THE FOLLOWING IS FOR  INFORMATIONAL  PURPOSES  ONLY.  THESE  STATEMENTS  ARE NOT
INCORPORATED  BY REFERENCE IN THIS OR ANY OTHER FILING WITH THE  SECURITIES  AND
EXCHANGE  COMMISSION.  THESE  STATEMENTS  SHOULD BE READ IN CONJUNCTION WITH THE
COMDISCO,  INC.  CONSOLIDATED  FINANCIAL  STATEMENTS  AND  THIS  INFORMATION  IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

     INDEPENDENT AUDITORS' REPORT

     The Stockholders and Board of Directors
     Comdisco, Inc.:

     We have audited the  accompanying  balance  sheets of Comdisco  Ventures (a
     division of  Comdisco,  Inc.) as of  September  30, 1999 and 1998,  and the
     related statements of earnings and division equity, and cash flows for each
     of the years in the  three-year  period ended  September  30,  1999.  These
     financial  statements  are the  responsibility  of the  Comdisco  Ventures'
     management.  Our responsibility is to express an opinion on these financial
     statements based on our audits.

     We  conducted  our audits in  accordance  with  general  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.

     As described in note 1 to the financial statements,  Comdisco Ventures is a
     division of  Comdisco,  Inc.;  accordingly,  the  financial  statements  of
     Comdisco  Ventures should be read in conjunction with the audited financial
     statements of Comdisco, Inc.

     In our opinion,  the financial statements referred to above present fairly,
     in all material  respects,  the financial  position of Comdisco Ventures at
     September 30, 1999 and 1998, and the results of its operations and its cash
     flows for each of the years in the  three-year  period ended  September 30,
     1999 in conformity with generally accepted accounting principles.

     /s/  KPMG LLP

     Chicago, Illinois
     December 2, 1999


<PAGE>

COMDISCO VENTURES
Balance Sheets
September 30, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>




                                                                          1999            1998
                                                                       -------         -------
<S>                                                                    <C>             <C>
ASSETS
     Equity securities............................................    $197,335        $ 16,995
     Receivables, net.............................................     341,061          66,425
     Inventory of equipment.......................................       1,762           1,120
     Leased assets:
          Direct financing and sales-type.........................       5,106           7,344
          Operating (net of accumulated depreciation).............     283,241         182,403
               Net leased assets..................................     288,347         189,747
     Other assets.................................................      17,069           6,956
                                                                      --------        --------
                                                                      $845,574        $281,243
                                                                      ========        ========


LIABILITIES AND DIVISION EQUITY
     Inter-group loan............................................     $533,297        $189,281
     Accounts payable............................................          329             561
     Deferred income taxes.......................................       72,265           4,116
     Other liabilities...........................................       40,034          16,205
                                                                      --------        --------
                                                                       645,925         210,163

     Division equity.............................................      199,649          71,080
                                                                      --------        --------
                                                                      $845,574        $281,243
                                                                      ========        ========



See accompanying notes to financial statements.
</TABLE>



<PAGE>


COMDISCO VENTURES
Statements of Earnings and Division Equity
Years ended September 30, 1999, 1998, and 1997
(in thousands)
<TABLE>




                                                              1999          1998          1997
                                                           -------       -------       -------
<S>                                                        <C>            <C>           <C>
Revenue:
    Leasing:
      Operating.......................................    $116,678      $ 83,147      $ 61,544
      Direct financing................................       1,389         1,073         2,771
      Sales-type......................................         336           866         4,305
                                                           -------       -------       -------
            Total leasing.............................     118,403        85,086        68,620

    Sales.............................................       6,142         7,136         6,942
    Interest income on notes..........................      22,580         6,655         3,139
    Warrant sale proceeds and capital gains...........      80,731        14,938        16,435
    Other.............................................         683           483           195
                                                           -------       -------       -------
            Total revenue.............................     228,539       114,298        95,331
                                                           -------       -------       -------

Cost and expenses:
    Leasing:
      Operating.......................................      87,860        59,884        42,740
      Sales-type......................................         254           479         3,615
                                                           -------       -------        ------
            Total leasing.............................      88,114        60,363        46,355

    Sales.............................................       4,460         3,980         4,423
    Selling, general, and administrative..............      18,166         5,793         5,436
    Interest..........................................      23,373        10,835         7,670
    Bad debt expense..................................      23,200         4,786         6,250
                                                           -------       -------        ------
            Total costs and expenses..................     157,313        85,757        70,134
                                                           -------       -------        ------

            Earnings before income taxes..............      71,226        28,541        25,197
Income taxes..........................................      28,402        11,381        10,047
                                                           -------       -------        ------
            Net earnings..............................    $ 42,824      $ 17,160      $ 15,150
                                                           =======       =======        ======

Division equity at beginning of year..................    $ 71,080      $ 53,920      $ 38,770

Comprehensive income:
    Net earnings......................................      42,824        17,160        15,150
    Other comprehensive income
      unrealized gains, net of tax....................      85,745            --            --
            Total comprehensive income................     128,569        17,160        15,150
                                                           -------       -------        ------
Division equity at end of year........................    $199,649      $ 71,080      $ 53,920
                                                           =======       =======       =======


See accompanying notes to financial statements.
</TABLE>



<PAGE>

COMDISCO VENTURES
Statements of Cash Flows
Years ended September 30, 1999, 1998, and 1997
(in thousands)
<TABLE>
<CAPTION>




                                                               1999            1998            1997
                                                             -------         ------          ------
<S>                                                          <C>             <C>             <C>
Cash flows from operating activities:
    Operating lease and other leasing receipts..........    $117,504        $ 91,632        $ 80,051
    Leasing costs, primarily rentals....................         (90)         (1,269)           (111)
    Sales...............................................       6,671           7,220           6,104
    Cost of sales.......................................        (113)           (980)           (423)
    Warrant proceeds....................................      80,731          14,938          16,435
    Promissory note receipts............................      66,912          32,685          15,753
    Other revenue.......................................      15,231           6,883           3,334
    Selling, general, and administrative expenses.......      (7,546)         (6,794)         (5,435)
                                                            --------        --------        --------
          Net cash provided by operating activities.....     279,300         144,315         115,708
                                                            --------        --------        --------

Cash flows from investing activities:
    Equipment purchased for leasing.....................    (205,624)       (114,188)        (91,297)
    Purchase of property and equipment..................        (324)           (140)           (249)
    Equity investments..................................     (39,641)         (7,945)         (4,294)
    Issuance of promissory notes........................    (323,876)        (57,213)        (34,319)
    Other...............................................      (5,558)          2,366          16,273
                                                             --------        --------        --------
          Net cash used in investing activities.........    (575,023)       (177,120)       (113,886)
                                                             --------        --------        --------

Cash flows from financing activities:
    Net change in inter-group loans.....................     295,723          32,931          (1,948)
    Principal payments on nonrecourse debt..............          --            (126)            126
                                                             --------        --------        --------
          Net cash provided by financing activities.....     295,723          32,805           (1,822)
                                                             --------        --------        --------
          Net increase in cash and
            cash equivalents............................          --              --              --

Cash and cash equivalents at beginning of period........          --              --              --
                                                             --------        --------        --------
Cash and cash equivalents at end of period..............    $     --        $     --        $     --
                                                             ========        ========        ========
</TABLE>



<PAGE>
COMDISCO VENTURES
Statements of Cash Flows, Continued
Years ended September 30, 1999, 1998 and 1997
(in thousands)
<TABLE>
<CAPTION>





                                                                      1999            1998            1997
                                                                   -------         -------         -------
<S>                                                                <C>             <C>             <C>

Reconciliation of net earnings to net cash
    provided by operating activities -- net earnings...........   $ 42,824        $ 17,160        $ 15,150
Adjustments to reconcile net earnings to
    net cash provided by operating activities:
      Leasing costs, primarily depreciation and amortization...     88,024          59,094          46,244
      Leasing revenue..........................................      2,238           6,231          11,425
      Principal portion of notes receivable....................     44,332          26,030          12,614
      Cost of sales............................................      4,347           3,000           4,000
      Selling, general, and administrative expenses............     33,820           3,785           6,251
      Income taxes.............................................     28,402          11,381          10,047
      Interest.................................................     23,373          10,835           7,670
      Other -- net.............................................     11,940           6,799           2,307
                                                                   -------         -------         -------
 Net cash provided by operating activities.....................   $279,300        $144,315        $115,708
                                                                   =======         =======         =======


See accompanying notes to financial statements.
</TABLE>



<PAGE>



                               COMDISCO VENTURES
                         Notes to Financial Statements
                       September 30, 1999, 1998, and 1997
                                 (in thousands)


(1)       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          NATURE OF OPERATIONS

          Formed in  1987  as  a  division of Comdisco, Inc., Comdisco  Ventures
          ("Ventures") provides a wide variety of financing  products to venture
          capital-backed start-up companies.  These include equipment leases and
          loans, subordinated debt, receivables financing, and equity financing.
          Its principal market is North America.

          Ventures'  cash  activity is reflected  through the  inter-group  loan
          account.  Interest  expense on suc loan  account,  which  amounted  to
          $23,373,  $10,835,  and $7,670 in the years ended  September 30, 1999,
          1998, and 1997,  respectively,  is included in interest expense in the
          accompanying financial statements.

          Ventures is allocated  certain shared services and support  activities
          of Comdisco,  Inc.,  consisting of, among other things,  financial and
          accounting services,  information system services, certain selling and
          marketing activities, executive management, human resources, corporate
          finance,  legal,  and corporate  planning  activities.  Such allocated
          expenses  amounted to $3,000 during the year ended  September 30, 1999
          and $1,000 in both of the years  ended  September  30,  1998 and 1997.
          Ventures was allocated  such expenses  based on use and other criteria
          which management believes is reasonable.

          USE OF ESTIMATES

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

          INCOME TAXES

          Ventures is included in the consolidated  Federal and state income tax
          returns of Comdisco,  Inc.  Income tax expense has been computed as if
          Ventures  filed  its own  income  tax  returns.  Related  current  tax
          liabilities are settled through the inter-group loan account.

          Ventures  uses the asset and  liability  method to account  for income
          taxes.  Deferred tax assets and  liabilities  are  recognized  for the
          future  tax  consequences  attributable  to  differences  between  the
          financial   statement   carrying   amounts  of  existing   assets  and
          liabilities  and  their  respective  tax  basis.  The  measurement  of
          deferred tax assets is reduced, if necessary, by a valuation allowance
          for any tax benefits of which future realization is uncertain.

          LEASE ACCOUNTING

          See note 4 and 5 of Notes to Financial Statements for a description of
          lease  accounting  policies,  lease revenue  recognition,  and related
          costs.

          INVENTORY OF EQUIPMENT

          Inventory  of  equipment  is  stated at the lower of cost or market by
          categories of similar equipment.

          FURNITURE AND EQUIPMENT

          Furniture  and equipment is carried at cost and is  depreciated  using
          the  straight-line  method  over  the  estimated  useful  lives of the
          related  assets  ranging  from  three  to five  years.  Furniture  and
          equipment is included as a component of other assets.

          INVESTMENTS IN EQUITY SECURITIES

          Ventures  determines  the  appropriate  classification  of  marketable
          securities at the time of purchase and reevaluates such designation at
          each  balance  sheet  date.   Marketable   securities   classified  as
          available-for-sale  are carried at fair value,  based on quoted market
          prices,  net of market value discount to reflect any  restrictions  on
          transferability,  with  unrealized  gains  and  losses  reported  as a
          component of division equity. Equity investments for which there is no
          readily  determinable  fair  value  are  carried  at  cost,  less  any
          appropriate valuation allowance.

          WARRANTS

          Ventures'  investments  in warrants  (received in connection  with its
          lease or other  financings)  are  initially  recorded at zero cost and
          carried in the financial statements as follows:

          o   Warrants   that   meet  the   criteria   for   classification   as
          available-for-sale  are carried at fair value  based on quoted  market
          prices with  unrealized  gains and losses  excluded  from earnings and
          reported in other comprehensive income.

          o  Warrants  that do not meet the  criteria  for  classification  as a
          marketable security are carried at zero value.

          The proceeds  received  from the sale or  liquidation  are recorded as
          earnings when received.


<PAGE>


(2)       EQUITY SECURITIES

          Ventures invests in equity instruments of privately-held  companies in
          networking,   communications,   software,  Internet-based,  and  other
          industries. For equity instruments,  which are non-quoted investments,
          Ventures' policy is to regularly review the assumptions underlying the
          operating  performance  and  cash  flow  forecasts  in  assessing  the
          carrying values.  Ventures identifies and records impairment losses on
          equity  securities  when events and  circumstances  indicate that such
          assets  might be  impaired.  During  1999 and 1998,  certain  of these
          investments  in  privately-held  companies  became  available-for-sale
          securities when the investees completed initial public offerings.

          Equity securities include the following as of September 30:
<TABLE>
<CAPTION>

                                                                            1999             1998
                                                                         -------          -------
          <S>                                                            <C>               <C>
          Available-for-sale securities:
            Cost......................................................  $  7,735         $  3,390
            Unrealized gain...........................................   142,612               --
                                                                        --------         --------
                   Market value.......................................   150,347            3,390
          Equity instruments (at cost less valuation adjustments).....    46,988           13,605
                                                                        --------         --------
                   Carrying value.....................................  $197,335         $ 16,995
                                                                        ========         ========
</TABLE>


          Realized gains or losses are recorded upon  disposition of investments
          based upon the  difference  between  the  proceeds  and the cost basis
          determined using the specific identification method. All other changes
          in the valuation of portfolio  investments  are included as changes in
          the  unrealized  appreciation  or  depreciation  of investments in the
          other  comprehensive  income.  Net  realized  gains  from the sales of
          equity  investments  were $5,161,  $1,396,  and $3,425 in fiscal 1999,
          1998, and 1997,  respectively.  Gross realized gains from the sales of
          equity  securities were $7,646 in fiscal 1999,  $2,084 in fiscal 1998,
          and $3,515 in fiscal 1997.

          Ventures records the proceeds received from the sale or liquidation of
          warrants received in conjunction with its lease or other financings as
          income when  received.  These  proceeds  were  $75,570,  $13,542,  and
          $13,010 in fiscal 1999, 1998, and 1997, respectively.




(3)       RECEIVABLES

          Receivables include the following at September 30:
<TABLE>
<CAPTION>


                                                                      1999             1998
                                                                  --------         --------
          <S>                                                    <C>              <C>
          Equipment loans......................................   $ 85,088          $31,311
          Subordinated loans...................................    249,565           32,521
          Receivable financing and other.......................      5,477               --
          Nonperforming loans..................................      2,975            1,487
                                                                  ---------         --------
                 Total notes receivable........................    343,105           65,319
          Accounts.............................................      7,148            3,325
          Other................................................      7,321            3,781
                                                                  ---------         --------
                 Total receivables.............................    357,574           72,425
          Allowance for credit losses..........................    (16,513)          (6,000)
                                                                  ---------         --------
                 Total.........................................   $341,061          $66,425
                                                                  =========         ========
</TABLE>


          Ventures provides loans to high technology  privately held   companies
          in  networking, communications,  software, Internet-based  industries,
          healthcare  and  other  industries.  Ventures'  loans  are   generally
          structured as equipment loans or subordinated loans.

          The amount of each loan  varies,  but  generally  does not exceed $5.0
          million.  The loans bear fixed interest  rates with coupons  currently
          ranging  from 8.0% to 13.0% per annum.  In addition,  loan  processing
          fees  typically  ranging  from .5% to 2.0% of the principal  amount of
          the loan may be paid at loan closing. As part of the loan transaction,
          Ventures  receives  warrants  to  purchase  an equity  interest in the
          borrower  at a nominal  exercise  price.  The  amount of the  warrants
          received  and the exercise  price varies based upon  borrower-specific
          valuation  factors.  Loans  provide  current  income from interest and
          fees.

          Contractual  maturities of total notes receivables as of September 30,
          1999  were  as  follows:  2000  -$130,000;  2001  -  $153,000;  2002 -
          $107,000;  2003 and thereafter - $13,000.  Actual cash flows will vary
          from contractual maturities due to prepayments and charge-offs.

          Changes  in the  allowance  for  credit  losses  (combined  notes  and
          accounts  receivables)  for  the  years  ended  September  30  were as
          follows:
<TABLE>
<CAPTION>

                                                     1999                1998               1997
                                                  --------             -------            -------
          <S>                                    <C>                 <C>                <C>
          Balance at beginning of year.......... $  6,000             $ 5,500            $    --
          Provision for credit losses...........   23,200               4,786              6,250
          Net credit losses.....................  (12,687)             (4,286)              (750)
                                                  --------             -------            -------
              Balance at end of year............ $ 16,513             $ 6,000            $ 5,500
                                                  ========             =======            =======
</TABLE>



<PAGE>


(4)       LEASE ACCOUNTING POLICIES

          FASB Statement of Financial  Accounting Standards No. 13 requires that
          a lessor  account  for each  lease by  either  the  direct  financing,
          sales-type, or operating method.

          LEASED ASSETS

          o Direct financing and sales-type leased assets consist of the present
          value of the future  minimum lease  payments plus the present value of
          the  residual  (collectively  referred  to  as  the  net  investment).
          Residual is the estimated fair market value at lease  termination.  In
          estimating the equipment's fair value at lease  termination,  Ventures
          relies on  historical  experience by equipment  type and  manufacturer
          and, where available,  valuations by independent appraisers,  adjusted
          for known trends.  Ventures'  estimates are reviewed  continuously  to
          ensure  realization,  however the  amounts  Ventures  will  ultimately
          realize could differ from the estimated amounts.

          o Operating  leased  assets  consist of the equipment  cost,  less the
          amount depreciated to date.

          REVENUE, COSTS, AND EXPENSES

          o DIRECT FINANCING LEASES - Revenue consists of interest earned on the
          present  value  of  the  lease  payments  and  residual.   Revenue  is
          recognized  periodically over the lease term as a constant  percentage
          return on the net investment.  There are no costs and expenses related
          to direct  financing leases since leasing revenue is recorded on a net
          basis.

          o  SALES-TYPE  LEASES - Revenue  consists of the present  value of the
          total   contractual  lease  payments  which  is  recognized  at  lease
          inception.  Costs and  expenses  consist of the  equipment's  net book
          value at lease  inception,  less the  present  value of the  residual.
          Interest  earned  on the  present  value  of the  lease  payments  and
          residual,  which is recognized  periodically  over the lease term as a
          constant  percentage  return on the net  investment,  is  included  in
          direct financing lease revenue in the statement of earnings.

          o  OPERATING  LEASES  -  Revenue  consists  of the  contractual  lease
          payments and is  recognized  on a  straight-line  basis over the lease
          term.   Costs  and  expenses  are  principally   depreciation  of  the
          equipment.  Depreciation is recognized on a  straight-line  basis over
          the lease term to Ventures'  estimate of the  equipment's  fair market
          value at lease  termination,  also commonly  referred to as "residual"
          value. In estimating the equipment's fair value at lease  termination,
          Ventures  relies  on  historical  experience  by  equipment  type  and
          manufacturer   and,   where   available,   valuations  by  independent
          appraisers,   adjusted  for  known  trends.  Ventures'  estimates  are
          reviewed  continuously  to ensure  realization,  however  the  amounts
          Ventures will ultimately realize could differ from the amounts assumed
          in determining  depreciation  on the equipment in the operating  lease
          portfolio at September 30, 1999.

          o Initial  direct  costs  related to  operating  and direct  financing
          leases,  including  salesperson's  commissions,  are  capitalized  and
          amortized over the lease term.


<PAGE>


(5)       LEASED ASSETS

          The  components  of  the  net  investment  in  direct   financing  and
          sales-type leases as of September 30 are as follows:
<TABLE>
<CAPTION>


                                                                   1999              1998
                                                                --------         --------
          <S>                                                    <C>            <C>
          Minimum lease payments receivable....................  $5,540         $7,876
          Estimated residual values............................     181            717
          Less: unearned revenue...............................    (615)        (1,249)
                                                                 ------         ------
                 Net investment in direct financing and
                   sales-type leases.........................    $5,106         $7,344
                                                                 ======         ======
</TABLE>


          Unearned revenue is recorded as leasing revenue over the lease terms.

          The  following is a schedule of future  minimum  lease  payments to be
          received  under  direct  financing  and  sales-type  leases,  based on
          contractual terms in existence as of September 30, 1999:

                      YEARS ENDING              MINIMUM
                      SEPTEMBER 30,            PAYMENTS
                    ----------------           --------

                          2000                   $3,147
                          2001                    1,954
                          2002                      422
                          2003                       17
                          2004                       --
                                                 ------
                                                 $5,540
                                                 ======

          Operating leased assets include the following as of September 30:


                                                         1999              1998
                                                    ---------         ---------

          Operating leased assets.................  $ 432,862         $ 294,352
          Less: accumulated depreciation
             and amortization.....................   (149,621)         (111,949)
                                                    ---------         ---------
                  Net.............................  $ 283,241         $ 182,403
                                                    =========         =========



<PAGE>


          The following is a schedule of future  minimum  rental  payments to be
          received  under  operating  leases,  based  on  contractual  terms  in
          existence as of September 30, 1999:


                          YEARS ENDING                  MINIMUM
                          SEPTEMBER 30,                PAYMENTS
                         --------------               ----------

                              2000                      $129,127
                              2001                       109,085
                              2002                        66,515
                              2003                        10,565
                              2004                            --
                                                        --------
                                                        $315,292
                                                        ========

(6)       LEASE PORTFOLIO INFORMATION

          The size of Ventures'  lease  portfolio can be measured by the cost of
          leased assets at the date of lease inception.  Cost at lease inception
          represents either the equipment's  original cost or its net book value
          at termination of a prior lease.  The following table  summarizes,  by
          year of lease commencement and by year of projected lease termination,
          the  cost  at  lease  inception  for all  leased  assets  recorded  at
          September 30, 1999:

<TABLE>
<CAPTION>


                                                                             PROJECTED YEAR OF LEASE TERMINATION
                                                COST AT
          YEAR LEASE                             LEASE         --------------------------------------------------
          COMMENCED                          INCEPTION            2000             2001         2002         2003
          ------------------                 ---------         -------          -------      -------      -------
          <S>                                <C>             <C>                <C>         <C>           <C>
          1995 and prior                      $ 10,476         $10,156          $   320      $    --      $    --
          1996                                  39,838          38,168            1,393          277           --
          1997                                  77,909          45,338           31,636         461           474
          1998                                 113,881           3,942           40,899      64,608         4,532
          1999                                 204,202              13            9,325     115,465        79,399
                                              --------         -------          -------     --------      -------
                                              $446,306         $97,617          $83,573     $180,711      $84,405
                                              ========         =======          =======     ========      =======

</TABLE>

<PAGE>
<TABLE>
<CAPTION>


          The following  table  summarizes the estimated net book value at lease
          termination  for all leased assets recorded at September 30, 1999. The
          table  is  presented  by year  of  lease  commencement  and by year of
          projected lease termination:



                                      NET BOOK       PROJECTED YEAR OF LEASE TERMINATION
                                      VALUE AT
          YEAR LEASE                     LEASE      -------------------------------------
          COMMENCED                TERMINATION         2000      2001      2002      2003
        ------------------         -----------      -------   -------   -------    ------
             <S>                       <C>          <C>        <C>      <C>        <C>

             1996                      $ 3,625      $ 3,625    $   --   $    --    $   --
             1997                       10,306        6,421     3,885        --        --
             1998                       11,790          509     4,549     6,732        --
             1999                       24,209           --       636    13,710     9,863
                                        ------      -------    ------   -------    ------
                                       $49,930      $10,555    $9,070   $20,442    $9,863
                                       =======      =======    ======   =======    ======

</TABLE>


(7)       INCOME TAXES

          Ventures  is included in the  consolidated  U.S.  income tax return of
          Comdisco, Inc. In absence of a tax sharing agreement, Ventures records
          its income tax liabilities on a separate return basis.

          The  components  of  the  income  tax  provision   (benefit)   charged
          (credited) to operations were as follows:

<TABLE>
<CAPTION>


                                                       1999               1998               1997
                                                      ------             ------             -----
          <S>                                         <C>                <C>               <C>
          Current:
              U.S. Federal.......................    $13,899            $ 9,280           $ 4,776
              U.S. state and local...............      3,220              2,150             1,106
                                                      ------             ------            ------
                                                      17,119             11,430             5,882
                                                      ------             ------            ------

          Deferred:
              U.S. Federal.......................      9,161                (40)            3,382
              U.S. state and local...............      2,122                 (9)              783
                                                      ------             ------            ------
                                                      11,283                (49)            4,165
                                                      ------             ------            ------
                  Total tax provision............    $28,402            $11,381           $10,047
                                                      ======             ======            ======

</TABLE>




<PAGE>

<TABLE>
<CAPTION>


          The reasons for the  difference  between the U.S.  Federal  income tax
          rate and the effective income tax rate for earnings were as follows:

                                                                     1999                1998            1997
                                                                    ------             ------          ------
          <S>                                                         <C>              <C>              <C>

          U.S. Federal income tax rate                                35.0%             35.0%            35.0%
          Increase resulting from - state income taxes,
             net of U.S. Federal tax benefit                           4.9               4.9              4.9
                                                                     ------            -----            -----
                                                                      39.9%             39.9%            39.9%
                                                                     ======            =====            =====

          Deferred tax assets and  liabilities  at  September  30, 1999 and 1998
          were as follows:

                                                                                              1999              1998
                                                                                       ---------------   ---------------

          Deferred tax assets (liabilities):

              Investments                                                               $       3,504    $        3,504
              Accounts receivable                                                               1,968               848
              Lease accounting                                                                (18,420)          (11,858)
              Deferred income                                                                  (2,450)            3,390
              Accumulated other comprehensive income                                          (56,867)               --
                                                                                        --------------   ---------------
                  Gross deferred tax assets (liabilities)                                     (72,265)           (4,116)
              Less: valuation allowance                                                             --                --
                                                                                        --------------   ---------------
                  Net deferred tax assets (liabilities)                                 $     (72,265)   $       (4,116)
                                                                                        ==============   ===============

</TABLE>


(8)       COMMITMENTS

          Ventures  leases  office  spaces  under  operating  leases that expire
          periodically  through  February 29, 2004. Under the renewal options of
          the agreement,  Ventures may extend the lease terms.  Rent expense was
          $272,  $198, and $161 in fiscal 1999,  1998,  and 1997,  respectively.
          Minimum lease payments for the office spaces are as follows:

                                   YEARS ENDING SEPTEMBER          MINIMUM LEASE
                                             30,                     PAYMENTS
                                  --------------------------    --------------

                                  2000                          $    214
                                  2001                               218
                                  2000                                25
                                  2003                                25
                                  2004 and thereafter                 11
                                                                --------
                                                                $    493
                                                                ========



<PAGE>



(9)       FAIR VALUE OF FINANCIAL INSTRUMENTS

          The estimated fair value of the Ventures' financial instruments are as
          follows:
<TABLE>
<CAPTION>

                                                                     1999                             1998
                                                         ------------------------------  -------------------------------
                                                           CARRYING                         CARRYING
                                                            AMOUNT        FAIR VALUE         AMOUNT        FAIR VALUE
                                                         --------------  --------------  --------------- ---------------
        <S>                                                 <C>               <C>           <C>             <C>

        Assets:

            Equity securities                               $197,335          $197,335      $16,995         $16,995
            Notes receivable including
              noncurrent portion                             341,061           341,061       66,425          66,425


</TABLE>

          Fair values were determined as follows:

          o  Equity   instruments   are  based  on  quoted   market  prices  for
          available-for-sale securities, and, for non-quoted equity instruments,
          based on the lower of  management's  estimates  of fair value or cost.
          Ventures'  investment in warrants of public  companies  were valued at
          the bid quotation.

          o Notes  receivable  are  estimated by  discounting  future cash flows
          using  the  current  rates at  which  similar  loans  would be made to
          borrowers with similar business profiles.


(10)      COMPREHENSIVE INCOME

          Comprehensive  income  for  the  year  ended  September  30,  1999  is
          comprised as follows:

          Net income                                            $ 42,824
          Other comprehensive income:
              Unrealized gains on marketable
               equity securities                                 142,612
              Less income tax expense                             56,867
                                                                --------
          Total comprehensive income                            $128,569
                                                                ========