EXHIBIT 99.1 INDEX TO FINANCIAL STATEMENTS CFT CONSULTING, INC. TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT...................................................................................1 FINANCIAL STATEMENTS Balance Sheets as of December 31, 1998 and June 30, 1999 (Unaudited)...........................................2 Statements of Operations for the Year Ended December 31, 1998 and for the Six Months Ended June 30, 1998 (Unaudited) and 1999 (Unaudited)........................................4 Statement of Changes in Stockholders' Equity for the Year Ended December 31, 1998...............................................................................5 Statement of Changes in Stockholders' Equity for the Six Months Ended June 30, 1999 (Unaudited).................................................................6 Statements of Cash Flows for the Year Ended December 31, 1998 and for the Six Months Ended June 30, 1998 (Unaudited) and 1999 (Unaudited)........................................7 Notes to Financial Statements .................................................................................9 INDEPENDENT AUDITORS' REPORT Board of Directors CFT Consulting, Inc. Sarasota, Florida We have audited the accompanying balance sheet of CFT Consulting, Inc. as of December 31, 1998, and the related statement of operations, changes in stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CFT Consulting, Inc. as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Eaton Honick Pellegrino & McFarland, P.A. Sarasota, Florida May 21, 1999 CFT CONSULTING, INC. Balance Sheets JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------------ ASSETS Current Assets Cash & cash equivalents $ 71,211 $ 514,311 Marketable securities 670 670 Accounts receivable net of allowance for doubtful accounts 2,285,999 3,467,115 Advance - employees 6,909 - Notes receivable - employees 14,524 77,692 Deferred tax asset 44,000 56,700 ----------------- ------------------ Total Current Assets 2,423,313 4,116,488 Property and Equipment, net of accumulated depreciation 456,671 473,226 Other Assets Deposits 20,651 26,151 Deferred tax asset 35,700 51,500 Organizational costs, net of amortization - - ----------------- ------------------ Total Other Assets 56,351 77,651 ----------------- ------------------ TOTAL ASSETS $ 2,936,335 $ 4,667,365 ================= ================== See accompanying notes and accountant's report - 2 - CFT CONSULTING, INC. Balance Sheets (Continued) JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------------ LIABILITIES Current Liabilities Accounts payable $ 431,327 $ 757,003 Accrued expenses 81,247 931,742 Accrued interest 19,223 - Deposits 8,296 8,296 Deferred tax liability 293,000 252,000 Shareholder loan - short-term 440,523 440,511 Current portion - capital lease obligation 83,503 74,158 Short-term borrowings 1,026,285 765,562 Income tax payable 152,830 469,343 ----------------- ------------------ Total Current Liabilities 2,536,234 3,698,615 Long-Term Liabilities Capital lease obligations, net of current portion 99,086 68,964 Notes payable, net of current portion 4,555 - Deferred tax liability 11,600 21,000 ----------------- ------------------ Total Long-Term Liabilities 115,241 89,964 ----------------- ------------------ Total Liabilities 2,651,475 3,788,579 EQUITY Stockholders' Equity 284,860 878,786 ----------------- ------------------ TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 2,936,335 $ 4,667,365 ================= ================== See accompanying notes and accountant's report - 3 - CFT CONSULTING, INC. Statements of Operations FOR THE SIX FOR THE SIX FOR THE MONTHS ENDED MONTHS ENDED YEAR ENDED JUNE 30, 1998 JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) (UNAUDITED) ----------------- ----------- ----------- REVENUE Revenue $ 9,248,029 $ 4,836,390 $ 8,791,929 EXPENSES Operating expenses 9,643,796 4,419,669 7,722,895 ------------- ---------------- --------------- Income (loss) from operations (395,767) 416,721 1,069,034 OTHER INCOME AND EXPENSES Interest income 6,774 3,430 3,333 Interest expense (81,241) (41,248) (51,060) Other income 1,377 - 25,461 Loss on disposal of equipment (17,301) (1,452) (58,586) ------------- ---------------- --------------- Total other income and expense (90,391) (39,270) (80,852) ------------- ---------------- --------------- Income (loss) before income taxes (486,158) 377,451 988,182 Income tax benefit (expense) 64,839 150,000 (438,571) ------------- ---------------- --------------- NET INCOME (LOSS) $ (421,319) $ 527,451 $ 549,611 ============= ================ =============== See accompanying notes and accountant's report - 4 - CFT CONSULTING, INC. Statement of Changes in Stockholders' Equity For the Year Ended December 31, 1998 COMMON ACCUMULATED ADDITIONAL STOCK DEFICIT PAID-IN CAPITAL TOTAL ---------- ---------- --------------- ---------- Balance at December 31, 1997 $ 2,132 $ (204,798) $ 529,749 $ 327,083 Stock issuance to ESOP 83 - 279,917 280,000 Stock options issuance - - 99,096 99,096 Net loss - (421,319) - (421,319) ---------- ---------- ---------- ---------- Balance at December 31, 1998 $ 2,215 $ (626,117) $ 908,762 $ 284,860 ========== ========== ========== ========== See accompanying notes and accountant's report - 5 - CFT CONSULTING, INC. Statement of Changes in Stockholders' Equity For the Six Months Ended June 30, 1999 (Unaudited) COMMON ACCUMULATED ADDITIONAL STOCK DEFICIT PAID-IN CAPITAL TOTAL ---------- ------------ --------------- ------------ Balance at December 31, 1998 $ 2,215 $ (626,117) $ 908,762 $ 284,860 Stock options issuance - - 44,315 44,315 Net income - 549,611 - 549,611 ---------- ------------ ------------ ------------ Balance at June 30, 1999 $ 2,215 $ (76,506) $ 953,077 $ 878,786 ========== ============ ============ ============ See accompanying notes and accountant's report - 6 - CFT CONSULTING, INC. Statements of Cash Flows For the Year Ended December 31, 1998 FOR THE SIX FOR THE SIX FOR THE MONTHS ENDED MONTHS ENDED YEAR ENDED JUNE 30, 1998 JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) (UNAUDITED) ----------------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (421,319) $ 527,451 $ 549,611 Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: Amortization 215 108 - Depreciation 171,076 76,280 133,541 Deferred taxes (301,000) (150,000) (60,100) Loss on disposal of equipment 17,301 1,452 58,586 Common stock issued to ESOP 279,999 - - Stock options issuance 99,096 - 44,314 (Increase) decrease in operating assets: Accounts receivable (447,057) (447,562) (1,181,115) Employee advances 3,091 5,000 6,909 Deposits (10,458) - (5,500) Increase (decrease) in operating liabilities: Accounts payable 120,052 (16,069) 325,676 Accrued expenses 38,433 - 831,272 Accrued income taxes 64,508 (88,322) 316,513 Deposits - 8,400 - --------------- ---------------- -------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (386,063) (83,262) 1,019,707 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (295,316) (40,284) (208,682) Proceeds from: Note receivable issuance (4,524) - (63,168) --------------- ---------------- -------------- NET CASH USED IN INVESTING ACTIVITIES (299,840) (40,284) (271,850) See accompanying notes and accountant's report - 7 - CFT CONSULTING, INC. Statements of Cash Flows (Continued) FOR THE SIX FOR THE SIX FOR THE MONTHS ENDED MONTHS ENDED YEAR ENDED JUNE 30, 1998 JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) (UNAUDITED) ----------------- ----------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term debt (519,087) (387,723) (265,278) Fixed assets acquired by capital lease obligations 122,972 - - Repayments of capital lease obligations (55,924) (12,504) (39,467) Shareholder loan payments (1,444) (7,501) (12) Proceeds from: Bank loans 950,000 330,073 - --------------- ----------------- -------------- Net cash provided by (used in) financing activities 496,517 (77,655) (304,757) Net increase in cash (189,386) (201,201) 443,100 Cash and cash equivalents at beginning of year 260,597 260,597 71,211 --------------- ----------------- -------------- Cash and cash equivalents at end of year $ 71,211 $ 59,396 $ 514,311 =============== ================= ============== SUPPLEMENTARY INFORMATION Interest paid during the period $ 50,559 $ 41,248 $ - =============== ================= ============== Income taxes paid during the period $ 171,654 $ - $ - =============== ================= ============== See accompanying notes and accountant's report - 8 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE A - ORGANIZATION CFT Consulting, Inc. (CFT) was incorporated in the state of Florida on April 7, 1995. CFT provides computer consulting to a variety of customers nationwide. NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. BASIS OF PRESENTATION The accompanying financial statements are prepared using the accrual basis of accounting that recognizes revenues when earned and expenses when incurred. 2. INTERIM FINANCIAL STATEMENTS The financial statements for the six month periods ended June 30, 1999 and 1998, and all related footnote information for these periods, are unaudited, and reflect all normal and recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim period. The results of operation for the six months ended June 30, 1999 are not necessarily indicative of the results to be achieved for the entire fiscal year ending December 31, 1999. 3. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less. 4. ALLOWANCE FOR DOUBTFUL ACCOUNTS The allowance for doubtful accounts is based on management's evaluation of outstanding accounts receivable at the end of year. 5. INVESTMENT SECURITIES Management determines the appropriate classification of investment securities at the time they are acquired and evaluates the appropriateness of such classifications at each balance sheet date. The classification of those securities and the related accounting policies are as follows: Trading securities: Trading securities are held for resale in anticipation of short-term (generally 90 days or less) fluctuations in market prices. Trading securities are stated at fair value. Realized and unrealized gains and losses are included in income. - 9 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Available-for-sale securities: Available-for-sale securities consist of marketable equity securities not classified as trading securities. Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders' equity. Dividends on marketable equity securities are recognized in income when declared. Realized gains and losses are included in income. Realized gains and losses are determined on the basis of the actual cost of the securities sold. 6. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Depreciation is provided by utilizing the double declining and straight-line methods over the estimated useful lives ranging from three to thirty-nine years. 7. ORGANIZATIONAL COSTS Organizational costs were recorded at their estimated fair market value on the date that they were expended. Amortization is provided using the straight-line method over an estimated useful life of five years. 8. INCOME TAXES Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. - 10 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 9. FINANCIAL INSTRUMENTS The following methods and assumptions were used by CFT to estimate the fair values of financial instruments as disclosed herein: Cash and equivalents: The carrying amount approximates fair value because of the short period to maturity of the instruments. Investments securities: The carrying amounts approximate fair value, which is based on quoted market prices. 10. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE C - ACCOUNTS RECEIVABLE JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ----------- Accounts receivable for CFT $ 2,406,582 $ 3,824,021 Less allowance for doubtful accounts 120,583 356,906 ------------- ------------- $ 2,285,999 $ 3,467,115 ============= ============= NOTE D - INVESTMENT SECURITIES JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ----------- Available-for-sale securities: Marketable equity securities, at cost $ 670 $ 670 Unrealized gains (losses) - - ------------- ------------- Marketable equity securities, at fair market value $ 670 $ 670 ============= ============= - 11 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE E - NOTES RECEIVABLE Note receivable from an employee due in 11 monthly installments of $500 along with a lump sum payment of $3,000 due July 1, 1999. The remaining principal to be paid from bonuses in December 1999 $10,000 Note receivable from an employee due in monthly installments of $2,000 beginning September 1998 until balance is paid 4,524 --------- $ 14,524 ========= NOTE F - PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------- Automobiles $ 18,500 $ 18,500 Computers equipment 378,253 530,219 Furniture and equipment 341,853 294,906 Leasehold improvements 46,202 50,476 Software 43,417 46,532 ------------- ------------- 828,225 940,633 Less: Accumulated depreciation 371,554 467,407 ------------- ------------- $ 456,671 $ 473,226 ============= ============= NOTE G - ORGANIZATIONAL COSTS JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------- Organizational costs $ 1,600 $ 1,600 Less: Accumulated amortization 1,600 1,600 ------------- ------------- $ - $ - ============= ============= - 12 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE H - SHORT-TERM BORROWINGS Short-term borrowings for CFT consisted of the following: JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------- Note to bank, interest at prime plus .5%, payable quarterly, principal balance due December 31, 1999, collateralized by all assets of CFT and is guaranteed by CFT's shareholders. $ 500,000 $ 250,000 Note payable, interest at 8.25%, principal balance due April 6, 1999, collateralized by all assets of CFT and is guaranteed by CFT's shareholders. 2,613 - Line of credit, interest at prime plus .5%, payable monthly principal balance due on demand, collateralized by all assets of CFT and is guaranteed by CFT's shareholders. 50,000 - Line of credit, interest at prime plus .5%, payable monthly principal balance due on demand collateralized by all assets of CFT and is guaranteed by CFT's shareholders. 450,000 500,000 ------------ ------------- 1,002,613 750,000 Current portion of long-term debt 23,672 15,562 ------------ ------------- $ 1,026,285 $ 765,562 ============ ============= NOTE I - LONG-TERM DEBT Long-term debt for CFT consisted of the following: JUNE 30, 1999 DECEMBER 31, 1998 (UNAUDITED) ----------------- ------------- Note to bank, interest at prime plus .5%, payable monthly plus interest, principal balance due February 2, 2000 collateralized by all the assets of CFT. $ 28,227 $ 15,562 Less current maturities 23,672 15,562 ------------ ------------- $ 4,555 $ - ============ ============= Aggregate maturities required on long-term debt are as follows: For the year ending December 31, 2000 $ 4,555 $ - ============ ============= - 13 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE J - INCOME TAX MATTERS Effective January 1, 1997 the shareholders of CFT elected to revoke CFT's tax status as an S corporation and to be taxed as a C corporation. This election resulted in the need to account for both accrued and deferred income taxes at the corporate level. The net deferred tax asset (liability) of CFT consisted of the following components as of December 31, 1998: Deferred tax assets relating to: Accounts payable $ 15,000 Accrued vacation 29,000 Stock option compensation 35,700 Deferred tax liabilities relating to: Accounts receivable (293,000) Property and equipment (11,600) ----------- Net deferred tax liability $ (224,900) The components giving rise to the net deferred tax asset (liability) described above have been included in the accompanying balance sheet of CFT as of December 31, 1998 as follows: Current assets $ 44,000 Other assets 35,700 Current liability (293,000) Other liability (11,600) ----------- $(224,900) =========== Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences are expected to be available to reduce taxable income. The provision for income taxes for the year ended December 31, 1998, for CFT consisted of the following: Current income taxes $ 236,161 Deferred income taxes (343,645) ------------ Total income taxes $ (107,484) ============ Cash payments for income taxes amounted to $83,331 for the year ended December 31, 1998. Income taxes were underpaid by approximately $152,830 at December 31, 1998. The underpayments are included in the accompanying balance sheet as a payable. - 14 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE K - TRANSACTIONS WITH RELATED PARTIES 1. NOTE PAYABLE At December 31, 1998 the amount due to shareholders and included in notes payable was $440,523 with accrued interest of $19,223. The principal is due on demand. Interest is accrued at 8%. 2. PROPERTY RENTAL CFT conducts its operations in leased facilities under a non-cancelable operating lease from TSA Licensing, Inc, a related party. The lease expires December 31, 2004. The rent is $12,500 per month for the period March 1, 1997, to December 31, 2004. In addition, CFT is responsible for property taxes, insurance, and general maintenance. Total rent paid was $150,000 for the year ended December 31, 1998. Future minimum lease payments required under the operating lease for the years ending December 31, are as follows: 1999 166,800 2000 166,800 2001 178,250 2002 178,250 2003 189,757 2004 189,757 ------------- Total $ 1,069,614 NOTE L - CAPITAL LEASES CFT leases various leasehold improvements and equipment under capital leases. The capital leases in effect as of December 31, 1998, are scheduled to expire beginning in 2000 through 2003. At the expiration of the lease terms, CFT may exercise options to purchase the equipment for fair market value or a bargain value. Amortization of the leased property is computed by the straight-line or declining balance methods and has been included in depreciation. Based on items leased as of December 31, 1998, monthly lease payments are approximately $7,921. As of December 31, 1998, the gross amount of assets recorded under capital leases totaled $284,234. Accumulated amortization related to those assets totaled $95,778 as of December 31, 1998. - 15 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE L - CAPITAL LEASES - CONTINUED The following leases have been determined to be capital leases to CFT and have been recorded as such in the financial statements: DESCRIPTION CURRENT LONG-TERM - ----------- ------- --------- WINR Business Credit, lease term 36 months, with monthly lease payments of $1,420, ending February 2000. $ 15,920 $ 3,724 WINR Business Credit, lease term 36 months, with monthly lease payments of $2,407, ending February, 2000. 26,371 5,575 WINR Business Credit, lease term 36 months, with monthly lease payments of $1,399, ending July, 2001 13,029 24,083 WINR Business Credit, lease term 60 months, with monthly lease payments of $1,456, ending October, 2003 15,274 63,089 WINR Business Credit, lease term 36 months, with monthly lease payments of $1,239, ending February, 2000. 12,909 2,615 ----------- ----------- $ 83,503 $ 99,086 =========== =========== The following is a schedule of minimum lease payments, including interest and principal for the fiscal year ending December 31, 1999 $ 81,787 2000 42,612 2001 27,257 2002 17,466 2003 13,467 ----------- Total $ 182,589 - 16 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE M - EMPLOYEE STOCK OWNERSHIP PLAN CFT has an Employee Stock Ownership Plan (ESOP) covering substantially all employees. CFT may contribute amounts as determined by the Board of Directors. At December 31, 1998 a total of 1,289,894 shares of CFT's common class A stock had been allocated to the plan. Any contributions of cash or company stock to the ESOP are reported as compensation expense equal to the amount of the contribution. Cash dividends paid on allocated shares of company stock are charged to retained earnings. Contributions for each year are allocated in the proportion that each such Participant's covered compensation bears to the total covered compensation of all such Participants for the year. The contribution expense was $280,000 for the year ended December 31, 1998. NOTE N - CONCENTRATIONS OF RISK CFT maintains cash accounts in a commercial bank. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $100,000 per bank. The bank balances of CFT Consulting, Inc. are categorized at December 31, 1998 as follows: Amount insured by FDIC $ 100,000 Unisured 173,063 ----------- Total $ 273,063 =========== NOTE O - CAPITAL STOCK On November 8, 1997, the board of directors approved a new capital structure for CFT. The board also approved a six thousand to one stock split for all currently outstanding shares. The capital stock of the corporation at December 31, 1998, was as follows: CFT Consulting, Inc., Class A, voting common stock, .000167 par value, authorized 50,000,000 shares, issued and outstanding 13,289,894 shares $ 2,215 CFT Consulting, Inc., Class B, non-voting common stock, $1 par value, authorized 10,000,000 shares, issued and outstanding 0 shares - CFT Consulting, Inc., Class C, convertible voting and participating preferred stock, par value, authorized 10,000,000 shares, issued and outstanding 0 shares - -------------- $ 2,215 ============== - 17 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE P - STOCK OPTION PLAN On November 21, 1997, CFT adopted a stock option plan for officers and key employees. A maximum of 5,000,000 shares of common stock may be issued under the plan. The option price, number of shares and grant date are determined at the discretion of the stock option committee. The stock sold pursuant to granted options will be Class B, non-voting common stock having a $1 par value. The options may not be exercised until the officer or key employee has remained in the continuous employ of the corporation for a period of four years from the date such option was granted. Options granted under the plan are exercisable for a period not to exceed five years from the option grant date. 1,318,698 stock options were issued and outstanding at December 31, 1998. Compensation expense for the stock option plan was determined based on the fair value of the options at the grant date consistent with the methodology prescribed under STATEMENT OF FINANCIAL STANDARDS NO. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION." The fair value of the options granted during 1998 was estimated using the minimum value method, using the following assumptions: Risk-free interest rate 7.5% Expected life (years) 4 Expected volatility None Expected dividends None A summary of the status of CFT's stock option plan as of December 31, 1998 is presented below: NUMBER WEIGHTED-AVERAGE OF SHARES EXERCISE PRICE --------- ----------------- Granted 1,464,698 $ .15 Exercised - - Canceled (146,000) .38 --------------- ---------------- Outstanding at December 31, 1998 1,318,698 .13 Exercisable at December 31, 1998 - Available for issuance at December 31, 1998 3,681,302 EXERCISE OUTSTANDING PRICE SHARES $ .05 775,698 .10 175,000 .25 304,500 .50 53,500 .75 10,000 --------------- 1,318,698 - 18 - CFT CONSULTING, INC. NOTES TO FINANCIAL STATEMENTS For Year Ended December 31, 1998 NOTE Q - SUBSEQUENT EVENTS As of the report date 1,446,198 stock options had been granted to employees. NOTE R - EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITOR'S REPORT On July 6, 1999, the Company was acquired by AnswerThink Consulting Group, Inc. (AnswerThink). Under the terms of the transaction, AnswerThink acquired all of the outstanding stock of the Company in exchange for cash and AnswerThink stock. - 19 -