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

                                   FORM 10-K/A
                                (Amendment No. 2)

                                  ANNUAL REPORT
               PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the fiscal year ended December 31, 2000


                           Commission File No. 1-9690


                          INTERNATIONAL FIBERCOM, INC.
        (Exact name of small business issuer as specified in its charter)


         Arizona                                          86-0271282
 (State of Incorporation)                     (IRS Employer Identification No.)


  3410 E. University Drive, Ste. 180
          Phoenix, Arizona                                 85034
(Address of principal executive offices)                 (Zip Code)


       Registrant's telephone number, including area code: (602) 387-4000


           Securities registered pursuant to Section 12(b) of the Act:

                                      None

           Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock, no 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. [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  Registrant  based  on the  average  of  the  high  and  low  prices  of the
Registrant's  Common Stock on the NASDAQ  National  Market on April 26, 2001 was
approximately  $133,843,845.  This is not necessarily a conclusive determination
for other purposes.  As of April 26, 2001, the Registrant had 35,691,692  shares
of Common Stock outstanding.

                                Explanatory Note

This amendment to our Annual Report on Form 10-K for the year ended December 31,
2000 is  filed  for the  sole  purpose  of  clarifying  that  we  adopted  Staff
Accounting Bulletin ("SAB") No. 101, "Revenue  Recognition,"  beginning with our
fiscal 2000 consolidated  financial statements.  Our adoption of SAB No. 101 did
not  have a  material  effect  on the  financial  results  of our  Company.  All
financial and other informative information has remained unchanged from the 10-K
filed on April 2, 2001.

In order to collectively  present all 10-K data previously filed, this amendment
also  incorporates  Part III  information  that we filed  on April  30,  2001 as
Amendment No. 1 to our Annual Report on Form 10-K.
<PAGE>
     The following  statement is made pursuant to the safe harbor provisions for
forward-looking statements described in the Private Securities Litigation Reform
Act of 1995.  International  FiberCom,  Inc.  and  subsidiaries  ("International
FiberCom,  Inc." or the  "Company")  may make certain  statements in this Annual
Report on Form 10-K, including, without limitation,  statements that contain the
words "believes,"  "anticipates,"  "estimates,"  "expects," and words of similar
import, constitute "forward-looking  statements." Forward-looking statements may
relate to our future growth and  profitability;  the  anticipated  trends in our
industry;  our competitive strengths and business strategies;  and our intent to
increase  our  presence  and scope by  introducing  new  wireless  products  and
solutions.  Further,   forward-looking  statements  are  based  on  our  current
expectations and are subject to a number of risks, uncertainties and assumptions
relating to our operations, financial condition and results of operations. For a
discussion of factors that may affect the outcome  projected in such statements,
see "Cautionary  Factors That May Affect Future Results,"  beginning on page 11.
If any of these risks or uncertainties materialize,  or if any of the underlying
assumptions prove incorrect, actual results could differ materially from results
expressed  or  implied  in  any  of our  forward-looking  statements.  We do not
undertake any obligation to revise these  forward-looking  statements to reflect
events or  circumstances  arising  after the date of this Annual  Report on Form
10-K.

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

SUMMARY OF OUR BUSINESS

     Unless the context  requires  otherwise,  all  references to "we," "our" or
"us"  refer  to   International   FiberCom,   Inc.,  a  corporation   originally
incorporated in the state of Arizona in 1972 and its 25 subsidiaries.

     We  are  an  end-to-end,   independent   solutions   provider  serving  the
telecommunications  industry.  We deliver a broad range of solutions designed to
enable,  enhance and support voice, data and video communications  through wired
and  wireless,  proprietary  and public  networks  operating  inside and outside
buildings - internal and external  networks.  In delivering these solutions,  we
design, develop,  install and maintain networks that support voice, video, data,
Internet-related  and other  communications  applications  and  services for our
customers  through  broadband,  including  fiber-optic and copper,  and wireless
connectivity  solutions.  We  deliver  engineering,   design,   development  and
installation  services to wireless  telecommunications  companies  and  develop,
manufacture and sell  proprietary  wireless  communications  equipment.  We also
resell new, deinstalled and refurbished  communications equipment from a variety
of manufacturers and recently, we began reselling fiber optic cable.

     We have grown  significantly  since 1997 as a result of internal growth and
strategic  acquisitions.  Since 1997, our consolidated revenues have grown at an
average  annual rate of 66%. See Selected  Financial  Information  and Note 11 -
Segment Information - in the accompanying financial statements.

     We deliver our products and services through four operating divisions:

     Wired  Services  Division  provides  consulting,   design  and  engineering
services;  installs and maintains internal and external broadband communications
systems,  including  underground  and aerial  fiber-optic,  copper and  wireless
systems; installs and maintains integrated local area networks ("LANs") and wide
area  networks  ("WANs");   installs  and  maintains  the  equipment  needed  to
interconnect  networks in existing  central  office and other network  points of
presence; and installs modem, telephony and cable connections covering the "last
mile" to the consumer;

     Wireless  Services  Division  provides  services  in  support  of  wireless
services  carriers  and  networks,   including  system  optimization   services,
propagation  studies,  audit services,  technology  conversion and  integration,
tower construction and maintenance, and site acquisition services;

     Wireless   Technologies   Division   designs,   manufactures  and  installs
proprietary  wireless  connectivity  solutions  designed  to enable and  enhance
wireless communications, in both  fixed and mobile  applications; and

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<PAGE>
     Equipment  Distribution  Division resells new,  deinstalled and refurbished
communications equipment manufactured by a variety of companies.  This equipment
is used in the digital access, switching and transport systems of communications
service  providers and other companies.  This Division  recently began reselling
fiber optic cable.

     We provide our communications solutions services to a number of the largest
and most prominent  companies in the  telecommunications  and other  industries,
including:

     *    incumbent local exchange carriers;
     *    cable television operators,
     *    long distance carriers,
     *    competitive local exchange carriers,
     *    wireless service providers,
     *    telecommunications equipment vendors, and
     *    co-location facilities providers.

     Our representative customers include:

<TABLE>
<S>                              <C>                                   <C>
     Ameritech                     MCI WorldCom                         State of Tennessee
     AT&T                          Media One                            The Red Cross
     Cablevision                   Metromedia Fiber Network, Inc.       Time Warner
     Charter Cable                 Nike                                 U.S. Department of Defense
     Comcast                       Nortel Networks                      U.S. General Services Administration
     Cox Communications            Pacific Telesis                      Velocita (formerly PF.Net)
     Federal Express               Port Authority of New York           Verizon
     Fluor Global Services         and New Jersey                       Voicestream
     Gambro Healthcare             Qwest                                Williams Communications
     Level 3 Communications        SBC Communications                   XO Communications
     Lucent Technologies           Sprint
</TABLE>

     In 2000, one customer,  Fluor Global Services,  accounted for more than 10%
of our  revenues.  Our top ten  customers  represented  54.6% of our revenues in
fiscal 2000 and also included AT&T,  Velocita,  Cox Communications,  Time Warner
and Cablevision.

RECENT ACQUISITIONS

     Our acquisitions during 2000 and to date in 2001 include three companies in
our Wired Services Division, two companies in our Wireless Services Division and
one in our Wireless Technologies Division.

WIRED SERVICES ACQUISITIONS

     *   New York Antenna,  Inc. - based in Staten Island,  NY with  additional
         operations in New York City and Pennsylvania.
     *   Premier  Cable  Communications,  Inc. - based in Lake  Worth,  FL with
         additional operations in Virginia, Wisconsin, Texas, Illinois, Maryland
         and North Carolina.
     *   Beecroft Trenching, Inc. - based in Phoenix, AZ.

     These companies design,  build,  install and maintain internal and external
broadband  communication  systems,  including underground and aerial fiber-optic
and copper systems.

WIRELESS SERVICES ACQUISITIONS

     *   New CC,  Inc.  and  New CC  West,  Inc.  - based  in  Denver,  CO with
         additional operations in California, Minnesota and Oregon.
     *   Quick Tower Construction, Inc. - based in Austin, TX.

     New CC and New CC West provide site  development,  tower  erection,  signal
propagation, system upgrade, technology integration, system optimization, audit,
maintenance  and  other  technical  services  to  wireless  carriers  and  tower
companies.  Quick Tower provides tower  construction  and  maintenance  and site
acquisition services.

                                        2
<PAGE>
WIRELESS TECHNOLOGY ACQUISITION

     *    Anacom  Systems  Corporation - based in  Piscataway,  NJ is engaged in
          developing   products  and  solutions   utilizing  optical  technology
          including radio frequency solutions over fiber-optic cable, modulation
          devices, optical multiplexers and infrared laser links.

OUR INDUSTRY

     We believe  that several  notable  industry  trends will  continue to cause
significant  increases in demand for our services and products over the next few
years. These trends include:

THE DEMAND FOR BANDWIDTH AND CONNECTIVITY

     Recent  increased  growth  in  telecommunications  voice,  video  and  data
traffic,   electronic  commerce,   and  in  the  transmission  of  high  quality
information,  entertainment  and other content over the  Internet,  coupled with
increased use of and reliance on personal  computers,  has enhanced the need for
greater bandwidth, or the communications network capacity to carry such data.

     Concurrent  with this demand for  bandwidth  is the  increasing  demand for
connectivity,  or the consumer  access to this  bandwidth.  While  virtually all
homes and businesses  are connected to the existing  public  telephone  network,
most are not  connected  to  networks  with the  bandwidth  to  provide  desired
services and  performance  levels.  While the  development of broadband  network
backbone networks continues at a rapid pace,  deployment of the network to homes
and businesses,  the "last mile" connections,  lags behind.  Many see this final
connection as a wired solution: "fiber to the home, fiber to the curb" scenario,
while others believe a wireless solution will solve this connectivity  issue for
most users. The answer to broadband connectivity may ultimately be a combination
of both wired and wireless solutions.  In the meantime,  demand for "Internet on
the go" through  existing  wireless  infrastructure  will challenge the existing
infrastructure  and architecture of wireless  networks in much the same way that
bandwidth demand has challenged cable television and switched digital  telephone
networks.

     In   response   to   demand   for   increased   bandwidth,   the   nation's
telecommunications  industry,  including cable television system operators,  are
upgrading their facilities with new technology, expanding, and in many instances
replacing,  their  existing  telecommunications   infrastructure  to  allow  for
increased  bandwidth capable of carrying  increasingly large quantities of data.
Major telecommunications companies,  including AT&T, Time Warner, Charter Cable,
Cablevision and Cox  Communications,  all of whom are our customers,  are in the
process of upgrading  networks or  converting  existing  networks to  broadband,
fiber-optic based systems and more recently are also concentrating on connecting
their customers to these new networks, or fulfillment services.  Equally,  other
telecommunications companies,  including Velocita, Level 3 Communications and XO
Communications, all of whom are also our customers, are building extensive, high
capacity local and long distance fiber-optic based networks.

THE DEMAND FOR INTERNAL COMMUNICATIONS SYSTEMS

     As businesses  become more  sophisticated  in their demands for  electronic
communications  services,  including voice mail, e-mail,  video conferencing and
data exchange, the parallel need for more sophisticated internal  communications
systems increases.  Accordingly,  many companies and public enterprises, such as
the State of Tennessee, Nike, Federal Express and Gambro Healthcare, all of whom
are our  customers,  have  commissioned  us to install  systems  designed  to be
adaptable  and  to  provide  sufficient  capacity  for  multiple   applications,
including both voice and data  transmission  internally within their user groups
and externally.

THE NEED TO COVER  THE  "LAST  MILE:"  CONVERGENCE  OF  BROADBAND  AND  WIRELESS
TECHNOLOGY

     The final network connection to residences and businesses is often referred
to as the  "last  mile."  Existing  copper  and  cable  networks  will  play  an
increasingly  significant role in this last connection.  However,  these systems
cannot provide high capacity access to digital telecommunications  networks on a
timely,   consistent  and  cost-effective   basis  without  the  integration  or

                                        3
<PAGE>
development of new  technology.  We believe that wireless  technology will be an
efficient,  cost effective means for customer connection.  We intend to continue
to pursue the expansion of our wireless  services  through  acquisitions  and to
allocate  significant  research  and  development   resources  to  our  Wireless
Technologies   Divisions  with  the  goal  of  developing  our  own  proprietary
technology and solutions to help solve these connectivity issues.

THE TREND TOWARD OUTSOURCING OF INFRASTRUCTURE NEEDS

     Due to the  increasingly  competitive  environment  for  the  provision  of
telecommunications   services,   telecommunications  companies  are  focused  on
satisfying  customer demand for enhanced  services,  seamless and  comprehensive
coverage,  better  quality,  faster  data  transmission  and lower  prices.  The
proliferation of  telecommunications  companies and new technologies has created
an environment where speed to market is an important component of the success of
these companies.  Telecommunications companies are also faced with the challenge
of  managing   increasingly   complex  networks  and  technologies  that  create
additional  hurdles for  establishing or upgrading their networks and delivering
the  service  to  their  customers.  In our  experience,  this  has led  them to
increasingly   prioritize  their  resources,   focusing  on  revenue  generating
activities and outsourcing infrastructure needs when they can do so effectively.

     We  believe  that the  changing  environment  is also  placing  significant
operational challenges on telecommunications companies. They must make decisions
about which  geographic  markets to serve and which services and technologies to
offer.   Staffing  challenges  and  process   implementation  can  present  cost
uncertainties  and  operational  challenges  for them in deploying  and managing
their  networks and  completing  the delivery of services to the consumer.  This
situation is exacerbated by consolidation  in the industry,  which often entails
the integration of distinct networks.

     We believe that  telecommunications  companies  and  equipment  vendors are
outsourcing network planning,  development and management to focus on their core
competencies  and  refine  their  competitive  advantages.  In  our  experience,
telecommunications  companies and equipment vendors who are seeking  outsourcing
are looking for service providers who:

     *    offer end-to-end solutions;
     *    are technology and vendor independent; and
     *    have  sufficient  numbers  of highly  skilled,  experienced  employees
          capable of  handling  large-scale  projects,  as well as dealing  with
          "last mile"  installation,  referred to as "fulfillment  services," to
          the   business   or   residential    customer   on   behalf   of   the
          telecommunications company.

THE DEMAND FOR COMPREHENSIVE SOLUTIONS

     We  believe  that our  customers  increasingly  are  seeking  comprehensive
end-to-end solutions to their infrastructure needs by turning to fewer qualified
infrastructure  service  providers who have the size,  financial  capability and
technical  expertise  to deliver a quality and reliable  network on time.  These
customers are seeking service providers who can build large and complex networks
quickly with a high level of quality and who can rapidly  mobilize their capital
equipment,  financial  assets  and  personnel  to  respond  effectively  to  the
increasing scale and time constraints of customer  demands.  In addition,  these
customers are increasingly seeking service providers who can and deliver quality
fulfillment  services,  including  installing  and  replacing  new  equipment or
deinstallating equipment for the business or residential customer.

OUR COMPETITIVE STRENGTHS

     We have pursued a strategic plan to grow  internally and through  selective
acquisitions in order to become an end-to-end, independent provider of wired and
wireless solutions to the telecommunications industry. In order to capitalize on
the foregoing  industry trends,  we intend to rely on our competitive  strengths
described below.

END-TO-END SOLUTIONS PROVIDER

     We  believe  we are  one of a  small  number  of  infrastructure  solutions
providers  that  can  provide  all of the  design,  building,  installation  and
maintenance  services  necessary  for  a  complete   telecommunications  network
starting  from a  transmission  point,  such as a  telecommunications  company's
central  office or cable  television  head-end,  and running  through  aerial or
underground  cables or through wireless  transmission to the ultimate end users'
voice and data ports, computer terminals, cable outlets or cellular stations.

                                        4
<PAGE>
TECHNICAL EXPERTISE AND RELIABLE CUSTOMER SERVICE

     We believe that we have  established a reputation for quality,  reliability
and technical  expertise.  We continue to work towards improving the consistency
of our operating and financial efficiency.  We believe that our reputation among
our customers gives us an advantage in securing larger, more technically complex
infrastructure  projects,  central office installation and fulfillment projects,
and a larger volume of business from our existing and new customers.

WIRELESS TECHNOLOGIES AND EXPERTISE

     We  can  provide  our  customers  with  proprietary  wireless  connectivity
solutions,  fiber optic  connectivity  solutions and other proprietary  products
designed to enable and enhance  communications  in wired and  wireless and fixed
and mobile  applications.  Through our team of design  engineers and  technology
professionals,   we  are  dedicating   significant  resources  to  research  and
development  efforts in our Wireless  Technologies  Division aimed at continuing
the development of solutions  related to transmission  and  connectivity  issues
impacting  broadband  networks;  cellular,  PCS,  radio and other two-way mobile
communication  systems;  and in  wireless  LAN and WAN  networking.  We have two
patents issued relating to optical links and radio frequency filters and several
patent  applications  pending on products  designed to improve  radio  frequency
signal  clarity,  to  multiplex on fiber optic cable using a single laser and to
enable radio  communications  in environments  where wireless  communication has
historically not been technologically  feasible.  We have successfully  deployed
our technology solutions for customers across North America and we believe there
are significant global opportunities for our products and services.

AGILE FOOTPRINT

     We provide our design, development,  engineering and internal communication
services  in a  flexible  and  geographically  mobile way that we refer to as an
"agile footprint." We can deploy these solutions capabilities quickly to respond
to new market  opportunities,  either from a specific  customer or from  growing
demand in new markets. Additionally, we provide our services to customers in the
telecommunications,   broadband  and  wireless   industries.   These   operating
characteristics  give  us the  ability  to  capitalize  on  the  wide  range  of
technological advances and other market developments that drive capital spending
by our  customers  and to help  reduce the risk of being  dependent  on a single
geographic  region or technology  platform for our success.  We believe that our
agile footprint has helped us to attract our diverse and growing  customer base,
especially  from the larger  companies in the  telecommunications  industry.  We
believe this makes us less susceptible to downturns in any particular geographic
region or industry sector.

TECHNOLOGY AND VENDOR NEUTRAL

     We believe that our  customers  increasingly  are seeking  single  national
vendors to provide all of their  telecommunications and infrastructure  services
needs. We view ourselves as technology neutral because our services are based on
fiber-optic,  coaxial and copper cable and wireless technologies, and therefore,
we believe that we are more flexible in meeting our customers needs. Further, we
deal with and resell a variety of  telecommunications  equipment,  and we do not
have binding,  exclusive  relationships with any particular  manufacturer.  As a
result, we are vendor neutral in addressing our customers'  equipment and system
needs.

INCREASING NATIONAL SCOPE AND NAME RECOGNITION

     We have significantly broadened our geographic presence in recent years and
believe we are capable of servicing  customers across the United States.  We are
continuing to develop the brand name "International  FiberCom" across all of our
operating  units,  with the goal of achieving  national  branding of our name in
2001  within our  marketplace  and  further  establishing  us as an  integrated,
national company.

EXPERIENCED MANAGEMENT

     We have a strong  management team. During 2000 we added depth to our senior
and middle  management  in response to the rapid growth in the size and scope of
our projects. We believe that our management team has the operational,  business

                                        5
<PAGE>
development and financial  knowledge and experience to identify  industry trends
and consistently meet our customers' expectations.

OUR BUSINESS STRATEGY

     Our   objective  is  to  be  the  leading   independent   provider  to  the
telecommunications  industry of  end-to-end  wired and wireless  solutions.  The
following are the key elements of our strategy:

EXPAND EXISTING CUSTOMER RELATIONSHIPS

     We plan to  continue  to expand our  existing  customer  relationships  and
pursue new customers by focusing on our service quality and offering  end-to-end
communications solutions. We believe that our customers are increasingly seeking
national vendors who can provide all of their telecommunications services needs.
We actively cross sell our  comprehensive  service offerings to our existing and
potential  customers  and  emphasize  our ability in being able to deliver these
services efficiently, effectively and where the customer needs them -- our agile
footprint.  We also  continue  to focus on  increasing  our  range of  services,
particularly  in the  wireless  arena.  Further,  we will  continue  to focus on
maintaining  and  improving  the  quality of our service  through our  training,
supervisory  and  incentive  programs  designed to incent our  employees.  A key
element of our quality  assurance  program  includes  paying our supervisory and
management  personnel  incentive  compensation  based upon  performance of their
business units and customer satisfaction.

MAINTAIN FLEXIBILITY OF SERVICE OFFERINGS

     In order to respond to new market  opportunities,  we provide  our  design,
development,  engineering and internal communications services in a flexible and
geographically  mobile way. By developing our flexible  service  delivery model,
our agile footprint, we are able to deploy our solutions capabilities quickly to
respond to market  opportunities  from existing  customers or to service growing
demand in a new market.  We plan to continue  to develop our  business  model by
increasing  our range of services and adding new  business  locations to give us
increased geographic scope and service capabilities.

DEVELOP OUR WIRELESS TECHNOLOGIES AND SERVICES DIVISIONS

     Since 1999,  we made  several  acquisitions  that  comprise the platform on
which we  intend to  develop  a  comprehensive  range of  wireless  connectivity
solutions  capabilities.  We plan to build on this  platform  through  selective
acquisitions and recruiting in order to provide  additional depth and breadth to
our wireless capabilities. Further, we plan to dedicate significant resources to
our Wireless  Technologies  and  Services  Division's  research and  development
efforts with the goal of continuing to develop solutions related to transmission
and  connectivity  issues that affect  wired and  wireless  and fixed and mobile
communication applications.

ATTRACT AND RETAIN QUALIFIED PERSONNEL

     During 2000, we added depth to our senior and middle management in order to
manage  our  rapid  growth  and  service  our  projects.   Our  engineering  and
development  teams are  particularly  important  factors to our success.  We are
preparing  and  implementing  programs  for  career  development,  training  and
advancement.  We plan to continue to attract and retain our skilled personnel by
offering our employees the  opportunity to work on projects using both wired and
wireless   technologies  in  an  entrepreneurial   environment  that  encourages
innovation,  learning and  professional  development.  We offer  employee  stock
purchase and stock option plans to our skilled employees as important factors in
their recruiting and retention.

PURSUE SELECTED ACQUISITIONS

     Through selected acquisitions, we continue to seek to enhance our capacity,
technology,  customer base and  capabilities,  as well as expand our  geographic
coverage.  We will  continue  to focus  our  selective  acquisition  efforts  on
companies with complementary  service  offerings,  strong management and a sound
investment case. We have completed a number of acquisitions in the United States
in the last two years,  targeting selected companies to expand into new customer
and geographic markets and to expand the range and depth of services we provide.
We  are  not  currently  engaged  in  any  negotiations  to  make  any  material
acquisitions.

                                        6
<PAGE>
OUR SERVICES AND PRODUCTS

WIRED SERVICES DIVISION

     The Wired  Services  Division  provides  three  general  types of services:
engineering, outside plant and systems integration. We provide these services as
individual  components,  as a combination,  or as a full turnkey solution.  This
Division  maintains  a  presence  in the  Northeastern,  Western,  Southwestern,
Southern and Southeastern regions of the United States.

     Engineering  Services. We specialize in design and consulting in connection
with the  development  of major  broadband,  fiber-optic  networks.  Design work
includes fiber-optic and hybrid fiber-optic/coaxial cable broadband distribution
networks for  telecommunications  and cable television  companies using computer
automated design and geographic conformation software. We also offer "land based
development," a service which includes  mapping,  verification and documentation
of existing network  installations.  This service frequently requires conversion
of existing  documentation  into a database system using geographic  information
software. These platforms offer network operators an efficient and effective way
to relate customer base,  demographics and existing  networks and equipment in a
single system. For new or planned networks,  we provide construction  oversight,
existing network evaluation,  broadband system and design, network plant testing
and training.

     Outside Plant Services. We design, build, install and maintain the physical
facilities  used to  provide  end-to-end  telecommunications  service  from  the
central  office  of the  switching  center  or  cable  head-end  to the  home or
business. Our services include:

     *    placing and splicing fiber optic, coaxial and copper cable;
     *    excavating trenches in which to place the cable;
     *    installing  related  structures,  such as  poles,  anchors,  conduits,
          manholes, cabinets and closures;
     *    placing drop lines from the main distribution terminals to the home or
          business;
     *    installing  cable,  telephony  and  internet  service  in the home and
          business (fulfillment services), and
     *    maintaining, removing and replacing these facilities.

     We also provide route development, right of way and other site acquisition,
permitting,    materials   procurement,    acceptance   testing   and   as-built
documentation.

     We bundle our services in order to better provide  end-to-end  solutions to
our customers as follows:

     *    Inter-exchange Networks. We design, engineer and build fiber-optic and
          other cable networks between metropolitan areas.
     *    Local  Exchange  Networks.  We  design,  install,  build and  maintain
          telecommunications  networks from the provider's  point-of-presence to
          its customers' locations within metropolitan areas - a local loop.
     *    Broadband  Networks.  We  design,  engineer,  build  and  install  the
          infrastructure  for network  rebuilds,  upgrades and  maintenance  for
          broadband telecommunication system operators.

     Our wired services customers include: AT&T, Cablevision, Charter Cable, Cox
Communications,  Fluor Global Services,  Level 3  Communications,  MCI WorldCom,
Media One, Time Warner, SBC Communications, Verizon,  Velocita, and Williams and
XO Communications.

     Systems Integration Services. We provide services consisting of the design,
installation,  testing and documentation of switching and transmission equipment
and supporting  components at a provider's  point-of-presence  (central  office)
locations. We also design, install and maintain integrated voice, data and video
networks  inside  customer  premises along with the  infrastructure  required to
support complex intranet and Internet solutions.  We provide systems integration
services involve the selection,  configuration,  installation and maintenance of
software,  hardware, other computing and communications equipment and cabling to
provide an  integrated  computing  and  communications  system.  We also provide

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e-commerce   and  website   development   consulting   services.   Our  internal
communication  services are less capital  intensive than external  communication
services, but they require more technically skilled personnel.

     Our systems integration  services customers include:  Lucent  Technologies,
MCI WorldCom,  Federal Express, Gambro Healthcare, the State of Tennessee, Nike,
The Red Cross and the U.S. General Services Administration.

WIRELESS SERVICES DIVISION

     This Division  provides  services in support of wireless  services carriers
and networks, including system optimization services, propagation studies, audit
services,   technology  conversion  and  integration,   tower  construction  and
maintenance,  placement  of antennas  and  associated  wiring,  installation  of
transmission equipment and shelters and site acquisition services.

     Our wireless services customers include AT&T Wireless,  Nextel, Verizon and
Voicestream.

WIRELESS TECHNOLOGIES DIVISION

     This  Division  develops and  delivers  products  and  solutions  utilizing
proprietary radio frequency and optical  technology and expertise.  Its products
include radio frequency over fiber optic cable modulation devices,  active radio
frequency  interference  and  intermodulation   filters,  optical  multiplexers,
infra-red  wireless  laser  links,   repeaters,   radios,   antennas  and  other
inventions. Solutions utilizing these technologies include wireless connectivity
systems  for  trains  and  tunnels,  high  speed WAN and LAN  "wireless  bridge"
connectivity systems and wireless tower optimization  systems.  Through our team
of design engineers and technology professionals,  we are dedicating significant
resources  to  research  and   development   efforts  aimed  at  continuing  the
development  of  solutions  related  to  transmission  and  connectivity  issues
impacting  broadband  networks;  cellular,  PCS,  radio and other two-way mobile
communication systems; and in wireless wide and local area networking.  To date,
we have two patents issued relating to optical links and radio frequency filters
and several patent  applications  pending on products  designed to improve radio
frequency signal clarity, to multiplex on fiber optic cable using a single laser
and to enable radio communications in environments where wireless  communication
has  historically  not  been  technologically  feasible.  We  have  successfully
deployed our  technology  solutions  for  customers  across North America and we
believe  there  are  significant  global  opportunities  for  our  products  and
services.

     Our wireless  technologies  customers include Nextel, Port Authority of New
York  and  New  Jersey,   Sprint,  U.S.  Department  of  Defense,   Verizon  and
Voicestream.

EQUIPMENT DISTRIBUTION DIVISION

     This Division provides communications service providers and other companies
with a broad range of infrastructure  equipment and related services designed to
meet their  specific  and changing  equipment  needs.  We offer our  customers a
combination  of new,  deinstalled  and  refurbished  equipment from a variety of
manufacturers,  allowing  them to make  multi-vendor  purchases  from a  single,
cost-effective  source.  We supply  the  equipment  in the form of piece  parts,
complete  central office switches or  line-extensions.  This equipment  includes
both traditional circuit switching equipment and equipment with packet switching
and Internet  protocol  capabilities.  To further serve our customer's needs, we
offer      value-added      services,       including:       central      office
installation/deinstallation,  system testing,  asset verification,  warehousing,
and inventory  disposition.  We have one distribution  point located in Virginia
and two in Florida from which both the domestic and international markets can be
served. We maintain an industry standard ISO 9000 Quality Control  Certification
with respect to our inventory and distribution.  We inventory and sell equipment
produced by a number of  prominent  companies,  including  Lucent  Technologies,
Nortel Networks, Tellabs, DSC, Alcatel, Fujitsu, ADC and Cisco. We are a factory
authorized,  value added  reseller of Lucent  Technologies  and Nortel  Networks
equipment. We recently began to resell fiber optic cable.

     Our equipment  distribution  customers include Ameritech,  Comcast,  Lucent
Technologies, Nortel Networks, Time Warner and Qwest.

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<PAGE>
OUR CUSTOMERS

     As an  end-to-end  solutions  provider,  we often deliver our services to a
single customer in multiple  geographic  locations through one or more operating
segments.  For our year ended  December 31,  2000,  one  customer,  Fluor Global
Services,  accounted  for more than 10% of our  revenues.  Our top ten customers
represented  54.6% of our  revenues  in  fiscal  2000 and  also  included  AT&T,
Velocita, Cox Communications, Time Warner and Cablevision.

CONTRACTS

     Under a typical outside plant services  contract,  we supply the expertise,
equipment and labor and the customer supplies nearly all materials,  such as the
fiber-optic cable and conduit.  The work is generally performed under fixed unit
prices  and we usually  receive  payment  on  contracts  within 30 to 75 days of
invoicing. Accordingly, we must finance accounts receivable and work-in-progress
during that period. Under a typical systems integration  installation  contract,
we supply the  expertise,  equipment,  labor and materials.  System  Integration
services   are   performed   under  both  time  and  material  and  fixed  price
arrangements.

     Engineering  services are performed under a variety of contracts,  purchase
orders,  standing  relationships and working arrangements.  We have entered into
master  contracts  of  indefinite  term with  major  systems  operators  for the
services  specified in such contracts.  Specific  projects are undertaken  under
these contracts in response to purchase orders, change orders, revised standards
and work orders.  We also perform  services  for certain  long-standing  clients
under work orders without governing master contracts. In general,  contracts and
work orders are  terminable or  expandable  at will by our customers  consistent
with the customer's network requirements.  We have continuing relationships with
equipment  vendors  under which we are  recommended  or  specified  to equipment
customers as the system design vendor.

SALES AND MARKETING

     As part of our marketing plan, we are now  emphasizing  the  "International
FiberCom"  name,  with the objective of achieving  nationwide  name  recognition
within our industry in 2001.  In  addition,  our  marketing  plan is to position
ourselves  in the  telecommunications  and  Internet  related  marketplace  as a
seamless,  end-to-end solutions provider.  The management of our various service
groups is carrying  out local  marketing  efforts and  executive  management  is
supplementing  their efforts on a corporate-wide  basis.  Our regional  division
presidents  market  to  existing  and  potential  telecommunications  customers,
negotiate  new  contracts  and seek to be placed on lists of vendors  invited to
submit bids for master  services  agreements and individual  projects.  They are
responsible for developing and maintaining  productive,  long-term relationships
with our customers.  We believe that this local  orientation,  with support from
our  headquarters,  helps to gain repeat business and enter new markets.  We are
also finding that because we have  performed  well in one region,  our customers
are asking us to assist them in other  locales  that they are  entering or where
they already have a presence.

COMPETITION

     The market for the products and services we offer is highly competitive and
requires substantial resources and skilled and experienced personnel. We believe
that the  principal  competitive  factors in our market  include  the ability to
deliver   quality   performance   within   budget   and  on  time,   reputation,
accountability,  project management  expertise,  industry  experience,  pricing,
breadth of service offerings and financial and operational resources. We believe
that we compete favorably with our competitors on the basis of these factors. We
compete  with other  independent  contractors  and  equipment  resellers  in the
markets in which we operate,  several of which are large  companies  and some of
which  may have  greater  financial,  technical,  and  marketing  resources.  In
addition,  there are relatively few, if any,  barriers to entry into the markets
in which we operate.  As a result,  any organization that has adequate financial
resources and access to technical  expertise  may become a  competitor.  We face
competition  from  the  in-house  service   organizations  of  our  existing  or
prospective   customers,   including   telecommunications   providers  employing
personnel who perform some of the same types of services we deliver.

                                        9
<PAGE>
LICENSES

     We believe  that we have all material  licenses  required for us to perform
our services and that our ability to conduct our business will not be limited by
licensing  requirements.  We maintain  licenses in a number of states  requiring
general and specialty contractor licenses.

SAFETY, INSURANCE AND BONDS

     Our policy is to help ensure that our  employees  perform their work safely
and to  instill  safe work  habits  in all of our  employees.  To this  end,  we
evaluate our employees on the basis of their  efficiency  and quality of work as
well as on their safety  records and the safety  records of the  employees  they
supervise.  We hold  periodic  training  sessions and seminars for our employees
devoted to safe work practices.

     Primary  claims  we  face  in our  operations  are  workers'  compensation,
automobile  liability and general  liabilities.  We maintain liability insurance
policies  for claims  arising  from our  business.  These  policies  have limits
ranging from $1.0 million to $6.0 million in the  aggregate  and insure  against
both  property  damage and  personal  injury.  The  policies  are  written on an
"occurrence"  basis, which provides coverage for insured risks that occur during
the policy period irrespective of when a claim is made. Higher policy limits are
sometimes purchased for individual projects when contractually required. We also
maintain  umbrella  policies with aggregate and  occurrence  limits of up to $10
million. We have performance and payment bonding capability of $200 million on a
total  program  basis and $50  million  on a single  job  basis.  If we  require
additional  bonding  capacity,  we  believe  we  could  obtain  it  based on the
specifics of the project.

BACKLOG ORDERS AND WORK-IN-PROGRESS

     We had a backlog of  approximately  $184 million and $142.9  million,  on a
work-in-progress  basis,  as of December  31, 2000 and 1999,  respectively.  All
related work orders are expected to be completed by mid-year  2002. In addition,
at December  31,  2000,  we had signed  contracts  totaling  approximately  $101
million for which we had not yet started  work.  Our backlog only  includes work
for  which  we have  signed  contracts,  except  for  recurring  work  from  our
established customers, which is included in our backlog.

SUPPLIERS

     We do not depend upon any single supplier. Because we have multiple sources
of supply, we have not experienced difficulties in obtaining adequate sources of
supply and adequate alternatives to satisfy our customers. We do not have formal
purchase  contracts  for our  supplies,  but instead we generally  purchase such
items under individual  purchase orders. Our external  communications  customers
typically provide their own equipment and we provide the services.  Accordingly,
we are not directly dependent on suppliers, except in our Equipment Distribution
Group, which relies on OEMs for whom we act as a reseller.

EMPLOYEES

     As of December 31, 2000 we had approximately 2,338 full-time employees.  We
believe that our employee relations are good.

WARRANTIES

     We give warranties for  workmanship on the services we provide.  Warranties
generally range from one to two years, but have been as high as twenty years for
certain systems integration projects. From a practical standpoint,  any warranty
issues are generally  identified during the testing and acceptance of the system
installed.  While  most  of the  equipment  sold by the  Equipment  Distribution
Division is under warranty from the original manufacturer,  we typically provide
a one-year  warranty  on all  equipment  sold to  end-users  and  six-months  on
equipment sold to resellers.

                                       10
<PAGE>
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS

RISKS RELATING TO OUR INDUSTRY

THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL AND REGULATORY
CHANGES THAT COULD REDUCE THE DEMAND FOR OUR SERVICES

     We derive and  anticipate  that we will  continue  to derive a  substantial
portion of our revenue from customers in the  telecommunications  industry.  Our
revenues   and  net   income   depend   primarily   on   capital   spending   by
telecommunications companies,  including cable system operators, for rebuilding,
maintaining or upgrading their telecommunications  networks and for constructing
completely  new networks.  Our services and products are subject to  significant
technological  change and innovation.  Technological  developments are occurring
rapidly  in the  telecommunications  industry  and,  while the  effects of these
developments  are  uncertain,  they may have a  material  adverse  effect on the
demand for our services. For example,  wireline systems used for transmission of
video,  voice and data face  potential  displacement  by  various  technologies,
including wireless  technologies.  This could require a significant shift in our
resources from wireline to wireless services.

     The demand for our services could also be adversely affected if alternative
technologies  are  developed  and  implemented  that  enable  telecommunications
companies or other organizations to provide enhanced telecommunications services
without physically  upgrading their networks.  As a result of regulatory changes
and economic  factors,  a number of our  significant  customers  have  undergone
consolidation,  and we expect this consolidation to continue.  These factors may
result in the loss of one or more customers.

THE  VOLUME  OF WORK WE  RECEIVE  FROM  OUR  CUSTOMERS  IS  DEPENDENT  ON  THEIR
DEVELOPMENT PLANS, FINANCIAL RESOURCES AND ABILITY TO OBTAIN CAPITAL

     The  volume  of  work  awarded  under   contracts  with  a  number  of  our
telecommunications customers is subject to their development plans and financial
resources  during each contract's  term. If one of our customers fails to obtain
or allocate  sufficient  capital for any of its projects,  that  customer  could
reduce or delay the volume of work that it awards to us.  These  outcomes  could
reduce the demand for the services we provide.  In  addition,  a number of other
factors,  including financing conditions in the industry, could adversely affect
our customers and their ability or willingness to fund capital  expenditures  in
the  future.  These  factors  could also  reduce the demand for the  services we
provide. These factors include:

     *    the  amount  of  capital  spending  by  telecommunications  companies,
          including cable system operators;
     *    our customers' access to financing;
     *    demand for telecommunications services;
     *    technological developments in the telecommunications industry;
     *    general economic conditions; and
     *    government regulation.

THE  TELECOMMUNICATIONS  SERVICES  INDUSTRY IS HIGHLY  COMPETITIVE AND POTENTIAL
COMPETITORS FACE FEW BARRIERS TO ENTRY

     The industry in which we operate is highly  competitive and we compete with
other  companies in the markets in which we operate on a national,  regional and
local basis. We may also face competition from existing or prospective customers
who employ  in-house  personnel to perform some of the same types of services as
we provide.  Many of our competitors or potential  competitors are substantially
larger and have greater financial, technical and marketing resources, as well as
greater  name  recognition,  than  we  do.  For a  further  description  of  our
competition, see "Item 1. Description of Business -- Competition."

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<PAGE>
     In addition,  because of the convergence of the  telecommunications,  cable
television and computer  industries  and rapid  technological  development,  new
competitors  may seek to enter the market.  There are relatively few significant
barriers  to enter into the markets in which we operate  and,  as a result,  any
organization  that has  adequate  financial  resources  and access to  technical
expertise may become one of our competitors.

     We believe that the principal competitive factors in our market include the
ability to deliver quality  performance  within budget and on time,  reputation,
accountability,  project management  expertise,  industry  experience,  pricing,
breadth of  service  offerings  and  financial  and  operational  resources.  In
addition,  our expertise has become  increasingly  important as we move into new
and  evolving  technologies,  such as  wireless  services.  We also  believe our
ability  to  compete  depends  on a  number  of  factors  outside  our  control,
including:

     *    the prices at which our competitors offer their services;
     *    the ability and willingness of our  competitors to finance  customers'
          projects on favorable terms;
     *    the ability of our customers to perform the services themselves; and
     *    the degree of our competitors' responsiveness to customer needs.

     We may not be able to compete  effectively on these or other bases, and, as
a result, our revenues or income may decline and harm our business.

RISK RELATING TO OUR COMPANY AND OUR BUSINESS

IF WE CANNOT  ATTRACT  AND  RETAIN  QUALIFIED  EMPLOYEES,  WE MAY NOT BE ABLE TO
IMPLEMENT OUR GROWTH STRATEGY

     In  implementing  our business plan, we will be dependent on our ability to
attract and retain highly skilled engineering,  managerial,  marketing and sales
personnel,  as well as less highly  skilled  personnel.  In order to continue to
increase  our revenues  significantly,  we need to hire a number of personnel in
the  near  future,  including  project  management,  engineering  and  marketing
personnel.  The  actual  number  of  employees  we  will  need  to  hire  is not
determinable and may fluctuate substantially depending on the size and number of
new contracts we receive and any changes in the scope of our existing  services.
Competition for skilled personnel is intense,  especially for engineers,  and we
may not be able to attract a sufficient  number of  qualified  personnel to meet
the demand for our services.

     Labor  shortages  or  increased  labor costs could have a material  adverse
effect  on  our  ability  to  implement  our  growth  strategy  and  manage  our
operations.  The low  unemployment  rate in the  United  States has made it more
difficult for us to find qualified  personnel at low cost in some areas where we
operate. We can offer no assurances that we will be able to continue to hire and
retain a sufficient skilled labor force necessary to operate  efficiently and to
support our growth  strategy or that our labor  expenses  will not increase as a
result of a shortage in the supply of skilled personnel.  Further,  our external
communications  work  is  labor  intensive,  and we  experience  a high  rate of
turnover in these operations among our unskilled and semi-skilled  employees. If
we are not able to replace these employees at an appropriate level, our business
could be adversely affected.

IF WE ARE UNABLE TO EXPAND AND ENHANCE OUR  INTERNAL  SYSTEMS AND  CONTROLS,  WE
WILL NOT BE SUCCESSFUL IN MANAGING OUR RAPID GROWTH

     We are  currently  experiencing  a period of rapid growth and we anticipate
that further growth will be required to meet the expected demand for our new and
existing  services.  This has placed  significant  demands on our resources.  To
manage  our  growth  effectively,  we  will  have to  continue  to  enhance  our
operational,  financial,  management and information systems and to motivate and
effectively  manage  our  employees.  If we are  unable  to  manage  our  growth
effectively,  to maintain the quality of our services and products and to retain
key personnel, our business, financial condition and results of operations could
be materially adversely affected.

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<PAGE>
OUR QUARTERLY RESULTS COULD FLUCTUATE AND OUR STOCK PRICE COULD DECLINE

     Our quarterly and annual operating  results have fluctuated in the past and
will vary in the future due to a variety of  factors,  many of which are outside
of our control.

     Factors that are outside our control include:

     *    the timing and size of projects undertaken by our customers;
     *    fluctuations in the demand for our services;
     *    the prices and terms offered by our competitors;
     *    costs of integrating acquired technologies or businesses with our own;
          and
     *    market conditions within the  telecommunications  industry and general
          economic conditions.

     Factors that are within our control include:

     *    changes  in our  actual  and  estimated  costs and  timing  related to
          fixed-priced, time-certain projects;
     *    the timing of expansion into new markets; and
     *    the timing and the payments associated with possible acquisitions.

     Due  to  these  factors,  quarterly  revenues,   expenses  and  results  of
operations  could vary  significantly  in the future.  You should consider these
factors when evaluating past periods and,  because of the potential  variability
in our results due to these factors, you should not rely upon our past operating
results as an indication of our future performance.

     Further,  the longer term  prospects  of our business  could be  negatively
affected if there were a downward trend in these factors.  Because our operating
results may vary  significantly  from quarter to quarter  based upon the factors
described  above  and  elsewhere  in this  section,  results  may not  meet  the
expectations  of  securities  analysts and  investors,  and this could cause the
price of our common stock to decline significantly.

MANY  OF  OUR  CONTRACTS  MAY  BE  CANCELED  ON  SHORT  NOTICE,  AND  WE  MAY BE
UNSUCCESSFUL IN REPLACING OUR CONTRACTS AS THEY ARE COMPLETED OR EXPIRE

     A number of our contracts  are  substantial  in size.  Failure to timely or
adequately  replace large contracts upon  completion,  the termination of one or
more  new  contracts  or the  loss  of one or  more  significant  customers  may
materially  adversely affect our business and operations.  We could experience a
material adverse effect on our revenue, net income and liquidity if:

     *    our customers cancel a significant number of contracts;
     *    we fail to win a  significant  number of our existing  contracts  upon
          rebid; or
     *    we  complete  the  required  work  under a  significant  number of our
          non-recurring projects and cannot replace them with similar projects.

     Many of our customers may cancel our long-term contracts with them on short
notice,  typically  60 to 90  days,  even if we are  not in  default  under  the
contracts.  As a result,  these  contracts  do not give us the  assurances  that
long-term  contracts  typically  provide.  Many of our contracts,  including our
master  service  contracts,  are  subject  to  rebid  or  renegotiation  at  the
expiration of their terms and price is often an important factor in the award of
these  agreements.  We cannot  assure you that we will be successful in renewing
our contracts that expire. We also provide a significant portion of our services
on a non-recurring, project-by-project basis.

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<PAGE>
OUR CONTRACTS SUBJECT US TO UNCERTAIN REVENUE GROWTH

     We derive a significant  portion of our revenues from our fixed price, unit
price and master services contracts for infrastructure  development  services. A
significant  decline in the scope of the work that our customers assign us under
these  contracts  could  materially  and  adversely  affect our revenues and net
income. Under our infrastructure development contracts, we may be one of several
companies  that perform  services for the customer,  and our  customers  have no
obligation under our contracts to undertake any infrastructure projects or other
work with us.

OUR BUSINESS MAY BE HARMED IF WE INCREASE OUR STAFFING LEVELS IN ANTICIPATION OF
A PROJECT AND UNDERUTILIZE OUR PERSONNEL BECAUSE THE PROJECT IS DELAYED, REDUCED
OR TERMINATED

     Because our business is driven by large,  frequently multi-month contracts,
we project our personnel needs for future anticipated  business.  If we increase
our staff in anticipation  of a project and such project is ultimately  delayed,
reduced or terminated,  we may underutilize  these additional  personnel,  which
would  increase  our general and  administrative  expenses  and could  adversely
affect our operating results.

OUR  SUCCESS  IS  DEPENDENT   ON  THE   CONTINUED   TREND   TOWARD   OUTSOURCING
TELECOMMUNICATIONS NETWORK SERVICES

     Our  success is  dependent  on the  continued  trend by both  wireline  and
wireless  carriers to  outsource  their  design,  development,  maintenance  and
upgrading of their new and  existing  networks.  If our  existing and  potential
customers elect to perform more of these services  themselves,  our revenues may
decline and our business would be harmed.

SPECIAL RISKS OF ACQUISITIONS

Acquisitions involve a number of special risks, some of which include:

     *    time   associated   with   identifying   and  evaluating   acquisition
          candidates;
     *    diversion  of  management's  attention  by the need to  integrate  the
          operations  and  personnel  of the  acquired  companies  into  our own
          business and corporate culture;
     *    assimilation  of acquired  products,  services and operations into our
          existing products, services and operations;
     *    possible adverse short-term effects on our operating results;
     *    future operating  results of the acquisition,  including the expansion
          of its  business,  retention  and growth of its customer  base and the
          demand for its products, technologies or services;
     *    assumption of unknown liabilities;
     *    realization of acquired intangible assets;
     *    loss of key employees of the acquired companies; and
     *    other unanticipated events or circumstances.

COMPETITION FOR ACQUISITION CANDIDATES

      Since 1997, we have experienced  substantial growth in our revenues due in
part to our acquisitions.  The competition for attractive acquisition candidates
is  intense.  Further,  due  to  proposed  changes  in  "pooling  of  interests"
accounting  treatment for  acquisitions  due to take effect this year, we expect
competition for candidates willing to be acquired through a pooling of interests
will be especially intense. Heightened competition for candidates could increase
the cost of  acquisitions  and reduce the number of  attractive  candidates.  We
cannot  assure  you  that  we  will be  able  to  identify  additional  suitable
acquisition  candidates,   consummate  or  finance  any  such  acquisitions.  We
regularly evaluate  potential  acquisition  prospects,  but we are not currently
negotiating any material acquisitions.

                                       14
<PAGE>
DEPENDENCE UPON KEY PERSONNEL

     Our success depends,  to a significant  extent, upon the continued services
of our  executive  officers,  both  individually  and  as a  group.  Our  future
performance  will be  substantially  dependent  on our  ability to retain  these
individuals.  The  loss  of the  services  of any  of  our  executive  officers,
particularly Joseph P. Kealy, our Chairman and President, could adversely affect
our  business.  In  addition,  as we  acquire  companies  we  often  enter  into
consulting or employment  agreements with their key executives to continue their
employment  with us.  We must  compete  with  much  larger  companies  that have
significantly  greater  resources  to attract  and retain  personnel.  We cannot
assure you that we will be successful in this regard or, if successful, that the
services of such personnel can be secured on terms  favorable to us. The loss of
the services of any of our key  executives  or our  inability  to attract  other
qualified  employees  could  materially  and  adversely  affect our business and
operations.

LIMITATIONS IMPOSED BY GOVERNMENT REGULATION

     Our ability to pursue our business  activities  is  regulated,  directly or
indirectly,  by various agencies and departments of state and local governments.
Licenses from public utilities  commissions are frequently required prior to the
commencement  of services by us and our  customers.  In  addition,  our wireless
telecommunications  customers generally require licenses for their services from
the federal government.  There can be no assurance that we or our customers will
be successful in our or their efforts to obtain necessary licenses or regulatory
approvals.  Our inability or the inability of any of our customers to secure any
necessary  licenses or  approvals  could have a material  adverse  effect on our
business.  In addition to specific  regulations,  we are subject to all federal,
state and local rules and  regulations  imposed upon businesses  generally.  The
cost of compliance with  regulations is an additional cost of doing business for
us.

RISKS OF POSSIBLE COST ESCALATION UNDER FIXED PRICE CONTRACTS

     A substantial portion of our revenues has been generated  principally under
firm  fixed-price   contracts.   Fixed-price  contracts  carry  inherent  risks,
including underestimating costs, problems with new technologies and economic and
other  changes that may occur over the contract  period.  We recognize  revenues
using  the  percentage-of-completion  method.  Under  this  method,  revenue  is
recognized  based on actual costs incurred in relation to total  estimated costs
to complete the contract.  This method may result in volatility in our quarterly
results. Unforeseen events and circumstances can alter our estimate of the costs
and potential profit associated with a particular  contract.  To the extent that
original  cost  estimates are modified,  estimated  costs to complete  increase,
delivery  schedules  are  delayed,  or progress  under a contract  is  otherwise
impeded,  cash flow,  revenue  recognition and  profitability  from a particular
contract may be adversely affected.

INSURANCE AND POTENTIAL EXCESS LIABILITY

     We maintain  liability  insurance to protect  against damages to persons or
property that may result from our work. If we were to incur  liability in excess
of our policy coverage, our financial condition could be adversely affected.

OUR STOCK PRICE MAY BE PARTICULARLY VOLATILE BECAUSE OF OUR INDUSTRY

     The stock  market in general has  recently  experienced  extreme  price and
volume fluctuations.  In addition, the market prices of securities of technology
and   telecommunications   companies  have  been  extremely  volatile  and  have
experienced  fluctuations that have often been unrelated to or  disproportionate
to the operating performance of these companies. These broad market fluctuations
could adversely affect the price of our common stock.

                                       15
<PAGE>
ARIZONA ANTI-TAKEOVER STATUTE

     The Arizona  Corporate  Takeover Act ("Takeover  Act") was adopted in 1987.
The policy of the  Takeover  Act is to  prevent  unfriendly  corporate  takeover
attempts  by  third   parties.   The  Takeover  Act  prohibits   some  types  of
transactions,   including   "green   mail,"  limits  voting  rights  of  certain
individuals  acquiring  shares in the  market  and  regulates  various  business
combinations  involving corporate  transactions proposed by insiders and as part
of a takeover plan.

     The Takeover Act enhances the possibility  that a potential  bidder for our
control will be required to act through arm's-length negotiation with respect to
a  major   transaction,   such  as  a  merger,   consolidation  or  purchase  of
substantially  all of our assets.  The  Takeover Act may also have the effect of
discouraging  tender offers or other stock  acquisitions,  giving our management
power to reject some types of  transactions  that might be desired by the owners
of the majority of our voting securities.  The Takeover Act could also be deemed
to benefit  incumbent  management to the extent that the Act deters these offers
by persons who would wish to make changes in management or exercise control over
management.

DEPENDENCE ON SUPPLIERS

     We do not have written  agreements with our suppliers.  It is possible that
in the future our Equipment Distribution Group may encounter shortages in parts,
components, or other elements vital to its operations. If these shortages occur,
we  cannot  guarantee  that  we  would  be  able to  locate  other  satisfactory
suppliers, or even if other suppliers could be located, that we would be able to
establish  commercial  relationships  with these suppliers.  If we are unable to
establish commercial  relationships with other suppliers,  we may be required to
suspend or curtail some of our services.  Suspension or  curtailment of services
could have a material adverse effect on us.

OUR CREDIT FACILITY COULD BE ACCELERATED IF WE DEFAULT AND COULD ALSO PREVENT US
FROM ENGAGING IN CERTAIN BENEFICIAL TRANSACTIONS

     We have a credit facility with a group of financial institutions. The terms
of our indebtedness  contain  customary events of default and covenants.  Events
that are beyond our control  may affect our  ability to comply  with  certain of
these  provisions.  If we breach any of these covenants,  we could be in default
under the credit  facility and a default could  accelerate  the repayment of the
indebtedness.  Further, the covenants may significantly  restrict our ability to
respond to changing  business and economic  conditions  or to secure  additional
financing, if needed, and prevent us from engaging in transactions that we might
otherwise  consider  beneficial to our business.  The following  actions,  among
other things, require the prior written consent of our lenders:

     *    making investments in excess of specified amounts;
     *    incurring additional indebtedness in excess of a specified amount;
     *    paying dividends;
     *    making capital expenditures in excess of a specified amount;
     *    creating liens on our assets;
     *    engaging in mergers or combinations; and
     *    engaging in transactions which would result in a "change of control."

     Our credit facility also requires us to maintain  financial ratio coverages
of debt to earnings and of earnings to interest  expense.  We anticipate that we
may be in violation of certain  covenants  for the quarter ended March 31, 2001.
Accordingly,  we have  obtained  a waiver  from our  lenders  while a  permanent
modification to our credit facility is being negotiated.


ECONOMIC AND GENERAL RISKS OF THE BUSINESS

     Our success  will depend upon  factors that are beyond our control and that
cannot clearly be predicted at this time. These factors include general economic
conditions,   both  nationally  and   internationally,   changes  in  tax  laws,
fluctuations  in  operating  expenses,   including  energy  costs,   changes  in
governmental regulations,  including regulations imposed under federal, state or
local environmental laws, labor laws, trade laws and other trade barriers.

                                       16
<PAGE>
ITEM 2. DESCRIPTION OF PROPERTY

     We lease  approximately 3,500 square feet of office space for our corporate
office in Phoenix,  Arizona.  We are  building an office in Phoenix  with 34,000
square  feet on a 2.5  acre  parcel  with a total  project  cost of  about  $5.0
million.  We expect to consolidate our existing Phoenix leased office space into
about  20,000  square  feet of this  facility  and will lease the balance of the
space to tenants. We also maintain the operating facilities listed below.

     The Wired  Services  Group  has  principal  offices  in  Atlanta,  Georgia;
Columbia,  Maryland; Lake Worth, Florida; Denver,  Colorado;  Staten Island, New
York; Melissa, Texas;  Nashville,  Tennessee;  Phoenix,  Arizona; and Perris and
Sacramento,  California.  We also maintain several satellite offices  throughout
the United  States.  We own office  buildings  of 9,600  square feet in Phoenix,
19,400 square feet in Memphis and 8,100 square feet in Melissa and approximately
2.5 acres of land in Phoenix and four acres of land in Perris,  all of which are
subject to mortgages  totaling $442,840.  In addition,  we lease an aggregate of
1.7  million  square  feet of office,  warehouse  and yard space  under  various
leasing arrangements for our other locations.

     The  Equipment  Distribution  Division has  principal  offices in Richmond,
Virginia,  Lakeland and Marianna,  Florida and the United Kingdom.  Our Marianna
facility consists of an office/warehouse building of approximately 28,000 square
feet,  including  24,000  square  feet  of  warehouse  space  and an  additional
warehouse  consisting of  approximately  33,000  square feet.  The buildings are
located on approximately  8.4 acres of land. In addition,  we lease an aggregate
of 52,000  square  feet of office and  warehouse  space  under  various  leasing
arrangements for our other locations.

     The Wireless Services Division leases an aggregate of approximately  34,000
square feet located in Austin, Texas; San Jose,  California;  Denver,  Colorado;
Van Nuys, California; and West St. Paul, Minnesota.

     The Wireless  Technologies  Division  leases an aggregate of  approximately
19,000 square feet located in  Germantown,  Maryland and Englewood  Cliffs,  New
Jersey.

     We believe our operating  facilities  are adequate to meet our  operational
needs for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

     We are not involved as a party to any legal  proceeding  other than various
claims and lawsuits arising in the normal course of our business, none of which,
in our opinion, is individually or collectively material to our business.

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

     We did not submit any matter for a vote by our  stockholders,  through  the
solicitation  of proxies or otherwise,  during the fourth  quarter of the fiscal
year covered by this report.

                                       17
<PAGE>
                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock is listed on the NASDAQ  National  Market.  The  following
table  shows the high and low bid prices in  dollars  per share for the last two
years as reported by NASDAQ.  These  prices may not be the prices that you would
pay to  purchase a share of our common  stock  during the periods  shown.  These
prices are what a  securities  dealer  would pay for a share of our common stock
and do not include any  commissions you might have to pay or any retail mark-ups
or mark-downs.

     YEAR ENDED DECEMBER 31, 1999                       LOW           HIGH
     ----------------------------                     ------         ------
     First Quarter                                    $ 6.00         $ 9.00
     Second Quarter                                   $ 5.56         $ 9.13
     Third Quarter                                    $ 4.50         $ 9.09
     Fourth Quarter                                   $ 5.00         $ 9.00

     YEAR ENDED DECEMBER 31, 2000
     ----------------------------
     First Quarter                                    $ 7.03         $38.25
     Second Quarter                                   $10.63         $25.94
     Third Quarter                                    $14.50         $26.94
     Fourth Quarter                                   $ 4.56         $15.94

     As of March 9, 2001, there were approximately  36,962 beneficial holders of
our common stock.

DIVIDEND POLICY

     Holders of our common  stock are  entitled to receive  dividends  only when
declared by our Board of Directors.  To date  dividends have never been declared
or paid and we do not plan to make any dividend payments in the future. Instead,
we will reinvest in the expansion and development of our business.  If the Board
of Directors  decides to declare a dividend in the future,  the decision will be
based on our earnings,  financial  condition,  cash requirements,  and any other
factors  they  deem  relevant.  A  covenant  in our  revolving  credit  facility
restricts us from paying dividends, except under certain circumstances.

RECENT SALES OF UNREGISTERED SECURITIES

     During the fourth quarter of 2000, we issued 552,885 shares of common stock
to the  former  shareholders  of  New  C.C.,  Inc.  and  New  C.C.  West,  Inc.,
collectively  "New C.C.,  Inc.",  at a price of $5.0531  per share,  the average
market  price  of  our  common  stock  on  the  NASDAQ  National  Market  on the
acquisition close date. The purchase  agreement  requires us to issue additional
shares of common  stock to the  former  shareholders  of New C.C.,  Inc.  if the
market price of our common stock on the six month anniversary is below a certain
level. See Note 10 to the accompanying  consolidated financial statements.  Such
shares were issued  pursuant to Section 4(2) of the  Securities  Act of 1933, as
amended, (the "Act") and Regulation D promulgated under the Act.

     During the first quarter of 2001, we issued  616,542 shares of common stock
to the former shareholders of Anacom Systems  Corporation  ("Anacom") at a price
of $6.4878 per share, the average market price of our common stock on the NASDAQ
National Market for the ten trading days beginning five days prior to close, and
ending four days following  close, in connection with the acquisition of Anacom.
Such shares were issued  pursuant to Section 4(2) of the Securities Act of 1933,
as amended, (the "Act") and Regulation D promulgated under the Act.

During the first quarter of 2001, we issued 35,694 shares of common stock to the
former  shareholders of NY Antenna,  Inc. at a price of $11.70312 per share, the
average market price of our common stock on the NASDAQ  National  Market for the
ten trading days  immediately  preceding  November 28, 2000, in connection  with
provisions contained in the NY Antenna, Inc. purchase agreement that required us
to issue  additional  shares of common  stock to the former  shareholders  of NY
Antenna, Inc. if the above referenced average market price was below the average
market price calculated for the initial common stock issued upon the acquisition
close.  Such  shares  were  issued  pursuant  to  Section  4(2)  of the  Act and
Regulation D promulgated under the Act.

                                       18
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA

     The selected  consolidated  financial  information and consolidated balance
sheet data presented below as of and for the years ended December 31, 2000, 1999
and 1998 are derived from the  accompanying  consolidated  financial  statements
that  have  been  audited  by  BDO  Seidman  LLP.  The  consolidated   financial
information  and  consolidated  balance sheet data presented below as of and for
the years ended  December  31, 1997 and 1996 are derived  from the  consolidated
financial statements that have been audited by Semple & Cooper LLP. On September
1, 1998, the Company  completed two  acquisitions,  both of which were accounted
for  using the  pooling  of  interests  method.  On June 1,  2000,  the  Company
completed an  acquisition  that was accounted for using the pooling of interests
method.  Accordingly,  the selected consolidated financial information presented
below has been restated to include the results of operations of the acquisitions
for all periods presented.

<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                 ----------------------------------------------------------
                                   2000         1999         1998         1997        1996
                                 --------     --------     --------     -------     -------
                                            (in thousands, except per share amounts)
<S>                              <C>          <C>          <C>          <C>          <C>
Revenues                         $315,715     $187,680     $118,684     $73,341     $41,918
Cost of revenues                  236,105      141,093       83,524      53,613      31,370
                                 --------     --------     --------     -------     -------

Gross margin                       79,610       46,587       35,160      19,728      10,548
General and administrative         53,546       31,094       18,676      14,000      11,015
                                 --------     --------     --------     -------     -------

Income from operations             26,064       15,493       16,484       5,728        (467)
Other income (expense), net        (7,600)      (3,194)      (1,242)      1,167         (87)
Nonrecurring acquisition-
 related expenses                  (1,380)          --         (890)         --          --
                                 --------     --------     --------     -------     -------
Income before provision for
 income taxes                      17,084       12,299       14,352       6,895        (554)
Provision for income taxes         (6,600)      (4,391)      (4,899)        334        (139)
                                 --------     --------     --------     -------     -------

Net income                         10,484        7,908        9,453       7,229        (693)
Preferred stock dividend               --           (4)         (48)       (173)       (171)
                                 --------     --------     --------     -------     -------
Net income attributable to
 common stockholders               10,484        7,904        9,405       7,056        (864)
Pro forma provision for
 income taxes (2)                     (48)         (41)        (534)     (1,769)        341
                                 --------     --------     --------     -------     -------
Net income after pro forma
  provision for income taxes     $ 10,436     $  7,863     $  8,871     $ 5,287     $  (523)
                                 ========     ========     ========     =======     =======
Earnings per share:
    Basic                        $   0.32     $   0.27     $   0.39     $  0.56     $ (0.08)
    Diluted                      $   0.30     $   0.26     $   0.34     $  0.36     $ (0.08)

Proforma earnings per share
   Basic                         $   0.32     $   0.27     $   0.37     $  0.42     $ (0.05)
   Diluted                       $   0.30     $   0.26     $   0.32     $  0.27     $ (0.05)

Shares used in computing
  earnings per share:
    Basic                          32,487       28,897       24,375      12,577      10,307
    Diluted                        35,205       30,684       28,042      19,446      10,307
</TABLE>
                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                         December 31,
                                ----------------------------------------------------------
                                  2000         1999         1998         1997        1996
                                --------     --------     --------     -------     -------
                                                       (in thousands)
<S>                             <C>          <C>          <C>          <C>          <C>
Consolidated balance sheet data:
 Cash                           $ 10,333     $  3,358     $ 4,841      $ 3,412     $    99
 Working capital                 108,527       64,947      25,506       11,586        (881)
 Total assets                    272,570      163,334      90,272       53,919      10,483
 Long-term debt
   less current portion          102,119       57,753       7,463        5,292       1,641
 Stockholders' equity            125,738       74,509      54,166       32,906       2,456
</TABLE>

(1)  Consolidated  balance sheet data and results of operations of  subsidiaries
acquired on September 1, 1998 under pooling of interests method is not available
for  certain  periods.  Therefore,  the  consolidated  balance  sheet data as of
December 31, 1996 has not been restated.

(2) During the second quarter of 2000 and the third quarter of 1998, the Company
made certain  acquisitions  accounted for under the pooling of interests method.
Prior to the  acquisitions,  the  companies  acquired  operated as  Subchapter S
corporations and, accordingly, were not subject to federal income taxes. The pro
forma  provision for income taxes was recorded for 2000,  1999,  1998,  1997 and
1996 to present income taxes as though the consolidated operating results of the
acquired  companies  had been  subject to federal  income  taxes or all  periods
presented.

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

GENERAL

     We  are  an  end-to-end   solutions  provider  serving   telecommunications
industry. We deliver a broad range of solutions designed to enable,  enhance and
support voice, data and video communications through wired,  wireless,  internal
and external  networks.  In  delivering  these  solutions,  we design,  develop,
install  and  maintain   internal  and  external   networks   that  support  the
Internet-related  applications and other  communications for our customers.  Our
services  range from the design,  development  and  installation  of fiber-optic
networks to wireless connectivity solutions. Our products range from proprietary
wireless   communications   equipment  to  new,   deinstalled   and  refurbished
communications  equipment  from a  variety  of  manufacturers.  We  deliver  our
products and services through four operating segments: wired services,  wireless
services, wireless technologies and equipment distribution.

     The Company derives a substantial  portion of its revenue through contracts
accounted  for under the  percentage  of completion  method  whereby  revenue is
recognized  based on the ratio of contract  costs  incurred  to total  estimated
contract costs.  As a result,  gross margins can increase or decrease based upon
changes in estimates during individual contracts.

RESULTS OF OPERATIONS

     During 2000 and 1999, we made several strategic acquisitions to enhance our
service  capabilities  and broaden  our  geographic  coverage  as an  end-to-end
solutions  provider.  None of the acquisitions were material  individually or in
the aggregate.  Details of these  transactions  can be found in the accompanying
Consolidated Financial Statements.

                                       20
<PAGE>
<TABLE>
<CAPTION>
                                     2000(1)               1999(1)              1998(1)
                               ------------------    ------------------    ------------------
<S>                            <C>          <C>      <C>          <C>      <C>          <C>
Revenues                       $315,715    100.0%    $187,680    100.0%    $118,684    100.0%
Cost of revenues                236,105     74.8%     141,093     75.2%      83,524     70.4%
                               --------    -----     --------    -----     --------    -----

Gross margin                     79,610     25.2%      46,587     24.8%      35,160     29.6%
General and administrative       53,546     17.0%      31,094     16.6%      18,676     15.7%
                               --------    -----     --------    -----     --------    -----

Income from operations           26,064      8.3%      15,493      8.2%      16,484     13.9%
Other income (expense), net      (7,600)    -2.4%      (3,194)    -1.7%      (1,242)    -1.1%
Nonrecurring acquisition-
  related expenses               (1,380)    -0.5%          --       --         (890)    -0.7%
                               --------    -----     --------    -----     --------    -----

Income before provision for      17,084      5.4%      12,299      6.5%      14,352     12.1%
  income taxes
Provision for income taxes       (6,600)    -2.1%      (4,391)    -2.3%      (4,899)    -4.1%
                               --------    -----     --------    -----     --------    -----

Net income                       10,484      3.3%       7,908      4.2%       9,453      8.0%
Preferred stock dividend             --       --           (4)     0.0%         (48)    -0.1%
                               --------    -----     --------    -----     --------    -----
Net income attributable to
  common stockholders            10,484      3.3%       7,904      4.2%       9,405      7.9%
Pro forma provision for
  income taxes                      (48)      --          (41)     0.0%        (534)    -0.4%
                               --------    -----     --------    -----     --------    -----
Net income after pro forma
  provision for income taxes   $ 10,436      3.3%    $  7,863      4.2%    $  8,871      7.5%
                               ========    =====     ========    =====     ========    =====
</TABLE>

(1) During the second quarter of 2000 and the third quarter of 1998, the Company
made certain  acquisitions  accounted for under the pooling of interests method.
Prior to the  acquisitions,  the  companies  acquired  operated as  Subchapter S
corporations and, accordingly, were not subject to federal income taxes. The pro
forma  provision  for  income  taxes was  recorded  for 2000 and 1998 to present
income  taxes as though  the  consolidated  operating  results  of the  acquired
companies had been subject to federal income taxes for all periods presented.

2000 COMPARED TO 1999

     REVENUES.  Revenues for 2000 increased  $128.0  million,  or 68%, to $315.7
million as compared to $187.7 million in 1999. The increase was due primarily to
revenue growth of $112.9 million in the wired services  segment during 2000. The
increase was the result of revenue growth from existing  subsidiaries as well as
incremental  revenues from  acquisitions made during the year. Also contributing
to the  overall  increase  in our  revenues  was the  addition  of the  wireless
services segment during the third quarter of 2000 which contributed  revenues of
$6.9 million in 2000.  Revenues from our wireless  technology  segment increased
$1.0  million,  or 31%, to $4.1 million due to the  continued  deployment of our
proprietary wireless connectivity solutions.  Our equipment distribution segment
experienced revenue growth of $7.2 million, or 23%, primarily due to an expanded
line of products offered for sale.

     GROSS MARGIN.  Gross margin for 2000 increased  $33.0  million,  or 71%, to
$79.6 million as compared to $46.6  million in 1999.  The increase was primarily
the result of increased revenue volume in each of our operating segments.

     Gross margin, as a percentage of revenues, increased less than 1% to 25% in
2000. Gross margin within the wired services segment increased 2% to 25% in 2000
compared to 23% in 1999 primarily due to the mix of services  offered and strong
industry demand. This increase was offset by a 2% decrease in gross margin, as a
percentage of revenue, in the equipment distribution segment to 30% in 2000 from
32% in 1999 as a result of a changing mix of products sold.  Gross margin,  as a
percentage of revenue, in our newly created wireless services segment was 21% in
2000.

                                       21
<PAGE>
     GENERAL AND  ADMINISTRATIVE.  General and administrative  expenses for 2000
increased  $22.5 million,  or 72%, to $53.5 million as compared to $31.1 million
in  1999.  The  increase  was  primarily  due to  internal  growth  of  existing
subsidiaries,  incremental  costs associated with  acquisitions made during 2000
and  management  additions  made during 2000 to support  our  continued  growth.
General and administrative  expenses,  as a percentage of revenues,  were 17% in
2000 and 1999.

     OTHER INCOME (EXPENSE).  Other expenses for 2000 increased $4.4 million, or
138%,  to $7.6  million as compared  to $3.2  million in 1999.  The  increase is
primarily due to interest expense on our credit  facilities.  Borrowing activity
increased  during 2000 due to the  acquisition of several  subsidiaries  through
purchase  agreements  consisting of all cash or cash and common stock terms, the
acquisition  of  operating  equipment  to  support  revenue  growth in the wired
services segment,  and the funding research and development  initiatives  within
our wireless technology segment.

     NON-RECURRING  ACQUISITION  COSTS.  Non-recurring  acquisition  costs  were
attributable  to certain  acquisitions  made  during the second  quarter of 2000
accounted for under the pooling of interests method.

     PROVISION  FOR INCOME  TAXES.  Income tax expense for 2000  increased  $2.2
million,  or 50.3%,  to $6.6  million as compared to $4.4  million in 1999.  The
provision for income taxes increased due to higher taxable earnings and a higher
effective tax rate in 2000 due to  non-deductible  acquisition costs incurred in
2000  related to an  acquisition  accounted  for under the pooling of  interests
method in the second  quarter of 2000. The company we acquired under the pooling
of interests  method operated as a Subchapter S corporations  and,  accordingly,
was not subject to federal income taxes. A pro forma  provision for income taxes
was  recorded  for 2000 to  present  income  taxes as  though  the  consolidated
operating  results of the acquired  company had been  subject to federal  income
taxes for all periods presented.

     NET INCOME. Net income  attributable to common  stockholders before the pro
forma  provision for income taxes for 2000  increased  $2.6 million,  or 33%, to
$10.5 million,  or $0.32 and $0.30 per basic and diluted  share,  as compared to
$7.9  million,  or $0.27 and $0.26 per basic and  diluted  share,  in 1999.  Net
income  attributable  to common  stockholders  after the pro forma provision for
income taxes for 2000 increased $2.5 million, or 32%, to $10.4 million, or $0.32
and $0.30 per basic and diluted share, as compared to $7.9 million, or $0.27 and
$0.26 per basic and diluted share, in 1999.

1999 COMPARED TO 1998

     REVENUES.  Revenues for 1999 increased  $69.0 million,  or 58.1%, to $187.7
million as compared to $118.7 million in 1998. The increase was due primarily to
revenue growth of $74.5 million in the wired  services  segment during 1999. The
increase was the result of revenue growth from existing  subsidiaries as well as
incremental  revenues from  acquisitions made during the year. Also contributing
to the  overall  increase  in our  revenues  was the  addition  of the  wireless
technologies segment during the first quarter of 1999 which contributed revenues
of  $3.2  million  in  1999.   Partially   offsetting   revenue  growth  in  the
infrastructure  and wireless segments was a decrease in revenues of $8.6 million
in the equipment distribution segment in 1999 as compared to 1998.

     GROSS MARGIN.  Gross margin for 1999 increased $11.4 million,  or 32.5%, to
$46.6 million as compared to $35.1 million in 1998. The increases were primarily
the  result of  increased  revenue  volume in the  infrastructure  and  wireless
segments,  partially  offset by a decrease in revenue volume and sales prices in
the equipment distribution segment.

     Gross margin,  as a percentage of revenues,  decreased 5% to 25% in 1999 as
compared to 30% in 1998. The decrease was primarily due to declines in the gross
margins within the equipment  distribution  segment,  offset by increases in the
wired services segment. Gross margin in the equipment distribution segment, as a
percentage of revenues, in 1999 was 32% as compared to 53% in 1998. Current year
margins have declined as compared to the prior year due to changes in prevailing
market  conditions.  During the fourth  quarter of 1998,  we  successfully  sold
approximately  $3.2 million of older inventory which had previously been written
down.  This older  inventory  was sold at prices in excess of its  adjusted  net
realizable  value resulting in a non-recurring  higher than normal gross profit.
The same market  conditions  did not exist during 1999,  and as such, we did not
sell  any of the old  inventory  and did not  achieve  the same  margins  in the

                                       22
<PAGE>
current  year as in the prior year.  Having made no sales of this old  inventory
during 1999, no  significant  adjustments to the reserve for  obsolescence  were
made. Gross margin,  as a percentage of revenues,  in the wired services segment
increased 2% to 23% in 1999 as compared to 21% in 1998 primarily due to improved
operating efficiencies and contract execution.

     GENERAL AND  ADMINISTRATIVE.  General and administrative  expenses for 1999
increased  $12.4 million,  or 67%, to $31.1 million as compared to $18.7 million
in  1998.  The  increase  was  primarily  due to  internal  growth  of  existing
subsidiaries,  incremental  costs associated with  acquisitions made during 1999
and  management  additions  made during 1999 to support  our  continued  growth.
General and administrative  expenses,  as a percentage of revenues,  were 17% in
1999 as compared to 16% in 1998.

     OTHER INCOME (EXPENSE).  Other expenses for 1999 increased $2.0 million, or
157%,  to $3.2  million as compared  to $1.2  million in 1998.  The  increase is
primarily due to interest expense on our credit  facilities.  Borrowing activity
increased  during 1999 due to the  acquisition of several  subsidiaries  through
purchase  agreements  consisting  of all cash or cash and common  stock terms as
well as the acquisition of operating  equipment to support revenue growth in the
wired services  segment.  Partially  offsetting the increase in interest expense
was an increase in interest and other income of $199,200 due to interest  earned
on deposited funds and realized gains on short-term liquid investments.

     NON-RECURRING  ACQUISITION  COSTS.  Non-recurring  acquisition  costs  were
attributable  to certain  acquisitions  made  during  the third  quarter of 1998
accounted for under the pooling of interests method.

     PROVISION FOR INCOME TAXES. Income tax expense for 1999 decreased $508,000,
or 10%, to $4.4 million as compared to $4.9 million in 1998.  The  provision for
income taxes  decreased due to lower  taxable  earnings,  partially  offset by a
lower effective tax rate in 1998 due to certain acquisitions accounted for under
the  pooling of  interests  method in the third  quarter  of 1998.  Prior to the
acquisitions,  the companies acquired operated as Subchapter S corporations and,
accordingly, were not subject to federal income taxes. A pro forma provision for
income  taxes was  recorded  for 1998 to  present  income  taxes as  though  the
consolidated  operating  results of the acquired  companies  had been subject to
federal income taxes for all periods presented.

     NET INCOME. Net income  attributable to common  stockholders before the pro
forma  provision for income taxes for 1999  decreased  $1.5 million,  or 16%, to
$7.9  million,  or $0.27 and $0.26 per basic and diluted  share,  as compared to
$9.4  million,  or $0.39 and $0.34 per basic and  diluted  share,  in 1998.  Net
income  attributable  to common  stockholders  after the pro forma provision for
income taxes for 1999 decreased $1.0 million,  or 11%, to $7.9 million, or $0.27
and $0.26 per basic and diluted share, as compared to $8.9 million, or $0.36 and
$0.32 per basic and diluted share, in 1998.

LIQUIDITY AND CAPITAL RESOURCES

     Our capital needs consist  primarily of equipment needed to support revenue
growth and working  capital  needed for general  corporate  purposes,  including
strategic  acquisitions.  We have  historically  financed  operations  through a
combination of lines of credit, and debt and equity offerings.  Our liquidity is
impacted,  to a large  degree,  by the  nature of billing  provisions  under our
installation  and  service  contracts.   Generally,  in  the  early  periods  of
contracts,  cash  expenditures  and accrued  profits are  greater  than  allowed
billings, while contract completion results in billing previously unbilled costs
and related accrued profits.

     During 2000,  net cash used in operations  totaled $5.2 million as compared
to $15.3  million in 1999.  Cash  generated  from  operations  during the period
totaled $42.6 million and  consisted  primarily of net income of $10.5  million,
depreciation  and amortization  totaling $12.2 million,  an increase in accounts
payable  of $9.0  million,  income  taxes of $8.7  million  and  other  non-cash
expenses  included  in  net  income  of  $2.2  million.   Operating  assets  and
liabilities  decreased  operating  cash flow  $47.8  million,  primarily  due to
increases in accounts  receivable,  inventory,  costs and estimated  earnings in
excess of billings  and other  assets and  decreases in other assets and accrued
expenses.

                                       23
<PAGE>
     Cash used in investing  activities  in 2000 totaled  $42.1  million,  which
consisted  primarily of net equipment  purchases totaling $29.2 million and cash
used in business  acquisitions  totaling $12.9 million.  During 2000,  financing
activities generated  approximately $54.2 million,  which consisted primarily of
net borrowings under our credit  facilities  totaling $37.5 million,  borrowings
under notes  payable and  capital  lease  obligations  related to  purchases  of
equipment  totaling  $17.1  million,  proceeds  from  warrant  and stock  option
exercises  totaling  $12.5 million and proceeds from stock  purchased  under the
Employee  Stock  Purchase  Plan  totaling  $1.6  million,  partially  offset  by
scheduled principal payments on long-term debt totaling $13.6 million.

     As of  December  31,  2000,  we had a cash  balance  of $10.3  million  and
additional working capital of $97.8 million.  Additionally, at December 31, 2000
we had a  revolving  line of  credit  with a  syndication  of  commercial  banks
totaling $100 million  (with a provision,  under  certain  conditions  including
consent  of the  lenders,  to  raise  the  total  borrowings  available  to $150
million),  with an available balance of approximately  $16.8 million,  and a $25
million  lease line of credit with an available  balance of  approximately  $5.1
million.  Aggregate  proceeds  from current  working  capital,  funds  generated
through operations and current availability under existing credit facilities are
considered  sufficient to fund our operations  for the next 12 to 18 months.  We
are, however, pursuing opportunities to augment our capital structure to support
anticipated  growth from increased demand for our products and services.  We can
offer no  assurance  that we will be able to obtain such  additional  capital or
that it will be available on terms or conditions acceptable to us. Our revolving
credit agreement places certain business,  financial and operating  restrictions
on the Company  relating to, among other  things,  the  incurrence of additional
indebtedness,  acquisitions, asset sales, mergers, dividends,  distributions and
repurchases and redemption of capital stock. Our revolving credit agreement also
requires  that  specified  financial  ratios and balances be  maintained.  As of
December 31, 2000, the Company was in compliance with these covenants. We do not
expect to be in  compliance  with  certain  covenants at March 31, 2001 and have
obtained a waiver from our lenders while a permanent  modification to our credit
facility is being negotiated.

INFLATION

     We do not believe that we are significantly impacted by inflation.

SEASONALITY

     As a result of acquisitions and geographical expansion, our operations have
become  seasonally  weaker in the first and fourth quarters of the year and have
produced stronger results in the second and third quarters.  This seasonality is
primarily the result of customer  budgetary  constraints and preferences and the
effect  of  winter  weather  on  outside  construction  activities.  Some of our
customers,  particularly the incumbent local exchange carriers, tend to complete
budgeted  capital  expenditures  before the end of the year and defer additional
expenditures until the following budget year.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("FAS") No. 133,  "Accounting for
Derivative  Instruments and Hedging  Activities"  ("FAS 133"), as amended by FAS
No. 137 and FAS No. 138. FAS 133 requires the Company to record all  derivatives
on the balance  sheet at fair value  commencing  with the first quarter of 2001.
Changes in  derivative  fair  values will  either be  recognized  in earnings as
offsets to the changes in fair value of related hedged assets,  liabilities  and
firm  commitments  or, for forecasted  transactions,  deferred and recorded as a
component of stockholders'  equity until the hedged  transactions  occur and are
recognized in earnings. The ineffective portion of a hedging derivative's change
in fair value will be immediately  recognized in earnings.  Based on our current
analysis,  FAS 133 will not have a material impact on the consolidated financial
statements of the Company.

                                       24
<PAGE>
     In December 1999, the  Securities  and Exchange  Commission  ("SEC") issued
Staff Accounting  Bulletin ("SAB") No. 101 "Revenue  Recognition" which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB No. 101 was adopted beginning with our fiscal
2000  consolidated  financial  statements  and  had no  material  impact  on the
financial results of the Company.

     In March  2000,  the FASB  issued  Interpretation  No. 44  "Accounting  for
Certain  Transactions  Involving Stock  Compensation,  the Interpretation of APB
Opinion No. 25" ("FIN 44"). The  Interpretation  is intended to clarify  certain
problems  that  have  arisen  in  practice  since the  issuance  of APB No.  25,
"Accounting   for  Stock  Issued  to  Employees."  The  effective  date  of  the
Interpretation  was July 1, 2000.  The  provisions of the  Interpretation  apply
prospectively,  but they will also cover certain events occurring after December
15, 1998 and after January 12, 2000. The Company believes the adoption of FIN 44
has not had a material adverse affect on the current and historical consolidated
financial statements.

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     Market  risk  generally  represents  the risk that  losses may occur in the
values of financial  instruments  as a result of  movements  in interest  rates,
foreign currency exchange rates and commodity prices.  The Company does not have
foreign currency exchange rate and commodity price market risk.

     Interest Rate Risk - From time to time the Company  temporarily invests its
excess cash and retianage in interest-bearing  securities issued by high-quality
issuers.  Company  policies  limit the amount of investment in securities of any
one financial institution. Due to the short time the investments are outstanding
and  their  general   liquidity,   these  instruments  are  classified  as  cash
equivalents  in the  consolidated  balance sheet and do not represent a material
interest rate risk to the Company.  The Company's  primary  market risk exposure
for  changes  in  interest  rates  relates  to  the  Company's   long-term  debt
obligations.  The Company  manages  its  exposure  to  changing  interest  rates
principally through the use of a combination of fixed and floating rate debt.

     The  Company  evaluated  the  potential  effect  that near term  changes in
interest  rates  would  have had on the fair  value of its  interest  rate  risk
sensitive financial instruments at December 31, 2000. Assuming a 100 basis point
increase in the prime  interest rate at December 31, 2000 and December 31, 1999,
respectively,  the potential  increase in the fair value of the  Company's  debt
obligations  would have been  approximately  $500,000 at  December  31, 2000 and
$320,000 at  December  31,  1999.  See note 3 in the  accompanying  consolidated
financial statements.

ITEM 8. FINANCIAL STATEMENTS.

     The consolidated  financial  statements and schedules are included herewith
commencing on page F-1.

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

     There were no changes in or  disagreements  with  accountants on accounting
and financial disclosure during the year ended December 31, 2000.

                                       25
<PAGE>
                                    PART III

ITEM 10. EXECUTIVE AND DIRECTORS OFFICERS

The following sets forth certain information as of March 31, 2001 concerning our
executive officers and directors.

JOSEPH P. KEALY
(age 51)

Mr. Kealy has been our Chairman since May 1994 and our President and a member of
our board of directors since September 1990. Since 1994, he has been involved in
infrastructure development for the telecommunications industry. From 1972 to
1994 he was involved in the construction business in both field and management
capacities. He attended Hastings College in Nebraska and Northern Arizona
University.

ANTHONY T. BAUMANN
(age 36)

Mr. Baumann has served as our Chief Operating Officer since November 1999. From
July 1998 to September 1999 he served as our Controller. From 1996 to 1998, Mr.
Baumann owned an automotive consulting business. From 1994 to 1996, Mr. Baumann
served as divisional controller for Old Castle ITS, a publicly traded
multi-national conglomerate. From 1987 to 1994, Mr. Baumann was a certified
public accountant with Ernst & Young where he worked with emerging businesses.
Mr. Baumann graduated from the University of Arizona with a bachelor of science
in public administration.

GREGORY B. HILL
(age 32)

Mr. Hill has served as our Chief Financial Officer, Secretary and Treasurer
since January 2001. Mr. Hill served as our Controller from September 1999 to
March 2000 and as our Vice President-Finance from April 2000 to December 2000.
From June 1998 until June 1999, Mr. Hill was employed by All Star Telecom, our
infrastructure development company that we acquired in April 1999, where he
served as chief financial officer and controller. From June to September 1999,
Mr. Hill served as Regional Controller of our Infrastructure Development Group.
Mr. Hill is a certified public accountant and served in the Technology Industry
Group of Price Waterhouse providing audit, transaction support, and business
advisory services to technology companies from January 1992 through June 1998.
He received his bachelor of science in business administration from California
State University - Sacramento.

DOUGLAS N. KIMBALL
(age 46)

Mr. Kimball has served as our Senior Executive Vice President concentrating on
acquisitions since October 1999. Mr. Kimball was our Chief Operating Officer
from October 1997 to October 1999. From 1995 to October 1997 he was Vice
President-Operations at American Environmental Network an environmental testing
firm. From 1992 to March 1996 he provided financial consulting services to
emerging businesses. Mr. Kimball graduated with a bachelor of arts degree from
Dartmouth College and earned a masters of science in accounting/business
administration from Northeastern University.

                                       26
<PAGE>
C. JAMES JENSEN
(age 60)

Mr. Jensen has been a member of our board of directors since May 1999. Since
December 1996, Mr. Jensen has been the President of SWD Holdings, Inc., a
privately-held company specializing in the development of master planned
residential and recreational communities in the western United States and Texas.
Since 1985, he also has been president of J. J. Consulting Corporation, a
privately-held company that specializes in the marketing and sales of high-end,
master planned residential communities. Mr. Jensen is an active member of the
World Presidents' Organization, the alumni group of the Young Presidents'
Organization. Mr. Jensen attended the University of Washington.

JOHN F. KEALY
(age 56)

Mr. Kealy has been a member of our board of directors since September 1990. He
was our Executive Vice President and Secretary until March 1995. In 1987, he
formed International Environmental Corp. (IEC), which is involved in asbestos
remediation, with his brother Joseph P. Kealy, our Chairman and President, and
served as its chairman from its inception to May 1994. He has been the President
of IEC since 1995, when he acquired IEC from us in connection with our entry
into the telecommunications service industry. Mr. Kealy has been involved in the
construction business in both field and management capacities since 1967. He
attended Notre Dame University and graduated from Arizona State University with
a bachelor of science in construction management.

JOHN P. MORBECK
(age 57)

Mr. Morbeck became a member of our board of directors in January 2000. Since
1997, he has been an investment manager and registered investment advisor with
Sirach Capital Management, a money management firm. From 1979 to 1997 he was the
president and a founding principal of Olympic Capital Management, which was
acquired by Sirach Capital. Mr. Morbeck received his bachelor of science in
economics and masters in business administration from the University of
Washington.

RICHARD J. SEMINOFF
(age 54)

Mr. Seminoff has been a member of our board of directors since 1994. Since May
1995, he has been vice president of Semco Enterprises, Inc., which is in the
metal processing business. Mr. Seminoff received his bachelor of science in
business administration from Arizona State University.

                                       27
<PAGE>
JOHN P. STEPHENS
(age 59)

Mr. Stephens has been a member of our board of directors since 1998. He has been
Vice President and regional manager for J.A. Jones Construction Co., a general
contracting firm, since 1985. He earned his bachelor of science in civil
engineering from the University of Detroit and his masters in business
administration from Adelphi University.

JERRY A. KLEVEN
(age 47)

Mr. Kleven has been a member of our board of directors since 1994. He is the
President of Kleven Communications, Inc., one of our infrastructure development
subsidiaries. He has been involved in the telecommunications service industry,
including cable television, since 1971.

All executive officers are appointed by and serve at the discretion of the board
of directors for continuous terms.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Such officers, directors and shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms that they file.
During the last year Messrs. Beiriger, Stephens, Seminoff, Kleven, Kealy (John),
Kealy (Joseph), Jensen, Wiltse, Baumann, Hill and Morbeck each failed to file
one report on Form 4 in a timely fashion, each of which should have contained
disclosure regarding one transaction. All of such transactions were reported on
Form 5.

                                       28
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION

     The following table sets forth all cash compensation paid by us to the
chief executive officer and the four highest compensated executive officers
whose total remuneration exceeded $100,000 for services rendered in all
capacities to us during the last three completed fiscal years.

<TABLE>
<CAPTION>
                                                                         LONG TERM
                                                                       COMPENSATION
                                                                          AWARDS
                                                                        -----------
                                                         ANNUAL         SECURITIES
                                                     COMPENSATION/      UNDERLYING         ALL OTHER
    Name and Principal Positions            YEAR     SALARY & BONUS     OPTIONS (3)     COMPENSATION (4)
    ----------------------------            ----     --------------     -----------     ----------------
<S>                                         <C>         <C>              <C>                <C>
Joseph P. Kealy                             2000        $248,750         225,000            $ 11,481
Chairman of the Board                       1999         210,312         500,000              10,794
and President (1)                           1998         146,680         400,000               9,600

Kenneth L. Wiltse, II                       2000         239,038          40,000              16,200
Executive Vice President (5)                1999         171,071         335,000              13,500
                                            1998              --              --                  --

Terry W. Beiriger                           2000         170,000         145,000              13,298
Former Chief Financial                      1999         154,196         100,000               7,014
Officer, Secretary and                      1998         150,000          55,000               9,600
Treasurer (2)

Gregory B. Hill                             2000         148,634         150,000               9,456
Chief Financial Officer,                    1999              --              --                  --
Secretary and Treasurer (2)                 1998              --              --                  --

Douglas N. Kimball                          2000         152,000          15,000               7,085
Senior Executive Vice                       1999         131,596          90,000               7,054
President                                   1998         104,000          30,000               7,200

Anthony T. Baumann                          2000         137,307          60,000               9,000
Chief Operating Officer (6)                 1999          98,750         180,000               1,500
                                            1998              --              --                  --
</TABLE>

----------
(1)  In 1999 we entered into an extension of the employment agreement with
     Joseph P. Kealy providing for an annual base salary of $200,000. See
     "Employment and Change of Control Agreements."
(2)  On December 31, 2000, Terry W. Beiriger resigned as the Company's Chief
     Financial Officer, Secretary and Treasurer. Mr. Beiriger continues to serve
     the Company in a non-officer capacity. Gregory B. Hill was elected by the
     Board of Directors to replace Mr. Beiriger as the Company's Chief Financial
     Officer, Secretary and Treasurer, effective January 1, 2001.
(3)  The exercise prices of all stock options granted were at least equal to the
     fair market value of our common stock on the date of grant.
(4)  The amounts set forth in this column are the automobile allowances received
     by the persons in the table under their respective employment agreements.
(5)  During 2000, Mr. Wiltse resigned as Executive Vice President. Mr. Wiltse
     continues to serve the Company in a non-officer capacity.
(6)  In 2000, we entered into an employment agreement with Mr. Baumann providing
     for an annual base salary of $156,000. See "Employment and Change of
     Control Agreements."

                                       29
<PAGE>
                           STOCK OPTION GRANTS IN 2000

     The following key executive officers were granted stock options under and
outside of our option plans in fiscal 2000 in recognition of their past
contributions to us. In each case, the option price was equal to or in excess of
the fair market value of the common stock on the date of grant.

<TABLE>
<CAPTION>
                                                                                              VALUE AT ASSUMED
                                             % OF TOTAL                                       ANNUAL RATES OF
                            NUMBER OF       OPTIONS AND                                         STOCK PRICE
                             SHARES           WARRANTS                                        APPRECIATION FOR
                           UNDERLYING        GRANTED TO     EXERCISE                           OPTION TERM (2)
                            OPTIONS          EMPLOYEES       PRICE         EXPIRATION        --------------------
NAME                        GRANTED         IN 2000 (1)    PER SHARE          DATE              5%         10%
----                        -------         -----------    ---------          ----           --------    --------
<S>                          <C>                <C>          <C>         <C>                <C>         <C>
Joseph P. Kealy              75,000             3.9%         $14.31      May 30, 2005        $296,519    $655,230
                            150,000             7.7%           7.63      January 4, 2005      315,997     698,271

Terry W. Beiriger(7)         25,000             1.3%          14.31      May 30, 2005          98,840     218,410
                             90,000             4.6%          12.94      April 13, 2005       321,695     710,863
                             30,000             1.5%           7.63      January 4, 2005       63,199     139,654

Kenneth L. Wiltse, II(7)     40,000 (3)         2.1%           7.63      January 4, 2005       84,266     186,206

Douglas N. Kimball           15,000 (4)         0.8%          14.31      May 30, 2005          59,304     131,046

Anthony T. Baumann           25,000 (5)         1.3%          14.31      May 30, 2005          98,840     218,410
                             35,000             1.8%           7.63      January 4, 2005       73,733     162,930

Gregory B. Hill              25,000 (5)         1.3%          14.31      May 30, 2005          98,840     218,410
                             75,000 (6)         3.9%          12.94      April 13, 2005       268,079     592,385
                             50,000 (8)         1.3%           7.63      January 4, 2005       52,666     116,378
</TABLE>

----------
(1)  Percentages represent total percentages for fiscal 2000 including all
     grants under and outside of our stock option plans listed for each person.
(2)  Potential gains are net of the exercise price, but before taxes associated
     with the exercise. Amounts represent hypothetical gains that could be
     achieved for the respective options if exercised at the end of the option
     term. The assumed 5% and 10% rates of stock price appreciation are provided
     in accordance with the rules of the Securities and Exchange Commission and
     do not represent our estimate or projection of the future price of our
     common stock. Actual gains, if any, on stock option exercises will depend
     upon the future market prices of our common stock.
(3)  These options became exercisable on January 5, 2001.
(4)  Of these options, 7,500 became exercisable on May 31, 2000 and 7,500 become
     exercisable on May 31, 2001.
(5)  Of these options, 12,500 became exercisable on May 31, 2000 and 12,500
     become exercisable on May 31, 2001.
(6)  Of these options, 25,000 became exercisable on April 14, 2001, 25,000
     become exercisable on April 14, 2002 and 25,000 become exercisable on April
     14, 2003.
(7)  Messrs. Beriger and Wiltse resigned as executive officers during 2000.
(8)  Of these options, 12,500 became exercisable on January 5, 2001.

AGGREGATE YEAR-END OPTION VALUES. The following table provides information
concerning the number of unexercised options held by each of the executives as
of December 31, 2000. Also reported are the values for "in the money" options,
which represent the positive spread between the exercise price and the fair
market value of our Common Stock as of December 31, 2000.

                                       30
<PAGE>
<TABLE>
<CAPTION>
                                                             NUMBER OF SHARES             VALUE OF UNEXERCISED
                                                          UNDERLYING UNEXERCISED          IN-THE-MONEY OPTIONS
                          SHARES                      OPTIONS AT DECEMBER 31, 2000      AT DECEMBER 31, 2000 (1)
                         ACQUIRED         VALUE       ----------------------------     ---------------------------
NAME                    ON EXERCISE      REALIZED     EXERCISABLE   UNEXERCISABLE      EXERCISABLE   UNEXERCISABLE
----                    -----------      --------     -----------   -------------      -----------   -------------
<S>                       <C>          <C>             <C>                <C>           <C>               <C>
Joseph P. Kealy                --      $       --      1,689,446        50,000          $1,978,345      $   --
Kenneth L. Wiltse, II     137,500       3,489,943        197,500        40,000                  --          --
Terry W. Beiriger              --              --        370,000            --                  --          --
Douglas N. Kimball             --              --        157,500        37,500                  --          --
Anthony T. Baumann        105,000       1,731,419         97,500        67,500                  --          --
Gregory B. Hill            38,750         855,581         53,750       115,000                  --          --
</TABLE>

----------
(1)  Based upon a closing price of $4.9375 on December 29, 2000, as reported on
     The Nasdaq National Market.


DIRECTOR COMPENSATION

Directors currently receive no cash compensation for their services in that
capacity. Reasonable out-of-pocket expenses may be reimbursed to directors in
connection with attendance at meetings. We granted the following options to our
non-employee directors in 2000:

                      NUMBER OF
                       SHARES
                     UNDERLYING                      EXERCISE
                      OPTIONS                         PRICE
     NAME             GRANTED     DATE OF GRANT     PER SHARE   EXPIRATION DATE
     ----             -------     -------------     ---------   ---------------
Johh F. Kealy         10,000      May 31, 2000       $14.31      May 30, 2005
                      10,000      January 5, 2000      7.63      January 4, 2005


Richard J. Seminoff   10,000      May 31, 2000        14.31      May 30, 2005
                      10,000      January 5, 2000      7.63      January 4, 2005


John P. Stephens      10,000      May 31, 2000        14.31      May 30, 2005
                      10,000      January 5, 2000      7.63      January 4, 2005


C. James Jensen       10,000      May 31, 2000        14.31      May 30, 2005
                      10,000      January 5, 2000      7.63      January 4, 2005


John P. Morbeck       10,000      May 31, 2000        14.31      May 30, 2005
                      25,000      January 5, 2000      7.63      January 4, 2005
                      25,000 (1)  January 5, 2000      7.63      January 4, 2005


Jerry A. Kleven       10,000      May 31, 2000        14.31      May 30, 2005
                      15,000      January 5, 2000      7.63      January 4, 2005

----------
(1)  These options became exercisable on January 5, 2001.

                                       31
<PAGE>
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS

     In 1999 we entered into extensions of the employment agreements of Joseph
P. Kealy, Terry W. Beiriger and Jerry A. Kleven and in 2000 entered into an
employment agreement with Anthony Baumann. These agreements automatically renew
on August 11 of each year for successive thirty-five month terms, except for Mr.
Baumann's agreement, which terminates on June 29, 2003. As a part of the
employment agreements, we have entered into change of control agreements with
these individuals. The objectives of the agreements are to attract and retain
qualified executives, encourage key management personnel to devote full
attention to our business if a third party expresses an intention to acquire or
merge with us, and provide compensation in the event of termination of
employment of such an individual upon a change of control of us. The agreements
are effective for the duration of the employee's employment and terminate only
upon the employee's termination of employment with us. "Change of control" means
the occurrence of any of the following events: (i) when any person acquires,
directly or indirectly, beneficial ownership of more than 20% of our common
stock; (ii) a change in the composition of the board of directors, as a result
of which fewer than one half of the incumbent directors are directors who either
had been directors 24 months prior to such change or were elected, or nominated
for election, to the board of directors with the affirmative votes of at least a
majority of the directors who had been directors 24 months prior to such change
and who were still in office at the time of the election or nomination; (iii) a
merger or consolidation if more than 50% of the combined voting power of the
continuing or surviving entities securities are owned by persons who were not
shareholders immediately prior to such transaction; or (iv) the sale, transfer,
or other disposition in one or more transactions, of all or substantially all of
our assets. In the event of such a change of control, covered employees who are
terminated by the acquiring person prior to expiration of the current term of
the employment agreement will receive compensation and benefits, including: (i)
a multiple of their then current annual base salary, plus the equivalent dollar
value of all benefits, such multiple being 2.99; (ii) 299% of covered employees
incentive bonus; and (iii) continued life and health insurance coverage for
three years after termination.

                                       32
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information, as of March 31, 2001, with
respect to the number of shares of our common stock beneficially owned by
individual directors, by all directors and officers as a group, and by persons
who we know own more than 5% of our common stock. We have no other class of
voting stock outstanding. Unless otherwise indicated, the address of our
officers and directors is 3410 East University Drive, Suite 180, Phoenix,
Arizona 85034.

Name of Beneficial                           Number              Percentage of
Owner and Address                         of Shares (1)       Common Stock Owned
-----------------                         -------------       ------------------
Joseph P. Kealy                           1,995,677 (2)              5.2%

C. James Jensen                             377,293 (3)              1.0%
101 Wild Oak Court
Danville, California 94506

John P. Morbeck                              60,700 (4)              0.2%
c/o Sirach Capital
3323 One Union Square
600 University Streeet
Seattle, Washington 98101

Richard J. Seminoff                         174,308 (5)              0.5%
475 S. Wilson Way
City of Industry, California 91744

John P. Stephens                            180,000 (6)              0.5%
5771 Rickenbacker Road
Los Angeles, California 90040

John F. Kealy                               429,711 (7)              1.1%

Jerry A. Kleven                             167,021 (8)               *

Anthony T. Baumann                          121,362 (9)               *

Kenneth L. Wiltse, II                       120,055 (10)              *

Douglas N. Kimball                          165,000 (11)              *

Gregory B. Hill                             126,029 (12)              *

All executive officers and directors
 as a group (11 persons)                  3,917,156                 10.2%

----------
(1)  The shareholder listed has sole voting and investment power with respect to
     the shares listed.
(2)  Includes options to purchase 1,689,446 shares of common stock that are
     presently exercisable. Does not include 50,000 options not exercisable
     within the next 60 days.
(3)  Includes options to purchase 175,000 shares of common stock that are
     presently exercisable. Mr. Jensen disclaims beneficial ownership of an
     additional 1,950 shares held by members of his family.
(4)  Includes options to purchase 60,000 shares of common stock that are
     presently exercisable.

                                       33
<PAGE>
(5)  Includes options to purchase 145,000 shares of common stock that are
     presently exercisable.
(6)  Includes options to purchase 175,000 shares of common stock that are
     presently exercisable.
(7)  Includes options to purchase 100,000 shares of common stock that are
     presently exercisable. John F. Kealy disclaims beneficial ownership of an
     additional 1,500 shares owned by his immediate family.
(8)  Includes options to purchase 112,500 shares of common stock that are
     presently exercisable.
(9)  Includes options to purchase 110,000 shares of common stock that are
     presently exercisable. Does not include options to purchase 55,000 shares
     of common stock not exercisable within the next 60 days.
(10) Includes options to purchase 117,500 shares of common stock that are
     presently exercisable. Does not include options to purchase 120,000 shares
     of common stock not exercisable within the next 60 days.
(11) Includes options to purchase 165,000 shares of common stock that are
     presently exercisable. Does not include options to purchase 30,000 shares
     of common stock not exercisable within the next 60 days.
(12) Includes options to purchase 103,750 shares of common stock that are
     presently exercisable. Does not include options to purchase 65,000 shares
     of common stock not exercisable within the next 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Commencing in 1989 we advanced funds to Wings Limited Partnership
("Wings"), the partners of which included Joseph P. Kealy, John F. Kealy and one
of our former principal shareholders. In 1993, these persons and their spouses
assumed the Wing's obligation by executing a promissory note in the principal
amount of $396,732, plus accrued interest. Such individuals secured the note by
pledging 267,000 shares of common stock to us. In June 1996, the former
principal shareholder paid $108,035 representing his pro-rata share of the
principal and accrued interest on the note. Upon such payment we released him
and his spouse from their obligations under the note and 107,000 shares of
common stock that they had pledged to secure the note. The total principal and
accrued interest due as of December 31, 2000 was $107,751, and the maturity date
of the note has been extended to December 31, 2001.

                                       34
<PAGE>
                                     PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  EXHIBITS

          The  following  Exhibits  are filed  herewith  pursuant to Rule 601 of
          Regulation S-K.

Exhibit
Number      Description                                                Reference
------      -----------                                                ---------
3.1         Restated Articles of Incorporation of Registrant,
            dated October 21, 1981                                        (1)

3.2         Amendment to Articles of Incorporation of Registrant,
            dated April 18, 1986                                          (1)

3.3         Amendment to Articles of Incorporation of Registrant,
            dated May 20, 1987                                            (1)

3.4         Amendment to Articles of Incorporation of Registrant,
            dated  February 4, 1988                                       (1)

3.5         Amendment to Articles of Incorporation of Registrant,
            dated August 15, 1991                                         (1)

3.6         Amendment to Articles of Incorporation of Registrant,
            dated June 3, 1994                                            (1)

3.7         Amended, Revised, and Restated Bylaws of Registrant,          (1)

4.1         Form of Common Stock Certificate                              (1)

10.1        1997 Stock Option Plan, as amended                            (2)

10.2        1997 Restricted Stock Plan                                    (3)

10.3        1994 Incentive Stock Option Plan                              (3)

10.4        1994 Restricted Stock Plan                                    (1)

10.5        International FiberCom Employee Stock Purchase Plan           (3)

21.1        List of Subsidiaries of the Registrant                         *

23.1        Consent of BDO Seidman, LLP                                    *

----------
*    Filed herewith
(1)  Filed with Registration Statement on Form SB-2, No. 33-79730,  which became
     effective August 12, 1994.
(2)  Filed with 2000 Notice and Proxy Statement, dated May 12, 2000.
(3)  Filed with Registration  Statement on Form S-8, No. 333-41817,  on December
     8, 1997.

     (b)  CURRENT REPORTS ON FORM 8-K

          None

                                       35
<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.

                                    INTERNATIONAL FIBERCOM, INC.


                                    By /s/ Joseph P. Kealy
                                       -----------------------------------------
Dated: June 19, 2001                   Joseph P. Kealy, Chairman of the Board,
                                       President and Principal Executive 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 and Title                                            Date
-------------------                                            ----

/s/ Joseph P. Kealy                                        June 19, 2001
---------------------------------------
Joseph P. Kealy, Chairman of the Board,
President, Principal Executive Officer
and Director


/s/ Gregory B. Hill                                        June 19, 2001
---------------------------------------
Gregory B. Hill, Principal Financial
Officer, Treasurer and Secretary


/s/ C. James Jensen                                        June 19, 2001
---------------------------------------
C. James Jensen, Director


/s/ John F. Kealy                                          June 19, 2001
---------------------------------------
John F. Kealy, Director


/s/ Jerry A. Kleven                                        June 19, 2001
---------------------------------------
Jerry A. Kleven, Director


/s/ John P. Morbeck                                        June 19, 2001
---------------------------------------
John P. Morbeck, Director


/s/ Richard J. Seminoff                                    June 19, 2001
---------------------------------------
Richard J. Seminoff, Director


/s/ John P. Stephens                                       June 19, 2001
---------------------------------------
John P. Stephens, Director

                                       36
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           Page
                                                                           ----

Report of Independent Certified Public Accountants                          F-2

Consolidated Balance Sheets as of December 31, 2000 and 1999                F-3

Consolidated Statements of Income for the years ended
  December 31, 2000, 1999 and 1998                                          F-4

Consolidated Statements of Comprehensive Income for the years
  ended December 31, 2000, 1999 and 1998                                    F-5

Consolidated Statements of Changes in Stockholders' Equity for
  the years ended December 31, 2000, 1999 and 1998                          F-6

Consolidated Statements of Cash Flows for the years ended
  December 31, 2000, 1999 and 1998                                          F-8

Notes to Consolidated Financial Statements                                  F-10
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors
International FiberCom, Inc.
Phoenix, Arizona

     We  have  audited  the   accompanying   consolidated   balance   sheets  of
International  FiberCom, Inc. and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended  December 31, 2000.  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 audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and  perform  the  audit to  obtain  reasonable  assurances  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 presentation of the financial statements. 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  financial   position  of
International  FiberCom, Inc. and subsidiaries at December 31, 2000 and 1999 and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000, in conformity with accounting  principles
generally accepted in the United States of America.

     Also,  in our  opinion,  the  schedules  present  fairly,  in all  material
respects, the information set forth therein.


                                        /s/ BDO SEIDMAN, LLP


Los Angeles, California
February 16, 2001, except for Note 3
which is as of March 30, 2001

                                       F-2
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                         December 31,
                                                                ------------------------------
                                                                    2000             1999
                                                                -------------    -------------
<S>                                                             <C>              <C>
                                     Assets
Current assets:
  Cash and cash equivalents                                     $  10,332,908    $   3,358,341
  Accounts receivable - trade, net                                 64,518,202       51,445,147
  Costs and estimated earnings in excess of billings               47,188,666       16,125,647
  Inventory, net                                                   20,414,467       18,722,334
  Income taxes receivable                                           1,184,391          868,055
  Deferred tax asset                                                1,392,890        1,961,894
  Other current assets                                              5,554,598        1,817,780
                                                                -------------    -------------
   Total current assets                                           150,586,122       94,299,198

Property and equipment, net                                        51,326,343       27,098,135
Goodwill, net                                                      67,521,734       40,398,981
Other assets, net                                                   3,135,530        1,537,546
                                                                -------------    -------------

Total assets                                                    $ 272,569,729    $ 163,333,860
                                                                =============    =============
                      Liabilities and Stockholders' Equity
Current liabilities:
  Current portion of notes payable                              $   1,276,106    $   3,798,367
  Current portion of capital lease obligations                      4,866,170        2,858,012
  Current portion of notes payable to related parties                  86,618          925,911
  Accounts payable                                                 28,269,905       16,395,723
  Accrued expenses                                                  7,560,718        5,373,737
                                                                -------------    -------------
   Total current liabilities                                       42,059,517       29,351,750

Notes payable                                                       2,178,011        3,776,280
Capital lease obligations                                          16,703,500        8,091,989
Notes payable to related parties                                           --          146,776
Line of credit                                                     83,237,986       45,737,986
Deferred tax liability                                              2,653,108        1,720,146
                                                                -------------    -------------
   Total liabilities                                              146,832,122       88,824,927
                                                                -------------    -------------
Commitments and contingencies (Note 6)

Stockholders' equity:
  Common stock, no par value, 100,000,000 shares authorized;       93,333,067       60,124,750
   34,391,128 shares issued and 34,185,439 shares
   outstanding at December 31, 2000; 29,978,157 shares issued
   and 29,772,468 shares outstanding at December 31, 1999
  Additional paid-in capital                                       10,127,279        2,581,149
  Foreign currency translation adjustment                              (9,842)              --
  Retained earnings                                                23,117,190       12,633,121
                                                                -------------    -------------
                                                                  126,567,694       75,339,020
  Less: treasury stock, 205,689 shares, at cost                      (830,087)        (830,087)
                                                                -------------    -------------
  Total stockholders' equity                                      125,737,607       74,508,933
                                                                -------------    -------------

  Total liabilities and stockholders' equity                    $ 272,569,729    $ 163,333,860
                                                                =============    =============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                        CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                            For the Year Ended December 31,
                                                 ---------------------------------------------------
                                                     2000               1999               1998
                                                 -------------      -------------      -------------
<S>                                              <C>                <C>                <C>
Revenues                                         $ 315,715,025      $ 187,679,640      $ 118,684,404
Cost of revenues                                   236,105,356        141,092,734         83,524,548
                                                 -------------      -------------      -------------

Gross margin                                        79,609,669         46,586,906         35,159,856
General and administrative                          53,545,751         31,094,057         18,675,950
                                                 -------------      -------------      -------------

Income from operations                              26,063,918         15,492,849         16,483,906
Other income (expense):
  Interest income                                      896,888            362,971            163,822
  Interest expense                                  (8,464,794)        (3,929,364)        (1,462,530)
  Nonrecurring acquisition costs                    (1,380,286)                --           (890,000)
  Other                                                (31,538)           372,229             56,972
                                                 -------------      -------------      -------------

Income before provision for income taxes            17,084,188         12,298,685         14,352,170
Provision for income taxes                          (6,600,119)        (4,390,784)        (4,899,497)
                                                 -------------      -------------      -------------

Net income                                          10,484,069          7,907,901          9,452,673
Preferred stock dividend                                    --             (4,000)           (47,722)
                                                 -------------      -------------      -------------
Net income attributable to common stockholders
  before pro forma provision for income taxes       10,484,069          7,903,901          9,404,951
Pro forma provision for income taxes                   (48,288)           (40,498)          (534,062)
                                                 -------------      -------------      -------------
Net income attributable to common stockholders
  after pro forma provision for income taxes     $  10,435,781      $   7,863,403      $   8,870,889
                                                 =============      =============      =============
Earnings per share:
  Basic                                          $        0.32      $        0.27      $        0.39
  Diluted                                        $        0.30      $        0.26      $        0.34

Proforma earnings per share
  Basic                                          $        0.32      $        0.27      $        0.37
  Diluted                                        $        0.30      $        0.26      $        0.32

Shares used in computing earnings per share:
  Basic                                             32,486,970         28,896,951         24,374,712
  Diluted                                           35,204,615         30,683,601         28,041,726
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                    For the Year Ended December 31,
                                             -----------------------------------------------
                                                 2000              1999             1998
                                             ------------      ------------     ------------
<S>                                          <C>               <C>              <C>
Net income                                   $ 10,484,069      $  7,907,901     $  9,452,673
Other comprehensive income, net of tax:
  Foreign currency translation adjustments         (9,842)               --               --
                                             ------------      ------------     ------------
Comprehensive income                         $ 10,474,227      $  7,907,901     $  9,452,673
                                             ============      ============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                      Preferred Stock                 Common Stock
                                                 ---------------------------    --------------------------
                                                  Series B        Series C        Shares         Amount
                                                 -----------    ------------    ----------    ------------
<S>                                              <C>            <C>             <C>           <C>
Balance, January 1, 1998                         $ 1,126,837    $    766,662    20,752,812    $ 32,408,731
Series B Preferred Stock Conversion               (1,126,837)                      792,046       1,126,837
Series C Preferred Stock Conversion                                 (459,997)      126,316         459,997
Conversion of 8% convertible debentures                                            480,000         600,000
Accrued interest paid in Common Stock                                                7,744          46,948
Public warrant exercises                                                         1,288,930       6,981,453
Non-employee option and warrant exercises                                        2,682,632       2,013,393
Employee stock option exercises                                                    788,745         392,150
Common Stock purchased under ESPP                                                  139,876         678,305
Common Stock issued in connection
  with acquisitions                                                                 87,978         525,000
Finders fee paid in Common Stock                                                    25,131         150,000
Repurchase of Treasury Stock
Issuance of repricing shares                                                       300,000       1,948,959
S-corporation shareholder distribution
Preferred Stock dividend                                                             7,771          47,722
Net income
                                                 -----------    ------------    ----------    ------------

Balance, December 31, 1998                                --         306,665    27,479,981      47,379,495
                                                 -----------    ------------    ----------    ------------

                                                 Additional
                                                   Paid-in        Retained       Treasury
                                                   Capital        Earnings         Stock         Totals
                                                 -----------    ------------    ----------    ------------
Balance, January 1, 1998                         $ 2,961,109    $ (3,689,602)   $ (668,017)   $ 32,905,720
Series B Preferred Stock Conversion                                                                     --
Series C Preferred Stock Conversion                                                                     --
Conversion of 8% convertible debentures                                                            600,000
Accrued interest paid in Common Stock                                                               46,948
Public warrant exercises                            (379,960)                                    6,601,493
Non-employee option and warrant exercises                                                        2,013,393
Employee stock option exercises                                                                    392,150
Common Stock purchased under ESPP                                                                  678,305
Common Stock issued in connection                                                                       --
  with acquisitions                                                                                525,000
Finders fee paid in Common Stock                                                                   150,000
Repurchase of Treasury Stock                                                      (162,070)       (162,070)
Issuance of repricing shares                                                                     1,948,959
S-corporation shareholder distribution                              (986,129)                     (986,129)
Preferred Stock dividend                                             (47,722)                           --
Net income                                                         9,452,673                     9,452,673
                                                 -----------    ------------    ----------    ------------

Balance, December 31, 1998                         2,581,149       4,729,220      (830,087)     54,166,442
                                                 -----------    ------------    ----------    ------------
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                   FOR THE THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                     Preferred Stock                Common Stock
                                               --------------------------    -------------------------
                                                Series B       Series C         Shares        Amount
                                               -----------    -----------    -----------   -----------
<S>                                            <C>            <C>            <C>           <C>
Series C Preferred Stock Conversion                              (306,665)        79,840       306,665
Conversion of convertible debt                                                   182,648     1,000,000
Common Stock issued in connection
    with acquisitions                                                          1,021,271     7,132,711
Common Stock purchased under ESPP                                                189,644     1,185,645
Exercise of Common Stock options
    and warrants                                                               1,024,181     3,116,234
Preferred Stock dividends                                                            592         4,000
Net income
                                               -----------    -----------    -----------   -----------

Balance, December 31, 1999                              --             --     29,978,157    60,124,750

Common Stock issued in connection
    with acquisitions                                                          1,438,874    18,101,774
Common Stock purchased under ESPP                                                237,488     1,576,976
Exercise of Common Stock options
    and warrants                                                               2,672,431    12,520,476
Non-recurring acquisition-related
  expenses paid in common stock                                                   64,178     1,009,091
Stock option and warrant
  income tax benefit
Change in foreign
    currency translation
Net income
                                               -----------    -----------    -----------   -----------
Balance, December 31, 2000                     $        --    $        --     34,391,128   $93,333,067
                                               ===========    ===========     ==========   ===========

                                             Additional       Foreign
                                              Paid-in         Currency        Retained       Treasury
                                              Capital       Translation       Earnings         Stock           Totals
                                            ------------    ------------    ------------   ------------    ------------
Series C Preferred Stock Conversion                                                                                  --
Conversion of convertible debt                                                                                1,000,000
Common Stock issued in connection
    with acquisitions                                                                                         7,132,711
Common Stock purchased under ESPP                                                                             1,185,645
Exercise of Common Stock options
    and warrants                                                                                              3,116,234
Preferred Stock dividends                                                         (4,000)                            --
Net income                                                                     7,907,901                      7,907,901
                                            ------------    ------------    ------------   ------------    ------------

Balance, December 31, 1999                     2,581,149              --      12,633,121       (830,087)     74,508,933

Common Stock issued in connection
    with acquisitions                                                                                        18,101,774
Common Stock purchased under ESPP                                                                             1,576,976
Exercise of Common Stock options
    and warrants                                                                                             12,520,476
Non-recurring acquisition-related
  expenses paid in common stock                                                                               1,009,091
Stock option and warrant
  income tax benefit                           7,546,130                                                      7,546,130
Change in foreign
    currency translation                                          (9,842)                                        (9,842)
Net income                                                                    10,484,069                     10,484,069
                                            ------------    ------------    ------------   ------------    ------------
Balance, December 31, 2000                  $ 10,127,279    $     (9,842)   $ 23,117,190   $   (830,087)   $125,737,607
                                            ============    ============    ============   ============    ============

</TABLE>
          See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                      Twelve Months Ended December 31,
                                                                ------------------------------------------------
                                                                    2000              1999              1998
                                                                ------------      ------------      ------------
<S>                                                             <C>               <C>               <C>
Cash flows from operating activities:
  Net income                                                    $ 10,484,069      $  7,907,901      $  9,452,673
  Adjustments to reconcile net income to net cash
    used in operating activities:
    Depreciation and goodwill amortization                        12,093,237         6,979,524         3,980,720
    Amortization of non-compete covenant                              79,967            79,967            73,588
    Amortization of debt issuance costs                              334,833           103,168           179,369
    Provision for bad debts                                          678,411            47,341            94,382
    Provision for obsolete inventory                                 190,870            12,000        (3,263,000)
    Loss (gain) on sale of property and equipment                    (33,236)           56,054            10,660
    Non-recurring acquisition-related expenses
     paid in common stock                                          1,009,091                --           150,000
  Changes in operating assets and liabilities
    net of business combinations:
    Accounts receivable, net                                      (8,961,396)      (14,178,142)      (12,785,403)
    Costs and estimated earnings in excess of billings, net      (31,677,189)       (9,557,327)       (2,420,530)
    Inventory, net                                                (1,874,003)       (1,600,068)       (7,535,342)
    Income taxes                                                   8,731,760        (3,665,201)        2,967,023
    Other current assets                                          (2,587,372)         (290,505)         (133,166)
    Other assets                                                    (856,981)         (162,193)         (673,262)
    Accounts payable                                               9,019,534           579,396         4,699,292
    Accrued expenses                                              (1,798,689)       (1,566,067)        1,616,578
                                                                ------------      ------------      ------------
        Net cash used in operating activities                     (5,167,094)      (15,254,152)       (3,586,418)
                                                                ------------      ------------      ------------

Cash flows from investing activities:
  Acquisition of property and equipment, net                     (29,193,626)      (14,680,318)       (7,966,980)
  Payments for acquisitions                                      (12,915,339)      (12,119,783)       (1,476,503)
                                                                ------------      ------------      ------------
       Net cash used in investing activities                     (42,108,965)      (26,800,101)       (9,443,483)
                                                                ------------      ------------      ------------

Cash flows from financing activities:
  Net change in line of credit borrowings                         37,500,000        29,626,143         3,740,328
  Proceeds from notes payable and lease obligations               17,067,706        11,967,410        17,143,731
  Proceeds from notes payable - related parties                           --                --           129,129
  Repayment of notes payable and lease obligations               (12,643,205)       (3,985,469)      (12,284,719)
  Repayment of notes payable to related parties                     (986,069)       (1,107,796)       (2,365,301)
  Debt issuance costs                                               (785,258)         (230,389)         (130,774)
  S-Corp shareholder distributions                                        --                --          (986,129)
  Purchase of treasury stock                                              --                --          (162,070)
  Proceeds from ESPP                                               1,576,976         1,185,645           678,305
  Proceeds from warrant and stock option exercises                12,520,476         3,116,234         8,696,713
                                                                ------------      ------------      ------------
        Net cash provided by financing activities                 54,250,626        40,571,778        14,459,213
                                                                ------------      ------------      ------------

Net change in cash and cash equivalents                            6,974,567        (1,482,475)        1,429,312
Cash and cash equivalents, beginning of year                       3,358,341         4,840,816         3,411,504
                                                                ------------      ------------      ------------

Cash and cash equivalents, end of year                          $ 10,332,908      $  3,358,341      $  4,840,816
                                                                ============      ============      ============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                      F-8
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS CONTINUED

<TABLE>
<CAPTION>
                                                                        Twelve Months Ended December 31,
                                                                 -------------------------------------------
                                                                     2000            1999            1998
                                                                 -----------     -----------     -----------
<S>                                                              <C>             <C>             <C>
Supplemental cash flow disclosures:
    Cash paid during the year for interest                       $ 7,773,726     $ 3,690,639     $ 1,294,942
    Cash paid during the year for income taxes                       121,920       7,579,020         499,675

Supplemental disclosure of non-cash transactions:
    Stock issued in business combinations                         18,101,774       7,132,711         525,000
    Increase in additional paid-in capital resulting
     from recognizing tax benefits from stock
     option and warrant exercises                                  7,546,130              --              --
    Foreign currency translation adjustment                            9,842              --              --
    Conversion of convertible debt                                        --       1,000,000         600,000
    Conversion of Series B Preferred Stock                                --              --       1,126,837
    Conversion of Series C Preferred Stock                                --         306,665         459,997
    Preferred Stock dividends paid in Common Stock                        --           4,000          47,722
    Accrued interest paid in Common Stock                                 --              --          46,948
    Accrued offering costs paid in Common Stock                           --              --         310,323
    Issuance of additional shares of Common Stock
      relating to 1997 private placement                                  --              --       1,948,959
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-9
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     International  FiberCom,  Inc., a C Corporation  incorporated in Arizona on
December  29,  1972,  offers a wide  range  of  services  to the  communications
marketplace  throughout  the United  States  through  four  principle  operating
segments: wired services, equipment distribution, wireless services and wireless
technologies.   Wired  services  provides  consulting,  design  and  engineering
services;  installs and maintains internal and external broadband communications
systems,  including  underground and aerial fiber-optic and copper systems;  and
installs  and  maintains  integrated  local  and wide area  networks.  Equipment
distribution resells new, deinstalled and refurbished  communications  equipment
manufactured  by a variety of companies.  This  equipment is used in the digital
access,  switching and transport systems of communications service providers and
other companies.  Wireless services  includes site development,  maintenance and
optimization services. Wireless technologies include the design, manufacture and
installation of proprietary wireless  connectivity  solutions designed to enable
and enhance wireless communications, in both fixed and mobile applications.

PRINCIPLES OF CONSOLIDATION

     The accompanying  consolidated financial statements include the accounts of
the Company and its  subsidiaries.  All  significant  intercompany  accounts and
transactions have been eliminated.

RECLASSIFICATIONS

     Certain  balances as of December 31, 1999 and 1998 and the years then ended
have been reclassified in the accompanying  consolidated financial statements to
conform  with the current  year  presentation.  These  reclassifications  had no
effect on previously reported net income or stockholders' equity.

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
disclosures  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.

REVENUE RECOGNITION

     Revenue from the sale of  telecommunications  equipment is recognized  upon
shipment.  Revenue  from  related  services is  recognized  as the  services are
performed.

     Revenues from fixed-price and modified fixed-price contracts are recognized
on the percentage-of-completion  method based primarily on the ratio of contract
costs  incurred  to date to  total  estimated  contract  costs.  Contract  costs
include, among other things, direct labor, field labor,  subcontracting,  direct
materials and direct overhead. Project losses are provided for in their entirety
in the period in which such losses are determined.  As contracts can extend over
one or more accounting periods, revisions in costs and estimated earnings during
the course of the work are reflected  during the accounting  period in which the
facts that require such  revisions  become  known.  The length of the  Company's
contracts  vary,  but are typically  less than one year.  Therefore,  assets and
liabilities  are  classified  as  current  and  non-current  based on a one year
operating cycle.

CASH AND CASH EQUIVALENTS

     Cash  equivalents are highly liquid  investments  purchased with an initial
maturity of three months or less.

                                      F-10
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


ACCOUNTS RECEIVABLE

     Contract billings represent the amounts billed but uncollected on completed
and in-progress  contracts,  less retainage  receivables.  Retainage receivables
represent  amounts  retained by customers which are not currently  available for
collection in  accordance  with  contractual  provisions.  Non-contract  related
accounts receivable represents amounts billed but uncollected on equipment sales
and other services not performed under contractual arrangements.

INVENTORY

     Inventories  are  stated  at the  lower  of  cost  or  market,  cost  being
determined  using the first-in  first-out or average cost  methods,  and consist
primarily of new, deinstalled and refurbished  telecommunications equipment. The
Company periodically reviews, for all reporting periods, its inventory and makes
adequate provisions for damaged or obsolete inventory.

PROPERTY AND EQUIPMENT

     Property and equipment are recorded at cost.  Depreciation is provided over
the estimated useful lives of the assets utilizing straight-line and accelerated
methods.  Leasehold improvements are amortized over their estimated useful lives
or the remaining lease term,  whichever is shorter.  The estimated  useful lives
are as follows:

     Construction equipment                                     5 - 7 years
     Vehicles                                                   3 - 5 years
     Buildings                                                28 - 40 years
     Office furniture and equipment                            3 - 10 years
     Software                                                   3 - 7 years
     Leasehold improvements                                    5 - 40 years

     Maintenance  and repairs  that neither  materially  add to the value of the
property  nor  appreciably  prolong its life are charged to expense as incurred.
Betterments or renewals are capitalized when incurred.  The Company periodically
reviews the carrying  value of property and equipment and  impairments,  if any,
will be recognized  when the expected  future  operating cash flows derived from
the assets are less than  carrying  value.  Depreciation  expense  for the years
ended  December  31,  2000,  1999 and 1998 totaled  $9,156,276,  $4,957,023  and
$2,661,004, respectively.

GOODWILL

     Goodwill represents the excess of the purchase price over the fair value of
the net assets  acquired.  Goodwill is amortized on a  straight-line  basis over
periods  ranging  from 3 to 20  years.  The  Company  periodically  reviews  the
carrying value of intangible assets and impairments,  if any, will be recognized
when the expected  future  operating cash flows derived from the intangibles are
less than  carrying  value.  Goodwill  amortization  expense for the years ended
December 31, 2000, 1999 and 1998 totaled $2,936,961,  $2,022,501 and $1,140,347,
respectively.

WARRANTIES

     The Company provides  warranties for products sold and services  performed.
The Company has had no material warranty claims to date.

INCOME TAXES

     The Company  reports  deferred  taxes on an asset and  liability  approach.
Deferred income taxes arise from timing differences  resulting from revenues and
expenses  reported  for  financial  accounting  and tax  reporting  purposes  in
different periods.  Deferred income taxes primarily  represent the estimated tax
liability on additional depreciation expense reported based upon accelerated tax
depreciation methods, and timing differences in the utilization of net operating
losses.

                                      F-11
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


STOCK-BASED COMPENSATION

     The  Company   accounts  for  stock-based   compensation   arrangements  in
accordance  with  provisions  of APB No.  25,  "Accounting  for Stock  Issued to
Employees"  and  related  interpretations,  and  complies  with  the  disclosure
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Under APB
No. 25, compensation cost is recognized based on the difference,  if any, on the
date of grant  between the fair value of the  Company's  stock and the amount an
employee must pay to acquire the stock.

EARNINGS PER SHARE

     Basic  earnings per share  amounts  include no dilution and are computed by
dividing income available to common  stockholders by the weighted average number
of shares outstanding for the period.

     Diluted  earnings  per share  amounts are  computed  based on the  weighted
average  number of shares  actually  outstanding  plus the shares  that would be
outstanding   assuming  conversion  of  the  convertible   preferred  stock  and
convertible  debentures and exercise of dilutive stock options and warrants, all
of which are  considered  to be common stock  equivalents.  The number of shares
that would be issued from the exercise of stock  options has been reduced by the
number of shares that could have been purchased from the proceeds at the average
market price of the Company's  stock. Net income has been adjusted for dividends
on the  convertible  preferred  stock and interest and finance  expenses (net of
tax) on the convertible debt.

COMPREHENSIVE INCOME

     The  Company  defines  comprehensive  income as all  changes in equity (net
assets)  during a  period  from  non-owner  sources.  The  Company's  source  of
comprehensive  income consists of foreign currency  translation gains and losses
resulting  from the  translation  of the financial  statements of its non-United
States subsidiary into United States dollars using current rates of exchange.

CONCENTRATIONS OF CREDIT RISK

     Financial  instruments that potentially  subject the Company to significant
concentrations  of credit risk  consist  primarily of accounts  receivable.  The
Company's revenues are derived  principally from contracts with companies in the
telecommunications  industry in the United States.  The Company performs ongoing
credit  evaluations  of its  customers  and  maintains an allowance for probable
credit losses based upon its historical  experience.  Additionally,  the Company
maintains  cash  balances at various  financial  institutions.  Deposits  not to
exceed $100,000 at the financial  institution are insured by the Federal Deposit
Insurance   Corporation.   The  Company  had  uninsured  cash  of  approximately
$7,638,984 and $3,490,922 at December 31, 2000 and 1999, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying value of financial instruments,  consisting primarily of notes
payable and notes payable to related  parties,  approximate  fair value based on
current  rates at which the Company  could borrow  funds with similar  remaining
maturities.

                                      F-12
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("FAS") No. 133,  "Accounting for
Derivative  Instruments and Hedging  Activities"  ("FAS 133"), as amended by FAS
No. 137 and FAS No. 138. FAS 133 requires the Company to record all  derivatives
on the balance  sheet at fair value  commencing  with the first quarter of 2001.
Changes in  derivative  fair  values will  either be  recognized  in earnings as
offsets to the changes in fair value of related hedged assets,  liabilities  and
firm  commitments  or, for forecasted  transactions,  deferred and recorded as a
component of stockholders'  equity until the hedged  transactions  occur and are
recognized in earnings. The ineffective portion of a hedging derivative's change
in fair value will be immediately  recognized in earnings.  Based on our current
analysis,  FAS 133 will not have a material impact on the consolidated financial
statements of the Company.

     In December 1999, the  Securities  and Exchange  Commission  ("SEC") issued
Staff Accounting  Bulletin ("SAB") No. 101 "Revenue  Recognition" which provides
guidance on the recognition, presentation and disclosure of revenue in financial
statements filed with the SEC. SAB No. 101 was adopted beginning with our fiscal
2000  consolidated  financial  statements  and  had no  material  impact  on the
financial results of the Company.

     In March  2000,  the FASB  issued  Interpretation  No. 44  "Accounting  for
Certain  Transactions  Involving Stock  Compensation,  the Interpretation of APB
Opinion No. 25" ("FIN 44"). The  Interpretation  is intended to clarify  certain
problems  that  have  arisen  in  practice  since the  issuance  of APB No.  25,
"Accounting   for  Stock  Issued  to  Employees."  The  effective  date  of  the
Interpretation  was July 1, 2000.  The  provisions of the  Interpretation  apply
prospectively,  but they will also cover certain events occurring after December
15, 1998 and after January 12, 2000. The Company believes the adoption of FIN 44
has not had a material adverse affect on the current and historical consolidated
financial statements.

                                      F-13
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE 2 - SIGNIFICANT BALANCE SHEET COMPONENTS

Significant balance sheet components consist of the following:

<TABLE>
<CAPTION>
                                                                        December 31,
                                                              ----------------------------------
                                                                  2000                 1999
                                                              -------------        -------------
<S>                                                           <C>                  <C>
Accounts receivable, net:
  Contract billings                                           $  53,557,518        $  40,592,199
  Retainage                                                       5,203,786            3,673,616
  Non-contract related accounts receivable                        7,359,383            8,343,574
                                                              -------------        -------------
                                                                 66,120,687           52,609,389
  Less: allowance for doubtful accounts                          (1,602,485)          (1,164,242)
                                                              -------------        -------------
                                                              $  64,518,202        $  51,445,147
                                                              =============        =============
Costs and estimated earnings in excess of billings:
  Costs incurred on contracts in progess                      $ 167,815,370        $  76,631,918
  Estimated earnings                                             58,218,913           21,033,140
                                                              -------------        -------------
                                                                226,034,283           97,665,058
  Less: billings to date                                       (178,845,617)         (81,539,411)
                                                              -------------        -------------
                                                              $  47,188,666        $  16,125,647
                                                              =============        =============
Inventory, net:
  New and used telecommunications equipment                   $  20,343,259        $  19,218,888
  Cabling and equipment                                           1,189,194            1,222,039
  Raw materials                                                   1,045,054              253,577
                                                              -------------        -------------
                                                                 22,577,507           20,694,504
  Less: allowance for obsolete inventory                         (2,163,040)          (1,972,170)
                                                              -------------        -------------
                                                              $  20,414,467        $  18,722,334
                                                              =============        =============
Property and equipment, net:
  Construction equipment                                      $  40,605,159        $  23,882,017
  Vehicles                                                       11,211,782            8,115,934
  Building and land                                              10,010,259            2,854,860
  Office furniture and equipment                                  8,258,924            5,157,612
  Software                                                        2,835,897            1,964,772
  Leasehold improvements                                          1,325,044              752,141
                                                              -------------        -------------
                                                                 74,247,065           42,727,336
  Less: accumulated depreciation and amortization               (22,920,722)         (15,629,201)
                                                              -------------        -------------
                                                              $  51,326,343        $  27,098,135
                                                              =============        =============
Goodwill, net:
  Goodwill                                                    $  74,046,272        $  43,986,558
  Less: accmulated amortization                                  (6,524,538)          (3,587,577)
                                                              -------------        -------------
                                                              $  67,521,734        $  40,398,981
                                                              =============        =============
Accrued expenses:
  Accrued payroll and related expenses                        $   3,905,466        $   2,917,059
  Accrued interest                                                  717,458              361,223
  Accrued retention payable                                         701,982              464,848
  Accrued sales tax                                                 574,069              656,920
  Other                                                           1,661,743              973,687
                                                              -------------        -------------
                                                              $   7,560,718        $   5,373,737
                                                              =============        =============
</TABLE>
                                      F-14
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE 3 - NOTES PAYABLE AND LINE OF CREDIT

NOTES PAYABLE

     Notes payable consist of the following:

                                                         December 31,
                                                -------------------------------
                                                   2000                1999
                                                -----------         -----------
Equipment  notes  payable  to  financial
institutions,  bearing interest at rates
from  2.0% to 14.5%,  monthly  principal
and  interest   payments  from  $252  to
$18,056  and  quarterly   principal  and
interest payments of up to $150,000, due
at various dates through  December 2005;
collateralized by equipment                     $ 3,011,277         $ 3,308,423

Mortgage   notes   payable  to  a  bank,
bearing  interest at rates from 8.48% to
8.78%,  monthly  principal  and interest
payments   totaling   $10,334,   due  at
various  dates  through  December  2006,
collateralized by deeds of trust                    442,840             716,954

Notes   payable  to  various   financial
institutions  under  revolving  lines of
credit,  interest  payable  monthly at a
variable  rate  based on  prime  plus an
index of 2.0%, repaid in 2000                            --           1,921,268

Note payable to an  investment  company,
interest  payable  monthly at a variable
rate  based  on  prime  plus an index of
3.0%, repaid in 2000                                     --           1,500,000

Other                                                    --             128,002
                                                -----------         -----------
                                                  3,454,117           7,574,647
Less: current portion                            (1,276,106)         (3,798,367)
                                                -----------         -----------
                                                $ 2,178,011         $ 3,776,280
                                                ===========         ===========

OPERATING LINE OF CREDIT

     During 1999,  the Company  entered into a line of credit  agreement  with a
syndication of commercial banks which provided for borrowings up to $60,000,000.
In March 2000, the Company entered into an Amended and Restated Revolving Credit
Agreement (the "Agreement")  with a syndication of commercial  banks.  Under the
terms of the  Agreement,  the Company may borrow up to  $100,000,000  (including
$10,000,000 in stand-by letters of credit, of which $1,829,925 were issued as of
December 31,  2000).  Borrowings  bear  interest at either LIBOR plus 175 to 250
basis points or the prime rate plus 25 to 100 basis points,  determined based on
certain financial  covenants,  at the discretion of the Company. The Company has
an option, subject to certain conditions,  to increase the maximum borrowings to
$150,000,000.  As of December 31, 2000 and 1999, total line of credit borrowings
were $83,237,986 and $45,737,986,  respectively.  The Agreement requires monthly
payments of interest  and it matures in March  2003.  Borrowings  are secured by
substantially  all of the Company's assets and the Company is required to pay an
annual  commitment  fee  equal to 0.375% to 0.5%,  determined  based on  certain

                                      F-15
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

financial covenants,  of the unused portion of the line of credit. The Agreement
places certain  business,  financial and operating  restrictions  on the Company
relating to, among other things,  the  incurrence  of  additional  indebtedness,
acquisitions, asset sales, mergers, dividends, distributions and repurchases and
redemption  of  capital  stock.  The  Agreement  also  requires  that  specified
financial  ratios and  balances be  maintained.  As of December  31,  2000,  the
Company was in compliance with these  covenants.  The Company does not expect to
be in  compliance  with  certain  covenants at March 31, 2001 and has obtained a
waiver from its lenders while a permanent modification to its credit facility is
negotiated.

     In connection  with the Agreement,  the borrowing limit under the Company's
equipment lease line of credit was increased from $10,000,000 to $15,000,000. In
September 2000, the borrowing limit under the equipment lease line of credit was
further increased to $25,000,000.  Total borrowings  outstanding at December 31,
2000 under the equipment lease line were $19,897,459. See Note 6.

     Future  minimum  payments  due on notes  payable  and line of  credit as of
December 31, 2000 are as follows:

            2001                        $ 1,276,106
            2002                            975,919
            2003                         83,703,814
            2004                            270,103
            2005                            167,348
            Thereafter                      298,813
                                        -----------
                                        $86,692,103
                                        ===========

NOTE 4 - INCOME TAXES

     The provision for income taxes consist of the following:

                                        Year Ended December 31,
                                ----------------------------------------
                                   2000           1999          1998
                                -----------    -----------   -----------
Current provision:
    Federal                     $4,404,150     $ 3,353,196   $ 3,954,905
    State                          694,003         680,773       790,977
Deferred provision:
    Federal                      1,366,789         292,802       128,013
    State                          135,177          64,013        25,602
                                -----------    -----------   -----------
                                $ 6,600,119    $ 4,390,784   $ 4,899,497
                                ===========    ===========   ===========

     Deferred income tax assets and liabilities consist of the following:

                                               2000             1999
                                            -----------      -----------
Deferred income tax assets:
    Non-deductible reserves                 $ 1,456,905      $ 1,239,957
    Net operating loss carryforwards            326,204          333,034
    Accrued expenses                            518,581          165,888
    Other                                            --          223,015
                                            -----------      -----------
Total deferred income tax assets:             2,301,690        1,961,894
                                            -----------      -----------
Deferred income tax liabilities:
    Net asset basis difference in
      acquisitions                             (794,166)              --
    Depreciation and amortization            (2,653,108)      (1,720,146)
    State taxes                                 (47,835)              --
    Other                                       (66,799)              --
                                            -----------      -----------
Total deferred income tax liabilities        (3,561,908)      (1,720,146)
                                            -----------      -----------
Net deferred income tax liability           $(1,260,218)     $   241,748
                                            ===========      ===========

                                      F-16
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     At December 31, 2000,  the Company had net federal and state net  operating
loss carryforwards totaling $836,421 and $930,908, respectively, which expire at
various  times  through  2014.  Certain net  operating  losses were  acquired in
connection with acquisitions made during 1999 and,  accordingly,  are subject to
annual utilization  limits. The Company believes that it is more likely than not
it will utilize  available  net  operating  loss  carryforwards.  Therefore,  no
valuation allowance has been recorded.

     The income tax rate varies  from  amounts  computed  by  applying  the U.S.
statutory  rate to income before the  provision for income taxes.  The effective
tax rate is as follows:

                                                Year Ended December 31,
                                                -----------------------
                                                 2000     1999     1998
                                                -----    -----    -----
Statutory rate                                   34.0%    34.0%    34.0%
State taxes                                       4.3      5.3      5.0
Net operating loss utilization                     --       --     (2.3)
Research and development tax credits             (2.3)    (2.5)      --
Subchapter S income acquired                     (0.3)    (0.3)    (4.9)
Nonrecurring acquisition costs                    2.9       --      2.0
Other                                              --     (0.8)     0.3
                                                -----    -----    -----
                                                 38.6%    35.7%    34.1%
                                                =====    =====    =====

NOTE 5 - RELATED PARTY TRANSACTIONS

NOTES PAYABLE TO RELATED PARTIES

     In 1997,  the  Company  issued  a  $3,200,000  note to a  former  principal
stockholder  of an entity  acquired by  International  Fibercom,  Inc.  The note
required monthly principal and interest payments of $86,663, bearing interest at
8.5%.  The balance  outstanding  on the note at  December  31, 2000 and 1999 was
$86,618  and  $1,072,687,  respectively.  The note was repaid in full  through a
final payment made in January 2001.

COVENANT NOT TO COMPETE

     Included in other assets is a covenant not to compete  entered into in 1998
with two former  principles  of an acquired  subsidiary.  The  covenant is being
amortized over its life of five years.  Amortization expense for the years ended
December  31,  2000,  1999  and  1998  totaled  $79,967,  $79,967  and  $73,588,
respectively.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

COMMITMENTS

     The Company leases certain  facilities and equipment  under  non-cancelable
operating  leases which expire through 2006.  Certain  operating  leases contain
renewal   provisions  and  generally  require  the  Company  to  pay  insurance,
maintenance  and other  operating  expenses.  The Company  also  leases  certain
equipment  under long-term  lease  arrangements  which are classified as capital
leases.  The  Company  has a  capital  lease  line of  credit  with a  financial
institution  whereby the Company can acquire up to $25 million in equipment with
repayment  terms of 3-5 years with  interest at  prevailing  market  rates.  The
leases  terminate at various dates through  December  2005.  Equipment  acquired
under capital leases totaled  $25,293,154  and  $11,169,711 at December 31, 2000
and 1999, respectively.

     Future minimum lease commitments under non-cancelable operating and capital
leases are as follows:

                                      F-17
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                                 Operating      Capital
                                                   Leases        Leases
                                                -----------   -----------
2001                                            $ 5,583,230   $ 6,601,126
2002                                              4,434,740     6,273,982
2003                                              3,508,225     5,736,357
2004                                              2,184,043     4,729,473
2005                                                608,992     2,604,216
Thereafter                                          269,631            --
                                                -----------   -----------
                                                $16,588,861    25,945,154
                                                -----------
Less: amount representing interest                             (4,375,484)
                                                              -----------
Present value of capital lease obligations                     21,569,670
Less: current portion                                          (4,866,170)
                                                              -----------
                                                              $16,703,500
                                                              ===========

     Rental expense for the years ended December 31, 2000, 1999 and 1998 totaled
$6,506,598, $4,604,969 and $1,995,360 respectively.

CONTINGENCIES

     The  Company  has  legal  proceedings  incidental  to its  normal  business
activities.  In the opinion of management,  the outcome of the proceedings  will
not have a  material  adverse  effect on the  Company's  consolidated  financial
position, results of operations or cash flows.

NOTE 7 - STOCKHOLDERS' EQUITY

PREFERRED STOCK

     The Series B 4%  preferred  are  convertible  into common  stock at a price
equal  to the  lower of the  average  stock  price  on the date of each  monthly
subscription  installment or the  discounted  average stock price on the date of
conversion.  The "average  stock price" is the average of the daily  closing bid
prices of the common stock for the five  consecutive  trading  days  immediately
preceding the relevant date. The "discounted  average stock price" means (i) 70%
of the average of the daily  closing bid prices of the common stock for the five
consecutive  trading days  immediately  preceding  the date of  conversion  into
common  stock if such  average of the daily  prices is below  $3.00 per share or
(ii) 75% of the  average of such daily  prices if the average is above $3.00 per
share.  For a one year  period  after  issuance of the series B  preferred,  the
series B conversion  Price floor will be the lower of $.75 or 50% of the average
stock  price.  There  will be no floor on the series B  conversion  price if the
Company fails to achieve certain gross profits in any two consecutive  quarters.
The Company may redeem the series B preferred,  in whole or in part,  commencing
60 days after issuance at 150% of the purchase price of $1,000 per share. All of
the Series B 4% preferred stock was converted into Common Shares in 1998.

     The Series C 4%  preferred  shares are  convertible  into common stock at a
price  of  $6.48375  per  share  which  approximated  fair  value at the date of
issuance.  Additional  shares may be issuable upon conversion based upon certain
conditions.  Dividends  are payable on the Series C preferred  at the rate of 4%
per annum in shares of common  stock or cash,  at the option of the Company on a
quarterly  basis.  In 1998, 600 of the 1,000  outstanding  shares of Series C 4%
preferred stock was converted into Common Stock.  During 1999, the remaining 400
shares were converted to Common Stock.

                                      F-18
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


EMPLOYEE STOCK PURCHASE PLAN

     During  1997,  the Company  adopted an Employee  Stock  Purchase  Plan (the
"Plan") for all employees meeting certain eligibility criteria.  Under the plan,
eligible employees may purchase shares of the Company's common stock, subject to
certain limitations, at 85% of its market value. Purchases are limited to 15% of
an  employee's  eligible  compensation,  up to a maximum of $25,000 per year. An
aggregate of 2,000,000  shares of the Company's  common stock are authorized and
available for sale to eligible  employees.  During the years ended  December 31,
2000, 1999 and 1998,  237,488,  189,644 and 139,876 shares,  respectively,  were
issued to employees under the Plan.

EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK PLANS

     During the year ended  December  31,  1994,  the  Company  adopted the 1994
Incentive  Stock  Option  Plan and the 1994  Restricted  Stock  Plan.  The Plans
authorized  the granting of  restricted  shares of common stock and common stock
options to key employees, consultants,  researchers, and members of the Advisory
Board.  Under the above Plans,  441,707 shares of common stock were reserved for
issuance.

     On January 7, 1997, the Board of Directors  approved the 1997 International
FiberCom,  Inc.  Stock Option  Plan.  The Plan  authorizes  the Company to grant
incentive stock options and non-qualified  stock options to key employees of the
Company.  In addition,  the Company has adopted the 1997 Restricted  Stock Plan.
This Plan  authorizes  the granting of restricted  shares of common stock to key
employees, consultants,  researchers, and members of the Board. Under the Plans,
6,200,000  shares of common stock are  reserved for issuance  pursuant to a Plan
amendment on June 16, 2000.

     As of  December  31,  2000,  options  exercisable  to  purchase  all shares
available  for  issuance  under the 1994 Plans  have been  granted  and  options
exercised to purchase  4,286,140  shares have been granted under the 1997 Plans.
In  addition,  the  Company  has  issued  4,722,343  options  to  employees  and
directors, not pursuant to any authorized plan.

     Following  is a  summary  of the  status  of the  stock  option  plans  for
employees and directors during the years ended December 31, 2000, 1999 and 1998:

                                                             Weighted
                                                             Average
                                               Number of     Exercise
                                                Options       Price
                                              ----------     --------
Outstanding as of January 1, 1998              2,265,885      $ 1.83
Granted                                        2,215,982        5.43
Exercised                                       (889,540)       1.06
Forteited                                            (63)       1.47
                                              ----------
Outstanding as of December 31, 1998            3,592,264        4.23
Granted                                        3,091,516        5.99
Exercised                                       (552,372)       3.55
Forteited                                       (107,844)       4.11
                                              ----------
Outstanding as of December 31, 1999            6,023,564        5.35
Granted                                        1,945,169       11.03
Exercised                                     (2,135,431)       5.54
Forteited                                       (393,141)       6.41
                                              ----------
Outstanding as of December 31, 2000            5,440,161        7.21
                                              ==========

     Information  relating to stock options at December 31, 2000,  summarized by
exercise price, is as follows:

                                      F-19
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
                                        Options Outstanding
                            -----------------------------------------------
                                                                 Weighted           Options Exercisable
                                                                  Average      -----------------------------
                                                Weighted         Remaining                          Weighted
                                                Average         Contractual                         Average
                                                Exercise           Life                             Exercise
Exercise Range                 Shares            Price           (In Years)       Shares             Price
--------------                 ------            -----           ----------       ------             -----
<S>                         <C>                 <C>             <C>            <C>                  <C>
$0.94 to 1.47                   342,769          $ 1.09             0.7            342,769           $ 1.09
$3.00 to 4.43                   456,201            3.01             1.8            456,201             3.01
$5.00 to 7.25                 2,742,300            5.68             3.1          2,542,846             5.68
$7.63 to 10.50                1,032,157            8.90             4.0            698,361             8.86
$11.46 to 17.00                 833,234           14.50             4.4            387,851            14.15
$17.63 to 19.94                  33,500           18.45             4.5             10,000            18.27
                            -----------                                        -----------
                              5,440,161            7.21             3.2          4,438,028             6.32
                            ===========                                        ===========
</TABLE>

     All stock options  issued to employees have an exercise price not less than
the fair market value of the  Company's  common  stock on the date of grant.  In
accordance  with  accounting  for such options  utilizing  the  intrinsic  value
method,  there  is no  related  expense  recorded  in  the  Company's  financial
statements  for  the  years  ended  December  31,  2000,   1999  and  1998.  Had
compensation cost for stock-based compensation been determined based on the fair
value of the options at the grant dates  consistent with the method of SFAS 123,
the  Company's  net income and earnings per share would have been reduced to the
pro forma amounts presented below:

                                         Year Ended December 31,
                            ------------------------------------------------
                                2000              1999              1998
                            ------------      ------------      ------------
Net income:
    As reported              $10,484,069       $7,907,901       $9,452,673
    Pro forma                  5,784,316        2,871,444        3,349,570

Earnings per share:
    Basic:
      As reported            $      0.32       $     0.27       $     0.39
      Pro forma                     0.18             0.10             0.14

    Diluted:
      As reported            $      0.30       $     0.26       $     0.34
      Pro forma                     0.16             0.09             0.12

     The fair  value  of  option  grants  is  estimated  as of the date of grant
utilizing the  Black-Scholes  option-pricing  model with the following  weighted
average  assumptions for grants in 2000, 1999 and 1998: expected life of options
of 2 years,  expected  volatility of 75%, 57% and 82%,  respectively,  risk-free
interest rates of 6%, and a 0% dividend yield.  The weighted  average fair value
at  date  of  grant  for  options  granted  during  2000,  1999  and  1998  were
approximately $4.85, $2.18 and $2.68, respectively.

NON-EMPLOYEE STOCK OPTIONS AND WARRANTS

     Prior to December 31, 1997,  the Company  issued  non-employee  options and
warrants to purchase shares of Common Stock in connection with certain offerings
to sell  Common  and  Preferred  Stock and in  exchange  for  services.  Warrant
activity for the years ended  December 31, 2000,  1999 and 1998 is summarized as
follows:

                                      F-20
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                                                             Weighted
                                                              Average
                                            Number of        Exercise
                                             Options           Price
                                           -----------       --------
Outstanding as of January 1, 1998            6,101,923        $ 3.47
Exercised                                   (4,288,373)         2.63
Redeemed                                        (7,440)         0.10
Forteited                                     (126,110)         6.80
                                           -----------
Outstanding as of December 31, 1998          1,680,000          5.33
Exercised                                     (480,000)         2.48
                                           -----------
Outstanding as of December 31, 1999          1,200,000          6.47
Exercised                                     (537,000)         6.24
Forteited                                     (513,000)         5.50
                                           -----------
Outstanding as of December 31, 2000            150,000          7.50
                                           ===========

     Warrants and non-employee  options  outstanding as of December 31, 2000 are
exercisable  at a price of $7.50  and  expire in  December  2002.  All  services
received in exchange for options and warrants  during 1997 were related to stock
offerings  and,  accordingly,  the fair value of those  services,  as determined
using the  Black-Scholes  pricing model, were netted against the proceeds of the
related offerings.

                                      F-21
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE 8 - EARNINGS PER SHARE

     The following  data shows amounts used in computing  earnings per share and
the  effect on income  and the  weighted  average  number of shares of  dilutive
potential common stock.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                    -----------------------------------------------
                                                        2000              1999              1998
                                                    -----------       -----------       -----------
<S>                                                 <C>               <C>               <C>
Numerator:
  Numerator for basic earnings per
    share - net income  attributable to
    common stockholders before proforma
    provision for income taxes                      $10,484,069       $ 7,903,901       $ 9,404,951
  Interest and finance expense on convertible
   debt                                                      --            31,126           157,357
  Preferred stock dividends                                  --             4,000            47,722
                                                    -----------       -----------       -----------
  Numerator for diluted earnings per share          $10,484,069       $ 7,939,027       $ 9,610,030
                                                    ===========       ===========       ===========
Proforma Numerator:
  Numerator for basic earnings per share - net
   income attributable to common stockholders
   after proforma provision for income taxes        $10,435,781       $ 7,863,403       $ 8,870,889
  Interest and finance expense on convertible
   debt                                                      --            31,126           157,357
  Preferred stock dividends                                  --             4,000            47,722
                                                    -----------       -----------       -----------
  Proforma numerator for diluted earnings
   per share                                        $10,435,781       $ 7,898,529       $ 9,075,968
                                                    ===========       ===========       ===========
Denominator:
  Denominator for basic earnings per share -
   weighted-average shares outstanding               32,486,970        28,896,951        24,374,712
  Effect of dilutive securities:
    Convertible preferred stock                              --            10,943           401,001
    Dilutive options and warrants                     2,717,644         1,700,146         3,039,968
    Convertible debt                                         --            75,561           226,045
                                                    -----------       -----------       -----------
  Denominator for diluted earnings per share         35,204,614        30,683,601        28,041,726
                                                    ===========       ===========       ===========
Earnings per common share:
  Basic                                             $      0.32       $      0.27       $      0.39
  Diluted                                           $      0.30       $      0.26       $      0.34

Proforma earnings per common share:
  Basic                                             $      0.32       $      0.27       $      0.37
  Diluted                                           $      0.30       $      0.26       $      0.32
</TABLE>

                                      F-22
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     Anti-dilutive  options  excluded from the calculation of earnings per share
are summarized as follows:

                                        2000           1999           1998
                                     ----------     ----------     -----------
Number of options                        13,500         69,610         707,000
Weighted average exercise price      $    19.66     $     9.93     $      7.63
Expire on various dates through       8/23/2005      8/13/2004      11/20/2002

NOTE 9 - EMPLOYEE BENEFIT PLANS

     The Company  sponsors a 401(k)  retirement  plan (the "Plan")  which covers
substantially  all  fulltime  employees.  The Plan  allows for  participants  to
contribute  up  to  15%  of  eligible   compensation.   The  Plan  provides  for
discretionary   contributions   by  the  Company.   Several  of  the   Company's
subsidiaries  sponsored  individual  defined  contribution  plans prior to being
acquired  by the  Company.  Upon  acquisition,  the plans were  merged  with the
Company's  Plan.  Certain  plans  required  the  subsidiaries  to make  matching
contributions  based  upon a  participant's  eligible  compensation,  subject to
certain  limitations.  Contributions  made by the Company during the years ended
December 31, 2000, 1999 and 1998 totaled $0, $37,987 and $189,104, respectively.

NOTE 10 - BUSINESS COMBINATIONS

     During 2000 and 1999,  the  Company  completed  six and four  acquisitions,
respectively,  which were accounted for using the purchase method of accounting.
Accordingly,  the results of  operations  of the  acquired  companies  have been
included in the  accompanying  consolidated  results of  operations  as of their
respective  acquisition dates. Under the purchase  agreements,  the Company paid
both cash and stock for the acquisitions. Common stock issued in connection with
the  acquisitions was valued at fair market value based upon the market value of
the securities over a reasonable period of time before and after the acquisition
was  announced.  Certain  agreements  completed in 2000 and prior years included
provisions for contingent  consideration  which is payable if certain  financial
targets are met over a three year period or purchase  price  adjustments  if the
quoted market price of the Company's  common stock is below an agreed upon price
on the six month  anniversary  following the  acquisition  date. At December 31,
2000,  the maximum  potential  contingent  consideration  totaled  approximately
$15,875,000 and, to the extent earned,  will be recorded as additional  goodwill
in future periods.

     Companies  acquired in 2000 located in North America  include two companies
that provide wireless construction and maintenance services - New C.C., Inc. and
QuickTower  Construction,  Inc.; and three  companies that provide wired outside
plant services - New York Antenna, Inc., Beecroft Trenching, Inc., and Precision
Directional  Systems,  Inc.  Additionally,  in 2000, the Company acquired Modern
Systems, an equipment distribution company located in the United Kingdom.

     Companies  acquired  in 1999 are  located  in  North  America  and  include
AeroComm,  Inc., All Star Telecom, Inc., BlueRidge Solutions and Washington Data
Systems,  Inc.  With the  exception of  AeroComm,  Inc.,  all 1999  acquisitions
provide wired services to customers in the  communications  industry.  AeroComm,
Inc.  is  a  developer  of  proprietary  wireless  communications  products  and
connectivity solutions.

     The following  unaudited  pro forma  results of operations  assume that the
Company's  significant  acquisitions  occurring in 2000 and 1999,  accounted for
using the purchase method of accounting, were consumated as of January 1, 1999.

                                      F-23
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
                                                                                           Pro Forma
                                    International                        Pro Forma        Consolidated
                                    FiberCom, Inc.  Acquisitions (1)   Adjustments (2)      Amounts
                                    -------------   ----------------   ---------------   -------------
<S>                                 <C>             <C>                <C>               <C>
Year ended December 31, 2000:
Revenues                            $ 315,715,025     $  13,143,202                      $ 328,858,227
Net income                             10,484,069         1,398,137          (286,630)      11,595,576
Earnings per share:
    Basic                           $        0.32                                        $        0.35
    Diluted                         $        0.30                                        $        0.32
Shares used in computation:
    Basic                              32,486,970                                           33,018,276
    Diluted                            35,204,615                                           35,735,921
Year ended December 31, 1999:
Revenues                              187,679,640        47,208,421                        234,888,061
Net income                              7,907,901         2,307,667          (905,079)       9,310,489
Earnings per share:
    Basic                           $        0.27                                        $        0.31
    Diluted                         $        0.26                                        $        0.29
Shares used in computation:
    Basic                              28,896,951                                           30,043,212
    Diluted                            30,683,601                                           31,829,862
</TABLE>

----------
(1)  Represents  activity  for the  period  from  January  1, 1999  through  the
     acquisition dates in 2000 and 1999.
(2)  To record the after-tax  effect of interest  expense and of amortization of
     goodwill  associated with the  acquisitions  for the period from January 1,
     1999 through the acquisition dates in 2000 and 1999.

     The  unaudited  pro forma  information  does not  necessarily  reflect  the
results which would have been obtained had the acquisitions  occurred on January
1, 1999 nor are they indicative of future results which may be obtained.

     In 2000, the Company consummated a business  combination with Premier Cable
Communications,   Inc.   ("Premier")   which   was   accounted   for  under  the
pooling-of-interests  method of accounting. The Company exchanged 865,963 shares
of IFCI common stock for all  outstanding  shares of Premier.  Premier  provides
wired services to customers in the communications industry.

     In 1998, the Company  completed two  acquisitions  which were accounted for
under the  pooling-of-interests  method of  accounting.  The  Company  exchanged
1,502,000  and  1,752,000  shares of Common  Stock for all the  common  stock of
United Tech, Inc. and Diversitec, Inc., respectively. Both United and Diversitec
sell new,  deinstalled  and  refurbished  communications  equipment  used in the
digital access,  switching and transport systems of  telecommunications  service
providers and other Fortune 500 companies.

     Premier,  United and Diversitec were Subchapter S corporations  for federal
tax purposes and,  accordingly,  were not subject to federal  income  taxes.  In
accordance with the  pooling-of-interests  accounting  method,  all prior period
consolidated  financial  statements  presented have been restated to include the
combined  results of operations,  financial  position and cash flows of Premier,
United  and  Diversitec  as though  it has  always  been a part of the  Company.
Additionally,  a pro forma  provision for income taxes has been recorded for the
years ended  December 31, 2000,  1999 and 1998 to present income taxes as though
the consolidated operating results of the acquired companies had been subject to
federal income taxes for all periods presented.

                                      F-24
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

     The results of operations for the separate  companies and combined  amounts
presented in the consolidated financial statements follow.

<TABLE>
<CAPTION>

                                          International      Diversitec and      Premier Cable
                                          FiberCom, Inc.      United Tech       Communications        Restated
                                          Before Pooling        Pooling             Pooling         For Pooling
                                           Acquisitions       Acquisitions      Acquisition (1)     Acquisitions
                                           ------------       ------------      ---------------     ------------
<S>                                       <C>                <C>                <C>                 <C>
Year Ended December 31, 2000:
  Revenues                                 $311,221,441       $        --        $  4,493,584       $315,715,025
  Net income                                 10,391,621                --              92,448         10,484,069
  Unaudited pro forma net income             10,391,621                --              44,160         10,435,781
Year Ended December 31, 1999:
  Revenues                                  170,399,742                --          17,279,898        187,679,640
  Net income                                  7,759,091                --             148,810          7,907,901
  Unaudited pro forma net income              7,755,091                --             108,312          7,863,403
Year Ended December 31, 1998:
  Revenues                                   85,178,699        19,797,296          13,708,409        118,684,404
  Net income (loss)                           7,910,479         3,492,844          (1,950,650)         9,452,673
  Unaudited pro forma net income (loss)       7,862,757         2,224,997          (1,216,865)         8,870,889
</TABLE>

     (1)  Included  in this table for the year ended  December  31,  2000 is the
results of Premier Cable  Communications  for the three month period ended March
31, 2000.  Premier Cable  Communications  was acquired by the Company  effective
April 1, 2000.

     Unauadited  pro forma net income  (loss)  reflects an adjustment to present
income  taxes as though  the  operating  results  of  Premier,  United  Tech and
Diversitec had been subject to federal income taxes for all periods presented.

     In connection with the Premier  acquisition,  the Company recorded a charge
to  expenses  of  $1,380,286  for direct and other  acquisition  related  costs.
Acquisition  costs  consisted  primarily of finder's,  attorney's and accounting
fees.  Similar  expenses  totaling  $890,000  were incurred  resulting  from the
acquisition of United and Diversitec.

NOTE 11 - SEGMENT INFORMATION

     The Company  delivers  its products  and  services  through four  operating
segments: wired services, equipment distribution, wireless services and wireless
technologies.

     Wired Services - this segment  provides  specialty  broadband system design
and engineering  services;  the  installation and maintenance of underground and
aerial fiber-optic,  copper and broadband communications systems; the design and
installation of integrated  local and wide area networks;  the  installation and
maintenance of the equipment needed to interconnect networks in existing central
office and other network points of presence; and the "last mile" installation of
modem, telephony and cable connections.

     Equipment  Distribution  - this  segment  sells new,  used and  refurbished
communications equipment from a variety of manufacturers. This equipment is used
in the digital  access,  switching  and  transport of voice and data traffic for
telecommunications services providers and other Fortune 500 companies.

                                      F-25
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


     Wireless  Services - this segment provides  services in support of wireless
services  carriers  and  networks   including  system   optimization   services,
propagation  studies,  audit services,  technology  conversion and  integration,
tower construction and maintenance, and site acquisition services.

     Wireless  Technology  - this segment  develops  and  delivers  products and
solutions  utilizing  proprietary  radio  frequency and optical  technology  and
know-how.  Products  include radio  frequency over fiber optic cable  modulation
devices,  active  radio  frequency  interference  and  intermodulation  filters,
optical  multiplexers,   infra-red  wireless  laser  links,  repeaters,  radios,
antennas and other inventions.  Solutions  utilizing these technologies  include
wireless  connectivity  systems for trains and  tunnels,  high speed WAN and LAN
"wireless bridge"  connectivity  systems,  wireless tower optimization  systems,
etc.

     Summary financial  information for each operating segment as of and for the
years ended December 31, 2000, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                                    Wired           Equipment       Wireless        Wireless
                                                   Services       Distribution      Services      Technologies         Total
                                                 ------------     ------------    ------------    ------------     ------------
<S>                                             <C>               <C>             <C>             <C>              <C>
For the twelve months ended December 31, 2000:
  Revenues                                       $266,340,187     $ 38,315,477    $  6,918,139    $  4,141,222     $315,715,025
  Gross margin                                     65,401,975       11,333,643       1,456,493       1,417,558       79,609,669
  Depreciation and amortization                    10,469,437        1,245,246         155,937         302,584       12,173,204
  Interest expense                                  7,358,948          685,468         114,132         306,246        8,464,794
  Provision (benefit) for income taxes              6,415,515        1,075,892         149,459      (1,040,747)       6,600,119
  Operating income (loss)                          24,210,125        3,903,304         530,293      (2,579,804)      26,063,918

  Assets                                          206,494,290       46,740,122       9,687,891       9,647,426      272,569,729
  Capital expenditures                             28,014,189          492,923         325,868         360,646       29,193,626

For the twelve months ended December 31, 1999:
  Revenues                                       $153,430,456     $ 31,077,638    $         --    $  3,171,546     $187,679,640
  Gross margin                                     35,585,978        9,961,171              --       1,039,757       46,586,906
  Depreciation and amortization                     5,611,089        1,152,257              --         296,145        7,059,491
  Interest expense                                  3,367,026          508,922              --          53,416        3,929,364
  Operating income (loss)                          10,983,736        4,689,539              --        (180,426)      15,492,849

  Assets                                          111,436,249       44,813,967              --       7,083,644      163,333,860

For the twelve months ended December 31, 1998:
  Revenues                                       $ 79,002,726     $ 39,681,678    $         --    $         --     $118,684,404
  Gross margin                                     13,986,147       21,173,709              --              --       35,159,856
  Depreciation and amortization                     2,883,758        1,170,550              --              --        4,054,308
  Interest expense                                  1,087,706          374,824              --              --        1,462,530
  Operating income                                  3,036,826       13,447,080              --              --       16,483,906

  Assets                                           46,438,416       43,834,051              --              --       90,272,467
</TABLE>

     For the purpose of measuring the results of operations of each segment, the
Company  allocates  corporate  overhead to each segment based on a percentage of
revenues.

NOTE 12 - MAJOR CUSTOMERS

     For the year ended December 31, 2000,  one customer  accounted for 10.7% of
revenues.  For the year ended December 31, 1999, no customer  accounted for more
than 10% of  revenues.  For the year ended  December  31,  1998,  two  customers
accounted for 13% and 11% of total revenues. Amounts due from these customers at
December  31, 2000 and 1998 totaled  approximately  $2,711,058  and  $2,173,000,
respectively.

                                      F-26
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


NOTE 13 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The following table summarizes the unaudited consolidated quarterly results
of operations  as reported and as restated for the Premier  pooling-of-interests
acquisition in 2000.

<TABLE>
<CAPTION>
                                                    Year Ended December 31, 2000
                                       -----------------------------------------------------
                                          First        Second         Third        Fourth
                                         Quarter       Quarter       Quarter       Quarter
                                       -----------   -----------   -----------   -----------
<S>                                    <C>           <C>           <C>           <C>
Revenues:
  2000 as reported                     $59,563,715   $75,607,042   $87,368,954   $88,681,730
  2000 as restated                      64,057,299    75,607,042    87,368,954    88,681,730
Gross profit:
  2000 as reported                      18,215,924    21,989,543    21,129,853    17,577,598
  2000 as restated                      18,912,675    21,989,543    21,129,853    17,577,598
Net income:
  2000 as reported                       3,516,003     3,433,156     3,169,284       273,178
  2000 as restated                       3,608,451     3,433,156     3,169,284       273,178
Basic earnings per common share:
  2000 as reported                            0.12          0.11          0.10          0.01
  2000 as restated                            0.12          0.11          0.10          0.01
Diluted earnings per common share:
  2000 as reported                            0.11          0.10          0.09          0.01
  2000 as restated                            0.11          0.10          0.09          0.01

                                                    Year Ended December 31, 1999
                                       -----------------------------------------------------
                                          First        Second         Third        Fourth
                                         Quarter       Quarter       Quarter       Quarter
                                       -----------   -----------   -----------   -----------
Revenues:
  1999 as reported                     $27,865,337   $40,740,191   $46,981,560   $54,812,654
  1999 as restated                      31,717,423    44,858,587    51,331,650    59,771,980
Gross profit:
  1999 as reported                       8,462,559    10,094,285    10,240,838    14,943,103
  1999 as restated                       9,063,482    10,800,961    10,972,687    15,749,776
Net income:
  1999 as reported                       2,231,974     2,324,258       571,087     2,631,772
  1999 as restated                       2,053,415     2,371,505       642,684     2,840,297
Basic earnings per common share:
  1999 as reported                            0.08          0.08          0.02          0.09
  1999 as restated                            0.07          0.08          0.02          0.10
Diluted earnings per common share:
  1999 as reported                            0.08          0.08          0.02          0.09
  1999 as restated                            0.07          0.08          0.02          0.09
</TABLE>

                                      F-27
<PAGE>
                          INTERNATIONAL FIBERCOM, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

<TABLE>
<CAPTION>
                                                              Additions
                                                       -----------------------     Deductions
                                        Balance at     Charged to      Charged    (Write-offs,     Balance
                                         Beginning     Costs and      to Other       Net of         at End
Description                              of Period      Expenses      Accounts    Collections)    of Period
-----------                              ---------      --------      --------    ------------    ---------
<S>                                     <C>           <C>             <C>         <C>                <C>
Deducted from asset accounts:
  Allowance for doubtful accounts:
    Year ended December 31, 1998       $  234,821    $    94,382     $       --    $ (62,814)    $  266,389
    Year ended December 31, 1999          266,389         47,341        850,512           --      1,164,242
    Year ended December 31, 2000        1,164,242        678,411        411,443     (651,611)     1,602,485

  Allowance for obsolete inventory:
    Year ended December 31, 1998        1,556,002     (3,263,000)     3,667,168           --      1,960,170
    Year ended December 31, 1999        1,960,170         12,000             --           --      1,972,170
    Year ended December 31, 2000        1,972,170        190,870             --           --      2,163,040
</TABLE>

                                       S-1