ABLE TELCOM HOLDING CORP, 10-K/A, 2000-05-26

ABLE TELCOM HOLDING CORP
10-K/A, 2000-05-26
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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K/A-2

(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended October 31, 1998

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

Commission file number 0-21986

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

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

1000 HOLCOMB WOODS PARKWAY, SUITE 440, ROSWELL,
GEORGIA 33401 (Address of principal executive offices) (Zip Code)

(770) 993-1570
Registrant's telephone number, including area code:

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

Securities registered under Section 12(g) of the Act: Common Stock

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

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

As of August 27, 1999, 11,193,949 shares of the registrant's Common Stock were
held by non-affiliates of the registrant (assuming, solely for these purposes,
such persons to be all persons other than (i) current directors and executive
officers off the registrant and (ii) persons believed by the registrant to
beneficially own more than 10% of the registrant's outstanding Common Stock,
based on reports, if any, submitted to the registrant by such persons). As of
such date, the aggregate market value of the voting stock of the registrant held
by non-affiliates, computed by reference to the average closing bid and asked
prices on that date, was $100,745,541.

There were 12,093,364 shares of Common Stock outstanding as of August 27, 1999.

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Able Telcom Holding Corp. ("Registrant" or "Company") is amending its Form
10-K/A filed on March 1, 1999, to include certain additional disclosures
throughout the filing and to include changes required to "Pro Forma Financial
Information" disclosed in Note 3 "ACQUISITIONS."

TABLE OF CONTENTS

PART I

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

Item 2. Properties................................................... 14

Item 3. Legal Proceedings............................................ 15

Item 4. Submission of Matters to a Vote of Security Holders.......... 15

PART II

Item 5. Market for Registrant's Common Equity and Related
Shareholders Matters......................................... 16

Item 6. Selected Financial Data...................................... 17

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations................ 18

Item 7a. Quantitative and Qualitative Information About Market Risk... 25

Item 8. Financial Statements and Supplementary Data.................. 25

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 26

PART III

Item 10. Directors and Executive Officers of the Registrant........... 27

Item 11. Executive Compensation....................................... 32

Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................... 41

Item 13. Certain Relationships and Related Transactions............... 43

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 47

Signatures................................................... 53
</TABLE>

2
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PART 1

ITEM 1. BUSINESS

OVERVIEW

Able Telcom Holding Corp. (the "Company"/"Able") is a contractor for the
construction and maintenance of facilities-based communications systems for both
public and private sector customers in the United States and South America. The
Company has three operating groups: (i) Network Services, (ii) Transportation
Services, and (iii) Communications Development. Through the Company's Network
Services Group, it provides development, design, engineering, project
management, installation, construction, operation and maintenance services for
telecommunications systems. In addition, the Company's Transportation Services
Group provides services for the design, development, integration, installation,
construction, project management, maintenance and operation of advanced
intelligent transportation systems, automated toll collection systems and
electronic traffic management and control systems. The Company's Communication
Development Group provides communications design, installation and maintenance
services to foreign telephone companies.

In the discussion below regarding the Company's business, any statement of its
future expectations, including without limitation, future revenues and earnings,
plans and objectives for future operations, future agreements, future economic
performance or expected operational developments and all other statements
regarding the future are "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, and as that term is defined in the
Private Securities Litigation Reform Act of 1995. The Company intends that the
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements are based on the past financial performance of recent
acquisitions and the Company's strategic plans. The Company knows of no
presently existing factors that would cause the Company's revenues to decrease
from historical levels. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that its expectations
will be achieved. The important factors, risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements herein (the "Cautionary Statements") include, without limitation, the
Company's reliance on third parties to complete the transactions contemplated by
the Company, the Company's degree of financial leverage, risks associated with
debt services requirements and interest rate fluctuations, risks associated with
acquisitions and the integration thereof, risks of international business,
dependence on availability of transmission facilities, regulations risks
including the impact of the Telecom Act, contingent liabilities and the impact
of competitive services and pricing, as well as other risks referenced from time
to time in the Company's filings with the Securities and Exchange Commission.
All subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements. The Company does not undertake any
obligations to release publicly any revisions to such forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

STRATEGY

The Company's strategy is to capture an increased share of the market for
outsourced network installation, maintenance and system integration services.
The Company believes that customers will continue to require such services to
deploy and upgrade the fiber optic, coaxial and digital network infrastructure
associated with advancements in technology and the competition created by the
convergence of the telecommunications, computer and media industries. The
Company intends to accomplish this objective primarily through strategic
acquisitions and internal growth of existing and complementary lines of
business. The Company believes that the communication services industry is
highly fragmented, consisting of a large number of smaller, regional businesses,
and presents significant opportunities for consolidation. The Company plans to
target those businesses with high quality management and strong performance
records and to integrate such acquired operations into the Company's operating
groups.

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

The Company expects to achieve margin improvement through cross-utilization
among operating groups of people, equipment and technologies and through the
centralization of certain financial controls, cash and risk management.

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HISTORICAL DEVELOPMENT OF BUSINESS

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

To further expand in the domestic market and to facilitate a continued
acquisition program, during the fourth quarter of fiscal 1995 the Company
reorganized its management and operational structure into three operating groups
described above and embarked on a series of acquisitions. On December 8, 1995,
the Company acquired the common stock of H.C. Connell, Inc. ("Connell").
Connell, a twenty year old business, performs primarily outside plant
telecommunication and electric power services for local telephone and utility
companies in central Florida. The Connell acquisition provided the Company
expanded market share and a significant number of new customers. On October 12,
1996, the Company acquired the common stock of Georgia Electric Company ("GEC"),
a forty-five year old business headquartered in Albany, Georgia. GEC operates in
eight southeastern states and specializes in the installation, testing and
maintenance of intelligent highway and communication systems including
computerized traffic management, wireless and fiber optic data networks, weather
sensors, voice data and video systems and computerized manufacturing and control
systems. On December 2, 1996, the Company acquired the common stock of Dial
Communications, Inc. ("Dial") of Tallahassee, Florida. Operating in northern
Florida, Alabama and Georgia for more than twenty five years, Dial provides
outside and inside plant telecommunication services to the regional Bell
operating company, other local and long distance phone companies, private
businesses and universities.

Substantially all of the Company's assets and operations are held by or
conducted through domestic and foreign subsidiaries. Each of TSCI, Connell, GEC,
Dial, Patton Management Corporation and MFS Network Technologies ("MFSNT") (See
"Fiscal Year 1998 and Recent Developments") continue to operate as wholly-owned
subsidiaries of the Company.

FISCAL YEAR 1998 AND SUBSEQUENT EVENTS

MFSNT ACQUISITION. On July 2, 1998, the Company acquired the network
construction and transportation systems business of MFS Network Technologies,
Inc. ("MFSNT") from WorldCom, Inc. ("WorldCom") pursuant to a merger agreement
dated April 26, 1998 ("MFSNT Agreement"). On September 9, 1998, the Company,
WorldCom and WorldCom Network Services, Inc. ("WorldCom Network"), a wholly
owned subsidiary of WorldCom, finalized the terms of the MFSNT Agreement through
the execution of an amended agreement, which agreement was subsequently amended
on January 26, 1999 (as amended, the "September Agreement"). The acquisition of
MFSNT was accounted for using the purchase method of accounting at a total price
of approximately $67.5 million comprised of a $58.8 million contract price,
costs associated with the acquisition and the value attributed to options and
equity awards described below. $38.8 million of the purchase price was paid in
cash and the remainder was paid by issuing a promissory note as described below
(the "WorldCom Note"). The September Agreement provides that on December 29,
2000, the Company will pay WorldCom the following amounts, if positive:

(a) The difference between $9.0 million related to losses on MFSNT
projects in existence on March 31, 1998 and recorded by MFSNT as of
June 30, 1998, and the amount actually lost on such contracts through
December 15, 2000;

(b) The difference between $3.0 million related to losses on MFSNT
projects not recorded by MFSNT as of June 30, 1998 and the amount
actually lost on such contracts through December 15, 2000; and

(c) The difference between $5.0 million and the aggregate costs of Able
in defending MFSNT litigation that the Company assumed as part of the
MFSNT Acquisition, and payments made in settlement or in payment of
judgements with respect to such [pre-acquisition] litigation.

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The range of contingent consideration potentially payable to WorldCom, as
discussed above, is from $0 to $17.0 million. The allocation of the purchase
price to identifiable assets and liabilities acquired is based upon preliminary
estimates. The Company is in the process of obtaining additional information
necessary to finalize the allocation of the purchase price. The effect of the
final allocation on previously reported amounts in Able's periodic filings is
not expected to be significant.

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

Under the WorldCom Modification, WorldCom is entitled to participate in an
increase in the value of an aggregate of 2,000,000 shares of Common Stock. For
each SAR exercised, WorldCom is entitled to receive an amount equal to the
excess of the fair market value of the Common Stock as of the applicable
exercise date over $7.00 (the "Appreciation Amount"). The Appreciation Amount
will be paid in cash within fifteen days of receipt of an exercise notice;
provided, however, that to the extent that the Company would be required to pay
in excess of $10.0 million in any twelve month period as a result of any
exercises of any SARs, then the amount of such excess shall be represented by a
promissory note with quarterly payments amortized ratably over a period of six
months at 10% per annum. The exercise period for the SARs granted commences on
the earlier of:

o One business day after the date upon which the potential issuance of
Common Stock under this Agreement is voted upon by the Company
shareholders, and

o October 1, 1999 (the "Commencement Date"),

and ending on January 2, 2002. As of August 30, 1999, none have been exercised.

Payment of any SARs in cash only could materially and adversely affect the
Company's cash flow because:

o Of the short time frame to pay for any SARs exercised (between 15 and
30 days from the date notice is received by the Company), and

o The payment owed could be a significant amount depending on the number
of SARs exercised and the then fair market value of the Common Stock.

Able also granted WorldCom an equity award in the form of a phantom stock award
or other equity participation award ("WorldCom Equity Awards/Phantom Stock
Awards") which is generally equivalent to 600,000 shares of Common Stock,
payable in cash, stock, or a combination of both, at the Company's option. The
WorldCom Equity Awards are exercisable, in whole or in part, solely with respect
to the following days: July 2, 1999, July 2, 2000, or July 2, 2001. To date,
none have been exercised. On January 8, 1999, Able and WorldCom entered into an
written agreement (the "Intent Agreement") setting forth the terms and
conditions of and when the WorldCom Equity Award Agreement (the "Equity Award
Agreement") will be executed. The Intent Agreement also sets forth the specific
terms of the WorldCom Equity Award, to be evidenced in the form of a Stock
Appreciation Rights Agreement ("SAR Agreement"). The Intent Agreement provides
that until the Company obtains

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shareholder approval in accordance with Rule 4460(i)(1)(C), the SAR Agreement
will be executed at such time as the Company meets certain "Conditions to
Issuance." Additionally, subject to Shareholder approval, upon the exercise of
any WorldCom Equity Awards, any payments may be made, in the Company's sole
discretion, in cash, Common Stock, or a combination of both cash and Common
Stock.

The Company is submitting a proposal to the Company's shareholders at the next
Annual Meeting of Shareholders to approve the issuance of more than 20 percent
of the outstanding Common Stock in connection with the MFSNT Acquisition. If the
Company's shareholders approve the Company's proposals,

o The SARs granted under the WorldCom Modification automatically revert
back to the WorldCom Option and the holder will have the right to
purchase an aggregate of 2,000,000 shares of Common Stock at $7.00 per
share through January 2, 2002, and

o Upon the exercise of any WorldCom Equity Awards, the Company would
have the option to make the payments in cash, stock, or a combination
of cash and stock, in the Company's discretion.

As of July 31, 1999, approximately $30.0 million of principal and approximately
$3.8 million of accrued and unpaid interest were outstanding under the WorldCom
Note. The Company must repay the WorldCom Note in full on November 30, 2000. The
WorldCom Note is dated September 1, 1998 and bears interest at a rate of 11.5
percent per year. The obligations under the WorldCom Note are junior and fully
subordinated to those under the Secured Credit Facility (as defined below). No
amounts may be paid on the WorldCom Note so long as any debt is outstanding
under the Secured Credit Facility. Subject to the subordination provisions and
after full payment of all amounts owed under the Secured Credit Facility, the
WorldCom Note may be prepaid as follows:

o By applying eight percent of the payment WorldCom Network owes Able
under the WorldCom Master Services Agreement, described below

o By paying to WorldCom a portion of certain proceeds received by the
Company upon the sale of certain conduit assets

o By paying to WorldCom a portion of certain proceeds received from time
to time under maintenance contracts for certain conduit projects

In addition, if the Company does not repay the WorldCom Note in full by November
30, 2000, it is anticipated that WorldCom also will be able to:

o Require the Company to pay a 13.5 percent annual default rate of
interest as long as the Company is in default;

o Reduce the minimum yearly and aggregate revenues the Company would
otherwise receive under the WorldCom Master Services Agreement; and

o Refuse to give the Company additional work under the WorldCom Master
Services Agreement while the Company is in default.

As part of the MFSNT acquisition, the Company, WorldCom Network and MFSNT
entered into a Master Services Agreement (the "WorldCom Master Services
Agreement") pursuant to which the Company agreed to provide telecommunication
infrastructure services to WorldCom Network on a cost-plus 12 percent basis for
a minimum of $40.0 million per year, and the aggregate sum payable to the
Company for the five-year contract is guaranteed to be no less than $325.0
million, subject to certain adjustments if the Company defaults on the WorldCom
Note. To achieve these established minimums, WorldCom Network has agreed to
award the Company at least 75 percent of all WorldCom Network's outside plant
work related to its local network projects up to $500.0 million and the Company
has agreed to accept and perform work orders from WorldCom Network for as much
as $130.0 million of services during each year of the five-year contract. The
Company has also agreed that WorldCom Network will have met all of its
commitments to the Company, to the extent that payments made to the Company
reach an aggregate of $500.0 million at any time during the five-year term of
the contract.

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The Company is permitted to use the trade name "MFSNT" during the 18-month
transition period immediately following the MFSNT Acquisition but will not be
entitled to use it after such 18-month period.

THE SERIES B SECURITIES. On June 30, 1998, the Company received $20.0 million
from the sale of 4,000 shares of Series B Convertible Preferred Stock (the
"Series B Preferred Stock") at a purchase price of $5,000 per share and the
Series B Warrants, as defined below (the Company sometimes refers to the Series
B Preferred Stock and the Series B Warrants collectively as the "Series B
Securities"). As a result of the previous conversion of and the redemption of
shares of Series B Preferred Stock, there are currently 779 shares of Series B
Preferred Stock outstanding. Dividends accrue on the Series B Preferred Stock at
a rate of 4 percent per year and are cumulative. The Company may pay dividends
in shares of Common Stock, or, at the Company's option, in cash if the Company
provides 20 days advance written notice to each holder of the Series B Preferred
Stock. The Company sold the Series B Preferred Stock to finance part of the
purchase price for MFSNT. The holders of the Series B Preferred Stock may
convert their shares at any time into shares of Common Stock at a conversion
rate equal to 97 percent of the "market value" of the Common Stock; provided
that a maximum price of $3.5138 was agreed to with the holders of 404 shares of
Series B Preferred Stock. However, each holder of the Series B Preferred Stock
has agreed that it will convert its shares of Series B Preferred Stock into
Common Stock only to the extent that, after the conversion, the holder and its
affiliates would beneficially own 4.99 percent or less of the Common Stock. For
these purposes, the Company has agreed that "market value" equals the lesser of:

o The average of the lowest intraday trading price of the Common Stock
for any three trading days within the 22 trading days prior to the date
of conversion; or

o The lowest intraday trading price of the Common Stock on the trading
day immediately prior to the date of conversion; however, this amount
cannot be less than 95 percent of the lowest intraday trading price of
the Common Stock on the date of conversion.

In addition, Able issued warrants (the "Series B Warrants") to purchase a total
of up to 1,000,000 shares of Common Stock to the holders of the Series B
Preferred Stock, of which 370,000 remain outstanding and which are currently
exercisable at $13.25 per share. The remaining 630,000 Series B Warrants were
retired without exercise in exchange for a payment of $3.00 per Series B Warrant
(or $2.1 million). However, each holder of the Series B Warrants has agreed that
it will exercise the warrants only to the extent that, after the exercise, the
holder and its affiliates would beneficially own 4.99 percent or less of the
Common Stock. The Series B Warrants are immediately exercisable and expire on
June 30, 2003.

Able granted the holders of the Series B Preferred Securities certain rights to
cause Able to register the Common Stock underlying the Series B Securities.
Under certain circumstances, including if the registration statement that
includes the shares of Common Stock underlying the Series B Securities is not
declared effective by September 13, 1999, or if Able is delisted under certain
circumstances from any securities exchange, or any representation or warranty
made by Able to holders of the Series B Securities was not true, then the
holders of the Series B Preferred Stock, in whole or in part, have the option to
require Able to redeem their securities at premium prices. Although the Company
intends to use its best efforts to comply with all provisions of the Company's
documents with the holders of the Series B Securities, Able cannot guarantee
that it will be able to do so, in part because certain of such matters are
dependent upon the efforts or approval of others (such as the SEC with respect
to the effectiveness of the aforementioned registration statement). To the
extent the holders of the Series B Preferred Stock become entitled to exercise a
redemption right and seek to require the redemption of their shares, such
exercise could materially increase the Company's cash requirements, could result
in a default under the terms of the Company's Secured Credit Facility and, to
the extent replacement financing is not available on commercially reasonable
terms (if at all), would likely have a material adverse impact on the Company.
Furthermore, so long as any of the Series B Securities is outstanding, the
Company is prohibited from declaring or paying any dividends (other than to
holders of Series B Preferred Stock) or purchasing any of the Company's equity
securities.

SENIOR NOTES. Effective January 6, 1998, the Company issued $10.0 million of
unsecured 12 percent Senior Notes ("Senior Notes") originally due January 6,
2005 with detachable warrants to purchase 409,505 shares of common stock at a
price of $8.25 per share, which were valued at approximately $1.2 million. The
agreement pursuant to which the Senior Notes were issued, contains covenants
which require, among other things, that the Company maintain certain tangible
net worth, minimum fixed charge coverage and limitations on total debt and which
limit the Company's ability to pay dividends and make certain other payments,
make investments and sell assets or subsidiaries. At October 31, 1998, the
Company was in violation of certain of the covenants and other terms in the
Senior Note agreement, the maturity date of which had been reduced first to
August

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31, 1998 and subsequently to November 30, 1998. These Senior Notes were
purchased from the holder of these notes subsequent to October 31, 1998, which
will be accounted for by the Company as a redemption. See "Sale of Senior Notes
and Series B Preferred Stock."

SALE OF THE SENIOR NOTES AND SERIES B PREFERRED STOCK. In January 1999,
Interfiducia Partners, LLC, a Texas limited liability company ("Interfiducia"),
entered into certain letter agreements with Able, and the holders of the Series
B Securities relating to the proposed purchase by Interfiducia of, among other
things, all or a portion of the outstanding Series B Securities from the
RoseGlen Group ("RoseGlen Group") and the Palladin Group ("Palladin Group") who,
in the aggregate, comprise all of the holders of the Series B Securities. Able
undertook due diligence regarding Interfiducia at that time and all parties
continued their respective negotiations to finalize the contemplated
transactions.

Because the Company was then in default under certain provisions of the terms of
the Series B Securities, Able believed that it was important to complete the
transfer of all or a portion of the Series B Securities to a party willing to
waive defaults. Interfiducia was not able to provide the funds necessary to
complete the transactions contemplated by the letter agreements in a timely
manner in order to avoid paying certain premiums and penalties to the holders of
the Series B Securities. As a result, on February 16, 1999, WorldCom advanced
Able $32.0 million ("WorldCom Advance") to facilitate the purchase of 2,785
shares, or approximately 78%, of the Series B Preferred Stock, as well as the
purchase of the outstanding Senior Notes. The WorldCom Advance is non-interest
bearing, and is due on November 30, 2000. At the same time, WorldCom also agreed
to make available additional advances to the Company of up to $15.0 million
against amounts otherwise payable pursuant to the WorldCom Master Services
Agreement. These additional advances also accrue interest at 11.5 percent and
are repayable to WorldCom on November 30, 2000. The repayment of the WorldCom
Advance is subordinate to the Company's obligations to its senior credit
facility. The WorldCom Advance was evidenced by a written agreement between Able
and WorldCom dated February 16, 1999, which was subsequently amended and
restated as of April 1, 1999.

Immediately thereafter, the Company, in turn, advanced funds (the "Company
Advance") to Cotton Communications, Inc., which may be deemed a Company
affiliate. On February 17, 1999, pursuant to certain purchase agreements between
and among Able, Cotton, and the RoseGlen Group and/or the Palladin Group (the
"February Agreements"), Cotton, in turn, used the Company Advance to purchase
approximately 78% of then the outstanding shares of Series B Preferred Stock, or
2,785 shares of the then 3,564 shares outstanding (1,425 shares from the
RoseGlen Group for $11.0 million and 1,360 shares from the Palladin Group for
$7.85 million, which amounts included any accrued dividends, interest or
penalties), as well as the Senior Notes principal and accrued interest. The sole
shareholder, officer and director of Cotton was Tyler Dixon. Mr. Dixon is a
partner with the law firm of Raiford, Dixon & Thaxton, LLP, which, during fiscal
1998, received approximately $125,000 in legal fees from Able for legal services
rendered. Cotton received no consideration from Able in connection with the
transactions. However, the Company agreed to continue using Mr. Dixon and
his firm's legal services and the Company waived any conflicts that may arise
with respect to the performance of such legal services as a result of Cotton's
purchase of the Series B Preferred Stock. See "Management - Certain
Relationships and Related Party Transactions" for a discussion concerning the
consulting agreement between Mr. Dixon and the Company dated January 1, 1999 and
effective April 1, 1999 and the grant of certain stock options to Mr. Dixon.

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

In connection with the purchase and sale of the Senior Notes and the Series B
Preferred Stock, Cotton and the remaining holders of the Series B Preferred
Stock agreed to either waive all outstanding defaults under such securities or
refrain from exercising any remedies with respect to any such outstanding
defaults until September 13, 1999. During such period of time, Able agreed to
use its best efforts to have declared effective the Registration Statement
covering the resale of shares of common stock underlying the remaining Series B
Securities (as well as the WorldCom Option and the WorldCom Equity Award). The
September 13, 1999 deadline was extended from an initial deadline of December
27, 1998. While a "triggering event," as defined under "Description of
Securities - Series B Convertible Preferred Stock -Triggering Event", has
occurred, the Company has not, to date, received any notice(s) of redemption
from any of the holders of the Series B Preferred Stock.

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<PAGE> 9

On March 22, 1999, Able redeemed the Senior Notes from Cotton, as well as the
2,785 shares of Series B Preferred Stock in exchange for the cancellation of the
Company Advance made to Cotton on February 17, 1999. The Company also assumed
Cotton's obligation to acquire 630,000 of the Series B Warrants at a price of
$3.00 per Warrant, on or before April 30, 1999, if not previously exercised or
redeemed. The Senior Notes have now been marked paid, the 2,785 shares of Series
B Preferred Stock have been canceled, and the Company purchased 630,000 Series B
Warrants at $3.00 per Series B Warrant (for an aggregate of $2.1 million), at
which time the 630,000 Series B Warrants were canceled.

In connection with these transactions, the Company recognized an extraordinary
loss in the second quarter of fiscal year 1999 on the purchase of the Senior
Notes of approximately $1.8 million net of taxes and a reduction in income
applicable to common stock of approximately $9.9 million on the purchase of the
Series B Preferred Stock. In addition, the modification to the terms of the
existing Series B Preferred Stock conversion and warrant agreements resulted in
a reduction in income applicable to common stock of approximately $8.3 million
during the second quarter of fiscal year 1999.

SECURED CREDIT FACILITY. In June 1998, the Company replaced its previous bank
credit agreement with a new $35 million three year senior secured revolving
credit facility with a syndicate of lenders with an original term of three years
(the "Secured Credit Facility"). The Secured Credit Facility has a letter of
credit sublimit of $5 million. On June 30, 1998, the Secured Credit Facility was
amended to permit (i) the Company's acquisition of MFSNT and the related
financing of such transaction, (ii) changes in financial covenants related
thereto, and (iii) other amendments relating to investments, pledging and
intercompany matters. As amended to date, the Secured Credit Facility matures on
November 1, 2000. The Company used a portion of the proceeds from the Secured
Credit Facility to repay the previous credit facility and to finance $10 million
of the MFSNT acquisition purchase price.

The Company has granted a security interest in certain of its assets to the
lenders under the Secured Credit Facility, including:

o All of the stock in its existing and future Restricted Subsidiaries
(as defined in the Pledge Agreement with respect to the Secured Credit
Facility); and

o A pledge of all existing intercompany notes issued to any Restricted
Subsidiary by any of its subsidiaries

The Secured Credit Facility also includes covenants which, among other things,
restrict the Company's ability to:

o Incur additional debt

o Declare dividends or redeem or repurchase capital stock

o Prepay, redeem or purchase debt

o Incur liens

o Make loans and investments

o Make capital expenditures

o Engage in mergers, acquisitions and asset sales, and

o Engage in transactions with affiliates.

The Company is also required to comply with financial covenants with respect to
certain minimum ratios, including debt covenants, interest, fixed charges and
current ratio.

The Company is in technical violation of certain provisions of the Secured
Credit Facility, including, without limitation, certain covenants related to the
delivery of financial statements and certain covenants which required consent
for the Company to enter into the September Agreement, issue the SAR to WorldCom
and enter into the related WorldCom Modification and engage in certain of the
transactions effected in connection with the third party's purchase of the
Senior Notes and the Series B Preferred Stock. The Company has received waivers
of all existing violations.

-7-
<PAGE> 10

ACQUISITION OF PATTON MANAGEMENT CORPORATION. On April 1, 1998 the Company
purchased all of the outstanding common stock of Patton Management Corporation
("Patton") for approximately $4.0 million cash. Patton provides advanced
telecommunication network services to upgrade existing networks and to provide
connectivity to office buildings, local and wide area networks.

ASSUMPTION OF COMSAT CONTRACTS. On February 25, 1998, the Company, through a
wholly owned subsidiary, Georgia Electric Company ("GEC"), assumed obligations
to complete 12 contracts ("COMSAT Contracts") with the Texas Department of
Transportation from CRSI Acquisition Inc., a subsidiary of COMSAT Corporation
("COMSAT"). The COMSAT Contracts are 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>
<CAPTION>
<S> <C>
Consideration received:
Cash $ 4,663
Accounts receivable 3,754
Equipment and other assets 6,548
- -----------------------------------------------------------------
Subtotal 14,965
Accounts payable assumed (2,549)
- -----------------------------------------------------------------
Deferred revenue (net amount received from COMSAT
to complete the contracts) $(12,416)
- -----------------------------------------------------------------
</TABLE>

JOINT VENTURE WITH CLARION RESOURCES COMMUNICATION CORP. On September 23, 1997,
the Company entered into a five-year joint venture with Clarion Resources
Communication Corp. ("Clarion"). Clarion is principally owned by Telenor, the
telephone company of Norway. The Company has agreed with Clarion to jointly
market, manufacture and license its proprietary telephone call record and data
collection technology, called NeuroLAMA, in Europe and Asia. Clarion has agreed
to provide international sales force and to obtain suitable financing to
purchase and install NeuroLAMA. The venture will not require a capital
investment from the Company but should provide a stable royalty stream if the
venture is successful. No material progress has been made in implementing this
joint venture and Able does not expect to have any capital expenditures to
install NeuroLAMA in the foreseeable future.

SERVICES, MARKETS AND CUSTOMERS

The Company conducts three distinct types of business activities, two of which
are primarily conducted in the United States and one of which is conducted
abroad. Domestically, the Company provides telecommunication services and
traffic management services. Abroad, principally in Venezuela, the Company
conducts communication development activities. Each of these activities is
discussed in more detail below.

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

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

The Telecommunications Construction division provides construction and technical
services for building both outside plant and inside plant telecommunications
systems. Outside plant services are large-scale installation and maintenance of
coaxial and fiber optic cable (installed either aerially or underground) and
ancillary equipment for digital voice, data and video transmissions. These
installations are most often undertaken to upgrade or replace existing
communications networks. Inside plant services, also known as premise wiring,
include design, engineering, installation and integration of telecommunications
networks for voice, video and data inside customers' facilities. Additionally,
the Company provides maintenance and installation of electric utility grids and
water and sewer utilities. The Company provides outside plant telecommunications
services primarily under hourly and per unit basis contracts to local telephone
companies. The Company also provides these services to long distance telephone
companies, electric utility companies, local municipalities and cable television
multiple system operators. Network Services Group accounted for 59%, 41% and 42%
of the Company's consolidated revenues during the fiscal years 1998, 1997 and
1996, respectively.

TRANSPORTATION SERVICES GROUP. Similar to the Telecommunications Systems
Integration division, the Transportation Services Group provides intelligent
transportation and traffic management services through two divisions: (i)

-8-
<PAGE> 11

the Transportation Systems Integration division, that provides full-service
general contracting services for large-scale projects, and (ii) the
Transportation Construction division that specializes in the construction of
network projects phases.

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

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

The Company's traffic management services are provided primarily to state and
local governments. Traffic Management Group, Inc. accounted for 39%, 54% and 50%
of the Company's consolidated revenues during fiscal years 1998, 1997 and 1996,
respectively.

In October 1996, the Company placed Gerry W. Hall, a former principal of GEC, in
charge of its Traffic Management Group and replaced certain management of its
TSCI operations with experienced managers from GEC. In June 1997, James B. Hall,
also a former owner of GEC, succeeded Gerry Hall as President of the Traffic
Management Group.

COMMUNICATIONS DEVELOPMENT GROUP. The Company's Communications Development Group
operates in Latin America, primarily Venezuela. These activities consist of
management of the joint venture arrangements, which were formed to provide
telecommunication installation and maintenance services to privatized local
phone companies. These joint ventures are in the form of subsidiaries in which
the Company has an 80% voting and ownership interest and a 50% share of profits
and losses. In 1996, the Company expanded its communication development
activities to include the marketing to Latin American telephone companies of
NeuroLAMA, an internally developed proprietary telephone call record and data
collection system. The Company does not expect to have significant capital
expenditures to install NeuroLAMA in the foreseeable future. During fiscal years
1998, 1997 and 1996, the Company's Latin American operations accounted for 2%,
5% and 8% of the Company's revenues on a consolidated basis, respectively.

Certain risks are inherent in international operations, including exposure to
currency fluctuations, the imposition of government controls, restrictions on
the export of critical technology, political and economic instability, trade
restrictions, changes in tariffs, taxes and freight rates, generally longer
payment cycles, difficulties in staffing and managing international operations
and general economic conditions. From time to time in the past, the Company's
financial results have been affected both favorably and unfavorably by
fluctuations in currency exchange rates. Unfavorable fluctuations in currency
exchange rates could have an adverse impact on the Company's revenues and
operating results.

-9-
<PAGE> 12

INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION

The Company currently operates primarily in two industry segments: network
services and transportation services. Transportation services are conducted
primarily in the United States with small projects in South America, Canada, and
Asia while telecommunication network services are conducted both in the United
States and Latin America. Revenues, income (loss) from operations, identifiable
assets, capital expenditures and depreciation and amortization pertaining to the
industries and geographic areas in which the Company operates are presented
below (in thousands).

<TABLE>
<CAPTION>
INDUSTRY SEGMENTS 1998 1997 1996
- ----------------- -------- -------- --------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Transportation Services..................................... $84,022 $46,795 $22,661
Network Services........................................... 133,459 39,539 26,245
------- ------ ------
Total................................................... $217,481 $86,334 $48,906
======== ======= =======
Income (loss) from operations:
Transportation Services..................................... $8,220 $3,772 $(3,454)
Network Services............................................ 3,189 1,069 (2,833)
----- ----- -------
Total.................................................... $11,409 $4,841 $(6,287)
======= ====== ========
Identifiable Assets:
Transportation Services..................................... $88,340 $28,884 $25,099
Network Services............................................ 202,420 21,462 13,820
------- ------ ------
Total.................................................... $290,760 $50,346 $38,919
======= =======
Capital Expenditures:
Transportation Services.................................... $3,238 $1,635 $1,275
Network Services............................................ 6,728 2,852 2,216
----- ----- -----
Total.................................................... $9,966 $4,487 $3,491
====== ====== ======
Depreciation and Amortization
Transportation Services..................................... $2,824 $1,710 $1,229
Network Services............................................ 4,776 2,822 1,521
----- ----- -----
Total.................................................... $7,600 $4,532 $2,750
====== ====== ======

<CAPTION>
GEOGRAPHIC AREAS 1998 1997 1996
- ----------------- -------- -------- --------
<S> <C> <C> <C>
Revenues:
United States.............................................. $212,152 $82,171 $45,160
Latin America.............................................. 5,329 4,163 3,746
-------- ------- --------
Total.................................................... $217,481 $86,334 $48,906
======== ======= ========
Income (loss) from operations:
United States.............................................. $11,310 $4,824 $(2,073)
Latin America.............................................. 99 17 (4,214)
-------- ------- --------
Total................................................... $11,409 $4,841 $(6,287)
======== ======= ========
Identifiable Assets:
United States............................................... $287,569 $47,781 $36,410
Latin America.............................................. 3,191 2,565 2,509
-------- ------- -------
Total................................................... $290,760 $50,346 $38,919
======== ======= =======
</TABLE>
-10-
<PAGE> 13

SIGNIFICANT CUSTOMERS

The Company derives a significant portion of its revenues from a few large
customers. The percentage of revenues derived from the Company's largest
customers are presented as follows:

<TABLE>
<CAPTION>
OCTOBER 31,
-----------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Cooper Tire --% 15% 6%
Florida Department of Transportation 12 6 2
BellSouth -- 12 8
United Telephone of Florida 20 9 2
Florida Power Corp. 13 7 4
WorldCom -- -- 14
</TABLE>

CONTRACTS

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

TELECOMMUNICATION AND RELATED SERVICES

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

TRAFFIC MANAGEMENT AND GENERAL UTILITY SERVICES

For traffic management and general utility services (i.e., government funded
business) the Company generally obtains fixed price contracts for projects,
either as a prime or as a subcontractor, on a competitive bid basis. Typically,
for prime contracts, a state department of transportation ("DOT") or other
governmental body provides to qualified contractors a set of specifications for
the project. The Company then estimates the total project cost based on input
from engineering, production and materials procurement personnel. A bid is then
submitted by the Company along with a bid bond. For most government funded
projects, the scope of work extends across many industry segments. In such
cases, the Company subcontracts its expertise to a prime contractor. The Company
must submit performance bonds on substantially all contracts obtained. The
Company believes its relations with its bonding company are good and that its
bonding capacity is adequate. However, the financial viability of the Company is
dependent on maintaining adequate bonding capacity and any loss of such would
have a material adverse effect on the Company.

The Company derived approximately 29% of its total revenues for the fiscal year
ended October 31, 1998 from contracts with state and local governments. No
individual government customer accounted for more than 6% of the Company's total
consolidated revenues. Government business is, in general, subject to special
risks, such as delays in funding, termination of contracts or subcontracts for
the convenience of the government or for the default by a contractor, reduction
or modification or contracts or subcontracts, changes in governmental policies,
and the imposition of budgetary constraints. The Company's contracts with
governmental agencies provide specifically that such contracts are cancelable
for the convenience of the government. Historically, the Company has not
experienced cancellations or renegotiations of its contracts in any material
amounts.

-11-
<PAGE> 14

Contract duration is dependent on the size and scope of the project but
typically is from six to nine months. Contracts generally set forth
date-specific milestones and provide for severe liquidated damages for failure
to meet the milestone by the specified dates. At January 31, 1999, the Company
has one contract for which it is subject to liquidated damages at a rate of
$25,000 per day associated with obtaining an extension of time for completing a
phase of the project. Company management anticipates that this default will be
cured no later than March 31, 1999, resulting in total liquidated damages
associated with the violation of approximately $1.5 million.

The failure to complete the contract backlog on time could have a material
adverse impact on the financial condition of the Company. The Company is
typically paid based on "completed units". Retainage is normally held on
contracts (usually 5% to 10% of the contract amount), until approximately 90
days after the services are rendered and accepted by the customer. The majority
of the contracts are bonded/guaranteed as to payment by the DOT upon performance
by the Company.

In addition to generating revenues from the installation of traffic management
systems under fixed price contracts, the Company performs under maintenance
contracts with the DOT obtained through competitive bidding. Maintenance
contracts are normally for a renewable one to three year term. Under such
contracts, the Company generally is assigned a section of highway along which to
maintain traffic control devices and is paid on a per unit basis.

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

COMPETITION

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

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

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

-12-
<PAGE> 15

The market in which the Transportation Construction division competes is
characterized by large competitors who meet the experience, bonding and
licensure requirements for larger projects and by small private companies
competing for projects of $3 million or less in limited geographic areas. The
Transportation Construction division's large competitors include Lockheed
Martin, Traffic Control Devices of Florida and MasTec, Inc. The Transportation
Construction division's smaller competitors are High Power of Florida, MICA
Corporation of Texas and Fishback & Moore.

COMMUNICATION DEVELOPMENT GROUP. The Communications Development Group competes
for business in the international market, primarily in Latin America. Presently,
the operations of Communications Development Group are in Venezuela and Brazil.
In Venezuela, the market is characterized by a single customer, CANTV, the
telephone company of Venezuela, and a large number of smaller sized private
companies that compete for business generally in a limited geographic area. In
Brazil, the market consists of a myriad of smaller companies competing for a
growing but limited market, which forces margins down. There are also several
products similar to the NeuroLAMA call data collection system for billing
purposes, which compete for the very large analog market, although the Company
is not aware of any that can produce the same results.

BACKLOG

As of January 31, 1999, backlog was approximately $1.0 billion, approximately
31% of which was attributable to WorldCom Network. The Company expects to
complete approximately 45% of the total backlog within the next fiscal year. Due
to the nature of the Company's contractual commitments, in many instances its
customers do not commit to the volume of services to be purchased under the
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, and 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 the procurements of this nature. Contract backlog of
$549 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 the customer's requirements during a particular period or
that such estimates at any point in time are accurate.

RESEARCH AND DEVELOPMENT; PROPRIETARY TECHNOLOGY AND RIGHTS

The Company acquired proprietary software from MFSNT in the MFSNT Acquisition
including applications at the lane, plaza, host, and customer service center
levels within a sophisticated electronic toll collection system architecture.
Prior to the MFSNT Acquisition, MFSNT had also developed a proprietary video and
data multiplexing system used for surveillance, monitoring, and system audit
purposes. The benefits of this proprietary software include reduced operating
costs, non-stop tolling, reduce traffic congestion, efficient traffic
management, and increase revenue accountability.

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

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

-13-
<PAGE> 16

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

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

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

The Company has spent an aggregate of approximately $1.0 million on research and
development activities during the prior three fiscal years, primarily in
connection with its development of NeuroLAMA. Management believes that the
acquisition of MFSNT will result in an increase in the Company's future research
and development expenditures.

SEASONALITY

Operations of the Company are seasonal, resulting in reduced revenues and
profits during the first quarter (November, December and January) relative to
other quarters. Factors affecting the seasonality of the Company's business are
holiday season shut-downs, winter weather and capital expenditure patterns by
telephone companies that can impede outside plant construction activities. The
impact of seasonality is mitigated somewhat by the presence of the Company's
operations primarily in the southern United States.

EMPLOYEES

At August 9, 1999, the Company and its subsidiaries had approximately 2,000
employees. The number of employees considered as laborers can vary significantly
according to contracts in progress. Such employees are generally available to
the Company through an extensive network of contacts within the communications
industry.

ITEM 2. PROPERTIES

The Company's legal and accounting offices (formerly the Company's corporate
offices) are in West Palm Beach, Florida, where it occupies 5,110 square feet
under a lease that expires January 31, 2004. The Company leases 33,571 square
feet of office space in Omaha, Nebraska under a lease that expires September 30,
1999, and which houses MFSNT's network operations, and 40,111 square feet in Mt.
Laurel, New Jersey under a lease that expires February 28, 2003 and which houses
MFSNT's transportation operations. The Company leases 6,400 square feet of space
in Fairbanks, Alaska for a network operations center. The Company leases 6,800
square feet of space in Fort Lauderdale, Florida under a lease, which expires
September 30, 2003, which facility is presently available for sublet. As of
August 15, 1999, Able has moved its corporate offices to Roswell, Georgia, where
it has leased 6,600 square feet under a lease expiring on August 31, 1999. The
Company leases several field offices and numerous smaller offices. The Company
also leases on a short-term or cancelable basis temporary equipment yards or
storage locations in various areas as necessary to enable it to efficiently
perform its service contracts.

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

-14-
<PAGE> 17

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

ITEM 3. LEGAL PROCEEDINGS

On May 21, 1998 SIRIT Technologies, Inc., ("SIRIT") filed a lawsuit in the
United States District Court for the Southern District of Florida, against the
Company and Thomas M. Davidson, who has since become a member of the Company's
Board of Directors. SIRIT asserts claims against the Company for tortuous
interference, fraudulent inducement, negligent misrepresentation and breach of
contract in connection with the Company's agreement to purchase the shares of
MFSNT and seeks injunction relief and compensatory damages in excess of $100.0
million. At present, the parties are conducting discovery in this case. The
Company is vigorously defending the action and will continue to do so. The
Company does not believe that SIRIT's claims are well-founded.

On or about September 10, 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 former officers Gideon Taylor, Frazier L.
Gaines, Jesus Dominguez, and Mark A. Shain (collectively, the "Defendants"). Six
additional plaintiffs have filed substantially similar lawsuits. All of these
cases have been consolidated with the SFCS case. The consolidated complaint
asserts claims under the Federal Securities Laws against the Company and certain
of its former officers alleging that the Defendants caused the Company to
falsely represent and mislead the public with respect to two acquisitions,
COMSAT and MFSNT, and the ongoing financial condition of the Company as a result
of the acquisitions and the related financing of those acquisitions. Plaintiffs
have received certification of a class action on behalf of all similarly
situated investors and seek unspecified damages and attorneys' fees. Management
is currently assessing the allegations set forth in the lawsuits and the Company
is vigorously defending this matter.

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

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

During the fourth quarter of the year covered by this report, no matters were
submitted to a vote of the Company's security holders.

-15-
<PAGE> 18

PART II

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

The Company's Common Stock, par value $.001 per share, began trading on NASDAQ
on February 24, 1994 under the symbol "ABTE." Prior to the NASDAQ listing, the
Company's Common Stock was sporadically traded over-the-counter, under the same
symbol, since September 15, 1988, the date of the Company's initial public
offering. Set forth below is the range of the high and low closing bid
quotations of the Company's Common Stock for each quarter within the last two
fiscal years as reported by NASDAQ.

MARKET PRICE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the Nasdaq National Market under the trading
symbol "ABTE." The following table provides for each period indicated the high
and low prices for the Common Stock.

<TABLE>
<CAPTION>
FISCAL QUARTER 1998 1997
- -------------- ----------------------------------- -------------------------------
High Low High Low
<S> <C> <C> <C> <C>
First Quarter 9-13/16 9-5/8 9-5/8 7-3/8

Second Quarter 12-7/16 7-5/16 8-3/4 7-3/8

Third Quarter 20-5/16 9-3/8 9 7-3/8

Fourth Quarter 10-5/8 1-3/4 10-5/8 7-9/16
</TABLE>

At August 27, 1999, there were approximately 436 shareholders of record of the
Company's Common Stock. No cash dividends have been declared by the Company
since its inception and the Company has no present intention to declare or pay
cash dividends on the Common Stock in the foreseeable future. The Company
intends to retain any earnings which it may realize in the foreseeable future to
finance its operations. The terms of the Company's Series B Preferred Stock and
the Secured Credit Facility restrict the payment of cash dividends on the
Company's Common Stock.

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

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

The Warrants are exercisable at a purchase price per share equal to $9.82;
provided, however, if there is an effective registration statement covering the
shares issuable upon the exercise of the Warrants, the purchasers may exercise
the Warrants in whole or in part in exchange for the number of shares of Common
Stock equal to the product of (i) the number of shares as to which

-16-
<PAGE> 19

the Warrants are being exercised multiplied by (ii) a fraction, the numerator of
which is the "Market Price" (as defined in the Warrants) less $9.82, and the
denominator of which is the Market Price.

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

Pursuant to the original terms of the Series B Offering, holders of the Series B
Preferred Stock have the right to convert their shares at any time into shares
of Common Stock at a conversion rate equal to 97% of the "market value" of the
Common Stock (the "Conversion Rate"). However, each holder of the Series B
Preferred Stock has agreed that it will convert its shares of Series B Preferred
Stock into Common Stock only to the extent that, after the conversion, the
holder and its affiliates would beneficially own 4.99% or less of the Common
Stock. This limitation may be waived, however, upon 61 days prior written
notice, at which time the Company may be required to seek shareholder approval
to issue additional shares of Common Stock, as required by certain rules and
regulations, including The Nasdaq Stock Market, Inc. Marketplace Rule 4460(i).
For these purposes, "market value" equals the lesser of: (i) the average of the
lowest intraday trading price of the Common Stock for any three trading days
within the 22 trading days prior to the date of conversion; or (ii) the lowest
intraday trading price of the Common Stock on the trading day immediately prior
to the date of conversion; however, this latter amount cannot be less than 95%
of the lowest intraday trading price of the Common Stock on the date of
conversion. The Conversion Rate may be further reduced to the extent the Company
does not meet certain requirements or is in default of certain terms of the
agreements evidencing the Series B Offering. See "Item 1. Business - Series B
Preferred Stock and - Sale of Senior Notes and Series B Preferred Stock."

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected consolidated financial data of
the Company for the five years ended October 31, 1998 which has been derived
from the audited consolidated financial statements of the Company and its
subsidiaries. This data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements included elsewhere in this report.

<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
-----------------------
(in thousands, except share and per share amounts)

1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $217,481 $86,334 $48,906 $35,408 $25,784
Net income (loss) 2,514 2,857 (5,910) (281) 946

Average shares outstanding 9,907 8,505 8,361 8,284 7,736
Income (loss) per share from operations-
basic and diluted (.59) .16 (.71) (.03) .12

Current assets 185,822 27,010 21,449 18,573 18,635
Current liabilities 160,434 12,969 17,155 11,175 9,942

Property and equipment, net 32,074 13,114 10,667 6,120 5,314
Total assets 290,760 50,346 38,919 32,482 36,604
Long-term debt 91,094 17,294 10,115 5,255 8,293
Shareholders equity 40,217 15,247 11,598 17,467 15,832
</TABLE>

-17-
<PAGE> 20

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

The following discussion and analysis relates to the financial condition and
results of operations of the Company for the three years ended October 31, 1998.
This information should be read in conjunction with the Company's Consolidated
Financial Statements appearing elsewhere in this document.

OVERVIEW

As discussed in "Item 1. Business" and the Company's consolidated financial
statements, during the fiscal year ended October 31, 1998, GEC assumed 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 COMSAT Contracts generated
revenues, costs of revenues and margins of $17.6 million, $8.5 million and $9.1
million, respectively, during the fiscal year ended October 31, 1998. These
revenues, costs of revenues and margins are nonrecurring and are not generally
indicative of returns the Company expects to achieve on future contracts.

The Company's results of operations reflect the operating results of MFSNT and
other acquired businesses only from the respective dates of acquisition.
Accordingly, the Company's results are not necessarily comparable on a
period-to-period basis. As a result of these acquisitions, the results of Latin
American operations for the fiscal year ended October 31, 1998 are no longer
significant to the consolidated results of operations.

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER
------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues: 100.00% 100.00% 100.00%
Cost of revenues................................................... 82.54 78.95 82.78
General and administrative......................................... 8.59 10.17 17.18
Depreciation and amortization...................................... 3.49 5.25 5.62
Income (loss) from operations...................................... 5.25 5.60 (12.85)
Other expenses, net................................................ 2.24 1.12 2.27
Net income (loss).................................................. 1.16 3.31 (12.08)
</TABLE>

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

RESULTS OF OPERATIONS. The following discussion and analysis relates to the
financial condition and results of operations of the Company for the fiscal
years ended October 31, 1998 and 1997. This information should be read in
conjunction with the Company's consolidated financial statements appearing
elsewhere in this document.

As discussed in "Item 1. Business and Note 4 to the Company's consolidated
financial statements, "Assumption of COMSAT Contracts," during the fiscal year
ended October 31, 1998, GEC assumed 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
COMSAT Contracts generated revenues, costs of revenues and margins of $17.6
million, $8.5 million and $9.1 million, respectively, during the fiscal year
ended October 31, 1998. These revenues, costs of revenues and margins are
non-recurring and are not generally indicative of returns the Company expects to
achieve on future contracts.

-18-
<PAGE> 21

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

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

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

<TABLE>
<CAPTION>
Network Transportation
Services Services Total
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, July 2, 1998(1) 16,266 24,234 40,500
Amount utilized (8,237) (6,873) (15,110)
- -------------------------------------------------------------------------------------------------
Balance, October 31, 1998 8,029 17,361 25,390
- --------------------------------------------------------------------------------------------------
</TABLE>

(1) The preacquisition financial statements of MFSNT have been restated by
Company management to reflect certain adjustments to previously reported
amounts, including estimates of contract losses. Company management believes
that it has established adequate controls and procedures to estimate
contractual revenues and costs.

The Company intends to complete a final assessment of the adequacy of reserves
for contract losses related to the uncompleted MFSNT preacquisition loss
contracts prior to the close of the "allocation period" (approximately July 2,
1999), with any changes to the reserves impacting goodwill.

-19-
<PAGE> 22

GENERAL AND ADMINISTRATIVE EXPENSES. For the fiscal year ended October 31, 1998
general and administrative expenses were $18.7 million, an increase of $9.9
million over the same period in the prior year. This increase was due to the
overall increase in the management structure at the corporate level, as well as
the division offices, necessary to support the Company's increased revenue in
accordance with the Company's strategic objective of growth through acquisition,
and an increase in costs resulting from the acquisition of MFSNT. For the fiscal
year ended October 31, 1998, general and administrative expenses relating to the
operations of MFSNT were approximately $5.1 million.

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

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

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

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

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

FISCAL YEAR ENDED OCTOBER 31, 1997 COMPARED TO FISCAL YEAR ENDED OCTOBER 31,
1996.

REVENUES. Revenues for the year ended October 31, 1997 increased $37.4 million
over the year prior period, from $48.9 million to $86.3 million, an increase of
76.5%. The acquisition of Georgia Electric Company ("GEC") in October 1996 and
Dial Communications, Inc. ("Dial") in December 1996 accounted for approximately
$35.0 million of the revenue increase between the 1996 and 1997 fiscal years.
The remaining increases in revenue for fiscal year 1997 over fiscal year 1996
were generated from increased demand for services from the other subsidiaries.
Revenue for Latin American operations totaled $4.2 million and $3.7 million in
the years ended October 31, 1997 and 1996, respectively.

COSTS OF REVENUES. Costs of revenues increased $27.7 million, from $40.5 million
for the 1996 fiscal year to $68.2 million for the 1997 fiscal year. Costs of
revenues as a percentage of revenues decreased from 82.8% in 1996 to 78.9% in
1997. The assimilation of GEC and Dial accounted for approximately $27.4 million
of the increase in costs of revenues. The increase in gross margin from 17.2% in
1996 to 21.1% in 1997 is due primarily to the increase in profitability in the
transportation services industry as a result of measures implemented during
fiscal year 1997 to improve labor productivity, control costs, and generate
other operational efficiencies as well as the assimilation of GEC. Costs of
revenues for Latin American operations totaled $2.2 million and $2.1 million in
1997 and 1996, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for the
year ended October 31, 1997, were $8.8 million, or 10.2% of revenues, compared
to $8.4 million, or 17.2% of revenues, in 1996. The increase in general and
administrative expenses for the fiscal year 1997 can be attributed to the
assimilation of GEC and Dial which accounted for $1.0 million and $1.5 million,
respectively, of the total increase for 1997. This increase was partially offset
by a decline in general and administrative expenses from the implementation of
cost cutting and containment strategies at the subsidiary level. These expense
totals represent a significant decline as a percentage of revenues from prior
years as a result of the Company's efforts

-20-
<PAGE> 23

to enhance financial controls and the implementation of its cost-containment
program. General and administrative expenses for Latin America were $1.3 million
and $1.6 million in 1997 and 1996, respectively.

In 1997 and 1996, the Company incurred approximately $.2 million and $1.1
million, respectively, of start-up and marketing costs related to NeuroLAMA,
Able's proprietary telephone call data and billing system, with no corresponding
revenues. These amounts have been included in general and administrative
expenses for both 1997 and 1996. There can be no assurance that the Company will
generate sufficient revenues from this business to offset its start up costs.

DEPRECIATION AND AMORTIZATION EXPENSE. Depreciation and amortization expense was
$4.5 million for the year ended October 31, 1997, or 5.2% of revenues, compared
to $2.7 million or 5.6% of revenues for 1996. The GEC and Dial acquisitions
accounted for $.6 million and $.8 million, respectively, of the total increase
in depreciation and amortization expense for 1997. The remaining increase
resulted from the continuing improvement and updating of the Company's
equipment. Depreciation and amortization expense relating to Latin American
operations totaled approximately $.5 million in both 1997 and 1996.

INTEREST EXPENSE. Interest expense was $1.6 million for 1997, or 1.8% of
revenues, compared to $1.4 million, or 2.8% of revenues, for 1996. This increase
in interest expense is a result of acquisition-related debt and the financing of
equipment purchases, which was partially offset by the payment of debt with the
proceeds from the issuance of the Series A Preferred Stock.

OTHER (INCOME) EXPENSE, NET. Other (income) expense, net decreased to $1.0
million in 1997 from $1.1 million in 1996. These changes reflect the $.3 million
non-cash charge for compensation recognized on stock options granted to certain
officers and directors at a discount to market during the year ended October 31,
1997. Additional income and expense items for fiscal year 1997 include a
reduction in reserves for settlement of litigation of $.5 million and interest
and dividend income of $.4 million.

NET INCOME. The Company reported a net income of $2.9 million, or $.34 per share
of Common Stock for both basic and diluted, for the year ended October 31, 1997,
compared to a net loss of $5.9 million, or a loss of $.71 per share of Common
Stock for both basic and diluted for 1996, before taking into account the
non-cash charge for a discounted conversion feature associated with the Series A
Preferred Stock (the "Accretive Dividend"). For fiscal 1997, the Accretive
Dividend was $1.3 million which resulted in income applicable to common stock of
$1.3 million, or $.16 per share of common stock for both basic and diluted.

The increase in net income for the fiscal year ended October 31, 1997, compared
to the previous year is due to the assimilation of GEC, the continued
improvement in margins within the Transportation Services Group, and the
improvement in margins within the Latin American operations coupled with a
reduction in special charges relating to these operations.

Revenues and net income (loss) from the Company's international operating
subsidiaries are presented below for the fiscal years ended October 31, 1997,
and 1996. These figures exclude costs associated with the continued marketing
and development cost of NeuroLAMA and general and administrative costs of the
international management group.

LATIN AMERICAN OPERATIONS. For the year ended October 31, 1997, Able's net
income from Latin American operations increased by $3.5 million over the year
ended October 31, 1996. In 1996, the Latin American operations incurred losses
of $2.8 million relating to the write-down of goodwill and other assets.
Additionally, costs associated with marketing NeuroLAMA decreased from $1.1
million in 1996 to $.2 million in 1997.

For the year ended October 31, 1997, Latin American revenues increased $.5
million as compared to the year ended October 31, 1996. Revenues generated by
the Company's Venezuelan operations are largely dependent upon one customer. In
the fiscal year ended October 31, 1997, the Company's Venezuelan operations were
expanded to include a reclamation project that was responsible for approximately
$1.0 million of the increase in revenues which was offset by a decrease in
activity under the existing contracts in Latin America.

Revenues and net income (loss) pertaining to Latin American operations are
presented below for the years ended October 31, 1997 and 1996:

-21-
<PAGE> 24

<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Revenues................................................... $4,163,317 $3,745,858
Net income (loss).......................................... 16,556 (3,628,503)
</TABLE>

The Company's net assets of Latin American subsidiaries totaled $2.6 million and
$2.1 million at October 31, 1997 and 1996, respectively. In addition, the
Company's net equity in Latin American operations totaled $1.8 million and $1.6
million at October 31, 1997 and 1996, respectively.

The foreign currency translation and transaction losses improved during fiscal
year 1997. The stabilization of the Venezuelan Bolivar resulted in a decrease in
foreign currency losses of $.9 million for the fiscal year ended October 31,
1997, as compared to 1996.

INCOME TAXES. Income tax expense (benefit) for the year ended October 31, 1997
and 1996, differs from the amounts that would result from applying federal and
state statutory tax rates to pre-tax income (loss) primarily due to
non-deductible goodwill and losses from foreign operations.

MINORITY INTEREST. Minority interest represents a shareholder's 50% interest in
the earnings of the Company's Venezuelan corporations for the fiscal year ended
October 31, 1997. For fiscal year 1996, losses were allocated to minority
interest to the extent of its invested capital.

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 1998, cash and cash equivalents totaled $13.5 million, which
represents an increase of approximately $7.3 million from October 31, 1997. Cash
provided by operating activities of approximately $6.9 million is a result of
net income of $2.5 million, increased primarily by non-cash charges relating to
depreciation, amortization, deferred income taxes and minority interest of
approximately $8.9 million, decreases in receivables, inventory, other current
assets and other assets of approximately $6.3 million and increases in accounts
payable, accrued expenses, billings in excess of costs and estimated profits on
uncommitted contracts and other liabilities of approximately $5.6 million due to
the reduction of cash payments associated with operations, offset by an increase
in costs and profit in excess of billings on uncompleted contracts related to
work acquired in connection with the MFSNT acquisition of approximately $17.0
million. Cash flows from operations during the fiscal year ended October 31,
1999, was also adversely effected by cash payments of $15.1 million related to
Loss Jobs acquired from MFSNT and charged to the reserves for losses on
uncompleted contracts.

Cash used in investing activities of $14.0 million is due to capital
expenditures of approximately $10.0 million made in order to support increased
operations as well as the replacement of existing equipment and approximately
$4.0 million in net expenditures for the acquisitions of businesses during the
fiscal year ended October 31, 1998.

Cash provided by financing activities of $14.3 million is a result of borrowings
under various financing sources of approximately $70.5 million used to fund
acquisitions and operations of the Company, net proceeds from the issuance of
the Series B Preferred Stock of approximately $18.1 million and approximately
$2.1 million in proceeds from the exercise of stock options, offset by
repayments of debt and other borrowings of approximately $74.4 million, of which
$38.8 million relates to payments made for the acquisition of MFSNT, and other
items.

In February 1999, WorldCom advanced the Company $32.0 million for the purposes
of arranging the purchase of 2,785 shares, or approximately 78% of the Series B
Preferred Stock and the purchase of the outstanding $10.0 million of Senior
Notes. This advance is due the earlier of (i) October 31, 2000 or (ii) the dates
of redemption and/or conversion of the Series B Preferred Stock or the Senior
Subordinated Notes.

In connection with this advance, the Company expects to recognize an
extraordinary loss on the purchase of the Senior Notes of approximately $3.3
million and a reduction in the income applicable to common stock of
approximately $10.0 million related to the purchase of the Series B Preferred
Stock. In addition, the Company agreed to modify the terms of the existing
Series B Preferred Stock conversion and warrant agreements which may have a
significant effect on the underlying value of these securities and result in a
material charge to income applicable to common stock in 1999.

-22-
<PAGE> 25

WorldCom has also agreed to make available additional advances to the Company of
up to $15.0 million against amounts otherwise payable pursuant to the WorldCom
Master Services Agreement, which, if advanced, would be due on October 31, 2000.

At the date of this filing, the Company has obtained all necessary waivers which
cover various defaults under the Company's financing and preferred stock
agreements.

EFFECT ON FUTURE LIQUIDITY OF CERTAIN CONTRACTS ACQUIRED FROM MFSNT

As reflected above and in the notes to the Company's consolidated financial
statements, the Company acquired Loss Jobs from MFSNT that are expected to use
cash from operations of approximately $25.4 million predominantly over the next
two fiscal years. The Company also assumed, as part of the acquisition of MFSNT,
certain obligations to perform under long-term service contracts for the
operation and maintenance of fiber networks. Performance under these agreements,
which were predominantly executed in 1996 and 1997, began during fiscal 1999.
The Company subsequently determined that the costs to perform under these
contracts are expected to be greater than amounts presently expected to be
billable to network users under firm contractual commitments. The Company has
also subsequently determined that such losses over the contract terms (up to 20
years) cannot be reasonably estimated due to potential changes in various
assumptions. Increases in management's estimates of costs to complete the Loss
Jobs and to service the maintenance contracts, without an offsetting increase in
revenues, could have a material adverse effect on the Company's consolidated
statement of condition and liquidity.

As reflected in the Company's consolidated financial statements, the Company
acquired from MFSNT a 25 percent interest in Kanas Telcom, Inc. As of the date
of the acquisition of MFSNT, the Company anticipated a near-term sale of its
interest in Kanas. Accordingly, the estimated amount expected to be realized on
sale (approximately $12.8 million) was allocated to this investment in purchase
accounting. WorldCom was and continues to be the guarantor of the payment
obligations of Kanas under its credit agreement. The aggregate commitment at
October 31, 1998 was approximately $77.5 million. In conjunction with the
acquisition of MFSNT, the Company has agreed to indemnify WorldCom under its
guarantee. As described in Note 6 to the consolidated financial statements,
Kanas has not received final acceptance of the system and the anticipated sale
of the Company's interest in Kanas has not occurred. Consequently, the interest
in Kanas has not provided the liquidity expected at the date of acquisition. In
addition, the indemnity provided to WorldCom, if called, could have a material
adverse affect on the Company's liquidity.

The Company believes that it has available cash, from operations as well as from
the additional advance available from WorldCom described above, sufficient to
meet the Company's operating and capital requirements for the next twelve
months. Nonetheless, pursuant to the terms of the documents relating to the
Series B Preferred Stock, under certain circumstances, including without
limitation, if the registration statement that includes the shares of common
stock underlying the Series B Securities is not declared effective on or before
May 18, 1999, the Company is delisted under certain circumstances from any
securities exchange, or any representation or warranty by the Company to the
holders is not true and correct, then the holders of certain outstanding shares
of Series B Preferred Stock, in whole or in part, have the option to require the
Company to redeem their securities at premium prices. Although the Company
intends to use its best efforts to comply with the provisions in the documents
relating to the Series B Preferred Stock, the failure of which would provide the
holder the right to exercise such redemption option, there can be no assurance
that the Company will be able to do so, in part, because certain of such matters
are dependent upon the efforts or approval of others (such as the Securities and
Exchange Commission with respect to the effectiveness of the aforementioned
registration statement). 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.

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 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.

-23-
<PAGE> 26

YEAR 2000

The Company's business is dependent upon various computer software programs and
operating systems that utilize dates and process data beyond the year 2000. The
Company's actions to address the risks associated with the year 2000 are as
follows:

THE COMPANY'S STATE OF READINESS. The Company has established programs to
coordinate its year 2000 (Y2K) compliance efforts across all business functions
and geographic areas. The scope of the programs include addressing the risks
associated with the Company's i) information technology (IT) systems (including
the Company's products and services), ii) non-IT systems that include embedded
technology (e.g., equipment and other infrastructure), and iii) significant
vendors and their Y2K readiness. The Company is utilizing the following steps in
executing its Y2K compliance program: 1) awareness, 2) assessment, 3)
renovation, 4) validation and testing, and 5) implementation. The Company has
completed the awareness and assessment steps for all areas.

IT Systems. The Company's most significant renovation effort involves the
conversion of substantially all of MFSNT's IT Systems. The Company believes it
will be substantially completed with its testing and implementation for all IT
Systems by October 31, 1999.

Non-IT Systems. The Company expects to have all of its mission critical non-IT
systems Y2K compliant by October 31, 1999. The Company is currently formulating
its testing and implementation plans for its mission critical non-IT systems.

Significant Vendors. As part of the Company's Y2K compliance program, the
Company has contacted its significant vendors to assess their Y2K readiness. For
all mission critical third party software embedded in or specified for use in
conjunction with the Company's IT systems and products, the Company's
communications with the vendors indicates that the vendors believe they will be
Y2K compliant by October 31, 1999. Such third party software is being tested in
conjunction with the testing of the IT systems and products discussed above.
There can be no assurance that i) the Company's significant vendors will succeed
in their Y2K compliance efforts, or ii) the failure of vendors to address year
2000 compliance will not have a material adverse effect on the Company's
business or results of operations. Additionally, the Company has no independent
verification nor validation processes to assure the reliability of third party
relationships' risks and cost estimates.

THE COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES. Since inception of its
program through October 31, 1998, the costs related to the Company's Y2K
compliance efforts were not material. The total estimated costs to complete the
Company's Y2K compliance effort are approximately $2.0 million. The estimated
costs to complete, which does not include any costs which may be incurred by the
Company if its significant vendors fail to timely address Y2K compliance, is
based on currently known circumstances and various assumptions regarding future
events. However, there can be no assurance that these estimates will be achieved
and actual results could differ materially from those anticipated.

THE RISKS OF THE COMPANY'S YEAR 2000 ISSUES. The Company's failure to timely
resolve the Y2K risks could result in system failures, the generation of
erroneous information, and other significant disruptions of business activities.
Although the Company believes it will be successful in its Y2K compliance
efforts, there can be no assurance that the Company's systems and products
contain all necessary date code changes. In addition, the Company's operations
may be at risk if its vendors and other third parties fail to adequately address
the Y2K issue or if software conversions result in system incompatibilities with
these third parties. To the extent that either the Company or a third-party
vendor or service provider on which the Company relies does not achieve Y2K
compliance, the Company's results of operations could be materially adversely
affected. Furthermore, it has been widely reported that a significant amount of
litigation surrounding business interruption will arise out of Y2K issues. It is
uncertain whether, or to what extent, the Company may be affected by such
litigation.

THE COMPANY'S CONTINGENCY PLAN. The Company has not yet developed a
comprehensive contingency plan to address the situation that may result if the
Company or its vendors are unable to achieve Y2K compliance for its critical
operations. During fiscal 1999, based upon the status of the Company's Y2K
compliance efforts at that time and the Company's perceived risks to critical
business operations, the Company plans to evaluate what areas the Company
believes a contingency plan may be necessary, and execute such contingency plan
if warranted. The i) inability to timely implement a contingency plan, if deemed
necessary, and ii) the cost to develop and implement such a plan, may have a
material adverse effect on the Company's results of operations.

-24-
<PAGE> 27

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS. Except for
statements of existing or historical facts, the foregoing discussion of Y2K
consists of forward-looking statements and assumptions relating to
forward-looking statements, including without limitation the statements relating
to future costs, the timetable for completion of Y2K compliance efforts,
potential problems relating to Y2K, the Company's state of readiness, third
party representations, and the Company's plans and objectives for addressing Y2K
problems. Certain factors could cause actual results to differ materially from
the Company's expectations, including without limitation i) the failure of
vendors and service providers to timely achieve Y2K compliance, ii) system
incompatibilities with third parties resulting from software conversions, iii)
the Company's systems and products not containing all necessary date code
changes, iv) the failure of existing or future clients to achieve Y2K
compliance, v) potential litigation arising out of Y2K issues, the risk of which
may be greater for information technology based service providers such as the
Company, vi) the failure of the Company's validation and testing phase to detect
operational problems internal to the Company, in the Company's products or
services or in the Company's interface with service providers, vendors or
clients, whether such failure results from the technical inadequacy of the
Company's validation and testing efforts, the technological infeasibility of
testing certain non-IT systems, the perceived cost-benefit constraints against
conducting all available testing, or the unavailability of third parties to
participate in testing, or vii) the failure to timely implement a contingency
plan to the extent Y2K compliance is not achieved.

ITEM 7A. QUANTITATIVE AND QUALITATIVE INFORMATION ABOUT MARKET RISK

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

<TABLE>
<CAPTION>
Expected Maturity
-------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 Thereafter
----------- ----------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fixed rate debt $15,047 $18,225 $ 1,021 9 35 $ 872 $21,081

Average interest rate 12.40% 13.00% 13.64% 13.61% 13.57% 13.54%

Variable rate debt $ --- $ --- $35,000 $ --- $ --- $ ---

Average interest rate ---% ---% 7.69% ---% ---% ---%
</TABLE>

The Company has no cash flow exposure due to interest rate changes for its fixed
debt obligations. All of the Company's debt is non-trading. 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, 1998. Additionally,
foreign currency transaction gains and losses were not material to the Company's
results of operation for the fiscal year ended October 31, 1998. 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 significant foreign
currency forward exchange contracts or other derivative financial instruments to
hedge the effects of adverse fluctuations in foreign currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

-25-
<PAGE> 28

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

In October 1998, the Board of Directors of the Company approved the appointment
of Arthur Andersen LLP as its principal accountant to audit the Company's
Consolidated Financial Statements. Information regarding the resignation of the
Company's previous principal accountant and the engagement of Arthur Andersen
LLP was previously reported by the Company on Current Reports on Form 8-K filed
September 14, 1998 and October 16, 1998, respectively.

-26-
<PAGE> 29

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information, as of September, 1999, about
each person who is currently a Company director or executive officer.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Billy V. Ray, Jr.(3) 40 President, Chief Executive officer and Acting
Chief Financial Officer and a Director
James E. Brands 62 Senior Executive Vice President
Michael A. Summers 34 Chief Accounting Officer
Michael Arp 52 Financial Vice President
Edward Z. Pollock 60 In-House Counsel
Frazier L. Gaines 59 President - Able Telcom International
Stacy Jenkins 42 President - MFS Network Technologies
G. Vance Cartee 56 President - MFS Transportation Systems
J. Barry Hall 50 President - Traffic Management Group
Richard A. Boyle 45 President - Patton Management Group
C. Franklin Swartz(1)(2)(3) 60 Chairman of the Board of Directors
Jonathan A. Bratt(4) 46 Director
Thomas M. Davidson(1)(5) 62 Director
Alec McLarty(4) 48 Director
Gerald Pye(5) 54 Director
Hans G. Tanzler, III(4) 47 Nominee for Director
G. Chris Kosmos, Jr.(4) 51 Nominee for Director
</TABLE>
- ----------

(1) Member of the Audit Committee. Mr. C. Franklin Swartz is the Chairman of
the Audit Committee.
(2) Member of the Compensation Committee. Mr. Davidson is the Chairman of the
Compensation Committee.
(3) Member of the Nominating Committee.
(4) Proposed Nominee for Director at the Company's next Annual Meeting of
Shareholders.
(5) Will not be standing for re-election as a Director of the Company at the
Company's next Annual Meeting of Shareholders. There is no link among any
of the Directors not standing for re-election.

All directors are elected annually at the Annual Meeting of Shareholders of Able
Telcom Holding Corp. and hold office following election or until their
successors are elected and qualified. Once elected, the newly elected Directors
will determine who will serve as members of the Company's Audit Committee,
Compensation Committee and Nominating Committee. The chief executive officer is
elected by and serves at the discretion of the Company's Board of Directors. All
other executive officers are appointed by the Chief Executive Officer.

BILLY V. RAY, JR. has been the Company's President, Chief Executive Officer and
acting Chief Financial Officer since November 30, 1998 and as a Director since
March 5, 1999. From October 1, 1998 to November 30, 1998, Mr. Ray was the
Company's Executive Vice President of Mergers and Acquisitions and Treasurer.
From May 1998 to October 1998 and from January 1997 to June 1997, Mr. Ray served
as a consultant to the Company. Mr. Ray served as the Chief Financial Officer of
the Company from June 1997 to April 1998. From December 1995 to January 1997 and
from April 1997 to July 1997, Mr. Ray was the President of Ten-Ray Utility
Construction, Inc., a utility construction company. During a part of that
period, he also served as a consultant to Alcatel, a maker of intelligent
highway systems. From September 1994 to November 1995, Mr. Ray was the
Controller of Tri-Duct, a utility construction company, and served as a
consultant to such company from November 1995 to March 1996. From March 1994 to
September 1994, Mr. Ray was the staff manager at Mastec, Inc. a utility
construction company and he was assistant to the president at Burnup & Sims, a
utility construction company, from January 1993 to March 1994.

-27-
<PAGE> 30

JAMES E. BRANDS has served as the Company's Senior Executive Vice President
since March 1999. From November 1997 to March 1999, Mr. Brands was the CFO of
Wilson Pest Control, Inc., a pest control services company. From July 1997 to
November 1997. Mr. Brands served as the Executive Vice President and a Director
of KBAS, Inc., an employee leasing company and from February 1997 to July 1997,
he was the CFO of Arrow Exterminators, which provides pest control services.
From January 1993 to March 1995, Mr. Brands served as Chairman, CEO and a
Director of Marquest Medical Products, Inc. (NASDAQ:MMPI), which manufactures
disposable products for respiratory, pulmonary and related medical segments and
also served, as Vice Chairman, CFO and a director of Scherer Healthcare, Inc.
(Nasdaq:SCHR), which was involved in disposable medical products, pharmaceutical
development and medical waste management. From January 1985 to February 1995,
Mr. Brands was the Executive Vice President and a director of RPS Investments,
Inc., a private investment company involved in real estate and controlled
manufacturing services company. Since 1981, Mr. Brands has been the owner of
Brands & Co., which provides financial and business consulting services. From
1988 to the present, he has served as the President and a director of Georgia
American Land Company, a real estate investment company. Mr. Brands also
continues to serve as a General Partner of Tri-County Partners, a real estate
investment group (from 1990 to the present), as a Manager of Two States
Partners, LLC, a real estate investment group (since December 1997), Vice
President and a Manager of Maximum Benefits, LLC, a consumer products marketing
company, as a Vice President and a Director of National Travel Management, Inc.,
which provides corporate travel and meeting services, and from 1989 to the
present, as Vice President and a Director of Body Care, Inc., which manufactures
and distributes orthopedic products.

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

MICHAEL ARP became the Company's Financial Vice President and principal
accounting officer in January 1999. From February 1997 through December 1998,
Mr. Arp was the group controller of the Company's Traffic Management Group. From
January 1994 to February 1997, Mr. Arp was President of American Turf
Manufacturing.

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

FRAZIER L. GAINES has served as a Director of the Company from August 1992
through March 19, 1999 and served as Interim President and Chief Executive
Officer of the Company from March 6, 1998 to November 30, 1998. Mr. Gaines has
also served as the President of the Company's subsidiary, Able Telcom
International, Inc. ("ATI") since June 1994. From 1992 through 1994, Mr. Gaines
was the Chief Operating Officer of the Company. From 1987 to 1992, Mr. Gaines
was Vice President of Judycom, Inc. and Judycom Construction Corporation, both
of which were located in Lexington, Kentucky and engaged in fiber optic
installation.

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

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

J. BARRY HALL has been the President of Georgia Electric Company, a subsidiary
of the Company, since October 1996. From 1990 to October 1996, Mr. Hall was Vice
President of Georgia Electric Company.

RICHARD A. BOYLE has been the President of Patton Management Corp. and
subsidiaries, a subsidiary of the Company since March 1996. From May 1991 to
March 1996, Mr. Boyle was Vice President and General Manager of Wright & Lopez,

-28-
<PAGE> 31

Inc., a telecommunications contractor. From January 1990 to May 1991, Mr. Boyle
was Vice President and General Manager of Pressure Concrete Construction
Company, a division of South Eastern Public Services Co.

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

JONATHAN A. BRATT has served as a Director of the Company since June 1997. Mr.
Bratt, a Venezuelan businessman, is on the boards of several Venezuelan
companies in the oil and gas and telecommunications industries. Mr. Bratt is a
Director of BFGP Ingenieros, C.A., a software engineering firm ("BGFP") (from
January 1980 until the present); Infotrol, C.A., an engineering integration firm
(from January 1987 until the present); Cybertrol, C.A., a petroleum engineering
firm; Inversiones Tocolicao, D.A., a construction firm (from January 1986 until
the present); I.T.S., an engineering consulting joint venture; and Inacom, an
IBM wholesale dealer. He is also Managing Director of Able Telcom, C.A., a joint
venture of BFGP and the Company.

THOMAS M. DAVIDSON has served as a Director of the Company since August 1998.
Since April 1998, Mr. Davidson has been the President of Davidson Capital Group,
LLC, an investment banking firm. Mr. Davidson was an investment banker with
Washington Equity Partners from July 1997 to April 1998. From February 1997 to
July 1997, Mr. Davidson practiced law at Reed, Smith, Shaw and McClay, located
in Washington, D.C. Prior to that, Mr. Davidson practiced law at Coffield,
Ungaretti and Harris, in Washington, D.C. from April 1995 to January 1997 and at
Verner, Liipfert, Bernhard, McPherson and Hand, in Washington, D.C. from April
1993 to April 1995.

ALEC MCLARTY is the Chairman and Chief Executive Officer of Clarion Resources
Communications Corporation. Since 1971, Mr. McLarty has developed six companies,
three of which are telecommunication companies. In 1987, Mr. McLarty founded
Resurgens West and in 1996, founded Clarion Resources Communications
Corporation, a multifaceted company in the domestic and international
telecommunications industry providing services ranging from research and
development to international long distance services.

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

HANS G. TANZLER, III has been a consultant for operational and financial
restructurings in the southeastern United States since August 1995. From January
1994 to August 1995, he was the Executive Vice President, Chief Financial
Officer and a member of the Board of Directors of Consolidated International
Group, Inc., an international group of 26 insurance companies with $1.0 billion
in assets, located in Tampa, Florida and from 1990 to October 1993, Mr. Tanzler
served as an Executive Vice President, General Counsel, Chief Financial Officer
and Interim CEO of Mark III Industries, Inc., a van conversion manufacturer. Mr.
Tanzler is a lawyer and a member of the Florida Bar.

G. CHRIS KOSMOS, JR. has since 1979 been President of Westar Life Insurance
Agency, Inc., a consulting firm engaged in executive compensation plans and
cash management for private and public companies.

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

Section 16(a) ("Section 16") of the Securities Exchange Act of 1934, as amended
requires the Company's executive officers, directors and 10% shareholders to
file reports regarding initial ownership and changes in ownership with the SEC
and the Nasdaq Stock Market. Executive Officers, Directors and 10% Shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16 forms they file. The Company's information regarding compliance with
Section 16 is based solely on a review of the copies of such reports furnished
to the Company by the Company's Executive Officers, Directors and 10%
shareholders. These forms include (i) Form 3, which is the Initial Statement of
Beneficial Ownership of Securities, (ii) Form 4, which is a Statement of Changes
in Beneficial Ownership, and (iii) Form 5, which is an Annual Statement of
Changes in Beneficial Ownership. The majority of the Company's Executive
Officers and Directors were delinquent in filing one or more Section 16(a) forms
and failed to file certain forms during the fiscal year ended October 31, 1998.

It is the intention of the Company's general counsel to oversee the timely
filing of the Section 16 forms. All other Section 16 forms appear to have been
filed in a timely manner other than as to the following individuals who were
delinquent in filing certain forms or failed to file certain forms during the
fiscal year ended October 31, 1998 (titles reflected herein are as of July 15,
1999):

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<PAGE> 32

<TABLE>
<CAPTION>
NAME OF INDIVIDUAL POSITION DELINQUENCY OR FAILURE
<S> <C> <C>
Billy V. Ray, Jr. President, Chief Executive Form 4's which should have been filed for
Officer, Acting Chief Financial the months of November 1997, July 1998
Officer and Director and August 1998 were filed through a Form
5 for October 1998. The Form 5, however,
was not filed timely pursuant Section 16.

Gerry W. Hall Former Chief Executive Officer A Form 4 which should have been filed for
the month of February 1998 was actually
filed for the month of April 1998. In
addition, the number of shares issued should
have been 102,220, (not 102,200). A Form
4 should also have been filed in March 1998
stating that Mr. Hall was no longer subject to
Section 16 filing requirements, which Form
4 has not been filed to date.

J. Barry Hall President - Traffic Management A Form 4 which should have been filed in
Group the month of February 1998 was not filed.
In addition, a Form 5 for October 1998 has
not been filed.

Curtis A. "Butch" Dale Former Chief Operating Officer The Form 5 for October 1998 was not filed
timely pursuant to Section 16.

Mark A. Shain Former Chief Financial Officer A Form 5 was filed for October 1998,
however, it was not filed timely pursuant to
Section 16.

Jesus G. "Jay" Dominguez Former Chief Accounting Officer A Form 3 which should have been filed no
later than May 3, 1998 was filed on June 9,
1998. A Form 4 which should have been
filed for July 1998 was filed through a Form
5 for October 1998. However, the Form 5
was not filed timely pursuant to Section 16.

Frazier L. Gaines President - Able Telcom A Form 4 for the month of September was
International not filed in a timely manner pursuant to
Section 16. Form 4s which should have
been filed for the months of April and July
1998 were filed through a Form 5 for
October 1998. However, the Form 5
was not filed timely pursuant to Section 16.

Richard A. Boyle President - Patton Management A Form 3 which should have been filed no
Group later than April 10, 1998 was filed through a
Form 5 in October 1998. However, the
Form 5 was not filed timely pursuant to
Section 16.

Ralph Ouimette Former President - Able A Form 4 which should have been filed for
Telecommunications and Power May 1998 and a Form 5 which should have
Group been filed for October 1998 have not been
filed.
</TABLE>

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<PAGE> 33

<TABLE>
<S> <C> <C>
Gideon D. Taylor Former Director and Former The Form 4 filed for the month of April
Vice President of Special Projects 1998 omitted certain required information
which was subsequently included on a Form
5 for October 1998. Form 4s which should
have been filed for the months of July and
October were filed through a Form 5 for
October 1998. A Form 4 for August 1998
was not filed timely pursuant to Section 16.
The Form 5 was not filed timely pursuant to
Section 16.

C. Frank Swartz Chairman of the Board of A Form 4 which should have been filed in
Directors August 1998 was filed through a Form 5 for
October 1998. However, the Form 5 was
not filed timely pursuant to Section 16.

Jonathan A. Bratt Director A Form 4 which should have been filed for
the month of April 1998 was filed through a
Form 5 in October 1998. The Form 5,
however, was not filed timely pursuant to
Section 16.

Thomas M. Davidson Director A Form 4 which should have been filed in
August 1998, was filed through a Form 5 for
October 1998. However, the Form 5 was
not filed timely pursuant to Section 16.

John D. Foster Former Director A Form 4 which should have been filed in
the month of April 1998 was not filed. A
Form 4 should also have been filed for June
1998 stating that Mr. Foster was no longer
subject to Section 16 filing requirements. To
date, no such filings have been made.

Robert C. Nelles Former Director A Form 4 which should have been filed in
the month of February 1998 was not filed. A
Form 4 should also have been filed for May
1998 stating that Mr. Nelles was no longer
subject to Section 16 filing requirements. To
date, no such filings have been made.

Richard J. Sandulli Former Director A Form 4 which should have been filed in
the month of April 1998 was not filed. A
Form 4 should also have been filed for
August 1998 stating that Mr. Sandulli was
no longer subject to Section 16 filing
requirements. To date, no such filings have
been made.
</TABLE>

-31-
<PAGE> 34

ITEM 11. EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION

The following table sets forth certain summary information for the years
indicated concerning the compensation awarded to, earned by, or paid to (i)
those persons serving as the Company's Chief Executive Officer during the 1998
fiscal year, (ii) the other four most highly compensated Executive Officers of
the Company who were serving as such at October 31, 1998, and (iii) up to two
additional individuals who had served as an Executive Officer of the Company
during the 1998 fiscal year but who were not Executive Officers at October 31,
1998, except that persons referred to in clauses (ii) and (iii) above generally
are not included in the table if they received total annual salary and bonus of
$100,000 or less for the 1998 fiscal year end. The persons named in this table
shall be collectively referred to as the "Named Executive Officers."

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
FOR THE FISCAL YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996
----------------------------------------------------------

LONG-
TERM
COMPEN-
SATION
ANNUAL COMPENSATION AWARDS

OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND YEAR SALARY($) BONUS($) SATION ($) SARS (#) SATION ($)
PRINCIPAL POSITION ---- --------- -------- ---------- --------- ----------
- ------------------
<S> <C> <C> <C> <C> <C> <C>

Frazier L. Gaines(1) 1998 153,986 210,000 4,609
Chief Executive Officer 1997 110,000 5,000 1,024,375
President- Able Telcom 1996 110,000 36,000
International

Robert Dupuis (2) 1998 6,058
Former Chief Executive Officer

Gerry W. Hall (3) 1998 103,846 4,787
Former Chief Executive Officer 1997 180,769 75,000 27,500 3,200

Billy V. Ray, Jr. (4) 1998 140,561 35,000 18,719
Executive Vice President of 1997 55,715 40,000 35,861
Mergers and Acquisitions and
Treasurer; Promoted to Chief
Executive Officer On December 1,
1998; Acting Chief Financial
Officer

J. Barry Hall (5) 1998 209,173 75,000 33,906
President - Traffic Management 1997 161,538 27,500
Group

Gideon D. Taylor(6) 1998 133,846 750 220,000 10,198
Chairman of the Board and Chief 1997 45,308
Administrative Officer

Ralph Ouimette(7) 1998 93,267 48,000 6,500
President - Able 1997 59,452 40,000
Telecommunications and
Power Group

Richard J. Sandulli(8) 1998 134,615 30,000 12,078
Former Vice President - Finance 1997 71,000 3,750
</TABLE>

-32-
<PAGE> 35

(1) Mr. Gaines served as the President and Chief Executive Officer of the
Company from March 1998 through November 30, 1998 (except for the period
between August 19, 1998 and August 31, 1998). Prior thereto, Mr. Gaines
was President of ATI (a position which he continues to hold). For 1998,
other compensation includes an automobile allowance of $4,500 and health
insurance premiums paid by the Company on Mr. Gaines behalf in the
amount of $109. For 1997, other compensation consists of an automobile
allowance, a housing allowance and an amount of $991,375, which
represents the difference between the price paid by Mr. Gaines upon the
exercise of certain stock options and the fair market value of the
underlying Common Stock on the date of exercise. For 1996, other
compensation includes an automobile allowance and a housing allowance.

(2) Mr. DuPuis was appointed President and Chief Executive Officer of the
Company on August 19, 1998 and resigned on August 31, 1998.

(3) Mr. Hall was President and Chief Executive Officer of the Company from
June 1997 to March 1998 at an annual salary of $200,000. Mr. Hall also
served as President of Georgia Electric Company during the fiscal year
ended October 31, 1997. In 1998, other compensation consists of a living
allowance of $3,000, a car allowance of $1,000, health insurance
premiums paid on Mr. Hall's behalf of $227 and contributions of $560 to
the Company's 401(k) plan. In 1997, other compensation consists of an
automobile allowance. Gerry W. Hall and J. Barry Hall are brothers.

(4) In 1998 and 1997, Mr. Ray's salary included consulting fees paid to Mr.
Ray under a consulting agreement, totaling $92,099 and $21,100,
respectively. In 1998, other compensation includes an automobile
allowance of $5,400, a housing allowance of $12,600 and health insurance
premiums paid on Mr. Ray's behalf of $719. In 1997, other annual
compensation consists of a travel and housing allowance. 25,000 of Mr.
Ray's options expired on August 30, 1998.

(5) In 1998, other compensation includes a housing allowance of $24,000, an
automobile allowance of $7,800 and contributions of $2,106 to the
Company's 401(k) plan. Gerry W. Hall and J. Barry Hall are brothers.

(6) In 1998, other compensation includes a housing allowance of $6,000, use
of a company vehicle estimated at $3,633 and health insurance premiums
paid on Mr. Taylor's behalf of $565.

(7) In 1998, other compensation includes an automobile allowance. Mr.
Ouimette's employment with the Company was terminated in April 1999.

(8) In 1998, other compensation includes a moving allowance of $10,000,
health insurance premiums paid on Mr. Sandulli's behalf of $454, and
$1,624 in country club dues. In 1997, other compensation consists of an
automobile allowance.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The Company's Board of Directors met 14 times during the fiscal year ended
October 31, 1998 and during that time, never acted by unanimous written consent.

The Board has an Audit Committee, a Compensation Committee and a Nominating
Committee.

The Audit Committee reviews the scope of the accountants' engagement, including
the remuneration to be paid, and reviews the independence of the accountants.
The Audit Committee, with the assistance of the Company's Chief Financial
Officer and other appropriate personnel, reviews the Company's annual financial
statements and the independent auditor's report, including significant reporting
and operational issues, corporate policies and procedures as they relate to
accounting and financial reporting and financial controls, litigation in which
the Company is a party and use by the Company's Executive Officers of expense
accounts and other non-monetary perquisites, if any. The Audit Committee may
direct the Company's legal counsel or independent accountants to inquire into
and report to it on any matter having to do with the Company's accounting or
financial procedures or reporting. The Audit Committee held two meetings during
the fiscal year ended

-33-
<PAGE> 36

October 31, 1998. During fiscal year 1998, the members of the Audit Committee
consisted of C. Frank Swartz, who also served as its Chairman, and Thomas
Davidson.

The Compensation Committee is responsible for setting and approving the
salaries, bonuses and other compensation for the Company's Executive Officers,
establishing compensation programs and determining the amounts and conditions of
all grants of awards under the Company's Stock Option Plan, as amended (the
"Plan"), and grants of awards outside of the Plan. The Compensation Committee
held two meetings during the fiscal year ended October 31, 1998. During the
fiscal year ended October 31, 1998, the Compensation Committee consisted of
Thomas Davidson, who served as its Chairman, C. Frank Swartz, and Gideon D.
Taylor, who resigned as a Director of the Company on March 9, 1999.

The Nominating Committee is responsible for selecting those individuals who will
stand for election to the Company's Board of Directors. The Nominating Committee
will consider all reasonable comments from Shareholders regarding proposed
nominees for Directors, as well as nominations for Board members recommended by
Shareholders. To date, the Nominating Committee has no formal procedures for
submitting comments or recommendations and has accepted both written and oral
comments, as well as names of proposed nominees prior to the filing of a
definitive proxy statement. Typically, once a recommendation has been received,
the Committee will undertake due diligence, will discuss the comments or the
proposed nominee with the Shareholder submitting such proposal and, if
applicable, will meet with the proposed nominee before making a final
determination as to whether to recommend the proposed individual as a nominee to
the entire Board of Directors to stand for election to the Board of Directors.
Similarly, the Committee members will personally discuss comments regarding
proposed nominees with those Shareholders submitting such comments. The
Nominating Committee held one meeting during the fiscal year ended October 31,
1998. During the fiscal year ended October 31, 1998, the Nominating Committee
consisted of Frazier L. Gaines, who served as its Chairman, and C. Frank Swartz.

No Director attended fewer than 75% of the meetings of the Board of Directors or
of any committee on which such Director served held during the fiscal year ended
October 31, 1998.

DIRECTOR COMPENSATION

Any member of the Board of Directors who is (i) not an employee of the Company
or any subsidiary and (ii) does not beneficially own, within the meaning of Rule
13d-2 of the Securities Exchange Act of 1934, as amended, more than five percent
(5%) of any class of the outstanding capital stock of the Company is deemed to
be a "Non-Affiliate Director" ("Non-Affiliate Director"). Non-Affiliate
Directors are currently paid $12,000 annually plus $750 for each committee
meeting attended and are reimbursed for expenses associated with Board
responsibilities. In addition, pursuant to the Plan, Non-Affiliate Directors
receive one-time automatic grants of options to purchase 5,000 shares of Common
Stock as of the date such Non-Affiliate Director was initially elected or
appointed having an exercise price equal to the fair market value at the date of
grant. In April 1998, the Company granted an option to purchase 10,000 shares of
Common Stock to all Directors, which grants were outside the Plan. Directors who
are also employed by the Company receive no additional fees or remuneration for
acting in their capacity as a Director of the Company.

On May 7, 1999, the Board of Directors voted to increase the annual fees paid
and grants of options under the Plan (which grants under the Plan are subject to
Shareholder approval) to Non-Affiliate Directors, effective immediately upon the
adjournment of the 1999 Annual Meeting of Shareholders, as follows:

<TABLE>
<CAPTION>
POSITION FEES NUMBER OF OPTIONS
-------- ---- (ANNUALLY)
----------

<S> <C> <C>
Chairman of the Board $2,500 per month 15,000

Board Member (other than Chairman of the Board) $1,750 per month 10,000

Audit Committee Chairman $1,000 per meeting 2,000

Audit Committee Member $750 per meeting 1,000

Compensation Committee Chairman $1,000 per meeting 2,000

Compensation Committee Member $750 per meeting 1,000
</TABLE>

-34-
<PAGE> 37

Nominating Committee Chairman $1,000 per meeting 2,000

Nominating Committee Member $750 per meeting 1,000
</TABLE>

The fees described above will be paid on a monthly basis; provided that such
Non-Affiliate Director attends at least 65% of properly noticed meetings and any
adjustments to such fee payments shall be done on a quarterly basis.

During fiscal 1998, the following options were granted to Directors of the
Company (certain of whom no longer serve in that capacity and will not stand for
re-election). The initial terms of these option grants are summarized below.

<TABLE>
<CAPTION>
FAIR MARKET VALUE DATE
NUMBER INITIAL AT DATE OF INITIAL OF INITIAL EXPIRATION
DIRECTOR OF SHARES GRANT PRICE GRANT(1) GRANT DATE(2)
-------- --------- ----------- ------------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Jonathan A. Bratt 10,000(3) $6.20 $7.75 4/24/98 7/3/04
20,000(3) $11.9375 7.9375 4/24/98 7/3/04

Thomas M. Davidson 20,000(3) $11.9375 $7.625 8/18/98 7/3/04

John D. Foster (5) 10,000(3) $6.20 $7.75 4/24/98 7/3/04
20,000(3) $11.9375 $7.9375 4/24/98 7/3/04

Frazier L. Gaines(9) 10,000(4) $6.20 $7.75 4/24/98 7/3/04
20,000(4) $11.9375 $7.9375 4/24/98 7/3/04
80,000(4) $14.00 $14.00 7/8/98 12/31/00
100,000(4) $6.00 $11.1875 3/10/97 12/31/00

Robert C. Nelles (6) 10,000(4) $6.20 $7.75 4/24/98 7/3/04
20,000(4) $11.9375 $7.9375 4/24/98 7/3/04
15,000(4) $5.34 $8.50 2/19/98 9/19/05

Richard J. Sandulli (7) 10,000(3) $6.20 $7.75 4/24/98 7/3/04
20,000(3) $11.9375 $7.9375 4/24/98 7/3/04

C. Frank Swartz 20,000(3) $11.9375 $7.625 8/18/98 7/3/04

Gideon D. Taylor(8) 10,000(4) $6.20 $7.75 4/24/98 7/3/04
20,000(4) $11.9375 $7.9375 4/24/98 7/3/04
120,000(4) $14.00 $14.00 7/8/98 12/31/00
70,000(4) $6.00 $11.1875 3/10/97 12/31/00
</TABLE>
- ----------

(1) On December 31, 1998, in an effort to clear up a large number of
ambiguities in the minutes of Board of Directors meetings and in order
to maintain compliance with various debtor documents as well as to keep
the Company in substantial compliance with certain rules of the SEC and
The Nasdaq Stock Market, Inc. ("Nasdaq"), the Board of Directors
rescinded all of the above option grants with the exception of the grant
to Nelles for 15,000 shares, and reissued new options in the amounts set
forth above at the calculated fair market value per share on December
31, 1998, which was $5.75.

(2) The initial expiration dates ranged from July 8, 2000 to April 24, 2005
prior to the reissuances.

(3) Issued outside the Company's 1995 Stock Option Plan.

(4) Non-qualified stock options granted pursuant to the Company's 1995
Stock Option Plan.

(5) Mr. Foster resigned from the Company's Board of Directors on June 5,
1998.

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<PAGE> 38

(6) Mr. Nelles resigned from the Company's Board of Directors on May 5, 1998

(7) Mr. Sandulli resigned from the Company's Board of Directors on August
25, 1998.

(8) Mr. Taylor resigned from the Company's Board of Directors on March 9,
1999.

(9) Mr. Gaines resigned from the Company's Board of Directors on March 16,
1999.

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

The Company has adopted the 1995 Stock Option Plan (the "Plan") pursuant to
which 550,000 shares of Common Stock were originally authorized for issuance. In
April 1998, the Shareholders of the Company approved amendments to the Plan to
increase the number of shares outstanding under the Plan to 1,300,000. The
Company intends to amend its registration statement on Form S-8 to register the
additional 750,000 shares of Common Stock reserved for issuance under the Plan.
The Company may grant stock options (both Nonqualified Stock Options and
Incentive Stock Options, as defined in the Plan) and restricted stock under the
Plan to Non-Affiliate Directors (as defined in the Plan), key employees,
advisors and consultants (the "Participants"). The Plan also provides for the
automatic grant to Non-Affiliate Directors, at such time as an individual
becomes a Non-Affiliate Director of the Company, of Nonqualified Stock Options
to purchase 5,000 shares of Common Stock at an exercise price per share equal to
100% of the fair market value of the shares on the date of grant. With respect
to the grant of awards under the Plan to persons other than Non-Affiliate
Directors, the Board of Directors, or a committee appointed by the Board of
Directors (in either case, the "Plan Administrators"), will determine persons to
be granted stock options and restricted stock, the amount of stock to be
optioned or granted to each such person, and the terms and conditions of any
stock options and restricted stock. Both Incentive Stock Options and
Nonqualified Stock Options may be granted under the Plan. An Incentive Stock
Option is intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). Any
Incentive Stock Option granted under the Plan will have an exercise price of not
less than 100% of the fair market value of the shares on the date on which such
option is granted. With respect to an Incentive Stock Option granted to a
Participant who owns more than 10% of the total combined voting stock of the
Company or any parent or subsidiary of the Company, the exercise price for such
option must be at least 110% of the fair market value of the shares subject to
the option on the date the option is granted. A Nonqualified Stock Option
granted under the Plan (i.e., an option to purchase the Common Stock that does
not meet the Code's requirements for Incentive Stock Options) shall be as
determined by the Plan Administrators. Subject to the terms of the Plan, the
Plan Administrators may award shares of restricted stock to the Participants.
Generally, a restricted stock award will not require the payment of any option
price by the Participant but will call for the transfer of shares to the
Participant subject to forfeiture, without payment of any consideration by the
Company, if the Participant's employment terminates during a "restricted" period
(which must be at least six months) specified in the award of the restricted
stock.

Amendments to the Plan are being submitted for Shareholder approval at the next
Annual Meeting of Shareholders. These amendments include (i) increasing the
number of shares of Common Stock which may be issued pursuant to awards granted
thereunder from 1,300,000 to 3,500,000, (ii) increasing the number of options
granted to Non-Affiliate Directors from 5,000 (initially) to 10,000 (annually),
(iii) granting additional options, on an annual basis, to Non-Affiliate
Directors who serve as Chairman of the Board of the Company, and as Chairman
and/or as a member of a Board committee, and (iv) extending the exercise period
of the date of grants to Non-Affiliate Directors to the earlier of (A) the
earlier of the date which is six years from the date of its grant or September
19, 2005, or (B) the date which is two years after the date that such
Non-Affiliate Director is no longer serving in such capacity.

STOCK OPTIONS ISSUED OUTSIDE THE PLAN DURING FISCAL YEAR 1998

During the fiscal year ended 1998, the Company issued options to purchase an
aggregate of 902,000 shares of Common Stock to employees, Executive Officers and
Directors of the Company and its subsidiaries at exercise prices ranging from
$5.34 to $14.00 per share. On December 31, 1998, in an effort to clear up a
large number of ambiguities in the minutes of Board of Directors meetings and in
order to maintain compliance with the Plan, as well as various financing
documents, 840,000 of these options were rescinded. 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 price to Non-Affiliate
Directors within the Plan, contrary to the terms of the Plan, (iii) not
specifying

-36-
<PAGE> 39

whether the grants were issued inside or outside the Plan, (iv) not specifying
the exercise period for options granted, or (v) issuing options outside the
Plan.

Immediately thereafter, the same number of options were issued on December 31,
1998 at an exercise price of $5.75, which was the average of the ten-day closing
market price for the Common Stock for the period from December 16-December 30,
1998. The expiration for the exercise period for these options range from
December 31, 2000 to April 24, 2005. Of the 902,000 options granted in the
fiscal year ended October 31, 1998, 852,000 were vested as of December 31, 1998,
25,000 had been canceled and 25,000 had already been exercised.

OPTION GRANTS DURING THE FISCAL YEAR ENDED OCTOBER 31, 1998

The following table shows all grants during the fiscal year ended October 31,
1998 of stock options to the Named Executive Officers.

INDIVIDUAL GRANTS
<TABLE>
<CAPTION>

POTENTIAL REALIZABLE
% OF TOTAL VALUE AT
OPTIONS ASSUMED ANNUAL RATES
NUMBER OF GRANTED TO MARKET OF STOCK PRICE
SHARES EMPLOYEES EXERCISE OR PRICE ON APPRECIATION
UNDERLYING IN FISCAL BASE PRICE DATE OF EXPIRATION FOR OPTION TERM(2)
NAME OPTIONS(# ) YEAR(1) ($/SH)(2) GRANT DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Frazier L. Gaines 10,000 29% 6.20 7.75 4/24/05 $47,100 $89,000
20,000 11.9375 7.9375 7/3/04 -- 47,600
80,000 14.00 14.00 7/8/00 114,400 235,200
100,000 6.00 11.1875 12/31/00 661,000 813,000
Gideon D. Taylor 10,000 30% 6.20 7.75 4/24/05 47,100 89,000
20,000 11.9375 7.9375 7/3/04 -- 47,600
120,000 14.00 14.00 7/8/00 171,600 352,800
70,000 6.00 11.1875 12/31/00 462,700 569,100
Billy V. Ray, Jr. (3) 10,000 5% 14.00 14.00 7/8/00 14,300 29,400
25,000 7.75 7.75 9/19/05 90,250 215,000
Richard J. Sandulli 10,000 4% 6.20 7.75 4/24/05 47,100 89,000
20,000 11.9375 7.9375 7/3/04 -- 47,600
</TABLE>

Note: Mr. Robert DuPuis was also granted an option to purchase 125,000 shares
of the Common Stock on August 19, 1998. Because Mr. DuPuis' employment
with the Company was less than two weeks, the Company has not included a
valuation of those options in the above table. At the time of Mr. DuPuis'
separation from the Company, this option had not vested and the option
was forfeited.

(1) The percentage of total options granted to employees is based upon grants
of options to purchase 735,000 shares granted to employees during the
fiscal year ended October 31, 1998.

(2) On December 31, 1998, in an effort to clear up a large number of
ambiguities in the minutes of Board of Directors meetings and in order to
maintain compliance with various debtor documents, as well as to keep the
Company in substantial compliance with certain rules of the SEC and
Nasdaq, the Board of Directors rescinded all of the above option grants,
with the exception of the grant to Mr. Ray of 25,000 options which were
canceled pursuant to the Plan, as amended, and reissued new options in
the amounts set forth above at the then fair market value per share on
December 31, 1998, which was $5.75.

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

-37-
<PAGE> 40

(4) The option to purchase 25,000 shares of the Common Stock was canceled in
August 1998 pursuant to the 1995 Stock Option Plan, as amended.

OPTION EXERCISES AND PERIOD-END VALUES

The following table provides information on options exercised in the fiscal year
ended October 31, 1998 by the Named Executive Officers, the number of
unexercised options each of them held at October 31, 1998 and the value of the
unexercised "in-the-money" options each of them held as of that date.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
OPTIONS/AT FY END(#) AT FY-END ($)
SHARES -------------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(1)(2)
<S> <S> <S> <C> <C>

Frazier L. Gaines --- --- 210,000/--- $804,375/---

Gideon D. Taylor --- --- 220,000/--- $585,000/---

Billy V. Ray, Jr. --- --- 100,000/10,000 ---/---

Richard J. Sandulli --- --- 30,000/--- $73,125/---
</TABLE>

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

(2) For those options which were "In-the-Money" at October 31, 1998, the
valuation is based on the closing price of the Common Stock of $7-5/16.

EMPLOYMENT AND CONSULTING AGREEMENTS

BILLY V. RAY, JR., President, Chief Executive Officer and Acting Chief Financial
Officer and Director, is party to an employment agreement, dated December 1,
1998 with the Company (the "Ray Employment Agreement"). The Ray Employment
Agreement terminates on November 30, 2000, and provides that Mr. Ray is to be
paid a salary of $180,000 per year, plus a monthly housing allowance of $1,500
per month and an automobile allowance of $500 per month, plus health insurance
and other benefits. The Ray Employment Agreement may be extended for an
additional two year period. The Ray Employment Agreement also contains a
covenant by Mr. Ray not to compete with the Company for a period of three years
following his employment. The Ray Employment Agreement also provides that if Mr.
Ray's employment is terminated with cause, Mr. Ray would be entitled to 90 days
prior notice. However, should Mr. Ray's employment be terminated without cause,
Mr. Ray would be paid out the remainder of his contract, or for 90 days,
whichever is greater. In addition, the Ray Employment Agreement provides for the
grant of 100,000 options to purchase 100,000 shares of Common Stock, as approved
by the Company's Board of Directors, which vest immediately. On December 31,
1998, the Company's Board of Directors rescinded the above grant of options and
issued new options to purchase 100,000 shares through December 31, 2001 at an
exercise price of $5.75 per share. Effective April 30, 1999, he received a stock
award of 50,000 shares of Common Stock and effective May 7, 1999, his base
salary increased to $240,000 per year and he was granted options to purchase
50,000 shares of Common Stock at $6.375 per share, one-third of which vested as
of May 7, 1999, one-third vest on May 7, 2000 and one-third vest on May 7, 2001.
The exercise period for the options granted on May 7, 1999 to Mr. Ray commences
as of the date of vesting and continues through the earlier of (i) September 19,
2005 or (ii) two years from the date Mr. Ray no longer is an employee and/or
serves as a Director of the Company.

JAMES E. BRANDS, Senior Executive Vice President, is party to a consulting and
employment agreement, dated March 15, 1999 with the Company (the "Brands
Employment Agreement"). The Brands Employment Agreement terminates on April 5,
2000, which may be extended for an additional two year period. The Brands
Employment Agreement provides that Mr. Brands is to be paid (i) a consulting fee
of $20,000 for the period commencing March 15, 1999 and ending May 15,

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<PAGE> 41

1999, and (ii) a salary of (A) $5,750 for the period between April 2, 1999 to
April 30, 1999, (B) $2,500 for the period between May 1, 1999 to May 31, 1999
and (C) $12,500 per month from June 1, 1999 through May 31, 2000; provided that
if another executive or management employee other than a CEO is hired during the
initial term of the Brands Employment Agreement at a rate of more than $12,500
per month, Mr. Brands monthly rate shall immediately become the same as such
employee. Mr. Brands is also entitled to an automobile allowance of $500 per
month or at the Company's option, the Company may provide Mr. Brands with a late
model Lincoln Town Car and reimbursement of its operating costs, a housing
allowance of $1,500 per month effective August 1, 1999 (and during April 2, 1999
to July 31, 1999, Mr. Brands will be reimbursed for actual expenses incurred),
plus health and life insurance benefits. In addition, the Brands Employment
Agreement provides for the grant of options to purchase 100,000 shares of Common
Stock at $6.375 per share, of which 75,000 vested as of April 5, 1999 and 25,000
will vest on June 21, 2000 (which options are subject to divestiture if Mr.
Brands is not a Company employee on April 5, 2000). In the event of a change of
control or ownership of the Company, the options will vest immediately. The
exercise period terminates two years from each vesting date.

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

MICHAEL ARP, Financial Vice President, is party to an employment agreement,
dated January 1, 1999 with the Company (the "Arp Employment Agreement"). The Arp
Employment Agreement terminates on December 31, 2000, and provides that Mr. Arp
is to be paid a salary of $12,500 per month, an automobile allowance of $500 per
month, and a housing allowance of $1,000 per month, plus health and life
insurance benefits. The Arp Employment Agreement also provides that if Mr. Arp
is terminated with cause that Mr. Arp would be entitled to 90 days prior notice.
However, should Mr. Arp's employment be terminated without cause, Mr. Arp would
be paid out the remainder of the term of the Arp Employment Agreement. In
addition, the Arp Employment Agreement provides for the grant of options to
purchase 40,000 shares of Common Stock, as approved by the Company's Board of
Directors, of which 20,000 vested as of January 1, 1999, 10,000 vest as of
December 31, 1999 and 10,000 vest as of December 31, 2000, or immediately upon
either a change in control or ownership of the Company. These options terminate
on December 31, 2001. Effective May 7, 1999, Mr. Arp was granted options to
purchase 25,000 shares of Common Stock at $6.375 per share, one-third of which
vested as of May 7, 1999, one-third vest on May 7, 2000 and one-third vest on
May 7, 2001. The exercise period for the options granted on May 7, 1999 to Mr.
Arp commences as of the date of vesting and continues through the earlier of (i)
September 19, 2005 or (ii) two years from the date Mr. Arp is no longer an
employee of the Company.

EDWARD Z. POLLOCK, General Counsel, is party to an employment agreement, dated
January 1, 1999 with the Company (the "Pollock Employment Agreement"). The
Pollock Employment Agreement terminates on December 31, 2000 and provides that
Mr. Pollock is to be paid an initial salary of $10,000 per month for the period
from January 1, 1999 to June 30, 1999, increased to $11,000 per month for the
period from July 1, 1999-December 31, 1999, increased to $12,000 monthly for the
period from January 1, 2000 to June 30, 2000, and increased to $12,500 monthly
for the period from July 1, 2000 to December 31, 2000. In addition, the Pollock
Employment Agreement provides an automobile allowance of $300 per month, plus
health insurance and other benefits. The Pollock Employment Agreement may be
extended for an additional two year period. The Pollock Employment Agreement
also contains a covenant by Mr. Pollock not to compete with the Company for a
period of three years following his employment. The Pollock Employment Agreement
also provides that if Mr. Pollock is terminated with cause, Mr. Pollock would be
entitled to 90 days prior notice. However, should Mr. Pollock's employment be
terminated without cause, Mr. Pollock would be paid out the remainder of his
contract. In addition, the Pollock Employment Agreement provides for the grant
of options to purchase 40,000 shares of Common Stock, as approved by the
Company's Board of Directors, which vest over a three year period (15,000
options vested on January

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<PAGE> 42

1, 1999, 15,000 options will vest on January 1, 2000 and 10,000 options will
vest on January 2, 2001), unless there is a change in control/ownership of the
Company. Effective May 7, 1999, Mr. Pollock's salary increased to $150,000 per
year and he was granted options to purchase 25,000 shares at $6.375 per share,
one-third of which vested as of May 7, 1999, one-third vest on May 7, 2000 and
one-third vest on May 7, 2001. The exercise period for the options granted on
May 7, 1999 to Mr. Pollock commences as of the date of vesting and continues
through the earlier of (i) September 19, 2005 or (ii) two years from the date
Mr. Pollock no longer is an employee of the Company.

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

STACY JENKINS, President of MFSNT, is party to an employment agreement, dated
July 16, 1998 with the Company (the "Jenkins Employment Agreement"). The Jenkins
Employment Agreement terminates on July 15, 2001, and provides that Mr. Jenkins
is to be paid a salary of $200,000 per year, an automobile allowance of $500 per
month, plus health insurance and other benefits. The Jenkins Employment
Agreement also contains a covenant by Mr. Jenkins not to compete with the
Company for a period of two years following his employment. The Jenkins
Employment Agreement also provides that if Mr. Jenkins is terminated with cause
that Mr. Jenkins would be entitled to 30 days prior notice. However, should Mr.
Jenkins' employment be terminated without cause, Mr. Jenkins would be paid out
the remainder of his annual salary contract rate, or for 90 days, whichever is
greater. In addition, the Jenkins Employment Agreement provides for the grant of
options to purchase 100,000 shares of Common Stock, as approved by the Company's
Board of Directors, which vest after one year of employment, or immediately upon
either a change in control or ownership of the Company or Mr. Jenkins is
terminated without cause. On December 31, 1998, the Company's Board of Directors
rescinded the above grant of options and issued new options to purchase 100,000
shares at $5.75 per share through December 31, 2000 or 90 days after termination
of employment, whichever is earlier. Effective May 7, 1999, Mr. Jenkins' base
salary increased to $216,000 per year and he was granted options to purchase
25,000 shares of Common Stock at $6.375 per share, one-third of which vested as
of May 7, 1999, one-third vest on May 7, 2000 and one-third vest on May 7, 2001.
The exercise period for the options granted on May 7, 1999 to Mr. Jenkins
commences as of the date of vesting and continues through the earlier of (i)
September 19, 2005 or (ii) two years from the date Mr. Jenkins no longer is an
employee of the Company.

G. VANCE CARTEE, President of MFS Transportation Systems, Inc., is party to an
employment agreement, dated January 4, 1999 with the Company (the "Cartee
Employment Agreement"). The Cartee Employment Agreement terminates on January 2,
2001, and provides that Mr. Cartee is to be paid a salary of $150,000 per year,
plus insurance and other benefits. The Cartee Employment Agreement also contains
a covenant by Mr. Cartee not to compete with the Company for a period of one
year following his employment. The Cartee Employment Agreement also provides
that if Mr. Cartee is terminated with cause that Mr. Cartee would be entitled to
90 days prior notice. However, should Mr. Cartee's employment be terminated
without cause, Mr. Cartee would be paid out the remainder of his contract, or
for 180 days, whichever is greater. In addition, the Cartee Employment Agreement
provides for the grant of options to purchase 40,000 shares of Common Stock, as
approved by the Company's Board of Directors, which vest on the earlier of
January 1, 2000, or immediately upon either a change in control or ownership of
the Company or at such time as Mr. Cartee is terminated without cause. On
December 31, 1998, the Company's Board of Directors rescinded the above grant of
options and issued new options to purchase 40,000 shares at $5.75 per share, all
of which are fully vested, through December 31, 2001. Effective May 7, 1999, Mr.
Cartee's base salary increased to $162,000 per year and he was also granted
options to purchase 25,000 shares of Common Stock at $6.375 per share, one-third
of which vested as of May 7, 1999, one-third vest on May 7, 2000 and one-

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<PAGE> 43

third vest on May 7, 2001. The exercise period for the options granted on May 7,
1999 to Mr. Cartee commences as of the date of vesting and continues through the
earlier of (i) September 19, 2005 or (ii) two years from the date Mr. Cartee no
longer is an employee of the Company.

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

RICHARD A. BOYLE, President of the Patton Management Group, is party to an
employment agreement, dated April 1, 1998 with the Company (the "Boyle
Employment Agreement"). The Boyle Employment Agreement terminates on March 31,
2000, and provides that Mr. Boyle is to be paid a salary of $159,000 per year,
plus insurance and other benefits. The Boyle Employment Agreement also contains
a covenant by Mr. Boyle not to compete with the Company for a period of two
years following his employment. Also, per the terms of the Patton Management
Corporation acquisition, Mr. Boyle's non-competition agreement has been extended
for one additional year. The Boyle Employment Agreement also provides that if
Mr. Boyle is terminated with cause that Mr. Boyle would not be entitled to any
notice. Effective May 7, 1999, Mr. Boyle was granted options to purchase 65,000
shares of Common Stock at $6.375 per share, one-third of which vested as of May
7, 1999, one-third vest on May 7, 2000 and one-third vest on May 7, 2001. The
exercise period for the options granted on May 7, 1999 to Mr. Boyle commences as
of the date of vesting and continues through the earlier of (i) September 19,
2005 or (ii) two years from the date Mr. Boyle is no longer an employee of the
Company.

None of the Company's Named Executive Officers are parties to any agreements
that are triggered upon a "change of control" of the Company, although certain
employment contracts provide for the accelerated vesting of stock options and
the acquisition agreement for the purchase of GEC provides for an acceleration
of certain contingent payments of the purchase price of GEC to Gerry W. Hall and
J. Barry Hall in the event that Company should sell GEC prior to October 31,
2001, as more fully described in "Certain Relationships and Related
Transactions."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows, as of August 9, 1999, the Common Stock owned
beneficially by (i) each of the current Directors of the Company and each
"nominee for director", (ii) each Executive Officer, (iii) all Directors and
Executive Officers as a group, and (iv) each person known by the Company to be
the "beneficial owner" of more than five percent (5%) of such Common Stock.
"Beneficial ownership" is a technical term broadly defined by the Securities and
Exchange Commission ("SEC") to mean more than ownership in the usual sense. For
example, you "beneficially" own Common Stock not only if you hold it directly,
but also if you indirectly (through a relationship, a position as a director or
trustee, or a contract or understanding), have (or share the power to vote the
stock, or sell it) the right to acquire it within 60 days. Except as disclosed
in the footnotes below, each of the Directors and Executive Officers listed have
sole voting and investment power over his shares. As of August 9, 1999, there
were 12,071,132 shares of Common Stock issued and outstanding and approximately
436 holders of record.

<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
NAME (1) CURRENT TITLE OWNED OWNED
<S> <C> <C> <C>
Billy V. Ray, Jr.(2)(3) President, Chief Executive Officer and
Acting Chief Financial Officer and Director 176,667 1.45%

James E. Brands(4) Senior Executive Vice President 75,000 *

Edward Z. Pollock(4) General Counsel 23,332 *
</TABLE>

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<PAGE> 44

<TABLE>
<S> <C> <C> <C>
Michael Arp (5) Financial Vice President 58,533 *

Michael A. Summers(4) Chief Accounting Officer 15,000 *

Stacy Jenkins (4) President - MFS Network Technologies 108,330 *

G. Vance Cartee(4) President - MFS Transportation Systems 8,333 *

J. Barry Hall President - Traffic Management Group 321,199 2.66%

Frazier L. Gaines(6) President - Able Telcom International 563,430 4.59%

Richard A. Boyle(4) President - Patton Management Group 21,667 *

C. Frank Swartz(3)(4) Chairman of the Board of Directors 30,000 *

Jonathan A. Bratt(3)(7) Director 36,500 *

Thomas M. Davidson(8)(9) Director 148,286 1.23%

Alec McLarty(3) Director --- 0

Gerald Pye(8) Director --- 0

Hans G. Tanzler, III(3) Nominee for Director --- 0

All Directors, Nominees and
Executive Officers as a Group (16 persons) 1,586,280 12.35%

Gideon D. Taylor (10) Shareholder 946,638 7.70%

Kennedy Capital Management, Inc.(11)
Shareholder 652,450 5.41%
</TABLE>
- -------------
*Less than 1%.

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

(2) Includes 126,667 shares underlying options which are immediately
exercisable and 50,000 shares of Common Stock pursuant to a stock award.

(3) Nominee for Director.

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

(5) Includes 28,333 shares underlying options which are immediately
exercisable and 30,000 shares owned by Mr. Arp.

(6) These include 210,000 shares underlying stock options which are
immediately exercisable and 402,730 shares held in a trust controlled by
Mr. Gaines. Mr. Gaines resigned as a Director of the Company on March 16,
1999, but continues to serve as President--Able Telcom International.

(7) Includes 30,000 shares underlying options which are immediately
exercisable and 6,500 shares owned by Mr. Bratt.

(8) Will not be standing for re-election as a Director of the Company. There
is no link among any of these Directors not standing for re-election.

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<PAGE> 45

(9) Includes 30,000 shares underlying options which are immediately
exercisable.

(10) These include (i) 21,619 shares owned by Mr. Taylor's wife, and (ii)
220,000 shares underlying stock options which are immediately
exercisable. Mr. Taylor resigned as a Director of the Company on March 9,
1999 and as Vice President of Special Projects on June 6, 1999.

(11) The address is 10829 Olive Blvd., St. Louis, MO 63141, This information
is based solely upon public filings filed by this entity pursuant to
Schedule 13G.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended October 31, 1998, compensation for the Company's
Officers was determined by the Company's Compensation Committee, consisting of
Messrs. C. Frank Swartz, Thomas Davidson and Gideon Taylor, of which Messrs.
Swartz and Davidson are non-employee members of the Board of Directors. Mr.
Taylor was Chairman of the Compensation Committee from November 1, 1997 through
August 18, 1998. On August 18, 1998, Mr. Davidson became the Chairman of the
Company's Compensation Committee. During the year, Mr. Taylor was Chairman of
the Company's Board of Directors and the Company's Chief Administrative Officer.

In April 1998, the Company engaged Washington Equity Partners ("WEP") as an
advisor in connection with the acquisition of the network construction and
transportation systems business of MFSNT, including the financing thereof. At
the time of the engagement, Mr. Davidson, who subsequently became a member of
the Company's Board of Directors and a member of the Compensation Committee, was
Managing Director of WEP. In connection with the engagement, the Company agreed
to pay WEP a fee if the Company consummated the financing of the MFSNT
Acquisition through an investor contacted by WEP. Such fee equaled 2% of the
gross proceeds of any senior indebtedness issued by the Company, 3% of the gross
proceeds of any subordinated indebtedness issued by the Company, and 4% of the
gross proceeds of any equity securities issued by the Company. In addition, the
Company agreed to pay WEP, upon the consummation of the MFSNT Acquisition, a fee
of 2% of the aggregate purchase price paid by the Company for this acquisition
up to $50.0 million, and 1-1/2% of the aggregate purchase price in excess of
$50.0 million. The Company also committed to reimburse WEP for its reasonable
travel and out-of-pocket expenses (up to a maximum of $20,000 without prior
approval) incurred in connection with its engagement. Under the agreement, the
Company agreed to indemnify WEP and its permitted assigns against all losses and
expenses, including reasonable counsel fees and expenses, arising out of the
MFSNT Acquisition or the financing, except any losses or expenses found in a
final judgment by a court of competent jurisdiction to have resulted from WEP's
bad faith, gross negligence or breach of its agreement with the Company. Mr.
Davidson subsequently left his position as Managing Director of WEP in April
1998 and WEP assigned its rights in the agreement to Mr. Davidson, who became a
Director of the Company in August 1998. On October 21, 1998, Mr. Davidson and
the Company executed a letter agreement pursuant to which the Company agreed to
pay Mr. Davidson $1.3 million in satisfaction of amounts owing under the
agreement with WEP with respect to the MFSNT Acquisition and the related
financing. At April 30, 1999, $828,002 of the then obligation to Mr. Davidson
($1,078,000) was converted into 118,286 shares of Common Stock, based upon the
then fair market value of the Common Stock of $7.00 per share and during May
1999, the remaining balance was paid in cash.

On April 24, 1998, to finance part of the non-refundable deposit for the MFSNT
Acquisition, Frazier L. Gaines, the Company's then President and Chief Executive
Officer, and Gideon D. Taylor, the Company's then Chairman of the Board of
Directors, borrowed $5.0 million from a bank which in turn, was lent to the
Company. This loan was secured by a pledge of the 1,047,000 shares of Common
Stock owned by Messrs. Taylor and Gaines. On July 2, 1998, to finance an
additional non-refundable deposit on the MFSNT Acquisition purchase price,
Messrs. Taylor and Gaines borrowed an additional $4.2 million which was in turn
lent to the Company. This loan was also secured by a pledge of 1,047,000 shares
of Common Stock owned by Messrs. Taylor and Gaines. On August 17, 1998, the
Company repaid both of these loans as well as agreed to pay Messrs. Taylor and
Gaines $25,000 each for interest related to the loans. On July 8, 1998, Messrs.
Taylor and Gaines were granted two year options to purchase 120,000 and 80,000
shares, respectively, of the Common Stock, at an exercise price of $14.00 per
share, as compensation for providing the capital necessary to fund the initial
deposits required to consummate the MFSNT Acquisition. On December 31, 1998,
these options were rescinded and new options were granted at an exercise price
of $5.75 per share, the fair market value at December 31, 1998, as defined in
the Plan, as amended. See "Stock Options Issued Outside the Plan During Fiscal
Year 1998."

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<PAGE> 46

On August 11, 1998, Messrs. Taylor and Gaines each loaned the Company $1.0
million on an unsecured basis to cover certain expenses associated with the
MFSNT Acquisition. These loans were repaid in full on August 17, 1998 and
interest of $2,200 was paid to each Mr. Taylor and to Mr. Gaines.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On October 12, 1996, the Company acquired all of the issued and outstanding
capital stock of Georgia Electric Company ("GEC"), which prior to the
acquisition was owned equally by brothers Gerry W. and J. Barry Hall
(collectively, the "Halls"). Following the acquisition, Gerry Hall was elected
to the Board of Directors of the Company, and on June 12, 1997, was elected
President and Chief Executive Officer of the Company. Gerry Hall resigned as
President, Chief Executive Officer and a Director of the Company on March 2,
1998. The purchase price for the GEC acquisition was $3.0 million in cash, plus
the issuance at the end of each of the next five fiscal years of a number of
shares of Common Stock to be determined pursuant to a formula contained in the
acquisition agreement by dividing a dollar figure derived from GEC's actual
pre-tax profits and operating margins compared with target profits and margins
for each such fiscal year by a discounted per share price. In the event that GEC
is sold by the Company prior to the end of fiscal year 2001, the Company is
obligated to issue to Gerry Hall and J. Barry Hall a number of shares of Common
Stock having a market value (as determined in accordance with the contract) of
$1.0 million for each year that earn-out consideration remains payable. The GEC
acquisition agreement was amended in February 1998 to increase the percentage
discount applicable to the price of the Common Stock for purposes of determining
the number of shares to be issued with respect to each fiscal year and to limit
the total market value of the shares of Common Stock which could be issued under
the agreement.

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

On July 1, 1997, the Company entered into a six month consulting agreement with
Nelles & Associates, Inc. ("NAI"), an international telecommunications
consulting firm founded by Robert C. Nelles, a former Director of the Company.
The consulting agreement provided for NAI to be paid $6,000 per month to provide
consulting services in support of the Company's business activities for eight
days per month and for Mr. Nelles to be granted options to purchase 15,000
shares of Common Stock. On January 1, 1998, the Company entered into a three
month consulting agreement with NAI which provided for NAI to be paid $2,000 per
month to provide consulting services in support of the Company's business
activities for up to three days per month and an hourly fee for additional
services. On March 6, 1998, the Company entered into a four month consulting
agreement with NAI, pursuant to which Mr. Nelles served as the interim Chief
Operating Officer of the Company for which the Company paid him consulting fees
of $12,500 per month, provided Mr. Nelles with the use of a leased automobile
and reimbursed NAI for temporary living, travel and related expenses incurred in
connection with Mr. Nelles' performance of services as interim Chief Operating
Officer.

The Company entered into a consulting agreement with Tyler Dixon dated January
1, 1999 and effective as of April 1, 1999, whereby Mr. Dixon will serve as a
legal consultant to the Company, will provide the Company with a minimum of 80
hours of legal services per month commencing April 1, 1999 and continuing
through May 31, 2000, and will be compensated at a rate of $16,000 per month.
Mr. Dixon also received options to purchase 40,000 shares of Common Stock at
$6.375 per share, which exercise period commenced on April 1, 1999 and will
terminate two years from the expiration of the consulting agreement or any
extensions or renewals thereof (whichever occurs last). Mr. Dixon is a partner
in the law firm of Raiford Dixon & Thaxton, LLP, which, during fiscal 1998,
received approximately $125,000 in legal fees from the Company. Mr. Dixon was
also the sole officer, director and shareholder of Cotton Communications, Inc.
("Cotton").

On February 17, 1999, in order to facilitate the purchase of (i) 2,785 shares of
Series B Convertible Preferred Stock, par value $.001 ("Series B Preferred
Stock") from the Palladin Group and the RoseGlen Group acquired in connection
with the "Series B Offering"

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<PAGE> 47

and (ii) the outstanding $10.0 million principal amount of the Company's 12%
Senior Subordinated Notes originally due January 6, 2005 (the "Senior Notes"),
the Company advanced Cotton approximately $32.0 million ("Company Advance"),
which advance accrues interest at 11.5% and matures on November 30, 2000.
Immediately thereafter, Cotton purchased 2,785 shares of Series B Preferred
Stock (1,425 shares from the RoseGlen Group for $11.0 million and 1,360 shares
from the Palladin Group for $7.85 million), as well as the Senior Notes.

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

See also "Compensation Committee Interlocks and Insider Participation" regarding
certain related party transactions between the Company, members of the
Compensation Committee and with Mr. Frazier Gaines, the former President and
Chief Executive Officer of the Company and a former Director of the Company.

REPORT ON EXECUTIVE COMPENSATION

During the fiscal year ended October 31, 1998, the Compensation Committee was
responsible for setting and approving the salaries, bonuses and other
compensation for the Company's Executive Officers, establishing compensation
programs, and determining the amounts and conditions of all grants of awards
under the Plan.

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

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

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

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The compensation of Gerry W. Hall,
former President and Chief Executive Officer of the Company, is fixed pursuant
to the Hall Employment Agreement. The Board of Directors increased Mr. Hall's
annual base salary to $200,000 in connection with his appointment on June 12,
1997 as the Company's President and Chief Executive Officer. The increase was
based upon arm-length negotiations between Mr. Hall and the remaining members of
the Board of Directors. In agreeing to increase Mr. Hall's compensation, the
Board of Directors sought to provide an appropriate incentive to Mr. Hall, who
has extensive experience in the Company's industry by virtue of his former
ownership and management of GEC, to accept an appointment as the Company's Chief
Executive Officer. The

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<PAGE> 48

Board of Directors believes that Mr. Hall's salary was appropriate for the Chief
Executive Officer of a public company the size of the Company. See "Summary
Compensation Table" for information concerning Mr. Hall's compensation. Mr. Hall
resigned as Chief Executive Officer of the Company on March 2, 1998 and resumed
full-time performance of his duties at GEC pursuant to the terms of the Hall
Employment Agreement. The Board of Directors approved the payment of a bonus to
Mr. Hall of $75,000, based upon the Company's operating results and strategic
accomplishments during the period of Mr. Hall's service as President and Chief
Executive Officer.

Frazier Gaines served as the Chief Executive Officer of the Company from March
1998 through November 1998 (excluding August 19-31, 1998). During the fiscal
year ended October 31, 1998. Mr. Gaines was paid $153,986. Mr. Gaines received
other compensation that is more fully presented in the "Summary of Compensation"
above.

STOCK OPTIONS. The Board of Directors may grant to certain employees of the
Company long-term incentives consisting of non-qualified stock options and
incentive stock options. In order to vary the types of awards that may be
offered, the Board of Directors approved the Plan Amendments, which will
increase the number of shares of stock available for grant under the Stock
Option Plan and will allow for the grant of shares of Common Stock subject to
restrictions. During fiscal year 1998, the Board of Directors approved grants of
stock options to Messrs. Hall, Gaines, Taylor and Ray. See "Executive
Compensation--Option Grants During the Fiscal Year Ended October 31, 1998".

Respectfully Submitted,

Thomas Davidson, Chairman
C. Frank Swartz
Gideon D. Taylor

STOCK PERFORMANCE

The following performance graph compares the cumulative total return on the
Company's Common Stock with the cumulative total return of the companies in the
Standard and Poor's 500 index, the NASDAQ Telecommunications Stocks Index and a
self-determined peer group consisting of Advanced Communications Systems, Inc.,
AmeriLink Corp.; ANTEC Corporation; C-Cor Electronics, Inc.; Comtech
Telecommunications Corp.; Dycom Industries, Inc.; Eltrax Systems, Inc.; Internet
Communications Corp.; IPC Information Systems, Inc.; IWL Communications,
Inc.;MasTec, Inc.; NumereX Corp.; Porta Systems Corp.; Tollgrade Communications
Corp.; View Tech, Inc.; and World Access, Inc. In fiscal 1998, due to a change
in business associates with MFSNT, the peer group was changed by adding Lockheed
Martin ("Peer Group-New"). The cumulative total return for each of the periods
shown in the performance graph is measured assuming an initial investment of
$100 on October 31, 1993 and assuming dividend reinvestment. No dividends have
been paid on the Common Stock.

COMPARISON OF 12-MONTH CUMULATIVE TOTAL RETURN

Among Able Telcom Holding Corp., the S&P 500 Index, self-determined peer groups
and the NASDAQ Telecommunications Stocks Index

<TABLE>
<CAPTION>
10/31/94 10/31/95 10/31/96 10/31/97 10/31/98
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Able Telcom Holding Corp. 78 59 93 86 79
Peer Group-Old 47 85 175 171 147
Peer Group-New 109 159 216 240 273
S&P 500 104 131 163 215 263
NASDAQ
Telecommunications 84 95 99 145 200
</TABLE>

-46-
<PAGE> 49

PART IV

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

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

Reports of Independent Certified Public Accountants Consolidated Financial
Statements:

Consolidated Balance Sheets - October 31, 1998 and 1997
Consolidated Statements of Operations - Years ended October 31, 1998,
1997 and 1997
Consolidated Statements of Shareholders' Equity - Years
ended October 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended October 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements

(a) 2. The financial statement schedule for the years ended October
31, 1998, 1997 and 1996 is filed as part of this report and should be read in
conjunction with the Consolidated Financial Statements of the Company.

Schedule II-Valuation and Qualifying Accounts

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

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

-47-
<PAGE> 50

EXHIBIT NO.
DESCRIPTION

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)

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)

-48-
<PAGE> 51

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

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)

3.2 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)

4.4 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)

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)

5.1 Opinion regarding Legality of Common Stock (12)

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

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

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

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

-49-
<PAGE> 52

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)

10.29 Employment Agreement with Jesus G. Dominguez, dated April 27, 1998 (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)

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

10.34 Employment Agreement with Curtis A. "Butch" Dale, dated August 17, 1998
(14)

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)

10.39 Employment Agreement with Gideon D. Taylor, dated December 7, 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)

10.42 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)

-50-
<PAGE> 53

11 Computation of Per Share Earnings (7)

16.1 Letter regarding change in certifying accountants(15)

21 Subsidiaries of Able Telcom Holding Corp. (13)

23.1 Consent of Ernst & Young LLP (12)

23.3 Consent of Counsel (included with Exhibit 5.1)

27 Financial Data Schedule (12)

- -------------------
(1) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), dated February 25, 1998, as
filed with the Commission on March 12, 1998, as amended by Form
8-K/A-1, dated May 11, 1998, as filed with the Commission on April 14,
1998.

(2) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), dated April 1, 1998, as filed
with the Commission on 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), dated December 20, 1996, as
filed with the Commission on December 31, 1996.

(5) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), dated October 12, 1996, as filed
with the Commission on 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 with the Commission on February 13, 1998, as
amended by 10-K/A, as filed with the commission on 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), dated December 2, 1996, as filed
with the Commission on December 13, 1996, as amended by Form 8-K/A-1,
dated February 11, 1997, as filed with the Commission on 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 with the Commission on June 14, 1998.

(10) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K (File No. 0-21986), dated July 2, 1998, as filed
with the Commission on July 16, 1998.

(11) Incorporated by reference from an exhibit to the Company's Current
Report on Form 8-K/A (File No. 0-21986), dated July 2, 1998, as filed
with the Commission on August 3, 1998.

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

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

-51-
<PAGE> 54

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

(b) Reports on Form 8-K

None

-52-
<PAGE> 55

SIGNATURES

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

ABLE TELCOM HOLDING CORP.

May 26, 2000 BY: /S/ BILLY V. RAY, JR.
---------------------
BILLY V. RAY, JR.,
Chief Executive Officer

-53-
<PAGE> 56

ABLE TELCOM HOLDING CORP.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Reports of Independent Certified Public Accountants

Consolidated Financial Statements:

Consolidated Balance Sheets - October 31, 1998 and 1997

Consolidated Statements of Operations - Years Ended October 31, 1998, 1997 and
1996

Consolidated Statements of Shareholders' Equity - Years ended October 31, 1998,
1997 and 1996

Consolidated Statements of Cash Flows - Years Ended October 31, 1998, 1997 and
1996

Notes to Consolidated Financial Statements - October 31, 1998

Financial Statement Schedule:

II. Valuation and Qualifying Accounts - Years ended
October 31, 1998, 1997, and 1996

F-1
<PAGE> 57

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

We have audited the accompanying consolidated balance sheet of Able Telcom
Holding Corp. (a Florida Corporation) and subsidiaries as of October 31, 1998,
and the related consolidated statements of operations, shareholders' equity and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Able Telcom Holding Corp. and
subsidiaries as of October 31, 1998, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The financial statement schedule listed in the
Index at Item 14(a) is presented for purposes of complying with the Securities
and Exchange Commissions rules and is not part of the basic financial
statements. The schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Omaha, Nebraska
February 17, 1999

F-2
<PAGE> 58

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors Able Telcom Holding Corp.:

We have audited the accompanying consolidated balance sheet of Able Telcom
Holding Corp. and subsidiaries (the "Company") as of October 31, 1997, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the two years in the period ended October 31, 1997. Our audits
also included the financial statement schedule listed in the Index at Item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express and opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Able
Telcom Holding Corp. and subsidiaries at October 31, 1997, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended October 31, 1997, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

/s/ Ernst & Young LLP

West Palm Beach, Florida
January 19, 1998

F-3
<PAGE> 59

<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--OCTOBER 31, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

ASSETS 1998 1997
----------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $13,544 $6,230
Accounts receivable, net of allowances for bad debts of $866 and $686
at October 31, 1998 and 1997, respectively 64,159 13,399
Costs and profits in excess of billings on uncompleted contracts 105,478 5,615
Prepaid expenses and other current assets 2,641 1,766
----------- ----------
Total current assets 185,822 27,010
----------- ----------
PROPERTY AND EQUIPMENT:
Land and buildings 4,473 1,415
Equipment, furniture and fixtures 42,522 19,982
----------- ----------
46,995 21,397
Less - Accumulated depreciation (14,921) (8,283)
----------- ----------
Property and equipment, net 32,074 13,114
----------- ----------

OTHER ASSETS:
Goodwill, net of accumulated amortization of $2,162 and $1,200 at October 31, 1998
and 1997, respectively 31,374 8,341
Assets held for sale 38,750 ---
Other non-current assets 2,740 1,881
----------- ----------
Total other assets 72,864 10,222
----------- ----------
Total assets $290,760 $50,346
=========== ==========

LIABILITY AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt $14,438 $3,154
Accounts payable and accrued liabilities 61,229 8,649
Accruals for incurred job costs 51,111 --
Billings in excess of costs and profits on uncompleted contracts 6,328 291
Reserves for losses on uncompleted contracts 25,390 ---
Notes payable shareholders/directors 1,182 875
----------- ----------
Total current liabilities 159,678 12,969
Long-term debt, non-current portion 61,685 14,140
Property tax payable, non-current portion 15,118 --
Other non-current liabilities and minority interest 2,737 1,277
----------- ----------
Total liabilities 239,218 28,386
----------- ----------

COMMITMENTS AND CONTINGENCIES (Note 8)

CONVERTIBLE PREFERRED STOCK
Series A redeemable preferred stock, $.10 par value, 995 shares
issued and outstanding in 1997 --- 6,713
Series B preferred stock, $.10 par value, (aggregate liquidation value
of $17,820,000), 4,000 shares authorized, 3,564 shares issued and
outstanding in 1998 11,325 ---
----------- ----------
Total convertible preferred stock 11,325 6,713
----------- ----------
</TABLE>

F-4
<PAGE> 60

<TABLE>

<S> <C> <C>
SHAREHOLDERS' EQUITY
Preferred stock, 1,000,000 shares authorized, 5,200 shares issued --- --
Common stock, $.001 par value, authorized 25,000,000 shares;
11,065,670 and 8,580,422 shares issued and outstanding
at October 31, 1998 and 1997, respectively 11 9
Additional paid-in capital 35,164 15,096
Senior Note warrants 1,244 --
Series B preferred stock warrants 5,400 --
WorldCom stock options 3,490 --
WorldCom phantom stock 606 --
Retained earnings (deficit) (5,698) 142
----------- ----------
Total shareholders' equity 40,217 15,247
----------- ----------
Total liabilities and shareholders' equity $290,760 $50,346
=========== ==========
</TABLE>

The accompanying notes are an integral part to these consolidated financial
statements.

F-5
<PAGE> 61

<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1998 1997 1996
------------ ----------- ----------
<S> <C> <C> <C>
REVENUES $217,481 $86,334 $48,906
COSTS AND EXPENSES

Cost of revenues 179,505 68,164 40,486
General and administrative 18,692 8,780 8,404
Depreciation 6,638 4,124 2,411
Amortization 962 408 339
Charges and transaction/translation losses related to
Latin American operations 275 17 3,553
------------ ----------- ----------
Total costs and expenses 206,072 81,493 55,193
------------ ----------- ----------
INCOME (LOSS) FROM OPERATIONS 11,409 4,841 (6,287)
OTHER (INCOME) EXPENSE, NET:
Interest expense, including amortization
of discount of $157 in 1998 5,534 1,565 1,350
Interest and dividend income (342) (449) (270)
Other (320) (152) 32
------------ ----------- ----------
Total other expense, net 4,872 964 1,112
------------ ----------- ----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST 6,537 3,877 (7,399)
PROVISION (BENEFIT) FOR INCOME TAXES 3,405 727 (891)
------------ ----------- ----------
INCOME (LOSS) BEFORE MINORITY INTEREST 3,132 3,150 (6,508)
MINORITY INTEREST 618 293 (598)
------------ ----------- ----------
NET INCOME (LOSS) 2,514 2,857 (5,910)
PREFERRED DIVIDENDS (341) (260) ---
BENEFICIAL CONVERSION PRIVILEGE OF PREFERRED STOCK (8,013) (1,266) ---
------------ ----------- ----------
INCOME (LOSS) APPLICABLE TO COMMON STOCK $(5,840) $1,331 $(5,910)
============ =========== ==========
INCOME (LOSS) PER COMMON SHARE:
Basic $(0.59) $0.16 $(0.71)
============ =========== ==========
Diluted $(0.59) $0.16 $(0.71)
============ =========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic 9,907,060 8,504,972 8,361,458
============ =========== ==========
</TABLE>

The accompanying notes are an integral part to these consolidated financial
statements.

F-6
<PAGE> 62

<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT COMMON STOCK SHARES AND AMOUNTS)

Common Stock Additional Subordinated
----------------------------------- Paid-In Notes
Shares Amount Capital Warrants
-------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
BALANCE, November 1, 1995 8,193,212 $8,193 $12,790 $ ---
Issuance of common stock to directors in ---
connection with acquisition 10,000 10 43 ---
Change in unrealized loss on investments --- --- --- ---
Net loss --- --- --- ---
-------------- --------------- ------------- ------------
BALANCE, October 31, 1996 8,203,212 8,203 12,833 ---
Issuance of common stock in connection
with acquisition 108,489 108 620 ---
Issuance of common stock for services 2,000 2 12 ---
Issuance of common stock for exercise of options 262,240 262 732 ---
Compensation recognized on stock options --- --- 338 ---
Issuance of common stock for conversion of
convertible preferred shares 4,481 4 34 ---
Changes in unrealized loss on investments
Convertible preferred dividends paid --- --- --- ---
Embedded dividend recognized on convertible
preferred shares --- --- --- ---
Tax benefit from exercise of options --- --- 527 ---
Net income --- --- --- ---
-------------- --------------- ------------- ------------
BALANCE, October 31, 1997 8,580,422 8,579 15,096 ---
Issuance of common stock for GEC earnout 204,440 204 1,278 ---
Compensation expense for below market options --- --- 93 ---
Issuance of common stock for exercise of options 351,935 352 2,071 ---
Dividends on Series A preferred stock --- --- --- ---
Embedded dividend recognized on Series A convertible
preferred shares --- --- --- ---
Issuance of common stock for conversion of Series A
convertible preferred shares 920,946 921 6,817 ---
Valuation of subordinated note warrants --- --- --- 1,244
Valuation of Series B Preferred Stock warrants --- --- 5,400 ---
Beneficial conversion privilege applicable to Series B
Preferred Stock --- --- 7,909 ---
Valuation of WorldCom options --- --- --- ---
Valuation of WorldCom phantom stock awards --- --- --- ---
Issuance of common stock for conversion of Series
B Preferred Stock 1,007,927 1,008 1,384 ---
Dividends on Series B Preferred Stock --- --- --- ---
Tax benefit from exercise of options --- --- 516 ---
Net income --- --- --- ---
-------------- --------------- ------------- ------------
BALANCE, October 31, 1998 11,065,670 $11,064 $40,564 $1,244
============== =============== ============= ============

<CAPTION>
Unrealized
Loss on Retained
WorldCom WorldCom Investments Earnings
Stock Options Phantom Stock Net of Taxes (Deficit)
-------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
BALANCE, November 1, 1995 $ --- $ --- $(0.53) $4,721
Issuance of common stock to directors in
connection with acquisition --- --- --- ---
Change in unrealized loss on investments --- --- (1) ---
Net loss --- --- --- (5,910)
--------- --------- ------- -------
</TABLE>

F-7
<PAGE> 63

<TABLE>
<S> <C> <C> <C> <C>
BALANCE, October 31, 1996 --- --- (54) (1,189)
Issuance of common stock in connection with
acquisition --- --- --- ---
Issuance of common stock for services --- --- --- ---
Issuance of common stock for exercise of options --- --- --- ---
Compensation recognized on stock options --- --- --- ---
Issuance of common stock for conversion of
convertible preferred stock --- --- --- ---
Changes in unrealized loss on investments --- --- 54 ---
Convertible preferred dividends paid --- --- --- (260)
Embedded dividends recognized on convertible
preferred shares --- --- --- (1,266)
Tax benefit from exercise of options --- --- --- ---
Net income --- --- --- 2,857
--------- --------- ------- -------
</TABLE>

F-8
<PAGE> 64

<TABLE>
<S> <C> <C> <C> <C>
BALANCE, October 31, 1997 --- --- --- 142
Issuance of common stock for GEC earnout --- --- ---
Compensation expense for below market options --- --- ---
Issuance of common stock for exercise of options,
net of tax benefit --- --- ---
Dividends on Series A preferred stock --- --- --- (79)
Embedded dividend recognized on Series A
convertible preferred shares --- --- --- (104)
Issuance of common stock for conversion of Series
A convertible preferred shares --- --- --- ---
Valuation of subordinated note warrants --- --- --- ---
Valuation of Series B Preferred Stock warrants --- --- --- ---
Beneficial conversion privilege applicable to
Series B Preferred Stock --- --- --- (7,909)
Valuation of WorldCom options 3,490 --- --- ---
Valuation of WorldCom phantom stock awards --- 606 --- ---
Issuance of common stock for conversion of Series
B Preferred Stock --- --- --- ---
Dividends on Series B preferred stock --- --- --- (262)
Net income --- --- --- 2,514
--------- --------- ------- -------
BALANCE, October 31, 1998 $3,490 $606 $ --- $(5,698)
========= ========= ======= =======
<CAPTION>

Total
-------
<S> <C>
BALANCE, November 1, 1995 $17,466
Issuance of common stock to directors in connection
with acquisition 43
Change in unrealized loss on investments (1)
Net loss (5,910)
-------
BALANCE, October 31, 1996 11,598
Issuance of common stock in connection with
acquisition
Issuance of common stock for services 621
Issuance of common stock for exercise of options 12
Compensation recognized on stock options 732
Issuance of common stock for conversion of 338
convertible preferred shares
Changes in unrealized loss on investments 34
Convertible preferred dividends paid 54
Embedded dividend recognized on convertible (260)
preferred shares
Tax benefit from exercise of options (1,266)
Net income 527
2,857
-------
BALANCE, October 31, 1997 15,247
Issuance of common stock for GEC earnout 1,278
Compensation expense for below market options 93
Issuance of common stock for exercise of options 2,071
Dividends on Series A preferred stock (79)
Embedded dividend recognized on Series A
convertible preferred shares (104)
Issuance of common stock for conversion of
Series A convertible preferred shares 6,818
Valuation of subordinated note warrants 1,244
Valuation of Series B Preferred Stock warrants 5,400
Beneficial conversion privilege applicable to Series B
Preferred Stock ---
Valuation of WorldCom options 3,490
Valuation of WorldCom phantom stock awards 606
Issuance of common stock for conversion of Series B
Preferred Stock 1,385
Dividends on Series B preferred stock (262)
Tax benefit form exercise of options 516
Net income 2,514
-------
BALANCE, October 31, 1998 $40,217
=======
</TABLE>

The accompanying notes are an integral part to these consolidated financial
statements.

F-9
<PAGE> 65

<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED OCTOBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)

1998 1997 1996
------------ -------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $2,514 $2,857 $(5,910)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities, net of effects
of acquisitions:
Depreciation 6,638 4,532 2,750
Amortization 962 --- ---
Bad debt expense --- 160 1,094
Translation/transaction Losses 275 17 1,180
Deferred income taxes 717 727 (891)
Minority interest 618 293 (598)
Write down of Latin American assets --- --- 1,593
Compensation recognized for conversion of stock options 93 338 ---
Reduction in revenue for litigation --- (433) ---
Other -- net 156 10 313
------------ -------------- -------------
11,973 8,501 (469)
Changes in assets and liabilities, net of effects from acquisitions:
Decrease in accounts receivable 2,694 842 1,855
Increase in costs and profits in excess of billings on
uncompleted contracts (16,987) (4,661) (829)
Decrease in inventory 2,602 118 1,871
Decrease (increase) in other current assets (268) 313 340
Decrease (increase) in other assets 1,247 (280) (287)
Increase (decrease) in accounts payable and accrued expenses 17,383 (199) 160
Increase (decrease) in billings in excess of costs and estimated
profits on completed contracts 569 (927) 681
Change in reserves
for losses on uncompleted contracts (15,110) --- ---
Increase in other liabilities 2,789 230 ---
------------ -------------- -------------
Cash Provided by Operating Activities 6,892 3,937 3,322
------------ -------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net (9,966) (4,487) (2,557)
Net proceeds from sale of assets 90 96 129
Sales of investments --- 567 ---
Cash acquired in acquisitions 4,661 404 1,761
Cash paid for acquisitions (8,681) (3,000) (3,500)
------------ -------------- -------------
Net cash used in investing activities (13,896) (6,420) (4,167)
------------ -------------- -------------
CASH FLOW FROM FINANCING ACTIVITIES:
Borrowings under lines of credit 50,518 (4,626) 1,254
Payment of shareholder/directors loans (2,925) (250) (500)
Borrowings from shareholder/directors 2,050 --- 500
Proceeds from long-term debt 10,000 11,014 4,547
Proceeds from debt to finance acquisition 10,000 3,000 3,000
Repayments on long-term debt (74,388) (9,272) (6,251)
Distributions to minority interests (502) (293) (210)
Foreign currency translation adjustment (275) (17) (779)
Proceeds from the issuance of preferred stock, net 18,110 5,418 ---
Proceeds from the exercise of stock options 2,071 732 ---
Dividends paid (341) (260) ---
------------ -------------- -------------
Net cash provided by financing activities 14,318 5,446 1,561
------------ -------------- -------------
Effect of exchange rate changes on cash and cash equivalents --- --- (401)
Increase in cash and cash equivalents 7,314 2,963 315
Cash and cash equivalents at beginning of year 6,230 3,267 2,952
------------ -------------- -------------
Cash and cash equivalents at end of year $13,544 $6,230 $3,267
============ ============== =============
</TABLE>

F-10
<PAGE> 66

<TABLE>
<S> <C> <C> <C>
Supplemental disclosures of cash flow information:
Valuation of warrants $6,644 $ --- $ ---
Discount on preferred stock 7,909 --- ---
Conversion of Series B Preferred Stock 1,385 --- ---
Conversion of Series A Preferred Stock 6,818 --- ---
Issuance of common stock for acquisition 1,278 621 43
Issuance of common stock for services --- 11 ---
GEC earnout (4,595) (1,278) ---
Compensation recognized on below market options 93 338 ---
Valuation of below market options on acquisition 4,096 --- ---
Cash paid for:
Interest 4,226 1,684 1,120
Income taxes 29 --- ---

</TABLE>

F-11
<PAGE> 67

ABLE TELCOM HOLDING CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 1998

1. THE COMPANY:

Able Telcom Holding Corp. ("Able Telcom" or the "Company") develops, builds and
maintains communications systems for companies and governmental authorities. The
Company is headquartered in West Palm Beach, Florida, and operates its
subsidiaries throughout the United States, as well as in areas of South America.
The Company has three main organizational groups:

<TABLE>
<CAPTION>
ORGANIZATIONAL GROUP SERVICES PROVIDED

<S> <C>
Network Services Group Design, development, engineering, installation,
construction, operation and maintenance services for
telecommunications systems

Transportation Services Group Design, development, integration, installation,
construction, project management, maintenance and
operation of automated toll collection systems,
electronic traffic management and control systems, and
computerized manufacturing systems.

Communications Development Group Design, installation and maintenance services to foreign
(Latin America) telephone companies.
</TABLE>

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

The Company's customers include local and long distance telephone companies,
utilities, cable television operators, financial institutions, universities,
medical facilities, correctional facilities and local, state and federal
governments.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements are prepared on an accrual
basis and include the accounts of the Company and its subsidiaries. A
substantial portion of consolidated total assets, liabilities and revenues are
generated by one subsidiary of the Company, MFS Network Technologies, Inc.
(MFSNT) which was acquired during the fiscal year ended October 31, 1998.
Operations for subsidiaries acquired in purchase business combinations are
included in the consolidated results of operations since the date of
acquisition. All material intercompany accounts and transactions have been
eliminated. Certain items in the 1997 and 1996 consolidated financial statements
have been reclassified to conform to the 1998 presentation.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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

F-12
<PAGE> 68

ASSETS HELD FOR SALE

Assets held for sale represent certain assets acquired in connection with the
acquisition of MFSNT which are held for sale and are reported at the estimated
fair value less costs to sell.

PROPERTY AND EQUIPMENT

Property and equipment are recorded, at cost. Depreciation is provided for using
the straight-line method over the estimated useful lives of the assets which
generally range from five to ten years.

GOODWILL

Goodwill represents the amount by which the purchase price of businesses
acquired exceeds the fair market value of the net assets acquired under the
purchase method of accounting. Goodwill is being amortized on a straight-line
basis over 20 years.

The Company, at each balance sheet date, evaluates whether events or changes in
circumstances have occurred that indicate the carrying value of its long-lived
assets and identifiable intangibles may not be recoverable. If such events or
changes in circumstances are deemed to have occurred, the Company estimates the
future cash flows related to the assets and compares the sum of the expected
future cash flows (undiscounted and without interest charges) to the carrying
amount of the assets to determine if there has been an impairment. If an
impairment has occurred, the Company will write the assets down to their
estimated fair value. The estimated fair value of the assets is typically
calculated using the present value of estimated expected future cash flows using
a discount rate commensurate with the risks involved.

STOCK BASED COMPENSATION

The Company accounts for its stock based compensation plan under Accounting
Principle Board Opinion No. 25, ("APB No. 25")"Accounting for Stock Issued to
Employees," and relating interpretations, and follows the disclosure provisions
of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation." See Note 12.

REVENUE RECOGNITION

Construction and Installment Contracts. Revenues from construction contracts and
installation contracts are recognized as contract costs are incurred under the
percentage-of-completion method measured on the cost to cost basis. Contract
costs include all direct material and labor costs, as well as those indirect
costs relating to the contract such as indirect labor, supplies and equipment
costs. Generally, the determination of substantial contract completion is made
by the customer.

Changes in job performance, condition and the estimated profitability may result
in changes in the estimates for project costs and profits. The cumulative effect
of revised estimates are recognized in the period in which the changes are
determined. When the current estimates of total contract revenue and contract
costs indicate a loss ("loss jobs"), a provision for the entire loss on the
contract is made.

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

FOREIGN CURRENCY TRANSLATION

The financial statements of the Company's Latin American subsidiaries are
remeasured using the U.S. dollar as the functional currency. Monetary assets and
liabilities denominated in a foreign currency are remeasured into U.S. dollars

F-13
<PAGE> 69

at the year end exchange rate. Non-monetary assets and liabilities, and related
income statement amounts are remeasured at historical exchange rates.

INCOME TAXES

The Company files consolidated federal income tax returns. The Company
recognizes deferred tax assets and liabilities based on the difference between
the financial statement and tax bases of assets and liabilities using estimated
tax rates in effect for the year in which the differences are expected to
reverse.

INCOME (LOSS) PER COMMON SHARE

In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share" ("SFAS No. 128"), which specifies the computation,
presentation and disclosure requirements for earnings per share (EPS). SFAS No.
128 is effective for periods ending after December 15, 1997, and requires
retroactive restatement of EPS for all prior periods presented. The statement
replaces the previous "primary earnings per share" computation with a "basic
earnings per share" and redefines the "diluted earnings per share" computation.

The difference between the Company's weighted 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 include warrants related to the Series A Preferred Stock,
Series B Preferred Stock, stock options, warrants and phantom stock awards.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

SFAS No. 130 - In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income." This statement establishes standards for reporting and
display of comprehensive income and its components in a full set of financial
statements. This statement is effective for fiscal years beginning after
December 15, 1997. Companies are also required to report comparative totals for
comprehensive income in interim reports. The Company will report comprehensive
income commencing in fiscal year 1999.

SFAS No. 131 - In June 1997, the FASB issued SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information". This statement requires
disclosures for each segment that are similar to those required under current
standards with the addition of quarterly disclosure requirements and more
specific and detailed geographic disclosures especially by countries as opposed
to broad geographic regions. The provisions of SFAS No. 131 are effective for
fiscal years beginning after December 15, 1997. The Company will adopt this
statement in the fiscal year 1999.

SFAS No. 133 - In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and for Hedging Activities." This statement revises the
accounting for the recognition and measurement of derivatives and hedging
transactions and is effective for fiscal years beginning after June 15, 1999.
The Company does not anticipate the early adoption of this statement and has not
determined the impact it will have on the consolidated financial statements.

3. ACQUISITIONS

On July 2, 1998, the Company acquired the network construction and
transportation systems business of MFSNT from WorldCom, Inc. ("WorldCom")
pursuant to a merger agreement dated April 26, 1998 ("Plan of Merger"). On
September 9, 1998, the Company and WorldCom finalized the terms of the Plan of
Merger through the execution of an amended

F-14
<PAGE> 70

agreement. The acquisition of MFSNT was accounted for using the purchase method
of accounting at a total price of approximately $67.5 million, as described
below.

The MFSNT Acquisition agreements provide that on December 29, 2000, the Company
shall pay to WorldCom the following amounts, if positive:

(b) The difference between $3.0 million related to losses on MFSNT
projects not recorded by MFSNT as of June 30, 1998 and the amount
actually lost on such contracts through December 15, 2000;

The range of contingent consideration potentially payable to WorldCom, as
discussed above, is from $0 to $17.0 million.

In conjunction with the acquisition of MFSNT, the Company granted an option to
WorldCom (the "WorldCom Option") to purchase up to 2,000,000 shares of the
Company's common stock, at an exercise price of $7.00 per share, but subject to
a 1,817,941 share maximum limitation, and the right to receive upon satisfaction
of certain conditions phantom stock awards (the "Phantom Stock Awards")
equivalent to 600,000 shares of common stock, payable in cash, stock, or a
combination of both at the Company's option. The WorldCom Phantom Stock Awards
are exercisable only on the following three days: July 2, 1999, July 2, 2000, or
July 2, 2001. WorldCom will be entitled to receive any appreciation of the
Common Stock over a base price of $5 3/32 per share, but in no event shall the
maximum payment exceed $25.00 per share. The fair values of the WorldCom Option
and Phantom Stock Awards were estimated at the date of grant at $3.5 million and
$0.6 million, respectively, and are included as a component of the total
consideration paid for the acquisition of MFSNT.

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

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

Subsequent to October 31, 1998, the Company and WorldCom agreed to convert the
WorldCom Option to stock appreciation rights with similar terms and provisions,
except that the stock appreciation rights provide for the payment of cash to
WorldCom based upon the appreciation of the Company's common stock over a base
price of $7.00 per share. The stock appreciation rights may revert back to the
Option if certain shareholder approvals are received.

<TABLE>
<S> <C>
Contract Price $58.8
Transaction related costs 4.6
WorldCom Option 3.5
WorldCom Phantom Stock Awards .6
-----

Total Purchase Price $67.5
=====
The Company allocated the purchase price to the assets acquired and the
liabilities assumed based on the fair value of those assets and liabilities as
follows (in millions):

Cash and accounts receivable $47.0
Costs and profits in excess of billings
on uncompleted contracts 93.7
Assets held for sale 38.8
Prepaid expenses 1.0
Property 5.7
Goodwill(1) 16.5
Accounts payable (13.7)
Accruals for incurred job costs and billings in excess of
costs and profits on uncompleted contracts (56.6)
Reserve for losses on uncompleted contracts(2) (40.5)
Accrued restructuring costs(3) (2.0)
Property taxes payable (15.0)
Other accrued liabilities(4) (7.4)
------

Total allocated purchase price $67.5
======
</TABLE>
- --------

(1) Goodwill is being amortized on a straight-line basis over 20 years.

(2) As of July 2, 1998, the Company estimated the need for reserves for
contract losses with respect to MFSNT contracts of $40.5 million.
These reserves for contract losses relate to specific MFSNT loss jobs,
jobs where the current estimates of remaining contract costs exceed
remaining contract revenues. Revenues and costs of revenues recognized
in the Company's consolidated statement of operations on these
contracts subsequent to the acquisition have resulted in no net margin.
The following is a summary of the reserves for losses on uncompleted
contracts (amounts in thousands):

<TABLE>
<CAPTION>
Reserves for Uncompleted MFSNT Preacquisition Loss Contracts
------------------------------------------------------------

Amount October 31,
July 2, 1998 Utilized 1998
--------------- ------------ ----------------
<S> <C> <C> <C>
Network Services Jobs:
Alyeska $2,517 $195 $2,712
NYSTA 9,262 (4,558) 4,704
Other 1,775 (462) 1,313
------- -------- -------
13,554 (4,825) 8,729
------- -------- -------
Transportation Services Jobs:

ATCAS 12,937 (5,432) 7,505
E-470 6,098 (2,688) 3,410
Other 7,911 (2,165) 5,746
------- -------- -------
26,946 (10,285) 16,661
------- -------- -------
$40,500 $(15,110) $25,390
------- -------- -------
</TABLE>

The Company intends to complete a final assessment of the adequacy of reserves
for contract losses related to the uncompleted MFSNT preacquisition loss
contracts prior to the close of the "Allocation period" (approximately July 2,
1999), with any changes of the reserves impacting goodwill.

(3) Accrued restructuring costs related primarily to severance and benefit
costs associated with the involuntary termination of employees pursuant
to an approved restructuring plan. During the fiscal year ended October
31, 1998, approximately $1.7 million was charged against this reserve.

(4) Includes allowances for costs related to litigation and claims of $5.0
million which, according to the Plan of Merger, is payable to WorldCom
in the event specified litigation costs and claims are not paid by the
Company.

F-15
<PAGE> 71

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

The Company is entitled to use the name "MFSNT" during the 18-month transition
period commencing July 2, 1998.

PATTON MANAGEMENT CORPORATION

On April 1, 1998, the Company purchased all of the outstanding common stock of
Patton Management Corporation ("Patton") for a total purchase price of
approximately $4.0 million. The acquisition was accounted for using the purchase
method of accounting. Goodwill of approximately $2.8 million was recorded and is
being amortized on a straight-line basis over 20 years.

DIAL COMMUNICATIONS, INC.

On December 2, 1996, Able acquired all the outstanding common stock of Dial
Communications, Inc. (Dial). As consideration, the Company paid $3.0 million in
cash, issued 108,489 shares of common stock (fair value of $0.6 million) and
issued a $0.9 million promissory note with a three year term bearing interest at
Prime plus 1/2 percent. The acquisition was accounted for using the purchase
method of accounting. The results of operations are included in the consolidated
statements of operations since the date of acquisition. Goodwill of $1.5 million
was recorded in this transaction which is being amortized over 20 years using
the straight-line method.

GEORGIA ELECTRIC COMPANY

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

F-16
<PAGE> 72

The Company recorded goodwill of $1.3 million at October 31, 1997 and additional
goodwill of $4.6 million at October 31, 1998 as a result of additional purchase
price due to the former owner of GEC under the terms of the earn-out provisions
of the acquisition agreement. The goodwill is being amortized over 20 years
using the straight-line method. Corresponding amounts are reflected as accounts
payable and accrued liabilities in the consolidated balance sheets pending the
issuance of the Company's common stock.

H. C. CONNELL, INC.

On December 8, 1995, the Company, through a wholly owned subsidiary, acquired
all of the outstanding common stock of H.C. Connell, Inc. ("Connell"). As
consideration, the Company paid $0.5 million in cash and issued a $1.9 million
promissory note. The acquisition was accounted for using the purchase method of
accounting. The results of operations of Connell are included in the
consolidated statements of operations since the date of the acquisition.

Pro Forma Financial Information (Unaudited)

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

<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
--------------------------
1998 1997
---- ----
<S> <C> <C>
Revenues $388,905 $481,707
Net loss (44,497) (26,796)
Loss applicable to common stock (53,384) (37,031)
Loss applicable to common stock per share (5.39) (4.35)
</TABLE>

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

4. ASSUMPTION OF COMSAT CONTRACTS:

On February 25, 1998, GEC assumed obligations to complete 12 contracts (the
"COMSAT Contracts") with the Texas Department of Transportation from CRSI
Acquisition, Inc., a subsidiary of COMSAT Corporation ("COMSAT"). The COMSAT
Contracts are 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.

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

During the fiscal year ended October 31, 1998, the Company recognized revenues
and cost of revenues related to the COMSAT Contracts of $19.8 million and $10.7
million, respectively. At October 31, 1998, seven of the COMSAT Contracts were
substantially complete. Billings on the COMSAT contracts include approved
change order revenues associated with these contracts but not anticipated when
GEC assumed such contracts. 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.

5. UNCOMPLETED CONTRACTS:

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

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Costs incurred on uncompleted contracts $116,073 $43,237
Earnings recognized on uncompleted contracts 29,086 7,361
Total -------- -------
145,159 50,598
Less: Billings to date (97,120) (45,274)
-------- --------
$48,039 $5,324
======== ========
</TABLE>

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

F-17

<PAGE> 73

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Costs and profits in excess of billings on
uncompleted contracts $105,478 $5,615
Billings in excess of costs and profits on
uncompleted contracts 6,328 291
Accruals for incurred job costs 51,111 --
Net -------- ------
$48,039 $5,324
======== ======
</TABLE>

6. ASSETS HELD FOR SALE:

NYSTA CONDUIT NETWORK

Assets held for sale include approximately $26.0 million of certain fiber optic
conduit that was constructed by MFSNT prior to the MFSNT Acquisition (the
"NYSTA Network").

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

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

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

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

o Total construction costs were estimated and accumulated in the job cost
ledgers as incurred. Costs incurred were effectively charged to cost of
construction and maintenance or left on the balance sheet as "costs and
profits in excess of billings on uncompleted contracts" based on signed
contracts from users.

o The approach treated each new contract signed as a sale of partially
completed "inventory." Some of the revenue would be recognized on signing
based on the calculated percentage complete and a proportionate part of the
"inventory" costs would be charged off. In this way, revenues from each new
contract were effectively recognized on a progress to completion basis.

o When it became apparent that total revenues to be received from sale of the
inventory, as well as profits from separate installation agreements with
the users, would be less than the costs to construct the conduit network,
an estimated loss expected to be incurred to complete the project was
accrued.

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

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

At the date of acquisition of MFSNT by the Company, negotiations were in
process with a telecommunications company for purchase of nearly all the
remaining network capacity. In purchase accounting, the Company applied a
similar conceptual "inventory" approach to the valuation of this asset. It was
estimated that the user would pay a one-time, up-front fee of $34.5 million for
the IRU's with respect to both the On-NYSTA and Off-NYSTA portions of the
network. Of that amount it was estimated that approximately $8.5 million would
be payable to NYSTA based on the revenue sharing arrangement. Consequently, the
Company allocated $26.0 million of the purchase price to this asset.

The agreement with NYSTA also provides for sharing of "profits" experienced by
MFSNT in excess of certain specified percentages of related costs with respect
to fiber and equipment installation contracts for the "On-NYSTA" system
separately entered into by MFSNT with the users.

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

Prospective Accounting for Sales of IRU's: FIN 43 broadens the definition of
real estate and will likely require that some or all elements of fiber optic
networks (e.g., right-of-way and conduit) must now be defined as real estate
and revenue recognition criteria for the sale or lease of IRU's will be
provided by SFAS No. 66, "Accounting for Sales of Real Estate." SFAS 66 is a
different accounting model and is likely to result in the deferral and
amortization of both costs and revenues related to network assets that would
have previously been accounted for as described above. Among other
requirements, SFAS 66 requires title to transfer to the buyer for up-front
revenue recognition to be appropriate. FIN 43 is effective for all sales of
real estate with property improvements or integral equipment entered into
after June 30, 1999. Consequently, none of the transactions entered into by
MFSNT prior to July 2, 1998, are subject to those provisions. However, for
transactions subsequent to June 30, 1999, the Company will be required to apply
the guidance of FIN 43.

F-18
<PAGE> 74

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

INVESTMENT IN KANAS

Assets held for sale also includes approximately $12.75 million representing an
equity interest in Kanas which was acquired in the MFSNT Acquisition, and has
been held for sale since that time. The original carrying value of the
Company's interest in Kanas, which was assigned in purchase accounting,
represents the net proceeds originally expected to be received from the sale of
Kanas stock and was based, in part, on active negotiations with potential
buyers.

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

While Kanas provided MFSNT with notice of substantial completion in December
1998, the owner of Alyeska Network has yet to give Kanas final acceptance of
the system and significant outstanding claims exist among the parties. While
MFSNT has outstanding claims against Alyeska for work it believes was outside
the scope of the contract of at least $15.8 million, no recognition has been
given to those claims in the accompanying consolidated financial statements as
resolution of those matters remain uncertain. The construction costs incurred
by MFSNT significantly exceeded the revenues recognizable under the contract
terms.

Kanas owns and is responsible for maintaining the Alyeska Network. While the
Company does not participate in the day-to-day management of Kanas, Kanas has
contracted with MFSNT to operate and maintain the Alyeska Network for 15 years.
The term of the Kanas O&M agreement began in December 1998. To date, service
contract revenues have been insufficient to cover costs of performance and are
not projected to be sufficient to do so for at least the foreseeable future.
These operating losses are being recognized as incurred.

As of October 31, 1998, the unaudited financial statements of Kanas reflected
total assets, liabilities and net deficit of $88.5 million, $88.8 million and
$0.3 million, respectively. Additionally, the unaudited financial statements
reflected net income for the year ended December 31, 1998, of $1.2 million. The
Company's proportionate share of Kanas' pre-operational gains/losses from July
2, 1998 through October 31, 1998, was insignificant. The Company has received no
dividends from Kanas.

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

During the construction of the Alyeska Network, which was completed in December
1998, Kanas was a development-stage company.

WorldCom was and continues to be the guarantor of the payment obligations of
Kanas under its credit agreement. In conjunction with the acquisition of MFSNT,
the Company has agreed to indemnify WorldCom under its guarantee. The aggregate
commitment of the lenders under the Kanas credit agreement at October 31, 1998
was approximately $77.5 million.

7. DEBT:

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

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Note payable to bank under Revolving Credit Facility, maturing on
June 20, 2001, interest payment dates and rates vary (7.69 percent at
October 31, 1998), secured by the Company's existing and future
restricted subsidiaries, excluding MFSNT $35,000 $ ---

Note payable to WorldCom maturing on December 15, 2000, interest is
payable quarterly at an annual rate of 11.5 percent 30,000 ---

Senior Subordinated Notes, annual payments of $5.0 million on January 6,
2004 and 2005, 12 percent interest per annum, in arrears, paid
semi-annually 10,000 ---

Notes payable to a bank, payable in monthly installments aggregating
approximately $47,161, interest payable monthly ranging from 2.0 to
8.75 percent secured by substantially all the assets of the Company 491 3,560

Notes payable to former owner of Dial payable in monthly installments
of principal and interest of 8.75 percent at October 31, 1998 369 669

Bank lines of credit, $6.0 million maturing on March 1, 1998, interest
payable monthly at prime (8.75 percent at October 31, 1997) secured
by substantially all the assets of the Company --- 6,000

Notes payable to banks, payable in monthly installments of principal and
interest of 8.5 percent at October 31, 1997, secured by real and
personal property of GEC --- 2,500

Mortgage note payable to a bank, payable in monthly installments of
$1,604 plus interest at prime (8.75 percent at October 31, 1997) --- 269

Notes payable to bank, payable in monthly installments of principal and
interest at prime (8.75 percent at October 31, 1997), secured by real
and personal property of Dial --- 2,876

Notes payable to banks, payable in monthly installments of principal and
interest at prime (8.75 percent at October 31, 1997), secured by
related equipment --- 385
</TABLE>

F-19
<PAGE> 75

<TABLE>
<S> <C> <C>
Notes payable to bank, payable in monthly installments of principal and
interest at prime (8.75 percent at October 31, 1997), secured by
related equipment --- 511
-------- ---------
75,860 16,770
Capital leases 1,350 524
-------- ---------
77,210 17,294
Less - Discount on Senior Subordinated Notes (1,087) ---
-------- ---------
76,123 17,294
Less - Current portion (14,438) (3,154)
-------- ---------
Long-term debt, excluding current portion $61,685 $14,140
======== =========
</TABLE>

CREDIT FACILITIES

On April 6, 1998, the Company obtained a $25.0 million three-year senior secured
revolving credit facility (the "Credit Facility") with a $2.0 million sub-limit
for the issuance of standby letter(s) of credit. The Credit Facility allowed 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 made thereunder. Interest was payable monthly in arrears on base rate
advances and at the expiration of each interest period for LIBOR advances. The
Credit Facility contained certain covenants which required, among other
conditions, that the Company maintain certain net worth, minimum fixed charge
coverage and limitations on total debt, and was secured by a perfected first
priority security interest on all tangible assets of the Company. The proceeds
of the Credit Facility were used to finance working capital requirements and for
other general corporate purposes, including acquisitions and capital
expenditures, not to exceed $15.0 million, associated with the Company's overall
strategic plan. On June 11, 1998, this amount was repaid with proceeds from the
Company's New Credit Facility defined below.

On June 11, 1998, the Company replaced the Credit Facility with a new $35.0
million three-year senior secured revolving credit facility ("New Credit
Facility") with a $5.0 million sub-limit for the issuance of standby letter(s)
of credit. The New 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 New Credit Facility
contains certain financial covenants which require, among other conditions, that
the Company maintain certain minimum ratios, including current and debt
leverage, minimum fixed charge coverage, interest coverage, as well as
limitations on total debt. The New 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 New Credit Facility was amended to
include (i) the Company's acquisition of MFSNT and the related financing of such
transaction, (ii) changes in financial covenants related thereto, and (iii)
other amendments relating to investments, pledging and intercompany matters. At
October 31, 1998 and thereafter, the Company was in violation of certain of the
covenants in the New Credit Facility which were subsequently waived through
November 1, 1999.

WORLDCOM NOTE:

In conjunction with the acquisition of MFSNT, the Company executed a $30.0
million promissory note to WorldCom bearing interest of 11.5 percent per year
(the "WorldCom Note").

The principal amount of the WorldCom Note is to be repaid in part by applying a
portion of certain fees (i) due under the WorldCom Master Services Agreement and
(ii) received by the Company in connection with the sale and installation of
certain fiber optic conduit projects. Pursuant to an agreement, the Company has
pledged all of the shares of capital stock in MFSNT to WorldCom to secure the
Company's obligations under the WorldCom Note.

F-20
<PAGE> 76

The Company has classified $13.2 million of the WorldCom Note as a current
liability based upon the estimates of the fiscal year 1999 repayments resulting
from proceeds under the WorldCom Master Services Agreement and the sale of the
fiber optic conduit.

The WorldCom Note provides for covenants of which the Company was in compliance
at October 31, 1998. Upon noncompliance or an event of default, the entire
balance of the WorldCom Note shall automatically become due and payable, subject
to certain subordination provisions. In addition, remedies available to WorldCom
include the following:

o Acquire all of the stock in MFSNT.

o Keep all principal and interest already paid under the WorldCom Note.
o Require an 18 percent annual default rate of interest.

o Cause WorldCom to apply 12 percent of the payment it owes to the
Company at the time of default under the WorldCom Master Services
Agreement to the outstanding principal and interest due under the
WorldCom Note.

In addition, if the WorldCom Note is not repaid in full by December 15, 2000, it
is anticipated that WorldCom will be able to:

o Reduce the minimum yearly and aggregate revenues under the WorldCom
Master Services Agreement.

o Refuse to give additional work under the WorldCom Master Service
Agreement while in default.

SENIOR SUBORDINATED NOTES

Effective January 6, 1998, the Company issued $10.0 million of unsecured 12
percent Senior Subordinated Notes due January 6, 2005 (the "Senior Subordinated
Notes") with detachable warrants to purchase 409,505 shares of common stock at a
price of $8.25 per share, which were valued at approximately $1.2 million
resulting in a corresponding discount applicable to the Senior Subordinated
Notes which is being amortized to interest expense over the life of such notes.
The agreement, pursuant to which the Senior Subordinated Notes were issued,
contains covenants which require, among other conditions, that the Company
maintain certain tangible net worth, minimum fixed charge coverage and
limitations on total debt and which limit the Company's ability to pay dividends
and make certain other payments, make investments and sell assets or
subsidiaries. At October 31, 1998, the Company was in violation of certain of
the covenants in the Senior Subordinated Note agreement. These notes were
purchased from the holder of these notes subsequent to October 31, 1998, which
will be accounted for as a redemption by the Company. See Note 17.

OTHER BORROWINGS

On June 1, 1997, the Company entered into a $6.0 million Line of Credit Facility
(the "Line of Credit"). The Line of Credit was due March 1, 1998 and was repaid
in 1998.

AGGREGATE MATURITIES

The aggregate maturities of long-term debt and capital leases for years
subsequent to October 31, 1998, are as follows:

<TABLE>
<S> <C>
1999 $15,047
2000 18,225
2001 36,021
2002 935
2003 872
Thereafter 21,081
------
$92,181
</TABLE>

8. COMMITMENTS AND CONTINGENCIES:

LITIGATION

F-21
<PAGE> 77

On May 21, 1998, SIRIT Technologies, Inc. ("SIRIT") filed a lawsuit in the
United States District Court for the Southern District of Florida, against the
Company and Thomas M. Davidson, who has since become a member of the Company's
Board of Directors. SIRIT asserts claims against the Company for tortuous
interference, fraudulent inducement, negligent misrepresentation and breach of
contract in connection with the Company's agreement to purchase the shares of
MFSNT and seeks injunction relief and compensatory damages in excess of $100.0
million.

On September 10, 1998, Shipping Financial Services Corp. ("SFSC") filed a
lawsuit in the United States District Court for the Southern District of Florida
against the Company, and certain of its officers. SFSC asserts claims under the
federal securities laws against the Company and four of its officers that the
defendants allegedly caused the Company to falsely represent and mislead the
public with respect to two acquisitions, COMSAT and MFSNT, and the ongoing
financial condition of the Company as a result of the acquisitions and the
related financing of those acquisitions. SFSC seeks certification as a class
action on behalf of itself and all others similarly situated and seeks
unspecified damages and attorneys' fees.

CONTRACTS

LEASED PROPERTIES

As of October 31, 1998, the Company leased office space and equipment under
various noncancelable long-term operating lease arrangements.

Rental expense for operating leases amounted to $2.4 million, $0.8 million and
$0.6 million for the fiscal years ended October 31, 1998, 1997 and 1996,
respectively.

During fiscal year 1998, the Company leased certain equipment under capitalized
lease agreements which have been included in Property and Equipment. Cost and
accumulated amortization of such assets as of October 31, 1998, totaled $3.2
million and $1.8 million, respectively.

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

<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31, CAPITAL OPERATING
LEASES LEASES

<S> <C> <C>
1999 $788 $3,177
2000 454 1,738
2001 149 1,238
2002 64 1,125
2003 -- 625
Thereafter -- 416
----- ------
Total minimum lease payments $1,455 $8,319
====== ======

Present value of net minimum lease payments $1,321
Less current installments of obligations
under capital leases 706
------
Obligations under capital leases, excluding
current installments $615
======
</TABLE>

F-22
<PAGE> 78

9. PREFERRED STOCK:

SERIES A PREFERRED

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

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

SERIES B PREFERRED

Effective June 30, 1998 (the "Closing"), the Company completed a private
offering (the "Offering") of 4,000 shares of $0.10 par value, nonvoting Series B
Convertible Preferred Stock (the "Series B Preferred Stock") which bear annual
dividends of 4 percent, and warrants to purchase 1,000,000 shares of the
Company's common stock at $19.80 per share for a period of five years from the
date of grant (the "Warrants"). Net proceeds from the Offering totaled $18.1
million. In general, the conversion amount of each share of Series B Preferred
Stock is convertible into shares of the Company's common stock commencing on
June 30, 1998, at 97 percent of the lesser of the (i) average of the low trading
prices for any three days during the twenty-two (22) trading days immediately
preceding the conversion date, or (ii) the low trading price on the day
immediately preceding the conversion date, subject to a minimum equal to 95
percent of such conversion price. The conversion amount of each share of Series
B Preferred Stock is equal to $5,000 plus any unpaid dividends thereon. Unless
waived by a holder on not less than 61 days prior written notice, no holder may
convert an amount which would result in such holders and its affiliates'
beneficial ownership exceeding 4.99 percent of the then outstanding common stock
of the Company.

The Series B Preferred Stock is not redeemable. At its maturity, the Series B
Preferred Stock will automatically convert into common stock based upon the fair
market of the Company's common stock and the conversion amount of the Series B
Preferred Stock, which is equal to $5,000 plus unpaid dividends.

Of the $18.1 million of proceeds $5.4 million was assigned to the value of the
warrants and $12.7 million was assigned as the Series B Preferred Stock. The
warrants are exercisable for a five-year period commencing June 30, 1998. In
addition, approximately $7.9 million was assigned to the beneficial conversion
privilege and has been reflected as a reduction in income available to common
stock for the fiscal year ended October 31, 1998.

As of October 31, 1998, 436 shares of the Series B Preferred Stock were
converted into 1,007,927 shares of common stock at a price of $2.17 per share.

Subsequent to October 31, 1998, 2,785 shares were acquired from the holders of
this stock by an affiliate of the Company. See Note 17.

F-23
<PAGE> 79

The Series B Preferred Stock agreements contain certain covenants including
registration rights and limitations on common stock dividends. Subsequent to
October 31, 1998, the Company was in violation of certain of the covenants
related primarily to registration rights and intends to complete the required
registration statement in the fiscal year 1999. The Series B Preferred Stock
agreements provide for mandatory redemption at amounts up to 130% of the
liquidation value under certain circumstances.

10. IMPAIRMENT OF LATIN AMERICAN OPERATIONS

During the second quarter of fiscal 1996, the Company identified circumstances
that suggested the carrying value of goodwill related to its Brazilian
telecommunications company had been impaired. These included continuing losses
from operations, consistent failure to meet budgeted operating results despite
the Company's attempts to improve performance and the Company's resulting
decision during the second quarter of 1996 to substantially curtail its
telecommunications maintenance and construction operations. As a result, the
Company estimated the expected income to be derived in future periods and the
expected undiscounted future cash flows of the Brazilian telecommunications
company. The results indicated that goodwill would not be recovered.
Accordingly, during the second quarter, the carrying value of goodwill related
to this acquisition was reduced from $447,010 to zero. This charge is included
in "Charges and transaction/translation losses related to Latin American
operations" in the Consolidated Statement of Operations for fiscal year 1996.

11. INCOME TAXES:

An analysis of the components of income (loss) before income taxes and minority
interest and the related provision (benefit) for income taxes is presented below
(in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- ----------
<S> <C> <C> <C>
Domestic $6,084 $3,304 $(3,770)
Foreign 453 573 (3,629)
---------- -------- ----------
$6,537 $3,877 $(7,399)
========== ======== ==========
Provision (benefit) for income taxes
Federal
Current $1,937 $ --- $ ---
Deferred 792 657 (969)
State
Current 751 -- ---
Deferred (75) 70 (167)
Foreign
Current --- --- ---
Deferred --- --- 245
---------- -------- ----------
Provision (benefit for income taxes) $3,405 $727 $(891)
========== ======== ==========
</TABLE>

Reconciliation of the federal statutory income tax rate to the Company's
effective income tax rate is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- ----------
<S> <C> <C> <C>
Provision (benefit) tax at federal statutory rate 34% 34% (34)%
State income tax, net 7 .2 4
Non-deductible goodwill 4 4 2
Reduction in valuation Allowance -- -- (1)
Foreign operations, net 4 (20) 22
Other items, net 3 3.8 (5)
------ ------ ------
Effective income tax rate 52% 22% (12)%
====== ====== ======
</TABLE>

F-24
<PAGE> 80

The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities are presented below:

<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
Deferred tax assets--
Reserve for bad debts $312 $135
Net operating loss carryforward --- 1,143
Foreign tax credit carryforwards --- 424
Other 747 69
-------- -------
1,059 1,771
-------- -------
Deferred tax liabilities--Property and equipment (755) (660)
Investment in foreign subsidiaries --- (129)
Other (39) ---
-------- -------
(794) (789)
-------- -------
Net deferred tax asset $265 $982
======== =======
</TABLE>

On October 31, 1997, the Company had Federal net operating loss carryforwards of
approximately $3.3 million which were fully utilized in 1998.

12. STOCK OPTIONS:

In fiscal 1996, the Company's shareholders adopted a stock option plan for the
issuance of up to 550,000 shares which included provisions for both incentive
and nonqualified stock options (the Plan) and which expires on September 19,
2005. Salaried employees are eligible to receive both incentive and nonqualified
stock options, except that employees of the Company may not receive incentive
stock options if at the date of grant they own more than ten percent (10%) of
the Company's outstanding stock, unless (i) the incentive stock options are
granted at an option price at least equal to 110 percent of the fair market
value of the Company's common stock at the date of grant, and (ii) the options
are not exercisable after five years from the date of the grant. Grants of
incentive stock options are also limited under the Plan to the extent that the
aggregate fair market value at the date of grant is exercisable for the first
time by an employee of the Company during any calendar year in an amount which
exceeds $100,000. Nonemployee directors who do not own more than five percent
(5%) of any class of the Company's outstanding stock, consultants and advisors
are eligible to receive nonqualified stock options under the Plan.

The Plan specifies that all options must be granted at a price which is equal to
or in excess of the fair market value of the Company's common stock, determined
in accordance with the Plan (the average closing price of the Company's common
stock for the ten (10) business days immediately preceding the date of grant)
and are not transferable other than at the death of the optionee. Incentive
stock options generally become exercisable over a three-year period in equal
installments beginning in the year after the date of grant, while nonqualified
stock options are exercisable, as determined by the plan administrator described
below. The Plan is currently administered by the Company's Board of Directors,
although the Plan provides that a committee of disinterested persons appointed
by the Board of Directors may also administer the Plan.

On April 24, 1998, the shareholders increased the number of shares issuable
under the Plan to 1,300,000 and made certain other amendments to the Plan which
relate primarily to the issuance of restricted stock awards.

A summary of the Company's stock option activity under the Plan, and related
information for the period from October 31, 1996, through October 31, 1998,
follows:

F-25
<PAGE> 81

NUMBER OPTION
OF PRICE
SHARES PER SHARE
------ ---------
<S> <C> <C>
Options outstanding at October 31, 1996 160,000 $5.75 - $6.875
Grants 323,500 6.00 - 7.813
Exercises (71,740) 6.00 - 6.875
Cancellations (39,320) 5.875 - 7.813
-------------------------------------
Options Outstanding at October 31, 1997 372,440 6.00 - 7.813
Grants 592.000 5.34 - 14.00
Exercises (211,935) 5.34 - 7.813
Cancellations (88,030) 6.375 - 7.813
-------------------------------------
Options Outstanding at October 31, 1998 664,475 6.20 - 14.00
=====================================
</TABLE>

In addition, stock options have been granted to certain officers prior to the
adoption of the Plan and to certain employees of the Company outside of the
Plan. During fiscal 1992, an option to purchase 260,000 shares of the Company's
common stock at $0.05 per share was granted to a director of the Company. In
addition, in fiscal 1993, an officer was granted an option to purchase 100,000
shares of common stock at $0.50 per share and a financial consultant for the
Company was granted a total of 200,000 shares at an average price of $3.38 per
option, all of which were exercised prior to October 31, 1996. During fiscal
1995, options to purchase 100,000 shares at the fair market value of $4.83 per
share were granted to an officer, pursuant to an employment agreement. During
fiscal 1996, options to purchase 40,000 were granted to an employee at an option
price of $6.44 per share, which was above the fair market value at the date of
grant ($6.00). During fiscal 1998, options to purchase 160,000 shares of the
Company's common stock were granted to members of the Company's Board of
Directors at option prices of $6.20 or $11 15/16 per share, and 150,000 options
were granted to certain employees of the Company at an option price of $14.00
per share.

A summary of the Company's stock option activity outside the Plan, and related
information for the period from October 31, 1996, through October 31, 1998,
follows:

<TABLE>
<CAPTION>
NUMBER OPTION
OF PRICE
SHARES PER SHARE
------ ---------
<S> <C> <C>
Options outstanding at October 31, 1996 300,500 $0.05 - $6.44
Grants --- ---
Exercises (190,500) 0.05 - 4.83
Cancellations --- ---
-------------------------------------
Options Outstanding at October 31, 1997 110,000 0.05 - 6.44
Grants 310,000 6.20 - 14.00
Exercises (110,000) 0.05 - 6.44
Cancellations --- ---
-------------------------------------
Options Outstanding at October 31, 1998 310,000 6.20 - 14.00
=====================================
</TABLE>

The estimated average remaining life of the stock options in the Plan and
outside the Plan is approximately 3.5 years and 6 years, respectively.

Subsequent to October 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 above
stock option grants, or 530,000 options under the Plan and 310,000 options
outside the Plan, and reissued these options at the calculated fair market value
on December 31, 1998, as well as shortened certain of the expiration dates of
the options.

F-26
<PAGE> 82

In addition, subsequent to October 31, 1998, the Board of Directors of the
Company granted an additional 162,500 stock options under the Plan and 1,050,000
options outside the Plan to employees of the Company.

Compensation expense associated with options issued at an option price less than
fair market value for the fiscal year ended October 31, 1998 totaled $0.1
million. For the fiscal years ended October 31, 1997 and 1996, the Company did
not have any compensation expense associated with stock options.

FASB issued SFAS No. 123 in 1995, which requires expanded disclosures of stock
based compensation arrangements with employees and encourages compensation cost
to be measured based on the fair value of the equity instrument. Under SFAS No.
123, companies are permitted to apply APB No. 25 which recognizes compensation
cost based on the intrinsic value of the equity instrument awarded. The Company
has elected to continue to apply APB No. 25. Under APB No. 25, to the extent the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized. The following is the pro forma effect on net income (loss) and
earnings (loss) per share as if the Company had adopted the expense recognition
requirement of SFAS No. 123:

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------
1998 1997 1996
------- -------- -------
<S> <C> <C> <C>
Proforma income (loss) applicable to common stock $(7,303) $1,121 $(5,760)
Proforma income (loss applicable to common stock per share:
Basic (0.74) .13 (0.69)

The fair value of each option was estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions for options granted in 1998 and 1997, respectively; risk-free
interest rates of 5.4 percent and 5.65 percent; dividend yield of zero percent
for each year; expected lives of two to six years and two years; and volatility
of .549-.561 and .463.

The number of vested options at the end of each reporting period is as follows:

<CAPTION>
Under Outside
the Plan the Plan
-------- ---------
<S> <C> <C>
October 31, 1996 28,060 250,500
October 31, 1997 192,400 85,000
October 31, 1998 565,157 310,000
</TABLE>

13. MAJOR CUSTOMERS/CONCENTRATION OF CREDIT RISK

In fiscal years 1997 and 1996, a significant portion of the Company's business
is derived from four major customers including a governmental agency, two
telephone companies and an industrial manufacturer. At October 31, 1997, the
Company had accounts receivable from these customers of $3.1 million or 48% of
total accounts receivable. Revenues from these customers totaled approximately
$30.9 million and $22.8 million or 36% and 50% of consolidated revenues in
fiscal years 1997 and 1996, respectively.

Approximately 50% of the Company's Latin American revenues are derived from one
customer in Venezuela. Revenues from this customer were approximately 2% of
consolidated revenues in 1997 and 4% in 1996. Accounts receivable outstanding
for this customer were $0.8 million at October 31, 1997.

During fiscal year 1998, only one customer, WorldCom, accounted for ten percent
or more of the Company's consolidated revenues. Revenues from WorldCom during
the fiscal year ended October 31, 1998 totaled approximately $30.3 million, and
receivables from WorldCom at October 31, 1998 totaled $11.8 million.

14. RELATED-PARTY TRANSACTIONS:

In conjunction with certain finders fees associated with the acquisition of
MFSNT, the Company entered into three-year, 10 percent note for $1.3 million
with a third party who subsequently became a member of the Company's Board of

F-27
<PAGE> 83

Directors. At October 31, 1998, the outstanding balance of this note was $1.2
million and is reflected in current liabilities in the accompanying consolidated
balance sheet.

At various times in the past, certain of the Company's directors have loaned the
Company money for a variety of purposes. Generally these loans are unsecured at
market rates of interest. Other than the note described above, there were no
notes to directors at October 31, 1998 and $0.9 million outstanding under such
notes at October 31, 1997.

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

15. INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION:

The Company currently operates primarily in two industry segments: network
services and transportation services. Transportation services are conducted
primarily in the United States with small projects in South America, Canada and
Asia, while telecommunication network services are conducted both in the United
States and Latin America. Revenues, income (loss) from operations, identifiable
assets, capital expenditures, and depreciation and amortization pertaining to
the industries and geographic areas in which the Company operates are presented
below (in thousands):

<TABLE>
<CAPTION>
INDUSTRY SEGMENTS 1998 1997 1996
- ----------------- ------- ------ ------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Transportation Services..................................... $84,022 $46,795 $22,661
Network Services........................................... 133,459 39,539 26,245
------- ------ ------
Total................................................... $217,481 $86,334 $48,906
======== ======= =======
Income (loss) from operations:
Transportation Services..................................... $8,220 $3,772 $(3,454)
Network Services............................................ 3,189 1,069 (2,833)
----- ----- -------
Total.................................................... $11,409 $4,841 $(6,287)
======= ====== ========
Identifiable Assets:
Transportation Services..................................... $88,340 $28,884 $25,099
Network Services............................................ 202,420 21,462 13,820
------- ------ ------
Total.................................................... $290,760 $50,346 $38,919
======== ======= =======
Capital Expenditures:
Transportation Services.................................... $3,238 $1,635 $1,275
Network Services............................................ 6,728 2,852 2,216
----- ----- -----
Total.................................................... $9,966 $4,487 $3,491
====== ====== ======
Depreciation and Amortization

Transportation Services..................................... $2,824 $1,710 $1,229
Network Services............................................ 4,776 2,822 1,521
----- ----- -----
Total.................................................... $7,600 $4,532 $2,750
====== ====== ======
</TABLE>

F-28
<PAGE> 84

<TABLE>
<CAPTION>
GEOGRAPHIC AREAS 1998 1997 1996
- ---------------- ---------- ------- ---------
<S> <C> <C> <C>
Revenues:
United States.............................................. $212,152 $82,171 $45,160
Latin America.............................................. 5,329 4,163 3,746
---------- ------- --------
Total.................................................... $217,481 $86,334 $48,906
======== ======= =======
Income (loss) from operations:
United States.............................................. $11,310 $4,824 $(2,073)
Latin America.............................................. 99 17 (4,214)
--------- -------- -------
Total................................................... $11,409 $4,841 $(6,287)
======= ====== ========
Identifiable Assets:
United States............................................... $287,569 $47,781 $36,410
Latin America.............................................. 3,191 2,565 2,509
--------- ----- -------
Total................................................... $290,760 $50,346 $38,919
======== ======= =======
</TABLE>

16. QUARTERLY FINANCIAL DATA (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA):

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
<S> <C> <C> <C> <C>

1998(1)

Revenues $22,268 $34,552 $58,305 $102,356
Operating income (loss) (1,261) 2,083 4,032 5,156
Net income (loss) (926) 868 790 1,785
Income (loss applicable to common stock) (1,080) 840 (7,185) 1,589

1997(2)

Revenues $18,326 $20,871 $21,984 $25,153
Operating income (loss) 1,142 1,785 1,024 888
Net income (loss) 505 851 932 567
Income (loss applicable to common stock) 470 337 491 33
</TABLE>

(1) The fiscal 1998 quarterly unaudited amounts have been adjusted from
amounts previously reported by the Company in their quarterly filings
with the SEC. The adjustments related to accounting errors
discovered during the fourth quarter of 1998. Their nature and effects
on the results of operations for each of the quarterly periods are
summarized below:

F-29
<PAGE> 85

<TABLE>
<CAPTION>
NET INCOME (LOSS) APPLICABLE TO
NET INCOME (LOSS) COMMON STOCK
-------------------------------------- --------------------------------
FIRST SECOND THIRD FIRST SECOND THIRD
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Amounts previously reported $(670) $1,835 $1,464 $(824) $1,792 $824
Adjustments:
Additional revenues related to errors
in calculating the percent complete
of certain MFSNT contracts --- --- 600 --- --- 600
Additional costs of revenues related to
errors in calculating the percent
complete of certain construction
contracts (300) (300) --- (300) (300) ---
Additional costs of revenues related to
errors in calculating the percentage
complete of the COMSAT Contracts --- (387) (194) --- (387) (194)
Additional depreciation expense related
to property and equipment that was in
service but not appropriately
depreciated (88) (158) (150) (88) (158) (150)
Increased general and administrative
expense related to workers'
compensation and other insurance claims --- (700) (700) --- (700) (700)
Adjustments to charges and transaction/
translation losses related to Latin
American operations (97) (97) (97) (97) (97) (97)
Additional interest expenses related to
property taxes payable --- --- (189) --- --- (189)
Additional preferred stock dividends --- --- --- --- 15 (45)
Additional beneficial conversion privilege
of preferred stock resulting from errors
in the original calculation --- --- --- --- --- (7,290)
Benefit for income taxes resulting
primarily to the aforementioned
adjustments 180 626 7 180 626 7
Other 49 49 49 49 49 49
----------------------------------------------------------------------
(256) (967) (674) (256) (952) (8,009)
----------------------------------------------------------------------
Restated amount $(926) $868 $790 $(1,080) $840 $(7,185)
----------------------------------------------------------------------
</TABLE>

The effect of the adjustments on net income (loss) per common share for each of
the three month periods ended January 31, 1998, April 30, 1998, and July 31,
1998, was to change the previously reported net income (loss) per common share
amounts of $(0.09) to $(0.12), $0.19 to $0.09 and $0.08 to $(0.72),
respectively.

(2) Certain adjustments were made in the fourth quarter of 1997 which
included a reduction in reserves associated with litigation between the
Company and former owners of TSCI of $0.2 million.

17. SUBSEQUENT EVENTS:

The following transactions were effected in February 1999 to resolve defaults
by the Company with respect to the Senior Subordinated Notes and the Series B
Preferred Stock.

WORLDCOM ADVANCE

In February 1999, WorldCom advanced the Company $32.0 million ("WorldCom
Advance") as an advance against amounts otherwise payable by WorldCom to the
Company pursuant to the WorldCom Master Services Agreement. As amended, the
WorldCom Advance bears no interest and is subordinate to the New 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.

F-30

<PAGE> 86

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

REPURCHASE OF SENIOR SUBORDINATED NOTES

In February 1999, the Company repurchased the Senior Subordinated Notes for
approximately $11.5 million using part of the proceeds from the WorldCom
Advance. The purchase of Senior Subordinated Notes resulted in an extraordinary
loss on the early extinguishment of debt of approximately $3.1 million,
recognized during the second quarter of fiscal 1999.

PURCHASE OF SERIES B PREFERRED STOCK

The WorldCom Advance was also used to purchase 2,785 shares (approximately 78%)
of the Series B Preferred Stock from the original holders for $18.9 million.
The transaction was treated as a repurchase of the shares and the related
beneficial conversion feature. The excess of the amount paid over the carrying
value of the preferred stock and the intrinsic value of the beneficial
conversion privilege was recognized as an additional loss applicable to common
stock of approximately $4.5 million during the second quarter of fiscal 1999.
The holders of the remaining Series B shares agreed to either waive all
outstanding defaults or refrain from exercising any remedies with respect to
any such defaults until May 18, 1999. During such period of time, the Company
agreed to use its best efforts to have a registration statement declared
effective.

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

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

PRO FORMA EFFECT ON SHAREHOLDERS' EQUITY

Had the above transactions occurred during the three months ended October 31,
1998, shareholders' equity at that date would have been as follows:

<TABLE>
<CAPTION>
AS REPORTED PRO FORMA
----------- ---------

<S> <C> <C>
Common stock $ 11 $ 11
Paid-in capital 35,164 36,088
Senior warrants 1,244 1,244
Series B Preferred Stock Warrants 5,400 7,294
WorldCom stock options 3,490 3,490
WorldCom phantom stock 606 606
Retained earnings (deficit) (5,698) (21,585)
-------- --------
$ 40,217 $ 27,148
======== ========
</TABLE>

F-31

<PAGE> 87

<TABLE>
<CAPTION>
ABLE TELCOM HOLDING CORP. AND SUBSIDIARIES

SCHEDULE II

Valuation and Qualifying Accounts

Years ended October 31, 1998, 1997 and 1996

Balance Charged Balance At
at to End of
Beginning Acquisitions Costs and Deductions Period
of Period Expenses
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
October 31, 1998 $686 $75 $782 $677 $866
October 31, 1997 828 --- 160 302 686
October 31, 1996 536 2 746 456 828

Restructuinrg charges
October 31, 1998 --- 2,227 --- 1,720 507
October 31, 1997 --- --- --- --- ---
October 31, 1996 --- --- --- --- ---

Reserves for litigation and claims
October 31, 1998 --- 5,000 --- 986 4,014

Reserves for losses on uncompleted
contracts --- 40,500 --- 15,110 25,390
October 31, 1998
</TABLE>

F-32