ABLE TELCOM HOLDING CORP, 10-Q, 2000-04-12

ABLE TELCOM HOLDING CORP
10-Q, 2000-04-12
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<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES AND 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 OF OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

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)

NOT APPLICABLE
--------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)

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 [ ]

As of January 31, 2000, there were 15,340,353 shares, par value $.001 per share,
of the Registrant's Common Stock outstanding.

<PAGE> 2

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

Condensed Consolidated Balance Sheets as of January 31, 2000
(Unaudited) and October 31, 1999....................................................... 3

Condensed Consolidated Statements of Operations (Unaudited)
for the three months ended January 31, 2000 and 1999................................... 4

Condensed Consolidated Statements of Cash Flows (Unaudited)
for the three months ended January 31, 2000 and 1999................................... 5

Notes to Condensed Consolidated Financial Statements (Unaudited).......................... 6

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................. 18

Item 3. Quantitative and Qualitative Disclosures about Market Risk....................................... 24

PART II. OTHER INFORMATION

Items 1, 4 and 5 - Not Applicable

Item 2. Changes in Securities and Use of Proceeds........................................................ 25

Item 3. Defaults Upon Senior Securities.................................................................. 26

Item 6. Exhibits and Reports on Form 8-K................................................................. 26

SIGNATURES......................................................................................................... 33
</TABLE>

2
<PAGE> 3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31,
2000 1999 (1)
----------- ----------
<S> <C> <C>
ASSETS (UNAUDITED)
Currents Assets:
Cash and cash equivalents ............................................. $ 10,145 $ 16,568
Accounts receivable, including retainage of $19,662
and $16,158 and net of allowances for bad
debts of $3,803 and $3,032 at January 31, 2000 and
October 31, 1999, respectively .................................... 92,739 73,645
Costs and profits in excess of billings on uncompleted contracts ...... 63,626 69,977
Prepaid expenses and other current assets ............................. 7,245 5,853
--------- ---------
Total current assets .......................................... 173,755 166,043
Property and equipment:
Land and buildings ............................................ 3,801 3,801
Equipment, furnitures and fixtures ............................ 45,510 43,989
--------- ---------
49,311 47,790
Less - Accumulated depreciation ....................................... (21,727) (19,987)
--------- ---------
Property and equipment, net ........................................... 27,584 27,803
Other assets:
Goodwill, net of accumulated amortization of $4,659 and $4,078 at
January 31, 2000 and October 31, 1999, respectively ........... 41,033 41,222
Networks under construction ........................................... 17,918 1,831
Investment in Kanas ................................................... 11,850 12,159
Other non-current assets .............................................. 11,351 12,975
--------- ---------
Total other assets ........................................... 82,152 68,187
--------- ---------
Total assets .......................................................... $ 283,491 $ 262,033
========= =========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term-debt ..................................... $ 40,386 $ 35,754
Accounts payable and accrued liabilities including
retainage of $13,853 and $11,618 at January 31, 2000
and October 31, 1999, respectively ............................... 76,718 66,617
Accruals for incurred job costs ....................................... 47,639 45,593
Billings in excess of costs and profits on uncompleted contracts ...... 21,380 6,478
Reserves for losses on uncompleted contracts .......................... 12,151 8,620
Notes payable to shareholders and employees ........................... 658 --
Stock appreciation rights payable ..................................... -- 3,710
--------- ---------
Total current liabilities ..................................... 198,932 166,772
Long-term debt, non-current portion ................................... 1,463 30,618
Advance from WorldCom ................................................. 32,000 32,000
Property tax payable, non-current portion ............................. 16,018 15,468
Other non-current liabilities and minority interest ................... 354 422
--------- ---------
Total liabilities ............................................ 248,767 245,280
Commitments and contingencies
Series B Preferred Stock, $.10 par value; stated at
aggregate accumulated redemption value at
January 31, 2000 and October 31, 1999, respectively;
4,000 shares authorized; 779 shares issued and outstanding ............ 17,726 16,322
--------- ---------
Shareholders' Equity:
Common stock, $.001 par value, authorized 25,000,000
shares; 15,192,484 and 11,891,338 shares issued
and outstanding, respectively ....................................... 15 12
Additional paid-in capital ............................................ 65,592 38,290
Senior Note Warrants .................................................. 1,244 1,244
Series B Preferred Stock Warrants ..................................... 2,735 2,735
WorldCom Phantom Stock ................................................ 606 606
Retained deficit ...................................................... (53,194) (42,456)
--------- ---------
Total shareholders' equity ................................... 16,998 431
--------- ---------
Total liabilities and shareholders' equity ............................ $ 283,491 $ 262,033
========= =========
</TABLE>

(1) The balance sheet at October 31, 1999 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

See notes to condensed consolidated financial statements.

3
<PAGE> 4

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

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JANUARY 31,
----------------------------------
2000 1999
------------ -------------
(UNAUDITED) (RESTATED) (1)
<S> <C> <C>
Revenue:
Construction and maintenance ........................... $ 106,915 $ 93,080
Conduit sale ........................................... -- --
------------ ------------

Total revenue .......................................... 106,915 93,080

Costs and expenses:
Construction and maintenance ........................... 102,526 78,097
Costs of conduit sale .................................. -- --
General and administrative expense ..................... 11,967 9,686
Depreciation ........................................... 2,227 2,221
Amortization ........................................... 581 555
------------ ------------

Total costs and expenses ............................... 117,301 90,559
------------ ------------

Income (loss) from operations ...................................... (10,386) 2,521

Other income (expense):
Interest expense ....................................... (2,449) (2,478)
Change in value of stock appreciation rights ........... 3,710 (5,334)
Equity in losses of investment in Kanas ................ (309) --
Other .................................................. 324 (3)
------------ ------------

Total other income (expense) ........................... 1,276 (7,815)
------------ ------------

Loss before income taxes and minority interest ..................... (9,110) (5,294)
Provision for (benefit from) income taxes .......................... 296 (50)
------------ ------------

Loss before minority interest ...................................... (9,406) (5,244)
Minority interest .................................................. 72 (74)
------------ ------------

Net loss ........................................................... (9,334) (5,318)
Increase in default redemption value of Series B Preferred Stock ... (1,404) --
Series B Preferred Stock dividends ................................. -- 180
------------ ------------
Loss applicable to common stock .................................... $ (10,738) $ (5,498)
============ ============

Weighted average shares outstanding:
Basic .................................................. 12,747,481 11,694,088
Diluted ................................................ 12,747,481 11,694,088
Loss applicable to common stock per share:
Basic .................................................. $ (0.84) $ (0.47)
Diluted ................................................ (0.84) (0.47)
</TABLE>

(1) The fiscal 1999 quarterly unaudited amounts have been adjusted from amounts
previously reported by the Company in quarterly filings with the Securities
and Exchange Commission. Refer to Note 4, "Quarterly Financial Data."

See notes to condensed consolidated financial statements.

4
<PAGE> 5

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

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JANUARY 31,
-----------------------------
2000 1999
----------- -------------
(UNAUDITED) (RESTATED)(1)

<S> <C> <C>
Cash used in operating activities ................................................ $ (5,335) $ (5,247)

Cash flows from Investing Activities:
Capital expenditures, net ............................................... (2,065) (291)
Cash acquired from acquisition of businesses ............................ 122 --
-------- --------

Net cash used in investing activities ................................... (1,943) (291)

Cash flows from Financing Activities:
Repayments of long-term debt and other borrowings ....................... (399) (478)
Proceeds from the issuance of long-term debt and other borrowings ....... 232 --
Proceeds from the issuance of preferred stock, net ...................... -- (92)
Proceeds from the exercise of stock options ............................. 1,022 82
Dividends paid on preferred stock ....................................... -- (262)
Other ................................................................... -- 67
-------- --------

Net cash provided by financing activities ............................... 855 (683)
-------- --------

Change in cash and cash equivalents .............................................. (6,423) (6,221)
Cash and cash equivalents, beginning of period ................................... 16,568 13,544
-------- --------

Cash and cash equivalents, end of period ......................................... $ 10,145 $ 7,323
======== ========

Supplemental disclosures:
Increases in goodwill resulting from acquisition of SASCO/SES ........... 392 $ --
Common stock issued in conjunction with the acquisition of SASCO/SES .... 739 --
Conversion of WorldCom debt to common stock ............................. 25,544 --
Valuation of stock appreciation rights .................................. 3,710 (5,334)
Cash paid for:
Interest ........................................................... 1,561 1,976
Taxes .............................................................. 219 --
</TABLE>

See notes to condensed consolidated financial statements.

5
<PAGE> 6

ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

In the opinion of management of Able Telcom Holding Corp. ("Able" or the
"Company"), the unaudited condensed consolidated financial statements furnished
herein include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the results of operations for the interim
periods presented. These interim results of operations are not necessarily
indicative of results for the entire year. The condensed consolidated financial
statements contained herein should be read in conjunction with the consolidated
financial statements and related notes contained in the Company's 1999 Annual
Report on Form 10-K.

The accompanying unaudited condensed consolidated financial statements are
prepared on an accrual basis and include the accounts of the Company and all its
subsidiaries. A substantial portion of consolidated total assets, liabilities
and revenues are generated by one subsidiary of the Company, Adesta
Communications, Inc. ("Adesta"), formerly MFS Network Technologies, Inc.

All material intercompany accounts and transactions have been eliminated.
Certain items in the condensed consolidated financial statements as of October
31, 1999, have been reclassified to conform with the current presentation.

2. GOING CONCERN

The accompanying condensed consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The Company incurred
losses from operations of $10.4 million, net losses of $9.3 million, and losses
applicable to common stock of $10.7 million during the three months ended
January 31, 2000. The Company also 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 January 31, 2000, to
redeem the Series B Preferred Stock and to reduce obligations for loss contracts
assumed in 1998 in the acquisition of Adesta. 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. In addition, as
described in Note 7, "Investment in Kanas (Held for Sale)," on February 24,
2000, Alyeska declared Kanas to be in default under the terms of their contract.
WorldCom is the guarantor of approximately $87.5 million of Kanas indebtedness
and the Company has indemnified WorldCom with respect to that guarantee. Claims
that may be made against the Company with respect to that indemnification are
presently unknown. Consequently, there is substantial doubt about the Company's
ability to continue as a going concern.

The accompanying condensed 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.

6
<PAGE> 7

(2) As discussed in Note 9, "Debt," approximately $25.5 million of the
Company's indebtedness to WorldCom was converted to common stock of the
Company during January 2000.

(3) As discussed in Note 12, "Subsequent Events," approximately $8.0
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 January 31, 2000. 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) As discussed in Note 12, "Subsequent Events," the Company has obtained
a commitment for a new credit facility that is anticipated to close in
May 2000 and is pursuing additional financing through discussions with
investors.

3. 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 Adesta (the "Adesta
Acquisition") from WorldCom effective July 2, 1998. As a result of the ongoing
review by the SEC, the Company's Annual Report on From 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 shareholders'
meeting since April 1998. Once the SEC's reviews have been completed, Able
expects to hold an Annual Meeting.

While the Adesta 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 Adesta. 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 Adesta ($11.7
million) as of July 2, 1998, by $28.8 million. The net assets reported by Adesta
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 Adesta.
Resolution of these issues may result in the restatement of Adesta'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
Adesta Acquisition. Refer to Note 4, "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 6,
"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 fiscal year ended
October 31, 1999, of the NYSTA conduit. Refer to Note 8, "Network
Assets Held For Sale," in the Company's Form 10-K for the fiscal year
ended October 31, 1999, for an explanation of the Company's accounting
for the NYSTA conduit sale.

(5) The Company's accounting for future property taxes relating to the
NYSTA network. As of July 2, 1998, Adesta had recorded an accrual for
the present value of future property taxes payable (over a period of 20
years). The Company included a similar accrual in the purchase price
allocation for the acquisition of Adesta. The Company believes its
recognition in purchase accounting of the property taxes as an assumed
obligation was appropriate. However, if not accrued, goodwill (and the
related

7
<PAGE> 8

prospective amortization over twenty years) would be reduced and
property taxes would instead be accrued and expensed each year as
assessed.

Other than item (2) above, 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.

4. QUARTERLY FINANCIAL DATA

The quarterly unaudited amounts for the three months ended January 31, 1999,
have been adjusted from amounts previously reported by the Company in its
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 the quarterly period ended
January 31, 1999, are summarized below (in thousands, except per share data):

<TABLE>
<CAPTION>
As Reported Adjustments Adjusted
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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)
</TABLE>

<TABLE>
<CAPTION>
Net Loss
Applicable to
Net Loss Common Stock
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>

Amounts previously reported $ (581) $ (761)
Adjustments:
WorldCom SAR obligation (1) (1,906) (1,906)
Improperly deferred costs (2) (763) (763)
Costs improperly charged against reserves (3) (132) (132)
Prior year accrual adjustment (4) (957) (957)
Tax effects of all adjustments (118) (118)
Other adjustments (5) (625) (625)
Long-term service contracts adjustments (6) (236) (236)
- -------------------------------------------------------------------------------------------------------------
Total adjustments (4,737) (4,737)
- -------------------------------------------------------------------------------------------------------------

Restated amounts $(5,318) $(5,498)
- -------------------------------------------------------------------------------------------------------------
</TABLE>

(1) The obligation under the WorldCom SARs 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) 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) Other adjustments made as a result of the year-end audit affected the
previously reported quarterly amounts as shown.

8
<PAGE> 9

(6) 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 three months ended July 31, 1999, 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 Adesta 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. In March
2000, the SEC informed the Company that it would not object to the conclusion
that such revised accounting is appropriate under generally accepted accounting
principles.

The Company expects to amend its fiscal 1999 quarterly filings with the
Securities and Exchanges Commission once the matters addressed in Note 3,
"Review by the Securities and Exchange Commission," are resolved.

5. ACQUISITIONS

SASCO/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.

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.
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.

At January 31, 2000, the Company has borrowed approximately $0.7 million from
the former shareholders of

9
<PAGE> 10

SASCO and SES. Such amounts are reflected in the accompanying condensed
consolidated balance sheet as "Notes Payable to Shareholders and Employees" and
bear interest at 10 percent per annum.

6. ASSUMPTION OF COMSAT CONTRACTS

On February 25, 1998, Georgia Electric Company ("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)
- ---------------------------------------------------------------------------------------------

The following is a summary of revenues and costs associated with the COMSAT
contracts for the three months ended January 31, 1999 (amounts in thousands):

Billings on the COMSAT contracts (1) $ 2,305
Deferred revenue recognized 1,499
- ---------------------------------------------------------------------------------------------
3,804
Direct contract costs 3,067
- ---------------------------------------------------------------------------------------------
Gross margin from COMSAT contracts $ 737
- ---------------------------------------------------------------------------------------------
</TABLE>

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

All of the COMSAT Contracts were substantially complete as of October 31, 1999.
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.

7. INVESTMENT IN KANAS (HELD FOR SALE)

An equity interest in Kanas was acquired in the Adesta 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.

Until March 2000, the Company was 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"). Adesta
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.

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<PAGE> 11

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 had
contracted with Adesta to operate and maintain the Alyeska Network for 15 years.
The term of the Kanas O&M agreement began in December 1998. Through January 31,
2000, 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 of December 31, 1999, the unaudited financial statements of Kanas reflected
total assets, liabilities and net deficit of $79.8 million, $87.9 million and
$8.1 million, respectively. The December 31, 1999, deficit includes $10.5
million of network depreciation.

At the date of the acquisition of Adesta, 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 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 Adesta. The amount of loss the Company recorded during the
quarter ended January 31, 2000, against the carrying value of the asset was
approximately $0.2 million, while the associated amortization of the difference
in carrying value was approximately $0.2 million.

WorldCom was and continues to be the guarantor of the payment obligations of
Kanas under its credit agreement. In conjunction with the acquisition of Adesta,
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.

The Company learned on February 25, 2000, that on February 24, 2000, Alyeska
declared Kanas to be in default under the terms of their contract. Adesta, which
was the subcontractor for Kanas on the telecommunications network, received
"substantial completion" from Kanas in December 1998, but Kanas has not received
final acceptance from Alyeska and, in turn, has not provided final acceptance to
Adesta. Alyeska has taken the position that Kanas does not have the right to
cure the default and has notified Kanas that it is terminating the contract.
Adesta has not received any notice of default from Kanas nor has it received any
request regarding the indemnification agreement with WorldCom.

During March 2000, Kanas executed a memorandum of understanding that provided
the following:

(1) Kanas sold shares equal to 80 percent of the then outstanding shares to
WorldCom for approximately $1.5 million thereby reducing the ownership
interest of the original Kanas shareholders, including Adesta, to 5
percent each.

(2) Substantially all of the officers and directors of Kanas resigned.

(3) Adesta's responsibilities under its network operations and maintenance
agreement with Kanas were transferred to an affiliate of WorldCom.

The Company is continuing to monitor and further assess the impact of these
developments on the value of the Company's investment in Kanas, its obligations
under the indemnity provisions of the Kanas debt, and other obligations the
Company may have with respect to the operations and maintenance agreement or
otherwise. However, it now appears likely the Company will write-off most of
remaining carrying value of its interest in Kanas during the three months ended
April 30, 2000, of approximately $11.9 million. Additionally, the Company
continues to assess the collectiblity of receivables from Kanas of approximately
$1.2 million at April 10, 2000.

11
<PAGE> 12

8. RESERVES FOR LOSSES ON UNCOMPLETED CONTRACTS

The following is a summary of the reserves for losses on uncompleted contracts
(amounts in thousands):

<TABLE>
<CAPTION>
Transportation Services
Network Services Group Group Total
2000 1999 2000 1999 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, November 1 $ 5,703 $ 8,029 $ 2,917 $ 17,361 $ 8,620 $ 25,390
Additions (1) 141 -- 4,744 -- 4,885 --
Amount utilized (393) (1,231) (961) (6,068) (1,354) (7,299)
- -----------------------------------------------------------------------------------------------------------------
Balance, January 31 $ 5,451 $ 6,798 $ 6,700 $ 11,293 $ 12,151 $ 18,091
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Additions during the three months ended January 31, 2000, related
primarily to the New Jersey Consortium Contracts. Refer to Note 12,
"Segment Information."

9. DEBT

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 Adesta 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 January 31, 2000 and 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 consolidated balance sheets. During the default
period, the Company is required to pay a default penalty of two percent per
annum on all outstanding balances.

WORLDCOM NOTE

On January 11, 2000, the Company entered into an agreement with WorldCom whereby
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. The
conversion was based on the January 8, 2000 closing price of the Company's
Common Stock at $8.375 per share. The remainder of the original WorldCom Note,
approximately $4.5 million was changed into an amended and restated 11.5 percent
subordinated promissory note due February 2001.

OTHER DEBT

In conjunction with the acquisition of SASCO and SES (refer to Note 5,
"Acquisitions"), the Company assumed the following:

12
<PAGE> 13

<TABLE>
<CAPTION>
Outstanding at
January 31, 2000
- --------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C>
Revolving line of credit; aggregate commitment amount of $1.3 million; priced at 1 percent
above the bank's floating prime rate; secured by the assets of SASCO and guaranteed by
the former shareholders of SASCO $730
Revolving line of credit; aggregate commitment amount of $0.3 million; priced at
1 percent above the bank's floating prime rate; secured by the assets of
SES and guaranteed by SASCO 250

Other term debt 287
</TABLE>

10. 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 (a former director of the Company). 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 Adesta 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 Adesta, 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.

In 1997, Bayport Pipeline, Inc. ("Bayport") filed a lawsuit against Adesta
seeking a declaratory judgment concerning the rights and obligations of Bayport
and Adesta 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
October 31, 1999, was increased to $19 million. On February 24, 2000, the
independent arbitrator ruled that Adesta owed Bayport $4.1 million, which is
consistent with amounts previously accrued by the Company. The arbitrator's
award is binding; however, the Company is disputing the calculation of the
award, which it believes is in error. Additionally, the Company may appeal the
award in future legal proceedings.

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 Adesta 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 Adesta 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.

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 Adesta related to the fiber optic network constructed by Adesta 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

13
<PAGE> 14

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.

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 Adesta.

11. EARNINGS PER SHARE

The difference between the Company's weighted basic average shares outstanding
and diluted shares outstanding is due to the dilutive effect of stock options
and convertible securities. There are no significant differences in the
numerator of the Company's computations of basic and diluted earnings per share
for any period presented. The effect of securities that could dilute basic
earnings per share would be antidilutive for all periods presented. 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 January 31, 2000:
WorldCom Options (subject to shareholder approval) 2,000 $ 7.00
Employee stock options (subject to shareholder approval) 1,604 6.14
Employee stock options (527,000 vested) 926 6.64
Shares issued to redeem Series B Preferred Stock in February 2000 802 6.01
Senior Subordinated Note Warrants 410 8.25
Series B Preferred Stock Warrants 370 13.25
GEC Earnout 205 --
Series A Preferred Stock Warrants 62 9.82
Employee stock grants (subject to shareholder approval) 50 --
- --------------------------------------------------------------------------------------------------------------------
Subtotal outstanding at January 31, 2000 6,429 6.81
- --------------------------------------------------------------------------------------------------------------------
Potentially dilutive securities issued subsequent to January 31, 2000:
Series C Preferred Stock (1) 3,750 4.00
Employee stock options (subject to shareholder approval) (2) 525 8.10
Warrants issued to redeem Series B Preferred Stock (Refer to Note 13) 200 10.13
Series C Preferred Stock Warrants (Refer to Note 13) 200 10.75
Warrants issued to financial advisors related to the Series C Preferred Stock
(Refer to Note 13) 75 10.75
Warrants issued to redeem Series B Preferred Stock Warrants 66 9.50
Stock issued to settle litigation 25 --
- --------------------------------------------------------------------------------------------------------------------
Subtotal granted subsequent to January 31, 2000 4,841 5.14
- --------------------------------------------------------------------------------------------------------------------
Total 11,270 $ 6.10
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Assumes a conversion price of $4.00 or the contractual floor that is
subject to reduction in the event of default.

(2) In February 2000 the Company granted options to purchase a total of
525,000 to three new employees of the

14
<PAGE> 15

Company. The options, if approved by shareholders, will vest as
follows: 125,000 as of February 1, 2000; 200,000 on February 1, 2001;
and 200,000 on February 1, 2002 with the exercise price being $6.00,
$8.50 and $9.00 respectively. These options will expire on February 1,
2004.

In connection with the acquisition of Adesta, the Company 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.

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 January 31, 2000, in accounts
payable and accrued liabilities. Approximately 205,000 shares were issued in
February 2000. The Company has made a similar commitment related to the
acquisition of SASCO and SES (refer to Note 5, "Acquisitions"). The number of
shares that may be issued as earn-out consideration under these commitments in
the future is not presently determinable.

The Company has also executed an equity swap agreement with 186K.NET. Either the
Company or 186K.NET can exercise the swap at any time from July 2000 to July
2003. 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. The value of the shares to be issued and received is to
be determined by the lower of 10% of the increase in the fair market value of
the Company or of 186K.NET from July 1999 to the date of exercise. 186K.NET is a
privately-owned start-up company that provides data and communications
facilities consulting services.

12. SEGMENT INFORMATION:

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 Networks Development Group, which had no significant
activity during the three months ended January 31, 2000.

<TABLE>
<CAPTION>
For the Three Months Ended January 31,
- -----------------------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales to unaffiliated customers:
Network Services $ 62,555 $ 48,522
Transportation Services 16,430 11,701
Construction 27,115 31,858
Communication Development (International) 815 999
- ------------------------------------------------------------------------------------------------------------
$ 106,915 $ 93,080
- ------------------------------------------------------------------------------------------------------------
Income (loss) from operations:
Network Services $ 4,970 $ 3,677
Transportation Services (13,058) 1,421
Construction (1,662) (14)
Communication Development (International) (196) (165)
Unallocated Corporate Overhead (440) (2,398)
- ------------------------------------------------------------------------------------------------------------
$ (10,386) $ 2,521
- ------------------------------------------------------------------------------------------------------------
Identifiable assets:
Network Services $ 165,021 $ 161,848
Transportation Services 38,197 48,322
Construction 71,448 70,640
Communication Development (International) 3,362 3,453
Corporate 5,463 3,848
- ------------------------------------------------------------------------------------------------------------
$ 283,491 $ 288,111
- ------------------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE> 16

The Company derives a significant portion of its revenues from a few large
customers. Those customers and their revenues for the three months ended
January 31, 2000, are as follows:

Customer Operating Group Revenues
- --------------------------------------------------------------------------------

<S> <C> <C>
New Jersey Consortium Transportation and Network Services $ 18,578
WorldCom Network Services 25,862
Cooper Tire Company Construction 3,550
Florida Power Corp. Construction 3,936
</TABLE>

Adesta 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, Adesta to (i) construct a fully integrated electronic toll collection
("ETC") system; (ii) maintain the related Customer Service Center ("CSC") and
Violations Process Center ("VPC") for periods of up to 10 years; and (iii)
construct and maintain a supporting fiber optic network. The estimated gross
value of the New Jersey Consortium Contracts is approximately $280.0 million.
The Company is currently negotiating with the New Jersey Consortium to amend
the ETC program, including design specifications and certain milestone dates on
the ETC systems construction segment of the New Jersey Consortium Contracts.
Such amendment could have a material effect on the Company's revenues, costs of
revenues and margins from these contracts.

During the three months ended January 31, 2000, the Company determined through
its ongoing analyses of the ETC construction segment of the New Jersey
Consortium Contracts (excluding the Customer Service Center and Violations
Processing Center operations) that costs to be incurred are expected to exceed
amounts billable by approximately $7.7 million. This change from October 31,
1999, related primarily to changes in estimated costs associated with changing
design specifications and certain near-term milestones. As previously
mentioned, the Company is currently negotiating with the New Jersey Consortium
to amend the contracts, including the design specifications, which, if
finalized, may mitigate a portion or all of these losses.

The loss recognized during the three months ended January 31, 2000 and reserve
for loss on uncompleted contracts at January 31, 2000, related to the New
Jersey Consortium Contracts were approximately $8.2 million and $4.7 million,
respectively.

At January 31, 2000, the Company had billed and unbilled receivables of $21.4
million and $14.9 million, respectively, related to the New Jersey Consortium
and $16.4 million and $16.3 million, respectively, related to WorldCom.

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

13. SUBSEQUENT EVENTS

SERIES B AND 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

16
<PAGE> 17

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 also are entitled
to warrants for 75,000 common shares at $10.75 per share.

Changes in the conversion price may result in charges in future periods.

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. Certain Financial Advisor to the Company were also
issued Warrants for 75,000 common shares at $10.75 per share.

The pro forma effect of the Series B and Series C Transactions and the
impairment of the investment in Kanas (refer to Note 6, "Investment in Kanas
(Held for Sale)") is as follows (amounts in thousands):

Impairment of
As Reported Series B Series C Investment in Kanas Pro Foma
- -----------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Cash $ 10,145 $ (10,879) $ 14,400 $ -- $ 13,666
Current assets 173,755 (10,879) 14,400 -- 177,276
Total Assets 283,491 (10,879) 14,400 (11,850) 275,162
Current liabilities 198,932 -- -- -- 198,932
Long-term debt 1,463 -- -- -- 1,463
Preferred stock 17,726 (17,726) 13,637 -- 13,637
Equity 16,998 6,847 763 (11,850) 12,758
</TABLE>

FINANCING COMMITMENT

On March 15, 2000, the Company received financing commitments from investors
which, if closed, will allow the Company to repay its existing Credit Facility
of $35 million through new financing of approximately $56 million. The
transaction will also provide for funding of an initial $35 million for certain
current and future Network and Right-of Way development projects through a
newly established affiliated company. The new company, to be owned 40% by Able
and 60% by private investors, will purchase certain fiber assets from Able for
approximately $7 million and will lend $49 million to Able in the form of a
two-year, 11 percent term loan. The term loan will be secured by a first
priority, perfected lien on and security interest in substantially all of the
Company's and its subsidiaries now owned and subsequently acquired assets.

A portion of the loan will be used to repay the Company's existing Credit
Facility.

The new affiliate, to be established with initial equity of $35 million from
the investors, will be in a position to provide funding -- through additional
debt or equity financing -- for future major development projects.
It will have the first right of opportunity to fund and participate in
fiber-optic projects of Able that result in retained ownership of fiber assets
and must use Able to design, develop and manage any projects which it
undertakes, providing that business to Able at normal profit margins.

Consummation of the financing is subject to a number of conditions, but is
presently anticipated to occur in May 2000.

17
<PAGE> 18

ITEM 2. 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 months ended January 31,
2000 and 1999. This information should be read in conjunction with the
Company's condensed consolidated financial statement appearing elsewhere in
this document. Except for historical information contained herein, the matters
discussed below contain forward looking statements that involve risk and
uncertainties, including but not limited to economic, governmental and
technological factors affecting the Company's operations, markets and
profitability.

OVERVIEW

As discussed in Note 5 to the accompanying condensed consolidated financial
statements, "Assumption of COMSAT Contracts," during the fiscal year ended
October, 31, 1998, GEC acquired 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 January 31, 1999 (amounts in
thousands):

<TABLE>

<S> <C>
Billings on the COMSAT contracts (1) $ 2,305
Deferred revenue recognized 1,499
- -------------------------------------------------------------------------------
3,804
Direct contract costs 3,067
- -------------------------------------------------------------------------------
Gross margin from COMSAT contracts $ 737
- -------------------------------------------------------------------------------
</TABLE>

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

The Company's results of operations reflect the operating results of SASCO and
SES only from the respective dates of acquisition. Combined revenues, costs of
revenues and net loss from SASCO and SES during the three months ended January
31, 2000 were $4.8 million, $4.7 million and $0.5 million, respectively.
Accordingly, the Company's results are not necessarily comparable on a
period-to-period basis.

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

<TABLE>

2000 1999
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
<S> <C> <C>
Revenues 100.0% 100.0%
- -------------------------------------------------------------------------------

Cost of revenues 95.9 83.9
General and administrative expense 11.2 10.4
Depreciation and amortization 2.6 3.0
- -------------------------------------------------------------------------------
Income (loss) from operations (9.7) 2.7
Other expenses, net 1.2 (8.4)
- -------------------------------------------------------------------------------

Net loss (8.7) (5.7)
- -------------------------------------------------------------------------------
</TABLE>

RESULTS OF OPERATIONS

REVENUES

18
<PAGE> 19

Construction and Maintenance - Construction and maintenance revenues were
$106.9 million for the three months ended January 31, 2000, compared to $93.1
million for the same three month period of fiscal 1999 an increase of $13.8
million or 14.8 percent. Substantially all of the increase is due to increased
revenues from the WorldCom Master Services Agreement and the New Jersey
Consortium Contracts.

The Company's estimated backlog at January 31, 2000, was as follows (in
thousands):

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 twelve months. 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.

COSTS AND EXPENSES

Construction and Maintenance - Construction and maintenance costs were $102.5
million for the three months ended January 31, 2000, compared to $78.1 million
for the same three month period of fiscal 1999, an increase of $24.4 million or
31.2 percent. The Company's construction and maintenance margins were 4.1
percent for the three months ended January 31, 2000, compared to 16.1 percent
for the same three month period of fiscal 1999.

Substantially all of the increase in construction and maintenance costs is due
to increased costs associated with the WorldCom Master Services Agreement and
the New Jersey Consortium Contracts. Losses recognized during the three months
ended January 31, 2000 and reserve for loss on uncompleted contracts at January
31, 2000, related to the New Jersey Consortium Contracts were approximately
$8.2 million and $4.7 million, respectively.

The Company is currently negotiating with the New Jersey Consortium to amend
the ETC program, including design specifications and certain milestone dates on
the ETC systems construction segment of the New Jersey Consortium Contracts.
Such amendment could have a material effect on the Company's revenues, costs of
revenues and margins from these contracts.

19
<PAGE> 20

Company is currently negotiating with the New Jersey Consortium to amend the
contracts, including the design specifications, which, if finalized, may
mitigate a portion or all of these losses.

The following is a summary of the reserves for losses on uncompleted contracts
(amounts in thousands):

Transportation Services
Network Services Group Group Total
2000 1999 2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C>
Balance, November 1 $ 5,703 $ 8,029 $ 2,917 $ 17,361 $ 8,620 $ 25,390
Additions (1) 141 -- 4,744 -- 4,885 --
Amount utilized (393) (1,231) (961) (6,068) (1,354) (7,299)
- --------------------------------------------------------------------------------------------------------------------
Balance, January 31 $ 5,451 $ 6,798 $ 6,700 $ 11,293 $ 12,151 $ 18,091
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

General and Administrative - General and administrative expenses were $12.0
million for the three months ended January 31, 2000, compared to $9.7 million
for the same three month period of fiscal 1999 an increase of $2.3 million or
23.7 percent. The increase in general and administrative expense is primarily
attributable to increased non-job specific compensation and professional fees.

OTHER INCOME (EXPENSE)

Other income (expense), including equity in losses of investment in Kanas, the
provision for (benefit from) income taxes and minority interest, was $0.9
million for the three months ended January 31, 2000, compared to $7.8 million
for the same respective period of fiscal 1999 and consisted of the following
(dollars in thousands):

2000 1999 $ Change % Change
- -------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Interest expense $ (2,449) $ (2,478) $ 29 1.2%
Change in value of stock appreciation rights 3,710 (5,334) 9,044 (169.6)
Benefit from income taxes (296) 50 (346) (692.0)
Other (57) (77) 20 26.0
</TABLE>

Interest Expense - The decrease in interest expense during fiscal 2000 compared
to fiscal 1999 is primarily attributable to lower outstanding balance to
WorldCom due to the WorldCom Debt to Equity Conversion. During the three months
ended January 31, 2000, the Company had $35.0 million outstanding under its
Credit Facility and $4.5 million outstanding under the WorldCom Note with an
interest rate of 11.5 percent and $18.0 million outstanding under property
taxes payable that is net of imputed interest at 15 percent per annum.

The $32.0 million outstanding under the WorldCom Advance is non-interest
bearing.

Stock Appreciation Rights - The change in the value of the stock appreciation
rights is a non-cash item related to the value of amounts potentially owed to
WorldCom under the existing WorldCom stock appreciation rights (WorldCom SARs).
Management expects the conversion of WorldCom SARs into options for the
Company's common stock at the Company's next shareholders' meeting and will not
result in a cash charge to the Company. The value of the WorldCom SARs will be
increased or decreased based on the intrinsic value of the WorldCom SAR's
utilizing the price of the Company's common stock at each reporting date until
the WorldCom SARs are converted to options or exercised by WorldCom.

Provision For (Benefit From) Income Taxes - The provision for (benefit from)
income taxes was $0.3 million for the three months ended January 31, 2000,
compared to $0.05 million for the same three month period of fiscal 1999.
During the three months ended January 31, 2000, the Company's income tax
expense related primarily to state income taxes. The Company has a net
operating loss carryforwards for income tax purposes of approximately $10.0
million that will expire in 2019. For financial reporting purposes, a valuation
allowance has been recognized against the book value of these net operating
loss carryforwards due to the uncertainty that the Company will realize the

20
<PAGE> 21

income tax benefit from its net deferred tax assets.

LOSS APPLICABLE TO COMMON STOCK

Loss applicable to common stock was $10.7 million for the three months ended
January 31, 2000, compared to $5.5 million for the same three-month period of
fiscal 1999 an increase of $5.2 million or 94.5 percent. During the three
months ended January 31, 2000, the Company recorded approximately $1.4 million
related to additional Series B Preferred Stock default penalties that resulted
in a direct increase in loss applicable to common shareholders.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $10.1 million at January 31, 2000 compared to
$16.6 million at October 31, 1999. The decrease in cash and cash equivalents of
$6.5 million during the three months ended January 31, 2000 resulted from cash
from financing activities of $0.9 million, offset by cash used in operating and
investing activities of $5.3 million and $1.9 million, respectively.

CASH FROM OPERATING ACTIVITIES

Cash used in operating activities during the three months ended January 31,
2000 of $5.3 million consisted primarily of (i) net losses of $5.3 million,
excluding non-cash charges totaling $4.1, and (ii) increases in accounts
receivable and networks under construction of $12.7 million and $16.1 million,
respectively, offset by (i) an $8.2 million decrease in costs and profits in
excess of billings on uncompleted contracts, and (ii) increases in accounts
payable and accrued liabilities, accruals for incurred job costs and billings
in excess of costs and estimated profits on uncompleted contracts of $4.8
million, $14.9 million and $2.1 million, respectively.

The $16.1 increase in networks under construction related predominately to the
ongoing construction of telecommunications systems on rights-of-way leased from
the Colorado Department of Transportation (the "CDOT Networks"). The Company
has executed various long-term user agreements for the CDOT Networks, which
will be recognized as revenue ratably over the term of the user agreement
beginning upon the completion of the networks. Conversely, the related costs
will be recognized ratably over the useful life of the networks and the
rights-of-way.

Cash flows from operations during the three months ended January 31, 2000, were
adversely effected by cash payments of $1.4 million related to Loss Jobs
acquired from Adesta that were charged to reserves for losses on uncompleted
contracts.

The Company expects to incur significant additional amounts to complete the
construction of the CDOT Networks. Failure of the Company to execute sufficient
user agreements for the CDOT Networks could have a material adverse effect on
the carrying value of the Company's investment.

CASH FROM INVESTING ACTIVITIES

Cash used in investing activities during the three months ended January 31,
2000 of $1.9 million is due to net capital expenditures of approximately $2.0
million required to support increased operations and replacement of existing
equipment offset by cash acquired in the acquisition of SASCO and SES of
approximately $0.1 million.

CASH FROM FINANCING ACTIVITIES

Cash provided by financing activities during the three months ended January 31,
2000 of $0.9 million is due primarily to proceeds from the issuance of debt and
stock options of $0.3 million and $1.0 million, respectively, offset by
payments of debt of $0.4 million.

On January 11, 2000, the Company entered into an agreement with WorldCom
whereby 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. The
conversion was based on the January 8, 2000 closing price of the Company's
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 11.5
percent subordinated promissory note due February 2001.

21
<PAGE> 22

As discussed in Note 12 to the accompanying condensed consolidated financial
statements, "Subsequent Events," subsequent to January 31, 2000, the Company
(i) converted approximately $8.0 million of the accrued redemption value of the
Company's Series B Preferred Stock into common stock and warrants of the
Company; (ii) repaid with cash the remaining Series B Preferred Stock
redemption obligation of approximately $10.0 million through the issuance of
$15.0 million of Series C Preferred Stock; and (iii) received financial
commitments from investors which will provide new financing ofapproximately
$56.0 million and also will provide funding of an initial $35.0 million for
certain current and future network and right-of-way development projects.
A portion of the new financing will be used to repay the Company's existing
$35.0 million Credit Facility that is currently in default.

EFFECT ON FUTURE LIQUIDITY OF CERTAIN CONTRACTS ACQUIRED FROM ADESTA

The Company has recorded reserves for losses on certain contracts assumed in
the Adesta Acquisition that are expected to use cash from operations of
approximately $7.3 million over the next two fiscal years. The Company also
assumed in the Adesta Acquisition 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
by Adesta 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. 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 accompanying condensed consolidated financial
statements, the Company acquired from Adesta a 25 percent interest in Kanas
Telcom, Inc. As of the date of the acquisition of Adesta, 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 that total approximately $85.4 million at October 31, 1998. In
conjunction with the acquisition of Adesta, the Company has agreed to indemnify
WorldCom under its guarantee.

The Company learned on February 25, 2000, that on February 24, 2000, Alyeska
declared Kanas to be in default under the terms of their contract. Adesta,
which was the subcontractor for Kanas on the telecommunications network,
received "substantial completion" from Kanas in December 1998, but Kanas has
not received final acceptance from Alyeska and, in turn, has not provided final
acceptance to Adesta. Alyeska has taken the position that Kanas does not have
the right to cure the default and has notified Kanas that it is terminating the
contract. Adesta has not received any notice of default from Kanas nor has it
received any request regarding the indemnification agreement with WorldCom.

During March 2000, Kanas executed a memorandum of understanding that provided
the following:

(4) Kanas sold shares equal to 80 percent of the then outstanding shares to
WorldCom for approximately $1.5 million thereby reducing the ownership
interest of the original Kanas shareholders, including Adesta, to 5
percent each.

(5) Substantially all of the officers and directors of Kanas resigned.

(6) Adesta's responsibilities under its network operations and maintenance
agreement with Kanas were transferred to an affiliate of WorldCom.

22
<PAGE> 23

However, it now appears likely the Company will write-off most of remaining
carrying value of its interest in Kanas during the three months ended April 30,
2000, of approximately $11.9 million. Additionally, the Company continues to
assess the collectiblity of receivables from Kanas of approximately $1.2
million at April 10, 2000.

Changes in the realization of the Company's investment in Kanas and any amounts
paid out under the indemnity agreement with WorldCom, could have a material
adverse effect on the Company's consolidated statement of condition and
liquidity.

FUTURE LIQUIDITY

The Company incurred losses from operations of $10.4 million, net losses of
$9.3 million, and losses applicable to common stock of $10.7 million during the
three months ended January 31, 2000. The Company also 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 January 31,
2000, to redeem the Series B Preferred Stock and to reduce obligations for loss
contracts assumed in 1998 in the acquisition of Adesta. 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. In addition, as described in Note 7 to the accompanying condensed
consolidated financial statements, "Investment in Kanas (Held for Sale)," on
February 24, 2000, Alyeska declared Kanas to be in default under the terms of
their contract. WorldCom is the guarantor of approximately $87.5 million of
Kanas indebtedness and the Company has indemnified WorldCom with respect to
that guarantee. Claims that may be made against the Company with respect to
that indemnification are, there is substantial doubt about the Company's
ability to continue as a going concern. Consequently, there is substantial
doubt about the Company's ability to continue as a going concern. In addition,
there can be no assurance that the Company will not experience adverse
operating results or other factors which could materially increase its cash
requirements or adversely affect its liquidity position.

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 discussed in
Note 2 to the accompanying condensed consolidated financial statements, "Going
Concern."

CAUTIONARY STATEMENTS

Certain of the information contained herein may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, as the same may be amended from time to time ("the Act") and in
releases made by the Securities and Exchange Commission ("SEC") from time to
time. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance, or achievements expressed or implied by such forward-looking
statements. The words "estimate," "believes," "project," "intend," "expect" and
similar expressions when used in connection with the Company, are intended to
identify forward-looking statements. Any such forward-looking statements are
based on various factors and derived utilizing numerous important assumptions
and other important factors that could cause actual results to differ
materially from those on the forward-looking statements. These cautionary
statements are being made pursuant to the Act, with the intention of obtaining
benefits of the "Safe Harbor" provisions of the Act. The Company cautions
investors that any forward-looking statements made by the Company are not
guarantees of future performance and that actual results may differ materially
from those in the forward-looking statements as a result of various factors,
including but not limited to those set forth below.

Important assumptions and other important factors that could cause actual
results to differ materially from those in the forward-looking statements
include, but are not limited to: (i) risks associated with leverage, including
cost increases due to rising interest rates: (ii) risks associated with the
Company's ability to continue its strategy of growth through acquisitions;
(iii) risks associated with the Company's ability to successfully integrate all
of its recent acquisitions: (iv) the Company's ability to make effective
acquisitions in the future and to successfully integrate newly acquired
businesses into existing operations and the risks associated with such newly
acquired

23
<PAGE> 24

businesses; (v) changes in laws and regulations, including changes in tax
rates, accounting standards, environmental laws, occupational, health and
safety laws: (vi) access to foreign markets together with foreign economic
conditions, including currency fluctuations; (vii) the effect of, or changes
in, general economic conditions; (viii) economic uncertainty in Venezuela; (ix)
weather conditions that are adverse to the specific businesses of the Company,
and (x) the outcome of litigation, claims and assessments involving the
Company.

Other factors and assumptions not identified above may also be involved in the
derivation of forward- looking statements, and the failure of such other
assumptions to be realized as well as other factors may also cause actual
results to differ materially from those projected. The Company assumes no
obligation to update these forward-looking statements to reflect actual
results, changes in assumptions or changes in other factors affecting such
forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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):

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:
Amount $ 36,286 -- -- -- -- --
Average interest rate 11.45% -- -- -- -- --
Fixed rate debt:
Amount $ 654 $ 4,777 $ 75 $ 19 $ 19 $ 19
Average interest rate 9.00% 11.10% 9.00% 9.00% 9.00% 9.00%
Total:
Amount $ 36,940 $ 4,777 $ 75 $ 19 $ 19 $ 19
Average 11.06% 11.10% 9.00% 9.00% 9.00% 9.00%
</TABLE>

The above presentation does reflect the $32.0 million WorldCom Advance that
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. Additionally, the above presentation does not reflect the present value
of future property taxes payable (over a period of 20 years). On the January
31, 2000, condensed consolidated balance sheet, the long-term portion of this
liability totaled $16.0 and is reflected as "Property Taxes Payable," while the
current portion totaled $2.6 million and is reflected in "Accounts Payable and
Accrued Liabilities."

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 as current a current maturity (fiscal year
2000) in the above expected maturity schedule. During the default period, the
Company is required to pay a default penalty of two percent per annum on all
outstanding balances.

The fair value of the Company's debt approximates its carrying value.

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 it would
receive from its foreign subsidiaries. To date, the Company has not entered
into any

24
<PAGE> 25

significant foreign currency forward exchange contracts or other derivative
financial instruments to hedge the effects of adverse fluctuations in foreign
currency exchange rates.

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On November 12, 1998, the Company granted options to purchase 150,000 shares of
the Company's common stock, par value $0.001 per share ("Common Stock") to two
employees of the Company. The options were granted pursuant to the Company's
1995 Stock Option Plan, as amended (the "Plan"), are non-qualified, vested over
three years, are exercisable at $7.125 per share, and expire on July 8, 2000.
In addition, on November 12, 1998, the Company granted options to purchase
350,000 shares of Common Stock to employees of the Company's subsidiaries
acquired in connection with the Adesta acquisition. The options were granted
outside the Plan.

On December 23, 1998, the Company granted options to purchase 12,500 shares of
Common Stock to employees of the Company. The options were granted pursuant to
the Plan, are qualified, vested immediately, are exercisable at $5.75 per
share, and expire on December 31, 2004.

On December 31, 1998, in an effort to correct certain of the actions taken by
the Company's Board of Directors in order to maintain compliance with the Plan,
as amended, the Board of Director's rescinded certain of the stock option
grants made during the fiscal year ended October 31, 1998, or 530,000 options
under the Plan and 310,000 options outside the Plan. These ambiguities and
compliance issues included, in certain instances, (i) granting options that had
been granted inside the Plan where there were not a sufficient number of shares
available, (ii) granting options at below market prices to nonemployee
directors with the Plan, contrary to terms of the Plan, (iii) not specifying
whether the grants were issued inside or outside the Plan, (iv) not specifying
the exercise period for the options granted or (v) issuing options outside the
Plan, which could be considered contrary to the terms of certain financing
documents. These options, which vested immediately, were reissued at the fair
market value ($5.75 per share), as defined by the Plan, on December 31, 1998,
as well as shortened certain of the expiration dates of the options. In
addition, the Company rescinded and reissued the 350,000 options outside the
Plan and the 150,000 options pursuant to the Plan described above on December
31, 1998 at $5.75 per share for the reasons described above. These options
vested immediately and expire on November 12, 2004 (outside the Plan) and
December 31, 2004 (pursuant to the Plan). All options granted outside the plan
are subject to shareholder approval.

On December 31, 1998, the Company granted options to purchase 1,050,000 shares
of Common Stock to employees of the Company's subsidiaries acquired in
connection with the Adesta acquisition. The options were granted outside the
Plan, are non-qualified, vest over three years, are exercisable at $5.75 per
share, and expire on November 12, 2004. All options granted outside the plan
are subject to shareholder approval.

On December 31, 1998, the Company granted options to purchase 40,000 shares of
Common Stock to an employee of the Company. The options were granted outside
the Plan, are non-qualified, 20,000 of which vested on January 1, 1999, 10,000
vest on December 31, 1999 and 10,000 vest on December 31, 2000, are exercisable
at $5.75 per share, and expire on the earlier of September 19, 2005 or two
years after the date of termination.

On December 31, 1998, the Company granted options to purchase 180,000 shares of
Common Stock to three employees of the Company. The options were granted
pursuant to the Plan, are non-qualified, vested immediately, are exercisable at
$5.75 per share, and expire on December 31, 2001.

On February 17, 1999, 2,785 shares of non-voting Series B Convertible Preferred
Stock, $0.10 par value ("Series B Preferred Stock") were purchased by the
Company for approximately $18.9 million and retired. In connection with the
purchase of the 78% of the Series B Preferred Stock, the Company agreed to
certain modifications in the conversion price of the related warrants. The
terms of the existing Series B Preferred Stock conversion price for the
remaining shares were modified from 97% of market value, as defined in the
agreements, to a fixed amount of approximately $3.50 per share for 404 of the
remaining 779 shares. The conversion price of (i) warrants to purchase a total
of 370,000 shares of the Company's common stock was reduced to $13.25 per share
and (ii) warrants to purchase a total of 630,000 shares of common stock was
reduced to $13.50 per share. On May 7, 1999, the warrants to purchase the
630,000 shares of common stock were purchased by the Company for $3.00 per
share.

25
<PAGE> 26

On February 19, 1999, 628,398 shares were issued to the former owners, or their
assignees, of Georgia Electric Corporation ("GEC") pursuant to the earn-out
provision of the acquisition agreement whereby the Company purchased all of the
outstanding stock of GEC.

Effective April 1, 1999, the Company granted to an employee options to purchase
100,000 shares of Common Stock. The options were granted outside the Plan, are
non-qualified, 75,000 of which vested immediately with the remaining 25,000
vesting on June 21, 2000, are exercisable at $6.375 per share, and expire at
the earlier of September 19, 2005 or two years from the date of termination.

Effective April 1, 1999, the Company granted a consultant options to purchase
40,000 shares of Common Stock. The options were granted outside the Plan, are
non-qualified, 20,000 of which vested immediately, 10,000 vest on April 1,
2000, and 10,000 vest on April 1, 2001, are exercisable at $6.375 per share,
and expire two years from the date of expiration of the consulting agreement or
any extensions or renewals thereof. All options granted outside the plan are
subject to shareholder approval.

On April 30, 1999, the Company granted to an employee a restricted stock award
of 50,000 shares of Common Stock.

On May 3, 1999, the Company granted options to purchase 40,000 shares of common
stock to the Company's legal consultant. The options were granted outside of
the Plan, are non-qualified, 20,000 of which vested immediately, 10,000 vest on
May 3, 2000 and 10,000 vest on May 3, 2001. All of said options are exercisable
at $6.75 per share. Said options expire on May 3, 2004.

On April 30, 1999, the Company converted a payable to a Director of the Company
in the amount of $0.8 million into 118,286 shares of Common Stock based upon a
conversion rate equal to the fair market value of the Company's common stock on
the date of conversion, or $7.00 per share.

On May 18, 1999, the Company granted options to purchase 215,000 shares of
common stock to employees of the Company. The options were granted outside of
the Plan, are non-qualified, 72,000 of which vested immediately, 71,000 vest on
May 1, 2000 and 71,000 vest on May 1, 2001. All of said options are exercisable
at $6.375 per share. Said options expire on May 1, 2004.

On June 9, 1999, the Company granted options to purchase 10,000 shares of
common stock to a director of the Company. The options were granted outside of
the Plan, are non-qualified and all of which vest immediately. All of said
options are exercisable at $6.75 per share. Said options expire on June 9,
2002.

On July 26, 1999, the Company granted options to purchase 218,000 shares of
common stock to employees of the Company. The options were granted outside of
the Plan, are non-qualified, 73,000 of which vested immediately, 73,000 vest on
July 23, 2000 and 72,000 vest on July 23, 2001. All of said options are
exercisable at $9.94 per share. Said options expire on May 1, 2004.

On July 29, 1999, the Company granted options to purchase 10,000 shares of
common stock to a director of the Company. The options were granted outside of
the Plan, are non-qualified and all of which vest after one-year. All of said
options are exercisable at $8.75 per share. Said options expire on July 29,
2002.

In February 2000 the Company granted options to purchase a total of 525,000 to
three new employees of the Company. The options, if approved by shareholders,
will vest as follows: 125,000 as of February 1, 2000; 200,000 on February 1,
2001; and 200,000 on February 1, 2002 with the exercise price being $6.00,
$8.50 and $9.00 respectively. Said options will expire on February 1, 2004.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

At January 31, 2000, the Company has borrowed the maximum available under its
existing Credit Facility and 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 January 31, 1999, consolidated

26
<PAGE> 27

balance sheet. During the default period, the Company is required to pay a
default penalty of two percent per annum on all outstanding balances. In the
event that the lender demands payment, the Company has insufficient liquidity
to pay such amounts.

In addition, during the quarter ended January 31, 2000, the Company was and
continues to be in default on the Series B Preferred Stock for the nonpayment
of dividends related to the remaining 22% (or 779 shares) of shares of Series B
Preferred Stock. (See Note 13 "Subsequent Events").

ITEM 5. OTHER INFORMATION

NASDAQ HEARING

On March 23, 2000, the Company was advised by the Staff of Nasdaq-Amex Market
Group ("NASDAQ") that its securities would be delisted if its Form 10-Q for the
period ended January 31, 2000 was not filed by March 30, 2000. On March 29,
2000, the Company requested a hearing and a stay was issued until the hearing
date on May 4, 2000. NASDAQ has further advised the Company that the hearing
will also cover the issues dealing with listing qualifications and failure to
hold an annual meeting. Management believes that it will be able to satisfy
NASDAQ that the Company should not be delisted.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

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)

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)
</TABLE>

27
<PAGE> 28
<TABLE>

<S> <C>
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. (17)

2.5.10 Agreement dated March 15, 1999 by and between Able Telcom
Holding Corp. and WorldCom Network Services, Inc. (17)

2.5.14 Letter Agreement dated January 11, 2000 related to WorldCom
Conversion of Certain Debt into Equity (18)

2.6 Teaming Agreement dated July 7, 1999 by and between Able
Telcom Holding Corp. and 186K.Net, Co. (18)

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. (18)

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. (18)

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. (18)

2.7.3 Stock Purchase Agreement by and among Able Telcom Holding
Corp., Southern Aluminum & Steel Corporation and the
Shareholders dated November 5, 1999. (18)
</TABLE>

28
<PAGE> 29
<TABLE>

<S> <C>
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. (18)

2.7.5 Employment Agreement with Donald G. Garner dated November 5,
1999. (18)

2.7.5.1 Non-Competition Agreement with Donald G. Garner dated
November 5, 1999. (18)

2.7.6 Employment Agreement with C. Michael Hoover dated November 5,
1999. (18)

2.7.6.1 Non-Competition Agreement with C. Michael Hoover dated
November 5, 1999. (18)

2.7.7 Employment Agreement with Jesse R. Joyner dated November 5,
1999. (18)

2.7.7.1 Non-Competition with Jesse R. Joyner dated November 5, 1999.
(18)

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. (18)

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 (18)

4.3.2 Specimen Series C Preferred Stock Certificate (18)

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)

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)
</TABLE>

29
<PAGE> 30
<TABLE>

<S> <C>
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. (18)

4.15.2 Letter Agreement dated February 17, 1999 from Cotton
Communications, Inc. to Able Telcom Holding Corp. (18)

4.15.3 Termination Agreement dated March 22, 1999 by and between
Able Telcom Holding Corp. and Cotton Communication, Inc. (18)

4.16 Series B Convertible Preferred Stock Exchange Agreement by
and between Able Telcom Holding Corp. and the Palladin Group
dated February 4, 2000. (18)

4.16.3 Letter Agreement dated February 17, 1999 from the Palladin
Group to Able Telcom Holding Corp. (18)

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. (18)

4.17 Form of First Common Stock Purchase Warrants in connection
with Series B Convertible Preferred Stock Exchange Agreement
with the Palladin Group. (18)

4.18 Form of Second Common Stock Purchase Warrants in connection
with Series B Convertible Preferred Stock Exchange Agreement
with the Palladin Group (18)

4.19 Series B Convertible Preferred Stock Exchange Agreement by
and between Able Telcom Holding Corp. and the RoseGlen Group
dated February 4, 2000. (18)

4.20 Form of Common Stock Purchase Warrants in connection with
Series B Convertible Preferred Stock Exchange Agreement with
the RoseGlen Group. (18)

4.21 Registration Rights Agreement associated with Series B
Convertible Preferred Stock Exchange Agreement (18)

4.22 Series C Convertible Preferred Stock Purchase Agreement (18)

4.23 Form of Common Stock Purchase Warrants in connection with
Series C Convertible Preferred Stock Purchase Agreement. (18)

4.24 Registration Rights Agreement associated with Series C
Convertible Preferred Stock Purchase Agreement. (18)

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)
</TABLE>

30
<PAGE> 31
<TABLE>

<S> <C>
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 (16)

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

10.33.1 Employment Agreement with Billy V. Ray, Jr., dated February
21, 2000

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)

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)
</TABLE>

31
<PAGE> 32
<TABLE>

<S> <C>
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. (17)

10.47 Employment Agreement with Thomas Montgomery, dated February
21, 2000.

10.48 Employment Agreement with Charles Maynard, dated February 21,
2000.

10.49 Employment Agreement with Philip Kernan, dated February 21,
2000.

11 Computation of Per Share Earnings (7)

16.1 Letter regarding change in certifying accountants (15)

27 Financial Data Schedule
</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.

(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.

32
<PAGE> 33

(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 January
31, 1999, as filed March 17, 1999.

(17) 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.

(18) 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

33
<PAGE> 34

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ABLE TELCOM HOLDING CORP.
(REGISTRANT)

Signatures Title Date Signed
- ---------------------------------------------------------------------------------------------------

<S> <C> <C>
/s/ BILLY V. RAY, JR. President and Chief Executive Officer and Director April 11, 2000
- ---------------------
Billy V. Ray, Jr.

/s/ MICHAEL A. SUMMERS Chief Accounting Officer April 11, 2000
- ----------------------
Michael A. Summers
</TABLE>

<PAGE> 1

EXHIBIT 10.33.1

EMPLOYMENT AGREEMENT

Agreement dated this 21st day of February, 2000, by and between Able Telcom
Holding Corp., with its address at 1000 Holcomb Woods Parkway, Suite 440,
Roswell, GA 30076, ("Employer"), and BILLY V. RAY, JR. ("Employee") of 2919
Truitt Drive Burlington, NC 27215.

WITNESSETH:

WHEREAS, Employer is engaged in the telephone and telecommunication installation
and service, business and manufacture, sale and installation of highway signs
and traffic control products, and

WHEREAS, Employer desires to employ Employee as the Chief Executive Officer and
President; and

WHEREAS, Employer desires to avail itself of the services of the Employee in
order that his knowledge and ability may be utilized in the conduct and
development of the business and affairs of Employer; and

WHEREAS, Employee has evidenced his willingness to enter into an employment
agreement with respect to his employment by Employer, pursuant to the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the foregoing and mutual promises and
covenants herein contained, it is agree as follows:

1. EMPLOYMENT: DUTIES

Employer hereby employs the Employee as the Chief Executive Officer and
President. Subject at all times to the direction of the Board of Directors, the
Employee shall be in charge of the overall business operations of Employer and
of such other services and duties as the Board of Directors shall determine.
However, the duties and responsibilities assigned to the Employee during the
term of employment shall be substantially similar in type and character to those
ordinarily assigned to and performed by persons employed as high level
executives by corporations carrying on a business similar to Employer.

2. FULL TIME EMPLOYMENT

Employee hereby accepts employment by Employer upon the terms and conditions
contained herein and agrees that during the term of this Agreement, Employee
shall devote all of his business time, attention and energies to the business of
Employer.

3. TERM

Employee's employment hereunder shall be for a term of three (3) years to
commence on the date hereof. This Agreement will automatically be extended for
an additional three-year term after the initial term of three (3) years. If
Employer violates a major provision of this Agreement, Employee may terminate
this Agreement and receive an amount equal to the provisions under paragraph 5
of this agreement titled "Termination without Cause." At the end of the
three-year period, the Employee may sign a consulting agreement. The terms of
either an extension of this Agreement or of a consulting agreement will be
negotiated not later than the 30th month of this Agreement.

<PAGE> 2

4. TERMINATION FOR CAUSE

Notwithstanding any other provision of this Agreement, Employee may be
terminated on ninety (90) days notice without further benefits or compensation
for any of the following reasons during the term of this agreement: a) material
misuse, misappropriation or embezzlement of any Employer property or funds; b)
conviction of a felony or c) material breach of any provision of this Agreement.

5. TERMINATION WITHOUT CAUSE

Termination without cause can only be effected by an action by the Board of
Directors with a majority of the members approving such termination. In the
event of termination without cause or a substantial change of job
responsibility, Employee will receive in cash immediately receive the balance of
his yearly base salary for the remaining term of this agreement plus regular
company fringe benefits. All of said payments will be without any rights of
mitigation. In no case shall Employee receive less than the total compensation
for the remaining term, plus payment of phantom stock and option "in the money"
values, as severance pay.

6. COMPENSATION

As full compensation for the performance of his duties on behalf of Employer,
Employee shall be compensated as follows:

a. Base Salary: Employer during the term hereof shall pay
Employee a base salary at the rate of three hundred fifty
thousand dollars ($350,000) per annum, payable no less
frequently than in monthly installments.

b. Bonus: Employer shall pay Employee promptly after the end of
each fiscal year of Employer during the term of this Agreement
a cash bonus of up to the annual salary if Employer and its
subsidiaries exceed performance and/or other goals reasonably
attainable.

c. Reimbursement of Expenses: Employer shall reimburse Employee
for the expenses incurred by Employee in connection with his
duties hereunder, including travel and entertainment, such
reimbursement to be made in accordance with regular Employer
policy and upon presentation by Employee of the details of,
and vouchers for, such expenses.

d. Salary Adjustments: Prior to the expiration of each contract
year, the Board of Directors may review Employee's salary and
benefits and, if appropriate, in its sole and absolute
discretion, may increase such salary and benefits for the next
succeeding year.

e. Automobile Allowance: Employer shall provide Employee with an
automobile allowance of five hundred dollars ($500) per month
or Employer will provide Employee, at Employee's option, with
an automobile and reimbursement of its operating costs.

f. Housing Allowance: Employer shall provide Employee with a
housing allowance of fifteen hundred dollars ($1,500) per
month.

7. OPTIONS

Employee will receive, when allowed by a shareholder-approved plan, an option to
purchase 100,000 shares of common stock with a strike price equal to the NASDAQ
price at the close of business on award date. Said option will vest immediately
upon approval by shareholders.
<PAGE> 3

8. FRINGE BENEFITS

During the term of this Agreement, Employer shall provide to the Employee and
his family hospitalization, major medical, life insurance, in accordance with
Able Telcom benefit plans, and other fringe benefits on the same terms and
conditions as it affords other executive management employees.

9. UPON TERMINATION OF EMPLOYMENT

Subsequent to the termination of the employment of Employee, Employee will not
interfere with, disrupt, or attempt to disrupt Employer's business relationship
with its customers or suppliers. Further, Employee will not solicit any of the
employees of Employer to leave the Employer for a period of two (2) years
following such termination. In addition, Employee agrees that all information
received from principals and agents of Employer will be held in total confidence
for a period of two (2) years following termination of employment, to the extent
such information is proprietary and not generally available to the public or
sources outside the company.

10. INCAPACITY

In the event that Employee shall become incapacitated or unable to perform the
duties of his employment hereunder for the balance of the current three year
period (hereinafter referred to as the "Disability Period"), the Employee
nevertheless shall be entitled to full salary and other payments not including
bonus, provided for hereunder during the Disability Period; provided, however,
that any amount paid to the Employee under any Employer provided disability
insurance will be subtracted from payments to be made to the Employee by the
Employer. In the event that Employee is incapacitated for a period which exceeds
the Disability Period, Employee shall not be entitled to receive the
compensation and other payments provided for hereunder for any time after the
end of the Disability Period. In no event shall the disability payment period
exceed the period of this Agreement. Employee shall be considered incapacitated
when the Board of Directors determines that he is unable to perform the normal
duties required of him hereunder. Incapacity shall be determined by two (2)
medical doctors assigned by Employer.

11. NOTICES

All notices hereunder shall be in writing and shall be sent to the parties at
the respective addresses above set forth. All notices shall be delivered in
person or given by registered or certified mail, postage prepaid, and shall be
deemed to have been given when delivered in person or deposited in the United
States mail. Either party may designate any other address to which notice shall
be given, by giving notice to the other such change of address in the manner
herein provided. Employer, or its management, directors, representatives,
employees or affiliates will not make any public announcements or any other
information related to Employee, directly or indirectly, without the express
written consent of Employee, except as required by law or regulation.

12. SEVERABILITY OF PROVISIONS

If any provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, the remaining conditions and provisions or portions thereof shall
nevertheless remain in full force and effect and enforceable to the extent they
are valid, legal and enforceable, and no provision shall be deemed dependent
upon any other covenant or provision unless so expressed herein.

<PAGE> 4

13. ENTIRE AGREEMENT: MODIFICATION

All prior agreements with respect to the subject matter hereof between the
parties are hereby canceled. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof, supersedes any and all previous
agreements whether written or oral and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. No modification of this Agreement
shall be valid unless made in writing and signed by the parties hereto.

14. BINDING EFFECT

The rights, benefits, duties and obligations under this Agreement shall inure
to, and be binding upon, the Employer, its successors and assigns, and upon the
Employee and his legal representatives, heirs and legatees. This Agreement
constitutes a personal service agreement, and the performance of the Employee's
obligations hereunder may not be transferred or assigned by the Employee.

15. NON-WAIVER

The failure of either party to insist upon the strict performance of any of the
terms, conditions and provisions of this Agreement shall not be construed as a
waiver or relinquishment of this Agreement and shall not be construed as a
waiver or relinquishment of future compliance therewith, and said terms,
conditions and provisions shall remain in full force and effect. No waiver of
any term or condition of this Agreement on the part of either party shall be
effective for any purpose whatsoever unless such waiver is in writing and signed
by such party.

16. GOVERNING LAW

This Agreement shall be construed and governed by the laws of the State of
Georgia.

17. ARBITRATION

Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach hereof, shall be settled by
arbitration before the American Arbitration Association, in Fulton County,
Georgia, before a panel of three arbitrators, in accordance with its rules, and
judgment upon any award rendered may be entered in any court having jurisdiction
thereof. Neither party shall resort to litigation.

18. HEADINGS

The headings of the paragraphs herein are inserted for convenience and shall not
affect any interpretation of this Agreement.

<PAGE> 5

IN WITNESS WHEREOF the parties have set their hands and seals this _________ day
of _________________, 2000.

Witness: Employer: ABLE TELCOM HOLDING CORP.

By: By:
-------------------------------- ---------------------------------
C. Frank Swartz
Chairman of the Board

Witness: Employee:

By: By:
-------------------------------- ---------------------------------
Billy V. Ray

<PAGE> 1

EXHIBIT 10.47

EMPLOYMENT AGREEMENT

Agreement dated this 21st day of February, 2000, by and between Able Telcom
Holding Corp., with its address at 1000 Holcomb Woods Parkway, Suite 440,
Roswell, GA 30076, ("Employer"), and THOMAS W. MONTGOMERY ("Employee") of 7301
Burnet Rd. #102-222, Austin, Texas 78757.

WITNESSETH:

WHEREAS, Employer is engaged in the telecommunication, network development,
installation and service, business and manufacture, sale and installation of
highway signs and traffic control products, and

WHEREAS, Employer desires to employ Employee as the Executive Vice President of
Finance and Chief Financial Officer; and

WHEREAS, Employee has evidenced his willingness to enter into an employment
agreement with respect to his employment by Employer, pursuant to the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the foregoing and mutual promises and
covenants herein contained, it is agree as follows:

1. EMPLOYMENT: DUTIES

Employer hereby employs the Employee as the Executive Vice President of Finance
and Chief Financial Officer. Subject at all times to the direction of the Chief
Executive Officer, the Employee shall be in charge of the overall Financial and
reporting of Employer and of such other services and duties as the Chief
Executive Officer shall determine. However, the duties and responsibilities
assigned to the Employee during the term of employment shall be substantially
similar in type and character to those ordinarily assigned to and performed by
persons employed as high level executives by corporations carrying on a business
similar to Employer. If another Employee is hired as Chief Financial Officer,
the new Employee will report directly to the Executive Vice President of
Finance.

2. FULL TIME EMPLOYMENT

3. TERM

Employee's employment hereunder shall be for a term of three (3) years to
commence on the date hereof. This Agreement may be extended for an additional
three-year term after the initial term of three (3) years. The Employee/Employer
must give a minimum of ninety days (90) prior written notice to the
Employee/Employer that either party elects to have the Agreement terminate
effective at the end the initial term. If Employer violates a major provision of
this Agreement, Employee may terminate this Agreement and receive an amount
equal to the provisions under paragraph 5 of this agreement titled "Termination
without Cause." At the end of the three-year period, the Employee may sign a
consulting agreement. The terms of either an extension of this Agreement or of a
consulting agreement will be negotiated not later than the 30th month of this
Agreement.

<PAGE> 2

4. TERMINATION FOR CAUSE

Notwithstanding any other provision of this Agreement, Employee may be
terminated on ninety (90) days notice without further benefits or compensation
for any of the following reasons: a) misuse, misappropriation or embezzlement of
any Employer property or funds; b) conviction of a felony or c) breach of any
material provision of this Agreement.

5. TERMINATION WITHOUT CAUSE

Termination without cause can only be effected by an action by the Board of
Directors with a majority of the members approving such termination. In the
event of termination without cause or a substantial change of job
responsibility, Employee will receive bi-weekly the balance of his yearly base
salary for the remaining term of this agreement, plus regular company fringe
benefits. All of said payments will be without any rights of mitigation. In no
case shall Employee receive less than the total compensation for the remaining
term, plus payment of phantom stock and option "in the money" values, as
severance pay.

6. COMPENSATION

As full compensation for the performance of his duties on behalf of Employer,
Employee shall be compensated as follows:

a. Base Salary: For the period commencing January 31, 2000 -
February 13, 2000 Employee shall be compensated $6,250.
Employer during the term commencing February 21, 2000 shall
pay Employee a base salary at the rate of two hundred
twenty-eight thousand dollars ($228,000) per annum, payable no
less frequently than in monthly installments, with a review of
performance within six months by the Chief Executive Officer.

e. Automobile Allowance: Employer shall provide Employee with an
automobile allowance of five hundred dollars ($500) per month.

f. Housing Allowance: Employer shall provide Employee with a
housing allowance of fifteen hundred dollars ($1,500) per
month. Employer will pay for a corporate furnished apartment
until such time that Employee's furniture arrives, but no
longer than 30 days.

g. Relocation Expense: Employer shall pay all relocation costs
allowable under the existing policies as stated in the MFS
Network Technologies, Inc. Employee Handbook. If these have
not been used by the end of the third year, these will
terminate unless otherwise agreed to by the CEO and Board of
Directors.
<PAGE> 3

7. OPTIONS

Employee will receive, when a shareholder-approved plan allows, an option to
purchase 200,000 shares of common stock with a strike price and vesting schedule
as listed below:

SHARES STRIKE PRICE PER SHARE VESTING
------ ---------------------- -------
<S> <C> <C>
50,000 $6.00 February 11, 2001
75,000 8.50 February 11, 2002
75,000 9.50 February 11, 2003
</TABLE>

8. FRINGE BENEFITS

9. UPON TERMINATION OF EMPLOYMENT

10. INCAPACITY

11. NOTICES

12. SEVERABILITY OF PROVISIONS

13. ENTIRE AGREEMENT: MODIFICATION

14. BINDING EFFECT

15. NON-WAIVER

16. GOVERNING LAW

This Agreement shall be construed and governed by the laws of the State of
Georgia.

17. ARBITRATION

18. HEADINGS

The headings of the paragraphs herein are inserted for convenience and shall not
affect any interpretation of this Agreement.

<PAGE> 5

IN WITNESS WHEREOF, the parties have set their hands and seals this _______ day
of _______________, 2000.

Witness: Employer: ABLE TELCOM HOLDING CORP.

By: By:
-------------------------------- ---------------------------------
C. Frank Swartz
Chairman of the Board

Witness: Employee:

By: By:
-------------------------------- ---------------------------------
Thomas W. Montgomery

<PAGE> 1

EXHIBIT 10.48

EMPLOYMENT AGREEMENT

Agreement dated this 21st day of February, 2000, by and between Able Telcom
Holding Corp., with its address at 1000 Holcomb Woods Parkway, Suite 440,
Roswell, GA 30076, ("Employer"), and CHARLES C. MAYNARD ("Employee") of
1033 Colina Drive, Villa Hills, KY 41017.

WITNESSETH:

WHEREAS, Employer desires to employ Employee as the Chief Operating Officer; and

WHEREAS, Employee has evidenced his willingness to enter into an employment
agreement with respect to his employment by Employer, pursuant to the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the foregoing and mutual promises and
covenants herein contained, it is agree as follows:

1. EMPLOYMENT: DUTIES

Employer hereby employs the Employee as the Chief Operating Officer. Subject at
all times to the direction of the Chief Executive Officer, the Employee shall be
in charge of the operating divisions of Employer and of such other services and
duties as the Chief Executive Officer shall determine. However, the duties and
responsibilities assigned to the Employee during the term of employment shall be
substantially similar in type and character to those ordinarily assigned to and
performed by persons employed as high level executives by corporations carrying
on a business similar to Employer.

2. FULL TIME EMPLOYMENT

Employee hereby accepts employment by Employer upon the terms and conditions
contained herein and agree that during the term of this Agreement, Employee
shall devote all of his business time, attention and energies to the business of
Employer.

3. TERM

Employee's employment hereunder shall be for a term of three (3) years to
commence on the date hereof. This Agreement may be extended for an additional
three-year term after the initial term of three (3) years. The Employee/Employer
must give a minimum of ninety days (90) prior written notice to the
Employee/Employer that either party elects to have the Agreement terminate
effective at the end of the initial term. If Employer violates a major provision
of this Agreement, Employee may terminate this Agreement and receive an amount
equal to the provisions under paragraph 5 of this agreement titled "Termination
without Cause." At the end of the three-year period, the Employee may sign a
consulting agreement. The terms of either an extension of this Agreement or of a
consulting agreement will be negotiated not later than the 30th month of this
Agreement.

<PAGE> 2

4. TERMINATION FOR CAUSE

Notwithstanding any other provision of this Agreement, Employee may be
terminated on ninety (90) days notice without further benefits or compensation
for any of the following reasons: a) misuse, misappropriation or embezzlement of
any Employer property or funds; b) conviction of a felony or c) breach of any
material provision of this Agreement.

5. TERMINATION WITHOUT CAUSE

Termination without cause can only be effected by an action by the Board of
Directors with a majority of the members approving such termination. In the
event of termination without cause or a substantial change of job
responsibility, Employee will receive bi-weekly the balance of his yearly base
salary for the remaining term of this agreement plus regular company fringe
benefits. All of said payments will be without any rights of mitigation. In no
case shall Employee receive less than the total compensation for the remaining
term, plus payment of phantom stock and option "in the money" values, as
severance pay.

6. COMPENSATION

As full compensation for the performance of his duties on behalf of Employer,
Employee shall be compensated as follows:

a. Base Salary: Employer during the term hereof shall pay
Employee a base salary at the rate of two hundred forty
thousand dollars ($240,000) per annum, payable no less
frequently than in monthly installments effective as of
February 1, 2000.

e. Automobile Allowance: Employer shall provide Employee with an
automobile allowance of five hundred dollars ($500) per month.

7. OPTIONS

Employee will receive, when a shareholder-approved plan allows, an option to
purchase 200,000 shares of common stock with a strike price and vesting schedule
as listed below:

SHARES STRIKE PRICE PER SHARE VESTING
------ ---------------------- -------
<S> <C> <C>
50,000 $6.00 February 11, 2001
75,000 8.50 February 11, 2002
75,000 9.50 February 11, 2003
</TABLE>

<PAGE> 3

8. FRINGE BENEFITS

During the term of this Agreement, Employer shall provide to the Employee and
family hospitalization, major medical, life insurance, in accordance with Able
Telcom benefit plans, and other fringe benefits on the same terms and
conditions, as it affords other executive management employees.

9. UPON TERMINATION OF EMPLOYMENT

10. INCAPACITY

11. NOTICES

12. SEVERABILITY OF PROVISIONS

13. ENTIRE AGREEMENT: MODIFICATION

<PAGE> 4

supersedes any and all previous agreements whether written or oral and the
parties hereto have made no agreements, representations or warranties relating
to the subject matter of this Agreement which are not set forth herein. No
modification of this Agreement shall be valid unless made in writing and signed
by the parties hereto.

14. BINDING EFFECT

15. NON-WAIVER

16. GOVERNING LAW

This Agreement shall be construed and governed by the laws of the State of
Georgia.

17. ARBITRATION

Any controversy or claim arising under, out of, or in connection with this
Agreement or any breach or claimed breach hereof, shall be settled by
arbitration before the American Arbitration Association, in Palm Beach County,
Florida, before a panel of three arbitrators, in accordance with its rules, and
judgment upon any award rendered may be entered in any court having jurisdiction
thereof. Neither party shall resort to litigation.

18. HEADINGS

The headings of the paragraphs herein are inserted for convenience and shall not
affect any interpretation of this Agreement.

IN WITNESS WHEREOF the parties have set their hands and seals this _________ day
of ________________, 2000.

Witness: Employer: ABLE TELCOM HOLDING CORP.

By: By:
--------------------------- -------------------------------
C. Frank Swartz
Chairman of the Board

Witness: Employee:

By: By:
--------------------------- -------------------------------
Charles C. Maynard

<PAGE> 1

EXHIBIT 10.49

EMPLOYMENT AGREEMENT

Agreement dated this 21st day of February, 2000, by and between Able Telcom
Holding Corp., with its address at 1000 Holcomb Woods Parkway, Suite 440,
Roswell, GA 30076, ("Employer"), and PHILIP A. KERNAN ("Employee") of 8877
Trenton Falls Road, Remsen, New York 13438.

WITNESSETH:

WHEREAS, Employer is engaged in the telecommunication development, installation
and service, business and manufacture, sale and installation of highway signs
and traffic control products, and

WHEREAS, Employer desires to employ Employee as the Director of Compliance for
Operations; and

WHEREAS, Employee has evidenced his willingness to enter into an employment
agreement with respect to his employment by Employer, pursuant to the terms and
conditions hereinafter set forth.

NOW THEREFORE, in consideration of the foregoing and mutual promises and
covenants herein contained, it is agree as follows:

1. EMPLOYMENT: DUTIES

Employer hereby employs the Employee as the Director of Compliance for
Operations. Subject at all times to the direction of the Chief Executive
Officer, the Employee shall be in charge of the overall business operations of
Employer and of such other services and duties as the Chief Executive Officer
shall determine. However, the duties and responsibilities assigned to the
Employee during the term of employment shall be substantially similar in type
and character to those ordinarily assigned to and performed by persons employed
as high level executives by corporations carrying on a business similar to
Employer.

2. FULL TIME EMPLOYMENT

3. TERM

Employee's employment hereunder shall be for a term of three (3) years to
commence on the date hereof. This Agreement may be extended for an additional
three-year term after the initial term of three (3) years. The Employee/Employer
must give a minimum of ninety days (90) prior written notice to the
Employee/Employer that either party elects to have the Agreement terminate
effective at the end of any term. If Employer violates a major provision of this
Agreement, Employee may terminate this Agreement and receive an amount equal to
the provisions under paragraph 5 of this agreement titled " Termination without
Cause." At the end of the three-year period, the Employee may sign a consulting
agreement. The terms of either an extension of this Agreement or of a consulting
agreement will be negotiated not later than the 30th month of this Agreement.

<PAGE> 2

4. TERMINATION FOR CAUSE

Notwithstanding any other provision of this Agreement, Employee may be
terminated on ninety (90) days notice without further benefits or compensation
for any of the following reasons: a) misuse, misappropriation or embezzlement of
any Employer property or funds; b) conviction of a felony or c) breach of any
material provision of this Agreement.

5. TERMINATION WITHOUT CAUSE

Termination without cause can only be effected by an action by the Board of
Directors with a majority of the members approving such termination. In the
event of termination without cause or a substantial change of job
responsibility, Employee will receive bi-weekly the balance of his yearly base
salary for the remaining term of this agreement plus regular company fringe
benefits. All of said payments will be without any rights of mitigation. In no
case shall Employee receive less than the total compensation for the remaining
term, plus payment of phantom stock and option "in money" values, as severance
pay.

6. COMPENSATION

As full compensation for the performance of his duties on behalf of Employer,
Employee shall be compensated as follows:

a. Base Salary: Employer during the term hereof shall pay
Employee a base salary at the rate of one hundred eighty-two
thousand dollars ($182,000) per annum, payable no less
frequently than in monthly installments. Effective February 1,
2000.

e. Automobile Allowance: Employer shall provide Employee with an
automobile allowance of five hundred dollars ($500) per month.

7. OPTIONS

Employee will receive, and will be issued when a shareholder approved plan
allows, an option to purchase 125,000 shares of common stock with a strike price
and vesting schedule as listed below:

SHARES STRIKE PRICE PER SHARE VESTING
------ ---------------------- -------
<S> <C> <C>
25,000 $6.00 February 11, 2000
50,000 8.50 February 11, 2001
50,000 9.50 February 11, 2002
</TABLE>

<PAGE> 3

8. FRINGE BENEFITS

During the term of this Agreement, Employer shall provide at its sole expense to
the Employee and family hospitalization, major medical, life insurance, in
accordance with Able Telcom benefit plans, and other fringe benefits on the same
terms and conditions as it affords other executive management Employees.

9. UPON TERMINATION OF EMPLOYMENT

10. INCAPACITY

11. NOTICES

12. SEVERABILITY OF PROVISIONS

<PAGE> 4

13. ENTIRE AGREEMENT: MODIFICATION

14. BINDING EFFECT

15. NON-WAIVER

16. GOVERNING LAW

This Agreement shall be construed and governed by the laws of the State of
Georgia.

17. ARBITRATION

18. HEADINGS

The headings of the paragraphs herein are inserted for convenience and shall not
affect any interpretation of this Agreement.

<PAGE> 5

IN WITNESS WHEREOF the parties have set their hands and seals this __________
day of ___________________, 2000.

Witness: Employer: ABLE TELCOM HOLDING CORP.

By: By:
--------------------------- -------------------------------
C. Frank Swartz
Chairman of the Board

Witness: Employee:

By: By:
--------------------------- -------------------------------
Philip A. Kernan

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-01-2000
<CASH> 10,145
<SECURITIES> 0
<RECEIVABLES> 92,739
<ALLOWANCES> 3,803
<INVENTORY> 0
<CURRENT-ASSETS> 173,755
<PP&E> 49,311
<DEPRECIATION> 21,727
<TOTAL-ASSETS> 283,491
<CURRENT-LIABILITIES> 198,932
<BONDS> 0
0
17,726
<COMMON> 15
<OTHER-SE> 16,983
<TOTAL-LIABILITY-AND-EQUITY> 283,491
<SALES> 106,915
<TOTAL-REVENUES> 106,915
<CGS> 102,526
<TOTAL-COSTS> 102,526
<OTHER-EXPENSES> 11,050
<LOSS-PROVISION> 4,302
<INTEREST-EXPENSE> 2,449
<INCOME-PRETAX> (9,110)
<INCOME-TAX> 296
<INCOME-CONTINUING> (10,326)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,334)
<EPS-BASIC> (.84)
<EPS-DILUTED> (.84)

</TABLE>