APPLIED CELLULAR TECHNOLOGY INC, 10-K, 1999-03-31

APPLIED CELLULAR TECHNOLOGY INC
10-K, 1999-03-31
TELEPHONE & TELEGRAPH APPARATUS

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As Filed with the Securities and Exchange Commission on March 31, 1999
- -------------------------------------------------------------------------------

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

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
or
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________

Commission file number: 000-26020

APPLIED CELLULAR TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)

MISSOURI 43-1641533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

400 Royal Palm Way
Suite 410
Palm Beach, Florida 33480
(561) 366-4800
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.001 par value

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. [X]

At March 22, 1999, the aggregate market value of the voting and
non-voting stock held by non-affiliates of the registrant was approximately
$87,661,000.

At March 22, 1999, 37,716,439 shares of Common Stock were outstanding.

Documents Incorporated By Reference
(1) Portions of the registrant's definitive proxy statement to be filed
within 120 days of the registrant's year-end, issued in connection with
the registrant's 1999 annual meeting of shareholders (Part III).

<PAGE>

TABLE OF CONTENTS

Item Description Page

PART I

1. Business 3
2. Properties 10
3. Legal Proceedings 11
4. Submission of Matters to a Vote of Security Holders 11

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters 12
6. Selected Financial Data 15
7. Management's Discussion and Analysis of Financial Condition 16
and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk 28
8. Financial Statements and Supplementary Data 29
9. Changes in and Disagreements With Accountants on 29
Accounting and Financial Disclosures

PART III

10. Directors and Executive Officers of the Registrant 30
11. Executive Compensation 33
12. Security Ownership of Certain Beneficial Owners and Management 34
13. Certain Relationships and Related Transactions 34

PART IV

14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 35

2
<PAGE>

PART I

ITEM 1 BUSINESS

GENERAL

Applied Cellular Technology, Inc. (with it subsidiaries, the "Company", "ACT" or
the "Registrant") is a full service communications company that provides a wide
range of products and services to the wireless, telecommunications and digital
data industry. The Company's goal is to be a single source communications
provider that businesses can turn to for integrated communications systems. To
achieve this goal, it intends to take advantage of the communication industry's
move from analog to digital and from wireline to wireless systems. ACT's
services include the construction and installation of communications
infrastructure, the installation of local and wide area networks and the
development of specialized software for business applications. ACT also provides
traditional telecommunications services such as long distance toll service,
one-number dialing and call centers. The Company currently operates in the
United States, Canada and the United Kingdom. The Company is a Missouri
corporation and was incorporated on May 11, 1993. The principal office of the
Company is located at 400 Royal Palm Way, Suite 410, Palm Beach, Florida 33480,
phone 561-366-4800.

The majority of the Company's current operations are the result of acquisitions
completed during the last three years. The Company's net operating revenues were
$207.1 million, $103.2 million and $19.9 million, respectively, in 1998, 1997
and 1996. Since January 1, 1998, the Company has completed fourteen acquisitions
of companies whose aggregate net revenues for the year ended December 31, 1998
were approximately $94.8 million, or 45.8% of the Company's total revenues for
1998. Until 1999, each of these acquisitions was managed independently and was
directed by its own management team, and had its own marketing and operations
support personnel.

The Company announced a corporate reorganization in March 1999 at which time it
named five new divisions as outlined below. Each division is managed by a
division president who reports to the Senior Vice President who in turn reports
to the President. Each division is in the process of hiring a vice president of
marketing and a financial controller. The Company believes it will attain
increased operating efficiencies through this reorganization and believes this
structure will facilitate the cross marketing of its products and services.
Refer to Note 20 to the Company's consolidated financial statements for a
description of the segments of business in which the Company operates.

Business Divisions

The Company's primary businesses, other than Inteletek and the Non-Core Business
Group, are now organized into five business divisions:

- - Telecommunications -- offers a wide range of communications services
including interconnect and computer telephony integration, flat rate
extended calling area service for commercial and residential accounts,
commercial long distance toll service, toll free service, call centers, one
number dialing, voice messaging and commercial long distance calling cards.

- - Network Infrastructure -- provides personal computer network
infrastructure for the development of local and wide area networks as well
as site analysis, configuration proposals, training and customer support
services.

3
<PAGE>

- - Internet -- is focused on developing electronic commerce sites for
businesses and providing internet access services to customers of the
Company's other divisions.

- - Communications Infrastructure -- provides specialty communications
contracting services. It is involved in the fabrication, installation, and
maintenance of microwave, cellular and digital personal communication
services (PCS) towers and the construction and installation of fiber optic,
voice/data communications and switchgear systems. The division also
provides complete installation, service and maintenance of power
distribution systems such as lighting, standby power, alarms, security,
video systems, voice/data, network infrastructure and the installation of
fiber optics within customer premises. The Communications Infrastructure
division has secured contracts and provided services for national accounts
such as Sprint, AT&T Wireless, GTE, MCI Worldcom, Wiltel and Pacific Bell.

- - Application Technology -- provides software applications for data
acquisition, asset management and decision support systems and develops
programs for portable data collection equipment, including wireless
hand-held devices. Its Flex Connect System links corporate systems to
laptops, PDA's, handheld terminals and other mobile devices via wireless or
wireline connections. It is also involved in the design, manufacture and
support of satellite communication technology including satellite modems,
data broadcast receivers and wireless global positioning systems for
commercial and military applications. In addition, the division develops
and markets peripheral enhancement software that creates a user-friendly
environment for sending faxes, email and scanning, copying and managing
documents on a desktop computer with a multi-function peripheral device.
Integration of these capabilities into a single multifunction program is
particularly advantageous to users in small offices, home offices and small
workgroup environments.

As of December 31, 1998, 1997 and 1996, revenues from these divisions together
accounted for 57.0%, 48.8% and 70.1%, respectively, of the Company's total
revenues.

Inteletek

Inteletek, Inc. provides leasing, re-marketing, parts-on-demand and consulting
services for mainframe, midrange and PC systems to industrial, commercial and
retail organizations. It utilizes e-commerce and traditional distribution
channels to market its products. Inteletek is also a parts supplier and
purchases electronic components and other scrap for de-manufacturing and
reclamation of precious materials, steel, aluminum and copper.

As of December 31, 1998, 1997 and 1996, revenues from Inteletek accounted for
29.4%, 38.2% and 10.0%, respectively, of the Company's total revenues.

The Company has announced its intention to seek a separate public listing of
Inteletek's shares but will continue to hold a significant majority interest in
Inteletek for the foreseeable future. With its recently announced
reorganization, the Company believes that Inteletek should conduct business as a
separate publicly traded entity which can yield, over time, far greater returns
to its shareholders than under the current business structure. The Company
anticipates that it will file a registration statement for the initial public
offering of Inteletek by the end of June 1999, although no assurances can be
given that such offering will in fact be completed.

4
<PAGE>

The Non-Core Business Group

This group is comprised of six individually managed companies whose businesses
are as follows:

- - CRA-TEK Company is a specialized manufacturer of custom digital and analog
industrial electric controls and components.

- - C.T. Specialists, Inc. is a distributor and manufacturers representative
company, specializing in the application and sales of controls for factory
automation, combustion and commercial heating and air conditioning (HVAC).

- - Gavin-Graham Electrical Products is a custom manufacturer of electrical
products, specializing in digital and analog panelboards, switchboards,
motor controls and general control panels. The company also provides custom
manufacturing processes such as shearing, punching, forming, welding,
grinding, painting and assembly of various component structures.

- - Ground Effects, Ltd., based in Windsor, Canada, is a certified
manufacturer and tier one supplier of standard and specialized vehicle
accessory products to the automotive industry. The company exports over 80%
of the products it produces to the United States, Mexico, South America,
the Far East and the Middle East.

- - Hopper Manufacturing Co., Inc. remanufactures and distributes automotive
parts. This primarily includes alternators, starters, water pumps,
distributors and smog pumps.

- - Innovative Vacuum Solutions, Inc. designs, installs and re-manufactures
vacuum systems used in industry.

As of December 31, 1998, 1997 and 1996, revenues from this business group
accounted for 13.6%, 13.0% and 19.3%, respectively, of the Company's total
revenues.

The Company has announced its intention to divest, in the ordinary course of
business, these non-core businesses at such time and on such terms as the board
of directors determines advisable. There can be no assurance that the Company
will divest of any or all of these businesses or as to the terms of any
divestiture transaction.

Growth Strategy

ACT's growth strategy is focused on internal expansion and growth through
acquisitions. The following are key elements of the Company's strategy:

- - Become a Single Source Communications Provider. The Company believes that
its expertise in all five areas of the communications path will enable it
to capitalize on the interest of businesses in fulfilling their
communications services needs through one supplier.

- - Leverage of Existing Customer Relationships. The Company believes there
are significant opportunities within and between each division to cross
market its services to its existing client base. The Company is in the
process of hiring a vice president of marketing for each division who will
be responsible for identifying these opportunities.

- - Profit Center Management. While ACT's corporate management team provides
overall guidance, strategic direction and administrative support, its
division presidents have responsibility for the day-to-day operations of

5
<PAGE>

their respective groups. The Company operates each business division as a
largely autonomous profit center, which is held accountable for achieving
its financial goals. ACT believes this approach to management increases its
responsiveness to changes in the marketplace and its customers'
requirements and contributes to the Company's ability to grow profitably.

- - Acquisitions. Since 1995 ACT has completed 35 acquisitions. Management
analyzes each acquisition opportunity using criteria including
profitability over a two to three year period, the strength of its balance
sheet, the strength of its customer base and the experience of its
management team. Going forward, the Company intends to make acquisitions
that fit within one of its five primary operating divisions.

Competition

Each segment of the Company's business is highly competitive, and it is expected
that competitive pressures will continue. Many of the Company's competitors have
far greater financial, technological, marketing, personnel and other resources
than the Company. The areas which the Company has identified for continued
growth and expansion are also target market segments for some of the largest and
most strongly capitalized companies in the United States, Canada and Europe.
There can be no assurance that the Company will have the financial, technical,
marketing and other resources required to compete successfully in this
environment in the future.

FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

Certain statements in this annual report, and the documents incorporated by
reference herein, constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995.
The Company intends that such forward-looking statements be subject to the safe
harbors created thereby. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: the continued ability of the Company to sustain its growth through
product development and business acquisitions; the successful completion and
integration of future acquisitions; the ability to hire and retain key
personnel; the continued development of the Company's technical, manufacturing,
sales, marketing and management capabilities; relationships with and dependence
on third-party suppliers; anticipated competition; uncertainties relating to
economic conditions where the Company operates; uncertainties relating to
government and regulatory policies; uncertainties relating to customer plans and
commitments; rapid technological developments and obsolescence in the industries
in which the Company operates and competes; potential performance issues with
suppliers and customers; governmental export and import policies; global trade
policies; worldwide political stability and economic growth; the highly
competitive environment in which the Company operates; potential entry of new,
well-capitalized competitors into the Company's markets; changes in the
Company's capital structure and cost of capital; and uncertainties inherent in
international operations and foreign currency fluctuations. The words "believe",
"expect", "anticipate", "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statement
was made.

6
<PAGE>

RISK FACTORS

In addition to the other information contained herein, the following factors
should be considered carefully in evaluating the Company and its business.

Uncertainty of Future Financial Results

While the Company has been profitable for the last three fiscal years, future
financial results are uncertain. There can be no assurance that the Company will
continue to be operated in a profitable manner. Profitability depends upon many
factors, including the success of the Company's various marketing programs, the
maintenance or reduction of expense levels and the ability of the Company to
successfully coordinate the efforts of the different segments of its business.

Future Sales of and Market for the Shares

As of December 31, 1998, there were 35,577,308 shares of Common Stock
outstanding. In addition, 3,345,140 shares of Common Stock are reserved for
issuance in exchange for the exchangeable shares of ACT-GFX Canada, Inc. and the
exchangeable shares of TigerTel Services Limited (formerly Commstar, Ltd.), both
wholly owned subsidiaries of ACT. Since January 1, 1998, the Company has issued
or reserved an aggregate of 18,634,675 shares of Common Stock, of which
14,073,937 shares of Common Stock were issued in acquisitions, 3,345,140 are
reserved for issuance of exchangeable shares, 850,000 shares of Common Stock
were issued upon the exercise of warrants, 100,000 shares of Common Stock were
sold to an officer of the Company, and 265,598 shares of Common Stock were
issued for services rendered, including services under employment agreements and
employee bonuses.

Although the Company has recently announced that it intends to limit the use of
stock in future acquisitions, and to focus on cash transactions, the Company may
effect acquisitions or contract for certain services through the issuance of
Common Stock or other equity securities of the Company, as it has typically done
in the past. In addition, the Company has agreed to certain "price protection"
provisions in acquisition agreements which may result in additional shares of
common stock being issued to selling shareholders as of the effective date of
the registration of the shares such selling shareholder previously received as
consideration from the Company. Such issuances of additional securities may be
viewed as being dilutive of the value of the Common Stock in certain
circumstances and may have an adverse impact on the market price of the Common
Stock.

Risks Associated with Acquisitions and Expansion

The Company has engaged in a continuing program of acquisitions of other
businesses which are considered to be complementary to the lines of business
carried on by the Company, and it is anticipated that such acquisitions will
continue to occur. Total assets of the Company were approximately $124 million,
$61 million, $33 million and $4 million as of December 31, 1998, 1997, 1996 and
1995, respectively. Net operating revenue was approximately $207 million, $103
million, $20 million and $2 million for the years ended December 31, 1998, 1997,
1996 and 1995, respectively. Managing these dramatic changes in the scope of the
business of the Company will present ongoing challenges to management, and there
can be no assurance that the Company's operations as currently structured, or as
affected by future acquisitions, will be successful.

7
<PAGE>

defined, expires on July 31, 1999 and there is no assurance that the Company
will be able to extend or refinance the Credit Agreement or obtain terms similar
to those now in place.

It is the Company's policy to retain existing management of acquired companies,
under the overall supervision of senior management of the Company. The success
of the operations of these subsidiaries will depend, to a great extent, on the
continued efforts of the management of the acquired companies.

The Company has entered into earnout arrangements with selling shareholders
under which they are entitled to additional consideration for their interests in
the companies they sold to ACT. Under these agreements, assuming that all
earnouts are achieved, and assuming certain levels of profitability in the
future, the Company is contingently liable for additional consideration
amounting to approximately $11 million based on achieved 1999 results,
approximately $2 million based on achieved 2000 results, and approximately $4
million based on achieved 2001 results.

The Company has entered into put options with the selling shareholders of those
companies in which the Company acquired less than a 100% interest. These options
provide for the Company to acquire the remaining portion it does not own after
periods ranging from 4 to 5 years from the dates of acquisition at amounts per
share generally equal to 10% - 20% of the average annual earnings per share of
the company before income taxes for, generally, a two-year period ending on the
effective date of the put multiplied by a multiple ranging from 4 to 5.

Dependence on Key Individuals

The future success of the Company is highly dependent upon the Company's ability
to attract and retain qualified key employees. The Company is organized with a
small senior management team, with each of its separate operations under the
day-to-day control of local managers. If the Company were to lose the services
of any members of its central management team, the overall operations of the
Company could be adversely affected, and the operations of any of the individual
facilities of the Company could be adversely affected if the services of the
local managers should be unavailable. The Company has entered into employment
contracts with key officers and employees of the Company and certain
subsidiaries. The agreements are for periods of one to ten years through June
2009. Some of the employment contracts also call for bonus arrangements based on
earnings.

In July of 1998, the Company announced that it had formed an executive search
committee to locate and interview candidates for the position of President and
Chief Operating Officer. The Company expects to fill this new position by the
end of the second quarter of 1999.

Lack of Dividends on Common Stock; Issuance of Preferred Stock

The Company does not have a history of paying dividends on its Common Stock, and
there can be no assurance that such dividends will be paid in the foreseeable
future. Under the terms of a credit agreement with a bank, the Company may
declare and pay cash dividends to its stockholders in the aggregate amount of up
to $150,000 in any calendar year. The Company intends to use any earnings which
may be generated to finance the growth of its businesses. The Board of Directors
has the right to authorize the issuance of preferred stock, without further
stockholder approval, the holders of which may have preferences as to payment of
dividends.

8
<PAGE>

Possible Volatility of Stock Price

The Company's Common Stock is quoted on the Nasdaq Stock Market(R), which stock
market has experienced and is likely to experience in the future significant
price and volume fluctuations which could adversely affect the market price of
its Common Stock without regard to the operating performance of the Company. In
addition, the Company believes that factors such as the significant changes to
the business of the Company resulting from continued acquisitions and
expansions, quarterly fluctuations in the financial results or cash flows of the
Company, shortfalls in earnings or sales below analyst expectations, changes in
the performance of other companies in the same market sectors as the Company and
the performance of the overall economy and the financial markets could cause the
price of its Common Stock to fluctuate substantially. During the 12 months
preceding the date of this Annual Report, the price per share of its Common
Stock has ranged from a high of $5 1/2 to a low of $1 9/16.

EMPLOYEES

At December 31, 1998, the Company and its subsidiaries employed approximately
1,650 employees.

BACKLOG

At December 31, 1998, the Company had a backlog of approximately $16 million,
all of which is expected to be filled in 1999.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

Federal, state, and local laws or regulations which have been enacted or adopted
regulating the discharge of materials into the environment have not had, and
under present conditions the Company does not foresee that they will have, a
material adverse effect on the capital expenditures, earnings, cash flows or the
competitive position of the Company. The Company will continue to monitor its
operations with respect to potential environmental issues, including changes in
legally mandated standards.

9
<PAGE>

ITEM 2. PROPERTIES

At December 31, 1998, the Company leased 819,019 square feet of its operating
facilities, of which 231,501 square feet is for office facilities, 257,518
square feet is for factory/warehouse use and 330,000 square feet is for
exhibition space. These leases expire at various dates through 2009. In
addition, the Company owns office and manufacturing facilities, comprising
41,000 square feet, of which 34,500 square feet is for manufacturing and 6,500
square feet is for office space.

The following table sets forth the principal locations of the Company's
properties:

<TABLE>
<CAPTION>
Square Feet

Factory/ Exhibit/
Office Warehouse Other Total
--------- --------- -------- ----------

Alaska 6,000 23,532 - 29,532
California 5,574 31,000 - 36,574
Canada 79,041 73,600 - 152,641
Florida 9,848 - - 9,848
Illionois 19,486 5,400 - 24,886
Louisiana 500 - - 500
Massachusets 3,781 10,791 - 14,572
Minnesota 2,000 9,900 - 11,900
Missouri 5,000 - - 5,000
New Hampshire 2,688 - - 2,688
New Jersey 43,247 59,370 - 102,617
New York 3,240 21,000 330,000 354,240
Pennsylavnia 18,196 4,925 - 23,121
Texas 2,750 2,500 - 5,250
United Kingdom 32,150 40,000 - 72,150
Utah 4,500 10,000 - 14,500
--------- -------- -------- ---------
238,001 292,018 330,000 860,019
========= ======== ======== =========
</TABLE>

<PAGE>

The following table sets forth the Company's properties by business divisions:

<TABLE>
<CAPTION>
Square Feet

Factory/ Exhibit/
Office Warehouse Other Total
------- --------- -------- --------
<S> <C> <C> <C> <C>

Telecommunications 106,723 10,325 - 117,048
Network Infrastructure 5,000 1,720 - 6,720
Internet 5,500 - - 5,500
Communications Infrastructure 13,974 33,532 - 47,506
Application Technology 53,947 40,000 - 93,947
Inteletek 15,390 62,200 330,000 407,590
Non-Core 30,431 144,241 - 174,672
Corporate 7,036 - - 7,036
------- ------- ------- -------
238,001 292,018 330,000 860,019
======= ======= ======= =======
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

The Company and certain subsidiaries are parties to various legal actions as
either plaintiff or defendant. In the opinion of management, these proceedings
will not have a material adverse affect on the financial position, cash flows or
overall trends in results of the Company. The estimate of the potential impact
on the Company's financial position, overall results of operations or cash flows
for these proceedings could change in the future. The Company is not subject to
any environmental or governmental proceedings.

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

No matters were submitted to a vote of security holders during the fourth
quarter of 1998.

11
<PAGE>

PART II

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

The Company's Common Stock trades on the Nasdaq Stock Market(R) under the symbol
"ACTC." The following table sets forth the high and low sale prices of the
Common Stock as reported by the Nasdaq for each of the quarters during the
Company's last two fiscal years.

High Low
1997
First Quarter........................ 5 7/8 4
Second Quarter....................... 4 3/8 2 5/8
Third Quarter ....................... 8 3/4 2 13/16
Fourth Quarter ...................... 9 3/4 3 25/32

1998
First Quarter........................ 5 1/2 4 1/32
Second Quarter....................... 4 7/8 3 1/8
Third Quarter ....................... 3 1/2 1 9/16
Fourth Quarter ...................... 5 1/2 1 17/32

Holders

As of March 22, 1999, there were 1,227 holders of record of the Company's Common
Stock.

Dividends

Holder's of the Company's Common Stock are entitled to receive such dividends as
may be declared by its Board of Directors. Other than the distribution of
warrants pursuant to the Joint Actions by Unanimous Consent of the Board of
Directors and Shareholders dated March 25, 1994, since the Company's inception,
no dividends on the Company's Common Stock have ever been paid, and the Company
does not anticipate that dividends will be paid on the Company's Common Stock in
the foreseeable future. Pursuant to certain restrictions under a Credit
Agreement dated as of August 25, 1998 with a bank, the Company may declare and
pay cash dividends to its stockholders in the aggregate amount of up to $150,000
in any calendar year. In addition, the Company may only declare or pay dividends
on the Company's Common Stock if the Company's subsidiaries, TigerTel Services
Limited (formerly Commstar Ltd.) and ACT-GFX Canada, Inc. are able to, and
simultaneously do, declare or pay an equivalent dividend on each of their
exchangeable shares. The Board of Directors has the right to authorize the
issuance of preferred stock, without further stockholder approval, the holders
of which may have preferences as to payment of dividends.

12
<PAGE>

Recent Sales of Unregistered Securities

The following table lists all unregistered securities sold by the Company in
1998. These shares were issued without registration in reliance upon the
exemption provided by Section 4(2) of the Securities Act of 1933, as amended,
and Regulation D promulgated thereunder.
<TABLE>
<CAPTION>

Number of
Issued Date Common
Name/Entity/Nature Note For Issued Shares
<S> <C> <C> <C> <C>

Alacrity Systems, Inc. 1 Acquisition January 1998 321,768
The Americom Group, Inc. 2 Acquisition June 1998 235,507
Amherst Systems 3 Assets August 1998 66,667
Advanced Telecommunications, Inc. 4 Acquisition September 1998 775,822
ATI Communications, Inc. 5 Acquisition March 1998 200,000
Aurora Electric, Inc. 6 Acquisition July 1998 1,138,039
Blue Star Electronics, Inc. 7 Acquisition August 1998 222,643
Canadian Network Services, Inc. 8 Acquisition January 1998 322,512
Commstar Limited 9 Acquisition June 1998 3,849,590
Consolidated Micro Components, Inc. 10 Acquisition July 1998 429,805
CT Specialists, Inc. 11 Acquisition August 1998 7,328
Cybertech Station, Inc. 12 Acquisition March 1998 49,847
Data Path Technologies, Inc. 13 Acquisition July 1998 403,077
The Fromehill Company dba Winward Electric, 14 Acquisition March 1998 1,816,400
Inc.
GDB Software Services, Inc. 15 Acquisition July 1998 412,308
Ground Effects Limited 16 Acquisition June 1998 1,105,708
Innovative Vacuum Solutions, Inc. 17 Acquisition July 1998 298,301
Information Products Center, Inc. 18 Acquisition March 1998 711,433
Norcom Resources, Inc. 19 Acquisition March 1998 74,667
Pizarro Re-Marketing, Inc. 19 Acquisition March 1998 42,723
Service Transportation Company 20 Acquisition April 1998 37,181
Signature Industries Limited 21 Acquisition June 1998 3,605,948
Signal Processors Limited 22 Acquisition February 1998 928,293
Teledata Concepts, Inc. 23 Acquisition June 1998 144,828
The Bay Group 24 Acquisition May 1998 218,682
Services
Warrants Exercised 25 Warrants Exercised April 1998 850,000
Services 26 Services January - December 265,598
1998
Employee Stock Sale 27 Stock Purchase May 1998 100,000
==========
Total 18,634,675
==========

<FN>
- --------------------------
1. Includes (a) 312,630 additional shares issued to the selling
shareholders and (b) 9,138 additional shares issued as finder's fees in
connection with the "price protection" provision of the Agreement of
Sale.
2. Represents shares issued to the selling shareholder to acquire such
shareholder's 80 percent interest in the company.
3. Represents shares issued to Amherst Systems to acquire customer lists
for the Company's subsidiary, Atlantic Systems, Inc.
4. Represents shares issued in connection with the "price protection"
provision of the Agreement of Sale.
5. Represents the first and second installments of shares issued to a
selling shareholder in connection with the earnout provision under the
Agreement and Plan of Merger.
6. Includes (a) 1,098,039 shares issued to selling shareholders to acquire
such shareholders' 100 percent interest in the company, and (b) 40,000
shares issued as a finder's fee.
7. Includes (a) 202,667 shares issued to the selling shareholder to
acquire such shareholder's 80 percent interest in the company, (b)
</FN>
</TABLE>

13
<PAGE>

19,394 shares issued as a finder's fee, and (c) 582 shares issued for
services in connection with the acquisition.
8. Includes (a) 7,530 shares issued to the Stage I selling shareholders to
correct the initial issuance of shares, (b) 170,683 shares issued to
the Stage II selling shareholders upon acquisition of their minority
interest in 1998, (c) 109,774 shares issued to the Stage I and Stage II
selling shareholders in connection with the "price protection"
provision of the Agreement of Sale, and (d) 34,525 shares issued as a
finder's fee.
9. Represents shares of stock reserved for issuance in exchange for
Exchangeable Shares of Commstar Limited, in connection with the
Company's acquisition of 100 percent of Commstar Limited, and
Commstar's acquisition of certain assets from Western Inbound Network,
Inc. As of December 31, 1998, 1,437,074 Exchangeable Shares had been
converted into shares of the Company's common stock.
10. Includes (a) 392,157 shares issued to the selling shareholder to
acquire such shareholder's 80 percent interest in the company, and (b)
37,648 shares issued as a finder's fee.
11. Represents additional shares issued as finder's fees in connection with
the "price protection" provision of the Agreement of Sale.
12. Includes (a) 26,444 additional shares issued to the selling shareholder
and 805 additional shares issued as finder's fees in connection with
the "price protection" provision of the Agreement of Sale, and (b)
22,598 shares issued to the selling shareholder as part of the earnout
provision in the Agreement of Sale.
13. Represents (a) 384,616 shares issued to selling shareholders to acquire
such shareholders' 100 percent interest in the company, and (b) 18,461
shares issued as a finder's fee.
14. Includes (a) 1,778,543 shares issued to the selling shareholder to
acquire such shareholder's 100 percent interest in the company, and (b)
37,857 shares issued as a finder's fee.
15. Includes (a) 384,616 shares issued to the selling shareholder to
acquire such shareholder's 80 percent interest in the company, and (b)
27,692 shares issued as a finder's fee.
16. Represents shares of stock reserved for issuance in exchange for
Exchangeable Shares of ACT-GFX Canada, Inc., in connection with the
Company's acquisition of 85 percent of Ground Effects Limited. As of
December 31, 1998, 173,084 Exchangeable Shares had been converted into
shares of the Company's common stock.
17. Represents (a) 276,079 shares issued to selling shareholders to acquire
such shareholders' 80 percent interest in the company, and (b) 22,222
shares to acquire certain assets for Innovative Vacuum Solutions.
18. Represents shares issued to the selling shareholder to acquire such
shareholder's 100 percent interest in the company.
19. Represents earnout payments under the Agreements of Sale of these
companies.
20. Includes (a) 35,000 shares issued to the selling shareholder to acquire
such shareholder's 80 percent interest in the company, and (b) 2,181
shares issued for acquisition services.
21. Includes (a) 3,571,235 shares issued to selling shareholders to acquire
such shareholders' 85 percent interest in the company, and (b) 34,713
shares issued as a finder's fee.
22. Includes (a) 915,167 shares issued to the selling shareholders, and (b)
13,126 shares issued as finder's fees in connection with the "price
protection" provision of the Agreement of Sale.
23. Includes (a) 140,138 shares issued to the selling shareholder to
acquire such shareholder's 100 percent interest in the company, and (b)
4,690 shares issued as a finder's fee.
24. Represents shares issued for investment banking services in connection
with acquisitions made by the Company in 1998.
25. Represents shares issued upon the exercise of Warrants by Great Bay
Technology, Inc. and Dominick & Dominick, Incorporated.
26. Represents shares issued for professional services or under employment
or other such agreements.
27. Represents shares sold to Marc Sherman, an officer of the Company, at
the market price on the effective date of the transaction.

14
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
(In thousands, except per share data) Year Ended December 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------
SUMMARY OF OPERATIONS

Net Operating Revenue $ 207,081 $ 103,159 $ 19,883 $ 2,336 $ 323
Cost Of Goods Sold 142,893 69,408 10,524 1,186 270
--------- --------- -------- ------- ------
Gross Profit 64,188 33,751 9,359 1,150 53
Selling, General And Administrative Expenses 55,253 28,159 8,105 981 533
--------- --------- -------- ------- ------
Operating Income 8,935 5,592 1,254 169 (480)
Interest Income 420 192 126 75 -
Interest Expense (1,653) (978) (200) (15) (2)
--------- --------- -------- ------- ------
Income From Continuing Operations Before
Provision For Income Taxes and Minority Interest 7,702 4,806 1,180 229 (482)
Provision For Income Taxes 2,588 1,769 362 - -
--------- --------- -------- ------- ------
Income Before Minority Interest 5,114 3,037 818 229 (482)
Minority Interest 424 697 132 49 -
--------- --------- -------- ------- ------
Net Income 4,690 2,340 686 180 (482)
Preferred Stock Dividends 44 72 60 - -
--------- --------- -------- ------- ------
Net Income Available To Common Stockholders $ 4,646 $ 2,268 $ 626 $ 180 $ (482)
========= ========= ======== ======= =======
Average Common Shares Outstanding 32,318 12,632 3,329 1,792 588
Average Common Shares Outstanding Assuming
Dilution 34,800 15,245 4,641 1,967 588

PER COMMON SHARE DATA

Basic Net Income 0.14 0.18 0.19 0.10 (0.82)
Diluted Net Income 0.13 0.15 0.15 0.09 (0.82)
Cash Dividends - - - - -

BALANCE SHEET DATA

Cash and Cash Equivalents $ 4,555 $ 7,657 $ 810 $ 125 $ 3
Property and Equipment 15,627 5,339 2,915 138 36
Goodwill 33,430 12,787 14,528 907 -
Total Assets 124,116 61,282 33,208 4,131 1,360
Long-Term Debt 2,838 2,199 1,386 19 9
Total Debt 27,213 7,825 5,799 352 150
Minority Interest 2,961 1,785 456 57 -
Redeemable Preferred Stock - 900 10,900 - -
Stockholders' Equity 67,560 36,285 8,252 3,052 1,128

</TABLE>

Refer to Note 2 to the Company's consolidated financial statements for a
description of the business combinations that took place in 1998 and 1997.

Refer to Note 20 to the Company's consolidated financial statements for a
description of the segments of business in which the Company operates.

15
<PAGE>

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

This discussion should be read in conjunction with the accompanying consolidated
financial statements and related notes included in this report. Certain
statements made in this report may contain forward-looking statements.

Beginning in the fourth quarter of 1998 and continuing into 1999, the Company
reorganized into seven operating segments to more effectively and efficiently
provide integrated communications products and services to a broad base of
customers. The five operating segments that represent the Company's core
competency are:

- Telecommunications - The Telecommunications division provides
telephone services and systems, computer telephony integration,
interactive voice response, call centers and voice messaging.
- Network Infrastructure - The Network Infrastructure division
provides computer systems, local area networks and application
servers.
- Internet - The Internet division provides electronic commerce,
intranet and extranet services and wide area networks.
- Communications Infrastructure - The Communications Infrastructure
division provides communications towers, fiber optics, cabling,
power distribution and communications equipment.
- Application Technology - The Application Technology division
provides global positioning systems, satellite systems, field
automation, asset management, corporate enterprise access,
decision support and voice/data technology.

Operating segments outside the Company's core competency are:

- Inteletek - The Inteletek division purchases and sells new and
used computer equipment, and provides peripherals, components,
consulting, systems integration and transportation of all types of
computer systems.
- Non-Core - The Non-Core division provides electrical components,
control panels, design engineering, manufacturing engineering,
automation systems and vacuum pumps.

16
<PAGE>

RESULTS OF OPERATIONS

The following table summarizes the Company's results of operations as a
percentage of net operating revenue for the last three years:
<TABLE>
<CAPTION>

Relationship to Net Operating Revenue
-----------------------------------------
1998 1997 1996
% % %
-------- ------- -------
<S> <C> <C> <C>

Net operating revenue 100.0 100.0 100.0
Cost of goods sold 69.0 67.3 52.9
-------- ------- -------

Gross margin 31.0 32.7 47.1
Selling, general and administrative expenses 26.7 27.3 40.8
-------- ------- -------
Operating income 4.3 5.4 6.3
Interest income 0.2 0.2 0.6
Interest expense (0.8) (0.9) (1.0)
-------- ------- -------
Income before provision for income taxes and
minority interest 3.7 4.7 5.9
Provision for income taxes 1.2 1.7 1.8
-------- ------- -------
Income before minority interest 2.5 3.0 4.1
Minority interest 0.2 0.7 0.7
-------- ------- -------
Net income 2.3 2.3 3.4
Preferred stock dividends 0.0 0.1 0.3
-------- ------- -------
Net income available to common stockholders 2.3 2.2 3.1
======== ======= =======
</TABLE>

Company Overview

Revenue

Revenue for 1998 was $207.1 million, an increase of $103.9 million, or 100.7%,
from $103.2 million in 1997. The 1997 revenue represents an increase of $83.3
million, or 418.8% over the $19.8 million reported in 1996. These significant
increases are attributable to the Company's growth of existing businesses and to
its growth through acquisition.

In 1997, the Company exited the cellular phone business, a part of its
Telecommunications division, due to increased competition from industry leaders
and changes in the marketplace. Revenue from this line of business totaled
approximately $12.6 million in 1997. After adjusting for the cellular line of
business, revenue from internal operations grew 23.9% in 1998 from 1997,
compared to 43.4% in 1997 from 1996. Revenue from external customers for each of
the operating segments was:

(In thousands) 1998 1997 1996
---------- ---------- ----------
Telecommunications $ 30,369 $ 32,208 $ 10,537
Network Infrastructure 21,282 -- --
Internet 2,901 -- --
Communications Infrastructure 43,729 8,545 --
Application Technology 19,859 9,574 3,394
Inteletek 60,877 39,445 1,993
Non-Communications 28,064 13,387 3,839
Corporate -- -- 120
---------- ---------- ---------
Consolidated $ 207,081 $ 103,159 $ 19,883
========== ========== =========

17
<PAGE>

Gross Margin

The gross margin for 1998 was $64.2 million, an increase of $30.4 million, or
90.2%, from $33.7 million in 1997. The 1997 gross margin represents an increase
of $24.4 million, or 260.6%, over the $9.4 million reported in 1996. As a
percentage of revenue, the gross margin decreased to 31.0% in 1998 from 32.7% in
1997 and 47.1% in 1996. This decrease is a result of changes within the business
mix, increased competition, and to new acquisitions with lower overall gross
margin contributions.

Selling, General and Administrative Expense

Selling, general and administrative expenses were $55.3 million in 1998, an
increase of $27.1 million, or 96.2%, from $28.2 million in 1997. The 1997
expense represents an increase of $20.1 million or 247.4% over the $8.1 million
reported in 1996. As a percentage of revenue, selling, general and
administrative expenses have decreased to 26.7% in 1998 from 27.3% in 1997 and
40.8% in 1996. This decrease as a percentage of revenue is due to economies of
scale that the Company was able to recognize as it grew larger. Contributing to
the dollar increase as a whole is the additional amortization expense associated
with goodwill from acquisitions. Total depreciation and amortization expense
included in selling general and administrative expense was $4.5 million, $1.9
million and $0.7 million in 1998, 1997 and 1996 respectively. Information on
depreciation and amortization expense by operating segment can be found in Note
20 to the Company's consolidated financial statements.

Operating Income

Operating income was $8.9 million in 1998, an increase of $3.4 million, or
59.8%, from $5.6 million in 1997. The 1997 operating income represents an
increase of $4.3 million, or 345.9% over the $1.3 million reported in 1996.
Operating income for each of the operating segments was:

(In thousands) 1998 1997 1996
----------- ---------- ---------
Telecommunications $ 852 $ 1,477 $ 896
Network Infrastructure 1,563 -- --
Internet 272 -- --
Communications Infrastructure 3,789 348 --
Application Technology 1,424 2,159 (68)
Inteletek 4,509 2,356 504
Non-Communications 1,122 626 444
Corporate (including amounts incurred
during consolidation) (4,596) (1,374) (522)
----------- ---------- ---------
Consolidated $ 8,935 $ 5,592 $ 1,254
=========== ========== =========

Interest Income and Expense

Interest income was $0.4 million in 1998, an increase of $0.2 million, or
118.8%, from $0.2 million in 1997. The 1997 interest income represents an
increase of $66,000 or 52.4% over the $0.1 million reported in 1996. Interest
income is earned primarily from short term investments and notes receivable.

Interest expense was $1.7 million in 1998, an increase of $0.7 million, or
69.0%, from $1.0 million in 1997. The 1997 expense represents an increase of
$0.8 million, or 389.0% over the $0.2 million reported in 1996. Interest expense
is principally associated with revolving credit lines and notes payable.

18
<PAGE>

Information on interest income and interest expense by operating segment can be
found in Note 20 to the Company's consolidated financial statements.

Income Taxes

The Company's effective income tax rate was 33.6%, 36.8% and 30.7% in 1998, 1997
and 1996, respectively. Changes in the effective rate primarily arise from the
effects of purchase accounting, given the Company's acquisition activities in
recent years.

Segment Overview
<TABLE>

Telecommunications

(In thousands) 1998 % 1997 % 1996 %
--------- ------ --------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>

Revenue $ 30,369 100.0 $ 32,208 100 $ 10,537 100.0
Gross profit 17,870 58.8 16,215 50.3 5,523 52.4
Selling, general and administrative 17,018 56.0 14,738 45.8 4,627 43.9
Operating income 852 2.8 1,477 4.6 896 8.5
</TABLE>

In 1997, the Company exited the cellular phone business due to increased
competition from industry leaders and changes in the marketplace. Revenue and
operating income from this line of business totaled approximately $12.6 million
and $0.2 million in 1997. Excluding the cellular business, revenue increased
54.7% and 86.4% in 1998 and 1997, respectively. Of those amounts, 23.7% and 3.9%
came from internal growth in 1998 and 1997, respectively.

The cost shift in 1998 from cost of sales to selling, general and administrative
expenses is due to different cost allocation methods associated with the
Canadian markets entered during 1998. The operating income decrease in 1998
primarily reflected increasing competitive pressures in the telecommunications
industry as a whole.

Network Infrastructure

(In thousands) 1998 % 1997 1996
-------- ----- ----- ----
Revenue $ 21,282 100.0 $ --- $ ---
Gross profit 3,862 18.1 --- ---
Selling, general and administrative 2,299 10.8 --- ---
Operating income 1,563 7.3 --- ---

The Network Infrastructure division
began operations during 1998.

Internet

(In thousands) 1998 % 1997 1996
-------- ----- ----- -----
Revenue $ 2,901 100.0 $ --- $ ---
Gross profit 1,200 41.4 --- ---
Selling, general and administrative 928 32.0 --- ---
Operating income 272 9.4 --- ---

The Internet division began operations
during 1998.

19
<PAGE>

Communications Infrastructure
<TABLE>

(In thousands) 1998 % 1997 % 1996 %
-------- ----- ------- ----- ----- ---
<S> <C> <C> <C> <C> <C> <C>

Revenue $ 43,729 100.0 $ 8,545 100.0 $ --- ---
Gross profit 8,887 20.3 1,274 14.9 --- ---
Selling, general and administrative 5,098 11.7 926 10.8 --- ---
Operating income 3,789 8.7 348 4.1 --- ---
</TABLE>

The Communications Infrastructure division began operations during 1997. Revenue
increased 411.8% in 1998, 109.1% of which came from growth in internal
operations. As a percentage of revenue, operating income was 8.7% and 4.1% in
1998 and 1997, respectively. This increased profitability is a result of the
division's successful move to a larger operations base. The selling, general and
administrative expenses, as a percentage of revenue, increased to 11.7% in 1998
from 10.8% in 1997 as a result of increased overhead associated with the
expansion of this divisions internal infrastructure.

Application Technology
<TABLE>
<CAPTION>

(In thousands) 1998 % 1997 % 1996 %
-------- ------ ------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>

Revenue $ 19,859 100.0 $ 9,574 100.0 $ 3,394 100.0
Gross profit 11,613 58.5 5,846 61.1 1,374 40.5
Selling, general and administrative 10,189 51.3 3,687 38.5 1,442 42.5
Operating income 1,424 7.2 2,159 22.6 (68) (2.0)
</TABLE>

The Application Technology division has grown mostly though acquisition. Revenue
increased 107.5% and 182.0% in 1998 and 1997, respectively. Due to the
competitive nature of this industry segment, gross margins declined from 61.1%
in 1997 to 58.5% in 1998 and could decline further in the future. This, combined
with increased selling, general and administrative expenses relating to
development of new products, has lowered the operating income as a percentage of
revenue.

Inteletek
<TABLE>
<CAPTION>

(In thousands) 1998 % 1997 % 1996 %
-------- ------ ------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 60,877 100.0 $ 39,445 100.0 $ 1,993 100.0
Gross profit 12,871 21.1 6,243 15.8 1,142 57.3
Selling, general and administrative 8,362 13.7 3,887 9.9 638 32.0
Operating income 4,509 7.4 2,356 6.0 504 25.3
</TABLE>

Revenue increased 54.3% and 1,880.1% in 1998 and 1997, respectively. Of those
amounts, 9.1% and 281.6% came from internal growth in 1998 and 1997,
respectively. The tremendous revenue growth in 1997 came at the expense of
margins due to the high volume, low profit businesses that were acquired in that
year. Internal growth and additional acquisitions in 1998 helped to round out
the product mix. Gross margins increased by 5.3% to 21.1% in 1998 from 15.8% in
1997. Gross margins had declined by 42.5% to 15.8% in 1997 from 57.3% in 1996 as
the business expanded into high volume but lower margin hardware sales. Selling,
general and administrative expenses, which were as high as 32.0% of revenue in
1996, reduced to 13.7% of revenue in 1998. This decline reflects the economies
of scale that have resulted from overall growth in the last two years.

20
<PAGE>

Non-Core
<TABLE>
<CAPTION>

(In thousands) 1998 % 1997 % 1996 %
-------- ------ ------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenue $ 28,064 100.0 $ 13,387 100.0 $ 3,839 100.0
Gross profit 7,885 28.1 4,173 31.2 1,384 36.1
Selling, general and administrative 6,763 24.1 3,547 26.5 940 24.5
Operating income 1,122 4.0 626 4.7 444 11.6
</TABLE>

Revenue increased 109.7% and 248.7% in 1998 and 1997, respectively. Of those
amounts, 25.4% and 60.2% came from internal growth in 1998 and 1997,
respectively. Although there has been substantial growth in the level of
business, changes in product mix and pressures from a competitive marketplace
have resulted in a gradual decline of the gross margin from 36.1% in 1996 to
28.1% in 1998, which has contributed to the decline in operating income. Margins
may continue to decline in the future. Selling, general and administrative
expenses have remained relatively steady as a percentage of revenue.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1998, cash and cash equivalents totaled $4.6 million, a
decrease of $3.1 million, or 40.5% from $7.7 million at December 31, 1997. Cash
used in operating activities totaled $2.8 million, $3.3 million and $1.4 million
in 1998, 1997 and 1996, respectively. In all three years, the cash was used
primarily to fund increases in accounts receivable, inventory and prepaid assets
and to pay down accounts payable. Accounts and unbilled receivables, net of
allowance for doubtful accounts increased by $16.4 million or 90.6% to $34.4
million in 1998 from $18.0 million in 1997. This increase was primarily
attributable to the increased volume of business in 1998 over 1997, as well as
the increases as a result of businesses acquired in 1998. As a percentage of
1998 and 1997 net operating revenue, accounts and unbilled receivable were 16.6%
and 17.5%, respectively. Inventories increased by $9.8 million or 90.0% to $20.7
million in 1998 from $10.9 million in 1997. This increase was primarily
attributable to the increased volume of business in 1998 over 1997, as well as
the increases as a result of businesses acquired in 1998. As a percentage of
1998 and 1997 cost of goods sold, inventories were 14.5% and 15.7%,
respectively. Prepaid expenses and other current assets increased by 61.2% or
$0.7 million to $2.0 million in 1998 from $1.3 million in 1997. This increase is
attributable to the overall increase in size of the Company in 1998. Accounts
payable and accrued expenses increased by $8.6 million or 59.2% to $23.1 million
in 1998 from $14.5 million in 1997. This increase was primarily attributable to
the increased volume of business in 1998 over 1997, as well as the increases as
a result of businesses acquired in 1998. As a percentage of 1998 and 1997 cost
of goods sold, accounts payable and accrued expenses were 16.1% and 20.9%,
respectively.

Investing activities used cash of $6.8 million in 1998 and provided cash of $4.2
million and $0.8 million in 1997 and 1996, respectively. In 1998, $7.4 million
was used principally to increase assets such as notes receivable, property and
equipment and other assets, while $0.5 million was received from the sale of
assets. In 1997, sources of cash primarily included $4.0 million of cash
acquired in acquisitions and $2.3 million in proceeds from the sale of assets.
These amounts were partially offset by payments of $2.2 million for property and
equipment and other assets. In 1996, $1.2 million of cash was provided by
payments received on notes receivable and proceeds from the sales of assets.
This was offset slightly by investments of $0.3 million in property and
equipment and other assets.

Cash of $6.4 million, $6.0 million and $1.4 million was provided by financing
activities in 1998, 1997 and 1996, respectively. In 1998, $13.2 million was
obtained through borrowings under notes payable and long term debt and $1.4
million was obtained through the issuance of common shares. Uses of cash in 1998
included repayments of $6.9 million on long term debt, $0.9 million for the

21
<PAGE>

redemption of preferred stock and $0.3 million for the repurchase of common
stock. In 1997, $9.4 million of cash was provided primarily though the issuance
of common stock and from long term debt proceeds. In 1997, $3.3 million of cash
was used to pay down notes payable and long term debt. In 1996, $1.6 million of
cash came from borrowings under notes payable and the issuance of common stock.
$0.2 million of cash was used mostly to pay down long term debt.

The Company has a stated objective to maximize cash flow as management believes
positive cash flow is an indication of financial strength. However, due to the
Company's significant growth rate, its investment needs are generally more
substantial than those of more mature companies with modest investment needs.
Consequently, the Company will continue, for the foreseeable future, to use cash
from operations and will continue to finance this use of cash through financing
activities such as the sale of common stock and/or bank borrowing.

In August, 1998, the Company entered into a twenty million dollar line of credit
with a bank secured by all the domestic assets of the Company (the "Credit
Agreement") at the prime lending rate or at the London Interbank Offered Rate,
as elected by the Company. In February 1999, the amount of the Credit Agreement
was increased to twenty-three million dollars. The Credit Agreement expires on
July 31, 1999 and contains standard debt covenants relating to financial
position and performance as well as restrictions on the declarations and payment
of dividends. The Company is in the process of negotiating a new credit
facility, but has not yet entered into a definitive agreement. As of March 16,
1999, the outstanding balance was approximately $15 million and the availability
was approximately $8 million.

The Company's sources of liquidity include, but are not limited to, funds from
operations, and funds available under the Credit Agreement, which the Company
anticipates extending or refinancing. The Company may be able to use additional
bank borrowings, proceeds from the sale of common and preferred shares, proceeds
from the exercise of warrants, and the raising of other forms of debt or equity
through private placement or public offerings. There can be no assurance
however, that these options will be available, or if available, on terms
favorable to the Company. The Company believes that its current cash position,
augmented by financing activities, will provide it with sufficient resources to
finance its working capital requirements for the foreseeable future. The
Company's capital requirements depend on a variety of factors, including but not
limited to, the rate of increase or decrease in its existing business base; the
success, timing, and amount of investment required to bring new products
on-line; revenue growth or decline; and potential acquisitions. The Company
believes that it has the financial resources to meet its future business
requirements.

OUTLOOK

The Company's objective is to continue to grow each of its operating segments
internally and through acquisitions, both domestically and abroad. The Company's
strategy has been, and continues to be, to invest in and acquire businesses that
complement and add to its existing business base. The Company has expanded
significantly through acquisitions in the last twelve months and continues to do
so. The Company's financial results and cash flows are substantially dependent
on not only its ability to sustain and grow existing businesses, but to continue
to grow through acquisition. The Company expects to continue to pursue its
acquisition strategy in 1999 and future years, but there can be no assurance
that management will be able to continue to find, acquire, finance and integrate
high quality companies at attractive prices.

The Company is constantly looking for ways to maximize stockholder value. As
such, it is continually seeking operational efficiencies and synergies within
operating segments as well as evaluating acquisitions of businesses and customer
bases which complement the operations of the Company. The Company has retained
the services of an investment banking firm to help evaluate strategic

22
<PAGE>

initiatives and maximize stockholder value. These strategic initiatives may
include acquisitions, raising additional funds through debt or equity offerings,
or the divestiture of non-core business units that are not critical to the
Company's long term strategy or other restructuring or rationalization of
existing operations. The Company will review all alternatives to ensure maximum
appreciation of its shareholders' investments. There can be no assurance however
that any initiatives will be found, or if found, that they will be on terms
favorable to the Company.

Forward-Looking Statements And Associated Risk

Risk Factors

In addition to the other information contained herein, the following factors
should be considered carefully in evaluating the Company and its business.

Competition

23
<PAGE>

Uncertainty of Future Financial Results

Future Sales of and Market for the Shares

Risks Associated with Acquisitions and Expansion

The Company and the businesses acquired by the Company may require substantial
additional capital, and there can be no assurance as to the availability of such
capital when needed, nor as to the terms on which such capital might be made
available to the Company. The Company's Credit Agreement expires on July 31,
1999 and there is no assurance that the Company will be able to extend or
refinance the Credit Agreement or obtain terms similar to those now in place.

24
<PAGE>

Dependence on Key Individuals

Lack of Dividends on Common Stock; Issuance of Preferred Stock

The Company does not have a history of paying dividends on its Common Stock, and
there can be no assurance that such dividends will be paid in the foreseeable
future. Under the terms of a credit agreement with a bank, the Company may
declare and pay cash dividends to its stockholders in the aggregate amount of up
to $150,000 in any calendar year. The Company intends to use any earnings which
may be generated to finance the growth of the its businesses. The Board of
Directors has the right to authorize the issuance of preferred stock, without
further stockholder approval, the holders of which may have preferences as to
payment of dividends.

Possible Volatility of Stock Price

25
<PAGE>

the business of the Company resulting from continued acquisitions and
expansions, quarterly fluctuations in the financial results or cash flows of the
Company, shortfalls in earnings or sales below analyst expectations, changes in
the performance of other companies in the same market sectors as the Company and
the performance of the overall economy and the financial markets could cause the
price of its Common Stock to fluctuate substantially. During the 12 months
preceding the date of this Annual Report, the price per share of its Common
Stock has ranged from a high of $5 1/2 to a low of $1 9/16.

YEAR 2000 COMPLIANCE

Background. Some computers, software, and other equipment include programming
code in which calendar year data is abbreviated to only two digits. As a result
of this design decision, some of these systems could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900, rather than 2000.
These problems are widely expected to increase in frequency and severity as the
year 2000 approaches, and are commonly referred to as the "Millenium Bug" or
"Year 2000 problem".

Assessment. The Year 2000 problem could affect computers, software, and other
equipment used, operated, or maintained by the Company. Accordingly, the Company
is reviewing its internal computers, software, applications and related
equipment and its systems other than information technology systems to ensure
that they will be Year 2000 compliant. The Company believes that its Year 2000
plan will be completed in all material respects prior to the anticipated Year
2000 failure dates. The Company spent approximately $200,000 in 1998 on its Year
2000 compliance plan and estimates an additional $450,000 will be spent in 1999,
most of which relates to new equipment. There can be no assurance however, that
the total costs will be limited to this amount.

Software Sold to Consumers. The Company is in the process of identifying all
potential Year 2000 problems with any of the software products it develops and
markets. However, management believes that it is not possible to determine with
complete certainty that all Year 2000 problems affecting the Company's software
products will be identified or corrected due to the complexity of these
products. In addition, these products interact with other third party vendor
products and operate on computer systems which are not under the Company's
control. For non-compliant products, the Company is providing recommendations as
to how an organization may address possible Year 2000 issues regarding that
product. Software updates are available for most, but not all, known issues.
Such information is the most currently available concerning the behavior of the
Company's products and is provided "as is" without warranty of any kind.
However, variability of definitions of "compliance" with the Year 2000 and of
different combinations of software, firmware, and hardware could likely lead to
lawsuits against the Company. The outcome of any such lawsuits and the impact on
the Company are not estimable at this time.

Internal Infrastructure. The Company believes that its major computers, software
applications, and related equipment used in connection with its internal
operations are not subject to significant Year 2000 problems, because the
computer programs used by the Company are primarily off-the-shelf, recently
developed programs from third-party vendors. The Company is in the process of
obtaining assurances from such vendors as to the Year 2000 compliance of their
products. Most vendors are reluctant to provide written assurances and, although
some vendors may make verbal assurances of Year 2000 compliance, there can be no
certainty that the systems utilized by the Company will not be affected. We have
assessed all 35 of our operating locations and have determined that 20 of the 35
locations are Year 2000 compliant. Of the remaining 15 locations, 13 are in the
process of upgrading their current systems and 2 are replacing their systems.
All internal infrastructure systems and equipment are expected to be Year 2000
compliant prior to the anticipated Year 2000 failure dates.

26
<PAGE>

Systems Other than Information Technology Systems. In addition to computers and
related systems, the operation of office and facilities equipment, such as fax
machines, photocopiers, telephone switches, security systems, elevators, and
other common devices may be affected by the Year 2000 problem. We have assessed
all 35 of our operating locations and have determined that 28 of the 35
locations are Year 2000 compliant. The remaining 7 locations are in the process
of upgrading or replacing the current systems. All non-information technology
systems and equipment are expected to be Year 2000 compliant prior to the
anticipated Year 2000 failure dates.

Suppliers. The Company has initiated communications with third party suppliers
of the major computers, software, and other equipment used, operated, or
maintained by the Company to identify and, to the extent possible, to resolve
issues involving the Year 2000 problem. However, the Company has limited or no
control over the actions of these third party suppliers. Thus, while the Company
expects that it will be able to resolve any significant Year 2000 problems with
these systems, there can be no assurance that these suppliers will resolve any
or all Year 2000 problems with these systems before the occurrence of a material
disruption to the business of the Company or any of its customers. Any failure
of these third parties to resolve Year 2000 problems with their systems in a
timely manner could have a material adverse effect on the Company's business,
financial condition, results of operations and cash flows.

Contingency Plans. At certain subsidiaries, where it feels it is necessary, the
Company is preparing contingency plans relating specifically to identified Year
2000 risks and developing cost estimates relating to these plans. Contingency
plans may include stockpiling raw and packaging materials, increasing inventory
levels, securing alternate sources of supply and other appropriate measures. We
anticipate completion of the Year 2000 contingency plans prior to the
anticipated Year 2000 failure dates. Once developed, Year 2000 contingency plans
and related cost estimates will be tested in certain respects and continually
refined as additional information becomes available.

Most Likely Consequences of Year 2000 Problems. The Company expects to identify
and resolve all Year 2000 problems that could materially adversely affect its
business operations and cash flows. However, management believes that it is not
possible to determine with complete certainty that all Year 2000 problems
affecting the Company have been identified or corrected. The number of devices
that could be affected and the interactions among these devices are simply too
numerous. In addition, one cannot accurately predict how many Year 2000
problem-related failures will occur or the severity, duration, or financial
consequences of these perhaps inevitable failures. As a result, management
expects that the Company may suffer the following consequences:

1. A significant number of operational inconveniences and inefficiencies for
the Company and its clients that may divert management's time and attention and
financial and human resources from its ordinary business activities; and

2. A lesser number of serious system failures that may require significant
efforts by the Company or its customers to prevent or alleviate material
business disruptions.

Based on the activities described above, the Company does not believe that the
Year 2000 problem will have a material adverse effect on the Company's business,
results of operations or cash flows. The estimate of the potential impact on its
financial position, overall results of operations or cash flows for the Year
2000 problem could change in the future. The discussion of the Company's
efforts, and management's expectations, relating to Year 2000 compliance are
forward-looking statements. The Company's ability to achieve Year 2000
compliance and the level of incremental costs associated therewith, could be
adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' ability to modify proprietary

27
<PAGE>

software, and unanticipated problems identified in the ongoing compliance
review.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In 1998, the Company adopted Statement of Financial Accounting Standards (FAS)
131, Disclosures about Segments of an Enterprise and Related Information. FAS
131 supersedes FAS 14, Financial Reporting for Segments of a Business
Enterprise, replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. FAS 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of FAS 131 did not affect results of operations or financial
position but did affect the disclosure of segment information (see Note 20 to
the Company's consolidated financial statements).

In 1998, the Company adopted FAS 130, Reporting Comprehensive Income, which
establishes standards for reporting and disclosure of comprehensive income and
its components. The Company's comprehensive income consists of foreign currency
translation adjustments and is reported in the consolidated statements of
stockholders' equity.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

With its Canadian and United Kingdom subsidiaries, the Company has operations
and sales in various regions of the world. Additionally, the Company may export
and import to and from other countries. The Company's operations may therefore
be subject to volatility because of currency fluctuations, inflation and changes
in political and economic conditions in these countries. Sales and expenses may
be denominated in local currencies and may be affected as currency fluctuations
affect the Company's product prices and operating costs or those of its
competitors.

The Company presently does not use any derivative financial instruments to hedge
its exposure to adverse fluctuations in interest rates, foreign exchange rates,
fluctuations in commodity prices or other market risks, nor does it invest in
speculative financial instruments.

The Company's borrowings under its Credit Agreement are either at the prime rate
or at the London Interbank Offered Rate, at the Company's election. Such rates
are subject to adjustment at any time.

28
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Consolidated financial statements of the Company at December 31, 1998 and 1997,
and for each of the three years in the period ended December 31, 1998, and the
Report of Management and the Reports of Independent Accountants thereon are
incorporated by reference from the Company's consolidated financial statements
on pages F-1 through F-31 of this annual report on Form 10-K.

QUARTERLY DATA (UNAUDITED)
(In thousands, except per share data) First Second Third Fourth Full
Year Ended December 31, Quarter Quarter Quarter Quarter Year
- ------------------------------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
1998
Net Operating Revenue $ 38,784 $ 53,680 $ 59,044 $ 55,573 $ 207,081
Gross Profit 10,486 17,456 18,949 17,297 64,188
Net Income Applicable to Common Stockholders 597 2,351 1,654 44 4,646
Basic Net Income Per Share 0.03 0.07 0.05 - 0.14
Diluted Net Income Per Share 0.02 0.07 0.05 - 0.13
-------- -------- -------- -------- ---------
1997
Net Operating Revenue $ 18,127 $ 24,743 $ 29,195 $ 31,094 $ 103,159
Gross Profit 6,048 8,309 10,369 9,025 33,751
Net Income Applicable to Common Stockholders 279 519 1,174 296 2,268
Basic Net Income Per Share 0.05 0.07 0.09 0.02 0.18
Diluted Net Income Per Share 0.04 0.06 0.08 0.01 0.15
-------- -------- -------- -------- ---------
</TABLE>

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

On October 23, 1998, the Board of Directors of the Company voted to replace
Rubin, Brown, Gornstein & Co. LLP ("RBG") with PricewaterhouseCoopers LLP
("PwC") as the Company's independent accountants for the year ending December
31, 1998.

The reports of RBG on the Company's financial statements for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements for each of
the two fiscal years ended December 31, 1997 and 1996, and in the subsequent
interim period through November 2, 1998, there were no disagreements with RBG on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of RBG, would have caused RBG to make reference to the matter in
their report.

During the two most recent fiscal years and in the subsequent interim period
through November 2, 1998, there were no reportable events as defined in
Regulation S-K Item 304(a)(1)(v).

On November 2, 1998, the Company engaged PwC as its principal accountants to
audit its consolidated financial statements for the year ending December 31,
1998. During fiscal 1996 and 1997 and in the subsequent interim period, the
Company had not consulted PwC on items which concerned the application of
accounting principles generally, or to a specific transaction or group of
transactions, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements.

The Company filed a Current Report on Form 8-K on November 4, 1998 with the
Securities and Exchange Commission to report the engagement of PwC. Attached to
that report as an exhibit was a letter from RBG addressed to the Securities and
Exchange Commission stating that they agreed with the disclosure contained in
Current Report on Form 8-K.

<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>

Name Age Position/Committees Position Held Since
- ----------------------- ------- ------------------------------------------- -------------------
<S> <C> <C> <C>

Richard J. Sullivan 59 Chairman, CEO (1,2) May 1993
Garrett A. Sullivan 64 Director, President, COO (1,3) March 1995
Daniel E. Penni 51 Director (1,2,3) March 1995
Angela M. Sullivan 39 Director (1,2) April 1996
Arthur F. Noterman 57 Director (1,3) February 1997
Constance K. Weaver 46 Director (1,3) June 1998
Andrew J. Hidalgo 42 Senior Vice President March 1999
Marc Sherman 35 Senior Vice President March 1999
Scott R. Silverman 35 Senior Vice President March 1999
Jerome C. Artigliere 45 Vice President March 1999
Gary A. Gray 46 Vice President, Chief Technology Officer April 1998
David A. Loppert 44 Vice President, Treasurer, CFO February 1997
Tabitha N. Zane 39 Vice President February 1999
- ----------------------- -----
<FN>

(1) Member of the Executive Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
</FN>
</TABLE>

Richard J. Sullivan: Mr. Sullivan was elected to the Board of Directors, and
named Chief Executive Officer, in May 1993. He is Chairman of the Executive and
Compensation Committees of the Company's Board of Directors. He was appointed
Secretary in March 1996. Mr. Sullivan is currently Chairman of Great Bay
Technology, Inc. From August 1989 to December 1992, Mr. Sullivan was Chairman of
the Board of Directors of Consolidated Convenience Systems, Inc., in
Springfield, Missouri. He has been the Managing General Partner of The Bay
Group, a merger and acquisition firm in New Hampshire since February 1985. Mr.
Sullivan was formerly Chairman and Chief Executive Officer of Manufacturing
Resources, Inc., an MRP II software company in Boston, Massachusetts and was
Chairman and CEO of Encode Technology, a "Computer-Aided Manufacturing" Company,
in Nashua, New Hampshire from February 1984 to August 1986. Mr. Sullivan is
married to Angela M. Sullivan.

Garrett A. Sullivan: Mr. Sullivan has been President of the Company since March
1995. He was elected to the Board of Directors in August 1995. He was acting
secretary of the Company from March 1995 to March 1996 and acting Chief
Financial Officer from March 1995 to February 1997. From 1993 to 1994 he was an
Executive Vice President of Envirobusiness, Inc. From 1988 to 1993, he served as
president and chief operating officer of two medium sized companies in the
electronics and chemical industries which were owned by Philips North America.
He was previously a partner in the Bay Group, a merger and acquisition firm in
New Hampshire from 1988 to 1993. From 1991 to 1998 Mr. Sullivan was President of
Granada Hospital Group, Burlington, Massachusetts. Mr. Sullivan received a
Bachelor of Arts degree from Boston University in 1960 and obtained an MBA from
Harvard University in 1962.

30
<PAGE>

Daniel E. Penni: Mr. Penni has served as a Director since March 1995. He is
currently a Senior Vice President and General Manager for Arthur J. Gallagher &
Co., an insurance agency. He has worked in many sales and administrative roles
in the insurance business since 1969. He was President of the Boston Insurance
Center, Inc., an insurance agency until 1988. Mr. Penni was founder and
President of BIC Equities, Inc., a broker/dealer registered with the NASD. Mr.
Penni graduated with a Bachelor of Sciences degree in 1969 from the School of
Management at Boston College.

Angela M. Sullivan: Ms. Sullivan has served as a Director since April 1996. From
1988 to the present, Ms. Sullivan has been a partner in the Bay Group, a private
merger and acquisition firm, President of Great Bay Technology, Inc., and
President of Spirit Saver, Inc. Ms. Sullivan received a Bachelor of Science
degree in Business Administration in 1980 from Salem State College. Ms. Sullivan
is married to Richard J. Sullivan.

Arthur F. Noterman: Mr. Noterman, a Chartered Life Underwriter, has served as a
Director since February 1997, and is Chairman of the Audit Committee. An
operator of his own insurance agency, Mr. Noterman is a registered NASD broker
affiliated with a Chicago, IL registered broker/dealer. Mr. Noterman attended
Northeastern University from 1965 to 1975 and obtained the Chartered Life
Underwriters Professional degree in 1979 from The American College, Bryn Mawr,
Pennsylvania.

Constance K. Weaver: Ms. Weaver was elected to the Board of Directors in June
1998. From 1996 to the present, Ms. Weaver has been Vice President, Investor
Relations and Financial Communications for AT& T Corporation. From 1995 through
1996 she was Senior Director, Investor Relations and Financial Communications
for Microsoft Corporation. From 1993 to 1995 she was Vice President, Investor
Relations, and from 1991 to 1993 she was Director of Investor Relations, for MCI
Communications, Inc. Ms. Weaver is a director of Primark Corporation and the
National Investor Relations Institute (NIRI). Ms. Weaver received a Bachelor of
Science degree from the University of Maryland in 1975.

Andrew J. Hidalgo: Mr. Hidalgo joined the Company as Vice President of Strategic
Relations in January 1998. In March 1999, he was appointed Senior Vice President
of the Company's primary business group with overall responsibility for the
operations of the Company's Communications Infrastructure, Network
Infrastructure, Application Technology, Telecommunications and Internet
divisions. From 1995 to 1997 he was Divisional Director of Bentley Systems, Inc.
From 1993 to 1995 he was Vice President, Sales and Marketing, of Cadkey, Inc.
Mr. Hidalgo has over twenty years of experience in a variety of sales,
marketing, operations and executive management positions with such organizations
as 3M Company, Schlumberger/MDSI and General Electric. At General Electric, he
was a member of the corporate strategic business development committee. Mr.
Hidalgo attended Fairfield University in Fairfield Connecticut where he majored
in marketing.

Marc Sherman: Mr. Sherman is President of the Company's Inteletek division. He
was appointed Vice President of the Company in April 1998 and Senior Vice
President in March 1999. Since 1994, Mr. Sherman has been President of Universal
Commodities Corporation, a company acquired by ACT in November 1996. He has over
ten years of experience in marketing, operations and executive management. Mr.
Sherman attended Rider University and majored in Business Administration.

Scott R. Silverman: Mr. Silverman joined the Company in December 1997 as Vice
President of Business Development with a focus on merger and acquisition
activity. In March 1999, he was appointed Senior Vice President, Corporate
Development and Legal Affairs. From 1995 to 1996 Mr. Silverman was Vice
President and Corporate Counsel of ATI Communications. He was appointed
President of ATI in November 1996 after ATI was acquired by the Company. Mr.
Silverman is a licensed attorney. From 1989 to 1995 he practiced law in the
Philadelphia and South New Jersey area specializing in commercial litigation and

31
<PAGE>

communications law. Mr. Silverman graduated from the University of Pennsylvania
in 1985 and Villanova University School of Law in 1988.

Jerome C. Artigliere: Mr. Artigliere joined a subsidiary of the Company as
President in December 1997, and was appointed Vice President of the Company in
April 1998. From 1996 to 1997 he was Regional Vice President at General Electric
Capital Corporation in Portsmouth, NH. Prior to that, from 1994 to 1996 he was
State Vice President at First National Bank in Portsmouth, NH, a commercial bank
subsidiary of Peoples Heritage Bank of Portland, MA. He received an
undergraduate degree in finance from Seton Hall University in 1977, and an MBA
from Fairleigh Dickinson University in 1980.

Gary A. Gray: Mr. Gray is Vice President and Chief Technology Officer of the
Company and President of an ACT operating unit. He joined the Company at its
founding in 1993 and served as its President from 1993 to 1995. From 1990 to
1992 he was Vice President for Business Development of Consolidated Convenience
Systems. Mr. Gray has spent 22 years in the development and marketing of
computer software. He is a 1974 graduate of Hope College, Holland, Michigan,
with a Bachelor of Science degree in Physics.

David A. Loppert: Mr. Loppert joined the Company as Vice President, Treasurer
and Chief Financial Officer in February 1997. From 1996 to 1997, he was Chief
Financial Officer of Bingo Brain, Inc. From 1994 to 1996, he was Chief Financial
Officer of both C.T.A. America, Inc., and Ricochet International, L.L.C. Prior
to that he was Senior Vice President, Acquisitions and Due Diligence, of
Associated Financial Corporation. Mr. Loppert started his financial career with
Price Waterhouse in 1978, in Johannesburg, South Africa, before moving to their
Los Angeles Office in 1980 where he rose to the position of Senior Manager. He
holds Bachelor degrees in both Accounting and Commerce, as well as a Higher
Diploma in Accounting, all from the University of the Witwatersrand,
Johannesburg. Mr. Loppert was designated a Chartered Accountant (South Africa)
in 1980.

Tabitha N. Zane: Ms. Zane joined the Company in February 1999 as Vice President
of Investor Relations. Previously, from 1997 to 1999, she was Director of
Investor Relations for Vanguard Cellular System, until that company was acquired
by AT&T. From 1993 to 1997, Ms. Zane served as Director of Investor Relations
for U.S. Long Distance Corp. Ms. Zane obtained a Bachelor of Arts degree,
majoring in political science, from Trinity College, Hartford, CT in 1981.

Certain of the other information required by this Item 10 will be included in
the Company's definitive proxy statement and is incorporated herein by reference
and for the executive officers' terms of office, see the terms of employment
agreements under Item 11, "Executive Compensation".

32
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

Employment Contracts and Termination of Employment and Change-In-Control
Arrangements

The Company has entered into employment agreements with its named executive
officers, as follows:

Term
--------------------------------- Base
Name Length Commencing Salary
- ---------------------- --------- ------------------ -----------
Richard J. Sullivan 5 years 1 July 1, 1998 $ 450,000 2
Garrett A. Sullivan 5 years 1 June 1, 1998 $ 165,000
Andrew J. Hidalgo 3 years May 11, 1998 $ 150,000 3
Marc Sherman 3 years November 13, 1996 $ 210,000 4
Scott R. Silverman 3 years February 1, 1999 $ 240,000 5
Jerome C. Artigliere 3 years December 16, 1997 $ 100,000 6
Gary A. Gray 3 years December __, 1998 $ 42,000 7
David A. Loppert 5 years 1 June 19, 1998 $ 150,000
Tabitha Zane 2 years February 8, 1999 $ 120,000

- ---------------------------------------------
1 - Automatically renewed for successive additional one-year terms on each
anniversary.
2 - Provides for a minimum annual bonus of $140,000.
3 - Effective as of March 9, 1999. Also contains a bonus provision if certain
targets are met.
4 - Effective as of January 1, 1999
5 - Provides for a minimum annual increase of 10% of base salary.
6 - Effective as of February 1, 1999
7 - In addition to base compensation, Mr. Gray receives a commission of 10% of
gross sales revenue of Applied Cellular Technology of Missouri, Inc.

The formal employment agreements for Richard J. Sullivan, Garrett A. Sullivan
and David A. Loppert entered into in 1998 only covered certain of the employment
terms and conditions and the rest of the employment terms remained under
negotiation until final agreement was reached on March 23, 1999. As of that date
each employment agreement for Richard J. Sullivan, Garrett A. Sullivan and David
A. Loppert was revised and restated. Such employment agreements, as revised and
restated, include certain "change of control" provisions. At the employee's
option, he may terminate his employment under the agreement at any time within
one year after such change of control. The Company shall pay to the employee a
severance payment equal to the maximum amount which would not result in such
payment being an excess parachute payment as defined in the Internal Revenue
Code which would be subject to an excise tax. However, if any other amounts
payable by the Company to the employee are subject to the parachute provisions
of the Internal Revenue Code and reducing the severance payment would eliminate
the excise tax on the severance payment and such other payments and result in a
greater net payment, the severance payment may be reduced. Additionally, upon
termination of employment for any reason other than for breach under the
agreement, Garrett Sullivan and David Loppert shall be entitled to receive from
the Company 60 equal monthly payments of 8.333% of his compensation from the
Company over the 12-month period for which his compensation was the greatest,
and Mr. Richard Sullivan shall receive 60 monthly payments of $37,500 each.
These payments are reduced by any severance payments. Mr. Richard Sullivan's
agreement provides that he may elect to receive a percentage of his salary for
each 12-month period in the Company's Common Stock. For the 12-month period
commencing July 1, 1998, Mr. Sullivan has elected to receive $200,000 of his
compensation in stock.

Additionally, the agreements for both Mr. Richard Sullivan and Mr. Garrett
Sullivan provide for certain "triggering events" which include a change in
control of the Company, the termination of Richard Sullivan's employment other
than for cause, or if Richard Sullivan ceases to hold his current positions with
the Company for any reason other than a material breach of the terms of his
employment agreement. Within ten days of the occurrence of a triggering event,
the Company shall pay, in cash or in stock, or in a combination thereof, $12.1
million and $3.5 million, respectively to Richard Sullivan and to Garrett
Sullivan. In addition, the Company shall transfer to Richard Sullivan certain
other property valued at approximately $0.5 million. The Company would also be
required to make a gross up payment that covers all federal and state income
taxes payable by Mr. Sullivan, if any, as a result of the transfer.

Certain of the other information required by this Item 11 will be included in
the Company's definitive proxy statement and is incorporated herein by
reference.

33
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this Item 12 will be included in the Company's
definitive proxy statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item 13 will be included in the Company's
definitive proxy statement and is incorporated herein by reference.

34
<PAGE>

PART IV

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

(a)(1) Financial Statements and Schedules

The consolidated financial statements listed in the accompanying index
to the consolidated financial statements as set forth under Item 8 of
this annual report on Form 10-K are filed or incorporated by reference
as part of this annual report on Form 10-K.

(a)(2) Financial statement schedules have been omitted since they are either
not required, not applicable or the information is otherwise included.

(a)(3) Exhibits

See Index to Exhibits filed as part of this annual report on Form 10-K.

(b) Reports on Form 8-K

On November 4, 1998, the Company filed a Current Report on Form 8-K
reporting the engagement of PricewaterhouseCoopers LLP as its
independent accountants.

On March 11, 1999, the Company filed Amendment No. 3 to Form 8-K
regarding the acquisition of Signature Industries Limited. In a Report
on Form 8-K filed June 26, 1998, the Company reported that, on June 8,
1998, it had purchased an 85% interest in Signature Industries Limited,
a company registered in England ("Signature"). At the time of the
filing, the Company believed it would be required to include in the
report Signature's financial statements and the Company's pro forma
financial information, and stated that this information would be filed
by amendment as soon as it was available. The Company later concluded,
however, that it was not required to include this financial
information, which was indicated in Amendment Number 2 to the Form 8-K.
In the course of preparing its financial statements for the year ended
December 31, 1998, the Company was advised that under one of the
applicable tests under Rule 3-05(b) and 11-01 of Regulation S-X, the
financial information is required to be included in the Company's Form
8-K on account of the amount of the historical operating loss incurred
by Signature. Upon discovering its previous error, the Company promptly
filed Amendment Number 3 to provide Signature's financial statements
and the Company's pro forma information.

<PAGE>

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 in the city of Palm Beach,
State of Florida, on March 29, 1999.

APPLIED CELLULAR TECHNOLOGY, INC.

By: /s/ David A. Loppert
---------------------------------------
David A. Loppert, Vice President,
Treasurer and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature Title Date

Chairman of the Board of Directors,
/S/ Richard J. Sullivan Chief Executive Officer and
- ------------------------------ Secretary (Principal Executive
(Richard J. Sullivan) Officer) March 29, 1999

/S/ Garrett A. Sullivan President and Director (Principal
- ------------------------------ Operating Officer)
(Garrett A. Sullivan) March 29, 1999

/S/ David A. Loppert Vice President, Treasurer and Chief
- ------------------------------ Financial Officer (Principal
(David A. Loppert) Accounting Officer) March 29, 1999

/S/ Angela M. Sullivan Director
- ------------------------------
(Angela M. Sullivan) March 29, 1999

/S/ Daniel E. Penni
- ------------------------------ Director
(Daniel E. Penni) March 29, 1999

/S/ Arthur F. Noterman Director
- ------------------------------
(Arthur F. Noterman) March 29, 1999

/S/ Constance K. Weaver Director
- ------------------------------
(Constance K. Weaver) March 29, 1999

36
<PAGE>

INDEX TO FINANCIAL STATEMENTS
(ITEM 14 (a))

Financial
Statements
Page

Report Of Management...................................... F-1 - 2

Reports Of Independent Accountants........................ F-3 - 4

Financial Statements

Consolidated Balance Sheets.......................... F-5

Consolidated Statements Of Operations................ F-6

Consolidated Statements Of Stockholders' Equity ..... F-7

Consolidated Statements Of Cash Flows................ F-8

Notes to Consolidated Financial Statements........... F-9 - 31

<PAGE>
Report Of Management

Management is responsible for the preparation and integrity of the Consolidated
Financial Statements appearing in our Annual Report. The financial statements
were prepared in conformity with generally accepted accounting principles
appropriate in the circumstances and, accordingly, include certain amounts based
on our best judgments and estimates. Financial information in this Annual Report
is consistent with that in the financial statements.

Management is responsible for maintaining a system of internal accounting
controls and procedures to provide reasonable assurance, at an appropriate
cost/benefit relationship, assets are safeguarded and transactions are
authorized, recorded and reported properly. The internal accounting control
system is augmented by a program of internal audits and appropriate reviews by
management, written policies and guidelines, careful selection and training of
qualified personnel and a written Code of Business Conduct adopted by the
Company's Board of Directors, applicable to all employees of the Company and its
subsidiaries. In our opinion, the Company's internal accounting controls provide
reasonable assurance that assets are safeguarded against material loss from
unauthorized use or disposition and that the financial records are reliable for
preparing financial statements and other data and for maintaining accountability
of assets.

The Audit Committee of the Company's Board of Directors, composed of a majority
of Directors who are not officers of the Company, meets with the independent
accountants, management and internal auditors periodically to discuss internal
accounting controls and auditing and financial reporting matters. The Committee
reviews with the independent accountants, the scope and results of the audit
effort. The Committee also meets periodically with the independent accountants
and the director of internal audit without management present to ensure that the
independent accountants and the director of internal audit have free access to
the Committee.

F-1
<PAGE>

Report of Management (Continued)

The independent accountants, PricewaterhouseCoopers LLP, are recommended by the
Audit Committee of the Board of Directors, selected by the Board of Directors
and ratified by the Company's stockholders. PricewaterhouseCoopers LLP is
engaged to audit the Consolidated Financial Statements of Applied Cellular
Technology, Inc. and subsidiaries and conduct such tests and related procedures
as it deems necessary in conformity with generally accepted auditing standards.
The opinion of the independent accountants, based upon their audits of the
Consolidated Financial Statements, is contained in this Annual Report.

/S/ Richard J. Sullivan
- -------------------------------------
Richard J. Sullivan
Chairman, Board of Directors and
Chief Executive Officer

/S/ Garrett A. Sullivan
- -------------------------------------
Garrett A. Sullivan
President and Chief Operating Officer

/S/ David A. Loppert
- -------------------------------------
David A. Loppert
Vice President, Treasurer and
Chief Financial Officer

February 19, 1999

F-2
<PAGE>

Report of Independent Accountants

To the Board of Directors and
Shareholders of Applied Cellular Technology, Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Applied
Cellular Technology, Inc. and its subsidiaries at December 31, 1998, and the
results of their operations and their cash flows for the year in conformity with
generally accepted accounting principles. 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
of these statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

/S/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
St. Louis, Missouri
February 19, 1999

F-3
<PAGE>

Report of Independent Accountants

Board of Directors and Stockholders
Applied Cellular Technology, Inc.

We have audited the accompanying consolidated balance sheet of Applied Cellular
Technology, Inc. and subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Applied
Cellular Technology, Inc. and subsidiaries as of December 31, 1997, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31 1997, in conformity with generally
accepted accounting principles.

/S/ Rubin, Brown, Gornstein & Co., LLP
- ---------------------------------------
Rubin, Brown, Gornstein & Co., LLP
St. Louis, Missouri
February 24, 1998

F-4

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)

Assets

December 31,
----------------------
1998 1997
------- ------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 4,555 $ 7,657
Accounts receivable and unbilled receivables
(net of allowance for doubtful accounts of
$990 in 1998 and $675 in 1997) 34,390 18,039
Inventories 20,657 10,872
Notes receivable 3,600 1,040
Prepaid expenses and other current assets 2,042 1,267
--------- --------

Total Current Assets 65,244 38,875

Property And Equipment, net 15,627 5,339

Notes Receivable 1,445 1,275

Goodwill, net 33,430 12,787

Other Assets 8,370 3,006
--------- ---------
$ 124,116 $ 61,282
========= =========

Liabilities And Stockholders' Equity

Current Liabilities
Notes payable $ 23,217 $ 4,783
Current maturities of long-term debt 1,158 843
Accounts payable and accrued expenses 23,070 14,487
Other current liabilities 3,312 --
--------- ---------
Total Current Liabilities 50,757 20,113

Long-Term Debt 2,838 2,199
--------- ---------
Total Liabilities 53,595 22,312
--------- ---------
Commitments And Contingencies

Minority Interest 2,961 1,785
--------- ---------
Redeemable Preferred Shares -- 900
--------- ---------
Stockholders' Equity
Preferred shares:
Authorized 5,000 shares in 1998 of $10 par value;
special voting, issued and outstanding 1 share
in 1998, Class B voting, issued and outstanding
1 share in 1998 -- --
Common shares:
Authorized 80,000 and 40,000 shares in 1998 and
1997, respectively, of $.001 par value;
issued 35,683 shares and outstanding 35,577
shares in 1998 and 20,672 shares issued
and outstanding in 1997 36 21
Common and preferred additional paid-in capital 60,517 33,680
Retained earnings 7,232 2,586
Treasury stock (carried at cost, 106 shares) (337) --
Accumulated other comprehensive income 112 (2)
--------- ---------
Total Stockholders' Equity 67,560 36,285
--------- ---------
$ 124,116 $ 61,282
========= =========
</TABLE>

See the accompanying notes to consolidated financial statements.

F-5
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

For The Years Ended December 31,
--------------------------------------
1998 1997 1996
--------------------------------------
<S> <C> <C> <C>

Net Operating Revenue $ 207,081 $103,159 $ 19,883

Costs Of Goods Sold 142,893 69,408 10,524
--------- -------- --------
Gross Profit 64,188 33,751 9,359

Selling, General And Administrative Expenses 55,253 28,159 8,105
--------- -------- --------
Operating Income 8,935 5,592 1,254

Interest Income 420 192 126

Interest Expense (1,653) (978) (200)
--------- -------- --------
Income Before Provision For Income
Taxes And Minority Interest 7,702 4,806 1,180

Provision For Income Taxes 2,588 1,769 362
--------- -------- --------
Income Before Minority Interest 5,114 3,037 818

Minority Interest 424 697 132
--------- -------- --------
Net Income 4,690 2,340 686
Preferred Stock Dividends 44 72 60
--------- -------- --------
Net Income Available To Common Stockholders $ 4,646 $ 2,268 $ 626
========= ======== ========
Earnings Per Common Share - Basic $ .14 $ .18 $ .19
========= ======== ========
Earnings Per Common Share - Diluted $ .13 $ .15 $ .15
========= ======== ========
Weighted Average Number Of Common
Shares Outstanding - Basic 32,318 12,632 3,329
========= ======== ========
Weighted Average Number Of Common
Shares Outstanding - Diluted 34,800 15,245 4,641
========= ======== ========

</TABLE>

See the accompanying notes to consolidated financial statements.

F-6

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY For The Years Ended
December 31, 1998, 1997 And 1996
(In thousands)

Accumulated
Other Total
Preferred Stock Common Stock Additional Retained Compre- Stock-
---------------- ------------- Paid-In Earnings Treasury hensive holders
Number Amount Number Amount Capital (Deficit) Stock Income Equity
------ ------ ------ ------ -------- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Balance - December 31, 1995 -- $ -- 2,268 $ 2 $ 3,358 $ (308) $ -- $ -- $ 3,052
Net income -- -- -- -- -- 686 -- -- 686
Issuance of common shares -- -- 483 1 132 -- -- -- 133
Issuance of common shares for
acquisitions -- -- 2,788 3 3,604 -- -- -- 3,607
Warrants redeemed for common shares -- -- 260 -- 650 -- -- -- 650
Payments received on note receivable -- -- -- -- 72 -- -- -- 72
Settlement of note receivable -- -- -- -- 112 -- -- -- 112
Preferred stock dividends paid -- -- -- -- -- (60) -- -- (60)
---- ---- ------ ---- -------- -------- ------- ----- --------
Balance - December 31, 1996 -- -- 5,799 6 7,928 318 -- -- 8,252
---- ---- ------ ---- -------- -------- ------- ----- --------

Net income -- -- -- -- -- 2,340 -- -- 2,340
Comprehensive income - foreign
currency translation -- -- -- -- -- -- -- (2) (2)
---- ---- ------ ---- -------- -------- ------- ----- --------
Total comprehensive income -- -- -- -- -- 2,340 -- (2) 2,338
Issuance of common shares -- -- 1,572 2 5,534 -- -- -- 5,536
Issuance of common shares to redeem -- --
preferred stock -- -- 1,354 1 2,499 -- -- -- 2,500
Issuance of common shares for
acquisitions -- -- 9,624 10 10,263 -- -- -- 10,273
Warrants redeemed for common shares -- -- 2,323 2 7,456 -- -- -- 7,458
Preferred stock dividends paid -- -- -- -- -- (72) -- -- (72)
---- ---- ------ ---- -------- -------- ------- ----- --------
Balance - December 31, 1997 -- -- 20,672 21 33,680 2,586 -- (2) 36,285
---- ---- ------ ---- -------- -------- ------- ----- --------
Net income -- -- -- -- -- 4,690 -- -- 4,690
Comprehensive income - foreign
currency translation -- -- -- -- -- -- -- 114 114
---- ---- ------ ---- -------- -------- ------- ----- --------
Total comprehensive income -- -- -- -- -- 4,690 -- 114 4,804
Issuance of common shares -- -- 50 -- 100 -- -- -- 100
Issuance of common shares for
acquisitions -- -- 12,511 12 18,770 -- -- -- 18,782
Issuance of preferred shares -- -- -- -- 6,020 -- -- -- 6,020
Conversion of preferred shares to
common shares -- -- 1,600 2 (2) -- -- -- --
Warrants redeemed for common shares -- -- 850 1 1,949 -- -- -- 1,950
Preferred dividends paid -- -- -- -- -- (44) -- -- (44)
Common shares repurchased -- -- (106) -- -- -- (337) -- (337)
---- ---- ------ ---- -------- -------- ------- ----- --------

Balance - December 31, 1998 -- $ -- 35,577 $ 36 $ 60,517 $ 7,232 $ (337) $ 112 $ 67,560
==== ==== ====== ==== ======== ======== ======= ===== ========

</TABLE>

See the accompanying notes to consolidated financial statements.

F-7
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

For The Years Ended December 31,
----------------------------------------
1998 1997 1996
----------------------------------------
<S> <C> <C> <C>

Cash Flows From Operating Activities
Net income $ 4,690 $ 2,340 $ 686
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,501 1,874 712
Minority interest 424 697 132
(Gain) loss on sale of assets (873) (1,679) 2
Net change in operating assets and liabilities (11,525) (6,549) (2,974)
----------- ---------- ----------
Net Cash Used In Operating Activities (2,783) (3,317) (1,442)
----------- ---------- ----------
Cash Flows From Investing Activities
(Increase) decrease in notes receivable (2,338) 122 607
Proceeds from sale of assets 507 2,296 564
Payments for property and equipment and other assets (5,068) (2,243) (318)
(Payments for) proceeds from asset and business acquisitions
(net of cash balances acquired) 57 3,983 (81)
----------- ---------- ----------
Net Cash Provided By (Used In) Investing Activities (6,842) 4,158 772
----------- ---------- ----------
Cash Flows From Financing Activities
Net amounts borrowed (paid) on notes payable 12,202 (2,847) 663
Proceeds from long-term debt 1,011 335 21
Payments for long-term debt (6,936) (494) (214)
Issuance of common shares 1,354 9,084 945
Repurchase of common stock (337) -- --
Redemption of preferred shares (900) -- --
Preferred stock dividends paid (44) (72) (60)
----------- ---------- ----------
Net Cash Provided By Financing Activities 6,350 6,006 1,355
----------- ---------- ----------
Net Increase (Decrease) In Cash (3,275) 6,847 685

Effect Of Exchange Rate Changes On Cash 173 -- --

Cash And Cash Equivalents - Beginning Of Year 7,657 810 125
----------- ---------- ----------
Cash And Cash Equivalents - End Of Year $ 4,555 $ 7,657 $ 810
========== ========= ==========

Supplemental Disclosure Of Cash Flow Information
Income taxes paid $ 2,430 $ 964 $ 3
Interest paid 1,534 1,012 162

</TABLE>

See the accompanying notes to consolidated financial statements.

F-8
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 And 1997

1. Organization And Summary Of Significant Accounting Policies

Organization

Applied Cellular Technology, Inc. and subsidiaries (the Company) is a
full service communications company that provides a wide range of
products and services to the wireless, telecommunications and digital
data industry. The Company's goal is to be a single source
communications provider to which businesses can turn for integrated
communications systems and it intends to take advantage of the
communications industry move from analog to digital and from wireline
to wireless systems. The Company's services include the construction
and installation of communications infrastructure, the installation of
local and wide area networks and the development of specialized
software for business applications. The Company also provides
traditional telecommunications services such as long distance toll
service, one-number dialing and call centers. The Company currently
operates in the United States, Canada and the United Kingdom.

Principles of Consolidation

The consolidated financial statements include the accounts of Applied
Cellular Technology, Inc. and its wholly owned and majority owned
subsidiaries. All significant intercompany accounts and transactions
have been eliminated upon consolidation.

As further discussed in Note 2, the Company acquired subsidiaries
during 1998 and 1997 all of which have been accounted for under the
purchase method of accounting.

Use of Estimates

The preparation of the financial statements requires management to make
certain estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Although these
estimates are based on the knowledge of current events and actions the
Company may undertake in the future, they may ultimately differ from
actual results.

Foreign Currencies

The Company's foreign subsidiaries use their local currency as their
functional currency. Results of operations and cash flow are translated
at average exchange rates during the period, and assets and liabilities
are translated at end of period exchange rates. Translation adjustments
resulting from this process are included in accumulated other
comprehensive income in stockholders' equity.

Transaction gains and losses that arise from exchange rate fluctuations
on transactions denominated in a currency other than the functional
currency, are included in the results of operations as incurred.

Cash And Cash Equivalents

The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.

Unbilled Receivables

Unbilled receivables consist of certain direct costs incurred in
connection with projects not yet billed.

Inventories

Inventories consist of raw materials, work in process and finished
goods. Inventory is valued at the lower of cost or market, determined
by the first-in, first-out method. The Company closely monitors and
analyzes inventory for potential obsolescence and slow-moving items
based upon the aging of the inventory and the inventory turns by
product. Inventory items designated as obsolete or slow-moving are
reduced to net realizable value.

F-9

<PAGE>

Notes To Consolidated Financial Statements (Continued)

Property And Equipment

Property and equipment are carried at cost, less accumulated
depreciation and amortization computed using straight-line and
accelerated methods. Building and leasehold improvements are
depreciated and amortized over periods ranging from 10 to 40 years and
equipment is depreciated over periods ranging from 3 to 10 years.

Goodwill And Other Intangible Assets

Goodwill and other intangible assets are stated on the cost basis and
are amortized, principally on a straight-line basis, over the estimated
future periods to be benefitted (not exceeding 20 years). Goodwill and
other intangible assets are periodically reviewed for impairment based
on expected future undiscounted cash flows to ensure that they are
appropriately valued.

Purchased Computer Software

Purchased computer software is stated at cost less accumulated
amortization. Amortization is computed over the greater of current
revenues divided by the total of expected revenues or straight-line
over the number of years of expected revenue. The straight-line life
is determined to be no more than five years.

Proprietary Software In Development

In accordance with Statement of Financial Accounting Standards No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed, the Company has capitalized certain computer
software development costs upon the establishment of technological
feasibility. Technological feasibility is considered to have occurred
upon completion of a detailed program design which has been confirmed
by documenting and tracing the detail program design to product
specifications and has been reviewed for high-risk development issues,
or to the extent a detailed program design is not pursued, upon
completion of a working model that has been confirmed by testing to be
consistent with the product design. Amortization is provided based on
the greater of the ratios that current gross revenues for a product
bear to the total of current and anticipated future gross revenues for
that product, or the straight-line method over the estimated useful
life of the product. The straight-line life is determined to be 2 to 5
years.

Revenue Recognition

For programming, consulting and software licensing services and
construction contracts, the Company recognizes revenue based on the
percent complete for fixed fee contracts, with the percent complete
being calculated as either the number of direct labor hours in the
project to date divided by the estimated total direct labor hours or
based upon the completion of specific task orders. It is the Company's
policy to record contract losses in their entirety in the period in
which such losses are foreseeable. For non fixed fee jobs, revenue is
recognized based on the actual direct labor hours in the job times the
standard billing rate and adjusted to realizable value, if necessary.
For product sales, the Company recognizes revenue upon shipment. There
are no significant post contract support obligations at the time of
revenue recognition. The Company's accounting policy regarding vendor
and post-contract support obligations is based on the terms of the
customers' contract, billable upon the occurrence of the post-sale
support. Revenue from royalties is recognized when licensed products
are shipped. Costs of goods sold are recorded as the related revenue is
recognized.

The Company does not experience significant product returns, and
therefore, management is of the opinion that no allowance for sales
returns is necessary. The Company has no obligation for warranties on
hardware sales, because the warranty is provided by the manufacturer.
The Company does not offer a warranty policy for services to customers.

F-10
<PAGE>

Notes To Consolidated Financial Statements (Continued)

Advertising Costs

The Company generally expenses production costs of print advertisements
as of the first date the advertisements take place. Advertising
expense, included in selling, general and administrative expenses, was
$0.7 million in 1998, $0.9 million in 1997, $0.5 million in 1996.

Income Taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes,
which requires the asset and liability approach for the financial
accounting and reporting for income taxes. Income taxes include U.S.
and international taxes. The Company and its U.S. subsidiaries file a
consolidated federal income tax return. Income taxes are paid by the
parent company and are allocated to each subsidiary through
intercompany charges.

Earnings Per Common And Common Share Equivalent

The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 128 (SFAS 128), Earnings Per Share, effective
December 31, 1997. SFAS 128 requires the presentation of basic and
diluted earnings per share (EPS). Basic EPS is computed by dividing
income available to common stockholders by the weighted average number
of common shares outstanding for the period. Diluted EPS is computed
giving effect to all dilutive potential common shares that were
outstanding during the period. Dilutive potential common shares consist
of incremental shares issuable upon exercise of stock options and
warrants, conversion of preferred stock outstanding and contingently
issuable shares. All prior period earnings per share amounts have been
restated to comply with SFAS 128.

New Accounting Standards

In 1998, the Company adopted Statement of Financial Accounting
Standards (FAS) 131, Disclosures about Segments of an Enterprise and
Related Information. FAS 131 supersedes FAS 14, Financial Reporting for
Segments of a Business Enterprise, replacing the "industry segment"
approach with the "management" approach. The management approach
designates the internal organization that is used by management for
making operating decisions and assessing performance as the source of
the Company's reportable segments. FAS 131 also requires disclosures
about products and services, geographic areas, and major customers. The
adoption of FAS 131 did not affect results of operations or financial
position but did affect the disclosure of segment information (see Note
20).

In 1998, the Company adopted Statement of Financial Accounting
Standards (FAS) 130, Reporting Comprehensive Income, which establishes
standards for reporting and disclosure of comprehensive income and its
components. The Company's comprehensive income consists of foreign
currency translation adjustments and is reported in the consolidated
statements of stockholders' equity.

F-11

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

2. Acquisitions

The following represents acquisitions which occurred in 1998 and 1997 (in
thousands):

<TABLE>
<CAPTION>
Common/
Date Of Percent Acquisition Preferred
Acquisition Acquired Price Shares Issued Business Description
<S> <C> <C> <C> <C> <C>

1998 Acquisitions
Information Products Center, Inc. 01/01/98 100% $ 1,297 1,104 Network Infrastructure services provider
Winward Electric 01/01/98 100% 3,606 1,773 Full service electrical and communications
systems contractor
Americom Group 04/01/98 80% 404 227 Provider of communications infrastructure
construction, maintenance, installation and
training services
Aurora Electric, Inc. 04/01/98 100% 1,897 1,098 Full service electrical and communications
system contractor
Blue Star Electronics 04/01/98 80% 431 203 Cable assembly manufacturer
Consolidated Micro Components 04/01/98 100% 698 392 Reseller of memory, processors and mass storage
devices
Data Path Technologies 04/01/98 100% 671 385 Seller of computer systems, peripherals,
components and software
GDB Software Services 04/01/98 100% 681 385 Provider of data processing consulting services
Ground Effects, Ltd. 04/01/98 85% 2,046 1,106 Manufacturer of aluminum and steel tubes
Innovative Vacuum Solutions, Inc. 04/01/98 80% 455 276 Re-manufacturer of high-end vacuum pumps
Service Transport Company 04/01/98 80% 89 35 Transporter of computer systems and electronics
Teledata Concepts, Inc. 04/01/98 100% 308 138 Internet and telecommunications services
provider
TigerTel Services, Ltd. 05/01/98 100% 6,384 3,418 Call centers, voice messaging and one number
dialing services provider
Signature Industries, Ltd. 06/01/98 85% 4,963 3,571 Manufacturer of high-grade communications and
safety devices
1997 Acquisitions
Hopper Manufacturing Co., Inc. 01/01/97 100% 287 179 Re-manufacturer and distributor of automotive
parts
Norcom Resources, Inc. 01/01/97 80% 538 359 Sales, service and support of mainframe
computers
Pizarro ReMarketing, Inc. 01/01/97 80% 356 234 Re-marketing services for the computer disc and
tape industry
MVAK Technologies, Inc. 02/01/97 100% 786 389 Re-manufacturer of vacuum pumps
Advanced Telecommunications, Inc. 05/01/97 80% 3,195 2,824 Telecommunications solutions provider
Signal Processors, Ltd. 05/01/97 80% 1,368 1,391 Manufacturer of satellite communication
technology
Cybertech Station, Inc. 07/01/97 80% 289 222 Provider of computer memory products
DLS Service Corp. 07/01/97 100% 73 58 Value added reseller of computer software
Intermatica, Inc. 07/01/97 100% 753 711 Software sales company
PPL, Ltd. 07/01/97 80% 719 504 Leasing and rental services
STC Netcom, Inc. 07/01/97 80% 1,415 1,600 Communications construction contractor
Alacrity Systems, Inc. 10/01/97 100% 1,348 935 Software developer and marketer
C.T. Specialists, Inc. 10/01/97 100% 1,027 758 Distributor of control systems
Canadian Network Services, Ltd. 10/01/97 100% 1,639 1,404 Provider of extended area calling services

- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

F-12
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

All of the above acquisitions have been accounted for using the purchase method
of accounting and, accordingly, the consolidated financial statements reflect
the results of operations of each company from the date of acquisition. The
costs of acquisitions include all payments according to the acquisition
agreements plus costs for investment banking services, legal services and
accounting services, that were direct costs of acquiring these assets. Goodwill
resulting from these acquisitions is being amortized on a straight-line basis,
over twenty years. Certain acquisition agreements include the issuance of
additional shares contingent on profits of the acquired subsidiary. Upon
issuance of these shares, the value will be recorded as additional goodwill.
The acquisitions above include contingent shares issued upon attainment of
certain profits by subsidiaries through December 31, 1998. See Note 22 for
unaudited pro forma information for the above acquisitions that occurred in
1998 and 1997.

F-13
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

3. Restructuring

Towards the end of the third quarter of 1997, the Company made a
decision to exit its retail cellular operations. During the fourth
quarter of 1997, the Company completed its exit strategy and incurred
costs related to the restructuring of these operations, including
provisions for terminations of leases and employees and writedown of
the carrying values of inventory and other assets. Costs totalling $1.7
million were included in selling, general and administrative expenses
in 1997 and no material costs are to be incurred in future periods.
All amounts were paid in 1997.

4. Inventories (In thousands)

1998 1997
<S> <C> <C>
Raw materials $ 4,437 $ 1,962
Work in process 2,349 1,085
Finished goods 15,246 8,721
-------- --------
22,032 11,768
Less: Allowance for excess and obsolescence 1,375 896
-------- --------
$ 20,657 $ 10,872
========= =========
</TABLE>

5. Notes Receivable (In thousands)

1998 1997
<S> <C> <C>

Due from purchaser of cellular assets, personally
guaranteed by company owners, bears interest at 6.5%,
$350 due 1/1/99, remaining payable in monthly
installments of $25 including interest starting July
1999 $ 1,300 $ --

Due from purchaser of interconnect service business,
unsecured, payable in two payments due through December
1999 1,350 1,350

Due from officers of subsidiaries, unsecured, bear
interest at varying interest rates, due on demand 1,594 328

Due from customer, unsecured, bears interest at the
prime rate, due on demand 226 62

</TABLE>

F-14
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

<TABLE>

Due from other, secured by maker's assets, bears
interest at 8.7% and provides for monthly payments of
principal and interest equal to 10% of the maker's net
cash revenue for each preceding month, balance due
October 2001 575 575

--------- ---------
5,045 2,315
Less: Current portion 3,600 1,040
--------- ---------
$ 1,445 $ 1,275
========= =========
</TABLE>

6. Property And Equipment (In thousands)

1998 1997
<S> <C> <C>

Land $ 755 $ 759
Building and leasehold improvements 4,097 875
Equipment 18,021 8,691
--------- ---------
22,873 10,325
Less: Accumulated depreciation and amortization 7,246 4,986
--------- ---------
$ 15,627 $ 5,339
========= =========
</TABLE>

Included above are vehicles and equipment acquired under capital lease
obligations in the amount of $1,577 and $908 at December 31, 1998 and
1997, respectively. Related accumulated depreciation amounted to $602
and $428 at December 31, 1998 and 1997, respectively.

Depreciation and amortization charged against income amounted to
$2,260, $846 and $207 for the years ended December 31, 1998, 1997 and
1996, respectively.

7. Goodwill (In thousands)

Goodwill consists of the excess of cost over fair value of tangible and
identifiable intangible assets of companies purchased. The Company
applies the principles of Accounting Principles Board Opinion No. 16,
Business Combinations, and uses the purchase method of accounting for
acquisitions of wholly owned and majority owned subsidiaries.

1998 1997
<S> <C> <C>

Original balance $ 35,920 $ 13,790
Accumulated amortization (2,490) (1,003)
---------- ----------
Carrying value $ 33,430 $ 12,787
========= =========

</TABLE>

F-15
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Amortization expense amounted to $1,487, $670 and $295 for the year
ended December 31, 1998, 1997, and 1996, respectively.

The Company has entered into various earnout arrangements with the
selling shareholders of certain acquired subsidiaries. These
arrangements provide for additional consideration to be paid in future
years if certain earnings levels are met. These amounts are added to
goodwill as earned.

8. Other Assets (In thousands)

1998 1997
<S> <C> <C>

Proprietary software $ 5,586 $ 2,722
Purchased computer software 393 387
Other assets 417 272
------- -------
6,396 3,381
Less: Accumulated amortization 1,730 976
------- -------
4,666 2,405
Investment in preferred stock 3,000 --
Other 704 601
------- -------
$ 8,370 $ 3,006
======= =======

</TABLE>

Amortization of other assets charged against income amounted to $754,
$358 and $210 for the years ended December 31, 1998, 1997 and 1996,
respectively.

9. Notes Payable (In thousands)
<TABLE>
<CAPTION>

1998 1997
<S> <C> <C>

Notes payable - banks, collateralized by business
assets and by personal guarantees of
officers/stockholders of certain subsidiaries.
Interest is payable monthly at rates varying from
prime plus 1/2% to prime plus 2-1/4% in 1998. The
credit lines are due through December 1999. $ 5,974 $ 4,505

Revolving credit line - bank, collateralized by all
domestic assets of the Company, bearing interest at
the prime lending rate or the London Interbank Offered
Rate, as elected by the Company, expiring in July 1999 17,193 --

</TABLE>

F-16
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Notes payable - other, unsecured, due on demand 50 278
-------- -------
$ 23,217 $ 4,783
======== =======
</TABLE>

During the third quarter of 1998, the Company entered into a twenty
million dollar line of credit with a bank, collateralized by all
domestic assets of the Company (the "Credit Agreement"), at the prime
lending rate or at the London Interbank Offered Rate, as elected by the
Company. The Credit Agreement expires on July 31, 1999 and contains
standard debt covenants relating to financial position and performance
as well as restrictions on the declarations and payment of dividends.
As of December 31, 1998, the outstanding balance was $17,193 and the
availability was $2,807.

On February 4, 1999, the bank increased the amount available under the
revolving line of credit to twenty-three million dollars.

The weighted average interest rate was 8.8% and 9.8% for the years
ended December 31, 1998 and 1997, respectively.

10. Long-Term Debt (In thousands)
<TABLE>
<CAPTION>

1998 1997
<S> <C> <C>

Notes payable - banks, collateralized by
subsidiaries' business assets, payable in
monthly installments totalling $28 plus interest
at rates of prime plus 1.5% and prime plus 2.5%
in 1997, originally due through May 2001, paid
off in 1998 $ -- $ 1,105

Notes payable - bank, collateralized by land,
building and aassets, payable in monthly
installments of principal and interest totalling
$25, bearing interest at rates between 8.15% and
prime plus 1.5%, due through October 2002 805 --

Note payable - bank, collateralized by subsidiary's
business assets, payable in monthly principal
payments of $62 plus interest at the prime rate
plus 1/2%, due in November 2002 1,402 --

Mortgage notes payable - bank, collateralized by
buildings, payable in monthly installments of
principal and interest totalling $8, bearing
interest at rates ranging from 4.2% to 10.75%
in 1998 and $5, bearing interest at 9.5% in 1997,
due through April 2028 802 529

Notes payable - finance companies and banks,
collateralized by vehicles, payable in monthly
principal installments of $6, bearing interest at
rates ranging from 0.9% to 10.9% in 1998 and $6,
bearing interest at rates ranging from 9.75% to 10.9%
in 1997, due through June 2003 132 114

Notes payable - bank, collateralized by business
assets, payable in monthly installments of principal
and interest totalling $23, bearing interest at
rates ranging from 5.61% to prime plus 2%, due
through June 2003 118 869
</TABLE>

F-17
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Capital lease obligations 737 425
------- -------
3,996 3,042
Less: Current maturities 1,158 843
------- -------
$ 2,838 $ 2,199
======= =======
</TABLE>

The scheduled maturities of long-term debt at December 31, 1998 are as
follows:

Year Amount

1999 $ 1,158
2000 907
2001 689
2002 546
2003 177
Thereafter 519
-------
$ 3,996
=======

Interest expense on the long and short-term notes payable (including
notes payable in Note 9) amounted to $1,653, $978 and $200 for the
years ended December 31, 1998, 1997, 1996, respectively.

11. Fair Value Of Financial Instruments

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

Cash And Cash Equivalents

The carrying amount approximates fair value because of the short
maturity of those instruments.

Notes Receivable

The carrying value of the notes approximate fair value because either
the interest rates of the notes approximate the current rate that the
Company could receive on a similar note, or because of the short-term
nature of the notes.

Notes Payable

The carrying amount approximates fair value because of the short-term
nature of the notes.

F-18
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Long-term Debt

The carrying amount approximates fair value because either the stated
interest rates fluctuate with current market rates or the interest
rates approximate the current rates at which the Company could borrow
funds on a similar note.

Accounts Payable and Accrued Expenses

The carrying amount approximates fair value.

12. Income Taxes (In thousands)

The provision for income taxes consists of:
<TABLE>
<CAPTION>

1998 1997 1996
<S> <C> <C> <C>
Current:

United States at statutory rates $1,747 $1,570 $ 477
International 930 533 --
Current taxes covered by net operating
loss -- (88) (32)
------- ------- ------
Current income tax provision 2,677 2,015 445
------- ------- ------
Deferred:
United States 94 (246) (83)
International (183) -- --
------- ------- ------
Deferred income taxes provision (credit) (89) (246) (83)
------- ------- ------
$2,588 $1,769 $ 362
======= ======= =====
</TABLE>

The tax effects of temporary differences and carryforwards that give
rise to significant portions of deferred tax assets and liabilities
consist of the following:
<TABLE>
<CAPTION>

1998 1997
<S> <C> <C>

Deferred Tax Assets:
Liabilities and reserves $ 557 $ 269
Net operating loss carryforwards 3,892 3,749
-------- --------
Gross deferred tax assets 4,449 4,018
Valuation allowance (2,994) (3,514)
-------- --------
1,455 504
-------- --------
Deferred Tax Liabilities:
Accounts Receivable 719 --
Notes Receivable 361 --
Property and equipment 10 45
Intangible assets 365 59
-------- --------
1,455 104
-------- --------
Net Deferred Tax Asset $ -- $ 400
======== ========
</TABLE>

F-19
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

The valuation allowance for deferred tax asset decreased by $520
in 1998 and increased by $3,514 in 1997.

Approximate domestic and international income before provision for
income taxes consists of :

1998 1997 1996
<S> <C> <C> <C>

Domestic $ 5,082 $ 3,132 $ 1,180
International 2,620 1,674 --
------- ------- -------
$ 7,702 $ 4,806 $ 1,180
======= ======= =======
</TABLE>

At December 31, 1998, the company had aggregate net operating loss
carryforwards of approximately $10,200 for income tax purposes which
expire in various amounts through 2012. The net operating loss
carryforwards were acquired in connection with various 1997 and 1998
acquisitions and are limited as to use in any particular year based on
Internal Revenue Code sections related to separate return year and
change of ownership restrictions. Utilization of the Company's net
operating loss carryforwards are estimated to be limited to
approximately $941 per year. When realized, the tax benefit of the
acquired net operating loss carryforwards will be recorded a reduction
of goodwill or other long-term assets.

The reconciliation of the effective tax rate with the statutory federal
income tax rate is as follows:
<TABLE>
<CAPTION>

1998 1997 1996
<S> <C> <C> <C>
% % %
---- ---- ----
Statutory rate 34 34 34
State income taxes, net of federal benefits 5 7 4
International tax rates different from the
the statutory US federal rate -- (3) --
Realization of deferred tax asset valuation
allowance (6) (5) (3)
Other 1 4 (4)
---- ---- ----
34 37 31
==== ==== ====

</TABLE>

F-20
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

13. Earnings Per Share (In thousands, except per share data)

In accordance with the disclosure requirements of SFAS 128, a
reconciliation of the numerator and denominator of basic and diluted
EPS is provided as follows:
<TABLE>
<CAPTION>

1998 1997 1996
<S> <C> <C> <C>

Numerator:
Net income $ 4,690 $ 2,340 $ 686
Preferred stock dividends (44) (72) (60)
-------- -------- --------
Numerator for basic earnings per share -
net income available to common
stockholders 4,646 2,268 626

Effect of dilutive securities:
Preferred stock dividends 44 72 60
-------- -------- --------
Numerator For Diluted Earnings
Per Share - Income Available To
Common Stockholders $ 4,690 $ 2,340 $ 686
======== ======== ========
Denominator:
Denominator for basic earnings per
share - weighted-average shares 32,318 12,632 3,329
-------- -------- --------
Effect of dilutive securities:
Redeemable preferred stock 85 998 580
Warrants 477 779 628
Employee stock options 266 451 104
Contingent stock - acquisitions 1,654 385 --
-------- -------- --------
Dilutive potential common shares 2,482 2,613 1,312
-------- -------- --------
Denominator For Diluted Earnings
Per Share - Adjusted Weighted-
Average Shares And Assumed
Conversions 34,800 15,245 4,641
======== ======== ========
Basic Earnings Per Share $ .14 $ .18 $ .19

Diluted Earnings Per Share $ .13 $ .15 $ .15
</TABLE>

14. Commitments And Contingencies

Rentals of space, vehicles, and office equipment under operating leases
amounted to approximately $3.9 million, $2.7 million and $0.8 million
for the years ended December 31, 1998, 1997, and 1996, respectively.

The Company has entered into employment contracts with key officers and
employees of the Company and certain subsidiaries. The agreements are
for periods of one to ten years through June 2009. Some of the
employment contracts also call for bonus arrangements based on earnings
of the particular subsidiary.

The approximate minimum payments required under operating leases and
employment contracts that have initial or remaining terms in excess of
one year at December 31, 1998 are (in thousands):

F-21
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>

Minimum Employment
Year Rental Payments Contracts
<S> <C> <C>
1999 $ 3,753 $ 7,400
2000 3,251 6,700
2001 2,740 5,000
2002 2,195 4,000
2003 1,316 1,600
Thereafter 2,775 800
-------- --------
$ 16,030 $ 25,500
======== ========
</TABLE>

The Company has entered into put options with the selling shareholders
of various companies in which the Company acquired less than a 100%
interest. These options provide for the Company to acquire the
remaining portion it does not own after periods ranging from 4 to 5
years from the dates of acquisition at amounts generally equal to
10%-20% of the average annual earnings of the company before income
taxes for the two-year period ending the effective date of the put
multiplied by a multiple ranging from 4 to 5.

The employment agreements for three officers of the Company include
certain "change of control" provisions. At the employee's option, he
may terminate his employment under the agreement at any time within one
year after such change of control. The Company shall pay to the
employee a severance payment based on formulas relating to parachute
payment provisions of the Internal Revenue Code and prior compensation.

Additionally, the agreements for two officers provide for certain
"triggering events" which include a change in control of the Company
and the termination of employment other than for cause. Upon the
occurrence of a triggering event, the Company shall pay, in cash or in
stock, or in a combination thereof, $12.1 million and $3.5 million,
respectively, to these two officers.

15. Profit Sharing Plan

The Company has a Section 401(k) Plan for the benefit of eligible
United States employees. The Company has made no contributions to the
Section 401(k) Plan.

The Company's International subsidiaries operate certain defined
contribution pension schemes. The Company's expense relating to the
schemes approximated $0.3 million in 1998.

16. Redeemable Preferred Shares

In March 1996, the Company issued nine thousand 8% convertible
preferred shares at $100 per share, in exchange for 80% of Burling
Instruments, Inc. If, and to the extent, the preferred shares had not
been converted to common stock by the second anniversary of the initial
issuance of the shares, the Company was required to redeem the
preferred shares by paying $100 per share. Each holder of the preferred
shares had the ability to convert their preferred shares into common
shares by dividing the redemption price ($100) by $5.75 per common
share. The shares were redeemed in 1998.

F-22

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

In October 1996, the Company issued one hundred thousand 8% redeemable
preferred shares at $100 per share as partial consideration for the
100% purchase of ATI Communications. For purposes of redemption of the
preferred shares, each share of ACT Communications, Inc.'s common stock
was valued at $10,000. During 1997, the one hundred thousand shares of
preferred stock were redeemed for 1.4 million of the Company's common
shares.

17. Stockholders' Equity

Preferred Shares

The Company has authorized 5 million shares of preferred stock, $10.00
par value, to be issued from time to time on such terms as is specified
by the Board of Directors.

In May 1998, in connection with the Company's acquisition of Commstar
Limited, an Ontario corporation ("Commstar"), the Board of Directors
authorized the issuance of one share of the Company's Preferred Stock
($10.00 par value) designated as the Company's Special Voting Preferred
Stock (the "Special Preferred Share"). The Special Preferred Share is
entitled to a number of votes equal to the number of outstanding shares
of Commstar not owned by the Company that can be exchanged for the
Company's common shares. The holder of the Special Preferred Share is
not entitled to receive any dividends or participate in any
distribution of assets to the stockholders of the Company. When all of
Commstar's exchangeable shares have been exchanged or redeemed for
shares of the Company's Common Stock, the Special Preferred Share will
be cancelled. The Company has the right to call the outstanding
exchangeable shares with the occurrence of various events including
liquidation of Commstar and at the five-year anniversary date of the
acquisition. The Company initially reserved 3.4 million shares of its
Common Stock to be exchanged for exchangeable shares held by the
Commstar selling shareholders, 1.4 million of which have been exchanged
into shares of Common Stock and 2.0 million are reserved at December
31, 1998. On July 30, 1998, Commstar acquired certain assets from
Western Inbound Network, Inc., an Ontario corporation, in consideration
for 0.4 million exchangeable shares.

In June 1998, in connection with the Company's acquisition of Ground
Effects Limited, an Ontario corporation ("Ground Effects"), the Board
of Directors authorized the issuance of one share of the Company's
Preferred Stock ($10.00 par value) designated as the Company's Class B
Voting Preferred Stock (the "Class B Special Preferred Share"). The
Class B Special Preferred Share is entitled to a number of votes equal
to the number of outstanding shares of Ground Effects not owned by the
Company that can be exchanged for the Company's common shares. The
holder of the Class B Special Preferred Share is not entitled to
receive any dividends or participate in any distribution of assets to
the stockholders of the Company. When all exchangeable shares of Ground
Effects have been exchanged or redeemed for shares of the Company's
Common Stock, the Special Preferred Share will be cancelled. The
Company has the right to call the outstanding exchangeable shares with
the occurrence of various events including liquidation of Ground
Effects and at the five-year anniversary date of the acquisition. The
Company has reserved 1.1 million shares of its Common Stock to be
exchanged for exchangeable shares held by Ground Effects selling
shareholders, 0.2 million of which have been exchanged into shares of
common stock and 0.9 million are reserved as of December 31, 1998.

Since the Preferred Shares provide votes for the equivalent number of
common shares that may be exchanged and the common shares may be
exchanged at any time at the holders' option, for purposes of computing

F-23
<PAGE>

basic and diluted earnings per share (Note 13), the reserved common
shares are considered to be outstanding for all periods that the
Preferred Shares are issued.

Warrants

The Company has issued warrants convertible into shares of common stock
for consideration, as follows (in thousands, except exercise price):

Class Of Exercise Exercisable
Warrants Authorized Issued Exercised Price Date Of Issue Period
<S> <C> <C> <C> <C> <C> <C>

Class F 300 300 260 $ 2.50 December 1994 5 years
Class H 450 450 350 2.00 August 1995 5 years
Class K 250 250 -- 5.31 September 1996 5 years
Class L 51 51 50 5.35 October 1996 5 years
Class L 74 74 -- 3.00 October 1996 5 years
Class N 800 800 600 3.00 August 1997 5 years
Class P 520 520 -- 3.00 September 1997 5 years
Class Q 250 250 250 8.38 September 1997 5 years
Class R 125 125 -- 8.38 October 1997 5 years
Class S 600 600 -- 2.00 April 1998 5 years
Class U 250 250 -- 8.38 November 1998 5 years
----- ----- -----
3,670 3,670 1,510
===== ===== =====
</TABLE>

Stock Option Plan

During 1996, the Company adopted a non-qualified stock option plan (the
Option Plan) and applies APB Opinion No. 25 and related Interpretations
in accounting for the Option Plan. Under the Option Plan, options are
granted at an exercise price equal to fair value on the date of grant.
Accordingly, no compensation cost has been recognized. Had compensation
cost for the Option Plan been determined based on the fair value at the
grant dates for awards under the Option Plan, consistent with the
alternative method set forth under SFAS 123, Accounting for Stock-Based
Compensation, the Company's net income applicable to common
stockholders and earnings per common and common equivalent share would
have been reduced. The pro forma amounts are indicated below (in
thousands, except per share data):

1998 1997
<S> <C> <C>

Net Income Available To Common
Stockholders
As reported $ 4,646 $ 2,268
Pro forma $ 2,408 $ 1,614

Earnings Per Common Share - Basic
As reported $ .14 $ .18
Pro forma $ .07 $ .13

Earnings Per Common Share - Diluted

As reported $ .13 $ .15

Pro forma $ .07 $ .11
</TABLE>

F-24
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Under the Option Plan, options for ten million and five million common
shares were authorized for issuance to certain officers and employees
of the Company at December 31, 1998 and 1997 respectively, of which 9.8
million had been issued through December 31, 1998. The options may not
be exercised until one to three years after the options have been
granted, and are exercisable for a period of five years.

The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1998 and 1997: dividend
yield of 0% in both years; expected volatility of 43.69% and 44.03%;
risk-free interest rate of 8.5% for both years; and expected lives of 5
years for both years. The weighted-average fair value of options
granted was $1.27 for the year ended December 31, 1998 and $1.58 for
the year ended December 31, 1997. A summary of stock option activity
for 1998 and 1997 is as follows (in thousands, except for per share
data):

1998 1997
--------------------- -------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Shares Price Shares Price
<S> <C> <C> <C> <C>

Outstanding on January 1 3,835 $ 4.39 2,180 $ 4.40
Granted 5,367 2.80 2,487 4.62
Exercised -- (650) 4.25
Forfeited (97) 4.79 (182) 4.23
----- ------- ------ -------
Outstanding on December 31 9,105 3.55 3,835 4.39
----- ------- ------ -------
Exercisable on December 31 2,885 4.48 705 4.44
----- ------- ------ -------
Shares available on December 31 for
options that may be granted 450 1,145
----- ------

</TABLE>

The following table summarizes information about stock options at December 31,
1998 (in thousands, except for exercise price data and contractual life):

Outstanding Stock Options Exercisable Stock Options
------------------------------------------------ -------------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range Of Contractual Exercise Exercise
Exercise Prices Shares Life Price Shares Price
<S> <C> <C> <C> <C> <C>

$2.00 to $3.00 2,825 6.22 $ 2.35 70 $ 2.71
$3.01 to $4.00 3,446 5.49 3.53 930 3.93
$4.01 to $5.00 1,929 4.70 4.38 1,185 4.38
$5.01 to $6.00 855 5.03 5.53 700 5.57
$6.01 to $7.00 50 5.76 6.99 -- --
------ ------ ----- ------
$2.00 to $7.00 9,105 $ 3.55 2,885 $ 4.48
====== ====== ===== ======

</TABLE>

F-25

<PAGE>

18. Legal Proceedings

The Company is party to various legal proceedings. In the opinion of
management, these proceedings are not likely to have a material adverse
affect on the financial position or overall trends in results of the
Company. The estimate of potential impact on the Company's financial
position, overall results of operations or cash flows for the above
legal proceedings could change in the future.

19. Supplemental Cash Flow Information

The changes in operating assets and liabilities are as follows (in
thousands):
<TABLE>
<CAPTION>

For The Years Ended December 31,
----------------------------------------------

1998 1997 1996
<S> <C> <C> <C>

(Increase) decrease in accounts receivable
and unbilled receivables $ (1,922) $ (3,992) $ 65
Increase in inventories (4,148) (657) (826)
Increase in prepaid expenses (422) (676) (140)
Increase in deferred tax asset (89) (121) (83)
Increase (decrease) in accounts payable
and accrued expenses (4,944) (1,103) (1,990)
---------- --------- ---------
$ (11,525) $ (6,549) $ (2,974)
========== ========= =========
</TABLE>

In the years ended December 31, 1998, 1997 and 1996, the Company had
the following noncash investing and financing activities (in
thousands):

1998 1997 1996
<S> <C> <C> <C>

Payment of debt in exchange for common stock $ -- $ 521 $ 300

Assets acquired for long-term debt 2,042 490 --

Assets acquired for common stock 25,408 13,485 14,396

Capital leases 593 124 128

Sale of assets for preferred stock 3,000 -- --

Other 132 -- 37
</TABLE>

On December 31, 1998, the Company entered into a Purchase and Sale
Agreement for the sale of certain of its cellular assets. In
consideration, the Company received one thousand shares of 6% first
series preferred stock of the purchaser of the cellular assets in the
face amount and having a liquidation value of $1 million. The first
series preferred stock may be redeemed at any time through December 31,
2004. This sale resulted in a gain of $647,000 included in operating
income.

On December 31, 1998, the Company entered into an Agreement for Sale of
Stock for the sale of its investment in a subsidiary company. In
consideration, the Company received two thousand shares of 6% preferred
stock of the purchaser of the subsidiary in the face amount and having
a liquidation value of $2 million, due December 31, 2003. This sale
resulted in a gain of $86,000 included in operating income.

In 1997, one hundred thousand shares of the Company's 8% redeemable
preferred shares, as discussed in Note 16, were redeemed for 1.4
million common shares. This resulted in a net decrease in goodwill of
$7.5 million.

F-26
<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

20. Segment Information

In 1998, the Company adopted SFAS No. 131. Prior year information has
been restated to present the Company's reportable segments.

The Company is organized into seven operating segments. The seven
segments and their principal products and services are as follows:

Operating Segment Principal Products and Services

Telecommunications o Telephone services and systems
o Computer telephony integration
o Interactive voice response
o Call centers
o Voice messaging

Network Infrastructure o Computer systems
o Local area networks
o Application servers

Internet o Electronic commerce
o Intranet
o Extranet
o Wide area networks

Communications Infrastructure o Communications towers
o Fiber optics
o Cabling
o Power distribution
o Communications equipment

Application Technology o Global positioning systems
o Field automation
o Asset management
o Satellite systems
o Corporate enterprise access
o Decision support
o Voice/data technology

Inteletek o Purchase/sale of new and used computer
equipment
o Peripherals
o Components
o Business continuity services
o Consulting
o Systems integration

F-27

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

Non-Core o Transportation
o Electrical components
o Control panels
o Design engineering
o Manufacturing engineering
o Automation systems
o Vacuum pumps

The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies, except that
intersegment sales and transfers are generally accounted for as if the sales or
transfers were to third parties at current market prices; segment data includes
an allocated charge for the corporate headquarters costs; and segment income tax
expense is allocated to the segments by an application of the effective tax rate
to the profit or loss of each segment. It is on this basis that management
utilizes the financial information to assist in making internal operating
decisions. The Company evaluates performance based on stand alone segment
operating income.

F-28
<PAGE>
APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

The "Eliminations" category includes all amounts recognized upon
consolidation of the Company's subsidiaries such as the elimination of
intersegment revenues, expenses, assets and liabilities and goodwill
amortization expense.

1998 (In thousands)
Communi-
Network cations
Telecommun- Infra- Infra- Application Corporate Elimina- Consol-
ications structure Internet structure Technology Inteletek Non-Core Overhead tions idated
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net revenue from external
customers $ 30,369 $ 21,282 $ 2,901 $ 43,729 $ 19,859 $ 60,877 $ 28,064 $ -- $ -- $207,081

Intersegment net revenue -- -- -- -- -- 1,949 -- -- (1,949) --
-------- -------- ------- -------- -------- -------- -------- --------- -------- --------
Total revenue 30,369 21,282 2,901 43,729 19,859 62,826 28,064 -- (1,949) 207,081
======== ======== ======= ======== ======== ======== ======== ========= ======== ========
Depreciation and
amortization 653 39 24 458 1,241 251 477 137 1,221 4,501
Operating income 852 1,563 272 3,789 1,424 4,509 1,122 (3,376) (1,220) 8,935
Interest income 128 14 1 71 47 45 12 686 (584) 420
Interest expense 468 144 63 111 192 340 448 471 (584) 1,653
Income tax expense
(benefit) (935) 498 43 1,050 (359) 757 163 440 931 2,588

Segment assets 21,066 5,528 923 13,497 22,849 13,595 15,777 147,518 (116,637) 124,116
Expenditures for property 226 46 5 574 73 138 214 674 -- 1,950

</TABLE>

<TABLE>
<CAPTION>
1997 (In thousands)

Communi-
Network cations
Telecommun- Infra- Infra- Application Corporate Elimina- Consol-
ications structure Internet structure Technology Inteletek Non-Core Overhead tions idated
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net revenue from external
customers $ 32,208 $ -- $ -- $ 8,545 $ 9,574 $ 39,445 $ 13,387 $ -- $ -- $103,159
Intersegment net revenue -- -- -- -- -- 2,127 -- -- (2,127) --
-------- -------- ------- -------- -------- -------- -------- --------- -------- --------
Total revenue 32,208 -- -- 8,545 9,574 41,572 13,387 -- (2,127) 103,159
======== ======== ======= ======== ======== ======== ======== ========= ======== ========
Depreciation and
amortization 300 -- -- 104 459 108 173 17 713 1,874
Operating income 1,477 -- -- 348 2,159 2,356 626 (665) (709) 5,592
Interest income 62 -- -- 1 26 1 6 130 (34) 192
Interest expense 491 -- -- 44 103 152 212 9 (33) 978
Income tax expense
(benefit) 251 -- -- 125 312 883 161 (203) 240 1,769

Segment assets 12,559 -- -- 4,490 77,886 8,736 8,177 3,523 (54,089) 61,282
Expenditures for property 118 -- -- 62 141 364 216 15 -- 916

</TABLE>

F-29

<PAGE>
APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>

1996 (In thousands)
Communi-
Network cations
Telecommun- Infra- Infra- Application Corporate Elimina- Consol-
ications structure Internet structure Technology Inteletek Non-Core Overhead tions idated
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Net revenue from external
customers $ 10,537 $ -- $ -- $ -- $ 3,394 $ 1,993 $ 3,839 $ 120 $ -- $ 19,883
Intersegment net revenue -- -- -- -- -- -- -- -- -- --
-------- -------- ------- -------- -------- -------- -------- --------- -------- --------
Total revenue 10,537 -- -- -- 3,394 1,993 3,839 120 -- 19,883
======== ======== ======= ======== ======== ======== ======== ========= ======== ========
Depreciation and
amortization 83 -- -- -- 241 2 37 9 340 712
Operating income 896 -- -- -- (68) 504 444 241 (763) 1,254
Interest income 31 -- -- -- -- 1 4 90 -- 126
Interest expense 137 -- -- -- 23 10 23 7 -- 200
Income tax expense
(benefit) 296 -- -- -- (181) 190 158 (37) (64) 362
Segment assets 24,280 -- -- -- 24,198 1,920 2,608 3,033 (22,831) 33,208
Expenditures for property 25 -- -- -- 26 8 13 37 -- 109

</TABLE>

Revenues are attributed to geographic areas based on the location of the assets
producing the revenues. Information concerning principal geographic areas as of
and for the years ended December 31, was as follows (in thousands):

<TABLE>
<CAPTION>
United
United States Canada Kingdom Consolidated
<S> <C> <C> <C> <C>

1998
Net revenue $ 172,369 $ 22,017 $ 12,695 $ 207,081
Total assets 91,458 18,137 14,521 124,116

1997
Net revenue $ 96,796 $ 1,381 $ 4,982 $ 103,159
Total assets 56,177 1,254 3,851 61,282

1996
Net revenue $ 19,883 $ -- $ -- $ 19,883
Total assets 33,208 -- -- 33,208

</TABLE>

F-30

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements (Continued)

21. Related Party Transactions

In connection with the acquisitions which took place in 1998, 1997 and
1996, the Company paid a related party, $0.6 million, $0.5 million and
$0.5 million, respectively, for investment banking services. These
payments were included in the total cost of assets purchased and are
being amortized over the life of the related assets.

In 1998, the Company sold its investment in a subsidiary company to a
related party for two thousand shares of preferred stock.

22. Pro Forma Information (Unaudited)

The following pro forma consolidated information of the Company for
the years ended December 31, 1998 and 1997 gives effect to the
acquisitions, disclosed in Note 2, as if they were effective at
January 1, 1997. The statement gives effect to the acquisitions under
the purchase method of accounting.

The pro forma information may not be indicative of the results that
would have actually occurred if the acquisitions had been effective on
the dates indicated or of the results that may be obtained in the
future. The pro forma information should be read in conjunction with
the consolidated financial statements and notes thereto of the
Company.
<TABLE>
<CAPTION>

Pro Forma
(In thousands)
December 31,
----------------------------
<S> <C> <C>

1998 1997

Net operating revenue $ 230,425 $ 231,151

Net income 2,803 2,873

Net income available to common stockholders 2,759 2,312

Earnings per common share - basic .08 .08

Earnings per common share - diluted .08 .07

</TABLE>

F-31
<PAGE>

LIST OF EXHIBITS
(Item 14 (c))
Exhibit
Number Description

4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (File No.
333-37713) filed with the Commission on November 19, 1997)

4.2 Amendment of Restated Articles of Incorporation of the Company
(incorporated herein by reference to Exhibit 4.2 to the
Company's Registration Statement on Form S-3 (File No.
333-59523) filed with the Commission on July 21, 1998)

4.3 Amended and Restated Bylaws of the Company dated March 31, 1998
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (File No.
333-51067) filed with the Commission on April 27, 1998)

*10.1 1996 Non-Qualified Stock Option Plan of Applied Cellular
Technology, Inc., as amended through June 13, 1998

10.2 Credit Agreement between Applied Cellular Technology, Inc. and
State Street Bank and Trust Company dated as of August 25, 1998
(incorporated herein by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q filed with the
Commission on November 16, 1998 (Commission File Number
000-26020))

10.3 First Amendment to Credit Agreement between Applied Cellular
Technology, Inc. and State Street Bank and Trust Company dated
as of February 4, 1999

*10.4 Richard J. Sullivan Employment Agreement

*10.5 Garrett A. Sullivan Employment Agreement

*10.6 David A. Loppert Employment Agreement

*10.7 Scott R. Silverman Employment Agreement

*10.8 Andrew J. Hidalgo Employment Agreement

*10.9 Gary A. Gray Employment Agreement

*10.10 Jerome C. Artigliere Employment Agreement

*10.11 Tabitha Zane Employment Agreement

*10.12 Marc Sherman Employment Agreement

16.1 Letter from Rubin, Brown, Gornstein & Co., LLP ("RBG")
concurring with the statements made by the Company in the Form
8-K report concerning RBG's resignation as the Company's
principal accountant (incorporated herein by reference to
Exhibit 16 to the Company's Current Report on Form 8-K filed
with the Commission on November 4, 1998 (Commission File Number
000-26020))

21.1 List of Subsidiaries of Applied Cellular Technology, Inc.

27.1 Financial Data Schedule

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

* Management contract or compensatory plan.

Exhibit 10.1

APPLIED CELLULAR TECHNOLOGY, INC.

1996 NON-QUALIFIED STOCK OPTION PLAN
(As amended through June 13, 1998)

<PAGE>

APPLIED CELLULAR TECHNOLOGY, INC.

1996 NON-QUALIFIED STOCK OPTION PLAN

(As amended through June 13, 1998)

TABLE OF CONTENTS

Page

ARTICLE I - Name and Purpose. 1
1.1. Name...........................................................1
1.2. Purpose........................................................1

ARTICLE II - Definitions of Terms and Rules of Construction. 1
2.1. General Definitions............................................1
(a) Affiliate..............................................1
(b) Agreement..............................................1
(c) Board..................................................1
(d) Change of Control......................................2
(e) Company................................................2
(f) Committee..............................................2
(g) Common Stock...........................................2
(h) Director...............................................2
(i) Effective Date.........................................2
(j) Employee...............................................2
(k) Employer...............................................2
(l) Fair Market Value......................................2
(m) NQSO 2
(n) Option.................................................2
(o) Parent.................................................2
(p) Participant............................................3
(q) Plan 3
(r) Share..................................................3
(s) Subsidiary.............................................3
2.2. Other Definitions..............................................3
2.3. Conflicts in Plan..............................................3

ARTICLE III - Common Stock. 3
3.1. Number of Shares...............................................3
3.2. Reusage........................................................3
3.3. Adjustments....................................................4

ARTICLE IV - Eligibility. 4
4.1. Determined By Committee........................................4

i
<PAGE>

ARTICLE V - Administration. 4
5.1. Committee......................................................4
5.2. Authority......................................................5
5.3. Adjudication of Claims.........................................5
5.4. Options for Directors..........................................6

ARTICLE VI - Amendment, Termination, and Change of Control. 6
6.1. Power of Board.................................................6
6.2. Limitation.....................................................6
6.3. Term...........................................................6
6.4. Termination....................................................6
6.5. Effect of Amendment or Termination.............................6
6.6. Committee's Right..............................................7
6.7. Change of Control..............................................7

ARTICLE VII - Agreements 8
7.1. Grant Evidenced by Agreement...................................8
7.2. Provisions of Agreement........................................8

ARTICLE VIII - Payment, Dividends, and Withholdings. 8
8.1. Payment........................................................8
8.2. Dividend Equivalents...........................................9
8.3. Withholding....................................................9

ARTICLE IX - Options. 9
9.1. Type of Options................................................9
9.2. Terms of NQSOs.................................................9
9.3. Determination by Committee....................................10

ARTICLE X - Miscellaneous Provisions. 10
10.1. Underscored References.......................................10
10.2. Number and Gender............................................10
10.3. Governing Law................................................10
10.4. Purchase for Investment......................................10
10.5. No Employment Contract.......................................10
10.6. No Effect on Other Benefits..................................11

ii
<PAGE>
APPLIED CELLULAR TECHNOLOGY, INC.

1996 NON-QUALIFIED STOCK OPTION PLAN

(As amended through June 13, 1998)

ARTICLE I

NAME AND PURPOSE

1. Name and Purpose.

1.1 Name.

The name of this Plan is the "Applied Cellular Technology, Inc. 1996
Non-Qualified Stock Option Plan."

1.2. Purpose

The Company has established this Plan to attract, retain, motivate and
reward Employees and Directors and to encourage ownership of the Company's
Common Stock by them.

ARTICLE II

DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION

2. Definitions of Terms and Rules of Construction.

2.1. General Definitions.

The following words and phrases, when used in the Plan, unless otherwise
specifically defined or unless the context clearly otherwise requires, shall
have the following respective meanings:

(a) Affiliate. A Parent or Subsidiary of the Company.

(b) Agreement. The document which evidences the grant of an Option
under the Plan and which sets forth the terms, conditions and provisions
of, and restrictions relating to, such Option.

1
<PAGE>

(d) Change of Control. The acquisition, without the approval of the
Board, by any person or entity, other than the Company or a Related Entity,
of more than 20% of the outstanding shares of the Company's voting common
stock through a tender offer, exchange offer or otherwise; the liquidation
or dissolution of the Company following a sale or other disposition of all
or substantially all of its assets; a merger or consolidation involving the
Company which results in the Company not being the surviving parent
corporation; or any time during any two-year period in which individuals
who constituted the Board at the start of such period (or whose election
was approved by at least two-thirds of the then members of the Board who
were members at the start of the two-year period) do not constitute at
least 50% of the Board for any reason. A Related Entity is the Parent, a
Subsidiary or any employee benefit plan (including a trust forming a part
of such a plan) maintained by the Parent, the Company or a Subsidiary.

(e) Company. Applied Cellular Technology, Inc.

(f) Committee. The Committee described in Section 5.1.

(g) Common Stock. The Company's common stock which presently has a par
value of $.001 per Share.

(h) Director. A member of the Board or a member of the Board of
Directors of any Affiliate.

(i) Effective Date. The date that the Plan is approved by the
shareholders of the Company which was August 2, 1996.

(j) Employee. Any person employed by the Employer.

(k) Employer. The Company and all Affiliates.

(l) Fair Market Value. The closing price of the Shares on the NASDAQ
on a given date, or, in the absence of sales on a given date, the closing
price on the NASDAQ on the last day on which a sale occurred prior to such
date.

(m) NQSO. A non-qualified stock option, which is an Option that does
not qualify as an Incentive Stock Option under Section 422 of the Internal
Revenue Code of 1986, as amended.

(n) Option. An option to purchase Shares granted under the Plan.

(o) Parent. Any corporation (other than the Company or a Subsidiary)
in an unbroken chain of corporations ending with the Company, if, at the
time of the grant of an Option, each of the corporations (other than the
Company or a Subsidiary) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.

2
<PAGE>

(p) Participant. An individual who is granted an Option under the
Plan. Options may be granted only to Employees and Directors.

(q) Plan. The Applied Cellular Technology, Inc. 1996 Non-Qualified
Stock Option Plan and all amendments and supplements to it.

(r) Share. A share of Common Stock.

(s) Subsidiary. Any corporation, other than the Company, in an
unbroken chain of corporations beginning with the Company if, at the time
of grant of an Option, each of the corporations, other than the last
corporation in the unbroken chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

2.2. Other Definitions.

In addition to the above definitions, certain words and phrases used in the
Plan and any Agreement may be defined in other portions of the Plan or in such
Agreement.

2.3. Conflicts in Plan.

In the case of any conflict in the terms of the Plan relating to an Option,
the provisions in the ARTICLE of the Plan which specifically grants such Option
shall control those in a different ARTICLE.

ARTICLE III

COMMON STOCK

3. Common Stock.

3.1. Number of Shares.

The number of Shares for which Options may be granted under the Plan shall
be 10,000,000 Shares. Such Shares may be authorized but unissued Shares, Shares
held in the treasury, or both.

3.2. Reusage.

If an Option expires or is terminated, surrendered, forfeited, or cancelled
without having been fully exercised, the Shares with respect to which such
Option has not been exercised at the time of termination, surrender, forfeiture,
or cancellation shall again be available for use under the Plan. In addition,
Shares delivered to the Company as payment of the exercise price of an Option
shall again be available for use under the Plan.

<PAGE>

3.3. Adjustments.

If there is any change in the Common Stock of the Company by reason of any
stock dividend, spin-off, split-up, spin-out, recapitalization, merger,
consolidation, reorganization, combination or exchange of shares, number and
class of shares available for Options and the number of Shares subject to
outstanding Options, and the price thereof, as applicable, shall be
appropriately adjusted by the Committee.

ARTICLE IV

ELIGIBILITY

4. Eligibility.

4.1. Determined By Committee.

The Participants and the Options they receive under the Plan shall be
determined solely by the Committee. In making its determinations, the Committee
shall consider past, present and expected future contributions of Participants
and potential Participants to the Employer, including, without limitation, the
performance of, or the refraining from the performance of, services.

ARTICLE V

ADMINISTRATION

5. Administration.

5.1. Committee.

The Plan shall be administered by the Committee. The Committee shall
consist of the Board, unless the Board appoints a Committee of two or more but
less than all of the Board. If the Committee does not include the entire Board,
it shall serve at the pleasure of the Board, which may from time to time appoint
members in substitution for members previously appointed and fill vacancies,
however caused, in the Committee. The Committee may select one of its members as
its Chairman and shall hold its meetings at such times and places as it may
determine. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. Any
decision or determination reduced to writing and signed by a majority of the
members shall be fully as effective as if it had been made by a majority vote at
a meeting duly called and held.

<PAGE>

5.2. Authority.

Subject to the terms of the Plan, the Committee shall have discretionary
authority to:

(a) determine the individuals to whom Options are granted, the amounts
of Options to be granted and the time of all such grants;

(b) determine the terms, conditions and provisions of, and
restrictions relating to, each Option granted;

(d) prescribe, amend and rescind rules and regulations relating
to the Plan;

(e) determine the content and form of all Agreements;

(f) determine all questions relating to Options under the Plan;

(g) maintain accounts, records and ledgers relating to Options;

(h) maintain records concerning its decisions and proceedings;

(i) employ agents, attorneys, accountants or other persons for such
purposes as the Committee considers necessary or desirable;

(j) take, at anytime, any action permitted by Section 6.7 irrespective
of whether any Change of Control has occurred or is imminent; and

(k) do and perform all acts which it may deem necessary or appropriate
for the administration of the Plan and carry out the purposes of the Plan.

5.3. Adjudication of Claims.

The Committee shall have discretionary authority to make all determinations
as to the right to benefits under the Plan. In the event that a Participant
believes he has not received the benefits to which he is entitled under the
Plan, a claim shall be made in writing to the Committee. The claim shall be
reviewed by the Committee. If the claim is approved or denied, in full or in
part, the Committee shall provide a written notice of approval or denial within
90 days with, in the case of a denial, the specific reasons for the denial and
specific reference to the provisions of the Plan and/or Agreement upon which the
denial is based. A claim shall be deemed denied if the Committee does not take
any action within the aforesaid 90 day period. If a claim is denied or deemed
denied and a review is desired, the Participant shall notify the Committee in
writing within 60 days of the receipt of notice of denial or the date on which
the claim is deemed to be denied, as the case may be. In requesting a review,
the Participant may review the Plan or any document relating to it and submit
any written issues and comments he may deem appropriate. The Committee shall

5
<PAGE>

then review the claim and provide a written decision within 60 days. This
decision, if adverse to the Participant, shall state the specific reasons for
the decision and shall include reference to specific provisions of the Plan
and/or Agreement on which the decision is based. The Committee's decision on
review shall be final.

5.4. Options for Directors.

Notwithstanding any other provision of the Plan, all determinations
relating to whether or not a member of the Board shall receive an Option, the
terms and conditions relating to any Option granted to such member, and all
matters relating to such Option after it is granted shall be made by the Board,
and the Board shall have all of the powers and authorities granted in the Plan
to the Committee for such purposes.

ARTICLE VI

AMENDMENT, TERMINATION, AND CHANGE OF CONTROL

6. Amendment, Termination, and Change of Control.

6.1. Power of Board.

Except as hereinafter provided, the Board shall have the sole right and
power to amend the Plan
at any time and from time to time.

6.2. Limitation.

The Board may not amend the Plan, without approval of the shareholders of
the Company, in a manner which would violate applicable law.

6.3. Term.

The Plan shall commence as of the Effective Date and, subject to the terms
of the Plan, shall continue in full force and effect until the earlier of March
15, 2006 or the termination of the Plan by the Board.

6.4. Termination.

The Plan may be terminated at any time by the Board.

6.5. Effect of Amendment or Termination.

Subject to the provisions of Section 6.6, the amendment or termination of
the Plan shall not adversely affect a Participant's right to any Option granted
prior to such amendment or termination.

<PAGE>

6.6. Committee's Right.

Any Option granted may be converted, modified, forfeited or cancelled, in
whole or in part, by the Committee if and to the extent permitted in the Plan or
applicable Agreement or with the consent of the Participant to whom such Option
was granted.

6.7. Change of Control.

In order to maintain a Participant's rights in the event of a Change in
Control, the Committee, in its sole discretion, may, in any Agreement evidencing
an Option, or at any time prior to, or simultaneously with or after a Change in
Control, provide such protection as it may deem necessary. Without, in any way,
limiting the generality of the foregoing sentence or requiring any specific
protection, the Committee may:

(a) provide for the acceleration of any time periods relating to the
exercise of such Option so that such Option may be exercised in full on or
before a date fixed by the Committee;

(b) provide for the purchase of such Option, upon the Participant's
request, for an amount of cash equal to the amount which could have been
attained upon the exercise of such Option had such Option been currently
exercisable;

(c) make such adjustment to the Option then outstanding as the
Committee deems appropriate to reflect such transaction or change; and/or

(d) cause the Options then outstanding to be assumed, or new Options
substituted therefor, by the surviving corporation in such change.

7
<PAGE>
ARTICLE VII

AGREEMENTS

7. Agreements

7.1. Grant Evidenced by Agreement.

The grant of any Option under the Plan shall be evidenced by an Agreement
which shall describe the Option granted and the terms and conditions of the
Option. The granting of any Option shall be subject to, and conditioned upon,
the recipient's execution of any Agreement required by the Committee. Except as
otherwise provided in an Agreement, all capitalized terms used in the Agreement
shall have the same meaning as in the Plan, and the Agreement shall be subject
to all of the terms of the Plan.

7.2. Provisions of Agreement.

Each Agreement will provide that the grantee shall not resign as an
Employee or Director until at least one year has elapsed. Subject to the
preceding sentence and the other terms of the Plan, each Agreement shall contain
such additional provisions that the Committee shall determine to be necessary,
desirable and appropriate for the Option granted.

ARTICLE VIII

PAYMENT, DIVIDENDS, AND WITHHOLDING

8. Payment, Dividends, and Withholdings.

8.1. Payment.

Upon the exercise of an Option, the amount due the Company shall be paid:

(a) in cash;

(b) by the tender or constructive tender to the Company of Shares
owned by the optionee and registered in his name having a Fair Market Value
equal to the amount due to the Company;

(d) in cash, but by means of a so-called "cashless exercise" of an
Option; and/or

<PAGE>

(e) by any combination of the payment methods specified in (a), (b),
(c) and (d) above.

Notwithstanding, the foregoing, any method of payment other than (a) may be used
only with the consent of the Committee or if and to the extent so provided in an
Agreement. The proceeds of the sale of Common Stock purchased pursuant to an
Option shall be added to the general funds of the Company or to the Shares held
in treasury, as the case may be, and used for the corporate purposes of the
Company as the Board shall determine.

8.2. Dividend Equivalents.

Grants of Options may include dividend equivalent payments or dividend
credit rights.

8.3. Withholding.

The Company may, at the time any Option is exercised, withhold from the
Shares issuable upon the exercise of an Option, any amount necessary to satisfy
federal, state and local income and/or other tax withholding requirements with
respect to the exercise of such Option. The Committee or the Company may require
a participant to tender to the Company cash in the amount necessary to comply
with any such withholding requirements.

ARTICLE IX

OPTIONS

9. Options.

9.1. Type of Options.

Only NQSOs may be granted by the Committee under the Plan.

9.2. Terms of NQSOs.

The terms of each NQSO shall provide that (a) such Option shall not be
treated as an Incentive Stock Option under Section 422 of the Internal Revenue
Code of 1986, as amended, (b) that the Option will not be exercisable (i) until
at least one year after the Option has been granted and (ii) unless the optionee
is a Director or an Employee at the time of exercise or has ceased to be such at
least one year after the Option is granted and after it is exercisable because
of death, total and permanent disability or termination by the Company without
cause, and (c) that such option shall not be exercisable more than ten years
after the date of grant. The purchase price for Shares under any NQSO shall be
not less than 85% of the Fair Market Value of the Shares at the time the Option
is granted.

9
<PAGE>

9.3. Determination by Committee.

Except as otherwise provided in Section 9.2, or otherwise in the Plan, the
terms of all Options shall be determined by the Committee.

ARTICLE X

MISCELLANEOUS PROVISIONS

10. Miscellaneous Provisions.

10.1. Underscored References.

The underscored references contained in the Plan are included only for
convenience, and they shall not be construed as a part of the Plan or in any
respect affecting or modifying its provisions.

10.2. Number and Gender.

The masculine and neuter, wherever used in the Plan, shall refer to either
the masculine, neuter or feminine; and, unless the context otherwise requires,
the singular shall include the plural and the plural the singular.

10.3. Governing Law.

This Plan shall be construed and administered in accordance with the laws
of the State of Missouri.

10.4. Purchase for Investment.

The Committee may require each person purchasing Shares pursuant to an
Option to represent to and agree with the Company in writing that such person is
acquiring the Shares for investment and without a view to distribution or
resale. The certificates for such Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer. All
certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under all applicable laws, rules and regulations, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
references to such restrictions.

10.5. No Employment Contract.

The adoption of the Plan shall not confer upon any Employee any right to
continued employment nor shall it interfere in any way with the right of the
Employer to terminate the employment of any of its Employees at any time.

10
<PAGE>

10.6. No Effect on Other Benefits.

The grant of Options under the Plan shall have no effect on any benefits to
which a Participant may be entitled from the Employer, under another plan or
otherwise, or preclude a Participant from receiving any such benefits.

Exhibit 10.3

FIRST AMENDMENT TO CREDIT AGREEMENT

This FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is
entered into as of February 4, 1999, by and between APPLIED CELLULAR TECHNOLOGY,
INC., a Missouri corporation (together with its successors and assigns, the
"Borrower") and (b) STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company (together with its successors and assigns, the "Bank").

All capitalized terms not defined herein but defined in that certain
Credit Agreement, dated as of August 25, 1998, by and between the Borrower and
the Bank (as the same may be amended, modified, substituted, extended or
restated, from time to time, the "Credit Agreement") shall have the meanings
given to such terms in the Credit Agreement.

Preliminary Statements:

A. Pursuant to the terms and conditions of the Credit Agreement and the
other Credit Documents, the Bank has established a certain Revolving Credit
Facility (the "Revolving Credit Facility") in favor of the Borrower in the
original principal amount of up to Twenty Million and 00/100 Dollars
($20,000,000.00); and

B. On or about October 7, 1998, the Borrower created Applied Cellular
Technology Financial Corp., a New Hampshire corporation, which is a new
wholly-owned Subsidiary of the Borrower (the "New Subsidiary"); and

C. Section 5.18 of the Credit Agreement requires that, within thirty
(30) days after the creation of any new Subsidiary, the Borrower cause such new
Subsidiary to become a Guarantor of the Obligations by executing and delivering
certain agreements, documents and instruments which are more particularly
described therein; and

D. The Borrower now requests that (i) the Bank increase the aggregate
principal amount available under the Revolving Credit Facility from Twenty
Million and 00/100 Dollars ($20,000,000.00) to Twenty Three Million and 00/100
Dollars ($23,000,000.00); and (ii) extend the date by which the New Subsidiary
must become a Guarantor to March 31, 1999; and

E. The Bank is not willing to (i) so increase the aggregate principal
amount available under the Revolving Credit Facility or (ii) extend the date by
which the New Subsidiary must become a Guarantor, unless and until the Borrower
has entered into and agreed to all of the terms and conditions of this First
Amendment;

NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Bank hereby
agree as follows:

1. Amendments to Credit Agreement.

1.1 Amendment to Section 1.01. The definition of "Credit
Documents" contained in Section 1.01 of the Credit Amendment is hereby
amended, restated and superseded in its entirety as follows:

<PAGE>

"'Credit Documents' shall mean this Agreement, the
Note, the Guaranty Agreement, the Security Documents and any
and all other agreements, guaranties, instruments, documents,
certificates, financing statements, powers of attorney,
consents and filings, whether heretofore, now, or hereafter
executed by or on behalf of the Borrower, any Guarantor or any
other Person and delivered to the Bank in connection with the
Credit, all as may be amended, modified, supplemented,
restated or extended, from time to time."

1.2 Amendment to Section 2.01(a). The reference contained in
Section 2.01(a) of the Loan Agreement to "$20,000,000" is deleted and
replaced with the following: "Twenty- Three Million and 00/100 Dollars
($23,000,000.00)".

1.3 Amendment to Section 2.01(b). The reference contained in
Section 2.01(b) of the Loan Agreement to "$20,000,000" is deleted and
replaced with the following: "Twenty- Three Million and 00/100 Dollars
($23,000,000.00)".

2. First Allonge to Revolving Credit Note. The Borrower shall execute
and deliver contemporaneously herewith to the Bank a certain First Allonge to
Revolving Credit Note (the "First Allonge to Revolving Credit Note") by and
between the Borrower and the Bank which amends the Revolving Credit Note to
reflect the increase in the aggregate principal amount available under the
Revolving Credit Facility from Twenty Million and 00/100 Dollars
($20,000,000.00) to Twenty Three Million and 00/100 Dollars ($23,000,000.00).
The First Allonge to Revolving Credit Note shall be substantially in the form
attached hereto as Exhibit A and incorporated herein by reference.

3. Reaffirmation of Guaranty Agreement and Security Documents. The
Borrower shall cause the Guarantors to execute and deliver contemporaneously
herewith to the Bank a certain Reaffirmation of Guaranty Agreement and Security
Documents (the "Reaffirmation of Guaranty Agreement and Security Documents") by
and between the Borrower and the Guarantors, pursuant to which, among other
things, each of the Guarantors reaffirms all of its obligations and liability
under the Guaranty Agreement and each of the Security Documents to which each
such Guarantor is a party. The Reaffirmation of Guaranty Agreement and Security
Documents shall be substantially in the form attached hereto as Exhibit B and
incorporated herein by reference.

4. New Subsidiary - Extension. The Bank hereby extends the date by
which the New Subsidiary must become a Guarantor to March 31, 1999, so long as
by such date the Borrower shall have complied with all of the requirements of
Section 5.18 of the Credit Agreement with respect to such New Subsidiary.

5 Ratification of Credit Documents. Subject to the amendments expressly
set forth in Section 1 above and in the First Allonge to Revolving Credit Note,
the Borrower hereby ratifies and reaffirms all of the terms and provisions of
the Credit Agreement and all of the other Credit Documents to which it is a
party or by which it or its property is bound, and hereby expressly acknowledges
and confirms that the terms and provisions of each thereof, as amended hereby,
shall and do remain in full force and effect, without change.

<PAGE>

6. Representations and Warranties. The Borrower hereby acknowledges and
confirms that all of its representations and warranties contained in the Credit
Agreement and in all of the other Credit Documents are and remain true, correct
and complete as of the date hereof as if made as of the date hereof (except as
the same may expressly relate to an earlier date, and except as the same may
relate or apply to the New Subsidiary). The Borrower represents and warrants to
the Bank that if, effective as of the date hereof, the New Subsidiary was to be
party to the Guaranty Agreement and the other Credit Documents to which all of
the other Guarantors are parties, there would be no breach by the New Subsidiary
of any of the representations and warranties contained therein which would have
a material and adverse effect on the Borrower and the Guarantors (including the
New Subsidiary), when taken as a whole, and there would be no events,
circumstances or conditions (financial or otherwise) relating to the New
Subsidiary, which would materially and adversely impair the ability of the New
Subsidiary to perform or observe all of its respective obligations thereunder,
in accordance with the terms thereof.

7. No Events of Default. The Borrower hereby represents and warrants to
the Bank that no Event of Default or Default has occurred and is now continuing
under the Credit Agreement or under any of the other Credit Documents, and there
does not now exist any circumstance or set of facts, which with the passage of
time or the giving of notice or both would constitute or result in an Event of
Default or a default under the Credit Agreement or under any of the other Credit
Documents.

8. Conditions Precedent. The obligations of the Bank under this First
Amendment are subject to the satisfaction of each of the following conditions
precedent, all of which shall be in form, scope and substance satisfactory to
the Bank and its counsel:

(a) Credit Modification Documents. The Bank shall have
received (i) this First Amendment, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart for the Bank,
(ii) the First Allonge to Revolving Credit Note, executed and delivered
by a duly authorized officer of the Borrower, with a counterpart for
the Bank, and (iii) the Reaffirmation of Guaranty Agreement and
Security Documents, executed and delivered by a duly authorized officer
of each Guarantor.

(b) Corporate Proceedings of the Borrower. The Bank shall have
received a copy of the resolutions, in form and substance satisfactory
to the Bank, of the Board of Directors of the Borrower authorizing the
execution, delivery and performance of this First Amendment and the
First Allonge to Revolving Credit Note, all as certified by the
Secretary or an Assistant Secretary of the Borrower as of the date
hereof, which certificate shall be in form and substance reasonably
satisfactory to the Bank and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.

(c) Incumbency Certificate for Borrower. The Bank shall have
received a certificate, dated as of the date hereof, executed by the
Secretary or an Assistant Secretary of the Borrower, certifying (i) as
to the incumbency and signature of the officers of the Borrower
executing this First Amendment and the First Allonge to Revolving
Credit Note, and (ii) since August 25, 1998, there have been no
amendments, modifications or other changes to the Certificate of
Incorporation and By-Laws for the Borrower, and said Certificate of
Incorporation and By-Laws have not rescinded and are in full force and
effect as of the date hereof.

3
<PAGE>

(d) Corporate Proceedings of Guarantors. The Bank shall have
received a copy of the resolutions, in form and substance reasonably
satisfactory to the Bank, of the Board of Directors of each of the
Guarantors authorizing the execution, delivery and performance of the
Reaffirmation of Guaranty Agreement and Security Documents, certified
by the Secretary or an Assistant Secretary of each such Guarantor as of
the date hereof, which certificate shall be in form and substance
reasonably satisfactory to the Bank and shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded.

(e) Incumbency Certificates for Guarantors. The Bank shall
have received a certificate, dated as of the date hereof, executed by
the Secretary or an Assistant Secretary of each of the Guarantors,
certifying (i) as to the incumbency and signature of the officers of
such Guarantor executing the Reaffirmation of Guaranty Agreement and
Security Documents, and (ii) since August 25, 1998, there have been no
amendments, modifications or other changes to the Certificate (or
Articles) of Incorporation (or Organization) and By-Laws for such
Guarantor, and said Certificate (or Articles) of Incorporation (or
Organization) and By-Laws have not rescinded and are in full force and
effect as of the date hereof.

(f) Certificates of Legal Existence and Good Standing. The
Bank shall have received certificates of legal existence and corporate
good standing for the Borrower and each Guarantor, all of recent date
issued by the appropriate governmental authorities.

(g) Legal Opinion. The Bank shall have received executed legal
opinions of the law firms of Riemer & Braunstein and/or Merra, Kanakis,
Creme & Mellor, P.C., counsel to the Borrower and the Guarantors,
covering such matters related to the transactions contemplated by this
First Amendment as the Bank may reasonably request. Such legal opinion
shall be in a form and substance reasonably acceptable to the Bank and
its counsel.

(h) Reimbursement of Costs. The Borrower shall have paid all
legal fees, costs and expenses incurred by the Bank in connection with
this First Amendment and the transactions contemplated herein.

9. Miscellaneous

9.1 No Other Amendments. Except for the amendments expressly
set forth in Section 1 of this First Amendment and in the First Allonge
to Revolving Credit Note, nothing herein contained shall be construed
to modify, amend or otherwise alter any of the terms or provisions of
the Credit Agreement or any of the other Credit Documents; and nothing
herein contained shall constitute a waiver of or bar to any rights or
remedies available to the Bank, or a waiver of any Event of Default
under the Credit Documents on any occasion; and nothing herein shall
constitute an agreement by the Bank or obligate the Bank to take or
refrain from taking any action, and nothing herein shall constitute an
agreement by the Bank to give notice to or obtain acknowledgements from
any of the parties, on any other occasion, whether similar to or
dissimilar from this occasion.

9.2 Execution; Counterparts. This First Amendment may be executed
in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears hereon, and

4
<PAGE>

all of which shall together constitute one and the same instrument.
This First Amendment shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.

9.3 Successors and Assigns. This First Amendment shall be
binding upon and inure to the benefit of the parties hereto, and their
respective representatives, successors and assigns.

9.4 Governing Law. This First Amendment and all questions
relating to its validity, interpretation, performance and enforcement
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts, notwithstanding any conflict-of-law
provisions to the contrary.

IN WITNESS WHEREOF, the undersigned have executed this First Amendment
under seal as of the date first set forth above.

WITNESS: APPLIED CELLULAR TECHNOLOGY,
INC.

/s/ Paul C. Creme /s/ Jerome C. Artigliere
__________________________________ By:____________________________________
Name: Jerome C. Artigliere, Vice President

WITNESS: STATE STREET BANK AND TRUST COMPANY

/s/ /s/ R. Scott Haskell
___________________________________ By:____________________________________
Name: R. Scott Haskell, Vice President

Exhibit 10.4

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") made and entered into this 23rd day of March,
1999, by and between APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation
("Company") and RICHARD J. SULLIVAN ("Employee").

BACKGROUND

Employee has been and presently is employed by Company as its chairman of
the board and chief executive officer. The parties have entered into a formal
employment agreement covering the terms and conditions of such employment.
Subsequently, the parties reached a tentative agreement regarding some, but not
all, of the terms and conditions of a revised employment agreement. The parties
have now reached an agreement on all of the terms and conditions of a revised
employment agreement and desire to set forth in this document such terms and
conditions.

TERMS AND CONDITIONS

1. Employment. Company hereby employs Employee, and Employee hereby accepts
such employment by Company, on the terms and conditions set forth below.

2. Capacity. Employee shall serve as Company's chairman of the board and
chief executive officer. Employee shall perform such services for company and
its subsidiaries and affiliates as Company's board of directors shall direct
from time to time. However, no such services shall be of a nature which are not
commensurate with, and/or are beneath the dignity of, Employee's title.

<PAGE>

3. Term. Company's employment of Employee under this Agreement shall be for
an initial term of five years commencing on July 1, 1998 and ending on June 30,
2003. The term of Employee's employment under this Agreement shall automatically
be renewed for successive additional one year terms on each anniversary of the
commencement of Employee's employment under this Agreement, beginning with the
July 1, 1999 anniversary date, each of which terms shall be added at the end of
the then existing term (taking into account any prior extensions or failures to
extend), unless either party notifies the other at least 30 days prior to an
anniversary date of this Agreement. For example, unless either party notifies
the other to the contrary on or before June 1, 1999, the term of this Agreement
shall be extended from July 1, 2003 to June 30, 2004. For further example, and
assuming the term of this Agreement has been extended to June 30, 2004, if one
party notifies the other that it does not desire to extend the term of this
Agreement for an additional year and such notice is given on or before June 1,
2000, the term of this Agreement shall not be extended from July 1, 2004 to June
30, 2005. Notwithstanding the foregoing, the term of this Agreement may end
prior to the termination date determined under this paragraph 3 as provided in
paragraphs 9, 10, 11 and 12.

4. Service While Employed. Employee agrees to devote his best efforts, his
full diligence and at least 60% his business time to his duties hereunder and
shall not engage, either directly or indirectly, in any business or other
activity which is competitive with or adverse to the interests or the business
of Company.

5. Items Furnished and Relocation. Company shall furnish Employee with such
private office, secretarial assistance, and such other facilities, equipment and

2
<PAGE>

services suitable to his position and adequate to perform his duties hereunder.
Employee shall not be relocated by Company without his consent.

6. Compensation, Vacations and Reimbursement. As partial compensation for
his services to Company, Company agrees to pay Employee an annual salary in
regular monthly or other agreed upon installments of not less than $450,000 and
an annual bonus of not less than $140,000. In addition, Employee shall be
entitled to receive such bonuses (in addition to that required under the
preceding sentence), incentive compensation, and other compensation, if any, as
Company's board of directors, executive committee, compensation committee, or
other designated committee shall award Employee from time to time whether in
cash, Company stock, stock options, other stock based compensation, other form
of remuneration, or any combination of the foregoing. All such compensation
shall be subject to legally required income and employment tax withholding.
Employee shall be entitled to paid vacations and reimbursement for all
reasonable business expenses in accordance with Company's policies for executive
officers.

7. Other Benefits. In addition to his compensation described in paragraph 6
above, Employee shall be entitled to participate in such bonus, profit sharing,
deferred compensation and pension plans of Company for which he is eligible.

8. Welfare and Fringe Benefits. In addition to his compensation described
in paragraph 6 and the benefits described in paragraph 7 above, Employee shall
be entitled to participate in such welfare and fringe benefits plans and
programs of the Company for which he is eligible.

<PAGE>

9. Death and Disability. If Employee dies during the term of this
Agreement, his employment shall be deemed to have been terminated as of the last
day of the month in which his death occurs, and Company will pay to Employee's
personal representative all salary and other compensation due Employee through
the end of such month. If Employee becomes permanently disabled so that he
cannot perform his duties hereunder, as determined by a physician selected by or
acceptable to Company, his employment shall be deemed to have been terminated as
of the last day of the month in which such determination is made, and he will
receive his salary and other compensation through the end of such month. For
purposes of the foregoing computations, Employee shall be deemed to have earned
the same percentage of his minimum annual bonus for such employment year as the
number of days in the employment year through the date his employment is deemed
to terminate is of 365.

10. Retirement. From and after the time Employee attains age 65, he may
retire at any time by notifying Company at least 120 days prior to his
retirement date or be retired by Company upon at least two years notice.

11. Default. In the event that either party fails to perform material
provision of this Agreement and such failure continues for 15 days after
notification from the nonbreaching party, the nonbreaching party may terminate
this Agreement by notice to the breaching party. Such termination shall be
without prejudice to any rights or remedies which the nonbreaching party may
have.

4
<PAGE>

one year after such change of control upon 15 days notice. In the event of such
termination, Company shall pay to Employee a severance payment ("Severance
Payment") equal to three times the base amount as defined in Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended ("Code") minus $1.00.
Notwithstanding the foregoing, (a) if the Severance Payment and any other
amounts payable by Company to Employee are parachute payments under Code Section
280b (collectively, "Parachute Payments") and, (b), if reducing the Severance
Payment would eliminate the tax provided for in Code Section 4999 ("Section 4999
Tax") which would otherwise be applicable to the Parachute Payments, and (c) if,
because of such elimination, the net amount of the Parachute Payments (total
payments minus Section 4999 Tax) would be greater than such net amount without
reduction, then the Severance Payment shall be reduced by the smallest amount
required to eliminate the imposition of the Section 4999 Tax. The foregoing
determination shall be made by Company's general counsel, and his determination
shall be binding upon Company and Employee. The amount determined under the
foregoing provisions of this paragraph 12 shall be payable no later than one
month after the effective date of the Employee's termination of employment. A
change in control means: the acquisition, without the approval of Company's
board of directors, by any person or entity, other than Company or a "related
entity," of more than 20% of the outstanding shares of Company's voting common
stock through a tender offer, exchange offer or otherwise; the liquidation or
dissolution of Company following a sale or other disposition of all or
substantially all of its assets; a merger of consolidation involving Company
which results in Company not being the surviving parent corporation; or any time
during any two-year period in which individuals who constituted the board of
directors of Company at the start of such period (or whose election was approved
by at least two-third of the then members of the board of directors of Company
who were members at the start of the two-year period) do not constitute at least

5
<PAGE>

50% of the board of directors for any reason. A related entity is the parent, a
subsidiary or any employee benefit plan (including a trust forming a part of
such a plan) maintained by Company, its parent or a subsidiary.

13. Nondisclosure; Return of Records. Employee will not, except as
authorized by Company, publish or disclose to others, or use for his own
benefit, or authorize anyone else to publish or disclose or use, or copy or make
notes of any secret, proprietary, or confidential information or knowledge of
data or trade secrets of or relating to the business activities of Company which
may come to Employee's knowledge during his employment with the Company. Upon
termination of Employee's employment for any reason, Employee will deliver to
Company, without retaining any copies, notes or excerpts, all records, notes,
data, memoranda, and all other documents or materials made or compiled by
Employee, or made available to him by Company during his employment, which are
in Employee's possession and/or control and which are the property of Company
and/or which relate to Employee's employment or the business activities of
Company.

14. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Company and any successors or assigns of Company, and Employee, his
heirs, personal representatives and assigns, except that Employee's obligations
to perform services and rights to receive payment therefore shall be
nonassignable and nontransferable.

15. Entire Agreement: Modification. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter and supersedes

6
<PAGE>

all prior or contemporaneous agreements not set forth in this agreement. This
Agreement may not be modified other than by an agreement in writing signed by
each of the parties.

16. Waiver. Any failure by either party to enforce any provision of this
Agreement shall not operate as a waiver of such provision or any other
provision. Any waiver by either party of any breach of any provision of this
Agreement shall not operate as a waiver of any other breach of such provision or
any other provision of this agreement.

17. Severability. The invalidity or unenforceability of any particular
provision of this Agreement shall not effect the other provisions of this
Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.

18. Paragraph Headings. Paragraph headings throughout this Agreement are
solely for the convenience of the parties and shall not be construed as a part
of any section or as modifying the contents of any section.

19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri.

20. Notices. All notices under this Agreement shall be personally
delivered, sent certified mail, postage prepaid, to Company at its corporate
office and to Employee at his principal residence, or sent by telecopy.

7
<PAGE>

the above described monthly payments have been made, all payments or all
remaining payments shall be made to his designated beneficiary, if any,
otherwise to his estate. Notwithstanding the foregoing, the aggregate amount
payable under this paragraph 21 shall be reduced by the amount, if any, payable
under paragraph 12.

22. Non-Competition. During the period that Employee is entitled to receive
payments under paragraph 21, Employee shall not engage, directly or indirectly,
either on his own behalf or on behalf of any other person, firm, corporation or
other entity, in any business competitive with the business of Company, in the
geographic area in which Company is conducting business at the time of
termination of Employee's employment, or own more than 5% of any such firm,
corporation or other entity. In addition, Employee must furnish Company with
such information as Company shall from time to time request in order to
determine that Employee is in compliance with the requirements of the preceding
provisions of this paragraph 22. The payments to be made under paragraph 21 are
conditioned upon Employee's complying with the provisions of this paragraph 22,
and, in the event that such provisions are not complied with, Company may
suspend such payments for any period of time in which Employee is not in
compliance with the preceding provisions of this paragraph 22.

23. Company. For purposes of paragraphs 4, 13, and 22 of this Agreement,
the Company shall mean Applied Cellular Technology, Inc. and all subsidiaries
and affiliates of it.

24. Salary in Stock or Cash. At least 10 days prior to each July 1 that
this Agreement is in effect, Employee shall elect the amount or percentage, if
any, of his salary for the 12 month period beginning on that date which he
desires to be payable in company common stock ("Stock"). To the extent Employee

8
<PAGE>

elects to have all or part of his salary paid in Stock, the per share value of
the Stock, which shall be used to determine the number of shares payable for the
employment year, shall be the average closing price for the last five business
days prior to the applicable July 1. Any election shall be irrevocable. If
Employee fails to make a timely election, his entire salary for the employment
year shall be paid in cash. Any shares of Stock payable to Employee shall be
subject to such transfer restrictions as are required by applicable securities
law and a legend to such effect shall be placed on the certificates. Employee
represents and warrants that any Stock which will be paid to him pursuant to
this paragraph 24 shall be acquired for investment purposes and not for resale
or distribution. Company shall include such Stock in any subsequent registration
to the extent practical. If any portion of Employee's salary is paid in Stock,
Employee shall tender to Company the amount required for income and employment
tax withholding on any such payment. If, and to the extent such amount is not so
tendered, Company may withhold the number of shares of Stock equal to the amount
such required withholding from the shares of Stock issued to Employee.
Notwithstanding the foregoing provisions of this paragraph 24, unless otherwise
elected by Employee on or before August 21, 1998, the election previously made
under the prior employment agreement for the employment year beginning June 1,
1998 shall apply to the employment year beginning on July 1, 1998. Any such
revised election shall apply only to salary payable after such revised election
is made.

25. Other Matters. For purposes of this paragraph 25, the following words
shall have the following respective meanings:

(a) Condominium. The condominium owned by Company known and numbered
as Unit #14, 6110 North Ocean Boulevard, Pelican Cove, Ocean Ridge, Florida
33480, or any condominium which the Company acquires to replace it.

9
<PAGE>

(b) Gross Up Payment. A payment that covers all federal and state
income taxes payable by Employee, if any, which would not have been
incurred by Employee if another payment or transfer and the Gross Up
Payment had not been made to Employee.

(d) Triggering Event. A Change of Control, termination of Employee's
employment for any reason other than due to his breach of a material
provision of the terms of his employment as described in paragraph 11 of
the Employment Agreement, or if he ceases to be Company's chairman of the
board or chief executive officer for any reason other than due to his
breach of a material provision of the terms of his employment as described
in paragraph 11 of the Employment Agreement. Within 10 days of the
occurrence of a Triggering Event, Company shall promptly transfer ownership
of the Condominium free and clear of all mortgages, deeds of trust, and
other encumbrances to Employee and, in addition, shall pay Employee an
amount of cash equal to the Gross Up Payment. In the event that the
Condominium is not owned by Company at such time, Company shall pay
Employee in cash an amount equal to the value of the Condominium free and
clear of all mortgages, deeds of trust and other encumbrances (as
determined by a reputable appraiser selected by Employee whose fee shall be
paid one half by each party) plus the Gross Up Payment. Within 10 days of
the occurrence of a Triggering Event, Company shall also pay to Employee
the sum of $12,105,000. If the Triggering Event is the Employee's death,
such amount shall be paid to his designated beneficiary, if any, otherwise
to his estate. Company may pay such amount in cash or in Company's common

10
<PAGE>

stock or in a combination of cash and common stock. Common Stock used in
payment shall be valued at the average closing price on the Nasdaq National
Market over the last 5 business days prior to the date of the Triggering
Event.

26. Effect of Amendment. This amended and restated agreement shall
supersede all agreements between the parties relating to Employee's employment
by Company.

IN WITNESS WHEREOF, the parties have duly executed this agreement as of the
day and year first above written.

APPLIED CELLULAR TECHNOLOGY, INC.

By: /S/ Garrett A. Sullivan
--------------------------------------
Title: President

"Company"

/S/ Richard J. Sullivan
--------------------------------------
Richard J. Sullivan

"Employee"

Exhibit 10.5

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") made and entered into this 23rd day of March,
1999, by and between APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation
("Company") and GARRETT A. SULLIVAN ("Employee").

BACKGROUND

Employee has been and presently is employed by Company as its president and
chief operating officer. The parties have entered into a formal employment
agreement covering the terms and conditions of such employment. Subsequently,
the parties reached a tentative agreement regarding some, but not all, of the
terms and conditions of a revised employment agreement. The parties have now
reached an agreement on all of the terms and conditions of a revised employment
agreement and desire to set forth in this document such terms and conditions.

TERMS AND CONDITIONS

1. Employment. Company hereby employs Employee, and Employee hereby accepts
such employment by Company, on the terms and conditions set forth below.

2. Capacity. Employee shall serve as Company's president and chief
operating officer unless and until otherwise determined by the Company's board
of directors and thereafter as the Company's vice chairman and executive vice
president-strategic planning. Employee shall perform such services for Company
and its subsidiaries and affiliates as Company's board of directors shall direct

<PAGE>

from time to time. However, no such services shall be of a nature which are not
commensurate with, and/or are beneath the dignity of, Employee's title.

3. Term. Company's employment of Employee under this Agreement shall be for
an initial term of five years commencing on June 1, 1998 and ending on May 31,
2003. The term of Employee's employment under this Agreement shall automatically
be renewed for successive additional one year terms on each anniversary of the
commencement of Employee's employment under this Agreement, beginning with the
June 1, 1999 anniversary date, each of which terms shall be added at the end of
the then existing term (taking into account any prior extensions or failures to
extend), unless either party notifies the other at least 30 days prior to an
anniversary date of this Agreement. For example, unless either party notifies
the other to the contrary on or before May 2, 1999, the term of this Agreement
shall be extended from June 1, 2003 to May 31, 2004. For further example, and
assuming the term of this Agreement has been extended to May 31, 2004, if one
party notifies the other that it does not desire to extend the term of this
Agreement for an additional year and such notice is given on or before May 2,
2000, the term of this Agreement shall not be extended from June 1, 2004 to May
31, 2005. Notwithstanding the foregoing, the term of this Agreement may end
prior to the termination date determined under this paragraph 3 as provided in
paragraphs 9, 10, 11 and 12.

4. Service While Employed. Employee agrees to devote his best efforts, his
full diligence and substantially all of his business time to his duties
hereunder and shall not engage, either directly or indirectly, in any business
or other activity which is competitive with or adverse to the interests or the
business of Company.

<PAGE>

5. Items Furnished and Relocation. Company shall furnish Employee with such
private office, secretarial assistance, and such other facilities, equipment and
services suitable to his position and adequate to perform his duties hereunder.
Employee shall not be relocated by Company without his consent. Company shall
furnish Employee with an automobile upon the terms and conditions that were in
effect on June 1, 1998.

6. Compensation, Vacations and Reimbursement. As partial compensation for
his services to Company, Company agrees to pay Employee an annual salary in
regular monthly or other more frequent installments of not less than $165,000.
In addition, Employee shall be entitled to receive such bonuses, incentive
compensation, and other compensation, if any, as Company's board of directors,
executive committee, compensation committee, or other designated committee shall
award Employee from time to time whether in cash, Company stock, stock options,
other stock based compensation, other form of remuneration, or any combination
of the foregoing. All such compensation shall be subject to legally required
income and employment tax withholding. Employee shall be entitled to paid
vacations and reimbursement for all reasonable business expenses in accordance
with Company's policies for executive officers.

8. Welfare and Fringe Benefits. In addition to his compensation described
in paragraph 6 and the benefits described in paragraph 7 above, Employee shall

<PAGE>

be entitled to participate in such welfare and fringe benefits plans and
programs of the Company for which he is eligible.

<PAGE>

termination, Company shall pay to Employee a severance payment ("Severance
Payment") equal to three times the base amount as defined in Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended ("Code") minus $1.00.
Notwithstanding the foregoing, (a) if the Severance Payment and any other
amounts payable by Company to Employee are parachute payments under Code Section
280b (collectively, "Parachute Payments") and, (b), if reducing the Severance
Payment would eliminate the tax provided for in Code Section 4999 ("Section 4999
Tax") which would otherwise be applicable to the Parachute Payments, and (c) if,
because of such elimination, the net amount of the Parachute Payments (total
payments minus Section 4999 Tax) would be greater than such net amount without
reduction, then the Severance Payment shall be reduced by the smallest amount
required to eliminate the imposition of the Section 4999 Tax. The foregoing
determination shall be made by Company's general counsel, and his determination
shall be binding upon Company and Employee. The amount determined under the
foregoing provisions of this paragraph 12 shall be payable no later than one
month after the effective date of the Employee's termination of employment. A
change in control means: the acquisition, without the approval of Company's
board of directors, by any person or entity, other than Company or a "related
entity," of more than 20% of the outstanding shares of Company's voting common
stock through a tender offer, exchange offer or otherwise; the liquidation or
dissolution of Company following a sale or other disposition of all or
substantially all of its assets; a merger of consolidation involving Company
which results in Company not being the surviving parent corporation; or any time
during any two-year period in which individuals who constituted the board of
directors of Company at the start of such period (or whose election was approved
by at least two-third of the then members of the board of directors of Company
who were members at the start of the two-year period) do not constitute at least

5
<PAGE>

15. Entire Agreement: Modification. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter and supersedes
all prior or contemporaneous agreements not set forth in this agreement. This
Agreement may not be modified other than by an agreement in writing signed by
each of the parties.

6
<PAGE>

19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri.

21. Supplemental Compensation. Upon the termination of Employee's
employment with Company for any reason, other than due to his breach of a
material provision of his employment as described in paragraph 11, Employee
shall be entitled to receive from Company 60 equal monthly payments, with the
first such payment due on the second first day of the month after termination of
employment, of 8.333% of his compensation from Company over the 12 month period
for which his compensation was the greatest. If Employee should die before all
or any part of the above described monthly payments have been made, all payments

7
<PAGE>

or all remaining payments shall be made to his designated beneficiary, if any,
otherwise to his estate. Notwithstanding the foregoing, the aggregate amount
payable under this paragraph 21 shall be reduced by the amount, if any, payable
under paragraph 12.

23. Company. For purposes of paragraphs 4, 13, and 22 of this Agreement,
the Company shall mean Applied Cellular Technology, Inc. and all subsidiaries
and affiliates of it.

24. Other Matters. For purposes of this paragraph 24, a "Triggering Event"
is a Change of Control (as defined in paragraph 12), the termination of Richard
Sullivan's employment for any reason other than due to his breach of a material
provision of the terms of his employment as described in the present paragraph
11 of Richard Sullivan's Employment Agreement, or if Richard Sullivan ceases to

8
<PAGE>

be Company's chairman of the board or chief executive officer for any reason
other than due to his breach of material provision of the terms of his
employment as described in the present paragraph 11 of Richard Sullivan's
Employment Agreement. Within 10 days of the occurrence of a Triggering Event.
Company shall pay to Employee the sum of $3,525,000. Company may pay such amount
in cash or in Company's common stock or in a combination of cash and common
stock. Common stock used in payment shall be valued at the average closing price
on the Nasdaq National Market over the last 5 business days prior to the date of
the Triggering Event.

25. Effect of Amendment. This amended and restated agreement shall
supersede all agreements between the parties relating to Employee's employment
by Company.

IN WITNESS WHEREOF, the parties have duly executed this agreement as of the
day and year first above written.

APPLIED CELLULAR TECHNOLOGY, INC.

By: /S/ Richard J. Sullivan
--------------------------------------
Title: Chief Executive Officer

"Company"

/S/ Garrett A. Sullivan
--------------------------------------
Garrett A. Sullivan

"Employee"

Exhibit 10.6

EMPLOYMENT AGREEMENT

THIS AGREEMENT ("Agreement") made and entered into this 23rd day of March,
1999, by and between APPLIED CELLULAR TECHNOLOGY, INC., a Missouri corporation
("Company") and DAVID A. LOPPERT ("Employee").

BACKGROUND

Employee has been and presently is employed by Company as its vice
president and chief financial officer. The parties have entered into a formal
employment agreement covering the terms and conditions of such employment.
Subsequently, the parties reached a tentative agreement regarding some, but not
all, of the terms and conditions of a revised employment agreement. The parties
have now reached an agreement on all of the terms and conditions of a revised
employment agreement and desire to set forth in this document such terms and
conditions.

TERMS AND CONDITIONS

1. Employment. Company hereby employs Employee, and Employee hereby accepts
such employment by Company, on the terms and conditions set forth below.

2. Capacity. Employee shall serve as Company's vice president and chief
financial officer. Employee shall perform such services for Company and its
subsidiaries and affiliates as Company's board of directors shall direct from
time to time. However, no such services shall be of a nature which are not
commensurate with, and/or are beneath the dignity of, Employee's title.

<PAGE>

3. Term. Company's employment of Employee under this Agreement shall be for
an initial term of five years commencing on June 19, 1998 and ending on June 18,
2003. The term of Employee's employment under this Agreement shall automatically
be renewed for successive additional one year terms on each anniversary of the
commencement of Employee's employment under this Agreement, beginning with the
June 19, 1999 anniversary date, each of which terms shall be added at the end of
the then existing term (taking into account any prior extensions or failures to
extend), unless either party notifies the other at least 30 days prior to an
anniversary date of this Agreement. For example, unless either party notifies
the other to the contrary on or before May 20, 1999, the term of this Agreement
shall be extended from June 19, 2003 to June 18, 2004. For further example, and
assuming the term of this Agreement has been extended to June 18, 2004, if one
party notifies the other that it does not desire to extend the term of this
Agreement for an additional year and such notice is given on or before May 20,
2000, the term of this Agreement shall not be extended from June 19, 2004 to
June 18, 2005. Notwithstanding the foregoing, the term of this Agreement may end
prior to the termination date determined under this paragraph 3 as provided in
paragraphs 9, 10, 11 and 12.

5. Items Furnished and Relocation. Company shall furnish Employee with such
private office, secretarial assistance, and such other facilities, equipment and

<PAGE>

services suitable to his position and adequate to perform his duties hereunder.
Employee shall not be relocated by Company without his consent.

6. Compensation, Vacations and Reimbursement. As partial compensation for
his services to Company, Company agrees to pay Employee an annual salary in
regular monthly or other more frequent installments at the rate of not less than
$150,000. In addition, Employee shall be entitled to receive such bonuses,
incentive compensation, and other compensation, if any, as Company's board of
directors, executive committee, compensation committee, or other designated
committee shall award Employee from time to time whether in cash, Company stock,
stock options, other stock based compensation, other form of remuneration, or
any combination of the foregoing. All such compensation shall be subject to
legally required income and employment tax withholding. Employee shall be
entitled to paid vacations and reimbursement for all reasonable business
expenses in accordance with Company's policies for executive officers.

<PAGE>

personal representative all salary and other compensation due Employee through
the end of such month. If Employee becomes permanently disabled so that he
cannot perform his duties hereunder, as determined by a physician selected by or
acceptable to Company, his employment shall be deemed to have been terminated as
of the last day of the month in which such determination is made, and he will
receive his salary and other compensation through the end of such month.

12. Change in Control. Notwithstanding any other provision of this
Agreement, should a "change of control" occur, Employee, at his sole option and
discretion, may terminate his employment under this Agreement at any time within
one year after such change of control upon 15 days notice. In the event of such
termination, Company shall pay to Employee a severance payment ("Severance
Payment") equal to three times the base amount as defined in Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended ("Code") minus $1.00.
Notwithstanding the foregoing, (a) if the Severance Payment and any other
amounts payable by Company to Employee are parachute payments under Code Section

<PAGE>

280b (collectively, "Parachute Payments") and, (b), if reducing the Severance
Payment would eliminate the tax provided for in Code Section 4999 ("Section 4999
Tax") which would otherwise be applicable to the Parachute Payments, and (c) if,
because of such elimination, the net amount of the Parachute Payments (total
payments minus Section 4999 Tax) would be greater than such net amount without
reduction, then the Severance Payment shall be reduced by the smallest amount
required to eliminate the imposition of the Section 4999 Tax. The foregoing
determination shall be made by Company's general counsel, and his determination
shall be binding upon Company and Employee. The amount determined under the
foregoing provisions of this paragraph 12 shall be payable no later than one
month after the effective date of the Employee's termination of employment. A
change in control means: the acquisition, without the approval of Company's
board of directors, by any person or entity, other than Company or a "related
entity," of more than 20% of the outstanding shares of Company's voting common
stock through a tender offer, exchange offer or otherwise; the liquidation or
dissolution of Company following a sale or other disposition of all or
substantially all of its assets; a merger of consolidation involving Company
which results in Company not being the surviving parent corporation; or any time
during any two-year period in which individuals who constituted the board of
directors of Company at the start of such period (or whose election was approved
by at least two-third of the then members of the board of directors of Company
who were members at the start of the two-year period) do not constitute at least
50% of the board of directors for any reason. A related entity is the parent, a
subsidiary or any employee benefit plan (including a trust forming a part of
such a plan) maintained by Company, its parent or a subsidiary.

<PAGE>

Agreement shall not operate as a waiver of any other breach of such provision or
any other provision of this agreement.

19. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Missouri.

<PAGE>

otherwise to his estate. Notwithstanding the foregoing, the aggregate amount
payable under this paragraph 21 shall be reduced by the amount, if any, payable
under paragraph 12.

23. Company. For purposes of paragraphs 4, 13, and 22 of this Agreement,
the Company shall mean Applied Cellular Technology, Inc. and all subsidiaries
and affiliates of it.

24. Relocation Reimbursement. The Company has moved its corporate office to
Palm Beach, Florida and desires Employee to relocate to the Palm Beach, Florida
area as soon as feasible. Employee has agreed to so relocate, and the Company
has agreed to reimburse Employee for the following additional reasonable costs
on a "grossed up" basis:

(a) Employee's direct relocation expenses;

<PAGE>

(b) the closing costs and loan points incurred by Employee in
purchasing a new residence in the Palm Beach area;

(c) the broker's commission on the sale of Employee's residence in St.
Louis County, Missouri plus $10,000 (the difference between Employee's
final asking price for the residence and the buyer's final offer);

(d) the cost of private schools for Employee's children in the Palm
Beach area for no more than 3 school years but not in excess of $15,000 for
any school year, and;

(e) Employee's relocation expenses from the Palm Beach area if his
employment is terminated by the Corporation prior to November 30, 1999
other than pursuant to paragraph 11.

For purposes of the foregoing provisions, reimbursement on a grossed up
basis means reimbursement that covers the federal or state income taxes, if any,
which would not have been incurred by Employee if the expenditure to be
reimbursed had not been made and no reimbursement had been received. For
example, if the amount to be reimbursed is $10,000, and no portion of the
expenditure to be reimbursed is deductible by Employee for federal or state
income tax purposes and all of the reimbursement is includible in Employee's
gross income for federal and state income tax purposes, and Employee's combined
federal and state marginal income tax rate is 40%, the grossed up amount is
$16,667 ($16,667 - .4 (16,667) = $10,000). For further example, if, in the
preceding example, all of the expenditure to be reimbursed is fully deductible
by Employee, the grossed up amount is $10,000.

<PAGE>

25. Effect of Amendment. This amended and restated agreement shall
supersede all agreements between the parties relating to Employee's employment
by Company.

IN WITNESS WHEREOF, the parties have duly executed this agreement as of the
day and year first above written.

APPLIED CELLULAR TECHNOLOGY, INC.

By: /S/ Richard J. Sullivan
--------------------------------------
Title: Chief Executive Officer

"Company"

/S/ David A. Loppert
--------------------------------------
David A. Loppert

"Employee"

Exhibit 10.7

EMPLOYMENT AND NON-COMPETE AGREEMENT

This Employment and Non-Compete Agreement ("Employment Agreement") is
made this 1st day of February, 1999 by and between Applied Cellular Technology,
Inc., a Missouri corporation, with its principal office located at 400 Royal
Palm Way, Suite 410, Palm Beach, Florida 33480 ("Employer") and Scott Silverman
("Employee").

WHEREAS, Employer is a builder of infrastructure services and solutions
for the communications industry; and

WHEREAS, Employer desires to retain the services of the Employee; and

WHEREAS, Employee is willing to be employed by Employer.

NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

1. Term of Employment. Subject to the provisions of Section 5 of this Employment
Agreement, Employer hereby agrees to employ Employee for a period of three (3)
years (the "Employment Term") commencing as of February 1, 1999.

2. Office and Duties.

(a) During the Employment Term, Employee shall serve as an Senior Vice
President-Business Development and Law of Employer. In such position, Employee
shall have such duties and authority as shall be determined from time to time by
the President or his designee. During the Employment Term, Employee's employment
by Employer shall be Employee's exclusive full time employment.

(b) During the Employment Term, Employee shall devote his best efforts
to performance of his duties hereunder and shall not directly or indirectly
engage in any other business, profession or occupation for compensation or
otherwise which would conflict with the limitation of such duties without the
prior written consent of the Board of Directors (the "Board"), which consent
shall not reasonably be withheld, delayed or conditioned.

3. Compensation of Employee. As compensation for the services provided by
Employee under this Employment Agreement, Employer will pay Employee Two Hundred
and Forty Thousand Dollars ($240,000.00) on an annual basis ("Base
Compensation") for the first year of this Employment Agreement in accordance
with Employer's usual payroll procedures. In each year thereafter Employee shall
receive annual increases of ten percent (10%) in his then Base Compensation
provided that at the time of each anniversary date Employee remains an active
Employee. Also, in addition to such Base Compensation, Employee shall be
eligible to receive a "Bonus". The amount of such Bonus shall be based upon the
Employer's financial performance and mutually agreed upon performance goals of
Employee. The maximum amount of Bonus Employee may earn in each year is forty
percent (40%) of Employee's Base Compensation in the previous year. Employee
will also receive a $500.00/ month car allowance.

<PAGE>
Employment and Non-Compete
Agreement
Page 2

From time to time, Employer may develop and implement separate incentive and
stock option plans, for which Employee, if appropriate, may also be eligible.

The Employee shall also be entitled to participate in any and all employee
benefit plans, medical insurance plans, life insurance plans, disability income
plans, and other benefit plans, from time to time, in effect for employees of
Employer. Such participation shall be subject to the terms of the applicable
plan documents, generally applicable Employer policies and the discretion of the
Board or any administrative or other committee provided for in, or contemplated
by, such plan, except any waiting periods shall be waived if such waiver is
allowable under such plan and would not prejudice the rights of any other
participant. In addition, the Employee shall be entitled to receive benefits
which are the same or substantially similar to those which are currently being
provided to the other employees of Employer.

4. Reimbursement for Expenses. In accordance with Employer's policy, the
Employee will be reimbursed for all "out-of-pocket" and other direct business
expenses (exclusive of commuting costs), upon presentation of appropriate
receipts and documentation.

5. Termination.

(a) For Cause by Employer. Notwithstanding any other provision of this
Employment Agreement, Employee's employment hereunder may be terminated by
Employer at any time for Cause. For purposes of this Employment Agreement,
"Cause" shall mean (i) Employee's willful and continued failure to perform the
requirements of his duties hereunder (other than as a result of total or partial
incapacity due to physical or mental illness) for thirty (30) days after a
written demand is delivered to Employee on behalf of Employer, which
specifically identifies the manner in which it is alleged that Employee has not
substantially performed his duties, (ii) Employee's dishonesty in the
performance of his duties hereunder, (iii) an act or acts on Employee's part
involving moral turpitude or constituting a felony under the laws of the United
States or any state thereof, (iv) any other act or omission which materially
injures the financial condition or business reputation of Employer or any of its
subsidiaries or affiliates, or (v) Employee's material breach of his obligations
under Section 6 and 8 hereof.

(b) Permanent Disability. For the purposes of this Employment
Agreement, the term "permanent disability" shall mean the Employee's inability
to perform his duties as prescribed in this Employment Agreement, which,
following a written request by either Employer or the Employee, shall be
determined by agreement between the parties and, if they cannot agree, by a
panel of three (3) physicians, one of whom will be selected by Employer, one by
the Employee and the third by the first two so selected. Said panel shall also
fix the date of the occurrence of the "permanent disability." Said panel's
determination shall be conclusive. Notwithstanding anything to the contrary set
forth herein, the Employee shall be presumed to be permanently disabled, thus

<PAGE>
Employment and Non-Compete
Agreement
Page 3

terminating this Employment Agreement, as of the date he is receiving payments
for permanent disability under any disability insurance policies or under the
Social Security Act.

(c) Temporary Disability. If due to physical or mental illness,
disability or injury, the Employee shall be disabled so as to be unable to
perform substantially all of his duties and responsibilities hereunder, the
Board may designate another person to act in his place during the period of such
disability. Notwithstanding any such designation, the Employee shall continue to
receive his full salary and benefits under Section 3 of this Employment
Agreement until he becomes eligible for disability income under Employer
disability income plan. In the absence of a disability income plan at the time
of such disability, Employer shall pay the Employee benefits equal to those the
Employee would have received if Employer's current disability income plan were
in effect at such time; provided however, that Employer's obligations hereunder
shall cease twelve (12) months from the onset of such disability.

(d) Death. Employee's employment hereunder shall terminate immediately
in the event of the Employee's death. If Employee's employment is terminated by
the death of Employee, Employer shall pay to Employee's estate or his legal
representative all amounts due through the date of Employee's death. The payment
to Employee of any other benefits following the termination of Employee's
employment pursuant to this Section 5(d) shall be determined by the Board in
accordance with the plans, policies and practices of Employer.

(e) Without Cause by Employer. The Employee's employment hereunder may
be terminated by Employer at any time without Cause. If Employee's employment is
terminated by Employer without Cause (other than by reason of disability or
death), Employer shall continue to pay Employee the compensation to which he is
entitled pursuant to Section 3 hereof for the balance of the Employment Term as
if such termination had not occurred. The payment to Employee of any other
benefits following the termination of Employee's employment pursuant to this
Section 5(e) shall be determined by the Board in accordance with the plans,
policies and practices of Employer.

(f) Termination by Employee. Employee's employment hereunder may be
terminated by Employee at any time upon not less than sixty (60) days prior
written notice from Employee to Employer. If Employee terminates his employment
with Employer pursuant to this Section 5(f), Employer shall pay Employee any
amounts due through the date of termination.

(g) Notice of Termination. Any purported termination of employment by
Employer or by Employee shall be communicated by written "Notice of Termination"
to the other party hereto in accordance with Section 15 hereof. For purposes of
this Employment Agreement, a Notice of Termination shall mean a notice which
shall indicate the specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances

<PAGE>
Employment and Non-Compete
Agreement
Page 4

claimed to provide a basis for termination of employment under the provision so
indicated.

6. Non-Competition.

(a) Employee acknowledges and recognizes the highly competitive nature
of the businesses of Employer and its affiliates and accordingly agrees that
during the period commencing on the date hereof and continuing until the later
of (i) the date that Employee ceases to receive payments pursuant to Section 5
of this Employment Agreement or (ii) one (1) year from the date of the
termination of Employee's employment:

(i) Employee will not engage in any activity which is competitive
with any business now, or at any time during the Employment Term, conducted by
Employer, its subsidiaries or its affiliates, including without limitation
becoming an employee, investor (except for passive investments of not more than
one percent (1%) of the outstanding shares of, or any other equity
over-the-counter securities market), officer, agent, partner or director of, or
other participant in, any firm, person or other entity in any geographic area
which either directly competes with a line or lines of business of Employer, its
subsidiaries or its affiliates. Notwithstanding any provision of this Employment
Agreement to the contrary, upon the occurrence of any breach of this Section
6(a)(i), if Employee is employed by Employer, Employer may immediately terminate
the employment of Employee for Cause in accordance with the provisions contained
in Sections 5 and 15, whether or not Employee is employed by Employer, Employer
shall immediately cease to have any obligations to make payments to Employee
under this Employment Agreement.

(ii) Employee will not directly or indirectly assist others in
engaging in any of the activities in which Employee is prohibited to engage by
clause (i) above.

(iii) Employee will not directly or indirectly (A) induce any
employee of Employer, its subsidiaries or its affiliates to engage in any
activity in which Employee is prohibited from engaging by clause (i) above or to
terminate his employment with Employer, its subsidiaries or its affiliates, or
(B) employ or offer employment to any person who was employed by Employer, its
subsidiaries or its affiliates unless such person shall have ceased to be
employed by Employer, its subsidiaries or its affiliates for a period of at
least twelve (12) months.

(b) It is expressly understood and agreed that (i) although Employee
and Employer consider the restrictions contained in this Section 6 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Employment Agreement is unenforceable, this Employment Agreement shall not
be rendered void but rather shall be deemed to be enforceable to such maximum
extent as such court may judicially determine or indicate to be enforceable, and
(ii) if any restriction contained in this Employment Agreement is determined to
be unenforceable and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

<PAGE>
Employment and Non-Compete
Agreement
Page 5

7. Resignation as Officer and/or Director. In the event that Employee's
employment is terminated for any reason whatsoever, the Employee agrees to, as
the case may be, resign immediately as an officer and/or director of Employer.

8. Confidentiality. Employee will not at any time (whether during or after his
employment with Employer) disclose or use for his own benefit or purposes or the
benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other organization, entity or enterprise other than
Employer and any of its subsidiaries or affiliates, any Confidential
Information. As used herein, the term "Confidential Information" shall mean any
trade secrets, information, data, or other confidential information (excluding
information which is not unique to Employer or which is generally known to the
industry or development programs, costs, marketing, trading, investment, sales
activities, promotion, credit processes, formulas, data, software, drawings,
specifications, source and object code, financial and pricing information,
marketing information, and business and development plans or the business and
affairs of Employer generally, or of any subsidiary or affiliate of Employer.
Employee agrees that upon termination of his employment with Employer for any
reason, he will return to Employer immediately all copies of any Confidential
Information, together with any memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of Employer, its subsidiaries and its affiliates, except that he
may retain personal notes, notebooks and diaries. Employee further agrees that
he will not retain or use for his account at any time any trade name, trademark
or other proprietary business designation used or owned in connection with the
business of Employer, its subsidiaries or its affiliates.

9. Specific Performance. Employee acknowledges and agrees that Employer's
remedies at law for a breach or threatened breach of any of the provisions of
Section 6 or Section 8 would be inadequate and, in recognition of this fact,
Employee agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, Employer without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance,
temporary restraining orders, temporary or permanent injunctions or any other
equitable remedy which may then be available.

10. Vacation. The Employee shall be entitled to ten (10) days of paid vacation.
Such vacation shall be taken at a time mutually convenient to Employer and
Employee. Vacation days may not be accumulated.

11. Sick Days/Personal Business. The Employee shall be entitled to five (5) paid
sick or personal days off due to illness or personal business each year of
employment beginning on the first day of the Employee's employment.

12. Holidays. The Employee shall be entitled to the standard company holidays.

<PAGE>
Employment and Non-Compete
Agreement
Page 6

13. Restriction on Authority of Employee. Notwithstanding anything set forth in
this Employment Agreement to the contrary, the Employee, in the performance of
his duties hereunder, shall not take any of the following actions without the
written consent of the Board:

a. Enter into negotiations or execute documents that would materially affect
the existing debt and/or structure or alter, modify or change any banking
relations.

14. Representations and Warranties. The Employee hereby represents and warrants
that he is free to enter this Employment Agreement and to render his services
pursuant hereto and that neither the execution and delivery of this Employment
Agreement, nor the performance of his duties hereunder, violates the provisions
of any other agreement to which he is a party or by which he is bound.

15. Notices. All notices required or permitted under this Employment Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:

Employer: Applied Cellular Technology, Inc.
400 Royal Palm Way, Suite 410
Palm Beach, Florida 33480

Employee: Scott Silverman
955 Gardenia Drive
Delray Beach, Florida 33483

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

16. Entire Agreement. This Employment Agreement contains the entire agreement
of the parties and there are no other promises or conditions in any other
agreement, whether oral or written. This Employment Agreement supersedes any
prior written or oral agreements between the parties.

17. Expenses. Each party shall pay its own expenses incident to the performance
or enforcement of this Employment Agreement, including all fees and expenses of
its counsel for all activities of such counsel undertaken pursuant to this
Employment Agreement, except as otherwise herein specifically provided.

<PAGE>
Employment and Non-Compete
Agreement
Page 7

other provision hereof; provided, however, that no such written waiver, unless
it, by its own terms, explicitly provides to the contrary, shall be construed to
effect a continuing waiver of the provision being waived and no such waiver in
any instance shall constitute a waiver in any other instance or for any other
purpose or impair the right of the party against whom such waiver is claimed in
all other instances or for all other purposes to require full compliance with
such provision. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other party
may reasonably require in order to effectuate the terms and purposes of this
Employment Agreement.

19. Amendments. This Employment Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any waiver, change, modification, consent or discharge is sought.

20. Severability. If any provision of this Employment Agreement shall be held
or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Employment Agreement
shall be reformed and construed in any such jurisdiction or case as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case.

21. Counterparts. This Employment Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and in pleading or
proving any provision of this Employment Agreement, it shall not be necessary to
produce more than one of such counterparts.

22. Section Headings. The headings contained in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.

23. Gender. Whenever used herein, the singular number shall include the plural,
the plural shall include the singular, and the use of any gender shall include
all genders.

<PAGE>
Employment and Non-Compete
Agreement
Page 8

24. Governing Law. This Employment Agreement shall be governed by and construed
and enforced in accordance with the law (other than the law governing conflict
of law questions) of the State of Florida.

25. The parties have executed this Employment Agreement the day and year first
above written.

EMPLOYER

By: /S/ Garrett A. Sullivan
____________________________________
Its Duly Authorized President,
Garrett A. Sullivan

EMPLOYEE

______________________ By: /S/ Scott Silverman
____________________________________
Witness Scott Silverman

Exhibit 10.8

EMPLOYMENT AND NON-COMPETE AGREEMENT

This Employment and Non-Compete Agreement ("Employment Agreement") is made this
5th day of November, 1998 by and between Applied Cellular Technology, Inc a
Missouri corporation, with its principal office located at 400 Royal Palm Way
Suite 400, Palm Beach, Florida (the "Employer") and Andrew Hidalgo (the
"Employee").

WHEREAS, Employer is in the business of the building and selling of
communication systems; and

WHEREAS, Employer desires to retain the services of the Employee; and

WHEREAS, Employee is willing to be employed by the Employer.

WHEREAS, the parties wish to replace and supercede the current Employment
Agreement by and between the Employee and Alacrity Systems Incorporated.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:

1. Capacity. Employee shall serve the Employer as its Vice President of
Strategic Relations.

2. Best Efforts of Employee. During his employment hereunder, the Employee
shall, subject to the direction and supervision of the President and Board of
Directors, devote his full business time, best efforts, business judgment, skill
and knowledge to the advancement of the Employer's interests and to the
discharge of his duties and responsibilities hereunder. Such duties shall be
provided at Downingtown, Pennsylvania and other such places as the needs,
business or opportunities of the Employer may require from time to time. He
shall not engage in any other business activity, except as may be approved by
the Board of Directors; provided, however, that nothing herein shall be
construed as preventing the Employee from:

a. investing his assets in a manner which shall not require any material
services on his part in the operations or affairs of the companies or other
entities in which such investments are made;

b. serving on the Board of Directors of any company, provided he receives
the approval in writing from the Chief Executive Officer and Board of Directors,
and further provided that he shall not be required to render any material
services with respect to the operations or affairs of any such company; or

c. engaging in religious, charitable or other community or non-profit
activities which does not impair his ability to fulfill his duties and
responsibilities under this Employment Agreement.

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 2

3. Compensation of Employee. As compensation for the services provided by
Employee under this Paragraph, Employer will pay Employee an annual salary of
one hundred twenty thousand dollars ($120,000.00) in accordance with the
Employer's usual payroll procedures. Separate incentive and stock option plans
will be developed by the Employer, together with key management, and that these
plans will reflect company goals and performance objectives.

The Employee shall also be entitled to participate in any and all employee
benefit plans, medical insurance plans, life insurance plans, disability income
plans and other benefit plans, from time to time, in effect for executives of
the Employer. Such participation shall be subject to the terms of the applicable
plan documents, generally applicable Company policies and the discretion of the
Board of Directors or any administrative or other committee provided for in, or
contemplated by, such plan. In addition, the Employee shall be entitled to
receive benefits which are the same or substantially similar to those which are
currently being provided to the other Executives by the Employer.

In addition to the above compensation, Employee shall be eligible to
receive a bonus in the amount of thirty thousand dollars ($30,000.00) based upon
the achievement of those revenue objectives and parameters assigned by the
President in each year of this Employment Agreement. Such bonus, if any, shall
be payable within a reasonable period of time after the completion of the audit
for the calendar year.

4. Termination of Employment. Upon termination of this Employment Agreement,
any and all payments and/or obligations under Section 3, and as accrued under
Section 7, of this Employment Agreement shall cease; provided, however, that the
Employee shall be entitled to payments for periods or partial periods that
occurred prior to the date of termination and for which the Employee has not yet
been paid.

5. Reimbursement for Expenses. In accordance with the Employer's policy, the
Employee will be reimbursed for all "out-of-pocket" and other direct business
expenses (exclusive of daily commuting costs to principal place of business),
upon presentation of appropriate receipts and documentation.

6. Confidentiality. Employee recognizes that the Employer has and will have
inventions, business affairs, products, future plans, trade secrets, customer
lists and other vital information (collectively "Confidential Information")
which are valuable, special and unique assets of the Employer. The Employee
agrees that he will not at any time or in any manner, either directly or
indirectly, divulge, disclose or communicate in any manner any Confidential
Information to any third party without the prior written consent of the
Employer. The Employee will protect the Confidential Information and treat it as
strictly confidential.

In the event of a breach, or threatened breach, by Employee of his
obligations under this Paragraph, the Employee hereby acknowledges and

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 3

stipulates that the Employer shall not have an adequate remedy at law, shall
suffer irreparable harm and, therefore, it is mutually agreed and stipulated by
the parties hereto that, in addition to any other remedies at law or in equity
which Employer may have, the Employer shall be entitled to obtain in a court of
law and/or equity (i) a temporary and/or permanent injunction from disclosing in
whole or in part such Confidential Information or (ii) from providing any
services to any party to whom such Confidential Information has been disclosed,
or may be disclosed. Employer shall not be prohibited by this Paragraph from
pursuing other remedies, including a claim for losses and damages.

7. Vacation. The Employee shall continue to be entitled to two (2) weeks of paid
vacation. Such vacation shall be taken at a time mutually convenient to Employer
and Employee. Unused vacation may be carried over into the next calendar year
only.

8. Sick Days/Personal Business. The Employee shall be entitled to ten (10) paid
sick or personal days off due to illness or personal business each year of
employment beginning on the first day of the Employee's employment.

9. Holidays. The Employee shall be entitled to the standard company holidays.

10. Term. This Employment Agreement shall have an initial term of three (3)
years, beginning at the commencement date so indicated at the end of this
Employment Agreement.

11. Termination. Notwithstanding the provisions of Paragraph 10, the Employee's
employment hereunder shall terminate under the following circumstances:

a. Death or Permanent Disability. In the event of the Employee's death
during the Employee's employment hereunder, the Employee's employment shall
terminate on the date of his death or Permanent Disability (as defined below).

Permanent Disability. For the purposes of this Employment Agreement, the
term "permanent disability" shall mean the Employee's inability to perform the
essential functions of his duties as prescribed in this Employment Agreement,
which, following a written request by either the Employer or the Employee, shall
be determined by agreement between the parties and, if they cannot agree, by a
panel of three (3) physicians, one of whom will be selected by the Employer, one
by the Employee and the third by the first two so selected. Said panel shall
also fix the date of the occurrence of the permanent disability. Said panel's
determination shall be conclusive. Notwithstanding anything to the contrary set
forth herein, the Employee shall be presumed to be permanently disabled as of
the date he is receiving payments for permanent disability under any disability
insurance policies or under the Social Security Act.

b. Temporary Disability. If, due to physical or mental illness, disability
or injury, the Employee shall be disabled so as to be unable to perform
substantially all of his essential duties and responsibilities hereunder, the
Board of Directors may designate another person to act in his place during the

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 4

period of such disability. Notwithstanding any such designation, the Employee
shall continue to receive his full salary and benefits under Paragraph 3 of this
Agreement until he becomes eligible for disability income under the Employer
disability income plan. In the absence of a disability income plan at the time
of such disability, the Employer shall pay the Employee benefits equal to those
the Employee would have received if the Employer's current disability income
plan were in effect at such time; provided however, that the Employer's
obligations hereunder shall cease twelve (12) months from the onset of such
disability.

c. Termination by the Employer for Cause. The Employee's employment
hereunder may be terminated for cause, without further liability on the part of
the Employer, by a majority vote of all of the members of the Board of
Directors. Termination for cause shall be defined as:

(i) Deliberate dishonesty of the Employee with respect to the Employer.

(ii) Conviction of the Employee of a crime involving moral turpitude.

(iii) Gross and willful failure to perform a substantial portion of his
duties and responsibilities hereunder.

(iv) Employee's abandonment of his duties hereunder for a period of more
than thirty (30) days. Abandonment by the Employee of duties hereunder shall be
deemed to have occurred if: the Employee ceases to function and perform duties
hereunder, leaves the geographic area in which the Employer engages in its
business, or conducts himself with intentional disregard of the Employer's
interests and its business.

(v) Any other willful act that has or will have a similar negative
impact on the financial success of the Employer.

d. After the first anniversary date, Employee may, upon thirty (30) days
written notice, terminate this Employment Agreement. Notwithstanding such
termination, the provisions of paragraph 13 shall remain in effect for an
additional one (1) year beyond the date of resignation.

e. Termination Without Good Cause. In the event that Employee terminates
this Employment Agreement with good cause or Employer terminates the Employment
Agreement without good cause; Employee shall continue to receive payments and
benefits, including vesting of options issued by ACT, for the remaining Term of
the Employment Agreement.

12. Resignation as Officer. In the event that the Employee's employment with the
Employer is terminated for any reason whatsoever, the Employee agrees to
immediately resign as an Officer of the Employer.

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 5

13. Non-Competition. The Employee acknowledges that he has gained, and will gain
extensive and valuable experience and knowledge in the business conducted by
Employer and has had, and will have, extensive contacts with customers of
Employer. Accordingly, the Employee covenants and agrees with Employer that he
shall not compete directly or indirectly with Employer, either during the term
of his employment or during the one (1) year period immediately thereafter and
shall not, during such period, make public statements in derogation of Employer.
For the purposes of this Section 13, the term "Employer" shall be deemed to
include subsidiaries, parents and affiliates of Employer. Competing directly or
indirectly with Employer shall mean engaging or having a material interest,
directly or indirectly, as owner, employee, officer, director, partner,
venturer, stockholder, capital investor, consultant, agent, principal, advisor
or otherwise, either alone or in association with others, in the operation of
any entity engaged in the business of software design and development for office
devices that have telephony, faxing, copying, printing and scanning capabilities
combined in one multifunction product. Competing directly or indirectly with
Employer, as used in this Employment Agreement, shall be deemed not to include
an ownership interest as an inactive investor, which, for purposes of this
Employment Agreement, shall mean the beneficial ownership of less than one
percent (1%) of the outstanding shares of any series or class of securities of
any competitor of Employer, which shares are publicly traded in the securities
markets.

14. Restriction on Authority of Employee. Notwithstanding anything set forth in
this Employment Agreement to the contrary, the Employee, in the performance of
his duties hereunder, shall not take any of the following actions without the
written consent of the Board of Directors:

a. Enter into negotiations or execute documents that would effect the
existing debt and/or structure or alter, modify or change any banking relations
after such Closing Date.

15. Representations and Warranties. The Employee hereby represents and warrants
that he is free to enter this Employment Agreement and to render his services
pursuant hereto and that neither the execution and delivery of this Employment
Agreement, nor the performance of his duties hereunder, violates the provisions
of any other agreement to which he is a party or by which he is bound.

16. Date of Commencement. This Employment Agreement shall become effective
December 1, 1998.

17. Notices. All notices required or permitted under this Employment Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 6

Employer: Applied Cellular Technology, Inc.
400 Royal Way Suite 410
Palm Beach, Florida 33480

Copies to: Paul D. Creme, Esq.
Merra, Kanakis, Creme& Mellor
60 Main Street
Nashua, New Hampshire

Employee: Andrew Hidalgo
608 Perimeter Drive
Downingtown, PA 19335

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

18. Entire Agreement. This Employment Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement, whether oral or written. This Employment Agreement supersedes any
prior written or oral agreements between the parties.

19. Amendment. This Employment Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.

20. Assignment. This Employment Agreement may not be assigned by Employee.

21. Section Headings. The headings contained in this Employment Agreement are
for reference only and shall not in any way affect the meaning or interpretation
of this Employment Agreement.

22. Severability. If any provision of this Employment Agreement shall
be held to be invalid or unenforceable for any reason, the remaining provisions
shall continue to be valid and enforceable. If a court finds that any provision
of this Employment Agreement is invalid or unenforceable, but that by limiting
such provision it would become valid and enforceable, then such provision shall
be deemed to be written, construed and enforced as so limited.

23. Waiver of Contractual Right. The failure of either party to enforce any
provision of this Employment Agreement shall not be construed as a waiver or

<PAGE>

EMPLOYMENT AND NON-COMPETE AGREEMENT
ANDREW HIDALGO
Page 7

limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Employment Agreement.

24. Applicable Law. This Employment Agreement shall be governed by the laws
(other than the law governing conflict of law questions) of the State of
Florida.

25. Counterparts. This Employment Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and, in pleading or
proving any provision of this Employment Agreement, it shall not be necessary to
produce more than one of such counterparts.

26. The parties have executed this Employment Agreement the day and year first
above written.

EMPLOYER

Applies Cellular Technology, Inc

By: /S/ Garrett A. Sullivan
_________________________________
Garrett A. Sullivan
Chairman of the Board

EMPLOYEE

/S/ Andrew Hidalgo
______________________________________
Andrew Hidalgo

Exhibit 10.9

EMPLOYMENT AND NON-COMPETE AGREEMENT

This Employment and Non-Compete Agreement ("Employment Agreement") is made
this ___ day of December, 1998 by and between Applied Cellular Technology of
Missouri, Inc., a Missouri corporation, with its principal office located 1866
North Deffer Drive, Nixa, Missouri 65714 (the "Employer") and Gary A. Gray (the
"Employee").

WHEREAS, Employer is in the business of design, development, and sale of
software and consulting services and WHEREAS, Employer desires to retain the
services of the Employee; and

WHEREAS, Employee is willing to be employed by Employer.

NOW, THEREFORE, in consideration of the premises, and the mutual covenants
and agreements contained herein and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

1. Term of Employment. Subject to the provisions of Section 5 of this
Employment Areement, Employer hereby agrees to employ Employee for a period of
three (3) years (the "Employment Term") commencing as of the date hereof.

2. Office and Duties.

(a) During the Employment Term, Employee shall serve as a President of
Employer. In such position, Employee shall have such duties and authority as
shall be determined from time to time by the Chairman of the Board or his
designee. During the Employment Term, Employee's employment by Employer shall be
Employee's exclusive full time employment.

(b) During the Employment Term, Employee shall devote his best efforts to
performance of his duties hereunder and shall not directly or indirectly engage
in any other business, profession or occupation for compensation or otherwise
which would conflict with the limitation of such duties without the prior
written consent of the Board of Directors (the "Board"), which consent shall not
reasonably be withheld, delayed or conditioned.

3. Compensation of Employee.

(a) As compensation for the services provided by Employee under this
Employment Agreement, Employer will pay Employee Three Thousand Five Hundred
Dollars ($3,500.00) per month in accordance with Employer's usual payroll
procedures ("Base Compensation").

(b) In addition to such Base Compensation, so long as Employee remains an
active Employee, Employee shall also be eligible to receive a "Sales Commission"
paid as follows: for sales directly attributable to Employee's efforts, Employee
shall receive a commission of ten percent (10%) based upon the gross sales
revenues. In the event that such order does not meet a gross margin of
thirty-five percent (35%), the commission amount will be adjusted accordingly.

<PAGE>
Employment and Non-Compete
Agreement
Page 2

For sales not the result of the direct efforts of Employee, Employee shall
receive an "Override Commission" of three percent (3%). All commission payments
will be paid in two equal payments, the first half upon receipt of the order and
the customer deposit, the balance upon receipt by Employer of the remaining
balance from the customer.

(c) The Employer shall maintain and make available for review any and all
sales records so that Employee may, upon his reasonable request, confirm the
accuracy of commission payments due and payable hereunder.

(d) The Employee shall also be entitled to participate in any and all
employee benefit plans, medical insurance plans, life insurance plans,
disability income plans and other benefit plans, from time to time, in effect
for employees of Employer. Such participation shall be subject to the terms of
the applicable plan documents, generally applicable Employer policies and the
discretion of the Board or any administrative or other committee provided for
in, or contemplated by, such plan, except any waiting periods shall be waived if
such waiver is allowable under such plan and would not prejudice the rights of
any other participant. In addition, the Employee shall be entitled to receive
benefits which are the same or substantially similar to those which are
currently being provided to the other employees of Employer.

5. Termination.

(a) For Cause by Employer. Notwithstanding any other provision of this
Employment Agreement, Employee's employment hereunder may be terminated by
Employer at any time for Cause. For purposes of this Employment Agreement,
"Cause" shall mean (i) Employee's willful and continued failure to perform his
duties hereunder (other than as a result of total or partial incapacity due to
physical or mental illness) for ten (10) days after a written demand is
delivered to Employee on behalf of Employer, which specifically identifies the
manner in which it is alleged that Employee has not substantially performed his
duties, (ii) Employee's dishonesty in the performance of his duties hereunder,
(iii) an act or acts on Employee's part involving moral turpitude or
constituting a felony under the laws of the United States or any state thereof,
(iv) any other act or omission which materially injuries the financial condition
or business reputation of Employer or any of its subsidiaries or affiliates, or
(v) Employee's material breach of his obligations under Section 6 and 8 hereof
which breach shall remain uncured by Employee within ten (10) days following
receipt of notice from Employer specifying such breach.

<PAGE>

Employment and Non-Compete
Agreement
Page 3

written request by either Employer or the Employee, shall be determined by
agreement between the parties and, if they cannot agree, by a panel of three (3)
physicians, one of whom will be selected by Employer, one by the Employee and
the third by the first two so selected. Said panel shall also fix the date of
the occurrence of the "permanent disability". Said panel's determination shall
be conclusive. Notwithstanding anything to the contrary set forth herein, the
Employee shall be presumed to be permanently disabled thus terminating this
Employment Agreement, as of the date he is receiving payments for permanent
disability under any disability insurance policies or under the Social Security
Act.

(c) Temporary Disability. If, due to physical or mental illness, disability
or injury, the Employee shall be disabled so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Board may
designate another person to act in his place during the period of such
disability. Notwithstanding any such designation, the Employee shall continue to
receive his full salary and benefits under Section 3 of this Employment
Agreement until he becomes eligible for disability income under Employer
disability income plan. In the absence of a disability income plan at the time
of such disability, Employer shall pay the Employee benefits equal to those the
Employee would have received if Employer's current disability income plan were
in effect at such time; provided however, that Employer's obligations hereunder
shall cease twelve (12) months from the onset of such disability.

(d) Death. Employee's employment hereunder shall terminate immediately in
the event of the Employee's death. If Employee's employment is terminated by the
death of Employee, Employer shall pay to Employer's estate or his legal
representative all amounts due through the date of Employee's death. The payment
to Employee of any other benefits following the termination of Employee's
employment pursuant to this Section 5(d) shall be determined by the Board in
accordance with the plans, policies and practices of Employer.

(e) Without Cause by Employer. The Employee's employment hereunder may be
terminated by Employer at any time, without Cause. If Employee's employment is
terminated by Employer without Cause (other than by reason of disability or
death), Employer shall continue to pay Employee the compensation to which he is
entitled pursuant to Section 3 hereof for the balance of the Employment Term as
if such termination had not occurred. The payment to Employee of any other
benefits following the termination of Employee's employment pursuant to this
Section 5(e) shall be determined by the Board in accordance with the plans,
policies and practices of Employer.

<PAGE>
Employment and Non-Compete
Agreement
Page 4

6. Non-Competition.

(a) Employee acknowledges and recognizes the highly competitive nature of
the businesses of Employer and its affiliates and accordingly agrees that during
the period commencing on the date hereof and continuing until the later of (i)
the date that Employee ceases to receive payments pursuant to Section 5 of this
Employment Agreement or (ii) one (1) year from the date of the termination of
Employee's employment:

(ii) Employee will not directly or indirectly assist others in
engaging in any of the activities in which Employee is prohibited to engage by
clause (i) above.

<PAGE>

Employment and Non-Compete
Agreement
Page 5

that the time or territory or any other restriction contained in this Employment
Agreement is unenforceable, this Employment Agreement shall not be rendered void
but rather shall be deemed to be enforceable to such maximum extent as such
court may judicially determine or indicate to be enforceable, and (ii) if any
restriction contained in this Employment Agreement is determined to be
unenforceable and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

8. Confidentiality. Employee will not at any time (whether during or after his
employment with Employer) disclose or use for his own benefit or purposes or the
benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other organization, entity or enterprise other than
Employer and any of its subsidiaries or affiliates, any Confidential
Information. As used herein, the term "Confidential Information" shall mean any
trade secrets, information, data, or other confidential information (excluding
information which is not unique to Employer or which is generally known to the
industry or development programs, costs, marketing, trading, investment, sales
activities, promotion, credit processes, formulas, data, software, drawings,
specifications, source and object code, financial and pricing information,
marketing information and business and development plans or the business and
affairs of Employer generally, or of any subsidiary or affiliate of Employer,
Employee agrees that upon termination of his employment with Employer for any
reason, he will return to Employer immediately all copies of any Confidential
Information, together with any memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of Employer, its subsidiaries and its affiliates, except that he
may retain personal notes, notebooks and diaries. Employee further agrees that
he will not retain or use for his account at any time any trade name, trademark
or other proprietary business designation used or owned in connection with the
business of Employer, its subsidiaries or its affiliates.

<PAGE>
Employment and Non-Compete
Agreement
Page 6

10. Vacation. The Employee shall be entitled to four (4)weeks of paid vacation.
Such vacation shall be taken at a time mutually convenient to Employer and
Employee. Vacation days may not be accumulated.

11. Sick Days. The Employee shall be entitled to paid sick days off due to
illness limited to the policies and procedures of the then current disability
policies that may in place. In no event shall it be determined that the Employee
have more paid sick days than those allowed in such policies.

12. Holidays. The Employee shall be entitled to the standard company holidays.

a. Enter into negotiations or execute documents that would materially
affect the existing debt and/or structure or alter, modify or change any banking
relations.

Employer: Applied Cellular Technology, Inc.
1866 North Deffer Drive
Nixa, Missouri 65714

Employee: Gary A. Gray
718 E. Gaslight Dr.
Springfield, MO 65810

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

16. Entire Agreement. This Employment Agreement contains the entire agreement
of the parties and there are no other promises or conditions in any other

<PAGE>

Employment and Non-Compete
Agreement
Page 7

agreement, whether oral or written. This Employment Agreement supersedes any
prior written or oral agreements between the parties.

18. Waivers and Further Agreements. Any waiver of any terms or conditions of
this Employment Agreement shall not operate as a waiver of any other breach of
such terms or conditions or any other term or condition, nor shall any failure
to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof; provided, however, that no such written waiver, unless
it, by its own terms, explicitly provides to the contrary, shall be construed to
effect a continuing waiver of the provision being waived and no such waiver in
any instance shall constitute a waiver in any other instance or for any other
purpose or impair the right of the party against whom such waiver is claimed in
all other instances or for all other purposes to require full compliance with
such provision. Each of the parties hereto agrees to execute all such further
instruments and documents and to take all such further action as the other party
may reasonably require in order to effectuate the terms and purposes of this
Employment Agreement.

<PAGE>
Employment and Non-Compete
Agreement
Page 8

22. Section Headings. The headings contained in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.

23. Gender. Whenever used herein, the singular number shall include the plural,
the plural shall include the singular, and the use of any gender shall include
all genders.

24. Governing Law. This Employment Agreement shall be governed by and construed
and enforced in accordance with the law (other than the law governing conflict
of law questions) of the Missouri.

25. The parties have executed this Employment Agreement the day and year first
above written.

EMPLOYER

By: /S/ Garrett A. Sullivan
_________________________
Garrett A. Sullivan
Chairman of the Board

EMPLOYEE

By: /S/ Gary A. Gray
__________________________
Gary A. Gray

Exhibit 10.10

EMPLOYMENT AND NON-COMPETE AGREEMENT

This Employment and Non-Compete Agreement ("Employment Agreement") is made
this 16th day of December, 1997 by and between ACT Financial Corp., a Delaware
corporation, with its principal office located at James River Professional
Center, Suite 5, Nixa, MO 65714 (the "Employer") and Jerome C. Artigliere (the
"Employee").

WHEREAS, Employer is in the business of providing financing to the various
Applied Cellular Technology, Inc. ("ACT") subsidiaries; and

WHEREAS, Employer desires to retain the services of the Employee; and

WHEREAS, Employee is willing to be employed by the Employer.

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

1. Capacity. Employee shall serve the Employer as its President.

2. Best Efforts of Employee. During the Term of this Employment Agreement, the
Employee shall, subject to the direction and supervision of the Chairman and
Board of Directors, devote his full business time, best efforts, business
judgment, skill and knowledge to the advancement of the Employer's interests and
to the discharge of his duties and responsibilities hereunder. Such duties shall
be provided at Kensington, New Hampshire and other such places as the needs,
business or opportunities of the Employer may require from time to time.
Employee also is aware of the possibility of relocation to a new corporate
headquarters in West Palm Beach, Florida. Employer may, at its sole option,
determine that Employee's duties would best be performed in the new corporation
location. Provided however, that such relocation shall not occur for at least
one year from the date of the commencement of this Employment Agreement. In the
event that Employee is asked to relocate, Employer shall offer to Employee the
same or similar relocation package available to other similarly situated
executives. He shall not engage in any other business activity, except as may be
approved by the Board of Directors; provided, however, that nothing herein shall
be construed as preventing the Employee from:

a. investing his assets in a manner which shall not require any material
services on his part in the operations or affairs of the companies or other
entities in which such investments are made;

<PAGE>

Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 2

c. engaging in religious, charitable or other community or non-profit
activities which does not impair his ability to fulfill his duties and
responsibilities under this Employment Agreement.

3. Compensation of Employee. As compensation for the services provided by
Employee, Employer will pay Employee an annual salary of eighty-five thousand
dollars ($85,000.00) in accordance with the Employer's usual payroll procedures.
Separate incentive and stock option plans will be developed by the Employer,
together with key management, and that these plans will reflect company goals
and performance objectives. Such performance objectives and criteria shall be
mutually agreed upon on or before January 5 of each year of this Employment
Agreement, reduced to a writing and executed by both parties.

Employee shall also be eligible to receive a bonus, if performance criteria
are met, in the amount of twenty-five thousand dollars ($25,000.00). Such bonus
shall be payable within a reasonable period of time after the close of each
fiscal year.

Employee shall also receive, upon date of the effectiveness of this
Employment Agreement, stock options subject to a Side Agreement of even date.

The Employee shall also be entitled to participate in any and all employee
benefit plans, medical insurance plans, life insurance plans, disability income
plans and other benefit plans, from time to time, in effect for executives of
the Employer. Such participation shall be subject to the terms of the applicable
plan documents, generally applicable Corporation policies and the discretion of
the Board of Directors or any administrative or other committee provided for in,
or contemplated by, such plan. In addition, the Employee shall be entitled to
receive benefits which are the same or substantially similar to those which are
currently being provided to the other Executives by the Employer.

4. Reimbursement for Expenses. In accordance with the Employer's policy, the
Employee will be reimbursed for all "out-of-pocket" and other direct business
expenses (exclusive of commuting costs), upon presentation of appropriate
receipts and documentation.

5. Proprietary Information. The Employer possesses, and will continue to
possess, information that has been created, discovered or developed by, or
otherwise become known to, the Employer (including, without limitation,
information created, discovered, developed or made known to me during the period
of or arising out of Employee's employment by the Employer, whether before or
after the date hereof) or in which property rights have been or may be assigned
or otherwise conveyed to the Employer, which information has commercial value in
the business in which the Employer is engaged and is treated by the Employer as
confidential. All such information is hereinafter called "Proprietary
Information" which term, as used herein, shall also include, but shall not be
limited to, systems, processes, formulae, data, functional specifications,

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 3

computer programs, blueprints, know-how, improvements, discoveries,
developments, designs, inventions, techniques, marketing plans, strategies,
forecasts, new products, unpublished financial statements, budgets, projections,
licenses, prices, costs and customer and supplier lists; provided, however, that
the term "Proprietary Information" shall not include any of the foregoing which
is in the public domain.

All existing lists of customers of the Employer and all lists of customers
of the Employer developed during the course of Employee's employment by the
Employer are and shall be the sole and exclusive property of the Employer and
that Employee neither has nor shall have any right, title or interest therein;
such lists of customers are and must continue to be confidential; such lists of
customers are not readily accessible to competitors of the Employer; and the
Employer's present and future business relationship with its customers is and
will continue to be of a type which normally continues unless interfered with by
others.

In the event of a breach, or threatened breach, by Employee of his
obligations under this Section, the Employee hereby acknowledges and stipulates
that the Employer shall not have an adequate remedy at law, shall suffer
irreparable harm and, therefore, it is mutually agreed and stipulated by the
parties hereto that, in addition to any other remedies at law or in equity which
Employer may have, the Employer shall be entitled to obtain in a court of law
and/or equity (i) a temporary and/or permanent injunction from disclosing in
whole or in part such Confidential Information or (ii) from providing any
services to any party to whom such Confidential Information has been disclosed,
or may be disclosed. Employer shall not be prohibited by this Section from
pursuing other remedies, including a claim for losses and damages.

6. Ownership of Proprietary Information. All Proprietary Information shall be
the sole property of the Employer and its assigns and the Employer and its
assigns shall be the sole owner of all patents, copyrights, trademarks and other
rights in connection therewith. Employee hereby assign to the Employer any
rights he may have or acquire in such Proprietary Information. Employee hereby
acknowledges that all Proprietary Information is and must continue to be
confidential and that the same is not readily accessible to competitors of the
Employer. At all times, both during Employee's employment by the Employer and
after his termination, Employee will keep in strictest confidence and trust all
Proprietary Information and Employee will not use or disclose any Proprietary
Information without the written consent of the Employer except as may be
necessary in the ordinary course of performing Employee's duties as an employee
of the Employer.

7. Vacation. The Employee shall be entitled to two (2) weeks of paid vacation.
Such vacation shall be taken at a time mutually convenient to Employer and
Employee. Unused vacation may not be accumulated.

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 4

8. Sick Days/Personal Business. The Employee shall be entitled to five (5) paid
sick or personal days off due to illness or personal business each year of
employment beginning on the first day of the Employee's employment.

9. Holidays. The Employee shall be entitled to the standard company holidays.

10. Term. This Employment Agreement shall have an initial term of one (1) year,
beginning at the commencement date so indicated at the end of this Employment
Agreement. This Employment Agreement may be extended, by mutual agreement in
writing signed by both parties, an additional two (2) years.

11. Termination of Employment. Notwithstanding the provisions of Paragraph 10,
the Employee's employment hereunder shall terminate under the following
circumstances:

Permanent Disability. For the purposes of this Employment Agreement, the
term "permanent disability" shall mean the Employee's inability to perform his
duties as prescribed in this Employment Agreement, which, following a written
request by either the Employer or the Employee, shall be determined by agreement
between the parties and, if they cannot agree, by a panel of three (3)
physicians, one of whom will be selected by the Employer, one by the Employee
and the third by the first two so selected. Said panel shall also fix the date
of the occurrence of the permanent disability. Said panel's determination shall
be conclusive. Notwithstanding anything to the contrary set forth herein, the
Employee shall be presumed to be permanently disabled as of the date he is
receiving payments for permanent disability under any disability insurance
policies or under the Social Security Act.

b. Temporary Disability. If, due to physical or mental illness, disability
or injury, the Employee shall be disabled so as to be unable to perform
substantially all of his duties and responsibilities hereunder, the Board of
Directors may designate another person to act in his place during the period of
such disability. Notwithstanding any such designation, the Employee shall
continue to receive his full salary and benefits under Paragraph 3 of this
Employment Agreement until he becomes eligible for disability income under the
Employer disability income plan. In the absence of a disability income plan at
the time of such disability, the Employer shall pay the Employee benefits equal
to those the Employee would have received if the Employer's current disability
income plan were in effect at such time; provided however, that the Employer's
obligations hereunder shall cease twelve (12) months from the onset of such
disability.

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 5

(i) Deliberate dishonesty of the Employee with respect to the
Employer.

(ii) Conviction of the Employee of a crime involving moral
turpitude.

(iii) Gross and willful failure to perform a substantial
portion of his duties and responsibilities hereunder.

(iv) Employee's unexcused abandonment of his duties hereunder
for a period of more than thirty (30) days. Abandonment by the Employee of
duties hereunder shall be deemed to have occurred if: the Employee ceases to
function and perform duties hereunder, leaves the geographic area in which the
Employer engages in its business, or conducts himself with intentional disregard
of the Employer's interests and its business.

(v) Any other willful act that has or will have a smilar
negative impact on the financial success of the Employer.

d. After the first anniversary date, Employee may, upon thirty (30) days
written notice, terminate this Employment Agreement. Notwithstanding such
termination, the provisions of Section 14 shall remain in effect for the
additional one (1) year beyond the date of resignation.

e. Upon termination of this Employment Agreement, any and all payments
and/or obligations under Section 3 of this Employment Agreement shall cease;
provided, however, that the Employee shall be entitled to payments for periods
or partial periods that occurred prior to the date of termination and for which
the Employee has not yet been paid.

12. Termination Without Good Cause. In the event that the Employee terminates
the Employment Agreement with good cause or Employer terminates the Employment
Agreement without good cause, Employee shall continue to receive payments and
benefits, including vesting of options issued by Applied Cellular Technology,
Inc. for the remaining term of the Employment Agreement.

13. Resignation as Officer and Director. In the event that the Employee's
employment with the Employer is terminated for any reason whatsoever, the
Employee agrees to immediately resign as an Officer and Director of the
Employer.

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 6

14. Non-Competition. The Employee acknowledges that he has gained, and will
gain, extensive and valuable experience and knowledge in the business conducted
by Employer and has had, and will have, extensive contacts with customers of
Employer. Accordingly, the Employee covenants and agrees with Employer that he
shall not compete directly or indirectly with Employer, either during the term
of his employment or during the three (3) year period immediately thereafter and
shall not, during such period, make public statements in derogation of Employer.
For the purposes of this Section 14, the term "Employer" shall be deemed to
include subsidiaries, parents and affiliates of Employer. Competing directly or
indirectly with Employer shall mean engaging or having a material interest,
directly or indirectly, as owner, employee, officer, director, partner,
venturer, stockholder, capital investor, consultant, agent, principal, advisor
or otherwise, either alone or in association with others, in the operation of
any entity engaged in the business of providing financing to the various ACT
subsidiaries. Competing directly or indirectly with Employer, as used in this
Employment Agreement, shall be deemed not to include an ownership interest as an
inactive investor, which, for purposes of this Employment Agreement, shall mean
the beneficial ownership of less than one percent (1%) of the outstanding shares
of any series or class of securities of any competitor of Employer, which shares
are publicly traded in the securities markets.

In the event that one or more of the provisions contained herein shall, for
any reason, be held too excessively broad as to duration, geographical scope
activity or such provision shall be construed as limiting and reducing its as
determined by a court of competent jurisdiction and shall be enforceable to the
extent compatible with applicable law. Further the restriction set forth herein
are not intended to prevent Employee from earning a living or fostering his
career in a manner consistent with his past abilities and background.

15. Restriction on Authority of Employee. Notwithstanding anything set forth in
this Employment Agreement to the contrary, the Employee, in the performance of
his duties hereunder, shall not take any of the following actions without the
written consent of the Board of Directors:

a. Enter into negotiations or execute documents which would effect the
existing debt and/or structure or alter, modify or change any banking relations
after such Closing Date.

16. Representations and Warranties. The Employee hereby represents and warrants
that he is free to enter this Employment Agreement and to render his services
pursuant hereto and that neither the execution and delivery of this Employment
Agreement, nor the performance of his duties hereunder, violates the provisions
of any other agreement to which he is a party or by which he is bound.

17. Date of Commencement. This Employment Agreement is effective January 5,
1998.

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 7

18. Notices. All notices required or permitted under this Employment Agreement
shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:

Employer: ACT Financial Corp.
James River Professional Center, Suite 5
P. O. Box 2067
Nixa, MO 65714

Employee: Jerome C. Artigliere
10 Kady Lane
Kensington, NH 03833

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

19. Arbitration. Any and all disputes between the parties with respect to the
construction or performance of the terms of this Employment Agreement (except
with respect to the equitable remedies available under Section 13) which cannot
be resolved amicably shall be resolved by arbitration in accordance with the
rules of the American Arbitration Association and such arbitration shall occur
in the state in which Employers principal office is located.

20. Entire Agreement. This Employment Agreement contains the entire agreement of
the parties and there are no other promises or conditions in any other
agreement, whether oral or written. This Employment Agreement supersedes any
prior written or oral agreements between the parties.

21. Amendment. This Employment Agreement may be modified or amended, if the
amendment is made in writing and is signed by both parties.

22. Assignment. This Employment Agreement may not be assigned by Employee.

23. Section Headings. The headings contained in this Employment Agreement are
for reference only and shall not in any way affect the meaning or interpretation
of this Employment Agreement.

24. Severability. If any provision of this Employment Agreement shall be held to
be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of

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Employment and Non-Compete Agreement
Jerome C. Artigliere
Page 8

this Employment Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed and enforced as so limited.

25. Waiver of Contractual Right. The failure of either party to enforce any
provision of this Employment Agreement shall not be construed as a waiver or
limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Employment Agreement.

26. Applicable Law. This Employment Agreement shall be governed by the laws
(other than the law governing conflict of law questions) of the state in which
the Employer's principal office is located.

27. Counterparts. This Employment Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and, in pleading or
proving any provision of this Employment Agreement, it shall not be necessary to
produce more than one of such counterparts.

28. The parties have executed this Employment Agreement the day and year first
above written.

EMPLOYER

ACT FINANCIAL CORP.

By: /S/ Garrett A. Sullivan
_________________________________
Garrett A. Sullivan
Chairman of the Board

EMPLOYEE

By: /S/ Jerome C. Artigliere
_________________________________
Jerome C. Artigliere

Exhibit 10.11

EMPLOYMENT AND NON-COMPETE AGREEMENT

This Employment and Non-Compete Agreement ("Employment Agreement") is made
this 15th day of March, 1999 by and between Applied Cellular Technology, Inc., a
Missouri corporation, with its principal office located 400 Royal Palm Way,
Suite 410, Palm Beach, Florida (the "Employer") and Tabitha Zane (the
"Employee").

WHEREAS, Employer is a builder of infrastructure services and solutions for
the communications industry, and

WHEREAS, Employer desires to retain the services of the Employee; and

WHEREAS, Employee is willing to be employed by Employer.

NOW, THEREFORE, in consideration of the premises, and the mutual covenants
and agreements contained herein and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

1. Term of Employment. Subject to the provisions of Section 5 of this
Employment Agreement, Employer hereby agrees to employ Employee for a period of
two (2) years (the "Employment Term") commencing as of February 8, 1999.

2. Office and Duties.

(a) During the Employment Term, Employee shall serve as a Vice President of
Investor Relations of Employer. In such position, Employee shall have such
duties and authority as shall be determined from time to time by the Chairman of
the Board or his designee. During the Employment Term, Employee's employment by
Employer shall be Employee's exclusive full time employment.

(b) During the Employment Term, Employee shall devote her best efforts to
performance of her duties hereunder and shall not directly or indirectly engage
in any other business, profession or occupation for compensation or otherwise
which would conflict with the limitation of such duties without the prior
written consent of the Board of Directors (the "Board"), which consent shall not
reasonably be withheld, delayed or conditioned.

3. Compensation of Employee.

(a) Base Compensation: As compensation for the services provided by
Employee under this Employment Agreement, Employer will pay Employee One Hundred
and Twenty Thousand Dollars ($120,000.00) on an annual basis in accordance with
Employer's usual payroll procedures ("Base Compensation").

(b) Bonus: Also, in addition to such Base Compensation, Employee shall be
eligible to receive as a "Bonus", the payment and amount of which is expressly
conditioned upon the Employer's overall financial performance and the
achievement by Employee of the mutually agreed upon performance goals. The

<PAGE>

Employment and Non-Compete
Agreement
Page 2

maximum amount of Bonus Employee may earn in each year of this Employment
Agreement is twenty percent (20%) of the Employee's then Base Compensation.

(c) Stock Options: Upon the execution and delivery of this Employment
Agreement, Employer shall grant to Employee a stock option for Twenty Five
Thousand (25,000) shares of Employer's common stock ("ACT Stock") at a price
determined to be fifteen percent (15%) below the closing price of Act Stock as
of February 8, 1999. The issuance of such options shall be subject to the
Employer Stock Option Plan and Agreement, as amended, and conditioned upon Board
approval.

From time to time, Employer may develop and implement separate incentive
and stock option plans, for which Employee, if appropriate, may also be
eligible.

(d) Benefits: The Employee shall also be entitled to participate in any and
all employee benefit plans, medical insurance plans, life insurance plans,
disability income plans and other benefit plans, from time to time, in effect
for employees of Employer. Such participation shall be subject to the terms of
the applicable plan documents, generally applicable Employer policies and the
discretion of the Board or any administrative or other committee provided for
in, or contemplated by, such plan, except any waiting periods shall be waived if
such waiver is allowable under such plan and would not prejudice the rights of
any other participant. In addition, the Employee shall be entitled to receive
benefits which are the same or substantially similar to those which are
currently being provided to the other employees of Employer.

4. Relocation Reimbursement. It is a material part of the Employment Agreement
that Employee agrees to transfer to the corporate office of Employer on or
before July 1, 1999, and as of such date, to begin working full time at the
corporate office of Employer in Palm Beach, Florida.

Employer therefore agrees to reimburse Employee for any and all reasonable
expenses directly associated with such relocation; including, (i) the moving
expenses associated with moving Employee's household goods, (ii) closing costs
associated with purchasing a primary residence in the State of Florida, (iii)
costs and expenses associated with temporary housing, and (iv) up to five (5)
house hunting trips for Employee and her immediate family.

Such expenses shall be reimbursed within a reasonable period of time after
the presentation for review and approval of appropriate receipts and
documentation. Employee shall assume the tax consequences that may result from
such reimbursement.

<PAGE>
Employment and Non-Compete
Agreement
Page 3

5. Reimbursement for Expenses.

(a) Business Expenses In accordance with Employer's policy, the Employee
will be reimbursed for all "out-of-pocket" and other direct business expenses
(exclusive of commuting costs), upon presentation of appropriate receipts and
documentation.

(b) Educational/Professional Expenses. Employer shall support Employee's
membership in the National Investor Relations Institute ("NIRI"). Employer shall
pay the annual membership dues for such organization while Employee remains an
active employee. Employer shall also reimburse Employee for expenses incurred as
a result of her attending the annual meeting as well as up to three (3) speaking
engagements each year.

6. Termination.

(a) For Cause by Employer. Notwithstanding any other provision of this
Employment Agreement, Employer hereunder may terminate Employee's employment at
any time for Cause. For purposes of this Employment Agreement, "Cause" shall
mean (i) Employee's willful and continued failure to perform her duties
hereunder (other than as a result of total or partial incapacity due to physical
or mental illness) for thirty (30) days after a written demand is delivered to
Employee on behalf of Employer, which specifically identifies the manner in
which it is alleged that Employee has not substantially performed her duties,
(ii) Employee's dishonesty in the performance of her duties hereunder, (iii) an
act or acts on Employee's part involving moral turpitude or constituting a
felony under the laws of the United States or any state thereof, (iv) any other
act or omission which materially injuries the financial condition or business
reputation of Employer or any of its subsidiaries or affiliates, or (v)
Employee's material breach of her obligations under Section 7 and 9 hereof which
breach shall remain uncured by Employee within thirty (30) days following
receipt of notice from Employer specifying such breach.

(b) Permanent Disability. For the purposes of this Employment Agreement,
the term "permanent disability" shall mean the Employee's inability to perform
her duties as prescribed in this Employment Agreement, which, following a
written request by either Employer or the Employee, shall be determined by
agreement between the parties and, if they cannot agree, by a panel of three (3)
physicians, one of whom will be selected by Employer, one by the Employee and
the third by the first two so selected. Said panel shall also fix the date of
the occurrence of the "permanent disability". Said panel's determination shall
be conclusive. Notwithstanding anything to the contrary set forth herein, the
Employee shall be presumed to be permanently disabled thus terminating this
Employment Agreement, as of the date she is receiving payments for permanent
disability under any disability insurance policies or under the Social Security
Act.

(c) Temporary Disability. If, due to physical or mental illness, disability
or injury, the Employee shall be disabled so as to be unable to perform
substantially all of her duties and responsibilities hereunder, the Board may
designate another person to act in her place during the period of such
disability. Notwithstanding any such designation, the Employee shall continue to

<PAGE>

Employment and Non-Compete
Agreement
Page 4

receive her full salary and benefits under Section 3 of this Employment
Agreement until she becomes eligible for disability income under Employer
disability income plan. In the absence of a disability income plan at the time
of such disability, Employer shall pay the Employee benefits equal to those the
Employee would have received if Employer's current disability income plan were
in effect at such time; provided however, that Employer's obligations hereunder
shall cease twelve (12) months from the onset of such disability.

(d) Death. Employee's employment hereunder shall terminate immediately in
the event of the Employee's death. If Employee's employment is terminated by the
death of Employee, Employer shall pay to Employer's estate or her legal
representative all amounts due through the date of Employee's death. The payment
to Employee of any other benefits following the termination of Employee's
employment pursuant to this Section 6(d) shall be determined by the Board in
accordance with the plans, policies and practices of Employer.

(e) Without Cause by Employer. Employer hereunder may terminate the
Employee's employment at any time, without Cause. If Employee's employment is
terminated by Employer without Cause (other than by reason of disability or
death), Employer shall continue to pay Employee the compensation to which she is
entitled pursuant to Section 3 hereof for the balance of the Employment Term as
if such termination had not occurred. The payment to Employee of any other
benefits following the termination of Employee's employment pursuant to this
Section 6(e) shall be determined by the Board in accordance with the plans,
policies and practices of Employer.

(f) Termination by Employee. Employee hereunder may terminate employee's
employment at any time upon not less than sixty (60) days' prior written notice
from Employee to Employer. If Employee terminates her employment with Employer
pursuant to this Section 6(f), Employer shall pay Employee any amounts due
through the date of termination.

7. Non-Competition.

<PAGE>

Employment and Non-Compete
Agreement
Page 5

Employee ceases to receive payments pursuant to Section 6 of this Employment
Agreement.

(i) Employee will not engage in any activity which is competitive with
any business now, or at any time during the Employment Term, conducted by
Employer, its subsidiaries or its affiliates, including without limitation
becoming an employee, investor (except for passive investments of not more than
one percent (1%) of the outstanding shares of, or any other equity
over-the-counter securities market), officer, agent, partner or director of, or
other participant in, any firm, person or other entity in any geographic area
which either directly competes with a line or lines of business of Employer, its
subsidiaries or its affiliates. Notwithstanding any provision of this Employment
Agreement to the contrary, upon the occurrence of any breach of this Section
7(a)(i), if Employee is employed by Employer, Employer may immediately terminate
the employment of Employee for Cause in accordance with the provisions contained
in Sections 6 and 15, whether or not Employee is employed by Employer, Employer
shall immediately cease to have any obligations to make payments to Employee
under this Employment Agreement.

(ii) Employee will not directly or indirectly assist others in
engaging in any of the activities in which Employee is prohibited to engage by
clause (i) above.

(iii) Employee will not directly or indirectly (A) induce any employee
of Employer, its subsidiaries or its affiliates to engage in any activity in
which Employee is prohibited from engaging by clause (i) above or to terminate
her employment with Employer, its subsidiaries or its affiliates, or (B) employ
or offer employment to any person who was employed by Employer, its subsidiaries
or its affiliates unless such person shall have ceased to be employed by
Employer, its subsidiaries or its affiliates for a period of at least twelve
(12) months.

(b) It is expressly understood and agreed that (i) although Employee and
Employer consider the restrictions contained in this Section 7 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Employment
Agreement is unenforceable, this Employment Agreement shall not be rendered void
but rather shall be deemed to be enforceable to such maximum extent as such
court may judicially determine or indicate to be enforceable, and (ii) if any
restriction contained in this Employment Agreement is determined to be
unenforceable and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.

8. Resignation as Officer and/or Director. In the event that Employee's
employment is terminated for any reason whatsoever, the Employee agrees to, as
the case may be, resign immediately as an Officer and/or Director of Employer.

<PAGE>
Employment and Non-Compete
Agreement
Page 6

9. Confidentiality. Employee will not at any time (whether during or after
her employment with Employer) disclose or use for her own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other organization, entity or enterprise other than
Employer and any of its subsidiaries or affiliates, any Confidential
Information. As used herein, the term "Confidential Information" shall mean any
trade secrets, information, data, or other confidential information (excluding
information which is not unique to Employer or which is generally known to the
industry or development programs, costs, marketing, trading, investment, sales
activities, promotion, credit processes, formulas, data, software, drawings,
specifications, source and object code, financial and pricing information,
marketing information and business and development plans or the business and
affairs of Employer generally, or of any subsidiary or affiliate of Employer,
Employee agrees that upon termination of her employment with Employer for any
reason, she will return to Employer immediately all copies of any Confidential
Information, together with any memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of Employer, its subsidiaries and its affiliates, except that
she may retain personal notes, notebooks and diaries. Employee further agrees
that she will not retain or use for her account at any time any trade name,
trademark or other proprietary business designation used or owned in connection
with the business of Employer, its subsidiaries or its affiliates.

10. Specific Performance. Employee acknowledges and agrees that Employer's
remedies at law for a breach or threatened breach of any of the provisions of
Section 7 or Section 9 would be inadequate and, in recognition of this fact,
Employee agrees that, in the event of such a breach or threatened breach, in
addition to any remedies at law, Employer without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance,
temporary restraining orders, temporary or permanent injunctions or any other
equitable remedy which may then be available.

11. Vacation. The Employee shall be entitled to ten (10) days of paid vacation
on an annual basis. Such vacation shall be taken at a time mutually convenient
to Employer and Employee. Vacation days may not be accumulated. In the first
year of employment the amount of vacation shall be prorated.

12. Sick Days/Personal Business. The Employee shall be entitled to five (5)
paid sick or personal days off due to illness or personal business on an annual
basis beginning on the first day of the Employee's employment.

13. Holidays. The Employee shall be entitled to the standard company holidays.

14. Representations and Warranties. The Employee hereby represents and warrants
that she is free to enter this Employment Agreement and to render her services

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Employment and Non-Compete
Agreement
Page 7

pursuant hereto and that neither the execution and delivery of this Employment
Agreement, nor the performance of her duties hereunder, violates the provisions
of any other agreement to which she is a party or by which she is bound.

Employer: Applied Cellular Technology, Inc.
400 Royal Palm Way
Suite 410
Palm Beach, FL 33480

Employee: Tabitha Zane
1522 Worthington Place
Greensboro, NC 27410

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

<PAGE>

Employment and Non-Compete
Agreement
Page 8

constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Employment Agreement
shall be reformed and construed in any such jurisdiction or case as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case.

22. Survival. Sections 7, 8, 9, and 10 shall survive the termination of this
Employment Agreement.

23. Section Headings. The headings contained in this Employment Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Employment Agreement.

24. Gender. Whenever used herein, the singular number shall include the plural,
the plural shall include the singular, and the use of any gender shall include
all genders.

25. Governing Law. This Employment Agreement shall be governed by and
construed and enforced in accordance with the law (other than the law governing
conflict of law questions) of the State of Florida.

26. The parties have executed this Employment Agreement the day and year first
above written.

EMPLOYER:
APPLIED CELLULAR TECHNOLOGY, INC.

By: /S/ Garrett A. Sullivan
______________________________
Garrett A. Sullivan
President

EMPLOYEE:

________________________ By: /S/ Tabitha Zane
______________________________
Witness Tabitha Zane

Exhibit 10.12

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is made on November 13, 1996, by and
between Universal Commodities Corporation (the "Employer"), 2047 Route 130
North, Burlington, NJ 08016, and Marc Sherman (the "Employee"), 40D Long Beach
Blvd., Loveladies, NJ 08008, 609-361-2332.

A. Employer is engaged in the business of selling used computers and
computer parts.

B. Employer desires to have the services of Employee.

C. Employee is willing to be employed by Employer.

Therefore, the parties agree as follows:

1. Employee shall provide to Employer the normal services of President of the
business.

2. Employee agrees to perform faithfully, industriously and to the best of
Employee's ability, experience and talents, all of the duties that may be
required by the express and implicit terms of this Agreement, to the reasonable
satisfaction of Employer. Such duties shall be provided at Burlington, NJ and at
such other place(s) as the needs, business or opportunities of the Employer may
require from time to time.

3. As compensation for the services provided by Employee under this Agreement,
Employer will pay Employee an annual salary of $125,000.00, in accordance with
Employer's usual payroll procedures. Employee shall be entitled to a commission
based on the Lehmann formula for any acquisitions made by Employer which were
facilitated by Employee. Such commission shall be shared with Edward L.
Cummings. The Lehmann formula is calculated on the total purchase price as
follows: 5% commission on the first million, 4% commission on the second
million, 3% commission on the third million, 2% commission on the fourth
million, and 1% commission thereafter of the total purchase price. This is the
maximum commission that will be paid for each transaction.

4. Salaries will be reviewed annually and stock options will be issued as the
size of the management role expands.

5. Employer will reimburse Employee for "out of pocket" expenses in accordance
with Employer policies in effect from time to time.

6. Employee shall be entitled to six weeks of paid vacation per year beginning
on the first date of Employee's employment. Such vacation must be taken at a
time mutually convenient to Employer and Employee.

Unused vacation time may be accumulated if not used within the year it is
earned up to a total of twelve weeks. Cash payments will not be disbursed in
lieu of earned vacation time.

7. Employee shall be entitled to six days paid time due to illness or personal
business each year of employment beginning on the first date of Employee's
employment. All requests for sick days and personal days off shall be made by
Employee in accordance with Employer policies in effect from time to time.

8. Employee shall be entitled to the standard company holidays.

9. Employee shall be entitled to insurance benefits including health
insurance, disability insurance and any other benefits that are in effect from
time to time.

10. Employer will continue to provide Employee with two automobiles comparable
to the type in use at the signing of this Agreement.

<PAGE>

11. Employee's employment under this Agreement shall be for three years,
beginning on the date of signing of this Agreement. If Employee is terminated by
Employer for Cause or if Employee terminates this Agreement, or Cause exists,
Employer shall pay Employee compensation only to the date of such termination.
If Employer terminates Employee without Cause, Employer will pay Employee an
amount equal to the greater of compensation due to Employee for the remainder of
the Agreement or one years' compensation. "Cause" shall mean any willful
misconduct or premeditated fraud or willful acts against Employer by Employee.

12. Employee shall provided Employer all information regarding Employer's
business of which Employee has knowledge. Employee shall make all suggestions
and recommendations that will be of mutual benefit to Employer and Employee.

13. Employee recognizes that Employer has and will have inventions, business
affairs, products, future plans, trade secrets, customer lists, and other vital
information (collectively, "Information" which are valuable, special and unique
assets of Employer. Employee agrees that Employee will not at any time or in any
manner, either directly or indirectly, divulge, disclose or communicate in any
manner any Information to any third party without the prior written consent of
the Employer. Employee will protect the Information and treat it as strictly
confidential. A violation by Employee of this paragraph shall be a material
violation of this Agreement and will justify legal and/or equitable relief.

If it appears that Employee has disclosed (or has threatened to disclose)
Information in violation of this Agreement, Employer shall be entitled to an
injunction to restrain Employee from disclosing, in whole or in part, such
Information, or from providing any services to any party to whom such
Information has been disclosed or may be disclosed. Employer shall not be
prohibited by this provision from pursuing other remedies, including a claim for
losses and damages.

14. Employee agrees to submit to all of the rules and regulations of Employer.

15. All notices are required or permitted under this Agreement shall be in
writing and shall be deemed delivered when delivered in person or deposited in
the United States mail, postage paid, addressed as follows:

Employer: Universal Commodities Corporation
Attn. Garrett A. Sullivan
2047 Route 130 North
Burlington, NJ 08016

Employee: Marc Sherman
40D Long Beach Blvd.
Loveladies, NJ 08008

Such addresses may be changed from time to time by either party by
providing written notice in the manner set forth above.

16. This agreement contains the entire agreement of the parties and there are
not other promises or conditions in any other agreement whether oral or written.
This Agreement supersedes any prior written or oral agreements between the
parties.

17. This Agreement may be modified or amended, if the amendment is made in
writing and is singed by both parties.

18. If any provision of the Agreement shall be held to be invalid or
unenforceable for any reason, the remaining provisions shall continue to be
valid and enforceable. If a court finds that any provision of the Agreement is
invalid or unenforceable, but that by limiting such provision it would become
valid and enforceable, then such provision shall be deemed to be written,
construed, and enforced as so limited.

19. The failure of either party to enforce any provision of this Agreement
shall not be construed as a waiver or limitation of the party's right to
subsequently enforce and compel strict compliance with every provision of this
Agreement.

20. This Agreement shall be governed by the laws of the State of New Jersey.

<PAGE>

21. Employee hereby agrees that he shall not at anytime during the term of this
Agreement and for a period of three years thereafter participate in any business
which is in competition with Employer in the States of New Jersey, New York,
Delaware and Connecticut.

22. In the event that the Registration Statement (as defined in the Agreement
of Sale dated as of November 13, 1996, among Employer, Employee and Applied
Cellular Technology, Inc.) has not been declared effective by the Securities and
Exchange Commission or Employee has not received registered common stock as
provided in the Agreement of Sale within nine months after the date of the
Agreement of Sale, the provisions of Section 13 and 21 hereof shall be null and
void and Employee shall be permitted to compete against Employer at Employee's
sole discretion.

Agreed this 13th day of November, 1996.

Universal Commodities Corporation

By: _____________________________________
Garrett A. Sullivan - CEO

/s/ Marc Sherman
_____________________________________
Marc Sherman

The undersigned hereby agrees to guarantee all obligations of Employer
under this Agreement if Employer, for any reason, is unable or unwilling to
perform.

APPLIED CELLULAR TECHNOLOGY, INC.

By: ___________________________________

Title:_________________________________

<PAGE>

Agreed this 13th day of November, 1996.

Universal Commodities Corporation

By: /s/ Garrett A. Sullivan
_____________________________________
Garrett A. Sullivan - CEO

_____________________________________
Marc Sherman

The undersigned hereby agrees to guarantee all obligations of Employer
under this Agreement if Employer, for any reason, is unable or unwilling to
perform.

APPLIED CELLULAR TECHNOLOGY, INC.

By: /s/ Garrett A. Sullivan
_____________________________________

Title: President

<PAGE>

[Logo Omitted]

March 12, 1999

Personal & Confidential

Mr. Marc Sherman
2047 Route 130 North
Burlington, NJ 08016

Re: Employment Agreement dated November 13, 1996 ("Employment Agreement")

Dear Marc:

The referenced Employment Agreement is hereby amended as follows:

1. Base Salary: Commencing January 1, 1999 your base salary will be $210,000
per annum.

Except as indicated above, the remaining terms of the Employment Agreement shall
remain unchanged and the Employment Agreement will continue in full force and
effect.

Please indicate your acceptance of this Amendment to your Employment Agreement
by signing the enclosed copy of this letter and returning it to me.

Sincerely,

Applied Cellular Technology, Inc. Universal Commodities Corp.

By: /s/ Garrett A. Sullivan By: /s/ Garrett A. Sullivan
______________________________ _________________________
Garrett A. Sullivan Garrett A. Sullivan
President Chairman

Accepted:

/S/ Marc Sherman Date: 3-19-99
___________________________________ _________
Marc Sherman

400 Royal Palm Way, Suite 410 Palm Beach, FL 33480
TEL 561.366.4800 FAX 561.366.0002

Exhibit 21.1

Applied Cellular Technology, Inc.
List of Subsidiary Companies

Company Name Country or State of
Incorporation
- ------------------------------------------------- -------------------
ACT Acquisition Corp. Delaware
ACT Automotive Group, Inc. Delaware
ACT Communications, Inc. Delaware
ACT Financial Corporation Delaware
ACT-GFX Canada, Inc. Ontario, Canada
ACT Houston Leasing Corp. Texas
ACT Leasing Corp. Delaware
ACT Louisiana Leasing, Inc. Louisiana
Advanced Telecomm of Maryland, Inc. Maryland
Advanced Telecomm of Pittsburgh, a Pennsylvania
Business Trust Pennsylvania
Advanced Telecommunications, Inc. Illinois
Alacrity Systems, Inc. New Jersey
The Americom Group, Inc. Louisiana
Applied Cellular Technology Financial Corp. New Hampshire
Applied Cellular Technology International, Ltd. United Kingdom
Applied Cellular Technology of Missouri, Inc. Missouri
Atlantic Systems, Inc. New Jersey
Aurora Electric, Inc. Alaska
Blue Star Electronics, Inc. New Jersey
Canadian Network Services, Inc. Delaware
City Dial Network Services, Ltd. Ontario, Canada
Consolidated Micro Components, Inc. Pennsylvania
Cra-Tek Company California
C.T. Specialists, Inc. California
Cybertech Station, Inc. Pennsylvania
Data Path Technologies, Inc. New York
Delaware Tele-Resources, Inc. Ontario, Canada
Elite Computer Services, Inc. New Jersey
The Fromehill Company Utah
GDB Software Services, Inc. New York
Ground Effects Ltd. Ontario, Canada
Hopper Manufacturing Co., Inc. California
Information Products Center, Inc. New Jersey
Innovative Vacuum Solutions, Inc. Pennsylvania
Inteletek, Inc. Delaware
MVAK Technologies, Inc. New Jersey
Norcom Resources, Inc. Minnesota
Pizarro Re-Marketing, Inc. Texas
PPL, Ltd. New York
Service Transport Company New Jersey
Signal Processors Limited United Kingdom
Signature Industries Limited United Kingdom
STC Netcom, Inc. California

<PAGE>

Company Name Country or State of
Incorporation
- ------------------------------------------------- -------------------
Teledata Concepts, Inc. Florida
TigerTel Services Limited Ontario
Universal Commodities Corp. New Jersey
US Electrical Products Corp. New Jersey
Winward Electric Service, Inc. Utah

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

Exhibit 27.1

Financial Data Schedule

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's audited consolidated financial statements as of and for the twelve
months ended December 31, 1998, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000924642
<NAME> Applied Cellular Technology, Inc.

<S> <C>
<PERIOD-START> Jan-01-1998
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<CASH> 4555000
<SECURITIES> 0
<RECEIVABLES> 35380000
<ALLOWANCES> 990000
<INVENTORY> 20657000
<CURRENT-ASSETS> 65244000
<PP&E> 22873000
<DEPRECIATION> 7246000
<TOTAL-ASSETS> 124116000
<CURRENT-LIABILITIES> 50757000
<BONDS> 2838000
0
0
<COMMON> 36000
<OTHER-SE> 67524000
<TOTAL-LIABILITY-AND-EQUITY> 124116000
<SALES> 205701070
<TOTAL-REVENUES> 207081000
<CGS> 123654000
<TOTAL-COSTS> 142893000
<OTHER-EXPENSES> 55253000
<LOSS-PROVISION> 1031000
<INTEREST-EXPENSE> 1653000
<INCOME-PRETAX> 7702000
<INCOME-TAX> 2588000
<INCOME-CONTINUING> 51140100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4690000
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.13

</TABLE>