ABLE TELCOM HOLDING CORP, 10-K/A, 2000-10-31

ABLE TELCOM HOLDING CORP
10-K/A, 2000-10-31
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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K/A

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended October 31, 1999

[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ______________ to _______________.

Commission file number 0-21986

ABLE TELCOM HOLDING CORP.
(Exact name of registrant as specified in its charter)

FLORIDA 65-0013218
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

1000 HOLCOMB WOODS PARKWAY, SUITE 440, ROSWELL, GEORGIA 30076
(Address of principal executive offices) (Zip Code)

(770) 993-1570

Registrant's telephone number, including area code:

Securities registered under Section 12(b) of the Exchange Act: NONE

Securities registered under Section 12(g) of the Act: COMMON STOCK

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of February 4, 2000, 11,400,818 shares of the registrant's Common Stock were
held by non-affiliates of the registrant (assuming, solely for these purposes,
such persons to be all persons other than (i) current directors and executive
officers of the registrant and (ii) persons believed by the registrant to
beneficially own more than 10% of the registrant's outstanding Common Stock,
based on reports, if any, submitted to the registrant by such persons). As of
such date, the aggregate market value of the voting stock of the registrant held
by non-affiliates, computed by reference to the average closing bid and asked
prices on that date, $69,088,957.

There were 15,341,053 shares of Common Stock outstanding as of February 4, 2000.

1
<PAGE> 2

Able Telcom Holding Corp. ("Registrant" or "Company") is amending its Form 10-K
filed on February 22, 2000, to (i) include certain additional disclosures in
the "LIQUIDITY AND CAPITAL RESOURCES" section of Item 7, (ii) include changes
required to the "Pro Forma Financial Information" disclosed in Note 5
"ACQUISITIONS", and (iii) include changes (to breakout the adjustments relating
to "long-term service contracts adjustments" from "costs improperly charged
against reserves") to Note 22 "UNAUDITED QUARTERLY FINANCIAL DATA".

TABLE OF CONTENTS

PART I

Item 1. Business..................................................... 3

Item 2. Properties................................................... 21

Item 3. Legal Proceedings............................................ 21

Item 4. Submission of Matters to a Vote of Security Holders.......... 22

PART II

Item 5. Market for Registrant's Common Equity and Related
Shareholders Matters......................................... 22

Item 6. Selected Financial Data...................................... 29

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 29

Item 7a. Quantitative and Qualitative Information About Market Risk... 34

Item 8. Financial Statements and Supplementary Data.................. 35

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 35

PART III

Item 10. Directors and Executive Officers of the Registrant........... 36

Item 11. Executive Compensation....................................... 40

Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................... 49

Item 13. Certain Relationships and Related Transactions............... 51

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 52

Signatures................................................... 59
</TABLE>

2
<PAGE> 3

PART I

ITEM 1. BUSINESS

OVERVIEW

Able Telcom Holding Corp. and its subsidiaries ("Able" or the "Company")
develops, builds and maintains communications systems for companies and
governmental authorities. The Company has five main organizational groups. Each
group is compromised of subsidiaries of the Company with each having local
executive management functioning under a decentralized operating environment.
The Company completed operational restructuring of its subsidiaries during
fiscal year 1999. As a result, the Company now has 14 active subsidiaries, 11 of
which are wholly-owned.

<TABLE>
<S> <C> <C> <C> <C>
--------------------
Able Telcom Holding
Corp.
Headquartered:
Atlanta, GA
-------------------------------------------------------------------------------------------------------------------------
Network Services Network Development Transportation Construction Communications
Omaha, NE Atlanta, GA Services Tampa, FL Development
FY99 Consolidated FY99 Consolidated Mt. Laurel, NJ FY99 Consolidated Ft. Lauderdale, FL
Revenue: 63% Revenue: --% FY99 Consolidated Revenue: 27% FY99 Consolidated
Revenue: 9% Revenue: 1%
-------------------------------------------------------------------------------------------------------------------------
Adesta Communications, Able ICP, Inc. Adesta Georgia Electric Able Telcom
Inc. formerly Ownership: 100% Transportation, Inc. Company International, Inc.
MFS Network Roswell, GA formerly Ownership: 100% Ownership: 100%
Technologies, Inc. MFS Transportation Albany, GA Ft. Lauderdale, FL
Ownership: 100% Systems, Inc.
Omaha, NE Ownership: 100%
Mt. Laurel, NJ
-------------------------------------------------------------------------------------------------------------------------
TransTech, Inc. Patton Management Able Telcom CA
formerly Corp. Ownership: 80%
MFS TransTech, Inc. Ownership: 100% Venezuela
Ownership: 85% Tampa, FL
Mt. Laurel, NJ
----------------------------------------------------------------------
Southern Aluminum & Transportation Safety Able Telcom Do
Steel Corp. Contractors, Inc. Brasil, LTDA
Ownership: 100% Ownership: 100% Ownership: 99.9%
Irondale, AL Tampa, FL Brazil
----------------------------------------------------------------------
Specialty Electronic Able Able Wireless, Inc.
Systems, Inc. Telecommunications & Ownership: 100%
Ownership: 100% Power, Inc. Ft. Lauderdale, FL
Chantilly, VA Ownership: 100%
Leesburg, FL
----------------------------------------------------------------------
</TABLE>

The service provided by each group is as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ORGANIZATIONAL GROUP SERVICE PROVIDED
--------------------------------------------------------------------------------
<S> <C>
Network Services ................. Design, development, engineering,
installation, construction, operation and
maintenance services for telecommunications
systems.
--------------------------------------------------------------------------------
Network Development............... Established subsequent to October 31, 1999,
to own, operate and maintain local and
regional telecommunication networks.
--------------------------------------------------------------------------------
Transportation Services........... Design, development, integration,
installation, construction, project
management, maintenance and operation of
automated toll collection systems.
--------------------------------------------------------------------------------
Construction...................... Design, development, installation,
construction, maintenance and operation of
electronic traffic management and control
systems, and road signage.
--------------------------------------------------------------------------------
Communications Development........ Design, installation and maintenance
services to foreign telephone companies in
South America.
--------------------------------------------------------------------------------
</TABLE>

3
<PAGE> 4

HISTORICAL DEVELOPMENT OF BUSINESS

The Company was incorporated in 1987 as "Delta Venture Fund, Inc.," a Colorado
corporation. Able adopted its current name in 1989 and changed its corporate
domicile to Florida in 1991. Commencing in mid-1992 until mid-1994, 95 percent
of the Company's revenues and profits were derived from telecommunication
services provided primarily through two majority owned subsidiaries located in
Caracas, Venezuela. These services were provided to one customer, CANTV, the
Venezuelan national telephone company. To decrease its exposure to foreign
markets, in 1994, Able expanded its business focus by marketing its services in
the southeastern United States, with the acquisition of Florida-based
Transportation Safety Contractors, Inc. and its affiliates (collectively
"TSCI"). TSCI installs and maintains traffic control signage, signalization and
lighting systems and performs outside plant telecommunication services. The
majority of TSCI's business is conducted in Florida and Virginia with these
states' respective Departments of Transportation and various city and county
municipalities.

To further expand in the domestic market and to facilitate a continued
acquisition program, the Company acquired the common stock of H.C. Connell, Inc.
("Connell") in December 1995. Connell performs primarily outside plant
telecommunication and electric power services for local telephone and utility
companies in central Florida. Connell was renamed Able Telecommunications and
Power, Inc. ("ATP") in January 1999. In October 1996, Able acquired the common
stock of Georgia Electric Company ("GEC"), headquartered in Albany, Georgia. GEC
operates in eight southeastern states and specializes in the installation,
testing and maintenance of intelligent highway and communication systems
including computerized traffic management, wireless and fiber optic data
networks, weather sensors, voice data and video systems and computerized
manufacturing and control systems. In December 1996, Able acquired the common
stock of Dial Communications, Inc. ("Dial") of Tallahassee, Florida. At that
time, Dial provided outside and inside plant telecommunication services to the
regional Bell operating company, other local and long distance telephone
companies, private businesses and universities. Able has subsequently
discontinued Dial's operations. In April 1998, Able acquired the common stock of
Patton Management Company ("Patton") of Atlanta, Georgia which provides advanced
telecommunication network services to upgrade existing networks and to provide
connectivity to office buildings, local and wide area networks.

In July 1998, in a transaction that increased Able's revenues by approximately
300 percent, the Company acquired the network construction and transportation
systems business of MFS Network Technologies, Inc. ("MFSNT") from MCI WorldCom,
Inc. ("WorldCom"). MFSNT was then divided into two entities, 1) the network
construction business became MFS Network Technologies, Inc. and 2) the
transportation systems business became MFS Transportation Systems, Inc. As part
of the MFSNT acquisition, the Company, WorldCom and MFSNT entered into a Master
Services Agreement (the "WorldCom Master Services Agreement") pursuant to which
the Company agreed to provide telecommunication infrastructure services to
WorldCom on a cost-plus 12 percent basis for a minimum of $40.0 million per
year. The aggregate sum payable to the Company for the five-year contract is
guaranteed to be no less than $325.0 million, subject to certain adjustments. To
achieve these established minimums, WorldCom has agreed to award the Company at
least 75 percent of all WorldCom's outside plant work related to its local
network projects up to $500.0 million and the Company has agreed to accept and
perform work orders from WorldCom for as much as $130.0 million of services
during each year of the five-year contract. The Company has also agreed that
WorldCom will have met all of its commitments to the Company, to the extent that
payments made to the Company reach an aggregate of $500.0 million at any time
during the five-year term of the contract.

In July 1999, the Company entered into a teaming agreement with 186K.Net, Co.
(the "186K Agreement"), a technology firm and hosting facility, to combine their
respective expertise in infrastructure engineering/design and high-end Internet
technology to deliver high-speed Internet connectivity, telecommunications and
systems integration solutions. Under the 186K Agreement, the Company will focus
on infrastructure build-outs and 186K.Net, Co. will focus on the delivery of
high-end Internet services. Included in the 186K Agreement is a deferred value
added equity swap that would allow either party to benefit by an increase in
market capitalization value over a three year period (refer to Exhibit 2.6 for
more detail).

In November 1999 (subsequent to the fiscal year end to which this Form 10-K
relates), the Company acquired the common stock of Southern Aluminum and Steel
Corporation ("SASCO") and Specialty Electronic Systems, Inc. ("SES") which
together provide expertise in design, installation and project implementation of
advanced highway communication networks and Intelligent Transportation Systems.

<PAGE> 5

In January 2000 (subsequent to the fiscal year end to which this Form 10-K
relates), Able established Able ICP, Inc. ("Able ICP") which will own, operate
and maintain local and regional telecommunication networks as part of Able's
Network Development Group. Able ICP is a development company that is expected to
require significant capital expenditures related to network construction and
which is not expected during fiscal 2000 to generate significant net income or
earnings before interest, depreciation, taxes and amortization. The Company's
ability to grow Able ICP and to implement its business plan will be dependent on
the Company's ability to fund its capital expenditure needs, either internally
or through borrowings and the sale of equity. No assurance can be given that the
Company will be able to meet Able ICP's funding needs on a timely basis or at
all, on terms acceptable to the Company, or that Able ICP will ever be
profitable.

In compliance with a contractual obligation with WorldCom, effective February
2000, all subsidiaries bearing "MFS" as part of their name were changed. MFS
Network Technologies, Inc. changed its name to Adesta Communications, Inc.
("Adesta Communications"), MFS Transportation Systems, Inc. changed its name to
Adesta Transportation, Inc. ("Adesta Transportation") and MFS TransTech, Inc.
changed its name to TransTech, Inc. In conjunction with these name changes, the
Company intends to present a proposal to its shareholders to change its name to
"The Adesta Group, Inc." at the next annual meeting of shareholders.

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

In the discussion in this Annual Report regarding the Company's business, and
that of its subsidiaries and Organizational Groups, any statement of its future
expectations, including without limitation, future revenues and earnings, plans
and objectives for future operations, future agreements, future economic
performance or expected operational developments and all other statements
regarding the future are "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, and as that term is defined in the
Private Securities Litigation Reform Act of 1995. The Company intends that the
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements are based on the past financial performance of recent
acquisitions and the Company's strategic plans. Although Able believes that its
expectations are based on reasonable assumptions, it can give no assurance that
its expectations will be achieved. The important factors, risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements herein (the "Cautionary Statements") include,
without limitation, the Company's reliance on third parties to complete the
transactions contemplated by the Company, the Company's degree of liquidity,
requirements and existing leverage, including the need to obtain additional
funds to provide working capital for operations, risks associated with debt and
preferred stock service requirements and interest rate fluctuations, risks
associated with Able's ability to continue its strategy of growth through
acquisitions and the integration thereof, risks of international business,
dependence on availability of transmission facilities, regulations risk
including the impact of the Telecommunications Act of 1996, contingent
liabilities and the impact of competitive services and pricing, Able's ability
to make effective acquisitions in the future and to successfully integrate newly
acquired businesses into existing operations, changes in laws and regulations,
including changes in tax rates, accounting standards, environmental laws, and
occupational, health and safety laws, the Company's access to foreign markets,
together with foreign economic conditions, including currency fluctuations, the
effect of, or changes in, general conditions, economic conditions in various
countries within South America, weather conditions that are adverse to Able's
specific businesses, the outcome of litigation, claims and assessments, as well
as other risks referenced from time to time in the Company's filings with the
Securities and Exchange Commission. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
The Company does not undertake any obligations to release publicly any revisions
to such forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events. Please refer
to "Going Concern" in Item 7 on Page 30.

<PAGE> 6

STRATEGY

Able's strategy is to capture an increased share of the market for outsourced
network installation, maintenance and system integration services. The Company
believes that customers will continue to require such services to deploy and
upgrade the fiber optic, coaxial and digital network infrastructure associated
with advancements in technology and the competition created by the convergence
of the telecommunications, computer and media industries. Able intends to
accomplish this objective primarily through strategic acquisitions and internal
growth of existing and complementary lines of business. The Company believes
that the communication services industry is highly fragmented, consisting of a
large number of smaller, regional businesses and presents significant
opportunities for consolidation. The Company plans to target those businesses
with high quality management and strong performance records and to integrate
such acquired operations into the Company's Organizational Groups. The Company
makes no assurances, however, that it will be able to target or acquire
strategic acquisitions on terms beneficial to Able or that its internal growth
will develop as expected.

Additionally, the Company intends to expand its businesses through increased
marketing efforts by broadening the range of services it offers to its
customers. Able believes its current expertise in telecommunications, traffic
management and systems integration services can be expanded to cable television
and other cable and wireless communication systems and is actively seeking
acquisition candidates in areas that complement its existing strengths.

The Company also plans, through Able ICP, to own, operate and maintain local and
regional telecommunication networks.

The Company further expects to achieve margin improvement through
cross-utilization among operating groups of people, equipment and technologies
and through the centralization of certain financial controls, cash and risk
management. Able makes no assurances, however, that it will be able to achieve
projected margin improvements or if attained, that improvements will occur in a
timely manner.

FISCAL YEAR 1999 AND RECENT DEVELOPMENTS

GOING CONCERN

The accompanying consolidated financial statements and financial information has
been prepared assuming that the Company will continue as a going concern. The
Company incurred losses from operations of $1.9 million, net losses of $18.1
million and losses applicable to common stock of $36.8 million during the fiscal
year ended October 31, 1999. Significant payments were also made, both during
and subsequent to October 31, 1999, to redeem the Series B Preferred Stock and
to reduce obligations for loss contracts assumed in 1998 in the acquisition of
MFSNT. The Company has borrowed the maximum available under its existing Credit
Facility and is in default of the related covenants. While the Company is
current with respect to amounts due under the Credit Facility, the lender has
the right to demand payment and the Company has insufficient liquidity to pay
such amounts, if called. The Company has not yet been successful in obtaining
alternative financing and may have insufficient liquidity to fund its continuing
operations. Consequently, there is substantial doubt about the Company's ability
to continue as a going concern.

The Company's continuation as a going concern is dependent upon its ability to
(a) generate sufficient cash flow to meet its obligations on a timely basis, (b)
obtain additional financing as may be required, and (c) ultimately sustain
profitability.

Management's recent actions and plans in regard to these matters are as follows:

1. As part of the Company's ongoing efforts to strategically
align the profitable portions of its business and as a result
of significant turnover and the deterioration of underlying
contracts, the Company discontinued the operations of Dial and
Able Integrated Systems, Inc. ("AIS") during the fiscal year
ended October 31, 1999, which together used cash flows from
operations of approximately $7.4 million and $3.8 million
during the fiscal years ended October 31, 1999 and 1998.

<PAGE> 7

2. As discussed below and in the accompanying consolidated
financial statements, approximately $25.5 million of the
Company's indebtedness was converted to common stock of the
Company subsequent to October 31, 1999.

3. As discussed below and in the accompanying consolidated
financial statements, approximately $6.3 million of the
Company's Series B Preferred Stock was converted to common
stock of the Company and warrants to acquire the Company's
common stock, subsequent to October 31, 1999. Concurrent with
such conversion, the Company's remaining Series B Preferred
Stock was redeemed for approximately $10 million that was
funded through the issuance of $15.0 million of Series C
Convertible Preferred Stock. Warrants to acquire approximately
541,000 shares of Common Stock at varying prices were issued
as part of these transactions (refer to Exhibits 4.16 - 4.24
for more detail).

4. The Company is attempting to obtain a new credit facility with
new financing institutions and is pursuing additional
financing through discussions with other investors.

Able can give no assurance that these measures will provide the intended results
in a timely manner or at all.

REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION

The Company is working to resolve questions by the staff of the Securities and
Exchange Commission ("SEC") regarding certain accounting and other disclosures
made by the Company in connection with the acquisition of MFSNT (the "MFSNT
Acquisition") from WorldCom effective July 2, 1998. As a result of the ongoing
review by the SEC, the Company's Annual Report on Form 10-K for the year ended
October 31, 1998, filed February 24, 1999, as amended March 1, 1999 (as amended,
the "1998 10-K") may be further amended by the Company following completion of
the SEC's review. Additionally, because the Company's Notice of Annual Meeting,
Proxy Statement and Proxy (collectively the "1998 Proxy") for the year ended
October 31, 1998 incorporates the 1998 10-K, the SEC has also not completed its
review of the 1998 Proxy and Able has not been able to hold a shareholder
meeting since April 1998. Once the SEC's reviews have been completed, Able
expects to hold its 1998 Annual Meeting.

While the MFSNT Acquisition closed on July 2, 1998, subsequent negotiations with
WorldCom resulted in a $41.9 million reduction in purchase price. The reduction
related primarily to projected losses on contracts assumed by Able from MFSNT.
The allocation of the purchase price, as reported in the Company's 1998 10-K,
established additional reserves for losses on assumed contracts that exceeded
reserves reflected in the unaudited balance sheet of MFSNT ($11.7 million) as of
July 2, 1998, by $28.8 million. The net assets reported by MFSNT at July 2, 1998
exceeded the adjusted purchase price by approximately the same amount.

The SEC's principal questions have centered on the following:

(1) The allocation of the $28.8 million in additional loss accruals to the
proper preacquisition period in the financial statements of MFSNT.
Resolution of this issue may result in the restatement of MFSNT's
preacquisition financial statements and related pro forma disclosures
included in Able's prior SEC filings.

<PAGE> 8

(2) The appropriate accounting for obligations to perform under long-term
network operation and maintenance agreements acquired as part of the MFSNT
Acquisition. Refer to Note 22 of the accompanying consolidated financial
statements "Unaudited Quarterly Financial Data" for an explanation of the
Company's accounting for long-term operations and maintenance agreements.

(3) The Company's accounting for its investment in Kanas. Refer to Note 9 of
the accompanying consolidated financial statements, "Investment in Kanas
(Held For Sale)," for an explanation of the Company's accounting for Kanas.

(4) The Company's accounting for the sale during the current year of the NYSTA
conduit. Refer to Note 8 of the accompanying consolidated financial
statements, "Network Assets Held For Sale," for an explanation of the
Company's accounting for the NYSTA conduit sale.

The SEC has not yet agreed with the Company that such accounting for the above
issues is appropriate and may require the Company to further change its
accounting for these matters.

CORPORATE REORGANIZATION

In conjunction with Able's reorganization much of the executive management of
the Company, including the Company's Chief Executive Officer, Chief Accounting
Officer and certain Group Presidents were replaced during fiscal year 1999. The
Company added a Senior Executive Vice President and General Counsel to its
executive staff.

As reflected above, the Company organized its subsidiaries into five main
operating groups (Network Services, Network Development, Transportation
Services, Construction, and Communications Development). Additionally, as part
of the Company's ongoing efforts to strategically align the profitable portions
of its business, the following steps were taken during the fiscal year ended
October 31, 1999 to discontinue the operations of, merge and/or manage
unprofitable subsidiaries:

1. The Company assigned control of certain of its previously
independent operating subsidiaries (Patton and ATP) to the
Construction Group.

2. The Company merged several of its previously independent
operating subsidiaries into currently profitable Construction
Group subsidiaries.

3. As a result of significant turnover and the deterioration of
underlying contracts, the Company discontinued the operations
of Dial and AIS, which together used cash flows from
operations of approximately $7.4 million and $3.8 million
during the fiscal years ended October 31, 1999 and 1998.

<PAGE> 9

WORLDCOM CONVERSION AGREEMENT

On January 12, 2000, the Company entered into an agreement with WorldCom whereby
WorldCom converted approximately $25.5 million of an original $30.0 million note
("Original WorldCom Note"), issued to WorldCom as part of the MFSNT Acquisition,
into 3,050,000 shares of Common Stock ("WorldCom Conversion Agreement"). The
conversion was based on the January 8, 2000 closing price of Common Stock at
$8.375 per share. The remainder of the Original WorldCom Note, approximately
$4.5 million was converted into an amended and restated note ("New WorldCom
Note"). The New WorldCom Note will bear interest at 11.5 percent and will mature
February 1, 2001.

PURCHASE OF SENIOR NOTES AND SERIES B PREFERRED STOCK

In January 1999, Interfiducia Partners, LLC, a Texas limited liability company
("Interfiducia"), entered into certain letter agreements with Able and the
holders of the Company's Series B Convertible Preferred Stock and Series B
Warrants, (the Series B Preferred Stock and the Series B Warrants collectively
the "Series B Securities"). These letter agreements related to the proposed
purchase by Interfiducia of, among other things, all or a portion of the
outstanding Series B Securities. Able performed due diligence regarding
Interfiducia at that time and all parties continued their respective
negotiations to finalize the contemplated transactions.

Because Able was then in default under certain provisions of the terms of the
Series B Securities, Able believed that it was important to complete the
transfer of all or a portion of the Series B Securities to a party willing to
waive the defaults. Interfiducia was not able to provide the funds necessary to
complete the transactions contemplated by the letter agreements in a timely
manner in order to avoid paying certain premiums and penalties to the holders of
the Series B Securities, which amounts were incurred as a result of the
defaults. As a result, on February 16, 1999, WorldCom advanced the Company $32.0
million ("WorldCom Advance") to facilitate the purchase of 2,785 shares, or
approximately 78%, of the Series B Preferred Stock and $10.0 million principal
amount of senior notes (the "Senior Notes").

The WorldCom Advance is non-interest bearing and is due on November 30, 2000. At
the same time, WorldCom also agreed to make available additional advances to the
Company of up to $15.0 million against amounts otherwise payable pursuant to the
WorldCom Master Services Agreement. These additional advances will accrue
interest at 11.5 percent and are repayable to WorldCom on November 30, 2000. The
repayment of the WorldCom Advance is subordinate to the Company's obligations to
its senior credit facility and certain construction contracts. The WorldCom
Advance was evidenced by a written agreement between Able and WorldCom, dated
February 16, 1999, which was subsequently amended and restated as of April 1,
1999.

Immediately thereafter, Able used the WorldCom Advance to advance funds (the
"Company Advance") to Cotton Communications, Inc. ("Cotton") (which may be
deemed as a Company affiliate). On February 17, 1999, pursuant to certain
purchase agreements between and among Able, Cotton, and the holders of the
Series B Securities (the "February Agreements"), Cotton, in turn, used the
Company Advance to purchase approximately 78 percent of the then outstanding
shares of Series B Preferred Stock, or 2,785 shares of the then 3,564 shares for
an aggregate of $18.9 million, which amounts included any accrued dividends,
interest or penalties, and the accrued obligations under the Senior Notes.

The sole shareholder, officer and director of Cotton was Tyler Dixon. Mr. Dixon
is a partner with the law firm of Raiford, Dixon & Thackston, LLP, which during
fiscal years 1999 and 1998 received approximately $0.3 and $0.1 million,
respectively in legal fees from Able for legal services rendered. Cotton
received no consideration from Able in connection with the transactions.
However, Able agreed to continue to use Mr. Dixon and his firm's legal services
and the Company waived any conflicts that may arise with respect to the
performance of such legal services as a result of Cotton's purchase of the
Series B Preferred Stock.

9
<PAGE> 10

Interfiducia continued to state to Able throughout the negotiations with Cotton
and the holders of the Series B Securities and subsequent to the consummations
of the February Agreements that it would acquire Cotton's position in the Series
B Securities. Cotton verbally agreed that, if Interfiducia came forward with
funds shortly after the consummation of the February Agreements, it would sell
certain of the Series B Securities and the Senior Notes to Interfiducia on the
same terms and conditions. Nonetheless, Interfiducia was never able to fund the
proposed acquisition in a timely manner nor was the Company able to obtain
satisfactory due diligence regarding Interfiducia and its principals. As a
result, Interfiducia never acquired Cotton's position.

On March 22, 1999, Able redeemed the Senior Notes from Cotton, as well as the
2,785 shares of Series B Preferred Stock in exchange for the cancellation of the
Company Advance made to Cotton on February 17, 1999. The Company also assumed
Cotton's obligation to acquire 630,000 of the Series B Warrants at a price of
$3.00 per Warrant on or before April 30, 1999. The Senior Notes were marked
paid, the 2,785 shares of Series B Preferred Stock were cancelled, and the
Company purchased the 630,000 Series B Warrants at $3.00 per Series B Warrant
(for an aggregate of $1.9 million), at which time the 630,000 Series B Warrants
were canceled. Able also obtained a waiver of all outstanding defaults until
October 31, 1999. On October 31, 1999, the Company entered into a standstill
agreement while negotiating for the redemption/conversion of the then remaining
Series B Securities.

In connection with these transactions and as a result of the WorldCom Advance,
the Company recognized an extraordinary loss of approximately $3.1 million in
the second quarter of fiscal year 1999 on the purchase of the Senior Notes and a
reduction to income of approximately $10.0 million applicable to Common Stock on
the purchase of the Series B Preferred Stock.

SERIES C PREFERRED STOCK ISSUANCE AND SERIES B PREFERRED STOCK
CONVERSION/REDEMPTION

Subsequent to fiscal year end 1999, to finance the redemption of the remaining
Series B Preferred Stock, the Company issued an aggregate of 5,000 shares of
Series C Convertible Preferred Stock ("Series C Preferred Stock") with
detachable warrants ("Series C Preferred Stock Warrants") for $15.0 million. The
Series C Preferred Stock pays dividends at a rate of 5.9 percent of the stated
value ($3,000 per share) per annum and is immediately convertible into Common
Stock at an initial conversion price of $9.35. Commencing six months after the
closing date (February 4, 2000), and then for each six month period thereafter
(each of these dates, a "Series C Reset Date"), the conversion price shall be
recalculated to equal the average closing bid prices for Common Stock for the
ten consecutive trading days preceding the applicable Series C Reset Date,
however:

(a) no conversion price shall be adjusted if a recalculation would result
in a new conversion price that is greater than the current conversion
price, and

(b) if any such recalculation results in a conversion price less than
$4.00, the conversion price shall thereafter be $4.00.

The Series C Preferred Stock Warrants permit the holder to purchase 200,000
shares of Common Stock at an initial price per share of $10.75 which may from
time to time be adjusted. The conversion will be subject to Shareholder
approval.

10
<PAGE> 11

Preferred Stock by March, 2000 and if the registration statement is not
effective by October 31, 2000 (refer to Exhibits 4.16 - 4.24 for the terms of
the Series C Preferred Stock documents and the redemption of the Series B
Preferred Stock).

WORLDCOM OPTION AND STOCK APPRECIATION RIGHTS

As part of the MFSNT Acquisition, Able granted an option (the "WorldCom Option")
to WorldCom to purchase up to two million shares of the Company's Common Stock
("Common Stock") at an exercise price of $7.00 per share. WorldCom may elect to
exercise some or all of the WorldCom Option on a "cashless" basis rather than
for cash to the extent necessary to ensure that the actual number of shares of
Common Stock issued would not exceed 1,817,941 shares, which amount was based
upon just less than 20% of the then outstanding number of shares of Common
Stock, determined prior to Able executing the merger agreement with WorldCom
dated April 26, 1998, as amended September 9, 1998 (the "MFSNT Agreement"). A
"cashless" exercise means that WorldCom will receive shares of Common Stock with
a total market value equal to the per share excess of the market value of the
common stock over the exercise price multiplied by the number of shares of the
WorldCom Option being exercised. On January 8, 1999, the Company entered into a
modification to the WorldCom Option (the "WorldCom Modification") with WorldCom
which modified the WorldCom Option into stock appreciation rights ("SARs"),
unless and until such time as Able obtains shareholder approval (if ever),
pursuant to the Nasdaq Stock Market, Inc. ("Nasdaq") Marketplace Rule
4460(i)(1)(C) ("Rule 4460(i)(1)(C)"), to approve issuing 20 percent or more of
the Common Stock in connection with the MFSNT Acquisition (based upon the number
of shares outstanding prior to Able executing the MFSNT Agreement).

Under the WorldCom Modification, WorldCom is entitled to participate in an
increase in the value of an aggregate of two million shares of Common Stock. For
each SAR exercised, WorldCom receives an amount equal to the excess of the fair
market value of the Common Stock as of the applicable exercise date over $7.00
(the "Appreciation Amount"). The Appreciation Amount will be paid in cash within
fifteen days of receipt of an exercise notice; provided, however, to the extent
that Able is required to pay more than $10.0 million in any twelve month period
as a result of any exercises of any SARs, the amount of such excess will be
represented by a promissory note, with quarterly payments amortized ratably over
a period of six months at 10% per annum. The exercise period of the SARs granted
commences on the earlier of (1) one business day after the date upon which the
potential issuance of Common Stock under this Agreement is voted upon by the
Company shareholders, and (2) October 1, 2000 (the "Commencement Date"), and
ends on January 2, 2002. To date, no SARs have been exercised.

Payment of any SARs in cash only could materially and adversely effect the
Company's cash flow because (a) of the short time frame to pay for any SARs
exercised (between 15 and 30 days from the date notice is received by the
Company), and (b) the payment owed could be a significant amount, depending on
the number of SARs exercised and the then fair market value of the Common Stock.

Able also will grant to WorldCom, subject to shareholder approval, an equity
award in the form of stock appreciation rights or other equity participation
awards ("WorldCom Equity Awards/Phantom Stock Awards") which is generally
equivalent to up to 700,000 shares of Common Stock, payable in cash, stock, or a
combination of both, at Able's option. The WorldCom Equity Awards will be
convertible, in whole or in part, solely on the following days: July 2, 2000 or
July 2, 2001. On January 8, 1999, Able and WorldCom entered into a written
agreement (the "Intent Agreement") setting forth the terms and conditions of
when the WorldCom Equity Award Agreement (the "Equity Award Agreement") will be
effective. The Intent Agreement also sets forth the specific terms of the
WorldCom Equity Award, in the form of a Stock Appreciation Rights Agreement
("SAR Agreement"). The Intent Agreement provides that until Able obtains
shareholder approval in accordance with Rule 4460(i)(1)(C), the SAR Agreement
will be executed at such time as Able meets certain "Conditions to Issuance".
Additionally, upon the exercise of any WorldCom Equity Awards, any payments may
be made, in Able's sole discretion, in cash, Common Stock, or a combination of
both cash and Common Stock, assuming the Company obtains shareholder approval to
issue any of the payments in Common Stock. To date, the SAR Agreement has not
been executed (and thus no WorldCom Equity Awards have been issued), but it will
be once shareholder approval is obtained to

11
<PAGE> 12

issue payments to WorldCom in stock or a combination of stock and cash (up to
the equivalent of a maximum of 700,000 shares).

Able will submit a proposal to the Company's shareholders at its next annual
meeting of shareholders to approve issuing 20 percent or more of the outstanding
Common Stock in connection with the MFSNT Acquisition. If the Company's
shareholders approve Able's proposals (1) the SARs granted under the WorldCom
Modification automatically revert back to the WorldCom Option and the holder
will have the right to purchase an aggregate of 2,000,000 shares of Common Stock
at $7.00 per share through January 2, 2002, and (2) upon the exercise of any
WorldCom Equity Awards, Able would have the option to make the payments in cash,
stock, or a combination of cash and stock, at Able's discretion.

12
<PAGE> 13

TEAMING AGREEMENT WITH 186K.NET, CO.

In July 1999, the Company entered into a teaming agreement with 186K.Net, Co.
(the "186K Agreement"), a technology firm and hosting facility, to combine their
respective expertise in infrastructure engineering/design and high-end Internet
technology to deliver high-speed Internet connectivity, telecommunications and
systems integration solutions. Under the 186K Agreement, the Company will focus
on infrastructure build-outs and 186K.Net, Co. will focus on the delivery of
high-end Internet services. Included in the 186K Agreement is a deferred value
added equity that would allow either party to benefit by an increase in market
capitalization value over a three year period (refer to Exhibit 2.6 for more
detail).

ACQUISITION OF SASCO AND SES

On November 5, 1999, the Company acquired all of the outstanding common stock of
Southern Aluminum & Steel Corporation ("SASCO") along with Specialty Electronic
Systems, Inc. ("SES"). SASCO has operations in Birmingham, Cape Canaveral and
Atlanta and has 40 years' experience in surveillance systems, signalization,
Intelligent Transportation Systems ("ITS") and roadway lighting. It provides
expertise in design, installation, and project implementation of advanced
highway communication networks. SES is a systems/integration company in the ITS
market, having designed, fabricated, installed and integrated ITS systems in 11
states from the East Coast to Ohio and Texas.

Consideration for SASCO and SES was 75,000 shares of common stock with a value
of approximately $0.7 million. In addition to the initial consideration, the
Company has provided an earn-out provision to the prior shareholders whereby
additional consideration will be given based on certain performance
measurements. The additional consideration can be earned over a four-year
period. The Company intends to record this transaction using the purchase method
of accounting. The pro forma effect on consolidated results of operations, from
the acquisition of SASCO and SES, is not material.

<PAGE> 14

The earn-out consideration for year one (ending October 31, 2000) shall be
converted into the Company's common stock by dividing the earn-out consideration
by $8. The earn-out consideration for year two through year four shall be
converted into the Company's common stock by dividing the earn-out consideration
by the 52-week average of the closing market price of the Company's common stock
for each respective year.

The consideration shall be paid in shares of the Company's common stock. If the
combined consideration calculated pursuant to the terms of the two agreements,
and which includes the initial consideration and the earn-out consideration,
ever equals 19.9 percent of the total Company common stock issued and
outstanding then any and all consideration in excess of 19.9 percent of issued
and outstanding Company common stock shall be paid in cash or promissory note,
as mutually agreed upon by the Company and the former shareholders, at the time
of payment and shall include interest calculated at a market rate.

On a combined basis, SASCO and SES have total assets of less than $2 million and
are expected to generate third-party revenues during fiscal year 2000 of
approximately $15 million.

SERVICES, MARKETS AND CUSTOMERS

The Company conducts five distinct types of business activities, four of which
are primarily conducted in the United States and one of which is conducted
abroad. Domestically the Company provides network services, network development,
transportation services and construction. Abroad, principally in Venezuela, the
Company conducts communication development activities. Each of these activities
is discussed in more detail below. In most of Able's business activities it
faces competition that may be larger and may have substantially greater
financing, distribution and marketing resources than Able.

NETWORK SERVICES GROUP. The Network Services Group provides telecommunications
network services through two divisions: (i) the Telecommunications Systems
Integration Division provides general contracting services for large-scale
telecommunications projects, and (ii) the Telecommunications Construction
Division specializes in the construction of network projects or project phases.

The Company provides turnkey telecommunications infrastructure solutions through
the Telecommunications Systems Integration Division. As a telecommunications
systems integrator, Able provides "one-stop" capabilities that include project
development, design, engineering, construction management, and on going
maintenance and operations services for telecommunications networks. The
projects include the construction of fiber networks that provide advanced
digital voice, data and video communications and wireless infrastructure
deployment.

The Telecommunications Construction Division provides construction and technical
services for building both outside plant and inside plant telecommunications
systems. Outside plant services are large-scale installation and maintenance of
coaxial and fiber optic cable (installed either aerially or underground) and
ancillary equipment for digital voice, data and video transmissions. These
installations are most often undertaken to upgrade or replace existing
communications networks. Inside plant services, also known as premise wiring,
include design, engineering, installation and integration of telecommunications
networks for voice, video and data inside customers' facilities. Additionally,
Able provides maintenance and installation of electric utility grids and water
and sewer utilities. The Company provides outside plant telecommunications
services primarily under hourly and per unit basis contracts to local telephone
companies. Able also provides these services to long distance telephone
companies, electric utility companies, local municipalities and cable television
multiple system operators.

NETWORK DEVELOPMENT GROUP. The Network Development Group was established
subsequent to October 31, 1999, to design, engineer, construct, operate and
maintain state-of-the-art, 'future proof' (designed for low cost upgrades to
avoid obsolescence), fiber optic networks providing virtually unlimited
bandwidth, and a comprehensive suite of cutting edge multimedia
telecommunications services for users in Tier 3 cities (those with populations
between 100,000 and 250,000).

<PAGE> 15

TRANSPORTATION SERVICES GROUP. The Transportation Services Group provides
"one-stop" electronic toll and traffic management solutions for intelligent
transportation system infrastructure projects, including project development and
management, design, development, integration, installation, engineering,
construction, and systems operation and maintenance. Additionally, Able has and
continues to develop proprietary software and applications designed to support
these systems. The electronic toll and traffic management segment of the
intelligent transportation system industry uses technology to automate toll
collection for bridges and highways allowing for "non-stop" toll collection.
Electronic toll and traffic management systems use advanced scanning devices to
identify a vehicle's type, combined with the user's account information, as the
vehicle passes a tolling station and immediately debits the appropriate toll
from the user's account. In addition, significant support systems must be
developed to maintain electronic toll and traffic management accounts, and
process violations. Able developed automatic vehicle identification technology
jointly with Texas Instruments and used it in many of its electronic toll and
traffic management projects. The Transportation Services Group markets its
services to state and local government transportation departments.

CONSTRUCTION GROUP. The Company's Construction Group installs and maintains
traffic control and signalization devices. These services include the design and
installation of signal devices (such as stoplights, crosswalk signals and other
traffic control devices) for rural and urban traffic intersections, drawbridge
and railroad track signals and gate systems, and traffic detection and data
gathering devices. The Company also designs, develops, installs, maintains and
operates "intelligent highway" communications systems that involve the
interconnection of data and video systems, fog detection devices, remote
signalization or computerized signage. These systems monitor traffic conditions,
communicate such conditions to central traffic control computers, and provide
real-time responses to dynamic changes in traffic patterns and climate
conditions by changing speed limit display devices, lowering traffic control
gates, or changing the text on remote signs and signals. The Company also
installs and maintains computerized manufacturing systems for various industrial
businesses. Many of the functions of the Construction Group, particularly those
involved in intelligent highway systems, complement those of the Network
Services Group.

COMMUNICATIONS DEVELOPMENT GROUP. The Company's Communications Development Group
operates primarily in Venezuela. These activities consist of management of the
joint venture arrangements, which were formed to provide telecommunication
installation and maintenance services to privatized local phone companies. These
joint ventures are in the form of subsidiaries in which the Company has an 80%
voting and ownership interest and a 50% share of profits and losses. In 1996,
the Communications Development Group expanded its communication development
activities to include the marketing to Central and South American telephone
companies of NeuroLAMA, an internally developed proprietary telephone call
record and data collection system. Significant capital expenditures will be
required to install NeuroLAMA in South America.

<PAGE> 16

INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION

Sales to unaffiliated customers, income (loss) from operations, and identifiable
assets pertaining to the Groups in which the Company operates are presented
below (in thousands).

<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31,
--------------------------------------------------
1999 1998 1997
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Network Services $260,354 $62,243 $ --
Transportation Services 39,394 24,639 --
Construction 113,948 125,270 82,171
Communication Development (International) 4,869 5,329 4,163
---------------------------------------------------------------------------------------------------------------------
$418,565 $217,481 $86,334
---------------------------------------------------------------------------------------------------------------------
Income (loss) from operations:
Network Services $ 14,746 $ 6,272 $ --
Transportation Services (10,618) 2,586 --
Construction (5,730) 1,718 4,824
Communication Development (International) 346 182 17
Unallocated Corporate Overhead (628) 651 --
---------------------------------------------------------------------------------------------------------------------
$ (1,884) $ 11,409 $ 4,841
---------------------------------------------------------------------------------------------------------------------
Identifiable assets:
Network Services $139,460 $159,660 $ --
Transportation Services 50,178 48,830 --
Construction 66,667 71,941 44,751
Communication Development (International) 3,813 4,496 2,509
Corporate 1,915 5,833 3,086
---------------------------------------------------------------------------------------------------------------------
$262,033 $290,760 $50,346
---------------------------------------------------------------------------------------------------------------------
</TABLE>

DEPENDENCE UPON KEY CUSTOMERS

The Company derives a significant portion of its revenues from a few large
customers. Those customers are as follows:

Revenue for the Percentage of Total Revenues
Fiscal Year Ended During The Fiscal Years Ended
October 31, October 31,
Customer Operating Group 1999 1999 1998 1997
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New Jersey Consortium Transportation and Network Services $78,515 18% 7% --
WorldCom Network Services 61,636 15% 14% --
Williams Communications, Inc. Network Services 49,621 12% -- --
Cooper Tire Company Construction 13,050 3% 6% 15%
Florida Power Corp. Construction 13,514 3% 2% 9%
State of Illinois (ISTHA) Network Services 11,680 2% 8% 12%
</TABLE>

MFSNT is party to multiple contracts with the New Jersey Consortium ("New Jersey
Consortium Contracts") which includes the New Jersey Turnpike Authority, New
Jersey Highway Authority, Port Authority of New York and New Jersey, South
Jersey Transportation Authority, State of Delaware Department of Transportation.
The New Jersey Consortium Contracts provide for, among other items, MFSNT to
construct and maintain a fully integrated automated toll collection system and
supporting fiber optic network. The estimated gross value of the New Jersey
Consortium Contracts is in excess of $280.0 million. During the fiscal year
ended October 31, 1999, the Company incurred net losses related to the New
Jersey Consortium Contracts of approximately $4.0 million, including penalties
of approximately $4.9 million associated with the failure to meet certain
milestones provided in the contracts. The Company is not currently incurring
additional penalties related to the New Jersey Consortium Contracts.

At October 31, 1999, the Company had billed and unbilled receivables of $18.3
million and $20.4 million related to the New Jersey Consortium, $10.9 million
and $8.7 million related to WorldCom and $6.2 million and $1.1 million related
to Williams Communications, Inc., respectively.

Able believes that a substantial portion of its total revenues and operating
income will continue to be derived from a concentrated group of customers, in
particular the New Jersey Consortium and WorldCom. The loss of the New Jersey
Consortium, WorldCom or any other such customers could have a material adverse
effect on Able's business, financial condition and results of operations.

<PAGE> 17

SUPPLIERS AND RAW MATERIALS

Able has no material dependence on any one supplier of raw materials.

CONTRACTS

The Company has and will continue to execute various construction and other
contracts which may require the Company to, among other items, maintain specific
financial parameters, meet specific milestones and post adequate collateral,
generally in the form of performance bonds. Failure by the Company to meet its
obligation under a contract may result in the loss of the contract and subject
the Company to litigation and various claims, including liquidated damages.

CONSTRUCTION CONTRACTS. For construction contracts, the Company obtains fixed
price or cost plus contracts for projects, either as a prime contractor or as a
subcontractor, on a competitive bid basis. Typically, for prime contracts, a
state department of transportation ("DOT") or other governmental body provides a
set of specifications for the project to qualified contractors. The Company then
estimates the total project cost based on input from engineering, production and
materials procurement personnel. Able then submits a bid along with a bid bond.
For most government-funded projects, the scope of work extends across many
industry segments. In such cases, the Company subcontracts its expertise to a
prime contractor. Able must submit performance bonds on substantially all
contracts obtained. The financial viability of the Company is dependent on
maintaining adequate bonding capacity and any loss of such could have a material
adverse effect on Able.

Government business is, in general, subject to special risks, such as delays in
funding, termination of contracts or subcontracts for the convenience of the
government or for the default by a contractor, reduction or modification of
contracts or subcontracts, changes in governmental policies, and the imposition
of budgetary constraints. The Company's contracts with governmental agencies
provide specifically that such contracts are cancelable for the convenience of
the government.

Contract duration is dependent on the size and scope of the project but
typically is from six months to three years. Contracts generally set forth
date-specific milestones and provide for liquidated damages for failure to meet
the milestones. During fiscal 1999, Able was subject to liquidated damages
relating to the "Violations Processing Center" portion of the New Jersey
Consortium Contract amounting to approximately $4.9 million.

In most cases, Able supplies the materials required for a particular project,
including materials and component parts required for the production of highway
signage and guardrails and the assembly of various electrical and computerized
systems. Aluminum sheeting, steel poles, concrete, reflective adhesive, wood
products, cabling and electrical components are the principal materials
purchased domestically for the production of highway signage and guard railing.
Generally, the supply and costs of these materials has been and is expected to
continue to be stable, and the Company is not dependent upon any one supplier
for these materials. The Company also purchases various components for the
assembly of various electrical, lighting and computerized traffic control
systems. Many of these materials must be certified as meeting specifications
established by the customer. The unavailability of those components could have
an adverse impact on meeting deadlines for the completion of projects which may
subject the Company to liquidated damages; however, the availability of these
materials, generally, has been adequate.

SERVICE CONTRACTS. The Company generally provides telecommunication, cable
television, electric utility and manufacturing system services (i.e.,
non-governmental business) under comprehensive operation and maintenance and
master service contracts that either give Able the right to perform certain
services at negotiated prices in a specified geographic area during the contract
period or pre-qualify the Company to bid on projects being offered by a
customer. Contracts for projects are awarded based on a number of factors such
as price competitiveness, quality of work, on-time completion and the ability to
mobilize equipment and personnel efficiently. Able is typically compensated on
an hourly or per unit basis or, less frequently, at a fixed price for services
performed. Contract duration is either for a specified term, usually one to
three years, or is dependent on the size and scope of the project. In most
cases, the Company's customers supply most of the materials required, generally
consisting of cable, equipment and hardware, and the Company supplies the
expertise, personnel, tools and equipment necessary to perform its services.

<PAGE> 18

SALES AND MARKETING

Able markets its systems integration services through a dedicated sales group.
Its salespeople market directly to existing and potential customers, including
municipalities and other government authorities, telecommunications companies
and utility companies. Able's salespeople work with those responsible for
project development and funding to facilitate network design and funding
procurement.

Typically, the contracting process for systems integration projects entails the
development of a list of qualified bidders and the establishment of a bid
schedule, the distribution of, and response to, a request for proposal ("RFP"),
and the awarding of the contract to an approved service provider. Important
elements in determining the qualifications of a bidder are its reputation, its
previous projects and its ability to secure bonding for the project. The selling
cycle, which is usually 12 to 24 months in duration, is protracted due to the
scope and complexity of the services provided.

Able markets its telecommunications construction services to local and long
distance telephone companies, utility companies, local municipalities and
certain corporations with particular communications needs. In addition, the
Company markets its construction services to certain systems integrators. A
dedicated sales force, as well as members of each subsidiaries' senior
management, actively market Able's services in their defined geographic regions.
Additionally, Able markets its transportation construction services to state and
local departments of transportation, public/private toll authorities and certain
international authorities.

COMPETITION

NETWORK SERVICES GROUP. The Telecommunications Systems Integration Division of
the Network Services Group competes for business in two segments: the
traditional request for proposal ("RFP")/bid based segment for the installation
and integration of infrastructure projects and a less traditional "project
development" segment. Able's largest competitors in the traditional RFP/bid
based segment are telecommunications service providers. The Telecommunications
Systems Integration Division has identified and pursued the "project
development" segment as a "niche" market for its services, providing network
alternatives to large public agencies, utilities and telecommunications service
providers through the use of public-private partnerships and other financing
models unique to the industry. These customers often must choose between
building their own networks or using an existing telecommunication service
provider's network. Once a customer has decided to build its own network, the
Company assists the customer in preparing a viable and customized project
business plan that addresses the customer's specific telecommunications needs,
including budgetary and other concerns. Able also has focused on "project
development" opportunities presenting ownership or participation opportunities
that can generate recurring revenues. The Company believes that no other company
presently provides this kind of complete, turnkey project development service
for these customers. Able can make no assurances, however, that other systems
integration companies will not develop the expertise, experience and resources
to provide services that achieve greater market acceptance or that are superior
in both price and quality to Able's services, or that it will be able to
maintain its competitive position.

The Telecommunications Construction Division competes for business with several
competitors on a much larger scale. In addition, the Telecommunications
Construction Division also competes in a market characterized by a large number
of smaller size private companies that compete for business generally in a
limited geographic area or with few principal customers. The Telecommunications
Construction Division's largest competitors are MasTec, Inc. and Dycom, Inc.

NETWORK DEVELOPMENT GROUP. The competitive environments within the large
metropolitan areas (called Tier 1 cities), such as New York, Los Angeles,
Chicago and Atlanta, already have an Incumbent Local Exchange Carrier ("ILEC")
and multiple Competitive Local Exchange Carriers ("CLECs") competing for their
large, high volume, business base. In addition, due to the high density of
apartment complexes, many have more than one cable company.

In contrast, the Tier 3 cities that the Network Development Group is targeting
typically have the ILEC, one cable company, and in some cases facilities based
CLECs targeting a limited area of businesses. In most cases both the cable
company and the ILEC have legacy infrastructures with very limited capability to
provide modern services.

<PAGE> 19

TRANSPORTATION SERVICES GROUP. The Transportation Services Group believes its
major competitors in the North American market are Lockheed Information
Management Co., a division of Lockheed Martin, and Syntonic Technology, Inc.,
doing business as Transcore ("Transcore").

CONSTRUCTION GROUP. The market in which the Construction Group competes is
characterized by large competitors who meet the experience, bonding and
licensure requirements for larger projects and by small private companies
competing for projects of $3 million or less in limited geographic areas. The
Construction Group's largest competitors include Lockheed Martin, Traffic
Control Devices of Florida and MasTec, Inc. The Construction Group's smaller
competitors are High Power of Florida, MICA Corporation of Texas and Fishback &
Moore. A number of these competitors may be larger, may have substantially
greater financial, distribution and marketing resources, and may have more
established reputations than Able.

COMMUNICATION DEVELOPMENT GROUP. The Communications Development Group competes
for business in the international market, primarily in Latin America. The
operations of the Communications Development Group are in Venezuela and Brazil.
In Venezuela, the market is characterized by a single customer, CANTV, the
telephone company of Venezuela, and a large number of smaller private companies
that compete for business generally in a limited geographic area. In Brazil, the
market consists of a myriad of smaller companies competing for a growing but
limited market, which forces margins down.

BACKLOG

The Company's estimated backlog at January 31, 2000, was as follows:

<TABLE>
<CAPTION>
Operations and
Construction Maintenance
Organizational Group Contracts Contracts Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Network Services $408,000 $179,000 $587,000
Transportation Services 140,000 120,000 260,000
Construction 151,000 33,000 184,000
-------------------------------------------------------------------------------
$699,000 $332,000 $1,031,000
-------------------------------------------------------------------------------
</TABLE>

The Company expects to complete approximately 40% of the total backlog within
the next fiscal year. Due to the nature of the Company's contractual
commitments, in many instances its customers do not commit to the volume of
services to be purchased under a contract but, rather, commit the Company to
perform these services if requested by the customer and commit to obtain these
services from it if they are not performed internally. Many of the contracts are
multi-year agreements, ranging from less than one year to 20 years. The Company
includes the full amount of services projected to be performed over the life of
the contract in backlog due to its historical relationships with its customers
and experience in procurements of this nature. Contract backlog of $500 million
is under performance bonds and the Company may be subject to liquidated damages
for failure to perform in a timely manner. The Company's backlog may fluctuate
and does not necessarily indicate the amount of future sales. A substantial
amount of its order backlog can be canceled at any time without penalty, except,
in some cases, the Company can recover actual committed costs and profit on work
performed up to the date of cancellation. Cancellations of pending purchase
orders or termination or reductions of purchase orders in progress from its
customers could have a material adverse effect on its business, operating
results and financial condition. In addition, there can be no assurance as to
customers' requirements during a particular period or that such estimates at any
point in time are accurate.

RESEARCH AND DEVELOPMENT: PROPRIETARY TECHNOLOGY AND RIGHTS

The Company acquired proprietary software from MFSNT in the MFSNT Acquisition
including applications at the lane, plaza, host, and customer service center
levels within a sophisticated electronic toll collection system architecture.
Prior to the MFSNT Acquisition, MFSNT had also developed a proprietary video and
data multiplexing system used for surveillance, monitoring, and system audit
purposes. The benefits of this proprietary software include reduced operating
costs, non-stop tolling, reduced traffic congestion, efficient traffic
management, and increased revenue accountability. However, Able can make no
assurances that products will not be developed in the

<PAGE> 20

future that will produce the same or a better result or be produced in a more
economical manner. Below is a summary of certain of Able's proprietary
applications and technologies:

LANE SYSTEM APPLICATIONS. The lane system application is modular in nature to
allow and accommodate tolling operations in various configurations in accordance
with a customer's specific needs and operational requirements. The lane
controller application is the heart of the lane system. It runs on a standard PC
and under a real-time operating environment. The lane controller controls the
various in-lane equipment items and gathers data from the in-lane sensors to
provide transaction records for each vehicle that travels through a toll lane.
The lane controller coordinates and controls revenue collection events and
transactions. The lane controller also interacts with and can recognize
individual vehicles, as well as cars that evade toll collection. The transaction
data created at the lane level is sent to the plaza computer system for further
processing. The lane controller also has the unique capability of operating in a
completely autonomous mode if communications to the plaza system are disrupted.

PLAZA SYSTEM APPLICATIONS. The plaza system is the central repository of the
transaction data received from each toll lane. The data is stored in a database
and is then used for reporting and tracking purposes. Traffic reports, revenue
reports, and collector performance reports are among several reports that can be
generated from the plaza system. A real-time plaza supervisor system allows
client personnel to monitor traffic and collection events (as well as equipment
and security status) as each event actually occurs. The data received at the
lane plaza system level is forwarded to the host system for further processing
and review.

HOST SYSTEM APPLICATIONS. The primary role of the host application is to provide
the client with the capability to generate system-wide reports for traffic and
revenue, as well as audit and reconciliation capabilities. The host system also
acts as the primary interface to the customer service center ("CSC") system and
is the "conduit" for electronic toll transactions and patron account
information. The host application also controls the download of information to
the plaza and lane systems, such as toll schedules, employee identification
information, patron account status, time synchronization, and other information
required for daily operation of the system.

CSC SYSTEM APPLICATIONS AND SERVICES. The Company provides numerous CSC systems
and services, including hardware and software system applications and CSC
staffing, operations and management. The CSC application is a highly reliable
and robust, user friendly, efficient and fully auditable software application.
The system incorporates automated internal controls for audit and reconciliation
purposes and also employs a flexible design to accommodate potential changes to
customer policies, procedures, and/or operations.

VIDEO TRANSPORTATION DATA MULTIPLEXER ("VTDM") PRODUCT. The VTDM system is a
patented product that compiles video and data based records for every vehicle
that travels through a monitored lane. The VTDM provides auditors, toll
supervisors and other Customer personnel with the unique capability to record,
review, and analyze lane event data in an efficient and cost-effective manner.
This system can also be used for problem resolution relating to system and/or
toll collector performance. The VTDM system provides information (lane event
data) in the form of video and transaction event text (text-over-video display).
Cameras and VCRs are used to visually record lane activity on a 24-hour basis.

NEUROLAMA. The Communications Development Group ("CDG") has incurred in excess
of $1.0 million of costs developing its proprietary software, NeuroLAMA.
NeuroLAMA is a telephone call record and data collection system. NeuroLAMA helps
telephone companies increase revenues by decreasing fraud, eliminating
misoperation, and increasing efficiency through their analog telecommunications
systems. NeuroLAMA's quality, reliability and uniqueness of design are proving
far superior to any competing system. CDG estimates that roughly 250 million
analog lines worldwide could benefit from the implementation of NeuroLAMA. The
software is being marketed throughout South America. Currently, CDG has not
capitalized any costs related to this software.

Able relies on a combination of contractual rights, patents, trade secrets,
know-how, trademarks, non-disclosure agreements, licenses and other technical
measures to establish and protect the Company's proprietary rights to protect
its proprietary applications and technologies. To the extent necessary, Able
intends to vigorously defend any and all rights Able has, now or in the future,
in its proprietary applications and technologies. However, the Company can make
no assurances that it will be successful in pursuing any of its rights or, if
successful, that it will be timely.

<PAGE> 21

SEASONALITY

The Company operates throughout the United States, and its results of operations
are not significantly impacted by seasonal changes.

EMPLOYEES

At January 31, 2000, the Company and its subsidiaries had approximately 2,000
employees. The number of employees considered as laborers can vary significantly
according to contracts in progress. Such employees are generally available to
the Company through an extensive network of contacts within the communications
industry.

ITEM 2. PROPERTIES

The Company's corporate offices are in Roswell, Georgia, where it occupies 6,600
square feet under a lease that expires July 31, 2004. The Company also occupies
5,110 square feet of office space under a lease that expires January 31, 2004 in
West Palm Beach, Florida. The Company leases 35,815 square feet of office space
in Omaha, Nebraska, under a lease that expires September 30, 2004 and which
houses Adesta Communications, and 40,111 square feet in Mt. Laurel, New Jersey,
under a lease that expires February 28, 2003 and which houses Adesta
Transportation. The Company leases 6,400 square feet of space in Fairbanks,
Alaska, for a network operations center. The Company leases 6,800 square feet of
space in Fort Lauderdale, Florida, under a lease, which expires September 30,
2003, which facility is presently available for sublet. The Company leases
several field offices and numerous smaller offices. The Company also leases on a
short-term or cancelable basis temporary equipment yards or storage locations in
various areas as necessary to enable it to efficiently perform its service
contracts.

The Company owns (subject to a mortgage) and operates a 10,000 square foot
facility for operations based in Chesapeake, Virginia. The Company's Venezuelan
subsidiaries own and operate from a 33,000 square foot floor of an office
building located in Caracas, Venezuela, and lease an additional 50,000 square
feet of covered parking and shop facilities. The Company also owns a 15,000
square foot facility located on approximately three acres of land for operations
in Tampa, Florida.

The Company believes that its properties are in good condition and adequate for
current operations and, if additional capacity becomes necessary due to growth,
other suitable locations are available in all areas where it currently does
business. See "Commitments and Contingencies" in the Notes to the Consolidated
Financial Statements for additional information relating to leased facilities
which includes mortgage/lease obligations. Certain of the Company's properties
are subject to federal, state and local provisions involving the protection of
the environment. Compliance with these provisions has not had and is not
expected to have a material effect upon the Company's financial position.

ITEM 3. LEGAL PROCEEDINGS

In May 1998, SIRIT Technologies, Inc. ("SIRIT") filed a lawsuit in the United
States District Court for the Southern District of Florida, against the Company
and Thomas M. Davidson, who has since become a member of the Company's Board of
Directors. Mr. Davidson resigned in January 2000. SIRIT asserts claims against
the Company for tortuous interference, fraudulent inducement, negligent
misrepresentation and breach of contract in connection with the Company's
agreement to purchase the shares of MFSNT and seeks injunction relief and
compensatory damages in excess of $100.0 million.

In 1998, Shipping Financial Services Corp. ("SFSC") filed a lawsuit in the
United States District Court for the Southern District of Florida against the
Company, and certain of its officers. SFSC asserts claims under the federal
securities laws against the Company and four of its officers that the defendants
allegedly caused the Company to falsely represent and mislead the public with
respect to two acquisitions, COMSAT and MFSNT, and the ongoing financial
condition of the Company as a result of the acquisitions and the related
financing of those acquisitions. SFSC seeks certification as a class action on
behalf of itself and all others similarly situated and seeks unspecified damages
and attorneys' fees.

<PAGE> 22

In 1997, Bayport Pipeline, Inc. ("Bayport") filed a lawsuit against MFSNT
seeking a declaratory judgment concerning the rights and obligations of Bayport
and MFSNT under a Subcontract Agreement that was entered into on May 1, 1997
related to the NYSTA contract. The matter was referred to arbitration in January
1999. The total amount sought was not less than $5.5 million and subsequent to
year-end was increased to $19 million.

In 1997, U.S. Public Technologies, Inc. ("USPT") filed a lawsuit in the United
States District Court for the Southern District of California, (San Diego),
against MFSNT for breach of contract, breach of an alleged implied covenant of
good faith and fair dealing, tortious interference, violation of the California
Unfair Competition Act, promissory estoppel and unjust enrichment in connection
with a Teaming Agreement between MFSNT and USPT concerning the Consortium
Regional Electronic Toll Collection Implementation Program in the state of New
Jersey. In this lawsuit, USPT seeks actual damages in excess of $8.5 million and
unspecified exemplary damages. Discovery had not yet commenced in this lawsuit.

In 1999, Newbery Alaska, Inc. ("Newbery") filed a demand for arbitration seeking
approximately $3.8 million. This dispute arises out of Newbery's subcontract
with MFSNT related to the fiber optic network constructed by MFSNT for Kanas.
Newbery's claims are for the balance of the subcontract, including retainage and
disputed claims for extras based on alleged deficiencies in the plans and
specifications and various other alleged constructive change orders. The parties
are currently conducting discovery. Arbitration hearings on this matter should
take place in the spring or summer of 2000.

In 1998, Alphatech, Inc. ("Alphatech") filed a lawsuit in the U.S. District
Court in Massachusetts. This suit alleges ten counts, including breach of
Teaming Agreements on the E-470 project and the New Jersey Regional Consortium
project, breach of implied duty of good faith and fair dealing on both projects,
misappropriation of trade secrets, deceit, violation of Massachusetts General
Laws Chapter 93A, promissory estoppel, quantum meruit, and unjust enrichment.
Alphatech's claim is for $15 million. A hearing for a summary judgment is
scheduled in May 2000.

In 1998, T.A.M.E. Construction, Inc. ("TAME") sued for breach of contract,
promissory estoppel, discrimination and defamation related to certain contracts
performed by GEC. TAME alleges that it was wrongfully terminated as a
subcontractor. TAME claims contract damages in the amount of $250,000, punitive
damages for discrimination of $1,000,000 and defamation damages of an additional
$1,000,000. GEC has moved for summary judgment. This matter is not set for
trial.

The Company is subject to a number of shareholder and other lawsuits and claims
for various amounts which arise out of the normal course of its business. The
Company intends to vigorously defend itself in these matters. The disposition of
all pending lawsuits and claims is not determinable and may have a material
adverse effect on the Company's financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the year covered by this Annual Report on Form
10-K for the fiscal year ended October 31, 1999, no matters were submitted to
a vote of the Company's security holders.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

The Company's common stock, par value $.001 per share ("Common Stock"), began
trading on the National Association of Securities Dealers Automatic Quotation
("Nasdaq") System on February 24, 1994 under the symbol "ABTE." Prior to the
Nasdaq listing, the Company's Common Stock was sporadically traded on the
Over-The-Counter Bulletin Board, under the same symbol, since September 15,
1988, the date of the Company's initial public offering. Set forth below is the
range of the high and low closing bid quotations of the Common Stock for each
quarter within the last two fiscal years as reported by Nasdaq.

<PAGE> 23

MARKET PRICE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the Nasdaq National Market System (NMS) under the
trading symbol "ABTE." The following table sets forth the high and low sale
prices for the Common Stock for each fiscal quarter indicated below.

<TABLE>
<CAPTION>
Fiscal Quarter 1998 1999
------------------------------------------------------------------------------
High Low High Low
<S> <C> <C> <C> <C>

First Quarter 9-13/16 9-5/8 12-3/8 5-1/4

Second Quarter 12-7/16 7-5/16 11-9/16 5-3/4

Third Quarter 20-5/16 9-3/8 12-15/16 5-13/16

Fourth Quarter 10-5/8 1-3/4 10-1/16 7-1/2
</TABLE>

At February 4, 2000, there were approximately 412 shareholders of record of the
Company's Common Stock. No cash dividends have been declared by the Company on
its Common Stock since its inception and the Company has no present intention to
declare or pay cash dividends on the Common Stock in the foreseeable future. The
Company intends to retain any earnings, which it may realize in the foreseeable
future to finance its operations. The terms of the Company's Series C Preferred
Stock and the Secured Credit Facility restrict the payment of cash dividends on
the Company's Common Stock. See "Management's Discussion of Financial Condition
and Results of Operations - Liquidity and Capital Resources," and "Consolidated
Audited Financial Statements of the Company."

SENIOR NOTES

On January 6, 1998, the Company sold $10.0 million in principal amount of its
12% Senior Subordinated Notes Due January 6, 2005 (the "Senior Notes") in a
non-public offering exempt from registration pursuant to an exemption from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"). The investors were provided with, or otherwise had
access to information, including financial information, about the Company. The
Senior Notes were sold to John Hancock Life Insurance Company, John Hancock
Variable Life Insurance Company and Signature 1A (Cayman), Ltd. The Company used
the proceeds to fund working capital needs.

As part of the Company's offering of the Senior Notes, the Company issued to the
holders thereof warrants to purchase in the aggregate 409,505 shares of Common
Stock. The warrants are exercisable at an exercise price of $8.25 per share,
commencing on the earlier of (i) January 6, 1999, or (ii) the merger or
consolidation of the Company with or into another entity or the sale of all or
substantially all of the Company's assets to another entity. The Senior Notes
were purchased from the holders by the Company effective February 17, 1999 and
subsequently canceled.

SERIES A CONVERTIBLE PREFERRED STOCK CONVERSIONS

During the year ended October 31, 1998, the Company received conversion notices
from the holders of the Company's Series A Preferred Stock and converted 995
Series A Preferred Shares, as defined below, into 920,946 shares of Common
Stock. In addition, 30,000 warrants related to the Series A Preferred Stock were
exercised during the year ended October 31, 1998. In each case, the issuance of
the common stock was undertaken upon conversion of Series A Preferred Stock then
held by the purchaser and was issued pursuant to an exemption from registration
under Section 4(2) of the Securities Act of 1933. The resale of such common
stock by the purchaser is registered on a Registration Statement on Form S-3
(No. 333-22105).

<PAGE> 24

The Series A Preferred Stock that was converted, as set forth above, was issued
on December 20, 1996 in a private placement transaction (the "Private
Placement"), exempt from registration, pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act") for a total of 1,000
shares (the "Series A Preferred Shares") of the Company's Series A Preferred
Stock, par value $.10 per share. The investors were provided with, or otherwise
had access to, information, including financial information concerning the
Company. In connection with the Private Placement, the Company also issued
warrants totaling 200,000 shares of the Company's Common Stock (the "Series A
Warrants"). The number of shares purchasable pursuant to the Warrants was
subsequently reduced pursuant to its terms to an aggregate of 62,000 shares at
October 31, 1998. The purchasers paid the Company $6.0 million for the Series A
Preferred Shares and the Warrants. The Private Placement was effected pursuant
to a Series A Preferred Stock Agreement by and among the purchasers and the
Company dated December 20, 1996 (the "Agreement"). The Warrants became
exercisable on December 20, 1997. No Series A Preferred Shares remain
outstanding following the conversions effected during fiscal 1998.

The Series A Warrants are exercisable at a purchase price per share equal to
$9.82; provided, however, if there is an effective registration statement
covering the shares issuable upon the exercise of the Series A Warrants, the
purchasers may exercise the Series A Warrants in whole or in part in exchange
for the number of shares of Common Stock equal to the product of (i) the number
of shares as to which the Series A Warrants are being exercised multiplied by
(ii) a fraction, the numerator of which is the "Market Price" (as defined in the
Series A Warrants) less $9.82, and the denominator of which is the Market Price.

SERIES B CONVERTIBLE PREFERRED STOCK CONVERSIONS

During the fiscal year ended October 31, 1998, the Company received conversion
notices from certain holders of the Company's Series B Preferred Stock to
convert an aggregate of 436 shares of Series B Preferred Stock. In connection
with the conversion of such shares, the Company issued an aggregate of 1,007,927
shares of Common Stock, pursuant to an exemption from registration under Section
4(2) of the Act. The conversion price per share of Series B Preferred Stock was
approximately $2.18. Said conversion took place between September 14, 1998 and
October 2, 1998.

On June 30, 1998, Able issued to the RoseGlen Group and the Palladin Group (as
defined below) an aggregate of (i) 4,000 shares of Series B Preferred Stock and
(ii) Series B Warrants to purchase an aggregate of 1,000,000 shares of Common
Stock at a then exercise price of $19.80 per share. Able received total gross
proceeds of $20.0 million from the sale of the Series B Securities, offset by
$1.9 million in expenses associated with the issuance of the Series B
Securities. The Company sold the Series B Securities to finance part of the
purchase price of MFSNT. The sale of the Series B Securities was issued pursuant
to an exemption pursuant to Section 4(2) and Rule 506 of Regulation D of the
Securities Act.

The purchasers of the Series B Securities included two groups of accredited
investors (for a total of seven investors):

- The RoseGlen Group (the "RoseGlen Group"), which purchased
2,000 shares of Series B Preferred Stock and acquired Warrants
to purchase 370,000 shares of Common Stock, and

- The Palladin Group (the "Palladin Group"), which purchased
2,000 shares of Series B Preferred Stock and acquired Warrants
to purchase 630,000 shares of Common Stock.

<PAGE> 25

Prior to February 4, 2000, the RoseGlen Group and the Palladin Group owned the
following Company securities:

<TABLE>
<CAPTION>
Series B Preferred Warrants Common Stock(2)
Stock
---------------------------------------------------------------------------------
<S> <C> <C> <C>
The RoseGlen Group 375 370,000 461,907
The Palladin Group(1) 404 -- 546,020
---------------------------------------------------------------------------------
Total 779 370,000 1,007,927
---------------------------------------------------------------------------------
</TABLE>

(1) On May 7, 1999, the Company purchased 630,000 Series B Warrants owned
by the Palladin Group at $3.00 per share and, as a result, such
Warrants were retired.

(2) Represents shares of Common Stock issued upon conversion of an
aggregate of 436 shares of Series B Preferred Stock.

In January 1999, Interfiducia Partners, LLC, a Texas limited liability company
("Interfiducia"), entered into certain letter agreements with Able, the RoseGlen
Group and/or the Palladin Group relating to the proposed purchase by
Interfiducia of, among other things, all or a portion of the outstanding Series
B Securities from the RoseGlen Group and the Palladin Group. The Company
undertook due diligence regarding Interfiducia at that time and all parties
continued their respective negotiations to finalize the contemplated
transactions.

Because the Company was then in default under certain provisions of the terms of
the Series B Securities, Able believed that it was important to complete the
transfer of all or a portion of the Series B Securities to a party willing to
waive the defaults. Interfiducia was not able to provide the funds necessary to
complete the transactions contemplated by the letter agreements in a timely
manner in order to avoid paying certain premiums and penalties to the holders of
the Series B Securities. As a result, on February 16, 1999, WorldCom advanced
the Company $32.0 million ("WorldCom Advance") to facilitate the purchase of (i)
2,785 shares, or approximately 78 percent of the outstanding Series B Preferred
Stock and (ii) the outstanding $10.0 million principal amount of the Company's
12 percent Senior Subordinated Notes originally due January 6, 2005 (the "Senior
Notes"). The WorldCom Advance is non-interest bearing, and is due on November
30, 2000. At the same time, WorldCom also agreed to make available additional
advances to the Company of up to $15.0 million against amounts otherwise payable
pursuant to the WorldCom Master Services Agreement. These additional advances
would be repayable to WorldCom on November 30, 2000. The repayment of the
WorldCom Advance is subordinate to the Company's obligations to its senior
credit facility. The WorldCom Advance was evidenced by a written agreement
between Able and WorldCom dated February 16, 1999, which was subsequently
amended and restated as of April 1, 1999.

Immediately thereafter, the Company, in turn, used the WorldCom Advance to
advance funds (the "Company Advance") to Cotton Communications, Inc., which may
be deemed an affiliate of the Company. On February 17, 1999, pursuant to certain
purchase agreements between and among the Company, Cotton, the Palladin Group
and/or the RoseGlen Group (collectively the "February Agreements"), Cotton, in
turn, used the Company Advance to purchase approximately 78 percent of the
outstanding shares of Series B Preferred Stock, or 2,785 shares of the 3,564
shares outstanding (1,425 shares from the RoseGlen Group for $11.0 million and
1,360 shares from the Palladin Group for $7.85 million, which amounts included
any accrued dividends, interest or penalties), as well as the accrued
obligations under the Senior Notes.

The sole shareholder, officer and director of Cotton was Tyler Dixon. Mr. Dixon
is a partner with the law firm of Raiford, Dixon & Thackston, LLP, which, during
fiscal year 1999 and 1998, received approximately $0.3 million and $0.1 million
in legal fees from the Company. Cotton received no consideration from Able in
connection with the transactions. However, the Company agreed to continue using
the legal services of Mr. Dixon and the Company waived any conflicts that may
arise with respect to the performance of such legal services as a result of
Cotton's purchase of the Series B Preferred Stock. See "Certain Relationships
and Related Party Transactions" for a discussion concerning the consulting
agreement between Mr. Dixon and the Company dated January 1, 1999 and effective
April 1, 1999 and the grant of stock options to Mr. Dixon.

<PAGE> 26

Interfiducia continued to state to the Company throughout Cotton's negotiations
with the Palladin Group and the RoseGlen Group and subsequent to the
consummation of the February Agreements that it would acquire Cotton's position.
Cotton verbally agreed that, if Interfiducia came forward with funds shortly
after the consummation of the February Agreements, it would sell certain of the
Series B Securities and the Senior Notes to Interfiducia on the same terms and
conditions. Nonetheless, Interfiducia was never able to fund the proposed
acquisition in a timely manner nor was the Company able to obtain satisfactory
due diligence regarding Interfiducia and its principals. As a result,
Interfiducia never acquired Cotton's position.

In connection with the purchase and sale of the Senior Notes and the Series B
Preferred Stock, Cotton and the remaining holders of the Series B Preferred
Stock agreed to either waive all outstanding defaults under such securities or
refrain from exercising any remedies with respect to any such outstanding
defaults until October 31, 1999. During this period of time, the Company agreed
to use its best efforts to have declared effective the Registration Statement
covering the resale of shares of Common Stock underlying the remaining Series B
Securities (as well as underlying the WorldCom Option and the WorldCom Equity
Award as described in Proposal No. 5). The October 31, 1999 deadline was
extended from an initial date of December 27, 1998. To date, the Registration
Statement has not been declared effective and, while a "triggering event," as
defined below, has occurred, the Company has not, to date, received any
notice(s) of redemption from any of the holders of the Series B Preferred Stock.

As part of the February Agreements, generally,

--Cotton and the Company agreed that, notwithstanding any other
agreements, the conversion price of the Series B Preferred Stock owned
by Cotton would not be less than $8.25 per share, thus eliminating the
"floorless" conversion concerns as to the 2,785 shares of Series B
Preferred Stock owned by Cotton. Subsequently, the shares purchased by
Cotton were retired and the $8.25 per share "floor" has no effect on
the remaining outstanding shares of Series B Preferred Stock.

--The exercise price of the Warrants was reduced from $19.80 per share
to $13.50 for the Palladin Group and $13.25 for the RoseGlen Group.

--As to the RoseGlen Group,

-assuming Shareholder approval, the RoseGlen Group agreed to
convert its 375 shares of Series B Preferred Stock within 30
days after the Registration Statement registering the
underlying Common Stock is effective. As of October 25, 1999,
the number of shares of Common Stock issuable would be 647,430
which assumes that the RoseGlen Group has provided at least 60
days prior written notice that it intends to waive its 4.99%
share ownership limitation as described below.

-if the Common Stock is trading at 150% of the exercise price
of the Warrants (which is approximately $19.875 per share,
subject to certain reductions) for three consecutive trading
day periods, the Company may call for redemption of the
Warrants held by the RoseGlen Group, subject to the Common
Stock meeting certain requirements and adjustments.

--As to the Palladin Group,

-if, on or before April 30, 1999, the closing bid price for
the Common Stock is above $17.00 and there is an effective
Registration Statement, the Company may call for redemption of
the Warrants held by the Palladin Group, subject to certain
requirements and adjustments, including the 20% Share
Limitation and as of October 25, 1999 would be an aggregate of
694,498 shares.

-Palladin has agreed to a maximum conversion price equal to
the lesser of $3.5138 per share or the "Conversion Price," as
defined below.

26
<PAGE> 27

-On May 7, 1999, the Company purchased the Palladin Group
Warrants at $3.00 per share (for an aggregate of $18.9
million) and such Warrants were so retired.

On March 22, 1999, the Company entered into a termination agreement with Cotton
whereby the Company redeemed the Senior Notes held by Cotton, as well as the
2,785 shares of Series B Preferred Stock from Cotton, in exchange for the
cancellation of the Company Advance made to Cotton on February 17, 1999. The
Company also assumed Cotton's obligation to acquire 630,000 of the Series B
Warrants from the Palladin Group at a price of $3.00 per Series B Warrant on or
before April 30, 1999, which was extended to May 7, 1999, at which time the
Company acquired the 630,000 Series B Warrants from the Palladin Group. The
Senior Notes have now been marked paid and the 2,785 shares of Series B
Preferred Stock have been retired.

Pursuant to the original terms of the Series B Offering, holders of the Series B
Preferred Stock had the right to convert their shares at any time into shares of
Common Stock at a conversion rate equal to 97% of the "market value" of the
Common Stock (the "Conversion Price"). However, each holder of the Series B
Preferred Stock agreed that it would convert its shares of Series B Preferred
Stock into Common Stock only to the extent that, after the conversion, the
holder and its affiliates would beneficially own 4.99% or less of the Common
Stock.

On February 4, 2000, Able redeemed and retired all remaining shares of Series B
Preferred Stock by payment of $10,851,062 in cash and the issuance of 801,785 in
restricted common shares that were issued at or above market price and further
Able issued 267,000 Warrants to acquire its Common Stock at varying prices.
Also, on February 4, 2000, Able privately placed 5,000 shares of Series C
Preferred Stock with a small group of investors at $3,000 per share. The sale of
the Series C shares includes the issuance of Warrants to purchase up to 100,000
shares at prices substantially above market (see description of Series C
Convertible Preferred Stock below). Refer to Exhibits 4.16 - 4.24 for more
detail.

WORLDCOM CONVERSION AGREEMENT

SERIES C PREFERRED STOCK ISSUANCE AND SERIES B PREFERRED STOCK
CONVERSION/REDEMPTION

(a) no conversion price shall be adjusted if a recalculation would
result in a new conversion price that is greater than the
current conversion price, and

(b) if any such recalculation results in a conversion price less
than $4.00, the conversion price shall thereafter be $4.00.

27
<PAGE> 28

The terms of the Series C Preferred Stock are complicated. In particular, the
conversion price of the Series C Preferred Stock may be reduced below $4.00 per
share if Able does not file a registration statement covering the Series C
Preferred Stock and the Common Stock to be issued upon conversion of the Series
C Preferred Stock by March 2000 and if the registration statement is not
effective by October 31, 2000 (refer to Exhibits 4.16 - 4.24 for the terms of
the Series C Preferred Stock documents and the redemption of the Series B
Preferred Stock).

WORLDCOM OPTION AND STOCK APPRECIATION RIGHTS

As part of the MFSNT Acquisition, Able granted an option (the "WorldCom Option")
to WorldCom to purchase up to two million shares of Common Stock at an exercise
price of $7.00 per share. WorldCom may elect to exercise some or all of the
WorldCom Option on a "cashless" basis rather than for cash to the extent
necessary to ensure that the actual number of shares of Common Stock issued
would not exceed 1,817,941 shares, which amount was based upon just less than
20% of the then outstanding number of shares of Common Stock, determined prior
to Able's executing the merger agreement with WorldCom dated April 26, 1998, as
amended September 9, 1998 (the "MFSNT Agreement"). A "cashless" exercise means
that WorldCom will receive shares of Common Stock with a total market value
equal to the per share excess of the market value of the common stock over the
exercise price multiplied by the number of shares of the WorldCom Option being
exercised. On January 8, 1999, the Company entered into a modification to the
WorldCom Option (the "WorldCom Modification") with WorldCom which modified the
WorldCom Option into stock appreciation rights ("SARs"), unless and until such
time as Able obtains shareholder approval (if ever), pursuant to the Nasdaq
Stock Market, Inc. ("Nasdaq") Marketplace Rule 4460(i)(1)(C) ("Rule
4460(i)(1)(C)"), to approve issuing 20 percent or more of the Common Stock in
connection with the MFSNT Acquisition (based upon the number of shares
outstanding prior to Able's executing the MFSNT Agreement).

Payment of any SARs in cash only could materially and adversely effect the
Company's cash flow because (a) of the short time frame to pay for any SARs
exercised (between 15 and 30 days form the date notice is received by the
Company), and (b) the payment owed could be a significant amount, depending on
the number of SARs exercised and the then fair market value of the Common Stock.

Able also will be granting to WorldCom, subject to shareholder approval, an
equity award in the form of stock appreciation rights or other equity
participation awards ("WorldCom Equity Awards/Phantom Stock Awards") which is
generally equivalent to 600,000 shares of Common Stock, payable in cash, stock,
or a combination of both, at Able's option. The WorldCom Equity Awards are
convertible, in whole or in part, solely on the following days: July 2, 2000 or
July 2, 2001. On January 8, 1999, Able and WorldCom entered into a written
agreement (the "Intent Agreement") setting forth the terms and conditions of
when the WorldCom Equity Award Agreement (the "Equity Award Agreement") will be
executed. The Intent Agreement also sets forth the specific terms of the
WorldCom Equity Award, in the form of a Stock Appreciation Rights Agreement
("SAR Agreement"). The Intent Agreement provides that, until Able obtains
shareholder approval in accordance with Rule 4460(i)(1)(C), the SAR Agreement
will be executed at such time as Able meets certain "Conditions to Issuance."
Additionally, upon the exercise of any WorldCom Equity Awards, any payments may
be made, in Able's sole discretion, in cash, Common Stock, or a combination of
both cash and Common Stock, assuming that the Company obtains shareholder
approval to issue any payments in Common Stock. To date, the SAR Agreement has
not been executed (and thus no WorldCom Equity Awards have been issued), but it
will be once shareholder approval is obtained to issue payments to WorldCom in
stock or a combination of stock and cash (up to a maximum of 700,000 shares).

28
<PAGE> 29

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected consolidated financial data of
the Company for the five years ended October 31, 1999 which has been derived
from the audited consolidated financial statements of the Company and its
subsidiaries. This data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this report.

<TABLE>
<CAPTION>
Fiscal Years Ended October 31
(in thousands, except per share data)
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $418,565 $217,481 $86,334 $48,906 $35,408
Net income (loss) (18,060) 2,514 2,857 (5,910) (281)
Net income (loss) applicable to common stock (36,758) (5,840) 1,331 (5,910) (281)

Weighted average shares outstanding 11,849 9,907 8,505 8,361 8,284
Income (loss) per share from operations-
Basic and diluted (3.10) (.59) .16 (.71) (.03)

Current assets 167,874 185,822 27,010 21,449 18,573
Current liabilities 166,772 159,678 12,969 17,155 11,175

Property and equipment, net 27,803 32,074 13,114 10,667 6,120
Total assets 262,033 290,760 50,346 38,919 32,482
Long-term debt 30,618 61,685 17,294 10,115 5,255
WorldCom Advance 32,000 -- -- -- --
Shareholders' equity 431 40,217 15,247 11,598 17,467

</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis relates to the financial condition and
results of operations of the Company for the three years ended October 31, 1999.
This information should be read in conjunction with the Company's Consolidated
Financial Statements appearing elsewhere in this document.

<PAGE> 30

OVERVIEW

As discussed in Note 6 to the Company's consolidated financial statements,
"Assumption of COMSAT Contracts," during the fiscal year ended October, 31,
1998, GEC assumed obligations to complete 12 contracts with the Texas Department
of Transportation which were for the installation of intelligent traffic
management systems and design and construction of wireless communication
networks. The following is a summary of revenues and costs associated with the
COMSAT contracts for the fiscal years ended October 31 (amounts in thousands):

<TABLE>
<CAPTION>
1999 1998
--------------------------------------------------------------------
<S> <C> <C>
Billings on the COMSAT contracts $ 7,952 $11,327
Deferred revenue recognized 3,935 8,481
--------------------------------------------------------------------
Total revenue recognized 11,887 19,808
Direct contract costs 8,675 10,672
--------------------------------------------------------------------
Gross margin from COMSAT contracts $ 3,212 $ 9,136
--------------------------------------------------------------------
</TABLE>

At October 31, 1999, all of the COMSAT Contracts were substantially complete.
The revenues, cost of revenues and gross margins are non-recurring and are not
generally indicative of returns the Company expects to achieve on future
contracts.

The Company's results of operations reflect the operating results of MFSNT and
other acquired businesses only from the respective dates of acquisition.
Accordingly, the Company's results are not necessarily comparable on a
period-to-period basis.

The following table sets forth, for the fiscal years ended October 31, selected
elements of the Company's condensed consolidated statements of operations as a
percentage of its revenues:

<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------------------------
Revenues: 100.0% 100.0% 100.0%
------------------------------------------------------------------------------
<S> <C> <C> <C>
Cost of revenues......................... 87.2 82.5 79.0
General and administrative............... 9.8 8.7 10.2
Depreciation and amortization............ 2.8 3.5 5.2
Impairment of long-lived assets.......... 0.6 -- --
Income (loss) from operations............ (0.4) 5.3 5.6
Other expenses, net...................... (3.9) 4.1 2.3
------------------------------------------------------------------------------
Net income (loss)........................ (4.3) 1.2 3.3
------------------------------------------------------------------------------
</TABLE>

FISCAL YEAR ENDED OCTOBER 31, 1999 COMPARED WITH FISCAL YEAR ENDED OCTOBER 31,
1998.

REVENUES. For the fiscal year ended October 31, 1999, revenues totaled $418.6
million compared to $217.5 million during the fiscal year ended October 31,
1998, an increase of $201.1 million or 92 percent. This increase in revenues is
due primarily to growth in the Company's operations through the acquisition of
MFSNT on July 2, 1998. Revenues generated by MFSNT for the fiscal year ended
October 31, 1999, totaled approximately $264.0 million and included sales of
conduit capacity of approximately $35.7 million.

30
<PAGE> 31

COST OF REVENUES. For the fiscal year ended October 31, 1999 cost of revenues
totaled $365.1 million compared to $179.5 million during the fiscal year October
31, 1998, an increase of $185.6 million or 103 percent. This increase in cost of
revenues is due primarily to growth in the Company's operations through the
acquisition of MFSNT on July 2, 1998. Cost of revenues incurred by MFSNT for the
fiscal year ended October 31, 1999, totaled approximately $233.5 million and
included cost associated with sales of conduit capacity of approximately $34.7
million.

The Company's construction and maintenance margins (Revenues less Cost of
Revenues) were $53.5 million or 12.8 percent for the fiscal year ended October
31, 1999, compared to $38.0 million or 17.5 percent for the fiscal year ended
October 31, 1998. The dollar increase in construction and maintenance margins is
due primarily to the acquisition of MFSNT on July 2, 1998. Construction and
maintenance margins generated by MFSNT for the fiscal year ended October 31,
1999, totaled approximately $31.6 million and included margins from sales of
conduit capacity of $1.0 million. The decrease in construction and maintenance
margins on a percentage basis from fiscal year 1999 to fiscal year 1998 was due
primarily to increased emphasis on cost plus contracts (predominately with
WorldCom) and negative margins generated by Dial and AIS (which were closed in
fiscal year 1999).

As of July 2, 1998, the Company estimated the need for reserves for contract
losses with respect to MFSNT contracts of $40.5 million. These reserves relate
to specific MFSNT jobs identified as Loss Jobs. Revenues and costs recognized in
the Company's consolidated statement of operations related to these identified
Loss Jobs subsequent to the acquisition date have resulted in no net margin as
all losses were recorded against the reserve balance. The Company utilized the
reserves for losses on uncompleted contracts only on those jobs identified as
Loss Jobs at the date of acquisition. The following is a summary of the reserves
for losses on uncompleted contracts (amounts in thousands):

<TABLE>
<CAPTION>
NETWORK TRANSPORTATION
SERVICES SERVICES TOTAL
-------- -------------- -----
<S> <C> <C> <C>
Balance, July 2, 1998 16,266 24,234 40,500
Amount utilized (8,237) (6,873) (15,110)
------------------------------------------ ------ ------ -------
Balance, October 31, 1998 8,029 17,361 25,390
Valuation adjustments (1) 2,463 (3,082) (619)
Amount utilized (4,789) (11,362) (16,151)
------------------------------------------ ------ ------ -------
Balance, October 31, 1999 $5,703 $2,917 $8,620
------------------------------------------ ------ ------ -------
</TABLE>

(1) The valuation adjustments made during the fiscal year ended October 31,
1999, were the result of final projected cost estimates on previously
identified Loss Jobs unavailable at the date of acquisition.

GENERAL AND ADMINISTRATIVE EXPENSES. For the fiscal year ended October 31, 1999
general and administrative expenses were $41.0 million compared to $19.0 million
during the fiscal year ended October 31, 1998, an increase of $22.0 million or
116 percent. This increase in general and administrative expenses is due
primarily to growth in the Company's operations through the acquisition of MFSNT
on July 2, 1998. General and administrative expenses incurred by MFSNT for the
fiscal year ended October 31, 1999, totaled approximately $14.8 million. The
remaining increase was due to i) significant professional fees associated with
pending litigation and reviews by the Securities and Exchange Commission; ii)
increases in the Company's management structure necessary to support the
Company's increased revenue in accordance with the Company's strategic
objective; and iii) costs associated with ongoing efforts to recapitalize
the Company.

Costs and expenses for fiscal 1999 included a provision of $5.0 million for
uncollectible receivables compared to a charge of approximately $.8 million for
the prior year. The increase, in part, reflects the increased scope of the
Company's operations following the acquisition of MFSNT. However, most of the
increase resulted from contract disputes and negotiated settlements that are
more fully described in Schedule II to the consolidated financial statements.

DEPRECIATION AND AMORTIZATION. For the fiscal year period ended October 31,
1999, depreciation and amortization expense totaled $11.8 million compared to
$7.6 million during the fiscal year ended October 31, 1998, an increase of $4.2
million or 55 percent. As a percentage of revenues, depreciation and
amortization decreased from 3.49 percent during fiscal year 1998 to 2.83 percent
during fiscal year 1999 due to an increase in revenues which did not require the
same percentage increase in capital assets to support the operations of the
Company.

IMPAIRMENT OF LONG-LIVED ASSETS. During the fiscal year ended October 31, 1999,
the Company closed Dial and AIS that resulted in impairment of Dial goodwill of
$1.3 million. The Company also wrote-off $1.2 million of equipment.

INCOME (LOSS) FROM OPERATIONS. For the fiscal year ended October 31, 1999, loss
from operations was $1.9 million compared to income from operations of $ 11.4
million for the fiscal year ended October 31, 1998, a decrease of $13.3 million
or 117 percent. This decrease, as discussed above, was due primarily to lower
construction and maintenance margins and increased general and administrative
expenses.

OTHER EXPENSE, NET. For the fiscal year ended October 31, 1999, other expense
totaled $16.2 million compared to $8.9 million during the fiscal year ended
October 31, 1998, an increase of $7.3 million or 82 percent. Other expense
includes the following for the fiscal years ended October 31 (amounts in
thousands):

<TABLE>
<CAPTION>
1999 1998 $Change %Change
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest expense $9,512 $5,534 $3,978 72%
Extraordinary loss 3,067 -- 3,067 --
Change in value of stock appreciation rights 1,814 -- 1,814 --
Provision for (benefit from) income taxes (138) 3,405 (3,543) (104)%
Other 1,921 (44) 1,965 447%
</TABLE>

Interest Expense - The increase of $4.0 million in interest expense is due
primarily to the $30.0 million, 11.5 percent debt associated with the
acquisition of MFSNT on July 2, 1998 and accreted interest at 15 percent on
property taxes payable assumed in the acquisition of MFSNT.

<PAGE> 32

Extraordinary Loss - During the fiscal year ended October 31, 1999, the Company
purchased all of its outstanding Senior Subordinated Notes with an outstanding
principal balance of $10.0 million resulting in an extraordinary loss from the
early extinguishment of debt of $3.1 million. The Senior Subordinated Notes were
purchased by the Company with proceeds from the non-interest bearing WorldCom
Advance.

Change in Value of Stock Appreciation Rights - The change in the value of stock
appreciation rights is a non-cash charge associated with changes in the
intrinsic value of the WorldCom SAR. The Company expects shareholder approval
for the conversion of the WorldCom SAR into options for the Company's common
stock at the Company's next shareholders' meeting. If shareholder approval is
received, the SARs will not result in cash payments by the Company. Pending
approval, the WorldCom SAR liability will be increased or decreased based upon
the difference in the market price of the Company's common stock and the strike
price of the SARs.

Provision for (Benefit from) Income Taxes - For the fiscal year ended October
31, 1999, the benefit from income taxes was $0.1 million compared to a provision
for income taxes of $3.4 million during the fiscal year ended October 31, 1998,
a decrease of $3.5 million or 103 percent which corresponds to decreases in the
Company's income before taxes.

NET INCOME (LOSS). For the fiscal year ended October 31, 1999, net loss was
$18.1 million compared to net income of $2.5 million for the fiscal year ended
October 31, 1998 a decrease of $20.6 million. Net loss applicable to common
stock was $36.8 million after $18.7 million in charges related to the Series B
Preferred Stock and Warrants (see Note 14 of Notes to Consolidated Financial
Statements).

FISCAL YEAR ENDED OCTOBER 31, 1998 COMPARED WITH FISCAL YEAR ENDED OCTOBER 31,
1997.

REVENUES. For the fiscal year ended December 31, 1998 revenues increased $131.2
million, from $86.3 million through October 31, 1997 to $217.5 million, for the
fiscal year ended October 31, 1998. This increase in revenues is due primarily
to growth in the Company's operations through the acquisition of MFSNT in the
third quarter and the acquisition of Patton and the COMSAT Contracts in the
second quarter of fiscal 1998, as well as increased demands for services in the
traffic management and telecommunications industry. For the fiscal year ended
October 31, 1998, revenues increased approximately $87.0 million, $17.6 million
and $17.4 million related to the acquisition of MFSNT, the COMSAT contracts and
Patton, respectively.

COST OF REVENUES. For the fiscal year ended October 31, 1998 and 1997, cost of
revenues as a percentage of revenues increased from 78.95 percent to 82.54
percent. The increase was due to increased costs related to the Network Services
Group resulting from tighter margins and competition in the telecommunications
industry, as well as inclement weather which restricted some work during the
winter months and extended completion dates into later periods, offset by
decreased costs as a result of COMSAT Contracts included in the Transportation
Services Group's operations.

GENERAL AND ADMINISTRATIVE EXPENSES. For the fiscal year ended October 31, 1998
general and administrative expenses were $19.0 million, an increase of $10.2
million over the same period in the prior year. This increase was due to the
overall increase in the management structure at the corporate level, as well as
the division offices, necessary to support the Company's increased revenue in
accordance with the Company's strategic objective of growth through acquisition,
and an increase in costs resulting from the acquisition of MFSNT. For the fiscal
year ended October 31, 1998, general and administrative expenses relating to the
operations of MFSNT were approximately $5.1 million.

DEPRECIATION AND AMORTIZATION. For the fiscal year period ended October 31,
1998, depreciation and amortization expense as a percentage of revenue decreased
from 5.25% to 3.49% as compared to the same period in 1997. This decrease as a
percentage of revenue, is due to the significant increase in revenues which did
not require the same percentage increase in capital assets to support the
operations of the Company.

INCOME FROM OPERATIONS. For the fiscal year ended October 31, 1998, income from
operations was $11.4 million compared to $4.8 million for the same period in the
prior year, primarily as a result of the Company's growth through acquisitions.

32
<PAGE> 33

OTHER EXPENSE, NET. Other expense net increased by $3.9 million to $4.9 million
for the fiscal year ended October 31, 1998 as compared to $1.0 million for the
comparable period in 1997. This increase is due primarily to increased interest
costs related to the acquisition of MFSNT. Other expense, net was also impacted
by non-cash charges associated with stock options granted below market prices,
and amortization of loan costs associated with the Secured Credit Facility.

Income taxes increased from $0.7 million in fiscal 1997 to $3.4 million in
fiscal 1998. This increase is due to increased income from operations, state
taxes provided in the State of Georgia, and the write-off of foreign tax
credits.

NET INCOME. For the fiscal year ended October 31, 1998, net income was $2.5
million compared to net income of $2.9 million for the comparable period in 1997
for the reasons described above. For the year ended October 31, 1998, the loss
applicable to common stock of $(5.8) million, or $(0.59) per share, is a result
of an $8.0 million charge associated with the beneficial conversion privileges
on the Series B Preferred Stock, other non-recurring adjustments associated with
the Company's obtaining financing for a portion of the purchase price of MFSNT
and preferred stock dividends. For the year ended October 31, 1997, income
applicable to common stock was $1.3 million, or $0.16 per share.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating, financing and investing activities for the fiscal
years ended October 31, 1999 and 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
1999 1998 $ Change
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities $ (8,551) $6,617 $(15,168)
Investing activities 13,531 (13,896) 27,427
Financing activities (1,956) 14,593 (16,549)
--------------------------------------------------------------------------------------------
Change in cash and cash equivalents 3,024 7,314 (4,290)
Cash and cash equivalents beginning of year 13,544 6,230 7,314
--------------------------------------------------------------------------------------------
Cash and cash equivalents end of year $16,568 $13,544 $ 3,024
--------------------------------------------------------------------------------------------
</TABLE>

The $15.2 million decrease in cash from operating activities during the fiscal
year ended October 31, 1999 compared to the fiscal year ended October 31, 1998
was primarily the result of increases in accounts receivables and accruals for
incurred job costs of approximately $10.9 million and $9.3 million,
respectively, and decreases in reserves for losses on uncompleted contracts of
$16.2 million, offset by, decreases in costs and excess of billings of $25.0
million and net losses of $18.1 million.

The $27.4 million increase in cash from investing activities during the fiscal
year ended October 31, 1999, compared to the fiscal year ended October 31, 1998,
was primarily the result of $27.0 million of net proceeds on the sale of conduit
capacity. This was offset by $7.2 million of cash placed in escrow pending
resolution of a contract dispute (see Note 8 of Notes to Consolidated Financial
Statements). The amount of cash used in investing activities during the fiscal
year ended October 31, 1998, included $8.7 million related to cash paid for
acquisitions.

The $16.5 million decrease in cash from financing activities of during the
fiscal year ended October 31, 1999, compared to the fiscal year ended October
31, 1998, was primarily the result of significant proceeds from debt and
preferred stock during fiscal year 1998 to fund the acquisition of MFSNT.

As of October 31, 1999, the Company was in default under certain provisions of
its Senior Credit Facility and had no available borrowing capacity.

33
<PAGE> 34
EFFECT ON FUTURE LIQUIDITY OF CERTAIN CONTRACTS ACQUIRED FROM MFSNT. As
reflected above and in the notes to the Company's consolidated financial
statements, the Company acquired Loss Jobs from MFSNT that are expected to use
cash from operations of approximately $8.7 million predominately over the next
fiscal year. The Company also assumed, as part of the acquisition of MFSNT,
certain obligations to perform under long-term service contracts for the
operation and maintenance of fiber networks. Performance under these agreements,
which were predominantly executed in 1996 and 1997, began during fiscal 1999.
The Company subsequently determined that the costs to perform under these
contracts are expected to be greater than amounts presently expected to be
billable to network users under firm contractual commitments. The Company has
also subsequently determined that such losses over the contract terms (up to 20
years) cannot be reasonably estimated due to potential changes in various
assumptions. However, actual losses incurred for the year ended October 31,
1999, were approximately $1.5 million. Refer to Note 22 of the accompanying
consolidated financial statements, "Unaudited Quarterly Financial Data" for an
explanation of the Company's accounting for long-term operations and
maintenance agreements. Increases in management's estimates of costs to
complete the Loss Jobs and to service the maintenance contracts, without an
offsetting increase in revenues, could have a material adverse effect on the
Company's consolidated statement of condition and liquidity.

As reflected in the Company's consolidated financial statements, the Company
acquired from MFSNT a 25 percent interest in Kanas Telcom, Inc. As of the date
of the acquisition of MFSNT, the Company anticipated a near-term sale of its
interest in Kanas. Accordingly, the estimated amount expected to be realized on
sale (approximately $12.8 million) was allocated to this investment in purchase
accounting. WorldCom was and continues to be the guarantor of the payment
obligations of Kanas under its credit agreement. The aggregate commitment at
October 31, 1999 was approximately $87.5 million. In conjunction with the
acquisition of MFSNT, the Company has agreed to indemnify WorldCom under its
guarantee. As described in Note 9 to the consolidated financial statements,
Kanas has not received final acceptance of the system and the anticipated sale
of the Company's interest in Kanas has not occurred. Consequently, the
interest in Kanas has not provided the liquidity expected at the date of
acquisition. In addition, the indemnity provided to WorldCom, if called, could
have a material adverse affect on the Company's liquidity.

GOING CONCERN. The accompanying consolidated financial statements and financial
information was prepared assuming that the Company will continue as a going
concern. The Company incurred losses from operations of $1.9 million, net losses
of $18.1 million and loss applicable to common stock of $36.8 million during the
fiscal year ended October 31, 1999. Significant payments were also made, both
during and subsequent to October 31, 1999, to redeem the Series B Preferred
Stock and to reduce obligations for loss contracts assumed in 1998 in the
acquisition of MFSNT. The Company has borrowed the maximum available under its
existing Credit Facility and is in default of the related covenants. While the
Company is current with respect to amounts due under the Credit Facility, the
lender has the right to demand payment and the Company has insufficient
liquidity to pay such amounts, if called. The Company has not yet been
successful in obtaining alternative financing and may have insufficient
liquidity to fund its continuing operations. Consequently, there is substantial
doubt about the Company's ability to continue as a going concern.

So long as the Company's Credit Facility lender does not accelerate the due date
of their loans and no events of default occur relating to the Series C Preferred
Stock which could require the Company to redeem the shares, the Company projects
that it has available cash from operations sufficient to meet the Company's
operating and capital requirements for the next twelve months.

YEAR 2000

Many computer programs and applications define the applicable year using two
digits rather than four in order to save memory and enhance the speed of
repeated data based calculations. The "Year 2000 problem" refers to the
inability of these computer programs on or after January 1, 2000 to recognize
that "00" refers to "2000" rather than "1900." The term "Year 2000-compliant"
means a computer or a computer system, which has been designed or modified to
recognize dates on or after January 1, 2000.

The Company established programs to coordinate its year 2000 ("Y2K") compliance
efforts across all business functions and geographic areas. It utilized the
following steps in executing its Y2K compliance program: 1) awareness, 2)
assessment, 3) renovation, 4) validation and testing, and 5) implementation.
During fiscal year 1999, the Company completed the awareness and assessment
steps for all areas. Able has not experienced any material Y2K problems since
the date change on January 1, 2000. However, there can be no assurance that
problems will not arise for Able, its suppliers, its customers or others with
whom Able does business later in 2000, either in connection with the leap year
or with systems that have not yet been fully tested. Able intends to continue to
monitor its compliance, as well as the compliance of others whose operations are
material to Able's business.

During fiscal year 1999, the costs related to the Company's Y2K compliance
efforts were approximately $2.0 million.

ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest rates on debt
obligations that impact the fair value of these obligations. The Company's
policy is to manage interest rates through a combination of fixed and variable
rate debt. Currently, the Company does not use derivative financial instruments
to manage its interest rate risk. The table below provides information about the
Company's risk exposure associated with changing interest rates (amounts in
thousands):

<TABLE>
<CAPTION>
Expected Maturity During the Fiscal Year Ended October 31,
---------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 Thereafter
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Variable rate debt $38,327 $32,953 $2,665 $2,609 $2,603 $5,250
Average interest rate 9.95% 11.53% 14.83% 14.96% 14.96% 14.98%
</TABLE>

The Company's most significant fixed-rate debt obligation at October 31, 1999,
was an 11.5% $30.0 million note payable to WorldCom. Subsequent to year-end,
$25.5 million of principal was converted to common stock. The fair value of the
Company's debt approximates its carrying value.

34
<PAGE> 35

At October 31, 1999, the Company is in technical default of certain provisions
of the Credit Facility as described in Note 11 in the accompanying financial
statements, "Debt". As such, the Credit Facility is immediately callable by the
holder and is therefore classified in the current portion of long-term debt.
During the default period, the Company is required to pay a default penalty of
two percent per annum on all outstanding balances.

Although the Company conducts business in foreign countries, the international
operations were not material to the Company's consolidated financial position,
results of operations or cash flows as of October 31, 1999. Additionally,
foreign currency transaction gains and losses were not material to the Company's
results of operation for the fiscal year ended October 31, 1999. Accordingly,
the Company was not subject to material foreign currency exchange rate risk from
the effects that exchange rate movements of foreign currencies would have on the
Company's future costs or on future cash flows the Company would receive from
its foreign subsidiaries. To date, the Company has not entered into any
significant foreign currency forward exchange contracts or other derivative
financial instruments to hedge the effects of adverse fluctuations in foreign
currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's consolidated financial statements and related notes and reports of
independent public accountants are included herein under Item 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Arthur Andersen LLP has served as the Company's auditors to audit the
Consolidated Financial Statements of the Company and its subsidiaries since its
engagement by the Company on October 12, 1998. Ernst & Young LLP, the Company's
previous auditors, resigned as the Company's auditors effective September 7,
1998. The reports of Ernst & Young LLP on the Company's financial statements for
fiscal years ended October 31, 1997 and 1996 did not contain an adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. In connection with the audits of the
Company's financial statements for each of the two years ended October 31, 1997
and 1996, and in the subsequent interim periods, there were no disagreements
with Ernst & Young LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope and procedures which, if not
resolved to the satisfaction of Ernst & Young LLP, would have caused Ernst &
Young to make reference to the matter in their reports.

Ernst & Young informed the Company of the existence of the following reportable
events, as defined in Item 304(a)(l)(v) of Regulation S-K of the Securities Act
of 1933, as amended:

In their Report to the Audit Committee for the year ended October 31,
1997, Ernst & Young LLP advised the Company as to the existence of
reportable conditions in the Company's system of internal controls.
These reportable conditions related to: (i) the lack of segregation of
duties over the cash disbursement function, (ii) the failure to provide
adequate documentation to support the business purpose of certain
significant transactions with related parties, and (iii) the lack of
monitoring controls over operations of its foreign subsidiaries.

During the fiscal years ended October 31, 1998 and 1997 and during the
subsequent interim period prior to engaging Arthur Andersen LLP, neither the
Company nor anyone on the Company's behalf consulted with Arthur Andersen LLP
regarding either the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements. Previously, Arthur
Andersen LLP was the independent auditor for MFS Network Technologies, Inc. and
Patton Management Corporation, both of which were acquired by the Company during
fiscal year 1998.

Information regarding the resignation of the Company's previous principal
accountant, Ernst & Young LLP and the engagement of Arthur Andersen LLP was
reported by the Company on Form 8-Ks filed September 14, 1998 and October 16,
1998, respectively.

35
<PAGE> 36

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of Able Telcom Holding Corp. as of February 10, 2000:

<TABLE>
<CAPTION>
Name Age Position (4)
--------------------------------------------------------------------------------
<S> <C> <C>
Billy V. Ray Jr. (2)(3) 42 President, Chief Executive Officer and
Acting Chief Financial Officer and a
Director

Frazier L. Gaines 60 Former Chief Executive Officer, President
- Able Telcom International

James E. Brands 62 Senior Executive Vice President

Michael Arp 52 Financial Vice President

Edward Z. Pollock 60 General Counsel

Michael A. Summers 34 Chief Accounting Officer

Stacy Jenkins 42 President - Adesta Communications

G. Vance Cartee 56 President - Adesta Transportation

J. Barry Hall 50 President - Construction Group

Richard A. Boyle 44 President - Patton Management Group

C. Frank Swartz (1)(2)(3) 61 Chairman of the Board of Directors

Alec McLarty (1)(2)(3) 49 Director

Gerald Pye 55 Director
</TABLE>

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

(1) Member of the Audit Committee. Mr. C. Frank Swartz is the
Chairman of the Audit Committee.
(2) Member of the Compensation Committee. Mr. C. Frank Swartz is
the Chairman of the Compensation Committee.
(3) Member of the Nominating Committee.
(4) During the first two weeks of February 2000, the Company
filled the positions of Chief Financial Officer and Chief
Operating Officer. The required information regarding these
Executive Officers will be contained in the Form 10-Q to be
filed for the first quarter of the current fiscal year.

Directors are elected at the annual meeting of Able's shareholders and hold
office following election or until their successors are elected and qualified
the Directors may fill vacancies in the period between shareholder meetings. The
chief executive officer is elected by and serves at the discretion of the
Company's Board of Directors. All other executive officers are appointed by the
Chief Executive Officer.

During the fiscal year ended October 31, 1999, the Company's Chief Financial
Officer and its Chief Operating Officer resigned. Refer to footnote (4) above.

BILLY V. RAY, JR. has been the Company's President, Chief Executive Officer and
acting Chief Financial Officer since November 30, 1998 and has served as a
Director since December 1, 1998. From October 1, 1998 to November 30, 1998, Mr.
Ray was the Company's Executive Vice President of Mergers and Acquisitions and
Treasurer. From May 1998 to October 1998 and from January 1997 to June 1997, Mr.
Ray served as a consultant to the Company. Mr. Ray served as the Chief Financial
Officer of the Company from June 1997 to April 1998. From December 1995 to
January 1997 and from April 1997 to July 1997, Mr. Ray was the President of
Ten-Ray Utility Construction, Inc., a utility construction company. During a
part of that period, he also served as a consultant to Alcatel, a maker of
intelligent highway systems. From September 1994 to November 1995, Mr. Ray was
the Controller of Tri-Duct, a utility construction company, and served as a
consultant Tri-Duct from November 1995 to March 1996. From March

36
<PAGE> 37

1994 to September 1994, Mr. Ray was the staff manager at Mastec, Inc. a utility
construction company and he was assistant to the president at Burnup & Sims, a
utility construction company, from January 1993 to March 1994.

FRAZIER L. GAINES was a Director of the Company from August 1992 until March 19,
1999 and has served as President of Able Telcom International, Inc., a wholly
owned subsidiary of the Company, since June 1994. Mr. Gaines served as Interim
President and Chief Executive Officer of the Company from March 1998 to November
1998. From 1992 to 1994, Mr. Gaines was Chief Operating Officer of the Company.
From 1987 to 1992, Mr. Gaines was Vice President of Judycom, Inc. and Judycom
Construction Corporation, both of which were located in Lexington, Kentucky, and
engaged in fiber optic installation.

JAMES E. BRANDS has served as the Company's Senior Executive Vice President
since March 1999. From November 1997 to March 1999, Mr. Brands was the CFO of
Wilson Pest Control, Inc., a pest control services company. From July 1997 to
November 1997, Mr. Brands served as the Executive Vice President and a Director
of KBAS, Inc., an employee leasing company and from February 1997 to July 1997,
he was the CFO of Arrow Exterminators, which provides pest control services.
From January 1993 to March 1995, Mr. Brands served as Chairman, CEO and a
Director of Marquest Medical Products, Inc. (NASDAQ: MMPI), which manufactures
disposable products for respiratory, pulmonary and related medical segments and
also served as Vice Chairman, CFO and a director of Scherer Healthcare, Inc.
(Nasdaq: SCHR), which was involved in disposable medical products,
pharmaceutical development and medical waste management. From January 1985 to
February 1995, Mr. Brands was the Executive Vice President and a director of RPS
Investments, Inc., a private investment company involved in real estate,
manufacturing and services companies. Since 1981, Mr. Brands has been the owner
of Brands & Co., which provides financial and business consulting services.

MICHAEL ARP became the Company's Financial Vice President in January 1999. From
February 1997 through December 1998, Mr. Arp was the group controller of Georgia
Electric Company, Transportation Safety Contractors, Inc. and Transportation
Safety Contractors of Virginia, Inc. (collectively the "Traffic Management
Group"). From January 1994 to February 1997, Mr. Arp was President of American
Turf Manufacturing.

EDWARD Z. POLLOCK has been the Company's General Counsel since November 1998.
From 1963 to 1998, Mr. Pollock was a sole practitioner at the law firm of Edward
Z. Pollock.

MICHAEL A. SUMMERS has been the Company's Chief Accounting Officer since June
1999. From July 1996 to June 1999, Mr. Summers was a Senior Audit Manager with
Arthur Andersen LLP. From May 1995 to July 1996, Mr. Summers served as Financial
Reporting Manager for CalEnergy Company, Inc., a publicly traded independent
producer of power. From May 1994 to May 1995, Mr. Summers was the Chief
Accounting Officer for Mid-America Realty Investments, Inc., a publicly-traded
real estate investment trust which owned and managed income-producing commercial
real estate, primarily enclosed mall and neighborhood shopping centers. Mr.
Summers is a Certified Public Accountant and currently serves as a director
and/or a committee member for a variety of not-for-profit organizations.

STACY JENKINS was named President of Adesta Communications in July 1998. From
1990 to July 1998, Mr. Jenkins served as the Senior Vice President, Operations
Vice President, Engineering and Estimating; and as Project Manager for the
nationally recognized Iowa Communications Network. During this time, he directed
operations for more than 40 projects, with a combined value in excess of $300
million, in the United States and abroad.

G. VANCE CARTEE has been the President of Adesta Transportation since January
1999. From June 1998 to December 1998, Mr. Cartee served as a telecommunications
consultant, including performing consulting services for the Company. From
January 1996 to June 1998, Mr. Cartee was a business unit director for
Loral/Lockheed Martin Corp. From March 1993 to January 1996, Mr. Cartee was Vice
President and General Manager of Alcatel Contracting, N.A.

J. BARRY HALL has been the President of the Traffic Management Group since
October 1996, and now serves as President of the Construction Group. From 1990
to October 1996, Mr. Hall was Vice President of Georgia Electric Company.

37
<PAGE> 38

RICHARD A. BOYLE has been the President of Patton Management Corp., a subsidiary
of the Company since March 1996. From May 1991 to March 1996, Mr. Boyle was Vice
President and General Manager of Wright & Lopez, Inc., a telecommunications
contractor. From January 1990 to May 1991, Mr. Boyle was Vice President and
General Manager of Pressure Concrete Construction Company, a division of South
Eastern Public Services Co.

C. FRANK SWARTZ has served as a Director of the Company since August 1998 and as
Chairman of the Board since November 30, 1998. Mr. Swartz has been retired since
November 1994. For the five (5) years prior to November 1994, Mr. Swartz was
employed by GTE as the Director of Internal Support, based in Caracas,
Venezuela.

ALEC MCLARTY is the founder of Clarion Resources Communications Corporation
("Clarion") and has served as the Chairman and Chief Executive Officer of
Clarion since January 1996. Clarion is a multi-faceted company in the domestic
and international telecommunications industry providing services ranging from
research and development to international long distance services. In 1987, Mr.
McLarty founded Resurgens West, a telecommunications company and served as its
President until January 1996.

DR. GERALD PYE has served as a Director of the Company since January 1999. Mr.
Pye is a partner with Interfiducia, AG, a European investment firm.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) ("Section 16") of the Securities Exchange Act of 1934, as amended,
requires the Company's Executive Officers, Directors and 10% Shareholders to
file reports regarding initial ownership and changes in ownership with the SEC
and the Nasdaq Stock Market, Inc. Executive Officers, Directors and 10%
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16 forms they file. The Company's information regarding
compliance with Section 16 is based solely on a review of the copies of such
reports furnished to the Company by the Company's Executive Officers, Directors
and 10% Shareholders. These forms include (i) Form 3, which is the Initial
Statement of Beneficial Ownership of Securities, (ii) Form 4, which is a
Statement of Changes in Beneficial Ownership, and (iii) Form 5, which is an
Annual Statement of Changes in Beneficial Ownership (all of which were
inadvertently filed late for each Section 16 individual required to file such
Form 5). Form 5 filed in January 2000 for all Section 16 individuals include
stock options issued outside the plan and as such are subject to shareholder
approval.

It is the intention of the Company's General Counsel to oversee the timely
filing of the Section 16 forms.

38
<PAGE> 39

All other Section 16 forms appear to have been filed in a timely manner other
than as to the following individuals who were delinquent in filing certain forms
or failed to file certain forms during the fiscal year ended October 31, 1999.

<TABLE>
<CAPTION>
Name Of Individual Position Late Filing
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Billy V. Ray, Jr. President, Chief Executive Officer, Form 5 for fiscal year 1999 filed
Acting Chief Financial Officer and January 21, 2000.
Director

Frazier L. Gaines Former Chief Executive Officer, Form 5 for fiscal year 1999 filed
President - Able Telcom International January 21, 2000.

James E. Brands Senior Executive Vice President Form 5 for fiscal year 1999 filed
January 21, 2000.

Michael Arp Financial Vice President Form 5 for fiscal year 1999 filed
January 21, 2000.

Edward Z. Pollock General Counsel Form 5 for fiscal year 1999 filed
January 21, 2000.

Michael A. Summers Chief Accounting Officer Form 5 for fiscal year 1999 filed
January 21, 2000.

Stacy Jenkins President - Adesta Communications Form 5 for fiscal year 1999 filed
January 21, 2000.

G. Vance Cartee President - Adesta Transportation Form 5 for fiscal year 1999 filed
January 21, 2000.

Richard A. Boyle President - Patton Management Form 5 for fiscal year 1999 filed
January 21, 2000.

C. Frank Swartz Chairman of the Board of Directors Form 5 for fiscal year 1999 filed
January 21, 2000.

Alec McLarty Director Form 4 for the month of May was
filed on Form 5 for fiscal year 1999.
Form 5 for fiscal year 1999 filed
January 27, 2000.

Gerald Pye Director Form 5 for fiscal year 1999 has not
yet been filed.

Jonathan A. Bratt (1) Former Director Form 5 for fiscal year 1999 filed
January 24, 2000.

Thomas M. Davidson (2) Former Director Form 5 for fiscal year 1999 filed
January 24, 2000.
</TABLE>

--------------------------------------------
(1) Mr. Bratt resigned from the Company's Board of Directors in February
2000.
(2) Mr. Davidson resigned from the Company's Board of Directors in January
2000.

<PAGE> 40

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth certain summary information for the years
indicated concerning the compensation awarded to, earned by, or paid to (i)
those persons serving as the Chief Executive Officer during the 1999 fiscal
year, (ii) the other four most highly compensated Executive Officers of the
Company who were serving as such at October 31, 1999, and (iii) up to two
additional individuals who had served as an Executive Officer of the Company
during the 1999 fiscal year but who were not Executive Officers at October 31,
1999, except that persons referred to in clauses (ii) and (iii) above generally
are not included in the table if they received total annual salary and bonus of
$100,000 or less for the 1999 fiscal year end. The persons named in this table
shall be collectively referred to as the "Named Executive Officers."

Long Term
Compensation
Annual Compensation Awards
----------------------------------- ------------
Other Securities
Annual Underlying All other
Name and Compen- Options(6)/ Compen-
Principal Position Year Salary($) Bonus($) sation ($) SARs (#) sation ($)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Billy V. Ray, Jr.(1) 1999 203,792 200,000 24,000
Chief Executive Officer and 1998 48,462 40,000 35,000 110,818
President, Acting Chief Financial 1997 34,615 56,961
Officer and Director

Frazier L. Gaines(2) 1999 201,138 2,500
Former Chief Executive Officer, 1998 153,986 210,000 4,609
President - Able Telcom International 1997 110,000 5,000 1,024,375

Michael Arp (3) 1999 149,565 30,000 24,000 28,500
Financial Vice President

Stacy Jenkins (4) 1999 207,304 55,000 4,000
President of Adesta Communications

J. Barry Hall (5) 1999 240,000 150,000
President - Construction Group 1998 209,173 75,000 27,500 33,906
1997 161,538

Richard Boyle (7) 1999 159,000 70,000 19,200 65,000 --
President - Patton Management
</TABLE>

(1) Mr. Ray has served as President and Chief Executive Officer of
the Company since December 1, 1998. Prior to that date he had
served the Company as its Chief Financial Officer and as Vice
President. For 1999, other compensation includes auto
allowance of $6,000 and housing allowance of $18,000. In 1998,
other compensation included consulting fees in the amount of
$92,099, an automobile allowance of $5,400, a housing
allowance of $12,600 and health insurance premiums paid on Mr.
Ray's behalf of $719. In 1997, other annual compensation
includes compensation for consulting services rendered prior
to Mr. Ray's appointment in June 1997, as the Company's Chief
Financial Officer, and a travel and housing allowance. Subject
to shareholder approval, the Board of Directors has approved a
grant of 50,000 shares of common stock to the Company's Chief
Executive Officer ("CEO") at no cost to him. The Board has
also approved the payment by the Company of taxes that will be
payable by the CEO with respect to the grant. When and if
shareholder approval is received, the Company will recognize
compensation expense, the amount of which may be significant,
for the fair market value of the shares on the date of
shareholder approval and cash paid to tax protect the CEO.

(2) Mr. Gaines served as the President and Chief Executive Officer
of the Company from March 1998 through November 30, 1998.
Prior thereto, Mr. Gaines was President of Able Telcom
International, Inc. (a position which he continues to hold).
For 1999, other compensation includes an auto allowance of
$2500. For 1998, other compensation includes an automobile
allowance of $4,500 and health insurance premiums paid by the
Company on Mr. Gaines behalf in the amount of $109. For 1997,
other compensation consists of an automobile allowance, a
housing allowance and an amount of $991,375, which represents
the difference between the price paid by Mr. Gaines upon the
exercise of certain stock options and the fair market value of
the underlying Common Stock on the date of exercise.

40
<PAGE> 41

(3) Mr. Arp joined the Company in January 1999. In 1999, Mr. Arp's
other compensation included a $1,500 monthly housing allowance
and a $5,000 auto allowance.

(4) Mr. Jenkins other compensation includes $4,000 for automobile
allowance.

(5) In 1998, other compensation includes a housing allowance of
$24,000, an automobile allowance of $7,800 and contributions
to the Company's 401K plan.

(6) Includes options that have not yet been approved by
shareholders.

(7) Mr. Boyle's other compensation includes a housing allowance
of $14,400 plus an automobile allowance of $4,800.

DIRECTOR COMPENSATION

Directors who are not employees of the Company or who do not own 5% or more of
any class of the Company's Common Stock (Non-Affiliate Directors) are paid
$12,000 annually plus $750 for each committee meeting attended and are
reimbursed for expenses associated with Board responsibilities. In addition,
pursuant to the Company's 1995 Stock Option Plan, as amended, Non-Affiliate
Directors receive one-time automatic grants of options to purchase 5,000 shares
of Common Stock having an exercise price equal to the fair market value at the
date of grant. In April 1999, the Company granted an option to purchase 10,000
shares of the Company's common stock to all Non-Affiliate Directors. Directors
who are also employed by the Company receive no additional fees or remuneration
for acting in their capacities as Directors of the Company.

THE ABLE TELCOM HOLDING CORP. 1995 STOCK OPTION PLAN, AS AMENDED

The Company adopted the 1995 Stock Option Plan (the "Plan") pursuant to which
550,000 shares of Common Stock were originally authorized for issuance. In April
1998, the shareholders of the Company approved the amendment of the Plan to
increase the number of shares outstanding under the Plan to 1,300,000. The
Company intends to amend its registration statement on Form S-8 to register the
additional 750,000 shares of Common Stock reserved for issuance under the Plan.

The Company may grant stock options (both Non-qualified Stock Options and
Incentive Stock Options, as defined in the Plan) and restricted stock under the
Plan to Non-Affiliate Directors (as defined in the Plan), key employees,
advisors and consultants (the "Participants"). The Plan also provides for the
automatic grant to Non-Affiliate Directors, at such time as an individual
becomes a Non-Affiliate Director of the Company, of Non-qualified Stock Options
to purchase 5,000 shares of Common Stock at an exercise price per share equal to
100% of the fair market value of the shares on the date of grant.

With respect to the grant of awards under the Plan to persons other than
Non-Affiliate Directors, the Board of Directors, or a committee appointed by the
Board of Directors (in either case, the "Plan Administrators"), will determine
persons to be granted stock options and restricted stock, the amount of stock to
be optioned or granted to each such person, and the terms and conditions of any
stock options and restricted stock. Both Incentive Stock Options and
Non-qualified Stock Options may be granted under the Plan. An Incentive Option
is intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Any
Incentive Stock Option granted under the Plan will have an exercise price of not
less than 100% of the fair market value of the shares on the date on which such
option is granted. With respect to an Incentive Stock Option granted to a
Participant who owns more than 10% of the total combined voting stock of the
Company or any parent or subsidiary of the Company, the exercise price for such
option must be at least 110% of the fair market value of the shares subject to
the option on the date the option is granted. A Non-qualified Stock Option
granted under the Plan (i.e., an option to purchase the Common Stock that does
not meet the Code's requirements for Incentive Options) shall be as determined
by the Plan Administrators.

Subject to the terms of the Plan, the Plan Administrators may award shares of
restricted stock to the Participants. Generally, a restricted stock award will
not require the payment of any option price by the Participant but will call for
the transfer of shares to the Participant subject to forfeiture, without payment
of any consideration by the Company, if the Participant's employment terminates
during a "restricted" period (which must be at least six months) specified in
the award of the restricted stock.

41
<PAGE> 42

STOCK OPTIONS ISSUED OUTSIDE THE PLAN DURING FISCAL YEARS 1998 AND 1999

During the fiscal year ended October 31, 1998, the Company issued options to
purchase an aggregate of 892,000 shares of Common Stock to employees, Officers
and Directors of the Company and its subsidiaries at exercise prices ranging
from $6.20 to $14.00 per share. On December 31, 1998, all of these options were
rescinded. Immediately thereafter, the same number of options were issued on
December 31, 1998 at an exercise price of $5.75, which was the average of the
ten-day closing market price for the Company's Common Stock for the period from
December 16-December 30, 1998. The expiration for the exercise period for these
options range from December 31, 2000 to April 24, 2005. Of the 892,000 options
granted in the fiscal year ended October 31, 1998, all were immediately vested
as of December 31, 1998. During fiscal year 1999 the Company issued options to
purchase an aggregate of approximately 1.8 million shares of common stock to
employees, consultants and certain individuals who will be participating in an
advisory capacity. The expiration and vesting schedules vary from immediate to
June 30, 2004. No options were issued at less than market value. ALL OPTIONS
ISSUED OUTSIDE THE PLAN ARE SUBJECT TO SHAREHOLDER APPROVAL.

OPTION GRANTS DURING THE FISCAL YEAR ENDED OCTOBER 31, 1999

During the fiscal year ended October 31, 1999, the following options were
granted to the following Named Executive Officers, as well as certain other
executive officers:

Potential Realizable
Value at
% of Total Assumed Annual Rates
Options of Stock Price
Number of Granted to Market Appreciation
Shares (3) Employees Exercise price on for Option Term(2)
Underlying in Fiscal or Date of Expiration --------------------
Name Options(#) Year ($/Sh)(1) Base Price Grant Date 5% ($) 10% ($)
------------------- ---------- -------------- ---------- -------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Billy V. Ray, Jr. 50,000 .19 6.375 6.375 05/07/03 69,000 138,000
10,000 .004 5.75 5.75 12/31/00 5,750 11,500
100,000 .038 5.75 5.75 12/31/01 57,500 115,000

Frazier Gaines -- -- -- -- -- -- --

Michael Arp 40,000 .15 5.75 5.75 12/31/00 34,500 69,000
25,000 .09 6.375 6.375 05/07/03 23,905 47,813

Edward Z. Pollock 40,000 .15 5.75 5.75 12/31/00 34,500 69,000
25,000 .09 6.375 6.375 05/07/03 23,905 47,813

Stacy Jenkins 100,000 .038 5.75 5.75 12/31/00 57,500 111,500
25,000 .09 6.375 6.375 05/07/03 23,905 47,813

J. Barry Hall -- -- -- -- -- -- --

James E. Brands 100,000 .038 6.375 6.375 04/30/02 95,620 191,250

G. Vance Cartee 40,000 .15 5.75 5.75 12/31/01 34,500 69,000
25,000 .09 6.375 6.375 05/07/03 23,905 47,813
35,000 .10 9.94 9.94 07/26/02 52,185 104,370

Michael Summers 40,000 .15 7.625 7.625 06/01/03 47,750 91,500

Richard Boyle 65,000 .24 6.375 6.375 05/07/01 62,156 124,313
</TABLE>

(1) On December 31, 1998, in an effort to clear up a large number
of ambiguities in the minutes of Board of Director meetings
and in order to maintain compliance with various debtor
documents as well as to keep the Company in substantial
compliance with certain rules of the Securities and Exchange
Commission and Nasdaq the Board of Directors rescinded all of
the above options grants and reissued new options in the
amounts set

42
<PAGE> 43

forth above at the then fair market value, as defined in the
Plan, per share on December 31, 1998, which was $5.75.

(2) The potential realizable values are based upon assumed 5
percent and 10 percent annualized stock price growth rates and
are not intended to forecast future price appreciation of the
Company's Common Stock. Actual gains, if any, on stock option
exercises will depend on the amount, if any, by which the fair
market value exceeds the option exercise price on the date the
option is exercised. There is no assurance that the amounts
reflected in this table will be achieved.

(3) All of the options granted to officers, directors and
consultants during the past fiscal year are subject to
shareholder approval. The Proxy Statement for the next meeting
of Company shareholders will contain a proposal regarding all
said options.

OPTION EXERCISES AND PERIOD-END VALUES

The following table provides information on options exercised in the fiscal year
ended October 31, 1999 by the persons named in the "Summary Compensation Table"
above, the number of unexercised options each of them held at October 31, 1999
and the value of the unexercised "in-the-money" options each of them held as of
that date.

Number of Securities Value of Unexercised
Underlying In-the-Money Options
Shares Options/at FY End(#)(1) at FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable(2)
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Billy V. Ray -- -- 127,000/33,000 378,080/80,520

Frazier Gaines -- -- 80,000/80,000 244,800/244,800

Michael Arp -- -- 18,000/16,500 50,100/40,260

Stacy Jenkins -- -- 100,000/100,000 306,000/306,000

J. Barry Hall -- -- -- --

Rick Boyle -- -- 65,000/65,000 158,125/158,125

</TABLE>

(1) On December 31, 1998, in an effort to clear up a large number
of ambiguities in the minutes of Board of Director meetings
and in order to maintain compliance with various debtor
documents as well as to keep the Company in substantial
compliance with certain rules of the Securities and Exchange
Commission and Nasdaq, the Board of Directors rescinded all of
the above options grants and reissued new options in the
amounts set forth above at the then fair market value, as
defined in the Plan, per share on December 31, 1998, which was
$5.75.

(2) For those options, which were "In-the-Money" at October 31,
1999, the valuation is based on the closing price of the
common stock of Able Telcom Holding Corp. of $ 8.81.

EMPLOYMENT AND CONSULTING AGREEMENTS

BILLY V. RAY, JR., President, Chief Executive Officer and Acting Chief Financial
Officer and Director, is party to an employment agreement, dated December 1,
1998 with the Company (the "Ray Employment Agreement"). The Ray Employment
Agreement terminates on November 30, 2000, and provides that Mr. Ray is to be
paid a salary of $180,000 per year, plus a housing allowance of $1,500 per month
and an automobile allowance of $500 per month, as well as health insurance and
other benefits. The Ray Employment Agreement may be extended for an additional
two-year period. The Ray Employment Agreement also contains a covenant by Mr.
Ray not to compete with the Company for a period of three years following
termination of his employment. The Ray Employment Agreement also provides that
if Mr. Ray's employment is terminated with cause, Mr. Ray will be entitled to 90
days prior notice. However, should Mr. Ray's employment be terminated without
cause, Mr. Ray will be paid out the

<PAGE> 44

remainder of his contract, or for 90 days, whichever is greater. In addition,
the Ray Employment Agreement provides for the grant of 100,000 options to
purchase 100,000 shares of Common Stock, as approved by the Company's Board of
Directors, which vested immediately. On December 31, 1998, the Company's Board
of Directors rescinded the above grant of options and issued new options to
purchase 100,000 shares through December 31, 2001 at an exercise price of $5.75
per share. Effective May 7, 1999, Mr. Ray's base salary increased to $240,000
per year, and he was granted options to purchase 50,000 shares of Common Stock
at $6.375 per share, one-third of which vested as of May 7, 1999, one-third vest
on May 7, 2000 and one-third vest on May 7, 2001. The exercise period for the
options granted on May 7, 1999 to Mr. Ray commences as of the date of vesting
and continues through the earlier of (i) September 19, 2005 or (ii) two years
from the date Mr. Ray no longer is an employee and/or serves as a Director of
the Company. In December 1999, Mr. Ray was granted an additional salary increase
to $350,000.

FRAZIER L. GAINES, President of Able Telcom International, Inc., is party to an
employment agreement, dated November 12, 1998 with the Company (the "Gaines
Employment Agreement"). The Gaines Employment Agreement terminates on November
11, 2001, may be extended for one additional year, allows for a consulting
agreement to be signed at the end of the initial three year term, and provides
that Mr. Gaines is to be paid a salary of $200,000 per year, plus health and
life insurance and a monthly automobile allowance of $500. The Gaines Employment
Agreement also provides that the Company will pay all health and life insurance
benefits plus $60,000 per year for the number of years equal to Mr. Gaines'
years of service and will be payable beginning at Mr. Gaines' termination date.
The Gaines Employment Agreement also contains a covenant by Mr. Gaines not to
compete with the Company for a period of three years following termination of
his employment. The Gaines Employment Agreement also provides that if Mr.
Gaines' employment is terminated with cause Mr. Gaines will be entitled to 30
days prior notice. However, should Mr. Gaines' employment be terminated without
cause, Mr. Gaines will be paid one-year's severance plus regular Company health
and insurance benefits. $100,000 of this amount would be payable immediately
upon termination with the remainder of the $100,000 payable within 45 days from
termination. In addition, the Gaines Employment Agreement provides for the grant
of options to purchase 100,000 shares of Common Stock, subject to approval by
the Company's Board of Directors, which vest over a three year period, or
immediately upon either a change in control or ownership of the Company. To
date, these options have not been approved by the Company's Board of Directors.

JAMES E. BRANDS, Senior Executive Vice President, is party to a consulting and
employment agreement, dated March 15, 1999 with the Company (the "Brands
Employment Agreement"). The Brands Employment Agreement terminates on April 5,
2001, which may be extended for an additional one-year period. The Brands
Employment Agreement provides that Mr. Brands was paid (i) a consulting fee of
$20,000 for the period commencing March 15, 1999 and ending May 15, 1999, and
(ii) a salary of (A) $5,750 for the period between April 2, 1999 to April 30,
1999, (B) $2,500 for the period between May 1, 1999 to May 31, 1999 and (C)
$12,500 per month from June 1, 1999 through May 31, 2000; provided that if
another executive or management employee other than a CEO is hired during the
initial term of the Brands Employment Agreement at a rate of more than $12,500
per month, Mr. Brands' monthly rate shall immediately become the same as such
employee. Mr. Brands is also entitled to an automobile allowance of $500 per
month or at the Company's option, the Company may provide Mr. Brands with a late
model Lincoln Town Car and reimbursement of its operating costs, a housing
allowance of $1,500 per month effective August 1, 1999 (and during April 2, 1999
to July 31, 1999, Mr. Brands will be reimbursed for actual expenses incurred),
plus health and life insurance benefits. However, no housing allowance was paid
to Mr. Brands. In addition, the Brands Employment Agreement provides for the
grant of options to purchase 100,000 shares of Common Stock at $6.375 per share,
of which 75,000 vested as of April 5, 1999 and 25,000 will vest on June 21, 2000
(which options are subject to divestiture if Mr. Brands is not a Company
employee on April 5, 2000). In the event of a change of control or ownership of
the Company, the options will vest immediately. The exercise period terminates
two years from each vesting date. Mr. Brands was granted a salary increase to
$175,000 as of January 1, 2000.

MICHAEL ARP, Financial Vice President, is party to an employment agreement,
dated January 1, 1999 with the Company (the "Arp Employment Agreement"). The Arp
Employment Agreement terminates on December 31, 2000, and provides that Mr. Arp
is to be paid a salary of $12,500 per month, an automobile allowance of $500 per
month, and a housing allowance of $1,000 per month, plus health and life
insurance benefits. The Arp Employment Agreement also provides that if Mr. Arp's
employment is terminated with cause that Mr. Arp will be entitled to 90 days
prior notice. However, should Mr. Arp's employment be terminated without cause,
Mr. Arp will be paid out the

44
<PAGE> 45

remainder of the term of the Arp Employment Agreement. In addition, the Arp
Employment Agreement provides for the grant of options to purchase 40,000 shares
of Common Stock, as approved by the Company's Board of Directors, of which
20,000 vested as of January 1, 1999, 10,000 vest as of December 31, 1999 and
10,000 vest as of December 31, 2000, or immediately upon either a change in
control or ownership of the Company. These options terminate on December 31,
2001. Effective May 7, 1999, Mr. Arp was granted options to purchase 25,000
shares of Common Stock at $6.375 per share, one-third of which vested as of May
7, 1999, one-third vest on May 7, 2000 and one-third vest on May 7, 2001. The
exercise period for the options granted on May 7, 1999 to Mr. Arp commences as
of the date of vesting and continues through the earlier of (i) September 19,
2005 or (ii) two years from the date Mr. Arp is no longer an employee of the
Company. Mr. Arp was granted a salary increase to $175,000 on January 1, 2000.

EDWARD POLLOCK, General Counsel, is party to an employment agreement, dated
January 1, 1999 with the Company (the "Pollock Employment Agreement"). The
Pollock Employment Agreement terminates on December 31, 2000 and provides that
Mr. Pollock is to be paid an initial salary of $10,000 per month for the period
from January 1, 1999 to June 30, 1999, increased to $11,000 per month for the
period from July 1, 1999 to December 31, 1999, increased to $12,000 monthly for
the period from January 1, 2000 to June 30, 2000, and increased to $12,500
monthly for the period from July 1, 2000 to December 31, 2000. In addition, the
Pollock Employment Agreement provides an automobile allowance of $300 per month,
plus health insurance and other benefits. The Pollock Employment Agreement may
be extended for an additional two-year period. The Pollock Employment Agreement
also contains a covenant by Mr. Pollock not to compete with the Company for a
period of three years following termination of his employment. The Pollock
Employment Agreement also provides that if Mr. Pollock's employment is
terminated with cause, Mr. Pollock will be entitled to 90 days prior notice.
However, should Mr. Pollock's employment be terminated without cause, Mr.
Pollock will be paid out the remainder of his contract. In addition, the Pollock
Employment Agreement provides for the grant of options to purchase 40,000 shares
of Common Stock, as approved by the Company's Board of Directors, which vest
over a three year period (20,000 options vested on January 1, 1999, 10,000
options will vest on January 1, 2000 and 10,000 options will vest on January 2,
2001), unless there is a change in control or ownership of the Company.
Effective May 7, 1999, Mr. Pollock's salary increased to $150,000 per year and
he was granted options to purchase 25,000 shares at $6.375 per share, one-third
of which vested as of May 7, 1999, one-third vest on May 7, 2000 and one-third
vest on May 7, 2001. The exercise period for the options granted on May 7, 1999
to Mr. Pollock commences as of the date of vesting and continues through the
earlier of (i) September 19, 2005 or (ii) two years from the date Mr. Pollock no
longer is an employee of the Company.

MICHAEL A. SUMMERS, Chief Accounting Officer, is party to an employment
agreement, dated May 31, 1999 with the Company (the "Summers Employment
Agreement"). The Summers Employment Agreement terminates on May 31, 2001, and
provides that Mr. Summers is to be paid a salary of $130,000 per year, plus
health insurance and other benefits. The Summers Employment Agreement also
contains a covenant by Mr. Summers that upon termination of his employment, he
will not interfere with or disrupt any of the Company's business relationships
nor will Mr. Summers solicit any employees for a period of two years following
termination. The Summers Employment Agreement also provides that if Mr. Summers'
employment is terminated with cause that Mr. Summers will be entitled to 90 days
prior notice. However, should Mr. Summers' employment be terminated without
cause, Mr. Summers will be paid out the remainder of his annual contract salary,
or for 180 days, whichever is greater. In addition, the Summers Employment
Agreement provides for the grant of options to purchase 40,000 shares of Common
Stock, as approved by the Company's Board of Directors, of which 15,000 options
vested on June 1, 1999, 15,000 options will vest on June 1, 2000 and the
remaining 10,000 options will vest on June 1, 2001; provided that upon a change
in control or ownership of the Company, the options will all vest immediately.
The exercise price of Mr. Summers' options is $7.625 per share. Mr. Summers was
granted a salary increase to $150,000 on January 1, 2000.

STACY JENKINS, President of Adesta Communications, is party to an employment
agreement, dated July 16, 1998 with the Company (the "Jenkins Employment
Agreement"). The Jenkins Employment Agreement terminates on July 15, 2001, and
provides that Mr. Jenkins is to be paid a salary of $200,000 per year, an
automobile allowance of $500 per month, plus health insurance and other
benefits. The Jenkins Employment Agreement also contains a covenant by Mr.
Jenkins not to compete with the Company for a period of two years following
termination of his employment. The Jenkins Employment Agreement also provides
that if Mr. Jenkins' employment is terminated with cause that Mr. Jenkins will
be entitled to 30 days prior notice. However, should Mr. Jenkins' employment be
terminated without cause, Mr. Jenkins will be paid out the remainder of his
annual salary contract rate, or for 90

45
<PAGE> 46

days, whichever is greater. In addition, the Jenkins Employment Agreement
provides for the grant of options to purchase 100,000 shares of Common Stock, as
approved by the Company's Board of Directors, which vest after one year of
employment, or immediately upon either a change in control or ownership of the
Company or if Mr. Jenkins is terminated without cause. On December 31, 1998, the
Company's Board of Directors rescinded the above grant of options and issued new
options to purchase 100,000 shares at $5.75 per share through December 31, 2000
or 90 days after termination of employment, whichever is earlier. Effective May
7, 1999, Mr. Jenkins' base salary increased to $216,000 per year and he was
granted options to purchase 25,000 shares of Common Stock at $6.375 per share,
one-third of which vested as of May 7, 1999, one-third vest on May 7, 2000 and
one-third vest on May 7, 2001. The exercise period for the options granted on
May 7, 1999 to Mr. Jenkins commences as of the date of vesting and continues
through the earlier of (i) September 19, 2005 or (ii) two years from the date
Mr. Jenkins no longer is an employee of the Company. Mr. Jenkins was granted a
salary increase to $240,000 effective January 1, 2000.

G. VANCE CARTEE, President of Adesta Transportation, is party to an employment
agreement, dated January 4, 1999 with the Company (the "Cartee Employment
Agreement"). The Cartee Employment Agreement terminates on January 2, 2001, and
provides that Mr. Cartee is to be paid a salary of $150,000 per year, plus
insurance and other benefits. The Cartee Employment Agreement also contains a
covenant by Mr. Cartee not to compete with the Company for a period of one-year
following termination of his employment. The Cartee Employment Agreement also
provides that if Mr. Cartee's employment is terminated with cause that Mr.
Cartee will be entitled to 90 days prior notice. However, should Mr. Cartee's
employment be terminated without cause, Mr. Cartee will be paid out the
remainder of his contract, or for 180 days, whichever is greater. In addition,
the Cartee Employment Agreement provides for the grant of options to purchase
40,000 shares of Common Stock, as approved by the Company's Board of Directors,
which vest on the earlier of January 1, 2000, or immediately upon either a
change in control or ownership of the Company or at such time as Mr. Cartee's
employment is terminated without cause. On December 31, 1998, the Company's
Board of Directors rescinded the above grant of options and issued new options
to purchase 40,000 shares at $5.75 per share, all of which are fully vested,
through December 31, 2001. Effective May 7, 1999, Mr. Cartee's base salary
increased to $162,000 per year and he was also granted options to purchase
25,000 shares of Common Stock at $6.375 per share, one-third of which vested as
of May 7, 1999, one-third vest on May 7, 2000 and one-third vest on May 7, 2001.
The exercise period for the options granted on May 7, 1999 to Mr. Cartee
commences as of the date of vesting and continues through the earlier of (i)
September 19, 2005 or (ii) two years from the date Mr. Cartee no longer is an
employee of the Company. Mr. Cartee was granted a salary increase to $182,000
effective January 1, 2000.

J. BARRY HALL, President of the Construction Group, which includes
Transportation Safety Contractors, Inc. ("TSCI"), is party to an employment
agreement dated October 12, 1996 with TSCI (the "Hall Employment Agreement").
The Hall Employment Agreement terminates on October 11, 2001, and provides that
Mr. Hall is to be paid a salary of $150,000 per year, plus insurance and other
benefits. The Hall Employment Agreement also contains a covenant by Mr. Hall not
to compete with the Company for a period of two years following termination of
his employment, unless the Company terminates the Hall Employment Agreement for
cause or if Mr. Hall terminates the agreement with good reason, in which case
the non-competition period will terminate after six (6) months (which period may
be extended by the Company up to one year in exchange for additional
compensation). Effective May 7, 1999, Mr. Hall received a cash bonus of
$100,000, based upon compensation that has been assigned to Mr. Hall from Gerry
Hall, a former Chief Executive Officer of the Company currently under contract,
and Mr. J. Barry Hall's brother.

RICHARD A. BOYLE, President of the Patton Management Group, is party to an
employment agreement, dated April 1, 1998 with the Company (the "Boyle
Employment Agreement"). The Boyle Employment Agreement terminates on March 31,
2000, and provides that Mr. Boyle is to be paid a salary of $159,000 per year,
plus insurance and other benefits. The Boyle Employment Agreement also contains
a covenant by Mr. Boyle not to compete with the Company for a period of two
years following termination of his employment. Also, pursuant to the terms of
the Patton Management Corporation acquisition documents, Mr. Boyle's
non-competition agreement has been extended for one additional year. The Boyle
Employment Agreement also provides that if Mr. Boyle is terminated with cause
that Mr. Boyle will not be entitled to any notice. Effective May 7, 1999, Mr.
Boyle was granted options to purchase 65,000 shares of Common Stock at $6.375
per share, one-third of which vested as of May 7, 1999, one-third vest on May 7,
2000 and one-third vest on May 7, 2001. The exercise period for the options

<PAGE> 47

granted on May 7, 1999 to Mr. Boyle commences as of the date of vesting and
continues through the earlier of (i) September 19, 2005 or (ii) two years from
the date Mr. Boyle is no longer an employee of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal year ended October 31, 1999, compensation for the Company's
Executive Officers was determined by the Company's Compensation Committee,
consisting of Messrs. C. Frank Swartz, Alec McLarty and Billy V. Ray. Mr. Swartz
is Chairman of the Committee and he and Alec McLarty are the two non-employee
members of the Compensation Committee. In addition to being a Director of Able,
Mr. Ray is the Chief Executive Officer, President and Acting Chief Financial
Officer of the Company. Mr. Ray excused himself from all discussions and
abstained from voting on any issues relating to the compensation and bonuses to
be paid to Mr. Ray as Chief Executive Officer.

In April 1998, the Company engaged Washington Equity Partners ("WEP") as an
advisor in connection with the MFSNT Acquisition, including the financing
thereof. At the time of the engagement, Mr. Thomas M. Davidson, a member of the
Company's Board of Directors and a former member of the Compensation Committee
who resigned as a Director in January 2000, was Managing Director of WEP. In
connection with the engagement, the Company agreed to pay WEP a fee if the
Company consummated the financing of the MFSNT Acquisition through an investor
contacted by WEP. Such fee equals 2% of the gross proceeds of any senior
indebtedness issued by the Company, 3% of the gross proceeds of any subordinated
indebtedness issued by the Company, and 4% of the gross proceeds of any equity
securities issued by the Company. In addition, the Company agreed to pay WEP,
upon the consummation of the MFSNT Acquisition, a fee of 2% of the aggregate
purchase price paid by the Company for this acquisition up to $50 million, and
1-1/2% of the aggregate purchase price in excess of $50 million. Able also
committed to reimburse WEP for its reasonable travel and out-of-pocket expenses
(up to a maximum of $20,000 without prior approval) incurred in connection with
its engagement. Under the agreement, the Company agreed indemnify WEP and its
permitted assigns against all losses and expenses, including reasonable counsel
fees and expenses, arising out of the MFSNT Acquisition or the financing, except
any losses or expenses found in a final judgment by a court of competent
jurisdiction to have resulted from WEP's bad faith, gross negligence or breach
of its agreement with the Company. Mr. Davidson subsequently left his position
as Managing Director of WEP in April 1998 and WEP assigned its rights in the
agreement to Mr. Davidson, who became a Director of the Company in June 1998. On
October 21, 1998, Mr. Davidson and the Company executed a letter agreement
pursuant to which the Company agreed to pay Mr. Davidson $1,332,000 in
satisfaction of amounts owing under the agreement with WEP with respect to the
MFSNT Acquisition and the related financing. During the 1999 fiscal year, Mr.
Davidson was paid $350,000 and on April 30, 1999, Mr. Davidson converted the
remaining amount due totaling $828,000 to 118,286 shares of common stock at the
then market price of $7.00 per share.

REPORT ON EXECUTIVE COMPENSATION

During the fiscal year ended October 31, 1999, the Compensation Committee was
responsible for setting and approving the salaries, bonuses and other
compensation for the Company's Executive Officers, establishing compensation
programs, and determining the amounts and conditions of all grants of awards
under the Plan.

COMPENSATION OBJECTIVES. The Compensation Committee believes that the objectives
of executive compensation are to attract, motivate and retain highly qualified
executives, to align the interests of these executives with those of the
Shareholders and to motivate Company executives to increase shareholder value by
improving corporate performance and profitability. To meet these objectives, the
Board of Directors seeks to provide competitive salary levels and compensation
incentives that attract and retain qualified executives, to recognize individual
performance and achievements, as well as performance of the Company relative to
its peers and to encourage ownership of Company stock.

EXECUTIVE SALARIES. Base salaries for executives are determined initially by
evaluating the responsibilities of the position, the experience of the
individual, internal comparability considerations, as appropriate, the
competition in the marketplace for management talent and the compensation
practices among public companies the size of, or in businesses similar to, the
Company. Salary adjustments are determined and normally made at twelve-month
intervals.

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<PAGE> 48

ANNUAL BONUSES. The Company has historically paid bonuses to executives whom the
Board of Directors determines have contributed materially to the Company's
success during the most recently completed fiscal year. The bonuses are intended
to enable the Company's executives to participate in the Company's success, as
well as provide incentives for future performance. Bonus compensation has
typically been determined as a percentage of the executive's salary based upon
the pre-tax net income of the Company as a whole or the subsidiary, which
employs the executive.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The compensation of Billy V. Ray,
President and Chief Executive Officer of the Company, was adjusted during the
year to better reflect the accomplishments of Mr. Ray. The increases were based
upon arm-length negotiations between Mr. Ray and the remaining members of the
Board of Directors. In agreeing to increase Mr. Ray's compensation, the Board of
Directors sought to provide an appropriate incentive to Mr. Ray. The Board of
Directors believes that Mr. Ray's salary was appropriate for the chief executive
officer of a public company the size of the Company. See "Summary Compensation
Table" for information concerning Mr. Ray's compensation. The Board of Directors
approved the payment of a bonus to Mr. Ray of $200,000, based upon the Company's
operating results and strategic accomplishments during fiscal year 1999. Mr. Ray
did not participate nor did he vote on any issues relating to his compensation.

Frazier Gaines served as the Chief Executive Officer of the Company from March
1998 through November 1998 (excluding August 19-31, 1998) when he resigned to
direct his energies into Able Telcom International. During the fiscal year ended
October 31, 1999, Mr. Gaines was paid $ 15,000 as Chief Executive Officer for
the period of November 1 to November 30, 1998 thereupon Mr. Gaines resumed his
position as President of Able Telcom International. Mr. Gaines received other
compensation that is more fully presented in the "Summary of Compensation"
above.

STOCK OPTIONS. The Board of Directors may grant to certain employees of the
Company long-term incentives consisting of non-qualified stock options and
incentive stock options and stock options outside the plan. In order to vary the
types of awards that may be offered, the Board of Directors approved the Plan
Amendments, which will increase the number of shares of stock available for
grant under the Stock Option Plan and will allow for the grant of shares of
Common Stock subject to restrictions. During fiscal year 1999, the Board of
Directors approved grants of stock options to all Executive Officers. See
"Executive Compensation--Option Grants During the Fiscal Year Ended October 31,
1999".

Respectfully Submitted,

C. Frank Swartz, Chairman
Alec McLarty
Billy V. Ray

48
<PAGE> 49

STOCK PERFORMANCE

The following performance graph compares the cumulative total return on the
Company's Common Stock with the cumulative total return of the companies in the
Standard and Poor's 500 index, the Nasdaq Telecommunications Stocks Index and a
self-determined peer group consisting of Advanced Communications Systems, Inc.,
AmeriLink Corp.; ANTEC Corporation; C-Cor Electronics, Inc.; Comtech
Telecommunications Corp.; Dycom Industries, Inc.; Eltrax Systems, Inc.; Internet
Communications Corp.; IPC Information Systems, Inc.; IWL Communications, Inc.;
Lockheed Martin; MasTec, Inc.; NumereX Corp.; Porta Systems Corp.; Tollgrade
Communications Corp.; View Tech, Inc.; and World Access, Inc. The cumulative
total return for each of the periods shown in the performance graph is measured
assuming an initial investment of $100 on October 31, 1994 and assuming dividend
reinvestment. No dividends have been paid on the Common Stock.

COMPARISON OF THE 12-MONTH CUMULATIVE TOTAL RETURN AMONG ABLE TELCOM HOLDING
CORP., THE S&P 500 INDEX, SELF-DETERMINED PEER GROUPS AND THE NASDAQ
TELECOMMUNICATIONS STOCKS INDEX

<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Able Telcom Holding Corp. 100 75 120 110 100 125

Peer Group 100 145 200 220 250 130

S&P 500 100 125 155 205 250 320

Nasdaq Telecommunications 100 110 120 175 235 430
</TABLE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows, as of January 31, 2000, the Common Stock owned
beneficially by (i) Each Director of the Company, (ii) each Executive Officer,
(iii) all Directors and Executive Officers as a group, and (iv) each person
known by the Company to be the "beneficial owner" of more than five percent (5%)
of such Common Stock. "Beneficial ownership" is a technical term broadly defined
by the Securities and Exchange Commission to mean more than ownership in the
usual sense. For example, you "beneficially" own Common Stock not only if you
hold it directly, but also if you indirectly (through a relationship, a position
as a director or trustee, or a contract or understanding), have (or share the
power to vote the stock, or sell it) the right to acquire it within 60 days.
Except as disclosed in the footnotes below, each of the Directors and Executive
Officers listed have sole voting and investment power over his or her shares. As
of February 4, 2000, there were 15,341,053 shares of Common Stock issued and
outstanding and approximately 413 holders of record.

<PAGE> 50

Shares Percentage
Beneficially Beneficially
Name (1) Current Title Owned (9) Owned
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Billy V. Ray, Jr. (2) President, Chief Executive Officer and Acting 160,000 1%
Chief Financial Officer, Director

Frazier L. Gaines (3) Former Chief Executive Officer, President - 208,000 1.3%
Able Telcom International

James E. Brands (2) Senior Executive Vice President 100,000 *

Michael Arp (4) Financial Vice President 48,250 *

Edward Z. Pollock (2) General Counsel 38,500 *

Michael A. Summers (2) Chief Accounting Officer 15,000 *

Stacy Jenkins (5) President - Adesta Communications 125,000 *

G. Vance Cartee (2) President - Adesta Transportation 100,000 *

Richard A. Boyle (2) President - Patton Management Corp. 65,000 *

C. Frank Swartz (2) Chairman of the Board of Directors 30,000 *

Alec McLarty (6) Director 11,610 *

Gerald Pye (10) Director -- --

All Directors and Executive Officers
as a Group (12 Persons) 901,360 5.8%

Gideon D. Taylor (7) Former Director and Officer 946,638 6.1%

WorldCom (8) 3,050,000 19.8%
</TABLE>

* Less than 1%.

(1) The address for each of Able's Directors and Executive
Officers is 1000 Holcomb Woods Parkway, Suite 440, Roswell,
Georgia 30076.

(2) These represent stock options that are immediately
exercisable.

(3) Includes 80,000 shares underlying stock options, which are
immediately exercisable, and 128,000 shares held in a trust
controlled by Mr. Gaines. These do not include an aggregate of
9,000 shares held by Mr. Gaines as trustee to four minor
children and for which Mr. Gaines disclaims any beneficial
ownership.

(4) Includes 18,250 shares underlying options, which are
immediately exercisable, and 30,000 shares owned by Mr. Arp.

(5) Includes 100,000 shares underlying options, which are
immediately exercisable, and 25,000 shares owned by Mr.
Jenkins.

<PAGE> 51

(6) Includes 10,000 shares underlying options, which are
immediately exercisable, and 1,610 owned by Mr. McLarty's
wife.

(7) These include (i) 21,619 shares owned by Mr. Taylor's wife,
and (ii) 220,000 shares underlying stock options, which are
immediately exercisable. Mr. Taylor's address is 265 Harper
Road, Dry Fork, VA 24549.

(8) These shares were issued to WorldCom by converting debt into
3,050,000 shares at $8.375 per share on January 13, 2000.
WorldCom's address is 515 East Amite St., Jackson, MS 39201.

(9) All of the options granted to Officers, Directors and
Consultants during the past fiscal year are subject to
shareholder approval. The Proxy Statement will contain a
proposal regarding all said options.

(10) Will not be standing for re-election as a Director of the
Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On October 12, 1996, the Company acquired all of the issued and outstanding
capital stock of Georgia Electric Company ("GEC"), which prior to the
acquisition was owned equally by Gerry W. and J. Barry Hall (collectively, the
"Halls"). Following the acquisition, Gerry Hall was elected to the board of
directors of the Company, and on June 12, 1997, was elected President and Chief
Executive Officer of the Company. Gerry Hall resigned as President, Chief
Executive Officer and a director of the Company on March 2, 1998. The purchase
price for the GEC acquisition was $3 million in cash, plus the issuance at the
end of each of the next five fiscal years of a number of shares of Common Stock
to be determined pursuant to a formula contained in the acquisition agreement by
dividing a dollar figure derived from GEC's actual pre-tax profits and operating
margins compared with target profits and margins for each such fiscal year by a
discounted per share price. In the event that GEC is sold by the Company prior
to the end of fiscal year 2001, the Company is obligated to issue to Gerry Hall
and Barry Hall a number of shares of Common Stock having a market value (as
determined in accordance with the contract) of $1 million for each year that
earn-out consideration remains payable. The GEC acquisition agreement was
amended in February 1998 to increase the percentage discount applicable to the
price of the Common Stock for purposes of determining the number of shares to be
issued with respect to each fiscal year and to limit the total market value of
the shares of Common Stock which could be issued under the agreement. The shares
issued to the Halls for fiscal year 1998 totaled 508,398.

The Company entered into a consulting agreement with Tyler Dixon dated January
1, 1999 and effective as of April 1, 1999, whereby Mr. Dixon will serve as legal
consultant to the Company, will provide the Company with a minimum of 80 hours
of legal services per month commencing April 1, 1999 and continuing through May
31, 2000, and will be compensated at a rate of $16,000 per month. Mr. Dixon also
received options to purchase 40,000 shares of Common Stock at $6.375 per share,
which exercise period commenced on April 1, 1999 and will terminate two years
from the expiration of the consulting agreement or any extensions or renewals
thereof (whichever occurs last). Mr. Dixon is a partner in the law firm of
Raiford, Dixon & Thackston, LLP, which, during fiscal 1999 and 1998, received
approximately $0.3 million and $0.1 million in legal fees from the Company. Mr.
Dixon was also the sole officer, director and shareholder of Cotton
Communications, Inc. ("Cotton").

On February 17, 1999, in order to facilitate the purchase of (i) 2,785 shares of
Series B Preferred Stock, par value $.001 from the Palladin Group and the
RoseGlen Group acquired in connection with the Series B Offering, and (ii) the
outstanding $10.0 million principal amount of Senior Notes, the Company advanced
Cotton approximately $32.0 million ("Company Advance"), which advance accrues
interest at 11.5% and matures on November 30, 2000. Immediately thereafter,
Cotton purchased 2,785 shares of Series B Preferred Stock (1,425 shares from the
RoseGlen Group for $11.0 million and 1,360 shares from the Palladin Group for
$7.85 million), as well as the Senior Notes.

On March 22, 1999, the Company entered into a termination agreement with Cotton
whereby the Company redeemed the Senior Notes held by Cotton, as well as the
2,785 shares of Series B Preferred Stock from Cotton in exchange for the
cancellation of the Company Advance made to Cotton on February 17, 1999. The
Company also assumed Cotton's obligation to acquire 630,000 of the Series B
Warrants at a price of $3.00 per Series B Warrant. The Senior Notes have since
been canceled and the 2,785 shares of Series B Preferred Stock have been
retired. Additionally, the 630,000 Series B Warrants were purchased by the
Company and retired.

51
<PAGE> 52

See also "Compensation Committee Interlocks and Insider Participation" regarding
certain related party transactions between the Company, members of the
Compensation Committee and with Mr. Thomas Davidson, a former Director of the
Company.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K

(a) 1. The following consolidated financial statements of Able
Telcom Holding Corp. and its Organizational Groups are
included as part of this report.

Reports of Independent Public Accountants on the Consolidated Financial
Statements:

Consolidated Balance Sheets - October 31, 1999 and 1998
Consolidated Statements of Operations - Years ended October 31, 1999,
1998 and 1997
Consolidated Statements of Shareholders' Equity - Years ended October
31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - Years ended October 31, 1999,
1998 and 1997
Notes to Consolidated Financial Statements

(a) 2. The financial statement schedule for the years ended
October 31, 1999, 1998 and 1997 is filed as part of this
report and should be read in conjunction with the Consolidated
Financial Statements of the Company.

Schedule II-Valuation and Qualifying Accounts

Schedules not listed above have been omitted because they are not applicable or
not required or the information required to be set forth therein is included in
the Consolidated Financial Statements or Notes thereto.

(a) 3. The exhibits listed on the accompanying Index to
Exhibits immediately following the Financial Statement
Schedules are filed as part of, or incorporated by reference
into, this Report.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>

2.1 Asset Purchase Agreement, dated November 26, 1997, among Able
Telcom Holding Corp., Georgia Electric Company, Transportation
Safety Contractors, Inc., COMSAT RSI Acquisitions, Inc. and
COMSAT Corporation (1)

2.2 Indemnification Agreement, dated February 25, 1998, among Able
Telcom Holding Corp., Georgia Electric Company, Transportation
Safety Contractors, Inc., COMSAT RSI Acquisitions, Inc. and
COMSAT Corporation (1)

2.3 Stock Purchase Agreement, dated as of April 1, 1998, among
Able Telcom Holding Corp., James P Patton, Rick Boyle and
Claiborne K. McLemore III (2)

2.4 Closing Memorandum and Schedule, dated April 1, 1998, among
Able Telcom Holding Corp., James P. Patton, Rick Boyle and
Claiborne K. McLemore III (2)

2.5 Agreement and Plan of Merger by an among MFS Acquisition
Corp., Able Telcom Holding Corp., MFS Network Technologies,
Inc. and MFS Communications Company, Inc. dated as of April
22, 1998 (9)

2.5.1 Amendment to Agreement and Plan of Merger among MFS
Acquisition Corp., Able Telcom Holding Corp., MFS Network
Technologies, Inc. and MFS Communications Company, Inc. dated
as of July 2, 1998 (10)
</TABLE>

52
<PAGE> 53

<TABLE>
<S> <C>
2.5.1.1 Amendment No. 2 dated as of July 21, 1998 to Agreement and
Plan of Merger among MFS Acquisition Corp., Able Telcom
Holding Corp., MFS Network Technologies, Inc. and MFS
Communications Company, Inc. (11)

2.5.1.2 Agreement between WorldCom Network Services, Inc. and Able
Telcom Holding Corp. dated as of September 9, 1998 (13)

2.5.1.3 Agreement between WorldCom Network Services, Inc. and Able
Telcom Holding Corp. dated January 26, 1999 (12)

2.5.2 Promissory Note of Able Telcom Holding Corp. dated July 2,
1998 to MFS Communications Company, Inc. (10)

2.5.2.1 11.5% Promissory Note between Able Telcom Holding Corp., and
WorldCom Network Services, Inc. dated as of September 1, 1998
(12)

2.5.3 Stock Pledge Agreement dated as of July 2, 1998 by Able Telcom
Holding Corp. in favor of WorldCom, Inc. (10)

2.5.4 Master Services Agreement between WorldCom Network Services,
Inc. and MFS Network Technologies, Inc. dated as of July 2,
1998 (exhibits omitted) (11)

2.5.5 Assumption and Indemnity Agreement dated as of July 2, 1998
among Able Telcom Holding Corp., WorldCom Inc., MFS
Communications Company, Inc., MFS Intelenet, Inc., MFS
Datanet, Inc., MFS Telcom, Inc. and MFS Communications, Ltd.
(schedule omitted) (10)

2.5.6 License Agreement between MFS Communications Company, Inc. and
Able Telcom Holding Corp. dated as of July 2, 1998 (10)

2.5.7 Modification to Stock Option Agreement between the Company and
WorldCom, Inc. dated January 8, 1999 (12)

2.5.8 Agreement to Enter into Stock Appreciation Rights Agreement
between the Company and WorldCom, Inc. dated January 8, 1999
(12)

2.5.9 Financing Agreement between WorldCom Network Services, Inc.
and Able Telcom Holding Corp. dated February 16, 1999 (12)

2.5.9.1 Amendment and Restatement of Financing Agreement by and
between WorldCom Network Services, Inc. and Able Telcom
Holding Corp. dated April 1, 1999. (16)

2.5.10 Agreement dated March 15, 1999 by and between Able Telcom
Holding Corp. and WorldCom Network Services, Inc. (16)

2.5.14 Letter Agreement dated January 11, 2000 related to WorldCom
Conversion of Certain Debt into Equity (17)

2.6 Teaming Agreement dated July 7, 1999 by and between Able
Telcom Holding Corp. and 186K.Net, Co. (17)
</TABLE>

53
<PAGE> 54

<TABLE>
<S> <C>
2.7 Agreement and Plan of Merger by and among Able Telcom Holding
Corp., SES Acquisition Corp., and Specialty Electronics
Systems, Inc. and the Shareholders dated as of November 5,
1999. (17)

2.7.1 Schedule 2.6(a)-SASCO relating to the Agreement and Plan of
Merger by and among Able Telcom Holding Corp., SES Acquisition
Corp., and Specialty Electronics Systems, Inc. and the
Shareholders dated as of November 5, 1999. (17)

2.7.2 Schedule 2.6(a)-SES relating to the Agreement and Plan of
Merger by and among Able Telcom Holding Corp., SES Acquisition
Corp., and Specialty Electronics Systems, Inc. and the
Shareholders dated as of November 5, 1999. (17)

2.7.3 Stock Purchase Agreement by and among Able Telcom Holding
Corp., Southern Aluminum & Steel Corporation and the
Shareholders dated November 5, 1999. (17)

2.7.4 Registration Rights Agreement associated with the Stock
Purchase Agreement by and among Able Telcom Holding Corp.,
Southern Aluminum & Steel Corporation and the Shareholders
dated November 5, 1999. (17)

2.7.5 Employment Agreement with Donald G. Garner dated November 5,
1999. (17)

2.7.5.1 Non-Competition Agreement with Donald G. Garner dated November
5, 1999. (17)

2.7.6 Employment Agreement with C. Michael Hoover dated November 5,
1999. (17)

2.7.6.1 Non-Competition Agreement with C. Michael Hoover dated
November 5, 1999. (17)

2.7.7 Employment Agreement with Jesse R. Joyner dated November 5,
1999. (17)

2.7.7.1 Non-Competition with Jesse R. Joyner dated November 5,
1999. (17)

3.1 Articles of Incorporation of Able Telcom Holding Corp., as
amended (3) (4)

3.1.1 Articles of Amendment to the Articles of Incorporation of Able
Telcom Holding Corp. (13)

3.1.2 Articles of Amendment to the Articles of Incorporation of Able
Telcom Holding Corp. dated January 25, 2000. (17)

3.2 Bylaws of Able Telcom Holding Corp., as amended (3)

4.2 Specimen Common Stock Certificate (3)

4.3 Specimen Series A Preferred Stock Certificate (6)

4.3.1 Specimen Series B Preferred Stock Certificate (17)

4.3.2 Specimen Series C Preferred Stock Certificate (17)

4.4 Form of Warrant issued to Credit Suisse, First Boston and
Silverton International Fund Limited (4)

4.6 Able Telcom Holding Corp. 1995 Stock Option Plan (13)

4.7 Amendment to Able Telcom Holding Corp. 1995 Stock Option Plan,
dated April 24, 1998 (13)

4.8 Series B Convertible Preferred Stock Purchase Agreement (13)
</TABLE>

54
<PAGE> 55

<TABLE>
<S> <C>
4.9 Registration Rights Agreement for Series B Convertible
Preferred Stock Purchase Agreement and 350,000 Warrants (13)

4.10 Registration Rights Agreement for 650,000 Warrants associated
with Series B Convertible Preferred Stock Purchase Agreement
(13)

4.11 Form of Common Stock Purchase Warrants for 350,000 Shares in
connection with Series B Convertible Preferred Stock Purchase
Agreement (13)

4.12 Form of Common Stock Purchase Warrants for 650,000 Shares in
connection with Series B Convertible Preferred Stock Purchase
Agreement (13)

4.13 Preferred Stock Purchase Agreement by and among Able Telcom
Holding Corp., RGC International Investors, LDC, and Cotton
Communications, Inc. dated February 17, 1999 (12)

4.14 Warrant Amendment between Able Telcom Holding Corp., and
Purchasers (as defined) dated February 17, 1999 (12)

4.15 Securities Purchase Agreement by and between the Sellers (as
defined) and Cotton Communications, Inc. dated February 17,
1999 (12)

4.15.1 Letter Agreement dated February 17, 1999 from Cotton
Communications, Inc. to John Hancock Mutual Life Insurance
Company. (17)

4.15.2 Letter Agreement dated February 17, 1999 from Cotton
Communications, Inc. to Able Telcom Holding Corp. (17)

4.15.3 Termination Agreement dated March 22, 1999 by and between Able
Telcom Holding Corp. and Cotton Communication, Inc. (17)

4.16 Series B Convertible Preferred Stock Exchange Agreement by and
between Able Telcom Holding Corp. and the Palladin Group dated
February 4, 2000. (17)

4.16.3 Letter Agreement dated February 17, 1999 from the Palladin
Group to Able Telcom Holding Corp. (17)

4.16.4 Letter dated March 19, 1999 from Able Telcom Holding Corp. to
the Palladin Group associated with the termination of
Financing Agreement dated February 17, 1999. (17)

4.17 Form of First Common Stock Purchase Warrants in connection
with Series B Convertible Preferred Stock Exchange Agreement
with the Palladin Group (17)

4.18 Form of Second Common Stock Purchase Warrants in connection
with Series B Convertible Preferred Stock Exchange Agreement
with the Palladin Group (17)

4.19 Series B Convertible Preferred Stock Exchange Agreement by and
between Able Telcom Holding Corp. and the RoseGlen Group dated
February 4, 2000. (17)

4.20 Form of Common Stock Purchase Warrants in connection with
Series B Convertible Preferred Stock Exchange Agreement with
the RoseGlen Group (17)

4.21 Registration Rights Agreement associated with Series B
Convertible Preferred Stock Exchange Agreement (17)

4.22 Series C Convertible Preferred Stock Purchase Agreement (17)
</TABLE>

55
<PAGE> 56

<TABLE>
<S> <C>
4.23 Form of Common Stock Purchase Warrants in connection with
Series C Convertible Preferred Stock Purchase Agreement (17)

4.24 Registration Rights Agreement associated with Series C
Convertible Preferred Stock Purchase Agreement (17)

10.15 Stock Purchase Agreement between Able Telcom Holding Corp.,
Traffic Management Group, Inc., Georgia Electric Company,
Gerry W. Hall and J. Barry Hall (5)

10.16 Stock Purchase Agreement between Able Telcom Holding Corp.,
Telecommunications Services Group, Inc., Dial Communications,
Inc., William E. Newton and Sybil C. Newton (8)

10.17 Promissory Note of Able Telcom Holding Corp. Payable to
William E. Newton and Sybil C. Newton (8)

10.23 Form of Stock Purchase Agreement among Able Telcom Holding
Corp., Traffic Management Group, Inc., Georgia Electric
Company, Gerry W. Hall and J. Barry Hall (5)

10.25 Securities Purchase Agreements, dated as of January 6, 1998,
between Able Telcom Holding Corp. and each of the Purchasers
named therein (6)

10.25.1 Letter Agreement dated July 2, 1998 related to Securities
Purchase Agreements dated as of January 6, 1998 (13)

10.26 Senior Secured Revolving Credit Agreement dated as of April 6,
1998, between Able Telcom Holding Corp. and Suntrust Bank,
South Florida, N.A. and Bank of America, FSB (9)

10.27 Credit Agreement among Able Telcom Holding Corp., NationsBank,
N.A. and The Several Lenders from Time to Time Parties Hereto
dated as of June 11, 1998 (exhibits and schedules omitted)
(13)

10.30 Employment Agreement with Stacy Jenkins, dated July 16, 1998
(13)

10.32 Amendment to June 11, 1998 Credit Agreement among Able Telcom
Holding Corp. NationsBank N.A., and the Several Lenders from
Time to Time Parties thereto, dated as of June 30, 1998 (13)

10.32.1 Amendment and Amended and Restated Limited Waiver to June 11,
1998 Credit Agreement among Able Telcom Holding Corp.,
NationsBank N.A., and the Several Lenders from Time to Time
Parties thereto, dated as of June 30, 1998 (14)

10.33 Employment Agreement with Billy V Ray, Jr., dated October 1,
1998 (12)

10.35 Financial Advisor and Placement Engagement Letter, dated April
3, 1998, between Washington Equity Partners and Able Telcom
Holding Corp. (14)

10.36 Employment Agreement with G. Vance Cartee, dated January 4,
1999 (12)

10.37 Employment Agreement with Edward Pollock, dated January 1,
1999 (12)

10.38 Employment Agreement with Frazier L. Gaines, dated November
12, 1998 (12)

10.40 Employment Agreement with Rick Boyle, dated April 1, 1998 (12)

10.41 Financing Agreement between Able Telcom Holding Corp. and
Cotton Communications, Inc. dated February 17, 1999 (without
exhibits) (12)
</TABLE>

56
<PAGE> 57

<TABLE>
<S> <C>
10.41.1 Termination Agreement between Able Telcom Holding Corp. and
Cotton Communications, Inc. dated March 22, 1999 (14)

10.42 11.5% Non-Recourse Promissory Note between Cotton
Communications, Inc. and Able Telcom Holding Corp. dated
February 17, 1999 (12)

10.43 Stock Pledge Agreement between Able Telcom Holding Corp. and
Cotton Communications, Inc. dated February 17, 1999 (12)

10.44 Employment Agreement with Michael Arp, dated January 1, 1999
(14)

10.45 Consulting Agreement and Employment Agreement with James E.
Brands, dated March 15, 1999 (14)

10.46 Employment Agreement with Michael Summers, dated May 31, 1999.
(16)

11 Computation of Per Share Earnings (7)

16.1 Letter regarding change in certifying accountants (15)

21 Subsidiaries of Able Telcom Holding Corp. (17)

23.1 Consent of Ernst & Young LLP

23.2 Consent of Arthur Andersen LLP

27 Financial Data Schedule (17)
</TABLE>

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

(1) Incorporated by reference from an exhibit to the Company's Current
Report Form 8-K (File No. 0-21986), as filed March 12, 1998, as amended
April 14, 1998.

(2) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), ass filed April 14, 1998.

(3) Incorporated by reference from an exhibit to the Company's Registration
Statement on Form S-1 (File No. 33-65854), as declared effective by the
Commission on February 26, 1994.

(4) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed December 31, 1996.

(5) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed October 25, 1996.

(6) Incorporated by reference from an exhibit to the Company's Annual
Report on Form 10-K (File No. 0-21986) for the fiscal year ended
October 31, 1997, as filed February 13, 1998, as amended March 20,
1998.

(7) Incorporated by reference from Note 5 to the Condensed Consolidated
Financial Statements (Unaudited) filed herewith.

(8) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed December 13, 1996, as
amended February 11, 1997.

(9) Incorporated by reference from an exhibit to the Company's Quarterly
Report on Form 10-Q (File No. 0-21986), for the quarter ended April 30,
1998, as filed June 14, 1998.

57
<PAGE> 58

(10) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed July 16, 1998.

(11) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed August 3, 1998.

(12) Incorporated by reference from an exhibit to the Company's Annual
Report on Form 10-K (File No. 0-21986), for the fiscal year ended
October 31, 1998, as filed February 24, 1999, as amended March 1, 1999.

(13) Incorporated by reference to an exhibit to the Company's Quarterly
Report on Form 10-Q (File No. 0-21986), for the quarter ended July 31,
1998, as filed September 21, 1998, as amended October 13, 1998.

(14) Incorporated by reference to an exhibit to the Company's Form S-1 (File
No. 333-65991), as filed October 22,1998, as amended April 8, 1999.

(15) Incorporated by reference from an Exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), as filed September 14, 1998.

(16) Incorporated by reference to an exhibit to the Company's Quarterly
Report on Form 10-Q (File No. 0-21986), for the quarter ended April 30,
1999, as filed June 14, 1999.

(17) Incorporated by reference to an exhibit to the Company's Annual Report
on Form 10-K (File No. 0-21986), for the fiscal year ended October 31,
1999, as filed February 22, 2000.

(b) Reports on Form 8-K

None

58
<PAGE> 59

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized this 16th of February 2000.

ABLE TELCOM HOLDING CORP.

OCTOBER 31, 2000 BY: /s/ Edwin D. Johnson
---------------------
EDWIN D. JOHNSON
President, Chief Financial
Officer and Director

59
<PAGE> 60

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES

Report of Independent Public Accountants................................ F-2

Report of Independent Certified Public Accountants...................... F-3

Consolidated Financial Statements:

Consolidated Balance Sheets - October 31, 1999 and 1998................. F-4

Consolidated Statements of Operations -
Years Ended October 31, 1999, 1998 and 1997........................ F-5

Consolidated Statements of Shareholders' Equity -
Years Ended October 31, 1999, 1998 and 1997........................ F-6

Consolidated Statements of Cash Flows -
Years Ended October 31, 1999, 1998 and 1997........................ F-7

Notes to Consolidated Financial Statements - October 31, 1999........... F-8

Financial Statement Schedule:

II. Valuation and Qualifying Accounts - Years Ended October 31,
1999, 1998 and 1997............................................. F-34
</TABLE>

F-1
<PAGE> 61

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Able Telcom Holding Corp.:

We have audited the accompanying consolidated balance sheets of Able Telcom
Holding Corp. (a Florida Corporation) and subsidiaries as of October 31, 1999
and 1998 and the related consolidated 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.

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 financial statements referred to above present fairly, in
all material respects, the financial position of Able Telcom Holding Corp. and
subsidiaries as of October 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.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred
significant operating losses during the fiscal year ended October 31, 1999.
Significant payments were also made, both during and subsequent to October 31,
1999, to redeem the Series B Preferred Stock and to reduce obligations for loss
contracts assumed in 1998 in the acquisition of MFS Network Technologies, Inc.
The Company has borrowed the maximum available under its existing Credit
Facility and is in default of the related covenants. The lender has the right to
demand payment and the Company has insufficient liquidity to pay such amounts,
if called. The Company has not yet been successful in obtaining alternative
financing and may have insufficient liquidity to fund its continuing operations.
Consequently, there is substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to these matters are described
in Note 3. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule listed
in the index to the consolidated financial statements is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not part
of the basic financial statements. The schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.

ARTHUR ANDERSEN LLP

Omaha, Nebraska
February 11, 2000

F-2
<PAGE> 62

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors of
Able Telcom Holding Corp.:

We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of Able Telcom Holding Corp. and
subsidiaries for the year ended October 31, 1997. Our audit also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule 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 consolidated results of operations and
cash flows of Able Telcom Holding Corp. and subsidiaries for the year ended
October 31, 1997, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

ERNST & YOUNG LLP

West Palm Beach, Florida
January 19, 1998

F-3
<PAGE> 63

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Currents Assets:
Cash and cash equivalents............................................................ $ 16,568 $ 13,544
Accounts receivable, including retainage of $16,158 and $10,182 and net of allowances
for bad debts of $3,514 and $866 at October 31, 1999 and 1998, respectively.. 73,645 64,159
Costs and profits in excess of billings on uncompleted contracts..................... 71,808 105,478
Prepaid expenses and other current assets............................................ 5,853 2,641
-------- --------
Total current assets......................................................... 167,874 185,822

Property and equipment:
Land and buildings................................................................... 3,801 4,473
Equipment, furnitures and fixtures................................................... 43,989 42,522
-------- --------
47,790 46,995
Less - Accumulated depreciation...................................................... (19,987) (14,921)
-------- --------
Property and equipment, net.......................................................... 27,803 32,074

Other assets:
Goodwill, net of accumulated amortization of $4,078 and $2,162 at
October 31, 1999 and 1998, respectively...................................... 41,222 31,374
Assets held for sale................................................................. -- 38,750
Investment in Kanas.................................................................. 12,159 --
Other non-current assets............................................................. 12,975 2,740
-------- --------
Total other assets........................................................... 66,356 72,864
-------- --------
Total assets................................................................. $262,033 $290,760
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term-debt.................................................... $ 35,754 $ 14,438
Accounts payable and accrued liabilities including retainage of $11,618 and $10,374
at October 31, 1999 and 1998, respectively................................... 66,617 61,229
Accruals for incurred job costs...................................................... 45,593 51,111
Billings in excess of costs and profits on uncompleted contracts..................... 6,478 6,328
Reserves for losses on uncompleted contracts......................................... 8,620 25,390
Notes payable shareholders/directors................................................. -- 1,182
Stock appreciation rights payable.................................................... 3,710 --
-------- --------
Total current liabilities.................................................... 166,772 159,678

Long-term debt, non-current portion.................................................. 30,618 61,685
Advance from WorldCom................................................................ 32,000 --
Property tax payable, non-current portion............................................ 15,468 15,118
Other non-current liabilities and minority interest.................................. 422 2,737
-------- --------
Total liabilities.................................................................... 245,280 239,218
Commitments and contingencies.................................................................
Series B Preferred Stock, $.10 par value; stated at aggregate accumulated redemption value at
October 31, 1999; 4,000 shares authorized;
779 and 3,564 shares issued and outstanding.......................................... 16,322 11,325
-------- --------
Shareholders' Equity:
Common stock, $.001 par value, authorized 25,000,000 shares; 11,891,338 and
11,065,670 shares issued and outstanding, respectively............................. 12 11
Additional paid-in capital........................................................... 38,290 35,164
Senior Note Warrants................................................................. 1,244 1,244
Series B Preferred Stock Warrants.................................................... 2,735 5,400
WorldCom Stock Options............................................................... -- 3,490
WorldCom Phantom Stock............................................................... 606 606
Retained deficit..................................................................... (42,456) (5,698)
-------- --------
Total shareholders' equity........................................................... 431 40,217
-------- --------
Total liabilities and shareholders' equity........................................... $262,033 $290,760
======== ========
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 64

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED OCTOBER 31,

1999 1998 1997
---------- --------- ---------
<S> <C> <C> <C>
Revenue:
Construction and maintenance................................. $382,844 $217,481 $86,334
Conduit sale................................................. 35,721 -- --
---------- --------- ---------
Total revenue................................................ 418,565 217,481 86,334
Costs and expenses:
Construction and maintenance................................. 330,387 179,505 68,164
Costs of conduit sale........................................ 34,673 -- --
General and administrative expense........................... 41,041 18,967 8,797
Depreciation................................................. 9,644 6,638 4,124
Amortization................................................. 2,189 962 408
Impairment of long-lived assets.............................. 2,515 -- --
---------- --------- ---------
Total costs and expenses..................................... 420,449 206,072 81,493
---------- --------- ---------
Income (loss) from operations........................................... (1,884) 11,409 4,841

Other income (expense):
Interest expense............................................. (9,512) (5,534) (1,565)
Change in value of stock appreciation rights ................ (1,814) -- --
Equity in losses of investment in Kanas...................... (591) -- --
Other........................................................ (761) 662 601
---------- --------- ---------
Total other income (expense)................................. (12,678) (4,872) (964)
---------- --------- ---------
Income (loss) before income taxes, minority interest
and extraordinary item....................................... (14,562) 6,537 3,877
Provision for (benefit from) income taxes............................... (138) 3,405 727
---------- --------- ---------
Income before minority interest and extraordinary item.................. (14,424) 3,132 3,150
Minority interest....................................................... (569) (618) (293)
---------- --------- ---------
Income (loss) before extraordinary item................................. (14,993) 2,514 2,857
Extraordinary loss on the early extinguishment
of debt, net of tax of zero in 1999.......................... (3,067) -- --
---------- --------- ---------
Net income (loss)....................................................... (18,060) 2,514 2,857

Beneficial conversion privilege of preferred stock...................... -- (8,013) (1,266)
Repurchase of Series B Preferred Stock.................................. (4,496) -- --
Modification of conversion price of Series B Preferred Stock............ (6,430) -- --
Modification of exercise price of Series B Preferred Stock Warrants..... (1,894) -- --
Increase in default redemption value of Series B Preferred Stock........ (5,878) -- --
Preferred stock dividends............................................... -- (341) (260)
---------- --------- ---------
Income (loss) applicable to common stock................................ ($36,758) ($5,840) $1,331
========== ========= =========

Weighted average shares outstanding:
Basic........................................................ 11,776,072 9,907,060 8,504,972
Diluted...................................................... 11,776,072 9,907,060 8,504,972
Income (loss) per share (see Note 2):
Basic:
Income (loss) applicable to common stock before
extraordinary item................................... ($2.86) ($0.59) $0.16
Extraordinary loss....................................... (0.26) -- --
Income (loss) applicable to common stock................. (3.12) (0.59) 0.16
Diluted:
Income (loss) applicable to common stock before
extraordinary item................................... ($2.86) ($0.59) $0.16
Extraordinary loss....................................... (0.26) -- --
Income (loss) applicable to common stock................. (3.12) (0.59) 0.16
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 65

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 1999, 1998, AND 1997
(IN THOUSANDS)

<TABLE>
<CAPTION>
Common Additional Series B
------------------ Paid-in Senior Preferred WorldCom
Shares $.001 Par Capital Note Warrants Warrants Options
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1996 8,203 $ 9 $12,833 $ -- $ -- $ --

Issuance of common stock in
connection with acquisition 109 -- 620 -- -- --
Issuance of common stock for services 2 -- 12 -- -- --
Issuance of common stock for exercise of
options 262 -- 732 -- -- --
Compensation recognized on stock options -- -- 338 -- -- --
Issuance of common stock for conversion of
convertible preferred stock 5 -- 34 -- -- --
Changes in unrealized loss on investments -- -- -- -- -- --
Convertible preferred dividends paid -- -- -- -- -- --
Embedded dividend recognized on convertible
preferred shares -- -- -- -- -- --
Tax benefit from exercise of options -- -- 527 -- -- --
Net income -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1997 8,581 9 15,096 -- -- --

Issuance of common stock for GEC earnout 204 -- 1,278 -- -- --
Compensation expense for below
market options -- -- 93 -- -- --
Issuance of common stock for
exercise of options 352 -- 2,071 -- -- --
Tax benefit from exercise of options -- -- 516 -- -- --
Dividends on Series A preferred stock -- -- -- -- -- -
Embedded dividend recognized on Series
A Preferred Stock -- -- -- -- -- --
Issuance of common stock for conversion
of Series A Preferred Stock 921 1 6,817 -- -- --
Valuation of subordinated note warrants -- -- -- 1,244 -- --
Valuation of Series B Preferred Stock Warrants -- -- -- -- 5,400 --
Embedded dividend recognized on Series
B Preferred Stock -- -- 7,909 -- -- --
Valuation of WorldCom options -- -- -- -- -- 3,490
Valuation of WorldCom phantom stock awards -- -- -- -- -- --
Issuance of common stock for conversion
of Series B Preferred Stock 1,008 1 1,384 -- -- --
Dividends on Series B Preferred Stock -- -- -- -- -- --
Net income -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1998 11,066 11 35,164 1,244 5,400 3,490

Conversion of the WorldCom Option to SARs -- -- 1,594 -- -- (3,490)
Issuance of common stock for GEC earnout 628 1 4,595 -- -- --
Series B Preferred Stock Transactions:
Repurchase of Series B Preferred Stock -- -- (5,506) -- -- --
Modification of conversion price of Series B
Preferred Stock -- -- 6,430 -- -- --
Modification of conversion price of Series B
Preferred Stock Warrants -- -- -- -- 1,894 --
Repurchase of Series B Preferred Stock Warrants -- -- 2,669 -- (4,559) --
Increases to Series B default redemption value -- -- (7,970) -- -- --
Issuance of common stock in settlement of
notes payable to directors 118 -- 828 -- -- --
Issuance of common stock for
exercise of options 79 -- 355 -- -- --
Value of options granted to non--employees -- -- 131 -- -- --
Net loss -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1999 11,891 12 38,290 1,244 2,735 --
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
Unrealized Loss Retained
WorldCom on Investments Earnings
Phantom Stock Net of Taxes (Deficit) TOTAL
-------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, October 31, 1996 $-- $ (54) $ (1,189) 11,599

Issuance of common stock to directors in
connection with acquisition -- -- -- 620
Issuance of common stock for services -- -- -- 12
Issuance of common stock for exercise of
options -- -- -- 732
Compensation recognized on stock options -- -- -- 338
Issuance of common stock for conversion of
convertible preferred stock -- -- -- 34
Changes in unrealized loss on investments -- 54 -- 54
Convertible preferred dividends paid -- -- (260) (260)
Embedded dividend recognized on convertible
preferred shares -- -- (1,266) (1,266)
Tax benefit from exercise of options -- -- -- 527
Net income -- -- 2,857 2,857
---------------------------------------------------------------------------------------------------------------
Balance, October 31, 1997 -- -- 142 15,247

Issuance of common stock for GEC earnout -- -- -- 1,278
Compensation expense for below
market options -- -- -- 93
Issuance of common stock for
exercise of options -- -- -- 2,071
Tax benefit associated with stock options -- -- -- 516
Dividends on Series A preferred stock -- -- (79) (79)
Embedded dividend recognized on Series
A Preferred Stock -- -- (104) (104)
Issuance of common stock for conversion
of Series A Preferred Stock -- -- -- 6,818
Valuation of subordinated note warrants -- -- -- 1,244
Valuation of Series B Preferred Stock Warrants -- -- -- 5,400
Embedded dividend recognized on Series
B Preferred Stock -- -- (7,909) --
Valuation of WorldCom options -- -- -- 3,490
Valuation of WorldCom phantom stock awards 606 -- -- 606
Issuance of common stock for conversion
of of Series B Preferred Stock -- -- -- 1,385
Dividends on Series B Preferred Stock -- -- (262) (262)
Net income -- -- 2,514 2,514
---------------------------------------------------------------------------------------------------------------
Balance, October 31, 1998 606 -- (5,698) 40,217

Conversion of the WorldCom Option to SARs -- -- -- (1,896)
Issuance of common stock for GEC earnout -- -- -- 4,596
Series B Preferred Stock Transactions:
Repurchase of Series B Preferred Stock -- -- (4,496) (10,002)
Modification of conversion price of Series B
Preferred Stock -- -- (6,430) --
Modification of conversion price of Series B
Preferred Stock Warrants -- -- (1,894) --
Repurchase of Series B Preferred Stock Warrants -- -- -- (1,890)
Increases to Series B default redemption value -- -- (5,878) (13,848)
Issuance of common stock in settlement of
notes payable to directors -- -- -- 828
Issuance of common stock for --
exercise of options -- -- -- 355
Value of options granted to non-employees -- -- -- 131
Net loss -- -- (18,060) (18,060)
---------------------------------------------------------------------------------------------------------------
Balance, October 31, 1999 606 -- (42,456) 431
---------------------------------------------------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements

F-6
<PAGE> 66

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

FOR THE YEARS
ENDED OCTOBER 31,

1999 1998 1997
-------- ------ ------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(18,060) $2,514 $2,857
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities, net of
effects of acquisitions:
Extraordinary loss on early extinguishment of debt 3,067 -- --
Depreciation 9,644 6,638 4,532
Amortization 2,189 962 --
Deferred income taxes (265) 717 727
Minority interest 569 618 293
Impairment of long-lived assets 2,515 -- --
Equity in losses of investment in Kanas 591 -- --
Change in value of stock appreciation rights 1,814 -- --
Gain on sale of assets held for sale (1,048) -- --
Accretion of property tax payable 2,284 -- --
Compensation recognized for conversion of stock options -- 93 338
Reduction in revenue for litigation -- -- (433)
Gain on disposal of property and equipment (234) -- --
Issuance of options to non-employees 131 -- --
Other - net 4 156 10
-------- ------ ------
3,201 11,698 8,324
Changes in assets and liabilities, net of effects from
acquisitions:
Change in accounts receivable (10,886) 2,694 1,002
Change in costs and profits in excess of
billings on uncompleted contracts 25,000 (16,987) (4,661)
Change in other current assets (2,947) 2,334 431
Change in other assets 327 1,247 (280)
Change in accounts payable and accrued liabilities 4,750 17,383 (199)
Change in accruals for incurred job costs (9,318) -- --
Change in billings in excess of costs and
profits on uncompleted contracts 150 569 (927)
Change in reserves for losses on uncompleted contracts (16,170) (15,110) --
Change in other non-current liabilities (2,658) 2,789 230
-------- ------ ------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (8,551) 6,617 3,920
-------- ------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (8,438) (9,966) (4,487)
Net proceeds from sale of property and equipment 2,103 90 96
Proceeds from sale of assets held for sale 27,048 -- --
Sales of investments -- -- 567
Cash acquired in acquisitions -- 4,661 404
Cash paid for acquisitions -- (8,681) (3,000)
Cash invested in escrow account (7,182) -- --
-------- ------ ------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 13,531 (13,896) (6,420)
-------- ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under lines of credit -- 50,518 (4,626)
Payment of shareholder / director loans (354) (2,925) (250)
Borrowings from shareholder / director -- 2,050 --
Proceeds from long-term debt 667 10,000 11,014
Proceeds from debt to finance acquisition -- 10,000 3,000
Advances from WorldCom 32,000 -- --
Repayments on long-term debt (13,485) (74,388) (9,272)
Distributions to minority interests (226) (502) (293)
Repurchase of Series B Preferred Stock Warrants (1,890) -- --
Redemption of Series B Preferred Stock (18,857) -- --
Proceeds from the issuance of Preferred Stock, net -- 18,110 5,418
Proceeds from the exercise of stock options -- 2,071 732
Proceeds from issuance of common stock for options 355 -- --
Dividends paid (166) (341) (260)
-------- ------ ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,956) 14,593 5,463
-------- ------ ------
Increase in cash and cash equivalents 3,024 7,314 2,963
Cash and cash equivalents at beginning of year 13,544 6,230 3,267
-------- ------ ------
Cash and cash equivalents at end of year $ 16,568 $13,544 $ 6,230
======== ======= =======
Supplemental disclosures of cash flow information:
Valuation of detachable warrants -- $ 6,644 $ --
Discount on preferred stock -- 7,909 --
Conversion of Series B Preferred Stock -- 1,385 --
Conversion of Series A Preferred Stock -- 6,818 --
Valuation of below market options on acquisition -- 4,096 --
Issuance of common stock for services -- -- 11
Compensation recognized on below market options -- 93 338
Common stock issued in accordance with GEC earnout provisions 4,596 1,278 621
Common stock issued in exchange for note payable to director 828 -- --
Valuation of modification of conversion price of
Series B Preferred Stock Warrants 1,894 -- --
Conversion of WorldCom Options to SARs 1,896 -- --
Valuation of modification of
conversion of Series B Preferred Stock 6,430 -- --
Increases to Series B Preferred Stock default redemption value 13,848 -- --
Increases to goodwill for:
Accrued GEC earnout payments 1,806 (4,596) (1,278)
Recognition of deferred taxes for Patton
acquisition 1,460 -- --
Reallocation of MFSNT purchase price 9,773 -- --
Cash paid for:
Interest 3,689 4,226 1,684
Income taxes 4,643 29 --
</TABLE>

See notes to consolidated financial statements

F-7
<PAGE> 67

ABLE TELCOM HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999

1. THE COMPANY:

Able Telcom Holding Corp. ("Able" or the "Company") develops, builds and
maintains communications systems for companies and governmental authorities. The
Company is headquartered in Atlanta, Georgia, and operates its subsidiaries
throughout the United States. The Company also has limited activities in South
America. The Company has five main organizational groups:

Each group is comprised of subsidiaries of the Company with each having local
executive management functioning under a decentralized operating environment.

The Company's customers primarily include local and long distance telephone
companies, utilities and local, state and federal governments.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements are prepared on an accrual
basis and include the accounts of the Company and its subsidiaries, including
MFS Network Technologies, Inc., Georgia Electric Company, Patton Management
Corporation, Transportation Safety Contractors, Inc., Able Telecommunications &
Power, Inc. and Able Telcom International, Inc., Able Telcom CA and Able Telcom
Do Brasil, LTDA.

Minority shareholders of Able Telcom CA are entitled to share in 50 percent of
the earnings and losses of Able Telcom CA. The Company's share of ownership and
voting control is 80 percent. During the fiscal years ended October 31, 1999,
1998 and 1997, minority interests of $0.6 million, $0.6 million and $0.3
million, respectively, are reflected in the accompanying consolidated statements
of operations.

A substantial portion of consolidated total assets, liabilities and revenues are
generated by one subsidiary of the Company, MFS Network Technologies, Inc.
("MFSNT"), which was acquired effective July 2, 1998. Revenues and expenses of
businesses acquired in purchase transactions are included in the consolidated
results of operations since the date of acquisition. All material intercompany
accounts and transactions have been eliminated.

USE OF ESTIMATES AND SIGNIFICANT RISKS

The preparation of the consolidated 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 consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

The Company's construction and service activities are highly technical and its
contracts are complex. Some contracts have or will require several years to
complete. Work awarded to the Company is often the result of competitive bidding
and many of the Company's significant contracts are based on a fixed price
rather than cost-

F-8
<PAGE> 68

plus or time and materials. Initial cost estimates supporting the Company's bids
are necessarily based on facts and circumstances known at the time the estimates
are made. Estimates of projected contract costs must be continuously updated
over the period of contract performance. Contracts with governmental agencies
may include onerous requirements that adversely affect the cost and efficiency
of the Company's performance. High-profile public works can present difficulties
in obtaining final acceptance of completed work because of local political
considerations. Disputes regarding the scope of the work are not uncommon and
change order requests often require protracted negotiations and concessions on
the part of the Company. Unsatisfactory performance of subcontractors or failure
of installed equipment to function in accordance with contract specifications
may also adversely affect the Company's ultimate profitability. Most contracts
pose risks for both the quality and timeliness of performance. Many contracts
include liquidating or liquidated damage clauses to penalize the Company for
failure to meet contractual deadlines.

Considerable judgment must be applied to reasonably evaluate the potential
outcomes of issues that arise during the contract performance period and the
effect their resolution will have on the ultimate margins or losses that may be
realized by the Company. Consequently, the estimates that support the Company's
revenue recognition and cost accrual decisions have a very significant impact on
the results of operations reported by the Company.

CASH AND CASH EQUIVALENTS

The Company considers all unrestricted highly liquid investments with original
maturities of three months or less to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is provided for using
the straight-line and accelerated methods over the estimated useful lives of the
assets that generally range from three to ten years.

GOODWILL

Goodwill represents the amount by which the purchase price of businesses
acquired exceeds the fair value of the net assets acquired under the purchase
method of accounting. Goodwill is being amortized on a straight-line basis over
20 years. A rollforward of goodwill from November 1, 1998 is as follows (amounts
in thousands):

<TABLE>
<S> <C>
Net goodwill, at November 1, 1998 $31,374
Patton Management Corporation ("Patton") (1) 1,460
Dial Communications, Inc. ("Dial") (2) (1,319)
Georgia Electric Company ("GEC") (3) 1,806
MFSNT (4) 9,773
Amortization (1,872)
-------------------------------------------------------------------------------
Net goodwill, at October 31, 1999 $41,222
-------------------------------------------------------------------------------
</TABLE>

As discussed in Note 5 "Acquisitions," adjustments made to goodwill during the
fiscal year ended October 31, 1999, related to:

(1) Goodwill was increased to recognize deferred tax and other liabilities
of approximately $1.1 million and $0.4 million, respectively, assumed
in the 1998 acquisition of Patton.
(2) The Company terminated the operation of Dial and wrote-off the related
goodwill.
(3) The increase is for contingent earn-out consideration associated with
the 1996 acquisition of GEC.
(4) Goodwill was increased by approximately $9.8 million for adjustments to
the MFSNT purchase price allocation.

Amortization expense was $1.9 million, $1.0 million, and $0.4 million for the
fiscal years ended October 31, 1999, 1998 and 1997, respectively.

F-9
<PAGE> 69

IMPAIRMENT OF LONG-LIVED ASSETS

The Company, at each balance sheet date, evaluates whether events or changes in
circumstances have occurred that indicate the carrying value of its long-lived
assets and identifiable intangibles may not be recoverable. If such events or
changes in circumstances are deemed to have occurred, the Company estimates the
future cash flows related to the assets and compares the sum of the expected
future cash flows (undiscounted and without interest charges) to the carrying
amount of the assets to determine if there has been an impairment. If an
impairment has occurred, the Company will write the assets down to their
estimated fair value. The estimated fair value of the assets is typically
calculated using the present value of estimated expected future cash flows using
a discount rate commensurate with the risks involved. As described in Note 5,
"Acquisitions", the Company wrote-off $1.3 million of Dial goodwill during the
year ended October 31, 1999. In addition, the Company also wrote-off $1.2
million of equipment during the year ended October 31, 1999.

SELF-INSURED CLAIMS LIABILITY

The Company retains the risk, up to certain limits, for automobile, workers'
compensation, and employee group health claims. As of July 1, 1999, the Company
switched its self-insured automobile and workers' compensation policies to a
premium based, fully-insured policy, but continues to self-insure the employee
group health claims. A liability for unpaid claims and the associated claim
expenses, including incurred but not reported claims, is determined and
reflected in the consolidated financial statements as an accrued liability. The
self-insured claims liability includes estimates of incurred but not reported
claims of $1.6 million and $1.1 million at October 31, 1999 and 1998,
respectively. The determination of such claims and expenses and the
appropriateness of the related liability is continually reviewed and updated.

STOCK BASED COMPENSATION

The Company accounts for stock based compensation under Accounting Principles
Board Opinion No. 25, ("APB No. 25") "Accounting for Stock Issued to Employees,"
and related interpretations, and follows the disclosure provisions of Statement
of Financial Accounting Standards ("SFAS") No. 123. "Accounting for Stock-Based
Compensation." Refer to Note 15, "Stock Options and Other Stock Awarded to
Employees."

REVENUE RECOGNITION

Construction and Installation Contracts. Revenues recognized equal contract
costs incurred plus a percentage of the projected margin that will be earned on
each contract over the entire contract term. Measurements of cumulative progress
to completion approximate the cost-to-cost method. Contract costs include all
direct material and labor costs, as well as those indirect costs relating to the
contract such as indirect labor, supplies and equipment costs. Subcontractor
work completed and other costs not yet invoiced to the Company or processed for
payment are accrued at each balance sheet date as "Accruals For Incurred Job
Costs." Claims from sub-contractors are individually evaluated based upon the
merit of the claim, and if necessary, accruals for such claims are established.
Generally, the customer makes the determination of substantial contract
completion.

Changes in job performance, conditions and estimated costs result in changes in
the estimates for project profits unless change orders can be negotiated and
accepted by the customer. The cumulative effect of revised estimates are
recognized in the period in which the changes are determined. When the current
estimates of total contract revenue and contract costs indicate a loss ("Loss
Jobs"), a provision for the entire estimated loss on the contract is made.

Service Contracts. Service contracts consist primarily of recurring contracts
with telecommunication companies to maintain networks and grids; municipalities
to maintain electronic traffic management and control systems; and utility
companies to maintain utility facilities. Revenues from these contracts are
recognized at the time the services are rendered and accepted by the customer in
accordance with the provisions of the related contracts. Costs associated with
these contracts are incurred and recognized as the services are performed.
Losses on service contracts are recognized as incurred.

Change Orders. The Company begins to recognize revenues associated with change
orders once they have been approved by the customer.

F-10
<PAGE> 70

Segmentation. Each of the Company's contracts are evaluated to determine the
appropriate level of segmentation, if any, for revenue recognition purposes.
Contracts that include construction and installation elements and a long-term
service commitment are appropriately segmented and the long-term service
contract is separately accounted for as described above.

INCOME TAXES

The Company accounts for income taxes using an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
consolidated financial statements or tax returns. In estimating future tax
consequences, the Company considers all expected future events other than
enactment of or changes in the tax law or rates. The Company files consolidated
federal income tax returns.

INCOME (LOSS) PER COMMON SHARE

Basic earnings (loss) per share is determined by dividing net income (loss) from
continuing operations available to common shareholders by the weighted average
number of common shares outstanding during each period. Diluted earnings per
share includes the effects of potentially issuable Common Stock, but only if
dilutive. The treasury stock method, using the average price of the Company's
Common Stock for the period, is applied to determine dilution from options and
warrants. The if-converted method is used for convertible securities. Because of
reported losses, there are no differences between basic and diluted per share
amounts for the Company for 1999 or 1998.

The Company has potentially dilutive securities that could have a dilutive
effect in the future. Those securities and their potentially dilutive effects
are as follows (dilutive shares in thousands):

<TABLE>
<CAPTION>
Potentially
Dilutive Average
Shares Strike Price
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Potentially dilutive securities outstanding at October 31, 1999:
WorldCom Options (subject to shareholder approval) (Refer to Note 5) 2,000 $ 7.00
Employee stock options (subject to shareholder approval) (Refer to Note 15) 1,604 6.14
Employee stock options (572,000 vested) (Refer to Note 15) 992 6.59
Shares issued to redeem Series B Convertible Preferred Stock in February
2000 (Refer to Note 23) 802 6.13
Senior Subordinated Note Warrants (Refer to Note 11) 410 8.25
Series B Preferred Stock Warrants (Refer to Note 14) 370 13.25
GEC Earnout (Refer to Note 5) 205 --
Series A Preferred Stock Warrants (Refer to Note 14) 62 9.82
Employee stock grants (subject to shareholder approval) (Refer to Note 15) 50 --
------------------------------------------------------------------------------------------------------------------------
Subtotal outstanding at October 31, 1999 6,495 6.80
------------------------------------------------------------------------------------------------------------------------
Potentially dilutive securities issued subsequent to October 31, 1999:
Conversion of WorldCom debt to equity (Refer to Note 23) 3,050 8.38
Warrants issued to redeem Series B Preferred Stock (Refer to Note 23) 200 10.13
Series C Convertible Preferred Stock (Refer to Note 23) 1,604 9.35
Series C Preferred Stock Warrants (Refer to Note 23) 200 10.75
Warrants issued to redeem Series B Preferred Stock (Refer to Note 23) 66 10.13
Shares issued for the acquisition of SASCO/SES (Refer to Note 23) 75 --
Warrants issued to financial advisors related to the Series C Convertible
Preferred Stock (Refer to Note 17) 75 10.72
Stock issued to settle litigation 25 --
------------------------------------------------------------------------------------------------------------------------
Subtotal issued subsequent to October 31, 1999 5,295 $8.73
------------------------------------------------------------------------------------------------------------------------
Total 11,790 $7.67
------------------------------------------------------------------------------------------------------------------------
</TABLE>

The conversion price of the Series C Preferred Stock may be reset to a floor of
$4.00 per share. If reset to the floor, conversion would result in the issuance
of 3.75 million common shares.

The Company has also granted to WorldCom rights to receive upon satisfaction of
certain conditions, including shareholder approval, phantom stock awards for up
to 700,000 shares of common stock, payable in cash, stock, or a combination of
both at the Company's option. Refer to Note 5, "Acquisitions."

F-11
<PAGE> 71

As described in Note 5, "Acquisitions", the Company is committed to issue shares
of common stock as contingent consideration earned by the sellers of Georgia
Electric Company through 2001. Common stock issued to date as contingent
consideration earned for the years ended October 31, 1998 and 1997 was 628,398
shares and 204,448 shares, respectively. Contingent consideration earned for the
year ended October 31, 1999, amounted to $1.8 million and is accrued at that
date in accounts payable and accrued liabilities. Approximately 205,000 shares
will be issued in fiscal 2000. The Company has made a similar commitment
subsequent to October 31, 1999, related to the acquisition of SASCO and SES
(refer to Note 23). The number of shares that may be issued as earn-out
consideration under these commitments in the future is not presently
determinable.

In July 1999, the Company executed a teaming agreement with 186K.NET that
provides for a contingent equity swap. 186K.NET is a privately-owned start-up
company that provides data and communications facilities consulting services.
The swap provision was designed to enable each company to acquire an equity
interest in the other to promote the cooperative spirit of the teaming
agreement. The value of shares to be issued and received is to be equivalent
and is to be determined by taking 10% of the increase in the fair market value
of the Company or of 186K.NET, which ever is lower, from July 1999 to the date
of exercise. Upon exercise, the Company has committed to issue shares of its
common stock to 186K.NET in exchange for common shares of 186K.NET of equivalent
value at the date of exercise. Either the Company or 186K.NET can exercise the
swap at any time from July 2000 to July 2003 by giving six months prior notice
to the other party of its intent to exercise the swap. However, an exercise can
only occur if both companies experience an increase in fair market value;
otherwise, the value and number of shares that may be exchanged will be zero.
Unless and until the swap occurs, the Company has no opportunity for gain or
loss with respect to its rights and obligations under the swap provision and
no accounting is necessary. However, this arrangement could result in the
issuance of additional Company securities in the future for non-monetary
consideration.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable
(generally unsecured), accounts payable and notes payable approximate fair value
due to the short maturity of the instruments and the provision for what
management believes to be adequate reserves for potential losses. The fair
values of lines-of-credit and long-term debt approximate their carrying amount
since the currently effective rates reflect market rates for debt of similar
credit quality.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

SFAS NO. 133. In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and for Hedging Activities," (amended by SFAS No. 137,
"Accounting for Derivative Instrument and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133"). This statement revises the
accounting for the recognition and measurement of derivatives and hedging
transactions and is effective for fiscal years beginning after June 15, 2000.
During the periods covered by the accompanying consolidated financial
statements, the Company did not engage in hedging or other transactions
involving derivatives. The Company does not anticipate early adoption of
this statement.

FIN 43. In June 1999, the FASB issued Interpretation No. 43, "Real Estate
Sales." The prospective effects of FIN 43 are addressed in Note 8, "Network
Assets Held For Sale."

RECLASSIFICATIONS

Certain items in the 1998 and 1997 consolidated financial statements have been
reclassified to conform to the 1999 presentation.

3. GOING CONCERN:

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company incurred losses
from operations of $1.9 million, net losses of $18.1 million, and losses
applicable to common stock of $36.8 million during the fiscal year ended October
31, 1999. Significant payments were also made, both during and subsequent to
October 31, 1999, to redeem the Series B Preferred Stock and to reduce
obligations for loss contracts assumed in 1998 in the acquisition of MFSNT. The
Company has borrowed the maximum available under its existing Credit Facility
(refer to Note 11, "Debt") and is in default of the related covenants. While the
Company is current with respect to amounts due under the Credit Facility, the
lender has the right to demand payment and the Company has insufficient
liquidity to pay such amounts, if called. The Company has not

F-12
<PAGE> 72

yet been successful in obtaining alternative financing and may have insufficient
liquidity to fund its continuing operations. Consequently, there is substantial
doubt about the Company's ability to continue as a going concern.

The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to (a) generate
sufficient cash flow to meet its obligations on a timely basis, (b) obtain
additional financing as may be required, and (c) ultimately sustain
profitability.

Management's plans in regard to these matters are as follows:

(1) As part of the Company's ongoing efforts to strategically align the
profitable portions of its business and as a result of significant turnover
and the deterioration of underlying contracts, the Company closed Dial
Communications, Inc. ("Dial") and Able Integrated Systems, Inc. ("AIS")
during the fiscal year ended October 31, 1999, which together used cash
flows from operations of approximately $7.4 million and $3.8 million during
the fiscal years ended October 31, 1999 and 1998.

(2) As discussed in Note 11, "Debt," and Note 23, "Subsequent Events,"
approximately $25.5 million of the Company's indebtedness to WorldCom was
converted to common stock of the Company subsequent to October 31, 1999.

(3) As discussed in Note 14, "Preferred Stock," and Note 23, "Subsequent
Events," approximately $6.3 million of the accrued redemption value of the
Company's Series B Preferred Stock was paid by issuing common stock and
warrants of the Company subsequent to October 31, 1999. Concurrently, the
remaining Series B Preferred Stock redemption obligation of approximately
$10.0 million was paid with cash funded through the issuance of $15.0
million of Series C Preferred Stock.

(4) The Company is attempting to obtain a new credit facility with another
financial institution and is pursuing additional financing through
discussions with independent investors.

4. REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION:

The SEC's principal questions have centered on the following:

(1) The allocation of the $28.8 million in additional loss accruals to the
proper preacquisition period in the financial statements of MFSNT.

F-13
<PAGE> 73

Resolution of these issues may result in the restatement of MFSNT's
preacquisition financial statements and related pro forma disclosures
included in Able's prior SEC filings.

(2) The appropriate accounting for obligations to perform under long-term
network operation and maintenance agreements acquired as part of the MFSNT
Acquisition. Refer to Note 22, "Unaudited Quarterly Financial Data", for an
explanation of the Company's accounting for long-term operation and
maintenance contracts.

(3) The Company's accounting for its investment in Kanas. Refer to Note 9,
"Investment in Kanas (Held For Sale)," for an explanation of the Company's
accounting for Kanas.

(4) The Company's accounting for the sale during the current year of the NYSTA
conduit. Refer to Note 8, "Network Assets Held For Sale," for an
explanation of the Company's accounting for the NYSTA conduit sale.

The SEC has not yet agreed with the Company that such accounting for the
above issues is appropriate and may require the Company to further change
its accounting for these matters.

5. ACQUISITIONS:

On July 2, 1998, the Company acquired the network construction and
transportation systems business of MFSNT from WorldCom, Inc. ("WorldCom")
pursuant to a merger agreement dated April 26, 1998 ("Plan of Merger"). On
September 9, 1998, the Company and WorldCom finalized the terms of the Plan of
Merger through the execution of an amended agreement. The acquisition of MFSNT
was accounted for using the purchase method of accounting at a total price of
approximately $67.5 million. In addition, the MFSNT acquisition agreements, as
amended, provide that on November 30, 2000, the Company shall pay to WorldCom
certain amounts, if positive: (i) the difference between $12.0 million related
to losses on MFSNT projects in existence on March 31, 1998 and recorded by MFSNT
as of June 30, 1998, and the amount actually lost on such contracts through
November 30, 2000, and (ii) the difference between $5.0 million and the
aggregate costs incurred by Able for defense of litigation, and payments made in
settlement or in payment of judgments with respect to preacquisition litigation.
The range of this contingent consideration potentially payable to WorldCom is
from $0 to $17.0 million. Presently, Company management expects to pay no
additional consideration to WorldCom for these matters. The purchase price
for MFSNT included the following consideration (in millions):

<TABLE>
<S> <C>
Contract price $58.8
Transaction related costs 4.6
WorldCom Option 3.5
WorldCom Phantom Stock Awards 0.6
--------------------------------------------------------------
Total purchase price $67.5
--------------------------------------------------------------
</TABLE>

The consolidated balance sheet as of October 31, 1998, reflects the Company's
preliminary allocation of the purchase price to the assets acquired and the
liabilities assumed based on initial estimates of their fair values. During the
fiscal year ended October 31, 1999, the Company

F-14
<PAGE> 74

obtained the information needed to complete its valuations and finalized the
allocation as set forth below: (in millions)

<TABLE>
<CAPTION>
As Previously Final
Reported Adjustments Allocation
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts receivable (1) $ 47.0 $ (1.4) $ 45.6
Costs and profits in excess of billings on uncompleted contracts (2) 93.7 (5.0) 88.7
Assets held for sale 38.8 -- 38.8
Prepaid expenses 1.0 -- 1.0
Property 5.7 -- 5.7
Goodwill 16.5 9.8 26.3
Accounts payable (3) (13.7) (0.5) (14.2)
Billings in excess of costs and profits on uncompleted contracts (56.6) -- (56.6)
Reserves for losses on uncompleted contracts (4) (40.5) 0.6 (39.9)
Accrued restructuring costs (5) (2.0) 0.3 (1.7)
Property taxes payable (15.0) -- (15.0)
Other accrued liabilities (6) (7.4) (3.8) (11.2)
-----------------------------------------------------------------------------------------------------------------------
Total allocated purchase price $ 67.5 $ -- $ 67.5
-----------------------------------------------------------------------------------------------------------------------

<FN>
(1) It was determined that a receivable from WorldCom of $1.4 million should
not have been recorded as part of the purchase price allocation. Therefore,
the Company has adjusted accounts receivable and goodwill.
(2) It was determined that certain long-term receivables were recorded at their
gross values versus their present values. These receivables are to be paid
to MFSNT over 20 years. Therefore, an adjustment of approximately $5.0
million to cost and profits in excess of billings (i.e. unbilled
receivables) and goodwill was necessary to properly reflect the present
value of these receivables. Refer to Note 8, "Network Assets Held For
Sale."
(3) It was determined that $0.5 million of accounts payable assumed had not
been included in the original purchase price allocation. The Company
adjusted accounts payable and goodwill to reflect these accounts payable.
(4) The Company reviewed its estimates of losses on loss contracts and recorded
adjustments to such reserves. The adjustments decreased the reserves and
goodwill by $0.6 million.
(5) Accrued restructuring costs related primarily to severance and benefit
costs associated with the involuntary termination of employees pursuant to
an approved restructuring plan. During the fiscal year ended October 31,
1998, approximately $1.7 million was incurred and charged against this
reserve. The excess reserve of $0.3 million was reversed and goodwill was
reduced.
(6) Subsequent to the acquisition of MFSNT, the Company recorded an additional
accrued liability of $3.8 million relating to a claim not previously
recognized by MFSNT.
</FN>
</TABLE>

In conjunction with the acquisition of MFSNT, the Company granted an option to
WorldCom (the "WorldCom Option") to purchase up to 2,000,000 shares of the
Company's common stock, at an exercise price of $7.00 per share, but subject to
a 1,817,941 share maximum issuance limitation through "cashless" exercise, and
the right to receive upon satisfaction of certain conditions phantom stock
awards (the "Phantom Stock Awards") equivalent to 600,000 shares of common
stock, payable in cash, stock, or a combination of both at the Company's option.
The WorldCom Phantom Stock Awards are exercisable only on the following three
days: July 1, 2000, July 2, 2001, or July 2, 2002. WorldCom will be entitled to
receive any appreciation of the Common Stock over a base price of $5 3/32 per
share, but in no event shall the maximum payment exceed $25.00 per share. The
Phantom Stock Awards may be adjusted to be based on up to 700,000 shares and the
base price may be increased, but the maximum payment per share will not change.
The fair values of the WorldCom Option and Phantom Stock Awards were estimated
at the date of grant at $3.5 million and $0.6 million, respectively, and were
included as a component of the total consideration paid for the acquisition of
MFSNT.

The Phantom Stock Awards will be settled on a net basis and are payable in cash
or stock at the Company's option. In accordance with EITF 96-13, the Phantom
Stock Awards were initially measured at fair market value and reported as
permanent equity. Subsequent changes in fair value of the Phantom Stock Awards
will not be recognized. If the Phantom Stock Awards are ultimately settled in
a manner that requires that the Company deliver cash, the amount of cash paid
will be reported as a reduction of contributed capital.

Subsequent to the agreement to issue the Phantom Stock Awards, WorldCom agreed
not to exercise the Phantom Stock Awards until: (1) the registration statement
filed by the Company with respect to resale of shares of Common Stock issuable
upon conversion of the Series B Preferred Stock shall have been declared
effective, and (2) the Company shall obtain the consent or waiver of its
lenders under its secured credit facility permitting the Company to issue the
Phantom Stock Awards. Since it was considered remote that the Company would not
satisfy the above conditions, the Phantom Stock Awards were included in the
MFSNT purchase price.

On January 8, 1999, the Company and WorldCom agreed to convert the WorldCom
Option into stock appreciation rights ("SARs") with similar terms and
provisions, except that the SARs provide for the payment of cash to WorldCom
based upon the appreciation of the Company's common stock over a base price of
$7.00 per share. The SARs may revert back to the WorldCom Option allowing for
the exercise of all 2,000,000 shares (no longer subject to the 1,817,941 share
limitation) if required shareholder approval of the options is received. The
conversion of the WorldCom Option to SARs was treated as the reacquisition of
the WorldCom Option in exchange for a cash-settled obligation indexed to changes
in the fair market value of the Company's stock. The intrinsic value of the SARs
at the date of exchange of approximately $1.9 million was charged to equity and
reflected as a current liability. The liability will

F-15
<PAGE> 75

be adjusted at each balance sheet date for increases or decreases in the
intrinsic value, with an offsetting charge or credit to income, until the SARs
are paid, or if approved by the shareholders, converted back to an Option. The
exercise period for the SARs granted commenced on July 1, 1999, and ends on
January 2, 2002. As of October 31, 1999, the intrinsic value of the stock
appreciation rights liability was $3.7 million. Changes in the valuation of the
SARs have resulted in non-cash charges of $1.8 million during the year ended
October 31, 1999.

In conjunction with the acquisition of MFSNT, the Company entered into a
five-year agreement with WorldCom to provide telecommunications infrastructure
services to WorldCom (the "WorldCom Master Services Agreements") for a minimum
of $40.0 million per year, provided that the aggregate sum payable to MFSNT
shall be not less than $325.0 million, including a fee of 12 percent of
reimbursable costs under the agreement ("Aggregate Sum"). If MFSNT declines any
of the first $130.0 million of contract work in any year of the agreement, the
value of the declined work reduces the Aggregate Sum. MFSNT has agreed that
WorldCom will have met all of its obligations to MFSNT to the extent that
payments to MFSNT reach an aggregate of $500.0 million at any time during the
five-year term. During the fiscal years ended October 31, 1999 and 1998, the
Company recognized revenues of approximately $61.6 million and $30.3 million,
respectively, from the WorldCom Master Services Agreement.

In compliance with a contractual obligation with WorldCom, effective February
2000, the names of all subsidiaries were changed to eliminate "MFS." MFS Network
Technologies, Inc. changed its name to Adesta Communications, Inc. ("Adesta
Communications"), MFS Transportation Systems, Inc. changed its name to Adesta
Transportation, Inc. ("Adesta Transportation") and MFS TransTech, Inc. changed
its name to TransTech, Inc.

PATTON MANAGEMENT CORPORATION

On April 1, 1998, the Company purchased all of the outstanding common stock of
Patton Management Corporation ("Patton") for a total purchase price of
approximately $4.0 million. The acquisition was accounted for using the purchase
method of accounting. Goodwill of approximately $4.3 million (as adjusted) was
recorded and is being amortized on a straight-line basis over 20 years. The
results of operations are included in the consolidated statements of operations
since the date of acquisition.

DIAL COMMUNICATIONS, INC.

On December 2, 1996, Able acquired all the outstanding common stock of Dial. As
consideration, the Company paid $3.0 million in cash, issued 108,489 shares of
common stock (fair value of $0.6 million) and issued a $0.9 million promissory
note with a three-year term. The acquisition was accounted for using the
purchase method of accounting. The results of operations are included in the
consolidated statements of operations since the date of acquisition. Goodwill of
$1.5 million was recorded in this transaction for amortization over 20 years
using the straight-line method.

As part of the Company's ongoing efforts to strategically align the profitable
portions of its business and as a result of significant turnover and the
deterioration of underlying contracts, the Company terminated the operations of
Dial during the fiscal year ended October 31, 1999. For the year ended October
31, 1999, Dial had negative contract margins of $1.6 million and losses before
income taxes of $8.4 million which included a $1.3 million write-off of
goodwill.

GEORGIA ELECTRIC COMPANY

On October 12, 1996, the Company, through a wholly owned subsidiary, acquired
all of the outstanding common stock of Georgia Electric Company ("GEC"). As
initial consideration, the Company paid $3.0 million in cash. Under the terms of
the earn-out provision of the acquisition agreement, the Company will issue
shares of common stock over a five-year period beginning in fiscal 1997,
contingent upon the operating performance of GEC and the market value of the
Company's stock. Such amounts will be accounted for as purchase price
adjustments. The acquisition was accounted for using the purchase method of
accounting. The results of operations are included in the consolidated
statements of operations since the date of acquisition.

The Company increased goodwill by $1.8 million, $4.6 million and $1.3 million
for the years ended October

F-16
<PAGE> 76

31, 1999, 1998 and 1997, respectively, as a result of additional purchase price
due to the former owner of GEC under the terms of the earn-out provisions of the
acquisition agreement. The goodwill is being amortized over 20 years from the
acquisition date, using the straight-line method. Corresponding amounts are
reflected as accounts payable and accrued liabilities in the consolidated
balance sheets pending the issuance of the Company's common stock.

Pro Forma Financial Information (Unaudited)

Unaudited pro forma financial information for the Company is presented below as
if the acquisitions of MFSNT and Patton had taken place as of November 1, for
each of the following fiscal years ended October 31, (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $388,905 $481,707
Net loss (44,497) (26,796)
Loss applicable to common stock (53,384) (37,031)
Basic loss applicable to common stock per share (5.39) (4.35)
</TABLE>

The reserves for losses on uncompleted MFSNT contracts established by the
Company through purchase accounting of $28.8 million have been included as
losses in the 1998 pro forma information.

This unaudited pro forma information does not purport to be indicative of the
results of operations which would have resulted had the acquisitions been
consummated at the dates assumed.

6. ASSUMPTION OF COMSAT CONTRACTS:

On February 25, 1998, GEC assumed obligations to complete 12 contracts (the
"COMSAT Contracts") with the Texas Department of Transportation from CRSI
Acquisition, Inc., a subsidiary of COMSAT Corporation ("COMSAT"). The COMSAT
Contracts were for the installation of intelligent traffic management systems
and the design and construction of wireless communication networks. In exchange
for assuming the obligations to perform under the COMSAT Contracts, GEC received
consideration from COMSAT of approximately $15.0 million and assumed existing
payables of approximately $2.6 million.

On February 25, 1998, the date when GEC assumed the COMSAT contracts, the
remaining amounts billable to the customers for these contracts totaled $17.0
million. The estimated costs to complete these contracts for COMSAT was from
$17.0 million to $27.3 million. GEC made the following entry to reflect the
assumption of the COMSAT contracts (amounts in thousands):

<TABLE>
<S> <C>
Consideration received:
Cash $ 4,663
Accounts receivable 3,754
Equipment and other assets 6,548
-------------------------------------------------------------------------------------------
Subtotal 14,965
Accounts payable assumed (2,549)
-------------------------------------------------------------------------------------------
Deferred revenue (net amount received from COMSAT to complete the contracts) $(12,416)
-------------------------------------------------------------------------------------------
</TABLE>

The following is a summary of revenues and costs associated with the COMSAT
contracts for the fiscal years ended October 31 (amounts in thousands):

<TABLE>
<CAPTION>
1999 1998
--------------------------------------------------------------------------
<S> <C> <C>
Billings on the COMSAT contracts (1) $ 7,952 $11,327
Deferred revenue recognized 3,935 8,481
--------------------------------------------------------------------------
Total revenues recognized 11,887 19,808
Direct contract costs 8,675 10,672
--------------------------------------------------------------------------
Gross margin from COMSAT contracts $ 3,212 $ 9,136
--------------------------------------------------------------------------
</TABLE>

(1) Billings on the COMSAT contracts also include approved change order
revenues associated with these contracts but not anticipated when GEC
assumed such contracts.

F-17
<PAGE> 77

7. UNCOMPLETED CONTRACTS:

Uncompleted contracts consist of the following at October 31, (in thousands):

<TABLE>
<CAPTION>
1999 1998
--------------------------------------------------------------------------
<S> <C> <C>
Costs incurred on uncompleted contracts $ 212,590 $ 116,073
Earning recognized on uncompleted contracts 36,704 29,086
--------------------------------------------------------------------------
Total 249,294 145,159
Less billings to date (229,557) (97,120)
--------------------------------------------------------------------------
Net $ 19,737 $ 48,039
--------------------------------------------------------------------------
</TABLE>

Included in the accompanying consolidated balance sheets under the following
headings at October 31, (in thousands):

<TABLE>
<CAPTION>
1999 1998
-------------------------------------------------------------------------
<S> <C> <C>
Costs and profits in excess of billings on
uncompleted contracts $ 71,808 $ 105,478
Billings in excess of costs and profits on
uncompleted contracts (6,478) (6,328)
Accruals for incurred job costs (45,593) (51,111)
-------------------------------------------------------------------------
Net $ 19,737 $ 48,039
-------------------------------------------------------------------------
</TABLE>

8. NETWORK ASSETS HELD FOR SALE:

Assets held for sale at October 31, 1998, included approximately $26.0 million
of certain fiber optic conduit that was constructed by MFSNT prior to the MFSNT
Acquisition (the "NYSTA Network") and sold during the year ended October 31,
1999.

A portion (approximately 528 miles) of the NYSTA Network, was constructed on
rights of way obtained from the New York State Thruway Authority (i.e.,
"NYSTA"). This portion of the network is referred to as the "On-NYSTA network."
Separately, MFSNT was granted use of the right of way from others for a
contiguous network (the "Off-NYSTA" network) that connects the "On-NYSTA"
network to Cleveland, Ohio.

MFSNT owned or owns the conduit and equipment shelters installed in both
portions of the network. The conduit network was substantially complete and sold
at the date of acquisition in July 1998. As the system was constructed, the
costs had been initially deferred as "inventory" because it was MFSNT's
intention to sell undivided interests (indefeasible rights of use, or "IRU's")
in the owned ducts and shelters to other users. The fiber and electronics for
the network are generally owned by the users, although the Company retained
rights to a limited amount of excess capacity for some minor segments of the
network. The right of way for the On-NYSTA portion of the network is owned by
NYSTA (see revenue sharing with NYSTA below). Title to the On-NYSTA portion of
the network will transfer to NYSTA after twenty years.

The Company is not in the telephone or data distribution business, so no part of
the networks have been viewed as the construction of productive assets for their
own use.

The construction accounting was implemented with respect to the NYSTA Network as
follows:

- Total construction costs were estimated and accumulated in the job cost
ledgers as incurred. Costs incurred were effectively charged to cost of
construction and maintenance or left on the balance sheet as "costs and
profits in excess of billings on uncompleted contracts" based on signed
contracts from users.
- The approach treated each new contract signed as a sale of partially
completed "inventory." Some of the revenue would be recognized on signing
based on the calculated percentage complete and a proportionate part

F-18
<PAGE> 78

of the "inventory" costs would be charged off. In this way, revenues from
each new contract were effectively recognized on a progress to completion
basis.
- When it became apparent that total revenues to be received from sale of the
inventory, as well as profits from separate installation agreements with
the users, would be less than the costs to construct the conduit network,
an estimated loss expected to be incurred to complete the project was
accrued.

As owner of the right of way, NYSTA shares in user fees from the "On-NYSTA"
system. The arrangement entitled MFSNT to retain 100% of user fees up to
approximately $50.7 million. Then, NYSTA was entitled to 10% of user fees until
MFSNT had received and retained, as cost recovery, approximately $95.5 million
(i.e., from cumulative user fees of approximately $101.3 million); thereafter,
NYSTA is entitled to 50% of user fees and 20% of revenues received by MFSNT for
performance under operation and maintenance ("O&M") contracts with the users.
The O&M contracts provide for installment payments to MFSNT, generally over
twenty years, to offset costs of providing this service.

As part of the agreement, MFSNT also installed and maintains for NYSTA, free of
charge, a 16-strand fiber optic communications network within the conduit system
owned by MFSNT for the sole use of NYSTA.

At the date of acquisition of MFSNT by the Company, negotiations were in process
with a telecommunications company for purchase of nearly all the remaining
network capacity. In purchase accounting, the Company applied a similar
conceptual "inventory" approach to the valuation of this asset. It was estimated
that the user would pay a one-time, up-front fee of $34.5 million for the IRU's
with respect to both the On-NYSTA and Off-NYSTA portions of the network. Of that
amount it was estimated that approximately $8.5 million would be payable to
NYSTA based on the revenue sharing arrangement. Consequently, the Company
allocated $26.0 million of the purchase price to this asset. When the sale
closed in April 1999, Able recorded actual revenues of $35.7 million, and costs
of approximately $34.7 million, equal to $26.0 million assigned to the conduit
in purchase accounting, plus a revenue sharing payment due NYSTA from the
transaction of approximately $8.7 million.

The agreement with NYSTA also provides for sharing of "profits" experienced by
MFSNT in excess of certain specified percentages of related costs with respect
to fiber and equipment installation contracts for the "On-NYSTA" system
separately entered into by MFSNT with the users. Disputes have arisen between
MFSNT and NYSTA with respect to sharing of revenues from a specific installation
contract. Upon closing the April 1999 sale of the remaining conduit inventory, a
Partial Release and Settlement Agreement was made with NYSTA. From those
proceeds, $6.8 million was placed into escrow until NYSTA's rights to share in
revenues equal to twice that amount can be decided through arbitration or
otherwise settled. The escrowed funds are included in other non-current assets
as of October 31, 1999.

With only two exceptions, user fees were paid in their entirety at or shortly
after the time of execution of the user agreements. However, two of the user
agreements provide for the fees to be paid in installments over twenty years.
MFSNT had included these amounts in unbilled receivables (costs and profits in
excess of billings) at their gross, undiscounted future amounts. Consequently,
an adjustment was recorded by the Company to reallocate the purchase price to
recognize a discount on these long-term receivables. The discounted (at 10%)
present value of these long-term receivables was approximately $3.8 million at
October 31, 1999. Interest income from amortization of the discount was
approximately $0.2 million for the year ended October 31, 1999.

While MFSNT and the Company have sold IRU's that constitute virtually all the
usuable value of the network, MFSNT is still the legal owner and responsible for
property taxes assessed on the network. Ownership of the On-NYSTA portion of the
network automatically transfers to NYSTA after twenty years. Consistent with the
concept of having sold the network, MFSNT accrued and expensed, prior to the
acquisition, the estimated present value of future property taxes that would be
payable over the twenty-year term of the agreements. The Company recorded this
liability in purchase accounting at approximately $15.0 million, using a
discount rate of 15%. Amortization of the discount is included in interest
expense and amounted to $2.3 million and $0.8 million for the years ended
October 31, 1999 and 1998, respectively.

Prospective Accounting for Sales of Iru's: FIN 43 broadens the definition of
real estate and will likely require that some or all elements of fiber optic
networks (e.g., right-of-way and conduit) must now be defined as real estate and
revenue recognition criteria for the sale or lease of IRU's will be provided by
SFAS No. 66,

F-19
<PAGE> 79

"Accounting for Sales of Real Estate." SFAS 66 is a different accounting model
and is likely to result in the deferral and amortization of both costs and
revenues related to network assets that would have previously been accounted for
as described above. Among other requirements, SFAS 66 requires title to transfer
to the buyer for up-front revenue recognition to be appropriate. FIN 43 is
effective for all sales of real estate with property improvements or integral
equipment entered into after June 30, 1999. Consequently, none of the
transactions entered into by MFSNT prior to July 2, 1998, or the conduit sale
closed by the Company in April 1999 are subject to those provisions. However,
for transactions subsequent to June 30, 1999, the Company will be required to
apply the guidance of FIN 43.

Much of the conceptual basis for the IRU accounting historically followed by
MFSNT is that the arrangements for use of the conduit qualify for revenue
recognition as sales-type leases under SFAS No. 13. No part of the transaction
was viewed as a "real estate" transaction, so the legal transfer of title to the
"leased" assets was not considered determinative as to whether or not the
transactions could be recorded as sales versus operating leases.

9. INVESTMENT IN KANAS (HELD FOR SALE):

An equity interest in Kanas was acquired in the MFSNT Acquisition, and has been
held for sale since that time. The original carrying value of the Company's
interest in Kanas, which was assigned in purchase accounting, represents the net
proceeds originally expected to be received from the sale of Kanas stock and was
based, in part, on active negotiations with potential buyers.

The Company is a 25% owner of Kanas, with the remaining 75 percent owned by
native corporations of Alaska. Kanas was established by its shareholders with a
$100,000 total equity contribution ($25,000 per shareholder) to construct a
telecommunications network along the Alaskan Pipeline system between Prudhoe
Bay, Alaska and Valdez, Alaska (the "Alyeska Network"). MFSNT had been
contracted by Kanas to build the fiber optic network which cost in excess of
$83.0 million and was funded by Kanas through a credit agreement that is
guaranteed by WorldCom.

While Kanas provided MFSNT with notice of substantial completion in December
1998, the owner of the Alyeska Network has yet to give Kanas final acceptance of
the system and significant outstanding claims exist among the parties. As
described in Note 4, "Review By the Securities and Exchange Commission," Note 5,
"Acquisitions," and Note 10, "Reserves For Losses on Uncompleted Contracts,"
reserves were provided in purchase accounting for estimated amounts payable by
the Company to complete the project and settle outstanding claims. While MFSNT
has outstanding claims against Alyeska for work it believes was outside the
scope of the contract of at least $15.8 million, no recognition has been given
to those claims in the accompanying consolidated financial statements as
resolution of those matters remains uncertain. The construction costs incurred
by MFSNT significantly exceeded the revenues recognizable under the contract
terms.

Kanas owns and is responsible for maintaining the Alyeska Network. While the
Company does not participate in the day-to-day management of Kanas, Kanas has
contracted with MFSNT to operate and maintain the Alyeska Network for 15 years.
The term of the Kanas O&M agreement began in December 1998. To date, service
contract revenues have been insufficient to cover costs of performance and are
not projected to be sufficient to do so for at least the foreseeable future. As
described in Note 2, "Summary of Significant Accounting Policies," and Note 4,
"Review By the Securities and Exchange Commission," these operating losses are
being recognized as incurred.

As of October 31, 1999, the unaudited financial statements of Kanas reflected
total assets, liabilities and net deficit of $80.1 million, $87.8 million and
$7.7 million, respectively. The deficit includes approximately $8.9 million of
network depreciation. Management has been informed that as of October 31, 1999,
Kanas was current with respect to payment of interest on its debt, but it was in
technical default of loan covenants and has been assessed interest at a default
rate.

At the date of the acquisition of MFSNT, the Company anticipated a near-term
sale of its interest in Kanas. Accordingly, the estimated amount expected to be
realized on sale was allocated to this investment in purchase accounting and, in
accordance with the guidance of EITF Issue 87-11, "Allocation of Purchase Price
to Assets to be Sold," the equity method of accounting was not employed.
However, the anticipated final acceptance of the network by Alyeska has yet to
occur and the timing of any sale of this interest by the Company is uncertain.
Consequently, effective one year from the date of acquisition, the Company began
to apply equity method accounting to this

F-20
<PAGE> 80

investment based on the guidance of EITF Issue 90-06, "Accounting for Certain
Events Not Addressed in EITF 87-11 Relating to an Acquired Operating Unit to be
Sold."

In addition to equity in losses of Kanas, the Company is amortizing the
difference between the carrying value of the Kanas investment and its net equity
of Kanas over 19 years which is the remaining goodwill life related to the
acquisition of MFSNT. The amount of loss the Company recorded against the
carrying value of the asset was approximately $0.4 million, while the associated
amortization of the difference in carrying value was $0.2 million.

During the construction of the Alyeska Network, which was completed in December
1998, Kanas was a development-stage company. The Company has received no
dividends from Kanas.

WorldCom was and continues to be the guarantor of the payment obligations of
Kanas under its credit agreement. In conjunction with the acquisition of MFSNT,
the Company has agreed to indemnify WorldCom under its guarantee. The aggregate
commitment of the lenders under the Kanas credit agreement at October 31, 1999
was approximately $87.5 million.

10. RESERVES FOR LOSSES ON UNCOMPLETED CONTRACTS:

<TABLE>
<CAPTION>
Network Transportation
Services Services Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, July 2, 1998 16,266 24,234 40,500
Amount utilized (8,237) (6,873) (15,110)
-------------------------------------------------------------------------------
Balance, October 31, 1998 8,029 17,361 25,390
Valuation adjustments (1) 2,463 (3,082) (619)
Amount utilized (4,789) (11,362) (16,151)
-------------------------------------------------------------------------------
Balance, October 31, 1999 $ 5,703 $ 2,917 $ 8,620
-------------------------------------------------------------------------------
</TABLE>

(1) The valuation adjustments recorded during the fiscal year ended October 31,
1999, were the result of final projected cost estimates on previously
identified Loss Jobs unavailable at the date of acquisition.

11. DEBT:

The Company's debt consists of the following at October 31, (in thousands):

<TABLE>
<CAPTION>
1999 1998
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving Credit Facility with bank that is currently in default which gives the lender the
right to accelerate payment, maturing November 2000, interest payment dates and rates vary
(9.61 percent at October 31, 1999, including default interest of 2 percent and 7.69 percent
at October 31, 1998), secured by the Company's existing and future restricted subsidiaries $35,000 $35,000
</TABLE>

F-21
<PAGE> 81

<TABLE>
<S> <C> <C>
Note payable to WorldCom maturing November 2000, interest is payable quarterly at an annual
rate of 11.5 percent. Subsequent to October 31, 1999, $25.5 million was converted to common
stock. Refer to Note 23, "Subsequent Events." 30,000 30,000

Senior Subordinated Notes, repaid during fiscal year 1999, original agreement provided for
annual payments of $5.0 million January 6, 2004 and 2005, 12.0 percent interest per annum, in
arrears, paid semi-annually -- 10,000

Notes payable 303 860
---------------------------------------------------------------------------------------------------------------------
65,303 75,860

Capital leases 1,069 1,350
---------------------------------------------------------------------------------------------------------------------
66,372 77,210
Less discount on Senior Subordinated Notes -- (1,087)
---------------------------------------------------------------------------------------------------------------------
66,372 76,123
Less current portion 35,754 14,438
---------------------------------------------------------------------------------------------------------------------
Long-term debt, non-current portion $30,618 $61,685
---------------------------------------------------------------------------------------------------------------------
</TABLE>

CREDIT FACILITIES

On June 11, 1998, the Company obtained a $35.0 million three-year senior secured
revolving credit facility ("Credit Facility") with a $5.0 million sub-limit for
the issuance of standby letter(s) of credit. The Credit Facility allows the
Company to select an interest rate based upon the prime rate or on a short-term
LIBOR, in each case plus an applicable margin, with respect to each draw the
Company makes thereunder. Interest is payable monthly in arrears on base rate
advances and at the expiration of each interest period for LIBOR advances. The
Credit Facility contains certain financial covenants which require, among other
conditions, that the Company maintain certain minimum ratios, minimum fixed
charge coverage, interest coverage, as well as limitations on total debt and
dividends to shareholders. The Credit Facility is secured by a perfected first
priority security interest on all tangible assets of the Company and a pledge of
the shares of stock of each of the Company's subsidiaries operating in the
United States. On June 30, 1998, the Credit Facility was amended to include (i)
the Company's acquisition of MFSNT and the related financing of such
transaction, (ii) changes in financial covenants related thereto, and (iii)
other amendments relating to investments, pledging and intercompany matters. At
October 31, 1998, and thereafter, the Company was in violation of certain of the
covenants in the Credit Facility, which were subsequently waived through
November 1, 1999.

At October 31, 1999, the Company is in technical default of certain provisions
of the Credit Facility. As such, the Credit Facility is immediately callable by
the holder and is therefore classified as a current liability in the
accompanying October 31, 1999, consolidated balance sheet. During the default
period, the Company is required to pay a default penalty of two percent per
annum on all outstanding balances.

WORLDCOM NOTE

In conjunction with the acquisition of MFSNT, the Company executed a $30.0
million promissory note to WorldCom ("WorldCom Note"). Subsequent to October 31,
1999, the Company entered into an agreement with WorldCom to convert
approximately $25.5 million of the WorldCom Note into the Company's Common
Stock. The Company issued a note for the difference between the $30.0 million
and $25.5 million with interest at 11.5 percent per annum due February 2001.
Refer to Note 23, "Subsequent Events."

SENIOR SUBORDINATED NOTES

Effective January 6, 1998, the Company issued $10.0 million of unsecured 12
percent Senior Subordinated Notes due January 6, 2005 (the "Senior Subordinated
Notes") with detachable warrants to purchase 409,505 shares of common stock at a
price of $8.25 per share, which were valued at approximately $1.2 million
resulting in a corresponding discount applicable to the Senior Subordinated
Notes.

In February 1999, the Company repurchased the Senior Subordinated Notes for
approximately $11.6 million using part of the proceeds from the WorldCom Advance
described in Note 12, "WorldCom Advance." The purchase of

F-22
<PAGE> 82

Senior Subordinated Notes resulted in an extraordinary loss on the early
extinguishment of debt of approximately $3.0 million, net of tax of zero.

AGGREGATE MATURITIES

The aggregate maturities of long-term debt and capital leases for years
subsequent to October 31, 1999, are as follows:

<TABLE>
<S> <C>
2000 $35,754
2001 30,321
2002 75
2003 19
2004 19
Thereafter 184
-----------------------------------------------------------
$66,372
-----------------------------------------------------------
</TABLE>

12. WORLDCOM ADVANCE:

In February 1999, WorldCom advanced the Company $32.0 million ("WorldCom
Advance") as an advance against amounts otherwise payable by WorldCom to the
Company pursuant to the WorldCom Master Services Agreement. The proceeds of the
WorldCom Advance were used to facilitate the purchase of 2,785 shares, or
approximately 78% of the outstanding shares of Series B Preferred Stock (refer
to Note 14, Preferred Stock), and the purchase of the outstanding Senior
Subordinated Notes.

The WorldCom Advance bears no interest and is subordinate to the Credit
Facility. Payments under the WorldCom Advance were further subordinated to
liabilities associated with certain construction projects that are expected to
be completed during fiscal 2001.

The WorldCom Advance agreement also provides for additional advances to the
Company through November 30, 1999, of up to $15.0 million against amounts
otherwise payable pursuant to the WorldCom Master Services Agreement. These
additional advances are non-interest bearing and, subject to the subordination
agreements described above, include a stated date for repayment to WorldCom of
November 30, 2000. To date, the Company has not received any additional advances
against the $15.0 million available.

13. COMMITMENTS AND CONTINGENCIES:

LITIGATION

In 1998, SIRIT Technologies, Inc. ("SIRIT") filed a lawsuit in the United States
District Court for the Southern District of Florida, against the Company and
Thomas M. Davidson, who subsequently became a member of the Company's Board of
Directors. SIRIT asserts claims against the Company for tortuous interference,
fraudulent inducement, negligent misrepresentation and breach of contract in
connection with the Company's agreement to purchase the shares of MFSNT and
seeks injunction relief and compensatory damages in excess of $100.0 million.

F-23
<PAGE> 83

In 1997, U.S. Public Technologies, Inc. ("USPT") filed a lawsuit in the United
States District Court for the Southern District of California, (San Diego),
against MFSNT for breach of contract, breach of an alleged implied covenant of
good faith and fair dealing, tortuous interference, violation of the California
Unfair Competition Act, promissory estoppel and unjust enrichment in connection
with a Teaming Agreement between MFSNT and USPT concerning the Consortium
Regional Electronic Toll Collection Implementation Program in the state of New
Jersey. In this lawsuit, USPT seeks actual damages in excess of $8.5 million and
unspecified exemplary damages. Discovery has not yet commenced in this lawsuit.

CONTRACTS

The Company has and will continue to execute various construction and other
contracts which may require the Company to, among other items, maintain specific
financial parameters, meet specific milestones and post adequate collateral
generally in the form of performance bonds. Failure by the Company to meet its
obligations under these contracts may result in the loss of the contract and
subject the Company to litigation and various claims, including liquidated
damages. WorldCom continues to provide performance bonds on certain contracts
acquired in the acquisition of MFSNT.

LEASED PROPERTIES

As of October 31, 1999, the Company leased office space and equipment under
various noncancellable long-term operating lease arrangements. Rental expense
for operating leases amounted to approximately $2.3 million, $2.4 million and
$0.8 million for the fiscal years ended October 31, 1999, 1998 and 1997,
respectively.

During fiscal year 1999, the Company leased certain equipment under capitalized
lease agreements, which have been included in Property and Equipment. Cost and
accumulated amortization of such assets as of October 31, 1999, totaled $3.2
million and $1.8 million, respectively.

Future minimum lease payments required under operating and capital leases with
initial terms in excess of one year are as follows (in thousands):

F-24

<PAGE> 84

<TABLE>
<CAPTION>
YEARS ENDING OCTOBER 31, CAPITAL LEASES OPERATING LEASES
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

2000 $ 707 $ 3,549
2001 488 2,573
2002 60 1,938
2003 -- 1,386
2004 -- 811
Thereafter -- --
-----------------------------------------------------------------------------------------------------------------------
Total minimum lease payments $1,255 $10,257
-----------------------------------------------------------------------------------------------------------------------
Present value of net minimum lease payments $1,069
Less current installments or obligations under capital leases 707
-----------------------------------------------------------------------------------------------------------------------
Obligations under capital leases, excluding current installments $ 362
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

14. PREFERRED STOCK:

SERIES A PREFERRED

Effective December 20, 1996, the Company completed a private placement
transaction of 1,000 shares of $10 par value, Series A Convertible Preferred
Stock (the "Series A Preferred Stock") and warrants to purchase 200,000 shares
of the Company's common stock at $9.82 per share. Proceeds from the offering
totaled $6.0 million. Each share of Series A Preferred Stock was convertible
into shares of the Company's common stock after April 30, 1997, at the lesser of
$9.82 per share or at a discount (increased to a maximum of 20 percent for
conversions after December 20, 1997) of the average closing bid price of a share
of common stock for three days preceding the date of conversion. The Company
recognized the discount attributable to the beneficial conversion privilege of
approximately $1.3 million by accreting the amount from the date of issuance,
December 20, 1996, through the last date the discount rate increase could occur,
December 20, 1997, as an adjustment of net income attributable to common
shareholders. This accretion adjustment, which also represents the adjustment
needed to accrete to the redemption value of the Preferred Stock, resulted in a
charge to retained earnings and accompanying credit to the Preferred Stock. The
Preferred Stock accrued dividends at an annual rate of five percent and was
payable quarterly in arrears in cash or through a dividend of additional shares
of Preferred Stock.

During fiscal 1998, all remaining Series A Preferred Stock was converted into
common stock pursuant to the terms thereof and the related number of warrants
was reduced to 62,000, due to either conversion or forfeiture.

SERIES B PREFERRED

Effective June 30, 1998, the Company completed a private placement transaction
of 4,000 shares of $0.10 par value, non-voting Series B Convertible Preferred
Stock bearing an annual dividend rate of four percent (the "Series B Preferred
Stock") and warrants to purchase 1,000,000 shares of the Company's common stock
at a then exercise price of $19.80 per share (the "Series B Preferred Stock
Warrants"). The net proceeds from the transaction, after transaction costs of
$1.9 million, totaled $18.1 million. The Series B Preferred Stock Warrants are
exercisable for a five-year period commencing June 30, 1998, and were assigned a
value of $5.4 million on the date of the transaction.

The Series B Preferred Stock was convertible immediately into shares of the
Company's common stock at 97 percent of the trading price of the common stock,
determined by a prescribed calculation, immediately preceding the conversion
date. The conversion amount of each share of Series B Preferred Stock was equal
to its face value of $5,000, plus any unpaid dividends thereon. The proceeds
from the Series B offering were allocated as follows (in millions):

<TABLE>
<S> <C> <C>
Gross offering proceeds (face value of preferred stock) $20.0
Offering costs (1.9)
Value of Series B Preferred Stock warrants issued (5.4)
----------------------------------------------------------------------------------------------------------
Amount attributable to preferred stock and beneficial conversion privilege 12.7 $12.7
Value of common stock issuable on conversion (face value divided by 97%) -- 20.6
----------------------------------------------------------------------------------------------------------
Amount deemed paid for the beneficial conversion privilege (7.9) $(7.9)
----------------------------------------------------------------------------------------------------------
Amount deemed paid for Series B Preferred Stock $ 4.8
----------------------------------------------------------------------------------------------------------
</TABLE>

Because the Series B Preferred Stock was immediately convertible, the discount
attributable to the beneficial

F-25
<PAGE> 85

conversion privilege was fully amortized at the date of issue and reflected as a
reduction in income applicable to common stock for the year ended October 31,
1998.

In September 1998, 436 shares of the Series B Preferred Stock were converted to
approximately 1.0 million shares of the Company's common stock.

The terms of the Series B Preferred Stock provided that if certain events of
default occurred, the holders could require the Company to redeem their shares
for cash at a premium price. During the first quarter of fiscal 1999, the
Company was deemed to be in technical violation of the Series B Preferred Stock
due to its failure to have a registration statement declared effective by
December 27, 1998, covering the common stock underlying the Series B Preferred
Stock and Warrants. During the first quarter of fiscal 1999, the holders of the
Series B Preferred Stock notified the Company of their intent to exercise their
redemption rights, however, the notice was subsequently deferred. The carrying
value of the Series B Preferred Stock was excluded from shareholders' equity at
October 31, 1998.

In February 1999, the Company purchased 2,785 shares of the Series B Preferred
Stock from the original holders for $18.9 million. The transaction was treated
as a repurchase of the shares and the related beneficial conversion feature. The
excess of the amount paid over the carrying value of the preferred stock and the
intrinsic value of the beneficial conversion privilege was recognized as an
additional loss applicable to common stock of approximately $4.5 million. The
holders of the remaining shares agreed to either waive all outstanding defaults
under the remaining Series B Preferred Stock or refrain from exercising any
remedies with respect to any such outstanding defaults until May 18, 1999.
During such period of time, the Company agreed to use its best efforts to have a
registration statement declared effective. Subsequent to May 18, 1999, the
Company received further extensions. As of October 31, 1999, the Company has not
been successful in getting a registration statement declared effective related
to the remaining Series B Preferred Stock.

In connection with the repurchase of the Series B Preferred Stock shares in
February 1999, the Company agreed to a modification of the conversion price with
respect to the remaining 779 shares of Series B Preferred Stock. The conversion
price was changed to a fixed amount of approximately $3.50 per share, which was
further reduced by 1.5 percent per month until a registration statement was
declared effective. The modification of the conversion price of the remaining
779 shares of Series B Preferred Stock resulted in a charge to income applicable
to common stock of approximately $6.4 million in the second quarter of fiscal
1999.

In February 1999, the Company also agreed to certain modifications in the
conversion price of the Series B Preferred Stock Warrants. The conversion price
of warrants to purchase 370,000 shares of the Company's common stock was reduced
to $13.25 per share and the conversion price of warrants to purchase 630,000
shares of the Company's common stock was reduced to $13.50 per share. The
modification of the conversion prices of the Series B Preferred Stock Warrants
resulted in a charge to income applicable to common stock of approximately $1.9
million in the second quarter of fiscal 1999. The charge was determined based on
valuation of the Series B Preferred Stock warrants immediately before the
modification and immediately after the modification using a Black Scholes
pricing model.

In May 1999, the Company repurchased the warrants to purchase 630,000 shares of
the Company's common stock for approximately $1.9 million, which amount was
approximately $2.7 million less than the previous valuations of those warrants
that was made when the warrants were issued and modified.

In May 1999, the Company acknowledged that it was in default on the Series B
Preferred Stock and agreed that further punitive default provisions included in
the terms of the Series B Preferred Stock had been triggered. Those provisions
effectively allowed the holders to convert their shares to common stock and put
the common stock to the Company for a redemption price per common share of
$12.125. Because of the put provision being invoked, the carrying value of the
Series B Preferred Stock was adjusted in May 1999 to reflect the calculated
redemption value. As the conversion price is decreased by 1.5 percent per month,
additional common shares issuable on conversion have been calculated and the
redemption amount has been increased as additional charges against income
applicable to common stock. As of October 31, 1999, the calculated redemption
price was approximately $16.3 million. The recharacterization of the Series B
Preferred Stock as a cash obligation of the Company resulted in charges to
income applicable to common stock of approximately $4.8 million and $1.1 million
in the third and fourth quarters of fiscal 1999, respectively.

F-26
<PAGE> 86

A summary of the above described transactions and their effects on equity and
income applicable to common stock is presented below (amounts in $millions):

Additional
Series B Paid-in Charged to
Stock Warrants Capital Earnings
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Proceeds from Series B offering $ 12.7 $ 5.4 $ 7.9 $ (7.9)
Conversion of 436 Series B shares (1.4) -- 1.4 --
----------------------------------------------------------------------------------------------------------------
Balances at October 31, 1998 11.3 5.4 9.3 (7.9)
---------
Repurchase of 2,785 Series B shares (8.9) -- (5.5) (4.5)
February 1999 modifications of terms-
Additional embedded dividend -- -- 6.4 (6.4)
Additional warrant valuation -- 1.9 -- (1.9)
Repurchase of 630,000 warrants for $1.9 million -- (4.6) 2.7 --
May 1999 recharacterization of Series B Stock as put
liability 13.9 -- (8.0) (5.9)
---------
Total charged to earnings, year ended October 1999 (18.7)
----------------------------------------------------------------------------------------------------------------
Balances at October 31, 1999 $ 16.3 $ 2.7 $ 4.9 $ (26.6)
----------------------------------------------------------------------------------------------------------------
</TABLE>

As described in Note 23, "Subsequent Events," the Company repurchased the
remaining Series B Preferred Stock in February 1999. At October 31, 1999, the
original warrants to purchase 370,000 shares of the Company's common stock
remain outstanding.

15. STOCK OPTIONS AND OTHER STOCK AWARDED TO EMPLOYEES:

In fiscal 1996, the Company's shareholders adopted a stock option plan for the
issuance of up to 550,000 shares which included provisions for both incentive
and non-qualified stock options (the "Stock Option Plan") and which expires on
September 19, 2005. On April 24, 1998, the Company's shareholders amended the
Stock Option Plan to increase the aggregate number of shares of Common Stock
issuable under the Stock Option Plan from 550,000 to 1,300,000. The Company
intends to file a registration statement under the Securities Act of 1933 to
register these 750,000 additional shares of Common Stock reserved for issuance
under the Stock Option Plan.

Stock options are generally granted with an exercise price equal to the fair
market value of the Common Stock as of the date of grant. All outstanding
options have an option term ranging from 3 to 10 years with an average
outstanding life of 4.8 years as of October 31, 1999. Vesting terms range from
immediately vested to three year vesting terms. Stock options are summarized
below (shares in thousands):

1999 1998 1997
-----------------------------------------------------------------------------------------------------------------------
Option Price Option Price Option Price
Shares Per Share Shares Per Share Shares Per Share
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 664 $6.20-$14.00 372 $6.00-$7.81 160 $5.75-$6.88
Grants 1,134 5.75-9.94 592 5.34-14.00 323 6.00-7.81
Exercises (79) 5.75-7.25 (212) 5.34-7.81 (72) 6.00-6.88
Cancellations (647) 5.75-14.00 (88) 6.38-7.81 (39) 5.88-7.81
-----------------------------------------------------------------------------------------------------------------------
Outstanding, end of year 1,072 5.75-9.94 664 6.20-14.00 372 6.00-7.81
-----------------------------------------------------------------------------------------------------------------------
Options exercisable, end of year 652 5.75-9.94 91 6.20-14.00 95 6.00-7.81
-----------------------------------------------------------------------------------------------------------------------
Weighted average fair value of
options granted during the
year $ 6.61 $ 8.56 $ --
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

F-27
<PAGE> 87

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------------------------------------------------------
Weighted
Average Weighted
Range of Number Remaining Average Number Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$5.75-$5.75 780 4.81 $5.75 507 $5.75
6.00- 7.25 90 5.31 7.04 67 6.97
7.43- 8.75 67 8.73 8.05 32 7.57
9.94- 9.94 135 2.73 9.94 46 9.94
--------------------------------------------------------------------------------------------------
$5.75-$9.94 1,072 4.84 $6.59 652 $6.34
--------------------------------------------------------------------------------------------------
</TABLE>

The Board of Directors has committed to issue, subject to shareholder approval,
approximately 1.6 million options with strike prices ranging from $5.75 to $8.00
to directors, officers and consultants. The Company may report significant
compensation expense at or subsequent to the date of shareholder approval, if
and when obtained, for any excess of the fair market value at that date over the
strike prices of these options. The Company will occasionally issue options to
consultants. The expense related to options granted to consultants was
approximately $0.1 million in 1999 based on the fair value of the services or
the options in accordance with SFAS No. 123.

The Company accounts for stock options in accordance with APB No. 25. SFAS 123
requires supplemental disclosure of stock-based compensation determined based on
the fair value of options as of the date of grant. The compensation so
determined is recognized for pro forma purposes over the vesting period of the
options. For the purpose of determining the pro forma amounts shown below, the
fair value of each option was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions for options granted in 1999, 1998 and 1997, respectively; risk-free
interest rates of 5.97 percent, 5.40 percent, 5.65 percent; dividend yield of
zero percent for each year; expected lives of 1.5 years, two to six years and
two years; volatility of .59, .549-.561 and .463. Had compensation expense been
recognized in accordance with SFAS No. 123 the Company's income (loss)
applicable to common stock would approximate the pro forma amounts shown below
(in thousands except per share amounts):

<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------------------
1999 1998 1997
----------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) applicable to common stock:
As reported (36,758) (5,840) 1,331
Pro forma (38,302) (7,303) 1,121
Diluted income (loss) applicable to
common stock per share:
As reported $ (3.10) $ (0.59) $ 0.16
Pro forma (3.23) (0.74) 0.13
</TABLE>

Subject to shareholder approval, the Board of Directors has approved a grant of
50,000 shares of common stock to the Company's Chief Executive Officer ("CEO")
at no cost to him. The Board has also approved the payment by the Company of
taxes that will be payable by the CEO with respect to the grant. When and if
shareholder approval is received, the Company will recognize compensation
expense, the amount of which may be significant, for the fair market value of
the shares, on the date of shareholder approval, and cash paid to tax protect
the CEO.

16. FIBER MARKETING RIGHTS:

The following fiber optic network construction projects were executed by MFSNT
prior to the July 1998 acquisition of MFSNT and contain continuing fiber
marketing rights:

Bay Area Rapid Transit (San Francisco Bay Area) ("BART"). The network was fully
constructed at the date of acquisition and the Company has no ownership rights.
It does have a right to market excess capacity on the system and is entitled to
receive commissions from BART based on a percentage of any resulting user fees
received by BART. During the years ended October 31, 1999 and 1998, commissions
of approximately $0.4 million and $0.3 million were earned by the Company under
this arrangement.

Illinois State Toll Highway Authority ("ISTHA"). This conduit network was under
construction at the date of acquisition and the Company has no ownership rights.
The Company does have marketing rights and is entitled to a percentage of user
fees successfully negotiated on behalf of ISTHA. The Company can also separately
negotiate with users for installation of fiber and electronic equipment. During
the years ended October 31, 1999 and 1998, the Company earned commissions of
$2.0 million and $1.2 million. Revenues from separate installation contracts
with the users were approximately $10.1 million and zero during the fiscal years
ended October 31, 1999 and 1998, respectively.

17. FINANCIAL ADVISORY SERVICES:

Two related firms, L. Dolcenea, Inc. and Platinum Advisory Services, Inc., were
paid approximately $1.0 million by the Company

F-28
<PAGE> 88

for various advisory services during the year ended October 31, 1999, including
services related to extensions of default waivers under the Series B Preferred
Stock. L. Dolcenea, Inc. was also paid $1.0 million by the Company in July 1998
related to the original issuance of the Series B Preferred Stock. The services
billed to the Company include assistance with negotiation of a proposed
settlement with SIRIT (Refer to Note 13, "Commitments and Contingencies"),
involvement with potential business acquisitions, obtaining officers and
directors' liability insurance for the Company and proposals for the issuance of
additional securities by the Company with terms similar to the Series B and
Series C Preferred Stock. Amounts paid include both amounts designated as
retainers and success fees. The Company may be committed to pay these advisors
additional amounts or issue warrants to them for the purchase of the Company's
common stock related to future transactions for which the advisors may claim
compensation.

These advisors were paid an additional $1.7 million in February 2000, at the
time of conversion and redemption of the remaining outstanding Series B
Preferred stock and issuance of the Series C Preferred Stock. These advisors
also received 75,000 warrants to acquire the Company's common stock. Refer to
Note 23, "Subsequent Events"

18. DEFINED CONTRIBUTION RETIREMENT PLAN AND POST-EMPLOYMENT OBLIGATIONS:

The Company sponsors a defined contribution retirement plan covering
substantially all employees of the Company. Participants may contribute up to
fifteen percent of their annual salaries, subject to certain limitations, as
pre-tax salary deferral. The Company makes certain matching and service related
contributions to the plan that totaled approximately $0.7 million during the
fiscal year ended October 31, 1999.

During the fiscal year ended October 31, 1999, the Company executed deferred
compensation arrangements with two former directors that provide for payments to
them of $60,000 to $75,000 per year plus fringe benefits for the number of years
equal to the years of service, subject to a minimum of ten years. During the
fiscal year ended October 31, 1999, the Company incurred expense of
approximately $0.8 million related to these arrangements and paid benefits to
one former employee of $0.1 million. The present value of these future
obligations, $0.8 million, was accrued as of October 31, 1999.

19. INCOME TAXES:

An analysis of the components of income (loss) before income taxes and minority
interest is presented below for the fiscal years ended October 31 (amounts in
thousands):

<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C>
Domestic $(18,285) $6,084 $3,304
Foreign 656 453 573
----------------------------------------------------------------
$(17,629) $6,537 $3,877
----------------------------------------------------------------
</TABLE>

The provision (benefit) for income taxes is composed of the following for the
fiscal years ended October 31 (in thousands):

<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ (540) $ 1,937 $ --
State 402 751 --
--------------------------------------------------------------------------------
(138) 2,688 --
--------------------------------------------------------------------------------
Deferred:
Federal 4,003 792 657
State 149 (75) 70
Change in valuation allowance (4,152) -- --
--------------------------------------------------------------------------------
-- 717 727
--------------------------------------------------------------------------------
Total provision (benefit) for income taxes $ (138) $ 3,405 $727
--------------------------------------------------------------------------------
</TABLE>

The difference between the provision (benefit) for income taxes computed at the
statutory federal income tax rate and the financial statement provision
(benefit) for income taxes is summarized as follows for the fiscal year ended
October 31:

F-29
<PAGE> 89

<TABLE>
<CAPTION>
1999 1998 1997
--------------------------------------------------------------------------
<S> <C> <C> <C>
Expected statutory amount (34.0)% 34.0% 34.0%
Change in valuation allowance 26.4 -- --
Non-deductible goodwill 4.7 4.0 4.0
Foreign operations, net 3.0 4.0 (20.0)
State income taxes 1.5 7.0 0.2
Other (2.4) 3.0 3.8
--------------------------------------------------------------------------
Actual tax provision (benefit) (0.8)% 52.0% 22.0%
--------------------------------------------------------------------------
</TABLE>

Deferred tax assets and liabilities result from differences in the timing of the
recognition of certain income and expense items for tax and financial reporting
purposes. The sources of these differences are as follows at October 31 (amounts
in thousands):

<TABLE>
<CAPTION>
1999 1998
------------------------------------------------------------------------------
<S> <C> <C>
Current deferred tax assets (liabilities):
Allowance for doubtful accounts $ 1,243 $ 312
Accrued liabilities 1,029 --
Other (25) 747
------------------------------------------------------------------------------
2,247 1,059
------------------------------------------------------------------------------
Non-current deferred tax assets (liabilities):
Property and equipment (3,183) (755)
Net operating loss (NOL) carryforwards 2,806 --
Stock appreciation rights payable 744 --
Accrued liabilities 389 --
Other 204 (39)
------------------------------------------------------------------------------
960 (794)
------------------------------------------------------------------------------
Net deferred tax asset prior to valuation allowance 3,207 265
Valuation allowance (3,207) --
------------------------------------------------------------------------------
$ -- $ 265
------------------------------------------------------------------------------
</TABLE>

At October 31, 1997, the Company had NOL carryforwards for Federal income tax
purposes of approximately $3.3 million. These NOL carryforwards were fully
utilized in fiscal year 1998. During fiscal 1999, the Company had a NOL for
income tax purposes of approximately $9.7 million, approximately $2.0 million of
which will be carried back to fiscal 1998 and the remainder of approximately
$7.7 million will be carried forward and will expire in 2019. A valuation
allowance of $3.2 million has been recognized at October 31, 1999, due to the
uncertainty that the Company will realize the income tax benefit from its net
deferred tax assets.

20. RELATED-PARTY TRANSACTIONS:

In payment of certain finders fees associated with the acquisition of MFSNT, the
Company issued a three-year, 10 percent note for $1.3 million to a third party
who subsequently became a member of the Company's Board of Directors. At October
31, 1998, the outstanding balance of this note was $1.2 million and is reflected
in current liabilities in the accompanying consolidated balance sheet. During
the year ended October 31, 1999, the Company issued 118,000 shares of Common
Stock to the Director in payment of the then remaining balance of the note of
$0.8 million.

In November 1997, a subsidiary of the Company assumed the obligations of Ten-Ray
Utility Construction, Inc. ("Ten-Ray"), a North Carolina corporation, as
contractor under two network construction contracts and paid the costs Ten-Ray
had accrued under the contracts of approximately $0.1 million. On January 30,
1998, the Company purchased from Ten-Ray certain construction equipment used in
connection with the contracts. The purchase price for the equipment was the
satisfaction of Ten-Ray's bank loans secured by the equipment in the amount of
$0.3 million, including principal and interest, which in the opinion of the
executives of the subsidiary was not more than the fair market value of the
equipment at the time of this transaction. The Company's then Chief Financial
Officer, beneficially owned approximately 7.7 percent of the voting stock of
Ten-Ray and had personally guaranteed the equipment loans to the bank.

21. SEGMENT INFORMATION:

F-30
<PAGE> 90

The Company currently operates primarily in two industry segments: network
services and transportation services. Transportation services are conducted
primarily in the United States with small projects in South America, Canada and
Asia, while telecommunication network services are conducted both in the United
States and Latin America. The Company manages and analyzes the operations of the
Company in four separate groups, Network Services Group, Transportation Services
Group, Construction Group and Communications Development Group. Subsequent to
October 31, 1999, the Company established the Network Development Group. Refer
to Note 1, "The Company," for descriptions of services provided by each
operating group. The Company's international operations are primarily within the
Communications Development Group and are immaterial to the Company's
consolidated operations.
<TABLE>
<CAPTION>
For the Fiscal Year Ended October 31,
------------------------------------------------------------------------------------
1999 1998 1997
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Network Services $ 260,354 $ 62,243 $ --
Transportation Services 39,394 24,639 --
Construction 113,948 125,270 82,171
Communication Development (International) 4,869 5,329 4,163
------------------------------------------------------------------------------------
$ 418,565 $217,481 $86,334
------------------------------------------------------------------------------------
Income (loss) from operations:
Network Services $ 14,746 $ 6,272 $ --
Transportation Services (10,618) 2,586 --
Construction (5,730) 1,718 4,824
Communication Development (International) 346 182 17
Unallocated Corporate Overhead (628) 651 --
------------------------------------------------------------------------------------
$ (1,884) $ 11,409 $ 4,841
------------------------------------------------------------------------------------
Identifiable assets:
Network Services $ 139,460 $159,660 $ --
Transportation Services 50,178 48,830 --
Construction 66,667 71,941 44,751
Communication Development (International) 3,813 4,496 2,509
Corporate 1,915 5,833 3,086
------------------------------------------------------------------------------------
$ 262,033 $290,760 $50,346
------------------------------------------------------------------------------------
</TABLE>

The Company derives a significant portion of its revenues from a few large
customers. Those customers are as follows:

<TABLE>
<CAPTION>
Revenue for the Percentage of Total Revenues
Fiscal Year During The Fiscal Years Ended
Ended October 31,
Customer Operating Group October 31, 1999 1999 1998 1997
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New Jersey Consortium Transportation and Network Services $78,515 18% 8% --
WorldCom Network Services 61,636 15% 14% --
Williams Communications, Inc. Network Services 49,621 12% -- --
Cooper Tire Company Construction 13,050 3% 6% 15%
Florida Power Corp. Construction 13,514 3% 7% 9%
State of Illinois (ISTHA) Network Services 11,680 2% 5% --
</TABLE>

MFSNT is party to multiple contracts with the New Jersey Consortium ("New Jersey
Consortium Contracts") which includes the New Jersey Turnpike Authority, New
Jersey Highway Authority, Port Authority of New York and New Jersey, South
Jersey Transportation Authority and the State of Delaware Department of
Transportation. The New Jersey Consortium Contracts provide for, among other
items, MFSNT to construct and maintain a fully integrated automated toll
collection system and supporting fiber optic network. The gross revenues the
Company has or expects to receive from the New Jersey Consortium Contracts are
estimated to be approximately $280.0 million. During the fiscal year ended
October 31, 1999, the Company incurred net losses related to the New Jersey
Consortium Contracts of approximately $4.0 million, including penalties of
approximately $4.9 million associated with the failure to meet certain
milestones provided for in the contracts. The Company is not currently incurring
additional penalties related to the New Jersey Consortium Contracts. However,
scheduled minimum payments due the Company for operation of the violations
processing center have been deferred until certain work is completed by the
Company and accepted by the Consortium and may not be recouped as minimum
payments.

At October 31, 1999, the Company had billed and unbilled receivables of
approximately $18.3 million and $20.4 million relating to the New Jersey
Consortium, $10.9 million and $8.7 million relating to WorldCom and $6.2
million and $1.1 million relating to Williams Communications, Inc.,
respectively.

F-31

<PAGE> 91

The loss of the New Jersey Consortium, WorldCom or any other such customers
could have a material adverse effect on Able's business, financial condition and
results of operations.

22. UNAUDITED QUARTERLY FINANCIAL DATA (amounts in thousands except per
share data)

The fiscal 1999 quarterly unaudited amounts have been adjusted from amounts
previously reported by the Company in their quarterly filings with the
Securities and Exchange Commission. The adjustments relate to accounting errors
discovered subsequent to October 31, 1999. Their nature and effects on the
results of operations for each of the quarterly periods during fiscal 1999 are
summarized below (in thousands, except per share data):

<TABLE>
<CAPTION>
As Reported Adjustments Adjusted
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First quarter:
Revenues $ 91,777 $ 1,303 $ 93,080
Operating income (loss) 5,363 (2,842) 2,521
Net income (loss) (581) (4,737) (5,318)
Income (loss) applicable to common stock (761) (4,737) (5,498)
Income (loss) applicable to common stock per share (0.06) (0.41) (0.47)

Second quarter:
Revenues 124,481 (752) 123,729
Operating income (loss) 536 (3,393) (2,857)
Net income (loss) 41 (1,636) (1,595)
Income (loss) applicable to common stock (15,151) 845 (14,306)
Income (loss) applicable to common stock per share (1.29) 0.07 (1.22)

Third quarter:
Revenues 102,562 219 102,781
Operating income (loss) 6,546 (5,091) 1,455
Net income (loss) 161 (5,646) (5,485)
Income (loss) applicable to common stock 122 (10,387) (10,265)
Income (loss) applicable to common stock per share .01 (0.88) (0.87)

Fourth quarter:
Revenues 98,975 -- 98,975
Operating income (loss) (3,003) -- (3,003)
Net income (loss) (5,662) -- (5,662)
Income (loss) applicable to common stock (6,689) -- (6,689)
Income (loss) applicable to common stock per share (0.56) -- (0.56)
</TABLE>

NET INCOME (LOSS) APPLICABLE
NET INCOME (LOSS) TO COMMON STOCK
------------------------------------------------------------------------
FIRST SECOND THIRD FIRST SECOND THIRD
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Amounts previously reported $ (581) $ 41 $ 161 $ (761) $ (15,151) $ 122
------------------------------------------------------------------------
Adjustments:

WorldCom SAR obligation (1) (1,906) 821 (687) (1,906) 821 (687)
Improperly deferred costs (2) (763) (2,382) (2,778) (763) (2,382) (2,778)
Costs improperly charged against reserves (3) (132) 623 (1,514) (132) 623 (1,514)
Prior year accrual adjustment (4) (957) -- -- (957) -- --
Equipment impairment loss (5) -- (1,146) -- -- (1,146) --
Tax effects of other adjustments (6) (118) 807 309 (118) 807 309
Series B redemption and modification (7) -- -- -- -- 2,481 (3,338)
Series B liquidation value adjustment (8) -- -- -- -- -- (1,403)
Other adjustments (9) (625) (18) (92) (625) (18) (92)
Long-term service contract adjustments (10) (236) (341) (884) (236) (341) (884)
------------------------------------------------------------------------
Total adjustments (4,737) (1,636) (5,646) (4,737) 845 (10,387)
------------------------------------------------------------------------
Restated Amount $(5,318) $(1,595) $(5,485) $(5,498) $(14,306) $(10,265)
------------------------------------------------------------------------
</TABLE>

Quarterly adjustments:

(1) The obligation under the WorldCom SARs (Note 5) was calculated using a
Black-Scholes option-pricing model. The obligation should have been
accounted for at "intrinsic value" determined as the difference between
the closing price of the Company's common stock on the balance sheet
date and the strike price of $7.00.

(2) For the first three quarters, the Company deferred certain costs
relating to its operation of the Violation Processing Center for the
New Jersey Consortium that should have been expensed as incurred.

(3) Indirect costs were not consistently allocated to Transportation
Services Group jobs. In addition, costs were charged against reserves
for Loss Jobs that were not related to those jobs.

(4) A prior year consolidating adjustment to reduce accrued expenses was
inappropriately not reversed in the preparation of the 1999
consolidations.

(5) An impairment loss for certain equipment for one of the Company's
subsidiaries should have been recognized in the second quarter.

(6) The tax provision for all quarters has been restated, including
reversal of approximately $1.2 million tax benefit originally offset
against the extraordinary loss on the early extinguishment of debt.

(7) The February 1999 redemption of Series B Preferred Stock and the
modification of the terms of the then remaining Series B shares was not
correctly determined.

(8) The Series B Preferred Stock should have been reflected at its
liquidation value upon recharacterization as a default obligation in
May 1999 Refer to Note 14, "Preferred Stock"

(9) Other adjustments made as a result of the year-end audit affected the
previously reported quarterly amounts as shown.

(10) These adjustments recognize losses on long-term service contracts as
incurred as discussed more fully in the following paragraph.

LONG-TERM SERVICE CONTRACTS

During the third quarter, an accrual of $8.4 million was made with an offsetting
increase to goodwill for projected losses on long-term service contracts
assumed as part of the acquisition of MFSNT for operation and maintenance of
fiber networks. The contracts extend for fifteen to twenty years. Performance
under these agreements, which were predominately executed in 1996 and 1997,
began during fiscal 1999. The Company subsequently determined that the costs to
perform under these contracts are expected to be greater than amounts presently
expected to be billable to network users under firm contractual commitments.
The appropriate accounting treatment for long-term service contracts of this
nature is not clearly defined, particularly when the contracts have been
assumed as part of a purchase business combination. However, based on the
Company's ongoing discussions with the SEC, the Company believes the SEC does
not believe accruals for future losses on these types of long-term service
obligations are appropriate. The Company has also subsequently determined that
such losses cannot be reasonably estimated due to potential changes in various
assumptions. Consequently, the Company has determined the appropriate accounting
for these obligations is to record any such losses in the periods in which the
losses are incurred. The Company has restated its quarterly results for the
first, second and third quarters of 1999 to reflect these losses as incurred and
to reverse the additional $8.4 million accrued for these obligations. The SEC
has not yet agreed with the Company that such accounting is appropriate and may
require the Company to further change its accounting policies for operations
and maintenance contracts.

Quarterly unaudited amounts for the fiscal years ended October 31, 1998 and 1997
are as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998:
Revenues $22,268 $34,552 $58,305 $102,356
Operating income (loss) (1,164) 2,180 4,319 6,074
Net income (loss) (927) 867 790 1,784
Income (loss) applicable to common stock (1,081) 838 (7,186) 1,589
Income (loss) applicable to common stock per share (0.12) 0.09 (0.72) 0.16

1997:
Revenues 18,326 20,871 21,984 25,153
Operating income (loss) 1,144 1,785 1,024 888
Net income (loss) 507 851 932 567

Income (loss) applicable to common stock 470 337 491 33
Income (loss) applicable to common stock per share 0.04 0.04 0.06 0.02
</TABLE>

F-32
<PAGE> 92
23. SUBSEQUENT EVENTS

WORLDCOM DEBT TO EQUITY CONVERSION

On January 11, 2000, WorldCom agreed to convert approximately $25.5 million of
its $30.0 million WorldCom Note into 3,050,000 shares of the Company's Common
Stock ("WorldCom Conversion Agreement"). The conversion was based on the January
8, 2000 closing price of the Company's Common Stock of $8.375 per share. The
remainder of the original WorldCom Note of approximately $4.5 million was
converted into an amended and restated 11.5 percent subordinated promissory note
due February 2001.

SERIES B AND SERIES C PREFERRED STOCK

In February 2000, the Company purchased the remaining Series B Preferred Stock
outstanding for a redemption price of approximately $16.8 million. The
consideration paid included cash of $10.9 million, 802,000 shares of the
Company's common stock, and warrants to purchase 267,000 shares of common stock.
The warrants are exercisable with respect to 200,000 shares at $10.13 per share.
The price for the remaining 67,000 shares will be established at the end of 100
trading days, using a market-based formula, but could be as low as $.01 per
share. To fund the Series B redemption, the Company issued a new class of Series
C Convertible Preferred Stock with detachable warrants ("Series C Stock") for
cash of $15.0 million.

The Series C Stock has a dividend rate of 5.9% and is convertible immediately at
$9.35 per common share. The conversion price is subject to change every six
months. If the common stock is trading below the previously adjusted conversion
price, the conversion price will be reduced, but not to less than $4.00 per
common share. Under certain terms and conditions, the Company may redeem the
Series C Stock beginning 60 days after a registration statement for the
underlying common shares is declared effective at a price of $15 million plus
10% for each full or partial six-month period elapsed until redemption. The
terms of the Series C Preferred Stock include certain punitive provisions in the
event of default, including interest to accrue at 3% per month. The Series C
Stock was issued with detachable warrants for the purchase of 200,000 shares of
the Company's common stock at a price of $10.75 per share. The Financial
Advisors (Note 17) also are entitled to warrants for 75,000 common shares at
$10.75 per share.

The pro forma effect of the WorldCom Conversion Agreement and the Series B and
Series C Transactions on the October 31, 1999, consolidated balance sheet is as
follows:

<TABLE>
<CAPTION>
WorldCom
As Reported Conversion Series B Series C Pro Forma
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash $ 16,568 $ -- $(10,879) $ 14,400 $ 20,089
Current assets 167,874 -- (10,879) 14,400 171,395
Total Assets 262,033 -- (10,879) 14,400 265,554
Current liabilities 166,772 -- -- -- 166,772
Long-term debt 46,086 (25,500) -- -- 20,586
Preferred stock 16,322 -- (16,322) 13,637 13,637
Equity 431 25,500 5,443 763 32,137
</TABLE>

ACQUISITION

Consideration for SASCO and SES was 75,000 shares of common stock with a value
of approximately $0.7 million. In addition to the initial consideration, the
Company has provided an earn-out provision to the prior shareholders whereby
additional consideration will be given based on certain performance
measurements. The additional consideration can be earned over a four year
period. The Company intends to record this transaction using the purchase method
of accounting. The pro forma effect on consolidated results of operations, from
the acquisition of SASCO and SES, is not material.

The consideration shall be paid in shares of the Company's common stock.
However, the cumulative shares issued (initial and earn-out) may never exceed
19.9 percent of the total Company common stock issued and outstanding. Should
the 19.9 percent threshold be reached, any additional consideration earned will
be paid in cash or promissory notes with interest calculated at a market rate,
as mutually agreed upon by the Company and the former shareholders, at the time
of payment.

F-33
<PAGE> 93

Able Telcom Holding Corp. and Subsidiaries

Schedule II

Valuation and Qualifying Accounts

Years ended October 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning of Costs and End of
Period Acquisitions Expenses Deductions Period
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
October 31, 1999 $866 $ -- $5,044(A) $2,396 $3,514
October 31, 1998 686 75 782 677 866
October 31, 1997 828 -- 160 302 686

Restructuring and other acquisition reserves:
October 31, 1999 1,541 -- -- 959 582
October 31, 1998 -- 4,997 -- 3,456 1,541
October 31, 1997 -- -- -- -- --

Reserves for litigation and claims:
October 31, 1999 4,014 -- -- 700 3,314
October 31, 1998 -- 5,000 -- 986 4,014
October 31, 1997 -- -- -- -- --

Reserves for losses on uncompleted contracts:
October 31, 1999 25,390 2,463 -- 19,233 8,620
October 31, 1998 -- 40,500 -- 15,110 25,390
October 31, 1997 -- -- -- -- --
</TABLE>

(A) The Company's policy is to increase the allowance for doubtful accounts
based upon a specific analysis of individual receivables, and to a lesser
extent, on historical experience. Once a specific receivable is "reserved" on
the general ledger, it continues to be reflected on the accounts receivable
subsidiary ledger until all collection efforts have failed, after which the
receivable is written off. Historically, the Company has not experienced any
significant recovery of receivables previously written off.

The $5.0 million increase in the allowance for doubtful accounts during fiscal
1999 was greater, as a percentage of operating revenues and as an aggregate
amount, than the Company's historical experience. The increase is attributable
to the following operating groups and jobs (in thousands):

<TABLE>
<S> <C>
Network Services $ 83
------

Transportation Services
E-470 774
Panama 525
SR-91 642
Argentina 210
Other 279
------
Total Transportation Services 2,430
------

Construction
Texas Department of Transportation/COMSAT Corporation 1,401
Dial Communications, Inc. ("DIAL") - Various jobs 600
Other 530
------
Total Construction 2,531
------
$5,044
======
</TABLE>

NETWORK SERVICES GROUP - Charges to the reserve reflect normal experience in
collection of trade receivables.

TRANSPORTATION SERVICES GROUP - The need for an increase of $0.8 million for
E-470 became evident while negotiating a final settlement of that contract
during the last half of 1999. In this settlement the Company agreed to forebear
with respect to certain amounts owed in exchange for, among other things, a
release of the Company from any obligations to maintain software for the term of
the contract. Final resolution was achieved in March 2000 with no further
adjustments required. The increase of $0.5 million for Panama followed claims
and litigation by Panama in 1999 as to the adequacy of toll collection systems
installed by the Company during 1998 and 1999. The increase of $0.6 million
related to SR-91 was in response to customer claims that the Company had failed
to meet its contractual obligations under the existing operations and
maintenance contract, which the Company believed raised doubt as to
collectibility of certain accounts. These customer claims are still under
negotiation. The increase of $0.2 million for Argentina was to resolve a dispute
about the Company's performance under the construction contract. Other charges
to the reserve reflect normal experience in collecting trade receivables.

CONSTRUCTION GROUP - As consideration for the assumption of certain contracts
from COMSAT Corporation ("COMSAT") during fiscal 1998, the Company was assigned
approximately $3.8 million of receivables, predominately from the Texas
Department of Transportation. COMSAT indemnified the Company for any of these
receivables that were not collected, so long as the Company made a written
claim to COMSAT on or before one year after the closing date (i.e., February
25, 1999). The Company subsequently determined that approximately $1.4 million
of these receivables were not collectible, and began negotiations with COMSAT
prior to the one-year deadline. Based on these negotiations, the Company did
not file a written claim with COMSAT. When the negotiations were terminated
following the expiration of the one-year indemnification period, the Company
determined that the cost of pursuing any claims it might still have against
COMSAT would outweigh any potential benefit or recovery. Management believes
these receivables will not be collected.

In conjunction with the closure of Dial during 1999, the company negotiated the
settlement of various related contracts and receivables resulting in a combined
increase in the allowance for doubtful accounts of $0.6 million. Other charges
to the reserve reflect normal experience in collecting trade receivables.

F-34