Company's goodwill was $4.5 million and $4.0 million, respectively, as of January 1, 2002.

     Amortization of the assembled workforce intangible asset was $0.5 million for the period from April 3, 2001 through December 31, 2001.
Had the adoption of SFAS No. 142 occurred effective April 3, 2001, the pro forma net loss attributable to common stockholder and pro forma
basic and diluted net loss per common share for the period from April 3, 2001 through December 31, 2001 would have been $7.5 million and
$0.60, respectively.

    The Company has completed the required impairment tests of its goodwill as of January 1, 2002, upon adoption, and also as of October 1,
2002. Based on its testing, no impairment existed at either date. The Company will perform the annual SFAS No. 142 impairment testing of its
goodwill as of October 1 of each year, which could have an adverse effect on the Company's future results of operations if impairment occurs.

                                                                         F-24
Derivative Instruments

      The Company accounts for its derivative instruments according to the provisions of SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain Hedging Activities, an
Amendment of SFAS No. 133." SFAS No. 133 and SFAS No. 138 establish accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The standards also require that changes in the derivative's fair value be recognized currently in earnings unless the
derivatives qualify as hedges of future cash flows. For derivatives qualifying as hedges of future cash flows, the effective portion of changes in
fair value is recorded temporarily in equity, and then recognized in earnings along with the related effects of the hedged items. Any ineffective
portion of hedges is reported in earnings as it occurs.

Income Taxes

      The Company accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes." Under SFAS No. 109,
deferred tax assets or liabilities are computed based upon the difference between financial statement and income tax bases of assets and
liabilities using the enacted marginal tax rate. The Company provides a valuation allowance on its net deferred tax assets when it is more likely
than not that such assets will not be realized. Deferred income tax expense or benefits are based upon the changes in the asset or liability from
period to period.

Net Loss Per Common Share

     The Company computes loss per common share in accordance with SFAS No. 128, "Earnings Per Share." Basic net loss per common
share includes no dilution and is computed by dividing net loss attributable to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted net loss per common share includes the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common stock. As of December 31, 2002 and 2003, options to
purchase 314,909 and 374,293 shares of common stock, respectively, were outstanding. Due to the anti-dilutive nature of the options and the
Class A redeemable convertible preferred stock, there is no effect on the calculation of weighted average shares for diluted net loss per
common share. As a result, the basic and diluted net losses per common share amounts are identical.

     Unaudited pro forma net income (loss) per common share is computed using the pro forma weighted average number of common shares
outstanding for the period. Pro forma basic and diluted weighted average common shares includes the conversion of all outstanding Class A
redeemable convertible preferred stock plus accrued and unpaid dividends into common stock at an initial public offering price of $18.00.

     The following table reconciles net loss attributable to common stockholders and basic and diluted weighted average common shares
outstanding prior to the effects of the offering to the pro forma net income (loss) attributable to common stockholders and the pro forma basic
and diluted weighted

                                                                       F-25
average common shares outstanding and net loss per common share for the year ended December 31, 2003 (unaudited, in thousands, except
share and per share amounts):

Net loss attributable to common stockholders                                                $            (16,160 )
Dividends on preferred stock                                                                              15,060

Pro forma net loss attributable to common stockholders                                      $             (1,100 )

Basic and diluted weighted average common shares outstanding                                          12,373,335
Conversion of preferred stock                                                                          9,803,902

Pro forma basic and diluted weighted average common shares outstanding                                22,177,237

Pro forma basic and diluted net loss per common share                                       $              (0.05 )


Stock Compensation

      The Company accounts for employee stock options or similar equity instruments to employees under the intrinsic value method prescribed
by APB Opinion No. 25, "Accounting for Stock Issued to Employees." Under the intrinsic value method, compensation cost is the excess, if
any, of the fair value of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock.
SFAS No. 123, "Accounting for Stock-Based Compensation" defines a fair value method of accounting for employee stock options or similar
equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the value of the award and is
recognized over the service period. SFAS No. 123 allows an entity to continue to use the intrinsic value method. However, entities electing to
account for employee stock options or similar instruments pursuant to APB Opinion No. 25 must make pro forma disclosures of net income, as
if the fair value method of accounting had been applied.

    The fair value of each stock option was estimated on the date of grant using the Black-Scholes option-pricing model with the following
assumptions:

                                                                    Period from
                                                                    April 3, 2001
                                                                      through         Year ended         Year ended
                                                                    December 31,     December 31,       December 31,
                                                                        2001             2002               2003

Expected life                                                            5 years            5 years          5 years
Risk-free interest rate                                                    5.0%               5.0%             5.0%
Volatility                                                                72.0%              68.0%            58.5%
Dividend yield                                                             0.0%               0.0%             0.0%

     The weighted-average fair value per share of the stock options granted was $12.31, $14.51 and $12.23 for the period from April 3, 2001
through December 31, 2001, and the years ended December 31, 2002 and 2003, respectively. If stock compensation expense had been
determined based upon the fair value method at the grant dates, the Company's net loss attributable to common

                                                                    F-26
stockholders would have increased to the pro forma amounts indicated below (in thousands, except per share data):

                                                                          Period from
                                                                         April 3, 2001
                                                                            through                     Year ended              Year ended
                                                                       December 31, 2001               December 31,            December 31,
                                                                           (Restated)                      2002                    2003

Net loss attributable to common stockholders, as reported        $                     (7,910 ) $              (17,057 ) $          (16,160 )
Stock-based employee compensation expense determined
under fair value based method for all awards, net of related
tax effects (1)                                                                            (215 )                     (587 )            (638 )

Pro forma net loss attributable to common stockholders           $                     (8,125 ) $              (17,644 ) $          (16,798 )


Basic and diluted net loss per common share, as reported         $                         (0.64 ) $              (1.38 ) $            (1.31 )
Pro forma basic and diluted net loss per common share            $                         (0.66 ) $              (1.43 ) $            (1.36 )


(1)
       Net of stock compensation expense recorded under APB Opinion No. 25 of $—, $43,000 and $94,000 for the period from April 3, 2001
       through December 31, 2001 and the years ended December 31, 2002 and 2003, respectively.

Foreign Currency Translation

      The Company provides services in twelve countries outside the United States including the United Kingdom, Australia, Canada, France,
Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Spain, and Sweden. The Company has determined that the functional currency
of its non-U.S. operations is the local currency. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at
current exchange rates. Operating results are translated into U.S. dollars using the average rates of exchange prevailing during the period. The
Company's results of operations are affected by fluctuations in the value of the U.S. dollar as compared with foreign currencies, predominately
the euro, the British pound and the Australian dollar. Gains or losses resulting from the translation of assets and liabilities are included as a
component of accumulated other comprehensive loss in stockholders' deficit, except for the translation effect of intercompany balances that are
anticipated to be settled in the foreseeable future. For the period from April 3, 2001 through December 31, 2001, and the years ended
December 31, 2002 and 2003, the Company recorded a foreign exchange translation gain of $0.2 million, $1.3 million and $1.9 million,
respectively, which is included in other income, net in the accompanying consolidated statements of operations. Foreign exchange risk is
managed through the structure of the business.

Comprehensive Income

     Comprehensive income is the change in equity of a business enterprise during a period from transactions and other events and
circumstances from nonowner sources. Other comprehensive income refers to revenue, expenses, gains and losses that under accounting
principles generally accepted in the United States are included in comprehensive income, but excluded from net income. The elements within
other comprehensive income, net of tax, consisted of foreign currency translation adjustments and the changes in the market value and
expiration of the Company's derivative instruments.

Segment Reporting

     The Company provides segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company classifies its business into four segments: POS, TSD, FSD and ISD. However, the Company's
management only evaluates revenues for

                                                                      F-27
these four segments. A significant portion of the Company's North American operating expenses are shared between the POS, TSD and FSD
segments, and, therefore, management analyzes operating results for these three segments on a combined basis. SFAS No. 131 designates the
internal information used by management for allocating resources and assessing performance as the source of the Company's reportable
segments and requires disclosure about products and services, geographical areas and major customers.

Recent Accounting Pronouncements

     In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires certain guarantees to be recorded at fair value. This is
different from prior practice, which was generally to record a liability only when a loss is probable and reasonably estimable, as those terms are
defined in SFAS No. 5 "Accounting for Contingencies." FIN 45 also requires a guarantor to make new disclosures; even when the likelihood of
making any payments under the guarantee is remote. The initial recognition and measurement provisions of FIN 45 are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002. Currently, management does not believe that it has entered into
any guarantees that fall within the guidance of FIN 45.

      The Emerging Issues Task Force, (EITF), issued EITF Issue 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables."
EITF 00-21 provides guidance on how to determine whether a revenue arrangement involving multiple deliverable items contains more than
one unit of accounting and if so, requires that revenue be allocated amongst the different units based on fair value. EITF 00-21 also requires
that revenue on any item in a revenue arrangement with multiple deliverables not delivered completely must be deferred until delivery of the
item is completed. The guidance in EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15,
2003. The implementation of EITF 00-21 did not have a material impact on the Company's consolidated results of operations or financial
position.

     In January 2003, the FASB issued FIN 46, which clarifies the application of ARB No. 51 to certain entities in which equity investors do
not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. Certain disclosure requirements of FIN 46 are effective for financial
statements of interim or annual periods issued after January 31, 2003. FIN 46 applies immediately to variable interest entities created, or in
which an enterprise obtains a variable interest, after January 31, 2003. For variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003, FIN 46 applies to the first interim reporting period ending after March 15, 2004. Management
does not believe that it has invested in any variable interest entities for which the Company is the primary beneficiary.

      In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity." This statement establishes standards for classifying and measuring as liabilities certain financial instruments that have characteristics
of both liabilities and equity. This statement is effective immediately for instruments entered into or modified after May 31, 2003 and for all
other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. However, the
provisions of SFAS No. 150 will be applied to mandatorily redeemable instruments of nonpublic companies in fiscal periods beginning after
December 15, 2003. Early adoption of SFAS No. 150 is not permitted. Application of this standard to pre-existing instruments will be
recognized as a cumulative effect of a change in accounting principle. The provisions of this statement require that any financial instruments
that are mandatorily redeemable on a fixed or determinable date or upon an event certain to occur be classified as liabilities. The Company's
Class A redeemable convertible preferred stock may be converted into common stock at the

                                                                       F-28
option of the stockholder, and therefore, it will not be classified as a liability under the provisions of SFAS No. 150.

3.   Acquisitions and Long-Term Investments:

     The Company completed the acquisition of Transaction Network Services, Inc. from PSINet, Inc. on April 3, 2001. The Company has
accounted for the transaction as a purchase under the provisions of APB Opinion No. 16 "Business Combinations." The Company acquired all
of the outstanding common stock of Transaction Network Services, Inc. for a purchase price, net of cash acquired, of approximately
$277.0 million, including transaction costs of approximately $3.4 million. The Company entered into long-term debt arrangements and issued
equity instruments to finance the acquisition (see Notes 5 and 6). Included in the transaction costs is a severance liability of approximately
$2.0 million resulting from the elimination of approximately 40 positions in management, operations, engineering, and a number of other
support functions. This amount was paid during the period ended December 31, 2001.

     The purchase price was allocated as follows (in thousands):

                       Accounts receivable                                                                 $        30,353
                       Property and equipment                                                                       37,874
                       Current deferred tax assets                                                                   1,966
                       Other assets                                                                                  7,038
                       Intangible assets                                                                           242,695
                       Accounts payable, accrued expenses, and other liabilities                                   (39,579 )
                       Long-term deferred tax liabilities                                                           (3,392 )

                       Net assets acquired                                                                 $       276,955


     The value assigned to intangible assets consisted of the following (in thousands):

                        Customer relationships                                                                 $     95,606
                        Developed technology                                                                         76,494
                        Trade names                                                                                  67,598
                        Assembled workforce                                                                           2,997

                        Intangible assets                                                                      $    242,695

     The amounts allocated to customer relationships and trade names are being amortized over their estimated useful lives of twenty years.
Amounts allocated to developed technology related to the POS business segment are being amortized over four years, while amounts allocated
to developed technology related to the FSD and ISD business segments are being amortized over 15 years (see Note 2).

Acquisition of TNS Australia

     On October 5, 2001, the Company completed an acquisition of the 49.9 percent minority interest of Transaction Network Services
Australia PTY Limited (TNS Australia) for a purchase price of approximately $2.1 million in cash. The Company has accounted for the
transaction as a purchase under the provisions of AICPA Accounting Interpretation No. 26, "Acquisition of Minority Interest." The purchase
price was allocated to the reduction of the minority interest liability of approximately $0.6 million and goodwill of $1.5 million. Since the
purchase of the minority interest occurred subsequent to June 30, 2001, the acquired goodwill is not amortized, and is reviewed for impairment
on a regular basis pursuant to the provisions of SFAS No. 142. Unaudited pro forma results of operations are not provided, as the historical net
income of TNS Australia was not significant and pro forma results would not be significantly different from reported results for periods
presented. The Company's

                                                                       F-29
results of operations for the period from April 3, 2001 through December 31, 2001 include the operating results of this acquisition from
October 5, 2001 through December 31, 2001.

Acquisition of TranXact

      On May 13, 2002, the Company acquired from Sprint Communications Company L.P. (Sprint) the right to provide services under
substantially all customer contracts relating to the TranXact Service Operations (TranXact) of Sprint, as well as a two-year, non-compete
agreement. The consideration paid for these assets was approximately $45.0 million in cash, plus direct acquisition costs of approximately
$0.1 million. The source of funds used to acquire these assets was from additional borrowings under the Company's Credit Facility (see
Note 5). This transaction was accounted for as an acquisition of assets. As specified in the Asset Purchase Agreement between Transaction
Network Services, Inc. and Sprint, $40.0 million was paid for the customer relationships and $5.0 million was paid for the non-compete
agreement. These amounts are being amortized on a straight-line basis over a period of twenty years and two years, respectively. The unaudited
pro forma information for the period from April 3, 2001 through December 31, 2001 and the year ended December 31, 2002, give effect to the
acquisition of the TranXact assets as if the transaction had occurred on January 1 of the period presented. The unaudited pro forma information
is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been
achieved had the acquisition been consummated at the beginning of the period presented (in thousands, except per share data):

                                                                                       Period from
                                                                                       April 3, 2001
                                                                                         through          Year ended
                                                                                       December 31,      December 31,
                                                                                           2001              2002

Revenues                                                                           $        159,584 $            209,907
Net loss attributable to common stockholders                                                 (6,969 )            (15,849 )
Pro forma basic and diluted net loss per common share                                         (0.56 )              (1.28 )

     In connection with this transaction, the Company agreed to purchase transitional communication and other services (Transitional Services)
from Sprint until the TranXact customers were migrated from Sprint's network to the TNS network. The total amount paid to Sprint for these
Transitional Services was approximately $4.0 million during the period from May 13, 2002 through December 31, 2002. The Company's
results of operations for the year ended December 31, 2002 include the operating results of this acquisition from May 13, 2002 through
December 31, 2002.

Acquisition of Openet S.r.l.

      On December 4, 2002, the Company completed the acquisition of the 50.1 percent majority interest of an Italian company, Openet S.r.l.
(Openet) for a purchase price of $1.8 million, plus direct acquisition costs of approximately $0.4 million. As part of this acquisition, the
Company entered into a call option to purchase the remaining 49.9 percent minority interest in Openet for approximately 1.8 million euro
during the period from January 1, 2003 to January 31, 2003. To the extent this call option expired unexercised, Openet received a put option to
sell the remaining 49.9 percent to the Company for approximately 2.5 million euro during the period from February 1, 2003 to March 1, 2003.

                                                                     F-30
The Company exercised its call option to purchase the remaining 49.9 percent on January 24, 2003 for a purchase price of $2.0 million. The
purchase price was allocated as follows (in thousands):

                       Current assets                                                                     $     1,082
                       Property and equipment                                                                      11
                       Customer relationships                                                                   2,908
                       Non-compete agreements                                                                     500
                       Goodwill                                                                                   468
                       Accounts payable, accrued expenses, and other liabilities                               (1,136 )

                       Net assets acquired                                                                $     3,833


     The amount allocated to customer relationships is being amortized over their estimated useful lives of five years and the amount allocated
to the non-compete agreements is being amortized over their estimated useful lives of three years (see Note 2). Unaudited pro forma results of
operations are not provided, because the historical net income of Openet was not significant and pro forma results would not be significantly
different from reported results for periods presented. The Company's results of operations for the year ended December 31, 2002 include the
operating results of this acquisition from December 4, 2002 through December 31, 2002.

Acquisition of Transpoll Offline

     On November 18, 2003, the Company acquired certain tangible and intangible assets of Transpoll Offline, which provides POS services in
the United Kingdom, for a purchase price of approximately $2.5 million including direct acquisition costs of approximately $0.4 million. The
purchase price was allocated as follows (in thousands):

              Property and equipment                                                                               $       1,206
              Non-compete agreements                                                                                         251
              Customer relationships                                                                                       1,066

              Net assets acquired                                                                                  $       2,523

     The amount allocated to customer relationships is being amortized over their estimated useful lives of five years and the amount allocated
to the non-compete agreements is being amortized over their estimated useful lives of three years (see Note 2). Unaudited pro forma results of
operations are not provided, because the historical operating results of Transpoll Offline were not significant and pro forma results would not
be significantly different from reported results for periods presented. The Company's results of operations for the year ended December 31,
2003 include the operating results of this acquisition from November 18, 2003 through December 31, 2003.

Long-Term Investments

      In February 2002, TNS entered into an agreement to provide network connectivity services over a three-year period to a related entity. As
initial consideration for the services to be rendered, the Company received preferred stock valued at $500,000, representation on the entity's
board of directors, and 19.9 percent of the outstanding voting rights in the related entity. In October 2002, the Company paid $200,000, which
reduced the $500,000 of services to be performed to $300,000. During 2002, the Company recognized $300,000 of revenue under this
transaction as the services were rendered. The Company's Chairman and Chief Executive Officer (CEO) separately invested in this customer
through a partnership controlled by him.

    In January 2003, the Company sold its interest in this related entity for approximately $700,000 and the right to receive payments based
upon the entity's future performance. The Company

                                                                     F-31
recognized a gain on the sale of approximately $639,000, which is included in other income, net in the accompanying consolidated statement of
operations for the year ended December 31, 2003. Until the sale of the Company's interest in January 2003, the Company accounted for its
investment under the equity method of accounting. For the year ended December 31, 2002, the Company recognized a net loss in the equity of
an unconsolidated affiliate of $364,000.

     In April 2003, the Company made an investment in a company that provides wireless Internet access to recreational vehicle parks. The
Company purchased 3.2 percent of the company's common shares for $0.1 million and obtained representation on the company's board of
directors. In addition, in July 2003, the Company entered into an agreement to provide services to the company, and as consideration, received
stock valued at $0.3 million for an additional 7.9 percent of the company's common shares. The Company is accounting for its investment
under the equity method of accounting. For the year ended December 31, 2003, the Company recognized a net loss in the equity of an
unconsolidated affiliate of approximately $64,000.

4.    Balance Sheet Details:

Property and Equipment, Net

       Property and equipment consists of the following (in thousands):

                                                                                        December 31,             December 31
                                                                                            2002                    2003

Network equipment and software                                                      $            36,936      $            44,521
Office furniture and equipment                                                                   11,552                   11,422
Capitalized software development costs                                                           12,930                   18,108
Leasehold improvements                                                                            5,755                    7,954

                                                                                                  67,173                  82,005
Accumulated depreciation and amortization                                                        (21,704 )               (36,260 )

     Property and equipment, net                                                    $            45,469      $            45,745


     During the period from April 3, 2001 through December 31, 2001, the Company purchased a partial interest in an aircraft for $1.2 million
from a company that is owned by the Chairman and CEO. The Company obtained an independent appraisal to ascertain the fair value of the
partial interest on the purchase date and purchased it for the appraised fair value. During the year ended December 31, 2003, the Company sold
the partial interest for $0.9 million, for a net gain of $4,000. Depreciation expense related to the partial interest was $21,000, $252,000 and
$63,000 for the period from April 3, 2001 through December 31, 2001, and the years ended December 31, 2002 and 2003, respectively.

Identifiable Intangible Assets, Net

       Identifiable intangible assets consist of the following (in thousands):

                                                                                        December 31,             December 31,
                                                                                            2002                     2003

Customer relationships                                                             $            140,145      $           137,466
Developed technology                                                                             79,887                   76,494
Trade names                                                                                      67,820                   67,597
Non-compete agreements                                                                            5,500                    5,751

                                                                                                293,352                  287,308
     Accumulated amortization                                                                   (38,290 )                (63,389 )

     Identifiable intangible assets, net                                           $            255,062      $           223,919


                                                                          F-32
      During 2003, certain intangible assets acquired on April 3, 2001, were reduced for the subsequent realization of acquired income tax
attributes (see Note 8).

      Future amortization of intangible assets is as follows as of December 31, 2003 (in thousands):

2004                                                                                               $        23,758
2005                                                                                                        15,985
2006                                                                                                        13,544
2007                                                                                                        13,426
2008                                                                                                        12,857
Thereafter                                                                                                 144,349

                                                                                                   $       223,919

Accounts Payable and Accrued Expenses

      Accounts payable and accrued expenses consist of the following (in thousands):

                                                                                         December 31,           December 31,
                                                                                             2002                   2003

Accounts payable and accrued network costs                                           $            21,701    $            19,912
Accrued sales and use tax                                                                          8,224                  8,471
Accrued income taxes                                                                               1,272                  1,493
Accrued legal and professional fees                                                                3,118                  2,761
Accrued compensation and benefits                                                                  2,314                  3,288
Other accrued expenses                                                                             3,085                  3,947

     Accounts payable and accrued expenses                                           $            39,714    $            39,872

5.   Long-Term Debt:

     On April 3, 2001, the Company entered into a senior secured credit facility (the Credit Facility) consisting of a Term A Loan of
$30.0 million, Term B Loan of $100.0 million, and a revolving credit facility with available borrowings of $20.0 million. In addition, on
December 20, 2001, the Company refinanced the Credit Facility to allow for an additional $20.0 million in Term B Loan borrowings. On
May 15, 2002, in connection with the purchase of TranXact assets from Sprint (see Note 3), the Company obtained an additional $50.0 million
in Term B Loan borrowings. The Credit Facility is secured by all of the Company's assets. As of December 31, 2002, there was approximately
$17.1 million outstanding on the Term A Loan and $152.1 million outstanding on the Term B Loan. As of December 31, 2003, there was
approximately $10.3 million outstanding on the Term A Loan and $140.1 million outstanding on the Term B Loan. There were no borrowings
outstanding under the revolving credit facility at December 31, 2002 or 2003. Principal payments on the Term A and Term B Loans are due
quarterly through April 3, 2007. Borrowings on the Term A Loan and the revolving credit facility generally bear interest at a rate of, at the
Company's option, either 2.25 percent over the lender's base rate, which was 4.0 percent at December 31, 2003, or 3.25 percent over the
Eurodollar rate, which was 1.2 percent at December 31, 2003. Borrowings on the Term B Loan generally bear interest at a rate of, at the
Company's option, 2.75 percent over the lender's base rate or 3.75 percent over the Eurodollar rate. If the Company achieves a Senior Leverage
Ratio, as defined in the Credit Agreement, of less than two, the interest rates on the Credit Facility will be reduced by 0.25 percent. The
revolving credit facility is also subject to a non-use commitment fee on the unused availability of 0.5 percent per annum. The weighted-average
interest rate of the Credit Facility for the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and
2003 was 7.0 percent, 7.4 percent and 6.9 percent, respectively. Interest payments are due monthly, bimonthly or

                                                                      F-33
quarterly at the Company's option. The Company recorded interest expense on the Credit Facility of approximately $8.8 million, $11.9 million
and $11.3 million for the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and 2003,
respectively.

     In connection with the issuance and refinancing of the Credit Facility, the Company incurred $5.6 million in financing costs during the
period ended December 31, 2001, and an additional $1.6 million in May 2002 in connection with the $50.0 million of additional Term B Loan
borrowings. These financing fees are being deferred and amortized using the effective interest method over the life of the Credit Facility.
Included in total interest expense above are approximately $1.6 million, $2.0 million and $2.0 million for the period from April 3, 2001 through
December 31, 2001 and the years ended December 31, 2002 and 2003, respectively, of amortization of deferred financing costs. The net
balance of deferred financing costs as of December 31, 2002 and 2003, is approximately $3.7 million and $2.4 million, respectively, which is
included in other assets in the accompanying consolidated balance sheets.

     The terms of the Credit Facility require the Company to comply with financial and nonfinancial covenants, including maintaining certain
leverage, interest and fixed charge coverage ratios, as well as maintaining certain consolidated net worth and capital expenditure levels at the
end of each fiscal quarter. Certain of the financial covenants become more restrictive over the term of the Credit Facility. The Company's
future results of operations and its ability to comply with the covenants could be adversely impacted by increases in the general level of interest
rates since the interest on a majority of the Company's debt is variable. Noncompliance with any of the financial covenants without cure or
waiver would constitute an event of default under the Credit Facility. An event of default resulting from a breach of a financial covenant may
result, at the option of lenders holding a majority of the loans, in an acceleration of the principal and interest outstanding, and a termination of
the revolving credit facility. The Term A and Term B Loans and any indebtedness under the revolving credit facility may be voluntarily
prepaid in whole or in part without premium or penalty. The Term A and B Loans will be permanently reduced by the amount of any voluntary
prepayments made. The Credit Facility requires the Company to use all of the net proceeds of equity or debt financings to repay borrowings
under the Credit Facility unless prior approval is obtained. The net proceeds of the initial public offering will be used to repay a portion of the
Term A and B Loans.

     On April 14, 2003, the Company obtained an amendment to the Credit Facility that, among other items, reduced the amount of the
revolving credit facility by $10.0 million and increased the required quarterly Senior Leverage Ratios set forth in the Credit Facility. The
amendment also increased the interest rates on the Credit Facility by 0.50 percent until such time as the Senior Leverage Ratio is less than or
equal to 2.50 to 1.00. The Company incurred fees of approximately $0.5 million to secure the amendment.

     In addition to financial covenants, the Credit Facility required the Company to hedge at least $50.0 million of its outstanding debt against
significant interest rate fluctuations through April 2003. As of December 31, 2002, the Company had $16.6 million hedged with an interest rate
swap and $33.4 million hedged with interest rate caps. As of December 31, 2003 the interest rate swap and interest rate caps expired. The fair
values of the Company's interest rate swap agreements are based on dealer quotes. The fair value of the interest rate swap and caps were
$0.4 million as of December 31, 2002, which are included in other current liabilities in the accompanying consolidated balance sheets. In
addition, for the period from April 3, 2001 through December 31, 2001 and the years ended December 31, 2002 and 2003, the Company
recorded a loss of $0.9 million, a gain of $0.5 million and a loss of $0.4 million, respectively, within comprehensive income (loss) related to the
change in fair market value and expiration of its derivative instruments.

    The Company has entered into a commitment to replace the existing Credit Facility, upon completion of the initial public offering, with a
new senior secured credit facility (New Credit Facility).

                                                                       F-34
Transaction Network Services, Inc. will be the borrower under the New Credit Facility, and the Company will guarantee the obligations of
Transaction Network Services, Inc. obligations under the New Credit Facility and pledge substantially all of its assets as security for these
obligations. The New Credit Facility will consist of a $65.0 million term loan (New Term Loan) and a revolving credit facility (New Revolving
Credit Facility) of up to $30.0 million. The New Credit Facility will have a term of five years. Payments on the New Term Loan will be due in
equal quarterly installments over the five-year term, beginning on the last day of the first quarter after the closing date, anticipated to be
March 31, 2004, as follows (in thousands):

                        Year 1                                                                              $      11,000
                        Year 2                                                                                     12,000
                        Year 3                                                                                     13,000
                        Year 4                                                                                     14,000
                        Year 5                                                                                     15,000

                                                                                                            $      65,000

      For the period through June 30, 2004, borrowings on the New Revolving Credit Facility and the New Term Loan generally will bear
interest at a rate, at the Company's option, of either 1.25 percent over the lender's base rate or 2.50 percent over the LIBOR rate. Thereafter, if
the Company achieves a leverage ratio of less than one, the borrowings on the New Revolving Credit Facility and the New Term Loan
generally will bear interest at a rate, at the Company's option, of either 0.75 percent over the lender's base rate or 2.0 percent over the LIBOR
rate. If the Company achieves a leverage ratio of less than 1.5 but more than or equal to one, the borrowings on the New Revolving Credit
Facility and the New Term Loan generally will bear interest at a rate, at the Company's option, of either 1.0 percent over the lender's base rate
or 2.25 percent over the LIBOR rate. If the Company achieves a leverage ratio of less than 2.2 but more than or equal to 1.5, the borrowings on
the New Revolving Credit Facility and the New Term Loan generally will bear interest at a rate, at the Company's option, of either 1.25 percent
over the lender's base rate or 2.5 percent over the LIBOR rate. As of December 31, 2003, the lender's base rate was 4.0 percent, and the LIBOR
rate was 1.2 percent. The New Revolving Credit Facility will also be subject to an annual commitment fee in an amount equal to 0.5 percent
per annum multiplied by the amount of funds available for borrowing under the New Revolving Credit Facility. Interest payments on the New
Credit Facility will be due monthly, or quarterly at the Company's option.

      Upon closing of the New Credit Facility, the Company will incur approximately $2.0 million in fees and related expenses. These fees and
related expenses will be deferred and amortized using the effective interest method over the life of the New Credit Facility. The deferred
financing fees related to the existing Credit Facility will be expensed upon closing of the New Credit Facility.

      Although the terms of the New Credit Facility are not yet final, it is expected that they will require the Company to comply with financial
and nonfinancial covenants. Financial covenants will include maintaining certain leverage, interest and fixed charge coverage ratios at the end
of each fiscal quarter. Certain of the financial covenants will become more restrictive over the term of the New Credit Facility. The New Credit
Facility will also contain nonfinancial covenants that will restrict some of the Company's corporate activities, including the Company's ability
to dispose of assets, incur additional debt, pay dividends, create liens, make investments, make capital expenditures and engage in specified
transactions with affiliates. The Company's future results of operations and its ability to comply with the covenants could be adversely
impacted by increases in the general level of interest rates since the interest on a majority of the Company's debt is variable. Noncompliance
with any of the financial or nonfinancial covenants without cure or waiver would constitute an event of default under the New Credit Facility.
An event of default resulting from a breach of a financial or nonfinancial covenant may

                                                                       F-35
result, at the option of the lenders, in an acceleration of the principal and interest outstanding, and a termination of the New Revolving Credit
Facility. The New Credit Facility will also contain other customary events of default, including defaults based on events of bankruptcy and
insolvency, nonpayment of principal, interest or fees when due, subject to specified grace periods, breach of specified covenants, change in
control and material inaccuracy of representations and warranties.

     Long-term debt consists of the following (in thousands):

                                                                                         December 31,            December 31,
                                                                                             2002                    2003

                  Credit Facility:
                      Term A Loan                                                    $           17,101     $             10,314
                      Term B Loan                                                               152,088                  140,081
                  Other long-term debt                                                              158                       —

                                                                                     $          169,347     $            150,395

     Principal payments under all debt instruments are due quarterly through April 3, 2007. Debt maturities as of December 31, 2003 are as
follows (in thousands):

                        2004                                                                                $       28,731
                        2005                                                                                        50,365
                        2006                                                                                        57,039
                        2007                                                                                        14,260

                                                                                                            $     150,395

     However, under the New Credit Facility, the maturities stated above will be modified pursuant to the terms of the New Credit Facility.

     On April 3, 2001, the Company entered into a senior subordinated debt agreement with the majority shareholder of TNS LLC (see Note 1)
for $30.0 million, with interest payable quarterly at 14.0 percent per annum. The senior subordinated debt was issued with warrants to purchase
TNS LLC preferred and common units. The warrants were valued at $3.9 million using the Black-Scholes pricing model. The warrants were
recorded at issuance resulting in a debt discount, which was amortized using the effective interest rate method over the term of the debt. In
connection with the refinancing of the Credit Facility on December 20, 2001, the Company repaid the senior subordinated debt. As the lender
was the majority shareholder of TNS LLC, the remaining unamortized discount of $3.7 million, before the related tax benefit of $1.4 million,
was treated as a return of capital and reflected in the accompanying statements as a reduction of additional paid-in capital and as an increase in
the net loss attributable to common stockholders.

During the period from April 3, 2001 through December 31, 2001, the Company recorded interest expense on the senior subordinated debt of
$3.2 million, of which $0.2 million related to amortization of debt discount.

6.   Stockholders' Deficit and Preferred Stock:

     On April 3, 2001, the Company issued 134,846 shares of Class A redeemable convertible preferred stock (the Preferred Stock), par value
$0.01 per share, for approximately $134.8 million, or $1,000 per share. Preferred shareholders have no voting rights. The Preferred Stock
accrues dividends at 11.5 percent for the first year and 9.0 percent for each year thereafter. Dividends are cumulative and compound quarterly.
Dividends, if declared, are payable in cash on the last day of each calendar quarter. The Preferred Stock has a liquidation preference equal to its
purchase price, plus accrued and

                                                                       F-36
unpaid dividends. The Preferred Stock plus accrued and unpaid dividends are convertible, at the option of the holder, into shares of common
stock upon the closing of a qualified initial public offering (IPO), at the IPO price. The Company has the option to redeem the Preferred Stock
at any time, at the liquidation value including all accrued and unpaid dividends. All of the issued and outstanding shares of the Preferred Stock
are owned by TNS LLC.

     On April 3, 2001, the Company authorized 132,298,445 shares and issued 12,370,979 shares of common stock, par value $0.001, to TNS
LLC for approximately $4.2 million. No dividends have been declared or paid to the stockholder, and no dividends are payable until all accrued
and unpaid Preferred Stock dividends have been paid. The Company reserved 382,608 shares for issuance under its stock option plan (see
Note 7).

      Certain executives of the Company purchased 1,990 common units, or 20.4 percent, of the outstanding common units and 7,951 preferred
units, or 5.9 percent, of the outstanding preferred units of TNS LLC. The executives paid cash for their common and preferred units at the same
price per unit paid by the majority holder of TNS LLC. Total cash paid by the majority stockholder for common and preferred units was
approximately $795,000 and $129.1 million, respectively. Total cash paid by the executives for common and preferred units was approximately
$199,000 and $8.0 million, respectively. Of the 1,990 common units held by certain executives, 1,500 of these common units are restricted and
vest monthly over a five-year period beginning in April 2001. As of December 31, 2003, 825 of the restricted units are vested. Upon the
dissolution of TNS LLC at the closing of the initial public offering, shares of the Company's Preferred Stock and common stock will be
distributed to the executives based upon their respective ownership portion in TNS LLC. These shares will remain subject to the existing
vesting provisions. Upon completion of the initial public offering and the conversion of the Preferred Stock into common, the effective per
share price paid by the majority stockholder of TNS LLC and the executives in April 2001 was $13.84 and $0.08 for preferred (as converted)
and common shares, respectively.

     Certain investment funds affiliated with the majority unitholder of TNS LLC are collectively the controlling stockholder of Syniverse
Technologies, Inc. (formerly TSI Telecommunications Services Inc.). The Company has done business with Syniverse in the past and expects
to continue to do business with Syniverse in the future. For the year ended December 31, 2003, the Company received approximately $441,000
in payments from Syniverse and paid approximately $2.2 million to Syniverse for services received and provided in the ordinary course of
business. One of the Company's directors also serves on the board of directors of Syniverse.

7.   Stock Compensation and Retirement Plans:

Stock Option Plan

     During 2001, the Board of Directors of the Company adopted the TNS Holdings, Inc. 2001 Founders' Stock Option Plan (the Plan),
whereby employees, nonemployee directors, and certain other individuals are granted the opportunity to acquire an equity interest in the
Company. Either incentive stock options or nonqualified options may be granted under the Plan. Options granted under the Plan have an
exercise price equal to or greater than the estimated fair value of the underlying common stock at the date of grant, and become exercisable
based on a vesting schedule determined at the date of grant, generally over four years. The options expire 10 years from the date of grant.

                                                                      F-37
    The following table summarizes stock option activity under the Plan:

                                                                    Number of          Exercise price          Weighted-average
                                                                     shares              per share              exercise price

Outstanding, April 3, 2001                                                  —              $—             $                      —
Granted                                                                303,816            19.60                               19.60
Canceled                                                                (9,236 )          19.60                               19.60

Outstanding, December 31, 2001                                         294,580            19.60                               19.60

Granted                                                                  46,008       19.60 – 39.21                           25.19
Exercised                                                                (1,660 )         19.60                               19.60
Canceled                                                                (24,019 )     19.60 – 39.21                           19.65

Outstanding, December 31, 2002                                         314,909        19.60 – 39.21                           20.41

Granted                                                                  72,170       19.60 – 39.21                           21.82
Exercised                                                                  (731 )         19.60                               19.60
Canceled                                                                (12,055 )     19.60 – 39.21                           21.92

Outstanding, December 31, 2003                                         374,293        19.60 – 39.21                           20.64

Exercisable, December 31, 2001                                          45,310            19.60                               19.60

Exercisable, December 31, 2002                                         121,473        19.60 – 39.21                           19.67

Exercisable, December 31, 2003                                         198,662        19.60 – 39.21                           20.16


    The weighted-average remaining contractual life of outstanding options was 9.74, 8.83 and 8.19 years as of December 31, 2001, 2002 and
2003, respectively.

Stock Compensation to Employees

    During the year ended December 31, 2002, 10,665 options were remeasured as a result of a modification to the awards. The stock
compensation expense for these options was $43,000 and $52,000 for the years ended December 31, 2002 and 2003, respectively. As of
December 31, 2002 and 2003, the remaining deferred compensation expense related to these options is $166,000 and $114,000, respectively.

Options Granted to Non-Employees

     In conjunction with the acquisition of Openet in December 2002 (see Note 3), the Company entered into a three-year consulting
agreement with the former owner of Openet. In partial consideration for the services to be performed, the former owner received 6,377 options
in the Company's common stock with an exercise price of $39.21 per share. The options vest monthly over the three-year term of the
consultancy agreement and expire 10 years after the date of grant. The fair value of the options was initially valued at $201,000, using the
Black-Scholes pricing model. During the year ended December 31, 2003, the options were revalued to reflect the change in the fair market
value of the Company's common stock using the Black-Scholes pricing model, which resulted in a reduction in deferred compensation and
additional paid-in capital of $100,000. The unamortized fair value of the options as of December 31, 2003 was $59,000. Compensation expense
based on the fair value of the options is recognized over the term of the consultancy agreement pursuant to the provisions of EITF No. 96-18,
"Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services."

Retirement Savings Plan

      During 2001, the Company established a 401(k) and profit-sharing plan (the 401(k) Plan). Employees are eligible for the 401(k) Plan on
the first payroll of the month following their date of hire.

                                                                     F-38
Participants may elect to defer up to 20.0 percent of their salary, and the Company will match up to a maximum of 25.0 percent of the first
6.0 percent of the employee's salary during the 401(k) Plan year. Profit-sharing contributions are entirely discretionary. Participants are
100 percent vested in all contributions made to the 401(k) Plan. For the period from April 3, 2001 through December 31, 2001 and the year
ended December 31, 2002, the Board of Directors approved contributions of approximately $98,000 and $227,000, respectively, to the 401(k)
Plan. The Board of Directors has not yet authorized a contribution to the 401(k) Plan for the year ended December 31, 2003.

8.   Income Taxes:

    The components of income (loss) before income taxes, equity in net loss of unconsolidated affiliate and minority interest in net loss of
consolidated subsidiary are as follows (in thousands):

                                                                          Period from
                                                                          April 3, 2001
                                                                            through                  Year ended               Year ended
                                                                          December 31,              December 31,             December 31,
                                                                              2001                      2002                     2003

U.S.                                                                $               12,389 $                     272 $                  (3,900 )
Non-U.S.                                                                            (1,913 )                  (2,290 )                   3,702

Total income (loss) before income taxes, equity in net loss of
unconsolidated affiliate and minority interest in net loss of
consolidated subsidiary                                             $               10,476     $              (2,018 ) $                    (198 )


     The components of the Company's income tax provision (benefit) consisted of the following (in thousands):

                                                                        Period from
                                                                       April 3, 2001            Year ended              Year ended
                                                                          through              December 31,            December 31,
                                                                     December 31, 2001             2002                    2003

Current provision (benefit):
  U.S.                                                               $           4,344     $             1,947 $                 1,166
  Non-U.S.                                                                         691                     (31 )                 1,017

                                                                                 5,035                   1,916                   2,183

Deferred provision (benefit):
  U.S.                                                                             521                  (1,193 )                 (2,942 )
  Non-U.S.                                                                        (994 )                  (678 )                  1,597

                                                                                  (473 )                (1,871 )                 (1,345 )

Total income tax provision                                           $           4,562     $                  45   $                  838


                                                                        F-39
     The components of the Company's net deferred tax assets (liabilities) as of December 31, 2002, as included in other current assets and
deferred tax liabilities, consisted of the following (in thousands):

                                                                                    U.S.                 Non-U.S.              Total

Deferred tax assets:
  Allowance for doubtful accounts                                              $        229      $               —        $          229
  Accrued expenses                                                                    1,108                      —                 1,108
  Intangible assets                                                                   1,769                      —                 1,769
  Net operating loss carryforward                                                        —                    8,026                8,026

                                                                                      3,106                   8,026              11,132
  Less — valuation allowance                                                             —                   (2,579 )            (2,579 )

                                                                                      3,106                   5,447                8,553
Deferred tax liabilities:
  Depreciation and amortization of property and equipment                              (230 )                    —                 (230 )
  Deferred charges                                                                      (93 )                    —                  (93 )
  Capitalized software development costs                                             (2,112 )                    —               (2,112 )
  Intangible assets                                                                      —                  (10,412 )           (10,412 )

                                                                                     (2,435 )               (10,412 )           (12,847 )

Net deferred tax assets (liabilities)                                          $           671   $           (4,965 ) $           (4,294 )


     The components of the Company's net deferred tax assets (liabilities) as of December 31, 2003, as included in other current assets, other
assets and deferred tax liabilities, consisted of the following (in thousands):

                                                                                     U.S.                 Non-U.S.             Total

Deferred tax assets:
  Allowance for doubtful accounts                                               $        403         $            —       $          403
  Accrued expenses                                                                     1,609                      22               1,631
  Intangible assets                                                                    4,334                      —                4,334
  Depreciation and amortization of property and equipment                                395                   1,978               2,373
  Net operating loss carryforward                                                         —                    5,818               5,818

                                                                                       6,741                    7,818            14,559
  Less — valuation allowance                                                              —                    (5,713 )          (5,713 )

                                                                                       6,741                   2,105               8,846

Deferred tax liabilities:
  Deferred charges                                                                       (53 )                     —                 (53 )
  Capitalized software development costs                                              (3,419 )                     —              (3,419 )
  Intangible assets                                                                       —                    (2,297 )           (2,297 )

                                                                                      (3,472 )                 (2,297 )           (5,769 )

Net deferred tax assets (liabilities)                                           $      3,269         $              (192 ) $       3,077


     The Company has foreign net operating loss carryforwards for tax purposes in jurisdictions outside the U.S. amounting to approximately
$27.6 million as of December 31, 2003. Some of the non-U.S. loss carryforwards will expire in varying amounts in five to ten years. The
majority of the non-U.S. loss carryforwards will never expire under local country tax rules. The Company has provided a valuation allowance
against its deferred tax asset related to certain of its net operating loss carryforwards since realization of these tax benefits through future
taxable income cannot be reasonably assured.

                                                                      F-40
     During the year ended December 31, 2003, the Company determined that certain of its intangible assets acquired on April 3, 2001 were
deductible on its tax returns in the United States, and therefore, the Company reduced certain of its deferred tax liabilities and increased its
valuation allowance on its deferred tax assets related to certain of its foreign net operating loss carryforwards established at the date of such
acquisition by a net amount of $5.2 million (see offsetting $5.2 million reduction to intangible assets in Note 4).

     Taxes computed at the U.S. statutory federal income tax rate of 34.0 percent are reconciled to the Company's effective income tax rate as
follows:

                                                                     Period from
                                                                     April 3, 2001
                                                                       through           Year ended            Year ended
                                                                     December 31,       December 31,          December 31,
                                                                         2001               2002                  2003

U.S. federal taxes at statutory rate                                          34.0 %              34.0 %                34.0 %
U.S. state taxes (net of federal tax benefit)                                  5.0                 5.0                   5.0
Non-U.S. taxes                                                                 0.5                10.7                (474.7 )
Valuation allowance                                                            3.7               (60.0 )              (122.2 )
Other                                                                          0.3                 8.1                 134.7

     Effective tax rate                                                       43.5 %              (2.2 )%             (423.2 )
                                                                                                                             %


9.    Segment Information:

     The Company's reportable segments are strategic business units that offer different products and services. The Company classifies its
business into four segments: POS, TSD, FSD and ISD. However, the Company's management only evaluates revenues for these four segments.
A significant portion of the Company's North American operating expenses are shared between the POS, TSD and FSD segments, and
therefore, management analyzes operating results for these three segments on a combined basis. The accounting policies for the segments are
the same as those described in the summary of significant accounting policies (see Note 2).

      Management evaluates the North American and ISD performance on EBITDA, as adjusted, because operating expenses are
distinguishable between North American and ISD operations. The Company defines EBITDA, as adjusted, as income from operations before
depreciation and amortization and costs of terminated initial public offering. EBITDA, as adjusted, is not a generally accepted accounting
principle measure, but rather a measure employed by management to view operating results adjusted for major noncash items. The Company's
definition of EBITDA, as adjusted, may not be comparable to similarly titled measures used by other entities. Assets are not segregated
between reportable segments, and management does not use asset information by segments to evaluate segment performance. As such, no
information is presented related to fixed assets by reportable segment and capital expenditures for each segment.

                                                                       F-41
     Revenue for the Company's four business units is presented below (in thousands):

                                                                           Period from
                                                                           April 3, 2001
                                                                             through              Year ended              Year ended
                                                                           December 31,          December 31,            December 31,
                                                                               2001                  2002                    2003

Revenues:
POS                                                                    $          94,110     $           126,440     $        122,874
TSD                                                                               18,305                  24,022               31,217
FSD                                                                               11,490                  18,617               20,790
ISD                                                                               21,089                  33,101               48,472

  Total revenues                                                       $        144,994      $           202,180     $        223,353

     EBITDA, as adjusted for North American and ISD operations are reflected below (in thousands):

                                                                           Period from
                                                                           April 3, 2001
                                                                             through              Year ended              Year ended
                                                                           December 31,          December 31,            December 31,
                                                                               2001                  2002                    2003

EBITDA, as adjusted:
North America                                                         $           43,755     $            47,463     $         44,564
ISD                                                                                2,234                   2,624                9,955

  Total EBITDA, as adjusted                                           $           45,989     $            50,087     $         54,519

      EBITDA, as adjusted differs from income (loss) before income taxes, equity in net loss of unconsolidated affiliate and minority interest in
net loss of consolidated subsidiary reported in the consolidated statements of operations as follows (in thousands):

                                                                           Period from
                                                                           April 3, 2001
                                                                             through              Year ended              Year ended
                                                                           December 31,          December 31,            December 31,
                                                                               2001                  2002                    2003

EBITDA, as adjusted                                                    $          45,989     $            50,087     $         54,519
Reconciling items:
  Depreciation and amortization of property and equipment and
  intangible assets                                                              (23,977 )               (39,630 )            (45,989 )
  Costs of terminated initial public offering                                         —                   (1,473 )                 —
  Interest expense                                                               (12,091 )               (11,917 )            (11,272 )
  Interest and other income, net                                                     555                     915                2,544

Income (loss) before income taxes, equity in net loss of
unconsolidated affiliate and minority interest in net loss of
consolidated subsidiary                                                $          10,476     $             (2,018 ) $            (198 )


Geographic Information

    The Company sells its services through foreign subsidiaries in the United Kingdom, Australia, Canada, France, Germany, Ireland, Italy,
Japan, New Zealand, Spain, Sweden and the Netherlands. Information regarding revenues and long-lived tangible assets attributable to each
geographic region is stated below.

                                                                      F-42
       The Company's revenues were generated in the following geographic regions (in thousands):

                                                                            Period from
                                                                            April 3, 2001
                                                                              through                Year ended                Year ended
                                                                            December 31,            December 31,              December 31,
                                                                                2001                    2002                      2003

North America                                                           $        123,905        $              169,079    $       174,881
Europe                                                                            21,043                        32,442             44,554
Asia-Pacific                                                                          46                           659              3,918

      Total revenues                                                    $        144,994        $              202,180    $       223,353

       The Company's long-lived assets, including goodwill and intangible assets, were located as follows (in thousands):

                                                                                                December 31,             December 31,
                                                                                                    2002                     2003

North America                                                                               $          253,878      $               232,393
Europe                                                                                                  51,312                       45,057
Asia-Pacific                                                                                             4,353                        4,888

  Total long-lived assets                                                                   $          309,543      $               282,338

       Goodwill and intangible assets are located in the following reporting segments (in thousands):

                                                                                                December 31,             December 31,
                                                                                                    2002                     2003

POS                                                                                         $          180,219      $             160,271
TSD                                                                                                      3,475                      3,305
FSD                                                                                                     32,578                     30,503
ISD                                                                                                     43,309                     34,293

  Total goodwill and intangible assets                                                      $          259,581      $             228,372

10.    Commitments and Contingencies:

Operating Leases

     The Company leases office space and certain office equipment under various non-cancelable operating leases that expire through
October 2013. Rental expense is recognized on a straight-line basis over the term of the lease, regardless of when payments are due. Rental
expense was approximately $1.9 million, $4.4 million and $5.3 million for the period from April 3, 2001 through December 31, 2001, and the
years ended December 31, 2002 and 2003, respectively.

     Future minimum commitments under the Company's operating leases are as follows for each of the years ended December 31 (in
thousands):

                         2004                                                                                       $          5,142
                         2005                                                                                                  4,932
                         2006                                                                                                  4,435
                         2007                                                                                                  4,101
                         2008                                                                                                  3,934
                         Thereafter                                                                                           20,769

                                                                                                                    $         43,313

                                                                       F-43
Litigation and Claims

     The Company is periodically involved in disputes arising from normal business activities. In the opinion of management, resolution of
these matters will not have a material adverse effect upon the financial position or future operating results of the Company, and adequate
provision for any potential losses has been made in the accompanying consolidated financial statements.

     On August 26, 2002, an action was filed in the Superior Court of the State of Delaware by persons alleging that the Company breached an
agreement to purchase an unrelated entity. The plaintiffs are seeking unspecified damages. Management intends to vigorously contest this
action, although no assurance can be given as to the outcome of this lawsuit. Management cannot estimate a range of possible loss.
Management believes that it will prevail in this matter and that its loss will be limited to legal defense costs.

      Certain states in which the Company operates assess sales taxes on certain services provided by the Company. The Company believes it
has no liability because its customer contracts contain terms that stipulate the customer, not the Company, is responsible for any sales tax
liability. In jurisdictions where the customer may be liable for sales taxes, the Company either includes sales tax on its invoice or has obtained
an exemption certificate from the customer. Certain states have audited the Company from 1996 to early 2001 and have proposed $6.7 million
in assessments on the basis that sales taxes are owed. Both the Company and the customers involved are vigorously defending any proposed
assessments by the sales tax authorities. In the opinion of management, resolution of these matters will not have a material adverse effect upon
the financial position or future operating results of the Company.

Significant Customers and Suppliers

     A substantial portion of the revenues recognized by the Company is related to a limited number of customers. For the period from April 3,
2001 through December 31, 2001 two customers included in the Company's POS division accounted for 11.8 percent and 10.3 percent of the
Company's consolidated revenue. For the year ended December 31, 2002, one customer included in the Company's POS division accounted for
13.3 percent of the Company's consolidated revenue. For the year ended December 31, 2003, there were no customers that accounted for more
than 10 percent of the Company's consolidated revenues.

     Certain key components used in the Company's network are currently available only from limited sources. The Company does not have
long-term supply contracts with these or any other limited source vendors and purchases network equipment on a purchase order basis. The
inability to obtain sufficient quantities of limited source equipment and technical support as required, or to develop alternative sources as
required in the future, could result in delays or reductions in the Company's deployment of network equipment, which could adversely affect
the Company's business, operating results and financial condition.

                                                                       F-44
11.   Unaudited Quarterly Financial Data (in thousands, except per share amounts):

                                                               March 31         June 30,        September 30,          December 31,
                                                                2002             2002 (1)           2002                   2002

Revenues                                                   $        44,697 $        49,068 $              53,389 $              55,026
Cost of network services                                            24,407          25,907                29,085                28,993
Net loss attributable to common stockholders                        (4,350 )        (2,090 )              (4,012 )              (6,605 )
Basic and diluted net loss per common share                          (0.35 )         (0.17 )               (0.32 )               (0.53 )
                                                               March 31,       June 30,        September 30,         December 31,
                                                                2003            2003               2003                  2003

Revenues                                                   $       50,631 $        54,119 $             57,245 $              61,358
Cost of network services                                           28,177          29,236               29,714                32,863
Net loss attributable to common stockholders                       (6,017 )        (4,717 )             (2,362 )              (3,064 )
Basic and diluted net loss per common share                         (0.49 )         (0.38 )              (0.19 )               (0.25 )

(1)

       On May 13, 2002, the Company completed its acquisition of the right to provide services under substantially all customer contracts
       relating to the TranXact operations. The results of operations for the quarter ended June 30, 2002 include the operating results of
       TranXact from May 13, 2002 through June 30, 2002 along with that of the entire Company for the entire quarter ended June 30, 2002.

                                                                      F-45
                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To Transaction Network Services, Inc.:

     We have audited the accompanying consolidated statements of operations, stockholder's equity and cash flows of Transaction Network
Services, Inc. (the Company, formerly PSINet Transaction Solutions Inc.) for the period from January 1, 2001 to April 2, 2001. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audit.

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

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations and
cash flows of Transaction Network Services, Inc. for the period from January 1, 2001 to April 2, 2001, in conformity with U.S. generally
accepted accounting principles.

                                                              /s/ Ernst & Young LLP

McLean, Virginia
September 6, 2002

                                                                        F-46
                                              TRANSACTION NETWORK SERVICES, INC.
                                        (Predecessor #1, formerly PSINet Transaction Solutions Inc.)

                                           CONSOLIDATED STATEMENT OF OPERATIONS
                                         For the period from January 1, 2001 through April 2, 2001
                                                              (in thousands)

Revenues                                                                                       $         46,755
Operating expenses:
  Cost of network services, exclusive of the items shown separately below                               26,506
  Engineering and development                                                                            2,857
  Selling, general, and administrative                                                                  11,032
  Depreciation and amortization of property and equipment                                                3,749
  Amortization of goodwill and acquired intangibles                                                     11,520
  Impairment of goodwill                                                                               322,153

           Total operating expenses                                                                    377,817

Loss from operations                                                                                   (331,062 )
Interest expense                                                                                           (151 )
Interest income                                                                                             209
Other (expense) income, net                                                                                  41

Loss before income taxes and minority interest                                                         (330,963 )
Income tax benefit                                                                                        1,125
Minority interest in net loss of consolidated subsidiary                                                    156

Net loss                                                                                       $       (329,682 )


                                                           See accompanying notes.

                                                                    F-47
                                      TRANSACTION NETWORK SERVICES, INC.
                                (Predecessor #1, Formerly PSINet Transaction Solutions Inc.)

                             CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

                                                                                Accumulated
                                                                                   other
                                                                               comprehensive
                                 Common stock                                       loss

                                                                                                            Total
                                                          Accumulated                                   stockholder's          Comprehensive
                                                             deficit                                        equity                 loss

                             Shares      Amount

                                                                 (in thousands, except share amounts)



Balance, December 31, 2000      200 $      700,012 $           (123,989 ) $                (2,044 ) $           573,979
  Foreign currency               —              —                    —                        246                   246 $                      246
  translation
  Net loss                       —                —            (329,682 )                       —             (329,682 )              (329,682 )

Balance, April 2, 2001          200 $      700,012 $           (453,671 ) $                (1,798 ) $           244,543

Total, April 2, 2001                                                                                                       $          (329,436 )


                                                      See accompanying notes.

                                                               F-48
                                               TRANSACTION NETWORK SERVICES, INC.
                                        (Predecessor #1, Formerly PSINet Transaction Solutions, Inc.)

                                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                         For the period from January 1, 2001 through April 2, 2001
                                                              (in thousands)

Cash flows from operating activities:
  Net loss                                                                                     $        (329,682 )
  Adjustments to reconcile net loss to net cash provided by operating activities:
       Depreciation and amortization of property and equipment                                            3,749
       Amortization of goodwill and acquired intangibles                                                 11,520
       Impairment of goodwill                                                                           322,153
       Deferred income tax benefit                                                                       (2,961 )
       Minority interest in net loss of consolidated subsidiary                                            (156 )
  Changes in operating assets and liabilities:
       Accounts receivable, net                                                                           10,367
       Other current assets                                                                                1,609
       Other assets                                                                                         (245 )
       Accounts payable and accrued expenses                                                              (1,343 )
       Deferred revenue                                                                                     (564 )
       Other liabilities                                                                                    (571 )

          Net cash provided by operating activities                                                       13,876

Cash flows from investing activities:
  Purchases of property and equipment                                                                     (3,868 )

          Net cash used in investing activities                                                           (3,868 )

Cash flows from financing activities:
  Payments to PSINet, Inc.                                                                               (17,193 )

          Net cash used in financing activities                                                          (17,193 )

Effect of exchange rates on cash and cash equivalents                                                        246
Net decrease in cash and cash equivalents                                                                 (6,939 )
Cash and cash equivalents, beginning of period                                                            16,298

Cash and cash equivalents, end of period                                                       $           9,359


                                                            See accompanying notes.

                                                                      F-49
                                              TRANSACTION NETWORK SERVICES, INC.

                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                                       April 2, 2001

1.   The Company:

Business Description

     Transaction Network Services, Inc. (the Company or TNS, formerly PSINet Transaction Solutions Inc.), a Delaware corporation, is a
leading provider of business-critical data communications services to processors of credit card, debit card and automated teller machine (ATM)
transactions. TNS is also a leading provider of call signaling and database access services to the domestic telecommunications industry and of
secure data and voice network services to the global financial services industry. TNS' data communication services enable secure and reliable
transmission of time-sensitive, transaction-related information critical to its customers' operations. The Company's customers outsource their
data communication requirements to TNS because of the Company's expertise, comprehensive customer support and cost-effective services.
TNS provides services to customers in the United States and increasingly to international customers in 12 countries, including Canada and
countries in Europe and the Asia-Pacific region.

     The Company provides it's services through its multiple data networks, each designed specifically for transaction applications. These
networks support a variety of widely accepted communications protocols and are designed to be scalable and accessible by multiple methods,
including dial-up, dedicated, wireless and Internet connections.

     The Company has four business divisions: (1) the point-of-sale/point-of-service (POS) division, which provides data communications
services to payment processors in the U.S. and Canada, (2) the telecommunication services division (TSD), which provides call signaling
services and database access services targeting primarily the telecommunications industry, (3) the financial services division (FSD), which
provides, primarily to the financial services community, data networking services in support of the Financial Information eXchange (FIX)
messaging protocol and other transaction oriented trading applications and (4) the international services division (ISD), which markets the
Company's POS and financial services in countries outside of the United States and Canada.

Purchase of the Company by PSINet, Inc.

      On November 23, 1999, PSINet, Inc. (PSINet), a provider of Internet access services and related products to businesses, acquired the
Company, and subsequently changed its name to PSINet Transaction Solutions Inc. in June 2000. PSINet accounted for the acquisition as a
purchase under the provisions of Accounting Principles Bulletin (APB) Opinion No. 16 "Business Combinations." PSINet paid the Company's
shareholders approximately $339.3 million in cash and approximately 15.2 million shares of PSINet common stock, which represented an
aggregate value of approximately $347.7 million based upon a price per share of PSINet common stock of $22.859. PSINet also assumed
options to acquire approximately 926,000 shares of the Company's common stock, representing an aggregate value of approximately
$13.0 million, which were exercisable into 926,000 shares of PSINet's common stock. As a result of PSINet's acquisition of the Company, the
change of control provisions in several executives employment agreements were triggered which resulted in a lump sum severance obligation
of approximately $9.4 million. The liability has been included in the allocation of the overall purchase price. Approximately $8.0 million of
this liability was paid during the year ended December 31, 2000, and the remaining balance was paid in the second quarter of 2001. PSINet
also repaid outstanding principal and interest under the Company's revolving credit facility in the amount of $52.1 million.

                                                                     F-50
     The purchase price of the Company was $700.0 million. A summary of assets and liabilities acquired, at estimated fair market value, was
as follows (in millions):

                        Tangible assets                                                                    $      113.1
                        Liabilities                                                                              (198.4 )
                        In-process research and development                                                        84.0
                        Goodwill                                                                                  481.8
                        Customer relationships                                                                    101.4
                        Developed technology                                                                       77.0
                        Trade names                                                                                37.7
                        Assembled workforce                                                                         3.4

                                                                                                           $      700.0


      The amounts allocated to goodwill and acquired intangibles were being amortized over their estimated useful lives of 4 to 20 years using
the straight-line method (see Note 2). In June 2000, amortization of the Company's trade names was accelerated in conjunction with PSINet's
decision to change the Company's name to PSINet Transaction Solutions Inc.

     In connection with PSINet's acquisition of the Company, the Company recorded an $84.0 million charge for acquired in-process research
and development. At the time of the acquisition by PSINet in November 1999, the Company was working on five key research and
development projects, which had not yet been determined to be technologically feasible and which had no alternative future use.

     This charge was determined based upon an independent appraisal prepared using appropriate valuation techniques, including
percentage-of-completion which utilizes the key milestones to estimate the stage of development of each project at the date of acquisition, an
estimation, as appropriate, of cash flows resulting from the expected revenues generated from such projects, and the discounting of the net cash
flows to their present value. The discount rate includes a factor that takes into account the stage of completion and uncertainty surrounding the
successful development of the purchased in-process technology. The value of the in-process projects was adjusted to reflect the relative value
and contribution of the acquired research and development.

Basis of Presentation

     Subsequent to PSINet's acquisition of the Company in November 1999, the Company operated as a separate independent company. The
accompanying consolidated financial statements include all assets, liabilities, revenues and expenses directly attributable to the Company.
PSINet provided certain limited administrative functions to the Company that included primarily legal, tax and payroll processing services.
PSINet did not allocate any such costs to the Company as such amounts were not significant. As discussed further in Note 4, current and
deferred income tax expense and benefit have been allocated to the Company and recorded in the accompanying consolidated statement of
operations by applying Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," to the Company as if it
was a separate tax payer. These allocations and estimates are not necessarily indicative of the costs and expenses that would have resulted if the
Company had been operated as a stand-alone entity.

Disposition of the Company by PSINet

     On March 12, 2001, the board of directors of PSINet approved a plan to sell the Company to TNS Holdings, Inc. for an aggregate price of
approximately $282.9 million, excluding transaction costs. As a result, and in accordance with SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of," it was determined that the goodwill had been impaired. The goodwill,
with a carrying value of approximately $450.5 million as of March 12, 2001, was written

                                                                      F-51
down to $128.3 million, its estimated fair value based upon the approximate sales price of the Company. On April 2, 2001, TNS Holdings, Inc.
completed its purchase of the Company from PSINet for approximately $282.9 million (or approximately $277.0 million, net of cash acquired
of $9.3 million and inclusion of transaction costs of approximately $3.4 million). TNS Holdings, Inc. immediately changed the name of the
Company to Transaction Network Services, Inc.

Acquisition of Minority Interest in TNS Ireland

    In March 2000, the Company completed an acquisition of the 40.0 percent minority interest in TNS Ireland for a purchase price of
approximately $3.2 million in cash. The Company accounted for the acquisition as a purchase in accordance with APB Opinion No. 16. The
purchase price was allocated to the reduction of the minority interest liability of approximately $22,000 and to goodwill of $3.2 million. The
goodwill was amortized over its estimated useful life of 20 years using the straight-line method (see Note 2).

2.   Summary of Significant Accounting Policies:

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated upon consolidation. The Company consolidates investments where it has a controlling financial interest as
defined by Accounting Research Bulletin No. 51, "Consolidated Financial Statements" as amended by SFAS No. 94, "Consolidation of all
Majority-Owned Subsidiaries." The usual condition for controlling financial interest is ownership of a majority of the voting interest and,
therefore, as a general rule ownership, directly or indirectly, of over fifty percent of the oustanding volume shares is a condition pointing
towards consolidation. For those investments in entities where the Company has significant influence over operations, but where the Company
does not have a controlling financial interest, the Company follows the equity-method of accounting pursuant to APB Opinion No. 18, "The
Equity Method of Accounting for Investments in Common Stock."

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements. Significant estimates affecting the financial statements include management's
judgements regarding the allowance for doubtful accounts, reserves for excess and obsolete inventories, future cash flows from long-lived
assets, and accrued expenses for probable losses. Actual results could differ from those estimates.

Revenue Recognition

    In December 1999, the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements," which summarizes certain of the SEC staff views on revenue recognition in financial statements. The
adoption of SAB No. 101 did not have a material impact on the financial condition or results of operations of the Company.

     The Company recognizes revenue when persuasive evidence of an agreement exists, the terms are fixed and determinable, services are
performed, and collection is probable. Cash received in advance of revenue recognition is recorded as deferred revenue. POS services revenue
is derived primarily from per transaction fees paid by the Company's customers for the transmission of transaction data through the Company's
networks, between payment processors and POS or ATM terminals. Telecommunication services revenue is derived primarily from fixed
monthly fees for call signaling services and per query

                                                                      F-52
fees charged for database access and validation services. Financial services revenue is derived primarily from monthly recurring fees based on
the number of connections to and through the Company's networks. In addition, the Company receives installation fees related to the
configuration of the customer's systems. Revenue from installation fees is being deferred and recognized ratably over the estimated useful life
of the technology to the customer, generally four years. Installation fees were $27,000 for the period from January 1, 2001 through April 2,
2001.

Cost of Network Services

      Cost of network services is comprised primarily of telecommunications charges, which include data transmission and database access
charges, leased digital capacity charges, circuit installation charges and activation charges. The cost of data transmission is based on a contract
or tariff rate per minute of usage in addition to a prescribed rate per transaction for certain vendors. The cost of database access, circuits,
installation and activation charges is based on fixed fee contracts with local exchange carriers and interexchange carriers. The cost of network
services also includes salaries, equipment maintenance and other costs related to the ongoing operation of the Company's data networks. These
costs are expensed by the Company as incurred. Depreciation expense on network equipment was $1.6 million for the period from January 1,
2001 through April 2, 2001, and is included in depreciation and amortization of property and equipment in the accompanying consolidated
statements of operations. Amoritzation expense on developed technology, an intangible asset recorded in the acquisition of Transaction
Network Services, Inc. (see Note 1), was approximately $4.9 million for the period from January 1, 2001 through April 2, 2001 and is included
in amortization of goodwill and acquired intangibles in the accompanying consolidated statements of operations.

Cash and Cash Equivalents

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

Concentrations of Credit Risk

     Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash
equivalents, accounts receivable, and long-term investments. The Company does not, as a matter of policy, require collateral on credit granted
to customers. The Company performs periodic evaluations of its customer base and establishes allowances for estimated credit losses.

Inventory

     Inventory is stated at the lower of cost or market, using the first-in, first-out method. Inventory consists primarily of network and computer
parts and equipment. The Company's products are subject to technological change and changes in the Company's respective competitive
markets. Management has provided reserves for excess and obsolete inventories. It is possible that new product launches or changes in
customer demand could result in unforeseen changes in inventory requirements for which no reserve has been provided.

Long-Lived Assets

     In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
the Company reviews its long-lived assets, including property and equipment, capitalized software and development, identifiable intangibles
and goodwill for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully
recoverable. To determine recoverability of its long-lived assets, the Company

                                                                       F-53
evaluates the probability that future undiscounted net cash flows will be less than the carrying amount of the assets. If future estimated
undiscounted cash flows are less than the carrying amount of long-lived assets, then such assets are written down to their estimated fair value.

Property and Equipment

      Property and equipment is recorded at cost or fair value at the date of acquisition, net of accumulated depreciation and amortization.
Replacements and improvements that extend the useful life of property and equipment are capitalized. In accordance with AICPA Statement of
Position No. 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use," costs for internal use software
that are incurred in the preliminary project stage and in the post-implementation and operation stage are expensed as incurred. Costs incurred
during the application development stage are capitalized and amortized over the estimated useful life of the software.

     Depreciation and amortization of property and equipment is computed using the straight-line method over the estimated useful lives of the
assets as follows:

Network equipment and purchased software                 3 – 7 years
Office furniture and equipment                           3 – 5 years
Leasehold improvements                                   Shorter of the useful life or the lease term,
                                                         generally 5 – 15 years
Capitalized software development costs                   3 – 5 years

Goodwill and Acquired Intangibles

     Goodwill and acquired intangibles relate primarily to PSINet's acquisition of the Company in November 1999 (see Note 1). Amortization
of goodwill and other intangibles is recorded on a straight-line basis. The Company evaluates the useful lives assigned to goodwill and other
intangibles on a regular basis. Amortization periods are as follows:

Goodwill                                                                                                 20 years
Customer relationships                                                                                   20 years
Developed technology                                                                                     4 years
Assembled workforce                                                                                      5 years
Trade names                                                                                              20 years

Income Taxes

      The Company accounts for income taxes in accordance with SFAS No. 109. The taxable income of the Company for the periods presented
is included in the consolidated tax returns of PSINet. A separate return was not prepared in any material jurisdiction for the Company.

     Deferred income taxes and related tax expense have been recorded by applying the asset and liability approach to the Company as if it
were a separate taxpayer. Under SFAS No. 109, deferred tax assets or liabilities are computed based upon the difference between financial
statement and income tax bases of assets and liabilities using the enacted marginal tax rate. The Company provides a valuation allowance on its
net deferred tax assets when it is more likely than not that such assets will not be realized. Deferred income tax expense or benefits are based
upon the changes in the asset or liability from period to period. Current tax expense has been determined as if the Company was a separate
taxpayer. Income taxes currently payable and adjustments thereto arising from equity compensation charges are deemed payable to PSINet.

                                                                       F-54
Stock Compensation

      Through April 2, 2001, the Company's employees participated in PSINet's stock compensation programs. The Company accounts for
employee stock options or similar equity instruments to employees under the intrinsic value method prescribed by APB Opinion No. 25. Under
the intrinsic value method, compensation cost is the excess, if any of the fair value of the stock at the grant date or other measurement date over
the amount an employee must pay to acquire the stock. SFAS No. 123 defines a fair value method of accounting for employee stock options or
similar equity instruments. Under the fair value method, compensation cost is measured at the grant date based on the value of the award and is
recognized over the service period. SFAS No. 123 allows an entity to continue to use the intrinsic value method. However, entities electing to
account for employee stock options or similar instruments pursuant to APB Opinion No. 25 must make pro forma disclosures of net income, as
if the fair value method of accounting had been applied.

    The fair value of each stock option is estimated on the date of grant using the Black-Scholes option-pricing model with the following
assumptions:

Expected life                                                                                        4 years
Risk-free interest rate                                                                              4.6 – 5.8%
Volatility                                                                                           57 – 90%
Dividend yield                                                                                       0.0%

    Had compensation cost been determined based upon the fair value method at the grant dates, the Company's net loss would have been
$330.5 million for the period from January 1, 2001 through April 2, 2001.

Foreign Currency Translation

     The Company has determined that the functional currency of its non-U.S. operations is the local currency. Assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at current exchange rates. Operating results are translated into U.S. dollars
using the average rates of exchange prevailing during the period. Gains or losses resulting from the translation of assets and liabilities are
included as a component of accumulated other comprehensive loss in stockholder's equity except for the translation effect of intercompany
balances that are anticipated to be settled in the foreseeable future.

Comprehensive Loss

     Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances
from non-owner sources. Other comprehensive loss refers to revenue, expenses, gains, and losses that under accounting principles generally
accepted in the United States are included in comprehensive loss, but excluded from net loss. For the periods presented, the elements within
other comprehensive loss, net of tax, consisted solely of foreign currency translation adjustments.

Segment Reporting

     The Company provides segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company classifies its business into four segments: POS, TSD, FSD and ISD. However, the Company's
management only evaluates revenues for these four segments. A significant portion of the Company's North American operating expenses are
shared between the POS, TSD and FSD segments, and therefore, management analyzes operating results for these three segments on a
combined basis. SFAS No. 131 designates the internal information used by management for allocating resources and assessing performance as
the source of the

                                                                       F-55
Company's reportable segments and requires disclosure about products and services, geographical areas and major customers.

Recent Accounting Pronouncements

     In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria
are met. The Company adopted the provisions of SFAS No. 133 on January 1, 2001. The Company's adoption of SFAS No. 133 did not have a
material impact on the financial condition or results of operations of the Company.

3.   Stock Compensation and Retirement Plans:

Employee Stock Purchase Plan and Stock Option Plan

     The Company's employees participated in PSINet's qualified employee stock purchase plan (ESPP) and its stock option plan. Under the
ESPP, eligible employees of the Company purchased shares of PSINet's common stock through payroll deductions up to 15.0 percent of their
eligible compensation. The purchase price was equal to 85.0 percent of the lower of the fair market value on the first day or the last day of each
six-month purchase period.

     Under the stock option plan, Company employees received options to purchase shares of PSINet's common stock, the exercise price of
which was equal to the fair market value at the date of grant. Options granted under the stock option plan became exercisable based on a
schedule determined by PSINet's compensation committee at the date of grant, generally over four years. The options had terms of seven to ten
years from the date of grant.

     In connection with the acquisition of the Company by PSINet effective November 23, 1999 (see Note 1), options to acquire 463,000
shares of the Company's common stock were converted into options to acquire shares of PSINet common stock at an exchange ratio of
one-to-one.

     Upon the sale of the Company on April 2, 2001 (see Note 1), employees of the Company ceased participation in both PSINet's ESPP and
stock option plan. On April 2, 2001, PSINet refunded amounts contributed under the ESPP to the employees and vesting ceased for stock
options. Under the terms of PSINet's stock option plan, an employee had three months from the date of sale of the Company to exercise vested
stock options, at which time any unexercised stock options were forfeited.

     The following table summarizes the stock option activity:

                                                                     Number of
                                                                      shares of
                                                                      common                                         Weighted-average
                                                                    stock options         Price per share             exercise price

Balance, December 31, 2000                                              3,841,378            $0.07 – $24.31    $                    10.93
  Granted                                                                      —                         —                             —
  Exercised                                                                    —                         —                             —
  Forfeited                                                               (23,302 )           0.07 – 24.31                          15.73

Balance, April 2, 2001                                                  3,818,076              0.07 – 24.31                         10.90


     As of April 2, 2001, 1,006,023 outstanding options were exercisable and the weighted average remaining contractual life of the
outstanding options was 8.9 years.

                                                                      F-56
Retirement Savings Plan

     Through April 2, 2001, the Company's employees participated in PSINet's retirement savings plan, under which participants were eligible
to receive discretionary PSINet matching contributions each year at the equivalent of 100.0 percent of the first $1,000 of employee salary
deferral and 25.0 percent of amounts thereafter up to the maximum allowable deferral under Internal Revenue Service regulations. All
Company contributions to a participant's plan account are vested after two years of service with the Company. The accompanying statement of
operations includes as expense total contributions made by PSINet on behalf of the Company's employees under the Plan, or $53,617 for the
period from January 1, 2001 through April 2, 2001. Upon the sale of the Company on April 2, 2001 (see Note 1), employees of the Company
ceased participation in PSINet's retirement savings plan.

4.   Income Taxes:

    The components of loss before income taxes and minority interest were as follows for the period from January 1, 2001 through April 2,
2001 (in thousands):

                       U.S.                                                                            $       (328,748 )
                       Non-U.S.                                                                                  (2,215 )

                                                                                                       $       (330,963 )


    The components of the Company's income tax benefit consisted of the following for the period from January 1, 2001 through April 2,
2001 (in thousands):

                       Current provision:
                         U.S.                                                                              $     1,814
                         Non-U.S.                                                                                   22

                                                                                                                 1,836

                       Deferred benefit:
                         U.S.                                                                                   (2,961 )
                         Non-U.S.                                                                                   —

                                                                                                                (2,961 )

                                  Total income tax benefit                                                 $    (1,125 )


     The Company had foreign net operating loss carryforwards for tax purposes in jurisdictions outside the U.S. Some of the non-U.S. loss
carryforwards will expire in varying amounts in five to ten years. The majority of the non-U.S. loss carryforwards will never expire under local
country tax rules. The Company provided a valuation allowance against its deferred tax asset related to the non-U.S. net operating loss
carryforwards since realization of these tax benefits through future taxable income could not be reasonably assured.

                                                                     F-57
     Taxes computed at the U.S. statutory federal income tax rate of 35.0 percent are reconciled to the Company's effective income tax rate as
follows for the period from January 1, 2001 through April 2, 2001:

U.S. federal taxes at statutory rate                                                                        35.0 %
U.S. state taxes (net of federal tax benefit)                                                                5.0
Non-U.S. taxes                                                                                              (1.4 )
Amortization of non-deductible goodwill                                                                     (0.4 )
Impairment of goodwill                                                                                     (37.6 )
Valuation allowance and other                                                                               (0.3 )

Effective rate                                                                                               0.3 %


5.   Segment Information:

     The Company's reportable segments are strategic business units that offer different products and services. The Company classifies its
business into four segments: POS, TSD, FSD and ISD. However, the Company's management only evaluates revenues for these four segments.
A significant portion of the Company's North American operating expenses are shared between the POS, TSD and FSD segments, and
therefore, management analyzes operating results for these three segments on a combined basis. The accounting policies for the segments are
the same as those described in the summary of significant accounting policies (see Note 2).

     Management evaluates the North American and ISD performance on EBITDA because operating expenses are distinguishable between
North American and ISD operations. The Company defines EBITDA as income from operations before depreciation, amortization, impairment
of goodwill and in-process research and development. EBITDA is not a generally accepted accounting principle measure, but rather a measure
employed by management to view operating results adjusted for major non-cash items. The Company's definition of EBITDA may not be
comparable to similarly titled measures used by other entities. Assets are not segregated between reportable segments, and management does
not use asset information by segments to evaluate segment performance. As such, no information is presented related to fixed assets by
reportable segment and capital expenditures for each segment.

     Revenue for the Company's four business units is presented below for the period from January 1, 2001 through April 2, 2001 (in
thousands):

Revenues:
  POS                                                                                                 $     29,802
  TSD                                                                                                        7,591
  FSD                                                                                                        3,334
  ISD                                                                                                        6,028

       Total revenues                                                                                 $     46,755

     EBITDA for the North American and ISD operations are reflected below for the period from January 1, 2001 through April 2, 2001 (in
thousands):

EBITDA:
  North America                                                                                   $        8,908
  ISD                                                                                                     (2,548 )

       Total EBITDA                                                                               $       6,360


                                                                     F-58
     EBITDA differs from consolidated loss before income taxes and minority interest reported in the consolidated statements of operations as
follows for the period from January 1, 2001 through April 2, 2001 (in thousands):

EBITDA                                                                                            $         6,360
Reconciling items:
  Depreciation and amortization of property and equipment and goodwill and acquired
  intangibles                                                                                             (15,269 )
  Impairment of goodwill                                                                                 (322,153 )
  Interest expense                                                                                           (151 )
  Interest and other income, net                                                                              250

Loss before income taxes and minority interest                                                    $      (330,963 )


Geographic Information

     The Company sold its services in the United States and Canada and through foreign affiliates in Europe. Information regarding revenues
and long-lived assets attributable to the United States and Canada and to all foreign countries is stated below.

      The Company's revenues were generated in the following geographic regions for the period from January 1, 2001 through April 2, 2001
(in thousands):

                        North America                                                                   $      40,727
                        Europe                                                                                  6,028

                          Total revenues                                                                $      46,755

6.   Commitments and Contingencies:

Operating Leases

     The Company leases office space, network equipment and certain office equipment under various noncancelable operating leases that
expire through October 2013. Minimum rental expense is recognized on a straight-line basis over the term of the lease, regardless of when
payments are due. Rental expense was $0.8 million for the period from January 1, 2001 through April 2, 2001.

Significant Customers

     Substantial portions of the revenues recognized by the Company are related to a limited number of customers. For the period from
January 1, 2001 through April 2, 2001, two customers included in the Company's POS division accounted for 9.5 percent and 12.2 percent of
the Company's consolidated revenue.

                                                                    F-59
                INTRODUCTION TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

     The unaudited pro forma as adjusted consolidated statements of operations for the year ended December 31, 2003 and the six months
ended June 30, 2004 and the unaudited pro forma consolidated balance sheet as of June 30, 2004 give effect to our initial public offering on
March 16, 2004 and the offering contemplated by this prospectus and certain related transactions as follows, as if each had occurred on
January 1, 2003 for purposes of the unaudited pro forma as adjusted consolidated statements of operations and on June 30, 2004 for purposes of
the unaudited pro forma consolidated balance sheet:

         •
                 the sale of 1,200,000 shares of common stock in this offering at an assumed offering price of $20.64 per share;

         •
                 the application of the net proceeds we receive from this offering, after deducting the underwriting discounts and commissions
                 and estimated offering expenses, to redeem approximately $22.5 million in aggregate principal amount of our senior secured
                 credit facility as described in "Use of Proceeds";

         •
                 the sale on March 16, 2004 of 4,420,000 shares of common stock in the initial public offering at an offering price of $18.00
                 per share;

         •
                 the conversion of the Class A redeemable convertible preferred stock, plus accrued and unpaid dividends, into 9,984,711
                 shares of common stock upon completion of the initial public offering, at an initial public offering price of $18.00 per share;

         •
                 the application of the net proceeds from the initial public offering, after deducting the underwriting discounts and
                 commissions and estimated offering expenses, to redeem approximately $71.5 million in aggregate principal amount of the
                 prior senior secured credit facility; and

         •
                 the redemption and extinguishment of the prior senior secured credit facility and the payment of related financing costs from
                 the borrowings under the new term loan and revolving credit facility. (Please see our discussion of the new term loan and
                 revolving credit facility under the "Liquidity and Capital Resources" section of "Management's Discussion and Analysis of
                 Financial Condition and Results of Operations" and Note 5 to our audited consolidated financial statements, included
                 elsewhere in this prospectus.)

     The unaudited pro forma consolidated financial information is based upon currently available information, assumptions and estimates,
which we believe are reasonable. These assumptions and estimates, however, are subject to change. In our opinion, all adjustments have been
made that are necessary to present fairly the pro forma data. The unaudited pro forma consolidated financial information is presented for
informational purposes only and is not indicative of either future results of operations or results that might have been achieved if the
transactions had been consummated as of January 1, 2003 or June 30, 2004. The pro forma consolidated financial information should be read in
connection with our historical consolidated financial statements together with the related notes thereto, which are included elsewhere in this
prospectus.

                                                                      F-60
                                                                           TNS, INC.

                            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                                           For the six months ended June 30, 2004

                                                                               Initial
                                                                               Public
                                                                             Offering                   Offering                   Pro forma
                                                 TNS, Inc.                  adjustments                adjustments                 as adjusted

                                                                       (in thousands, except per share and share amounts)


Revenues                                     $        121,096          $                  —       $                   —        $         121,096

Operating expenses:
  Cost of network services                              59,825                            —                           —                    59,825
  Engineering and development                            6,932                            —                           —                     6,932
  Selling, general and administrative                   23,825                            —                           —                    23,825
  Depreciation and amortization of
  property and equipment                                 9,756                            —                           —                     9,756
  Amortization of intangible assets                     14,705                            —                           —                    14,705

         Total operating expenses                     115,043                             —                           —                  115,043

Income from operations                                   6,053                         —                              —                     6,053
Interest expense                                        (5,437 )                    3,218 (A)                        525 (D)               (1,694 )
Interest and other income, net including
equity in loss of unconsolidated affiliate                   (180 )                       —                           —                          (180 )

Income before income taxes                                    436                    3,218                         525                      4,179
Income tax provision                                         (630 )                 (1,287 )(B)                   (210 )(B)                (2,127 )

Net (loss) income                                            (194 )                 1,931                            315                    2,052

Dividends on preferred stock                            (3,428 )                    3,428 (C)                         —                            —


Net (loss) income attributable to
common stockholders                          $          (3,622 ) $                  5,359         $                  315       $            2,052


Basic and diluted (loss) earnings per
common share                                 $               (0.17 )                                                           $                 0.07


Basic weighted average common shares
outstanding                                        20,842,355                                                                         27,978,378 (E)


Diluted weighted average common
shares outstanding                                 20,842,355                                                                         28,227,558 (E)


                                                                             F-61
                                                                       TNS, INC.

                            UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                                            For the year ended December 31, 2003

                                                                              Initial
                                                                              Public
                                                                            Offering                    Offering                 Pro forma
                                                 TNS, Inc.                 adjustments                 adjustments               as adjusted

                                                                       (in thousands, except per share and share amounts)


Revenues                                     $        223,353          $                 —         $                 —       $         223,353

Operating expenses:
  Cost of network services                            119,990                            —                           —                 119,990
  Engineering and development                          11,560                            —                           —                  11,560
  Selling, general and administrative                  37,284                            —                           —                  37,284
  Depreciation and amortization of
  property and equipment                                20,220                           —                           —                   20,220
  Amortization of intangible assets                     25,769                           —                           —                   25,769

         Total operating expenses                     214,823                            —                           —                 214,823

Income from operations                                   8,530                        —                            —                      8,530
Interest expense                                       (11,272 )                   6,932 (A)                    1,030 (D)                (3,310 )
Interest and other income, net including
equity in loss of unconsolidated affiliate               2,480                           —                           —                    2,480

(Loss) income before income taxes                            (262 )                6,932                        1,030                     7,700
Income tax provision                                         (838 )               (2,773 )(B)                    (412 )(B)               (4,023 )

Net (loss) income                                       (1,100 )                   4,159                          618                     3,677

Dividends on preferred stock                           (15,060 )                  15,060 (C)                         —                          —


Net (loss) income attributable to
common stockholders                          $         (16,160 ) $                19,219           $              618        $            3,677


Basic and diluted (loss) earnings per
common share                                 $               (1.31 )                                                         $                 0.13


Basic and diluted weighted average
common shares outstanding                          12,373,335                                                                       27,978,046 (E)


                                                                           F-62
                                                         TNS, INC.

                                      UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                                                       As of June 30, 2004

                                                                                   Offering
                                                               TNS, Inc.          adjustments                 Pro forma

                                                                                  (in thousands)


ASSETS
Current assets:
  Cash and cash equivalents                                $        12,413    $                    —      $       12,413
  Accounts receivable, net                                          46,553                         —              46,553
  Other current assets                                               8,804                         —               8,804

     Total current assets                                           67,770                         —              67,770

Property and equipment, net                                        44,453                          —              44,453
Identifiable intangible assets, net                               218,764                          —             218,764
Goodwill                                                            4,453                          —               4,453
Other assets                                                        8,858                          —               8,858

     Total assets                                          $      344,298     $                    —      $      344,298

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                        $        11,500    $               (943 )(F)   $       10,557
  Accounts payable, accrued expenses and other current
  liabilities                                                       38,495                         —              38,495
  Deferred revenue                                                   9,801                         —               9,801

     Total current liabilities                                      59,796                    (943 )              58,853

Long-term debt, net of current portion                              69,510                (21,510 )(F)            48,000
Other liabilities                                                    4,401                     —                   4,401

     Total liabilities                                            133,707                 (22,453 )              111,254


Stockholders' equity:
   Common stock and additional paid-in capital                    259,059                  22,453 (G)            281,512
   Accumulated deficit                                            (42,513 )                    —                 (42,513 )
   Deferred stock compensation                                     (5,248 )                    —                  (5,248 )
   Accumulated other comprehensive loss                              (707 )                    —                    (707 )

     Total stockholders' equity                                   210,591                  22,453                233,044

     Total liabilities and stockholders' equity            $      344,298     $                    —      $      344,298


                                                           F-63
                                                                       TNS, INC.

                      NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

(A)
       Reflects the reduction of interest expense due to the repayment of $164.6 million indebtedness under the prior senior secured credit
       facility through the application of the net proceeds from the initial public offering of $71.5 million and the incremental interest expense
       as a result of borrowings under our senior secured credit facility of $95.0 million and incurrence of related deferred financing costs of
       $2.0 million as follows (dollars in thousands):


                                                                                  Year ended                    Six months ended
                                                                               December 31, 2003                  June 30, 2004

Interest on prior senior secured credit facility (assumes a weighted
average interest rate of 6.9% and 5.5%, respectively)                     $                        8,907    $                  1,610
Amortization and write-off of deferred financing costs related to our
prior senior secured credit facility                                                               1,951                       2,351
Interest on our senior secured credit facility (assumes a weighted
average interest rate of 3.7% and 3.8%, respectively)                                          (3,476 )                            (899 )
Amortization of deferred financing costs related to our senior
secured credit facility                                                                            (450 )                          156

                                                                          $                        6,932    $                  3,218


(B)
       Reflects the incremental provision for state and federal income taxes assuming an effective rate of 40.0%.

(C)
       Reflects the elimination of dividends on preferred stock as a result of the conversion of the outstanding shares of Class A redeemable
       convertible preferred stock plus accrued and unpaid dividends into common stock upon the consummation of the initial public offering.

(D)
       Reflects the reduction of interest expense due to the repayment of $5.7 million indebtedness under the prior senior secured credit
       facility and $16.8 million indebtedness under our senior secured credit facility through the application of the net proceeds we will
       receive from this offering as follows (dollars in thousands):


                                                                                  Year ended                    Six months ended
                                                                               December 31, 2003                  June 30, 2004

Interest on prior senior secured credit facility (assumes a weighted
average interest rate of 6.9% and 5.5%, respectively)                     $                         415     $                       207
Interest on our senior secured credit facility (assumes a weighted
average interest rate of 3.7% and 3.8%, respectively)                                               615                             318

                                                                          $                        1,030    $                       525

(E)
       The pro forma as adjusted basic weighted average common shares outstanding reflects:


       •
               4,420,000 shares of common stock issued in the initial public offering, to the extent such proceeds were used to repay amounts
               outstanding under the prior senior secured credit facility;

       •
               9,984,711 shares of common stock issued in connection with the conversion of the Class A redeemable convertible preferred
               stock, plus accrued and unpaid dividends, at an initial public offering price of $18.00 per share; and
F-64
      •
               1,200,000 shares of common stock to be issued by us in this offering, to the extent such proceeds were used to repay amounts
               outstanding under the prior senior secured credit facility and our senior secured credit facility.

      A reconciliation of the historical basic weighted average common shares outstanding to the pro forma as adjusted basic weighted average
      common shares outstanding is as follows:

                                                                                  Year ended            Six months ended
                                                                               December 31, 2003          June 30, 2004

Historical basic weighted average common shares outstanding                             12,373,335             20,842,355
Common stock issued in the initial public offering                                       4,420,000              1,821,445
Conversion of Class A redeemable convertible preferred stock                             9,984,711              4,114,578
Common stock to be issued in this offering                                               1,200,000              1,200,000

Pro forma as adjusted basic weighted average common shares
outstanding                                                                             27,978,046             27,978,378

      Due to the anti-dilutive nature of outstanding options to purchase 374,293 shares of common stock as of December 31, 2003, there is no
      effect on the calculation of pro forma as adjusted diluted weighted average common shares outstanding for pro forma as adjusted diluted
      earnings per common share. As a result, pro forma as adjusted basic and diluted earnings per common share for the year ended
      December 31, 2003 are identical.

      The treasury stock effect of options to purchase 71,158 shares of common stock and 304,000 restricted stock units have been included in
      the calculation of pro forma as adjusted diluted weighted average common shares outstanding for pro forma as adjusted diluted earnings
      per common share for the six months ended June 30, 2004.

(F)
          Reflects the repayment of borrowings under our senior secured credit facility.

(G)
          Reflects the common stock to be issued in connection with this offering.

                                                                        F-65
                         5,815,203 Shares




                         Common Stock

                            PROSPECTUS
                                    , 2004


  LEHMAN BROTHERS                                    JPMORGAN
      Sole Bookrunner                                Joint Lead Manager


WILLIAM BLAIR & COMPAN    SUNTRUST ROBINSON HUMPHR
Y                                               EY
                                                            PART II
                                            INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

    The following table sets forth all costs and expenses, other than the underwriting discounts and commissions payable by the Registrant in
connection with the sale and distribution of the common stock being registered. All amounts shown are estimates except for the Securities and
Exchange Commission registration fee and the NASD filing fee.

Securities and Exchange Commission registration fee                                                     $         17,870
NASD filing fee                                                                                                   14,604
Blue sky qualification fees and expenses                                                                          10,000
Printing and engraving expenses                                                                                  200,000
Legal fees and expenses                                                                                          300,000
Accounting fees and expenses                                                                                     200,000
Transfer agent and registrar fees                                                                                  5,000
Miscellaneous expenses                                                                                           452,526

Total                                                                                                   $      1,200,000

Item 14. Indemnification of Directors and Officers

     We have entered, and intend to continue to enter, into separate indemnification agreements with each of our directors and officers which
are broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification
agreements require us, among other things, to indemnify our officers and directors against liabilities that may arise by reason of their status or
service as directors or officers, other than liabilities arising from willful misconduct. These indemnification agreements also require us to
advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified and
to obtain directors' and officers' insurance if available on reasonable terms.

      Section 145 of the Delaware General Corporation Law, as amended, provides that a corporation may indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at its request
in such capacity in another corporation or business association, against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

     Section 102(b)(7) or the Delaware General Corporation Law, as amended, permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal
benefit.

      The Registrant's Amended and Restated Certificate of Incorporation provides for the elimination of personal liability of a director for
breach of fiduciary duty as permitted by Section 102(b)(7) of the Delaware General Corporation Law, and Article Eight of the Registrant's
certificate of incorporation

                                                                         II-1
provides that the Registrant shall indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law.

     The Registrant has in effect a directors and officers liability insurance policy under which the directors and officers of the Registrant are
insured against loss arising from claims made against them due to wrongful acts while acting in their individual and collective capacities as
directors and officers, subject to certain exclusions.

Item 15. Recent Sales of Unregistered Securities

     The Registrant was incorporated in March 2001 for the purpose of purchasing Transaction Network Services, Inc. from PSINet, Inc. In
connection with the formation of the Registrant, on April 3, 2001 the Registrant issued to TNS Holdings, L.L.C. 134,845.633 shares of its
Class A redeemable convertible preferred stock for $134,845,633 in cash ($1,000 per share) and 12,370,979 shares of its common stock for
$4,170,000 in cash ($0.34 per share). The issuance of the preferred stock and common stock were exempt from registration under Section 4(2)
of the Securities Act of 1933 as transactions by an issuer not involving a public offering.

     From April 3, 2001 through March 15, 2004, the Registrant has granted options to purchase 427,464 shares of common stock at exercise
prices ranging from $19.60 to $39.21 per share to its directors, officers, employees and consultants and those of its subsidiaries, under its 2001
Founders' Stock Option Plan, and 2,535 shares have been purchased pursuant to the exercise of such options. The issuance of the options
granted under the plan and the sale of common stock upon exercise of the options were exempt from registration under Rule 701 promulgated
under the Securities Act of 1933.

     On December 4, 2002, the Registrant granted options to purchase 6,377 shares of its common stock at an exercise price of $39.21 per
share to a consultant who provides services to it in Italy. The granting of the options was exempt from registration under Regulation S
promulgated under the Securities Act of 1933.

Item 16. Exhibits and Financial Statement Schedules

(a)
       The following documents are filed as exhibits to this registration statement.


1.1         Form of Underwriting Agreement

2.1         Asset Purchase Agreement by and between the Registrant and Sprint Communications Company L.P. dated May 13, 2002.**

2.2         Stock Purchase Agreement between PSINet, Inc., PSINet Transaction Solutions, Inc. and the Registrant dated March 12, 2001.**

2.3         Settlement Agreement among the Registrant, Transaction Network Services Inc. and PSINet, Inc. dated August 9, 2001.**

3.1         Form of Amended and Restated Certificate of Incorporation of the Registrant.**

3.2         Form of Amended and Restated Bylaws of the Registrant.**

4.1         Credit Agreement among Registrant, Transaction Network Services, Inc., Deutsche Bank Trust Company Americas and various
            lending institutions dated April 3, 2001, as amended.**

4.2         Form of Amended and Restated Registration Agreement.**

4.3         Stock Purchase Agreement dated April 3, 2001 between the Registrant and TNS Holdings, L.L.C., as amended.**

4.4         Form of Dissolution Agreement.**


                                                                        II-2
4.5         Form of Credit Agreement among Registrant, Transaction Network Services, Inc., General Electric Capital Corporation, various
            other lending institutions and GECC Capital Markets Group, Inc.**

5.1         Opinion of Arent Fox PLLC.

Material Contracts

10.1        Deed of Lease dated September 21, 1995 between Transaction Network Services, Inc. and Pond Building, L.L.C., as amended.**

10.2        Gross Lease dated December 31, 2002 by and between The Multi-Employer Property Trust and Transaction Network
            Services, Inc.**

10.3        Lease dated April 17, 2000 by and between Tinsley Park Limited, Transaction Network Services, Inc. and Transaction Network
            Services (UK) Ltd.**

Management Contracts and Compensatory Plans

10.4        TNS Holdings, Inc. 2001 Founders' Stock Option Plan.**

10.5        Form of TNS, Inc. 2004 Long-Term Incentive Plan.**

10.6        Form of Amended and Restated Senior Management Agreement between the Registrant and John J. McDonnell, Jr.**

10.7        Form of Amended and Restated Senior Management Agreement between the Registrant and Brian J. Bates.**

10.8        Form of Amended and Restated Senior Management Agreement between the Registrant and Henry H. Graham, Jr.**

10.9        Form of Amended and Restated Senior Management Agreement between the Registrant and John J. McDonnell III.**

10.10       Form of Amended and Restated Senior Management Agreement between the Registrant and Matthew M. Mudd.**

10.11       Form of Amended and Restated Senior Management Agreement between the Registrant and Edward C. O'Brien.**

10.12       Management Agreement between Transaction Network Services, Inc. and Mark G. Cole.**

10.13       Management Agreement between Transaction Network Services, Inc. and Larry A. Crompton.**

10.14       Management Agreement between Transaction Network Services, Inc. and Michael Q. Keegan.**

10.15       Management Agreement between Transaction Network Services, Inc. and James J. Mullen.**

10.16       Management Agreement between Transaction Network Services, Inc. and Alan R. Schwartz.**

10.17       Management Agreement between Transaction Network Services, Inc. and Barry S. Toser.**

10.18       Management Agreement between Transaction Network Services, Inc. and Scott E. Ziegler.**

10.19       Form of Indemnification Agreement between the Registrant and its directors and executive officers.**

21.1        Subsidiaries of the Registrant.**

23.1        Consent of Ernst & Young LLP.

23.2        Consent of Arent Fox PLLC (included in exhibit 5.1).

24.1        Power of attorney (previously filed).


**
        Incorporated by reference to the exhibit of the same designation in the registration statement on Form S-1 filed November 3, 2003, as
        amended (file no. 333-110188).
II-3
(b)
       Financial Statement Schedules.


                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                               ON FINANCIAL SCHEDULE

To the Board of Directors of TNS, Inc. (formerly TNS Holdings, Inc.):

     We have audited the consolidated financial statements of TNS, Inc. (formerly TNS Holdings, Inc., the Company) as of December 31, 2003
and 2002, and for the years ended December 31, 2003 and 2002, and for the period from April 3, 2001 through December 31, 2001, and have
issued our report thereon dated February 6, 2004, except with respect to the matter discussed in paragraph 5 of Note 1, as to which the date is
March 15, 2004, (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in
Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.

    In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

                                                            /s/ Ernst & Young LLP

McLean, Virginia
February 6, 2004

                                                                       II-4
                                                                        TNS, INC.
                                                              (formerly TNS Holdings, Inc.)

                                                Schedule II — Valuation and Qualifying Accounts

                                                                                  Additions

                                             Balance at
                                             beginning         Charged to costs          Reserves related to                               Balance at end
(in thousands)                               of period          and expenses             purchased entities         Deductions               of period

For the year ended December 31,
2003:
   Allowance for doubtful accounts       $         3,952                   1,351                               —          (990 ) (1)   $              4,313
   Valuation allowance on deferred
   tax assets                            $         2,579                  242 (2)                       2,892 (3)            —         $              5,713

For the year ended December 31,
2002:
   Allowance for doubtful accounts       $         5,127                     636                          145           (1,956 ) (1)   $              3,952
   Valuation allowance on deferred
   tax assets                            $         1,150                   1,429                               —             —         $              2,579

For the period from April 3, 2001
through December 31, 2001:
   Allowance for doubtful accounts       $                —                1,260                        4,712             (845 ) (1)   $              5,127
   Valuation allowance on deferred
   tax assets                            $                —                  390                          760                —         $              1,150


(1)
         Represents write-offs of amounts deemed uncollectible.

(2)
         Addition to valuation allowances for changes in the tax provision.

(3)
         TNS, Inc. (the Company) determined that certain of its intangible assets acquired in April 3, 2001 were deductible on its tax returns in
         the United States, and therefore, the Company reduced certain of its deferred tax liabilities and increased its valuation allowance on its
         deferred tax assets related to certain of its foreign net operating loss carryforwards.

                                                                             II-5
                              REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                               ON FINANCIAL SCHEDULE

To Transaction Network Services, Inc.:

     We have audited the consolidated statements of operations, stockholder's equity and cash flows of Transaction Network Services, Inc.
(formerly PSINet Transaction Solutions Inc., the Company) for the period from January 1, 2001 through April 2, 2001, and have issued our
report thereon dated September 6, 2002 (included elsewhere in this Registration Statement). Our audit also included the financial statement
schedule listed in Item 16(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit.

    In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set forth therein.

                                                            /s/ Ernst & Young LLP

McLean, Virginia
September 6, 2002

                                                                      II-6
                                                      Transaction Network Services, Inc.
                                                 (formerly PSINet Transaction Solutions, Inc.)

                                              Schedule II — Valuation and Qualifying Accounts

                                                                              Additions

                                            Balance at
                                            beginning      Charged to costs          Reserves related to                               Balance at end
(in thousands)                              of period       and expenses             purchased entities        Deductions                of period



For the period from January 1, 2001
through April 2, 2001:
   Allowance for doubtful accounts      $         2,720                2,053                               —           (61 ) (1)   $              4,712
   Valuation allowance on deferred
   tax assets                           $         6,200                  672                               —            —          $              6,872


(1)
         Represents write-offs of amounts deemed uncollectible.

                                                                        II-7
Item 17. Undertakings

      Insofar as indemnification by the Registrant for liabilities arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions referenced in Item 14 of this Registration Statement or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act, and is
therefore unenforceable. In the event that a claim for indemnification against such liabilities—other than the payment by the Registrant of
expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or
proceeding—is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the
Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

     The undersigned registrant hereby undertakes that:

     (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared
effective; and

     (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.

                                                                        II-8
                                                                 SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in city of Reston, Commonwealth of Virginia, on September 9, 2004.

                                                             TNS, INC.

                                                             By: /s/ MICHAEL Q. KEEGAN

                                                                   Michael Q. Keegan
                                                                   Executive Vice President, General Counsel
                                                                   and Secretary

     Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities
indicated on September 9, 2004:

Signature                                                                 Title



/s/ JOHN J. MCDONNELL, JR.*                                               Chief Executive Officer, Chairman and Director

John J. McDonnell, Jr.

/s/ JOHN B. BENTON*                                                       Director

John B. Benton

/s/ PHILIP A. CANFIELD*                                                   Director

Philip A. Canfield

/s/ STEPHEN X. GRAHAM*                                                    Director

Stephen X. Graham

/s/ GEORGE G. MOORE*                                                      Director

George G. Moore

/s/ BRUCE V. RAUNER*                                                      Director

Bruce V. Rauner

/s/ COLLIN E. ROCHE*                                                      Director

Collin E. Roche

/s/ BRIAN J. BATES*                                                       President, Chief Operating Officer and Director

Brian J. Bates

/s/ JOHN J. MCDONNELL III*                                                Executive Vice President and Director

John J. McDonnell III
/s/ HENRY H. GRAHAM, JR.*          Chief Financial Officer (Principal Financial Officer)

Henry H. Graham, Jr.



                            II-9
/s/ EDWARD O'BRIEN*                Controller (Principal Accounting Officer)

Edward O'Brien

*By:   /s/ MICHAEL Q. KEEGAN

       Michael Q. Keegan
       pursuant to
       power of attorney
       previously filed

                               II-10
                                         EXHIBIT INDEX


1.1    Form of Underwriting Agreement.

5.1    Opinion of Arent Fox PLLC.

23.1   Consent of Ernst & Young LLP.
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                                                        LEHMAN BROTHERS INC.
                                                     J.P. MORGAN SECURITIES INC.

                                               FORM OF UNDERWRITING AGREEMENT


                                                                   TNS, INC.

                                                      5,815,203 Shares of Common Stock

                                                                                                                              September    , 2004

Lehman Brothers Inc.
J.P. Morgan Securities Inc.
   As Representatives of the
   several Underwriters listed
   in Schedule I hereto
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019

Ladies and Gentlemen:

     TNS, Inc., a Delaware corporation (the "Company" ), proposes to issue and sell to the several Underwriters listed in Schedule I hereto
(the "Underwriters" ), for whom you are acting as representatives (the "Representatives" ), an aggregate of 1,200,000 shares of common
stock, par value $0.001 per share ( "Stock" ), of the Company, and the stockholders of the Company named in Schedule II hereto (the "Selling
Stockholders" ) propose to sell to the Underwriters an aggregate of 4,615,203 shares of Stock. The shares of Stock to be sold by the Company
are herein called the "Company Shares" and the shares of Stock to be sold by the Selling Stockholders are herein called the "Selling
Stockholder Shares" , collectively, the "Underwritten Shares" . The Company also proposes to sell to the Underwriters, at the option of the
Underwriters, up to an aggregate of 555,470 additional shares of Stock (the "Company Option Shares" ) and certain Selling Stockholders also
propose to sell to the Underwriters, at the option of the Underwriters, up to an aggregate of 316,810 additional shares of Stock (the "Selling
Stockholder Option Shares" and, together with the Company Option Shares, the "Option Shares" ). The Underwritten Shares and the Option
Shares are herein referred to as the "Shares" . This is to confirm the agreement concerning the purchase of the Shares from the Company and
the Selling Stockholders by the Underwriters.

     1. Registration Statement. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission" )
under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Securities Act" ),
a registration statement (File No. 333-118301) including a prospectus, relating to the Shares. Such registration statement, as amended at the
time it becomes effective, including the information, if any, deemed pursuant to Rule 430A under the Securities Act to be part of the
registration statement at the time of its effectiveness ( "Rule 430 Information" ), is referred to herein as the "Registration Statement" ; and as
used herein, the term "Preliminary Prospectus" means each prospectus included in such registration statement (and any amendments thereto)
before it becomes effective, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus
included in the Registration Statement at the time of its effectiveness that omits Rule 430A Information, and the term "Prospectus" means the
prospectus in the form first used to confirm sales of the Shares. If the Company has filed an abbreviated registration statement pursuant to
Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement" ), then any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462 Registration Statement. Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Registration Statement and the Prospectus.
     2. Purchase of the Shares by the Underwriters. (a) The Company agrees and each Selling Stockholder, as and to the extent indicated
in Schedule II hereto, agrees, severally and not jointly with the Company, to sell the Underwritten Shares to the several Underwriters as
provided in this Agreement, and each Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to
the conditions set forth herein, agrees, severally and not jointly, to purchase from the Company and the Selling Stockholders at a purchase price
per share of $        (the "Purchase Price" ) the number of Underwritten Shares as set forth opposite the name of such Underwriter in
Schedule I hereto.

      The Company and each of the Selling Stockholders, as and to the extent indicated in Schedule II hereto, agrees, severally and not jointly,
to sell the Option Shares to the several Underwriters as provided in this Agreement at the Purchase Price. The Underwriters, on the basis of the
representations and warranties herein contained and subject to the conditions hereinafter stated, shall have the option to purchase, severally and
not jointly, from the Company and the Selling Stockholders at the Purchase Price that portion of the number of Option Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Option
Shares by a fraction the numerator of which is the maximum number of Option Shares which such Underwriter is entitled to purchase and the
denominator of which is the maximum number of Option Shares which all of the Underwriters are entitled to purchase hereunder. Any such
election to purchase Option Shares shall be made in proportion to the maximum number of Option Shares to be sold by the Company and each
Selling Stockholder as set forth in Schedule II hereto.

      The Underwriters may exercise the option to purchase the Option Shares at any time (but not more than once) on or before the thirtieth
day following the date of this Agreement, by written notice from the Representatives to the Attorney-in-Fact (as defined below). Such notice
shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time when the Option Shares
are to be delivered and paid for which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than
the Closing Date nor later than the tenth full business day (as hereinafter defined) after the date of such notice (unless such time and date are
postponed in accordance with the provisions of Section 11 hereof). Any such notice shall be given at least two Business Days prior to the date
and time of delivery specified therein.

      (b) The Company and the Selling Stockholders understand that the Underwriters intend to make a public offering of the Shares as soon
after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and to offer the Shares on the terms set forth in
the Prospectus. The Company and the Selling Stockholders acknowledge and agree that the Underwriters may offer and sell Shares to or
through any affiliate of an Underwriter and that any such affiliate may offer and sell Shares purchased by it to or through any Underwriter.

     Payment for the Underwritten Shares shall be made by wire transfer in immediately available funds to the account specified by the
Company to the Representatives, and to the accounts specified by each Selling Stockholder to the Representatives, at the offices of Arent Fox
PLLC at 10:00 A.M. New York City time on September                 , 2004, or at such other time or place on the same or such other date, not later
than the fifth business day thereafter, as the Representatives, the Company and the Selling Stockholders may agree upon in writing or, in the
case of the Option Shares, to the account specified by the Company to the Representatives, and to the accounts specified by each Selling
Stockholder to the Representatives, on the date and at the time and place specified by the Representatives in the written notice of the
Underwriters' election to purchase such Option Shares. The time and date of such payment for the Underwritten Shares are referred to herein as
the "Closing Date" and the time and date for such payment for the Option Shares, if other than the Closing Date, are herein referred to as the
"Additional Closing Date" .

                                                                         2
     Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against
delivery to the Representatives through the facilities of the Depository Trust Company (the "DTC" ) for the respective accounts of the several
Underwriters of the Shares to be purchased on such date in definitive form registered in such names and in such denominations as the
Representatives shall request in writing not later than two full business days prior to the Closing Date or the Additional Closing Date, as the
case may be, with any transfer taxes payable in connection with the sale of the Shares duly paid by the Company or the Selling Stockholders, as
the case may be. The certificates for the Shares will be made available for inspection and packaging by the Representatives at the office of
Lehman Brothers Inc. not later than 1:00 P.M., New York City time, on the business day prior to the Closing Date or the Additional Closing
Date, as the case may be.

    3. Representations and Warranties of the Company.            The Company represents and warrants to each Underwriter and the Selling
Stockholders that:

     (a) Preliminary Prospectus . No order preventing or suspending the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof, complied in all material respects with the Securities Act and did not
contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading; provided that the Company makes no
representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Preliminary
Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information
in the Preliminary Prospectus furnished on behalf of each Underwriter including (i) the legend concerning over-allotments on the inside front
cover page and (ii) the information appearing in the "Commissions and Expenses", the "Electronic Distribution" and the "Stabilization, Short
Positions and Penalty Bids" paragraphs under the heading "Underwriting".

      (b) Registration Statement and Prospectus . No order suspending the effectiveness of the Registration Statement has been issued by the
Commission and to the Company's knowledge, no proceeding for that purpose has been initiated or threatened by the Commission; as of the
applicable effective date of the Registration Statement and any amendment thereto, if applicable, the Registration Statement complied and will
comply in all material respects with the Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein not misleading; and as of the applicable filing
date of the Prospectus and any amendment or supplement thereto and as of the Closing Date and, to the extent it occurs, as of the Additional
Closing Date, the Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided
that the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement and the Prospectus and any amendment or supplement thereto it being understood and agreed that the only
such information furnished by any Underwriter consists of the following information in the Registration Statement and the Prospectus
furnished on behalf of each Underwriter including (i) the legend concerning over-allotments on the inside front cover page and (ii) the
information appearing in the "Commissions and Expenses", the "Electronic Distribution" and the "Stabilization, Short Positions and Penalty
Bids" paragraphs under the heading "Underwriting".

    (c) Financial Statements . The financial statements and the related notes thereto included in the Registration Statement and the
Prospectus comply in all material respects with the applicable

                                                                         3
requirements of the Securities Act and the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act" ), as applicable, and present fairly the financial position of the Company and its subsidiaries as of
the dates indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements
have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods covered
thereby, and the supporting schedules included in the Registration Statement and the Prospectus have been derived from the accounting records
of the Company and its subsidiaries and present fairly the information required to be stated therein; and the pro forma financial information and
the related notes thereto included in the Registration Statement and the Prospectus have been prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and the assumptions underlying such pro forma financial information,
which assumptions are set forth in the Registration Statement and the Prospectus, are reasonable.

      (d) No Material Adverse Change . Since the date of the most recent financial statements of the Company included in the Registration
Statement and the Prospectus, (i) there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries,
or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development which would reasonably be expected to result in a material adverse change, in the business,
properties, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries taken as a whole;
(ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement that is material to the Company and its
subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries
taken as a whole other than as set forth in the Prospectus; and (iii) neither the Company nor any of its subsidiaries has sustained any loss or
interference with business which is material to the Company and its subsidiaries taken as a whole from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or
governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement or the Prospectus.

      (e) Organization and Good Standing . The Company and each of its subsidiaries listed on Schedule III have been duly organized and
are validly existing and in good standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and
are in good standing in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority necessary to own or hold their respective properties and to conduct the businesses
in which they are engaged, except where the failure to be so qualified or have such power or authority would not, individually or in the
aggregate, have a material adverse effect on the business, properties, management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect" ). The subsidiaries listed it Schedule III to this
Agreement are the only significant subsidiaries of the Company as defined in Regulation S-X.

     (f) Capitalization . The Company has an authorized capitalization as set forth in the Prospectus under the heading "Capitalization" ; all
the outstanding shares of capital stock of the Company (including the Shares to be sold by the Selling Stockholders) have been duly and validly
authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights; except as described in or
expressly contemplated by the Prospectus, there are no outstanding rights (including, without limitation, pre-emptive rights), warrants or
options to acquire, or instruments convertible into or exchangeable for, any shares of capital stock or other equity interest in the Company or
any of its subsidiaries, or entered into any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance
of any capital stock of the Company

                                                                        4
or any such subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options; the capital stock of the
Company conforms in all material respects to the description thereof contained in the Registration Statement and the Prospectus; and all the
outstanding shares of capital stock or other equity interests of each subsidiary of the Company listed in Schedule III have been duly and validly
authorized and issued, are fully paid and non-assessable (except, in the case of any foreign subsidiary, for directors' qualifying shares) and
(except as otherwise described in the Prospectus) are owned directly or indirectly by the Company, free and clear of any lien, charge,
encumbrance, security interest, restriction on voting or transfer or any other claim of any third party.

      (g) Due Authorization . The Company has full corporate right, power and authority to execute and deliver this Agreement and to
perform its obligations hereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery by
it of this Agreement and the consummation by it of the transactions contemplated thereby has been duly and validly taken.

     (h) The Shares . The Shares to be issued and sold by the Company hereunder upon the Closing Date or the Additional Closing Date, as
the case may be, have been duly authorized by the Company and, when issued and delivered against payment in full as provided herein, will be
duly and validly issued and will be fully paid and nonassessable and will conform to the descriptions thereof in the Prospectus; and the issuance
of the Shares is not subject to any preemptive or similar rights.

       (i) No Violation or Default . Neither the Company nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; or (iii) in violation of any law or statute or
any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and
(iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.

      (j) No Conflicts . The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares to be
sold by the Company hereunder and the consummation by the Company of the transactions contemplated by this Agreement will not
(i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or by-laws or similar organizational documents of the Company or any of its
subsidiaries or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority having jurisdiction over the Company or any of its subsidiaries or any of their property or assets, except,
in clause (i) and (iii) above, for any such conflict, breach or violation that would not, individually or in the aggregate, have a Material Adverse
Effect.

     (k) No Consents Required . No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution, delivery and performance by the Company of this Agreement, the issuance
and sale of the Shares to be sold by the Company hereunder and the consummation by the Company of the transactions contemplated by this
Agreement, except for (i) the registration of the Shares under the Securities Act and such consents, approvals, authorizations, orders and
registrations or qualifications as may be required under applicable state and foreign securities laws in connection with the purchase and

                                                                          5
distribution of the Shares by the Underwriters and (ii) any other consent, approval, authorization, order, registration or qualification which the
failure to obtain would not, individually or in the aggregate, have a Material Adverse Effect on the offerings contemplated by this Agreement.

      (l) Legal Proceedings . Except as described in the Prospectus, there are no legal, governmental or regulatory investigations, actions,
suits or proceedings pending to which the Company or any of its subsidiaries is or may be reasonably expected to be a party or to which any
property of the Company or any of its subsidiaries is or may be reasonably expected to be the subject that, individually or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect or materially
and adversely affect the ability of the Company to perform its obligations under this Agreement; no such investigations, actions, suits or
proceedings are, to the knowledge of the Company, threatened or contemplated by any governmental or regulatory authority or other third
parties; and (i) there are no current or pending legal, governmental or regulatory actions, suits or proceedings that are required under the
Securities Act to be described in the Prospectus that are not so described and (ii) there are no statutes, regulations or contracts or other
documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or described in the Registration
Statement or the Prospectus that are not so filed or described.

      (m) Independent Accountants . Ernst & Young LLP, who have certified certain financial statements of the Company and its subsidiaries
are independent public accountants with respect to the Company and its subsidiaries as required by the Securities Act.

       (n) Title to Real and Personal Property . The Company and its subsidiaries have good and marketable title to, or have valid rights to
lease or otherwise use, all items of real and personal property that are material to the respective businesses of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except those that (i) are disclosed in the
Prospectus, (ii) do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or
(iii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

     (o) Title to Intellectual Property . The Company and its subsidiaries own, are licensed or possess adequate rights to use all material
patents, patent applications, trademarks, are marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures)
(collectively, "Intellectual Property" ) necessary for the conduct of their respective businesses; and the conduct of their respective businesses
does not conflict in any material respect with any such rights of others, and the Company and its subsidiaries have not received any notice of
any claim of infringement or conflict with any such rights of others, except those claims or conflicts that (i) do not materially interfere with the
use made or proposed to be made of such Intellectual Property by the Company and its subsidiaries and (ii) could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

     (p) No Undisclosed Relationships . No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries,
on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that is
required by the Securities Act to be described in the Registration Statement and the Prospectus and that is not so described.

     (q) Investment Company Act . The Company is not and, after giving effect to the offering and sale of the Shares and the application of
the proceeds thereof as described in the Prospectus, will not be an "investment company" or an entity "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, "Investment Company Act" ).

                                                                         6
    (r) Public Utility Holding Company Act . Neither the Company nor any of its subsidiaries is a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning of the Public Utility Holding Company Act of 1935, as amended.

      (s) Taxes . Except as disclosed in the Prospectus, the Company and its subsidiaries have paid all material federal, state, local and
foreign taxes required to be paid and filed all material tax returns required to be filed through the date hereof; and except as otherwise disclosed
in the Prospectus, there is no material tax deficiency that has been, or could reasonably be expected to be, asserted against the Company or any
of its subsidiaries or any of their respective properties or assets.

     (t) Licenses and Permits . The Company and its subsidiaries possess all licenses, certificates, permits and other authorizations issued
by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that
are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the
Registration Statement and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate,
have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received notice of any revocation or modification of
any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will
not be renewed in the ordinary course.

     (u) No Labor Disputes . No material labor disturbance by or material dispute with employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is contemplated or threatened.

      (v) Compliance With Environmental Laws . The Company and its subsidiaries (i) are in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, decisions and orders relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants (collectively, "Environmental Laws" ); (ii) have received and are in
compliance with all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective
businesses; and (iii) have not received notice of any actual or potential liability for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, except in any such case for any such failure to comply, or failure to receive
required permits, licenses or approvals, or liability as would not, individually or in the aggregate, have a Material Adverse Effect.

      (w) Compliance With ERISA . Each domestic employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA" ), that is maintained, administered or contributed to by the Company or any of its
affiliates for domestic employees or former employees of the Company and its affiliates has been maintained in material compliance with its
terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Internal
Revenue Code of 1986, as amended (the "Code" ); no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption; and
for each such plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated funding
deficiency" as defined in Section 412 of the Code has been incurred, whether or not waived, and the fair market value of the assets of each
such plan (excluding for these purposes accrued but unpaid contributions) exceeds the present value of all benefits accrued under such plan
determined using reasonable actuarial assumptions.

     (x) Accounting Controls . The Company and its subsidiaries maintain systems of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in

                                                                          7
accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences.

      (y) Insurance . The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are reasonable and customary in the businesses in which they are engaged; and neither the Company nor any of its
subsidiaries has (i) received notice from any insurer or agent of such insurer that capital improvements or other similar expenditures are
required or necessary to be made in order to continue such insurance or (ii) 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 reasonably be expected, individually, or in the aggregate, to have a Material Adverse Effect.

     (z) Customer Contracts . Except as described in the Prospectus, the Company has not sent or received any communication regarding
termination of, or intent not to renew, any of the contracts or agreements referred to or described in, or filed as an exhibit to, the Registration
Statement, and no such termination or non-renewal has been threatened by the Company, or to the knowledge of the Company, any other party
to such contract or agreement.

     (aa) Regulatory Matters . The Company is not in violation of any statute, law, ordinance, regulation, rule or order of the Federal
Communications Commission ( "FCC" ) or any state regulatory authority except for any such violation that would not, individually, or in the
aggregate, have a Material Adverse Effect. The Company has all authorizations from, and has made all necessary filings with, all governmental
agencies, including any state regulatory authority and the FCC, required to conduct its businesses as the same are now being conducted, except
for any such authorization or filing that would not, individually or in the aggregate, have a Material Adverse Effect. There are no existing or, to
the knowledge of the Company, threatened proceedings before the FCC or state regulatory authorities (or any other regulatory authority)
regarding the authorizations, or otherwise that could reasonably be expected to result in a Material Adverse Effect.

     (bb) No Unlawful Payments . Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director,
officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment or (v) made any payment of funds to the Company or any of its subsidiaries or received or retained funds in violation of any law, rule
or regulation, which payment, receipt or retention of funds is of a character required to be disclosed in the Registration Statement or the
Prospectus, other than as set forth in the Registration Statement and the Prospectus.

     (cc) No Restrictions on Subsidiaries . No subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement
or other instrument to which it is a party or is subject, from paying any dividends to the Company, from making any other distribution on such
subsidiary's capital stock, except as provided in the Company's senior loan agreement, from repaying to the Company any loans or advances to
such subsidiary from the Company or from transferring any of such subsidiary's properties or assets to the Company or any other subsidiary of
the Company.

     (dd) No Broker's Fees . Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any
person (other than this Agreement) that would give rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder's fee or like payment in connection with the offering and sale of the Shares.

                                                                         8
     (ee) No Registration Rights . Except as described in the Prospectus, no person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Shares to be sold by the Company hereunder or, to the knowledge of the Company, the sale of the
Shares to be sold by the Selling Stockholders hereunder.

     (ff) No Stabilization . None of the Company, its subsidiaries, directors, officers or affiliates has taken, directly or indirectly, any action
designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares.

    (gg) NASD . To the Company's knowledge, there are no affiliations between any member of the National Association of Securities
Dealers, Inc. (the "NASD" ) and any of the Company's officers, directors or 5% or greater security holders, except as set forth in the
Registration Statement and Prospectus, except as disclosed in the NASD questionnaires delivered to the Underwriters by the Company.

     (hh) Business With Cuba . The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida) relating to doing business with the Government of Cuba or with any person located in Cuba.

     (ii) Margin Rules . Neither the issuance, sale and delivery of the Shares nor the application of the proceeds thereof by the Company as
described in the Registration Statement and the Prospectus will violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board of Governors.

     (jj) Forward-Looking Statements . No forward-looking statement (within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act) contained in the Registration Statement and the Prospectus has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

      (kk) Statistical and Market Data . Nothing has come to the attention of the Company (without conducting an independent investigation)
that has caused the Company to believe that the statistical and market-related data included in the Registration Statement and the Prospectus is
not based on or derived from sources that are reliable and accurate in all material respects.

     (ll)   NYSE Listing . The Shares have been listed on the New York Stock Exchange, subject to notice of issuance.

    In addition, any certificate signed by an officer of the Company and delivered to the Underwriters or counsel for the Underwriters in
connection with the offering of the Shares at the Closing Date or the Additional Closing Date shall be deemed to be a representation and
warranty by the Company as to matters covered thereby to each Underwriter.

    4. Representations and Warranties of the Selling Stockholders.           Each of the Selling Stockholders severally and not jointly represents
and warrants to each Underwriter and the Company that:

      (a) Required Consents; Authority . All consents, approvals, authorizations and orders necessary for the execution and delivery by such
Selling Stockholder of this Agreement and the Power of Attorney (the "Power of Attorney") and the Custody Agreement (the "Custody
Agreement") hereinafter referred to, and for the sale and delivery of the Selling Stockholder Shares and any Selling Stockholder Option Shares
to be sold by such Selling Stockholder hereunder, have been obtained; and such Selling Stockholder has full right, power and authority to enter
into this Agreement, the Power of Attorney and the Custody Agreement and, as of the Closing Date, will have full right, power and authority to
sell, assign, transfer and deliver the Selling Stockholder Shares and any Selling Stockholder Option Shares to be sold by such Selling
Stockholder hereunder; this Agreement, the Power of Attorney and

                                                                         9
the Custody Agreement have each been duly authorized, executed and delivered by such Selling Stockholder.

      (b) No Conflicts . The execution, delivery and performance by such Selling Stockholder of this Agreement, the Power of Attorney and
the Custody Agreement, the sale of the Selling Stockholder Shares and any Selling Stockholder Option Shares to be sold by such Selling
Stockholder and the consummation by such Selling Stockholder of the transactions herein and therein contemplated will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of such Selling Stockholder pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to
which any of the property or assets of such Selling Stockholder is subject, (ii) result in any violation of the provisions of the charter or by-laws
or similar organizational documents of such Selling Stockholder or (iii) result in the violation of any law or statute or any judgment, order, rule
or regulation of any court or arbitrator or governmental or regulatory agency.

     (c) Title to Shares . Such Selling Stockholder will have on the Closing Date, good and valid title to the Selling Stockholder Shares and
any Selling Stockholder Option Shares to be sold at the Additional Closing Date, by such Selling Stockholder, free and clear of all liens,
encumbrances, equities or adverse claims; and, upon delivery of the certificates representing such Selling Stockholder Shares and Selling
Stockholder Option Shares and payment therefor pursuant hereto, good and valid title to such Selling Stockholder Shares and Selling
Stockholder Option Shares, free and clear of all liens, encumbrances, equities or adverse claims, will pass to the several Underwriters
(assuming that no such Underwriter has notice of an "adverse claim" (within the meaning of Section 8-102(a)(1) of the Uniform Commercial
Code of the State of New York (the "NY UCC" )) with respect to any "security entitlement" in respect of such Shares), the Underwriters will
acquire a "securities entitlement" (within the meaning of Section 8-102(a)(17) of the NY UCC) to the Selling Stockholder Shares and any
Selling Stockholder Option Shares to be sold by such Selling Stockholder pursuant to this Agreement, and no action based on any "adverse
claim" (as defined in Section 8-102(a)(1) of the NY UCC) may be asserted against such Underwriters with respect to such securities.

    (d) No Stabilization . Such Selling Stockholder has not taken, directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of the Shares.

     (e) Registration Statement and Prospectus . As of the applicable effective date of the Registration Statement and any amendment
thereto, the Registration Statement did not and will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not misleading; and as of the applicable filing date of the Prospectus
and any amendment or supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus
will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that such Selling
Stockholder only makes such representation to the extent such untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with information furnished to the Company in writing by such Selling Stockholder expressly for
use in the Registration Statement or the Prospectus.

     (f) Custody . Certificates in negotiable form representing all of the Selling Stockholder Shares and any Selling Stockholder Option
Shares to be sold by such Selling Stockholders hereunder will be placed in custody under a Custody Agreement relating to such Selling
Stockholder Shares and any Selling Stockholder Option Shares on the Closing Date, in the form heretofore furnished to you, duly executed and
delivered by such Selling Stockholder to [the Company], as custodian (the "Custodian" ), and that

                                                                         10
such Selling Stockholder has duly executed and delivered Powers of Attorney, in the form heretofore furnished to you, appointing the person or
persons indicated on the signature page hereto, and each of them, as such Selling Stockholder's Attorneys-in-fact (the "Attorneys-in-Fact" or
any one of them the "Attorney-in Fact") with authority to execute and deliver this Agreement on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the Selling Stockholders as provided herein, to authorize the delivery of the
Selling Stockholder Shares and any Selling Stockholder Option Shares to be sold by such Selling Stockholder hereunder and otherwise to act
on behalf of such Selling Stockholder in connection with the transactions contemplated by this Agreement and the Custody Agreement.

      (g) Powers . The Selling Stockholder Shares and any Selling Stockholder Option Shares represented by the certificates to be held in
custody for such Selling Stockholder under the Custody Agreement, are subject to the interests of the Underwriters hereunder, and that the
arrangements made by such Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the Attorneys-in-Fact by
the Power of Attorney, are to that extent irrevocable. Each of the Selling Stockholders specifically agrees that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation of law, whether by the death or incapacity of any individual Selling Stockholder,
or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case
of a partnership, corporation or similar organization, by the dissolution of such partnership, corporation or organization, or by the occurrence of
any other event. If any individual Selling Stockholder or any such executor or trustee should die or become incapacitated, or if any such estate
or trust should be terminated, or if any such partnership, corporation or similar organization should be dissolved, or if any other such event
should occur, before the delivery of the Selling Stockholder Shares or Selling Stockholder Option Shares hereunder, certificates representing
such Selling Stockholder Shares or Selling Stockholder Option Shares shall be delivered by or on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and the Custody Agreement, and actions taken by the Attorneys-in-Fact pursuant
to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of
whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination,
dissolution or other event.

     5.   Further Agreements of the Company.         The Company covenants and agrees with each Underwriter that:

     (a) Effectiveness of the Registration Statement . The Company will use its commercially reasonable efforts to cause the Registration
Statement to become effective at the earliest possible time and, if required, will file the final Prospectus with the Commission within the time
periods specified by Rule 424(b) and Rule 430A under the Securities Act and the Company will furnish copies of the Prospectus to the
Underwriters in New York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement in
such quantities as the Representatives may reasonably request.

     (b) Delivery of Copies . The Company will deliver, without charge, (i) to the Representatives, two signed copies of the Registration
Statement as originally filed and each amendment thereto, in each case including all exhibits and consents filed therewith; and (ii) to each
Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) and
(B) during the Prospectus Delivery Period, as many copies of the Prospectus (including all amendments and supplements thereto) as the
Representatives may reasonably request. As used herein, the term "Prospectus Delivery Period" means such period of time after the first date of
the public offering of the Shares as in the opinion of counsel for the Underwriters a prospectus relating to the Shares is required by law to be
delivered in connection with sales of the Shares by any Underwriter or dealer.

                                                                          11
     (c) Amendments or Supplements . Before filing any amendment or supplement to the Registration Statement or the Prospectus, the
Company will furnish to the Representatives and counsel for the Underwriters a copy of the proposed amendment or supplement for review and
will not file any such proposed amendment or supplement to which the Representatives reasonably object.

     (d) Notice to the Representatives . The Company will advise the Representatives promptly (i) when the Registration Statement has
become effective; (ii) when any amendment to the Registration Statement has been filed or becomes effective; (iii) when any supplement to the
Prospectus or any amendment to the Prospectus has been filed; (iv) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or the receipt of any comments from the Commission relating to the Registration
Statement or any other request by the Commission for any additional information; (v) of the issuance by the Commission of any order
suspending the effectiveness of the Registration Statement or preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or the initiation or threatening of any proceeding for that purpose; (vi) of the occurrence of any event within the Prospectus Delivery Period as
a result of which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect to any suspension of the qualification of the
Shares for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the Company will use its
commercially reasonable efforts to prevent the issuance of any such order suspending the effectiveness of the Registration Statement,
preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification of the Shares and, if any
such order is issued, will obtain as soon as reasonably possible the withdrawal thereof.

     (e) Ongoing Compliance of the Prospectus . If during the Prospectus Delivery Period, in the judgment of the Company or the
Representatives, (i) any event shall occur or condition shall exist as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not misleading or (ii) it is
necessary to amend or supplement the Prospectus to comply with law, the Company will promptly notify the Underwriters thereof and
forthwith prepare and, subject to paragraph (c) above, file with the Commission and furnish to the Underwriters and to such dealers as the
Representatives may designate, such amendments or supplements to the Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus will comply with law.

     (f) Blue Sky Compliance . The Company will qualify the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution
of the Shares, provided that no such qualification shall require the Company to file a general consent to service, to qualify as a foreign
corporation or subject it to taxation as a foreign corporation.

     (g) Earning Statement . The Company will make generally available to its security holders and the Representatives as soon as
practicable an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the
"effective date" (as defined in Rule 158) of the Registration Statement.

   (h) Clear Market . For a period of 90 days after the date of this Agreement (which shall be the same date as the Prospectus), the
Company will not (i) offer, pledge, announce the intention to sell,

                                                                         12
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares of Stock or any securities convertible into or exercisable or
exchangeable for Stock or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of
ownership of the Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Stock or such other
securities, in cash or otherwise, without the prior written consent of the Representatives, other than (x) the Shares to be sold hereunder, (y) any
grant of stock options or issuance of any shares of Stock of the Company issued upon the exercise of options granted under existing employee
stock option plans or (z) any grant of awards or issuance of any shares of Stock issued pursuant to stock awards under existing employee stock
plans.

    (i) Use of Proceeds . The Company will apply the net proceeds from the sale of the Shares sold by the Company as described in the
Prospectus under the heading "Use of Proceeds".

     (j) No Stabilization . The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to
cause or result in any stabilization or manipulation of the price of the Shares.

     (k) Reports . For a period of three years from the date hereof, the Company will furnish to the Representatives, as soon as they are
available, copies of all reports or other communications (financial or other) furnished to holders of the Shares, and copies of any reports and
financial statements furnished to or filed with the Commission or any national securities exchange or automatic quotation system.

   (l) Transfer Agent . The Company agrees to maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the
Company, a registrar for the Stock.

      6. Further Agreements of the Selling Stockholders. Each of the Selling Stockholders covenants and agrees with each Underwriter
that it will deliver to the Representatives prior to or at the Closing Date a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by the Treasury Department regulations in lieu thereof) in order to facilitate the
Underwriters' documentation of their compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated.

     7. Conditions of Underwriters' Obligations. The obligation of each Underwriter to purchase the Underwritten Shares on the Closing
Date or the Option Shares on the Additional Closing Date, as the case may be as provided herein is subject to the performance by the Company
and each of the Selling Stockholders of their respective covenants and other obligations hereunder and to the following additional conditions:

      (a) Registration Compliance; No Stop Order . The Registration Statement (or if a post-effective amendment thereto is required to be
filed under the Securities Act, such post-effective amendment) shall have become effective, and the Representatives shall have received notice
thereof, not later than 5:00 P.M., New York City time, on the date hereof; no order suspending the effectiveness of the Registration Statement
shall be in effect, and no proceeding for such purpose shall be pending before or to the Company's knowledge, threatened by the Commission;
the Prospectus shall have been timely filed with the Commission under the Securities Act and in accordance with Section 5(a) hereof; and all
requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the Representatives.

     (b) Representations and Warranties . The respective representations and warranties of the Company and the Selling Stockholders
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may
be; and the statements of the Company and its officers and of each of the Selling Stockholders made in any certificates delivered

                                                                        13
pursuant to this Agreement shall be true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be.

     (c) No Material Adverse Change . Subsequent to the execution and delivery of this Agreement, no event or condition of a type
described in Section 3(d) or Section 10 hereof shall have occurred or shall exist, which event or condition is not described in the Prospectus
(excluding any amendment or supplement thereto) and the effect of which in the judgment of the Representatives makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be,
on the terms and in the manner contemplated by this Agreement and the Prospectus.

      (d) Officer's Certificate . The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the
case may be, a certificate (i) of the chief financial officer or chief accounting officer of the Company and one additional senior executive
officer of the Company who is satisfactory to the Representatives (A) confirming that such officers have carefully reviewed the Registration
Statement and the Prospectus and, to the knowledge of such officers, the representation of the Company set forth in Section 3(b) hereof is true
and correct, (B) confirming that the representations and warranties of the Company in this Agreement, other than the representation set forth in
Section 3(b) are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to such Closing Date and (C) to the effect set forth in paragraphs (a) and (c) above and (ii) of each of the
Selling Stockholders, other than Heller Financial, Inc., in form and substance reasonably satisfactory to the Representatives, (A) confirming, to
the knowledge of such Selling Stockholder, that the representation of such Selling Stockholder set forth in Section 4(e) hereof is true and
correct and (B) confirming that the representations and warranties in this Agreement, other than the representation set forth in Section 4(e), of
such Selling Stockholder are true and correct and that such Selling Stockholder has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to such Closing Date or Additional Closing Date, as applicable, unless otherwise
stated herein.

     (e) Comfort Letters . On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be,
Ernst & Young LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of delivery
thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements and
information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and the Prospectus; provided, that the letter delivered on the Closing Date
or the Additional Closing Date, as the case may be shall use a "cut-off" date no more than three business days prior to such Closing Date or
such Additional Closing Date, as the case may be.

     (f) Opinion of Counsel for the Company . Arent Fox PLLC, counsel for the Company, shall have furnished to the Representatives, at
the request of the Company, their written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to
the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex A-1 hereto.

      (g) Opinion of special Irish counsel for the Company . McCann Fitzgerald, special Irish counsel for the Company, shall have furnished
to the Representatives, their written opinion, with respect to Transaction Network Services Limited, a wholly-owned Irish subsidiary of the
Company, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form reasonably
satisfactory to the Representatives, to the effect set forth in Annex A-2 hereto.

    (h) Opinion of special U.K. counsel for the Company . Salans, special U.K. counsel for the Company, shall have furnished to the
Representatives, their written opinion, with respect to TNS

                                                                       14
TransXpress Holding Company (U.K.) Limited, TNS International Limited, TNS Transline Limited and Transaction Network Services (U.K.)
Limited (collectively the "TNS Companies" ), wholly-owned U.K. subsidiaries of the Company, dated the Closing Date and addressed to the
Underwriters, in form reasonably satisfactory to the Representatives, to the effect set forth in Annex A-3 hereto:

      (i) Opinion of Counsel for the Selling Stockholders . (i) Arent Fox PLLC, counsel for those certain Selling Stockholders listed in
Schedule II hereto, except GTCR Fund VII, L.P., GTCR Fund VII/A, L.P., GTCR Co-Invest, L.P. and GTCR Capital Partners, L.P.
(collectively, the "GTCR Funds" ) and Heller Financial, Inc. ( "Heller" ), shall have furnished to the Representatives, at the request of such
Selling Stockholders, their written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex B-1 hereto; (ii) Kirkland &
Ellis, LLP, counsel for the GTCR Funds shall have furnished to the Representatives, at the request of the GTCR Funds, their written opinion,
dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in Annex B-2 hereto and (iii) in-house counsel for Heller shall have
furnished to the Representatives, at the request of Heller, a written opinion, dated the Closing Date or the Additional Closing Date, as the case
may be, and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex
B-3 hereto.

     (j) Opinion of Counsel for the Underwriters . The Representatives shall have received on and as of the Closing Date or the Additional
Closing Date, as the case may be, an opinion of Gibson, Dunn & Crutcher LLP, counsel for the Underwriters, with respect to such matters as
the Representatives may reasonably request, and such counsel shall have received such documents and information as they may reasonably
request to enable them to pass upon such matters.

     (k) Opinion of In-House Counsel for the Company . Michael Keegan, general counsel for the Company, shall have furnished to the
Representatives, at the request of the Company, his written opinion, dated the Closing Date or the Additional Closing Date, as the case may be,
and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex C
hereto.

    (l) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted,
adopted or issued by any federal or state governmental or regulatory authority that would, as of the Closing Date or the Additional Closing
Date, as the case may be, prevent the issuance or sale of the Shares; and no injunction or order of any federal, state or foreign court shall have
been issued that would, as of the Closing Date or the Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares.

     (m) Good Standing . The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case
may be, satisfactory evidence of the good standing of the Company and its domestic significant subsidiaries in their respective jurisdictions of
organization and their good standing as foreign entities in such other jurisdictions as the Representatives may reasonably request, in each case
in writing or any standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

     (n) Lock-up Agreements . The "lock-up" agreements, each substantially in the form of Annex D hereto, between you and certain
stockholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or the Additional Closing Date, as the case
may be.

                                                                         15
     (o) Additional Documents . On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company and the
Selling Stockholders shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably
request.

     (p) All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance
with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.

     8.   Indemnification and Contribution.

      (a) Indemnification of the Underwriters by the Company . The Company and each of its subsidiaries, jointly and severally, agree to
indemnify and hold harmless each Underwriter, its affiliates, directors, officers, employees, representatives, agents and each person, if any,
who controls such Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (the "Controlling
Person" ), from and against any and all losses, claims, damages and liabilities (including, without limitation, reasonable legal fees and other
reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several that arise out of, or are based upon or caused by, (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in the Registration Statement or the Prospectus (or any amendment or supplement thereto) or any Preliminary Prospectus or any
amendment or supplement thereto or (B) in any statements or financial information included in materials or information provided to investors
by, or with the approval of, the Company in connection with the offering of the Stock, including any roadshow or investor presentation made to
investors by the Company, whether presented in person or electronically, which are directly based upon statements or financial information
included in the Registration Statement or the Prospectus (or any amendment or supplement thereto) or any Preliminary Prospectus (the
"Marketing Materials" ) or (ii) any omission or alleged omission to state in the Registration Statement or Prospectus (or any amendment or
supplement thereto), any Preliminary Prospectus or Marketing Materials, a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities arise out of, or are based upon or caused by, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in writing by
such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in Section 8(c) below; provided, that with respect to any such untrue
statement in or omission from any Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit
of any Underwriter, its affiliates, directors, officers, employees, representatives, agents or any Controlling Person, if any, to the extent that the
sale to the person asserting any such loss, claim, damage or liability was an initial resale by such Underwriter any such loss, claim, damage or
liability of or with respect to such Underwriter and results from the fact that both (i) to the extent required by applicable law, a copy of the
Prospectus was not sent or given to such person at or prior to the written confirmation of the sale of such Shares to such person and (ii) the
untrue statement in or omission from such Preliminary Prospectus was corrected in the Prospectus unless, in either case, such failure to deliver
the Prospectus was a result of non-compliance by the Company with the provisions of Section 5 hereof.

      (b) Indemnification of the Underwriters by the Selling Stockholders . Each of the Selling Stockholders agrees severally and not jointly,
in proportion to the number of Shares to be sold by such Selling Stockholder hereunder to indemnify and hold harmless each Underwriter, its
affiliates, directors, officers, employees, representatives and agents and each Controlling Person, from and against any and all losses, claims,
damages and liabilities (including, without limitation, reasonable legal fees and other reasonable expenses incurred in connection with any suit,
action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon or
caused by

                                                                         16
(i) any untrue statement or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such
Selling Stockholder furnished to the Company in writing by such Selling Stockholder expressly for use in the Registration Statement or the
Prospectus (or any amendment or supplement thereto) or any Preliminary Prospectus or (ii) any omission or alleged omission to state in the
Registration Statement or Prospectus (or any amendment or supplement thereto) or any Preliminary Prospectus, a material fact required to be
stated therein by the Selling Stockholder or necessary in order to make the statements made by the Selling Stockholder therein, in the light of
the circumstances under which they were made, not misleading; provided, that with respect to any such untrue statement in or omission from
any Preliminary Prospectus, the indemnity agreement contained in this Section 8(b) shall not inure to the benefit of any Underwriter, its
affiliates, directors, officers, employees, representatives, agents or any Controlling Person to the extent that the sale to the person asserting any
such loss, claim, damage or liability was an initial resale by such Underwriter and any such loss, claim, damage or liability of or with respect to
such Underwriter results from the fact that both (i) to the extent required by applicable law, a copy of the Prospectus was not sent or given to
such person at or prior to the written confirmation of the sale of such Shares to such person and (ii) the untrue statement in or omission from
such Preliminary Prospectus was corrected in the Prospectus. The liability of each Selling Stockholder over and above what is covered by
insurance policies paid for by the Company under such Selling Stockholder's representations and warranties contained in Section 4 hereof and
under the indemnity and contribution provisions contained in this Section 8 shall be limited to an amount equal to the aggregate net proceeds
received by such Selling Stockholder from the sale of Selling Stockholder Shares and any Selling Stockholder Option Shares sold by such
Selling Stockholder to the Underwriters.

      (c) Indemnification of the Company and the Selling Stockholders . Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who signed the Registration Statement and each Controlling Person of the Company to
the same extent as the indemnity set forth in paragraph (a) above and each of the Selling Stockholders to the same extent as the indemnity set
forth in paragraph (b) above, but only with respect to any losses, claims, damages or liabilities (including, without limitation, reasonable legal
fees and other reasonable expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses
are incurred) that arise out of, or are based upon, any untrue statement or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement and the Prospectus (or any amendment or supplement thereto) or any
Preliminary Prospectus, it being understood and agreed that the only such information furnished by any Underwriter consists of the following
information in the preliminary prospectus furnished on behalf of each Underwriter including (i) the legend concerning over-allotments on the
inside front cover page and (ii) the information appearing in the "Commissions and Expenses", the "Electronic Distribution" and "Stabilization,
Short Positions and Penalty Bids" "paragraphs under the heading "Underwriting".

      (d) Notice and Procedures . If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand
shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to either paragraph (a), (b) or
(c) above, such person (the "Indemnified Person" ) shall promptly notify the person against whom such indemnification may be sought (the
"Indemnifying Person" ) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 8 except to the extent that it has been materially prejudiced by such failure; and provided, further, that the failure
to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under this
Section 8. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person
thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and
any others entitled to indemnification pursuant to this Section 8 that the Indemnifying

                                                                         17
Person may designate in such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any
such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary;
(ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and expenses shall be paid or reimbursed as they are incurred. Any such
separate firm for any Underwriter, its affiliates, directors and officers and any control persons of such Underwriter shall be designated in
writing by Lehman Brothers Inc., any such separate firm for the Company, its directors, its officers who signed the Registration Statement and
any control persons of the Company shall be designated in writing by the Company and any such separate firm for the Selling Stockholders
shall be designated in writing by the Attorney-in-Fact. The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person
agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified
Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person
of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such
proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person, subject to the limitations and conditions contained in this Section 8.

      (e) Contribution . If the indemnification provided for in paragraphs (a), (b) and (c) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other from the offering of the Shares or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i)
but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with
the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other shall be deemed
to be

                                                                          18
in the same respective proportions as the net proceeds (before deducting expenses) received by the Company and the Selling Stockholders from
the sale of the Shares and the total underwriting discounts and commissions received by the Underwriters in connection therewith, in each case
as set forth in the table on the cover of the Prospectus, bear to the aggregate offering price of the Shares. The relative fault of the Company and
the Selling Stockholders on the one hand and the Underwriters on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information
supplied by the Company, by the Selling Stockholders or by the Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, any obligation of the Selling Stockholders to
contribute as set forth herein shall be several and not joint.

      (f) Limitation on Liability . The Company, the Selling Stockholders and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Selling Stockholders or the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred
to in paragraph (e) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (e) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by
such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 8, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received
by such Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to contribute pursuant to this Section 8 are several in proportion to
their respective purchase obligations hereunder and not joint.

      (g) Non-Exclusive Remedies . The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Person at law or in equity. For the avoidance of doubt, the provisions of this Section 8
shall not affect any agreement among the Company and the Selling Stockholders with respect to indemnification of each other.

     9. Effectiveness of Agreement. This Agreement shall become effective upon the later of (i) the execution and delivery hereof by the
parties hereto and (ii) receipt by the Company and the Representatives of notice of the effectiveness of the Registration Statement.

      10. Termination. This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company and
the Selling Stockholders, if after the execution and delivery of this Agreement and prior to the Closing Date or, in the case of the Option
Shares, prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by any of the New York
Stock Exchange, the Nasdaq National Market, the American Stock Exchange or the National Association of Securities Dealers, Inc.; (ii) trading
of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter market or the
settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange
or such market by the Commission by such exchange or by any other regulatory body or governmental authority having jurisdiction; (iii) a
general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or (iv) there shall
have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, including without limitation
as a result of terrorist activities, either within or outside the United States, that, in the judgment of the Representatives, is material and

                                                                        19
adverse and makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares on the Closing Date or the
Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this Agreement and the Prospectus.

      11. Defaulting Underwriter. (a) If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults
on its obligation to purchase the Shares that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their
discretion arrange for the purchase of such Shares by other persons satisfactory to the Company and the Selling Stockholders on the terms
contained in this Agreement. If, within 36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for
the purchase of such Shares, then the Company and the Selling Stockholders shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Underwriters to purchase such Shares on such terms. If other persons become obligated
or agree to purchase the Shares of a defaulting Underwriter, either the non-defaulting Underwriters or the Company and the Selling
Stockholders may postpone the Closing Date or the Additional Closing Date, as the case may be, for up to five full business days in order to
effect any changes that in the opinion of counsel for the Company, counsel for the Selling Stockholders or counsel for the Underwriters may be
necessary in the Registration Statement and the Prospectus or in any other document or arrangement, and the Company agrees to promptly
prepare any amendment or supplement to the Registration Statement and the Prospectus that effects any such changes. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement unless the context otherwise requires, any person not listed in
Schedule I hereto that, pursuant to this Section 11, purchases Shares that a defaulting Underwriter agreed but failed to purchase.

      (b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters, the Company and the Selling Stockholders as provided in paragraph (a) above, the aggregate number of Shares
that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company and the Selling Stockholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter's pro rata share (based on the number of Shares that such Underwriter agreed to purchase on such date) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements have not been made.

      (c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters, the Company and the Selling Stockholders as provided in paragraph (a) above, the aggregate number of Shares
that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount
of Shares to be purchased on such date, or if the Company and the Selling Stockholders shall not exercise the right described in paragraph (b)
above, then this Agreement or, with respect to any Additional Closing Date, the obligation of the Underwriters to purchase Shares on the
Additional Closing Date, as the case may be, shall terminate without liability on the part of the non-defaulting Underwriters. Any termination
of this Agreement pursuant to this Section 11 shall be without liability on the part of the Company and the Selling Stockholders, except that the
Company will continue to be liable for the payment of expenses as set forth in Section 12 hereof and except that the provisions of Section 8
hereof shall not terminate and shall remain in effect.

     (d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company, the Selling Stockholders
or any non-defaulting Underwriter for damages caused by its default.

                                                                       20
       12. Payment of Expenses. (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement
is terminated, the Company will pay or cause to be paid all costs and expenses incident to the performance of its obligations hereunder,
including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the Shares and any taxes
payable in that connection; (ii) the costs incident to the preparations, printing and filing under the Securities Act of the Registration Statement,
the Preliminary Prospectus and the Prospectus (including all exhibits, amendments and supplements thereto) and the distribution thereof;
(iii) the costs of reproducing and distributing this Agreement; (iv) the fees and expenses of the Company's counsel, Selling Stockholders'
counsel and independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination
of eligibility for investment of the Shares under the laws of such jurisdictions as the Representatives may designate (excluding the related fees
and expenses of counsel for the Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs and charges of any transfer agent and
any registrar; (viii) all expenses and application fees incurred in connection with any filing with, and clearance of the offering by, the NASD
(excluding the related fees and expenses of counsel for the Underwriters) and (ix) all expenses incurred by the Company in connection with any
"road show" presentation to potential investors.

     (b) If (i) the Company or the Selling Stockholders for any reason (other than pursuant to Section 10 or a breach of this Agreement by the
Underwriters) fail to tender the Shares for delivery to the Underwriters or (ii) the Underwriters decline to purchase the Shares for any reason
(other than pursuant to Section 10) permitted under this Agreement including, but not limited to, failure of the Company to perform under
Section 7 or 11 of this Agreement, the Company agrees to reimburse the Underwriters for all out-of-pocket costs and expenses (including the
fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with this Agreement and the offering contemplated
hereby.

      13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and the officers and directors and any controlling persons referred to in Section 8 hereof. Nothing in this Agreement
is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or
any provision contained herein. No purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.

     14. Survival. The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the
Selling Stockholders and the Underwriters contained in this Agreement or made by or on behalf of the Company, the Selling Stockholders or
the Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of
the Company, the Selling Stockholders or the Underwriters.

     15. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise expressly provided, the term "affiliate" has
the meaning set forth in Rule 405 under the Securities Act; (b) the term "business day" means any day other than a day on which banks are
permitted or required to be closed in New York City; and (c) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities
Act; and (d) the term "significant subsidiary" has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.

    16. Miscellaneous. (a) Authority of the Representatives . Any action by the Underwriters hereunder may be taken by Lehman
Brothers Inc. or J.P. Morgan Securities Inc. on behalf of the Underwriters, and any such action taken by Lehman Brothers Inc. or J.P. Morgan
Securities Inc. shall be binding upon the Underwriters.

                                                                        21
      (b) Notices . All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed
or transmitted and confirmed by any standard form of telecommunication. Notices to the Underwriters shall be given to the Representatives
(i) c/o Lehman Brothers Inc., 745 Seventh Avenue, New York, NY 10019 (Fax: 646-758-4231); Attention: Syndicate Desk and (ii) J.P.
Morgan Securities Inc., 277 Park Avenue, New York, New York 10172 (Fax: 212-622-8358); Attention: Syndicate Desk. Notices to the
Company shall be given to it at 11480 Commerce Park Drive, Suite 600, Reston, Virginia 20191 (Fax: 703-453-8397); Attention: Michael Q.
Keegan, Esq. Notices to the Selling Stockholders shall be given to the Attorneys-in-Fact at 11480 Commerce Park Drive, Suite 600, Reston,
Virginia 10191 (Fax: 703-453-8397); Attention: Michael Q. Keegan, Esq.

    (c)    Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

     (d) Counterparts . This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

    (e) Amendments or Waivers . No amendment or waiver of any provision of this Agreement, nor any consent or approval to any
departure therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

    (f) Headings . The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.

                                                                      22
     If the foregoing is in accordance with your understanding, please indicate your acceptance of this Underwriting Agreement by signing in
the space provided below.


                                                          Very truly yours,

                                                          TNS, Inc.

                                                          By:

                                                                   Name:
                                                                   Title:

                                                          SELLING STOCKHOLDERS

                                                          By:

                                                                   Name: Henry H. Graham, Jr.*

                                                          By:

                                                                   Name: Michael Q. Keegan*

                                                          By:

                                                                   Name: James T. McLaughlin*

                                                          *As Attorneys-in-Fact acting on behalf of each of the
                                                          Selling Stockholders named in Schedule II to this
                                                          Agreement.

Accepted: September     , 2004

LEHMAN BROTHERS INC.

For itself and on behalf of the several
Underwriters listed in Schedule I hereto.

By:

          Name:
          Title:

J.P. MORGAN SECURITIES INC.

For itself and on behalf of the several
Underwriters listed in Schedule I hereto.

By:

          Name:
          Title:

                                                                      23
                                                                                                                                      Annex A-1

                                                [Form of Opinion of Counsel for the Company]

     (a) The Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the
Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion on
the date specified therein; and to the knowledge of such counsel, no order suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose is pending or threatened by the Commission.

     (b) The Registration Statement and the Prospectus (other than the financial statements and related schedules therein and other financial
and statistical data contained therein, as to which such counsel need express no opinion) comply as to form in all material respects with the
requirements of the Securities Act.

     (c) The Company and each of its domestic Significant Subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification,
and have all corporate or limited liability company power and authority necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to be so qualified or have such power or authority would not, individually or in
the aggregate, have a Material Adverse Effect.

     (d) The Company and each of its domestic Significant Subsidiaries are duly qualified to do business as a foreign corporation or foreign
limited liability company and are in good standing in each jurisdiction listed on a schedule to such opinion.

     (e) The Company has an authorized capitalization as set forth in the Prospectus under the heading "Capitalization" ; all the outstanding
shares of capital stock of the Company (including the Shares to be sold by the Selling Stockholders) have been duly and validly authorized and
issued and are fully paid and non-assessable; the capital stock of the Company conforms in all material respects to the description thereof
contained in the Registration Statement and the Prospectus; and all the outstanding shares of capital stock or other equity interests of each
domestic Significant Subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable.

     (f) The Company has corporate right, power and authority to execute and deliver this Agreement and to perform its obligations
thereunder; and all corporate action required to be taken for the due and proper authorization, execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated thereby have been duly and validly taken.

     (g)   The Underwriting Agreement has been duly authorized, executed and delivered by the Company.

     (h) The Shares to be issued and sold by the Company hereunder have been duly authorized, and when delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and the issuance of the
Shares is not subject to any preemptive or similar rights set forth in the Company's certificate of incorporation or bylaws or to the knowledge of
such counsel any other agreement with the Company.

      (i) To the knowledge of such counsel, none of the Company or any of its domestic Significant Subsidiaries is (i) in violation of its
charter or by-laws or similar organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument attached as an exhibit to the Registration Statement or listed on Schedule to
this opinion (except any financial covenants contained therein, as to which such counsel expresses no opinion); or (iii) in violation of any
law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except in the case of
clauses (ii) or (iii) for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.

     (j) The execution, delivery and performance by the Company of this Agreement, the issuance and sale of the Shares to be sold by the
Company and delivered on the Closing Date or the Additional Closing Date, as the case may be, and compliance by the Company with the
terms of, and the consummation of the transactions contemplated by, this Agreement will not (i) conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument attached as an exhibit to the Registration Statement or listed on Schedule to this opinion (except any financial
covenants contained therein, as to which such counsel expresses no opinion), (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its domestic Significant Subsidiaries or (iii) to the knowledge of such
counsel result in the violation of any law or statute or any judgment, order or regulation of any court or arbitrator or governmental or regulatory
authority except, in the case of clauses (i) and (iii) above, for such conflict, breach or violation that would not, individually or in the aggregate,
have a Material Adverse Effect.

     (k) No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or
regulatory authority is required for the execution, delivery and performance by the Company of this Agreement, the issuance and sale of the
Shares to be sold by the Company and delivered on the Closing Date or the Additional Closing Date, as the case may be, and compliance by the
Company with the terms thereof and the consummation of the transactions contemplated by this Agreement, except for the registration of the
Shares under the Securities Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required under
applicable state securities laws and the bylaws or rules of the NASD (as to which consents, approvals, authorizations, orders and registrations
or qualifications such counsel express no opinion) in connection with the purchase and distribution of the Shares by the Underwriters.

      (l) Except as described in the Prospectus, to the knowledge of such counsel, there are no legal, governmental or regulatory
investigations, actions, suits or proceedings pending to which the Company or any of its domestic Significant Subsidiaries is or may be a party
or to which any property of the Company or any of its domestic Significant Subsidiaries is or may be the subject which, individually or in the
aggregate, if determined adversely to the Company or any of its subsidiaries, could reasonably be expected to have a Material Adverse Effect;
and to the knowledge of such counsel, no such investigations, actions, suits or proceedings are threatened or contemplated by any governmental
or regulatory authority or threatened by others.

     (m) The descriptions in the Prospectus of statutes, legal, governmental and regulatory proceedings and contracts and other documents
included in sections entitled "Management—Employment Agreements", "Management—Limitations of Liability and Indemnification of
Officers and Directors", "Certain Relationships and Related Party Transactions" and "Description of Capital Stock" and in the Registration
Statement in items 14 and 15, to the extent that they constitute summaries of the terms of stock, matters of law or regulation or legal
conclusions, fairly summarize the matters described therein in all material respects. To the knowledge of such counsel, there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are required under the Securities Act to be described in the
Prospectus and that are not so described.

    (n) To the knowledge of such counsel, there are no affiliate transactions that are required under the Securities Act to be described in the
Prospectus and that are not so described.

     (o) The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" within the meaning of the Investment Company Act.
     (p) To the knowledge of such counsel, neither the Company nor any of its domestic Significant Subsidiary has received any actual notice
of any proceeding relating to revocation or modification of any license, permit, certificate, consent, order, approval or other authorization,
except as described in the Registration Statement and the Prospectus.

     (q) No person has the right, pursuant to the terms of any contract, agreement or other instrument described in or filed as an exhibit to the
Registration Statement or otherwise known to such counsel, to cause the Company to register under the Securities Act any shares of Stock or
shares of any other capital stock or other equity interest of the Company, or to include such shares or interest in the Registration Statement or
the offering contemplated thereby, whether as a result of the filing or effectiveness of the Registration Statement or the sale of the Shares as
contemplated thereby or otherwise, that have not been satisfied or waived.

      Such counsel shall also state that they have participated in conferences with representatives of the Company and with representatives of its
independent accountants and counsel at which conferences the contents of the Registration Statement and the Prospectus and any amendment
and supplement thereto and related matters were discussed and, although such counsel assume no responsibility for the accuracy, completeness
or fairness of the Registration Statement, the Prospectus and any amendment or supplement thereto (except as expressly provided above),
nothing has come to the attention of such counsel to cause such counsel to believe that the Registration Statement, at the time of its effective
date (including the information, if any, deemed pursuant to Rule 430A to be part of the Registration Statement at the time of effectiveness but
excluding the financial statements, other financial information and other financial and statistical data included therein), contained an 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
not misleading, or that the Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading (other than the financial statements, other financial information and other financial and statistical data
included therein, as to which such counsel need express no belief).

     In rendering such opinion, such counsel may rely as to matters of fact on certificates of responsible officers of the Company and public
officials that are furnished to the Underwriters.

     The opinion of Arent Fox described above shall be rendered to the Underwriters at the request of the Company and shall so state therein.
                                                                                                                                    Annex A-2

                                          [Form of Opinion of Special Irish Counsel to the Company]

     (i)     Corporate status

      Transaction Network Services Limited (the "Company") is a limited liability company having a share capital duly incorporated under the
laws of Ireland with registration number 248837. The Company is a separate legal entity and is subject to suit in its own name. The searches
made by independent law searchers against the Company in the Companies Registration Office, the Petitions Section of the Central Office of
the High Court of Ireland and the Judgments Office of the Central Office of the High Court of Ireland (together, the "Searches") do not disclose
that any steps have been taken to appoint an examiner to the Company, to appoint a receiver to the Company or is assets or to wind up the
Company. On the basis of the Searches and the certificate of Francis MacDonagh, a director of the Company (the "Director's Certificate"), the
Company is validly existing.

     (ii)    Memorandum of Association

     The Company has the necessary corporate power and authority under its Memorandum of Association to provide the electronic
communications services which it currently provides (as detailed in the declaration made by the Company to the Commission for
Communications Regulation ("ComReg") under Regulation 5 of the European Communities (Electronic Communications Networks and
Services) (Authorisation) Regulations 2003 (the "Declaration")) along with ancillary powers, including the ownership and/or leasing of
property.

     (iii)    Share Capital

     The Company has an authorized share capital of €2,225,000 divided into 900,000 Ordinary Share of €1.25 each and 10,000,000 10%
Cumulative Preference Shares of €0.11 each, of which 16,000 Ordinary Shares and 126,851 Cumulative Preference Shares have been validly
issued, are fully paid up and are registered in the name of TNS Inc. The Searches do not disclose any registered liens or encumbrances on such
shares.

     (iv)     Electronic Communications

     ComReg is the statutory body responsible for licensing electronic communications networks and electronic communications services in
Ireland. Based on the Declaration and based on information received by us from ComReg on         2004, the Company is duly authorized by
ComReg to provide the electronic communications services which it currently provides to customers, subject too the conditions specified by
ComReg in the form of General Authorization issued by ComReg and such other conditions as ComReg may from time to time specify.
                                                                                                                                     Annex A-3

                                         [Form of Opinion of Special U.K. Counsel for the Company]

   (i) The TNS Companies are companies limited by shares and duly incorporated, validly existing, and duly registered under the
Companies Acts under the laws of England and Wales.

     (ii) The material particulars of each of the TNS Companies as shown by a Company Search of the register maintained by Companies
Registration Office as at       2004 and certified by a Director of each of the TNS Companies on      2004 are attached to this legal
opinion.

     (iii) Each of the TNS Companies has as its principal object in its Memorandum and Articles of Association the power and authority to
own its property, to conduct its business as described in the Prospectus, and to act as a general commercial company together with various
ancillary objects.

      (iv) Each of the TNS Companies is duly qualified to transact business and (according to certificates issued by Companies Registration
Office of England and Wales on          2004) is of good standing in England and Wales except to the extent that the failure to be so qualified
or to be of good standing would not have a material adverse effect on the relevant TNS Company.

      (v) The share of each of the TNS Companies has been validly issued and is fully paid up and so far as we are aware is free and clear of
all liens, encumbrances, equities and claims save as provided in the relevant TNS Company's Memorandum and Articles of Association.

     (vi) We are familiar with the regulatory requirements in England and Wales pertaining to the type of telecommunications services
provided by the TNS Companies. It is our view that each of the TNS Companies holds all such licenses Authorizations and other approvals as
are required (if any) by any relevant regulatory authority to enable such TNS Company to carry on its business as conducted as of the date
hereof.

     (vii) To the extent that any of the TNS Companies processes personal data, it is necessary to provide due notification pursuant to the
Data Protection Act 1998. A search of the register maintained at the Data Protection office carried out on the     2004 confirms that
notification pursuant to the Data Protection Act 1998 has been provided in respect of Transaction Network Services (U.K.) Limited. We are not
aware of any material matters which might render such notifications inadequate. None of the other TNS Companies have provided any
notification under the Data Protection Act 1998 since we are advised by a Director of each of such other TNS Companies that such other TNS
Companies do not process any personal data.
                                                                                                                                     Annex B-1

                                          [Form of Opinion of Counsel For The Selling Stockholders]

     (1) The Underwriting Agreement has been executed and delivered by or on behalf of each of the Selling Stockholders.

     (2) A Power of Attorney and a Custody Agreement have been executed and delivered by each Selling Stockholder and constitute valid
and binding agreements of each Selling Stockholder in accordance with their terms.

      (3) Upon payment for the Shares to be sold by each Selling Stockholder to each of the several Underwriters as provided in the
Underwriting Agreement, the delivery of the stock certificates representing the Shares to be sold by the Selling Stockholders, indorsed to the
Underwriters, (assuming no such Underwriter has notice of any "adverse claim" (as such term is defined in Section 8 102(a)(1) of the Uniform
Commercial Code as in effect in the State of New York (the "UCC" )) to the shares or any security entitlement in respect thereof), (A) under
Section 8 501 of the UCC, such Underwriter will acquire a "security entitlement" (within the meaning of Section 8 102(a)(17) of the UCC) in
respect of the shares and (B) no action based on any "adverse claim" (as defined in Section 8 102(a)(1) of the UCC) to such security
entitlement may be asserted against such Underwriter. We have also assumed that the Shares are duly authorized and validly issued.

     (4) The sale of the Shares and the execution and delivery by each Selling Stockholder of, and the performance by each Selling
Stockholder of his obligations under, the Underwriting Agreement, and the consummation by the Selling Stockholders of the transactions
contemplated therein, will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Underwriting
Agreement or (ii) constitute a violation by such Selling Stockholder of any applicable law, statute or regulation of any governmental agency or
body in New York or Delaware having jurisdiction over such Selling Stockholder or any of his properties (except with respect to compliance
with any disclosure requirement or any prohibition against fraud or misrepresentation or as to whether performance of the indemnification or
contribution provisions in the Underwriting Agreement would be permitted, as we have not been requested to express and therefore we do not
express an opinion); in each case other than such violations, breaches or defaults which, individually or in the aggregate, would not adversely
affect such Selling Stockholder's ability to perform his obligations under the Underwriting Agreement.

     (5) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is
required for the sale of the Shares or the consummation by the Selling Stockholders of the transactions contemplated by the Underwriting
Agreement, except such consents, approvals, authorizations, registrations or qualifications as have been obtained under the Securities Act and
as may be required under foreign securities or state securities or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters (as to which laws we express no opinion).
                                                                                                                                      Annex B-2

                                              [Form of Opinion of Counsel For The GTCR Funds]

     (1) The Underwriting Agreement has been duly authorized, executed and delivered by or on behalf of each of the Selling Stockholders.

     (2) A Power of Attorney and a Custody Agreement have been duly authorized, executed and delivered by each Selling Stockholder and
constitute valid and binding agreements of each Selling Stockholder in accordance with their terms.

      (3) Upon payment for the Shares to be sold by each Selling Stockholder to each of the several Underwriters as provided in the
Underwriting Agreement, the delivery of the stock certificates representing the Shares to be sold by the Selling Stockholders, indorsed to the
Underwriters, (assuming no such Underwriter has notice of any "adverse claim" (as such term is defined in Section 8 102(a)(1) of the Uniform
Commercial Code as in effect in the State of New York (the "UCC")) to the shares or any security entitlement in respect thereof), (A) under
Section 8 501 of the UCC, such Underwriter will acquire a "security entitlement" (within the meaning of Section 8 102(a)(17) of the UCC) in
respect of the shares and (B) no action based on any "adverse claim" (as defined in Section 8 102(a)(1) of the UCC) to such security
entitlement may be asserted against such Underwriter. We have also assumed that the Shares are duly authorized and validly issued.

     (4) The sale of the Shares and the execution and delivery by each Selling Stockholder of, and the performance by each Selling
Stockholder of its obligations under, the Underwriting Agreement, and the consummation by the Selling Stockholders of the transactions
contemplated therein, will not (i) result in a breach of any of the terms or provisions of, or constitute a default under, the Underwriting
Agreement; (ii) result in any violation of the provisions of the limited partnership agreement or similar organizational documents of any Selling
Stockholder or; (iii) constitute a violation by such Selling Stockholder of any applicable law, statute or regulation of any governmental agency
or body in New York or Delaware having jurisdiction over such Selling Stockholder or any of its properties (except with respect to compliance
with any disclosure requirement or any prohibition against fraud or misrepresentation or as to whether performance of the indemnification or
contribution provisions in the Underwriting Agreement would be permitted, as we have not been requested to express and therefore we do not
express an opinion); in each case other than such violations, breaches or defaults which, individually or in the aggregate, would not adversely
affect such Selling Stockholder's ability to perform its obligations under the Underwriting Agreement.

     (5) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is
required for the sale of the Shares or the consummation by the Selling Stockholders of the transactions contemplated by the Underwriting
Agreement, except such consents, approvals, authorizations, registrations or qualifications as have been obtained under the Securities Act and
as may be required under foreign securities or state securities or Blue Sky laws in connection with the purchase and distribution of the Shares
by the Underwriters (as to which laws we express no opinion).
                                                                                                                                      Annex B-3

                                            [Form of Opinion of Counsel For Heller Financial, Inc.]

     1. The Selling Stockholder has all requisite corporate power and authority to execute and deliver each of the Transaction Documents to
which it is a party and to perform its respective obligations thereunder. The execution, delivery and performance by the Selling Stockholder of
each Transaction Document to which it is a party have been duly authorized by all necessary corporate action on the part of the Selling
Stockholder. The Underwriting Agreement has been duly and validly executed and delivered by or on behalf of the Selling Stockholder. Each
of the Custody Agreement and the Power of Attorney to which the Selling Stockholder is party has been duly and validly executed and
delivered by the Selling Stockholder and constitutes a valid and binding agreement of the Selling Stockholder in accordance with its terms.

      2. Upon payment for the Shares to be sold by the Selling Stockholder to each of the several Underwriters as provided in the
Underwriting Agreement, the delivery of the stock certificates representing the Shares to be sold by the Selling Stockholder, indorsed to the
Underwriters, (assuming no such Underwriter has notice of any "adverse claim" (as such term is defined in Section 8 102(a)(1) of the Uniform
Commercial Code as in effect in the State of New York (the "UCC")) to the shares or any security entitlement in respect thereof), (A) under
Section 8 501 of the UCC, such Underwriter will acquire a "security entitlement" (within the meaning of Section 8 102(a)(17) of the UCC) in
respect of the shares and (B) no action based on any "adverse claim" (as defined in Section 8 102(a)(1) of the UCC) to such security
entitlement may be asserted against such Underwriter. We have also assumed that the Shares are duly authorized and validly issued.

      3. The sale of the Shares owned by the Selling Stockholder and the execution and delivery by the Selling Stockholder of the Transaction
Documents to which it is a party and the performance by the Selling Stockholder of its respective obligations thereunder (i) will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Selling Stockholder is a party or by which the Selling Stockholder is bound
or to which any of the property or assets of the Selling Stockholder is subject and (ii) will not conflict with, constitute a breach or default
(whether upon lapse of time and/or the occurrence of any act or event or otherwise) under or violate any of the terms, conditions or provisions
of the articles of incorporation or by-laws of the Selling Stockholder or New York, Delaware or federal law or regulation.

    4. No consent, approval, waiver, license or authorization or other action by or filing with any Delaware, New York or federal
governmental authority is required in connection with the execution and delivery by the Selling Stockholder of the Transaction Documents to
which it is a party, the consummation by the Selling Stockholder of the transactions contemplated thereby or the performance by the Selling
Stockholder of its respective obligations thereunder, except for those filings already obtained, made or complied with prior to the Closing Date.
                                                                                                                                          Annex C

                                               [Form of Opinion of In-House Company Counsel]

     (a) The descriptions in the Prospectus of statutes, legal, governmental and regulatory proceedings and contracts and other documents
included in sections entitled "Business—Intellectual Property" and "Business—Legal Proceedings" and in the Registration Statement in items
14 and 15, to the extent that they constitute summaries of the terms of stock, matters of law or regulation or legal conclusions, fairly summarize
the matters described therein in all material respects.

      (b) To the knowledge of such counsel, (A) there are no current or pending legal, governmental or regulatory actions, suits or proceedings
that are required under the Securities Act to be described in the Prospectus and that are not so described and (B) there are no statutes,
regulations or contracts and other documents that are required under the Securities Act to be filed as exhibits to the Registration Statement or
described in the Prospectus and that have not been so filed or described.

      (c) To the knowledge of such counsel, each of the Company and its subsidiaries owns, possesses or has obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has made all declarations and filings with, all Governmental
Authorities (including foreign regulatory agencies), all self-regulatory organizations and all courts and other tribunals, domestic or foreign,
necessary to own or lease, as the case may be, and to operate its properties and to carry on its business as conducted as of the date hereof,
except for any of the above, that would not, individually, or in the aggregate, have a Material Adverse Effect, and neither the Company nor any
such subsidiary has received any actual notice of any proceeding relating to revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except as described in the Registration Statement and the Prospectus; and to the knowledge of
such counsel, each of the Company and its subsidiaries is in compliance with all laws and regulations relating to the conduct of its business as
conducted as of the date of the Prospectus, except for any of the above, that would not, individually, or in the aggregate, have a Material
Adverse Effect.

     (d) To the knowledge of such counsel, there are no legal or governmental proceedings pending, or to the knowledge of such counsel,
threatened against or affecting the Company or any of its subsidiaries under any Environmental Law which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect on the Company and its subsidiaries taken as a whole.

     (e) The information and statement in the Registration Statement and the Prospectus that are descriptions of contracts, agreements or
other legal documents or of legal proceedings, or refer to such statement of law or legal conclusions, are accurate in all material respects and
present fairly the information required to be shown.
                                                                                                                                             Annex D


                                                             Form of Lock-up Agreement

     The undersigned understands that you, as Representatives of the several Underwriters named in Schedule I of this Letter Agreement (the
"Underwriters") and any stockholders selling shares in the Public Offering (defined below) (the "Selling Stockholders"), propose to enter into
an Underwriting Agreement (the "Underwriting Agreement") with TNS, Inc., a Delaware corporation (the "Company"), providing for the
public offering (the "Public Offering") by the Underwriters, of common stock, $0.001 par value per share of the Company (the "Common
Stock").

      In consideration of the Underwriters' agreement to purchase and make the Public Offering of the Common Stock, and for other good and
valuable consideration receipt of which is hereby acknowledged, the undersigned hereby agrees that, without the prior written consent of
Lehman Brothers Inc. on behalf of the Underwriters and the Selling Stockholders, the undersigned will not, during the period (the "Lock-Up
Period") beginning on the date the Underwriting Agreement has been executed by the parties thereto and ending ninety (90) days after the date
of the Underwriting Agreement (which shall be the same date as the prospectus relating to the Public Offering (the "Prospectus")), (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock (including without limitation, Common Stock which may be
deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission
and securities which may be issued upon exercise of a stock option or warrant) or (2) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. In addition, the undersigned agrees
that, without the prior written consent of Lehman Brothers Inc., on behalf of the Underwriters and the Selling Stockholders, it will not, during
the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.

      Subject to the paragraph below, the foregoing paragraph shall not apply to (A) transfers of shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock (i) in the Public Offering pursuant to the Underwriting Agreement, (ii) as a
bona fide gift or gifts to immediate family members and charitable institutions for no consideration, (iii) to an entity controlled by the
undersigned or an immediate family member of the undersigned, (iv) by will or the laws of descent and distribution, or (v) to a trust the
beneficiaries of which are members of the immediate family of the undersigned or (B) distributions of shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock to limited partners, members, affiliates or stockholders of the undersigned
or to the limited partners of investment funds affiliated with the undersigned.

     Notwithstanding the foregoing, in the case of any gift, transfer, distribution or acquisition pursuant to any clause other than clause (A)(i) in
the foregoing paragraph, (i) each donee, distributee, transferee or recipient shall, prior to the effectiveness of the transfer, execute and deliver to
Lehman Brothers Inc. an executed duplicate form of this Lock-Up Agreement unless such donee, distributee, transferee or recipient has already
signed this Lock-Up Agreement and (ii) no filing by any party (donor, donee, transferor, transferee, distributor, distributee or recipient) under
Section 16(a) of the Securities Exchange Act of 1934, as amended, shall be required or shall be made voluntarily in connection with such
transfer or distribution (other than a filing on a Form 5 made after the expiration of the Lock-Up Period).
      In furtherance of the foregoing, the Company, and any duly appointed transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of
this Letter Agreement.

     The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Letter Agreement. All
authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs
or personal representatives of the undersigned.

     The undersigned understands that if the Company withdraws the Registration Statement, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior
to payment for and delivery of the Common Stock to be sold thereunder, the undersigned shall be released form all obligations under this Letter
Agreement.

    The undersigned understands that the Underwriters and the Selling Stockholders are entering into the Underwriting Agreement and
proceeding with the Public Offering in reliance upon this Letter Agreement.

     This lock-up agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
QuickLinks

LEHMAN BROTHERS INC. J.P. MORGAN SECURITIES INC. FORM OF UNDERWRITING AGREEMENT TNS, INC. 5,815,203 Shares
of Common Stock
 Form of Lock-up Agreement
                                                                                                                                      Exhibit 5.1

                                                        [Letterhead of Arent Fox PLLC]

                                                                                                                               September 9, 2004

TNS, Inc.
1148 Commerce Park Drive, Suite 600
Reston, VA 20191

Gentlemen:

     We have acted as special counsel for TNS, Inc., a Delaware corporation (the "Company"), in connection with the Company's registration
statement on Form S-1, File No. 333-118301 (the "Registration Statement"), filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement covers the underwritten public offering by the Company of up to
1,755,470 shares of the Company's common stock, par value $0.001 per share (the "Company Shares"), and by the selling stockholders of up to
4,932,013 shares of the Company's common stock, par value $0.001 per share (the "Selling Stockholder Shares").

     With your permission, all assumptions and statements of reliance herein have been made without any independent investigation or
verification on our part except to the extent otherwise expressly stated, and we express no opinion with respect to the subject matter or accuracy
of such assumptions or items relied upon.

     In connection with this opinion, we have (i) investigated such questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records of the Company, such certificates of public officials and such
other documents, and (iii) received such information from officers and representatives of the Company, as we have deemed necessary or
appropriate for the purposes of this opinion. In all such examinations, we have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of original and certified documents and the conformity to original or certified documents of all
copies submitted to us as conformed or reproduction copies. As to various questions of fact relevant to the opinions expressed herein, we have
relied upon, and assume the accuracy of, representations and warranties contained in the documents and certificates and oral or written
statements and other information of or from representatives of the Company and others and assume compliance on the part of all parties to the
documents with their covenants and agreements contained therein.

    Based upon the foregoing, and subject to the limitations, qualifications and assumptions set forth herein, we are of the opinion that (i) the
Company Shares, when issued, delivered and paid for as contemplated by the Registration Statement, will be validly issued, fully paid and
non-assessable and (ii) the Selling Stockholder Shares have been validly issued and are fully paid and non-assessable.

     The opinions expressed herein are limited to the General Corporation Law of the State of Delaware, the Delaware Constitution and
reported judicial decisions interpreting those laws, each as currently in effect. We assume no obligation to supplement this letter if any
applicable laws change after the date hereof or if we become aware of any facts that might change the opinions expressed herein after the date
hereof.

     We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.

                                                             Very truly yours,

                                                             /s/ Arent Fox PLLC
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                                                                                                                                     Exhibit 23.1


                                         Consent of Independent Registered Public Accounting Firm

     We consent to the reference to our firm under the captions "Summary Consolidated Financial Data," "Selected Consolidated Financial
Data," and "Experts," and to the use of our reports on the consolidated financial statements and schedule of TNS, Inc. dated February 6, 2004
(except with respect to the matter discussed in paragraph 5 of Note 1, as to which the date is March 15, 2004), and to the use of our reports on
the consolidated financial statements and schedule of Transaction Network Services, Inc. dated September 6, 2002, in the Registration
Statement (Form S-1 No. 333-118301) and related Prospectus of TNS, Inc. for the registration of its common stock.

                                                       /s/ Ernst & Young LLP

McLean, Virginia
September 8, 2004
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Consent of Independent Registered Public Accounting Firm