VIASOURCE COMMUNICATIONS INC, S-1/A, 2000-07-07

VIASOURCE COMMUNICATIONS INC
S-1/A, 2000-07-07
ELECTRICAL WORK

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 7, 2000

REGISTRATION NO. 333-38476

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 1

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

VIASOURCE COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
NEW JERSEY 1731 22-2966853
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

1001 WEST CYPRESS CREEK ROAD, SUITE 118
FORT LAUDERDALE, FLORIDA 33309
800-683-0253

(Address, including zip code and telephone number, including
area code, of Registrant's principal executive offices)

CRAIG A. RUSSEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER

1001 WEST CYPRESS CREEK ROAD, SUITE 118

FORT LAUDERDALE, FLORIDA 33309

800-683-0253

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
COPIES TO:

<TABLE>
<S> <C>
MORTON A. PIERCE, ESQ. MICHAEL E. MICHETTI, ESQ.
DEWEY BALLANTINE LLP CAHILL GORDON & REINDEL
1301 AVENUE OF THE AMERICAS 80 PINE STREET
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10005
(212) 259-8000 (212) 701-3000
</TABLE>

---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE AGGREGATE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) FEE(3)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value................... 12,650,000 $14.00 $177,100,000 $46,754
--------------------------------------------------------------------------------------------------------------------------------
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</TABLE>

(1) Includes 1,650,000 shares of common stock which may be purchased by the
underwriters to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933, as amended.

(3) A registration fee of $52,800 was paid at the time of the initial filing of
this registration statement based on an estimate of the aggregate offering
price.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE> 2

WE WILL AMEND AND COMPLETE THE INFORMATION IN THIS PROSPECTUS. ALTHOUGH
WE ARE PERMITTED BY U.S. FEDERAL SECURITIES LAWS TO OFFER THESE
SECURITIES USING THIS PROSPECTUS, WE MAY NOT SELL THEM OR ACCEPT YOUR
OFFER TO BUY THEM UNTIL THE DOCUMENTATION FILED WITH THE SEC RELATING TO
THESE SECURITIES HAS BEEN DECLARED EFFECTIVE BY THE SEC. THIS PROSPECTUS
IS NOT AN OFFER TO SELL THESE SECURITIES OR OUR SOLICITATION OF YOUR
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THAT WOULD NOT BE
PERMITTED OR LEGAL.

SUBJECT TO COMPLETION - JULY 7, 2000

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PROSPECTUS
, 2000

(VIASOURCE LOGO)

11,000,000 SHARES OF COMMON STOCK

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VIASOURCE COMMUNICATIONS, INC.:

- We are a leading, nationwide provider of installation, integration,
fulfillment, long-term maintenance and support and premise networking services
to broadband communications providers.

- Viasource Communications, Inc.
1001 West Cypress Creek Road
Suite 118
Fort Lauderdale, Florida 33309
(800) 683-0253

PROPOSED SYMBOL AND MARKET:

- VVVV/ Nasdaq National Market

THE OFFERING:

- We are offering 11,000,000 shares of our common stock.

- We and one of our shareholders have granted to the underwriters an option to
purchase up to an additional 1,650,000 shares solely to cover over-allotments.

- This is the initial public offering of our common stock. Prior to the
offering, there has been no market for our common stock. We currently estimate
that the initial public offering price for our common stock will be between
$13 and $15 per share.

- Closing: , 2000.

<TABLE>
<CAPTION>
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Per Share Total
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<S> <C> <C>
Public offering price: $ $
Underwriting fees:
Proceeds to Viasource:
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</TABLE>

THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 9.

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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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DONALDSON, LUFKIN & JENRETTE

PRUDENTIAL VOLPE TECHNOLOGY
A UNIT OF PRUDENTIAL SECURITIES

CHASE H&Q

FIRST UNION SECURITIES, INC.

DLJDIRECT INC.
<PAGE> 3

INSIDE FRONT COVER - DESCRIPTION OF ARTWORK

A caption at the top center of the page reads: "The Right Connections"

Below the caption is a graphic made up of four circles linked together by a
cable representing the four business segments Viasource operates in, labeled
"Telephony & Internet," "Cable," "Premise Networking" and "Satellite &
Wireless."

The circle labeled "Cable" is centered at the top of the graphic and it
contains a picture of a bundle of brightly lit fiber optic cables. The circle
labeled "Satellite & Wireless" contains a picture of a satellite dish and it is
located at the bottom of the graphic. On the left side of the graphic is the
circle labeled "Telephony & Internet," which contains picture of a telephone
cable and a telephone keypad. The circle labeled "Premise Networking" is located
on the right side of the graphic and it contains a picture of a computer chip.

The Viasource logo is positioned in the bottom right-hand corner of the
page, below the graphic.

INSIDE COVER GATEFOLD - DESCRIPTION OF ARTWORK

The Viasource logo is centered at the top of the page.

Beneath the Viasource logo is a map of the United States of America
indicating the location of Viasource "Corporate offices," "Division
Headquarters," "Training Centers" and "Offices." The map legend is located in
the bottom left-hand corner of the page.

To the left of the map there are three circles linked by a cable. The top
circle, labeled "Branded Service," contains a picture of a Viasource company
van. The middle circle, labeled "Nationwide Office Locations," contains a
picture of a Viasource office building. The bottom circle, labeled "Trained
Service Technicians," contains a picture of a human eye superimposed over a
circuit board.

To the right of the map there are three circles linked by a cable. The top
circle, labeled "Integrated Service," contains a picture of a robotic hand
typing on a computer keyboard. The middle circle, labeled "Regional Training
Facilities," contains a picture of a human head overlaid with a circuit board.
The bottom circle, labeled "Strategic Relationships," contains a picture of a
human hand overlaid with a circuit board.

Below the map are located four circles, side by side. These circles are
identical to those found in the artwork located on the inside front cover page.

<PAGE> 4

You should rely only on the information contained in this prospectus. The
information contained in this prospectus is accurate only as of the date of this
prospectus. We have not authorized anyone to provide you with information
different from that contained in this prospectus. We are offering to sell, and
seeking offers to buy, shares of common stock only in jurisdictions where offers
and sales are permitted.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
Prospectus Summary............... 1
Risk Factors..................... 9
Use of Proceeds.................. 16
Dividend Policy.................. 17
Capitalization................... 18
Dilution......................... 19
Selected Unaudited Pro Forma
Financial Data................. 20
Selected Historical Financial
Data........................... 23
Management's Discussion and
Analysis of Financial Condition
and Results of Operations...... 25
</TABLE>

<TABLE>
<CAPTION>
Page
<S> <C>
Industry......................... 39
Business......................... 44
Management....................... 57
Certain Transactions............. 66
Principal and Selling
Shareholders................... 69
Description of Capital Stock..... 71
Shares Eligible for Future
Sale........................... 75
Underwriters..................... 77
Legal Matters.................... 80
Experts.......................... 80
Additional Information........... 81
Index to Financial Statements.... F-1
</TABLE>

<PAGE> 5

PROSPECTUS SUMMARY

This summary highlights information presented in more detail elsewhere in
this prospectus. You should read the entire prospectus, including the "Risk
Factors" and the financial statements and the related notes.

VIASOURCE

We are a leading, nationwide enabler of broadband technologies to
residential and commercial consumers. We offer comprehensive network integration
services to enable technologies offered by providers in the cable,
telecommunications, and satellite and wireless industries. Our services include
installation, integration, fulfillment, and long-term maintenance and support
services for broadband video, voice and data technologies. These broadband
service providers use us to make the critical connections between their network
infrastructures and equipment located at the premises of residential and
commercial end-users. We also design, install and maintain local area networks
and wide area networks, or LANs/WANs, and other network applications on a
residential and commercial basis.

The market for our services has grown rapidly as a result of increased
demand on both a residential and commercial basis for broadband video, voice and
data services, including high-speed Internet access. To satisfy this growth in
demand, many broadband service providers increasingly rely on independent
companies like us to deploy their technologies. We believe we provide nationwide
services that are of a higher quality and more cost efficient than the services
provided by smaller, local competitors or the existing in-house infrastructures
of service providers.

We believe that the following competitive advantages favorably position us
to capitalize on the rapidly growing demand for our services:

- our ability to provide high-quality, comprehensive technology solutions
on a nationwide basis,

- our technical knowledge, operational expertise, and ability to offer
higher value-added services,

- our on-going investments in sophisticated and centralized systems
infrastructure,

- our highly trained, experienced and quality-focused work-force,

- our exceptional recruiting and training programs, and

- our experienced management team.

Our principal clients are full-spectrum broadband service providers in the
cable, telecommunications, and satellite and wireless industries. To serve the
end-user, our clients rely on our knowledge and expertise to rapidly deploy the
latest technologies to support advanced cable services, cable telephony and
high-speed data services, digital subscriber lines, and satellite and wireless
broadband services. We have a long history of providing leading-edge technology
solutions. We have been successful in developing long-term relationships with
many of our clients, including many of the leaders in the industries we serve,
who frequently engage us to deliver a full suite of services over multiple
geographic regions.

1
<PAGE> 6

We believe that we are the largest independent provider of installation,
integration, fulfillment, and long-term maintenance and support services to the
cable, digital subscriber line, or DSL, and direct broadcast satellite, or DBS,
industries:

- Our cable clients include: Adelphia Communications Corporation, AT&T
Broadband, Cablevision Systems Corporation, Comcast Corporation, Cox
Communications, Inc., MediaOne Group Inc. and Time Warner Cable. As of
March 31, 2000, we served our cable clients in approximately 120 systems
in 33 states.

- Our DSL clients include: Covad Communications Group, Inc., DSL.net, Inc.,
HarvardNet, Inc., JATO Communications Corp., Network Access Solutions
Corporation, NorthPoint Communications Group, Inc., Qwest Communications
International, Inc., SBC Communications, Inc. and U S WEST, Inc. As of
March 31, 2000, we deployed DSL enabling services, primarily to small-
and medium-sized businesses, in 42 major markets in 23 states.

- We provide these services to DIRECTV/Hughes Electronics, the largest DBS
provider in the United States, with approximately 8.4 million DBS
subscribers at March 31, 2000. As of March 31, 2000, we served DIRECTV in
27 states.

- We provide services, including network design, installation and
maintenance, to Universal Studios, The Walt Disney Company and Home
Director, Inc., a leading provider of advanced network systems that allow
flexible distribution of video, voice and data technology throughout the
home.

BUSINESS STRATEGY

Our business strategy is to be the leading provider of comprehensive
installation, integration, fulfillment, long-term maintenance and support
services to broadband service providers serving residential and commercial
end-users. Key elements of our growth and operating strategies are to:

- provide broad-based, leading-edge technological expertise,

- broaden our geographic reach and expand our presence in existing markets,

- develop and deploy a broad range of higher value-added network
integration and support services,

- expand and strengthen our client relationships,

- build upon our relationships with leading manufacturers of broadband
communications equipment,

- enhance our brand recognition and customer service,

- maintain our technological expertise through the recruitment, retention
and continued training of qualified technicians, and

- pursue selective, strategic acquisitions.
2
<PAGE> 7

THE OFFERING

Common stock offered............ 11,000,000 shares

Common stock to be outstanding
after this offering........... 47,990,594 shares

Use of proceeds................. We intend to use the net proceeds from this
offering:

- to repay indebtedness,

- to expand our Web-based dispatch and
operations centers, invest in
additional training facilities,
implement distance learning programs
and augment our service infrastructure
to support our continued growth, and

- for possible future acquisitions,
working capital and other general
corporate purposes.

Over-allotment option........... We and one of our shareholders have granted
to the underwriters an option to purchase up
to an additional 1,650,000 shares solely to
cover over-allotments. We will not receive
any of the proceeds of any shares sold by the
selling shareholder upon any exercise of the
underwriters' over-allotment option.

Dividend Policy................. We do not anticipate declaring or paying cash
dividends for the foreseeable future.

Proposed Nasdaq symbol.......... VVVV

Unless otherwise indicated, all information in this prospectus:

- assumes no exercise of the underwriters' over-allotment option,

- assumes that 4,113,756 shares of common stock are issued simultaneously
with this offering upon the mandatory exercise of outstanding warrants
and automatic conversion of all outstanding shares of our preferred
stock,

- excludes 3,446,638 shares of common stock issuable upon exercise of
outstanding options at a weighted average exercise price of $4.11 per
share, and 2,235,294 shares of common stock reserved for future grants
under our 2000 Stock Option Plan, and

- reflects a 0.588 for 1 reverse stock split of our capital stock that will
become effective prior to this offering.

EXECUTIVE OFFICES

We are a New Jersey corporation. Our principal executive offices are
located at 1001 West Cypress Creek Road, Suite 118, Fort Lauderdale, Florida
33309. Our telephone number is (800) 683-0253. Our Web site can be found at
www.viasource.net. Information contained on our Web site is not intended to be a
prospectus and is not incorporated into this prospectus.

3
<PAGE> 8

SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA

The following table presents our summary unaudited pro forma consolidated
financial data. The summary unaudited pro forma financial data have been derived
from the pro forma consolidated financial statements included elsewhere in this
prospectus. Our unaudited pro forma statement of operations data for the fiscal
year ended January 1, 2000 and for the three months ended April 3, 1999 and
April 1, 2000 gives effect to the following transactions as if they had occurred
on January 3, 1999:

- our acquisition of Communication Resources Incorporated on July 23, 1999,

- our acquisition of Telecrafter Services Corporation on September 7, 1999,

- our acquisition of D.S. Cable TV Contractor, Inc. on April 21, 2000,

- our acquisition of Service Cable Electric, Inc. on May 4, 2000,

- our acquisition of Excalibur Cable Communications, Ltd on June 1, 2000,
and

- our acquisition of TeleCore, Inc. on June 1, 2000.

Our unaudited pro forma statement of operations data also gives effect to
the following adjustments arising from these acquisitions:

- goodwill and other intangibles,

- interest expense due to the incremental indebtedness, and

- income taxes.

Our unaudited pro forma balance sheet data as of April 1, 2000 gives effect
to the following adjustments:

- our acquisitions of TeleCore, Excalibur, D.S. Cable and Service Cable,
including the issuance of common and preferred stock, the issuance of
notes to certain shareholders, and the borrowings under our senior
revolving credit facility, and

- the mandatory exercise of warrants to purchase common stock and
conversion of our preferred stock into common stock upon this offering.

Our unaudited pro forma, as adjusted, balance sheet data as of April 1,
2000 gives effect to the above pro forma balance sheet adjustments and the
following adjustments:

- the issuance of common stock in this offering, and

- the repayment of indebtedness as described in "Use of Proceeds."

We have included EBITDA in our Summary Unaudited Pro Forma Financial Data.
We have presented EBITDA to enhance your understanding of our operating results.
EBITDA consists of net income (loss), excluding net interest, taxes,
depreciation and amortization. EBITDA is provided because it is an important
measure of financial performance commonly used in the telecommunications
industry to determine the value of companies within the industry and to define
standards for borrowing from institutional lenders. You should not construe
EBITDA as an alternative to operating income as an indicator of our operating
performance, or as an alternative to cash flows

4
<PAGE> 9

from operating activities as a measure of our liquidity, determined in
accordance with generally accepted accounting principles. We may calculate
EBITDA differently than other companies.

Included in EBITDA are non-cash operating charges in fiscal 1999 of $1.2
million of special compensation charges associated with certain stock option
grants and $1.1 million of recapitalization costs. Included in EBITDA for the
three months ended April 1, 2000 are non-cash operating charges of $2.7 million
of special compensation charges associated with certain stock option grants. As
a result of our recent acquisitions, on a pro forma basis we expect to incur in
the second quarter of fiscal 2000 a non-cash special compensation charge of $5.4
million.

You should read our Summary Unaudited Pro Forma Financial Data in
conjunction with our consolidated financial statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Selected Unaudited Pro Forma Financial Data," "Selected Historical
Financial Data" and our pro forma consolidated financial statements and notes
thereto included elsewhere in this prospectus.
5
<PAGE> 10

SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
ENDED -----------------------------
JANUARY 1, 2000 APRIL 3, 1999 APRIL 1, 2000
<S> <C> <C> <C>
OPERATING DATA:
Revenues.................................. $ 130,526 $ 28,047 $ 47,687
---------- ---------- ----------
Operating Expenses:
Cost of revenues....................... 108,632 23,475 42,535
Selling, general and administrative.... 17,896 1,647 9,070
Depreciation and amortization.......... 22,746 5,309 5,713
Special compensation charges........... 1,229 -- 2,654
Recapitalization costs................. 1,109 -- --
---------- ---------- ----------
Total operating expenses............ 151,612 30,431 59,972
---------- ---------- ----------
Loss from operations...................... (21,086) (2,384) (12,285)
Interest income........................... 217 31 28
Interest expense.......................... 5,693 1,246 1,659
---------- ---------- ----------
Loss before income taxes.................. (26,562) (3,599) (13,916)
Income tax provision (benefit)............ (1,232) 333 --
---------- ---------- ----------
Net loss.................................. $ (25,330) $ (3,932) $ (13,916)
========== ========== ==========
Pro forma basic and diluted net loss per
share.................................. $ (.63) $ (.09) $ (.38)
========== ========== ==========
Shares used in computation of pro forma
basic and diluted net loss per share... 40,505,625 45,516,548 36,983,419
========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA.................................... $ 1,660 $ 2,925 $ (6,572)
Capital expenditures...................... 6,380 779 2,452
Cash flows provided by (used in) operating
activities............................. 2,045 902 (4,848)
Cash flows used in investing activities... (23,229) (17,939) (2,409)
Cash flows provided by financing
activities............................. 26,406 15,960 5,431
</TABLE>

<TABLE>
<CAPTION>
AS OF APRIL 1, 2000
-----------------------
PRO PRO FORMA
FORMA AS ADJUSTED
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 6,949 $ 91,629
Working capital........................................ 10,614 101,407
Goodwill and other intangibles......................... 205,505 205,505
Total assets........................................... 269,475 354,155
Long-term debt, net of current portion................. 54,561 4,175
Total shareholders' equity............................. 176,411 317,591
</TABLE>

6
<PAGE> 11

SUMMARY HISTORICAL FINANCIAL DATA

The following table presents our summary historical financial data. The
summary historical financial data as of January 2, 1999 and January 1, 2000 and
for the fiscal years ended January 3, 1998, January 2, 1999 and January 1, 2000
are derived from our audited consolidated financial statements included
elsewhere in this prospectus. The summary historical financial data as of June
2, 1995, June 1, 1996, January 4, 1997 and January 3, 1998 and for the fiscal
years ended June 2, 1995, June 1, 1996 and for the period from June 2, 1996
through January 4, 1997 have been derived from unaudited financial statements
not included in this prospectus, which have been prepared on the same basis as
the audited financial statements. The summary historical financial data as of
April 1, 2000 and for the three month periods ended April 3, 1999 and April 1,
2000 are derived from unaudited consolidated financial statements included
elsewhere in this prospectus which have been prepared on the same basis as the
audited financial statements. In 1996, we changed our fiscal year from a 52/53
week year ending in May to a 52/53 week calendar year.

Our historical results include the results of Communication Resources from
July 23, 1999 and Telecrafter from September 7, 1999, their respective
acquisition dates. These acquisitions are both accounted for under the purchase
method of accounting. See note 3 of the notes to our consolidated financial
statements included elsewhere in this prospectus.

You should read our Summary Historical Financial Data in conjunction with
our consolidated financial statements and notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Selected Historical Financial Data," "Selected Unaudited Pro Forma Financial
Data" and our pro forma consolidated financial statements and notes thereto
included elsewhere in this prospectus. We explain the EBITDA measure presented
in this table in the discussion preceding our "Summary Unaudited Pro Forma
Financial Data."

7
<PAGE> 12

SUMMARY HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD
FROM
JUNE 2,
FISCAL YEAR ENDED 1996 FISCAL YEAR ENDED
------------------------- THROUGH ---------------------------------------
JUNE 2, JUNE 1, JANUARY 4, JANUARY 3, JANUARY 2, JANUARY 1,
1995 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues........................ $ 21,887 $ 20,039 $ 11,787 $ 25,707 $ 33,816 $ 61,396
----------- ----------- ----------- ----------- ----------- -----------
Operating Expenses:
Cost of revenues.............. 17,945 16,926 10,232 20,971 26,866 51,009
Selling, general and
administrative.............. 1,876 2,124 1,189 2,443 3,230 7,362
Depreciation and
amortization................ 660 660 350 780 980 2,814
Special compensation
charges..................... -- -- -- -- -- 1,164
Recapitalization costs........ -- -- -- -- -- 1,108
----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses.... 20,481 19,710 11,771 24,194 31,076 63,457
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from operations... 1,406 329 16 1,513 2,740 (2,061)
Interest income................. -- -- -- -- -- 76
Interest expense................ 205 146 79 177 122 1,419
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income
taxes......................... 1,201 183 (63) 1,336 2,618 (3,404)
Income tax provision
(benefit)..................... 550 105 42 747 1,203 (555)
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)............... $ 651 $ 78 $ (105) $ 589 $ 1,415 $ (2,849)
=========== =========== =========== =========== =========== ===========
Basic and diluted net income
(loss) per share.............. $ 0.03 $ -- $ -- $ 0.03 $ 0.07 $ (0.13)
=========== =========== =========== =========== =========== ===========
Shares used in computation of
basic and diluted net income
(loss) per share.............. 20,233,081 20,233,081 20,233,081 20,233,081 20,233,081 21,492,717
=========== =========== =========== =========== =========== ===========
OTHER FINANCIAL DATA:
EBITDA.......................... $ 2,066 $ 989 $ 366 $ 2,293 $ 3,720 $ 753
Capital expenditures............ 630 978 400 1,030 2,231 4,383
Cash flows provided by (used in)
operating activities.......... 1,361 835 334 1,660 2,236 1,903
Cash flows used in investing
activities.................... (409) (710) (667) (1,030) (2,231) (13,641)
Cash flows provided by (used in)
financing activities.......... (973) (308) 515 104 (315) 17,668

THREE MONTHS ENDED
-------------------------
APRIL 3, APRIL 1,
1999 2000
<S> <C> <C>
OPERATING DATA:
Revenues........................ $ 8,609 $ 29,098
----------- -----------
Operating Expenses:
Cost of revenues.............. 7,222 24,989
Selling, general and
administrative.............. 696 3,154
Depreciation and
amortization................ 332 1,259
Special compensation
charges..................... -- 2,626
Recapitalization costs........ -- --
----------- -----------
Total operating expenses.... 8,250 32,028
----------- -----------
Income (loss) from operations... 359 (2,930)
Interest income................. -- --
Interest expense................ 37 679
----------- -----------
Income (loss) before income
taxes......................... 322 (3,609)
Income tax provision
(benefit)..................... 131 (154)
----------- -----------
Net income (loss)............... $ 191 $ (3,455)
=========== ===========
Basic and diluted net income
(loss) per share.............. $ 0.01 $ (0.13)
=========== ===========
Shares used in computation of
basic and diluted net income
(loss) per share.............. 20,231,794 26,581,310
=========== ===========
OTHER FINANCIAL DATA:
EBITDA.......................... $ 691 $ (1,671)
Capital expenditures............ 670 1,412
Cash flows provided by (used in)
operating activities.......... (646) (1,512)
Cash flows used in investing
activities.................... (670) (1,412)
Cash flows provided by (used in)
financing activities.......... 538 1,431
</TABLE>

<TABLE>
<CAPTION>
AS OF
--------------------------------------------------------------------------------
JUNE 2, JUNE 1, JANUARY 4, JANUARY 3, JANUARY 2, JANUARY 1, APRIL 1,
1995 1996 1997 1998 1999 2000 2000
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ 454 $ 270 $ 453 $ 1,187 $ 877 $ 6,257 $ 3,744
Working capital............................. 1,021 1,532 1,716 1,899 1,926 11,949 11,979
Goodwill and other intangibles.............. -- -- -- -- -- 32,618 32,123
Total assets................................ 6,768 6,448 7,065 8,241 9,784 67,182 71,439
Long-term debt, net of current portion...... 419 996 1,411 1,249 661 20,927 24,144
Redeemable common stock and warrants........ -- -- -- -- -- 5,827 1,480
Total shareholders' equity.................. 2,686 2,753 2,641 3,154 4,818 26,649 28,481
</TABLE>

8
<PAGE> 13

RISK FACTORS

An investment in our common stock involves the following risks. You should
carefully consider the risks described below, together with all of the other
information in this prospectus, before you decide to purchase shares of our
common stock.

WE HAVE A LIMITED HISTORY OF OPERATING AS A COMBINED COMPANY WHICH MAKES IT
DIFFICULT FOR YOU TO EVALUATE OUR PERFORMANCE

We have grown rapidly through a number of recently completed transactions.
In July 1999, we acquired Communication Resources. In September 1999, we
acquired Telecrafter. In the second quarter of 2000, we acquired TeleCore,
Excalibur, D.S. Cable and Service Cable. As a result, you have limited
information upon which to evaluate the performance of the combined companies.
Furthermore, after giving effect to these recent transactions, our historical
and pro forma financial information may not be indicative of our future
operating results. You should read the discussions under "Business -- History
and Recent Acquisitions," "Certain Transactions" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- History and
Recent Acquisitions" for information concerning our history.

WE HAVE INCURRED LOSSES AND EXPERIENCED NEGATIVE CASH FLOW, AND WE EXPECT TO
EXPERIENCE LOSSES AND NEGATIVE CASH FLOW FOR AT LEAST THE NEXT SEVERAL QUARTERS

On a pro forma basis, as a result of our recent acquisitions we would have
incurred significant losses and experienced negative operating cash flow in
recent periods. We also experienced a loss in fiscal 1999 on a historical basis.
As a result of our recent acquisitions, we incurred additional debt and will
require additional cash to fund operations. Consequently, we expect to report
operating losses and experience negative cash flow in our combined business for
at least the next several quarters. If our revenue does not grow as expected or
capital and operating expenditures exceed our plans, then our business,
prospects, financial condition and results of operations will be materially
adversely affected. We cannot be certain if or when we will be profitable or if
or when we will generate positive operating cash flow.

WE INCURRED A SIGNIFICANT AMOUNT OF GOODWILL AND OTHER INTANGIBLES AS A RESULT
OF OUR ACQUISITIONS IN 1999 AND THE SECOND QUARTER OF 2000 THAT WILL DECREASE
OUR EARNINGS IN FUTURE PERIODS

We recorded approximately $207 million of goodwill and other intangibles as
a result of our acquisitions in 1999 and our acquisitions in the second quarter
of 2000. The goodwill and other intangibles are being amortized over periods
ranging from 3 to 20 years with a weighted average life of 11 years. The
amortization of this goodwill and other intangibles will adversely affect our
earnings and profitability in future periods.

IF WE ARE UNABLE TO INTEGRATE OR SUCCESSFULLY MANAGE THE COMBINED COMPANIES, OR
COMPANIES WE MAY ACQUIRE IN THE FUTURE, WE MAY INCUR UNEXPECTED EXPENDITURES AND
OUR GROWTH AND PROFITABILITY COULD BE ADVERSELY AFFECTED

If we are unable to integrate or successfully manage the combined companies
or companies we may acquire in the future, we may not realize anticipated cost
savings and revenue growth which

9
<PAGE> 14

may result in reduced profitability or operating losses. We intend to continue
to integrate the management information, accounting and financial reporting
systems, and some of the operational, administrative, purchasing and insurance
practices of the businesses we have acquired and may acquire in the future. The
successful integration and management of acquired companies involve the
following principal risks that could adversely affect our growth and
profitability:

- Acquisitions may result in liabilities and contingencies, which could be
significant to our operations.

- Acquisitions may require substantial financial resources that otherwise
could be used in the development of other aspects of our business.

- We may not be able to successfully integrate common systems and
procedures without substantial costs, delays or other operations or
financial problems.

- Our recently assembled management group may be unable to successfully
manage the combined companies, or the integration may place significant
demands on our management, diverting their attention from, and making it
more difficult for them to manage, our operations.

- Our existing operational, financial and management systems may be
incompatible with or inadequate to effectively integrate and manage
acquired systems and any steps taken to implement changes in our systems
may not be sufficient.

We cannot assure you that we will be able to successfully integrate any
businesses, technologies or personnel that we might acquire in the future, and
our failure to do so could adversely affect our business, operating results and
financial condition.

A LOSS OF ONE OR MORE OF OUR KEY CLIENTS COULD CAUSE A SIGNIFICANT DECREASE IN
OUR REVENUES

We have derived and may continue to derive a significant portion of our
revenues from a limited number of clients. On a pro forma basis after giving
effect to our recent acquisitions, for the fiscal year ended January 1, 2000,
DIRECTV, AT&T and Time Warner Cable accounted for 20%, 19% and 15% respectively,
of our revenues. The services required by any one client can be limited by a
number of factors, including industry consolidation, technological developments,
economic slowdown and internal budget constraints. Our clients are not obligated
to purchase additional services and most of our contracts are cancelable on
short notice. As a result of these factors, the volume of work performed for
specific clients is likely to vary from period to period and a major client in
one period may not use our services in a subsequent period. A temporary or
permanent loss of any of our key clients could seriously harm our business.

MOST OF OUR CONTRACTS CAN BE CANCELED ON SHORT NOTICE, AND IF ONE OR MORE
SIGNIFICANT CONTRACTS WERE CANCELLED, WE MAY NOT BE ABLE TO GENERATE REVENUE AT
OR EXCEEDING HISTORICAL LEVELS

Most of our contracts are cancelable on short notice, generally less than
90 days. Accordingly, we cannot assure you that our future revenues will
approximate our historical performance. If any canceled contracts were not
replaced with contracts from other clients, our revenues might decrease and our
profitability could be adversely affected.

10
<PAGE> 15

IF THE GROWTH IN THE BROADBAND COMMUNICATIONS INDUSTRIES DOES NOT CONTINUE OR
CONTINUES SLOWER THAN ANTICIPATED, OUR CLIENTS MAY NOT REQUIRE THE SAME VOLUME
OF SERVICES FROM US AND WE MAY NOT BE ABLE TO EXECUTE OUR GROWTH STRATEGY

The broadband communications industries have experienced a high rate of
growth. If the rate of growth slows, and broadband service providers reduce
their capital investments in upgrades or expansion of their systems, our clients
may not require the same volume of services from us and we may not be able to
execute our growth strategy. In that case, our profitability and our prospects
could be adversely affected.

IF BROADBAND SERVICE PROVIDERS DECREASE THEIR RELIANCE ON INDEPENDENT COMPANIES
FOR INSTALLATION, INTEGRATION, FULFILLMENT, AND LONG-TERM MAINTENANCE AND
SUPPORT SERVICES, OUR REVENUES MAY DECLINE AND OUR BUSINESS COULD BE HARMED

Our success is dependent on the continued reliance by broadband service
providers on independent companies like us for performance of their
installation, integration, fulfillment, and long-term maintenance and support
services. If these providers elect to perform these services themselves, our
revenues may decline and our business could be harmed.

THE CONSOLIDATION OF BROADBAND SERVICE PROVIDERS COULD REDUCE THE NUMBER OF OUR
CLIENTS OR POTENTIAL CLIENTS

Recently, the cable, telecommunications, and satellite and wireless
industries have been characterized by significant consolidation activity. In
addition, the consolidation of our clients could have the effect of reducing the
number of our current or potential clients which could result in our dependence
on a smaller number of clients.

NEW TECHNOLOGIES MAY EMERGE WHICH COULD REDUCE DEMAND FOR OUR SERVICES

Our industry is subject to rapid changes in technology. Existing
technologies for transmission of video, voice and data are subject to potential
displacement by various new technologies. New technologies may be developed that
allow broadband service providers to deliver their services to consumers without
a significant upgrade of their existing systems. Furthermore, new technologies
may be developed that enable consumers to perform more easily their own
installation and maintenance of the equipment required for the delivery of these
services at their premises. Such technologies could reduce the need for
installation, replacement and maintenance services, which could reduce the
demand for our services.

IF WE ARE UNABLE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY,
WE MAY LOSE CURRENT CLIENTS OR BE UNABLE TO OBTAIN NEW CLIENTS

We will need to be able to enhance our current service offerings to keep
pace with technological developments and to address increasingly sophisticated
client needs. We may not be successful in developing and marketing in a timely
manner service offerings that respond to technological advances, and our
services may not adequately or competitively address the needs of the changing
marketplace. If we are not successful in responding in a timely manner to
technological changes, market conditions and industry developments, we may lose
current clients or be unable to obtain new clients and our business, operating
results and financial condition could suffer.

11
<PAGE> 16

WE MAY BE UNABLE TO SUCCESSFULLY COMPETE WITH OTHER COMPANIES IN THE INDUSTRY

Our industry is fragmented and highly competitive. Accordingly, we cannot
assure you that we will be able to maintain or enhance our competitive position.
Historically, there have been relatively few barriers to entry into the markets
in which we operate. As a result, any organization that has adequate financial
resources and access to technical expertise may become one of our competitors.
Competition in the industry depends on a number of factors, including price. Our
competitors may have lower cost structures and may, therefore, be able to
provide their services at lower rates than we can. We also face competition from
the in-house service organizations of our existing or prospective clients which
often employ personnel who perform some of the same types of services as we do.
If we are unable to maintain or enhance our competitive position, our business,
operating results and financial condition may suffer materially. You should read
"Business -- Competition" for additional information.

IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES, WE MAY BE UNABLE TO
MEET OUR CONTRACTUAL COMMITMENTS OR MAINTAIN THE QUALITY OF OUR SERVICE

Our ability to provide high-quality services on a timely basis requires
that we employ an adequate number of field technicians. Accordingly, our ability
to meet the demand for our services will be limited by our ability to attract,
train and retain skilled personnel. Our industry is characterized by highly
competitive labor markets and, like many of our competitors, historically we
have experienced high rates of employee turnover. Furthermore, our labor
expenses may increase as a result of a shortage in the supply of skilled
personnel and our efforts to improve our employee retention, which could
adversely impact our profitability. We cannot be certain that we will be able to
improve our employee retention rates or maintain an adequate skilled labor force
necessary to operate efficiently and to support our growth strategy. Failure to
do so could impair our ability to operate efficiently and maintain our
reputation for high quality service. This could also impair our ability to
retain current clients and attract new clients which could cause our financial
performance to decline. You should read "Business -- Operating
Strategy -- Recruit, Train and Retain Highly Qualified Personnel" and
"-- Employees" for additional information.

OUR BUSINESS MAY BE HARMED IF WE INCREASE OUR STAFFING LEVELS IN ANTICIPATION OF
A PROJECT AND UNDERUTILIZE OUR PERSONNEL BECAUSE THE PROJECT IS DELAYED, REDUCED
OR TERMINATED

Since our business is driven by large, and sometimes multi-year, contracts,
we forecast our personnel needs for future projected business. If we increase
our staffing levels in anticipation of a project which is subsequently delayed,
reduced or terminated, we may underutilize these additional personnel, which
would increase our expenses and could harm our business.

IF WE WERE TO LOSE MEMBERS OF OUR SENIOR MANAGEMENT AND COULD NOT FIND
APPROPRIATE REPLACEMENTS IN A TIMELY MANNER, OUR OPERATIONS COULD BE DISRUPTED
AND OUR BUSINESS COULD BE ADVERSELY AFFECTED

Our success is substantially dependent upon the retention of, and the
continued performance by, our senior management and other key employees,
including certain key employees of the companies we have recently acquired and
key employees of companies that we may acquire in the future. If any member of
our senior management team becomes unable or unwilling to participate in our
business and operations and we are not able to replace them in a timely manner,
our business could suffer. We do not maintain "key man" life insurance policies
on any member of our

12
<PAGE> 17

senior management or any of our key employees. You should read the discussion
under "Management -- Directors and Executive Officers" for information
concerning the experience of some of these individuals.

WE MAY NOT BE ABLE TO CONTINUE OUR GROWTH THROUGH ACQUISITIONS

We may be unable to support the aspect of our growth strategy that we
intend will be accomplished through acquisitions if we cannot identify or
finance future acquisitions. If we are not able to use our common stock as part
of the consideration for such acquisitions, we would be required to utilize more
of our cash resources. Using cash for acquisitions limits our financial
flexibility and makes us more likely to seek additional capital through future
debt or equity financings, which we cannot be certain will be available to us on
acceptable terms. In addition, we are required to obtain the consent of our
lenders for acquisitions which would substantially increase the level of our
debt service obligations.

ANTI-TAKEOVER PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS COULD
MAKE AN ACQUISITION OF OUR COMPANY MORE DIFFICULT

Our certificate of incorporation and bylaws, and New Jersey law, include
provisions that could delay or make it more difficult for a third party to
acquire us or effect changes in our management, even if an acquisition or change
in management would benefit our shareholders. These provisions include:

- authorizing our Board of Directors to issue preferred stock without
shareholder approval,

- staggered terms for the members of our Board of Directors,

- requiring advance notice of shareholder nominations for directors and
limiting the ability of shareholders to call a meeting of shareholders,
and

- statutory limits regarding business combinations.

You should read "Description of Capital Stock -- Anti-takeover Effects" for
additional information.

WE HAVE SIGNIFICANT SHAREHOLDERS WHO MAY BE ABLE TO INFLUENCE MAJOR CORPORATE
EVENTS AND MAY HAVE INTERESTS THAT DIFFER FROM THOSE OF OTHER SHAREHOLDERS

As a result of the transactions that have combined the companies that now
comprise Viasource, Crest Communications Holdings LLC presently beneficially
owns approximately 27% of our common stock and may be deemed to control
Viasource. After completion of this offering Crest Communications will own
approximately 20% of our common stock. In addition, members of our senior
management beneficially own approximately 23% of our common stock and, after
completion of this offering, will own approximately 18% of our common stock. As
a significant shareholder, Crest Communications will be able to influence the
outcome of matters submitted to a vote of our shareholders, including the
election of directors and the approval of any merger or consolidation involving
us, or any sale of all or substantially all of our assets. Because our
certificate of incorporation does not provide for cumulative voting for the
election of directors, the holders of a majority of the shares voted at a
meeting of our shareholders can elect all of the directors then standing for
election. Our senior managers, to the extent they may vote in the same manner,
will similarly be able to influence the outcome of matters submitted to the vote
of our shareholders. Crest Communications and these management shareholders may
have interests in such matters that

13
<PAGE> 18

differ from those of other shareholders. See "Principal and Selling
Shareholders" for additional information.

OUR COMMON STOCK HAS NEVER BEEN PUBLICLY TRADED SO WE CANNOT PREDICT THE EXTENT
TO WHICH A TRADING MARKET WILL DEVELOP FOR OUR COMMON STOCK

There has not been a public market for our common stock prior to this
offering. We cannot predict the extent to which a trading market will develop or
how liquid that market might become. The initial public offering price will be
determined by negotiations between our management and representatives of the
underwriters and may not be indicative of prices that will prevail in the
trading market.

THE PRICE OF OUR COMMON STOCK MAY BE VOLATILE WHICH MAY LEAD TO LOSSES BY
INVESTORS

The trading price of our common stock could be subject to fluctuations in
response to a number of factors, including:

- variations in our results of operations,

- developments that affect our industry,

- changes in the overall economy, and

- changes in the financial markets.

The market price of our common stock is also influenced by market conditions for
the common stock of our competitors and by changes in recommendations or
earnings estimates by securities analysts. Volatility in the market price of our
common stock could lead to losses by investors.

WE MAY EXPERIENCE QUARTERLY VARIATIONS IN REVENUES AND PROFITABILITY WHICH COULD
RESULT IN INCREASED VOLATILITY OF THE PRICE OF OUR COMMON STOCK

We may experience quarterly variations in revenues and profitability which
could result in increased volatility of the price of our common stock. Quarterly
variations may result from many factors, including:

- fluctuations in demand for our services,

- a change in the mix of our clients, contracts or business,

- the budgetary spending patterns of our clients,

- the timing and volume of work under new agreements,

- the termination of existing agreements,

- variations in the profitability of projects performed during any
particular quarter,

- shortages of qualified field technicians or of materials supplied by our
clients that are necessary to the provision of our services,

- costs we incur to support growth internally or through acquisitions,

- the timing of our expansion into new markets,

- the timing of acquisitions,

- the costs associated with integrating businesses we have acquired or may
acquire in the future, and

- adverse weather conditions that interfere with our ability to provide
services.

14
<PAGE> 19

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THIS OFFERING

Purchasers of common stock in the offering will pay a price per share which
substantially exceeds the per share value of our assets after subtracting our
liabilities. In addition, assuming an initial public offering price of $14 per
share (the midpoint of the range set forth on the cover page of this preliminary
prospectus), purchasers of common stock in the offering will have contributed
approximately 46.4% of the aggregate price paid by all purchasers of our stock,
including former shareholders of companies we have acquired, but will own only
approximately 22.9% of our common stock outstanding after the offering.

Purchasers of common stock in the offering will experience additional
dilution as a result of common stock being issued upon the exercise of
outstanding stock options. If we make additional acquisitions, we intend to
issue additional shares of common stock in connection with those acquisitions,
which may result in additional dilution.

FUTURE SALES BY EXISTING SHAREHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK

Once a trading market develops for our common stock, many of our
shareholders will have an opportunity to sell their common stock for the first
time. Sales of a substantial number of shares of common stock in the public
market after the offering, or the threat that substantial sales might occur,
could cause the market price of our common stock to decrease. These factors
could also make it difficult for us to raise capital by selling additional
equity securities. See "Shares Eligible for Future Sale" for additional
information.

THERE ARE RISKS THAT MAY MAKE IT DIFFICULT FOR US TO ACHIEVE THE OUTCOMES
ANTICIPATED IN OUR FORWARD-LOOKING STATEMENTS

Some of the statements in this prospectus are forward-looking statements
that are subject to a number of risks and uncertainties, including statements
about:

- our business strategy,

- our plans for growth,

- our ability to keep pace with rapidly changing technologies,

- the future growth of the industries we serve, and

- the future level of reliance by broadband service providers on
independent technology enabling companies like us.

Forward-looking statements include statements regarding the intent, belief or
current expectations of us or our officers (including statements preceded by,
followed by or including forward-looking terminology such as "may," "will,"
"should," "believe," "expect," "anticipate," "estimate," "continue" or similar
expressions or comparable terminology) with respect to various matters. We
cannot guarantee future results, levels of activity, performance or achievements
and you should not place undue reliance on these forward-looking statements. Our
actual results could differ materially from those anticipated from the
forward-looking statements depending on various important factors, including,
among other things, those listed in the foregoing "Risk Factors" and elsewhere
in this prospectus. We do not assume any obligation to update any of the
forward-looking statements we make.

15
<PAGE> 20

USE OF PROCEEDS

We estimate we will receive net proceeds of approximately $141.2 million
from the sale of the 11,000,000 shares of common stock offered by us, assuming a
public offering price of $14 per share (the midpoint of the range set forth on
the cover page of this preliminary prospectus) and after deducting underwriting
discounts and estimated expenses payable by us of $12.3 million. The estimated
net proceeds will be $ million if the underwriters' over-allotment
option is exercised in full. We will not receive any of the proceeds of the
shares sold by the selling shareholder upon any exercise of the underwriters'
over-allotment option.

We intend to use the net proceeds from the offering:

- to repay approximately $56.5 million of indebtedness,

- to invest between $13 and $17 million in additional field service
equipment, vehicle and equipment upgrades and branding of our existing
fleet,

- to invest between $12 and $15 million to expand our Web-based dispatch
and operations centers,

- to invest between $6 and $8 million in a corporate office facility and
additional field office equipment,

- to invest between $2 and $5 million in additional training facilities and
the development and implementation of distance learning programs, and

- for possible future acquisitions, working capital and other general
corporate purposes.

We continually evaluate potential acquisition candidates and intend to
continue to selectively pursue strategic acquisition opportunities. We do not
currently have any plans or agreements to acquire particular companies. Pending
the allocation of the proceeds of this offering, we intend to invest the net
proceeds in interest-bearing, investment-grade instruments, certificates of
deposit, or direct or guaranteed obligations of the United States.

As discussed above, we intend to repay the following indebtedness:

- Approximately $15.0 million borrowed under a term loan which is payable
in quarterly installments beginning on December 31, 2000 and continuing
through September 7, 2004. At our election, the term loan bears interest
at the prime rate plus 3.75% or LIBOR plus 5.00%. Of the proceeds of the
term loan, $10.5 million were used to fund our acquisition of the assets
of Telecrafter and the remainder was used to repay debt and fund general
working capital needs.

- Approximately $14.6 million drawn on our senior revolving credit
facility, which matures September 7, 2004 and, at our election, bears
interest at the prime rate plus 1.5% or LIBOR plus 2.75%. Of the
borrowings under the senior revolving credit facility, approximately $5.2
million were used to repay all outstanding amounts under previous bank
facilities and equipment loans and most of the remaining $9.4 million was
drawn to fund our acquisitions of TeleCore, Excalibur, D.S. Cable and
Service Cable.

- Approximately $21.2 million under notes to shareholders of businesses we
have acquired, which contractually mature upon this offering and bear
interest at an annual rate of 9.0%.

- Approximately $5.7 million of other indebtedness assumed in our
acquisition of TeleCore.

16
<PAGE> 21

DIVIDEND POLICY

We currently intend to retain any future earnings for funding growth and,
therefore, we do not anticipate paying cash dividends on our common stock in the
foreseeable future. In addition, the terms of our debt limit our ability to pay
cash dividends on our common stock. Any future determination to pay cash
dividends will be at the discretion of the Board of Directors and will be
dependent upon our financial condition, operating results, capital requirements
and other factors deemed relevant by our Board of Directors.

17
<PAGE> 22

CAPITALIZATION

The following table presents:

- Our actual capitalization as of April 1, 2000,

- Our capitalization on a pro forma basis to reflect:
(i) our acquisitions of TeleCore, Excalibur, D.S. Cable and Service
Cable, including the issuance of common and preferred stock, the
issuance of notes to certain shareholders, and the borrowings under
our senior revolving credit facility, and

(ii) the mandatory exercise of warrants to purchase common stock and
conversion of preferred stock into common stock upon this offering.

- Our pro forma capitalization on an as adjusted basis to reflect:

(i) the issuance of common stock in this offering (assuming a public
offering price equal to the midpoint of the range shown on the cover
page of this prospectus), and

(ii) the use of the net offering proceeds to repay approximately $56.5
million of indebtedness.

The following information regarding shares outstanding excludes 3,446,638
shares of common stock issuable upon exercise of outstanding options and
2,235,294 shares of common stock reserved for future grants under our 2000 Stock
Option Plan.

See "Use of Proceeds," "Selected Historical Financial Data," "Selected Pro
Forma Financial Data," our consolidated financial statements and the notes
thereto, and our pro forma consolidated financial statements and the notes
thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
AS OF APRIL 1, 2000
---------------------------------
PRO PRO FORMA
ACTUAL FORMA AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 3,744 $ 6,949 $ 91,629
======= ======== ========
Long-term debt (including current portion):
Term note with bank..................................... $15,000 $ 15,000 $ --
Senior revolving facility with bank..................... 5,281 11,761 3,835
Term notes.............................................. 1,539 5,869 --
Subordinated notes payable to shareholders of businesses
acquired.............................................. 3,000 26,610 --
Other................................................... 302 1,607 512
------- -------- --------
Total long-term debt (including current portion)... 25,122 60,847 4,347
Redeemable common stock and warrants........................ 1,480 -- --
Shareholders' equity
Preferred stock shares authorized, no par value.........
no shares issued (actual);........................
(pro forma); and...................
(pro forma as adjusted)............ -- -- --
Common stock, no par value,
26,588,480 shares outstanding (actual);........... 35,033 183,213 324,393
36,990,594 shares outstanding (pro forma); and....
47,990,594 shares outstanding (pro forma as
adjusted).........................................
Common stock purchase warrants.......................... 250 -- --
Deferred compensation................................... (1,373) (1,373) (1,373)
Accumulated other comprehensive income.................. (11) (11) (11)
Retained earnings (deficit)............................. (1,418) (1,418) (1,418)
Treasury stock, 3,043,974 shares........................ (4,000) (4,000) (4,000)
------- -------- --------
Total shareholders' equity......................... 28,481 176,411 317,591
------- -------- --------
Total capitalization............................... $55,083 $237,258 $321,938
======= ======== ========
</TABLE>

18
<PAGE> 23

DILUTION

The pro forma net tangible deficit of our common stock as of April 1, 2000,
was $29.1 million, or $0.79 per share of common stock. Pro forma net tangible
book value or deficit per share represents the amount of our total tangible
assets reduced by the amount of our total liabilities, after giving effect to:

- our acquisitions of TeleCore, Excalibur, D.S. Cable and Service Cable,
including the issuance of common and preferred stock, the issuance of
notes to certain shareholders and the borrowings under our senior
revolving credit facility, and

- the mandatory exercise of warrants to purchase common stock and
conversion of preferred stock into common stock upon this offering,

all divided by the number of shares of common stock outstanding immediately
prior to this offering.

After giving effect to our sale of 11,000,000 shares of common stock in
this offering and after deduction of the underwriting discounts and commissions
and estimated offering expenses, our pro forma net tangible book value as of
April 1, 2000 would have been approximately $112.1 million, or $2.34 per share
of common stock. This represents an immediate increase in pro forma net tangible
book value of approximately $3.13 per share to existing shareholders and an
immediate dilution of $11.66 per share to new investors purchasing common stock
in this offering. The following table illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Offering price per share.................................... $14.00
Pro forma net tangible deficit per share prior to this
offering.................................................. $(0.79)
Increase in pro forma net tangible book value per share to
existing shareholders..................................... 3.13
Pro forma net tangible book value per share after the
offering.................................................. 2.34
------
Dilution per share to new investors......................... $11.66
======
</TABLE>

The following table summarizes on a pro forma basis as of April 1, 2000,
the differences between the total consideration paid and the average price per
share paid by the existing shareholders and the new investors with respect to
the number of shares of common stock purchased from us based on the initial
public offering price:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
<S> <C> <C> <C> <C> <C>
Existing shareholders.......... 36,990,594 77.1% $177,840,000 53.6% $ 4.81
New investors.................. 11,000,000 22.9 154,000,000 46.4 14.00
---------- ---- ------------ ----
Total................ 47,990,594 100% $331,840,000 100%
========== ==== ============ ====
</TABLE>

The amounts shown for existing shareholders include shares of common stock
issued to sellers of businesses we acquired in 1999 and 2000. The table excludes
3,446,638 shares of common stock issuable upon exercise of outstanding options
at a weighted average exercise price of $4.11 per share, and 2,235,294 shares
reserved for future grants under our 2000 Stock Option Plan. To the extent that
any options are exercised, there will be further dilution to the new investors.
The table includes 18,385,529 shares of common stock owned by our executive
officers and directors and their affiliates. We may also issue additional shares
to acquire additional businesses or upon exercise of stock options granted in
the future, which could result in additional dilution to our shareholders.

19
<PAGE> 24

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

The following table presents our selected unaudited pro forma consolidated
financial data. The selected unaudited pro forma financial data have been
derived from the pro forma consolidated financial statements included elsewhere
in this prospectus. Our unaudited pro forma statement of operations data for the
fiscal year ended January 1, 2000 and for the three months ended April 3, 1999
and April 1, 2000 gives effect to the following transactions as if they had
occurred on January 3, 1999:

- our acquisition of Communication Resources on July 23, 1999,

- our acquisition of Telecrafter on September 7, 1999,

- our acquisition of D.S. Cable on April 21, 2000,

- our acquisition of Service Cable on May 4, 2000,

- our acquisition of Excalibur on June 1, 2000, and

- our acquisition of TeleCore on June 1, 2000.

Our unaudited pro forma statement of operations data also gives effect to
the following adjustments arising from these acquisitions:

- goodwill and other intangibles,

- interest expense due to the incremental indebtedness, and

- income taxes.

Our unaudited pro forma balance sheet data as of April 1, 2000 gives effect
to the following adjustments:

- the mandatory exercise of warrants to purchase common stock and
conversion of our preferred stock into common stock upon this offering.

Our unaudited pro forma, as adjusted, balance sheet data as of April 1,
2000 gives effect to the above pro forma balance sheet adjustments and the
following adjustments:

- the issuance of common stock in this offering, and

- the repayment of approximately $56.5 million of indebtedness as described
in "Use of Proceeds."

We have included EBITDA in our Selected Unaudited Pro Forma Financial Data.
We have presented EBITDA to enhance your understanding of our operating results.
EBITDA consists of net income (loss) excluding net interest, taxes, depreciation
and amortization. EBITDA is provided because it is an important measure of
financial performance commonly used in the telecommunications industry to
determine the value of companies within the industry and to define standards for
borrowing from institutional lenders. You should not construe EBITDA as an
alternative to operating income as an indicator of our operating performance, or
as an alternative to

20
<PAGE> 25

cash flows from operating activities as a measure of our liquidity, determined
in accordance with generally accepted accounting principles. We may calculate
EBITDA differently than other companies.

You should read our Selected Unaudited Pro Forma Financial Data in
conjunction with our consolidated financial statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Selected Historical Financial Data" and our pro forma consolidated
financial statements and notes thereto included elsewhere in this prospectus.

21
<PAGE> 26

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
ENDED -----------------------------
JANUARY 1, 2000 APRIL 3, 1999 APRIL 1, 2000
<S> <C> <C> <C>
OPERATING DATA:
Revenues.................................. $ 130,526 $ 28,047 $ 47,687
---------- ---------- ----------
Operating Expenses:
Cost of revenues....................... 108,632 23,475 42,535
Selling, general and administrative.... 17,896 1,647 9,070
Depreciation and amortization.......... 22,746 5,309 5,713
Special compensation charges........... 1,229 -- 2,654
Recapitalization costs................. 1,109 -- --
---------- ---------- ----------
Total operating expenses............ 151,612 30,431 59,972
---------- ---------- ----------
Loss from operations...................... (21,086) (2,384) (12,285)
Interest income........................... 217 31 28
Interest expense.......................... 5,693 1,246 1,659
---------- ---------- ----------
Loss before income taxes.................. (26,562) (3,599) (13,916)
Income tax provision (benefit)............ (1,232) 333 --
---------- ---------- ----------
Net loss.................................. $ (25,330) $ (3,932) $ (13,916)
========== ========== ==========
Pro forma basic and diluted net loss per
share.................................. $ (0.63) $ (0.09) $ (0.38)
========== ========== ==========
Shares used in computation of pro forma
basic and diluted net loss per share... 40,505,625 45,516,548 36,983,419
========== ========== ==========
OTHER FINANCIAL DATA:
EBITDA.................................... $ 1,660 $ 2,925 $ (6,572)
Capital expenditures...................... 6,380 779 2,452
Cash flows provided by (used in) operating
activities............................. 2,045 902 (4,848)
Cash flows used in investing activities... (23,229) (17,939) (2,409)
Cash flows provided by financing
activities............................. 26,406 15,960 5,431
</TABLE>

22
<PAGE> 27

SELECTED HISTORICAL FINANCIAL DATA

The following table presents our selected historical financial data. The
selected historical financial data as of January 2, 1999 and January 1, 2000 and
for the fiscal years ended January 3, 1998, January 2, 1999 and January 1, 2000
are derived from our audited consolidated financial statements included
elsewhere in this prospectus. The selected historical financial data as of June
2, 1995, June 1, 1996, January 4, 1997 and January 3, 1998 and for the fiscal
years ended June 2, 1995, June 1, 1996 and for the period from June 2, 1996
through January 4, 1997 have been derived from unaudited financial statements
not included in this prospectus, which have been prepared on the same basis as
the audited financial statements. The selected historical financial data as of
April 1, 2000 and for the three month periods ended April 3, 1999 and April 1,
2000 are derived from unaudited consolidated financial statements included
elsewhere in this prospectus which have been prepared on the same basis as the
audited financial statements. In 1996, we changed our fiscal year from a 52/53
week year ending in May to a 52/53 week calendar year.

You should read our Selected Historical Financial Data in conjunction with
our consolidated financial statements and notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Selected Pro Forma Financial Data" and our pro forma consolidated financial
statements and notes thereto included elsewhere in this prospectus. We explain
the EBITDA measure presented in this table in the discussion preceding our
"Selected Unaudited Pro Forma Financial Data."

23
<PAGE> 28

SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PERIOD
FROM
JUNE 2,
FISCAL YEAR ENDED 1996 FISCAL YEAR ENDED THREE MONTHS ENDED
------------------------- THROUGH --------------------------------------- ------------------------
JUNE 2, JUNE 1, JANUARY 4, JANUARY 3, JANUARY 2, JANUARY 1, APRIL 3, APRIL 1,
1995 1996 1997 1998 1999 2000 1999 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............. $ 21,887 $ 20,039 $ 11,787 $ 25,707 $ 33,816 $ 61,396 $ 8,609 $ 29,098
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating Expenses:
Cost of revenues.... 17,945 16,926 10,232 20,971 26,866 51,009 7,222 24,989
Selling, general and
administrative.... 1,876 2,124 1,189 2,443 3,230 7,362 696 3,154
Depreciation and
amortization...... 660 660 350 780 980 2,814 332 1,259
Special compensation
charges........... -- -- -- -- -- 1,164 -- 2,626
Recapitalization
costs............. -- -- -- -- -- 1,108 -- --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses........ 20,481 19,710 11,771 24,194 31,076 63,457 8,250 32,028
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from
operations.......... 1,406 329 16 1,513 2,740 (2,061) 359 (2,930)
Interest income...... -- -- -- -- -- 76 -- --
Interest expense..... 205 146 79 177 122 1,419 37 679
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes........ 1,201 183 (63) 1,336 2,618 (3,404) 322 (3,609)
Income tax provision
(benefit)........... 550 105 42 747 1,203 (555) 131 (154)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss).... $ 651 $ 78 $ (105) $ 589 $ 1,415 $ (2,849) $ 191 $ (3,455)
=========== =========== =========== =========== =========== =========== =========== ===========
Basic and diluted net
income (loss) per
share............... $ 0.03 $ -- $ -- $ 0.03 $ 0.07 $ (0.13) $ 0.01 $ (0.13)
=========== =========== =========== =========== =========== =========== =========== ===========
Shares used in
computation of basic
and diluted net
income (loss) per
share............... 20,233,081 20,233,081 20,233,081 20,233,081 20,233,081 21,492,717 20,231,794 26,581,310
=========== =========== =========== =========== =========== =========== =========== ===========

OTHER FINANCIAL DATA:
EBITDA............... $ 2,066 $ 989 $ 366 $ 2,293 $ 3,720 $ 753 $ 691 $ (1,671)
Capital
expenditures........ 630 978 400 1,030 2,231 4,383 670 1,412
Cash flows provided
by (used in)
operating
activities.......... 1,361 835 334 1,660 2,236 1,903 (646) (1,512)
Cash flows used in
investing
activities.......... (409) (710) (667) (1,030) (2,231) (13,641) (670) (1,412)
Cash flows provided
by (used in)
financing
activities.......... (973) (308) 515 104 (315) 17,668 538 1,431
</TABLE>

<TABLE>
<CAPTION>
AS OF
--------------------------------------------------------------------------------
JUNE 2, JUNE 1, JANUARY 4, JANUARY 3, JANUARY 2, JANUARY 1, APRIL 1,
1995 1996 1997 1998 1999 2000 2000
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........... $ 454 $ 270 $ 453 $ 1,187 $ 877 $ 6,257 $3,744
Working capital..................... 1,021 1,532 1,716 1,899 1,926 11,949 11,979
Goodwill and other intangibles...... -- -- -- -- -- 32,618 32,123
Total assets........................ 6,768 6,448 7,065 8,241 9,784 67,182 71,439
Long-term debt, net of current
portion........................... 419 996 1,411 1,249 661 20,927 24,144
Redeemable common stock and
warrants.......................... -- -- -- -- -- 5,827 1,480
Total shareholders' equity.......... 2,686 2,753 2,641 3,154 4,818 26,649 28,481
</TABLE>

24
<PAGE> 29

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

The following discussion and analysis contains statements of a
forward-looking nature relating to future events or our future financial
performance. This discussion and analysis should be read in conjunction with the
financial statements and related notes which appear elsewhere in this
prospectus.

OVERVIEW

We derive revenues from providing installation, integration, fulfillment,
and long-term maintenance and support services to broadband service providers on
both a residential and commercial basis. We also design, install and maintain
LANs/WANs and other network applications on a commercial and residential basis.

Each of our target market segments is experiencing rapid growth and changes
in technology. To capitalize on this opportunity, broadband service providers
are making significant investments to build and upgrade their networks to enable
them to rapidly deploy advanced technologies such as high-speed Internet access,
digital video and telephony to consumers. Providers are implementing these
strategies in order to maximize their revenue per end-user and return on their
investments and maintain or gain competitive advantages. As a result, we expect
our future operating results to reflect the:

- increasing volume of current services and expanding scope of new services
to our existing clients,

- deployment of emerging technologies and higher value-added applications,

- development of new client relationships,

- broadening of our geographic service area, and

- integration of our businesses and management of controllable costs.

We operate in four reportable segments:

- CABLE, which includes traditional and advanced cable installation,
disconnects, equipment recovery, account collection and system audit
services,

- TELEPHONY AND INTERNET, which includes installation and maintenance of
digital subscriber line, or DSL, services, cable telephony and high-speed
data services and other broadband services, as well as traditional
telephony services for commercial and residential consumers,

- SATELLITE AND WIRELESS, which includes installation, equipment conversion
and maintenance services for direct broadcast satellite, or DBS, and
other wireless technologies, and

- PREMISE NETWORKING, which includes design, installation and maintenance
of LANs/WANs and other network applications for commercial and
residential consumers.

We provide services to our clients pursuant to service contracts, most of
which are cancelable on short notice. Under the terms of such contracts, the
client can typically terminate the contract with 30 to 90 days prior written
notice. Historically, these service contracts have been awarded through a
competitive bidding process, but recently we have experienced trends toward
securing

25
<PAGE> 30

such contracts by negotiations. These service contracts provide for payment
based on the installations or other services we provide. Revenues are generally
recognized as services are performed. Since June 1999, a portion of revenues
derived from the provision of services to one of our DBS clients is subject to
potential chargebacks. We have not accumulated sufficient client specific
historical data to date to reliably estimate the amount of potential
chargebacks. Accordingly, as required under the Securities and Exchange
Commission Staff Accounting Bulletin No. 101 - Revenue Recognition in Financial
Statements, we record these amounts subject to chargeback as deferred revenue
and record revenue as the right of chargeback expires. To date, the amount of
the chargebacks has not been significant.

Cost of revenues includes all direct costs of providing services under our
contracts, other than depreciation on vehicles and equipment owned or utilized
by us under capital leases. Cost of revenues is our principal expense and it
consists mostly of labor-related expenses. The cost of revenues includes all
costs of field service technicians, supervisory and quality control personnel,
subcontractor costs, all costs related to the operation and maintenance of
vehicles and equipment, cost of materials not supplied by the client, field
office occupancy costs and insurance costs.

Typically, our newly hired field technicians attend various company
developed and company sponsored technical and safety training courses during the
initial 30 days of employment. We also provide a variety of continuing education
programs designed to assist our employees in maintaining technical competence
and professional certifications. Costs associated with operating and maintaining
safety and training centers, including educational training and safety manuals,
materials and supplies, occupancy costs and staffing costs, are charged to the
cost of revenues.

Selling, general and administrative costs include all costs of executive
personnel, certain clerical and administrative support personnel, occupancy
costs, travel and entertainment costs and accounting, legal, consulting and
other professional fees.

Depreciation and amortization expenses include depreciation of property and
equipment and amortization of goodwill and other intangibles. As a result of our
acquisitions in 1999 and in the second quarter of 2000, total goodwill and other
intangibles will be approximately $207 million. The goodwill and other
intangibles will be amortized over periods ranging from 3 to 20 years with a
weighted average life of 11 years.

Special compensation charges include non-recurring, non-cash compensation
charges associated with the amortization of unearned compensation related to
certain stock option grants issued during fiscal 1999 and the first quarter of
2000 to certain employees and consultants for services rendered to us. In
addition, one of the companies we acquired in the second quarter of 2000 will
record a non-cash special compensation charge of approximately $5.4 million,
which will be reflected in our second quarter of 2000 pro forma results.

We have included EBITDA in our Management's Discussion and Analysis of
Financial Condition and Results of Operations. We have presented EBITDA to
enhance your understanding of our operating results. EBITDA consists of net
income (loss) excluding net interest, taxes, depreciation and amortization.
EBITDA is provided because it is an important measure of financial performance
commonly used in the telecommunications industry to determine the value of
companies within the industry and to define standards for borrowing from
institutional lenders. You should not construe EBITDA as an alternative to
operating income as an indicator of our operating

26
<PAGE> 31

performance or as an alternative to cash flows from operating activities as a
measure of our liquidity, determined in accordance with generally accepted
accounting principles. We may calculate EBITDA differently than other companies.

We operate on a 52/53 week fiscal year basis. This discussion and analysis
below describes our results for the 52 week fiscal years ended January 3, 1998,
January 2, 1999, and January 1, 2000, which we also refer to as fiscal 1997,
fiscal 1998 and fiscal 1999, as well as the three month periods ended April 3,
1999 and April 1, 2000.

For further information, see our consolidated financial statements and
notes thereto included elsewhere in this prospectus.

HISTORY AND RECENT ACQUISITIONS

In June 1999, we effected a recapitalization in connection with an investor
group led by Crest Communications which purchased a controlling interest in
Viasource from our then shareholders. We incurred $1.1 million of non-recurring
transaction related expenses, principally for professional fees associated with
the recapitalization.

We have enhanced our growth through selective, strategic acquisitions that
broaden our geographic reach or expand our presence in existing markets, expand
our technological capabilities or allow us to reach new clients.

On July 23, 1999, we acquired all of the outstanding common stock of
Communication Resources in exchange for approximately $17.5 million of our
common stock and an additional $4.3 million of common stock that was subject to
an agreement with one of the former shareholders of Communication Resources
which gave him the right to put the shares to us and one of our shareholders. On
January 3, 2000, he exercised his right to put 691,033 of the shares back to us.
In consideration for these shares, we issued a $1.5 million promissory note,
which is required to be repaid upon completion of this offering.

On September 7, 1999, we acquired substantially all of the assets and
assumed substantially all of the liabilities of Telecrafter for approximately
$18.2 million, which we paid in a combination of cash, common stock and a
promissory note.

On April 21, 2000, we acquired substantially all of the assets and assumed
substantially all of the liabilities of D.S. Cable for approximately $7.8
million, which we paid in a combination of cash, common stock and a promissory
note.

On May 4, 2000, we acquired substantially all of the assets and assumed
substantially all of the liabilities of Service Cable for approximately $8.1
million, which we paid in a combination of cash, common stock, options and a
promissory note.

On June 1, 2000, we acquired TeleCore for approximately $126.9 million,
which we paid in a combination of cash, common stock, preferred stock, options
and a promissory note.

27
<PAGE> 32

On June 1, 2000, we acquired Excalibur for approximately $34.7 million,
which we paid in a combination of cash, common stock and a promissory note.

All of these acquisitions are or will be accounted for under the purchase
method of accounting. See note 3 of the notes to our consolidated financial
statements included elsewhere in this prospectus.

Our historical financial condition and results of operations may not be
indicative of our future results because of recent significant events,
including:

- our acquisitions of TeleCore, Excalibur, D.S. Cable and Service Cable,

- the $173.4 million of goodwill and other intangibles incurred in
connection with these acquisitions, which we estimate will be amortized
at a rate of $16.7 million per year over a period of 3 to 20 years with a
weighted average life of 10.4 years, and

- the non-recurring recapitalization costs of $1.1 million in fiscal 1999
and non-cash, special compensation charges of $1.2 million in fiscal 1999
and $2.6 million in the first quarter of fiscal 2000.

RESULTS OF OPERATIONS

The following table presents certain operating and other financial data for
the fiscal years 1997, 1998 and 1999 and the three month periods ended April 3,
1999 and April 1, 2000:

<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
---------------------------- -----------------------------
1997 1998 1999 (1) APRIL 3, 1999 APRIL 1, 2000
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............................ $25,707 $33,816 $61,396 $8,609 $ 29,098
Operating expenses:
Cost of revenues............... 20,971 26,866 51,009 7,222 24,989
Selling, general and
administrative.............. 2,443 3,230 7,362 696 3,154
Depreciation and
amortization................ 780 980 2,814 332 1,259
Special compensation charges... -- -- 1,164 -- 2,626
Recapitalization costs......... -- -- 1,108 -- --
------- ------- ------- ------ --------
Total operating expenses.... 24,194 31,076 63,457 8,250 32,028
------- ------- ------- ------ --------
Income (loss) from operations....... 1,513 2,740 (2,061) 359 (2,930)
Interest income..................... -- -- 76 -- --
Interest expense.................... 177 122 1,419 37 679
------- ------- ------- ------ --------
Income (loss) before income taxes... 1,336 2,618 (3,404) 322 (3,609)
Income tax provision (benefit)...... 747 1,203 (555) 131 (154)
------- ------- ------- ------ --------
Net income (loss)................... $ 589 $ 1,415 $(2,849) $ 191 $ (3,455)
======= ======= ======= ====== ========
OTHER FINANCIAL DATA:
EBITDA.............................. $ 2,293 $ 3,720 $ 753 $ 691 $ (1,671)
</TABLE>

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

(1) Includes the results of Communication Resources from July 23, 1999 and
Telecrafter from September 7, 1999, their respective acquisition dates.

28
<PAGE> 33

The following table presents certain selected financial data for our
operating segments, as well as our corporate expenses (which include certain
financing costs, employee benefit costs and other selling, general and
administrative expenses), for the fiscal years 1997, 1998 and 1999 and the three
month periods ended April 3, 1999 and April 1, 2000.

<TABLE>
<CAPTION>
FISCAL YEARS THREE MONTHS ENDED
---------------------------- -----------------------------
1997 1998 1999 (1) APRIL 3, 1999 APRIL 1, 2000
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUES:
Cable......................... $18,806 $22,387 $45,501 $ 6,276 $ 19,140
Telephony and Internet........ 3,902 4,261 8,221 1,187 5,477
Satellite and Wireless........ 2,981 7,047 7,125 1,101 4,353
Premise Networking............ 18 121 549 45 128
------- ------- ------- -------- --------
Total................... $25,707 $33,816 $61,396 $ 8,609 $ 29,098
======= ======= ======= ======== ========
DEPRECIATION AND AMORTIZATION:
Cable......................... $ 592 $ 702 $ 2,027 $ 246 $ 803
Telephony and Internet........ 120 153 373 45 199
Satellite and Wireless........ 68 121 295 33 196
Premise Networking............ -- 4 50 2 4
Corporate Expense............. -- -- 69 6 57
------- ------- ------- -------- --------
Total................... $ 780 $ 980 $ 2,814 $ 332 $ 1,259
======= ======= ======= ======== ========
INCOME (LOSS) FROM OPERATIONS:
Cable......................... $ 2,430 $ 3,359 $ 2,295 $ 530 $ 1,227
Telephony and Internet........ 372 822 2,020 326 800
Satellite and Wireless........ 118 479 (1,163) (55) (1,309)
Premise Networking............ 10 (7) (80) 1 (66)
Corporate Expense............. (1,417) (1,913) (5,133) (443) (3,582)
------- ------- ------- -------- --------
Total................... $ 1,513 $ 2,740 $(2,061) $ 359 $ (2,930)
======= ======= ======= ======== ========
</TABLE>

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

(1) Includes the results of Communication Resources from July 23, 1999 and
Telecrafter from September 7, 1999, their respective acquisition dates.

THREE MONTHS ENDED APRIL 1, 2000 COMPARED TO THREE MONTHS ENDED APRIL 3, 1999

REVENUES. Total revenues for the three months ended April 1, 2000 were
$29.1 million, an increase of $20.5 million, as compared to total revenues of
$8.6 million for the three months ended April 3, 1999. Of this increase, $15.9
million, or 77.6%, was attributable to the companies acquired in fiscal 1999 and
$4.6 million, or 22.4%, was attributable to internal growth reflecting increased
demand for our services.

In the three months ended April 1, 2000, we recognized $19.1 million of
revenue from our Cable segment, as compared to $6.3 million in the prior fiscal
year. This increase resulted primarily from revenues contributed by acquired
companies of $12.3 million and increased volumes for installations, collections,
disconnects and other cable services of $0.5 million. Cable revenues represented
65.8% of our total revenue in the three months ended April 1, 2000 as compared
to

29
<PAGE> 34

72.9% of our total revenue in the three months ended April 3, 1999. We
recognized $5.5 million of revenues for the three months ended April 1, 2000
from our Telephony and Internet segment, as compared to $1.2 million for the
three months ended April 3, 1999. This increase resulted primarily from
increased consumer demand for broadband services, high-speed data and Internet
access and cable telephony. Telephony and Internet revenues represented 18.8% of
our total revenue in the three months ended April 1, 2000 as compared to 13.8%
of our total revenue in the three months ended April 3, 1999.

We recognized $4.4 million of revenues in the three months ended April 1,
2000 from Satellite and Wireless, as compared to $1.1 million in the three
months ended April 3, 1999. The companies we acquired in fiscal 1999 contributed
$2.5 million of revenues to this segment in the three months ended April 1,
2000. Satellite and Wireless revenues represented 15.0% of our total revenue in
the three months ended April 1, 2000 as compared to 12.8% of our total revenue
in the three months ended April 3, 1999. After our DBS client, DIRECTV,
completed its acquisition of PRIMESTAR in 1999, it initiated a conversion of
PRIMESTAR's customers to its own technology platform. As a result, we have
experienced increased demand for our services related to this conversion
program, contributing to growth in revenues in the three months ended April 1,
2000. This conversion program is expected to continue through late 2000. As of
April 1, 2000, $2.6 million of our revenues derived from this conversion program
are subject to potential chargebacks, and are recorded as deferred revenue. We
will recognize these amounts as revenues as the right of chargeback expires over
a period of 16 months.

COST OF REVENUES. Cost of revenues for the three months ended April 1,
2000 was $25.0 million, an increase of $17.8 million, as compared to cost of
revenues of $7.2 million in the three months ended April 3, 1999. The increased
cost of revenues for the three months ended April 1, 2000 reflects costs
associated with conversion services performed for DIRECTV and higher direct
costs of services related to the acquired companies, partially offset by higher
margins in our Telephony and Internet segment due to improved pricing and labor
and equipment utilization.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the three months ended April 1, 2000 were $3.2 million, an increase
of $2.5 million as compared to an expense of $0.7 million in the three months
ended April 3, 1999. Of this increase, the companies acquired in fiscal 1999
contributed $1.3 million, or 52.0%, and the investment in infrastructure and
personnel to support our continued growth contributed $1.2 million.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses for
the three months ended April 1, 2000 were $1.3 million, an increase of $0.9
million as compared to depreciation and amortization expenses of $0.3 million in
the three months ended April 3, 1999. The increase reflects $0.4 million of
additional depreciation resulting from capital expenditures incurred in the
ordinary course of business and assets acquired in the acquisitions completed in
fiscal 1999 and $0.5 million of amortization of goodwill and other intangible
assets related to these acquisitions. As a result of our acquisitions in 1999
and the second quarter of 2000, total goodwill and other intangibles will be
approximately $207 million. The goodwill and other intangibles will be amortized
over periods ranging from 3 to 20 years with a weighted average life of 11
years.

SPECIAL COMPENSATION CHARGES. During the three months ended April 1, 2000,
we incurred non-cash, special compensation charges of $2.6 million of which $0.1
million and $2.5 million relate to cost of revenues and selling, general and
administrative expenses, respectively. These arose

30
<PAGE> 35

as a result of certain stock option grants we made to employees and consultants,
and represent the difference between the option exercise price and the deemed
fair value of our common stock on the date that the options were granted. We
will amortize charges of $1.4 million over the stock option vesting periods of
$0.5 million for the remainder of 2000 and $0.6 million and $0.3 million in
fiscal 2001 and 2002, respectively.

OPERATING INCOME (LOSS). For the three months ended April 1, 2000, we
recognized an operating loss of $2.9 million, as compared to operating income of
$0.4 million for the three months ended April 3, 1999. If we had not incurred
the special compensation charge of $2.6 million in the three months ended April
1, 2000, we would have recognized an operating loss of $0.3 million.

Operating income from Cable was $1.2 million for the three months ended
April 1, 2000 as compared to $0.5 million for the three months ended April 3,
1999, an increase of 131.5%. Telephony and Internet operating income was $0.8
million in the three months ended April 1, 2000 as compared to $0.3 million in
the three months ended April 3, 1999, an increase of 145.4%. Improved pricing
and higher labor productivity were the primary factors contributing to the
higher operating income in the Telephony and Internet segment.

The operating loss from Satellite and Wireless was $1.3 million in the
three months ended April 1, 2000, as compared to an operating loss of $0.1
million in the three months ended April 3, 1999. We have experienced lower
operating margins in our Satellite and Wireless segment because we have deferred
a portion of the revenues derived from DIRECTV's conversion program without a
corresponding deferral of the infrastructure and service costs of the segment.

INTEREST EXPENSE. For the three months ended April 1, 2000, interest
expense was $0.7 million, an increase of $0.6 million, as compared to interest
expense of $0.1 million in the three months ended April 3, 1999. The increased
interest expense was due to higher debt levels and the amortization of direct
financing transaction costs and fees.

INCOME TAX PROVISION (BENEFIT). We had a benefit for income taxes of $0.2
million for the three months ended April 1, 2000 as compared to a provision for
income taxes of $0.1 million in the three months ended April 3, 1999. Our
effective tax rate was a benefit of 4.3% as compared to an effective tax rate
provision of 40.7% in the three months ended April 3, 1999. The effective tax
rate differs from the federal statutory tax rate due to the amortization of
goodwill and other intangible assets that do not provide a tax benefit, state
income taxes and certain other business expenses that are not deductible for tax
purposes. The tax benefit recorded in the three months ended April 1, 2000 was
limited to our available federal taxable income carryback amount.

NET INCOME (LOSS). We recognized a net loss of $3.5 million for the three
months ended April 1, 2000, as compared to net income of $0.2 million in the
three months ended April 3, 1999. The net loss was substantially due to the
non-recurring special compensation charges of $2.6 million.

EBITDA. For the three months ended April 1, 2000, EBITDA was negative $1.7
million, a decrease of $2.4 million as compared to $0.7 million in the three
months ended April 3, 1999. The decrease was primarily due to the non-recurring
special compensation charges of $2.6 million.

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FISCAL YEAR ENDED JANUARY 1, 2000 COMPARED TO FISCAL YEAR ENDED JANUARY 2,
1999

REVENUES. Total revenues for fiscal 1999 were $61.4 million, an increase
of $27.6 million, or 81.6%, as compared to total revenues of $33.8 million for
fiscal 1998. Of this increase, $21.3 million, or 77.2%, was attributable to the
companies acquired in fiscal 1999 and $6.3 million, or 22.8%, was attributable
to internal growth reflecting increased demand for our services.

In fiscal 1999, we recognized $45.5 million of revenue from our Cable
segment, as compared to $22.4 million in the prior fiscal year, an increase of
103.2%. This increase resulted primarily from revenues contributed by acquired
companies of $19.7 million and increased volumes for installations, collections,
disconnects and other cable services of $3.4 million. Cable revenues represented
74.1% of our total revenue in fiscal 1999 as compared to 66.2% of our total
revenue in fiscal 1998. We recognized $8.2 million of revenues in fiscal 1999
from our Telephony and Internet segment, as compared to $4.3 million in fiscal
1998, an increase of 92.9%. This increase resulted primarily from increased
consumer demand for broadband services, high-speed data and Internet access and
cable telephony. Telephony and Internet revenues represented 13.4% of our total
revenue in fiscal 1999 as compared to 12.6% of our total revenue in fiscal 1998.

We recognized $7.1 million of revenues in fiscal 1999 from Satellite and
Wireless, as compared to $7.0 million in fiscal 1998. After our DBS clients,
DIRECTV and PRIMESTAR, merged in the first half of 1999, they focused on
integrating their businesses and we experienced lower demand for our services
from them and lower revenue levels. After the merger, DIRECTV initiated a
conversion of PRIMESTAR's customers to its own technology platform. As a result,
since the third quarter of 1999 we have experienced increased demand for our
services related to this conversion program. This conversion program is expected
to continue through late 2000. Of the revenues derived from this program in
fiscal 1999, $1.5 million are subject to potential chargebacks and are recorded
as deferred revenue. We will recognize these amounts as revenues as the right of
chargeback expires over a period of 16 months. Satellite and Wireless revenues
represented 11.6% of our total revenue in fiscal 1999 as compared to 20.8% of
our total revenue in fiscal 1998.

COST OF REVENUES. Cost of revenues for fiscal 1999 was $51.0 million, an
increase of $24.1 million, or 89.9%, as compared to cost of revenues of $26.9
million in fiscal 1998. After our DBS clients, DIRECTV and PRIMESTAR, merged in
the first half of 1999, they focused on integrating their businesses and we
experienced lower demand for our services from them and lower revenue levels. At
the same time, we had to maintain our DBS services personnel and infrastructure
in place so that we would be able to supply services to them when their demand
for our services resumed. As a result, we experienced lower margins in our
Satellite and Wireless segment. The increased cost of revenues for fiscal 1999
also reflects costs associated with conversion services performed for DIRECTV
and higher direct costs of services related to the acquired companies, partially
offset by higher margins in our Telephony and Internet segment due to improved
pricing and labor and equipment utilization.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for fiscal 1999 were $7.4 million, an increase of $4.1 million, or
127.9%, as compared to $3.2 million in fiscal 1998. Of the increase, the
companies acquired in fiscal 1999 contributed $2.1 million, or 51.2%, and the
investment in infrastructure and personnel to support our continued growth
contributed $2.0 million.

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DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses for
fiscal 1999 were $2.8 million, an increase of $1.8 million, or 187.1%, as
compared to depreciation and amortization expenses of $1.0 million in fiscal
1998. The increase reflects $1.1 million of additional depreciation resulting
from capital expenditures incurred in the ordinary course of business and assets
acquired in the acquisitions completed in fiscal 1999 and $0.7 million of
amortization of goodwill and other intangible assets related to these
acquisitions.

SPECIAL COMPENSATION CHARGES. During fiscal 1999, we incurred non-cash,
special compensation charges of $1.2 million of which $0.3 million and $0.9
million relate to cost of revenues and selling, general and administrative
expenses, respectively. These arose as a result of certain stock option grants
we made to employees and consultants, and represent the difference between the
option exercise price and the deemed fair value of our common stock on the date
that the options were granted.

RECAPITALIZATION COSTS. During fiscal 1999, we effected a recapitalization
in connection with which an investor group led by Crest Communications acquired
6,470,588 shares of common stock for $11.0 million directly from the then
shareholders of Viasource. In addition, Crest Communications provided us with
$5.0 million of bridge equity financing. We incurred $1.1 million of
non-recurring transaction related expenses, principally for professional fees
associated with the recapitalization.

OPERATING INCOME (LOSS). For fiscal 1999, we recognized an operating loss
of $2.1 million, as compared to operating income of $2.7 million in fiscal 1998.
Included in this operating loss, is $1.2 million attributable to the special
compensation charges and $1.1 million attributable to recapitalization costs. If
we had not incurred the recapitalization expenses and special compensation
charges in fiscal 1999, we would have recognized operating income of $0.2
million.

Operating income from Cable was $2.3 million in fiscal 1999 as compared to
$3.4 million in the prior fiscal year, a decrease of 31.7%. Higher direct cost
of revenues from the acquired companies, due to their higher field service and
administrative costs, was the primary factor for the decline in operating
income. Telephony and Internet operating income was $2.0 million in fiscal 1999
as compared to $0.8 million in the prior fiscal year, an increase of 145.7%.
Improved pricing and higher labor productivity were the primary factors
contributing to the higher operating income in the Telephony and Internet
segment.

Operating loss from Satellite and Wireless was $1.2 million in fiscal 1999
as compared to operating income of $0.5 million in the prior fiscal year. After
our DBS clients, DIRECTV and PRIMESTAR, merged in the first half of 1999, they
focused on integrating their businesses and we experienced lower demand for our
services from them and lower revenue levels. At the same time, we had to
maintain our DBS services personnel and infrastructure in place so that we would
be able to supply services to them when their demand for our services resumed.

INTEREST EXPENSE. For fiscal 1999, interest expense was $1.4 million, an
increase of $1.3 million as compared to interest expense of $0.1 million in
fiscal 1998. The increased interest expense was due to higher debt levels
incurred in connection with our acquisition of Telecrafter and the amortization
of direct financing transaction costs and fees.

INCOME TAX PROVISION (BENEFIT). We had a benefit for income taxes of $0.6
million for fiscal 1999 as compared to a provision for income taxes of $1.2
million in fiscal 1998. Our effective tax

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rate was a benefit of 16.3% as compared to an effective tax rate provision of
46.0% in fiscal 1998. The effective tax rate differs from the federal statutory
tax rate due to the amortization of goodwill and other intangible assets that do
not provide a tax benefit, and certain other business expenses that are not
deductible for tax purposes.

NET INCOME (LOSS). We recognized a net loss of $2.8 million for fiscal
1999, as compared to net income of $1.4 million in fiscal 1998. The net loss was
substantially due to the non-recurring special compensation charges and the
recapitalization costs of $1.2 million and $1.1 million, respectively.

EBITDA. For fiscal 1999, EBITDA was $0.8 million, a decrease of $3.0
million, or 79.8%, as compared to $3.7 million in fiscal 1998. The decrease was
primarily due to the non-recurring special compensation charges and the
recapitalization costs of $1.2 million and $1.1 million, respectively.

FISCAL YEAR ENDED JANUARY 2, 1999 COMPARED TO FISCAL YEAR ENDED JANUARY 3,
1998

REVENUES. Total revenues for fiscal 1998 were $33.8 million, an increase
of $8.1 million, or 31.5%, as compared to $25.7 million in fiscal 1997,
reflecting increased demand for services in all reportable operating segments.

In fiscal 1998, Cable revenues were $22.4 million, an increase of $3.6
million, or 19.0%, as compared to revenues of $18.8 million in fiscal 1997.
Growth in this segment reflected continued strong demand for installations,
disconnects and other cable services. Cable revenues represented 66.2% of our
total revenue in fiscal 1998 as compared to 73.2% in fiscal 1997. Telephony and
Internet revenues were $4.3 million in fiscal 1998, an increase of $0.4 million,
or 9.2%, as compared to revenues of $3.9 million in fiscal 1997. Telephony and
Internet revenues represented 12.6% of our total revenue in fiscal 1998 as
compared to 15.2% in fiscal 1997.

Satellite and Wireless revenues were $7.0 million in fiscal 1998, an
increase of $4.1 million, or 136.4%, as compared to revenues of $3.0 million in
fiscal 1997. The acceleration in the consumers' acceptance of, and demand for,
DBS services led to increased demand for our services in fiscal 1998. Satellite
and Wireless revenues represented 20.8% of our total revenues in fiscal 1998 as
compared to 11.6% in fiscal 1997. Premise Networking revenues were $0.1 million
in fiscal 1998.

COST OF REVENUES. Cost of revenues for fiscal 1998 was $26.9 million, an
increase of $5.9 million, or 28.1%, as compared to cost of revenues of $21.0
million in fiscal 1997. As a percentage of revenues, however, cost of revenues
declined for fiscal 1998, as compared to fiscal 1997, partially due to increased
volume in our Telephony and Internet segment, which generally involves our
higher margin services.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for fiscal 1998 were $3.2 million, an increase of $0.8 million, or
32.2%, as compared to selling, general and administrative expenses of $2.4
million in fiscal 1997. The increase was attributed to the investment in
infrastructure and personnel to support our continued growth in our Telephony
and Internet and Satellite and Wireless segments.

DEPRECIATION AND AMORTIZATION. Depreciation expense for fiscal 1998 was
$1.0 million, an increase of $0.2 million, or 25.6%, as compared to depreciation
expense of $0.8 million in fiscal

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1997. The increase reflected additional capital expenditures incurred in the
ordinary course of business.

OPERATING INCOME (LOSS). Operating income for fiscal 1998 was $2.7
million, an increase of $1.2 million, or 81.1%, as compared to operating income
of $1.5 million in fiscal 1997. Of this increase, Cable operating income
increased $0.9 million, reflecting continued strong demand for our services and
improved utilization of labor and equipment. Telephony and Internet and
Satellite and Wireless operating income increased $0.5 million and $0.4 million,
respectively.

INTEREST EXPENSE. Interest expense for fiscal 1998 was $0.1 million, as
compared to $0.2 million in fiscal 1997. The lower interest expense in fiscal
1998 reflected lower outstanding indebtedness.

INCOME TAX PROVISION (BENEFIT). The provision for income taxes for fiscal
1998 was $1.2 million as compared to $0.7 million in fiscal 1997. Our effective
tax rate was 46.0% as compared to 55.9% in 1997. The effective tax rate differs
from the federal statutory tax rate due to state income taxes and certain other
business expenses that are not deductible for tax purposes.

NET INCOME (LOSS). We recognized net income of $1.4 million for fiscal
1998 as compared to net income of $0.6 million in fiscal 1997, an increase of
$0.8 million, or 140.2%.

EBITDA. For fiscal 1998, EBITDA increased $1.4 million, or 62.2% to $3.7
million, from EBITDA of $2.3 million in fiscal 1997. The increase reflected the
results of the items discussed above.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our working capital requirements, capital expenditures and
acquisitions to date through a combination of internally generated funds,
operating and capital lease financing arrangements, long-term revolving credit
and term note facilities and private equity contributions. We intend to continue
to finance these expenditures through internally generated funds, long-term
credit facilities and equity financings, including this offering.

We invest capital in our infrastructure, including our vehicles and
equipment to support contractual commitments to our clients. To support our
ability to provide nationwide services, we intend to invest in expanding our
Web-based dispatch and operations center, developing additional training
facilities, implementing distance learning programs and augmenting our service
infrastructure by purchasing and deploying additional field services equipment.
In addition, we have pursued a business strategy to date that includes
selective, strategic acquisitions and will continue to do so if and to the
extent we identify opportunities at attractive valuations and believe that the
acquisitions are appropriate uses of our capital resources.

In September 1999, we entered into a subordinated credit agreement with
General Electric Capital Corporation, which provided for initial borrowings of
$15.0 million under a term note. We incurred financing costs of approximately
$1.7 million in connection with the term note, which costs include the value of
warrants we issued and are being amortized using the effective interest rate
method over the life of the term note. The proceeds from the term note were used
to fund the $10.5 million cash consideration in our acquisition of Telecrafter,
to repay debt and to fund general working capital needs. The subordinated
facility must be repaid upon completion of this offering.

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In March 2000, we entered into our current $15.0 million senior revolving
credit facility with General Electric Capital Corporation. This facility, which
matures on September 7, 2004, includes a $12.0 million revolving credit facility
and a sub-facility of up to $3.0 million for letters of credit. We are required
to pay an annual non-utilization fee equal to 0.50% of the unused portion of the
facility. The facility bears interest, at our option, at the prime interest rate
plus 1.50% or LIBOR plus 2.75%. The initial borrowings of $5.2 million under
this facility were used to repay all outstanding principal amounts under
previous senior bank credit facilities and bank equipment loans. We borrowed an
additional approximately $6.5 million under this facility in connection with our
recent acquisitions of TeleCore, Excalibur, D.S. Cable and Service Cable. In
connection with our recent acquisitions, on May 31, 2000, we amended our
subordinated credit agreement and senior revolving facility which changed
certain of the financial covenants. We are in the process of renegotiating the
terms of these facilities and have executed a commitment letter to increase our
available borrowing capacity to $25 million, including the sub-facility of up to
$3.0 million for letters of credit. Based on the commitment letter, we expect
that the new facility will bear interest at rates that are adjusted quarterly,
based on our leverage ratios for the most recent trailing four quarters.
Depending on our leverage ratios, the facility would bear interest at (i) 3.5%
over LIBOR or 2.25% over the greater of prime rate or the federal funds rate
plus 0.50% or (ii), if our leverage ratios do not exceed certain thresholds,
2.75% over LIBOR or 1.50% over the greater of prime rate or the federal funds
rate plus 0.50%. The facility will be secured by all of our assets, including
the stock of our subsidiaries. We cannot assure you if or whether we will reach
agreement with our lender for these new terms.

Net cash provided by operating activities was $1.7 million, $2.2 million
and $1.9 million, in fiscal 1997, 1998 and 1999, respectively. Net cash used in
operating activities was $0.6 million and $1.5 million in the three months ended
April 3, 1999 and April 1, 2000, respectively. Net cash provided by operating
activities in 1999 of $1.9 million consisted of a net loss of $2.8 million
offset by non-cash charges of $3.5 million and a decrease in working capital of
$1.2 million. Net cash used in operating activities of $1.5 million in the three
months ended April 1, 2000 consisted of a net loss of $3.5 million and a
decrease in working capital of $1.5 million, offset by non-cash charges of $3.5
million.

For fiscal 1999, net cash used in investing activities for capital
expenditures was $4.4 million as compared to $2.2 million in 1998 and $1.0
million in 1997. The increase in capital expenditures for fiscal 1998 and 1999
reflects the expansion of our business both geographically and by service
offerings.

For fiscal 1999, 1998, and 1997 our capital expenditures were principally
for the purchase of new vehicles and equipment as well as ordinary course
replacement of vehicles and equipment. In addition, we used $10.5 million of
cash to acquire Telecrafter. Our planned capital expenditures for fiscal 2000,
which will be funded primarily with the net proceeds of this offering, are
expected to total approximately $10 million, which will be used to purchase
additional field service equipment, vehicle and equipment upgrades, corporate
office facility improvements and additional training facilities. These
expenditures will be capitalized and amortized over a straight line period of
generally five years.

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In fiscal 1999, net cash provided by financing activities was $17.7
million, which included net cash proceeds consisting of $15 million from our
term note with General Electric Capital Corporation and $5 million from the sale
of common stock offset by $4 million of treasury stock purchases and $1.7
million of long-term debt repayments. In addition, in fiscal 1999 we received
bridge equity financing of $5.0 million which was repaid with the proceeds of
the sale of common stock. In the three months ended April 1, 2000, net cash
provided by financing activities was $1.4 million which consisted of proceeds of
$5.2 million from the senior credit facility with General Electric Capital
Corporation offset by long-term debt repayments.

We intend to use the net proceeds of this initial public offering to repay:

- all outstanding principal amounts under our subordinated credit facility,
which will be approximately $15.0 million,

- approximately $14.6 million that we expect will be outstanding under our
revolving credit facility,

- approximately $21.2 million of notes we issued to shareholders in our
recent acquisitions of Telecrafter, TeleCore, Excalibur, D.S. Cable and
Service Cable, which we are required to repay upon this offering, and

- approximately $5.7 million of other indebtedness assumed in our
acquisition of TeleCore.

After this offering, we will have approximately $12.0 million available for
future borrowings and approximately $3.0 million will be available for letters
of credit under our revolving credit facility. If we reach agreement with our
lender to increase our borrowing capacity as described above, we will have
approximately $22 million available for borrowing. While we have no specific
plans to borrow additional amounts under this facility, we will draw on it as
needed to fund our operations in the ordinary course of business.

We expect that our capital resources, together with existing cash and cash
equivalents, will be sufficient to meet our financial obligations at our current
levels of business for at least the next twelve months. Our future operating
results and cash flows may be affected by a number of factors including our
success in securing future service contracts, integrating existing and future
acquisitions and managing controllable costs.

SEASONALITY; FLUCTUATIONS OF QUARTERLY RESULTS

Our operations are seasonal, generally resulting in higher revenues and
operating profits in the second and third quarters compared to the first and
fourth quarters of the year. Quarterly variations in our operating results may
result from many factors, including fluctuations in demand for our services, a
change in the mix of our clients, the timing and volume of work under new
agreements, the termination of existing agreements, variations in the
profitability of projects performed during any particular quarter, the length of
sales cycles, costs we incur to support growth internally or through
acquisitions, the timing of our expansion in new markets, the timing of
acquisitions, the costs associated with integrating businesses we have acquired
or may acquire in the future, and adverse weather conditions that interfere with
our ability to provide services to our clients. As a result, our operating
results in any particular quarter may not be indicative of the results that can
be expected for any other quarter or the entire year.

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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our senior revolving credit facility and subordinated term note facility
with General Electric Capital Corporation bear interest at floating rates.
Accordingly, we are exposed to potential losses related to changes in interest
rates. We do not enter into derivatives or other financial instruments for
trading or speculative purposes. As of January 1, 2000, approximately 80% of our
outstanding borrowings are exposed to interest rate risk. Assuming a 100 basis
point increase in interest rates, based on our indebtedness outstanding on that
date, our annual interest expense would increase by approximately $0.2 million.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board 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 on 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. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 is effective for fiscal years beginning after
June 15, 2000. We do not anticipate entering into or acquiring a significant
amount of derivative instruments. Accordingly, we believe that the impact of
adopting SFAS No. 133 on our financial statements will not be material.

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INDUSTRY

OVERVIEW

We offer comprehensive network integration services to enable technologies
offered by service providers in the broadband communications industry. Our
technology enabling services include installation, integration, fulfillment, and
long-term maintenance and support services for broadband video, voice and data
technologies such as high-speed Internet access, digital video and broadband
telephony, or voice communications technology over cable, DSL and other
broadband conduits. These broadband service providers use us for the critical
"last mile," where we make the connections between their network infrastructures
and equipment located at the premises of residential and commercial end-users.
These providers may use one or more of four possible delivery methods or
networks: cable, telephony, satellite and wireless, and the utility
infrastructure. We also provide premise networking services where we design,
install and maintain LANs/WANs and other communications network applications for
commercial and residential premises.

A significant development for the telecommunications industry has been the
emergence of the Internet as a mass medium for commerce and communications
involving both residential and commercial consumers. IDC estimates that there
were approximately 107 million Internet users in the United States at the end of
1999, a number that IDC expects to increase by approximately 86%, to
approximately 200 million users, by 2003.

Consolidation in the broadband communications industry among cable,
telecommunications, and satellite and wireless service providers has created
larger broadband service providers, many of whom provide an integrated suite of
advanced video, voice and data services to residential and commercial consumers.
These providers have expanded in size and geographic scope, and our experience
indicates that they increasingly rely on independent technology enabling
companies to provide comprehensive installation, integration, fulfillment, and
long-term maintenance and support services over multiple geographic regions and,
in some cases, nationwide. We believe that these larger providers who operate in
multiple geographic markets will prefer to align themselves with larger
technology enablers, like us, who are able to deploy consistent service on a
nationwide scale and have the expertise and resources to deploy and maintain
increasingly complex technologies over large networks.

We believe that our target market presents substantial growth opportunities
for independent technology enabling service providers, like us, due to:

- the increasing demand by residential and commercial consumers for
advanced broadband services such as high-speed Internet access, digital
video and telephony,

- the need to satisfy the demand for emerging broadband communications
technologies such as

-- Web-based video conferencing,

-- virtual private networks, which are networks run over the public
Internet that provide privacy to the network users, and

-- voice-over-DSL, which will allow simultaneous two-way voice
communication with high-speed data transmission over digital
subscriber lines,

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- the availability of multiple choices for consumers to receive these
advanced services, which has led to intensifying competition for
subscribers and an increased focus among broadband service providers on
consumer satisfaction, and

- the need for broadband service providers to rapidly deploy technology and
equipment capable of delivering advanced services to residential and
commercial consumers to realize a return on the significant investments
they have made to build and upgrade their networks.

INDUSTRY BACKGROUND

CABLE

The cable television industry was projected to pass 96.6 million homes, or
approximately 95% of homes in the United States, and to serve 67.3 million basic
subscribers, representing a penetration of 69.7% of total cable homes passed, as
of December 31, 1999.* The market for basic cable television is expected to grow
from $23.2 billion in revenue in 1999 to $29.9 billion in revenue by 2004. Cable
operators experience an average subscriber turnover rate, or churn, of
approximately 20.0% annually, which provides recurring opportunities to
technology enabling companies for installation of new equipment, as well as
retrieval of previously installed equipment.

Many cable system operators are expanding and upgrading their networks to
deliver new technologies, products and services to provide consumers with
greater value and choices in the face of growing competition. Cable system
operators spent approximately $10.8 billion in 1999 to expand and upgrade their
networks in order to create new capability for the delivery of more channels,
digital and high definition television programming and two-way interactive
services. In addition to upgrading their network infrastructure, operators need
to replace existing analog converter boxes with new digital technology at the
consumer's premises to enable advanced television services. At the end of 1999,
there were approximately 5.0 million subscribers to cable digital video,
representing a penetration of 7.4% of basic subscribers. There are currently
approximately 95,000 new cable digital video hook-ups every week, with the
number of digital service consumers projected to increase to 10.6 million by the
end of 2000, representing a penetration of 15.6% of basic subscribers, and to
33.6 million by the end of 2004, representing a penetration of 47.3% of basic
subscribers. The market for cable digital video is expected to grow from $451
million in revenue in 1999 to $4.3 billion in revenue by 2004.

The broad bandwidth of a cable network enables data to be transmitted over
50 times faster than traditional dial-up modem technologies. In addition, the
cable connection does not interfere with normal telephone activity or usage and
does not require the consumer to dial into an Internet service provider and
await authorization. Subscribers to broadband cable Internet access increased in
1999 to approximately 1.5 million, representing growth of 164.0% from 1998. The
number of high-speed data subscribers is projected to increase to approximately
3.6 million subscribers by the end

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

* Unless otherwise specified, all industry statistical data in the "Summary,"
"Industry" and "Business" sections of this prospectus is from the following
publications by Paul Kagan Associates, Inc., Carmel, CA, a leading media and
communications research firm: (1) Kagan's Broadband Internet 2000; (2) The
Business of Entertainment & Communications 2000; (3) The Cable TV Financial
Databook 1999; (4) The State of Broadband Competition: An Analysis of Cable,
Telco DSL, Fixed, Wireless and Satellite Competition for High-Speed Data
Services, 1999-2000; (5) Cable TV Investor, No. 540; and (6) The DBS Report.
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of 2000, a rate of 40,300 installations per week. Three of our long-term
clients, AT&T Broadband, Time Warner Cable and MediaOne, taken together, are
already adding 20,000 new subscribers per week. The number of high-speed data
subscribers using broadband cable technology is projected to grow to
approximately 13 million by the end of 2004, representing a compounded annual
growth rate of 51.3%. The market for high-speed Internet access via broadband
cable is expected to grow from $503 million in revenue in 1999 to $3.8 billion
in revenue by 2004.

During the last several years, the cable industry has been developing the
capability to provide broadband telephony over the existing cable
infrastructure. By the end of 2000, the number of homes subscribing to broadband
cable telephony is expected to be approximately 600,000, representing a
penetration of only 9.0% of the homes that will have been marketed this service.
By the end of 2008, the number of subscribing homes is expected to reach
approximately 23.9 million, representing a penetration of 36.0% of the homes
that will have been marketed this service. We believe that recent developments,
led by AT&T's purchase of Tele-Communications, Inc., its proposed acquisition of
MediaOne, and its implemented and proposed joint ventures with other cable
operators, will accelerate the pace of development and deployment of the
broadband telephony business for the cable industry.

DIGITAL SUBSCRIBER LINE TECHNOLOGY

As a result of technological developments and regulatory changes, DSL
technology has emerged as one of the leading, most cost-effective means of
providing high-speed data transmission. DSL technology allows data transmission
at higher rates by utilizing a larger portion of the bandwidth spectrum. DSL
equipment, when deployed at each end of a standard copper telephone line,
increases the data transfer rate of the line to over 25 times faster than
traditional dial-up modem technologies, depending on the distance between the
end-user and the central office and the quality of the copper telephone line.

The deployment of DSL solutions by competitive telecommunications companies
has been facilitated by changes in the regulatory framework in recent years.
Under the 1996 Telecommunications Act, traditional telephone companies are
generally required to lease telephone lines to competitive telecommunications
companies on a wholesale basis through resale or unbundling and to allow these
competitive telecommunications companies to locate certain of their equipment in
the traditional telephone companies' central offices. By using existing
facilities and copper lines, emerging DSL service providers avoid the
considerable up-front fixed costs necessary to deploy fixed communications
infrastructure. As a result, a significant portion of the investment in a DSL
network is incurred only as customers order the service.

An additional driver of demand for DSL and other telephony services will be
the changing competitive landscape resulting from an increasing number of large
mergers and partnerships within the telecommunications industry. These mergers
have resulted in carriers entering new markets where they do not have
established service and support infrastructure and also in the creation of new
communications companies without existing service infrastructures. For example,
as a condition of the merger of SBC Communications Inc. and Ameritech
Corporation, the combined company is required to offer service in 30 new
geographic markets, in which it will not have a service and support
infrastructure, and establish a separate subsidiary to provide advanced services
such as DSL. The improved ability of competitive local data carriers,
competitive local exchange

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carriers and interexchange carriers, such as Covad, Northpoint and Qwest, to
access the incumbent local exchange carrier networks, including those owned by
the regional "Bell" operating companies such as Ameritech and Pacific Bell
should result in increased competition for local services. In response, we
believe that incumbent local exchange carriers will accelerate DSL deployments
to preempt other competitors. Cable operators also may strategically elect to
resell DSL to establish a data foothold in difficult-to-upgrade markets.

There were approximately 390,000 new subscribers to DSL in 1999, yielding a
year-end total of approximately 420,940 subscribers. The number of DSL
subscribers is currently increasing by approximately 7,500 per week, and is
projected to grow to approximately 5.6 million subscribers by the end of 2004.
The market for DSL services is expected to grow from $112 million in revenue in
1999 to $1.9 billion in revenue by 2004. Small- and medium-sized businesses are
expected to be one of the fastest growing segments of the target market for DSL
services. The growth in this segment is driven by the increasing need among
small- and medium-sized businesses to maintain complex Web sites, access
critical business information and communicate more effectively with their
employees, customers and business partners and the absence of significant
penetration of this market by cable operators. As these businesses integrate the
Internet into their day-to-day operations, the demand for high-speed access is
expected to grow.

SATELLITE AND WIRELESS

DBS utilizes digital video compression technology to deliver hundreds of
television programming channels to consumers throughout the United States. DBS
delivery offers several benefits, including its inherent ubiquity, which enables
DBS providers to quickly roll out new products nationwide upon introduction, as
well as its usage of digital technologies. Recent legislation permitting the
retransmission of local channels over DBS has prompted an aggressive entry of
DBS providers into urban markets, long dominated by cable television systems. At
March 31, 2000, there were approximately 13.8 million DBS subscribers in the
United States. The number of DBS subscribers is currently increasing by
approximately 40,000 subscribers per week and is estimated to grow to
approximately 27.2 million by the end of 2008. The market for DBS services is
expected to grow from $6.1 billion in revenue in 1999 to $19.2 billion in
revenue by 2004.

Recently emerging broadband satellite wireless technologies for high-speed
data transmission, particularly attractive in rural areas that may not have
access to broadband cable or DSL technology, can deliver data at speeds up to 14
times faster than traditional dial-up modem technologies. Satellite wireless
technologies deliver high-bandwidth Web content to consumers via wireless
technology, while low-bandwidth, outbound information is sent by modem over
telephone lines.

PREMISE NETWORKING

The increasing availability of advanced telecommunications and networking
technologies to commercial and residential consumers has created a growing
demand for independent providers of premise networking services. Businesses of
all sizes are implementing new local area networks and upgrading their existing
networks to accommodate business applications, such as electronic commerce,
Intranets, electronic data exchanges and video conferencing. Advanced premise
networks

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are extensively used by entertainment companies in our target markets for the
computer animation, lighting and ride control of theme park attractions.

For residential and commercial consumers, advanced premise networking
technologies enable simultaneous Internet access for multiple devices, security
and premise monitoring system management and flexible distribution of sound,
video and other multimedia capabilities throughout the home or office. Many real
estate developers are beginning to offer the "intelligent home" or "wired home"
as an option in new construction in response to the new home networking
technologies, such as those offered by Home Director and Cisco Systems, Inc. We
believe that the demand for premise networking solutions is growing due to the
increased popularity of the Internet, the increased acceptance of telecommuting
and the growth of the so-called small office/home office market.

EMERGING TECHNOLOGIES

The industries in which we operate continue to evolve as new technologies
are developed, which will continue to provide us with new opportunities. For
example, high-speed data transmission, currently focused on downloading files
and applications, may lead to increased demand for large file applications such
as video telephony and video streaming. In the DSL industry, voice-over-DSL is
an important development, allowing delivery of high-speed data and multiple
telephone lines simultaneously over conventional copper phone lines. Other
advanced technologies, such as wireless broadband Internet access and delivery
of video, voice and data over utility lines, are currently under development. We
intend to utilize our substantial resources, experience and our existing
infrastructure to seek new deployment opportunities in these and other emerging
technologies.

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BUSINESS

We are a leading, nationwide enabler of broadband technologies to
residential and commercial consumers. We offer comprehensive network integration
services to enable technologies offered by providers in the cable,
telecommunications, and satellite and wireless industries. Our technology
enabling services include installation, integration, fulfillment, and long-term
maintenance and support services for broadband video, voice and data
technologies. Broadband service providers use us for the critical "last mile" to
make the connections between their network infrastructures and equipment located
at the premises of residential and commercial end-users. We also provide premise
networking services, where we design, install and maintain LANs/WANs and other
communications network applications for commercial and residential premises.

Our principal clients are full-spectrum broadband service providers in the
cable, telecommunications, and satellite and wireless industries. To serve the
end-user, our clients rely on our knowledge and expertise to rapidly deploy the
latest technologies to support advanced cable services, cable telephony and
high-speed data services, DSL, and satellite and wireless broadband services. We
have a long history of providing leading-edge technology enabling services. We
have been successful in developing long-term relationships with many of our
clients, including many of the leaders in the industries we serve, who
frequently engage us to deliver a full suite of services over multiple
geographic regions.

We believe there is a large and growing market for our services and that
the demand for our services has accelerated as:

- The increase in popularity of the Internet and in the complexity of
Internet sites has increased demand for high-speed Internet access from
both residential and commercial consumers.

- Technological advances, including the shift from an analog to a digital
network environment and the ability to leverage existing network
infrastructure to deploy high-speed services such as DSL technologies,
have accelerated the availability of advanced services such as digital
video, broadband telephony and high-speed Internet access.

- Cable, telecommunications, and satellite and wireless service providers
have made significant investments to build and upgrade their wired and
wireless networks, creating a substantial opportunity to deliver advanced
services to commercial and residential consumers.

- End-users increasingly demand access to integrated video, voice and data
services, advanced set top boxes, high-speed digital modems, telephone
lines, voice mail, computer networks, video conferencing and other
technologies. Our clients must rapidly deploy these technologies in order
to maximize their revenue per end-user, realize a return on their
investments and maintain or gain competitive advantages.

- The availability of multiple choices for end-users to receive advanced
services has led broadband service providers increasingly to focus on
end-user satisfaction to control turnover and to rely on technology
enabling companies for some of their non-core activities, such as
installation, integration, fulfillment, maintenance, warranty and support
services.

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INDUSTRY TRENDS

INCREASING TECHNOLOGICAL COMPLEXITY

Each of our target market segments is experiencing rapid changes in
technology. The convergence of previously separate technologies is producing
new, even more complex technologies, such as bundled video, voice and data
services. These increasingly complex technologies require more highly trained
technicians, cross-trained in several technologies, to provide installation,
integration, fulfillment, and long-term maintenance and support services than in
the past. For example,

- CABLE TELEPHONY AND DATA. High-speed Internet access requires that cable
system operators provide initial installation and testing as well as
on-going maintenance and support of new technologies, such as cable
modems and network cards. Advanced telephony services require
installation and testing of broadband telephony interface boxes and often
require installation or upgrade of additional premise phone lines.

- DIGITAL SUBSCRIBER LINE. DSL technology requires that providers make
end-user connections, test and monitor installed lines, and install and
configure customer premise equipment and end-user work stations.
Technicians must be sufficiently familiar with telephone networks and
wiring standards, as well as routers, modems and network cards from
various manufacturers and the methodologies associated with setting
compatible router and work-station configurations, as well as testing and
troubleshooting these installations to achieve acceptable installation
standards and higher end-user satisfaction.

- DIRECT BROADCAST SATELLITE. DBS programming services require
installation of a satellite receiving antenna or dish and a digital
receiver at the consumer premises. In order to facilitate high-speed
Internet access, additional coordination is required between the
satellite technologies and the standard telephone line modem connections
that handle outbound communications from the consumer. Although certain
DBS equipment may be installed by the consumer, there is a growing trend
toward professional installation of satellite technology.

- PREMISE NETWORKING. Premise networking requires installation,
certification and maintenance of high-speed data networks, including
LANs/WANs, client/server networks, and video, audio and security networks
meeting stringent industry requirements.

Substantial resources must be committed to train and retain field
technicians in the new technologies. In addition, installation, testing and
ongoing support of these technologies require technicians to spend extended
periods of time at the consumer premises. As a result, technician training also
must focus on the quality of the technician's interaction with the consumer. We
anticipate that the increasing knowledge requirements for field technicians will
present a significant challenge to smaller, independent competitors and to new
entrants in the independent technology enabling sector. We believe these
increasing knowledge and training requirements present a significant competitive
advantage for larger, nationwide, well-capitalized enabling companies, like us,
and provide additional motivation for broadband service providers to rely on
independent technology enablers thereby avoiding costly investments in internal
service and fulfillment infrastructures.

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INCREASED RELIANCE BY BROADBAND SERVICE PROVIDERS ON INDEPENDENT TECHNOLOGY
ENABLERS

Technological advances and deregulation in the cable, telecommunications,
satellite and wireless, and premise networking industries have provided
residential and commercial consumers with multiple choices for receiving
advanced services. The escalating competition for end-users has increased
competitive pressures on broadband service providers, which we believe is
requiring them to focus more on consumer satisfaction. The providers' need to
rapidly upgrade and expand existing systems, as a result of increased
competition and growing demand for advanced services, should lead to a continued
increase in the level of reliance on independent technology enablers for non-
core activities, such as installation, integration, fulfillment, and long-term
maintenance, warranty and support services. We anticipate that broadband service
providers will increase their reliance on independent technology enablers like
us to the extent that the enablers provide services that are of a higher quality
and more cost efficient than existing, in-house infrastructure, in the same way
that providers historically have relied on outside sources for other ancillary
functions, such as design and manufacture of consumer premise equipment.

Many emerging broadband service providers, such as DSL and DBS providers,
often enter new markets where they have little or no local presence and limited
resources to meet the growing demand for their advanced video, voice and data
services. These providers typically have no in-house service infrastructure. We
believe these broadband service providers will continue to rely on independent
technology enablers to meet their installation and maintenance needs. We believe
there will be an increased need for higher value-added services as the broadband
industry continues to evolve and recurring upgrades and value-added improvements
become more significant.

The rapidly increasing penetration of high-speed Internet connectivity
among commercial and residential consumers is driving the demand for security
and networking solutions, such as firewalls and virtual private networks and for
emerging advanced broadband applications, such as video conferencing and
multimedia-on-demand. Deployment of these applications typically involves
installation and configuration of hardware and software at the end-user's
premises and integration with existing components of the end-user's network and
requires extensive technical training and expertise from the installer.
Historically, large corporations with internal information technology
departments have been primary users for such applications. However, the rapidly
growing demand for such applications from small- and medium-sized businesses and
residential end-users, who do not have internal deployment and maintenance
capabilities, presents additional growth opportunities for independent
technology enablers like us.

EMERGENCE OF PREFERRED PROVIDERS OF TECHNOLOGY ENABLING SERVICES

We believe that because of the increasing geographic scope of, and the
increasing complexity of the technology deployed by, broadband service
providers, there is a growing trend towards long-term, strategic alliances with
technology enabling companies in contrast to the historic, contractual
project-by-project arrangements. We believe that our industry is highly
fragmented and characterized by smaller, privately held companies that offer a
limited range of industry-specific services to a small number of clients in
concentrated geographic areas. In our experience,

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broadband providers in our target markets who rely on technology enabling
companies prefer to align themselves with larger, better capitalized companies
which:

- have the expertise and resources to deploy and maintain increasingly
complex technologies over large networks,

- consistently deliver high quality service,

- provide nationwide coverage and have the capacity to work on multiple
projects simultaneously, and

- have the ability and willingness to invest in infrastructure to enhance
the deployment and maintenance of the advanced technologies demanded by
residential and commercial customers.

We believe that the desire of broadband service providers to align
themselves with larger technology enabling companies may lead to further
consolidation and provide acquisition opportunities within our industry.

COMPETITIVE ADVANTAGES

We believe that the following competitive advantages favorably position us
to capitalize on the rapidly growing demand for our services:

- our ability to provide high-quality, comprehensive technology enabling
solutions on a nationwide basis,

- our technical knowledge, operational expertise, and ability to offer
higher value-added services,

- our on-going investments in sophisticated and centralized systems
infrastructure,

- our highly trained, experienced and quality-focused work-force,

- our exceptional recruiting and training programs, and

- our experienced management team.

We believe that we are the largest independent provider of technology
enabling services to the cable, DSL and DBS industries:

- Our cable clients include: Adelphia, AT&T Broadband, Cablevision,
Comcast, Cox Communications, MediaOne and Time Warner Cable. As of March
31, 2000, we served our cable clients in approximately 120 systems in 33
states.

- Our DSL clients include: Covad Communications, DSL.net, HarvardNet, JATO,
Network Access Solutions, NorthPoint Communications, Qwest
Communications, SBC and U S WEST. As of March 31, 2000, we deployed DSL
enabling services, primarily to small- and medium-sized businesses, in 42
major markets in 23 states.

- We provide DBS enabling services to DIRECTV/Hughes Electronics, the
largest DBS provider in the United States, with approximately 8.4 million
DBS subscribers at March 31, 2000. As of March 31, 2000, we served
DIRECTV in 27 states.

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- Our premise networking clients include: Home Director, a leading provider
of advanced home networking systems, Universal Studios and The Walt
Disney Company.

We have increased our share of the technology enabling market because we
are able to provide nationwide services that generally are of a higher quality
and more cost efficient than the services provided by smaller, local competitors
or the existing in-house infrastructure of service providers. We believe that
with the creation of larger broadband service providers as a result of
consolidation in the cable, telecommunications and satellite and wireless
industries, providers will prefer to align themselves with larger technology
enabling companies, like us.

We intend to expand the portfolio of higher value-added services we offer
to our clients to include advanced network assessment, integration and support.
We believe that, by providing these higher value-added services, we will enhance
the strength of our client relationships and distinguish ourselves from smaller,
local competitors.

GROWTH STRATEGY

Our business strategy is to take advantage of these industry trends and be
the leading provider of comprehensive installation, integration, fulfillment,
and long-term maintenance and support services to the cable, telecommunications,
satellite and wireless, and premise networking industries throughout the United
States. Key elements of our growth strategy are to:

PROVIDE BROAD-BASED, LEADING-EDGE TECHNOLOGY EXPERTISE. There are four
potential methods or technologies for delivering video, voice and data services
to residential and commercial consumers: cable, telephony, satellite and
wireless, and the utility infrastructure. Because we believe that each has
unique characteristics that may be attractive to end-users, we have adopted a
technology neutral approach which allows us to provide services to clients that
use any of these methods to access residential or commercial premises. Our
technology-neutral strategy is designed to provide us with a diversified client
base and stable operating platform which will position us to benefit from the
successful deployment of a variety of new technologies while providing
protection from the inability of any particular technology to gain widespread
market acceptance. We intend to balance the scope and volume of services we
provide to each of the industries we serve and across each of our geographic
operating divisions. Emerging technologies present numerous opportunities and
challenges for broadband service providers, as well as increased demand for new
services from the end-user. We intend to support new technologies that will
enhance our relationship with existing clients or give us access to new clients.

BROADEN OUR GEOGRAPHIC REACH. We believe it is important to continue to
expand our presence in, and enter new, geographic markets throughout the
continental United States. New and existing clients frequently request that we
increase our geographic footprint beyond our primary markets, into secondary,
tertiary and rural markets. Our size and nationwide scope allow us to quickly
deploy launch teams of skilled technicians in response to client requests.
Geographic expansion also facilitates our ability to serve new clients. We
believe that continued geographic expansion will give us a competitive advantage
over smaller companies which generally provide services on a market specific
basis.

DEVELOP AND DEPLOY A BROAD RANGE OF HIGHER VALUE-ADDED NETWORK INTEGRATION
SERVICES. We intend to further develop our existing client relationships to
offer a wide range of higher value-

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added integration services through our existing client channels to their
residential and commercial end-users. We currently play a critical role in the
delivery of broadband services, by being the focal point where our clients'
services, the equipment manufacturers' products and broadband networks all come
together to connect consumers to video, voice and data services. We believe our
client relationships will allow us to provide a number of value-added network
integration services to residential and commercial consumers, including video,
voice and data infrastructure applications, LAN/WAN integration, network
monitoring, help desk support services, residential gateways and Internet
appliances.

EXPAND AND STRENGTHEN OUR CLIENT RELATIONSHIPS. Developing and maintaining
client relationships will continue to be a key aspect of our business strategy.
We are expanding our existing client relationships and developing new
relationships within each of our target markets by increasing the diversity of
the services we offer and the geographies in which we operate. We provide a
diverse set of traditional and advanced technology enabling services to each
industry segment in which we operate. Our core installation services and our
nationwide geographic coverage present numerous opportunities to expand into
other services with our clients, many of whom are leaders in advanced services
such as broadband telephony and high-speed Internet access. For example, in the
DSL industry, we offer service and support for the entire life cycle of our
clients' integrated networks, evaluate the current state of our clients'
networks, identify their needs and deploy the appropriate systems to meet these
needs. Many of these services provide recurring revenue opportunities. We
believe that these value-added services enable our clients to make more informed
strategic decisions and serve to strengthen our existing client relationships.

Many providers of advanced services such as DSL and premise networking are
in their early stages of deployment and it is imperative for our clients in
these industries to capture as much market share as rapidly as possible. The
rapidly developing broadband communications industry presents us with a unique
opportunity to provide services to an emerging group of clients within each of
our target markets. We will continue to focus on delivering turnkey solutions to
help our clients provide high-quality service and rapidly deploy their
technology in order to capitalize on the growing broadband market. We believe
this focus improves client satisfaction and results in two distinct benefits:
increased service with existing clients and the addition of new clients seeking
to remain or become competitive in the industry.

As an independent, technology-neutral enabler, we have enhanced our client
relationships by developing internal policies and systems to ensure the security
and confidentiality of each client's data. These systems strengthen our client
relationships by permitting us to provide services within the same industry and
market to competing providers without compromising the confidentiality of their
end-user and other data.

ENHANCE OUR BRAND RECOGNITION AND CUSTOMER SERVICE. Our goal is to become
a market leader of technology enabling services, widely recognized as a standard
for excellence in our industry, by continuing to provide consistent, high
quality technology enabling services throughout the continental United States.
We believe that our business practices combined with our commitment to
recruiting, training and retaining highly-skilled field technicians will be
instrumental in achieving this goal. We are implementing a strategy that will
improve the service experience for consumers of video, voice and data
technologies. The key part of this strategy will be to enhance our on-line
presence, through which we will provide Web-based resources, such as technical

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assistance and on-line customer support programs designed jointly with, and
implemented on behalf of, our clients.

MAINTAIN OUR TECHNOLOGICAL EXPERTISE THROUGH THE RECRUITMENT, RETENTION AND
CONTINUED TRAINING OF QUALIFIED TECHNICIANS. Our clients rely on us to provide
qualified technicians capable of adapting to new technologies and performing
value-added services to their end-users, and we are committed to recruiting and
training skilled technicians and maintaining a culture that fosters innovation
and collaboration. We maintain numerous training facilities to implement a
comprehensive training program, which instills in our employees the skills
necessary to providing high-quality consumer care. We will continue to actively
market our technological expertise to broadband service providers that are
deploying new technologies, while also adding value to our clients' product and
service offerings.

SELECTIVELY PURSUE STRATEGIC ACQUISITIONS. We believe that broadband
service providers increasingly desire to align themselves with well-capitalized,
independent technology enablers, like us, that are able to offer installation,
integration, fulfillment, and long-term maintenance and support services in
multiple geographic regions and possess advanced technological capacities. As a
result, we expect that there will continue to be a number of attractive
acquisition candidates that will desire to join our larger, well-capitalized
company to compete on a nationwide basis. We will pursue selective acquisitions
to the extent that we are able to identify opportunities at attractive
valuations and believe that the acquisitions are appropriate uses of our
capital. We intend to explore acquisition opportunities that will help us to:

- ENTER NEW GEOGRAPHIC MARKETS. We intend to expand into geographic
markets that are not served by us, or in which we can expand our presence
by selectively acquiring well-established companies that are leaders in
their regional markets, are financially stable and have a strong client
base and management team.

- EXPAND SERVICES WITHIN EXISTING MARKETS. We also intend to explore
selective acquisition opportunities of companies that will enable us to
expand the range of services we offer.

- REACH NEW CLIENTS. We also intend to selectively acquire companies that
have existing, strong relationships with broadband service providers that
we do not already serve.

STRATEGIC RELATIONSHIPS

We have developed several key strategic relationships with nationwide
broadband service providers, some of which are described below:

- We maintain important, long-standing relationships with many of the
leading cable system operators. For example, we have provided traditional
cable television installation services to (including predecessors):
Adelphia Communications for approximately 26 years, Comcast for
approximately 25 years, Cablevision for approximately 25 years, Time
Warner Cable for approximately 19 years, AT&T Broadband for approximately
18 years, Cox Communications for approximately 15 years, and MediaOne for
approximately 14 years.

- Time Warner Cable recently selected us to install its RoadRunner
high-speed cable modem product in New York City and surrounding areas. We
are currently the only independent technology enabler installing the
RoadRunner product for Time Warner Cable in Manhattan.

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We are exploring opportunities to assist Time Warner Cable in the
deployment of the RoadRunner product in other Northeastern markets.

- In 1998, AT&T selected us as the primary provider of installation,
testing, maintenance and training services for its first local service,
cable telephony launch in Fremont, California. Prior to this launch, we
assisted AT&T in the pre-launch testing of the cable telephony plants,
including quality assurance testing for AT&T's cable telephony systems.
As a result of our success in Fremont, AT&T certified us to provide
fulfillment services for AT&T's cable telephony launches across the
United States. We believe we are the largest technology enabler providing
these services to AT&T for its cable telephony service.

- In February 2000, we were awarded a contract from NorthPoint to provide
installation and maintenance support for NorthPoint's DSL-based
high-speed Internet access service. NorthPoint, a leading broadband
provider, offers DSL service to consumers and businesses in 33 major
United States markets. We expect that we will support NorthPoint in a
majority of the markets it serves.

- Through our recent acquisitions of companies who have had long standing
relationships with PRIMESTAR (recently acquired by DIRECTV/Hughes
Electronics), we are now DIRECTV's largest provider of fulfillment and
service work. As the key DIRECTV Home Service Provider, we offer
nationwide fulfillment and service to DIRECTV's multiple distribution
channels.

- In April 2000, we entered into an agreement to serve as the preferred
technology enabler for the advanced home network systems distributed
through the direct sales channels of Home Director, launching service
roll-outs in Phoenix, Arizona; Denver, Colorado; Dallas and Houston,
Texas; and Los Angeles and San Francisco, California. These home network
systems enable simultaneous Internet access for multiple devices,
security and home monitoring system management and flexible distribution
of video, voice and data telephone lines throughout the premises.

- We have provided premise networking services to Universal Studios for
approximately 10 years and The Walt Disney Company for approximately 5
years. Our services include designing, installing and maintaining
structured wiring systems for computer animation and ride control of
theme park attractions.

OPERATING STRATEGY

GENERAL

We have organized our business operations as follows:

- BUSINESS MANAGEMENT AND INTEGRATION. We have a centralized team at the
corporate level that establishes company policies, practices and
benchmarks and provides expertise and support for our operating divisions
and business development teams. We centralize our administrative
functions, financial infrastructure and buying power to allow our
business units to focus on core objectives, while leveraging our size,
scalability and capital assets.

- BUSINESS DEVELOPMENT. In each of our core businesses, cable, satellite
and wireless, telephony and Internet, and premise networking, our
development teams are responsible for

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generating new business opportunities, designing and helping to implement
business and marketing plans, developing nationwide relationships with
business partners, ensuring continuity of service delivery and pricing
across geographic boundaries, and representing us at trade and industry
functions.

- GEOGRAPHIC DIVISIONS. We operate on a nationwide basis through four
geographically differentiated divisions: Southern, Mountain, Western and
Northern. Our geographic divisions are responsible for the day-to-day
execution of service and fulfillment functions and for nurturing and
maintaining division-specific relationships with our clients. We believe
that our divisional structure allows us to capitalize on local and
regional relationships and market knowledge and regionally applicable
specialized skills.

ACHIEVE OPERATING EFFICIENCIES

We plan to achieve operating efficiencies and economies of scale by:

- IMPLEMENTING SOPHISTICATED INFORMATION SYSTEMS. We have developed a
Web-based work order management and reporting system to manage the
workflow process, which we have implemented in our DSL business. Our
enterprise system, which is integrated with some of our DSL clients'
systems, is designed to ensure accurate and timely status reporting,
scheduling and dispatching and to allow our operations to scale quickly
and efficiently, by automating many manual processes. We believe that
integrating our systems with our clients' systems strengthens our
relationship with our clients. We will seek to integrate our new system
with the information systems of our cable, DBS and premise networking
clients. We also have implemented a virtual private network linking all
of our offices.

- CENTRALIZING OUR INFRASTRUCTURE. We intend to centralize the
infrastructure of our recent acquisitions with our existing finance and
accounting, purchasing, bidding and other business functions. We use our
increased purchasing power to gain volume discounts in areas such as
vehicles, equipment, materials, marketing and insurance. We continually
review our divisional operations to develop uniform policies and to
identify "best practices" that can be successfully implemented throughout
our operations.

- PAY-FOR-PERFORMANCE. The compensation of most of our field technicians
includes a significant pay-for-performance component, which is based on
both productivity and work quality. We believe this leads our employees
to work more efficiently while delivering higher quality service to our
clients and benefiting us.

- WORKFORCE MOBILIZATION. We have developed a significant capacity to
rapidly mobilize our workforce for deployment throughout the continental
United States. We can choose from our large number of field technicians
to create a launch team for an assignment in a new geographic market,
deploy these trained technicians and, over time, train locally hired
technicians to support the new market.

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RECRUIT, TRAIN AND RETAIN HIGHLY QUALIFIED PERSONNEL

We are an employee-based company, dedicated to recruiting, training and
retaining a highly motivated workforce in order to consistently deliver
innovative client solutions and high-quality service. Our employee-based focus
distinguishes us from many of our competitors, which rely largely on independent
subcontractors hired to fill short-term needs. We intend to become the employer
of choice for skilled field technicians in each of our target markets by
offering our employees:

- comprehensive, ongoing technical training programs throughout their
careers,

- the opportunity to develop expertise in each of the diverse technologies
that we enable,

- career path planning and development opportunities and geographic
mobility,

- competitive compensation and employee benefit programs, and

- an opportunity for equity participation.

We utilize an internal team of personnel recruiters to develop our
workforce. To ensure that we provide consistent, high-quality service to our
clients, we have implemented a number of employment practices, including
pre-employment background checks; drug testing; technical, consumer and safety
training; advanced training for career pathing; and quality control employee
evaluations. We maintain training facilities at eight locations in the United
States and intend to build three additional training facilities. We are
developing distance-learning and self-paced training programs. Our comprehensive
training program consists of five segments: technical, safety, industry and
company orientation, consumer care and productivity. We also offer advanced
technology training to our employees upon their completion of our basic training
programs.

Our technicians can develop expertise during their careers in each of the
technologies we deploy on behalf of our clients. We believe that
multiple-technology training benefits us, enhances the flexibility of our
workforce, significantly extends the career path of our field technicians, and
leads to a reduced turnover rate among our employees.

We communicate frequently with our employees to instill safe and productive
work habits through our company-wide employee training and educational programs.
Trainers, mentors and operations management at each of our divisions review and
report on all accidents and claims, examine trends and implement changes in
procedures to address safety issues. We have established risk management
standards and have engaged a nationally-recognized risk management and insurance
firm to establish safety objectives and monitor our results.

Our industry is characterized by highly competitive labor markets. We
believe our advanced training, unique career path opportunities, quality and
productivity incentives and comprehensive benefits package we offer to our
employees, as well as our nationwide presence and financial resources, are
helping us to better attract a highly qualified workforce and reduce our
historically high rates of employee turnover. In contrast to many independent
technology enabling companies, we are implementing a comprehensive benefit
program for our workers, which includes paid vacation, holidays and sick leave,
health and welfare benefits, performance-based compensation and incentives, and
a 401(k) plan with company matching contributions.

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<PAGE> 58

HISTORY AND RECENT ACQUISITIONS

We were founded in New Jersey in 1972 and became one of the largest
independent providers of communications field services in the United States,
providing traditional cable services as well as cable telephony, cable modem and
DBS installation and maintenance services.

In July 1999, we acquired Communication Resources. Communication Resources
was founded in Florida in 1981 and became a leading field service and
fulfillment specialist in cable television services such as installations, field
audits, converter box recovery and collections. In September 1999, to extend our
nationwide presence and service offerings, we acquired Telecrafter, a leading
field services provider founded in Colorado in 1981. In addition to traditional
cable services, Telecrafter provided DBS installation and maintenance services,
principally in the Western United States. Recently, to further expand our
business, we acquired:

- TeleCore, the largest independent provider of DSL technology enabling
services in the United States, headquartered in Irvine, California,

- Excalibur, a leading provider of enabling services to the DBS industry,
headquartered in Chantilly, Virginia,

- D.S. Cable, a provider of enabling services to the cable television
industry, headquartered in St. Louis, Missouri, and

- Service Cable, a provider of premise networking services, headquartered
in Winter Park, Florida.

SERVICES

We provide a wide variety of services to our clients. For our cable
clients, we install the new technologies necessary to implement Internet access,
such as cable modems and network cards, in the consumers' premises, as well as
provide traditional cable services such as placement of the drop cable from the
main distribution lines to the consumers' homes and businesses and wiring inside
the consumers' premises to connect the drop cable to television sets, and a
broad range of other services, including audit, converter box recovery,
analog-to-digital box swap, and warranty services. Our technicians install
broadband telephony network interface units and additional premise phone lines
for telephony consumers, and we assume service responsibilities for a period of
time after the installation. We provide testing and certification to determine
whether existing cable plants are capable of supporting two way, high-speed data
and telephony technologies.

For our DSL clients, we provide a comprehensive solution to the complex
technical and administrative requirements associated with DSL installation,
maintenance and network integration. Key components of these services include
service order scheduling, equipment management, installation and network
integration service, service order monitoring, integrated management systems,
and assignment of technicians on a contract basis. Our technicians make end-user
connections, test and monitor installed lines, and install and configure
customer premise equipment and end-user work stations.

For our DBS clients, we install satellite dishes and receivers at
residential and commercial consumer premises, including conducting
pre-installation surveys of the premises for suitability, designing and
installing the necessary wiring, and activating the DBS service. We also provide

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<PAGE> 59

ongoing maintenance and support services, such as repointing satellite dishes,
repairing or replacing faulty wiring and equipment, and diagnosing and
rectifying other service problems.

For our premise networking clients, we install central network connection
boxes at the consumer premises, and run coaxial cable, twisted wire and fiber
optic lines to implement the advanced premise networks. For our entertainment
industry clients, we provide advanced premise networking services such as
designing, installing and maintaining structured wiring systems for the computer
animation, lighting and ride control of theme park attractions.

CLIENTS

We served a diverse group of approximately 50 clients in 1999. AT&T, Time
Warner Cable, Comcast and DIRECTV accounted for approximately 29%, 22%, 11% and
11%, respectively, of our revenues for the fiscal year ended January 1, 2000. On
a pro forma basis after giving effect to our recent acquisitions, DIRECTV, AT&T
and Time Warner Cable accounted for approximately 20%, 19%, and 15%,
respectively, of our revenues for the fiscal year ended January 1, 2000.

EMPLOYEES

As of May 31, 2000, we had approximately 530 salaried employees, including
executive officers, project managers or engineers, job superintendents, staff
and clerical personnel. We also had approximately 3,000 field-based technicians
whose pay includes productivity, quality and hourly components. To obtain
favorable workers' compensation and other employee benefit group rates,
approximately 1,175 of our employees are technically employed by two
independent, professional employer organizations, which provide payroll services
and certain employee benefits for these employees. We expect to discontinue use
of these professional employer organizations by the end of 2000. Approximately
200 of our employees are covered by collective bargaining agreements, which
require us to pay specified wages to union employees, observe certain workplace
rules and make employee benefit payments to multi-employer pension plans and
employee benefit trusts.

The number of our employees can fluctuate due to project-based work,
seasonality and other matters. However, we carefully monitor our workforce
levels to minimize short-term fluctuations and manage our growth in relation to
our client's needs. We intend to minimize the use of short-term employees,
typically using them only when we have significant short-term staffing needs in
rural areas or otherwise in response to client demand.

FACILITIES AND EQUIPMENT

Our facilities generally fall into the following categories: corporate or
divisional headquarter facilities, field/system offices (which serve as our
dispatch centers, generally accommodating a large number of vehicles and
sufficient warehousing capacity to provision our vehicles), co-located
facilities (similar to field/system offices, but established on client
premises), and training facilities.

Our corporate and Southern division headquarters are located in leased
space in Fort Lauderdale, Florida. Our three other divisions operate from leased
offices in: New Providence, New Jersey; Lakewood, Colorado; and Los Angeles,
California. The total leased area is approximately 220,000 square feet and the
total annual base rent for our headquarters and divisional facilities is
approximately $2.0 million. The leases for those facilities have terms ranging
from one to fifteen years. Our DSL operations currently lease a new facility in
Irvine, California, consisting of approximately 32,000 square feet. We have
leased this new facility through April 2005.

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<PAGE> 60

Our divisions also lease various district field offices, equipment yards,
shop facilities and temporary storage locations. We also lease other smaller
properties, as necessary. We believe that our facilities are generally adequate
for our current needs. We do not anticipate difficulty in replacing such
facilities or securing additional facilities, if needed.

We operate a fleet of owned and leased service and support vehicles and
utilize a variety of specialty installation equipment. The total size of our
fleet is approximately 2,000 vehicles. We believe that these vehicles generally
are well-maintained and insured and adequate for our present operations. We
believe that in the future, we will be able to lease or purchase this equipment
at favorable prices due to our large size and the volume of our leasing and
purchasing activity.

COMPETITION

Our business is highly competitive. Our competitors comprise both local,
industry specific independent technology enablers and the in-house service and
fulfillment organizations of our existing or prospective clients, which often
employ personnel who perform some of the same types of services as those
provided by us.

Historically, there have been relatively few barriers to entry into the
markets in which we operate. However, as the size and geographic scope of
broadband service providers in the industries we serve have expanded, we believe
that they are increasingly requiring technology enabling companies to provide
installation, integration, fulfillment, and long-term maintenance and support
services simultaneously over multiple geographic regions. As this occurs, we
believe that many of the smaller companies in our industry may not have the
financial resources necessary to provide comprehensive service capabilities over
a broad geographic area or the ability to manage multiple projects.

We believe that the principal competitive factors in our market include
technical expertise, reputation, established relationships, price and quality of
service, availability of skilled technical personnel, geographic presence,
breadth of service offering, adherence to industry standards and financial
stability. We believe that we compete favorably within our industry on the basis
of these factors, and that we benefit from the long-standing relationships we
maintain with a diverse group of clients.

LEGAL PROCEEDINGS AND REGULATION

We occasionally are party to legal proceedings incidental to our ordinary
business operations. At present, we are not a party to any pending legal
proceedings that we believe could have a material adverse effect on our
business, financial condition or results of operations.

Although some of the industries we serve are heavily regulated, our
services are not heavily regulated. Some states in which we operate require that
we register and/or obtain licenses to perform our services.

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MANAGEMENT

The following table sets forth information concerning our directors and
executive officers. Upon completion of the offering, three additional directors
will be appointed to our Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
William W. Sprague..................... 42 Chairman of the Board
Craig A. Russey........................ 45 President and Chief Executive Officer
and a Director
V. Michael Fitzgerald.................. 31 Director
Lawrence J. Toole...................... 61 Director
Randall R. Lunn........................ 49 Director
John M. Pientka........................ 48 Executive Vice President and Chief
Operating Officer
Roy D. Tartaglia....................... 49 Executive Vice President-Business
Relations and a Director
Douglas J. Betlach..................... 48 Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Richard M. Rettstadt................... 40 Executive Vice President
Patrick M. Ahern....................... 43 Executive Vice President of Human
Capital
Bruce A. Nassau, Ph.D.................. 47 President, Mountain Division and a
Director
Mark Stagen............................ 27 Senior Vice President
</TABLE>

The following sets forth certain biographical information with respect to
our directors and executive officers.

WILLIAM W. SPRAGUE has been Chairman of our Board of Directors since June
1999. Prior to founding Crest Communications in 1996, Mr. Sprague was a Managing
Director in the investment banking department of Smith Barney Inc., where he was
Head of the global Media and Communications Group and Co-Head of the Mergers &
Acquisitions Group. Mr. Sprague also serves on the Board of Directors of Ethan
Allen Interiors Inc. and several private companies.

CRAIG A. RUSSEY has been a director and President of Viasource since June
1999, and was appointed Chief Executive Officer in January 2000. Mr. Russey
served as Executive Vice President of Mergers & Acquisitions for Communication
Resources from July 1998 through June 1999. From 1995 to July 1998, Mr. Russey
served as the President and Chief Operating Officer of SmartLink Development
Corporation, an international, high technology mobile radio and dispatch company
in the local and wide area networking industry sectors. Prior to 1995, Mr.
Russey worked in the real estate services industry for over 15 years, including
serving as the eastern states regional manager for the Edward J. DeBartolo
Corporation and as Chief Executive Officer and Founder of Impact Management
Group, Inc.

V. MICHAEL FITZGERALD has served as a member of our Board of Directors
since June 1999. Since March 1996, Mr. Fitzgerald has served as a managing
director and partner of Crest Communications. Prior to joining Crest
Communications, Mr. Fitzgerald was an associate in the Media and
Telecommunications Group of Smith Barney, Inc. from August 1991 to March 1996.
Mr. Fitzgerald currently serves on several private company boards of directors.

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<PAGE> 62

LAWRENCE J. TOOLE has served as a member of our Board of Directors since
October 1999. Mr. Toole retired in July 1999 from his position as Senior Vice
President of Human Resources for GE Capital Services. Prior to his retirement,
Mr. Toole had been employed for 34 years with General Electric Company and
various affiliates.

RANDALL R. LUNN became a member of our Board of Directors upon our
acquisition of TeleCore on June 1, 2000. Since April 1999, Mr. Lunn has been a
Managing Member of Palomar Ventures L.L.P. From 1990 to 1998 he was the Managing
Partner of United States operations for TVM Techno Venture Management, an
international venture capital firm. Mr. Lunn currently serves on the boards of
directors of several private companies.

JOHN PIENTKA has been our Chief Operating Officer since May 2000. Mr.
Pientka served as Vice President and General Manager, Advanced System's
Division, Motorola, Inc., a provider of integrated communications solutions and
embedded electronic solutions, from 1997 to March 2000. Prior thereto, Mr.
Pientka served as Senior Vice President, UB Networks (a division of Tandem
Computers Incorporated), a provider of LAN equipment. In addition, since 1981,
Mr. Pientka has served a number of management positions in the
telecommunications industry.

ROY D. TARTAGLIA has served as a member of our Board of Directors since we
were formed in 1989 and is our Executive Vice President -- Business Relations.
Prior to June 1999, Mr. Tartaglia served as our Chairman of the Board and Chief
Executive Officer. In 1972 he co-founded one of our predecessors. Mr. Tartaglia
serves as a director of First Constitution Bank and Clear Cable TV.

DOUGLAS J. BETLACH has been our Executive Vice President, Chief Financial
Officer, Treasurer and Secretary since June 1999. Prior to joining Viasource,
Mr. Betlach was Vice President, Chief Financial Officer and Treasurer of Dycom
Industries, Inc., a nationwide provider of engineering, construction and
maintenance services to telecommunications operators.

RICHARD M. RETTSTADT has been our Executive Vice President since July 1999.
Prior to July 1999, Mr. Rettstadt was Vice President and Chief Operating Officer
of Communication Resources. Mr. Rettstadt was the founder of a predecessor to
Communication Resources.

PATRICK M. AHERN has been our Executive Vice President of Human Capital
since January 2000. Prior to joining Viasource, Mr. Ahern was Vice President of
Human Resources for Republic Services Inc., a waste hauling and disposal
company, from February 1997 to December 1999; prior thereto, he was Senior
Director of Human Resources for Alamo Rent-A-Car, Inc.

BRUCE A. NASSAU, PH.D., has served as a member of our Board of Directors
since October 1999 and became President of our Mountain Division in September
1999. Dr. Nassau served as President of Telecrafter from 1993, when he purchased
the company, to September 1999; prior to 1993, he was Telecrafter's Vice
President of Operations.

MARK STAGEN became Senior Vice President of Viasource upon our acquisition
of TeleCore on June 1, 2000. He has served as TeleCore's Secretary, since
September 1999, and its Senior Vice President, Business Development, since
October 1999. Mr. Stagen was employed by TeleCore in 1998 as Chief Operating
Officer. From October 1997 to March 1998, Mr. Stagen was a partner of Trainor &
Associates, a diversified real estate firm that developed and managed high
technology and industrial office parks. From October 1994 to October 1997, Mr.
Stagen was Project Director for Trainor & Associates.

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<PAGE> 63

Some of our shareholders have the right to designate members of our Board
of Directors under the terms of a shareholders agreement we entered into with
them, and the shareholders party to that agreement also are required to vote
their shares for the election of our President and Chief Executive Officer, Mr.
Russey, to the Board of Directors. Specifically, Crest Communications has a
right to designate three members of our Board of Directors, and each of Roy
Tartaglia and Richard Thomas (jointly), Richard Rettstadt and George O'Leary
(jointly, through certain of their affiliates) and Bruce A. Nassau and Lurie
Nassau (jointly), have the right to designate one member of our Board of
Directors. Upon completion of this offering, these provisions will terminate.
These shareholders have designated directors as follows:

- Messrs. Sprague and Fitzgerald are the directors designated by Crest
Communications,

- Mr. Tartaglia is the director designated by himself and Mr. Thomas, and

- Dr. Nassau is the director designated by himself and Ms. Nassau.

BOARD OF DIRECTORS

Upon completion of this offering, our board will consist of ten members,
and our directors will be divided into three classes. Messrs. ,
, and will serve as Class I directors, and their
terms will expire at our 2001 annual shareholders meeting. Messrs. Toole,
, and will serve as Class II directors,
and their terms will expire at our 2002 annual shareholders meeting. Messrs.
Sprague, Russey, and Fitzgerald will serve as Class III directors, and their
terms will expire at our 2003 annual shareholders meeting. At each annual
meeting, the successors to the directors whose terms expire will be elected to
serve three-year terms. Our directors may be removed only for cause upon the
vote of holders of a majority of our outstanding common stock, subject to any
preferential voting rights of outstanding preferred stock.

COMMITTEES OF THE BOARD OF DIRECTORS

Our Board of Directors has established an Audit and Finance Committee and a
Compensation Committee. Among other functions, the Audit and Finance Committee
will:

- have the authority and responsibility to select, evaluate and replace our
independent public accountant,

- review the independence of our independent public accountant,

- review the scope, results and costs of the audit with our independent
public accountant,

- consider the adequacy of our system of internal accounting controls,

- review our financial statements, discuss the statements with our
management and make a recommendation to our Board of Directors as to
filing the statements in our annual SEC report,

- review our interim financial information before each quarterly report is
filed with the SEC, and

- review and evaluate our internal control practices.

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<PAGE> 64

Upon completion of this offering, the members of the Audit and Finance
Committee will be Mr. , who will serve as Chairman, and Messrs.
and . Each person who will be a member of our
Audit Committee will qualify as an independent director, as defined in the
listing requirements of The Nasdaq National Market System.

The Compensation Committee is responsible for administering our stock
incentive plan, described below, and for reviewing and approving all
compensation arrangements for our officers. Upon completion of this offering,
the members of the Compensation Committee will be Mr. , who will
serve as Chairman, and Messrs. and .

DIRECTORS' COMPENSATION

During 1999, our outside directors did not receive cash compensation for
serving as directors. Following the offering, independent directors will receive
$1,000 for each board meeting attended in person. All directors are reimbursed
for out-of-pocket expenses incurred in connection with the rendering of services
as a director. Upon completion of this offering, each independent director who
has not already received options will receive an initial grant of 15,000
options, exercisable at the initial public offering price. These options vest
upon grant. Each independent director will receive an additional grant of 3,000
options, exercisable at the then current market value, on each anniversary of
the completion of this offering if such director nominee continues to serve as a
director at such time.

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<PAGE> 65

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation in 1999 of our Chief
Executive Officer and each of our other most-highly compensated executive
officers who earned more than $100,000 in salary and bonus for fiscal 1999, all
of whom we refer to as our named executive officers.

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
SECURITIES ALL OTHER
OTHER ANNUAL UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS/SARS ($)
<S> <C> <C> <C> <C> <C>
Craig A. Russey.......... $193,653 $75,000 $50,000(1) 529,412 $ --
President and Chief
Executive Officer
Richard M. Rettstadt..... 192,635 65,000 -- 29,412 --
Executive Vice President
Roy D. Tartaglia......... 241,540 35,000 -- -- 764(2)
Executive Vice
President -- Business
Relations
Douglas J. Betlach....... 87,500(3) 37,500 -- 88,235 --
Executive Vice President
and Chief Financial
Officer
</TABLE>

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

(1) Represents a bonus of $25,000 and forgiveness of note payable of $25,000.

(2) Represents premium paid on a term life insurance policy maintained for the
benefit of Mr. Tartaglia.

(3) Mr. Betlach became our Executive Vice President, Chief Financial Officer,
Treasurer and Secretary in June 1999. Pursuant to his employment contract,
he is entitled to an annual base salary of $200,000.

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<PAGE> 66

OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information on grants of options to purchase
shares of our common stock made during 1999 to our named executive officers.

The potential realizable values shown below are determined by subtracting
the exercise price from the fair market value of the common stock based on an
assumed initial public offering price of $14 per share, the mid-point of the
estimated range of the initial public offering price per share, multiplied by
the number of shares underlying the options. The assumed rates of 5% and 10% are
hypothetical rates of stock price appreciation selected by the SEC and are not
intended to, and do not, forecast or assume actual future stock prices. We
believe that future stock appreciation, if any, is unpredictable, and we are not
aware of any formula that will determine with any reasonable accuracy the
present value of stock options. There can be no assurance that the amounts
reflected in this table will be achieved.

The options granted at an exercise price of $0.51 per share are
nonqualified stock options that became exercisable on the grant date. The
options granted at an exercise price of $1.70 per share are incentive stock
options that become exercisable in three equal annual installments, beginning on
the grant date. Each of these options has a term of ten years and is not
transferable. The options granted to Messrs. Russey and Betlach expire upon
termination, except that the vested portion of an option will remain exercisable
until the earlier of the remaining term of the option and either (a) 30 days
after termination without cause or normal retirement or (b) 1 year after death.
The option granted to Mr. Rettstadt will be exercisable for its remaining term
after any termination of employment.

<TABLE>
<CAPTION>
% OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES OPTIONS/SARS ANNUAL RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM
SARS/OPTIONS EMPLOYEES BASE PRICE EXPIRATION -------------------------------------
NAME GRANTED(#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Craig A. Russey...... 235,294 8.8% $0.51 May 2, 2009 $4,746,912 $ 6,941,234
294,118 10.9 1.70 May 2, 2009 5,583,640 8,326,542
Richard M.
Rettstadt.......... 29,412 1.1 0.51 July 23, 2009 593,364 867,654
Roy D. Tartaglia..... -- -- -- -- -- --
Douglas J. Betlach... 88,235 3.3 1.70 June 28, 2009 1,675,092 2,497,963
</TABLE>

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<PAGE> 67

FISCAL YEAR-END OPTION VALUES

The following table provides information on the fiscal year-end values of
options held by our named executive officers.

The values shown below are determined by subtracting the exercise price
from the fair market value of the common stock based on an assumed initial
public offering price of $14 per share, the mid-point of the estimated range of
the initial public offering price per share, multiplied by the number of shares
underlying the options.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END ($)
-------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Craig A. Russey............ 276,471 311,765 $3,680,588 $3,834,706
Richard M. Rettstadt....... 12,981 19,706 175,108 265,832
Roy D. Tartaglia........... -- -- -- --
Douglas J. Betlach......... -- 88,235 -- 1,085,294
</TABLE>

EXECUTIVE EMPLOYMENT AGREEMENTS

We have an employment agreement with Mr. Tartaglia, which has a three-year
term ending in 2002. Mr. Tartaglia is entitled to receive a base salary of
$200,000 per year, and is eligible for discretionary bonuses and other incentive
compensation. Mr. Tartaglia is also entitled to health, life and disability
insurance and other benefits. Unless we terminate Mr. Tartaglia without cause,
he is prohibited from competing with us during his term of employment and for
two years thereafter. If we terminate Mr. Tartaglia without cause, then we must
pay him his salary for one year following the date of termination, plus a
pro-rated portion of his bonus for the year of termination, and permit him to
continue to participate in our benefit plans for one year. If we terminate Mr.
Tartaglia due to permanent disability, then we must pay him a lump sum equal to
his salary for one year, plus a pro-rated portion of his bonus for the year of
termination, and permit him to continue to participate in our benefit plans for
one year. If we terminate Mr. Tartaglia due to his death, then we must pay him
(or his estate) his accrued but unpaid benefits, plus a pro-rated portion of his
bonus for the year of termination.

We have an employment agreement with Mr. Nassau, which has a three-year
term ending in 2002. Mr. Nassau is entitled to receive a base salary of $200,000
per year, and is eligible for discretionary bonuses and other incentive
compensation. Mr. Nassau is also entitled to health, life and disability
insurance and other benefits. Unless we terminate Mr. Nassau without cause, he
is prohibited from competing with us during his term of employment and for two
years thereafter. If we terminate Mr. Nassau without cause, then we must pay him
his salary for one year following the date of termination, plus a pro-rated
portion of his bonus for the year of termination, and permit him to continue to
participate in our benefit plans for one year. If we terminate Mr. Nassau due to
permanent disability, then we must pay him a lump sum equal to his salary for
one year, plus a pro-rated portion of his bonus for the year of termination, and
permit him to continue to participate in our benefit plans for one year. If we
terminate Mr. Nassau due to his death, then we must pay him (or his estate) his
accrued but unpaid benefits, plus a pro-rated portion of his bonus for the year
of termination.

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We have an employment agreement with Mr. Betlach, which has a three-year
term ending in 2002. Mr. Betlach is entitled to receive a base salary of
$200,000 per year and is eligible for discretionary bonuses and other incentive
compensation. Mr. Betlach is also entitled to health, life and disability
insurance and other benefits. Unless we terminate Mr. Betlach without cause, he
is prohibited from competing with us during his term of employment and for two
years thereafter. If we terminate Mr. Betlach without cause, then we must pay
him his salary for six months in monthly installments, plus a pro-rated portion
of his bonus for the year of termination, and permit him to continue to
participate in our benefit plans for six months. If we terminate Mr. Betlach due
to permanent disability, then we must pay him a lump sum equal to his salary for
one year, plus a pro-rated portion of his bonus for the year of termination, and
permit him to continue to participate in our benefit plans for four months. If
we terminate Mr. Betlach due to his death, then we must pay him (or his estate)
his accrued but unpaid benefits, plus a pro-rated portion of his bonus for the
year of termination.

We have an employment agreement with Mr. Rettstadt, which has a three-year
term ending in 2002. Mr. Rettstadt is entitled to receive a base salary of
$193,000 per year, to be increased annually by at least 5%, and is eligible for
discretionary bonuses and other incentive compensation. Mr. Rettstadt is also
entitled to health, life and disability insurance and other benefits. Unless we
terminate Mr. Rettstadt without cause, he is prohibited from competing with us
during his term of employment and for one year thereafter. If we terminate Mr.
Rettstadt without cause, then we must pay him his salary for one year following
the date of termination, plus a pro-rated portion of his bonus for the year of
termination, and permit him to continue to participate in our benefit plans for
one year. If we terminate Mr. Rettstadt due to permanent disability, then we
must pay him a lump sum equal to his salary for one year, plus a pro-rated
portion of his bonus for the year of termination, and permit him to continue to
participate in our benefit plans for one year. If we terminate Mr. Rettstadt due
to his death, then we must pay him (or his estate) his accrued but unpaid
benefits, plus a pro-rated portion of his bonus for the year of termination.

2000 STOCK OPTION PLAN

Our 2000 Stock Option Plan provides for the grant of incentive stock
options and non-qualified stock options. We may grant options to any of our
employees, officers or directors and to any independent contractor or consultant
providing services to us. All options will be granted at or above fair market
value and evidenced by a written agreement. The total number of shares that may
be issued pursuant to options granted under the plan will be 2,235,294.

Our compensation committee will administer the plan. All options will be
subject to a vesting schedule which will be set forth in the option agreement.
However, our Board of Directors may modify or waive any vesting schedules. The
plan is designed to ensure that awards of options qualify as "performance-based
compensation" for purposes of Section 162(m) of the Internal Revenue Code.

Unless otherwise provided in an option agreement, an option will terminate
90 days following termination of the holder's employment or service with us if
the termination is for any reason other than cause, death or disability. If the
holder's employment is terminated by death or disability, his or her options
will immediately vest and will be exercisable for a period of up to one year
from the date of death or disability. If the holder's employment or service with
us is terminated for cause,

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<PAGE> 69

his or her options will expire. Our Board of Directors may extend the exercise
period following a termination of employment or service by an option holder for
any reason.

An option agreement may provide that the holder must return any gains
related to an option if the holder's employment or services with us are
terminated for cause or for the breach of a non-competitive provision of any
agreement entered into by the holder and us.

In the event of a reorganization or change of control, our Board of
Directors may provide that all or some of the outstanding options issued under
the plan will become immediately exercisable or will terminate. In the event the
options will terminate, holders will be given a reasonable period of time to
exercise vested options. In the case of a reorganization, if the option will not
terminate, the holder will be entitled to the number and kind of shares that a
holder of stock would have been entitled to upon the reorganization. An option
agreement may provide for immediate vesting upon a change of control or a
reorganization.

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CERTAIN TRANSACTIONS

GENERAL

We have entered into transactions with certain of our officers, directors
and principal shareholders and entities in which these parties have an interest.
We believe that these transactions have been on terms no less favorable to us
than could be obtained in a transaction with an independent third party.

VIASOURCE RECAPITALIZATION

On June 14, 1999, we effected a recapitalization in which Crest
Communications, Jackson National Life Insurance Company, Old Hickory Fund I, LLC
and BancBoston Investments Inc. acquired 6,470,588 shares of common stock for
$11,000,000 directly from our shareholders on a pro rata basis. Crest
Communications then loaned us $5,000,000 in exchange for a note, which was
convertible into 2,941,176 shares of common stock and bore interest at an annual
rate of 10%. We used the proceeds from the bridge equity financing to redeem
2,352,941 shares of common stock at $1.70 per share, on a pro rata basis, with
the remaining $1,000,000 of proceeds used as working capital. In connection with
the bridge equity financing, Crest Communications received a warrant to purchase
147,059 shares of common stock at $0.02 per share, which will be converted into
common stock upon this offering. The $5,000,000 loan was repaid on September 7,
1999 when we sold 2,941,176 shares of common stock at $1.70 per share to General
Electric Capital Corporation, PNC Venture Corp. and an affiliate of PNC.

Upon completion of the recapitalization transaction, including taking into
consideration the shares used in the bridge equity financing, the new investor
group held 76.5% of the common stock, and the remaining 23.5%, or 2,941,176
shares of common stock, was retained by the pre-recapitalization shareholders.
Of the shares held by the pre-recapitalization shareholders, 2,357,584 shares
were placed in escrow to be available to the purchasers as security for certain
indemnification obligations of the former shareholders; those shares will be
released on the third anniversary of the completion of this offering, or earlier
if certain conditions relating to the indemnification matters are satisfied. Mr.
Tartaglia, one of our existing shareholders, remained a member of our Board of
Directors and entered into an employment agreement described elsewhere in this
prospectus. Richard A. Thomas, also one of our existing shareholders, entered
into an employment agreement described elsewhere in this prospectus.

COMMUNICATION RESOURCES ACQUISITION

In July 1999, we acquired Communication Resources. An investor group led by
Crest Communications had acquired approximately 50% of the stock of
Communication Resources in May 1998. Pursuant to an agreement and plan of
merger, each share of Communication Resources common stock was exchanged for one
share of Viasource common stock and, as a result, the previous shareholders of
Communication Resources received 12,235,587 shares of Viasource common stock.
Mr. Rettstadt, a former officer and shareholder of Communication Resources,
became Executive Vice President of Viasource, pursuant to an employment
agreement described elsewhere in this prospectus. Mr. Rettstadt also was granted
options to purchase 29,412 shares of our common stock for $0.51 per share.
George O'Leary, a former officer and principal shareholder

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of Communication Resources, became a member of our Board of Directors and
remained Chief Executive Officer of Communication Resources pursuant to an
employment agreement with us. Mr. O'Leary was granted 29,412 shares of our
common stock as a discretionary bonus pursuant to his employment agreement and
the right to require us and/or Crest Communications to repurchase 1,951,929
shares issued to him in the merger, at $2.23 per share. He exercised that right
as described below.

TELECRAFTER ACQUISITION

In September 1999, we acquired all of the assets of Telecrafter for $10.5
million in cash, 2,647,059 shares of our common stock and a $3.0 million
promissory note which is required to be paid upon completion of this offering.
In connection with the acquisition, Mr. Nassau, the principal shareholder of
Telecrafter, was elected to our Board of Directors and was made a President of
our Telecrafter subsidiary pursuant to an employment agreement described
elsewhere in this prospectus, with an initial annual base salary of $200,000.

In connection with the acquisition of the Telecrafter assets, we also
entered into a $15 million term loan facility with General Electric Capital
Corporation pursuant to which General Electric Capital was issued warrants to
purchase 870,528 shares of our common stock at $.02 per share, which warrants
will be converted in shares of common stock simultaneously with this offering.
The term loan facility will be repaid with the proceeds of this offering. Mr.
Toole, one of our directors, was Senior Vice President of Human Resources of
General Electric Capital Services, a parent of General Electric Capital
Corporation, until his retirement in July 1999.

TELECORE ACQUISITION

In June 2000, we acquired TeleCore for approximately $126.9 million, which
we paid in a combination of cash, common stock, preferred stock and a promissory
note. Crest Communications had acquired approximately 17% of the stock of
TeleCore in October 1999 and, at the time of the acquisition, held approximately
19% of the stock of TeleCore. John M. Clarey, a principal shareholder of
TeleCore, received in the merger 2,929,839 shares of Viasource common stock and
$16.9 million in promissory notes, of which approximately $10 million is
required to be paid upon this offering unless we are advised by our financial
advisors that a lesser amount should be prepaid due to market conditions. The
notes bear interest at a rate of 9% per annum, however, the interest rate for
$10 million of the notes will be increased by 1% (up to a maximum interest rate
per annum of 15%) for each $1 million principal amount not prepaid upon the
offering. Crest Communications received in the merger 1,529,609 shares of
preferred stock and 63,768 shares of Viasource common stock. Mr. Stagen, one of
our executive officers, received in the merger 717,064 shares of Viasource
common stock and options to purchase 192,070 additional shares. Mr. Fitzgerald,
one of our directors, also served as a director of TeleCore.

SHAREHOLDERS AGREEMENT

Most of our shareholders are parties to a shareholders agreement. The
agreement will terminate upon completion of this offering, other than the
provisions which grant to certain shareholders the right to require us to
register their shares with the SEC and the right to participate in a public
offering of shares made by us.

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OTHER

In January 2000, we purchased 691,033 shares of our common stock from Mr.
O'Leary and an entity owned by Mr. O'Leary for $1,538,932. We issued a
promissory note in the principal amount of $1,538,932, bearing interest at 9%
per annum and maturing in January 2001. Of the shares of common stock we
purchased, 691,033 were put into escrow to secure our obligations under the
promissory note to Mr. O'Leary. The note will be paid upon the completion of
this offering. 1,260,896 additional shares of common stock owned by Mr. O'Leary
were purchased by certain of our shareholders for an aggregate purchase price of
$2,808,015. In connection with the exercise by Mr. O'Leary of his right to put
the securities to us, he resigned as a member of our Board of Directors.

In connection with his employment in 1998, Mr. Russey, our President and
Chief Executive Officer, received a loan of $75,000 as a sign-on bonus and to
defray his relocation costs. The loan bears interest at an annual rate of 8.5%
and, as long as Mr. Russey continues to be employed by us, the principal amount
will be forgiven ratably over three years. As of March 31, 2000, the principal
balance of the loan is $50,000.

Our Mountain Division leases its headquarters in Lakewood, Colorado from
Mr. Nassau. The lease runs through March 2011 and can be renewed for up to two
additional five-year terms. The lease currently provides for a total annual rent
of approximately $71,000, increasing by approximately $6,000 in each year of the
lease.

In March 2000, we entered into our current $15.0 million senior revolving
credit facility, which matures on September 7, 2004, with General Electric
Capital Corporation. Mr. Toole, one of our directors, was Senior Vice President
of Human Resources of General Electric Capital Corporation, a parent of General
Electric Capital Corporation, until his retirement in July 1999.

In the first and second quarters of 2000, Crest Communications loaned an
aggregate of $2.75 million, and Palomar Ventures I, L.P., of which Mr. Lunn, one
of our directors, is a Managing Member, loaned an aggregate of $1.5 million, to
TeleCore, in exchange for notes bearing interest at an annual rate of 8%. In
connection with these loans, Crest Communications and Palomar Ventures I, L.P.
received warrants to purchase shares of TeleCore, which were exercised and
converted into 63,742 and 43,864 shares, respectively, of Viasource common stock
in the acquisition of TeleCore. The notes initially were due June 30, 2000, but
have been extended to the earlier of September 30, 2000 or the completion of
this offering.

COMPANY POLICY

In the future, any transactions with our directors, officers, employees or
affiliates are anticipated to be minimal and will, in any case, be approved by a
majority of the Board of Directors or a committee thereof, including a majority
of disinterested members of the Board of Directors.

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PRINCIPAL AND SELLING SHAREHOLDERS

The table below lists information about the beneficial ownership of our
common stock as of June 1, 2000 and after completion of this offering, including
shares which the individuals have the right to acquire within 60 days upon the
exercise of options and shares that will be issued simultaneously with this
offering upon the mandatory exercise of outstanding warrants, by (a) each person
whom we know to own beneficially more than 5% of our common stock, (b) each of
our directors and named executive officers and (c) all of our directors and
executive officers as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES
BENEFICIALLY OWNED
NUMBER OF -------------------
SHARES BENEFICIALLY BEFORE AFTER
NAME OWNED OFFERING OFFERING
<S> <C> <C> <C>
Crest Communications Holdings LLC(1)................ 9,598,344 26.57% 20.00
PPM America, Inc.(2)................................ 3,174,171 8.82 6.61
PNC Venture Corp.(3)................................ 2,539,560 7.06 5.29
BancBoston Investments Inc.......................... 2,013,248 5.60 4.20
John M. Clarey...................................... 2,928,667 8.14 6.10
William W. Sprague(4)............................... 9,598,344 26.57 20.00
Craig A. Russey(5).................................. 374,360 1.03 *
V. Michael Fitzgerald(4)............................ 9,598,344 26.57 20.00
Lawrence J. Toole(6)................................ 14,700 * *
Randall R. Lunn(7).................................. 1,226,574 3.41 2.56
Roy D. Tartaglia(8)................................. 1,504,901 4.18 3.13
Douglas J. Betlach(9)............................... 29,411 * *
Richard Rettstadt(10)............................... 2,393,764 6.65 4.99
Bruce A. Nassau, Ph.D.(11).......................... 2,708,916 7.53 5.64
All executive officers and directors as a group
(12 persons)(12).................................. 18,385,529 48.55 37.62
</TABLE>

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

* Less than 1% of outstanding common stock.

(1) Includes 21,761 shares owned by Crest CRI LLC, 7,903,279 shares owned by
Crest Communications Partners LP, 147,050 shares that will be issued
simultaneously with this offering pursuant to a warrant owned by Crest
Communications Partners LP and 1,529,517 shares of common stock that will
be issued simultaneously with this offering upon conversion of preferred
stock owned by Crest Communications Partners LP; these entities are
affiliates of Crest Communications Holdings LLC. The address of the
beneficial owner is 320 Park Avenue, 17th Floor, New York, NY 10022.

(2) Includes 15,594 shares owned by Old Hickory Fund, I, LLC and 3,158,577
shares owned by Jackson National Life Insurance Company; these entities are
affiliates of PPM America, Inc. The address of the beneficial owner is c/o
PPM America, Inc., 225 West Wacker Drive, Suite 1200, Chicago, Illinois
60606.

(3) Includes 419,028 shares owned by Wood Street Partners, II, an affiliate of
PNC Venture Corp. The address of the beneficial owner is c/o PNC Equity
Management Corp., 3150 CNG Tower, 625 Liberty Avenue, Pittsburgh,
Pennsylvania 15222.

(4) All shares reported for Messrs. Sprague and Fitzgerald are beneficially
owned by Crest Communications Holdings LLC as described in note 1 above.
Mr. Sprague is the founder, and Mr. Fitzgerald is a Managing Director, of
Crest Communications. As such, Messrs. Sprague and Fitzgerald may be deemed
to be controlling persons of Crest Communications. Messrs. Sprague and
Fitzgerald disclaim beneficial ownership of these shares except to the
extent of their pecuniary interests in Crest Communications Partners LP and
Crest CRI LLC.

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<PAGE> 74

(5) Includes 374,360 shares that Mr. Russey may acquire pursuant to options
exercisable within 60 days.

(6) Includes 14,700 shares that Mr. Toole may acquire pursuant to options
exercisable within 60 days.

(7) Includes 43,864 shares of common stock owned by, and 11,761,151 shares of
common stock that will be issued simultaneously with this offering upon
conversion of shares of preferred stock owned by, Palomar Ventures LLP. Mr.
Lunn is a Managing Member of Palomar Ventures. The address of the
beneficial owner is 18881 Von Karman Avenue, Suite 960, Irvine, California
92612. Mr. Lunn disclaims beneficial ownership of shares owned by Palomar
Ventures except to the extent of his pecuniary interest in Palomar
Ventures.

(8) Includes 534,278 shares held by the Tartaglia Family Trust, as to which Mr.
Tartaglia shares voting power with his wife.

(9) Includes 29,411 shares that Mr. Betlach may acquire pursuant to options
exercisable within 60 days.

(10) Includes 2,380,788 shares held by CEEJ LLC, an affiliate of Mr. Rettstadt,
and 12,975 shares that Mr. Rettstadt may acquire pursuant to options
exercisable within 60 days. Includes up to shares that may be
sold by Mr. Rettstadt if the underwriters' over-allotment option is
exercised in full.

(11) Includes 294,000 shares held by Nassau Communications, Inc., an affiliate
of Mr. Nassau, and 917,280 shares held by Mr. Nassau's wife.

(12) Includes up to shares that may be sold by Mr. Rettstadt if the
underwriters' over-allotment option is exercised in full. See notes 1, 4,
5, 6, 7, 8 and 9 above.

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DESCRIPTION OF CAPITAL STOCK

The following summary description of our capital stock is based, in part,
on provisions of our certificate of incorporation and our bylaws. For a complete
description of our capital stock, you should review our certificate of
incorporation and bylaws, copies of which have been filed as exhibits to the
registration statement of which this prospectus is a part.

Our certificate of incorporation authorizes 115,000,000 shares of common
stock, with no par value, and 15,000,000 shares of preferred stock, with no par
value, the rights and preferences of which may be designated by our Board of
Directors. As of the date of this prospectus there will be 33,894,435 shares of
common stock and 3,096,159 shares of preferred stock issued and outstanding.
Upon the closing of this offering, all outstanding shares of preferred stock
will convert into an aggregate of 3,096,159 shares of common stock. After this
offering, there will be an additional 11,000,000 shares of common stock
outstanding.

COMMON STOCK

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of our shareholders, subject to any preferential
voting rights of outstanding preferred stock, and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
dividends as may be declared by our Board of Directors out of legally available
funds, subject to any preferential dividend rights of outstanding preferred
stock. If we liquidate, dissolve or wind up our business, the holders of common
stock will be entitled to share ratably in all assets remaining after the
payment of debts and liabilities and the liquidation preference of any then
outstanding preferred stock. Holders of our common stock have no preemptive,
subscription, redemption or conversion rights. The rights, preferences and
privileges of holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which we may designate and issue in the future.

PREFERRED STOCK

Our Board of Directors is authorized, subject to certain limitations
prescribed by law, without further shareholder approval, to issue up to an
aggregate of 15,000,000 shares of preferred stock in one or more series and to
fix the designations, and the relative rights, preferences and limitations of
the shares of each such series thereof, including the dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption (including sinking
fund provisions), redemption price or prices, liquidation preferences and the
number of shares constituting any series or designations of such series.

ANTI-TAKEOVER EFFECTS

There are provisions of New Jersey law, and our certificate of
incorporation and bylaws, that may have an anti-takeover effect. These
provisions are designed to protect shareholders against coercive, unfair or
inadequate tender offers and other abusive tactics and to encourage any person
contemplating a business combination with us to negotiate with our Board of
Directors for the fair and equitable treatment of all shareholders.

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PREFERRED STOCK

As we described above, our Board of Directors, without shareholder
approval, has the authority under our certificate of incorporation to issue
preferred stock with rights superior to the rights of the holders of common
stock. As a result, preferred stock could be issued quickly and easily, could
adversely affect the rights of holders of common stock and could be issued with
terms calculated to delay or prevent a change of control of Viasource or make
removal of management more difficult.

ELECTION AND REMOVAL OF DIRECTORS

Our certificate of incorporation and bylaws provide for the division of our
Board of Directors into three classes, as nearly equal in number as possible,
with the directors in each class serving for a three-year term, and one class
being elected each year by our shareholders. Also, our directors may be removed
only for cause. This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of us and may maintain the incumbency of our Board of Directors,
as it generally makes it more difficult for shareholders to replace a majority
of directors in a relatively short period of time.

SHAREHOLDER MEETINGS

Our bylaws provide that the shareholders may not call a special meeting of
shareholders. Rather, only our Board of Directors, chairman of the board or
president will be able to call special meetings of shareholders, unless, in
accordance with New Jersey law, a shareholders meeting is ordered by a court
upon application by at least 10% of our outstanding stock and a showing of good
cause. Our certificate of incorporation prohibits shareholders from taking
action by written consent, unless the action is unanimous.

REQUIREMENTS FOR ADVANCE NOTIFICATION OF SHAREHOLDER NOMINATIONS AND PROPOSALS

Our bylaws provide advance notice procedures with respect to the nomination
of candidates for election as directors, other than nominations made by or at
the direction of our Board of Directors or one of its committees.

NEW JERSEY ANTI-TAKEOVER LAW

New Jersey has adopted a type of anti-takeover statute known as a "business
combination" statute. Subject to numerous qualifications and exceptions, the
statute prohibits an interested shareholder of a corporation from effecting a
business combination with the corporation for a period of five years unless the
corporation's board approved the combination prior to the shareholder becoming
an interested shareholder. In addition, but not in limitation of the five-year
restriction, if applicable, corporations covered by the New Jersey statute may
not engage at any time in a business combination with any interested shareholder
of that corporation unless the combination is approved by the board prior to the
interested shareholder's stock acquisition date, the combination receives the
approval of two-thirds of the voting stock of the corporation not beneficially
owned by the interested shareholder, or the combination meets minimum financial
terms specified by the statute. An "interested shareholder" is defined to
include any beneficial owner of 10% or more of the voting power of the
outstanding voting stock of the corporation and any affiliate or associate of
the corporation who within the prior five-year period has at any time owned

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10% or more of the voting power. The term "business combination" is defined
broadly to include, among other things:

- the merger or consolidation of the corporation with the interested
shareholder or any corporation that after the merger or consolidation
would be an affiliate or associate of the interested shareholder,

- the sale, lease, exchange, mortgage, pledge, transfer or other
disposition to an interested shareholder or any affiliate or associate of
the interested shareholder of 10% or more of the corporation's assets, or

- the issuance or transfer to an interested shareholder or any affiliate or
associate of the interested shareholder of 5% or more of the aggregate
market value of the stock of the corporation.

The effect of the statute is to protect non-tendering, post-acquisition
minority shareholders from mergers in which they will be "squeezed out" after
the merger, by prohibiting transactions in which an acquiror could favor itself
at the expense of minority shareholders. The New Jersey statute generally
applies to corporations that are organized under New Jersey law, have either
their principal executive offices or significant business operations located in
New Jersey, and have a class of stock registered or traded on a national
securities exchange or registered with the Securities and Exchange Commission
pursuant to Section 12(g) of the Securities Exchange Act of 1934. The statute
would not apply to a business combination between us and Crest Communications,
because Crest Communications will beneficially own more than 10% of our voting
power at the time we first become subject to the Securities Exchange Act. A
corporation may not opt out of the coverage of the statute.

LIMITATION OF OFFICER AND DIRECTOR LIABILITY AND INDEMNIFICATION ARRANGEMENTS

As permitted by New Jersey law, our certificate of incorporation contains a
provision that eliminates the personal liability of directors and the personal
liability of officers to us or our shareholders for damages for breach of any
duty owed to us or our shareholders, except for liability for any breach of duty
based upon an act or omission which:

- was in breach of the director's or officer's duty of loyalty to us or our
shareholders,

- was not in good faith or involved a knowing violation of law, or

- resulted in receipt by the director or officer of an improper personal
benefit.

In appropriate circumstances, equitable remedies such as an injunction or other
forms of non-monetary relief would remain available under New Jersey law.

- is or was a director, officer, employee or agent of ours,

- is or was serving at our request as a director, officer, employee or
agent of another entity, or

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- is or was serving at our request as a fiduciary of an employee benefit
plan,

against expenses (and liabilities if the proceeding is not by or in the right of
Viasource) incurred by the person in connection with such proceeding. We will
not indemnify a person who:

- did not act in good faith and in a manner the person reasonably believed
to be in, or not opposed to, our best interests, or

- with respect to any criminal action or proceeding, had reasonable cause
to believe that the person's conduct was unlawful.

We will pay the expenses incurred by an indemnifiable person in advance of
the final disposition of any action, suit or proceeding described above if the
person agrees in advance to repay the amounts if it is determined that the
person is not entitled to indemnification under New Jersey law.

TRANSFER AGENT AND REGISTRAR

will be the transfer agent and registrar for our common
stock.

LISTING

We have applied to have our common stock approved for quotation on The
Nasdaq National Market System under the trading symbol "VVVV."

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have 47,990,594 shares of common
stock outstanding, including 1,017,586 shares that will be issued upon the
offering in respect of warrants we have issued and 3,096,159 shares of common
stock that will be issued upon the offering on conversion of our preferred
stock. All of the shares offered hereby will be freely saleable in the public
market after completion of this offering, unless acquired by our affiliates. We
have agreed not to sell, contract or otherwise dispose of any shares of common
stock for a period of 180 days after the date of this prospectus, except for
shares issued as consideration for business acquisitions, shares issuable upon
exercise of currently outstanding stock options or warrants, and options granted
under our stock option plan, without the prior written consent of Donaldson,
Lufkin & Jenrette Securities Corporation.

Of the 36,990,594 shares of our common stock that will be outstanding
immediately prior to completion of this offering, are subject to
agreements that prohibit the shareholders from selling or otherwise disposing of
shares for a period of 180 days after the date of this prospectus without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation.
The remaining shares of common stock that will be outstanding prior
to completion of this offering, are "restricted securities" as defined in Rule
144 under the Securities Act. Restricted securities may be sold in the public
market only if registered or if the sale qualifies for an exemption from
registration under Rule 144 or Rule 701 under the Securities Act. We summarize
these two rules below.

There has been no public market for our common stock prior to this
offering, and we cannot assure you that an active public market for our common
stock will develop or be sustained after completion of this offering. Sales of
substantial amounts of our common stock, or the perception that substantial
sales of common stock could occur, could adversely affect the prevailing market
price of our common stock and could impair our ability to raise capital or
effect acquisitions through the issuance of common stock.

RULE 144

Of the shares of our common stock that will be outstanding prior to this
offering, shares will become eligible for trading under the
exemption provided by Rule 144 beginning 90 days after the date on which the
registration statement of which this prospectus is a part becomes effective,
subject to restrictions described below. Of these shares, are subject to
agreements that prohibit the shareholders from selling or otherwise disposing of
shares for a period of 180 days after the date of this prospectus without the
prior written consent of Donaldson, Lufkin & Jenrette Securities Corporation. In
general, under Rule 144, a person, including persons who may be deemed our
affiliates, who has owned his or her shares for at least one year may sell
within any three-month period that number of shares which does not exceed the
greater of:

- 1% of the outstanding shares of the common stock (or approximately
369,900 shares, giving effect to this offering), or

- the average weekly trading volume during the four calendar weeks
preceding each sale.

Sales under Rule 144 also are subject to manner of sale provisions, notice
requirements and the availability of current public information about us. Under
Rule 144(k), a person who is not or

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has not been an "affiliate" of the company for at least three months and who has
owned his or her shares for at least two years would be entitled to sell these
shares under Rule 144 without regard to the limitations discussed above.

RULE 701

An additional approximately shares of common stock are currently
issuable upon the exercise of outstanding options that were issued in reliance
on Rule 701. All of these shares may be eligible for sale in reliance on Rule
701 beginning 90 days after the date on which the registration statement of
which this prospectus is a part becomes effective. In general, under Rule 701,
any of our employees who purchase shares from us in connection with a
compensatory plan or other agreement is eligible to resell those shares 90 days
after the effective date of the registration statement in reliance on Rule 144,
but without compliance with certain of the restrictions contained in Rule 144,
including the holding period and, in the case of employees who are not our
affiliates, the volume limitations. Of the shares eligible for sale in reliance
on Rule 701, are subject to agreements that prohibit the shareholders
from selling or otherwise disposing of shares for a period of 180 days after the
date of this prospectus without the prior written consent of Donaldson, Lufkin &
Jenrette Securities Corporation.

REGISTRATION RIGHTS

Upon completion of this offering, under an agreement we have entered into
with certain of our shareholders, the holders of 33,315,027 shares of common
stock that are restricted securities will be entitled to require us to register
sales of their shares with the SEC, subject to limitations in the case of an
underwritten offering. Of these shares, the holders of 9,598,344 shares of
common stock will be entitled to require us to register sales of their shares
180 days after the completion of this offering, and the holders of an additional
23,716,683 shares of common stock will be entitled to require us to register
sales of their shares after the first anniversary of the completion of this
offering. If we are eligible to file a short-form registration statement with
the SEC, after the first anniversary of the completion of this offering, the
holders of an additional 2,737,218 shares of common stock will be entitled to
require us to register sales of their shares, as long as the shares to be sold
represent at least 5% of the securities subject to the shareholders agreement.
If we register any of our securities under the Securities Act for our own
account or for the account of other shareholders, these shareholders are
entitled to notice of the registration and are entitled to include their shares
of common stock in the registration, subject to limitations in the case of an
underwritten offering. In most circumstances, we will be required to pay the
expense of registering these shareholders' shares.

STOCK OPTIONS

As soon as practical after the completion of this offering, we intend to
file a registration statement under the Securities Act to register
shares of common stock issuable on exercise of stock options, after the
expiration of vesting periods, granted or to be granted under our stock option
plan. After the filing of that registration statement, those shares will be
freely saleable in the public market immediately following exercise of such
options, except in the case of shares that may be acquired by our executive
officers and directors.

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UNDERWRITERS

Subject to the terms and conditions contained in an underwriting agreement,
dated , 2000, the underwriters named below, who are
represented by Donaldson, Lufkin & Jenrette Securities Corporation, Prudential
Securities Incorporated, Chase Securities Inc., First Union Securities
Incorporated and DLJdirect Inc. have severally agreed to purchase from us the
number of shares set forth opposite their names below.

<TABLE>
<CAPTION>
UNDERWRITERS: NUMBER OF SHARES
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation....
Prudential Securities Incorporated.....................
Chase Securities Inc. .................................
First Union Securities Incorporated....................
DLJdirect Inc..........................................

--------
Total............................................
========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase and accept delivery of the shares included in this
offering are subject to approval of certain legal matters by their counsel and
to certain other conditions including the effectiveness of the registration
statement, the continuing correctness of our representations, the receipt of a
"comfort letter" from our accountants, the listing of our common stock on The
Nasdaq National Market System and no occurrence of an event that would have a
material adverse effect on us. The underwriters are obligated to purchase and
accept delivery of all the shares, other than those covered by the
over-allotment option described below, if they purchase any of the shares.

The underwriters propose initially to offer some of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus and some of the shares to certain dealers at the public offering
price less a concession not in excess of $ per share. The underwriters
may allow, and such dealers may re-allow, a concession not in excess of
$ per share on sales to certain other dealers. After the initial
offering of the shares to the public, the representatives may change the public
offering price and such concessions. The underwriters do not intend to confirm
sales to any accounts over which they exercise discretionary authority.

An electronic prospectus will be available on the Web site maintained by
DLJdirect Inc., one of the underwriters and an affiliate of Donaldson, Lufkin &
Jenrette Securities Corporation. Prudential Securities Incorporated facilitates
the marketing of new issues online through its PrudentialSecurities.com
division. Clients of Prudential Advisor(SM), a full service brokerage firm
program, may view offering terms and a prospectus online and place orders
through their financial advisors.

77
<PAGE> 82

The following table shows the underwriting fees to be paid to the
underwriters by us in connection with this offering. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares of common stock.

<TABLE>
<CAPTION>
PAID BY VIASOURCE
---------------------------
NO EXERCISE FULL EXERCISE
<S> <C> <C>
Per share............................................. $ $
Total...................................... $ $
</TABLE>

We and certain of our stockholders have granted to the underwriters an
option, exercisable for 30 days from the date of the underwriting agreement, to
purchase up to additional shares at the public offering price less
the underwriting fees. The underwriters may exercise such option solely to cover
over-allotments, if any, made in connection with this offering. To the extent
that the underwriters exercise such option, each underwriter will become
obligated, subject to certain conditions, to purchase a number of additional
shares approximately proportionate to such underwriter's initial purchase
commitment.

We estimate our expenses relating to the offering to be $ .

Viasource and the underwriters have agreed to indemnify each other against
certain civil liabilities, including liabilities under the Securities Act.

Viasource, our executive officers and directors, and some of our other
shareholders have agreed that, for a period of 180 days from the date of this
prospectus and subject to some exceptions, they will not, without the prior
written consent of Donaldson, Lufkin & Jenrette Securities Corporation do either
of the following:

- offer, pledge, 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, or

- enter into any swap or other arrangement that transfers all or a portion
of the economic consequences associated with the ownership of any common
stock.

Either of the foregoing transaction restrictions will apply regardless of
whether a covered transaction is to be settled by the delivery of common stock
or such other securities, in cash or otherwise. In addition, during such period,
we have agreed not to file any registration statement with respect to, and each
of our executive officers and directors has agreed not to make any demand for,
or exercise any right with respect to, the registration of any shares of common
stock or any securities convertible into or exercisable for common stock, except
in respect of our stock option plan, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation.

At our request, the underwriters have reserved up to percent of the
shares offered hereby for sale at the initial public offering price to certain
of our employees, members of their immediate families and other individuals who
are our business associates. The number of shares of common stock available for
sale to the general public will be reduced to the extent these individuals
purchase such reserved shares. Any reserved shares not purchased will be offered
by the underwriters to the general public on the same basis as the other shares
offered hereby.

78
<PAGE> 83

We will apply to have our common stock approved for quotation on The Nasdaq
National Market System under the trading symbol "VVVV." In order to meet the
requirements for listing our common stock on The Nasdaq National Market System,
the underwriters have undertaken to sell lots of 100 or more shares to a minimum
of 400 beneficial owners.

Other than in the United States, no action has been taken by us or the
underwriters that would permit a public offering of the shares of common stock
included in this offering in any jurisdiction where action for that purpose is
required. The shares included in this offering may not be offered or sold,
directly or indirectly, nor may this prospectus or any other offering material
or advertisement in connection with the offer and sale of any such shares be
distributed or published in any jurisdiction, except under circumstances that
will result in compliance with the applicable rules and regulations of such
jurisdiction. Persons who receive this prospectus are advised to inform
themselves about and to observe any restrictions relating to this offering of
common stock and the distribution of this prospectus. This prospectus is not an
offer to sell or a solicitation of an offer to buy any shares of common stock
included in this offering in any jurisdiction where that would not be permitted
or legal.

Some of the underwriters or their affiliates have provided and/or may in
the future provide investment banking or other financial advisory services to us
and our affiliates from time to time, for which they have received and are
expected to receive customary fees and expenses.

STABILIZATION

In connection with this offering, certain underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
common stock. Specifically, the underwriters may create a syndicate short
position by making short sales of our common stock and may purchase our common
stock on the open market to cover syndicate short positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
common stock than they are required to purchase in the offering. Short sales can
be either "covered" or "naked". "Covered" short sales are sales made in an
amount not greater than the underwriters' over-allotment option to purchase
additional shares in the offering. "Naked" short sales are sales in excess of
the over-allotment option. A naked short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on the
price of the common stock in the open market after pricing that could adversely
affect investors who purchase in the offering. The underwriters may close out
any covered short position by either exercising their over-allotment option or
purchasing shares in the open market. The underwriters must close out any naked
short position by purchasing shares in the open market. In determining the
source of shares to close out the covered 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. The underwriting syndicate may reclaim selling
concessions if the syndicate repurchases previously distributed common stock in
syndicate covering transactions, in stabilization transactions or in some other
way or if Donaldson, Lufkin & Jenrette Securities Corporation receives a report
that indicates clients of such syndication members have "flipped" the common
stock. These activities may have the effect of raising or maintaining the market
price of our common stock or preventing or regarding 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

79
<PAGE> 84

otherwise exist in the open market. The underwriters are not required to engage
in these activities, and may end any of these activities at any time.

PRICING OF THIS OFFERING

Prior to the offering, there has been no established market for our common
stock. The initial public offering price for the shares of common stock offered
by this prospectus will be determined by negotiation between Viasource and the
representatives of the underwriters. The factors to be considered in determining
the initial public offering price include:

- the history of and the prospects for the industry in which we compete,

- our past and present operations,

- our historical results of operations,

- our prospects for future earnings,

- the recent market prices of securities of generally comparable companies,
and

- general conditions of the securities market at the time of this offering.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for us by our special New Jersey counsel, Pitney, Hardin, Kipp & Szuch LLP,
Morristown, New Jersey. Dewey Ballantine LLP, New York, New York, is also
representing us in connection with this offering. Cahill Gordon & Reindel, New
York, New York, is representing the underwriters in connection with this
offering.

EXPERTS

The consolidated financial statements and schedules of Viasource
Communications, Inc. and subsidiaries as of January 2, 1999 and January 1, 2000
and for each of the three fiscal years in the period ended January 1, 2000
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

The financial statements of Nassau Communications, Inc. (d/b/a Telecrafter
Services Corporation) as of December 31, 1997 and 1998 and for each of the two
years in the period ended December 31, 1998 included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

The consolidated financial statements of Communication Resources
Incorporated and subsidiary as of December 31, 1997 and 1998 and for the period
from February 13, 1997 (Inception) through December 31, 1997 and for the year
ended December 31, 1998 appearing in this Prospectus and Registration Statement
have been audited by Ernst & Young LLP, independent certified public
accountants, as set forth in their reports thereon appearing elsewhere herein,
and are
80
<PAGE> 85

included in reliance upon such reports given on the authority of such firm as
experts in accounting and auditing.

The consolidated financial statements of TeleCore, Inc. and subsidiaries as
of December 31, 1998 and 1999, and for each of the years in the three-year
period ended December 31, 1999, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing. The report of KPMG LLP
covering the consolidated financial statements contains an explanatory paragraph
that states that the Company's operating losses and negative cash flows from
operations to date and increased capital needs raise substantial doubt about the
entity's ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the outcome of
that uncertainty.

The combined financial statements of Excalibur Cable Communications, Ltd as
of December 31, 1999 and for the year ended December 31, 1999 included in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

The combined financial statements of Excalibur Cable Communications, Ltd as
of December 31, 1998 and for the year ended December 31, 1998 included in this
prospectus and elsewhere in the registration statement have been audited by D.R.
Maxfield & Company, independent public accountants, as indicated in their report
with respect thereto, and are included in this document in reliance upon the
authority of D.R. Maxfield & Company as experts in giving said reports.

The financial statements of D.S. Cable TV Contractor, Inc. as of December
31, 1998 and 1999 and for each of the two years in the period ended December 31,
1999 included in this prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

The combined financial statements of Service Cable Electric, Inc. and
Service Cable Corporation as of December 31, 1998 and 1999 and for each of the
two years in the period ended December 31, 1999 included in this prospectus and
elsewhere in the registration statement have been audited by Felsing, Rankin &
Co., P.A., independent public accountants, as indicated in their report with
respect thereto, and are included in this document in reliance upon the
authority of Felsing, Rankin & Co., P.A. as experts in giving said reports.

ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the
Securities Act with respect to the common stock being offered. This prospectus
contains all information about us and our common stock that would be material to
an investor. The registration statement includes exhibits and schedules to which
you should refer for additional information about us.

You may inspect a copy of the registration statement, and the exhibits and
schedules to the registration statement, free of charge at the public reference
facilities maintained by the SEC at

81
<PAGE> 86

Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at its regional offices located at 7 World Trade Center, New York, New York
10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You may obtain copies of all or any part of the registration
statement the Public Reference Section of the SEC, Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates and from the
SEC's Web site at www.sec.gov. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.

82
<PAGE> 87

INDEX TO FINANCIAL STATEMENTS

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
Basis of Presentation (Unaudited)......................... F-3
Pro Forma Consolidated Statement of Operations for the
Fiscal Year Ended January 1, 2000 (Unaudited).......... F-5
Pro Forma Consolidated Statement of Operations for the
Three Months Ended April 3, 1999 (Unaudited)........... F-6
Pro Forma Consolidated Statement of Operations for the
Three Months Ended April 1, 2000 (Unaudited)........... F-7
Pro Forma Consolidated Balance Sheet as of April 1, 2000
(Unaudited)............................................ F-8
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)............................................ F-9
HISTORICAL FINANCIAL STATEMENTS:
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES
Report of Independent Public Accountants............... F-17
Consolidated Balance Sheets as of January 2, 1999,
January 1, 2000 and April 1, 2000..................... F-18
Consolidated Statements of Operations for the Fiscal
Years Ended January 3, 1998, January 2, 1999 and
January 1, 2000 and Three Months Ended April 3, 1999
and April 1, 2000..................................... F-19
Consolidated Statements of Shareholders' Equity for the
Fiscal Years Ended January 3, 1998, January 2, 1999
and January 1, 2000 and Three Months Ended April 1,
2000.................................................. F-20
Consolidated Statements of Cash Flows for the Fiscal
Years Ended January 3, 1998, January 2, 1999 and
January 1, 2000 and Three Months Ended April 3, 1999
and April 1, 2000..................................... F-21
Notes to Consolidated Financial Statements............. F-22
All schedules are omitted because they are not
applicable, or not required, or because the required
information is included in the Consolidated Financial
Statements or notes thereto.
NASSAU COMMUNICATIONS, INC. (D/B/A TELECRAFTER SERVICES
CORPORATION)
Report of Independent Public Accountants............... F-43
Balance Sheets as of December 31, 1997 and 1998........ F-44
Statements of Operations for the Years Ended December
31, 1997 and 1998 and Six Months Ended June 30, 1998
and 1999.............................................. F-45
Statements of Shareholders' Equity for the Years Ended
December 31, 1997 and 1998............................ F-46
Statements of Cash Flows for the Years Ended December
31, 1997 and 1998 and Six Months Ended June 30, 1998
and 1999.............................................. F-47
Notes to Financial Statements.......................... F-48
COMMUNICATION RESOURCES INCORPORATED AND SUBSIDIARY - JUNE
30, 1998 AND 1999 (UNAUDITED)
Consolidated Statements of Operations for the Six
Months Ended June 30, 1998 and 1999................... F-54
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1999................... F-55
Notes to Consolidated Financial Statements............. F-56
COMMUNICATION RESOURCES INC. L.P. - DECEMBER 31, 1997
Report of Independent Certified Public Accountants..... F-59
Consolidated Balance Sheet as of December 31, 1997..... F-60
Consolidated Statement of Operations for the Period
from February 13, 1997 (Inception) through December
31, 1997.............................................. F-61
Consolidated Statement of Changes in Partners Capital
Accounts for the Period from February 13, 1997
(Inception) through December 31, 1997................. F-62
Consolidated Statement of Cash Flows for the Period
from February 13, 1997 (Inception) through December
31, 1997.............................................. F-63
Notes to Consolidated Financial Statements............. F-64
COMMUNICATION RESOURCES INCORPORATED - DECEMBER 31, 1998
Report of Independent Certified Public Accountants..... F-70
Balance Sheet as of December 31, 1998.................. F-71
</TABLE>

F-1
<PAGE> 88

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Statement of Operations for the Year Ended December 31,
1998.................................................. F-72
Statement of Shareholders' Equity for the Year Ended
December 31, 1998..................................... F-73
Statement of Cash Flows for the Year Ended December 31,
1998.................................................. F-74
Notes to Financial Statements.......................... F-75
D.S. CABLE TV CONTRACTORS, INC.
Report of Independent Public Accountants............... F-84
Balance Sheets as of December 31, 1998 and 1999 and
March 31, 2000........................................ F-85
Statements of Operations for the Years Ended December
31, 1998 and 1999 and Three Months Ended March 31,
1999 and 2000......................................... F-86
Statements of Shareholders' Equity for the Years Ended
December 31, 1998 and 1999 and Three Months Ended
March 31, 2000........................................ F-87
Statements of Cash Flows for the Years Ended December
31, 1998 and 1999 and Three Months Ended March 31,
1999 and 2000......................................... F-88
Notes to Financial Statements.......................... F-89
SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION
Report of Independent Public Accountants............... F-92
Combined Balance Sheets as of December 31, 1998 and
1999 and March 31, 2000............................... F-93
Combined Statements of Operations for the Years Ended
December 31, 1998 and 1999 and Three Months Ended
March 31, 1999 and 2000............................... F-94
Combined Statements of Stockholders' Equity for the
Years Ended December 31, 1998 and 1999................ F-95
Combined Statements of Cash Flows for the Years Ended
December 31, 1998 and 1999 and Three Months Ended
March 31, 1999 and 2000............................... F-96
Notes to Combined Financial Statements................. F-97
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND HOME SATELLITE
EXPRESS, INC.
Reports of Independent Public Accountants.............. F-101
Combined Balance Sheets as of December 31, 1998 and
1999 and March 31, 2000............................... F-103
Combined Statements of Operations for the Years Ended
December 31, 1998 and 1999 and Three Months Ended
March 31, 1999 and 2000............................... F-104
Combined Statements of Shareholders' Equity (Deficit)
for the Years Ended December 31, 1998 and 1999 and
Three Months Ended March 31, 2000..................... F-105
Combined Statements of Cash Flows for the Years Ended
December 31, 1998 and 1999 and Three Months Ended
March 31, 1999 and 2000............................... F-106
Notes to Combined Financial Statements................. F-107
TELECORE, INC.
Reports of Independent Public Accountants.............. F-115
Consolidated Balance Sheets as of December 31, 1998 and
1999 and March 31, 2000............................... F-116
Consolidated Statements of Operations for the Years
Ended December 31, 1997, 1998 and 1999 and Three
Months Ended March 31, 1999 and 2000.................. F-117
Consolidated Statements of Shareholders' Equity
(Deficiency) for the Years Ended December 31, 1997,
1998 and 1999 and Three Months Ended March 31, 2000... F-118
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1997, 1998 and 1999 and Three
Months Ended March 31, 1999 and 2000.................. F-119
Notes to Consolidated Financial Statements............. F-120
</TABLE>

F-2
<PAGE> 89

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION
(UNAUDITED)

The following unaudited pro forma consolidated financial statements as of
April 1, 2000 and for the fiscal year ended January 1, 2000, the three months
ended April 3, 1999 and the three months ended April 1, 2000 are based on the
historical consolidated financial statements of Viasource Communications, Inc.
("Viasource" or the "Company") as adjusted to illustrate the estimated effects
of the following transactions as if each transaction occurred on January 3, 1999
for the statement of operations and on April 1, 2000 for the balance sheet:

- our acquisition of Communication Resources Incorporated ("CRI") on July
23, 1999 and our acquisition of the net assets of Telecrafter Services
Corporation ("Telecrafter") on September 7, 1999 (together "the 1999
Acquisitions");

- the incurrence of all indebtedness arising from the 1999 Acquisitions;

- Our acquisition of the net assets of D.S. Cable TV Contractor, Inc.
("D.S. Cable") on April 21, 2000, our acquisition of the net assets of
Service Cable Electric, Inc. and Service Cable Corporation (collectively
"Service Cable") on May 4, 2000, our acquisition of Excalibur Cable
Communications, Inc. and Home Satellite Express, Inc. (collectively
"Excalibur") on June 1, 2000 and our acquisition of TeleCore, Inc.
("TeleCore") on June 1, 2000 (together "the 2000 Acquisitions"); and

- the incurrence of all indebtedness arising from the 2000 Acquisitions.

The following unaudited pro forma consolidated balance sheet as of April 1,
2000 is based on the historical consolidated financial statements of Viasource,
as adjusted to illustrate the estimated effects of the following transactions as
if each transaction occurred on April 1, 2000:

- the 2000 Acquisitions and the incurrence of all indebtedness arising from
the 2000 Acquisitions;

- the issuance of shares of Preferred stock, in the acquisition of
TeleCore, and the subsequent conversion of those preferred shares into
Common stock upon the Company's initial public offering; and

- the exercise of warrants to purchase shares of Common stock upon the
Company's initial public offering.

The unaudited pro forma consolidated financial statements give effect to
the 1999 Acquisitions and the 2000 Acquisitions under the purchase method of
accounting. These statements are based on the historical financial statements of
Viasource and the 1999 Acquisitions and the 2000 Acquisitions and assumptions
set forth below and in the notes to the unaudited pro forma consolidated
financial statements.

F-3
<PAGE> 90

The pro forma adjustments for the 2000 Acquisitions are based upon
preliminary estimates, currently available information and certain assumptions
that management deems appropriate. The unaudited pro forma consolidated
financial statements presented herein are not necessarily indicative of the
consolidated results that Viasource would have obtained had such events occurred
at the beginning of the period, as assumed, or of the future results of
Viasource. The unaudited pro forma consolidated financial statements should be
read in conjunction with the other historical financial statements and notes
thereto included elsewhere in this prospectus.

F-4
<PAGE> 91

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED JANUARY 1, 2000
(UNAUDITED)

<TABLE>
<CAPTION>
1999 ACQUISITIONS
--------------------------- PRO FORMA
HISTORICAL RESULTS (NOTE 1) 1999 PRO FORMA
----------------------------------------- ACQUISITION AFTER 1999
VIASOURCE CRI TELECRAFTER ADJUSTMENTS ACQUISITIONS
----------- ----------- ------------- ----------- ------------
(FISCAL (JANUARY 1, (JANUARY 1, (NOTE 2)
YEAR ENDED 1999 TO 1999 TO
JANUARY 1, JULY 23, SEPTEMBER 7,
2000) 1999) 1999)
<S> <C> <C> <C> <C> <C>
REVENUES................. $61,395,868 $18,179,606 $11,640,039 $ -- $ 91,215,513
----------- ----------- ----------- ----------- ------------
COST OF REVENUES......... 51,008,541 15,693,955 9,016,489 -- 75,718,985
SELLING, GENERAL AND
ADMINISTRATIVE.......... 7,362,166 1,790,051 713,703 -- 9,865,920
DEPRECIATION AND
AMORTIZATION............ 2,813,689 1,070,761 60,338 1,507,657(a) 5,452,445
SPECIAL COMPENSATION
CHARGES................. 1,163,638 -- -- -- 1,163,638
RECAPITALIZATION COSTS... 1,108,314 -- -- -- 1,108,314
----------- ----------- ----------- ----------- ------------
Total operating
expenses............ 63,456,348 18,554,767 9,790,530 1,507,657 93,309,302
----------- ----------- ----------- ----------- ------------
Income (loss) from
operations.......... (2,060,480) (375,161) 1,849,509 (1,507,657) (2,093,789)
INTEREST INCOME.......... 76,074 -- 71,434 -- 147,508
INTEREST EXPENSE......... 1,419,300 147,396 6,813 1,147,350(b) 2,720,859
----------- ----------- ----------- ----------- ------------
Income (loss) before
taxes............... (3,403,706) (522,557) 1,914,130 (2,655,007) (4,667,140)
INCOME TAX PROVISION
(BENEFIT)............... (554,630) 317,588 35,726 (458,509)(c) (659,825)
----------- ----------- ----------- ----------- ------------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS... $(2,849,076) $ (840,145) $ 1,878,404 $(2,196,498) $ (4,007,315)
=========== =========== =========== =========== ============
NET LOSS PER SHARE (NOTE
7)...................... $ (0.13) $ (0.13)
=========== ============
SHARES USED IN COMPUTING
NET LOSS PER SHARE (NOTE
7)...................... 21,492,717 30,103,516
=========== ============

<CAPTION>
PRO FORMA
PRO FORMA AFTER
2000 ACQUISITIONS HISTORICAL RESULTS (NOTE 1) 2000 1999 AND
------------------------------------------------------ ACQUISITION 2000
D.S. CABLE SERVICE CABLE EXCALIBUR TELECORE ADJUSTMENTS ACQUISITIONS
---------- ------------- ----------- ----------- ------------ -----------------
(YEAR ENDED DECEMBER 31, 1999) (NOTE 2)

<S> <C> <C> <C> <C> <C> <C>
REVENUES................. $3,294,200 $6,264,332 $20,168,220 $ 9,583,558 $ -- $130,525,823
---------- ---------- ----------- ----------- ------------ ------------
COST OF REVENUES......... 1,871,809 4,984,346 17,467,235 8,589,783 -- 108,632,158
SELLING, GENERAL AND
ADMINISTRATIVE.......... 639,446 308,291 3,738,983 3,343,489 -- 17,896,129
DEPRECIATION AND
AMORTIZATION............ 100,272 50,137 437,713 53,437 16,652,448(d) 22,746,452
SPECIAL COMPENSATION
CHARGES................. -- -- -- 65,420 -- 1,229,058
RECAPITALIZATION COSTS... -- -- -- -- -- 1,108,314
---------- ---------- ----------- ----------- ------------ ------------
Total operating
expenses............ 2,611,527 5,342,774 21,643,931 12,052,129 16,652,448 151,612,111
---------- ---------- ----------- ----------- ------------ ------------
Income (loss) from
operations.......... 682,673 921,558 (1,475,711) (2,468,571) (16,652,448) (21,086,288)
INTEREST INCOME.......... 12,002 1,853 56,348 -- -- 217,711
INTEREST EXPENSE......... 2,178 19,903 135,330 141,041 2,673,924(e) 5,693,235
---------- ---------- ----------- ----------- ------------ ------------
Income (loss) before
taxes............... 692,497 903,508 (1,554,693) (2,609,612) (19,326,372) (26,561,812)
INCOME TAX PROVISION
(BENEFIT)............... -- -- (574,873) 2,400 --(f) (1,232,298)
---------- ---------- ----------- ----------- ------------ ------------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS... $ 692,497 $ 903,508 $ (979,820) $(2,612,012) $(19,326,372) $(25,329,514)
========== ========== =========== =========== ============ ============
NET LOSS PER SHARE (NOTE
7)...................... $ (0.63)
============
SHARES USED IN COMPUTING
NET LOSS PER SHARE (NOTE
7)...................... 40,505,625
============
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-5
<PAGE> 92

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 3, 1999
(UNAUDITED)

<TABLE>
<CAPTION>
1999 ACQUISITIONS
------------------------- PRO FORMA
HISTORICAL RESULTS (NOTE 1) 1999 PRO FORMA
--------------------------------------- ACQUISITION AFTER 1999
VIASOURCE CRI TELECRAFTER ADJUSTMENTS ACQUISITIONS
----------- ----------- ----------- ----------- ------------
(THREE (THREE (THREE (NOTE 3)
MONTHS MONTHS MONTHS
ENDED ENDED ENDED
APRIL 3, MARCH 31, MARCH 31,
1999) 1999) 1999)
<S> <C> <C> <C> <C> <C>
REVENUES.................. $8,608,688 $6,802,023 $3,929,113 $ -- $19,339,824
----------- ----------- ----------- ----------- -----------
COST OF REVENUES.......... 7,221,638 6,059,297 3,073,871 -- 16,354,806
SELLING, GENERAL AND
ADMINISTRATIVE........... 696,122 103,044 305,177 -- 1,104,343
DEPRECIATION AND
AMORTIZATION............. 331,949 164,327 21,871 541,935(a) 1,060,082
SPECIAL COMPENSATION
CHARGES.................. -- -- -- -- --
RECAPITALIZATION COSTS.... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total operating
expenses........... 8,249,709 6,326,668 3,400,919 541,935 18,519,231
----------- ----------- ----------- ----------- -----------
Income (loss) from
operations......... 358,979 475,355 528,194 (541,935) 820,593
INTEREST INCOME........... -- -- 22,483 -- 22,483
INTEREST EXPENSE.......... 36,842 41,911 2,986 422,696(b) 504,435
----------- ----------- ----------- ----------- -----------
Income (loss) before
taxes.............. 322,137 433,444 547,691 (964,631) 338,641
INCOME TAX PROVISION
(BENEFIT)................ 131,000 168,662 5,660 (51,705)(c) 253,617
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS.... $ 191,137 $ 264,782 $ 542,031 $ (912,926) $ 85,024
=========== =========== =========== =========== ===========
NET INCOME (LOSS) PER
SHARE (NOTE 7)........... $ (0.01) $ --
=========== ===========
SHARES USED IN COMPUTING
NET INCOME (LOSS) PER
SHARE (NOTE 7)........... 20,231,794 35,114,439
=========== ===========

<S> <C> <C> <C> <C> <C> <C>
REVENUES.................. $ 801,061 $1,373,480 $ 5,314,503 $ 1,218,037 $ -- $ 28,046,905
---------- ---------- ----------- ----------- ------------ ------------
COST OF REVENUES.......... 399,821 1,107,160 4,625,958 987,003 -- 23,474,748
SELLING, GENERAL AND
ADMINISTRATIVE........... 124,178 114,166 204,292 100,122 -- 1,647,101
DEPRECIATION AND
AMORTIZATION............. 21,969 7,500 43,237 13,359 4,163,112(d) 5,309,259
SPECIAL COMPENSATION
CHARGES.................. -- -- -- -- -- --
RECAPITALIZATION COSTS.... -- -- -- -- -- --
---------- ---------- ----------- ----------- ------------ ------------
Total operating
expenses........... 545,968 1,228,826 4,873,487 1,100,484 4,163,112 30,431,108
---------- ---------- ----------- ----------- ------------ ------------
Income (loss) from
operations......... 255,093 144,654 441,016 117,553 (4,163,112) (2,384,203)
INTEREST INCOME........... 175 39 8,682 -- -- 31,379
INTEREST EXPENSE.......... -- 5,609 47,333 29,138 660,125(e) 1,246,640
---------- ---------- ----------- ----------- ------------ ------------
Income (loss) before
taxes.............. 255,268 139,084 402,365 88,415 (4,823,237) (3,599,464)
INCOME TAX PROVISION
(BENEFIT)................ -- -- 156,541 600 (77,822)(f) 332,936
---------- ---------- ----------- ----------- ------------ ------------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS.... $ 255,268 $ 139,084 $ 245,824 $ 87,815 $(4,745,415) $ (3,932,400)
========== ========== =========== =========== ============ ============
NET INCOME (LOSS) PER
SHARE (NOTE 7)........... $ (0.09)
============
SHARES USED IN COMPUTING
NET INCOME (LOSS) PER
SHARE (NOTE 7)........... 45,516,548
============
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-6
<PAGE> 93

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED APRIL 1, 2000
(UNAUDITED)

<TABLE>
<CAPTION>
2000 ACQUISITIONS HISTORICAL RESULTS (NOTE 1)
------------------------------------------------------
VIASOURCE D.S. CABLE SERVICE CABLE EXCALIBUR TELECORE
-------------- ---------- ------------- ----------- -----------
(THREE MONTHS (THREE MONTHS ENDED MARCH 31, 2000)
ENDED APRIL 1,
2000)
<S> <C> <C> <C> <C> <C>
REVENUES.............................................. $29,097,733 $701,838 $1,507,363 $ 9,266,038 $ 7,113,850
----------- -------- ---------- ----------- -----------
COST OF REVENUES...................................... 24,988,978 442,492 1,284,397 8,492,320 7,327,101
SELLING, GENERAL AND ADMINISTRATIVE................... 3,153,539 160,802 145,205 1,718,602 3,892,180
DEPRECIATION AND AMORTIZATION......................... 1,258,690 30,605 6,001 124,137 130,074
SPECIAL COMPENSATION CHARGES.......................... 2,625,998 -- -- -- 27,420
RECAPITALIZATION COSTS................................ -- -- -- -- --
----------- -------- ---------- ----------- -----------
Total operating expenses...................... 32,027,195 633,899 1,435,603 10,335,059 11,376,775
----------- -------- ---------- ----------- -----------
Income (loss) from operations................. (2,929,462) 67,939 71,760 (1,069,021) (4,262,925)
INTEREST INCOME....................................... -- 3,835 22 24,436 --
INTEREST EXPENSE...................................... 679,114 244 4,324 22,343 268,498
----------- -------- ---------- ----------- -----------
Income (loss) before taxes.................... (3,608,576) 71,530 67,458 (1,066,928) (4,531,423)
INCOME TAX PROVISION (BENEFIT)........................ (154,000) -- -- (377,618) --
----------- -------- ---------- ----------- -----------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS.......... $(3,454,576) $ 71,530 $ 67,458 $ (689,310) $(4,531,423)
=========== ======== ========== =========== ===========
NET LOSS PER SHARE (NOTE 7)........................... $ (0.13)
===========
SHARES USED IN COMPUTING NET LOSS PER SHARE (NOTE
7).................................................. 26,581,310
===========

<CAPTION>
PRO FORMA 2000
ACQUISITION PRO FORMA AFTER
ADJUSTMENTS 2000 ACQUISITIONS
-------------- -----------------
(NOTE 4)

<S> <C> <C>
REVENUES.............................................. $ -- $ 47,686,822
----------- ------------
COST OF REVENUES...................................... -- 42,535,288
SELLING, GENERAL AND ADMINISTRATIVE................... -- 9,070,328
DEPRECIATION AND AMORTIZATION......................... 4,163,112(a) 5,712,619
SPECIAL COMPENSATION CHARGES.......................... -- 2,653,408
RECAPITALIZATION COSTS................................ -- --
----------- ------------
Total operating expenses...................... 4,163,112 59,971,643
----------- ------------
Income (loss) from operations................. (4,163,112) (12,284,821)
INTEREST INCOME....................................... -- 28,293
INTEREST EXPENSE...................................... 685,295(b) 1,659,818
----------- ------------
Income (loss) before taxes.................... (4,848,407) (13,916,346)
INCOME TAX PROVISION (BENEFIT)........................ 531,618(c) --
----------- ------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS.......... $(5,380,025) $(13,916,346)
=========== ============
NET LOSS PER SHARE (NOTE 7)........................... $ (0.38)
============
SHARES USED IN COMPUTING NET LOSS PER SHARE (NOTE
7).................................................. 36,983,419
============
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-7
<PAGE> 94

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

PRO FORMA CONSOLIDATED BALANCE SHEET
APRIL 1, 2000
(UNAUDITED)

<TABLE>
<CAPTION>
PRO FORMA
2000 ACQUISITIONS (NOTE 1) 2000
------------------------------------------------------ ACQUISITION
VIASOURCE D.S. CABLE SERVICE CABLE EXCALIBUR TELECORE ADJUSTMENTS
----------- ---------- ------------- ----------- ----------- ------------
(AS OF (AS OF MARCH 31, 2000) (NOTE 5)
APRIL 1,
2000)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......... $ 3,743,710 $ 347,257 $ 58,457 $ 2,071,317 $ 710,691 $ --
Restricted cash................... 1,570,000 -- -- -- 242,340 --
Accounts receivable, net.......... 19,189,776 393,885 1,503,846 4,926,694 4,971,779 --
Supply inventory.................. 1,841,097 -- -- 1,483,780 -- --
Prepaid expenses and other........ 2,520,290 125,447 149,358 2,015,585 785,274 --
----------- ---------- ---------- ----------- ----------- ------------
Total current assets........ 28,864,873 866,589 1,711,661 10,497,376 6,710,084 --
PROPERTY AND EQUIPMENT, net........ 8,308,910 461,883 124,095 1,678,775 1,983,220 --
GOODWILL AND OTHER INTANGIBLES,
net............................... 32,122,893 -- -- -- -- 173,381,653
OTHER ASSETS....................... 2,142,147 48,003 1,560 87,529 466,310 --
----------- ---------- ---------- ----------- ----------- ------------
$71,438,823 $1,376,475 $1,837,316 $12,263,680 $ 9,159,614 $173,381,653
=========== ========== ========== =========== =========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term
debt............................ $ 978,071 $ 11,563 $ 126,090 $ 565,444 $ 4,604,899 $ --
Accounts payable.................. 4,579,873 25,749 575,106 5,145,379 3,209,187 --
Accrued expenses.................. 8,975,245 360,915 31,003 2,801,932 2,033,960 1,044,000
Deferred revenue.................. 2,353,009 -- -- 4,163,421 -- (3,530,442)
----------- ---------- ---------- ----------- ----------- ------------
Total current liabilities... 16,886,198 398,227 732,199 12,676,176 9,848,046 (2,486,442)
----------- ---------- ---------- ----------- ----------- ------------
LONG-TERM DEBT..................... 24,143,822 20,214 28,150 271,739 7,361 30,090,000
----------- ---------- ---------- ----------- ----------- ------------
DEFERRED REVENUE................... 228,315 -- -- 469,558 -- (469,558)
----------- ---------- ---------- ----------- ----------- ------------
DEFERRED TAX LIABILITY............. 219,647 -- -- -- -- --
----------- ---------- ---------- ----------- ----------- ------------
REDEEMABLE COMMON STOCK AND
WARRANTS.......................... 1,479,896 -- -- -- -- --
----------- ---------- ---------- ----------- ----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock................... -- -- -- -- -- 43,344,675
Common stock...................... 35,033,057 500 12,000 95,000 7,475,562 95,505,331
Common stock purchase warrants.... 250,000 -- -- -- -- --
Deferred compensation............. (1,373,296) -- -- -- (383,910) 383,910
Accumulated other comprehensive
income.......................... (11,337) -- -- -- -- --
Retained earnings (deficit)....... (1,417,479) 957,534 1,064,967 (143,773) (7,787,445) 5,908,717
Treasury stock.................... (4,000,000) -- -- (1,105,020) -- 1,105,020
----------- ---------- ---------- ----------- ----------- ------------
Total shareholders' equity
(deficit).................. 28,480,945 958,034 1,076,967 (1,153,793) (695,793) 146,247,653
----------- ---------- ---------- ----------- ----------- ------------
$71,438,823 $1,376,475 $1,837,316 $12,263,680 $ 9,159,614 $173,381,653
=========== ========== ========== =========== =========== ============

OTHER
ADJUSTMENTS PRO FORMA
----------- ------------
(NOTE 6)

<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......... $ 17,299(a) $ 6,948,731
Restricted cash................... -- 1,812,340
Accounts receivable, net.......... -- 30,985,980
Supply inventory.................. -- 3,324,877
Prepaid expenses and other........ -- 5,595,954
----------- ------------
Total current assets........ 17,299 48,667,882
PROPERTY AND EQUIPMENT, net........ -- 12,556,883
GOODWILL AND OTHER INTANGIBLES,
net............................... -- 205,504,546
OTHER ASSETS....................... -- 2,745,549
----------- ------------
$ 17,299 $269,474,860
=========== ============
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term
debt............................ $ -- $ 6,286,067
Accounts payable.................. -- 13,535,294
Accrued expenses.................. -- 15,247,055
Deferred revenue.................. -- 2,985,988
----------- ------------
Total current liabilities... -- 38,054,404
----------- ------------
LONG-TERM DEBT..................... -- 54,561,286
----------- ------------
DEFERRED REVENUE................... -- 228,315
----------- ------------
DEFERRED TAX LIABILITY............. -- 219,647
----------- ------------
REDEEMABLE COMMON STOCK AND
WARRANTS.......................... (1,479,896)(a) --
----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock................... (43,344,675)(a)(b) --
Common stock...................... 45,091,870(a,b) 183,213,320
Common stock purchase warrants.... (250,000)(a) --
Deferred compensation............. -- (1,373,296)
Accumulated other comprehensive
income.......................... -- (11,337)
Retained earnings (deficit)....... -- 1,417,479
Treasury stock.................... -- (4,000,000)
----------- ------------
Total shareholders' equity
(deficit).................. 1,497,195 176,411,208
----------- ------------
$ 17,299 $269,474,860
=========== ============
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

F-8
<PAGE> 95

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. HISTORICAL FINANCIAL STATEMENTS

The historical financial information represents the financial position and
results of operations for Viasource, the 1999 Acquisitions and the 2000
Acquisitions and was derived from the respective financial statements where
indicated. The Viasource financial information was derived from audited and
unaudited financial statements included herein. The 1999 Acquisitions' financial
information through the respective 1999 acquisition date was derived from
unaudited pro forma financial statements. The 2000 Acquisitions' financial
information was derived from their audited and unaudited financial statements
included herein.

The Company has included audited and unaudited historical financial
statements for the 1999 Acquisitions and 2000 Acquisitions in accordance with
Securities and Exchange Commission Regulation S-X Rule No. 3-05. The unaudited
pro forma consolidated financial statements should be read in conjunction with
the other historical financial statements and notes thereto included elsewhere
in this Registration Statement.

2. FISCAL 1999 STATEMENT OF OPERATIONS -- PRO FORMA ADJUSTMENTS

1999 ACQUISITIONS

(a) Represents increase in historical amortization expense as a result of
an allocation of the 1999 Acquisitions purchase price (see Note 3 to Notes to
Consolidated Financial Statements of Viasource).

<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION PRO FORMA
AMORTIZABLE ASSETS FAIR VALUES PERIOD EXPENSE
------------------ ----------- ------------ ----------
<S> <C> <C> <C>
Covenant not-to-compete.................................. $ 2,240,000 3 to 5 years $ 529,166
Trained workforce........................................ 1,040,000 7.5 years 138,667
Tradename................................................ 2,600,000 20 years 130,000
Customer relationships................................... 22,600,000 20 years 1,130,000
Goodwill................................................. 4,798,031 20 years 239,902
----------
Pro forma amortization expense......................... 2,167,735
Historical -- 1999 Amortization.......................... (660,078)
----------
Pro forma increase in amortization from the 1999
Acquisitions........................................ $1,507,657
==========
</TABLE>

F-9
<PAGE> 96
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

(b) Represents increase to interest expense due to incremental indebtedness
arising from the 1999 Acquisitions.

<TABLE>
<CAPTION>
PRO FORMA
PRINCIPAL INTEREST RATE EXPENSE
----------- ------------- ----------
<S> <C> <C> <C>
1999 Acquisitions bank debt (including $1.7 million of
deferred financing costs)............................... $10,500,000 * $1,428,775
1999 Acquisitions seller debt............................. 3,000,000 9.0% 270,000
----------
Pro forma interest expense.............................. 1,698,775
Historical interest expense............................... (551,425)
----------
Pro forma increase to interest expense from the 1999
Acquisitions......................................... $1,147,350
==========
</TABLE>

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

* Interest rate of 10.28% plus amortization of deferred financing costs over the
effective interest rate method over five years. (See Note 8 to Notes to
Consolidated Financial Statements of Viasource).

(c) Represents pro forma income tax provision adjustment for the 1999
Acquisitions. Effective tax rate excludes effect of $1,218,165 of non-deductible
goodwill amortization and approximately $1,510,000 of other non-deductible
expenses. No state tax benefit was recorded given the uncertainty of its
utilization.

2000 ACQUISITIONS

(d) Represents increase in historical amortization expense as a result of
preliminary allocation of the 2000 Acquisitions purchase price (see Note 3 to
Notes to Consolidated Financial Statements of Viasource).

<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION PRO FORMA
AMORTIZABLE ASSETS FAIR VALUES PERIOD EXPENSE
------------------ ------------ -------------- -----------
<S> <C> <C> <C>
Covenant not-to-compete................................ $ 18,330,000 6 years $ 3,055,000
Trained workforce...................................... 5,500,000 7.5 years 733,333
Tradename.............................................. 6,520,000 10 to 20 years 526,000
Customer relationships................................. 90,390,000 10 to 20 years 7,519,500
Goodwill............................................... 52,641,653 10 to 20 years 4,818,615
-----------
Pro forma amortization expense....................... 16,652,448
Historical -- 2000 Amortization........................ --
-----------
Pro forma increase in amortization from the 2000 Acquisitions... $16,652,448
===========
</TABLE>

F-10
<PAGE> 97
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

(e) Represents increase to interest expense due to incremental indebtedness
arising from the 2000 Acquisitions.

<TABLE>
<CAPTION>
PRO FORMA
PRINCIPAL INTEREST RATE EXPENSE
----------- ------------- ----------
<S> <C> <C> <C>
2000 Acquisitions bank debt............................... $ 6,480,000 8.5% $ 549,024
2000 Acquisitions seller debt............................. 23,610,000 9.0% 2,124,900
----------
Pro forma interest expense.............................. 2,673,924
Historical interest expense............................... --
----------
Pro forma increase to interest expense from the 2000
Acquisitions......................................... $2,673,924
==========
</TABLE>

(f) Represents pro forma income tax provision adjustment for the 2000
Acquisitions. The pro forma tax benefit excludes the effect of $17,033,186 of
non-deductible goodwill amortization and approximately $1,910,000 of other
non-deductible expenses. The pro forma tax benefit was limited to the Company's
available Federal taxable income carryback amount. No additional pro forma tax
benefit was recorded given the uncertainty of its utilization.

3. THREE MONTHS ENDED APRIL 3, 1999 STATEMENT OF OPERATIONS -- PRO FORMA
ADJUSTMENTS

1999 ACQUISITIONS

<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION PRO FORMA
AMORTIZABLE ASSETS FAIR VALUES PERIOD EXPENSE
------------------ ----------- ------------ ---------
<S> <C> <C> <C>
Covenant not-to-compete................................... $ 2,240,000 3 to 5 years $132,292
Trained workforce......................................... 1,040,000 7.5 years 34,667
Tradename................................................. 2,600,000 20 years 32,500
Customer relationships.................................... 22,600,000 20 years 282,500
Goodwill.................................................. 4,798,031 20 years 59,976
--------
Pro forma amortization expense.......................... 541,935
Historical -- 1999 Amortization........................... --
--------
Pro forma increase in amortization from the 1999
Acquisitions......................................... $541,935
========
</TABLE>

F-11
<PAGE> 98
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

(b) Represents increase to interest expense due to incremental indebtedness
arising from the 1999 Acquisitions.

<TABLE>
<CAPTION>
PRO FORMA
PRINCIPAL INTEREST RATE EXPENSE
----------- ------------- ---------
<S> <C> <C> <C>
1999 Acquisitions bank debt (including $1.7 million of
deferred financing costs)................................ $10,500,000 * $355,196
1999 Acquisitions seller debt.............................. 3,000,000 9.0% 67,500
--------
Pro forma interest expense............................... 422,696
Historical interest expense................................ --
--------
Pro forma increase to interest expense from the 1999
Acquisitions.......................................... $422,696
========
</TABLE>

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

* Interest rate of 10.21% plus amortization of deferred financing costs over the
effective interest rate method over five years. (See Note 8 to Notes to
Consolidated Financial Statements of Viasource).

(c) Represents pro forma income tax provision adjustment for the 1999
Acquisitions, based upon an effective tax rate of 38.6%. Effective tax rate
excludes $304,541 of non-deductible goodwill amortization and approximately
$103,000 of other non-deductible expenses.

2000 ACQUISITIONS

<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION PRO FORMA
AMORTIZABLE ASSETS FAIR VALUES PERIOD EXPENSE
------------------ ------------ -------------- ----------
<S> <C> <C> <C>
Covenant not-to-compete.................................. $ 18,330,000 6 years $ 763,750
Trained workforce........................................ 5,500,000 7.5 years 183,333
Tradename................................................ 6,520,000 10 to 20 years 131,500
Customer relationships................................... 90,390,000 10 to 20 years 1,879,875
Goodwill................................................. 52,641,653 10 to 20 years 1,204,654
----------
Pro forma amortization expense......................... 4,163,112
Historical -- 2000 Amortization.......................... --
----------
Pro forma increase in amortization from the 2000
Acquisitions........................................ $4,163,112
==========
</TABLE>

(e) Represents increase to interest expense due to incremental indebtedness
arising from the 2000 Acquisitions.

<TABLE>
<CAPTION>
PRO FORMA
PRINCIPAL INTEREST RATE EXPENSE
----------- ------------- ---------
<S> <C> <C> <C>
2000 Acquisitions bank debt................................ $ 6,480,000 8.0% $128,900
2000 Acquisitions seller debt.............................. 23,610,000 9.0% 531,225
--------
Pro forma interest expense............................... 660,125
Historical interest expense................................ --
--------
Pro forma increase to interest expense from the 2000
Acquisitions.......................................... $660,125
========
</TABLE>

F-12
<PAGE> 99
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

(f) Represents pro forma income tax provision adjustment for the 2000
Acquisitions. The pro forma tax provision rate excludes the effect of $4,258,296
of non-deductible goodwill amortization and approximately $203,000 of other
non-deductible expenses.

4. THREE MONTHS ENDED APRIL 1, 2000 STATEMENT OF OPERATIONS -- PRO FORMA
ADJUSTMENTS

2000 ACQUISITIONS

(a) Represents increase in historical amortization expense as a result of
preliminary allocation of the 2000 Acquisitions purchase price (see Note 3 to
Notes to Consolidated Financial Statements of Viasource).

<TABLE>
<CAPTION>
ESTIMATED AMORTIZATION PRO FORMA
AMORTIZABLE ASSETS FAIR VALUES PERIOD EXPENSE
------------------ ------------ -------------- ----------
<S> <C> <C> <C>
Covenant not-to-compete............................... $ 18,330,000 6 years $ 763,750
Trained workforce..................................... 5,500,000 7.5 years 183,333
Tradename............................................. 6,520,000 10 to 20 years 131,500
Customer relationships................................ 90,390,000 10 to 20 years 1,879,875
Goodwill.............................................. 52,641,653 10 to 20 years 1,204,654
----------
Pro forma amortization expense...................... 4,163,112
Historical -- 2000 Amortization....................... --
----------
Pro forma increase in amortization from the 2000 $4,163,112
Acquisitions....................................... ==========
</TABLE>

(b) Represents increase to interest expense due to incremental indebtedness
arising from the Pending 2000 Acquisitions.

<TABLE>
<CAPTION>
PRO FORMA
PRINCIPAL INTEREST RATE EXPENSE
----------- ------------- ---------
<S> <C> <C> <C>
2000 Acquisitions bank debt................................ $ 6,480,000 9.5% $154,070
2000 Acquisitions seller debt.............................. 23,610,000 9.0% 531,225
--------
Pro forma interest expense............................... 685,295
Historical interest expense................................ --
--------
Pro forma increase to interest expense from the 2000 $685,295
Acquisitions............................................ ========
</TABLE>

(c) Represents pro forma income tax provision adjustment for the 2000
Acquisitions. No pro forma tax benefit was recorded due to the uncertainty of
future Company operating performance.

F-13
<PAGE> 100
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

5. 2000 ACQUISITIONS -- BALANCE SHEET PRO FORMA ADJUSTMENTS

The 2000 Acquisitions will be accounted for using the purchase method of
accounting. The following table sets forth the consideration to be paid in (i)
cash, (ii) seller notes, (iii) shares of Common and preferred stock and (iv)
Common stock options to the shareholders of each of the 2000 Acquisitions.

<TABLE>
<CAPTION>
ESTIMATED
SHARES OF FAIR VALUE TOTAL
COMMON OF COMMON COMMON ESTIMATED
SELLER AND PREFERRED AND PREFERRED STOCK TRANSACTION PURCHASE
2000 ACQUISITIONS CASH NOTES STOCK SHARES OPTIONS COSTS PRICE
----------------- ---------- ----------- ------------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
D.S. Cable.................. $1,500,000 $ 750,000 387,735 $ 5,428,096 $ -- $ 155,000 $ 7,833,096
Service Cable............... 980,000 1,960,000 329,412 4,611,603 436,523 159,000 8,147,126
Excalibur................... 4,000,000 4,000,000 1,882,353 26,352,001 -- 300,000 34,652,001
TeleCore.................... -- 16,900,000 6,785,024 94,986,944 14,617,917 430,000 126,934,861
---------- ----------- --------- ------------ ----------- ---------- ------------
$6,480,000 $23,610,000 9,384,524 $131,378,644 $15,054,440 $1,044,000 $177,567,084
========== =========== ========= ============ =========== ========== ============
</TABLE>

The estimated fair value of shares of Common and preferred stock and the
total estimated purchase price of $177,567,068 for the 2000 Acquisitions is
based upon preliminary estimates, currently available information and certain
adjustments that management deems appropriate. A preliminary allocation of the
purchase price resulted in $173,318,653 of excess purchase price over the
estimated fair value of the net tangible assets acquired of $4,185,415 (net book
value approximates estimated fair value of tangible assets). The Company's
preliminary analysis resulted in excess purchase price being assigned to
intangible assets (consisting of $18,330,000 for agreements not-to-compete,
$6,520,000 for tradenames, $5,500,000 for trained workforce, $90,390,000 for
customer relationships and $52,641,653 for goodwill (see Note 2 -- Pro forma
adjustment (d)).

F-14
<PAGE> 101
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

The following summarizes the unaudited pro forma 2000 Acquisitions
adjustments to the April 1, 2000 balance sheet:

<TABLE>
<CAPTION>
2000 ACQUISITION ADJUSTMENTS
------------------------------------------------------
(i) (ii) (iii) TOTAL
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents.................. $ -- $ -- $ -- $ --
Property and equipment, net................ -- -- -- --
Goodwill and other intangibles............. -- -- 173,381,653 173,381,653
Other...................................... -- -- -- --
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt.......... -- -- -- --
Accrued expense............................ -- -- 1,044,000 1,044,000
Deferred revenue........................... -- -- (4,000,000) (4,000,000)
Debt, net of current portion............... 6,480,000 23,610,000 -- 30,090,000
Preferred stock............................ -- -- 43,344,675 43,344,675
Common stock............................... -- -- 95,505,331 95,505,331
Accumulated other comprehensive income..... -- -- 383,910 383,910
Retained earnings.......................... -- -- 5,908,717 5,908,717
Treasury stock............................. -- -- 1,105,020 1,105,020
---------- ----------- ------------ ------------
$6,480,000 $23,610,000 $ 30,090,000 $ --
========== =========== ============ ============
</TABLE>

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

(i) Reflects the liability for the cash portion of the consideration to be
paid for the 2000 Acquisitions.
(ii) Reflects the seller notes to be issued as a portion of the consideration
to be paid for the 2000 Acquisitions.

(iii) Reflects the 2000 Acquisitions and the allocation of purchase price
using the purchase method of accounting. The entries to shareholders'
equity reflect the elimination of the 2000 Acquisitions equity balances
(common stock, additional paid in capital and retained earnings) and
the issuance of common stock in connection with the 2000 Acquisitions.
The entry to deferred revenue reflects the adjustment to record to fair
value the Excalibur deferred revenue liability balance. Such
adjustments are based on preliminary estimates, currently available
information and certain assumptions management deems appropriate.

6. OTHER BALANCE SHEET PRO FORMA ADJUSTMENTS

(a) Represents the exercise of warrants to purchase 1,017,586 shares of
Common stock at $0.02 per share upon consummation of the Company's initial
public offering.

(b) Reflects conversion of 3,096,159 shares of Preferred stock issued in
the TeleCore acquisition into 3,096,159 shares of Common stock upon the
consummation of the Company's initial public offering.

F-15
<PAGE> 102
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

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

7. PRO FORMA NET INCOME (LOSS) PER SHARE

The shares used in computing pro forma net income (loss) per share include
the following:

<TABLE>
<CAPTION>
FISCAL YEAR THREE MONTHS ENDED
ENDED -----------------------
JANUARY 1, APRIL 3, APRIL 1,
2000 1999 2000
----------- ---------- ----------
<S> <C> <C> <C>
Viasource historical weighted average shares outstanding... 21,492,717 20,231,794 26,581,310
Pro forma adjustment for shares issued to owners of 1999
Acquisitions............................................. 8,610,799 14,882,646 --
---------- ---------- ----------
Pro forma after 1999 Acquisitions.......................... 30,103,516 35,114,439 26,581,310
Pro forma adjustment for shares issued to owners of 2000
Acquisitions............................................. 9,384,523 9,384,523 9,384,523
Pro forma adjustment for shares issued due to exercise of
outstanding warrants..................................... 1,017,586 1,017,586 1,017,586
---------- ---------- ----------
Pro forma.................................................. 40,505,625 45,516,548 36,983,419
========== ========== ==========
</TABLE>

F-16
<PAGE> 103

After the .588-for-one reverse stock split of each outstanding share of
Common stock, as discussed in Note 1 of Notes to Consolidated Financial
Statements is effected, we expect to be in a position to render the following
audit report.

/s/ ARTHUR ANDERSEN LLP

Philadelphia, Pa.

June 1, 2000

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Viasource Communications, Inc.:

We have audited the accompanying consolidated balance sheets of Viasource
Communications, Inc. (a New Jersey corporation) and subsidiaries as of January
2, 1999 and January 1, 2000, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three fiscal
years in the period ended January 1, 2000. 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 auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Viasource
Communications, Inc. and subsidiaries as of January 2, 1999 and January 1, 2000,
and the results of their operations and their cash flows for each of the three
fiscal years in the period ended January 1, 2000 in conformity with accounting
principles generally accepted in the United States.

F-17
<PAGE> 104

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1, APRIL 1,
1999 2000 2000
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 877,029 $ 6,257,290 $ 3,743,710
Restricted cash....................................... -- 550,000 1,570,000
Accounts receivable, net.............................. 4,340,788 15,097,378 19,189,776
Supply inventory...................................... 461,937 1,064,554 1,841,097
Prepaid expenses and other............................ 384,376 1,875,541 2,520,290
----------- ----------- -----------
Total current assets.......................... 6,064,130 24,844,763 28,864,873
PROPERTY AND EQUIPMENT, net............................. 3,590,022 7,660,278 8,308,910
GOODWILL AND OTHER INTANGIBLES, net..................... -- 32,617,953 32,122,893
OTHER ASSETS............................................ 129,387 2,058,894 2,142,147
----------- ----------- -----------
$ 9,783,539 $67,181,888 $71,438,823
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt..................... $ 980,451 $ 1,249,764 $ 978,071
Accounts payable...................................... 671,192 2,658,910 4,579,873
Accrued expenses...................................... 2,486,502 8,238,252 8,975,245
Deferred revenue...................................... -- 748,468 2,353,009
----------- ----------- -----------
Total current liabilities..................... 4,138,145 12,895,394 16,886,198
----------- ----------- -----------
LONG-TERM DEBT.......................................... 660,592 20,927,108 24,143,822
----------- ----------- -----------
DEFERRED REVENUE........................................ -- 705,139 228,315
----------- ----------- -----------
DEFERRED TAX LIABILITY.................................. 166,753 178,344 219,647
----------- ----------- -----------
REDEEMABLE COMMON STOCK AND WARRANTS (Redemption value
of $5,826,842 and $1,479,896 at January 1, 2000 and
April 1, 2000)........................................ -- 5,826,842 1,479,896
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY:
Common stock, no par value, 115,000,000 shares
authorized, 21,130,282, 29,617,924 and 29,632,454
shares issued and 20,233,081, 27,264,983 and
26,588,480 outstanding............................. 2,318,100 31,479,212 35,033,057
Common stock purchase warrants........................ -- 250,000 250,000
Deferred compensation................................. -- (3,278,153) (1,373,296)
Unrealized gain (loss) on marketable securities....... (75,181) 160,905 (11,337)
Retained earnings (accumulated deficit)............... 4,978,911 2,037,097 (1,417,479)
Treasury stock, 897,201, 2,352,941 and 3,043,974
shares at cost..................................... (2,403,781) (4,000,000) (4,000,000)
----------- ----------- -----------
Total shareholders' equity.................... 4,818,049 26,649,061 28,480,945
----------- ----------- -----------
$ 9,783,539 $67,181,888 $71,438,823
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-18
<PAGE> 105

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
--------------------------------------- ------------------------
JANUARY 3, JANUARY 2, JANUARY 1, APRIL 3, APRIL 1,
1998 1999 2000 1999 2000
----------- ----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES......................... $25,706,855 $33,815,638 $61,395,868 $8,608,688 $29,097,733
OPERATING EXPENSES:
Cost of revenues............... 20,970,541 26,865,856 51,008,541 7,221,638 24,988,978
Selling, general and
administrative.............. 2,442,947 3,229,503 7,362,166 696,122 3,153,539
Depreciation and
amortization................ 780,023 980,108 2,813,689 331,949 1,258,690
Special compensation
charges*.................... -- -- 1,163,638 -- 2,625,988
Recapitalization costs......... -- -- 1,108,314 -- --
----------- ----------- ----------- ---------- -----------
Total operating
expenses............. 24,193,511 31,075,467 63,456,348 8,249,709 32,027,195
----------- ----------- ----------- ---------- -----------
Income (loss) from
operations........... 1,513,344 2,740,171 (2,060,480) 358,979 (2,929,462)
INTEREST INCOME.................. -- -- 76,074 -- --
INTEREST EXPENSE................. 177,260 122,176 1,419,300 36,842 679,114
----------- ----------- ----------- ---------- -----------
Income (loss) before
income taxes......... 1,336,084 2,617,995 (3,403,706) 322,137 (3,608,576)
INCOME TAX PROVISION (BENEFIT)... 747,256 1,202,500 (554,630) 131,000 (154,000)
----------- ----------- ----------- ---------- -----------
NET INCOME (LOSS)................ $ 588,828 $ 1,415,495 $(2,849,076) $ 191,137 $(3,454,576)
=========== =========== =========== ========== ===========
Basic and diluted net income
(loss) per share (Note 2)...... $ 0.03 $ 0.07 $ (0.13) $ 0.01 $ (0.13)
=========== =========== =========== ========== ===========
Pro forma basic and diluted net
loss per share (unaudited)
(Note 2)....................... $ (0.63) $ (0.09) $ (0.38)
=========== ========== ===========
</TABLE>

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

* Special compensation charges consist of $256,000 and $907,638, and $52,520 and
$2,573,468 of cost of revenues and selling, general and administrative
expenses in fiscal year ended January 1, 2000 and the three months ended April
1, 2000, respectively.

The accompanying notes are an integral part of these statements.

F-19
<PAGE> 106

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ACCUMULATED RETAINED
COMMON STOCK STOCK OTHER EARNINGS
------------------------- PURCHASE DEFERRED COMPREHENSIVE (ACCUMULATED
SHARES AMOUNT WARRANTS COMPENSATION INCOME DEFICIT)
----------- ----------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 4, 1997........... 21,130,282 $ 2,318,100 $ -- $ -- $ (10,775) $ 2,974,588
Purchase of treasury stock...... -- -- -- -- -- --
Comprehensive income:
Net income.................... -- -- -- -- -- 588,828
Unrealized loss on marketable
securities.................. -- -- -- -- (38,999) --
Total comprehensive
income.................
----------- ----------- -------- ----------- --------- -----------
BALANCE, JANUARY 3, 1998........... 21,130,282 2,318,100 -- -- (49,774) 3,563,416
Comprehensive income:
Net income.................... -- -- -- -- -- 1,415,495
Unrealized loss on marketable
securities.................. -- -- -- -- (25,407) --
Total comprehensive
income.................
----------- ----------- -------- ----------- --------- -----------
BALANCE, JANUARY 2, 1999........... 21,130,282 2,318,100 -- -- (75,181) 4,978,911
Purchase of treasury stock...... -- -- -- -- -- --
Cancellation of treasury
stock......................... (9,365,592) (2,318,100) -- -- -- (92,738)
Recapitalization................ -- -- -- -- -- --
Sale of Common stock, net....... 2,941,176 4,907,507 -- -- -- --
Issuance of Common stock and
options to employees to
purchase Common stock below
fair market value............. 29,412 1,535,936 -- (1,170,936) -- --
Issuance of warrants in
connection with bridge
financing..................... -- -- 250,000 -- -- --
Issuance of Common stock and
options in acquisition of
CRI........................... 12,235,587 17,629,914 -- -- -- --
Issuance of Common stock in
acquisition of Telecrafter.... 2,647,059 4,500,000 -- -- -- --
Issuance of options to
consultants to purchase Common
stock......................... -- 2,905,855 -- (2,905,855) -- --
Amortization of deferred
compensation.................. -- -- -- 798,638 -- --
Comprehensive loss:
Net loss.................... -- -- -- -- -- (2,849,076)
Unrealized gain on
marketable securities...... -- -- -- -- 236,086 --
Total comprehensive
loss...................
----------- ----------- -------- ----------- --------- -----------
BALANCE, JANUARY 1, 2000........... 29,617,924 31,479,212 250,000 (3,278,153) 160,905 2,037,097
Reclassification of Redeemable
Common stock due to put right
termination (unaudited)....... -- 2,808,014 -- -- -- --
Issuance of options to employee
to purchase Common stock below
fair market value
(unaudited)................... -- 753,000 -- (753,000) -- --
Issuance of options to
consultant and director to
purchase Common stock
(unaudited)................... -- 480,057 -- -- -- --
Proceeds from exercise of
options to purchase Common
stock (unaudited)............. 14,530 24,700 -- -- -- --
Amortization of deferred
compensation (unaudited)...... -- (511,926) -- 2,657,857 -- --
Comprehensive loss:
Net loss (unaudited)........ -- -- -- -- -- (3,454,576)
Unrealized loss on
marketable securities
(unaudited)................ -- -- -- -- (172,242) --
Total comprehensive loss
(unaudited)............
----------- ----------- -------- ----------- --------- -----------
BALANCE, APRIL 1, 2000
(unaudited)....................... 29,632,454 35,033,057 $250,000 $(1,373,296) $ (11,337) $(1,417,479)
=========== =========== ======== =========== ========= ===========

TREASURY
STOCK TOTAL
----------- -----------
<S> <C> <C>
BALANCE, JANUARY 4, 1997........... $(2,366,794) $ 2,915,119
Purchase of treasury stock...... (36,987) (36,987)
Comprehensive income:
Net income.................... -- 588,828
Unrealized loss on marketable
securities.................. -- (38,999)
-----------
Total comprehensive
income................. 549,829
----------- -----------
BALANCE, JANUARY 3, 1998........... (2,403,781) 3,427,961
Comprehensive income:
Net income.................... -- 1,415,495
Unrealized loss on marketable
securities.................. -- (25,407)
-----------
Total comprehensive
income................. 1,390,088
----------- -----------
BALANCE, JANUARY 2, 1999........... (2,403,781) 4,818,049
Purchase of treasury stock...... (7,057) (7,057)
Cancellation of treasury
stock......................... 2,410,838 --
Recapitalization................ (4,000,000) (4,000,000)
Sale of Common stock, net....... -- 4,907,507
Issuance of Common stock and
options to employees to
purchase Common stock below
fair market value............. -- 365,000
Issuance of warrants in
connection with bridge
financing..................... -- 250,000
Issuance of Common stock and
options in acquisition of
CRI........................... -- 17,629,914
Issuance of Common stock in
acquisition of Telecrafter.... -- 4,500,000
Issuance of options to
consultants to purchase Common
stock......................... -- --
Amortization of deferred
compensation.................. -- 798,638
Comprehensive loss:
Net loss.................... -- (2,849,076)
Unrealized gain on
marketable securities...... -- 236,086
-----------
Total comprehensive
loss................... (2,612,990)
----------- -----------
BALANCE, JANUARY 1, 2000........... (4,000,000) 26,649,061
Reclassification of Redeemable
Common stock due to put right
termination (unaudited)....... -- 2,808,014
Issuance of options to employee
to purchase Common stock below
fair market value
(unaudited)................... -- --
Issuance of options to
consultant and director to
purchase Common stock
(unaudited)................... -- 480,057
Proceeds from exercise of
options to purchase Common
stock (unaudited)............. -- 24,700
Amortization of deferred
compensation (unaudited)...... -- 2,145,931
Comprehensive loss:
Net loss (unaudited)........ -- (3,454,576)
Unrealized loss on
marketable securities
(unaudited)................ -- (172,242)
-----------
Total comprehensive loss
(unaudited)............ (3,626,818)
----------- -----------
BALANCE, APRIL 1, 2000
(unaudited)....................... $(4,000,000) $28,480,945
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-20
<PAGE> 107

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
---------------------------------------- -------------------------
JANUARY 3, JANUARY 2, JANUARY 1, APRIL 3, APRIL 1,
1998 1999 2000 1999 2000
----------- ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................... $ 588,828 $ 1,415,495 $ (2,849,076) $ 191,137 $(3,454,576)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization..................... 780,023 980,108 2,813,689 331,949 1,258,690
Amortization of deferred compensation............. -- -- 798,638 -- 2,145,931
Amortization of debt issuance costs............... -- -- 368,530 -- --
Provision for deferred taxes (benefit)............ 44,420 78,000 (861,895) -- (400,193)
Stock compensation expense........................ -- -- 365,000 -- 480,057
Changes in operating assets and liabilities:
Accounts receivable............................. (386,617) (392,525) (3,517,712) (1,862,319) (4,092,398)
Supply inventory................................ (22,620) 12,962 (557,920) 12,893 (776,543)
Prepaid expenses and other...................... 221,325 (248,030) 441,856 103,341 (458,748)
Accounts payable................................ 75,088 (156,691) 1,917,234 303,046 1,920,963
Accrued expenses and deferred revenue........... 359,509 546,253 2,984,731 273,945 1,864,710
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) operating
activities.............................. 1,659,956 2,235,572 1,903,075 (646,008) (1,512,107)
----------- ----------- ------------ ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................. (1,029,933) (2,230,788) (4,383,325) (670,031) (1,412,262)
Business acquisitions, net of cash acquired......... -- -- (9,257,592) -- --
----------- ----------- ------------ ----------- -----------
Net cash used in investing activities..... (1,029,933) (2,230,788) (13,640,917) (670,031) (1,412,262)
----------- ----------- ------------ ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt........................ 690,000 700,000 24,108,703 600,000 5,280,076
Repayments on long-term debt........................ (548,880) (1,014,990) (7,341,050) (55,216) (3,873,987)
Purchase of treasury stock.......................... (36,987) -- (4,007,057) (7,057) --
Proceeds from sale of Common stock, net............. -- -- 4,907,507 -- 24,700
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) financing
activities.............................. 104,133 (314,990) 17,668,103 537,727 1,430,789
----------- ----------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 734,156 (310,206) 5,930,261 (778,312) (1,493,580)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........ 453,079 1,187,235 877,029 877,029 6,807,290
----------- ----------- ------------ ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.............. $ 1,187,235 $ 877,029 $ 6,807,290 $ 98,717 $ 5,313,710
=========== =========== ============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-21
<PAGE> 108

VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF APRIL 1, 2000 AND FOR THE THREE MONTHS ENDED APRIL 3, 1999
AND
APRIL 1, 2000 IS UNAUDITED)

1. BACKGROUND

Viasource Communications, Inc. and subsidiaries ("Viasource" or the
"Company") is a nationwide enabler of broadband technologies to residential and
commercial consumers. As a technology-neutral enabler, the Company offers
comprehensive network integration services to providers in the cable,
telecommunications, and satellite and wireless industries. Viasource provides
installation, integration, fulfillment, and long-term maintenance and support
services for broadband video, voice and data technologies.

On June 14, 1999, the Company affected a recapitalization whereby Crest
Communication Partners L.P. ("Crest") and two other financial investors acquired
6,470,588 shares of common stock for $11,000,000 directly from the then Company
shareholders on a pro rata basis. Crest then provided the Company $5,000,000 of
bridge equity financing which was convertible into 2,941,176 shares of common
stock and bore interest at 10%. The proceeds from the bridge equity financing
were used by the Company to redeem 2,352,941 shares of common stock for a
purchase price of $4,000,000 from the shareholders on a pro rata basis with the
remaining $1,000,000 of proceeds used as working capital. In connection with the
bridge equity financing, Crest received a warrant to purchase 147,059 shares of
common stock at $.02 per share (see Note 9). The $5,000,000 bridge equity
financing was repaid on September 7, 1999 when the Company sold 2,941,176 shares
of common stock at $1.70 per share to three new financial investors. Upon
completion of the recapitalization transaction described above, including taking
into consideration the shares and warrants used in the bridge equity financing,
the new investor group held 76.5% of the voting equity and the remaining 23.5%
of common stock, was retained by the pre-recapitalization Company shareholders.
The Company incurred $1,108,314 of recapitalization costs which were charged to
the Consolidated Statement of Operations during fiscal 1999. In July 1999, the
Company changed its name from The RTK Group, Inc. to Viasource Communications,
Inc.

The Company has grown through a number of recently completed acquisitions
and has a limited history of operating as a combined company. In 1999, the
Company acquired two businesses and in the second quarter of fiscal 2000 the
Company acquired four businesses (see Note 3). All these businesses had been
operating independently and the Company may not be able to integrate or
successfully manage the combined companies. In addition, the Company is
dependent on a significant portion of its revenues from a limited number of
customers (see Note 12). In fiscal 1999 and the first quarter of fiscal 2000,
the Company incurred losses and experienced negative cash flows. The second
quarter acquisitions resulted in the Company incurring additional debt and will
require additional cash to fund operations. On May 31, 2000, the Company
executed an amendment to its Term Note and Revolving Credit Facilities (see Note
8) and is in the process of renegotiating the terms of these facilities in order
to increase its available borrowing capacity. In addition, in May 2000, the
Company's principal shareholder has committed to provide continuing financial
support to enable the Company to continue to fund its operations. The Company
needs additional equity or other sources of long term financing. If capital is
not available

F-22
<PAGE> 109
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

from the public market, management believes that they will be able to raise
other alternative long term financing either through equity or debt which will
be sufficient for the Company to continue operations and execute its business
plan. There can be no assurance, however, that such financing will be available.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The accompanying financial statements include the accounts of Viasource
Communications, Inc. and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

FISCAL YEAR

The Company operates on a 52/53-week fiscal year ending on the last
Saturday nearest December 31. The years ended January 3, 1998 ("fiscal 1997"),
January 2, 1999 ("fiscal 1998") and January 1, 2000 ("fiscal 1999") included 52
weeks of operations.

INTERIM FINANCIAL STATEMENTS

The financial statements as of April 1, 2000 and for the three months ended
April 3, 1999 and April 1, 2000 are unaudited and, in the opinion of management
of the Company, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for those interim
periods. The results of operations for the three months ended April 1, 2000 are
not necessarily indicative of the results to be expected for the full year.

REVENUE RECOGNITION

Revenues are generally recognized as services are performed. One of the
Company's satellite installation customers, beginning in 1999, paid the Company
a portion of its fees subject to a chargeback. The Company has not accumulated
sufficient client specific historical data to date to reliably estimate the
amount of potential chargebacks. Accordingly, as required under the Securities
and Exchange Commission Staff Accounting Bulletin ("SAB") No. 101 - Revenue
Recognition in Financial Statements, the Company records these amounts subject
to chargeback as deferred revenue and records revenue as the right of chargeback
expires. To date, the amount of chargebacks have not been significant.

F-23
<PAGE> 110
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. At January 2, 1999 and
January 1, 2000, cash and cash equivalents include cash on hand, cash in the
bank, money market accounts and various government bonds with seven-day reset
features. At January 1, 2000 and April 1, 2000, the Company has a restricted
cash balance of $550,000 and $1,570,000, respectively.

MARKETABLE SECURITIES

The Company follows Statement of Financial Accountings Standards ("SFAS")
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The
marketable securities, which consist of equity securities, have been classified
as available-for-sale securities and are stated at fair market value. Unrealized
gains and losses are included as a separate component of stockholders' equity
until realized. Investments are included in prepaid expenses and other in the
accompanying consolidated balance sheets.

SUPPLY INVENTORY

Supply inventory is stated at the lower of cost (first-in, first-out
method) or market and is comprised of materials used to provide services.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Property and equipment
capitalized under capital leases are recorded at the present value of the
minimum lease payments due over the term of the lease. Depreciation and
amortization are provided using the straight-line method over the estimated
useful lives or the lease term, whichever is shorter.

Expenditures for maintenance, repairs and betterments that do not prolong
the useful life of an asset have been charged to operations as incurred.
Additions and betterments that substantially extend the useful life of the asset
are capitalized. Upon sale or other disposition of assets, the cost and related
accumulated depreciation and amortization are removed from the respective
accounts, and the resulting gain or loss, if any, is included in income.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred income tax assets
and liabilities are determined based on differences between the financial
reporting and income tax bases of assets and liabilities measured using enacted
income tax rates and laws that are expected to be in effect when the differences
reverse (see Note 10).

F-24
<PAGE> 111
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

GOODWILL AND OTHER INTANGIBLES

The Company amortizes, on a straight-line basis, the excess of cost over
the fair value of the net tangible and identifiable intangible assets of
acquired businesses (see Note 3) over an estimated life of 10 to 20 years. Other
identifiable intangible assets, including agreements not-to-compete, tradenames,
trained workforce and customer relationships, are amortized on a straight-line
basis over the estimated economic lives of 3 to 20 years.

The Company evaluates whether events and circumstances indicate that the
remaining estimated useful life warrants revision or that the remaining balance
of goodwill and other intangibles may not be fully recoverable. If the Company
concludes it is necessary to evaluate goodwill and other intangibles for
impairment, the Company will use, in part, an estimate of related undiscounted
cash flows, as well as other qualitative and quantitative factors, as the basis
to determine whether impairment has occurred. Such factors may include but will
not be limited to overall industry trends and growth and customer retention and
profitability. If such a determination indicates an impairment has occurred, the
Company will utilize the valuation method, which measures fair value based on
the best information available in the circumstances. As of December 31, 1999,
the Company believes that there has been no impairment of goodwill and other
intangibles.

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation to employees using the
intrinsic value method in accordance with Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", as amended. The
Company has recognized deferred stock compensation related to certain stock
option grants (see Note 9). The Company accounts for stock-based compensation to
nonemployees using the fair value method in accordance with SFAS No. 123,
"Accounting for Stock-Based Compensation" and Emerging Issues Task Force
("EITF") 96-18.

NET INCOME (LOSS) PER SHARE

The Company has presented basic and diluted net income (loss) per share
pursuant to SFAS No. 128, "Earnings per Share," and the Securities and Exchange
Commission SAB No. 98. In accordance with SFAS No. 128, basic net income (loss)
per share has been computed by dividing net income (loss) by the
weighted-average number of shares of Common stock outstanding during the period.
Diluted net income (loss) per share includes the effect, if any, from the
potential exercise or conversion of securities, such as stock options, which
would result in the issuance of shares of Common stock. For fiscal 1997 and
1998, and for the three months ended April 3, 1999, diluted net income (loss)
per share is the same as basic net income (loss) per share, since the Company
did not have any Common stock equivalents outstanding. For fiscal 1999, diluted
net income (loss) per share is the same as basic net loss per share as no
additional shares for the potential dilution from the exercise or conversion of
securities in Common stock are included as the result is anti-dilutive due to
the Company's losses.

F-25
<PAGE> 112
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pro forma basic and diluted net loss per share, as presented in the
accompanying consolidated statements of operations, has been computed for fiscal
1999 and the three months ended April 3, 1999 and April 1, 2000 in the Pro Forma
Consolidated Financial Statements included elsewhere in this
prospectus/registration statement. Pro forma diluted net loss per share is the
same as basic net income (loss) per share for fiscal 1999 and the three months
ended April 1, 2000 as no additional shares for the potential dilution from the
exercise of Common stock options are included as the result is anti-dilutive due
to the Company's pro forma losses.

The following table presents the calculation of basic and diluted net
income (loss) per share and pro forma basic and diluted net loss per share:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
---------------------------------------- --------------------------
JANUARY 3, JANUARY 2, JANUARY 1, APRIL 3, APRIL 1,
1998 1999 2000 1999 2000
----------- ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net income (loss)............ $ 588,828 $ 1,415,495 $ (2,849,076) $ 191,137 $ (3,454,576)
=========== =========== ============ =========== ============
Basic and diluted:
Weighted-average shares
used in computing basic
and diluted net income
(loss) per share........ 20,233,081 20,233,081 21,492,717 20,231,794 26,581,310
=========== =========== ============ =========== ============
Basic and diluted net income
(loss) per share........... $ 0.03 $ 0.07 $ (0.13) $ 0.01 $ (0.13)
=========== =========== ============ =========== ============
Pro forma:
Net loss to common
shareholders............ $(25,329,514) $(3,932,400) $(13,916,346)
============ =========== ============
Shares used above.......... 21,492,717 20,231,794 26,581,310
============ =========== ============
Pro forma adjustment for
shares issued to owners
of 1999 Acquisitions and
2000 Acquisitions....... 17,995,322 24,267,168 9,384,523
Pro forma adjustment to
reflect the
weighted-average effect
of assumed conversion of
warrants (unaudited).... 1,017,586 1,017,586 1,017,586
============ =========== ============
Shares used in computing pro
forma basic and diluted net
loss per share
(unaudited)................ 40,505,625 45,516,548 36,983,419
============ =========== ============
Pro forma basic and diluted
net loss per share
(unaudited)................ $ (0.63) $ (0.09) $ (0.38)
============ =========== ============
</TABLE>

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for possible impairments of long-lived assets in
accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to Be

F-26
<PAGE> 113
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Disposed Of." SFAS No. 121 requires that long-lived assets to be held and used
by the Company be reviewed for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. If changes in circumstances indicate that the carrying amount of an
asset that an entity expects to hold and use may not be recoverable, future cash
flows expected to result from the use of the asset and its disposition must be
estimated. If the undiscounted value of the future cash flows is less than the
carrying amount of the asset, an impairment will be recognized. Based on these
evaluations, there were no adjustments to the carrying value of long-lived
assets.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash and cash equivalents, accounts receivable, accounts payable and
accrued expenses are reflected at fair value in the accompanying financial
statements due to the short-term nature of those instruments. The carrying
amount of long-term debt and capitalized lease obligations approximates fair
value at the balance sheet dates.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded on the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 is effective for fiscal years beginning
after June 15, 2000. The Company believes that the impact of adopting SFAS No.
133 on its financial statements will not be material.

STOCK SPLIT

On , 2000, the Company effected a 0.588-for-1 reverse stock
split of each outstanding share of Common and Preferred stock which will occur
immediately prior to the date of this Prospectus. All share, stock option and
warrant data have been restated to reflect the reverse stock split.

3. ACQUISITIONS

1999 ACQUISITIONS

On July 23, 1999, the Company acquired Communication Resources Incorporated
("CRI") whereby the outstanding shares of CRI common stock were exchanged for
10,283,658 shares of Viasource Common stock valued at $17,482,218 or $1.70 per
share and 1,951,929 shares of Viasource Common stock valued at $4,346,946,
subject to a put agreement. The put agreement provides for the holder to put
1,951,929 shares back to the Company and one CRI selling shareholder at $2.23
per share for a six-month period. The $1.70 per share fair value estimate was
based on the June 14, 1999 Viasource recapitalization (see Note 1), whereby the
pre-recapitalization shareholders received $1.70 per share for shares sold on
that date and the price paid by the new

F-27
<PAGE> 114
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

investors in June and September 1999. In addition, the outstanding CRI options
to purchase shares of CRI common stock were exchanged for an option to purchase
149,156 shares of Viasource Common stock valued at $147,696. Transaction costs
related to this merger amounted to $246,236. The acquisition was accounted for
as a purchase. An allocation of the purchase price resulted in $18,669,966 of
excess purchase price over the estimated fair value of the net tangible assets
acquired of $3,553,130. A preliminary analysis resulted in the excess purchase
price being assigned to intangible assets consisting of $1,040,000 for
agreements not-to-compete, $1,500,000 for tradenames, $570,000 for trained
workforce, $12,100,000 for customer relationships and $3,459,966 for goodwill.
Intangible assets are amortized on a straight-line basis over their estimated
useful lives of 3 to 4 years for agreements not-to-compete, 20 years for
tradenames, 7.5 years for trained workforce, 20 years for customer relationships
and 20 years for goodwill.

The Company and one of the CRI selling shareholders entered into a put
agreement, whereby the selling shareholder had the right to put back to the
Company and one of the other CRI selling shareholders 1,951,929 shares of Common
stock at $2.23 per share. The put option and the underlying shares have been
classified as Redeemable Common stock in the accompanying consolidated balance
sheets.

On January 3, 2000, the selling shareholder put back 691,033 shares of
Common stock in accordance with the July 23, 1999 put agreement at $2.23 per
share to the Company. In consideration for these shares, the Company issued a
$1,538,932 Secured Subordinated Promissory Note which matures on January 3,
2001. The Promissory Note is subject to mandatory prepayment on the earlier of
an Initial Public Offering or a change in control, as defined. The Company
accounted for the share repurchase as an increase to treasury stock outstanding
in the first quarter of fiscal 2000. In addition, on January 3, 2000, the
selling shareholder put back 1,260,896 shares of Common stock in accordance with
the July 23, 1999 put agreement to the existing shareholders at $2.23 per share.
Since the put right on these shares is now terminated, the value of these shares
were reclassified from Redeemable Common stock to Common stock in the first
quarter of fiscal 2000.

On September 7, 1999, the Company acquired substantially all of the assets
(and assumed substantially all of the liabilities) of Nassau Communications,
Inc. d/b/a Telecrafter Services Corporation ("Telecrafter") for $18,223,943,
including transaction costs. The purchase price consisted of $10,500,000 in
cash, $3,000,000 in seller notes and 2,647,059 shares of common stock valued at
$1.70 per share, or $4,500,000. The $1.70 per share value was based on the price
paid by the new investors in September 1999. Based on a preliminary allocation
of the purchase price, the application of the purchase method resulted in
$14,608,065 of excess purchase price over the estimated fair value of the net
tangible assets acquired of $3,915,878. An analysis resulted in the excess
purchase price being assigned to intangible assets consisting of $1,200,000 for
the agreement not-to-compete, $1,100,000 for tradenames, $470,000 for trained
workforce, $10,500,000 for customer relationships and $1,338,065 for goodwill.
Intangible assets are amortized on a straight-line basis over their estimated
useful lives of 5 years for the agreement not-to-compete, 20 years for

F-28
<PAGE> 115
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

tradenames, 7.5 years for trained workforce, 20 years for customer relationships
and 20 years for goodwill.

For fiscal 1999, amortization expense of the goodwill and other intangibles
associated with the CRI and Telecrafter acquisitions was $660,078.

\The following unaudited pro forma summary combines the consolidated results of
operations of Viasource, CRI and Telecrafter as if the transactions had occurred
as of the beginning of the year presented after giving effect to certain
adjustments including amortization of the purchase price in excess of the net
tangible assets acquired and interest expense. This pro forma summary is not
necessarily indicative of the results of operations that would have occurred if
Viasource, CRI and Telecrafter had been combined during such periods. Moreover,
the pro forma summary is not intended to be indicative of the results of
operations to be attained in the future.

<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEAR ENDED ENDED
-------------------------- ------------
JANUARY 2, JANUARY 1, APRIL 3,
1999 2000 1999
----------- ------------ ------------
<S> <C> <C> <C>
Revenue........................................ $73,707,345 $ 91,215,513 $19,339,824
=========== ============ ===========
Operating income (loss)........................ $ 789,073 $ (2,093,789) $ 820,593
=========== ============ ===========
Net income (loss).............................. $(1,167,728) $ (4,007,316) $ 85,024
=========== ============ ===========
Basic and diluted net income (loss) per
share........................................ $ (0.03) $ (0.13) $ --
=========== ============ ===========
</TABLE>

2000 ACQUISITIONS

On April 21, 2000, the Company and D.S. Cable TV Contractors, Inc. ("D.S.
Cable") entered into a definitive agreement, whereby the Company acquired
substantially all of the assets (and assumed substantially all of the
liabilities) of D.S. Cable for approximately $7.8 million, including transaction
costs. The purchase price consisted of $1,500,000 in cash, $750,000 in seller
notes, 387,735 shares of common stock valued at $14.00 per share or $5,428,096
and transaction costs. Based on a preliminary allocation of the purchase price,
the application of the purchase method resulted in $6,875,062 of excess purchase
price over the estimated fair value of the net tangible assets acquired of
$958,034. A preliminary analysis resulted in the excess purchase price being
assigned to intangible assets consisting of $320,000 for the agreement
not-to-compete, $470,000 for tradenames, $300,000 for trained workforce,
$5,300,000 for customer relationships and $485,058 for goodwill. Intangible
assets are amortized on a straight-line basis over their estimated useful lives
of 6 years for the agreement not-to-compete, 20 years for tradenames, 7.5 years
for trained workforce, 20 years for customer relationships and 20 years for
goodwill.

On May 4, 2000, the Company and Service Cable Electric, Inc. and Service
Cable Corporation ("Service Cable") entered into a definitive agreement, whereby
the Company acquired substantially all of the assets (and assumed substantially
all of the liabilities) of Service Cable for approximately $8.1 million,
including transaction costs. The purchase price consisted of $980,000 in cash,
$1,960,000 in seller notes, 329,412 shares of common stock valued at $14.00 per
share, or $4,611,603, options to purchase common stock with a fair value of
$436,523 and transaction costs.

F-29
<PAGE> 116
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Based on a preliminary allocation of the purchase price, the application of the
purchase method resulted in $7,070,159 of excess purchase price over the
estimated fair value of the net tangible assets acquired of $1,076,967. A
preliminary analysis resulted in the excess purchase price being assigned to
intangible assets consisting of $310,000 for the agreement not-to-compete,
$450,000 for tradenames, $500,000 for trained workforce, $5,090,000 for customer
relationships and $720,156 for goodwill. Intangible assets are amortized on a
straight-line basis over their estimated useful lives of 6 years for the
agreement not-to-compete, 20 years for tradenames, 7.5 years for trained
workforce, 20 years for customer relationships and 20 years for goodwill.

On June 1, 2000, the Company and Excalibur Cable Communications, Ltd.
("Excalibur") entered into a definitive agreement, whereby the Company acquired
all of the outstanding stock of Excalibur for approximately $34.7 million,
including transaction costs. The purchase price consisted of $4,000,000 in cash,
$4,000,000 in seller notes and 1,882,353 shares of common stock valued at $14.00
per share or, $26,352,001 plus transaction costs. Based on a preliminary
allocation of the purchase price, the application of the purchase method
resulted in approximately $31,805,794 of excess purchase price over the
estimated fair value of the net tangible assets acquired of $2,846,207. A
preliminary analysis resulted in the excess purchase price being assigned to
intangible assets consisting of $1,200,000 for the agreement not-to-compete,
$1,600,000 for tradenames, $1,300,000 for trained workforce, $20,000,000 for
customer relationships and $7,705,793 for goodwill. Intangible assets are
amortized on a straight-line basis over their estimated useful lives of 6 years
for the agreement not-to-compete, 20 years for tradenames, 7.5 years for trained
workforce, 20 years for customer relationships and 20 years for goodwill.

On June 1, 2000, the Company and TeleCore, Inc. ("TeleCore") entered into a
definitive agreement, whereby the Company acquired all of the outstanding stock
of TeleCore for approximately $126.9 million, including transaction costs. The
purchase price consisted of $16,900,000 in seller notes, 6,785,024 shares of
common and preferred stock valued at $14.00 per share, or $94,986,944, options
to purchase common stock valued at $14,617,917 plus transaction costs. Based on
a preliminary allocation of the purchase price, the application of the purchase
method resulted in approximately $127.6 million of excess purchase price over
the estimated fair value of the net deficit acquired of $695,793. A preliminary
analysis resulted in the excess purchase price being assigned to intangible
assets consisting of $16,500,000 for the agreements not-to-compete, $4,000,000
for tradenames, $3,400,000 for trained workforce, $60,000,000 for customer
relationships and $43,730,646 for goodwill. Intangible assets are amortized on a
straight-line basis over their estimated useful lives of 6 years for the
agreements not-to-compete, 10 years for tradenames, 7.5 years for trained
workforce, 10 years for customer relationships and 10 years for goodwill.

The following unaudited pro forma summary combines the consolidated results
of operations of Viasource, CRI, Telecrafter, D.S. Cable, Service Cable,
Excalibur and TeleCore as if the transactions had occurred as of the beginning
of the year presented after giving effect to certain adjustments including
amortization of the purchase price in excess of the net tangible assets acquired
and interest expense. This pro forma summary is not necessarily indicative of
the results

F-30
<PAGE> 117
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of operations that would have occurred if Viasource, CRI, Telecrafter, D.S.
Cable, Service Cable, Excalibur and TeleCore had been combined during such
periods. Moreover, the pro forma summary is not intended to be indicative of the
results of operations to be attained in the future.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS
---------------------------- ENDED
JANUARY 2, JANUARY 1, APRIL 3,
1999 2000 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenue.......................................... $109,448,560 $130,525,823 $ 47,686,822
============ ============ ============
Operating income (loss).......................... $ 872,414 $(21,086,288) $(12,284,821)
============ ============ ============
Net income (loss)................................ $ (1,412,080) $(25,329,514) $(13,916,346)
============ ============ ============
Basic and diluted net income (loss) per share.... $ (0.03) $ (0.63) $ (0.38)
============ ============ ============
</TABLE>

4. SUPPLEMENTAL CASH FLOW INFORMATION

For fiscal 1997, 1998 and 1999, the Company paid interest of $177,258,
$122,177 and $851,531, respectively, and income taxes of $290,235, $979,429 and
$624,196, respectively. For the three months ended April 3, 1999 and April 1,
2000, the Company paid interest of $36,842 and $546,525, respectively, and
income taxes of $150,000 and $0, respectively.

The following table displays the net non-cash assets that were acquired
during fiscal 1999, as a result of the business acquisitions described in Note
3:

<TABLE>
<CAPTION>
CRI TELECRAFTER
----------- -----------
<S> <C> <C>
Non-cash assets (liabilities):
Current assets............................................ $ 4,013,025 $ 3,689,141
Property and equipment.................................... 1,541,039 299,503
Other assets.............................................. 597,339 20,812
Goodwill and other intangibles............................ 18,669,966 14,608,065
Current liabilities....................................... (1,412,720) (2,523,542)
Debt...................................................... (674,754) (93,422)
----------- -----------
Net noncash assets acquired............................... 22,733,895 16,000,557
Less: Common stock issued................................. (17,482,218) (4,500,000)
Put option issued................................... (4,346,946) --
Options issued...................................... (147,696) --
Notes payable to sellers of business................ -- (3,000,000)
----------- -----------
Cash paid for business acquisitions, net.................. $ 757,035 $ 8,500,557
=========== ===========
</TABLE>

F-31
<PAGE> 118
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1,
1999 2000
----------- -----------
<S> <C> <C>
Accounts receivable, trade................................ $ 4,328,452 $13,157,400
Unbilled receivables...................................... 105,331 2,266,848
Other receivables......................................... 107,005 714,779
----------- -----------
4,540,788 16,139,027
Allowance for doubtful accounts........................... (200,000) (1,041,649)
----------- -----------
$ 4,340,788 $15,097,378
=========== ===========
</TABLE>

Unbilled receivables represent receivables from current month services
which are billed in the following month billing cycle. The allowance for
doubtful accounts increased from January 2, 1999 to July 1, 2000 due to $745,000
recorded in the 1999 acquisitions and $318,739 charges to bad debt expense
offset by $222,090 of bad debt write-offs.

6. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1,
USEFUL LIVES 1999 2000
------------ ----------- -----------
<S> <C> <C> <C>
Vehicles............................................. 5 years $ 4,221,235 $ 6,339,427
Machinery and equipment.............................. 2 to 5 years 2,741,254 4,817,467
Office furniture and equipment....................... 2 to 5 years 805,822 2,041,782
Leasehold improvements............................... 3 to 5 years 129,827 385,783
----------- -----------
7,898,138 13,584,459
Accumulated depreciation and amortization............ (4,308,116) (5,924,181)
----------- -----------
$ 3,590,022 $ 7,660,278
=========== ===========
</TABLE>

For fiscal 1997, 1998 and 1999, depreciation expense was $780,023, $980,108
and $2,153,611, respectively.

7. ACCRUED EXPENSES

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1,
1999 2000
---------- ----------
<S> <C> <C>
Accrued compensation...................................... $ 696,527 $3,328,226
Accrued professional fees................................. -- 607,735
Accrued insurance......................................... 497,233 835,927
Accrued payable to former owner of Telecrafter (note 3)... -- 673,224
Other..................................................... 1,292,742 2,793,140
---------- ----------
$2,486,502 $8,238,252
========== ==========
</TABLE>

F-32
<PAGE> 119
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM DEBT

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1,
1999 2000
---------- -----------
<S> <C> <C>
Term note with bank, principal payable in quarterly
installments of $468,750 commencing on December 31, 2000,
increasing to $937,500 on December 31, 2001 and increasing
to $1,406,250 on December 31, 2003; bearing interest at
prime plus 3.75% or LIBOR plus 5.00% payable quarterly,
through September 7, 2004, when all remaining principal
and interest is due and payable. At January 1, 2000, the
interest rate was 10.96%.................................. $ -- $15,000,000
Subordinated note payable to stockholder, payable on March
7, 2001, plus
interest at 9.00% per year................................ -- 3,000,000
Term notes with variable principal payments over a term of
36 to 48 months plus interest ranging from 7.50% to
8.50%..................................................... 876,043 868,205
Equipment line of credit up to $2,000,000 due on March 31,
2000, plus interest
at the bank's prime rate less 1/2 of one percent (8.00% at
January 1, 2000).......................................... -- 1,595,000
Revolving line of credit up to $1,500,000 due on March 31,
2000, plus interest
at the bank's prime rate less 1/2 of one percent (8.00% at
January 1, 2000).......................................... -- 1,000,000
Three-year term note with 36 equal monthly principal
payments plus interest at the bank's prime rate plus 1/2
of one percent (8.25% and 9.00% at January 2, 1999 and
January 1, 2000, respectively)............................ 525,000 204,167
Three-year term note with 36 equal monthly principal
payments plus interest at the bank's prime rate less 1/2
of one percent (7.25% and 8.00% of January 2, 1999 and
January 1, 2000, respectively)............................ 240,000 173,333
Capital lease obligations (see Note 11)..................... -- 336,167
---------- -----------
1,641,043 22,176,872
Less -- Current maturities.................................. (980,451) (1,249,764)
---------- -----------
$ 660,592 $20,927,108
========== ===========
</TABLE>

Minimum principal repayments of long-term debt as of January 1, 2000,
excluding capitalized lease obligations (see Note 11), are as follows:

TERM NOTE AND REVOLVING CREDIT FACILITIES

In connection with the Telecrafter acquisition on September 7, 1999, the
Company entered into a Credit Agreement, which provided for initial borrowings
of $15,000,000 under a Term Note ("Term Note"). The Company incurred costs of
$1,745,351 in connection with the Term Note which are included in other assets
in the accompanying consolidated balance sheet as of January 1, 2000 and are
being amortized using the effective interest rate method over the life of the
Term Note. For the year ended December 31, 1999, debt issuance cost amortization
was $118,530. The

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<PAGE> 120
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

proceeds from the Term Note were used to fund the $10,500,000 cash consideration
in the Telecrafter acquisition (see Note 3), repay debt and to fund general
working capital needs. Borrowings under the Term Note are collateralized by
substantially all of the assets of the Company. The Term Note contains various
financial and non-financial covenants, the most restrictive of which require the
maintenance of certain financial ratios, restrict future indebtedness and
prohibit cash dividends.

In addition to the above scheduled payments, the Company is required to
make certain prepayments based on excess cash flows, as defined in the
agreement. Prepayments are also required when assets are sold and when debt or
equity securities are issued in excess of $5,000,000 on a aggregate basis.

In March 2000, the Company entered into a new additional $15,000,000
Revolving Credit Facility (the "Revolver"), which matures on September 7, 2004
with the same lender as the Term Note. The Revolver provides for a $12,000,000
working capital facility and a sub-facility of up to $3,000,000 for letters of
credit. The Revolver bears interest, at the Company's option, at prime plus
1.50% or LIBOR plus 2.75% and requires an annual commitment fee of 0.50% on the
unused portion of the Revolver. The Revolver contains the same financial
covenants and non-financial covenants as the Term Note. Together the Term Note
and Revolver are referred to as the "Term Note and Revolving Credit Facility".
On May 31, 2000, the Company executed an amendment to the Term Note and
Revolving Credit Facility which changed its financial covenants (see Note 1).
The initial borrowings on the Revolver were used to repay the Bank Facility (as
defined below), as well as certain Term Note. As of April 1, 2000, the
outstanding balance on the Revolver was approximately $5,300,000.

SUBORDINATED NOTE

On September 7, 1999, the Company entered into a $3,000,000 Subordinated
Note as partial consideration for the net assets acquired from Telecrafter (see
Note 3). The note is subject to prepayment upon an initial public offering of
not less than $25 million or upon a change of control, as defined.

BANK FACILITY

The Company is a party to a Bank Facility consisting of (i) a $1,500,000
revolving line of credit, (ii) a $2,000,000 equipment line of credit, (iii) a
$1,100,000 three-year term note, (iv) a $240,000 three-year term note and (v) a
$1,000,000 letter of credit line. This facility is collateralized by trade
accounts receivable less than 90 days old, inventories and equipment and
machinery. There is an annual one percent fee on the issuance of letters of
credit. The loan agreements contain certain annual financial covenants related
to tangible net worth, debt to tangible net worth, working capital ratio, a
specified minimum of excess current assets to current liabilities, and a
specified minimum of excess cash flow to debt service.

F-34
<PAGE> 121
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

On June 14, 1999, the Company established the 1999 Stock Incentive Plan
(the "1999 Plan") for its employees, officers, directors and certain other
individuals. A committee of the Board of Directors administers and awards grants
under the 1999 Plan. The 1999 Plan allows for the issuance of either incentive
stock options or nonqualified stock options. Options granted under the 1999 Plan
expire no later than ten years after the grant date. Each option entitles the
holder to purchase one share of Common stock at the indicated exercise price. As
of June 1, 2000, no further grants will be made pursuant to the Plan.

In May 2000, the Company established the 2000 Stock Option Plan (the "2000
Plan") and reserved 2,235,294 shares for issuance. The 2000 Plan allows for the
grant of incentive stock options, nonqualified stock options and certain other
stock-based awards to the Company's employees, officers, directors or
consultants. Options granted under the Plan expire no later than ten years after
the grant date. As of June 1, 2000, no options have been granted pursuant the
2000 Plan.

The following table summarizes the stock option activity under the Plan:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE EXERCISE PRICE
ACTIVITY PRICE PER SHARE
--------- ----------- ----------------
<S> <C> <C> <C>
Balance outstanding, June 14, 1999...................... -- $ -- $ --
Granted............................................... 1,250,208 1.70 1.70
Granted below fair market value....................... 264,706 .51 .51
Granted in CRI acquisition (see Note 3)............... 149,156 1.70 1.70
--------- ----------- -----
Balance outstanding, January 1, 2000.................... 1,664,070 .51-1.70 1.52
Granted............................................... 94,118 1.70 1.70
Exercised............................................. (14,530) 1.70 1.70
Canceled.............................................. (8,603) 1.70 1.70
--------- ----------- -----
Balance outstanding, April 1, 2000...................... 1,735,055 $ .51-1.70 $1.52
========= =========== =====
</TABLE>

Subsequent to April 1, 2000, the Company granted options to purchase
422,941 shares of Common stock to employees and options to purchase 58,824
shares of Common stock in connection with an acquisition. These grants were made
pursuant to the 1999 Plan. Subsequent to April 1, 2000, options to purchase
7,059 shares of Common stock pursuant to the 1999 Plan were terminated.
Additionally, subsequent to April 1, 2000, the Company granted 1,229,819 options
to purchase Common stock to the option holders of an acquired entity.

The Company follows APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations in accounting for its employee stock
options. Under APB Opinion No. 25, if the exercise price of the Company's
employee stock options equals or exceeds the market price of the underlying
stock on the date of the grant, no compensation expense is recognized.

Pro forma information regarding net income (loss) required by SFAS No. 123,
"Accounting for Stock-Based Compensation," has been determined as if the Company
had accounted for its
F-35
<PAGE> 122
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employee stock options under the fair value method of that statement. The
determination of the fair value of the options noted above was estimated at the
date of grant using a Black-Scholes option pricing model with the following
weighted-average assumptions for fiscal 1999: dividend yield of zero, risk free
interest rate of 6.0%, volatility factor of the expected market price of the
Company's Common stock of 0% and an expected life of the options of five years.

For fiscal 1999, the weighted average fair value of employee stock options
granted at fair market value is $1.70 and the weighted average fair value of
options granted below fair market value is $0.51. For purposes of pro forma
disclosure, the estimated fair value of the option is amortized to expense over
the option's vesting period. The Company's pro forma loss under SFAS No. 123 for
fiscal 1999 is $2,790,448 and its pro forma basic and diluted loss per share is
$0.13.

In June 1999, in connection with the grant of 264,706 options to two senior
executives, the Company recorded compensation expense of $315,000, which
represents the difference between the option exercise price and the fair value
of the Company's Common stock of $1.70 per share on the date the stock options
were granted. The fair value of $1.70 per share of the underlying Common stock
equaled the $1.70 per share price paid to redeem the Viasource shareholders in
June 1999 and the price paid by the new investors in June and September 1999.
These options were immediately exercisable on the date of grant. None of these
options were exercised as of January 1, 2000.

In October 1999, the Company granted options to purchase 172,132 shares of
Common stock to a consultant. These options vest over nine quarters and are
exercisable for ten years. In accordance with SFAS No. 123, the Company recorded
the fair value of the options issued to the consultant as deferred compensation,
which will be amortized over the vesting period of the options. The fair value
of the options was determined using the Black-Scholes option pricing model with
the following assumptions: dividend yield of zero, risk free interest rate of
6.0%, volatility factor of the expected market price of the Company's Common
stock of 70% and the contractual term of the options of ten years. The fair
value of the options issued to the consultant will be re-measured at each
balance sheet date over the vesting period. Any increases or decreases in the
fair value of the options will be recorded as adjustments to deferred
compensation and amortized over the remaining vesting period. For fiscal 1999,
the Company recorded stock-based compensation expense of $408,326 for
amortization of the related deferred compensation. The Company amended their
arrangement with this consultant in March 2000, which immediately vested the
remaining unvested options issued under the October 1999 consulting agreement
and removed the requirement for any further services. In accordance with SFAS
No. 123, the Company recorded compensation expense of $1,985,603 during the
first quarter of fiscal 2000.

On December 31, 1999, performance based options to purchase 76,532 shares
of Common stock were granted to various employees. These options have an
exercise price of $1.70 per share, vest one-third per year beginning in 1999 and
have a ten-year life. The Company recorded the $1,170,936 fair value of these
options as deferred compensation and recorded stock-based compensation expense
of $390,312 for amortization of the related deferred compensation. As of January
1, 2000, the Company has unamortized deferred compensation of $780,624
associated with

F-36
<PAGE> 123
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

these options, which will be amortized over the remaining two-year vesting
period. As of December 31, 1999, all performance requirements have been met. The
Company does not have any other performance based options outstanding as of
January 1, 2000.

In January 2000, the Company granted options to purchase 20,588 and 14,706
shares of Common stock at $1.70 per share, to a consultant and a director,
respectively. These options were immediately exercisable on the date of grant
and are exercisable for ten years. In accordance with SFAS No. 123, the Company
recorded the $480,057 fair value of these options, as determined using the
Black-Scholes option pricing model, as compensation expense during the three
months ended March 31, 2000. The fair value of the underlying Common stock was
$14.00 per share. In January 2000, the Company granted options to purchase
58,824 shares of Common stock to one senior executive. These options vest over
three years and are exercisable for ten years. The Company recorded deferred
compensation of $723,500, which will be amortized over the options vesting
period and represents the difference between the option exercise price of $1.70
per share and the $14.00 per share fair value of the Company's Common stock on
the date such stock options were granted.

WARRANTS

On June 14, 1999, the Company granted warrants to purchase 147,059 shares
of the Company's Common stock at $.02 per share in connection with a $5,000,000
bridge financing (see Note 1). These warrants were valued at their estimated
fair value of $250,000 and recorded as debt issue cost. The fair value of $1.70
per share of the underlying Common stock equaled the $1.70 per share price paid
to redeem the Viasource shareholders in June 1999 and the price paid by the new
investors in June and September 1999. In connection with the repayment of the
bridge financing on September 7, 1999, the remaining unamortized debt issue
costs were recorded as interest expense. The warrants are exercisable for ten
years. No warrants were exercised as of January 1, 2000.

On September 7, 1999, the Company granted warrants to purchase 870,538
shares of Common stock at $.02 per share in connection with sale of Common stock
and the $15,000,000 Credit Agreement (see Note 8). These warrants were valued at
their estimated fair value of $1,479,896 using the Black-Scholes pricing model
with the following assumptions: dividend yield of zero, risk free interest rate
of 6.0%, volatility factor of the expected market price of the Company's Common
stock of 70% and the contractual term of the warrants of ten years. The warrants
are exercisable for ten years. No warrants were exercised as of January 1, 2000.
The fair value of the warrants was recorded proportionately to the relative fair
value of the capital raised, as follows:

<TABLE>
<S> <C>
Common stock................................................ $ 92,493
Debt issuance costs......................................... 1,387,403
----------
Total............................................. $1,479,896
==========
</TABLE>

F-37
<PAGE> 124
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JANUARY 3, JANUARY 2, JANUARY 1,
1998 1999 2000
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal................................................... $557,478 $ 881,823 $ 318,000
State..................................................... 145,358 242,677 (10,735)
-------- ---------- ---------
702,836 1,124,500 307,265
-------- ---------- ---------
Deferred:
Federal................................................... 35,420 69,149 (861,895)
State..................................................... 9,000 8,851 --
-------- ---------- ---------
44,420 78,000 (861,895)
-------- ---------- ---------
$747,256 $1,202,500 $(554,630)
======== ========== =========
</TABLE>

Deferred taxes are determined based upon the estimated future tax effects
of differences between the financial statement and income tax bases of assets
and liabilities given the provisions of the enacted tax laws.

The reconciliation of the statutory federal income tax rate to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
JANUARY 3, JANUARY 2, JANUARY 1,
1998 1999 2000
---------- ---------- ----------
<S> <C> <C> <C>
Statutory federal income tax rate (benefit)................. 34.0% 34.0% (34.0)%
State taxes, net of federal tax benefit..................... 7.6 6.2 (.3)
Nondeductible expenses, principally nondeductible intangible
amortization, and other................................... 14.3 5.7 18.0
---- ---- ------
55.9% 45.9% (16.3)%
==== ==== ======
</TABLE>

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

<TABLE>
<CAPTION>
JANUARY 2, JANUARY 1,
1999 2000
---------- ----------
<S> <C> <C>
Deferred tax asset:
Accruals not currently deductible......................... $ 131,808 $1,051,146
Other..................................................... -- 378,638
--------- ----------
131,808 1,429,784
--------- ----------
Deferred tax liability:
Depreciation and amortization............................. (298,561) (190,728)
Other..................................................... -- (188,436)
--------- ----------
(298,561) (379,164)
--------- ----------
Net deferred tax asset (liability)................ $(166,753) $1,050,620
========= ==========
</TABLE>

F-38
<PAGE> 125
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases its office facilities and equipment under various
capital and noncancellable operating leases, which expire on various dates
through March 2011. Interest rates on capital leases range from 7.5% to 22.0%.
Rent expense for all operating leases was $855,105, $1,681,771 and $3,126,960 in
fiscal 1997, 1998 and 1999, respectively.

Future minimum lease payments as of January 1, 2000 are as follows:

<TABLE>
<CAPTION>
CAPITAL
OPERATING LEASES
LEASES (NOTE 8)
---------- ---------
<S> <C> <C>
2000........................................................ $2,626,410 $ 186,752
2001........................................................ 1,559,163 115,521
2002........................................................ 1,167,564 78,503
2003........................................................ 854,046 13,335
2004........................................................ 303,169 --
Thereafter.................................................. 721,985 --
---------- ---------
Total minimum lease payments................................ $7,232,337 394,111
==========
Less -- amount representing interest........................ (57,944)
---------
Present value of future minimum lease payments.............. 336,167
Less -- current portion of principal payments............... (152,855)
---------
$ 183,312
=========
</TABLE>

EMPLOYMENT AGREEMENTS

As of January 1, 2000, the Company has employment agreements with nine
executives, which expire at various dates through June 2002. These agreements
provide for, among other things, salary, bonus, severance and change in control
provisions.

LETTERS OF CREDIT

At January 2, 1999 and January 1, 2000, the Company had letters of credit
outstanding totaling $1,020,000, which primarily collaterize a workers'
compensation policy. The contract amount of the letters of credit is a
reasonable estimate of their fair value as the value for each is fixed over the
life of the commitment.

LITIGATION

In the normal course of business, the Company is a party to various claims
and legal proceedings. Although the ultimate outcome of these matters is not
presently determinable, management of the Company, after consultation with legal
counsel, does not believe that these matters will have a material adverse effect
on the Company's consolidated financial position or results of operations.

F-39
<PAGE> 126
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. CONCENTRATION RISKS

Financial instruments, which potentially subject the Company to
concentrations of credit risk are primarily cash, short-term investments and
accounts receivable. The Company performs periodic evaluations of the relative
credit standing of the financial institutions with which it does business. The
Company periodically evaluates the financial condition of its obligors and
generally does not require collateral. The Company's allowance for doubtful
accounts reflects current market conditions and management's assessment
regarding the collectibility of its accounts receivable.

For fiscal 1997, 1998 and 1999, five, five and four customers,
respectively, in aggregate, accounted for approximately 86%, 82% and 73% of
total revenues, respectively. At January 2, 1999 and January 1, 2000, these
customers, in aggregate, accounted for 65% and 64% of accounts receivable,
respectively. Revenues from these customers are included in the Company's Cable,
Telephony and Internet, and Satellite and Wireless segments. A loss of or a
material reduction in revenues from any of these customers could have a material
adverse effect on the Company's operating results and financial condition.

13. RELATED-PARTY TRANSACTIONS

In addition to the recapitalization transaction discussed in Note 1, during
1997 and 1999, the Company repurchased 6,216 and 553 shares of Common stock from
a shareholder for $36,987 and $7,057, respectively. For fiscal 1997, 1998 and
1999, the Company paid $158,416, $157,533 and $305,300, respectively, to a
shareholder for consulting services.

In connection with the Telecrafter acquisition on September 7, 1999 (see
Note 3), the Company entered into a facility lease with one of the selling
shareholders, which expires in March 2011. The lease provides for escalating
lease payments over the life of lease. For the period from September 7, 1999
through January 1, 2000, the Company recorded $13,757 of expense under this
lease.

14. SEGMENTS

The Company follows SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company classifies its operations into
four segments: Cable Services, Telephony and Advanced Services, Satellite and
Other Wireless Services and Premise Networking Services. The operating segments
are managed separately because each operating segment represents a strategic
business unit that offers different services. The accounting policies of the
operating segments are the same as described in the summary of significant
accounting policies (see Note 2). The business segments are described in further
detail below:

The Cable Segment provides traditional and advanced cable installation,
disconnects, equipment recovery, collection and system audit services.

The Telephony and Internet Segment includes installation and maintenance of
DSL services, cable telephony and high-speed data services and other broadband
services, as well as traditional telephony services for commercial and
residential consumers.

F-40
<PAGE> 127
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Satellite and Wireless Segment includes installation, equipment
conversion and maintenance services of direct broadcast satellite and other
wireless technologies.

The Premise Networking Segment includes installation and maintenance of
local area and wide area networking services and other communication systems for
commercial and residential consumers.

Corporate operations include senior management activities, professional
services and headquarters' facility and support and employee benefit costs.

Segment assets include amounts specifically identified to Cable Services,
Telephony and Advanced Services, Satellite and Other Wireless Services and
Premise Networking Services segments. Corporate assets consist primarily of cash
and cash equivalents, marketable securities, capitalized financing costs,
long-term debt and deferred tax assets.

Business segment information is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
--------------------------------------- -------------------------
JANUARY 3, JANUARY 2, JANUARY 1, APRIL 3, APRIL 1,
1998 1999 2000 1999 2000
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Cable............................................... $18,805,550 $22,386,996 $45,501,051 $ 6,276,000 $19,140,000
Telephony and Internet.............................. 3,902,597 4,260,771 8,221,255 1,187,000 5,477,000
Satellite and Wireless.............................. 2,980,874 7,047,183 7,124,957 1,101,000 4,353,000
Premise Networking.................................. 17,834 120,688 548,605 44,688 127,733
----------- ----------- ----------- ----------- -----------
$25,706,855 $33,815,638 $61,395,868 $ 8,608,688 $29,097,733
=========== =========== =========== =========== ===========
OPERATING INCOME (LOSS)
Cable............................................... $ 2,430,163 $ 3,358,899 $ 2,295,326 $ 530,000 $ 1,227,000
Telephony and Internet.............................. 372,041 822,316 2,019,826 326,000 800,000
Satellite and Wireless.............................. 117,627 479,228 (1,163,258) (55,000) (1,309,000)
Premise Networking.................................. 10,667 (7,318) (79,843) 979 (65,590)
Corporate Expense (includes special compensation
charges of $1,163,638 and recapitalization costs
of $1,108,314 in 1999 and a special compensation
charge of $2,625,988 for the three months ended
April 1, 2000).................................... (1,417,154) (1,912,954) (5,132,531) (443,000) (3,581,872)
----------- ----------- ----------- ----------- -----------
$ 1,513,344 $ 2,740,171 $(2,060,480) $ 358,979 $(2,929,462)
=========== =========== =========== =========== ===========
TOTAL ASSETS
Cable............................................... $ 4,953,925 $ 5,966,938 $43,712,777
Telephony and Internet.............................. 1,018,562 1,208,456 3,357,957
Satellite and Wireless.............................. 706,850 1,492,369 8,108,603
Premise Networking.................................. 34,432 109,360 1,214,584
Corporate Expense................................... 1,519,340 1,006,416 10,787,967
----------- ----------- -----------
$ 8,233,109 $ 9,783,539 $67,181,888
=========== =========== ===========
</TABLE>

F-41
<PAGE> 128
VIASOURCE COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
---------------------------------------
JANUARY 3, JANUARY 2, JANUARY 1,
1998 1999 2000
----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
DEPRECIATION AND AMORTIZATION
Cable............................................. $ 591,925 $ 702,416 $ 2,026,758
Telephony and Internet............................ 119,729 152,613 373,116
Satellite and Wireless............................ 68,159 120,782 295,470
Premise Networking................................ 210 4,297 49,664
Corporate Expenses................................ -- -- 68,681
----------- ----------- -----------
$ 780,023 $ 980,108 $ 2,813,689
=========== =========== ===========
CAPITAL EXPENDITURES
Cable............................................. $ 781,571 $ 1,598,743 $ 3,000,919
Telephony and Internet............................ 158,089 347,357 793,109
Satellite and Wireless............................ 89,996 274,907 426,707
Premise Networking................................ 277 9,781 57,816
Corporate Expenses................................ -- -- 104,774
----------- ----------- -----------
$ 1,029,933 $ 2,230,788 $ 4,383,325
=========== =========== ===========
</TABLE>

F-42
<PAGE> 129

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Nassau Communications, Inc.:

We have audited the accompanying balance sheets of Nassau Communications,
Inc. (a Colorado corporation) as of December 31, 1997 and 1998, and the related
statements of operations, shareholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nassau Communications, Inc.
as of December 31, 1997 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
January 14, 2000

F-43
<PAGE> 130

NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 543,730 $1,491,064
Marketable securities..................................... 215,715 246,421
Accounts receivable, net of allowance of $100,000 and
$321,968, respectively................................. 2,083,580 2,431,538
Supply inventory.......................................... 263,352 147,303
Prepaid expenses and other................................ 65,782 38,416
---------- ----------
Total current assets.............................. 3,172,159 4,354,742
---------- ----------
PROPERTY AND EQUIPMENT, net................................. 226,367 292,537
OTHER ASSETS................................................ 24,262 31,669
---------- ----------
$3,422,788 $4,678,948
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease obligations.............. $ 18,712 $ 35,122
Accounts payable.......................................... 148,057 15,057
Accrued expenses.......................................... 870,331 1,075,913
---------- ----------
Total current liabilities......................... 1,037,100 1,126,092
---------- ----------
NOTE PAYABLE TO RELATED PARTY............................... 20,000 20,000
---------- ----------
CAPITAL LEASE OBLIGATIONS................................... 47,688 81,461
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 7)
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 50,000 shares authorized,
10,000 shares issued and outstanding................... 10,000 10,000
Additional paid-in capital................................ 90,000 90,000
Retained earnings......................................... 2,202,285 3,304,974
Unrealized gain on marketable securities.................. 15,715 46,421
---------- ----------
Total shareholders' equity........................ 2,318,000 3,451,395
---------- ----------
$3,422,788 $4,678,948
========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-44
<PAGE> 131

NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------ -----------------------
1997 1998 1998 1999
---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES....................................... $8,977,820 $17,873,792 $7,625,595 $8,432,188
---------- ----------- ---------- ----------
COST OF REVENUES............................... 6,962,851 13,895,652 6,395,805 6,108,776
SELLING, GENERAL AND ADMINISTRATIVE............ 1,282,625 2,183,039 761,059 645,077
DEPRECIATION AND AMORTIZATION.................. 57,142 76,542 35,449 44,146
---------- ----------- ---------- ----------
Total operating expenses............. 8,302,618 16,155,233 7,192,313 6,797,999
---------- ----------- ---------- ----------
Income from operations............... 675,202 1,718,559 433,282 1,634,189
INTEREST INCOME................................ 32,086 41,151 21,491 46,987
INTEREST EXPENSE............................... 7,642 10,524 4,757 5,748
---------- ----------- ---------- ----------
Income before income taxes........... 699,646 1,749,186 450,016 1,675,428
STATE INCOME TAX PROVISION..................... 14,703 20,497 8,873 26,980
---------- ----------- ---------- ----------
NET INCOME..................................... $ 684,943 $ 1,728,689 $ 441,143 $1,648,448
========== =========== ========== ==========
PRO FORMA DATA (UNAUDITED):
Historical net income................ $ 684,943 $ 1,728,689 $ 441,143 $1,648,448
Pro forma income tax expense......... 232,881 587,754 149,989 560,472
---------- ----------- ---------- ----------
PRO FORMA NET INCOME........................... $ 452,062 $ 1,140,935 $ 291,154 $1,087,976
========== =========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-45
<PAGE> 132

NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN RETAINED UNREALIZED
SHARES AMOUNT CAPITAL CAPITAL GAIN TOTAL
------- ------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997..................... 10,000 $10,000 $90,000 $1,869,842 $ -- $1,969,842
Unrealized gain on marketable securities... -- -- -- -- 15,715 15,715
Net income................................. -- -- -- 684,943 -- 684,943
Shareholder distributions.................. -- -- -- (352,500) -- (352,500)
------- ------- ------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1997................... 10,000 10,000 90,000 2,202,285 15,715 2,318,000
Unrealized gain on marketable securities... -- -- -- -- 30,706 30,706
Net income................................. -- -- -- 1,728,689 -- 1,728,689
Shareholder distributions.................. -- -- -- (626,000) -- (626,000)
------- ------- ------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1998................... 10,000 $10,000 $90,000 $3,304,974 $ 46,421 $3,451,395
======= ======= ======= ========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-46
<PAGE> 133

NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- ---------------------
1997 1998 1998 1999
--------- ----------- -------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $684,943 $1,728,689 $441,143 $1,648,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for bad debt...................... 15,000 221,968 25,000 --
Depreciation and amortization............... 57,142 76,542 35,449 44,146
Loss on disposal of fixed assets............ 18,252 -- -- --
Changes in operating assets and liabilities:
Accounts receivable....................... (578,585) (569,926) (204,859) 440,325
Supply inventory.......................... 82,561 116,049 58,024 114,261
Prepaid expenses and other................ (56,237) 19,232 (22,900) (67,102)
Accounts payable.......................... 76,573 (133,000) 89,122 203,540
Accrued expenses.......................... 418,144 205,582 141,943 154,840
-------- ---------- -------- ----------
Net cash provided by operating
activities........................ 717,793 1,665,136 562,922 2,538,458
-------- ---------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............. (115,268) (65,823) (51,208) (15,049)
Purchase of marketable securities.............. (200,000) -- -- --
-------- ---------- -------- ----------
Net cash used in investing
activities........................ (315,268) (65,823) (51,208) (15,049)
-------- ---------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions...................... (352,500) (626,000) (350,000) (772,000)
Principal payments on capital lease
obligations................................. (8,512) (25,979) (10,899) (17,149)
Repayment of notes payable..................... (47,783) -- -- (20,000)
-------- ---------- -------- ----------
Net cash used in financing
activities........................ (408,795) (651,979) (360,899) (809,149)
-------- ---------- -------- ----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS.................................... (6,270) 947,334 150,815 1,714,260
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD... 550,000 543,730 543,730 1,491,064
-------- ---------- -------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD......... $543,730 $1,491,064 $694,545 $3,205,324
======== ========== ======== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-47
<PAGE> 134

NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

NOTES TO FINANCIAL STATEMENTS

(INFORMATION FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1999 IS UNAUDITED)

1. BACKGROUND

Nassau Communications, Inc., d/b/a Telecrafter Services Corporation (the
"Company") is headquartered in Denver, Colorado and provides outsourcing of
installations and other related services to companies in the cable and satellite
television industry across the continental United States.

On September 7, 1999, the Company sold substantially all of its assets and
liabilities to Telecrafter Acquisition Corp., a wholly-owned subsidiary of
ViaSource Communications, Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

INTERIM FINANCIAL STATEMENTS

The financial statements for the six months ended June 30,1998 and 1999 are
unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the six months ended June 30, 1999 are not necessarily indicative
of the results to be expected for the full year.

REVENUE RECOGNITION

Revenues are recognized as cable and satellite installation and maintenance
services are performed.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1997
and 1998, cash and cash equivalents include cash on hand, cash in the bank and
overnight repurchase agreements.

MARKETABLE SECURITIES

The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The
marketable securities, which consist of equity securities, have been classified
as available-for-sale securities and are stated

F-48
<PAGE> 135
NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

at fair market value. Unrealized gains and losses are included as a separate
component of stockholders' equity until realized. All of the Company's
investments have been classified as current.

SUPPLY INVENTORY

Supply inventory is stated at the lower of cost (first-in, first-out
method) or market and is comprised of materials used for cable and satellite
equipment installations and service.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Additions and improvements are
capitalized, while repairs and maintenance are charged to expense as incurred.
Depreciation of property and equipment is provided using the straight-line
method over the estimated useful lives of the assets which range from 3 to 7
years. Leasehold improvements are amortized on a straight line basis over the
shorter of the lease term or estimated useful lives of the assets.

INCOME TAXES

The Company has elected treatment as an "S" Corporation for federal and
state income tax purposes (except for states where "S" Corporations are not
recognized) and is not taxed as a separate entity. The Company's taxable income
or loss is allocated to the shareholders and recognized on the shareholders'
individual tax return. Accordingly, no provision for income taxes have been
reflected in the accompanying financial statements.

The Company reports certain income and expense items for income tax
purposes on a different basis than that reflected in the accompanying financial
statements. The primary differences are due to the cash basis of accounting for
income tax purposes. If the Company terminates its S Corporation status, a
deferred income tax liability accounted for under the provisions of SFAS No. 109
"Accounting for Income Taxes," of approximately $546,000 would need to be
reflected in the accompanying financial statements as of December 31, 1998.

For informational purposes, the accompanying statements of operations
include an unaudited pro forma adjustment for income taxes which would have been
recorded if the Company had not been an S Corporation, based on the tax laws in
effect during the respective periods. The differences between the federal
statutory income tax rate and the pro forma income tax rate primarily relate to
state income taxes and expenses not deductible for tax purposes.

SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1997, 1998 and the six months ended June
30, 1999, the Company paid interest of $7,642, $10,524, and $5,748 respectively,
income taxes of $14,703, $20,497 and $26,980, respectively, and financed
equipment purchased under capitalized lease obligations of $48,917, and $76,162
and $0, respectively.

F-49
<PAGE> 136
NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
-------- --------
<S> <C> <C>
Machinery and equipment..................................... $140,721 $172,929
Office furniture and equipment.............................. 197,999 307,776
Leasehold improvements...................................... 57,814 57,814
-------- --------
396,534 538,519
Accumulated depreciation and amortization................... (170,167) (245,982)
-------- --------
$226,367 $292,537
======== ========
</TABLE>

As of December 31, 1998, the net book value of property and equipment under
capital lease obligations was $116,921.

4. LINE OF CREDIT

The Company had a $500,000 line of credit with a bank bearing interest at
the prime rate plus 1% that expired on May 31, 1999. There were no borrowings
under the line during 1997 or 1998.

5. NOTE PAYABLE TO RELATED PARTY

In February 1993, the Company borrowed $20,000 from one of its directors.
The note bears interest at 8%, payable annually, and is due on February 26,
2000.

6. CAPITAL LEASE OBLIGATIONS

The company has entered into long-term capital lease agreements for office
furniture and equipment. The implicit interest rates under these leases range
from 7.5% to 12.2% per year.

Future principal payments on capital lease obligations as of December 31,
1998 are as follows:

<TABLE>
<S> <C>
1999........................................................ $ 44,242
2000........................................................ 46,131
2001........................................................ 20,887
2002........................................................ 17,724
2003........................................................ 6,418
--------
Minimum lease payments...................................... 135,402
Less - Amounts representing interest...................... (18,819)
--------
Present value of minimum lease payments..................... 116,583
Less - Current portion.................................... (35,122)
--------
$ 81,461
========
</TABLE>

F-50
<PAGE> 137
NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. COMMITMENTS AND CONTINGENCIES

LEASE OBLIGATIONS

The Company leases one of its office facilities from one of its
shareholders. The Company is also obligated under various noncancellable
operating leases for office space and equipment. Future minimum lease payments
as of December 31, 1998 are as follows:

<TABLE>
<CAPTION>
RELATED-PARTY NONRELATED-PARTY
LEASE LEASES
------------- ----------------
<S> <C> <C>
1999........................................................ $ 56,152 $ 86,273
2000........................................................ 68,620 46,074
2001........................................................ 76,079 6,600
2002........................................................ 82,046 --
2003........................................................ 88,013 --
Thereafter.................................................. 815,965 --
---------- --------
$1,186,875 $138,947
========== ========
</TABLE>

For the year ended December 31, 1997, 1998 and the six months ended June
30, 1999, rent expense under the related-party operating lease was $45,600,
$45,600 and $28,076, respectively. For the year ended December 31, 1997, 1998
and the six months ended June 30, 1999, rent expense under the non-related party
operating leases was $40,405, $78,721 and $43,137, respectively.

LITIGATION

In the normal course of business, the Company is a party to various claims
and legal proceedings. Although the ultimate outcome of these matters is
presently not determinable, management of the Company, after consultation with
legal counsel, does not believe that these matters will have a material adverse
effect on the Company's financial position or results of operations.

8. CONCENTRATION RISKS

CONCENTRATION OF CREDIT RISK

F-51
<PAGE> 138
NASSAU COMMUNICATIONS, INC.
(D/B/A TELECRAFTER SERVICES CORPORATION)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

SIGNIFICANT CUSTOMERS

For the years ended December 31, 1997 and 1998, two customers, in
aggregate, accounted for approximately 65% and 88% of total revenues,
respectively. As of December 31, 1997 and 1998, 58% and 81% of accounts
receivable, respectively, related to these two customers. For the six months
ended June 30, 1999, three customers, in aggregate, accounted for approximately
82% of total revenues. A loss of or a material reduction in revenues from any of
these customers could have a material adverse effect on the Company's operating
results and financial condition.

F-52
<PAGE> 139

COMMUNICATION RESOURCES INCORPORATED AND SUBSIDIARY

The following financial statements are presented for Communication
Resources Incorporated in accordance with Securities and Exchange Commission
Regulation S-X Rule No. 3-05:

<TABLE>
<S> <C>
Unaudited consolidated financial statements for the six
months ended June 30, 1998 and 1999....................... F-53
Audited consolidated financial statements as of December 31,
1997 and for the period from February 13, 1997 (Inception)
through December 31, 1997................................. F-60
Audited consolidated financial statements as of December 31,
1998 and for the year ended December 31, 1998............. F-70
</TABLE>

F-53
<PAGE> 140

COMMUNICATION RESOURCES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
REVENUES.................................................... $ 9,623,478 $14,431,186
----------- -----------
COST OF REVENUES............................................ 6,169,321 9,104,817
SELLING, GENERAL AND ADMINISTRATIVE......................... 4,500,052 4,809,392
DEPRECIATION AND AMORTIZATION............................... 124,762 335,932
----------- -----------
Total operating expenses.......................... 10,794,135 14,250,141
----------- -----------
Income (loss) from operations..................... (1,170,657) 181,045
INTEREST EXPENSE............................................ 155,012 105,902
GAIN ON SALE OF SERVICE LINE................................ -- 642,127
----------- -----------
Income (loss) before income taxes................. (1,325,669) 717,270
INCOME TAX PROVISION (BENEFIT).............................. (265,678) 292,076
----------- -----------
NET INCOME (LOSS)........................................... $(1,059,991) $ 425,194
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-54
<PAGE> 141

COMMUNICATION RESOURCES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $(1,059,991) $ 425,194
Adjustments to reconcile net income (loss) to net cash
provided by
(used in) operating activities:
Depreciation and amortization.......................... 124,762 335,932
Provision for allowance for doubtful accounts.......... 135,531 168,998
Provision for deferred income taxes.................... (265,758) 224,711
Changes in operating assets and liabilities:
Accounts receivable.................................. (41,075) 1,269,684
Prepaid expenses and other........................... (7,075) 109,768
Accounts payable..................................... 863,669 (472,855)
Accrued expenses..................................... (399,303) 23,482
Deferred gain on sale of service line................ -- 500,000
Other liabilities.................................... -- 73,607
----------- -----------
Net cash provided by (used in) operating
activities................................ (649,240) 2,658,521
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment....................... (573,220) (234,451)
Cash paid for acquisition of Pinnacle, net................ -- 8,552
----------- -----------
Net cash used in investing activities........ (573,220) (225,899)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit............. 124,325 (1,858,833)
Payments of long-term debt................................ (31,076) (670,104)
Proceeds from sale of Preferred stock, net................ 4,799,815 --
Proceeds from exercise of Common stock options............ -- 4,611
----------- -----------
Net cash used in financing activities........ 4,893,064 (2,524,326)
----------- -----------
NET INCREASE (DECREASE) IN CASH............................. 3,670,604 (91,704)
CASH, BEGINNING OF PERIOD................................... 195,401 208,436
----------- -----------
CASH, END OF PERIOD......................................... $ 3,866,005 $ 116,732
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest.................................... $ 155,000 $ 106,000
=========== ===========
Acquisition of property and equipment under capital
lease.................................................. $ 93,000 $ --
=========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-55
<PAGE> 142

COMMUNICATION RESOURCES INCORPORATED AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying financial statements are unaudited and have been prepared
by Communications Resources Incorporated and subsidiary ("CRI" or the "Company")
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to SEC rules and regulations.
The Company believes that the financial statements include all adjustments of a
normal and recurring nature necessary to present fairly the results of
operations, financial position and cash flows for the periods presented. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in this Registration Statement for the year ended
December 31, 1998 and for the period from February 13, 1997 (Inception) to
December 31, 1997.

The consolidated financial statements include the accounts of the Company
and its subsidiary. All material intercompany balances and transactions have
been eliminated. There have been no material changes in accounting policies from
those stated in the Company's financial statements included in this Registration
Statement.

2. NATURE OF BUSINESS

The Company provides outsourcing of installations and other related
services to companies in the communications industry across the continental
United States.

On July 1, 1999, the Company effected a 1.0772854 - for - 1 stock split in
the form of a stock dividend. On July 1, 1999, all stockholders received
.0772854 additional shares of Common stock for every share they owned on this
date. Share data in the unaudited June 30, 1998 and 1999 notes to consolidated
financial statements presented herein have been adjusted to give effect to this
split.

On July 23, 1999, the Company and The RTK Group, Inc. ("RTK") completed a
merger, whereby all of the outstanding stock and options to purchase Common
stock of the Company were exchanged for Common stock and options of RTK.

3. ACQUISITION

On March 12, 1999, the Company entered into an agreement to acquire all of
the outstanding stock of Pinnacle Cable Services, Inc. ("Pinnacle"). The
acquisition closed on April 27, 1999 and was accounted for as a purchase. The
total purchase price of Pinnacle was $342,422 and included

F-56
<PAGE> 143
COMMUNICATION RESOURCES INCORPORATED AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$100,000 of cash, 111,938 shares of Common stock with a value of $111,938 and
transaction costs of $130,484. The $126,642 excess of the total purchase over
the estimated fair value of the net assets acquired was recorded as goodwill and
is being amortized on a straight-line basis over 40 years.

The following table displays the net non-cash assets that were acquired
from Pinnacle:

<TABLE>
<S> <C>
Non-cash assets (liabilities):
Accounts receivable....................................... $1,091,848
Property and equipment.................................... 61,032
Other assets.............................................. 47,026
Goodwill.................................................. 126,642
Current liabilities....................................... (117,626)
Deferred taxes............................................ (292,635)
Debt...................................................... (682,417)
----------
Net noncash assets acquired................................. 233,870
Less: Common stock issued................................. (111,938)
Transaction costs................................... (130,484)
----------
$ (8,552)
==========
</TABLE>

4. SALE OF SERVICE LINE

On April 9, 1999, the Company sold the assets and customer contracts of its
collection service line for $1,250,000. The sale price may be adjusted, up or
down, based on a dollar-for-dollar calculation of revenues for the twelve month
period following closing, but in no event will the sales price adjustment be
more than $500,000. The sale of the collection service line resulted in a gain
of $642,127. The collection service line generated revenues of 476,538 and
344,237 in 1998 and 1999, respectively.

F-57
<PAGE> 144
COMMUNICATION RESOURCES INCORPORATED AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. SERIES A CONVERTIBLE PREFERRED STOCK

At December 31, 1998, there were 21,910,000 shares of $.01 par value,
Series A Convertible Preferred Stock ("Series A Preferred") authorized with
11,801,661 shares issued and outstanding. The Series A Preferred was convertible
at any time, at the option of the holders, into shares of Common stock and was
mandatorily convertible in the event of a Qualified Public Offering, as defined.
The Series A Preferred had preference over common stockholders in the event of a
liquidation and had voting rights equal to those of the common stockholders. On
June 30, 1999, all 11,801,661 shares of Series A Preferred were converted into
11,801,661 shares of Common stock.

6. CONCENTRATIONS OF CREDIT

The Company had three clients which accounted for approximately 56.8% of
revenues for the six months ended June 30, 1999 and three clients which
accounted for 58.3% of revenues for the six months ended June 30, 1998. These
clients are primarily regional operations of large, national cable companies
that are leaders in their market places. These national cable companies are made
up of many regional client locations dispersed throughout the United States
which individually contract with the Company for services.

F-58
<PAGE> 145

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Partners of
Communication Resources Inc. L.P.
and Subsidiaries

We have audited the accompanying consolidated balance sheet of
Communication Resources Inc. L.P. and Subsidiaries as of December 31, 1997, and
the related consolidated statements of operations, changes in partners' capital
accounts, and cash flows for the period from February 13, 1997 (inception)
through December 31, 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
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 financial position of Communication
Resources Inc. L.P. and Subsidiaries as of December 31, 1997, and the
consolidated results of their operations and their cash flows for the period
from February 13, 1997 (inception) through December 31, 1997 in conformity with
accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

March 20, 1998, except for Note 9 as
to which the date is May 7, 1998
Miami, FL

F-59
<PAGE> 146

COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS

Current Assets:
Cash................................................... $ 195,401
Trade accounts receivable, net of allowance for
doubtful accounts of $144,351........................ 3,684,566
Prepaid and other assets............................... 234,915
----------
Total current assets............................. 4,114,882
Property and equipment, net............................ 519,513
Other assets........................................... 188,371
Goodwill, net.......................................... 374,294
----------
Total assets..................................... $5,197,060
==========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Current portion of long-term debt...................... $2,880,267
Accounts payable....................................... 333,233
Accrued expenses....................................... 453,048
----------
Total current liabilities........................ 3,666,548
Long-term debt......................................... 351,688
----------
Total liabilities................................ 4,018,236
Commitments and Contingency
Partners' capital accounts............................. 1,178,824
----------
Total liabilities and partners' capital
accounts......................................... $5,197,060
==========
</TABLE>

See accompanying notes.

F-60
<PAGE> 147

COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 13, 1997 (INCEPTION) THROUGH DECEMBER 31, 1997

<TABLE>
<S> <C>
Revenues............................................... $13,157,135
Cost of services....................................... 9,672,008
-----------
Gross margin........................................... 3,485,127

General and Administrative Expenses:
Salaries......................................... 1,895,621
Occupancy........................................ 471,787
Office........................................... 316,993
Bad debts........................................ 258,087
Travel........................................... 312,659
Interest......................................... 173,702
Other............................................ 151,354
Marketing........................................ 162,659
Depreciation and amortization.................... 85,370
Professional fees................................ 42,823
-----------
Total general and administrative expenses........ 3,871,055
-----------
Net loss......................................... $ (385,928)
===========
</TABLE>

See accompanying notes.

F-61
<PAGE> 148

COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS
FOR THE PERIOD FROM FEBRUARY 13, 1997 (INCEPTION) THROUGH DECEMBER 31, 1997

<TABLE>
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------- ------------------------------- TOTAL
COMMUNICATION ALPINE/RFM ALPINE/RFM PARTNERS'
RESOURCES INC. CRI LLC CRI LLC DTJ LLC CEEJ LLC CAPITAL
<S> <C> <C> <C> <C> <C> <C>
Contributions from
partners........... $ 126,795 $1,937,436 $19,570 $-- $-- $2,083,801
Distributions to
partners........... (519,049) -- -- -- -- (519,049)
Net loss............. -- (385,928) -- -- -- (385,928)
Partners
reallocation....... 392,254 (388,332) (3,922) -- -- --
--------- ---------- ------- --- --- ----------
Balance at December
31, 1997........... $ -- $1,163,176 $15,648 $-- $-- $1,178,824
========= ========== ======= === === ==========
</TABLE>

See accompanying notes.

F-62
<PAGE> 149

COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM FEBRUARY 13, 1997 (INCEPTION) THROUGH DECEMBER 31, 1997

<TABLE>
<S> <C>
Operating Activities:
Net loss............................................... $ (385,928)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 85,370
Provision for doubtful accounts........................ 258,087
Net change in operating assets and liabilities:
Trade accounts receivable.............................. (3,111,974)
Prepaid and other current assets....................... (234,915)
Accounts payable....................................... (6,660)
Accrued expenses....................................... (107,020)
-----------
Net cash used in operating activities............ (3,503,040)
Investing Activities:
Acquisition of property and equipment.................. (232,825)
Other assets........................................... (136,188)
-----------
Net cash used in investing activities............ (369,013)
Financing Activities:
Proceeds from line of credit, net...................... 2,707,575
Proceeds from bank borrowings.......................... 98,260
Repayments of debt..................................... (183,905)
Contributions from partners............................ 1,957,006
Distributions to partners.............................. (519,049)
-----------
Net cash provided by financing activities........ 4,059,887
Increase in cash and cash equivalents.................. 187,834
Cash at beginning of year.............................. 7,567
-----------
Cash at end of year.................................... $ 195,401
===========
Supplemental Disclosure of Cash Flow Information:
Interest paid.......................................... $ 173,702
===========
Schedule of Noncash Investing and Financing Activities:
Acquisition of property and equipment under capital
leases............................................... $ 230,175
===========
</TABLE>

See accompanying notes.

F-63
<PAGE> 150

COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ORGANIZATION AND BASIS OF PRESENTATION

Communication Resources Inc. L.P. (CRI), a Delaware operating limited
partnership, was formed on February 13, 1997 for the purpose of acquiring the
net assets of Communication Resources Inc., a Florida corporation incorporated
on March 31, 1996, (the Predecessor Company). As a result of this transaction,
the shareholders of the Predecessor Company contributed their ownership interest
in exchange for 66 2/3% interest of CRI. The following summarizes the
significant assets acquired and liabilities assumed by CRI. This transaction was
recorded at historical cost in a manner similar to that in pooling-of-interests
accounting.

<TABLE>
<S> <C>
Trade accounts receivable................................... $ 830,679
Property and equipment, net................................. 148,000
Goodwill, net............................................... 392,009
Other assets................................................ 59,750
----------
Subtotal.................................................... 1,430,438
----------
Less liabilities:
Accounts payable.......................................... 339,843
Accrued expenses.......................................... 560,068
Capital leases and debt................................... 403,682
----------
Subtotal.................................................... 1,303,643
----------
Net assets acquired......................................... $ 126,795
==========
</TABLE>

Concurrent with this transaction, Alpine/RFM CRI LLC, a Delaware limited
liability company contributed $1,957,006 in exchange for the remaining 33 1/3%
interest in CRI.

On April 1, 1996 the Predecessor Company was formed and assumed the net
liabilities of Cabsco, Inc. The total purchase price amounted to the fair value
of the net liabilities assumed of $92,000 and cash paid of $300,000. The
resulting purchase price was recorded as good will.

2. SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

Communication Resources Inc. L.P. and its subsidiaries provides outsourcing
services to the communications industry. Approximately 90% of its business
results from technical or field services while, the remaining 10% is derived
from debt recovery and consulting. CRI operates in California, Florida, Georgia,
Kentucky, Louisiana, New Jersey, New York, Oregon, Pennsylvania, South Carolina,
Tennessee and Texas.

F-64
<PAGE> 151
COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of all
subsidiaries. All significant intercompany balances and transaction have been
eliminated.

REVENUE AND COST RECOGNITION

Revenue is recognized as services are performed and costs are recognized as
they are incurred.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and is depreciated and amortized
on a straight-line basis as follows:

<TABLE>
<CAPTION>
ASSET CATEGORY DEPRECIATION/AMORTIZATION PERIOD
<S> <C>
Furniture & fixtures..................... 5 years
Assets under capital lease............... Term of the lease or life of the asset
whichever is shorter, from 36 to 60
months
Office equipment......................... 12 months
</TABLE>

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS

CRI accounts for the impairment of long lived assets under the provisions
of Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets. SFAS No. 121 requires a company to review
the carrying value of long lived assets and certain intangibles for impairment
when events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable.

OTHERS ASSETS

CRI purchases uniforms, tools and radios for employee use. These assets are
recorded as other assets and amortized over their estimated useful lives.
Uniforms are amortized over a 12 month period, while radios and tools are
amortized over 24 months on a straight-line basis.

F-65
<PAGE> 152
COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

GOODWILL

Goodwill is being amortized on a straight line basis over a 40 year period
based on its estimated useful life. Amortization expense and accumulated
amortization was approximately $14,000 at December 31, 1997.

INCOME TAXES

CRI and its subsidiaries are recognized as limited partnerships and limited
liability companies for federal income tax purposes. Consequently, no provision
for taxes has been made for federal and applicable state income taxes, since any
income or losses will be reported by the partners or limited liability company
members on their personal income tax returns. There are certain states that tax
limited liability entities as regular corporations; therefore, CRI may be liable
for income taxes in those states.

ADVERTISING EXPENSE

CRI expenses advertising costs as incurred. Advertising expense for the
period from February 13, 1997 (inception) through December 31, 1997 was
approximately $24,000.

STARTUP COSTS

CRI incurs costs related to the start-up of operation in new locations and
markets, which are expensed as incurred and are comprised primarily of payroll,
travel, human resources activity and the related costs. Start up costs for the
period from February 13, 1997 (inception) through December 31, 1997 were
approximately $846,000.

3. CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS

CRI's financial instruments that are exposed to concentrations of credit
risk consist primarily of cash balances and accounts receivable. Cash balances
are held in high quality financial institutions, which are evaluated
periodically by the management of CRI to minimize the risk associated with
account balances in excess of federally insured account limits. CRI minimizes
its exposure to credit risk relating to accounts receivable through its credit
review procedures and collection practices.

The three largest clients or CRI accounted for a combined total of 31% of
the overall revenues in 1997, with the largest contributing approximately 14%.
These clients are large, national cable companies that are leaders in their
market place.

F-66
<PAGE> 153
COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1997 consisted of the following:

<TABLE>
<S> <C>
Office equipment............................................ $ 23,088
Computer equipment.......................................... 83,639
Furniture................................................... 113,548
Asset under capital leases.................................. 401,241
--------
621,516
Less: accumulated depreciation and amortization............. 102,003
--------
$519,513
========
</TABLE>

Amortization expense relating to assets under capital leases amounted to
$40,096 for the period from February 13, 1997 (inception) to December 31, 1997.

5. DEBT

<TABLE>
<S> <C>
$3,000,000 line of credit with a bank. The agreement expires
on August 5, 1998 and includes interest at LIBOR plus
2.50% (8.5% at December 31, 1997). The line is
collateralized by the substantially all the assets of CRI.
The loan is guaranteed by two officers of CRI. Advances
are based on 85% of eligible accounts receivable. On
January 1, 1998 through the end of the agreement, the
advance rate is adjusted to 80%. The line of credit
agreement contains certain restrictive covenants as
defined. The Company had no borrowing availability as of
December 31, 1997 and was in violation of certain
restrictive covenants which were cured by the bank through
May 5, 1998 in a debt covenant waiver letter dated April
29, 1998.................................................. $2,707,575
Note payable to former owner $7,609 principal and interest
payable monthly at 10%; subordinated to all nontrade debt
and uncollateralized. Final payment is due March 2000..... 189,316
Bank note payable in monthly installments of $1,602,
principal and interest at 9%. Final payment is due
November 1998, subordinated to all nontrade debt and
uncollateralized. The loan is guaranteed by an officer of
CRI....................................................... $ 15,813
Capital lease obligations payable in monthly installments of
$212 to $1,862, including interest ranging from 9% to
20.65%, collateralized by equipment and vehicles; maturing
at various dates through September 2002................... 319,251
----------
Total debt................................................ 3,231,955
Less: current portion....................................... 2,880,267
----------
$ 351,688
==========
</TABLE>

F-67
<PAGE> 154
COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1997, scheduled maturities of total debt are as follows:

<TABLE>
<CAPTION>
CAPITAL
NOTES LEASES TOTAL
<S> <C> <C> <C>
1998................................................ $2,805,835 $113,863 $2,919,698
1999................................................ 84,418 113,863 198,281
2000................................................ 22,451 94,576 117,027
2001................................................ -- 59,968 59,968
2002................................................ -- 28,273 28,273
---------- -------- ----------
2,912,704 410,543 3,323,247
Less: imputed interest.............................. -- 91,292 91,292
---------- -------- ----------
$2,912,704 $319,251 $3,231,955
========== ======== ==========
</TABLE>

6. COMMITMENTS AND CONTINGENCY

LEASES

CRI has numerous noncancelable operating leases relating to its facilities
which expire at various dates through September 2001. At December 31, 1997,
future minimum lease payments under such leases are as follows:

Rental expense for the period of February 13, 1997 (inception) through
December 31, 1997 amounted to $238,251.

EMPLOYMENT CONTRACTS

CRI has employment agreements with two senior executives that provide for
minimum annual compensation totaling $350,000 and additional compensation as
defined in the agreement. The contacts expire in December 2001. At December 31,
1997, the remaining commitment under these two agreements are as follows:

F-68
<PAGE> 155
COMMUNICATION RESOURCES INC. L.P. AND SUBSIDIARIES
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Payments made under these two agreements for the period February 13, 1997
(inception) through December 31, 1997 amounted to $353,690.

CONTINGENCY

CRI is a party to litigation in the normal course of business. Management
believes that CRI is not liable in these actions, and the probable resolution of
such matters will not have a material adverse effect on its financial position
or results of operations.

7. RELATED PARTY TRANSACTIONS

As discussed in Note 5, at December 31, 1997, CRI is obligated to a related
party under a promissory note. During the period from February 13, 1997
(inception) through December 31, 1997, CRI expensed approximately $29,000 in
interest and repaid approximately $58,000 in principal under this note.

8. YEAR 2000 ISSUES -- UNAUDITED

Some older computer programs were written using two digits rather than four
to define the applicable year. As a result, those computer programs have time
sensitive software that recognizes a date using "00" as the year 1900 rather
than the year 2000. This could cause a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

CRI management has assessed the need to modify or replace non-compliant
software to ensure computer systems function properly with respect to the dates
in the year 2000 and thereafter. Based on their assessment, Management has
identified only one application that is not year 2000 compliant: the Call Center
Collection Software program. This application stores dates in a six digit field
(00/00/00) instead of an eight digit field (00/00/0000).

CRI plans to replace the non-compliant Call Center application by March
1999, and management does not believe that the cost of either modifying existing
software or converting to new software will be significant or that the year 2000
issue will pose significant operational problems for its computer systems.

9. SUBSEQUENT EVENT

On May 7, 1998, CRI entered into an agreement with Crest International
Holding, LLC (Crest) whereby Crest provided funding of $9.6 million of which
$4.8 million was used to purchase limited partnership interests in CRI directly
from the existing owners and the remaining $4.8 million was used to purchase new
partnership interests in CRI. Concurrent with this investment, CRI's legal
structure was changed from a limited partnership to a corporation.

F-69
<PAGE> 156

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Communication Resources Incorporated

We have audited the accompanying balance sheet of Communication Resources
Incorporated as of December 31, 1998 and the related statements of operations,
changes in shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Communication Resources
Incorporated at December 31, 1998, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States.

/s/ Ernst & Young LLP

April 7, 1999
Miami, FL

F-70
<PAGE> 157

COMMUNICATION RESOURCES INCORPORATED

BALANCE SHEET (NOTE 1)
DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash................................................... $ 208
Trade accounts receivable, net of allowance for
doubtful accounts of $110............................ 4,581
Notes receivable, net of allowance for doubtful
accounts of $249..................................... 33
Prepaid expenses and other current assets.............. 189
Deferred income tax benefit............................ 531
-------
Total current assets............................. 5,542
Property and equipment, net............................ 1,641
Other non-current assets, net.......................... 178
Goodwill, net.......................................... 370
-------
Total assets..................................... $ 7,731
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable....................................... $ 1,506
Accrued expenses....................................... 86
Short term debt........................................ 1,790
Current portion of long-term debt...................... 196
-------
Total current liabilities........................ 3,578
Long-term debt, net of current portion...................... 275
-------
Total liabilities................................ 3,853
Commitments and contingencies
Shareholders' Equity:
Common stock ($.01 par value 25,000,000 shares
authorized, 8,245,000 shares issued and
outstanding)......................................... 82
Series A convertible preferred stock ($.01 par value
21,910,000 shares authorized, 10,955,000 shares
issued and outstanding).............................. 110
Additional paid-in capital............................. 6,354
Accumulated deficit.................................... (2,668)
-------
Total shareholders' equity....................... 3,878
-------
Total liabilities and shareholders' equity....... $ 7,731
=======
</TABLE>

See accompanying notes.

F-71
<PAGE> 158

COMMUNICATION RESOURCES INCORPORATED

STATEMENT OF OPERATIONS (NOTE 1)
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<S> <C>
Revenues............................................... $22,018
Cost of services....................................... 13,869
-------
Gross margin........................................... 8,149
General and Administrative Expenses:
Salaries......................................... 6,572
Occupancy........................................ 1,081
Travel........................................... 871
Office........................................... 794
Interest......................................... 216
Bad debts........................................ 347
Marketing........................................ 152
Professional fees................................ 146
Other............................................ 348
-------
Total general and administrative expenses........ 10,527
-------
Loss before benefit for income taxes................... (2,378)
Benefit for income taxes (Note 7)...................... (531)
-------
Net loss......................................... $(1,847)
=======
</TABLE>

See accompanying notes.

F-72
<PAGE> 159

COMMUNICATION RESOURCES INCORPORATED

STATEMENT OF STOCKHOLDERS' EQUITY (NOTE 1)
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMUNICATION RESOURCES INC. LP COMMUNICATION RESOURCES INCORPORATED
----------------------------------- -------------------------------------------------------------
CREST
ALPINE/ INTERNATIONAL TOTAL ADDITIONAL TOTAL
RFM CRI HOLDINGS, PARTNER'S COMMON PREFERRED PAID-IN ACCUMULATED STOCKHOLDERS'
LLC LLC CAPITAL STOCK STOCK CAPITAL DEFICIT EQUITY
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1997...................... $1,179 $ -- $ 1,179 $-- $ -- $ -- $ -- $ --
Net loss through May 7,
1998.................... (1,065) -- (1,065) -- -- -- -- --
Sale of partnership
interest to Crest
International Holdings,
LLC..................... (114) 114 -- -- -- -- -- --
Sale of additional
partnership interest
(net of syndication
costs of $254).......... -- 4,546 4,546 -- -- -- -- --
------- ------- ------- --- ---- ------ ------- ------
Balance at May 7, 1998...... -- 4,660 4,660 -- -- -- -- --
Reorganization of business
from partnership to C
corporation by issuance
of common stock for
exchange in partnership
interest................ -- (4,660) (4,660) 82 110 6,354 (1,886) 4,660
Net loss from May 8, 1998
through December 31,
1998.................... -- -- -- -- -- -- (782) (782)
------- ------- ------- --- ---- ------ ------- ------
Balance at December 31,
1998...................... $ -- $ -- $ -- $82 $110 $6,354 $(2,668) $3,878
======= ======= ======= === ==== ====== ======= ======
</TABLE>

See accompanying notes.

F-73
<PAGE> 160

COMMUNICATION RESOURCES INCORPORATED

STATEMENT OF CASH FLOWS (NOTE 1)
YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net loss............................................... $(1,847)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 495
Provision for doubtful accounts........................ 347
Deferred income tax benefit............................ (531)
Changes in operating assets and liabilities:
Trade accounts receivable.............................. (1,125)
Prepaid expenses and other current assets.............. (312)
Accounts payable....................................... 1,173
Accrued expenses....................................... (367)
-------
Net cash used in operating activities............ (2,167)
INVESTING ACTIVITIES:
Acquisition of property and equipment.................. (458)
Acquisition of tools, radios and uniforms.............. (937)
-------
Net cash used in investing activities............ (1,395)
FINANCING ACTIVITIES:
Proceeds from preferred stock issuance, net of $254 of
syndicated costs..................................... 4,546
Proceeds from short-term borrowings.................... 2,007
Repayments of debt..................................... (2,978)
-------
Net cash provided by financing activities........ 3,575
Increase in cash and cash equivalents.................. 13
Cash at beginning of year.............................. 195
-------
Cash at end of year.................................... $ 208
=======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid.......................................... $ 216
=======
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of property and equipment under capital
leases............................................... $ 93
=======
</TABLE>

See accompanying notes.

F-74
<PAGE> 161

COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

1. ORGANIZATION, BASIS OF PRESENTATION AND NATURE OF OPERATIONS

Communication Resources Incorporated (CRI or the Company), a Delaware
corporation, was formed on April 30, 1998 for the purpose of acquiring the net
assets of Communication Resources Inc. LP, a Delaware operating limited
partnership which was incorporated on February 13, 1997 (the Predecessor). On
May 7, 1998, the partners of the Predecessor contributed their partnership
interest in exchange for a similar pro-rata share percentage in CRI, which in
the aggregate amounted to 100% of CRI's total shares. This is considered a
change in the legal structure of CRI, therefore, the transfer of CRI's net
assets to the new corporation was made at a carryover basis. Consequently, the
financial statements of the Company included herein contain the operating
results of the Predecessor up to the date of the transaction.

Immediately prior to the above referenced transaction, an unrelated party
(Investor) acquired 33% partnership interest in the Predecessor from various
partners. The Investor then contributed an additional $4.8 million into the
Predecessor, which increased their partnership interest to 50%.

On December 17, 1998 the assets and liabilities of all subsidiaries, which
consist of five wholly-owned limited liability subsidiaries and three
wholly-owned Florida limited partnerships, were acquired and merged into CRI.
Following this transaction, CRI became the sole surviving company.

CRI provides outsourcing services to the communications industry.
Approximately 95% of its business results from technical or field services while
the remaining 5% is derived from debt recovery and consulting services. CRI
operates in Alabama, California, Colorado, Florida, Georgia, Louisiana,
Maryland, New Jersey, New York, Ohio, South Carolina, and Texas.

During 1998, the Company was involved in expanding its geographic presence
nationally. As a result, the Company added numerous new locations. This start-up
activity and its impact on operations is discussed further in Note 12.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions could change in the future as
more information becomes known that could affect the amounts reported herein.

PROPERTY AND EQUIPMENT

Property and equipment are stated on a basis of cost. Depreciation is
computed using the straightline method over the useful life for financial
reporting purposes. The depreciation period of these assets range from 3 to 7
years. Replacements and betterments that extend the lives of assets are
capitalized, while maintenance and repair costs are expensed as incurred. Upon
sale or

F-75
<PAGE> 162
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

retirement of property and equipment, the related costs and accumulated
depreciation are removed and any gain or loss is recognized.

Property and equipment includes tools, radios and uniforms for employee
use. These assets are amortized over their estimated useful lives using the
straight-line basis. Tools and radios are amortized over 2-5 years while
uniforms are amortized over a 12-month period.

IMPAIRMENT OF LONG-LIVED ASSETS

CRI accounts for the impairment of long lived assets under the provisions
of Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long Lived Assets and for Long-Lived Assets to be Disposed of.
SFAS No. 121 requires a company to review the carrying value of long-lived
assets and certain intangibles for impairment when events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. If the estimated undiscounted cash flows that are expected to
result from the use of the assets are less than the carrying amount of the
assets, an impairment loss, if any, is recorded to adjust the carrying amount of
these assets to their fair value.

OTHER NON-CURRENT ASSETS

Goodwill resulting from the excess of purchase price over the fair value of
net assets of businesses acquired is amortized on a straight-line basis over 40
years. Other noncurrent assets are primarily composed of acquisition,
organizational and debt financing costs. These assets are being amortized over
3-5 years which represents their estimated useful life or contract term of the
related debt.

INCOME TAXES

For the period January 1, 1998 through May 6, 1998 the Predecessor and its
subsidiaries were recognized as limited partnerships and limited liability
companies for federal income tax purposes. Consequently, no provision for taxes
has been made for federal and applicable state income taxes, since the partners
or limited liability company members will report any income or losses on their
personal income tax returns.

Subsequent to May 6, 1998, the Company utilized the liability method of
accounting for deferred income taxes. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using enacted tax rates for
the year in which the differences are expected to reverse.

REVENUE RECOGNITION

Revenue from services consists of outsourcing employees to customers.
Revenues are recognized when services are rendered.

F-76
<PAGE> 163
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to significant
concentration of credit risk consist primarily of cash balances and accounts
receivable. Cash balances are held in high quality financial institutions, which
are evaluated periodically by the management of CRI to minimize the risk
associated with account balances in excess of federally insured account limits.
CRI minimizes its exposure to credit risk relating to accounts receivable
through its credit review procedures and collection practices.

The Company sells its services to companies in the United States. Credit
evaluations of customers' financial conditions are performed periodically, and
the Company generally does not require collateral from its customers.

The top four clients of CRI, each of which accounted for revenues in excess
of $1 million during the year ended December 31, 1998, accounted for a combined
total of 27% of the Company's revenues in 1998, the largest of which accounting
for approximately 10% of the Company's revenue.

These clients are regional operations of large, national cable companies
that are leaders in their market places.

These national cable companies are made up of many regional client
locations dispersed throughout the United States which individually contract
with the Company for services. The three largest national cable companies (as
measured by a percentage of CRI's revenues) accounted for a combined total of
approximately 56% of CRI's overall revenue in 1998.

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, Disclosure about Fair Value of Financial Instruments,
requires disclosures of the estimated fair value of all financial instruments
including both assets and liabilities unless specifically exempted.

The following methods and assumptions were used by the Company in
estimating the fair value of financial instruments.

Cash and cash equivalents: The carrying amount reported in the
balance sheet for cash and cash equivalents approximates fair value due to
the short-term nature of those items.

Accounts Receivable and Accounts Payable: The carrying amounts
reported in the balance sheet for accounts receivable and accounts payable
approximate their fair value.

Short-term and Long-term Obligations: The carrying value of the
Company's borrowings under its short-term facilities and long-term note
payable and capitalized lease obligations approximates fair value based on
quoted market prices for the same or similar instruments.

F-77
<PAGE> 164
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1998 consisted of the following:

<TABLE>
<S> <C>
Computer equipment.......................................... $1,258,000
Office and furniture equipment.............................. 598,000
Tools, radios and uniforms.................................. 481,000
----------
2,337,000
Less: accumulated depreciation and amortization............. 696,000
----------
$1,641,000
==========
</TABLE>

Equipment under capital lease has been included in the computer equipment
and office and furniture equipment categories above in the amount of $323,000
and $216,000, respectively.

5. INTANGIBLE AND OTHER NON-CURRENT ASSETS

Accumulated amortization associated with goodwill and other non-current
assets is $27,000 and $14,000, respectively, as of December 31, 1998.

6. DEBT

On July 14, 1998 the Company entered into a credit facility agreement with
a maximum commitment of $7,000,000. The agreement expires on July 14, 2001 and
includes interest at prime (7.75% at December 31, 1998). The credit facility is
collateralized with the trade accounts receivable of CRI. Advances are based on
85% of eligible trade accounts receivable. The outstanding balance as of
December 31, 1998 was $1,492,000 with an additional borrowing availability of
$782,000.

On July 27, 1998 the Company entered into a line of credit with a maximum
commitment of $300,000. The line of credit is secured with substantially all the
assets of the Company. The agreement expires on July 31, 1998 and includes
interest at a 30-day commercial paper rate plus 3.30% (8.4% at December 31,
1998). Two officers of CRI guarantee the line of credit. At December 31, 1998,
the Company had an outstanding balance of $298,000, with no additional borrowing
availability under this line.

The Company has a note payable to a related party. The note requires a
weekly payment of $1,596 of principle and interest. The note bears interest at
5.3%. This note is subordinated to all debt and is uncollateralized. Final
payment is due March 2000.

Capital lease obligations payable in monthly installments of $86 to $1,862,
including imputed interest ranging from 9.14% to 21.98%, collateralized by
computers, equipment and furniture and maturing at various dates through May
2003.

F-78
<PAGE> 165
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following table provides a schedule of debt balances as of December 31,
1998:

<TABLE>
<S> <C>
Credit facility............................................. $1,492,000
Line of credit.............................................. 298,000
Capital leases.............................................. 371,000
Note payable................................................ 100,000
----------
Total debt................................................ 2,261,000
Less: current portion....................................... 1,986,000
----------
Long term debt............................................ $ 275,000
==========
</TABLE>

Maturities of the long-term debt obligations at December 31, 1998 are as
follows:

<TABLE>
<CAPTION>
CAPITAL
NOTES LEASES TOTAL
<S> <C> <C> <C>
1999................................................... $ 80,000 $162,000 $242,000
2000................................................... 20,000 140,000 160,000
2001................................................... -- 95,000 95,000
2002................................................... -- 61,000 61,000
2003................................................... -- 7,000 7,000
-------- -------- --------
100,000 465,000 565,000
Less: imputed interest................................. -- 94,000 94,000
-------- -------- --------
$100,000 $371,000 $471,000
======== ======== ========
</TABLE>

7. PROVISION FOR INCOME TAXES

At December 31, 1998, the Company had temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
such amounts measured by the tax laws. The Company also has net operating loss
carry forwards available to offset future taxable income. Significant components
of the Company's deferred tax assets and liabilities as of December 31, 1998 are
as follows:

<TABLE>
<S> <C>
Net operating loss carry forward............................ $512,000
Bad debts................................................... 72,000
Depreciation................................................ (21,000)
Amortization................................................ (32,000)
--------
Net deferred tax asset.................................... $531,000
========
</TABLE>

F-79
<PAGE> 166
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The components of the income tax benefit is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1998
<S> <C>
Current..................................................... $ --
Deferred.................................................... (531,000)
---------
Net tax benefit........................................... $(531,000)
=========
</TABLE>

For the period May 7, 1998 to December 31, 1998, the Company's net
operating loss carryforward for federal income tax purposes is $1,304,000, which
expires in the year 2018.

8. SHAREHOLDERS' EQUITY

COMMON STOCK

At December 31, 1998, there were 25,000,000 shares of $.01 par value common
stock authorized with 8,245,000 shares issued and outstanding. Dividends are
payable as declared by the Board of Directors and are subordinate to the Series
A Convertible Preferred Stock.

SERIES A CONVERTIBLE PREFERRED STOCK

At December 31, 1998, there were 21,910,000 shares of $.01 par value,
voting, Series A Convertible Preferred Stock (SACPS) authorized with 10,955,000
shares issued and outstanding. The SACPS is convertible at any time, at the
option of the holders, into shares of common stock. The SACPS is mandatorily
convertible in the event of a Qualified Public Offering (as defined). Dividends
are payable as declared by the Board of Directors. The preferred shareholders
have preference over common shareholders in the event of liquidation. The voting
rights for preferred shareholders are equal to those of the common shareholder.

9. COMMITMENTS AND CONTINGENCIES

LEASES

CRI has numerous noncancelable operating leases relating to its facilities
and vehicles, which expire at various dates through April 2002. At December 31,
1998, future minimum lease payments under such leases are as follows:

<TABLE>
<CAPTION>
FACILITIES VEHICLES
<S> <C> <C>
1999........................................................ $454,000 $1,012,000
2000........................................................ 338,000 477,000
2001........................................................ 121,000 --
2002........................................................ 9,000 --
-------- ----------
$922,000 $1,489,000
======== ==========
</TABLE>

Facility and vehicle lease expense for the year ended December 31, 1999
amounted to $526,000 and $896,000, respectively.

F-80
<PAGE> 167
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

EMPLOYMENT CONTRACTS

CRI has employment agreements with two senior executives that provide for
minimum annual compensation and additional compensation as defined in the
agreement. The contracts expire in December 2002. At December 31, 1998, the
remaining commitment under these two agreements is $386,000, $405,000, $425,000
and $447,000 for the year ending December 31, 1999, 2000, 2001 and 2002,
respectively.

Payments made under these two agreements for the year ended December 31,
1998 amounted to $361,000.

CONTINGENCIES

10. RELATED PARTY TRANSACTIONS

As discussed in Note 6, at December 31, 1998, CRI is obligated to a related
party under a promissory note. During the year ended December 31, 1998, CRI
expensed $7,000 in interest and repaid $76,000 in principal under this note.
This note is payable to a predecessor company, which is owned directly by two
officers and its purpose is to fund an obligation this predecessor company has
to a former owner.

11. STOCK OPTIONS

During 1998, the Board of Directors approved an Employees' Stock Option
Plan (the Employees' Plan). Under the Employees' Plan, 1,556,757 shares of the
Company's common stock were reserved for issuance. Under this plan, certain
options vest immediately while others vest over a two to five year period. The
options are exercisable over a ten-year period after the date of grant for an
exercise price of $1 per share. As of December 31, 1998, 858,622 options have
been granted, 282,400 are currently exercisable, 188,222 have been forfeited and
none have been exercised.

The Company has elected to follow Accounting Principles Board (APB) No. 25,
Accounting for Stock Issued to Employees, and related Interpretations in
accounting for its stock options granted to employees. Under APB No. 25, because
the exercise price of the Company's employee stock options equals or is greater
than the market price of the underlying stock on the date of grant, no
compensation expense is recognized.

F-81
<PAGE> 168
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Pro forma information regarding net income, required by SFAS No. 123
Accounting for Stock-Based Compensation, as if the Company has accounted for its
stock options issued to employees under the fair value method is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1998
<S> <C>
Net loss as reported........................................ $(1,847,000)
===========
Pro forma net loss.......................................... $(1,899,000)
===========
</TABLE>

The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following assumptions; risk-free
interest rate of 5.5%; volatility factor of the expected market price of the
Company's common stock of .25; no expected dividends; expected life to be the
life of the options; and stock price on the date of grant of $1.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair values of its stock options.

A summary of the Company's stock option activity through December 31, 1998
follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE NUMBER
EXERCISE OF
PRICE SHARES
<S> <C> <C>
Outstanding December 31, 1997............................... $-- $ --
Granted................................................... 1 858,622
Exercised................................................. 1 --
Forfeited................................................. 1 188,222
--- --------
Outstanding December 31, 1998............................... $ 1 $670,400
=== ========
</TABLE>

The weighted-average remaining contractual lives of those options are 9.37
years at 1998. The weighted-average fair value of options granted during 1998
was $.42 per share.

12. PLAN OF MANAGEMENT

CRI has experienced losses over the past two years. These losses were
attributable to CRI's focus on increasing the Company's geographic presence in
50 new locations throughout the United States, which resulted in the addition of
over 50 new clients. This strategy gave the Company national presence, but had a
significant negative impact on the Company's profits and cash flow. Capital
expenditures needed to support this level of growth were approximately $937,000
in 1998.

F-82
<PAGE> 169
COMMUNICATION RESOURCES INCORPORATED

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

During this period, CRI incurred costs related to the start-up of
operations in new locations and markets which were expensed as incurred.
Start-up costs represent the net operating losses incurred during the first
twelve months of operations. The net operating losses represent primarily the
excess of payroll, travel, and other related costs over revenues during the
first twelve months of operation. Start-up costs for the year ended December 31,
1998 were approximately $1,026,000. These start-up costs exclude approximately
$600,000 of personnel and travel costs of corporate employees who were involved
in the start-up activities and which costs were part of the corporate expenses
allocated to these operations. During the Fall 1998, CRI formulated a plan to
make the Company's operations profitable. In addition, during the 4th quarter of
1998, the Company eliminated certain management positions and terminated these
employees, whose 1998 compensation amounted to approximately $1,000,000.

CRI does not plan to start-up any operations in new markets during 1999.
Also, the Company's Recovery Division, which lost approximately $300,000 in
1998, will be sold as indicated in Note 13.

13. SUBSEQUENT EVENTS

On February 25, 1999, CRI entered into an agreement to sell the recovery
division for $1,250,000. The sales price may be adjusted up or down based on a
dollar-for-dollar calculation of revenues for the 12-month period following
closing, but in no event will the sales price adjustment be more than $500,000.
The closing is expected to occur by May 3, 1999.

On February 23, 1999, CRI formed a wholly owned subsidiary named CRI Cherry
Hill. Inc. (Cherry Hill), a Delaware corporation. On March 12, 1999, CRI,
through Cherry Hill, entered into an agreement with Pinnacle Cable Services,
Inc. (Pinnacle), a New Jersey S corporation, to acquire all of the outstanding
stock of Pinnacle at its net book value. The preliminary purchase price of
approximately $300,000 will be accounted for as a purchase. The closing is
expected to occur by April 30, 1999.

14. YEAR 2000 ISSUES -- UNAUDITED

CRI management has assessed the need to modify or replace non-compliant
software to ensure computer systems function properly with respect to dates in
the year 2000 and thereafter. Based on their assessment, management has
identified only one application that is not Year 2000 compliant: the Call Center
Collection Software program. This application stores dates in a six digit field
(00/00/00) instead of an eight digit field (00/00/0000).

As indicated in note 13, CRI plans to sell the recovery division before the
end of 1999. As such, the replacement of the non-compliant Call Center
application will not be necessary. Although, if the replacement would be
necessary, management does not believe that the cost of either modifying the
existing software or converting to new software would be significant.

F-83
<PAGE> 170

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To D.S. Cable TV Contractors, Inc.:

We have audited the accompanying balance sheets of D.S. Cable TV
Contractors, Inc. (a Missouri S Corporation) as of December 31, 1999 and 1998,
and the related statements of operations, shareholders' equity and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of D.S. Cable TV Contractors,
Inc. as of December 31, 1999 and 1998, and the results of its operations and its
cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
March 17, 2000

F-84
<PAGE> 171

D.S. CABLE TV CONTRACTORS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1998 1999 2000
-------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.................................................. $215,825 $ 269,406 $ 347,257
Accounts receivable, net of allowance of $10,000...... 295,560 410,479 393,885
Prepaid expenses and other............................ 35,775 131,143 125,447
-------- ---------- ----------
Total current assets.......................... 547,160 811,028 866,589
-------- ---------- ----------
PROPERTY AND EQUIPMENT, net............................. 314,456 487,408 461,883
OTHER ASSETS............................................ 29,584 43,671 48,003
-------- ---------- ----------
$891,200 $1,342,107 $1,376,475
======== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of debt............................... $ -- $ 11,563 $ 11,563
Accounts payable...................................... 24,332 54,240 25,749
Accrued expenses...................................... 144,273 125,727 144,915
Accrued shareholder distribution...................... 46,000 241,000 216,000
-------- ---------- ----------
Total current liabilities..................... 214,603 432,530 398,227
-------- ---------- ----------
DEBT.................................................... -- 23,073 20,214
-------- ---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Common stock, $10 par value, 3,000 shares authorized,
50 shares issued and outstanding................... 500 500 500
Retained earnings..................................... 676,097 886,004 957,534
-------- ---------- ----------
Total shareholders' equity.................... 676,597 886,504 958,034
-------- ---------- ----------
$891,200 $1,342,107 $1,376,475
======== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-85
<PAGE> 172

D.S. CABLE TV CONTRACTORS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -------------------
1998 1999 1999 2000
---------- ---------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES......................................... $2,520,362 $3,294,200 $801,061 $701,838
COST OF REVENUES................................. 1,490,691 1,871,809 399,821 442,492
SELLING, GENERAL AND ADMINISTRATIVE.............. 546,396 639,446 124,178 160,802
DEPRECIATION AND AMORTIZATION.................... 76,930 100,272 21,969 30,605
---------- ---------- -------- --------
Total operating expense................ 2,114,017 2,611,527 545,968 633,899
---------- ---------- -------- --------
Income from operations................. 406,345 682,673 255,093 67,939
INTEREST INCOME.................................. 550 12,002 175 3,835
INTEREST EXPENSE................................. 13,715 2,178 -- 244
---------- ---------- -------- --------
NET INCOME....................................... $ 393,180 $ 692,497 $255,268 $ 71,530
========== ========== ======== ========
PRO FORMA DATA (UNAUDITED):
Historical net income.......................... $ 393,180 $ 692,497 $255,268 $ 71,530
Pro forma income tax expense................... 139,579 245,836 90,620 25,393
---------- ---------- -------- --------
PRO FORMA NET INCOME............................. $ 253,601 $ 446,661 $164,648 $ 46,137
========== ========== ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-86
<PAGE> 173

D.S. CABLE TV CONTRACTORS, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------- RETAINED
SHARES AMOUNT EARNINGS TOTAL
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998............................ 50 $ 500 $ 353,407 $ 353,907
Net income........................................ -- -- 393,180 393,180
Distributions..................................... -- -- (24,490) (24,490)
Accrued shareholder distribution.................. -- -- (46,000) (46,000)
-------- -------- --------- ---------
BALANCE, DECEMBER 31, 1998.......................... 50 500 676,097 676,597
Net income........................................ -- -- 692,497 692,497
Distributions..................................... -- -- (287,590) (287,590)
Accrued shareholder distribution.................. -- -- (195,000) (195,000)
-------- -------- --------- ---------
BALANCE, DECEMBER 31, 1999.......................... 50 500 886,004 886,504
Net income (unaudited)............................ -- -- 71,530 71,530
Distributions (unaudited)......................... -- -- (25,000) (25,000)
Accrued shareholder distribution (unaudited)...... -- -- 25,000 25,000
-------- -------- --------- ---------
BALANCE, MARCH 31, 2000 (unaudited)................. 50 $ 500 $ 957,534 $ 958,034
======== ======== ========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

F-87
<PAGE> 174

D.S. CABLE TV CONTRACTORS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -------------------
1998 1999 1999 2000
----------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $ 393,180 $ 692,497 $255,268 $ 71,530
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............. 76,930 100,272 21,969 30,605
Changes in operating assets and
liabilities:
Accounts receivable.................... (139,073) (114,919) (72,349) 16,594
Prepaid expenses and other............. 22,659 (95,368) 785 5,696
Noncurrent asset....................... (7,611) (14,087) (1,788) (4,332)
Accounts payable....................... 4,475 29,908 (14,235) (28,491)
Accrued expenses....................... 10,495 (18,544) 26,142 19,188
----------- --------- -------- --------
Net cash provided by operating
activities...................... 361,055 579,759 215,792 110,790
----------- --------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment............. (111,772) (282,159) (27,500) (5,080)
Property retirement............................ 30,212 8,935 --
----------- --------- -------- --------
Net cash used in investing
activities...................... (81,560) (273,224) (27,500) (5,080)
----------- --------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions...................... (24,490) (287,590) -- (25,000)
Borrowings on debt............................. 1,815,000 34,636 -- --
Repayment of debt.............................. (1,861,788) -- -- (2,859)
----------- --------- -------- --------
Net cash used in financing
activities...................... (71,278) (252,954) -- (27,859)
----------- --------- -------- --------
NET INCREASE IN CASH............................. 208,217 53,581 188,292 77,851
CASH, BEGINNING OF YEAR.......................... 7,608 215,825 215,825 269,406
----------- --------- -------- --------
CASH, END OF YEAR................................ $ 215,825 $ 269,406 $404,117 $347,257
=========== ========= ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
ACCRUED SHAREHOLDER DISTRIBUTION............ 46,000 195,000 -- 25,000
=========== ========= ======== ========
</TABLE>

The accompanying notes are an integral part of these statements.

F-88
<PAGE> 175

D.S. CABLE TV CONTRACTORS, INC.

NOTES TO FINANCIAL STATEMENTS

(INFORMATION AS OF MARCH 31, 2000 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED)

1. BACKGROUND:

D.S. Cable TV Contractors, Inc. (the "Company") is a Missouri S Corporation
headquartered in St. Louis, Missouri and provides outsourcing of installations
and other related services to companies in the cable television industry. The
Company is dependent on one customer. This customer accounted for 94% and 99% of
the Company's 1998 and 1999 revenue, respectively (See Note 7).

On January 17, 2000, the Company entered into a letter of intent to sell
substantially all of its assets and liabilities to Viasource Communications,
Inc.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

USE OF ESTIMATES

INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 2000 and for the three months
ended March 31, 1999 and 2000 are unaudited and, in the opinion of management of
the Company, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results for those interim
periods. The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results to be expected for the full year.

REVENUE RECOGNITION

Revenues are recognized as cable installation and related services are
performed.

PROPERTY AND EQUIPMENT

INCOME TAXES

The Company has elected treatment as an "S" Corporation for federal and
state income tax purposes (except for states where "S" Corporations are not
recognized) and is not taxed as a

F-89
<PAGE> 176
D.S. CABLE TV CONTRACTORS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

separate entity. The Company's taxable income or loss is allocated to the
shareholders and recognized on the shareholders' individual income tax returns.
Accordingly, no provision for income taxes has been reflected in the
accompanying financial statements.

The Company reports certain income and expense items for income tax
purposes on a different basis than that reflected in the accompanying financial
statements. The primary differences are due to book versus tax depreciation
methods and certain accruals not yet deductible for income tax purposes. If the
Company terminates its S Corporation status, a deferred income tax liability
accounted for under the provisions of SFAS No. 109 "Accounting for Income
Taxes," of approximately $18,000 would need to be reflected in the accompanying
financial statements as of December 31, 1999.

3. PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------- MARCH 31
1998 1999 2000
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Machinery and equipment............................... $ 332,408 $ 463,103 $464,583
Office furniture and fixtures......................... 10,378 20,606 20,606
Auto.................................................. 159,110 254,438 254,438
Trailers.............................................. 40,161 39,646 43,246
Office equipment...................................... 27,606 27,070 27,070
--------- --------- --------
569,663 804,863 809,943
Accumulated depreciation and amortization............. (255,207) (317,455) 348,060
--------- --------- --------
$ 314,456 $ 487,408 $461,883
========= ========= ========
</TABLE>

4. LINE OF CREDIT:

The Company maintains a demand line of credit arrangement of which none was
outstanding at December 31, 1999 and 1998. Through April 2, 1999, the line
provided for borrowings up to $350,000. Interest was payable monthly at the
prime rate plus .5% (8.25% at December 31, 1998). The line now provides for
borrowings up to $400,000. Interest is payable monthly at the prime rate plus
.25% (8.75% at December 31, 1999). The line of credit is collateralized by
substantially all of the assets of the Company. There were no borrowings on the
line during 1999.

F-90
<PAGE> 177
D.S. CABLE TV CONTRACTORS, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

5. DEBT:

Debt outstanding at December 31, 1999, consisted of a note payable, secured
by a vehicle, due in monthly installments through November 2002. Interest on the
note is calculated monthly at 2.9%. Annual principal payments required are as
follows:

6. COMMITMENTS AND CONTINGENCIES:

Upon completion of the sale of the Company to Viasource, the current
stockholders intend to make payments out of the proceeds of approximately
$240,000 to two key employees. Such amount will be charged to the Company's
Statement of Operations at that time.

For the years ended December 31, 1998 and 1999, rent expense was $35,317
and $39,884, respectively.

LITIGATION

In the normal course of business, the Company is a party to various claims
and legal proceedings. Management of the Company, after consultation with legal
counsel, does not believe that these matters will have a material adverse effect
on the Company's financial position or results of operations.

7. CONCENTRATION RISKS:

CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentrations of credit risk are primarily accounts receivable. The Company
periodically evaluates the financial condition of its obligors and generally
does not require collateral. The Company's allowance for doubtful accounts
reflects current market conditions and management's assessment regarding the
collectibility of its accounts receivable.

SIGNIFICANT CUSTOMERS

For the years ended December 31, 1998 and 1999, one customer accounted for
approximately 94% and 99% of total revenues and 96% and 88% of total accounts
receivable, respectively. For the three months ended March 31, 2000, one
customer, in aggregate, accounted for approximately 98.1% of total revenues and
total sales. A loss of, or a material reduction in, revenues from this customer
could have a material adverse effect on the Company's operating results and
financial condition.

F-91
<PAGE> 178

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying combined balance sheets of Service Cable
Electric, Inc. and Service Cable Corporation as of December 31, 1998 and 1999,
and the related statements of operations, stockholders' equity, and cash flows
for the years then ended. These financials statements are the responsibility of
the Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Service Cable
Electric, Inc. and Service Cable Corporation as of December 31, 1999 and 1998,
and the results of their operations and their cash flows for the years then
ended in conformity with generally accepted accounting principles.

/s/ FELSING, RANKIN & CO., P.A.

Longwood, FL

March 30, 2000, except as to Note J,

as to which the date is May 5, 2000

F-92
<PAGE> 179

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- MARCH 21,
1998 1999 2000
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 89,658 $ 19,091 $ 58,457
Accounts receivable........................................ 915,478 1,165,012 1,061,375
Accounts receivable, retainage............................. 317,532 291,908 430,453
Due from affiliates........................................ 27,126 21,021 12,018
Costs and estimated earnings on uncompleted contracts in
excess of related billings............................... 78,751 197,363 124,362
Prepaid expenses and other................................. 27,689 47,192 24,996
---------- ---------- ----------
Total current assets............................. 1,456,234 1,741,587 1,711,661
PROPERTY AND EQUIPMENT, net................................ 140,389 130,096 124,095
OTHER ASSETS............................................... 1,310 45,060 1,560
---------- ---------- ----------
$1,597,933 $1,916,743 $1,837,316
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable, line of credit............................... $ 195,000 $ 280,000 $ 95,000
Current portion of long-term debt.......................... 24,938 31,090 31,090
Accounts payable........................................... 443,664 437,598 575,106
Due to affiliates.......................................... 168,877 3,003 --
Accrued expenses........................................... 157,932 77,413 16,439
Billings on uncompleted contracts in excess of related
costs and estimated earnings............................. 112,309 -- 9,769
Advances from stockholders................................. 51,909 -- 4,795
---------- ---------- ----------
Total current liabilities........................ 1,154,629 829,104 732,199
LONG-TERM DEBT............................................. 43,930 37,314 28,150

COMMITMENTS AND CONTINGENCIES (NOTE F)
STOCKHOLDERS' EQUITY:
Common stock:
Service Cable Electric. Inc. -- $.01 par value, 10,000
shares authorized, issued and outstanding................ 100 100 100
Service Cable Corporation -- $1 par value, 7,500 shares
authorized, 2,000 issued and outstanding................. 2,000 2,000 2,000
Additional paid-in capital................................. 9,949 9,900 9,900
Retained earnings.......................................... 387,325 1,038,325 1,064,967
---------- ---------- ----------
Total stockholders' equity....................... 399,374 1,050,325 1,076,967
---------- ---------- ----------
$1,597,933 $1,916,743 $1,837,316
========== ========== ==========
</TABLE>

See notes to financial statements

F-93
<PAGE> 180

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
----------------------- -----------------------
1998 1999 1999 2000
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES........................................ $4,188,362 $6,264,332 $1,373,480 $1,507,363
COST OF REVENUES................................ 3,613,468 4,984,346 1,108,660 1,285,597
---------- ---------- ---------- ----------
Gross profit.......................... 574,894 1,279,986 264,820 221,766
SELLING, GENERAL AND ADMINISTRATIVE............. 452,971 357,569 120,293 150,109
---------- ---------- ---------- ----------
Income from operations................ 121,923 922,417 144,527 71,657
OTHER INCOME (EXPENSE)
Interest income................................. 167 1,853 39 22
Interest expense................................ (14,035) (19,903) (5,609) (4,324)
Other........................................... (1,917) (859) 127 103
---------- ---------- ---------- ----------
(15,785) (18,909) (5,443) (4,199)
---------- ---------- ---------- ----------
NET INCOME...................................... $ 106,138 $ 903,508 $ 139,084 $ 67,458
========== ========== ========== ==========
PRO FORM DATA (unaudited)
Historical net income......................... $ 106,138 $ 903,508 $ 139,084 $ 67,458
Pro forma income tax expense.................. 42,455 361,403 55,636 26,983
---------- ---------- ---------- ----------
PRO FORMA NET INCOME............................ $ 63,683 $ 542,105 $ 83,448 $ 40,475
========== ========== ========== ==========
</TABLE>

See notes to financial statements

F-94
<PAGE> 181

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNING TOTAL
------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance, January 1, 1998............................ $2,100 $9,949 $ 481,187 $ 493,236
Net income.......................................... -- -- 106,138 106,138
Stockholder distributions........................... -- -- (200,000) (200,000)
------ ------ ---------- ----------
Balance, December 31, 1998.......................... $2,100 $9,949 $ 387,325 $ 399,374
Net income.......................................... -- (49) 903,508 903,459
Stockholder distributions........................... -- -- (252,508) (252,508)
------ ------ ---------- ----------
Balance, December 31, 1999.......................... $2,100 $9,900 $1,038,325 $1,050,325
====== ====== ========== ==========
</TABLE>

See notes to financial statements

F-95
<PAGE> 182

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

COMBINED STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------------- ---------------------
1998 1999 1999 2000
--------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income......................................... $ 106,138 $ 903,508 $ 139,084 $ 67,458
Adjustments to reconcile net income to net cash
provided by operating activities --
Depreciation and amortization...................... 35,508 50,137 7,500 6,001
(Increase) decrease in --
Accounts receivable.............................. (301,464) (249,534) (48,474) 103,637
Accounts receivable, retainage................... (223,316) 25,624 (59,396) (138,545)
Due from affiliates.............................. (102,998) 106,654 22,819 9,003
Cost and estimated earnings on uncompleted
contracts in excess of related billings....... (13,181) (118,612) 27,138 73,000
Other assets..................................... (8,844) (3,895) (5,959) 22,197
(Decrease) increase in --
Accounts payable................................. 198,202 (6,066) 42,742 124,965
Due to affiliates................................ 269,426 (266,423) 35,549 9,540
Accrued expenses................................. 128,240 (80,567) (155,930) (60,974)
Billings on uncompleted contracts in excess of
related costs and estimated earnings.......... 71,647 (112,309) 60,255 9,769
--------- --------- --------- ---------
Net cash provided by operating
activities............................. 159,358 248,517 65,328 226,051
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment.............................. (37,945) (43,746) (5,413) --
Other.............................................. 400 (40,651) -- 43,500
--------- --------- --------- ---------
Net cash provided (used) by investing
activities............................. (37,545) (84,397) (5,413) 43,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing on long-term debt........................ -- 25,724 -- --
Payments on long-term debt......................... (12,890) (26,189) (6,050) (9,164)
Borrowing on line-of-credit, net of repayments..... 145,000 86,000 (15,000) (185,000)
Borrowing (payments) on stockholder loans.......... 15,814 (66,714) (12,114) 4,795
Stockholder distributions.......................... (200,000) (252,508) -- (40,816)
--------- --------- --------- ---------
Net cash used by financing activities......... (52,076) (234,687) (33,164) (230,185)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH.................... 69,737 (70,567) 26,751 39,366
CASH AND EQUIVALENTS, BEGINNING OF PERIOD.......... 19,921 89,658 89,658 19,091
--------- --------- --------- ---------
CASH AND EQUIVALENTS, END OF PERIOD................ $ 89,658 $ 19,091 $ 116,409 $ 58,457
========= ========= ========= =========
Cash paid during the period for interest........... $ 14,035 $ 19,903 $ 5,609 $ 4,324
========= ========= ========= =========
</TABLE>

See notes to financial statements

F-96
<PAGE> 183

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

NOTES TO FINANCIAL STATEMENTS

Background -- Service Cable Electric, Inc. was incorporated on August 28,
1995 in the State of Florida and is engaged in the business of electrical
contracting in Central Florida. The work is generally done under fixed-price
contracts. Service Cable Corporation was incorporated on October 17, 1991 in the
State of Florida, and is engaged in installation and service of low-voltage
cabling, including television cable and computer networks, also in Central
Florida. Service Cable Electric, Inc. and Service Cable Corporation are together
referred to as the Company.

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation -- The combined financial statements include the
operations of Service Cable Electric, Inc, (SCE) and Service Cable Corporation
(SCC), which are affiliated companies. Material inter-company balances and
transactions have been eliminated.

Interim Financial Statements -- The financial statements for the three
months ended March 31, 1999 and 2000 are unaudited and, in the opinion of
management of the Company, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results for
those interim periods. The results of operations for the three months ended
March 31, 2000 are not necessarily indicative of the results to be expected for
the full year.

Revenue and cost recognition -- SCE's contract revenues are recognized
using the percentage-of-completion method, measured primarily by the
cost-to-cost method. Contract costs include all direct materials and labor costs
and those indirect costs related to contract performance, such as indirect
labor, supplies, repairs, depreciation and vehicle costs. SCC's revenue from
cabling are recognized when the work is completed and billed. This work is done
on the basis of time and materials and covers a relatively short duration.

Operating expenses are expensed as incurred. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined.

The asset "Costs and billings in excess of earnings" represents revenue
recognized in excess of amounts billed. The liability "Billings in excess of
costs and earnings represents billings in excess of revenue recognized.

Cash and equivalents -- For purposes of the statement of cash flows, the
Company considers all investments with an original maturity of three months or
less to be cash equivalents. At December 31, 1998 and 1999, cash and cash
equivalents include cash on hand and cash in the bank.

Property and equipment -- Property and equipment are recorded at cost.
Maintenance and repairs are charged to expense as incurred, while additions and
improvements are capitalized. Depreciation is provided using the straight-line
method over estimated useful lives, which range from 3-7 years.

Income taxes -- The Companies have elected treatment as S Corporations for
federal and state income tax purposes and are not taxed as separate entities.
Taxable income or loss is allocated to the stockholders' and recognized on the
stockholders' individual tax returns. Accordingly, no provision for income taxes
has been reflected in the accompanying financial statements.
F-97
<PAGE> 184

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Use of estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

SCE has estimated the percentage-of-completion on long-term construction
contracts in progress at the end of the year. Because of inherent uncertainties
in estimating costs, it is at least reasonably possible that the estimates will
change within the near term.

NOTE B -- PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
1998 1999
--------- --------
<S> <C> <C>
Software.................................................... $ 22,345 $ 22,345
Equipment................................................... 47,226 40,882
Vehicles.................................................... 147,673 181,700
Furniture & fixtures........................................ 3,740 2,576
--------- --------
220,984 247,503
Accumulated depreciation.................................... (80,595) (117,407)
--------- --------
$ 140,389 $130,096
========= ========
</TABLE>

The Companies recognized depreciation expense of $35,508 and $50,137 in
1998 and 1999, respectively.

NOTE C -- LINES OF CREDIT

The Companies have bank lines of credit totaling $350,000, bearing interest
at 1.5% over prime. Inventory, accounts receivable and equipment collateralize
borrowings under the lines of credit. Shareholders of the Companies have
guaranteed payment of the lines of credit.

The loan agreements contain certain restrictions and covenants, including
minimum levels of net worth and current ratio. Management believes the Companies
are in compliance with the restrictions and covenants as of December 31, 1999.

F-98
<PAGE> 185

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE D -- COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Costs incurred on uncompleted contracts..................... $2,614,572 $2,774,993
Estimated earnings thereon.................................. 387,929 378,347
---------- ----------
3,002,501 3,153,340
Less billings on uncompleted contracts...................... 3,036,059 2,955,977
---------- ----------
$ (33,558) $ 197,363
========== ==========
</TABLE>

Included in accompanying balance sheet under the following captions:

<TABLE>
<CAPTION>
1998 1999
-------- ---------
<S> <C> <C>
Costs and estimated earnings on uncompleted contracts in
excess of billings........................................ $ 78,751 $ 197,363
Billings on uncompleted contracts in excess of related costs
and estimated earnings.................................... (112,309) --
-------- ---------
$ 33,558 $ 197,363
======== =========
</TABLE>

NOTE E -- LONG-TERM DEBT

Long-term debt includes the following:

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Installment notes payable to bank, due in combined monthly
payments of $2,933, including interest ranging from 3.9%
to 9.25%, collateralized by vehicles with carrying values
of $80,406................................................ $ 68,868 $ 68,404
Less current portion........................................ (24,938) (31,090)
-------- --------
$ 43,930 $ 37,314
======== ========
</TABLE>

Maturities of long-term debt are as follows:

The Companies incurred interest expense of $14,035 and $19,903 in 1998 and
1999, respectively.

NOTE F -- COMMITMENTS AND CONTINGENCIES

Leases -- SCE conducts operations from facilities under a two-year
operating lease, which expires June 30, 2001. Rent expense under this lease
amounted to $10,928 for 1998 and $10,918 for 1999. Future minimum payments due
under the lease are $11,417 in 2000 and $5,821 in 2001.

F-99
<PAGE> 186

SERVICE CABLE ELECTRIC, INC. AND SERVICE CABLE CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Litigation -- From time-to-time, the Company is named as a defendant in
legal actions arising from its normal business activities. Although the amount
of any liability that could arise with respect to currently pending actions
cannot be accurately predicted, in the opinion of management, any such liability
will not have a material adverse effect on the financial position or operating
results of the Companies.

NOTE G -- EMPLOYEE BENEFIT PLAN

SCE maintains a profit sharing and 401 (k) plan for its employees. Employer
contributions to the plan amounted to $2,067 and $5,575 for the years 1998 and
1999, respectively. SCC maintains a profit sharing plan for its employees. There
were no employer contributions to the plan for 1998 or 1999.

NOTE H -- RELATED PARTY TRANSACTIONS

Administrative fees of $200,000 and $100,000 were incurred to companies
owned in part by shareholders of the Company as of December 31, 1998 and 1999,
respectively. The Company had revenue of $144,515 and $369,194 from these
companies in 1998 and 1999, respectively. Expenses of $96,752 and $80,828 were
paid to these companies in 1998 and 1999, respectively.

The Company borrowed $105,000 from its shareholders and affiliated
companies in 1998 and $100,500 in 1999. These loans bore interest at 6% and were
due on demand. Repayments of $16,236 were made in 1998 and $224,264 in 1999,
plus interest.

NOTE I -- CONCENTRATIONS

SCE performs contracts for Universal Studios in Orlando, Florida.
Approximately 96% in 1998 and 88% in 1999 of SCE's revenue was derived from
these contracts.

NOTE J -- SUBSEQUENT EVENTS

In May 2000, the Companies sold substantially all of their assets and
liabilities to ViaSource Communications Inc., together with its wholly owned
subsidiary, SCC Acquisition, Inc.

F-100
<PAGE> 187

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Excalibur Cable Communications, Ltd.
and Home Satellite Express, Inc.:

We have audited the accompanying combined balance sheet of Excalibur Cable
Communications, Ltd. (a Kentucky corporation) and Home Satellite Express, Inc.
(a Virginia corporation) as of December 31, 1999, and the related combined
statements of operations, shareholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Excalibur Cable
Communications, Ltd. and Home Satellite Express, Inc. as of December 31, 1999,
and the results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United
States.

/s/ ARTHUR ANDERSEN LLP

Vienna, Virginia
May 26, 2000

F-101
<PAGE> 188

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Excalibur Cable Communications, Ltd.
and Home Satellite Express, Inc.:

We have audited the accompanying combined balance sheet of Excalibur Cable
Communications, Ltd. (a Kentucky corporation) and Home Satellite Express, Inc.
(a Virginia corporation) as of December 31, 1998, and the related combined
statements of operations, shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Excalibur Cable
Communications, Ltd. and Home Satellite Express, Inc. as of December 31, 1998,
and the results of their operations and their cash flows for the year then ended
in conformity with accounting principles generally accepted in the United
States.

/s/ D.R. Maxfield & Company

Fairfax, Virginia,
April 7, 2000

F-102
<PAGE> 189

EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------- MARCH 31,
1998 1999 2000
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................... $ 275,489 $1,398,800 $ 2,071,317
Accounts receivable, net................................ 2,359,071 1,786,046 4,926,694
Supply inventory........................................ 480,878 681,926 1,483,780
Prepaid expenses and other.............................. 65,796 357,364 728,044
Deferred taxes.......................................... 196,060 909,923 1,287,541
---------- ---------- -----------
Total current assets............................ 3,377,294 5,134,059 10,497,376
---------- ---------- -----------
PROPERTY AND EQUIPMENT, net............................... 2,078,190 1,759,376 1,678,775
OTHER ASSETS.............................................. 79,548 328,298 87,529
---------- ---------- -----------
$5,535,032 $7,221,733 $12,263,680
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Line of credit.......................................... $1,300,000 $ -- $ --
Current portion of long-term obligations................ 456,074 621,035 565,444
Accounts payable........................................ 1,357,103 3,022,801 5,145,379
Accrued expenses........................................ 566,545 1,240,536 2,801,932
Deferred revenue........................................ -- 2,034,545 4,163,421
---------- ---------- -----------
Total current liabilities....................... 3,679,722 6,918,917 12,676,176
---------- ---------- -----------
LONG-TERM OBLIGATIONS..................................... 969,743 299,391 271,739
---------- ---------- -----------
DEFERRED REVENUE.......................................... -- 209,908 469,558
---------- ---------- -----------
DEFERRED TAX LIABILITY.................................... 7,230 -- --
---------- ---------- -----------
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock............................................ 95,000 95,000 95,000
Retained earnings (deficit)............................. 1,630,357 545,537 (143,773)
Treasury stock.......................................... (847,020) (847,020) (1,105,020)
---------- ---------- -----------
Total shareholders' equity (deficit)............ 878,337 (206,483) (1,153,793)
---------- ---------- -----------
$5,535,032 $7,221,733 $12,263,680
========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-103
<PAGE> 190

EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------- ------------------------
1998 1999 1999 2000
----------- ----------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUES................................... $26,222,743 $20,168,220 $5,314,503 $ 9,266,038
COST OF REVENUES........................... 21,839,673 17,467,235 4,625,958 8,492,320
SELLING, GENERAL AND ADMINISTRATIVE........ 4,270,437 3,738,983 204,292 1,718,602
DEPRECIATION AND AMORTIZATION.............. 539,201 437,713 43,237 124,137
----------- ----------- ---------- -----------
Total operating expenses......... 26,649,311 21,643,931 4,873,487 10,335,059
----------- ----------- ---------- -----------
Income (loss) from operations.... (426,568) (1,475,711) 441,016 (1,069,021)
----------- ----------- ---------- -----------
INTEREST INCOME............................ 9,064 56,348 8,682 24,436
INTEREST EXPENSE........................... (175,695) (135,330) (47,333) (22,343)
----------- ----------- ---------- -----------
Income (loss) before income
taxes.......................... (593,199) (1,554,693) 402,365 (1,066,928)
INCOME TAX PROVISION (BENEFIT)............. (162,960) (574,873) 156,541 (377,618)
----------- ----------- ---------- -----------
NET INCOME (LOSS).......................... $ (430,239) $ (979,820) $ 245,824 $ (689,310)
=========== =========== ========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-104
<PAGE> 191

EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
COMMON STOCK RETAINED
---------------- EARNINGS TREASURY
SHARES AMOUNT (DEFICIT) STOCK TOTAL
------ ------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998.................. 8,000 $95,000 $2,060,596 $ (847,020) $ 1,308,576
Net loss................................ -- -- (430,239) -- (430,239)
----- ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1998................ 8,000 95,000 1,630,357 (847,020) 878,337
Net loss................................ -- -- (979,820) -- (979,820)
Shareholder distributions............... -- -- (105,000) -- (105,000)
----- ------- ---------- ----------- -----------
BALANCE, DECEMBER 31, 1999................ 8,000 95,000 545,537 (847,020) (206,483)
Net loss (unaudited).................... -- -- (689,310) -- (689,310)
Treasury stock purchase (unaudited)..... -- -- -- (258,000) (258,000)
----- ------- ---------- ----------- -----------
BALANCE, MARCH 31, 2000
(unaudited)............................... 8,000 $95,000 $ (143,773) $(1,105,020) $(1,153,793)
===== ======= ========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-105
<PAGE> 192

EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------------- -----------------------
1998 1999 1999 2000
----------- ----------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income......................... $ (430,239) $ (979,820) $ 245,824 $ (689,310)
Adjustments to reconcile net (loss) income
to net cash (used in) provided by
operating activities:
Provision for bad debt................. -- 105,267 -- --
Depreciation and amortization.......... 539,201 437,713 43,237 124,137
Gain on disposal of fixed assets....... -- (34,410) -- --
Changes in operating assets and
liabilities:
Accounts receivable.................. (374,961) 467,758 120,152 (3,140,648)
Supply inventory..................... 107,488 (201,048) 56,484 (801,854)
Prepaid expenses and other........... (71,638) (469,757) (198,867) (129,911)
Deferred taxes....................... 196,060 (791,654) -- (377,618)
Accounts payable..................... (1,872,587) 1,665,698 294,539 2,122,578
Accrued expenses..................... (266,033) 673,991 156,205 1,561,396
Deferred revenue..................... -- 2,244,453 -- 2,388,526
----------- ----------- --------- -----------
Net cash (used in) provided by
operating activities............ (2,172,709) 3,118,191 717,574 1,057,296
----------- ----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment........ (602,226) (282,028) (6,920) (43,536)
Sale of fixed assets...................... 9,887 197,808 183,214 --
----------- ----------- --------- -----------
Net cash (used in) provided by
investing activities............ (592,339) (84,220) 176,294 (43,536)
----------- ----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Shareholder distributions................. -- (105,000) -- --
Principal payments on capital lease
obligations............................ (153,296) (202,347) (50,587) (37,781)
Repayment of notes payable................ (9,247,958) (5,089,988) (891,461) (45,462)
Proceeds from borrowings.................. 10,778,013 3,486,675 -- --
Repurchase of stock....................... -- -- -- (258,000)
----------- ----------- --------- -----------
Net cash provided by (used in)
financing activities............ 1,376,759 (1,910,660) (942,048) (341,243)
----------- ----------- --------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS............................... (1,388,289) 1,123,311 (48,180) 672,517
CASH AND CASH EQUIVALENTS, beginning of
period.................................... 1,663,778 275,489 275,489 1,398,800
----------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS, end of period.... $ 275,489 $ 1,398,800 $ 227,309 $ 2,071,317
=========== =========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-106
<PAGE> 193

EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS

(INFORMATION AS OF MARCH 31, 2000 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1999 AND 2000 IS UNAUDITED)

1. BACKGROUND

Excalibur Cable Communications, Ltd. (Excalibur) and Home Satellite
Express, Inc. (HSX), together referred to as (the Company), were incorporated on
March 20, 1981 and March 19, 1996, respectively. Excalibur was formed for the
purpose of installing cable, both above and underground, for cable companies
located in the United States and HSX was formed for the purpose of installing
private cable systems. In 1994, the Company expanded operations to include the
installation of satellite dishes for companies that offer direct satellite
services. The vast majority of the Company's business is now involved with the
installation of satellite dishes for one customer (see Note 13).

Both Excalibur and HSX were owned by two individuals, each owning 60%
(majority shareholder) and 40% (minority shareholder) of each of the two
entities. On March 28, 2000, Excalibur, HSX, the majority shareholder and the
minority shareholder entered into an agreement with the minority shareholder
agreeing to sell his 40% interests in Excalibur and HSX to the Company for
$258,000.

In April 2000, a letter of intent was entered into with ViaSource
Communications, Inc. (ViaSource) whereby ViaSource will acquire all the
outstanding stock of Excalibur.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF COMBINATION

The accompanying financial statements include the accounts of Excalibur
Communications, Ltd. and Home Satellite Express, Inc. which, as discussed in
Note 1, are under common control. All significant intercompany balances and
transactions have been eliminated.

USE OF ESTIMATES

INTERIM FINANCIAL STATEMENTS

The financial statements for the three months ended March 31, 1999 and 2000
are unaudited and, in the opinion of management of the Company, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of the results for those interim periods. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the full year.

F-107
<PAGE> 194
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

REVENUE RECOGNITION

Revenues are generally recognized as cable and satellite installation and
maintenance services are performed. One of the Company's satellite installation
customers (see Note 13), beginning in 1999, pays the Company a portion of its
fee subject to a chargeback. The Company has not accumulated sufficient company
specific data to date to estimate chargebacks. Accordingly, as required under
Staff Accounting Bulletin No. 101 -- Revenue Recognition in Financial Statements
(SAB No. 101), the Company records these amounts subject to chargeback as
deferred revenue and records revenue over the period the right of chargeback
terminates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. At December 31, 1998
and 1999, cash and cash equivalents include cash on hand and cash in an
overnight investment account.

SUPPLY INVENTORY

Supply inventory is stated at the lower of cost (first-in, first-out
method) or market and is comprised of materials used for cable and satellite
equipment installations and service. Market represents the lower of replacement
cost or estimated net realizable value.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Additions and improvements are
capitalized, while repairs and maintenance are charged to expense as incurred.
Depreciation of property and equipment is calculated using the double declining
balance method over the estimated useful lives of the assets which range from 5
to 7 years for equipment and 39 to 40 years for buildings. Leasehold
improvements are amortized using the double declining balance method over the
shorter of the lease term or the estimated useful lives of the assets.

INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, deferred income tax assets
and liabilities are determined based on differences between the financial
reporting and income tax basis of assets and liabilities measured using enacted
income tax rates and laws that are expected to be in effect when the differences
reverse.

SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1998 and 1999, the Company paid interest
of $250,836 and $135,330, respectively, income taxes of $16,320 and $487,223,
respectively, and financed equipment purchased under capitalized lease
obligations of $153,296 and $202,347, respectively. For the three months ended
March 31, 1999 and 2000, the Company paid interest of $47,333 and $22,343,
F-108
<PAGE> 195
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

respectively, income taxes of $0 and $6,404, respectively, and financed
equipment purchased under capitalized lease obligations of $50,587 and $37,781,
respectively.

3. ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1998 1999
---------- ----------
<S> <C> <C>
Accounts receivable, trade.................................. $2,320,594 $1,908,163
Other receivables........................................... 78,219 21,901
---------- ----------
2,398,813 1,930,064
Allowance for doubtful accounts............................. (39,742) (144,018)
---------- ----------
Accounts receivable, net.................................... $2,359,071 $1,786,046
========== ==========
</TABLE>

4. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1998 1999
------------ -----------
<S> <C> <C>
Land and Buildings.......................................... $ 825,219 $ 827,379
Leasehold improvements...................................... 25,481 25,611
Machinery and equipment..................................... 625,449 802,619
Furniture and fixtures...................................... 634,480 696,250
Vehicles.................................................... 1,448,547 1,201,176
------------ -----------
3,559,176 3,553,035
Accumulated depreciation and amortization................... (1,480,986) (1,793,659)
------------ -----------
$ 2,078,190 $ 1,759,376
============ ===========
</TABLE>

As of December 31, 1998 and 1999, the net book value of property and
equipment under capital lease obligations was $276,484 and 251,706,
respectively.

5. ACCRUED EXPENSES

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
-------- ----------
<S> <C> <C>
Accrued compensation........................................ $388,349 $ 877,511
Other....................................................... 178,196 363,025
-------- ----------
$566,545 $1,240,536
======== ==========
</TABLE>

F-109
<PAGE> 196
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

The (benefit) provision for income taxes consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
--------- ---------
<S> <C> <C>
Current:
Federal................................................... $ -- $ 180,484
State..................................................... 13,221 36,297
--------- ---------
13,221 216,781
--------- ---------
Deferred:
Federal................................................... (140,945) (659,103)
State..................................................... (35,236) (132,551)
--------- ---------
(176,181) (791,654)
--------- ---------
(Benefit) provision for income taxes.............. $(162,960) $(574,873)
========= =========
</TABLE>

Deferred taxes are determined based upon the estimated future tax effects
of differences between the financial statement and income tax basis of assets
and liabilities given the provisions of the enacted tax laws.

The reconciliation of the statutory federal income tax rate to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1999
-------- --------
<S> <C> <C>
Statutory federal income tax rate........................... 34.0% 34.0%
State taxes, net of federal tax benefit..................... 2.5 4.1
Effect of graduated tax rate................................ (11.4) (5.0)
Nondeductible expenses...................................... 2.4 3.9
-------- --------
27.5% 37.0%
======== ========
</TABLE>

The tax effect of temporary differences as established in accordance with
SFAS No. 109 that give rise to deferred taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1998 1999
-------- --------
<S> <C> <C>
Deferred tax asset:
Net operating loss carryforward........................... $173,800 $ --
Deferred revenue.......................................... -- 857,381
Allowance for doubtful accounts........................... 11,070 55,015
Other..................................................... 11,190 77,756
-------- --------
196,060 990,152
-------- --------
Deferred tax liability:
Depreciation and amortization............................. (7,230) (9,668)
-------- --------
Net deferred tax asset............................ $188,830 $980,484
======== ========
</TABLE>

F-110
<PAGE> 197
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. LINE OF CREDIT

The Company has a $1,500,000 line of credit with a bank bearing interest at
prime plus 1% that expires on May 31, 2000. Borrowings under the line are
secured by the general assets of the Company and are personally guaranteed by
the majority shareholder. At December 31, 1998, the Company had outstanding
borrowings of $1,300,000 under the line. There were no outstanding borrowings
under the line at December 31, 1999. The Company is currently not in compliance
with the debt covenants related to this line of credit.

8. DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1998 1999
---------- --------
<S> <C> <C>
Mortgage payable, payable in monthly installments including
interest at 8.5% with a balloon payment of $193,600 due
September 30, 2000........................................ $ 218,830 $199,329
Mortgage payable, payable in monthly installments including
interest at 9% with a balloon payment of $56,500 due
August 4, 2000............................................ 61,860 58,660
Notes payable, payable in monthly installments including
interest ranging from 9% to 15% due between 2000 and
2002...................................................... 810,188 442,902
Capital lease obligations (see Note 9)...................... 334,939 219,535
---------- --------
1,425,817 920,426
Less -- Current maturities.................................. 456,074 621,035
---------- --------
$ 969,743 $299,391
========== ========
</TABLE>

Properties with a net book value of $745,908 are the collateral for the
mortgages. The majority shareholder is the personal guarantor for the real
estate mortgages.

9. CAPITAL LEASE OBLIGATIONS

The Company has entered into long-term capital lease agreements for office
furniture and equipment. The interest rates under these leases range from 8% to
23% per year.

Future principal payments on capital lease obligations as of December 31,
1999 are as follows:

<TABLE>
<S> <C>
2000........................................................ $176,242
2001........................................................ 44,577
2002........................................................ 21,215
2003........................................................ 8,158
2004........................................................ 3,700
--------
Minimum lease payments...................................... 253,892
Less -- Amounts representing interest..................... (34,357)
--------
Present value of minimum lease payments..................... 219,535
Less -- Current portion................................ (149,550)
--------
$ 69,985
========
</TABLE>

F-111
<PAGE> 198
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

10. EMPLOYEE BENEFIT PLAN

The Company maintains a profit sharing thrift plan for full-time employees.
The Company may contribute 50% of the employee's contribution to the plan up to
a maximum of 3% of the employee's compensation. Company contributions vest over
six years. No contributions were made by the Company in 1998 or 1999, with
$75,088 included in accrued expenses related to 1999.

11. COMMON STOCK AND TREASURY STOCK

<TABLE>
<CAPTION>
EXCALIBUR CABLE HOME SATELLITE
COMMUNICATIONS, LTD. EXPRESS COMBINED
---------------------- ------------------ ----------------------
1998 1999 1998 1999 1998 1999
--------- --------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Common Stock, no par value,
10,000 shares authorized
and issued................ $ 20,000 $ 20,000 $ -- $ -- $ 20,000 $ 20,000
Common Stock, no par value,
25,000 shares authorized,
3,000 outstanding......... -- -- 75,000 75,000 75,000 75,000
--------- --------- ------- ------- --------- ---------
Total common
stock........... $ 20,000 $ 20,000 $75,000 $75,000 $ 95,000 $ 95,000
========= ========= ======= ======= ========= =========
Treasury Stock, 5,000 shares
at cost................... $(847,020) $(847,020) $ -- $ -- $(847,020) $(847,020)
========= ========= ======= ======= ========= =========
</TABLE>

12. COMMITMENTS AND CONTINGENCIES

LEASE OBLIGATIONS

The Company leases office facilities and certain equipment under various
noncancelable operating leases. Future minimum lease payments as of December 31,
1999 are as follows:

<TABLE>
<S> <C>
2000........................................................ $ 655,789
2001........................................................ 568,837
2002........................................................ 524,381
2003........................................................ 413,060
2004........................................................ 298,898
Thereafter.................................................. 139,162
----------
$2,600,127
==========
</TABLE>

For the year ended December 31, 1998 and 1999, rent expense under the
operating leases was $523,952 and $590,782, respectively.

DEFERRED COMPENSATION PLAN

Effective December 31, 1996, the Company adopted the Excalibur Cable
Communications, Ltd. Deferred Compensation Plan (the Phantom Stock Plan) for two
employees. The plan provides for performance units to be awarded to certain
employees of the Company. Each performance unit shall be valued equal to the
value of one share of common stock at the date of liquidation, dissolution

F-112
<PAGE> 199
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

and winding up or as of the sale of 60% of the outstanding stock of the Company.
Vesting is immediate but no payment is due until liquidation, dissolution and
winding up of the Company or as of the sale of 60% of the outstanding stock of
the Company. Payment for units shall be made in cash within 30 days of the
aforementioned events. Forty-two such units were awarded during 1997. In May
2000, the Company agreed to terminate the Phantom Stock Plan and will pay
$133,280 to the holders of the units as a result of the sale of Excalibur to
ViaSource (see Note 1). In addition, in May 2000, the Company agreed to issue
557 shares of Common Stock to certain employees for prior services. The $133,280
payment and the fair value of the shares will be charged to the Company's second
quarter statement of operations (see Note 14).

LITIGATION

The Company is a party to various claims and legal proceedings in the
normal course of business. Although the ultimate outcome of these matters is
presently not determinable, management of the Company, after consultation with
legal counsel, does not believe that these matters will have a material adverse
effect on the Company's financial position or results of operations.

13. CONCENTRATION RISKS

CONCENTRATION OF CREDIT RISK

SIGNIFICANT CUSTOMERS

For the years ended December 31, 1998 and 1999, Primestar, Inc./DirecTV,
Inc., in aggregate, accounted for approximately 79% and 76% of total revenues,
respectively. Included in 1999 revenues are approximately $1.8 million of
incentive payments made by DirecTV in 1999. No payments were received in 1998
and there can be no assurance that any payments will be received in subsequent
years. As of December 31, 1998 and 1999, 73% and 47% of accounts receivable,
respectively, related to this customer. A loss of or a material reduction in
revenues from this customer could have a material adverse effect on the
Company's operating results and financial condition.

F-113
<PAGE> 200
EXCALIBUR CABLE COMMUNICATIONS, LTD. AND
HOME SATELLITE EXPRESS, INC.

NOTES TO THE COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUBSEQUENT EVENTS (UNAUDITED)

On May 30, 2000, the Board of Directors authorized a dividend of
approximately $140,000. In addition on May 31, 2000, the board approved a bonus
of approximately $1,752,000. The bonus consisted of a $682,000 bonus for
services rendered for the three months ended March 31, 2000 (which was accrued
as of March 31, 2000) and the remaining amount related to post April 1, 2000
services which will be charged to the Company's second quarter Statement of
Operations.

F-114
<PAGE> 201

INDEPENDENT AUDITORS' REPORT

The Board of Directors
TeleCore, Inc.:

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

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

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

The accompanying consolidated financial statements have been prepared
assuming that Telecore, Inc. will continue as a going concern. As more fully
described in note 2, the Company has incurred operating losses and negative cash
flows from operations to date and has experienced increased capital needs. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Orange County, California
February 4, 2000

F-115
<PAGE> 202

TELECORE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
---------------------- MARCH 31,
1998 1999 2000
-------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 3,162 $ 1,161,805 $ 710,691
Restricted cash.......................................... -- 242,340 242,340
Accounts receivable, net of allowance for doubtful
accounts of $6,333, $144,000 and $362,145 at December
31, 1998 and 1999 and March 31, 2000 (unaudited),
respectively.......................................... 694,920 2,798,304 4,971,779
Other current assets..................................... 62,121 243,577 785,274
-------- ----------- -----------
Total current assets............................. 760,203 4,446,026 6,710,084
Property and equipment, net................................ 54,038 1,121,793 1,983,220
Other assets............................................... 4,752 129,814 466,310
-------- ----------- -----------
$818,993 $ 5,697,633 $ 9,159,614
======== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable......................................... $302,485 $ 1,279,566 $ 3,209,187
Accrued workers compensation............................. 34,400 135,201 61,902
Accrued payroll and related expenses..................... 126,560 672,793 1,325,122
Accrued consulting fees.................................. -- 223,152 289,110
Other accrued liabilities................................ 114,075 159,358 357,826
Line of credit........................................... 367,996 -- 1,000,000
Notes payable -- current portion......................... 4,708 4,899 3,604,899
-------- ----------- -----------
Total current liabilities........................ 950,224 2,474,969 9,848,046
-------- ----------- -----------
Notes payable -- long-term portion......................... 12,679 8,166 7,361
Stockholders' equity (deficiency):
Series A convertible preferred stock, $0.01 par value, no
shares authorized at December 31, 1998, 3,333,334
shares authorized, issued and outstanding at December
31, 1999 and March 31, 2000 (unaudited) (liquidation
preference of $6,500,000)............................. -- 33,333 33,333
Common stock, $0.01 par value. Authorized 20,000,000
shares; issued and outstanding 1,500, 5,442,308 and
5,442,308 shares at December 31, 1998 and 1999 and
March 31, 2000 (unaudited), respectively.............. 15 54,423 54,423
Additional paid-in capital............................... 85 6,794,094 7,387,806
Unearned compensation.................................... -- (411,330) (383,910)
Accumulated deficit...................................... (144,010) (3,256,022) (7,787,445)
-------- ----------- -----------
Net stockholders' equity (deficiency)............ (143,910) 3,214,498 (695,793)
Commitments (note 8).......................................
Subsequent events (note 9).................................
-------- ----------- -----------
$818,993 $ 5,697,633 $ 9,159,614
======== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-116
<PAGE> 203

TELECORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------- -----------------------------
1997 1998 1999 1999 2000
---------- ---------- ----------- ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues......................... $ 330,401 $2,809,748 $ 9,583,558 $1,218,037 $ 7,113,850
Operating expenses:
Payroll and related expenses... 169,389 2,164,711 8,975,843 987,003 7,327,101
General and administrative..... 164,504 664,296 3,076,286 113,481 4,049,674
---------- ---------- ----------- ---------- -----------
Operating income (loss)... (3,492) (19,259) (2,468,571) 117,553 (4,262,925)
Interest expense, net.......... 8,321 110,538 141,041 29,138 268,498
---------- ---------- ----------- ---------- -----------
Income (loss) before
income taxes........... (11,813) (129,797) (2,609,612) 88,415 (4,531,423)
Income tax expense............... 800 1,600 2,400 600 --
---------- ---------- ----------- ---------- -----------
Net income (loss)......... $ (12,613) $ (131,397) $(2,612,012) $ 87,815 $(4,531,423)
========== ========== =========== ========== ===========
Basic and diluted income (loss)
per share...................... $ -- $ (0.02) $ (0.48) $ 0.02 $ (0.83)
========== ========== =========== ========== ===========
Weighted average common shares... 5,416,668 5,416,668 5,423,131 5,416,668 5,442,308
========== ========== =========== ========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-117
<PAGE> 204

TELECORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
YEARS ENDED DECEMBER 31, 1997, 1998, AND 1999,
AND THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
SERIES A
CONVERTIBLE PREFERRED STOCK COMMON STOCK
---------------------------- ------------------- ADDITIONAL UNEARNED ACCUMULATED
SHARES AMOUNT SHARES AMOUNT PAID-IN CAPITAL COMPENSATION DEFICIT
------------ ------------- --------- ------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1997..................... -- $ -- -- $ -- $ -- $ -- $ --
Issuance of common stock... -- -- 1,500 15 85 -- --
Net loss................... -- -- -- -- -- -- (12,613)
--------- ---------- --------- ------- ---------- --------- -----------
Balance at December 31,
1997..................... -- -- 1,500 15 85 -- (12,613)
Net loss................... -- -- -- -- -- -- (131,397)
--------- ---------- --------- ------- ---------- --------- -----------
Balance at December 31,
1998..................... -- -- 1,500 15 85 -- (144,010)
Effect of reorganization
and distribution (note
1)....................... -- -- 5,415,168 54,152 (54,152) -- (500,000)
Issuance of preferred
stock, net of issuance
costs of $100,000........ 3,333,334 33,333 -- -- 6,366,667 -- --
Issuance of common stock... -- -- 25,640 256 4,744 -- --
Noncash compensation
recognized in connection
with issuance of common
stock.................... -- -- -- -- 38,000 -- --
Unearned compensation
related to grant of stock
options.................. -- -- -- -- 438,750 (438,750) --
Amortization of unearned
compensation............. -- -- -- -- -- 27,420 --
Net loss................... -- -- -- -- -- --
--------- ---------- --------- ------- ---------- --------- -----------
Balance at December 31,
1999..................... 3,333,334 33,333 5,442,308 54,423 6,794,094 (411,330) (3,256,022)
Issuance of stock warrants
(unaudited).............. -- -- -- -- 593,712 -- --
Amortization of unearned
compensation
(unaudited).............. -- -- -- -- -- 27,420 --
Net loss (unaudited)....... -- -- -- -- -- -- (4,531,423)
--------- ---------- --------- ------- ---------- --------- -----------
Balance at March 31, 2000
(unaudited).............. 3,333,334 $ 33,333 5,442,308 $54,423 $7,387,806 $(383,910) $(7,787,445)
========= ========== ========= ======= ========== ========= ===========

TOTAL
STOCKHOLDERS'
EQUITY (DEFICIENCY)
-------------------
<S> <C>
Balance at January 1,
1997..................... $ --
Issuance of common stock... 100
Net loss................... (12,613)
-----------
Balance at December 31,
1997..................... (12,513)
Net loss................... (131,397)
-----------
Balance at December 31,
1998..................... (143,910)
Effect of reorganization
and distribution (note
1)....................... (500,000)
Issuance of preferred
stock, net of issuance
costs of $100,000........ 6,400,000
Issuance of common stock... 5,000
Noncash compensation
recognized in connection
with issuance of common
stock.................... 38,000
Unearned compensation
related to grant of stock
options.................. --
Amortization of unearned
compensation............. 27,420
Net loss................... (2,612,012)
-----------
Balance at December 31,
1999..................... 3,214,498
Issuance of stock warrants
(unaudited).............. 593,712
Amortization of unearned
compensation
(unaudited).............. 27,420
Net loss (unaudited)....... (4,531,423)
-----------
Balance at March 31, 2000
(unaudited).............. $ (695,793)
===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-118
<PAGE> 205

TELECORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------- ----------------------------
1997 1998 1999 1999 2000
-------- --------- ----------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................ $(12,613) $(131,397) $(2,612,012) $ 87,815 $(4,531,423)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation............................... -- 10,007 53,437 13,359 130,074
Noncash compensation recognized in
connection with issuance of common
stock.................................... -- -- 38,000 -- --
Amortization of unearned compensation...... -- -- 27,420 -- 27,420
Amortization of discount in connection with
issuance of stock warrants............... -- -- -- -- 186,083
Changes in operating assets and
liabilities:
Accounts receivable...................... (78,425) (616,495) (2,103,384) (252,314) (2,173,475)
Other current assets..................... (6,019) (56,102) (181,456) 60,701 (134,068)
Other assets............................. (1,589) (3,163) (125,062) -- (336,496)
Accounts payable......................... 23,670 278,815 977,081 49,781 1,929,621
Accrued liabilities...................... 33,017 242,018 915,469 35,053 843,456
-------- --------- ----------- --------- -----------
Net cash used in operating
activities........................ (41,959) (276,317) (3,010,507) (5,605) (4,058,808)
-------- --------- ----------- --------- -----------
Cash flows from investing activities:
Purchase of property and equipment, including
software development cost.................. -- (64,045) (1,121,192) (6,854) (991,501)
Increase in restricted cash.................. -- -- (242,340) -- --
-------- --------- ----------- --------- -----------
Net cash used by financing
activities........................ -- (64,045) (1,363,532) (6,854) (991,501)
-------- --------- ----------- --------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock....... 100 -- 5,000 -- --
Proceeds from issuance of preferred stock,
net........................................ -- -- 6,400,000 -- --
Borrowings on notes payable.................. -- 19,680 -- 169 3,600,518
Repayments on notes payable.................. -- (2,293) (4,322) (1,323) (1,323)
Net borrowings (repayments) on line of
credit..................................... 47,036 320,960 (367,996) 22,808 1,000,000
Effect of reorganization and distribution to
stockholder................................ -- -- (500,000) -- --
-------- --------- ----------- --------- -----------
Net cash provided by financing
activities........................ 47,136 338,347 5,532,682 21,654 4,599,195
-------- --------- ----------- --------- -----------
Net increase (decrease) in cash and
cash equivalents.................. 5,177 (2,015) 1,158,643 9,195 (451,114)
Cash and cash equivalents at beginning of
period....................................... -- 5,177 3,162 3,162 1,161,805
-------- --------- ----------- --------- -----------
Cash and cash equivalents at end of period..... $ 5,177 $ 3,162 $ 1,161,805 $ 12,357 $ 710,691
======== ========= =========== ========= ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest................................... $ 8,193 $ 104,038 $ 179,139 $ 29,138 $ 8,129
Income taxes............................... 800 1,600 -- -- --
======== ========= =========== ========= ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-119
<PAGE> 206

TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1999
(INFORMATION AS OF MARCH 31, 2000 AND FOR
THE THREE MONTHS ENDED MARCH 31, 1999 AND 2000 IS UNAUDITED)

1. ORGANIZATION AND NATURE OF BUSINESS

On September 7, 1999, TeleCore, Inc. was incorporated in the state of
Delaware. On September 30, 1999, TeleCore LLC and The Synectics Group, Inc.,
entities under common control, effected a reorganization pursuant to which
TeleCore LLC and The Synectics Group, Inc. (d/b/a CMC Communications) became
wholly owned subsidiaries of TeleCore, Inc., (collectively, the "Company") in a
manner similar to a pooling of interests as both entities were under common
control and stock ownership. Accordingly, the assets and liabilities of TeleCore
LLC and The Synectics Group, Inc. have been consolidated as wholly owned
subsidiaries of Telecore, Inc. and presented on a historical (predecessor) cost
basis. All per share amounts have been stated as if the reorganization had been
effected during 1997. The consolidated financial statements include the accounts
of TeleCore, Inc and its wholly owned subsidiaries for all periods presented.
All intercompany transactions have been eliminated in consolidation.

Concurrent with the reorganization, the Company distributed $500,000 in
cash to the founders of The Synetics Group, Inc. Immediately following the
reorganization, the Company sold 3,333,334 shares of its Series A convertible
preferred stock to an investor group for gross proceeds of $6,500,000 (note 3).

TeleCore, Inc. contracts with telecommunications companies to provide
broadband network, installation, integration and maintenance services for
digital subscriber line technology, primarily to small- and medium-sized
businesses.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND GOING CONCERN

The Company has financed its operations through sales of common stock and
preferred stock. The Company has experienced losses and negative cash flows from
operations since its inception and has experienced increased capital needs. The
Company's ability to continue as a going concern is dependent upon raising
additional financing through a registered public offering or private equity
sources. In addition, if such resources are not available, the Company may be
required to delay or reduce expenditures. Should the Company be required to
delay or reduce expenditures, it may not be able to fund its expansion, take
advantage of acquisition or collaborative opportunities, develop or enhance
services or respond to competitive pressures. The conditions described above
raise substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of

F-120
<PAGE> 207
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the financial statements and the reported amounts of revenues and expenses
during the reporting period to prepare these consolidated financial statements
in conformity with generally accepted accounting principles. Actual results
could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents. The Company has included as
restricted cash $242,340 pledged as collateral for an outstanding letter of
credit issued for its operating lease facilities.

FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
receivable. The Company invests available cash in money market securities of
high credit quality financial institutions. The Company performs ongoing credit
evaluations of its customers and generally does not require collateral on
accounts receivable. The Company maintains allowances for potential credit
losses and such losses have been within management's expectations. Write-offs of
accounts receivable have not been material for any of the periods presented. The
Company's customers are headquartered in North America. The carrying value of
cash and cash equivalents, restricted cash, accounts receivable, accounts
payable, accrued liabilities and debt instruments approximate their fair value
due to their relatively short maturities.

At December 31, 1998, amounts due from three customers represented 44%, 32%
and 10%, respectively, of total accounts receivable. At December 31, 1999,
amounts due from three customers represented 47%, 24% and 12%, respectively, of
total accounts receivable. At March 31, 2000, amounts due from three customers
represented 40%, 26% and 14%, respectively, of total accounts receivable.

Revenues from major customers is summarized as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------- -------------
1997 1998 1999 1999 2000
----- ----- ----- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Customer A............................................ -- -- 47% 25% 43%
Customer B............................................ -- 46% 21% -- 21%
Customer C............................................ -- -- 15% 33% --
Customer D............................................ 95% 12% -- -- --
Customer E............................................ -- 27% -- 21% --
Customer F............................................ -- -- -- -- 19%
</TABLE>

F-121
<PAGE> 208
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is recorded on a
straight-line basis over the estimated useful life of the related assets which
range from three to five years. Maintenance and repairs are charged to
operations when incurred.

In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use. SOP 98-1 requires all costs
related to the development of internal use software other than those incurred
during the application development stage to be expensed as incurred. Costs
incurred during the application development stage are required to be capitalized
and amortized over the estimated useful life of the software. SOP 98-1 was
adopted by the Company on January 1, 1999. As of December 31, 1999, the Company
had capitalized approximately $689,000 related to costs incurred during the
application development stage.

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- MARCH 31,
1998 1999 2000
-------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Computer equipment.......................................... $ 26,456 $ 458,603 $ 749,730
Purchased software and capitalized software development
costs..................................................... -- 689,045 1,150,423
Leasehold improvements...................................... -- -- 231,365
Furniture and fixtures...................................... 10,477 10,477 18,108
Tools and fixtures.......................................... 4,932 4,932 4,932
Transportation equipment.................................... 22,180 22,180 22,180
-------- ---------- ----------
64,045 1,185,237 2,176,738
Less accumulated depreciation............................... (10,007) (63,444) (193,518)
-------- ---------- ----------
$ 54,038 $1,121,793 $1,983,220
======== ========== ==========
</TABLE>

IMPAIRMENT OF LONG-LIVED ASSETS

The Company records impairment losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount.

REVENUE RECOGNITION

The Company recognizes revenue as services are performed. Revenues pursuant
to fixed-price contracts are earned and recognized upon completion of the
service call. Revenues pursuant to time and material contracts are recognized as
services are provided.

NET LOSS PER SHARE

Basic net loss per share is computed using the weighted average number of
common shares outstanding during the periods presented. Diluted net loss per
share is calculated using the weighted-average number of common shares
outstanding, and when dilutive, potential common

F-122
<PAGE> 209
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shares from options and warrants to purchase common stock using the treasury
stock method and from convertible securities using the "if-converted" basis. On
September 30, 1999, the Company effected a reorganization, issuing 5,415,168
shares. The per share common amounts in the consolidated financial statements
have been adjusted to reflect the effect of the reorganization for all periods
presented.

Stock options to purchase 250,000 shares of common stock and 785,388
potential shares of common stock resulting from the conversion of the
convertible preferred stock on an "as if " converted basis were not included in
the computation of diluted earnings per share for the year ended December 31,
1999 as the impact would be antidilutive.

Stock options to purchase 250,000 (unaudited) shares of common stock, stock
warrants to purchase 180,549 (unaudited) shares of common stock and 785,388
(unaudited) potential shares of common stock resulting from the conversion of
the convertible preferred stock on and "as if" converted basis were not included
in the computation of diluted earnings per share for the three months ended
March 31, 2000 as the impact would be antidilutive.

There were no common stock equivalents as of December 31, 1997 and 1998 or
March 31, 1999.

INCOME TAXES

The Company uses the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected
to be realized.

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation arrangements with
employees using the intrinsic-value method pursuant to Accounting Principles
Board Opinion No. 25 (APB No. 25), Accounting For Stock Issued To Employees, and
related interpretations. Accordingly, no accounting recognition is given to
stock options issued to employees that are granted at fair market value until
they are exercised.

Stock options issued to non-employees are recorded at the fair value of the
stock options at the performance commitment date. Upon exercise, net proceeds,
including income tax benefits realized, are credited to equity.

REPORTING COMPREHENSIVE LOSS

The Company has no significant components of other comprehensive loss, and
accordingly, comprehensive loss is the same as net loss for all periods.

F-123
<PAGE> 210
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SEGMENT REPORTING

In June 1997, Statement of Financial Accounting Standards No. 131 ("SFAS
No. 131"), Disclosures About Segments of an Enterprise and Related Information,
was issued. SFAS No. 131 establishes standards for the way that a public
enterprise reports information about operating segments in annual financial
statements, and requires that those enterprises report selected information
about operating segments in interim financial reports issued to stockholders.
The Company has determined that it has one reporting business segment at this
time.

UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements as of March 31, 2000 and for the
three months ended March 31, 1999 and 2000 are unaudited. In the opinion of
management, the accompanying unaudited consolidated financial statements contain
all adjustments necessary, consisting only of normal recurring accruals, to
present fairly the financial information contained therein. Results for the
three months ended March 31, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000.

NEW ACCOUNTING PRONOUNCEMENTS

In December 1999, the United States Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in
Financial Statements, as amended. SAB No. 101 summarizes certain of the SEC
staff's views regarding the appropriate recognition of revenue in financial
statements. The Company believes its revenue recognition policy is in accordance
with SAB 101.

3. STOCKHOLDERS' EQUITY (DEFICIENCY)

AUTHORIZED SHARES

The Company's Amended and Restated Articles of Incorporation (Articles)
authorize the issuance of two classes of shares designated as common stock and
preferred stock, each having a par value of $0.01 per share. The number of
shares authorized is 23,333,334, consisting of 20,000,000 shares of common stock
and 3,333,334 of preferred stock. Of the preferred shares authorized, all shares
were designated as Series A convertible preferred stock.

SERIES A CONVERTIBLE PREFERRED STOCK

In September 1999, the Company issued 3,333,334 shares of Series A
convertible preferred stock for total cash consideration of $6,500,000. The
Company incurred approximately $100,000 of expenses related to the sale of
preferred stock which has been reflected as reduction in equity.

F-124
<PAGE> 211
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The rights, preferences and privileges of the Series A convertible
preferred stock are listed below:

CONVERSION RIGHTS

Each share of the Series A convertible preferred stock outstanding is
convertible at the option of the holder into such shares of common stock as
determined by dividing the original issue price by the conversion price. The
conversion price is subject to certain adjustments for dilutive issuances.
Conversion will occur automatically upon the closing of a registered public
offering of the Company's common stock that yields aggregate proceeds to the
Company of at least $25 million at a per share price of at least 300% of the
stated value within three years of issuance and 400% thereafter.

DIVIDEND RIGHTS

Series A convertible preferred stockholders are entitled to receive
non-cumulative dividends at the annual rate of 8% of the original issue price,
when, as and if declared by the Board of Directors. No dividends shall be
declared or paid to any holders of shares of the common stock of the Company
unless dividends for the Series A have first been declared and paid. At the
discretion of the Company, common stockholders would receive dividends on a pro
rata basis. To date, the Company has not declared any dividends.

LIQUIDATION PREFERENCE

In the event of a liquidation, dissolution or winding up of the Company,
the holders of Series A convertible preferred stock are entitled, sharing pro
rata, to receive a liquidation preference of up to $1.95 per share, plus any
accrued but unpaid dividends. Any remaining proceeds are to be shared with the
holders of the common stock on a pro rata basis.

VOTING RIGHTS

Holders of Series A convertible preferred stock are generally entitled to
vote together with holders of common stock on matters presented for stockholder
action at a voting percentage equal to the number if such preferred shares were
converted to common stock.

REDEMPTION RIGHTS

The Series A preferred stock is not redeemable.

EARNOUT SHARES

Pursuant to the Series A convertible preferred stock agreement (see note
6), the Company has designated 312,667 common shares as earnout shares to
shareholders prior to the reorganization on September 30, 1999
("Pre-reorganization Shareholders"). The performance period is October 1, 1999
to December 31, 2000. Pre-reorganization Shareholders would receive a total of
312,667 shares at the end of the performance period conditioned on certain
events occurring (securing a

F-125
<PAGE> 212
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

field service contract and recording of revenues from a specific customer of at
least $5 million during the performance period). If such shares are earned, the
Company will recognize compensation expense equal to the then fair market value
of the earnout shares at that time.

4. INCOME TAXES

Income tax expense of $800, $1,600 and $2,400 in 1997, 1998 and 1999,
respectively, consisted of minimum state income taxes. There were no significant
deferred tax assets attributed to TeleCore LLC at the date of the
reorganization.

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1998 1999
-------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 57,000 $ 921,000
Accounts receivable....................................... 3,000 62,000
Accrued expenses.......................................... -- 180,000
-------- -----------
Total gross deferred tax assets................... 60,000 1,163,000
Valuation allowance......................................... (60,000) (1,163,000)
-------- -----------
Total net deferred tax assets..................... $ -- $ --
======== ===========
</TABLE>

Management has established a full valuation against its net deferred tax
assets at December 31, 1998 and 1999 as it is more likely than not that no
benefit will be realized for its deferred tax assets. The Company has net
operating loss carryforwards for federal and state income tax purposes of
approximately $2,149,000 and $2,152,000, respectively, available to reduce
future taxable income subject to income taxes. The net operating loss
carryforwards for federal and state income tax purposes expire beginning in 2011
and 2004, respectively.

The Internal Revenue Code of 1986 and the California Conformity Act of 1987
substantially restrict the ability of a corporation to utilize existing net
operating losses and credits in the event of an "ownership change." Any unused
annual limitation can be carried over and added to the succeeding year's annual
limitation within the allowable carryforward period. Future changes in
ownership, as defined for tax purposes, may result in additional limitations.

5. NOTE PAYABLE AND LINE OF CREDIT

In June 1998, the Company entered into a note payable to purchase an
automobile. The note is collateralized by the automobile. The outstanding loan
balance was $17,387 and $13,065 at December 31, 1998 and 1999, respectively.
Interest expense on the loan was $373 and $789 in 1998 and 1999, respectively.
Subsequent to December 31, 1999, principal payments totaling $4,899 and $8,166
in 2000 and 2001, respectively, are due on the balance.

In 1997, the Company entered into a line of credit with a finance company
collateralized by substantially all of the Company's assets. The outstanding
loan balance was $367,996 and zero at

F-126
<PAGE> 213
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 1998 and 1999, respectively. Interest expense on the loan was
$8,193, $103,665 and $178,350 in 1997, 1998 and 1999, respectively.

6. STOCK-BASED COMPENSATION

In September 1999, the Company adopted the 1999 Employee Stock Option Plan
in connection with the Series A convertible preferred stock agreement. Options
may be granted from time to time for an aggregate of no more than 1,224,360
shares of common stock upon approval from the Board of Directors. Under the
plan, options vest ratably over either three or four years. The options are
exercisable up to ten years from the date of grant.

In September 1999, the Company granted to an employee an option to purchase
250,000 shares of common stock at an exercise price of $.195 per share. The
option vests ratably over four years. On the date of grant, the fair market
value of the underlying shares was $1.95 per share. For financial reporting
purposes, the Company recorded the intrinsic value of the option of $438,750 as
unearned compensation. During 1999 and during the three months ended March 31,
2000, the Company amortized $27,420 of the unearned compensation.

On September 30, 1999, the principal shareholder granted an option to an
officer/shareholder of the Company to purchase 135,416 shares of common stock
owned personally by this shareholder at an exercise price of $1.95 per share.
The option vests ratably over three years.

7. 401(K) PLAN

In 1999, the Company adopted a 401(k) plan for all qualified employees.
Contributions to the plan are at the sole discretion of the Company's Board of
Directors. Total plan contributions charged to operations was $174,475 for the
year ended December 31, 1999.

8. COMMITMENTS

OPERATING LEASES

The Company entered into a lease agreement in January 2000 for an
additional office facility. At December 31, 1999, future minimum payments under
noncancelable lease agreements, including the new facility lease entered into in
January 2000, are as follows:

<TABLE>
<S> <C>
Year ending December 31:
2000................................................... $ 656,084
2001................................................... 705,132
2002................................................... 734,634
2003................................................... 762,228
2004................................................... 799,583
Thereafter............................................. 200,787
----------
$3,858,448
==========
</TABLE>

Rent expense in 1997, 1998 and 1999 was $8,957, $35,152 and $111,158
respectively.

F-127
<PAGE> 214
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. SUBSEQUENT EVENTS (UNAUDITED)

In February and March 2000, the Company entered into loan agreements with
two Series A preferred stock investors and one individual. The loans bear
interest at 8% and are due on June 30, 2000. Net proceeds from the bridge loans
were $3.6 million. The loan agreements included warrants to purchase an
aggregate of 161,722 shares of common stock at exercise prices ranging from
$4.07 to $4.77 per share. The warrants have a five-year term. The Company will
amortize the fair value of these warrants totaling approximately $493,000 over
the terms of the credit agreements. The fair value of the warrants was
determined using the Black-Scholes option pricing method with the following
assumptions: risk-free interest rate of 6.3%, volatility of 80%, dividend rate
of 0% and an expected life of five years.

On March 10, 2000, the Company entered into a credit agreement with Silicon
Valley Bank. This agreement provides a revolving credit facility of $1.5 million
for working capital. The credit facility is renewable annually, and bears
interest at the prime rate plus 2%. Borrowings on this credit facility are
limited to 80% of eligible accounts receivable. The Company granted Silicon
Valley Bank a warrant to purchase 23,000 shares of preferred stock at an
exercise price of $1.95 per share. The warrant has a ten-year term. The Company
will amortize the fair value of the warrant of approximately $100,000 over the
term of the credit agreement. The fair value of the warrant was determined using
the Black-Scholes option pricing method with the following assumptions:
risk-free interest rate of 6.3%, volatility of 80%, dividend rate of 0% and an
expected life of ten years. Until borrowings under the credit facility are
repaid, the Company is required to grant to the bank, on a monthly basis,
warrants to purchase an additional 23,000 shares of preferred stock. On May 1,
2000, the Company granted to the bank a warrant to purchase an additional 23,000
shares of preferred stock. As of May 1, 2000, borrowings of $1,500,000 were due
on demand.

In April 2000, the Company entered into a loan agreement with a Series A
preferred stock investor. The loan bears interest at 8% and is due June 30,
2000. Net proceeds from the bridge loan were $750,000. The loan agreement
included a warrant to purchase 31,420 shares of common stock at an exercise
price of $4.77 per share. The warrant has a five-year term. The Company will
amortize the fair value of the warrant of approximately $103,000 over the term
of the credit agreement. The fair value of the warrant was determined using the
Black-Scholes option pricing method with the following assumptions: risk-free
interest rate of 6.3%, volatility of 80%, dividend rate of 0% and an expected
life of five years.

As a result of a financing representation agreement entered into between
the Company and Digital Coast Partners (DCP), as amended, the Company granted to
DCP a warrant to purchase 54,700 shares of common stock at an exercise price of
$5.48 per share in May 2000. The warrant has a five-year term. The Company will
expense the fair value of the warrant of approximately $206,000 in the period of
grant. The fair value of the warrant was determined using the Black-Scholes
option pricing method with the following assumptions: risk-free interest rate of
6.3%, volatility of 80%, dividend rate of 0% and an expected life of five years.
In addition, the Company has agreed to pay $500,000 to DCP upon delivery of an
opinion by DCP as to the fairness of the

F-128
<PAGE> 215
TELECORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

terms of the proposed merger with Viasource from the financial point of view of
the Company's stockholders.

In May 2000, the Company entered into a merger agreement between the
Company and Viasource Communications, Inc. (Viasource) and certain shareholders
of the Company. Under the terms of the agreement, Viasource will acquire all of
the outstanding shares of the Company's common stock and all of the issued and
outstanding rights to purchase shares of the Company's common stock pursuant to
certain warrants issued by the Company in exchange for the issuance by Viasource
of a subordinated promissory note and the issuance of Viasource common stock.
Viasource will also acquire all of the issued and outstanding shares of the
Company's preferred stock in exchange for shares of Viasource Series A
convertible preferred stock. Concurrent with the merger agreement, Viasource
provided the Company with a $1,000,000 bridge loan in the form of a convertible
subordinated promissory note. The note accrues interest at a rate of 9% per
annum and is to be repaid in equal monthly payments. The note matures on the
earlier of (i) November 3, 2001, (ii) the date of an initial public offering by
the Company or (iii) a Change in Control, as defined.

In May 2000, the Company entered into two loan agreements with CMS
Co-Investment Subpartnership ("CMS"). The loans bear interest at 8% and are due
on June 30, 2000. Net proceeds from these loans were $1.0 million. The loan
agreements included warrants to purchase 63,869 shares of common stock at an
exercise price of $5.48 per share. The warrants have a five-year term. The
Company will amortize the fair value of these warrants totaling approximately
$241,000 over the terms of the credit agreements. The fair value of the warrants
was determined using the Black-Scholes option pricing method with the following
assumptions: risk-free interest rate of 6.3%, volatility of 80%, dividend rate
of 0% and an expected life of five years.

On May 9, 2000, the Board of Directors reserved an additional 250,000
shares of common stock for issuance under the 1999 Employee Stock Option Plan.
On May 12, 2000, the Company granted to employees options to purchase an
aggregate of 1,183,600 shares of common stock at exercise prices ranging from
$1.95 to $4.93 per share, of which 95,000 options immediately vested. The
remaining options vest ratably over four years. On the date of grant, the fair
value of the underlying shares was $5.48 per share. For financial reporting
purposes, the Company will record the intrinsic value of the 95,000 options of
approximately $314,000 as compensation expense and will record the intrinsic
value of the remaining options of approximately $1,582,000 as unearned
compensation and amortize it over the vesting period.

F-129
<PAGE> 216

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

, 2000

(VIASOURCE LOGO)

11,000,000 SHARES OF COMMON STOCK

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

PROSPECTUS
----------------------

DONALDSON, LUFKIN & JENRETTE

PRUDENTIAL VOLPE TECHNOLOGY
A UNIT OF PRUDENTIAL SECURITIES

CHASE H&Q

FIRST UNION SECURITIES, INC.

DLJDIRECT INC.

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We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales made hereunder after the date of this prospectus shall create an
implication that the information contained herein or the affairs of Viasource
have not changed since the date hereof.
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Until , 2000 (25 days after the date of this prospectus),
all dealers, whether or not participating in this offering, that effect
transactions in these securities may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting as
an underwriter in this offering and when selling previously unsold allotments or
subscriptions.
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<PAGE> 217

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than the
underwriting discounts, payable by the Registrant in connection with the sale of
the securities being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and The Nasdaq National Market System
listing fee.

<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 52,800
NASD Filing Fee............................................. 20,500
The Nasdaq National Market Listing Fee...................... 78,875
Printing Costs.............................................. 150,000
Legal Fees and Expenses..................................... 1,000,000
Accounting Fees and Expenses................................ 600,000
Blue Sky Fees and Expenses.................................. 5,000
Transfer Agent and Registrar Fees........................... 10,000
Miscellaneous............................................... 122,825
----------
Total............................................ $2,040,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by New Jersey law, our certificate of incorporation contains a
provision that eliminates the personal liability of directors or officers to us
or our shareholders for damages for breaches of any duty, except where the
director's acts or omissions (i) were in breach of the director's or officer's
duty of loyalty to us or our shareholders, (ii) were not in good faith or
involved a knowing violation of law, or (iii) resulted in receipt by the
director or officer of an improper personal benefit. In appropriate
circumstances, equitable remedies such as an injunction or other forms of
non-monetary relief would remain available under New Jersey law.

Our certificate of incorporation also generally provides that we shall
indemnify, to the fullest extent permitted by law, any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of Viasource, by reason of
the fact that he (i) is or was a director, officer, employee or agent of ours,
(ii) is or was serving at our request as a director, officer, employee or agent
of another entity, or (iii) is or was serving at our request as a fiduciary of
an employee benefit plan, against expenses incurred by the person in connection
with such proceeding. We will not indemnify a person who did not act in good
faith and in a manner reasonably believed to be in, or not opposed to, our best
interests, or with respect to any criminal action or proceeding, had reasonable
cause to believe that the conduct involved was unlawful.

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<PAGE> 218

New Jersey law also permits us to purchase insurance and we have purchased
and maintain directors' and officers' liability insurance coverage. In general,
such insurance provides coverage for payment on behalf of directors and certain
of our officers of amounts they are legally obligated to pay because of covered
risks for which we are not required or permitted to indemnify them.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

We have issued and sold the following securities since May 1, 1997:

On various dates between May 7, 1998 and June 1, 2000, we authorized the
grant of stock options to employees, consultants, directors and officers to
purchase an aggregate of 3,446,638 shares of its Common Stock at a weighted
average exercise price of $4.11 per share. We relied on the exemption provided
by Rule 701 of the Securities Act.

On June 14, 1999, we issued a 10% convertible note due June 2000, having a
principal amount of $5,000,000 to an accredited investor in exchange for
$5,000,000. The note was convertible at the option of the holder into 2,941,176
shares of common stock, subject to anti-dilution adjustments. The note was
repaid in September 1999. On June 14, 1999, we issued a warrant to purchase
147,059 shares of common stock at $.02 per share to an accredited investor.
These transactions were exempt from registration under the Securities Act,
pursuant to Section 4(2) thereof, as transactions not involving a public
offering of securities.

On July 23, 1999, we acquired Communication Resources Incorporated in a
merger transaction and issued an aggregate of 12,235,587 shares of common stock
in exchange for the outstanding shares of Communication Resources common stock,
on a share for share basis. The sale of the common stock was exempt from
registration under the Securities Act, pursuant to Section 4(2) thereof, as a
transaction not involving a public offering of securities.

On September 7, 1999, we acquired substantially all of the assets and
assumed substantially all of the liabilities of Telecrafter Services Corporation
and issued an aggregate of 2,647,059 shares of common stock, of which 2,294,118
shares were issued to the shareholders of the seller, 58,824 shares were
delivered into escrow to secure certain indemnification obligations of the
seller and its shareholders, and 294,117 shares were issued to the seller. The
sale of the common stock was exempt from registration under the Securities Act,
pursuant to Section 4(2) thereof, as a transaction not involving a public
offering of securities. In connection with the Telecrafter acquisition, we
entered into a $15 million term loan agreement and issued warrants to purchase
1,479,896 shares of common stock at $.02 per share to the lender. The sale of
the common stock in connection with the Telecrafter acquisition was exempt from
registration under the Securities Act, pursuant to Section 4(2) thereof, as a
transaction not involving a public offering of securities.

On April 21, 2000, we acquired substantially all of the assets and assumed
substantially all of the liabilities of D.S. Cable TV Contractor, Inc. and
issued an aggregate of 387,735 shares of our common stock. The sale of the
common stock was exempt from registration under the Securities Act, pursuant to
Section 4(2) thereof, as a transaction not involving a public offering of
securities.

On May 4, 2000, we acquired substantially all of the assets and assumed
substantially all of the liabilities of Service Cable Electric, Inc. and a
related company and issued an aggregate of 329,412 shares of our common stock.
The sale of the common stock was exempt from registration

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<PAGE> 219

under the Securities Act, pursuant to Section 4(2) thereof, as a transaction not
involving a public offering of securities.

On June 1, 2000, we acquired TeleCore, Inc. in a merger transaction and
issued an aggregate of 3,688,865 shares of our common stock and 3,096,159 shares
of our preferred stock, which will convert on a one-for-one basis into common
stock upon the offering. The sale of the common stock was exempt from
registration under the Securities Act, pursuant to Section 4(2) thereof, as a
transaction not involving a public offering of securities.

On June 1, 2000, we acquired Excalibur Cable Communications, Ltd. in a
merger transaction and issued an aggregate of 1,882,353 shares of our common
stock. The sale of the common stock was exempt from registration under the
Securities Act, pursuant to Section 4(2) thereof, as a transaction not involving
a public offering of securities.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <C> <S>
1* -- Form of Underwriting Agreement.
3.1+ -- Amended and Restated Certificate of Incorporation
3.2+ -- Bylaws
4.1* -- Specimen Certificate of Viasource common stock
4.2+ -- Amended and Restated Stockholders Agreement dated as of June
1, 2000
5* -- Form of opinion of Pitney, Hardin, Kipp & Szuch LLP with
respect to the legality of Viasource common stock
10.1+ -- Employment agreement, dated as of June 28, 1999, by and
between Viasource and Douglas J. Betlach
10.2+ -- Employment agreement dated as of July 23, 1999, by and
between Viasource and Richard Rettstadt
10.3+ -- Employment agreement, dated as of June 14, 1999 by and
between Viasource and Roy D. Tartaglia
10.4+ -- Employment agreement dated as of September 7, 1999 by and
between Viasource and Bruce Nassau
10.5(a)+ -- 1999 Stock Incentive Plan
10.5(b) -- 2000 Stock Option Plan
10.6+ -- Stock Purchase Agreement by and among The RTK Group, Inc.,
Crest Communications, Jackson National Life Insurance
Company, BancBoston Investments Inc. and the Sellers named
therein dated as of June 14, 1999
10.7+ -- Share Repurchase Agreement by and among The RTK Group, Inc.
and the Sellers named therein, dated as of June 14, 1999
10.8+ -- Agreement and Plan of Merger among The RTK Group, Inc., CRI
Acquisition Corp., Communication Resources Incorporated, and
Crest Communications/CRI LLC, dated as of July 23, 1999
</TABLE>

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<PAGE> 220

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <C> <S>
10.9+ -- Asset Purchase Agreement by and among Viasource, Nassau
Communications Inc., Telecrafter Acquisition Corp., Dr.
Bruce Nassau and Lurie Nassau, dated as of July 28, 1999
10.10(a)+ -- Amended and Restated Credit Agreement, dated as of March 10,
2000, by and between Viasource, as Borrower, and General
Electric Capital Corporation, as Lender
10.10(b)+ -- Amendment No. 1, dated as of December 22, 1999, to the
Amended and Restated Credit Agreement dated as of March 10,
2000, by and between Viasource, as Borrower and General
Electric Capital Corporation, as Lender
10.10(c)+ -- Amendment No. 2, dated as of May 31, 2000, to the Amended
and Restated Credit Agreement, dated as of March 10, 2000,
by and between Viasource, as Borrower and General Electric
Capital Corporation, as Lender
10.11+ -- Asset Purchase Agreement entered into as of April 18, 2000,
by and among Viasource Communications, Inc; DS Acquisition,
Inc.; DS Cable TV Contractor, Inc.; Dennis M. Scanlan and
Lisa Scanlan
10.12+ -- Asset Purchase Agreement entered into as of May 4, 2000, by
and among Viasource Communications, Inc.; SCC Acquisition,
Inc.; Service Cable Electric, Inc., and its wholly-owned
subsidiaries, Service Cable Corporation and its
subsidiaries; Anthony K. Scruggs, Joe Kubisak and Mark
Kubisak
10.13+ -- Merger Agreement entered into as of June 1, 2000 by and
among Viasource Communications, Inc., Ex Acquisition, Inc.,
Excalibur Cable Communications, Ltd., and Poth, the Trust
and the Employee Shareholders (as defined)
10.14+ -- Merger Agreement entered into as of June 1, 2000 by and
among Viasource Communications, Inc., TC Acquisition, Inc.,
TeleCore, Inc., John M. Clarey, Christy Clarey, Mark Stagen,
Scott Sussman, Palomar Ventures I, L.P., Crest
Communications Partners, L.P., Mark IV Ventures, L.L.C.,
Mark IV Capital, BV-P Holding I, L.L.C. and Phil Paul
10.15* -- Lease Agreement effective as of April 1, 2000 by and between
The Irvine Company and TeleCore
10.16* -- Lease Agreement made and executed the 15th day of March 1996
by and between Bruce A. Nassau and Nassau Communications,
Inc. dba Telecrafter Services Corporation
10.17* -- Lease Agreement made and entered into on February 22, 1995
by and between 1001 Executive Park Associates, Ltd. and
Cabsco Corporation and Lease Modification Agreements No. 1,
No. 2 and No. 3 thereto
10.18* -- Lease Agreement made as of the 16th day of September 1988 by
and between Floral Avenue Associates, L.P. and RTK
Corporation and First Amendment thereto
21 -- Subsidiaries of Viasource
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of KPMG LLP
23.4 -- Consent of Felsing, Rankin & Co., P.A.
</TABLE>

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<PAGE> 221

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <C> <S>
23.5 -- Consent of D.R. Maxfield & Company
23.6* -- Consent of Pitney, Hardin, Kipp & Szuch LLP (included in
Exhibit 5)
24 -- Powers of Attorney (included on signature page of this
Registration Statement)
27.1+ -- Financial Data Schedule (for SEC use only)
27.2+ -- Financial Data Schedule (for SEC use only)
</TABLE>

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* To be filed by amendment.

+ Previously filed.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 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, 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 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 of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a 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.

(2) For the purpose of determining any liability under the Securities Act of
1933, 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 that time shall be
deemed to be the initial bona fide offering thereof.

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<PAGE> 222

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of Ft.
Lauderdale, State of Florida on July 7, 2000.

By: /s/ CRAIG A. RUSSEY
------------------------------------
Craig A. Russey
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
/s/ CRAIG A. RUSSEY Craig A. Russey July 7, 2000
--------------------------------------------------- (President and Director
Principal Executive
Officer)

* William W. Sprague July 7, 2000
--------------------------------------------------- Chairman of the Board of
Directors

/s/ DOUGLAS J. BETLACH Douglas J. Betlach July 7, 2000
--------------------------------------------------- Executive Vice
President, Chief
Financial Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)

* V. Michael Fitzgerald July 7, 2000
--------------------------------------------------- Director

* Bruce A. Nassau, Ph.D. July 7, 2000
--------------------------------------------------- Director
</TABLE>

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<PAGE> 223

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>
* Roy D. Tartaglia July 7, 2000
--------------------------------------------------- Director

* Lawrence J. Toole July 7, 2000
--------------------------------------------------- Director

/s/ RANDALL R. LUNN Randall R. Lunn July 7, 2000
--------------------------------------------------- Director

The undersigned, by signing his name hereto, does sign and execute this Amendment No. 1 pursuant to
the Powers of Attorney executed by the above named directors of the Registrant and previously filed
with the Securities and Exchange Commission on behalf of such directors.

*By: /s/ CRAIG A. RUSSEY
--------------------------------------------
Craig A. Russey
Attorney-in-Fact
</TABLE>

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<PAGE> 224

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <C> <S>
1* -- Form of Underwriting Agreement
3.1+ -- Amended and Restated Certificate of Incorporation
3.2+ -- Bylaws
4.1* -- Specimen Certificate of Viasource common stock
4.2+ -- Amended and Restated Stockholders Agreement dated as of June
1, 2000
5* -- Form of opinion of Pitney, Hardin, Kipp & Szuch LLP with
respect to the legality of Viasource common stock
10.1+ -- Employment agreement, dated as of June 28, 1999, by and
between Viasource and Douglas J. Betlach
10.2+ -- Employment agreement dated as of July 23, 1999, by and
between Viasource and Richard Rettstadt
10.3+ -- Employment agreement, dated as of June 14, 1999 by and
between Viasource and Roy D. Tartaglia
10.4+ -- Employment agreement dated as of September 7, 1999 by and
between Viasource and Bruce Nassau
10.5(a)+ -- 1999 Stock Incentive Plan
10.5(b) -- 2000 Stock Option Plan
10.6+ -- Stock Purchase Agreement by and among The RTK Group, Inc.,
Crest Communications, Jackson National Life Insurance
Company, BancBoston Investments Inc. and the Sellers named
therein dated as of June 14, 1999
10.7+ -- Share Repurchase Agreement by and among The RTK Group, Inc.
and the Sellers named therein, dated as of June 14, 1999
10.8+ -- Agreement and Plan of Merger among The RTK Group, Inc., CRI
Acquisition Corp., Communication Resources Incorporated, and
Crest Communications/CRI LLC, dated as of July 23, 1999
10.9+ -- Asset Purchase Agreement by and among Viasource, Nassau
Communications Inc., Telecrafter Acquisition Corp., Dr.
Bruce Nassau and Lurie Nassau, dated as of July 28, 1999
10.10(a)+ -- Amended and Restated Credit Agreement, dated as of March 10,
2000, by and between Viasource, as Borrower, and General
Electric Capital Corporation, as Lender
10.10(b)+ -- Amendment No. 1, dated as of December 22, 1999, to the
Amended and Restated Credit Agreement dated as of March 10,
2000, by and between Viasource, as Borrower and General
Electric Capital Corporation, as Lender
10.10(c)+ -- Amendment No. 2, dated as of May 31, 2000, to the Amended
and Restated Credit Agreement, dated as of March 10, 2000,
by and between Viasource, as Borrower and General Electric
Capital Corporation, as Lender
10.11+ -- Asset Purchase Agreement entered into as of April 18, 2000,
by and among Viasource Communications, Inc; DS Acquisition,
Inc.; DS Cable TV Contractor, Inc.; Dennis M. Scanlan and
Lisa Scanlan
</TABLE>

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<PAGE> 225

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<C> <C> <S>
10.12+ -- Asset Purchase Agreement entered into as of May 4, 2000, by
and among Viasource Communications, Inc.; SCC Acquisition,
Inc.; Service Cable Electric, Inc., and its wholly-owned
subsidiaries, Service Cable Corporation and its
subsidiaries; Anthony K. Scruggs, Joe Kubisak and Mark
Kubisak
10.13+ -- Merger Agreement entered into as of June 1, 2000 by and
among Viasource Communications, Inc., Ex Acquisition, Inc.,
Excalibur Cable Communications, Ltd., and Poth, the Trust
and the Employee Shareholders (as defined)
10.14+ -- Merger Agreement entered into as of June 1, 2000 by and
among Viasource Communications, Inc., TC Acquisition, Inc.,
TeleCore, Inc., John M. Clarey, Christy Clarey, Mark Stagen,
Scott Sussman, Palomar Ventures I, L.P., Crest
Communications Partners, L.P., Mark IV Ventures, L.L.C.,
Mark IV Capital, BV-P Holding I, L.L.C. and Phil Paul
10.15* -- Lease Agreement effective as of April 1, 2000 by and between
The Irvine Company and TeleCore
10.16* -- Lease Agreement made and executed the 15th day of March 1996
by and between Bruce A. Nassau and Nassau Communications,
Inc. dba Telecrafter Services Corporation
10.17* -- Lease Agreement made and entered into on February 22, 1995
by and between 1001 Executive Park Associates, Ltd. and
Cabsco Corporation and Lease Modification Agreements No. 1,
No. 2 and No. 3 thereto
10.18* -- Lease Agreement made as of the 16th day of September 1988 by
and between Floral Avenue Associates, L.P. and RTK
Corporation and First Amendment thereto
21 -- Subsidiaries of Viasource
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of KPMG LLP
23.4 -- Consent of Felsing, Rankin & Co., P.A.
23.5 -- Consent of D.R. Maxfield & Company
23.6* -- Consent of Pitney, Hardin, Kipp & Szuch LLP (included in
Exhibit 5)
24 -- Powers of Attorney (included on signature page of this
Registration Statement)
27.1+ -- Financial Data Schedule (for SEC use only)
27.2+ -- Financial Data Schedule (for SEC use only)
</TABLE>

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

* To be filed by amendment.

+ Previously filed.

II-9