SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                       [X] ANNUAL REPORT UNDER SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 1999

                     [ ] TRANSITION REPORT UNDER SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                          Commission File No. 000-21775

                              THINK NEW IDEAS, INC.
                 (Name of small business issuer in its charter)

         DELAWARE                                               95-4578104
(State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                        Identification Number)

    45 WEST 36TH STREET, 12TH FLOOR, NEW YORK, NEW YORK 10018 (212) 629-6800
         (Address and telephone number of principal executive offices)

Securities registered pursuant to Section 12(b) of the Exchange Act: None.

Securities  registered  pursuant to Section  12(g) of the Exchange  Act:  Common
Stock, $0.0001 par value.

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange Act during the past twelve (12) months (or for such
period that the Registrant was required to file such reports);  and (2) has been
subject to such filing requirements for the past ninety (90) days. Yes x No

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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-KSB or any
amendment to this Form 10-KSB?

The  Registrant's  revenues  for the fiscal  year ended  June 30,  1999  totaled
$49,797,232.

As of September 9, 1999, the aggregate  market value of the voting stock held by
non-affiliates of the Registrant  (assuming for this purpose that only directors
and officers of the Registrant are affiliates of the  Registrant),  based on the
last sale price on that date, was approximately $109,263,848.

As  of  September  9,  1999,  there  were  10,105,327  shares  of  Common  Stock
outstanding.

Documents   incorporated  by  reference:   Certain  exhibits  hereto  have  been
specifically incorporated by reference herein in Item 13 under Part III hereof.

Transitional Small Business Disclosure Format:       Yes        No x



<PAGE>




                              INDEX TO FORM 10-KSB
                                       OF
                              THINK NEW IDEAS, INC.

<TABLE>
<CAPTION>

                                                                            Page
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<S>      <C>                                                               <C>
                                PART I

ITEM 1.    Description of Business .........................................  3

ITEM 2.    Description of Property ......................................... 22

ITEM 3.    Legal Proceedings ............................................... 23

ITEM 4.    Submission of Matters to a Vote of Security Holders ............. 24

                               PART II

ITEM 5.    Market for Common Equity and Related Stockholder Matters ........ 25

ITEM 6.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations ....................................... 25

ITEM 7.    Consolidated Financial Statements ...............................  F

ITEM 8.    Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosures ....................................... 42

                              PART III

ITEM 9.    Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act ............... 43

ITEM 10.   Executive Compensation .......................................... 47

ITEM 11.   Security Ownership of Certain Beneficial Owners and Management .. 53

ITEM 12.   Certain Relationships and Related Transactions .................. 56

ITEM 13.   Exhibits and Reports On Form 8-K ................................ 58
</TABLE>

NOTE: Certain sections of this document contain forward-looking  statements that
involve  risks and  uncertainties.  The  Company's  actual  results  may  differ
significantly  from the results  discussed  in the  forward-looking  statements.
Factors  that might  cause such a  difference  include,  but are not limited to,
those discussed in the sections  entitled "Factors  Affecting  Operating Results
and  Market  Price of  Stock"  and  "Management's  Discussion  and  Analysis  of
Financial Condition and Results of Operations."

<PAGE>


                                     PART I
ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND

         THINK New Ideas,  Inc. (the "Company") was incorporated in the State of
Delaware in January 1996. On June 30, 1996, the Company commenced its operations
upon  completion of the acquisition of all of the capital stock of the following
entities:  Internet One, Inc., a Colorado corporation ("Internet One"), Creative
Resources Agency, Inc., a Georgia corporation ("Creative  Resources");  Scott A.
Mednick & Associates, Inc., a California corporation ("Mednick Group"); The S.D.
Goodman Group, Inc., a New York corporation  ("Goodman Group"); On Ramp, Inc., a
New York corporation ("On Ramp");  NetCube  Corporation,  a Delaware corporation
and NetCube Corporation, a New Jersey corporation (collectively,  "NetCube"), in
exchange for issuance of an aggregate of 723,167 shares of the Company's  common
stock (the "Common  Stock").  All of the foregoing  companies may be referred to
hereinafter as the "Founding Companies."

         In August 1996, the Company entered into a strategic  relationship with
Omnicom Group Inc., a publicly held company ("Omnicom").  Omnicom is the largest
marketing  and  advertising  company in the  world.  Pursuant  to the  Company's
agreement  with  Omnicom (the  "Omnicom  Agreement"),  the Company  received net
proceeds of  $4,948,000  from the issuance of 938,667  shares of Common Stock to
Omnicom.   In  November  1996,  four  principal   stockholders  of  the  Company
transferred  an  aggregate  of 124,667  shares of Common Stock to Omnicom for no
cash consideration (the "Omnicom Transaction").

         In November  1996, the Company  completed its initial  public  offering
(the "Initial Public  Offering")  pursuant to which the Company issued 2,150,000
shares of Common Stock.  In connection  with the Initial  Public  Offering,  the
Company effected two reverse stock splits; accordingly,  all share and per-share
data reflects the effects of such splits.

         Effective as of May 31, 1997, the Company  acquired  certain assets and
operations of Fathom Advertising,  a full service advertising agency ("Fathom"),
from  Ketchum  Communications,   Inc.,  a  wholly-owned  subsidiary  of  Omnicom
("Ketchum"),  in exchange for the issuance of an aggregate of 120,000  shares of
Common Stock (the "Fathom Acquisition").

         In November 1997, the Company  acquired all of the outstanding  capital
stock of BBG New  Media,  Inc.,  a  Massachusetts  corporation,  which  provides
interactive  marketing services ("BBG"), in exchange for the issuance of 303,334
shares of Common Stock and payment of $175,000 in cash  pursuant to an Agreement
and Plan of Merger dated  November 3, 1997 (the "BBG  Agreement").  In addition,
under the terms of the BBG Agreement,  the Company will issue additional  shares
of  Common  Stock to the  former  stockholders  of BBG if the  Company  achieves
certain sales growth during the period from November 1, 1998 through October 31,
1999.  In the first quarter of fiscal 2000, it is probable that the Company will
issue  approximately  $4,550,000  in  shares  of  Common  Stock  to  the  former
stockholders of BBG due to the attainment of such growth targets.  See Note 2 to
the Consolidated Financial Statements of the Company.

         In April 1998,  the Company  acquired  all of the  outstanding  capital
stock  of  Herring/Newman,   Inc.,  a  Washington  corporation,  which  provides
advertising services ("Herring/Newman"), in exchange


                                       3
<PAGE>

for the  issuance of 127,799  shares of Common  Stock and payment of $400,000 in
cash  pursuant to an  Agreement  and Plan of Merger dated April 2, 1998 (the "HN
Acquisition").  In addition,  the Company  issued into escrow  77,220  shares of
Common Stock which were released to the former stockholders of Herring/Newman in
the fourth fiscal quarter of 1999 upon the  fulfillment  of certain  conditions,
including the retention of certain key clients.  See Note 2 to the  Consolidated
Financial Statements of the Company.

         In June 1998, the Company acquired all of the outstanding capital stock
of Interweb, Inc., a Georgia corporation,  which provides Web-based solutions to
Fortune  500  companies  ("Interweb"),  and  UbiCube  Group,  Inc.,  a  Delaware
interactive  marketing  corporation  ("UbiCube").  The Company acquired Interweb
pursuant to an  Agreement  and Plan of Merger dated June 2, 1998 in exchange for
the  issuance  of  600,000  shares of Common  Stock  and  $200,000  in cash (the
"Interweb  Acquisition").  The Company acquired UbiCube pursuant to an Agreement
and Plan of Merger  dated  June 27,  1998 (the  "UbiCube  Agreement")  through a
wholly-owned subsidiary, UbiCube Acquisition Corp., in exchange for the issuance
of 154,257 shares of Common Stock and the promise to pay $2,250,000 in shares of
Common Stock through January 15, 2000 (the "UbiCube  Acquisition").  Pursuant to
the UbiCube Agreement,  an additional 154,257 shares of Common Stock were placed
in escrow to be  released to the former  stockholders  of UbiCube on January 15,
1999,  January 15, 2000,  and March 1, 2001,  based on the attainment of certain
milestones.  In the fourth  quarter of 1999,  7,924  shares were  released  from
escrow  to the  former  stockholders  of  UbiCube  upon  the  attainment  of the
milestones  for the  applicable  period.  In addition,  in  connection  with the
UbiCube  Acquisition,  the Company agreed to issue  additional  shares of Common
Stock to the former stockholders of UbiCube subject to the attainment of certain
revenue and profit targets during the three-year period ending June 2001. In the
fourth  quarter of 1999,  21,019  additional  shares  were  issued to the former
stockholders  of UbiCube upon the  attainment of the targets for the  applicable
period. See Note 2 to the Consolidated Financial Statements of the Company.

          In March 1999,  the Company  acquired the assets of Envision  Group, a
California  Internet solutions  partnership  ("Envision") that provides Internet
marketing and Web-based solutions to Fortune 500 companies. The Company acquired
Envision  pursuant  to an Asset  Purchase  Agreement  dated  March  10,  1999 in
exchange  for (i) the  issuance of 477,002  shares of Common  Stock;  and (ii) a
contingent  earnout of up to  $5,500,000  in shares of Common  Stock  based upon
revenue for the year ended  December  31, 1999.  See Note 2 to the  Consolidated
Financial Statements of the Company.

         The Founding  Companies,  BBG,  Herring/Newman,  Interweb,  UbiCube and
Envision may be collectively referred to hereinafter as the "Subsidiaries."

         In March 1999, the Company entered into a Securities Purchase Agreement
(the "Securities  Purchase  Agreement") with Capital Ventures  International and
Marshall  Capital  Management,  Inc.  (the"Purchasers")  whereby the  Purchasers
agreed to purchase (i) shares of the Company's  Common Stock,  and (ii) warrants
to acquire  shares of Common  Stock,  for an aggregate  purchase  price of up to
$11,000,000.  The  Company is using the  proceeds of the  financing  for general
working capital  purposes,  including the funding of its strategic  growth plan.
Pursuant to the Securities  Purchase  Agreement,  on March 5, 1999 (the "Initial
Closing  Date",) the Company  issued,  for  proceeds of  $6,000,000  (i) 871,142
shares  of  Common  Stock at  $6.8875  per share  (the"Initial  Closing  Price")
representing ninety-five percent (95%) of the closing bid price as quoted by the
Nasdaq National Market System


                                       4
<PAGE>

("Nasdaq") on the trading day  immediately  preceding the date of the Securities
Purchase  Agreement and (ii)  warrants  (the "Closing  Warrants") to purchase an
additional  174,230 shares  (representing  20% of the number of shares issued on
the  Initial  Closing  Date) of Common  Stock at an  exercise  price of  $10.33,
representing 150% of the Initial Closing Price for a five-year term.

         The  Purchasers  have the right  through  March 5, 2000 to purchase (i)
530,504  additional shares (the "Optional Shares") of Common Stock at $9.425 per
share,  representing  130% of the  market  price on the  date of the  Securities
Purchase Agreement,  and (ii) warrants to purchase 106,101 shares (the "Optional
Warrants") of Common Stock  (representing  20% of the number of Optional Shares)
at an exercise  price equal to 150% of the market price on the date of exercise.
In exchange for the Optional  Shares and the purchase of the Optional  Warrants,
the Company will receive up to $5,000,000 in additional proceeds.  See Note 9 to
the Consolidated Financial Statements of the Company.

PROPOSED MERGER WITH ANSWERTHINK

         On June 24, 1999,  the Company  entered  into an Agreement  and Plan of
Merger (the "Merger Agreement") by and among the Company, AnswerThink Consulting
Group,  Inc.  ("AnswerThink")  and  Darwin  Acquisition  Corp.,  a  wholly-owned
subsidiary of AnswerThink ("Sub") pursuant to which Sub will merge with and into
the Company  (the  "Merger").  The Company  will survive the Merger and become a
wholly-owned subsidiary of AnswerThink. Under the terms of the Merger Agreement,
all  outstanding  shares of the Company will be  exchanged  for shares of common
stock,  par value $.001 per share, of AnswerThink  ("AnswerThink  Common Stock")
and all  outstanding  options to acquire  shares of Common Stock will be assumed
and converted into options to acquire  shares of  AnswerThink  Common Stock at a
ratio of 0.70 shares of  AnswerThink  Common  Stock to one share of Common Stock
(the "Exchange Ratio").  The Merger is subject to certain conditions,  including
shareholder  approval of both  companies.  The Merger will be accounted for as a
pooling of interests and is intended to qualify as a tax-free reorganization.

         Pursuant  to the  Merger  Agreement,  the  Company  has  agreed  to pay
AnswerThink a termination fee of $6,000,000 in the event the Merger Agreement is
terminated  under  certain  circumstances,  including;  the  withdrawal  of  the
recommendation  of the Board of Directors of the Company (the  "Board"),  or the
Board's  recommendation of a third party acquisition  proposal.  The Company has
also agreed to pay a termination  fee of $3,000,000 to  AnswerThink  under other
termination  circumstances  such  as  the  inability  to  obtain  the  requisite
shareholder approval.  Pursuant to the Merger Agreement,  AnswerThink has agreed
to pay the Company a termination  fee of $3,000,000 for a material breach of the
Merger Agreement that has not been properly cured.

         In  connection   with  the  Merger   Agreement,   the  Company  granted
AnswerThink  an option to  purchase  up to 19.9% of the shares of the  Company's
Common Stock (the "AnswerThink  Option")  outstanding on the date of exercise of
the  AnswerThink  Option.  The AnswerThink  Option is exercisable  following the
execution or consummation of an alternative business  combination  involving the
Company and the occurrence of certain further triggering  events,  none of which
has  occurred as of August 13,  1999.  The  per-share  exercise  price under the
AnswerThink Option is $18.50.

         As  further   inducement  to  AnswerThink  to  enter  into  the  Merger
Agreement, each director,  Omnicom Group, Inc. and certain executive officers of
the Company (who, in the aggregate,  beneficially


                                       5
<PAGE>


own  approximately 22% of the Company's  outstanding  Common Stock) entered into
voting  agreements with  AnswerThink  pursuant to which they: (i) agreed to vote
their  shares of Common Stock in favor of the Merger  Agreement  and the Merger;
and (ii)  granted  irrevocable  proxies to  AnswerThink  to vote such  shares in
accordance with the voting agreements.  As an inducement to the Company to enter
into the Merger  Agreement,  each  director  and certain  executive  officers of
AnswerThink  (who,  in  aggregate,  beneficially  own  approximately  39.76%  of
AnswerThink's  outstanding Common Stock) entered into voting agreements with the
Company  pursuant to which they:  (i) agreed to vote their shares of AnswerThink
Common Stock in favor of the issuance of  AnswerThink  Common Stock  pursuant to
the Merger  Agreement;  and (ii) granted  irrevocable  proxies to the Company to
vote such shares in accordance with the voting agreements.

         The  Company  believes  that  it is  likely  that  the  Merger  will be
completed on the terms contained in the Merger Agreement.  However, there can be
no assurance that the required stockholder  approvals will be obtained,  or that
the other  conditions  to the Merger will be  fulfilled.  A  termination  of the
Merger  Agreement  for a reason that  requires the Company to pay  AnswerThink a
termination fee, as described above, could have a material adverse affect on the
Company's liquidity, financial position and results of operation. See Note 13 to
the Consolidated  Financial  Statements of the Company and "Risks Related to the
AnswerThink  Merger.  Additionally,  the future strategies of the two companies,
operating on a combined  basis,  may differ from the  strategies the Company had
been  pursuing  and which the Company  would  pursue if it  continued to operate
alone. In that regard,  all discussions of the Company's  strategies,  and other
forward-looking  discussions   in the  sections  that  follow,  are based on the
continued operation of the Company alone (that is, without the completion of the
proposed Merger with AnswerThink) unless otherwise indicated. See Note 13 to the
Consolidated  Financial  Statements  of the  Company  and "Risks  Related to the
AnswerThink Merger "commencing on page 19.

BUSINESS OVERVIEW

         The  Company  provides   integrated   marketing,   communications   and
technology  solutions  to Fortune  1000  e-business  and ".com"  companies.  The
Company's  solutions  help  its  clients  to  utilize  the  Internet  and  other
interactive  technologies  to  enhance  their  competitive  positions,  add  new
channels of distribution,  capture new market segments, build long-term customer
relationships  and reduce  operating  costs.  The Company focuses on identifying
opportunities  for companies to  restructure  their  marketing and  distribution
strategies around interactive  technologies and implementing  creative solutions
to deliver their  messages  with the greatest  impact.  The Company's  solutions
incorporate various technologies, including customized interactive applications,
e-commerce and e-catalog  technology,  consumer modeling and response technology
and database  development.  The Company  integrates its core expertise through a
standardized  process that begins with  strategic  planning and  consulting  and
continues through implementation and post-implementation review and maintenance.
The Company's  solutions help its clients determine and implement their business
strategies,  build brand awareness,  and effectively  communicate information to
their internal and external constituents.

         The Company  approaches each client  engagement  utilizing its standard
proprietary methodology,  the THINK Vision Process (described more fully below).
Utilizing this process, the Company thoroughly researches a client's business to
determine the  effectiveness  of existing  communications  programs and how such
programs may be improved and  integrated  into an  interactive  strategy that is
intended to help clients  gain a  competitive  advantage in a changing  business
landscape.


                                       6
<PAGE>


         The Company currently operates an international network of offices with
headquarters in New York City, New York and regional offices in Los Angeles, San
Francisco and Torrance, California;  Seattle, Washington; Boston, Massachusetts;
Atlanta,  Georgia;  London,  England and Sofia,  Bulgaria.  The Company provides
integrated solutions through multi-disciplinary teams with creative,  consulting
and technological expertise from across the Company's network of offices.

METHODOLOGY

         The THINK Vision Process. The Company approaches each client engagement
utilizing  its  standard  proprietary  methodology,  the THINK  Vision  Process.
Through this process, the Company's  consultants  thoroughly research a client's
entire business - including internal audiences,  such as employees, and external
audiences,  such as customers and suppliers - to determine the  effectiveness of
existing  communications  programs  and how such  programs  may be improved  and
integrated  into an  interactive  communications  strategy that helps the client
gain a  competitive  advantage.  The THINK  Vision  Process  places  significant
emphasis on strategic planning and  implementation.  The THINK Vision Process is
composed  of  six  phases:   (1)  assessment;   (2)  strategy   development  and
specification;  (3)  concept  development;  (4)  implementation;  (5) review and
adjustment; and (6) maintenance and long-term planning.

         The Company helps its clients identify their customers and other target
audiences,  define the processes of communicating to those audiences and analyze
the results of those  communications.  The Company applies its expertise to each
integrated  solution to enable clients to deliver the right message at the right
time to the right  audience.  The  Company's  solutions  range  from  extending,
enhancing and developing brands, designing corporate and product brand networks,
integrating  and developing  media  programming  and  relationship-building,  to
acquiring and maintaining customers.

         The Company's expertise in business processes helps its clients improve
the entire  value  chain of their  businesses,  from  sales,  accounting,  order
management,  supply chain management and inventory procurement,  to planning and
scheduling,  manufacturing and finished goods delivery.  The Company applies its
expertise  in  business  processes  to ensure that each  integrated  solution is
designed to consider,  analyze and improve all components of each client's value
chain.

TECHNOLOGY EXPERTISE

         The  Company's  technology  expertise  provides  the  Company  with the
ability to design, develop and implement integrated marketing and communications
technology solutions.  The Company is "technology agnostic" and seeks to develop
secure,  flexible and innovative solutions across a wide range of networking and
telecommunications  environments using third-party and proprietary technologies.
The Company's  technology expertise  encompasses multiple system  architectures,
programming languages,  broadband technologies,  digital media applications, and
communication  networks utilizing Internet,  Intranet and extranet technologies.
The Company's core technical competencies include:

APPLICATIONS  DESIGN  AND  DEVELOPMENT.   The  Company  utilizes  a  variety  of
programming languages and tools including C/C++, CORBA, Java, SQL, Visual Basic,
and other  object-oriented  technologies.


                                       7
<PAGE>


The Company also develops programming tools and environments when appropriate in
order to implement the most cost-effective and functional Interactive Solutions.

INNOVATIVE GUI DESIGN AND DEVELOPMENT. In order to maximize the effectiveness of
the  Company's   solutions,   the  Company  integrates  creative  marketing  and
communications  expertise  with  software  applications  development  to  create
engaging,  innovative  and  easy-to-use  GUIs for Web sites and other  front-end
applications.

NETWORK  INTEGRATION AND SYSTEMS MANAGEMENT.  In order to implement  effectively
the  Company's  solutions,  the  Company  utilizes  a  wide  range  of  database
management and information technology  integration and implementation  services.
The Company  integrates  its  solutions  into  existing  information  technology
environments and infrastructures,  including front- and back-end object oriented
and  relational  databases,  enterprise-wide,  local  and  wide  area  networks,
client/server architectures and other distributed computing environments.

INTERNET  APPLICATIONS  AND SERVICES.  The Company's  Internet  applications and
services  expertise includes the development of secure  electronic-commerce  and
electronic-catalog    environments,     Web-tracking    software    and    other
Internet-related  applications  and  services.  This  expertise  has allowed the
Company to develop certain applications that are integrated into its Interactive
Solutions.  For instance,  the Company has developed the following  applications
and tools that can be integrated into its Interactive Solutions:

MULTI-USER,  OBJECT-ORIENTED AUTHORING TOOL ("MOAT"). Client authoring tool that
enables  executives  without  technical  experience to add animated graphics and
text to any part of a Web site, intranet or extranet.

WEBMECHANIC.  Automated Web site and intranet  building and management tool that
enables real-time generation of customized Web sites.  WebMechanic also provides
the  ability  to  edit,  create  and  refresh  content  from any  location  in a
user-friendly process.

ELECTRONIC  CONSUMER  RELATIONS PROGRAM  ("E-CORP").  Consumer relations program
that automates the  communications  aspect of relationship  management  systems,
automatically generating personalized responses based on information provided or
queried.  E-CORP  simultaneously  logs  and  forwards  messages  to  appropriate
internal  departments.  E-CORP  collects  responses  in  a  relational  database
allowing  information  to  be  segmented  and  analyzed,   facilitating  outward
communications with interest groups based on various criteria.

ADVANCED  STATISTICAL  ANALYSIS PROGRAM  ("ASAP").  Tracks and analyzes Web site
usage and functionality.  ASAP works with existing log file analysis  technology
to present information in a format and language that can be easily understood.

X-TRACKER. Tracks and analyzes Web site traffic generation. Allows generation of
reports that show  effectiveness  of  individual  campaigns  and events from any
medium in driving  traffic  to Web  sites.  X-Tracker  reports  graphically  and
quantitatively show correlation  between individual and integrated  campaigns in
directing traffic.


                                       8
<PAGE>

LIGHTWEIGHT DIRECTORY ACCESS PROTOCOL ("LDAP").  Directory service protocol that
allows end users to query directory  entries for any attribute or combination of
attributes.  LDAP  provides  answers to problems  historically  associated  with
online directory systems by standardizing  data storage structure and optimizing
use of system resources.

SALES AND BUSINESS DEVELOPMENT

         The  Company  has  15   employees   dedicated  to  sales  and  business
development  divided between regional and national  development  teams in all of
its  U.S.  offices,  its  U.K.  office,  and in a  national  corporate  business
development group (the "Development  Group").  The Development Group manages the
many  opportunities  developed  from (1) the leverage and  expansion of existing
client opportunities,  (2) pursuit of referrals from existing clients,  partners
and third party  organizations  and (3) leads  developed  through the  Company's
extensive conference and sponsored corporate speaking engagements.

         The  Development  Group,  staffed with strategic  marketers and account
planners, leads and assists in developing and writing sophisticated responses to
requests for  proposals as  developed  and  aggregated  by the  Company's  sales
efforts. The Development Group is also responsible for coordinating and tracking
all new business  opportunities,  resource  allocation and revenue goal planning
and tracking.  The Company tracks extensively all business  development activity
and maintains an active business development database to statistically track and
measure the success of its sales and marketing efforts on a quarterly basis.

         The  Company  markets  itself  through   traditional   brand  promotion
strategies  such as  consolidated  marketing  and  collateral  material,  public
relations campaigns, client and partner referrals, and speaking engagements. The
Company also depends on establishing and maintaining  close  relationships  with
industry analysts, industry publications and speaking circuit registries.

COMPETITION

         The market for the  Company's  services  is highly  competitive  and is
characterized  by pressures to incorporate new  capabilities  and accelerate job
completion  schedules.  The Company faces  competition from a number of sources,
including   specialized  and  integrated   marketing  and  communication  firms,
information  technology  consulting firms, and national and regional advertising
agencies.  In addition,  many  national  advertising  agencies  have  internally
developed or acquired new media capabilities.  New competitors have also emerged
that either provide integrated or specialized services (e.g., corporate identity
and packaging,  advertising  services or Web site design) or are technologically
proficient, especially in the new media arena. Many of the Company's competitors
or  potential  competitors  have  longer  operating  histories,   longer  client
relationships  and  significantly  greater  financial,  management,  technology,
development, sales, marketing and other resources than the Company.

         The  Company's  business  has  moderately  low  barriers to entry.  The
Company has no significant proprietary technology that would preclude or inhibit
competitors from entering the Company's market. The Company expects that it will
face  additional  competition  from new  market  entrants.  Existing  or  future
competitors may develop or offer marketing  communication  services and products
that provide significant  performance,  price, creative or other advantages over
those offered by the Company,  which


                                       9
<PAGE>

could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.

EMPLOYEES

         As of June 30, 1999,  the Company had 353  full-time  employees  and 38
part-time employees.  None of the Company's employees are represented by a labor
union or are subject to a collective bargaining agreement. The Company has never
experienced a work stoppage and believes its employee relations are good.

GOVERNMENT REGULATION

         The Company has no  knowledge  of any  governmental  regulations  which
materially adversely affect its operations.


FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK

         The Company operates in a rapidly changing  environment that involves a
number of  uncertainties,  some of which are beyond the  Company's  control.  In
addition  to  the  uncertainties  described  elsewhere  in  this  report,  these
uncertainties include:

THE COMPANY'S  FUTURE  PROFITABILITY  IS UNCERTAIN  DUE TO CONTINUING  OPERATING
LOSES AND OUR LIMITED HISTORY OF COMBINED OPERATIONS

         The Company was formed in January 1996,  completed the  acquisition  of
various  companies  that formed its initial  core  business in June 1996 and has
grown since its inception  both through  acquisitions  and, to a lesser  extent,
internal  growth.  Although  certain  of the  acquired  businesses  have been in
operation  for some time,  the  Company  has had a limited  history of  combined
operations.  Consequently,  the historical and financial  information  contained
herein may not be  indicative of the Company's  future  financial  condition and
performance.  The  Company  experienced  operating  losses in each of the fiscal
quarters ended September 30, 1998, December 31, 1998 and March 31,1999.  For the
year ended June 30,1999,the  Company has an accumulated deficit of approximately
$43,537,000. Future operating results will depend on many factors, including:

      o  the demand for the Company's services;

      o  the  Company's  ability to maintain  client  relationships  and perform
         service for new clients;

      o  the  Company's  ability  to  integrate  successfully  the many  diverse
         businesses acquired;

      o  the Company's success in attracting and retaining qualified  personnel;
         and

      o  the Company's ability to respond to competitive developments.



                                       10
<PAGE>


THE COMPANY MAY NOT BE ABLE TO MANAGE SUCCESSFULLY THE RISKS ASSOCIATED WITH ITS
EXPANSION

         The  Company's  business  has grown  rapidly in recent  periods and its
customer  base has  expanded  significantly.  In fiscal  1998,  fiscal  1999 and
through the date of this Form 10-KSB, the Company has:

      o  acquired  companies  with  offices in Boston,  Massachusetts;  Seattle,
         Washington; San Francisco and Torrance,  California;  Atlanta, Georgia;
         Sofia, Bulgaria; and London, England; and

      o  continued  the  integration  of several  companies  into one  corporate
         organization.

         The Company  expects that the number of employees will continue to grow
and  that  both  existing  and new  management  personnel  will  increase  their
responsibilities.  The  Company's  success  depends on the ability of  executive
officers and other  members of senior  management to operate  effectively,  both
independently  and as a group.  This continued growth is expected to continue to
strain the Company's existing operational,  financial and management information
systems.

         Additionally,  the Company  has only two offices  outside of the United
States  and has  little  experience  in  managing  an  international  network of
consulting offices and marketing services to international clients.

         There  are  also  certain  risks  inherent  in  doing  business  on  an
international level. These risks include:

      o  unexpected changes in regulatory requirements;

      o  export and import restrictions;

      o  tariffs and other trade barriers;

      o  difficulties in staffing and managing foreign operations;

      o  potentially  adverse  differences  in business  customs,  practices and
         norms;

      o  longer payment cycles;

      o  problems in collecting accounts receivable;

      o  political instability;

      o  fluctuations in currency exchange rates;

      o  software piracy;

      o  seasonal reductions in business activity; and

      o  potentially adverse tax consequences.


                                       11
<PAGE>


         One or more of  these  factors  may  materially  adversely  affect  the
Company's  future  international  operations  and,  consequently,  its business,
results of operations and financial condition.

         In addition,  the Company  plans to expand its  offerings of integrated
marketing  communication  services  and  products.  There  can be no  assurance,
however,  that the Company will be  successful  in  identifying  new services or
products  that will be  attractive  to clients or that such services or products
will ultimately  generate  revenues in excess of the costs of introducing  them.
Difficulties  in  recruiting  and  assimilating  new  personnel,  enhancing  the
Company's  financial  and  operational  controls  and  expanding  the  Company's
marketing and customer support  capabilities may impede the Company's ability to
pursue its growth  strategy.  The  Company may be unable to manage its recent or
any future expansions effectively.  Any inability to do so would have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.  In  addition,  the  Company  may be unable to sustain  the rates of
growth that it has experienced in the past.

         Further,  as part of the Company's business  strategy,  the Company has
acquired  companies  in  businesses  that  are  complementary  to its  lines  of
business.  Such acquisitions are accompanied by risks encountered when acquiring
businesses, including:

      o  difficulty in assimilating the operations and personnel of the acquired
         businesses;

      o  potential disruptions in ongoing business;

      o  difficulty in maintaining uniform standards,  controls,  procedures and
         policies; and

      o  the impairment of relationships  with employees and clients as a result
         of the integration of new management personnel.

         The Company has eliminated  and is continuing to eliminate  portions of
the  businesses  that it has  acquired  that no longer fit its  business  model.
Consequently,  prior  acquisitions  may have a  material  adverse  effect on the
Company's business, results of operations and financial condition.

THE TRANSITION  FROM  PROVIDING  TRADITIONAL  ADVERTISING  SERVICES TO PROVIDING
INTERACTIVE MARKETING AND CONSULTING SERVICES MAY PROVE UNSUCCESSFUL

         For the year  ended  June 30,  1999,  traditional  advertising  clients
accounted for  twenty-six  percent  (26%) of the  Company's  net  revenues.  The
success  of  the  Company's  transition  into  the  interactive   marketing  and
communication services sector cannot be certain. This market is characterized by
extremely rapid change in technologies and in client requirements. The Company's
reliance  on this  sector  could  materially  affect  its  business,  results of
operations and financial condition.

THE COMPANY IS SUSCEPTIVE TO GENERAL ECONOMIC CONDITIONS

         The  Company's  revenues and results of  operations  will be subject to
fluctuations  based  upon  general  economic  conditions.  If there were to be a
general economic downturn or a recession in the United States,  then the Company
expects that business enterprises,  including its clients and potential


                                       12
<PAGE>

clients,  will  substantially  and  immediately  reduce  their  advertising  and
marketing budgets.  In the event of such an economic  downturn,  there can be no
assurance that the Company's business, operating results and financial condition
would not be materially and adversely affected.

QUARTERLY OPERATING RESULTS AND MARGINS MAY CONTINUE TO FLUCTUATE

         The Company's  quarterly  operating results have fluctuated in the past
and may fluctuate in the future as a result of a variety of factors, including:


     o    the  timing  of the  completion  or  cancellation  of,  or a  material
          reduction in, major projects;

     o    the loss of a major client;

     o    the timing of the receipt of new business;

     o    the timing of the hiring or loss of personnel;

     o    the timing of the opening or closing of an office;

     o    the relative mix of high margin creative projects as compared to lower
          margin production projects;

     o    changes in the pricing  strategies or business  model of the Company's
          or its competitors;

     o    capital  expenditures  and other costs  relating to the  expansion  of
          operations; and

     o    other factors that are outside of the Company's control.

         Operating  results  could  also be  materially  adversely  affected  by
increased  competition.  The  Company's  operating  margins may  fluctuate  from
quarter  to quarter  depending  on the  relative  mix of lower  cost,  full time
employees as compared to higher cost, independent contractors.

         The Company  experiences some seasonality in its business which results
from  timing of  product  introductions  and  business  cycles of the  Company's
clients.  The Company's  revenues may be somewhat higher during certain quarters
of the fiscal  year  reflecting  the trends of its clients  preparing  marketing
campaigns  for  products  launched in  anticipation  of fall trade shows and the
holiday  season.  As a result of the  foregoing and other  factors,  the Company
anticipates that it may experience  material and adverse  fluctuations in future
operating  results  on a  quarterly  or annual  basis.  Therefore,  the  Company
believes that period to period comparisons of revenues and operating results are
not necessarily  meaningful and that such  comparisons  cannot be relied upon as
indicators of future performance.


                                       13
<PAGE>

DEPENDENCE ON KEY ACCOUNTS

         The Company's four largest  clients  accounted for  twenty-six  percent
(26%) of its revenues for the year ended June 30, 1999, with fluctuations in the
amount of revenue  contribution  from each such client from  quarter to quarter.
The  Company's  two largest  clients  during the year ended June 30, 1999,  each
accounted for  approximately  sixteen  percent (16%) of its revenues  during the
period.  Since the Company's clients generally retain it on a project by project
basis,  a client  from whom the  Company  generates  substantial  revenue in one
period may not be a substantial source of revenue in a subsequent period. To the
extent that major  clients do not remain a significant  source of revenues,  and
the  Company is unable to replace  these  clients,  there  could be a direct and
immediate material adverse effect on business, financial condition and operating
results.  A typical  project lasts from two to four weeks in the case of smaller
projects and up to five months in the case of larger projects. Once a project is
completed  there can be no  assurance  that a client will engage the Company for
further  services.  In addition,  clients may  unilaterally  reduce their use of
services or terminate  existing  projects without penalty.  The termination of a
business  relationship with any significant  clients or a material  reduction in
the use of the Company's  services by a significant client would have a material
adverse  effect on the Company's  business,  results of operations and financial
condition.

RELIANCE ON PROPRIETARY TECHNOLOGIES

         The Company regards certain of its products and technologies, including
its software applications, as proprietary. The Company relies upon a combination
of trademark,  copyright and trade secret law, together with  non-disclosure and
invention  assignment  agreements,  to  establish  and protect  its  proprietary
rights. Much of the Company's proprietary information may not be patentable, and
the Company  does not  currently  possess any  patents.  The  Company's  current
intellectual  property  rights  may not  afford  meaningful  protection  and its
competitors  may  independently  develop  technologies  that  are  substantially
equivalent  or superior to its  technologies.  Others may infringe the Company's
proprietary  rights or assert  claims that the Company's  technologies  infringe
their  proprietary  rights.  Litigation  concerning  the  alleged  violation  of
intellectual  property  rights  is  inherently  uncertain  and  could  result in
significant costs to the Company, even if any such claims are not valid.

BUSINESS IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE

         The market for marketing and communication services is characterized by
rapid  technological  change,  changes  in  user  and  client  requirements  and
preferences,  frequent  new  product  and  service  introductions  and  evolving
industry  standards  and  practices.  Any of  these  factors  could  render  the
Company's existing service practices and methodologies  obsolete.  The Company's
success  will  depend,  in part,  on its ability to improve  existing  services,
develop new services and solutions that address the  increasingly  sophisticated
and varied needs of current and prospective clients. The Company may not respond
quickly,  cost-effectively or sufficiently to these developments. If the Company
is unable,  for  technical,  financial  or other  reasons,  to adapt in a timely
manner in response to changing  market  conditions or client  requirements,  the
Company's  business,  results of  operations  and financial  condition  would be
materially adversely affected.


                                       14
<PAGE>

INTERNET INFRASTRUCTURE IS VULNERABLE

         The  Company   currently   operates  servers  and  maintains   Internet
connectivity  from many of its  offices.  Although  the Company has  implemented
network security  measures,  such as limiting physical and network access to its
routers,  the Company's Internet  infrastructure could be vulnerable to computer
viruses, break-ins and similar disruptive problems.  Computer viruses, break-ins
or other security  problems could lead to  interruption,  delays or cessation in
service to the Company's Internet customers.  Further,  inappropriate use of the
Internet  could  also  potentially   jeopardize  the  security  of  confidential
information stored in the computer systems of the Company's  customers and other
entities  connected to the Internet.  This may deter  customers and give rise to
potential liability to users whose security or privacy has been infringed.

COMPUTER SYSTEMS AND EQUIPMENT COULD FAIL

         The Company's  success  depends on its ability to deliver high quality,
uninterrupted  Internet  hosting.   Therefore,  it  must  protect  its  computer
equipment  and the  information  stored in its servers  against  damage by fire,
natural  disaster,  power  loss,   telecommunications   failures,   unauthorized
intrusion  and other  catastrophic  events.  Any damage or failure  that  causes
interruptions  in the Company's  operations could have a material adverse effect
on its business, results of operations and financial condition. In particular, a
failure at the Company's New York office, if prolonged,  could result in reduced
revenues,  loss of customers  and damage to its  reputation.  The Company has an
aggressive  and stable back-up plan that  encompasses  daily full backups of all
server  platforms-both  inter-company  and  hosting  devices.  The  Company  has
contracted  an  off-site  storage  vendor to store  the  backup  off-site  in an
elements-proof  storage  facility  outside the New York City area. This rotation
occurs on a weekly  basis.  The  Company has the ability to retrieve at any time
the data back onsite if a need to do so should ever arise.  This  facility  also
provides  multiple  network  environments  if ever the need arose to duplicate a
server at their location due to the inability to do so at the Company's  offices
due to circumstances  such as fire,  flood, etc. The automated backup process is
accessible by only the most senior members of the Company's corporate technology
services department. Any of these events could have a material adverse effect on
business,  results of operations and financial  condition.  Although the Company
carries  property and business  interruption  insurance to cover its operations,
the coverage may not be adequate to compensate the losses that may occur.

FIXED-PRICE CONTRACTS INVOLVE FINANCIAL RISK

         The  Company  generates  most  of  its  project  revenues  on  a  fixed
fee-for-service basis. The Company assumes greater financial risk on fixed-price
type contracts than on either  time-and-material or cost reimbursable contracts.
Failure  to  document  the  project  properly,  anticipate  technical  problems,
estimate costs  accurately or control costs during  performance of a fixed-price
contract  may  reduce  the  Company's  profit or cause a loss.  However,  if the
Company does not  accurately  anticipate the progress of a number of significant
revenue-generating  projects,  business,  results of  operations  and  financial
condition could be materially adversely affected.


                                       15
<PAGE>

THE COMPANY MAY HAVE CONFLICTS OF INTEREST

         Conflicts of interest are inherent in certain segments of the marketing
communications  industry,  particularly in  advertising.  The Company has in the
past and will in the future be unable to pursue potential  advertising and other
opportunities  because  such  opportunities  will require the Company to provide
services to direct  competitors of existing  clients.  In addition,  the Company
risks alienating or straining  relationships with existing clients each time the
Company agrees to provide services to indirect  competitors of existing clients.
Conflicts of interest may  jeopardize  the stability of revenues  generated from
existing  clients and  preclude  access to business  prospects,  either of which
developments  could have a material  adverse  effect on the Company's  business,
results of operations and financial condition.

THE COMPANY MAY BE SUBJECT TO LEGAL LIABILITY TO ITS CLIENTS

         Many of the Company's consulting  engagements involves the development,
implementation  and  maintenance  of  applications  that  are  critical  to  the
operations of its clients'  businesses.  The  Company's  failure or inability to
meet a client's expectations could injure its business reputation or result in a
claim  for  substantial  damages  against  the  Company,  whether  or  not it is
responsible for such failure.  The Company attempts to limit  contractually  its
damages arising from negligent acts, errors,  mistakes or omissions in rendering
its services.  These contractual protections may not, however, be enforceable in
all instances and may not otherwise fully protect the Company from liability for
damages.  The Company maintains general liability insurance coverage,  including
coverage for errors and omissions.  Nevertheless, this coverage may not continue
to be  available  on  reasonable  terms  and may  not be  available  in  amounts
sufficient  to cover one or more large  claims.  In  addition,  the  insurer may
disclaim  coverage as to any future claim.  The Company's  business,  results of
operations and financial  condition may be materially  adversely affected if one
or more large claims are asserted against the Company that are uninsured, exceed
available  insurance  coverage or result in changes to the  Company's  insurance
policies, including premium increases.

LOSS OF KEY MANAGEMENT PERSONNEL COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS

         The Company's  operations depend on the continued efforts of its senior
management,  including Ronald Bloom, the Company's  chairman and chief executive
officer.  Mr.  Bloom  performs  significant  new  business,  sales  and  product
development functions. The loss of the services of any of the Company's officers
could be  detrimental  to the Company.  Mr. Bloom and certain  other  members of
senior  management  have entered into  employment  agreements  with the Company.
Several  of  these  agreements  contain  noncompete  provisions  that may not be
enforceable in certain states.

         Qualified  employees  are in great  demand  and are  likely to remain a
limited  resource for the foreseeable  future.  Competition for skilled creative
and technical talent is intense. The Company may not be successful in attracting
and retaining such  personnel.  In addition,  the Company's  ability to generate
revenues  relates directly to the number and expertise of the personnel that are
available to work on its projects. Any failure by the Company to retain existing
employees or to hire new employees when necessary could have a material  adverse
effect upon its business, results of operations and financial condition.


                                       16
<PAGE>

IMPACT OF THE YEAR 2000

         During calendar 1999 the Company has been, and continues to be, engaged
in efforts to  identify  and  remediate  its  exposure to the impact of the year
("Y2K") on its  computer  hardware and  software  systems.  The Y2K issue is the
result of computer programs being written using two digits, rather than four, to
define the applicable year. Any of the Company's computer programs that have two
digit date sensitive  software may encounter system failures or  miscalculations
if date entry of "00" is  recognized  as the year 1900  rather  than  2000.  The
failure of the Company's  critical  computer  systems to properly  recognize the
year 2000 could result in the interruption of the Company's  operations and have
material  adverse  affects on the  Company's  financial  position and results of
operations.

         The Company has studied the importance to its operations of its various
hardware and software  systems,  and is giving  priority to the  remediation  of
those systems that have been deemed critical. Currently, Company personnel, with
the  assistance of  consultants  from  AnswerThink,  are reviewing the Company's
critical  hardware and software  systems to identify  those with  potential  Y2K
issues and develop  remediation  plans.  In general,  the Company's  systems for
processing  its  accounting  data,  and for hosting the  Internet  functions  of
clients, are the systems likely to contain Y2K issues, while the Company's other
software and hardware systems,  because of the relative newness, are already Y2K
compliant.  To date the Company's  expenditures for the study and remediation of
its Y2K issues,  which,  except of the costs for the purchase of new software or
the purchase or lease of new hardware, are being expensed as incurred,  have not
been material.

         In some  instances  the  remediation  of a  system's  Y2K issue will be
accomplished  by the  correction  of code  within  the  software.  This  will be
performed by the Company's personnel with the assistance of the consultants from
AnswerThink.  In other instances, the nature or degree of the Y2K non-compliance
within a system will require the replacement of the hardware or software.

         The Company's initial Y2K remediation plan was revised when the Company
reached the agreement for the proposed Merger with AnswerThink. This is because,
if the Merger is completed,  many of the Company's systems which may contain Y2K
issues  would be replaced by software  and hardware  systems  currently  used by
AnswerThink  which are more  advanced  than that of the  Company's and which are
already Y2K compliant. Accordingly, the Company's revised Y2K plan calls for the
remediation  of many of its Y2K issues  through the  conversion  to  AnswerThink
systems prior to January 1, 2000, and the Company believes that if the Merger is
approved on the schedule  currently  contemplated  that such  conversion  can be
completed without material expenditures  (including revenues lost due to the use
of Company and AnswerThink personnel for this internal project) prior to January
1, 2000.

         In the event the proposed Merger with AnswerThink is not approved,  the
Company will engage  AnswerThink on a consulting basis to complete the study and
remediation  of the Company's  software and hardware  systems.  AnswerThink  has
expertise in this area,  and the Company  believes  that the  remediation  of it
critical  systems could be completed by January 1, 2000.  The Company  currently
estimates  that the cost of  engaging  AnswerThink  for  this  purpose,  and for
purchasing  any required  software or hardware,  would  approximate  $500,000 to
$1,000,000.

         As a part of its Y2K project the Company has also been  addressing  the
Y2K  readiness  of  vendors  and other  third  parties  deemed  critical  to its
operations.  The Company has been, and continues to, inquire of and receive from
these vendors  information on their Y2K compliance.  These efforts will continue
into the fourth quarter of calender 1999. To date the Company has not identified
any critical vendor or third party that presents a material Y2K readiness issue.
If a critical  vendor or third  party is found to not be Y2K ready,  the Company
will seek to convert to the use of an  alternative  vendor.  In that regard,  in
many  instances  the  Company,  assuming  the  completion  of  the  Merger  with
AnswerThink,  might  convert to a vendor or third  party with which  AnswerThink
already has a relationship.

         The Company is also in the process of developing  contingency plans for
Y2K issues that are not  successfully  identified  and remediated by the efforts
described above. Those contingency plans have not yet been fully developed.

         The Company  believes that it will be able to successfully  address all
critical Y2K issues by January 1, 2000.  However there can be no assurance  that
all Y2K issues  will be  resolved  by that date,  and the  Company's  failure to
successfully identify and remediate all Y2K issues by January 1, 2000 could lead
to an interruption  of its operations and have a material  adverse effect on its
financial position and results of operations.

                                       17

<PAGE>


THE MARKET PRICE OF THE COMPANY'S COMMON STOCK MAY BE HIGHLY VOLATILE

         The  trading  price  of the  Company's  Common  Stock  has  been and is
expected to continue to be subject to extreme fluctuations. This may result from
business-related issues such as:

     o    quarterly variations in operating results;

     o    the timing of commencement or completion of client projects;

     o    reductions   or  increases  in  client   spending  on  marketing   and
          communication services;

     o    announcements of new services or business  acquisitions by the Company
          or its competitors; or

     o    the gain or loss of client accounts.

         This may also result from stock market-related influences, such as:

     o    changes in estimates of securities analysts;

     o    the  presence  or absence of  short-selling  of the  Company's  common
          stock; and

     o    events   affecting  other  companies  that  the  market  deems  to  be
          comparable to the Company.

         In addition, the stock market has from time to time experienced extreme
price and volume  fluctuations that have particularly  affected the market price
of many  technology-oriented  companies  and that often have been  unrelated  or
disproportionate  to the operating  performance of these companies.  These broad
market  fluctuations  may  adversely  affect the market  price of the  Company's
common stock. As a result,  the trading price of the Company's  common stock may
not remain at or near its current level.

FUTURE  SALES OF COMMON  STOCK COULD DILUTE THE  OUTSTANDING  COMMON  SHARES AND
THEREBY CAUSE THE COMPANY'S STOCK TO DECLINE

         Existing  stockholders can sell outstanding  shares of Common Stock and
shares that may be issued on exercise of outstanding  options and warrants under
Rule 144 of the  Securities  Act of 1993,  as amended or through the exercise of
outstanding registration rights. These sales, or the perception that these sales
could  occur,  could  have an adverse  effect on the price of the Common  Stock.
Shares of Common Stock will be eligible for sale in the public market under Rule
144 based on the  Company's  obligation  to make  certain  earnout  payments  in
connection with previous  acquisitions or financings or with the acceleration of
earnout  payments  pursuant  to the Merger  Agreement  between  the  Company and
AnswerThink.


                                       18
<PAGE>

ANTI-TAKEOVER PROVISIONS COULD MAKE A THIRD-PARTY ACQUISITION DIFFICULT

         The Company's  certificate of incorporation  authorizes the issuance of
up to 5,000,000  shares of preferred  stock with such rights and  preferences as
may be determined  from time to time by the Company's  Board.  Accordingly,  the
Board  may  issue  shares  of  preferred   stock  with  dividend,   liquidation,
conversion,  and voting or other rights without stockholder approval. This could
adversely  affect  the  voting  power or other  rights of the  holders of Common
Stock.  Although  the Company does not  currently  intend to issue any shares of
preferred stock, the Company may do so in the future.

         In addition,  the Company's  certificate  of  incorporation  and bylaws
contain provisions that may discourage certain transactions  involving actual or
threatened change in control of the Company.  The bylaws prescribe the manner in
which  stockholder  proposals may be presented for  consideration at meetings of
stockholders.  The  Company  is also  subject to a  Delaware  statute  regarding
business  combinations.  Notwithstanding  the  Merger  Agreement,  any of  these
provisions may make it more difficult, or discourage an acquisition or change in
control of the Company.

THE COMPANY DOES NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE

         The Company has not paid any  dividends  on its common  stock since its
incorporation. The Company anticipates that, for the foreseeable future, working
capital and earnings, if any, will be retained for use in the Company's business
operations and in the expansion of its business.

RISKS RELATING TO THE ANSWERTHINK MERGER

         The  Company  expects to close the Merger with  AnswerThink  during the
last quarter of calendar 1999.  The closing is subject to conditions,  including
customary  regulatory  approvals and approval by the Company's  stockholders and
AnswerThink's  stockholders.  There  are  numerous  risks  associated  with  the
AnswerThink  transaction.

THE VALUE OF THE ANSWERTHINK  COMMON STOCK THAT THE COMPANY'S  STOCKHOLDERS WILL
RECEIVE IN THE MERGER  COULD BE  REDUCED IF THE MARKET  VALUE OF  ANSWERTHINKS'S
COMMON STOCK DECREASES.

         When the  Company  completes  the Merger,  each share of the  Company's
Common Stock will be exchanged for 0.70 of a share of AnswerThink  Common Stock.
This  exchange  ratio is fixed and will not be adjusted  if the market  price of
AnswerThink's Common Stock changes. Before the Merger's closing, if the price of
AnswerThink  Common  Stock price  decreases,  the  Company's  stockholders  will
receive less value for their  shares of Common  Stock that are  exchanged in the
Merger.  Also,  the Company is not  permitted to abandon the Merger or resolicit
the Company's  stockholders'  approval  solely  because of changes in the market
price  of  AnswerThink  Common  Stock.   Accordingly,   the  specific  value  of
AnswerThink  Common  Stock the  Company's  stockholders  will  receive  upon the
Merger's completion may decrease.

THE COMPANY MAY NOT REALIZE THE MERGER'S POTENTIAL BENEFITS

         The Company entered into the Merger Agreement with AnswerThink with the
expectation  that the Merger will result in benefits and potential cost savings.
The Company can achieve these  benefits and


                                       19
<PAGE>

savings only if it can integrate its technology, operations and personnel timely
and  efficiently.  If the Company fails to do this, it may lose customers or key
employees.  This  integration  could  also  divert  the  Company's  management's
attention from operations.  Among the challenges involved in this integration is
demonstrating to customers that the merger will not result in adverse changes in
client  service  standards  or business  focus,  and  persuading  the  Company's
personnel that its business cultures are compatible. The Company may not be able
to integrate successfully with AnswerThink and may not be able to realize any of
the Merger's  anticipated  benefits or cost savings.  The failure to do so could
impair AnswerThink's finances and business prospects after the Merger.

THE COMPANY'S  EXECUTIVE  OFFICERS AND DIRECTORS HAVE  DIFFERENT  INTERESTS FROM
SHAREHOLDERS IN CONNECTION WITH THE MERGER

         The Company's  directors and executive  officers have  interests in the
Merger and participate in certain  arrangements  that are different from, or are
in addition to, those of the  Company's  stockholders  generally.  These include
continuing indemnification against certain liabilities.  Also, Ronald Bloom, the
Chairman and Chief Executive  Officer of the Company,  will become a director of
AnswerThink if the Merger  closes.  As a result,  these  directors and executive
officers  could be more likely to vote to approve the Merger  Agreement  and the
Merger than if they did not hold these interests.

THE COMPANY MAY LOSE RIGHTS UNDER  CONTRACTS  WITH THIRD  PARTIES IF IT DOES NOT
OBTAIN CONSENTS AND WAIVERS

         The  Company  has  contracts  with  many of its  suppliers,  customers,
licensors,   licensees,  and  other  business  partners.  Under  some  of  these
contracts,  the Company has to obtain the consent,  waiver, or approval of these
other parties in connection with the Merger Agreement.  If the Company cannot do
so, the Company and AnswerThink may lose the right to use intellectual  property
or other rights that are necessary for the  operation of Company  business.  The
Company  has  agreed  to use all  reasonable  efforts  to secure  the  necessary
consents, waivers and approvals.  However, the Company may not be able to obtain
all of the necessary consents,  waivers, and approvals. The Company's failure to
do so could impair AnswerThink's finances and business prospects.

FAILURE TO COMPLETE THE MERGER

         If the Company does not  complete the Merger,  in addition to the risks
referred to above, the Company may be subject to the following:

     o    the Company may be required to pay  AnswerThink a  termination  fee of
          either $6,000,000 or $3,000,000, depending on the circumstances;

     o    an option the Company  granted to  AnswerThink  to purchase  2,008,288
          shares Common Stock for $18.50 per share may become exercisable; and

     o    the market  price of the  Company's  Common  Stock may  decline to the
          extent that its current market price reflects a market assumption that
          the Merger will be completed.


                                       20
<PAGE>

Also, the public  announcement  of the Company's  failure to complete the Merger
could have an adverse effect on:

     o    Company sales and operating results;

     o    the Company's ability to attract and retain key management, marketing,
          and technical personnel; and

     o    progress of certain development projects.

Additionally, the Company will have to pay the costs related to the Merger, such
as legal,  accounting,  and financial advisor fees, even if the Company does not
close the Merger.

         If the Merger is not consummated and the Company's Board  determines to
seek another merger or business combination, the Company may not be able to find
a partner willing to pay an equivalent or more attractive  price than the merger
consideration.  In addition, while the Merger Agreement is in effect and subject
to exceptions, the Company is prohibited from soliciting,  initiating, knowingly
encouraging,  or entering into extraordinary transactions such as a merger, sale
of assets, or other business  combination with any party other than AnswerThink.
Furthermore, if the Merger Agreement is terminated and AnswerThink exercises its
option to  purchase  shares  of Common  Stock,  the  Company  may not be able to
account for future transactions as a "pooling of interests." Consequently,  this
inability to obtain pooling of interests  accounting  treatment  could adversely
affect the Company's ability to enter into other transactions.

FORWARD-LOOKING STATEMENTS

         "Management's  Discussion  and  Analysis  of  Financial  Condition  and
Results  of  Operations"   contains  statements  about  activities,   events  or
developments  which the Company expects or anticipates will occur in the future,
including  without  limitation,  business  strategies,  industry trends,  market
potential, acquisitions of assets and businesses, and financial performance.

         The Company also uses the words  "intend to,"  "anticipate,"  "expect,"
and similar  expressions to identify those types of forward-looking  statements.
These  statements are based on certain  assumptions and analyses the Company has
made in light of its  perception  of  historical  trends,  current  business and
economic  conditions and expected future  developments as well as other factors.
However, whether actual results and developments will conform with the Company's
expectations  and predictions is subject to a number of risks and  uncertainties
beyond the Company's  control,  including without  limitation,  the risk factors
discussed in this Form 10-KSB, general economic,  market or business conditions,
changes in the laws or regulations and business opportunities,  or lack thereof,
that  may be  presented  to the  Company.  Additionally,  although  the  Company
believes  that it is  likely  that the  Merger  will be  completed  on the terms
contained in the Merger  Agreement,  the future strategies of the two companies,
operating on a combined  basis,  may differ from the  strategies the Company had
been  pursuing  and which the Company  would  pursue if it  continued to operate
alone. In that regard,  all discussions of the Company's  strategies,  and other
forward-looking  discussions  in the  sections  that  follow,  are  based on the
continued operation of the Company alone (that is, without the completion of the
proposed Merger with AnswerThink) unless otherwise indicated.


                                       21
<PAGE>

         Consequently,  the Company  cannot  assure  that the actual  results or
developments  the Company  anticipates will be realized or, even if subsequently
realized, that they will have the expected consequences or effects.

ITEM 2. DESCRIPTION OF PROPERTY

         The Company's  executive and administrative  offices are located in New
York, New York. The Company also maintains offices in Los Angeles, San Francisco
and Torrance  California;  Atlanta,  Georgia;  Boston,  Massachusetts;  Seattle,
Washington; London, United Kingdom and Sofia, Bulgaria.

         The New York facilities consist of approximately  20,000 square feet on
two  floors in  midtown  Manhattan.  The office  space is  currently  leased for
$290,000 per annum from October 1, 1996 to September  2001.  The rent on the New
York  facilities  will  increase to $310,000  per annum from  October 1, 2001 to
September 30, 2006.

         The Los Angeles,  California facility consists of approximately  15,500
square feet of space.  The lease is for a term of ten years ending May 31, 2007.
The rent for the first three years of the lease is  approximately  $370,000  per
annum. The rent for the following three years is approximately  $409,000 and the
rent for the remainder of the lease is approximately $460,000 per annum.

         The Georgia facility  consists of  approximately  14,000 square feet of
space located in Atlanta. The Company leased this space for a term of five years
ending May 15, 2002. The rent for the lease term is  approximately  $108,000 per
annum.

         The Massachusetts facility consists of approximately 17,500 square feet
of space located in Boston.  The lease expires October 1, 2003. The rent for the
first year of the lease is  approximately  $639,000 per annum and will  increase
$17,500 for each year thereafter.

         The Washington facility consists of approximately 21,298 square feet of
space located in Seattle.  The lease  expires on May 20, 2009.  The rent for the
lease term is approximately $543,000 per annum.

         The San Francisco, California facility consists of approximately 14,520
square feet of space. The lease expires on June 30, 2004. The rent for the lease
term is approximately $324,000 per annum.

         The Torrance,  California  facility  consists of  approximately  15,900
square feet of space,  which is leased through August 31, 2004. The rent for the
lease term is approximately $351,500 per annum.

         The London  facility  consists of  approximately  3,400  square feet of
space, which is leased through March 31, 2000 at the rate of $44,000 per annum.

         The Sofia, Bulgaria facility consists of approximately 450 square feet.
The rent for the lease term is approximately $3,600 per annum.

         The Company believes that its existing  facilities are adequate to meet
its current operating needs and that suitable additional space will be available
to the Company on favorable terms should the Company require additional space to
accommodate future operations or expansion.  Further,  in the event


                                       22
<PAGE>

that any one of the foregoing  leases is not renewed,  the Company believes that
it would be able to obtain  suitable  alternative  space on terms  comparable to
those currently afforded to the Company.

         The  Company  owns no real estate and does not intend to invest in real
estate or interests in real estate,  real estate  mortgages,  or  securities  of
interest  in  persons  primarily  engaged  in  real  estate  activities  for the
foreseeable future.


ITEM 3. LEGAL PROCEEDINGS

         On  September  25,  1998,  Michael R.  Farrell,  a  shareholder  of the
Company,  filed a putative class action suit, styled Farrell v. Think New Ideas,
Inc., Scott Mednick,  Melvin Epstein and Ronald Bloom, No. 98 Civ. 6809, against
the Company, Ronald Bloom (an officer of the Company),  Melvin Epstein and Scott
Mednick (both former  officers of the Company) (the  "Farrell  complaint").  The
suit was filed in the United States District Court for the Southern  District of
New York on behalf of all persons who purchased or otherwise  acquired shares of
the  Company's  common stock in the class period from  November 14, 1997 through
September 21, 1998.

         On various dates in October, 1998, six additional putative class action
suits were filed in the same court  against  the same  parties by six  different
individuals,  each  purporting  to represent a class of  purchasers of Think New
Ideas, Inc., common stock. These subsequent suits claimed  substantially similar
class periods (one alleged a class period  starting on November 5, 1997,  rather
than  November  14,  1997) and made  similar  allegations  as those  made in the
Farrell  complaint.  All seven of these lawsuits were ultimately  transferred to
Judge  Sidney H.  Stein of the United  States  District  Court for the  Southern
District of New York and  consolidated  by order of the Court dated December 15,
1998,  into one  action  styled  In Re:  Think  New  Ideas,  Inc.,  Consolidated
Securities Litigation, No. 98 Civ. 6809 (SHS).

         Pursuant to an order of the Court,  the plaintiffs filed a Consolidated
and Amended  Class  Action  Complaint  on February  10, 1999 (the  "consolidated
complaint").  The consolidated  complaint supersedes all prior complaints in all
of the cases and shall  serve as the  operative  complaint  in the  consolidated
class action. The consolidated  complaint names fourteen  individual  plaintiffs
and purports to be filed on behalf of a class of individuals who purchased Think
New Ideas, Inc., common stock from November 5, 1997, through September 21, 1998.
The  consolidated  complaint  makes  substantially  similar  allegations  as the
Farrell  complaint.  Like the  Farrell  complaint,  the  consolidated  complaint
alleges  that the Company and  certain of its  current and former  officers  and
directors  disseminated  materially false and misleading  information  about the
Company's  financial  position and results of operations  through certain public
statements and in certain documents filed by the company with the Securities and
Exchange  Commission  ("SEC").  The consolidated  complaint further alleges that
these  statements and documents  caused the market price of the Company's Common
Stock to be  artificially  inflated.  The  plaintiffs  further  allege that they
purchased  shares of  common  stock at such  artificially  inflated  prices  and
suffered damages as a result. The relief sought in the consolidated complaint is
unspecified, but includes a plea for compensatory damages and interest, punitive
damages where  appropriate,  reasonable  costs and expenses  associated with the
action  (including  attorneys'  fees and experts' fees) and such other relief as
the court deems just and proper.


                                       23
<PAGE>

         Management  believes that the Company has  meritorious  defenses to the
consolidated  complaint  and intends to contest it  vigorously.  The Company has
filed a motion to dismiss the consolidated  complaint on a number of grounds and
the plaintiffs have opposed the motion.  The motion is currently  pending before
the court and the court has not yet  determined  whether oral  arguments will be
heard.  Although  there can be no assurance as to the outcome of these  matters,
unfavorable  resolution  could have a material  adverse effect on the results of
operations and/or financial condition of the Company in the future.

Additionally,  in the  normal  course of  business,  the  Company  is subject to
certain other claims and  litigation,  which the Company is of the opinion that,
based on  information  presently  available,  such legal matters will not have a
material  adverse  effect on the financial  position or results of operations of
the Company.

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

         There were no matters  submitted to the stockholders of the Company for
consideration during the fourth quarter of the fiscal year ended June 30, 1999.





                                       24

<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                          MARKET PRICE OF COMMON STOCK

         The Common Stock commenced  quotation on Nasdaq under the symbol "THNK"
on November 26, 1996 upon consummation of the Initial Public Offering.  Prior to
that date,  there was no public market for the Common Stock. The following table
sets forth, for the periods indicated the high and low transaction prices of the
Common Stock as quoted by Nasdaq.


<TABLE>
<CAPTION>
                                                      High            Low
                                                    ------------------------
<S>           <C>                                   <C>             <C>
First Quarter 1998                                  $10.8750        $4.0625
Second Quarter 1998                                  13.0000         7.2500
Third Quarter 1998                                   17.9375         7.6250
Fourth Quarter 1998                                  39.2500         17.000
First Quarter 1999                                   33.2500         5.6250
Second Quarter 1999                                  16.1250         3.0000
Third Quarter 1999                                   18.7500         6.1250
Fourth Quarter 1999                                  17.4375         9.6250
First Quarter 2000 (through September 9, 1999)       16.3750         8.8750
</TABLE>

         As of  September  9, 1999,  there were 180  holders of record of Common
Stock based upon information  furnished by Continental  Stock Transfer and Trust
Company,  New York, New York,  the transfer agent for the Company's  securities.
The Company believes,  based upon security  positions  listings,  that there are
more than 400  beneficial  owners of the Common  Stock.  The sales  price of the
Common  Stock as reported by Nasdaq on  September  9, 1999 was $10 13/16.  As of
September 9, 1999, there were 10,105,327 shares of Common Stock outstanding.

         The  Company  has never  paid and does not  anticipate  paying any cash
dividends on its Common Stock in the foreseeable  future. The Company intends to
retain all  earnings for use in the  Company's  business  operations  and in the
expansion of its business.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         The following  discussion  and analysis of the  Company's  consolidated
financial condition and results of operations should be read in conjunction with
the  Company's  Consolidated  Financial  Statements  and Notes thereto in Item 7
hereof. This section and other parts hereof contain  forward-looking  statements
that involve risks and  uncertainties.  The Company's  actual results may differ


                                       25
<PAGE>

significantly  from the results  discussed  in the  forward-looking  statements.
Factors  that might  cause such a  difference  include,  but are not limited to,
those discussed in the section entitled "Factors Affecting Operating Results and
Market Price of Stock" commencing on page 10.

OVERVIEW

         The Company was  incorporated in January 1996 and commenced  operations
in June 1996 upon  completion  of its  acquisitions  of Internet  One,  Creative
Resources, Mednick Group, Goodman Group, On Ramp and NetCube (previously defined
as the "Founding  Companies").  In fiscal 1997, the Company acquired Fathom.  In
fiscal 1998, the Company acquired BBG, Herring/Newman,  Interweb and UbiCube and
in fiscal  1999,  the Company  acquired  Envision.  See Note 2 to the  Company's
Consolidated Financial Statements.

         The combination of the Mednick Group, the Goodman Group,  Internet One,
Creative  Resources and NetCube was accounted for using the pooling of interests
method of accounting.  Accordingly, the Consolidated Financial Statements of the
Company have been prepared as if each of the foregoing  entities had been a part
of the Company since the respective dates of each such entity's  inception.  The
Company's  acquisitions  of On  Ramp,  Fathom,  BBG,  Herring/Newman,  Interweb,
UbiCube and Envision were accounted for using the purchase method of accounting.
Accordingly,  the  results  of  operations  of each of the  foregoing  have been
included in the  Consolidated  Financial  Statements  of the  Company  since the
respective date of each such  acquisition.  As a result of these purchase method
acquisitions,  the Company's  financial  statements may lack  comparability from
period to period.

         On June 24, 1999,  the Company  entered into the Merger  Agreement with
AnswerThink.  Pursuant to the Merger  Agreement,  a  wholly-owned  subsidiary of
AnswerThink  ("Sub")  will merge with and into the  Company.  The  Company  will
survive the Merger and become a wholly  owned  subsidiary  of  AnswerThink.  The
Merger is subject to certain conditions,  including shareholder approval of both
companies.  The  completion of the proposed  Merger is likely to have a material
effect on the Company's  financial position and results of operations,  in that,
among other things,  the Company  would operate as a subsidiary of  AnswerThink,
and,  as the  Merger  will be  accounted  for as a  pooling  of  interests,  the
Company's  historical  results of  operations  would be  combined  with those of
AnswerThink  as if the  companies  had  always  operated  on a  combined  basis.
Additionally,  the  future  strategies  of the  two  companies,  operating  on a
combined  basis,  may differ from the  strategies the Company has been pursuing,
and which the Company  would pursue if it continued  to operate  alone.  In that
regard, all discussions of the Company's  strategies,  and other forward-looking
discussions,  in the sections that follow, are based on the continued  operation
of the Company alone (that is,  without the  completion  of the proposed  Merger
with  AnswerThink)  unless  otherwise  indicated.   See  "Proposed  Merger  with
AnswerThink."

         The  Company  provides   integrated   marketing,   communications   and
technology  solutions  enabling  clients  to  utilize  the  Internet  and  other
interactive  technologies  to enhance their  competitive  position.  The Company
focuses  on  identifying   opportunities  for  companies  to  restructure  their
marketing  and  distribution  strategies  around  interactive  technologies  and
implementing  creative  solutions to deliver  their  messages  with the greatest
impact.  The Company's  solutions  incorporate  various  technologies  including
customized  interactive  applications,   e-commerce  and  e-catalog  technology,
consumer modeling and response technology and database development.  The Company
integrates  its core expertise  through a standardized  process that begins with
strategic  planning and  consulting  and


                                       26
<PAGE>

continues through implementation and post-implementation review and maintenance.
The  Company's  solutions  are intended to help clients  determine and implement
their business strategies,  build brand awareness,  and effectively  communicate
information to their internal and external constituents.

         The Company  approaches each client  engagement  utilizing its standard
proprietary methodology,  the THINK Vision Process.  Utilizing this process, the
Company thoroughly researches a client's business to determine the effectiveness
of existing  communications  programs and how such  programs may be improved and
integrated into an interactive  strategy that is intended to help clients gain a
competitive  advantage  in a  changing  business  landscape.  See Part I, Item 1
"Description of Business."

         The Company has  historically  generated  revenue from both traditional
marketing and  interactive  media services  including Web site  development  and
hosting,  corporate  internal  communications  solutions,   database  marketing,
corporate  identity and product  branding and packaging,  advertising  and media
placement  services,  and interface solutions that provide high-speed access via
the Internet to off-line  databases.  Although the Company derives revenues from
both  traditional  marketing and interactive  media services,  management of the
Company  assesses  the  performance  of  the  internal  organization  and  makes
operational  decisions on the Company as one integrated client service business.
Revenues  from both these  services  have been  derived on a  project-by-project
basis,  which tends to cause fluctuations in revenues between reporting periods.
Substantial  portions of those revenues have been from  fixed-fee  contracts for
services to be delivered.  It is anticipated  that project revenue will continue
to be a  significant  component  of total  revenues  and  therefore  revenue may
continue to fluctuate significantly from period to period.

         The Company  generally  provides  Web site design and  development  and
traditional marketing services under contracts that vary in duration from two to
four weeks in the case of smaller  projects and up to five months in the case of
larger  projects.  Revenues from  contracted  services are generally  recognized
using the percentage of completion method based upon the ratio of costs incurred
to total estimated costs of the project. Revenues from hosting,  maintenance and
updates are recognized as the services are provided.

         The Company's strategy is to concentrate its future on the expansion of
its interactive  marketing services and, as a result,  revenues from traditional
advertising  services are  anticipated to decrease in  importance.  As a part of
this strategy the Company decided,  in April 1998, to dispose of its traditional
graphic  design  departments,  and in the  fourth  quarter  of 1998  recorded  a
restructuring  charge of $921,000 for the costs  associated  with that disposal.
Revenues and  operating  losses  generated  from the graphic  design and digital
output businesses located in Atlanta, Los Angeles and Boston are included in the
results  of  operations  for  fiscal  1998.  The  disposal  of these  operations
eliminated  the revenues and expenses from fiscal 1999, and the absence of these
operations from the fiscal 1999 results of operations  affects the comparability
of fiscal 1998 and 1999.

         Part of the  Company's  overall  business  strategy  is to  continue to
increase the percentage of revenue that is recurring and to continue to increase
the  number  of  services  provided  to a  particular  client.  The  Company  is
implementing   this   strategy  by   increasing   its  overall   marketing   and
cross-marketing efforts.


                                       27
<PAGE>

         Another part of the Company's  business strategy is to grow through the
acquisition  and  integration  of  synergistically  compatible  businesses.  The
Company  believes  that there  will be a  consolidation  among  technology-based
marketing solution providers and that this consolidation will continue to create
opportunities for the Company to expand through acquisitions and joint ventures.
In  addition  to its  recent  acquisitions,  the  Company  continued  to  pursue
acquisition opportunities during fiscal 1999 and was in discussions with several
companies engaged in businesses that are complementary or supplementary to those
of the Company.  The  Company's  acquisition  strategy was to focus on acquiring
companies that could be integrated into the Company's  existing  infrastructure,
enabling  the  Company  to  acquire  access to  additional  product  or  service
offerings  and  experienced  management  that can  contribute  to  building  the
business in a profitable manner, and providing international expansion,  such as
that achieved in Europe through the UbiCube Acquisitions. The Company expects to
continue  its focus on growth  opportunities  through new  clients and  expanded
representation  of  existing  clients.  The  Company  will look to  continue  to
maximize the use of its resources by the divestiture of non-strategic businesses
and investment in those portions of the business offering the highest returns.

RESULTS OF OPERATIONS- YEARS ENDED JUNE 30, 1999 AND 1998

         REVENUES

         Consolidated  revenues were  $49,797,000 in fiscal 1999, an increase of
$7,153,000 or 17% from revenues of  $42,644,000  in fiscal 1998.  This growth in
the Company's revenues reflects  increased  revenues from interactive  marketing
and communication services,  offset by lower revenues from traditional marketing
and communication  services.  The decline in revenues from traditional marketing
and   communication   services  reflects  the  Company's  shift  in  focus  from
traditional marketing assignments to interactive marketing assignments.  For the
fiscal  year  ended  June 30,  1999,  revenue  from  interactive  marketing  and
communication  services increased 66% and revenue from traditional marketing and
communications services decreased 37%, compared with fiscal 1998.

         The Company  achieved the growth in interactive  services from both the
acquisitions of companies engaged in the interactive market, and the addition of
new clients and  competencies  at its  existing  offices.  Interactive  services
revenue increased  approximately  $14,691,000 for the fiscal year ended June 30,
1999, as compared with June 30, 1998. Assignments performed by BBG, Interweb and
UbiCube which were acquired in fiscal 1998,  and Envision  which was acquired in
fiscal 1999,  accounted for  approximately  $12,713,000  of the increase.  These
acquisitions  were completed in the second quarter (for BBG) fourth quarter (for
Interweb and UbiCube) of fiscal 1998 and in the third quarter (for  Envision) of
fiscal 1999.  The increase in  interactive  services  revenue from the Company's
internal growth from its existing offices was approximately $1,978,000. Revenues
from traditional marketing and communication  services declined by approximately
$7,539,000. That decline included $2,171,000 from the fiscal 1998 closure of the
Atlanta  graphic design  department.  Traditional  and marketing  communications
revenues were positively affected by the fiscal 1998 acquisition Herring/Newman,
which  increased  revenues in fiscal 1999 by  $3,518,000.  The  remaining  (net)
decline reflects the Company's  previously discussed shift away from traditional
services.


                                       28
<PAGE>

         OPERATING RESULTS

         The  operating  loss  of  $8,250,000  for  fiscal  1999,  represents  a
$19,162,000  decrease from the fiscal 1998  operating loss of  $27,412,000.  The
fiscal  1998   operating  loss  included   charges  of  $29,164,000   for  stock
compensation,  purchased  in-process  research and development and restructuring
initiatives.  Except for $180,000 of stock compensation charges, the fiscal 1999
results of operations did not include any similar charges.  However,  the fiscal
1999 operating loss reflects the effect of a $989,000  charge for the impairment
of capitalized software costs.

         Excluding  the  effect of such  charges  from  both 1999 and 1998,  the
operating loss of $7,081,000 for fiscal 1999,  reflects a $8,833,000 change from
an operating  profit of  $1,752,000  in fiscal  1998.  This change is due to the
$7,153,000 increase in consolidated revenues being more than offset by increases
in all other  components of operating  expenses  totaling  $15,986,000 in fiscal
1999.

         The increases in the Company's  operating  expenses  throughout  fiscal
1999 have been the result of the Company's growth strategy, which included plans
for growth  through  acquisitions,  and from the  addition  of new  services  to
clients.  To achieve  this latter  growth the Company has added  personnel  with
certain  specialized  competencies,  and to support  both the  acquisitions  and
internally   generated  growth,  the  Company  has  added  personnel  in  senior
management,  finance and administrative  positions as well as sales/new business
development   and   strategy/planning.   The  Company  has  also  increased  its
competencies in production,  creative and client service  departments to support
the shift towards  interactive  marketing  assignments.  As a result,  operating
expenses,  relative  to  revenues,  have  been at  levels  above  the  Company's
long-term goals.  The operating loss the Company  experienced in fiscal 1999 has
been due, in part, to these higher levels of expenses. Additionally, the Company
has  found  that as it,  and its  competitors,  seek  larger  and  more  complex
assignments,  the decision process of prospective  clients has lengthened.  This
has caused  revenue  growth from new clients to be more sporadic and slower than
management expected.  As a result,  projecting  short-term revenue and adjusting
operating expenses accordingly has been more difficult, leading to the operating
losses throughout fiscal 1999.

         SALARIES AND RELATED EXPENSES

         Salaries and related expenses consist primarily of wages and associated
payroll costs and benefits for all  employees,  including such costs for finance
and  administrative  personnel.  Salaries and related expenses  increased 71% or
$11,797,000 in fiscal 1999 to $28,522,000 from $16,725,000 for the corresponding
prior year period. The inclusion of the operations of BBG, Interweb, UbiCube and
Herring/Newman,  which were  acquired in fiscal 1998,  and  Envision,  which was
acquired  in  fiscal  1999  (collectively  the  "Acquisitions")   accounted  for
approximately  $9,410,000 of the overall increase in salaries and related costs.
The remaining $2,387,000  increase,  which includes the effect of the savings of
$631,000  from the fourth  quarter  fiscal 1998  closure of the Atlanta  graphic
design  department,  was  due  to  the  addition  of  personnel  in  the  client
development/services and finance and administration  functions,  consistent with
the growth strategy discussed above.


                                       29
<PAGE>

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling,  general  and  administrative  expenses  consist of  marketing
expenses,  technology  costs  (hardware and software  purchases and leasing) and
telecommunications   costs   for   Internet   access.   Selling,   general   and
administrative  expenses  also include  corporate  expenses  such as  insurance,
accounting and legal fees, temporary help,  management  information systems, and
employee benefits.  In addition,  selling,  general and administrative  expenses
include  direct  expenses  such as  contract  labor and  travel  and  production
expenses  associated with providing  services to clients.  Selling,  general and
administrative  expenses  increased 13% or $2,788,000 to  $24,128,000  in fiscal
1999 compared with  $21,340,000  for the  corresponding  prior year period.  The
Acquisitions caused selling,  general and administrative expenses to increase by
$5,961,000.  That  increase was offset by a decrease of  $3,173,000,  net of the
effect of increases in legal and accounting fees of $1,200,000,  in the expenses
of the Company's other  operations  compared to the prior year. The increases in
these expenses are related to additional legal and accounting  services required
to support the Company's expanded operations as well as legal fees caused by the
class action  litigation  filed  against the Company.  Also included in selling,
general and administrative expenses is a fourth quarter of fiscal 1999 charge of
approximately  $500,000 for the write-off of both an accounts  receivable and an
equity  securities  receivable from a client,  which the Company  concluded were
unrecoverable. The net decrease includes the $1,116,000 of expense eliminated by
the closure of the Atlanta  graphic  design  department  and other  decreases of
$2,057,000,  primarily the result from the decline in traditional  marketing and
communication assignments.

         DEPRECIATION AND AMORTIZATION

         Depreciation  and  amortization for the fiscal year ended June 30, 1999
increased  $1,402,000 to $4,229,000 as compared with  $2,827,000  for the fiscal
year ended June 30, 1998.  This  increase  primarily  relates to the  additional
fixed assets and goodwill associated with the Company's  acquisitions as well as
the  addition to goodwill  related to new shares of Common  Stock  issued to the
former stockholders of UbiCube for the achievement of certain revenue and profit
targets in the fourth quarter of fiscal 1999.

         IMPAIRMENT OF CAPITALIZED SOFTWARE

         Capitalized  software development costs consist principally of salaries
and certain  other  expenses  directly  related to the  development  of software
products  capitalized in accordance with the provision of Statement of Financial
Accounting  Standards  (SFAS)  No.  86,  "Accounting  for the Costs of  Computer
Software to be Sold,  Leased,  or Otherwise  Marketed."  Capitalization  of such
costs begins after the  determination  of the software  product's  technological
feasibility.  Capitalization ceases and amortization of capitalized costs begins
when the software  product is  available  for use.  The  amortization  period is
estimated  to equate the term during which  meaningful  revenue from the related
product is  expected to be  recognized.  The  Company  periodically  reviews the
impairment on long lived assets when  indicators  of impairment  are present and
the  undiscounted  cash flows estimated to be generated by those assets are less
than  the  assets'  carrying  amounts. As the result  of such review, during the

                                       30
<PAGE>

fourth  quarter of 1999,  the Company  recognized a non-cash  pre-tax  charge of
$989,000  related  to  the  write-off  to net  realizable  value  of  previously
capitalized software development costs. The capitalized software written off was
related  to the  software  acquired  in the  fourth  quarter  of 1998  with  the
Company's  acquisition  of Interweb.  The write-off  resulted from the Company's
downward  revision of its estimate of future  revenues  from the  software.  The
estimate of future revenues from the use of the software  declined as the result
of the departure  during the second half of fiscal 1999  of personnel key to the
original development and continued maintenance and upgrade of the software, as a
result of which the software  lost its  advantage  over other,  newly  developed
products available outside the Company.

         STOCK COMPENSATION EXPENSE

         In fiscal 1999, the Compensation  Committee of the Company approved the
grant of  options  to two  directors,  appointed  in  January  and  March  1999,
respectively,  each for the  purchase  of 20,000  shares  of Common  stock at an
exercise  price equal to the closing  price of the shares of Common Stock on the
date of grant. Upon the grant of these  non-employee stock options to directors,
the Company recognized $180,000 in stock compensation expense, equal to the fair
value of the options  granted based on the Black Scholes  option  pricing model.
The  options  vest one year  after the date of  grant,  are  exercisable  over a
four-year period and expire five years from the date of grant.

         In fiscal 1998, the Company  recorded a one-time  charge of $21,700,000
as the  result of the  release  to certain  stockholders  of the  Company of the
shares of Common Stock owned by such  stockholders,  which were placed in escrow
at the time of the Initial Public Offering (the "IPO Escrow"). These shares were
subject to release upon the attainment of any one of certain performance targets
by the  Company,  including  a market  price  target  of $20 per share for forty
consecutive  business  days,  which was achieved in the fourth quarter of fiscal
1998. See "Certain Relationships and Related Transactions."

         In the fourth quarter of fiscal 1998, the Company  reached a settlement
agreement, as amended, with Scott A. Mednick, the former Chief Executive Officer
and Chairman of the Board of Directors of the Company,  in  connection  with his
resignation from such positions. Pursuant to the terms of the amended agreement,
the Company  accelerated  the exercise dates of options to purchase up to 60,000
shares of Common Stock granted to Mr. Mednick. As a result, the Company recorded
a $1,400,000  non-cash charge for the difference  between the exercise price for
such  options  and the market  price of the  underlying  Common  Stock as of the
settlement.

         RESTRUCTURING COSTS

         In April  1998,  the  Company  formalized  a decision to dispose of its
traditional  graphic design  departments and in connection  therewith recorded a
restructuring charge of $921,000 for costs associated with that closure. As part
of the  restructuring  plan,  approximately  25 employees were terminated in the
fourth  quarter of fiscal 1998. The charge  included  $500,000 for severance and
other  related  personnel  costs,  $421,000  for  lease  liabilities  and  other
occupancy and  facilities-related  costs. Through June 30, 1998 the Company paid
approximately  $614,000 of the restructuring costs, and at June 30, 1998 accrued
costs of  approximately  $307,000  remained,  relating  principally to estimated
costs for the termination of equipment and facility leases. The leases were


                                       31
<PAGE>

settled and terminated in fiscal 1999,  with the  difference  between the amount
accrued at June 30, 1998 and the actual costs  incurred in fiscal 1999 not being
material.

         PURCHASED RESEARCH AND DEVELOPMENT EXPENSE

         In its fiscal 1998  acquisitions  of  Interweb  and UbiCube the Company
acquired,  among other things,  the research and development  being conducted by
those companies on the  development of certain  software  products.  Since these
research and development  projects were in process for products that had not yet
reached  technological  feasibility  and since  the  efforts,  except  for those
products,  would have no other alternative  future use, the Company was required
by generally accepted accounting  principles to charge a portion of the purchase
price,  representing the fair value of the research to date, to expense. On such
basis,  the Company  charged  $4,700,000 and $500,000 of the purchase  prices of
Interweb and UbiCube, respectively, to research and development expense.

         TAXES ON INCOME

         The Company  recorded  income tax provisions of $259,000 in fiscal 1999
and $340,000 in fiscal 1998.  The 1999 and 1998 income tax provision  represents
certain state income taxes.  Valuation  allowances of 100% have been established
for the  Company's  net federal and state  deferred  tax  assets,  which  result
principally  for net  operating  loss  carryforwards  which  have  not yet  been
reflected in the results of  operations.  The net operating  loss  carryforwards
differ   from   the   Company's   financial   reporting   losses   due   to  the
non-deductibility  of the 1999 charges for stock  compensation and impairment of
capitalized  software and the 1998 charges for stock  compensation and purchased
research and development.

         LIQUIDITY AND CAPITAL RESOURCES

         In 1998, the Company financed its operations,  the cash requirements of
its  acquisitions  and  an  overall  reduction  in  its  interest-bearing   debt
principally  through the cash  generated  by  operations.  In fiscal  1999,  the
Company  experienced  negative cash flows from  operations,  which together with
additions to property and equipment were financed  principally with the proceeds
of the issuance of Common Stock.

         Net cash used in operating  activities  of  $4,666,000  for fiscal 1999
reflects  the  net  loss  of  $8,308,000,   reduced  by  non-cash   charges  for
depreciation and amortization,  bad debt expense, stock compensation expense and
the charge for impairment of software  development costs aggregating  $6,756,000
and the absorption of cash of $3,114,000 by operating changes in working capital
assets and  liabilities.  Working  capital  changes that  absorbed cash were the
$14,920,000 increase in accounts receivable, the $1,843,000 decrease in accounts
payable and accrued  expenses and the $1,182,000  decrease in other  liabilities
(principally representing the 1999 payment of the restructuring costs accrued in
fiscal 1998).  These uses of cash were partially  offset by cash provided by the
$13,638,000 increase in media payables,  and the $1,500,000 decrease in unbilled
receivables  Media  payables  represent  media  placement  costs  paid to  media
providers by the Company on behalf of clients, which are rebilled to clients and
included in accounts  receivable.  The level of media  payables  and the related
accounts


                                       32
<PAGE>

receivable  will  vary  with the  timing of  client  media  campaigns.  Unbilled
accounts  receivable  will vary based on the  relationship of the billing dates,
verses the progress of the work,  in client  assignment  agreements.  Net of the
increase in media payables and the decrease in unbilled  receivables,  the level
of accounts receivable remained  essentially  unchanged (a decrease of $218,000)
at June 30, 1999 as compared to June 30, 1998.  At June 30, 1999 the Company had
net  working  capital  of  $8,456,000  compared  with  net  working  capital  of
$6,869,000 at June 30, 1998.

         The Company  expended  cash of $2,247,000  for investing  activities in
fiscal  1999.  That amount  included  $1,651,000  for  additions to property and
equipment.  Property and equipment  additions were principally for the expansion
into new  office  space  in the  Company's  Boston,  Seattle  and San  Francisco
locations.

         The Company financed its fiscal 1999 negative  operating cash flows and
investing  expenditures  principally  with  the  $7,596,000  obtained  from  the
issuance  of  shares  of its  Common  Stock,  which  included  net  proceeds  of
$5,940,000 from the sale of shares of Common Stock under the Securities Purchase
Agreement (See Note 9(f) to the Notes to  Consolidated  Financial  Statements of
the Company) and  $1,656,000  received  upon the exercise of stock  options.  In
addition to financing the Company's  negative operating cash flows and investing
activities,  those proceeds allowed the Company to service its debt and increase
its cash balance by $288,000 to $7,791,000 at June 30, 1999.

         The Company's  operations  generated cash flows of $9,899,000 in fiscal
1998 due  principally  to the  inclusion in net loss of the non-cash  charges of
$23,043,000  for stock  compensation  and $5,200,000 for purchased  research and
development,  together with the increase in media payables of $6,959,000.  Media
payables  increased  at June  30,  1998  due to the  timing  and  level of media
placements.

         In fiscal 1998 the  Company's  investing  activities  utilized  cash of
$4,938,000  including  $3,442,000  used  to  finance  portions  of the  BBG  and
Herring/Newman  acquisitions  and $2,818,000  expended on equipment and software
development.

         Financing  activities in 1998 utilized cash of $908,000  principally to
reduce bank and related party debt by an aggregate of $1,518,000 and pay capital
lease installments of $455,000, partially funded by $1,065,000 received upon the
exercise of stock options.

         On April 24, 1998,  the Company  established  a line of credit with the
Bank of New York  ("BONY"),  pursuant to which BONY agreed to permit the Company
to borrow  $5,000,000  through March 31,1999.  Amounts  outstanding from time to
time under the line of credit  accrue  interest at a floating  rate based on the
prime lending rate of the bank and are due and payable  (together with interest)
on demand.  The line of credit is evidenced by a promissory  note and is secured
by  substantially  all of  the  assets  of the  Company.  In  addition,  amounts
outstanding under the line of credit have been guaranteed by each of the Mednick
Group and On Ramp.  During  April  1999,  BONY  agreed to permit the  Company to
extend the availability of the line of credit to July 31, 1999. At June 30, 1999
the Company had borrowed  $1,164,000 under its line of credit and had $3,836,000
available for borrowing. Since July 31, 1999 the Company has been in discussions
with BONY concerning the renewal of the line of credit.  BONY has indicated that
it desires  to await the  completion  of the  stockholder  vote on the  proposed
Merger with AnswerThink before finalizing any renewal.  However,  in the interim
BONY has  verbally  agreed to allow the Company to continue to borrow  under the
terms of the April 1998 agreement pending the vote on the proposed Merger.


                                       33
<PAGE>

         As of June 30, 1999 the Company has cash on hand of  $7,791,000,  and a
positive  working  capital of $8,456,000.  The Company  believes that cash flows
from these  sources,  together with cash flows  generated by its  operations and
borrowings available under its interim agreement with BONY will be sufficient to
fund  its  operations,  pay  required  debt  (including  the  repayment  of  the
outstanding  BONY  borrowings  if the line of credit is not renewed) and capital
lease  obligations,   and  continue  the  Company's  growth  strategy.  However,
unexpected  changes in operating or capital market  conditions could require the
Company to seek  additional  external  financing,  and there can be no assurance
that such  additional  capital will be available  when needed.  The inability to
obtain such financing,  if needed,  could adversely affect the Company's ability
to achieve its business objectives.

         INFLATION

         While  inflation  has  not  had a  material  effect  on  the  Company's
operations in the past,  there can be no assurance that the Company will be able
to continue to offset the effects of  inflation  on the costs of its products or
services  through  price  increases  to its  customers  without  experiencing  a
reduction in the demand for its  products;  or that  inflation  will not have an
overall  effect on the  advertising,  marketing,  Internet and intranet and data
management markets that would have a material effect on the Company.

IMPACT OF THE YEAR 2000

         During calendar 1999 the Company has been, and continues to be, engaged
in efforts to  identify  and  remediate  its  exposure to the impact of the year
("Y2K") on its  computer  hardware and  software  systems.  The Y2K issue is the
result of computer programs being written using two digits, rather than four, to
define the applicable year. Any of the Company's computer programs that have two
digit date sensitive  software may encounter system failures or  miscalculations
if date entry of "00" is  recognized  as the year 1900  rather  than  2000.  The
failure of the Company's  critical  computer  systems to properly  recognize the
year 2000 could result in the interruption of the Company's  operations and have
material  adverse  affects on the  Company's  financial  position and results of
operations.

         The Company has studied the importance to its operations of its various
hardware and software  systems,  and is giving  priority to the  remediation  of
those systems that have been deemed critical. Currently, Company personnel, with
the  assistance of  consultants  from  AnswerThink,  are reviewing the Company's
critical  hardware and software  systems to identify  those with  potential  Y2K
issues and develop  remediation  plans.  In general,  the Company's  systems for
processing  its  accounting  data,  and for hosting the  Internet  functions  of
clients, are the systems likely to contain Y2K issues, while the Company's other
software and hardware systems,  because of the relative newness, are already Y2K
compliant.  To date the Company's  expenditures for the study and remediation of
its Y2K issues,  which,  except of the costs for the purchase of new software or
the purchase or lease of new hardware, are being expensed as incurred,  have not
been material.

         In some  instances  the  remediation  of a  system's  Y2K issue will be
accomplished  by the  correction  of code  within  the  software.  This  will be
performed by the Company's personnel with the assistance of the consultants from
AnswerThink.  In other instances, the nature or degree of the Y2K non-compliance
within a system will require the replacement of the hardware or software.

         The Company's initial Y2K remediation plan was revised when the Company
reached the agreement for the proposed Merger with AnswerThink. This is because,
if the Merger is completed,  many of the Company's systems which may contain Y2K
issues  would be replaced by software  and hardware  systems  currently  used by
AnswerThink  which are more  advanced  than that of the  Company's and which are
already Y2K compliant. Accordingly, the Company's revised Y2K plan calls for the
remediation  of many of its Y2K issues  through the  conversion  to  AnswerThink
systems prior to January 1, 2000, and the Company believes that if the Merger is
approved on the schedule  currently  contemplated  that such  conversion  can be
completed without material expenditures  (including revenues lost due to the use
of Company and AnswerThink personnel for this internal project) prior to January
1, 2000.

         In the event the proposed Merger with AnswerThink is not approved,  the
Company will engage  AnswerThink on a consulting basis to complete the study and
remediation  of the Company's  software and hardware  systems.  AnswerThink  has
expertise in this area,  and the Company  believes  that the  remediation  of it
critical  systems could be completed by January 1, 2000.  The Company  currently
estimates  that the cost of  engaging  AnswerThink  for  this  purpose,  and for
purchasing  any required  software or hardware,  would  approximate  $500,000 to
$1,000,000.

                                       34

<PAGE>


         As a part of its Y2K project the Company has also been  addressing  the
Y2K  readiness  of  vendors  and other  third  parties  deemed  critical  to its
operations.  The Company has been, and continues to, inquire of and receive from
these vendors  information on their Y2K compliance.  These efforts will continue
into the fourth quarter of calender 1999. To date the Company has not identified
any critical vendor or third party that presents a material Y2K readiness issue.
If a critical  vendor or third  party is found to not be Y2K ready,  the Company
will seek to convert to the use of an  alternative  vendor.  In that regard,  in
many  instances  the  Company,  assuming  the  completion  of  the  Merger  with
AnswerThink,  might  convert to a vendor or third  party with which  AnswerThink
already has a relationship.

         The Company is also in the process of developing  contingency plans for
Y2K issues that are not  successfully  identified  and remediated by the efforts
described above. Those contingency plans have not yet been fully developed.

         The Company  believes that it will be able to successfully  address all
critical Y2K issues by January 1, 2000.  However there can be no assurance  that
all Y2K issues  will be  resolved  by that date,  and the  Company's  failure to
successfully identify and remediate all Y2K issues by January 1, 2000 could lead
to an interruption  of its operations and have a material  adverse effect on its
financial position and results of operations.

         NEW ACCOUNTING PRONOUNCEMENT

         In June 1998 the FASB issued SFAS No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities."  SFAS No. 133, as amended by SFAS No. 137,
must first be applied in the first quarter of fiscal years that begin after June
15,  2000,  and in general  requires  that  entities  recognize  all  derivative
financial  instruments  as assets or  liabilities,  measured at fair value,  and
include  in  earnings  the  changes  in  the  fair  value  of  such  assets  and
liabilities. SFAS No. 133 also provides that changes in the fair value of assets
or liabilities being hedged with recognized derivative instruments be recognized
and included in earnings.  The Company does not utilize  derivative  instruments
either  for  hedging  or other  purposes,  and  therefore  anticipates  that the
adoption of the requirements SFAS No. 133 will not have a material affect on its
financial statements.

PROPOSED MERGER WITH ANSWERTHINK

         On June 24, 1999,  the Company  entered  into an Agreement  and Plan of
Merger by and among the Company,  AnswerThink,  and Darwin  Acquisition Corp., a
wholly-owned  subsidiary of AnswerThink ("Sub") pursuant to which Sub will merge
with and into the  Company.  The  Company  will  survive the Merger and become a
wholly-owned subsidiary of AnswerThink. Under the terms of the Merger Agreement,
all  outstanding  shares  of  the  Company  will  be  exchanged  for  shares  of
AnswerThink  Common  Stock,  and all  outstanding  options to acquire  shares of
Common Stock,  will be assumed and converted  into options to acquire  shares of
AnswerThink  Common Stock at a ratio of 0.70 shares of AnswerThink  Common Stock
to one share of Common Stock. In addition,  the securities issued (and issuable)
by the company  pursuant  to the  Securities  Purchase  Agreement  with  Capital
Ventures  International  and  Marshall  Capital  Management  will be  assumed by
AnswerThink and converted  based upon the Exchange Ratio.  The Merger is subject
to certain conditions,  including  shareholder  approval


                                       35
<PAGE>

of both  companies.  The Merger will be accounted  for as a pooling of interests
and is intended to qualify as a tax-free reorganization.

         Pursuant  to the  Merger  Agreement,  the  Company  has  agreed  to pay
AnswerThink a termination fee of $6,000,000 in the event the Merger Agreement is
terminated  under  certain  circumstances,  including;  the  withdrawal  of  the
recommendation  of the  Board  of  Directors  of  the  Company,  or the  Board's
recommendation  of a third  party  acquisition  proposal.  The  Company has also
agreed  to pay a  termination  fee of  $3,000,000  to  AnswerThink  under  other
termination  circumstances  such  as  the  inability  to  obtain  the  requisite
shareholder approval.  Pursuant to the Merger Agreement,  AnswerThink has agreed
to pay the Company a termination  fee of $3,000,000 for a material breach of the
Merger Agreement that has not been properly cured.

         In  connection   with  the  Merger   Agreement,   the  Company  granted
AnswerThink  an  option to  purchase  up to 19.9% of the  shares of the  Company
Common Stock outstanding on the date of exercise of the AnswerThink  Option. The
AnswerThink Option is exercisable  following the execution or consummation of an
alternative  business  combination  involving the Company and the  occurrence of
certain  further  triggering  events,  none of which has occurred as of the date
hereof. The per-share exercise price under the AnswerThink Option is $18.50.

         As  further   inducement  to  AnswerThink  to  enter  into  the  Merger
Agreement, each director,  Omnicom Group, Inc. and certain executive officers of
the Company (who, in the aggregate,  beneficially own  approximately  22% of the
Company's   outstanding  Common  Stock)  entered  into  voting  agreements  with
AnswerThink  pursuant to which they:  (i) agreed to vote their  shares of Common
Stock  in  favor of the  Merger  Agreement  and the  Merger;  and  (ii)  granted
irrevocable  proxies to AnswerThink  to vote such shares in accordance  with the
voting  agreements.  As an  inducement  to the  Company to enter into the Merger
Agreement,  each director and certain executive officers of AnswerThink (who, in
aggregate,  beneficially own approximately  39.76% of AnswerThink's  outstanding
Common Stock) entered into voting  agreements with the Company pursuant to which
they:  (i) agreed to vote their shares of  AnswerThink  Common Stock in favor of
the issuance of AnswerThink  Common Stock pursuant to the Merger Agreement;  and
(ii)  granted  irrevocable  proxies  to the  Company  to  vote  such  shares  in
accordance with the voting agreements.

         The  Company  believes  that  it is  likely  that  the  Merger  will be
completed on the terms contained in the Merger Agreement.  However, there can be
no assurance that the required stockholder  approvals will be obtained,  or that
the other  conditions  to the Merger will be  fulfilled.  A  termination  of the
Merger  Agreement  for a reason that  requires the Company to pay  AnswerThink a
termination fee, as described above, could have a material adverse effect on the
Company's liquidity, financial position and results of operations.

         The  completion  of the  proposed  Merger is likely to have a  material
effect on the Company's  financial position and results of operations,  in that,
among other things,  the Company  would operate as a subsidiary of  AnswerThink,
and,  as the  Merger  will be  accounted  for as a  pooling  of  interests,  the
Company's  historical  results of  operations  would be  combined  with those of
AnswerThink  as if the  companies  had  always  operated  on a  combined  basis.
Additionally,  the  future  strategies  of the  two  companies,  operating  on a
combined  basis,  may differ from the  strategies the Company has been pursuing,
and which the Company would pursue if it continued to operate alone.


                                       36
<PAGE>

          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

         The  following   unaudited  pro  forma  combined  condensed   financial
information  gives effect to the proposed  Merger  between  AnswerThink  and the
Company.  The Merger will be accounted  for as a  pooling-of-interests,  and the
historical  financial  position and  operating  results of  AnswerThink  and the
Company will be combined. The pro forma combined condensed financial information
reflects the combined  financial  position of AnswerThink  and the Company as of
July 2, 1999 and the combined  operating  results of AnswerThink and the Company
for the years ended January 1, 1999, January 2, 1998 and December 31, 1996.

         The unaudited  pro forma  combined  condensed  statements of operations
assume that the Merger occurred at the beginning of the periods  presented.  The
unaudited pro forma combined condensed balance sheet assumes the Merger occurred
as of July 2, 1999.  The historical  financial  information of AnswerThink as of
July 2,  1999 and for the years  ended  January  1,  1999,  January  2, 1998 and
December 31, 1996 has been derived from  AnswerThink's  historical  consolidated
financial statements.  The historical financial information of the Company as of
June 30, 1999 and for the  twelve-month  period ended  December 31, 1998 and for
the years  ended  June 30,  1998 and June 30,  1997 have been  derived  from the
Company's historical consolidated financial statements. The historical financial
information of the Company has been  re-classified  to conform to  AnswerThink's
historical  presentation.  The unaudited pro forma combined condensed  financial
information  should  be read in  conjunction  with the  historical  consolidated
financial statements of AnswerThink and the Company.

         AnswerThink  uses a fiscal  year which  ends on the  Friday  nearest to
December 31. The Company uses a June 30 fiscal  year.  Accordingly,  in order to
prepare the unaudited pro forma combined statements of operations, the operating
results for the Company were recast to conform with  AnswerThink's  fiscal year.
As a result,  the operating results of the Company for the six months ended June
30, 1998 are included in both the pro forma combined  operating  results for the
year ended January 1, 1999 and in the pro forma combined  operating  results for
the year ended January 2, 1998.  The Company's  revenue and net loss for the six
months ended June 30, 1998 were $25,620,519 and  $28,086,490,  respectively. Pro
forma  weighted  average  common shares  outstanding  for all periods  presented
represent  the  historical  average  shares for  AnswerThink  combined  with the
historical  average shares for the Company after giving effect to the conversion
of all outstanding  shares of Common Stock into AnswerThink  common stock by the
Exchange Ratio  contemplated in the Merger.  Pro forma operating  results do not
include estimated merger-related costs of $7.5 million.

         The unaudited pro forma combined  condensed  financial  information has
been  included for  comparative  purposes only and does not purport to show what
the  financial  position or operating  results would have been if the merger had
been  consummated  as of the dates  indicated,  nor  should it be  construed  as
representative of future financial position or operating results.


                                       37
<PAGE>


              PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                       FOR THE YEAR ENDED JANUARY 1, 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                             HISTORICAL         HISTORICAL
                                                             ANSWERTHINK     THINK NEW IDEAS (1)     PRO FORMA
                                                             -----------     -------------------     ---------
<S>                                                         <C>               <C>                  <C>
Net revenues                                                $118,155,676      $ 49,361,578         $167,517,254
Costs and expenses:
   Project personnel and expense                              71,889,880        29,610,935          101,500,815
   Selling, general and administrative                        38,515,933        21,646,136           60,162,069
   Stock compensation expense                                 40,843,400        23,043,450           63,886,850
   Restructuring costs                                                --           920,610              920,610
   Purchased research and development expense                         --         5,200,000            5,200,000
                                                            ------------      ------------         ------------
       Total costs and operating expenses                    151,249,213        80,421,131          231,670,344
                                                            ------------      ------------         ------------
   Loss from operations                                      (33,093,537)      (31,059,553)         (64,153,090)
Other income (expenses):
   Litigation settlement                                       2,500,000                --            2,500,000
   Interest income                                               679,018           278,745              957,763
   Interest expense                                           (1,418,021)         (170,575)          (1,588,596)
                                                            ------------      ------------         ------------
Loss before income taxes                                     (31,332,540)      (30,951,383)         (62,283,923)
Income taxes                                                     324,820           255,549              580,369
                                                            ------------      ------------         ------------
Net loss                                                    $(31,657,360)     $(31,206,932)        $(62,864,292)
                                                            ============      ============         ============
Basic and diluted net loss per common share                 $      (1.62)     $      (4.17)        $      (2.53)
                                                            ============      ============         ============
Weighted average common shares outstanding                    19,602,520         7,488,538           24,844,497
                                                            ============      ============         ============
</TABLE>

(1) Pro forma  operating  results for the year ended January 1, 1999 include the
operating  results of Think New Ideas for the 12-month period ended December 31,
1998.


                                       38
<PAGE>


              PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                       FOR THE YEAR ENDED JANUARY 2, 1998
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                            HISTORICAL         HISTORICAL
                                                            ANSWERTHINK    THINK NEW IDEAS (1)    PRO FORMA
                                                            -----------    -------------------    ---------
<S>                                                        <C>               <C>                <C>
Net revenues                                               $ 34,499,746      $ 42,644,405       $ 77,144,151
Costs and expenses:
   Project personnel and expenses                            24,626,831        24,199,048         48,825,879
   Selling, general and administrative                       16,681,885        16,693,636         33,375,521
   Settlement costs                                           1,902,608                --          1,902,608
   Stock compensation expense                                        --        23,043,450         23,043,450
   Restructuring costs                                               --           920,610            920,610
   Purchased research and development expense                 4,000,000         5,200,000          9,200,000
                                                           ------------      ------------       ------------
       Total costs and operating expenses                    47,211,324        70,056,744        117,268,068
                                                           ------------      ------------       ------------
   Loss from operations                                     (12,711,578)      (27,412,339)       (40,123,917)
Other income (expenses):
   Interest income                                              508,470           287,940            796,410
   Interest expense                                            (151,668)          (88,666)          (240,334)
                                                           ------------      ------------       ------------
   Loss before income taxes                                 (12,354,776)      (27,213,065)       (39,567,841)
Income taxes                                                         --           339,834            339,834
                                                           ------------      ------------       ------------
Net loss                                                   $(12,354,776)     $(27,552,899)      $(39,907,675)
                                                           ============      ============       ============
Basic and diluted net loss per common share                $      (1.74)     $      (4.36)      $      (3.46)
                                                           ============      ============       ============
Weighted average common shares outstanding                    7,100,092         6,315,087         11,520,653
                                                           ============      ============       ============
</TABLE>

(1) Pro forma  operating  results for the year ended January 2, 1998 include the
operating results of Think New Ideas for the year ended June 30, 1998.


                                       39
<PAGE>


              PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                              HISTORICAL        HISTORICAL
                                                              ANSWERTHINK    THINK NEW IDEAS (1)   PRO FORMA
                                                              -----------    -------------------   ---------
<S>                                                          <C>               <C>                <C>
Net revenues                                                 $ 11,492,825      $ 17,436,847       $ 28,929,672
Costs and expenses:
   Project personnel and expenses                               6,559,278        10,209,202         16,768,480
   Selling, general and administrative                          4,909,191        12,972,777         17,881,968
   Restructuring costs                                                 --         1,732,000          1,732,000
                                                             ------------      ------------       ------------
       Total costs and operating expenses                      11,468,469        24,913,979         36,382,448
                                                             ------------      ------------       ------------
Income (loss) from operations                                      24,356        (7,477,132)        (7,452,776)
Other income (expenses):
   Interest income                                                 19,898           286,358            306,256
   Interest expense                                                (5,280)         (134,489)          (139,769)
                                                             ------------      ------------       ------------
   Income (loss) before income taxes                               38,974        (7,325,263)        (7,286,289)
Income taxes                                                           --           245,900            245,900
                                                             ------------      ------------       ------------
Net income (loss)                                            $     38,974      $ (7,571,163)      $ (7,532,189)
                                                             ============      ============       ============
Basic and diluted net income (loss) per common share         $       0.05      $      (1.63)      $      (1.88)
                                                             ============      ============       ============
Weighted average common shares outstanding                        757,773         4,638,337          4,004,609
                                                             ============      ============       ============
</TABLE>

(1) Pro forma operating results for the year ended December 31, 1996 include the
operating results of Think New Ideas for the year ended June 30, 1997.


                                       40
<PAGE>


                   PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                  JULY 2, 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                   HISTORICAL        HISTORICAL
                                                                                   ANSWERTHINK     THINK NEW IDEAS     PRO FORMA
                                                                                   -----------     ---------------     ---------
<S>                                                                               <C>                <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                      $ 12,034,567       $ 7,791,363      $ 19,825,930
   Short-term investments                                                              500,000                --           500,000
   Accounts receivable and unbilled revenue, net                                    45,782,096        30,749,411        76,531,507
   Prepaid expenses and other current assets                                         1,443,124           963,133         2,406,257
                                                                                --------------    --------------    --------------
       Total current assets                                                         59,759,787        39,503,907        99,263,694
Property and equipment, net                                                          4,306,956         5,298,736         9,605,692
Other assets                                                                         3,380,732         1,782,623         5,163,355
Goodwill, net                                                                       31,497,468        20,318,499        51,815,967
                                                                                  ------------       -----------      ------------
       Total assets                                                               $ 98,944,943       $66,903,765      $165,848,708
                                                                                  ============       ===========      ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                               $  2,632,212      $  3,310,262      $  5,942,474
   Accrued expenses and other liabilities                                           14,676,676         3,397,231        18,073,907
   Media payable                                                                            --        23,220,723        23,220,723
   Income taxes payable                                                              2,916,050           110,472         3,026,522
   Current portion of borrowings under revolving credit facility and other
     debt payable                                                                    1,896,000         1,194,647         3,090,647
                                                                                  ------------      ------------      ------------
       Total current liabilities                                                    22,120,938        31,233,335        53,354,273
Long-term liabilities                                                                       --                --                --
                                                                                  ------------      ------------      ------------
       Total liabilities                                                            22,120,938        31,233,335        53,354,273
Shareholders' equity                                                                76,824,005        35,670,430       112,494,435
                                                                                  ------------      ------------      ------------

       Total liabilities and shareholders' equity                                 $ 98,944,943      $ 66,903,765      $165,848,708
                                                                                  ============      ============      ============
</TABLE>

                                       41
<PAGE>
ITEM 7.  CONSOLIDATED FINANCIAL STATEMENTS

                     THINK New Ideas, Inc. and Subsidiaries

                   Index to Consolidated Financial Statements

                                                                          PAGE
                                                                          ----

Report of Independent Auditors, Ernst & Young, LLP........................ F-1

Consolidated Financial Statements:

      Consolidated Balance Sheets......................................... F-2

      Consolidated Statements of Operations............................... F-3

      Consolidated Statements of Shareholders' Equity..................... F-4

      Consolidated Statements of Cash Flows............................... F-5

      Notes to Consolidated Financial Statements.......................... F-6

                                       F



<PAGE>

Report of Independent Auditors

Board of Directors

THINK New Ideas, Inc.

We have audited the accompanying consolidated balance sheets of THINK New Ideas,
Inc.  and  subsidiaries  (the  "Company")  as of June 30,  1999 and 1998 and the
related  consolidated  statements of operations,  shareholders'  equity and cash
flows for the years then ended. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by management,  as well as evaluating  the overall  consolidated
financial  statement  presentation.   We  believe  that  our  audit  provides  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 THINK New Ideas,
Inc. and subsidiaries as of June 30, 1999 and 1998 and the consolidated  results
of their operations and their cash flows for the years then ended, in conformity
with generally accepted accounting principles.



                                                        /s/ ERNST & YOUNG LLP
                                                        ERNST & YOUNG LLP

New York, New York
August 13, 1999



                                      F-1
<PAGE>

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                         JUNE 30,
                                                                             ---------------------------------
                                                                                1999                  1998
                                                                             ------------         ------------
<S>                                                                           <C>                  <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                $ 7,791,363          $ 7,503,576
     Accounts receivable, net of allowance for doubtful
      accounts of $568,377 and $1,019,475                                      28,793,762           14,431,288
     Unbilled receivables                                                       1,955,649            3,455,181
     Prepaid expenses and other assets                                            963,133              865,574
                                                                              -----------          -----------
         Total current assets                                                  39,503,907           26,255,619

     Property, and equipment, net                                               5,298,736            5,682,059
     Software development costs, net                                              416,788            1,858,370
     Goodwill, net of accumulated amortization of
      $4,010,748 and $2,534,207                                                20,318,499           17,344,798
     Other assets                                                               1,365,835            1,112,225
                                                                              -----------          -----------
         Total assets                                                         $66,903,765          $52,253,071
                                                                              ===========          ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                         $ 3,310,262          $ 3,937,683
     Accrued expenses                                                           2,877,110            3,414,977
     Accrued restructuring costs                                                       --              307,482
     Media payable                                                             23,220,723            9,382,266
     Income taxes payable                                                         110,472              566,578
     Bank payable                                                               1,164,000              491,915
     Due to related party                                                          30,647              591,946
     Current portion of obligations under capital leases                          334,403              693,619
                                                                              -----------          -----------
         Total current liabilities                                             31,047,617           19,386,466

Obligations under capital leases                                                  185,718              260,645
Other long-term liabilities                                                            --              102,548
                                                                              -----------          -----------
         Total liabilities                                                     31,233,335           19,749,659
                                                                              -----------          -----------
Commitments and contingencies
Shareholders' equity:
     Preferred stock, $.0001 par value; 5,000,000 shares
      authorized; none issued and outstanding                                          --                   --
     Common stock, $.0001 par value; 50,000,000 shares
      authorized; 10,100,326 and 8,433,656 shares
      issued                                                                        1,010                  843
     Additional paid-in capital                                                79,212,908           67,731,946
     Accumulated deficit                                                      (43,537,417)         (35,229,377)
     Accumulated other comprehensive income                                        (6,071)                  --
                                                                              ------------         -----------
         Total shareholders' equity                                            35,670,430           32,503,412
                                                                              -----------          -----------
         Total liabilities and shareholders' equity                           $66,903,765          $52,253,071
                                                                              ===========          ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-2

<PAGE>

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                   YEAR ENDED JUNE 30,
                                                            -----------------------------------
                                                                1999                  1998
                                                            ------------          -------------
<S>                                                         <C>                    <C>
Revenues                                                    $ 49,797,232           $ 42,644,405

Operating expenses:
    Salaries and related expenses                             28,521,790             16,724,943
    Selling, general and administrative expenses              24,128,341             21,340,350
    Depreciation and amortization                              4,228,533              2,827,391
    Impairment of capitalized software                           988,566                     --
    Stock compensation expense                                   180,400             23,043,450
    Restructuring costs                                               --                920,610
    Purchased research and development expense                        --              5,200,000
                                                            ------------           ------------

Operating loss                                                (8,250,398)           (27,412,339)

Interest income and other, net                                   201,540                199,274
                                                            ------------           ------------
Loss before taxes on income                                   (8,048,858)           (27,213,065)
Provision for income taxes                                       259,182                339,834

                                                            ------------           ------------
Net loss                                                     $(8,308,040)          $(27,552,899)
                                                            =============          ============

Net loss per share-basic                                     $    (0.94)           $     (4.36)
Weighted average shares outstanding                            8,844,708              6,315,087

Net loss per share-diluted                                   $    (0.94)           $     (4.36)
Weight average shares outstanding                              8,844,708              6,315,087
</TABLE>

See accompanying notes to consolidated financial statements.



                                       F-3
<PAGE>

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                          ACCUMULATED
                                             COMMON STOCK              ADDITIONAL                            OTHER
                                    --------------------------------     PAID-IN         ACCUMULATED     COMPREHENSIVE
                                        SHARES          AMOUNT           CAPITAL           DEFICIT          INCOME            TOTAL
                                    ------------------------------------------------------------------------------------------------
<S>                                  <C>               <C>           <C>              <C>                       <C>     <C>

Balance at June 30, 1997               6,536,667         $  654        $19,050,174      $ (7,676,478)             --    $11,374,350
    Issuance of Common Stock for
     services rendered                    75,000              8            359,368                --              --        359,376
    Issuance of stock options for
     consulting services                      --             --             86,500                --              --         86,500
    Issuance of Common Stock in
     connection with acquisitions      1,416,867            141         23,538,845                --              --     23,538,986
    Issuance of Common Stock on
     exercise of stock options           181,713             18          1,065,665                                --      1,065,683
    Conversion of promissory notes        79,697              8            587,958                --              --        587,966
    Issuance of Common Stock on
     exercise of warrants                143,712             14                (14)               --              --             --
    Acceleration of stock option
     vesting                                  --             --          1,387,200                --              --      1,387,200
    Common stock released from
     escrow to founders                       --             --         21,656,250                --                     21,656,250
    Net loss                                  --             --                 --       (27,552,899)             --    (27,552,899)
                                    ------------------------------------------------------------------------------------------------
Balance at June 30, 1998              8,433,656          $  843        $67,731,946      $(35,229,377)        $    --    $32,503,412
                                                                                                                        ------------
    Comprehensive income
    Net loss                                  --             --                 --        (8,308,040)             --     (8,308,040)
    Foreign currency translation
     adjustments                              --             --                 --                --          (6,071)        (6,071)
                                                                                                                        ------------
    Comprehensive income                                                                                                 (8,314,111)
    Stock Compensation Expense                --             --            180,400                --              --        180,400
    Issuance of Common Stock on
     exercise of stock options           297,507             30          1,655,764                --              --      1,655,794
    Issuance of Common Stock in
     connection with acquisition         477,002             48          3,499,952                --              --      3,500,000
    Common Stock issued, net of
     issuance costs                      871,142             87          5,939,913                --              --      5,940,000
    Issuance of Common Stock in
     connection with contingent
     payments on past acquisitions        21,019              2            204,933                --              --        204,935
                                    ------------------------------------------------------------------------------------------------
Balance at June 30, 1999              10,100,326         $1,010        $79,212,908      $(43,537,417)        $(6,071)   $35,670,430
                                    ================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-4
<PAGE>

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED
                                                                                           JUNE 30,
                                                                             ---------------------------------------
                                                                                 1999                      1998
                                                                             -------------             -------------
<S>                                                                           <C>                     <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss                                                                      $(8,308,040)             $(27,552,899)
Adjustments to reconcile net loss to net cash (used in)
    provided by operating activities:
    Depreciation                                                                2,298,976                 1,341,470
    Amortization of intangibles                                                 1,929,557                 1,485,921
    Bad debt expense                                                            1,358,705                   534,257
    Impairment of capitalized software development                                988,566                        --
    Restructuring charges                                                              --                   920,610
    Stock compensation expense                                                    180,400                23,043,450
    Purchased research and development                                                 --                 5,200,000
    Changes in assets and liabilities:
        Accounts receivable, net                                              (14,919,655)                  728,735
        Unbilled receivables                                                    1,499,532                  (878,611)
        Accounts payable and accrued expenses                                  (1,842,841)                  119,396
        Accrued restructuring                                                    (307,482)               (1,706,867)
        Media payable                                                          13,637,981                 6,959,182
        Other assets and liabilities                                           (1,181,661)                 (295,730)
                                                                              ------------               -----------
Net cash (used in) provided by operating activities                            (4,665,962)                9,898,914
                                                                              ------------               -----------

CASH FLOW FROM INVESTING ACTIVITIES:
Additions to software development costs                                                --                  (577,770)
Payment for acquisition, net of cash acquired                                      44,910                (3,441,744)

Sales of marketable securities                                                         --                 1,321,722
Purchases of property and equipment                                            (1,651,526)               (2,240,529)
Other                                                                            (640,826)                       --
                                                                              ------------              ------------
Net cash used in investing activities                                          (2,247,442)               (4,938,321)
                                                                              ------------              ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net-repayments on operating lines of credit and short-term debt                        --                  (203,861)

Issuance of common stock                                                        7,595,794                 1,065,683
Net borrowings on short term debt                                                 672,085                        --
Principal payments on capital leases                                             (505,389)                 (455,620)
Payments on amounts due to related party                                         (561,299)               (1,314,566)
                                                                              ------------              -----------
Net cash provided by (used in) financing activities                             7,201,191                  (908,364)
                                                                              ------------              -----------

Net  increase in cash and cash equivalents                                        287,787                 4,052,229
Cash and cash equivalents, beginning of year                                    7,503,576                 3,451,347
                                                                              ============              ===========
Cash and cash equivalents, end of year                                        $ 7,791,363               $ 7,503,576
                                                                              ============              ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
     Income taxes                                                             $   221,038               $   264,232
     Interest                                                                      89,751                    74,958
Non-cash investing and financing activities:
     Issuance of common stock for Acquisitions                                  3,500,000                23,538,986
     Equipment  recorded in connection  with the final  purchase  price
allocation
      of Interweb                                                                 133,333                        --
     Issuance of common stock for contingent  payments  related to past           204,935                        --
      acquisitions
     Conversion of convertible promissory notes into common stock                      --                   587,966
     Purchase of equipment by capital leases                                           --                   988,645
     Issuance of common stock and options as finders fee to  consultant
      for acquisitions                                                                 --                   455,876
</TABLE>

See accompanying notes to consolidated financial statements.


                                       F-5
<PAGE>

                     THINK NEW IDEAS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company was  incorporated in January 1996, and commenced  operations on June
30, 1996 upon  combination  of the  Company  with the  Mednick  Group,  On Ramp,
Creative Resources,  the Goodman Group, Internet One, and NetCube, each of which
had been previously  engaged in providing various  marketing and  communications
services.  The combination of these companies into the Company was accounted for
as a pooling of interests,  (with the exception of On Ramp,  which was accounted
for as a purchase) and,  accordingly,  the consolidated  financial statements of
the Company are  prepared as if each of these  companies  had been a part of the
Company from inception of such companies.  The results of operations for On Ramp
have been included since the date of acquisition.  As hereinafter used, the term
"Company"  shall  include  all the  Company's  subsidiaries,  as the context may
require.

The Company provides "new media"  advertising  services including the design and
development   of  Internet  Web  sites  and  related  tools  and  marketing  and
communication  services that include traditional services,  such as advertising,
graphic design (discontinued April 1998; See Note 12). The Company considers its
operation to comprise a single  business  segment  under  Statement of Financial
Accounting  Standards  ("SFAS") No. 131.The  consolidated  financial  statements
include the accounts of the Company and its wholly-owned subsidiaries, (See Note
2  below).  All  intercompany   balances  and  transactions  are  eliminated  in
consolidation.

The Company reports on a June 30 fiscal year.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

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

PROPERTY AND EQUIPMENT

The  Company  uses  the  straight-line  method  of  depreciation.  Property  and
equipment includes certain assets utilized pursuant to capital leases, which are
recorded at the present value of the minimum  non-cancelable  lease  payments at
the inception of the lease. The estimated useful lives of property and equipment
are as follows:


                                       F-6
<PAGE>

                                                              YEARS
                                                              -----

         Equipment                                            3 to 5

         Furniture and fixtures                               5 to 7

Leasehold  improvements are amortized on a straight-line  basis over the term of
the lease or the estimated useful life of the improvement, whichever is shorter.

CAPITALIZED SOFTWARE

In accordance with SFAS No. 86, "Accounting for Costs of Computer Software to be
Sold, Leased or Otherwise  Marketed," the Company  capitalizes costs incurred to
develop new software products after determination that technological feasibility
has been established for the product.  Costs incurred prior to the establishment
of technological  feasibility are charged to expense.  Amortization of the costs
capitalized begins when the related product is available for general release and
is based on  current  and  anticipated  future  revenues  for  each  product  or
enhancement,  with an annual minimum charge equal to straight-line  amortization
over the remaining  estimated  economic life of the product or enhancement.  The
Company utilizes an estimated life of three years for capitalized  software.  It
is reasonably possible that those estimates of anticipated product revenues, the
remaining  estimated  economic  life  of the  product  or both  will be  reduced
significantly in the three-year term due to changing technologies. Consequently,
the amount of capitalized software costs may be significantly reduced.

GOODWILL AND OTHER INTANGIBLES

Goodwill and other  intangibles are amortized on a  straight-line  basis ranging
from 2 to 15 years. The Company periodically  assesses the recoverability of the
cost of its goodwill based upon estimated  future  profitability  of the related
operating  entities.  The  agreements  pursuant  to which the  Company  acquired
certain companies (See Note 2) include provisions that would require the Company
to issue  additional  shares if the acquired  company meets certain  goals.  The
value of any such shares  issued,  as of the date  issued,  will be added to the
goodwill  related to such  acquisition  and amortized over the remainder of that
goodwill's useful life.

REVENUE RECOGNITION

Revenues from the design and  development of Internet Web sites and  interactive
and    traditional    marketing    services    are    recognized    using    the
percentage-of-completion  method.  Unbilled receivables represent time and costs
incurred on projects in progress in excess of amounts  billed,  and are recorded
as assets.  Amounts  billed in excess of time and costs incurred are recorded as
liabilities.  To the extent  costs  incurred and  anticipated  costs to complete
projects in progress exceed  anticipated  billings,  a loss is recognized in the
period such determination is made for the excess.

Payments received for subsequent  maintenance of Internet Web sites are deferred
and recognized over the period during which the maintenance is provided.


                                       F-7
<PAGE>

Revenue from  advertising and related  services  comprises  commissions and fees
derived from billings to clients for media and production activities. Commission
revenue is recognized  primarily  when media  placements  appear on  television,
radio, or in print. Fee revenue is recognized when services are rendered.

STOCK COMPENSATION

The Company measures  compensation expense related to the grant of stock options
and  stock-based  awards to  employees  in  accordance  with the  provisions  of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," under which compensation  expense,  if any, is generally based on
the difference  between the exercise price of an option,  or the amount paid for
an award,  and the market price or fair value of the underlying  common stock at
the  date  of  the  award  or at  the  measurement  date  for  variable  awards.
Stock-based  compensation  arrangements involving nonemployees are accounted for
under SFAS No. 123, under which such arrangements are accounted for based on the
fair value of the option or award. As required by SFAS No. 123,  "Accounting for
Stock-Based  Compensation,"  the Company  discloses pro forma net income and net
income per share information reflecting the effect of applying SFAS No. 123 fair
value measurement to employee arrangements.

INCOME TAXES

The Company  determines its deferred tax provision  under the liability  method,
whereby  deferred tax assets and liabilities are recognized for the expected tax
consequences  of  temporary  differences  between  the tax basis of  assets  and
liabilities and their reported  amounts using presently  enacted tax rates.  The
effect  on  deferred  tax  assets  and  liabilities  of a change in tax rates is
recognized in income in the period that includes the enactment date.

EARNINGS PER SHARE

The  Company  adopted the  provisions  of SFAS No.  128,  "Earnings  Per Share,"
effective July 1, 1997. Under SFAS No. 128 basic earnings per share excludes any
dilution for Common Stock equivalents and is computed on the basis of net income
divided by the weighted average number of common shares  outstanding  during the
relevant period. Diluted earnings per share reflects the potential dilution that
could occur if options or other securities or contracts  entitling the holder to
acquire  shares of Common Stock were  exercised or  converted,  resulting in the
issuance of additional shares of Common Stock that would then share in earnings.
However,  diluted earnings per share do not consider such dilution if its effect
would be to reduce the loss per share ("anti-dilutive").

FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair value of cash and cash  equivalents,  marketable  securities,  accounts
receivables,  accounts and notes payable and short-term debt  approximates  book
value.

CONCENTRATION OF CREDIT RISK, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION


                                       F-8
<PAGE>
Financial instruments,  which potentially subject the Company to a concentration
of credit risk, consist of cash and cash equivalents,  marketable securities and
accounts receivable. Cash and cash equivalents and marketable securities consist
of deposits and money  market  funds  placed with  various  high credit  quality
financial institutions.

The  Company  generates  revenue  principally  from  customers  located in North
America,  many of which are large  multi-national  organizations.  One  customer
accounted for  approximately 10% of 1999  consolidated  revenues.  Two customers
each   separately   accounted  for  13%  of   consolidated   revenues  in  1998.
Concentrations of credit risk with respect to receivables are limited due to the
geographically  diverse  customer  base.  The  Company  routinely  assesses  the
financial  strength of its  customers  and does not require  collateral or other
security to support customer receivables.  Credit losses are provided for in the
consolidated  financial  statements  in the form of an  allowance  for  doubtful
accounts.

COMPREHENSIVE INCOME

The Company adopted SFAS No. 130, "Reporting Comprehensive Income," in the first
fiscal  quarter of 1999.  SFAS No. 130  establishes  standards for reporting and
displaying  comprehensive  income and its  components  in financial  statements.
Comprehensive  income is a more inclusive financial  reporting  methodology that
includes  the  disclosure  of certain  financial  information  that has not been
recognized in the  calculation of net income or loss,  such as foreign  currency
translations  and changes that are recorded  directly to  shareholders'  equity.
Accumulated other  comprehensive loss comprised of foreign currency  translation
adjustments of $6,071 at June 30, 1999, as a result of the Company's  operations
in the United Kingdom,  which the Company acquired in the fourth quarter of 1998
through its acquisition of UbiCube.

RECLASSIFICATIONS

Certain  balances in prior fiscal years have been  reclassified  to conform with
the presentation adopted in the current fiscal year.

NEW ACCOUNTING PRONOUNCEMENT

In June, 1998 FASB issued SFAS No. 133,  "Accounting for Derivative  Instruments
and Hedging Activities. "SFAS No. 133, as amended by SFAS No. 137, must first be
applied in the first quarter of fiscal years that begin after June 15, 2000, and
in general requires that entities recognize all derivative financial instruments
as assets or  liabilities,  measured at fair value,  and include in earnings the
changes in the fair  value of such  assets  and  liabilities.  SFAS No. 133 also
provides  that changes in the fair value of assets or  liabilities  being hedged
with recognized  derivative  instruments be recognized and included in earnings.
The Company does not utilize derivative  instruments either for hedging or other
purposes,  and therefore  anticipates that the adoption of the requirements SFAS
No. 133 will not have a material affect on its financial statements.

2. BUSINESS ACQUISITIONS

FISCAL 1996 ACQUISITIONS

On June 30, 1996, the Company acquired all of the issued and outstanding  shares
of capital stock of the following entities in exchange for 491,595 shares of the
Company's Common Stock:


                                       F-9
<PAGE>
<TABLE>
<CAPTION>
                                                                       NUMBER OF SHARES
                                                                       ISSUED TO EFFECT
ENTITY/DATE OPERATIONS COMMENCED                                          ACQUISITION
---------------------------------------------------------------    -------------------------

<S>                                                                                 <C>
Scott A. Mednick & Associates, Inc./October 1982                                    208,084
Creative Resources Agency, Inc./November 1994                                         3,970
The S.D. Goodman Group/July 1993                                                     49,623
Internet One, Inc./November 1993                                                     34,736
NetCube, Inc/ February 1978                                                         195,182

</TABLE>

Mednick Group,  Creative  Resources and Goodman Group provided a wide variety of
marketing-related  services. NetCube and Internet One were principally providers
of new media services.  The acquisition of each of these companies was accounted
for using the pooling of interests method of accounting,  and  accordingly,  the
accompanying  consolidated financial statements give retroactive effect to these
acquisitions,  as if the companies had always  operated as a single  entity.  In
connection with these acquisitions,  approximately $676,000 of transaction costs
and expenses were incurred and have been charged to expense during 1996.

On June 30, 1996, the Company acquired all of the outstanding  shares of capital
stock of On Ramp,  a provider of new media  services,  in  exchange  for 231,572
shares of Common Stock. The purchase price of $1,338,000  (includes  transaction
costs of  approximately  $750,000,  including  a $500,000  finder's  fee paid to
Benchmark Equity Group, Inc.,  formerly a principal  stockholder of the Company)
has been  allocated to the assets  purchased and the  liabilities  assumed based
upon  their  estimated  fair  values at the date of  acquisition.  The  carrying
amounts of the tangible assets and liabilities acquired and assumed approximated
their fair values,  and the excess  $2,310,000  of the  purchase  price over the
carrying amounts of net assets acquired, as follows:


Goodwill                                                              $2,159,000
Purchased software and other intangible assets                           251,000
Deferred income taxes                                                  (100,000)
                                                               -----------------
                                                                      $2,310,000
                                                               =================



Goodwill  related to this  acquisition  was amortized over a two-year period and
was fully amortized at June 30, 1998.

FISCAL 1997 ACQUISITIONS

On May 31, 1997,  the Company  acquired  certain assets and operations of Fathom
Advertising  Agency,  Inc.  ("Fathom"),  a provider of traditional  full service
advertising  services,  from  Ketchum   Communications,   Inc.,  a  wholly-owned
subsidiary of Omnicom Group Inc.  ("Omnicom"),  a principal  stockholder  of the
Company,  in exchange for 120,000  shares of the  Company's  Common  Stock.  The


                                      F-10
<PAGE>
purchase price of $442,500 was classified as goodwill,  which was amortized over
a two-year period and is fully amortized at June 30, 1999.

FISCAL 1998 ACQUISITIONS

In  November  1997,  the  Company  purchased  all of the issued and  outstanding
capital stock of BBG New Media, Inc., a Massachusetts  corporation ("BBG") which
provides  interactive  marketing  services.  As consideration,  the Company paid
$175,000  in cash and  issued  303,334  shares  of  Common  Stock to the  former
stockholders of BBG, valued at $3,602,000.  In addition, the Company is required
to issue additional  shares of Common Stock if BBG achieves certain sales growth
rates during the period from  November 1, 1998 through  October 31, 1999. In the
first quarter of fiscal 2000, the Company will issue approximately $4,550,000 in
shares of Common Stock to the former  stockholders  of BBG due to the attainment
of such growth targets. If such shares of Common Stock are issued, such issuance
will  increase   goodwill.   The  aggregate   purchase  price  of  approximately
$4,800,000,  including  acquisition  costs,  exceeded  the fair value of the net
tangible  assets  acquired  by  approximately  $4,233,000  and was  recorded  as
goodwill and is being amortized using the straight-line method over 15 years.

In April 1998, the Company acquired all of the issued and outstanding  shares of
capital   stock   of    Herring/Newman,    Inc.,   a   Washington    corporation
("Herring/Newman")  engaged in the  business  of full  service  advertising.  As
consideration,  the  Company  issued an  aggregate  of 127,799  shares of Common
Stock, valued at $1,655,000,  and paid $400,000 in cash. The Company issued into
escrow an additional  77,220 shares of Common  Stock.  The escrowed  shares were
released  to the former  stockholders  of  Herring/Newman  in the fourth  fiscal
quarter of 1999, upon the occurrence of certain conditions,  including retention
of Herring/Newman's largest clients. The aggregate purchase price of $3,006,000,
which  excludes  consideration  of the escrow  shares and  includes  acquisition
costs, exceeded the fair value of the net tangible assets acquired by $2,102,000
and was  recorded as goodwill  and is being  amortized  using the  straight-line
method over 15 years.

On June 3, 1998, the Company  acquired all of the issued and outstanding  shares
of capital stock of Interweb,  Inc., an Atlanta  corporation  ("Interweb") which
provided  Web-based  solutions to clients.  As consideration for the purchase of
Interweb,  the  Company  issued  600,000  shares  of  Common  Stock,  valued  at
$11,625,000,  and paid $200,000 in cash. The aggregate purchase price, including
acquisition costs,  exceeded Interweb's net assets  (approximately  $669,000) by
$11,304,000.  Of such amount,  $4,700,000 was immediately  charged to expense as
the fair value for software-related  research and development efforts in process
at Interweb for products that had not yet reached technological  feasibility and
which efforts, except for such products,  would have no other alternative future
use. The remaining $6,604,000 was allocated as follows:


Software (developed)                                                 $1,149,000
Goodwill                                                              5,165,000
Other                                                                   290,000
                                                               -----------------
                                                                     $6,604,000
                                                               =================



Goodwill is being amortized using the straight-line method over 15 years.


                                      F-11
<PAGE>
On June 29, 1998, UbiCube  Acquisition Corp.  ("UAC"), a wholly owned subsidiary
of the Company,  acquired  all of the issued and  outstanding  capital  stock of
UbiCube Group, Inc., a Delaware interactive  marketing company ("UbiCube") which
has offices in London and San Francisco. As a result of the acquisition, UbiCube
was merged with and into UAC in exchange for the  issuance of 154,257  shares of
Common  Stock  having  an  aggregate  value  of  approximately  $4,000,000,  and
guaranteed  future  payments of  $2,250,000  in shares of Common  Stock  through
January 15,  2000.  In addition,  154,257  shares of Common Stock were placed in
escrow to be released to the former stockholders of UbiCube on January 15, 1999,
January  15,  2000,  and  March 1,  2001  based  on the  attainment  of  certain
milestones.  In the fourth  fiscal  quarter of 1999,  7,924 shares were released
from escrow to the former  shareholders  of UbiCube upon the  attainment  of the
milestones for the applicable  period. In addition,  the Company agreed to issue
additional  shares  to the  former  stockholders  of  UbiCube  having a value of
approximately  $9,000,000,  subject to the  attainment  of certain  revenue  and
profit targets during the three-year  period ending June 2001. During the fourth
fiscal  quarter of 1999,  21,019  additional  shares  were  issued to the former
stockholders  of UbiCube upon the  attainment of the targets for the  applicable
period.  The aggregate purchase price, which excludes shares held in escrow, but
includes  acquisition  costs,   exceeded  UbiCube's  net  assets  (approximately
$600,000) by approximately  $6,100,000. Of such amount, $500,000 was immediately
charged  to  expense  as  the  fair  value  of  software-related   research  and
development   efforts  in  process  for  products   that  had  not  yet  reached
technological  feasibility  and which efforts,  except for such products,  would
have no other alternative future use. The remaining $5,600,000 exceeded the fair
value of the net tangible  assets acquired and was recorded as goodwill which is
being  amortized  using the  straight-line  method  over 15 years.

FISCAL 1999 ACQUISITION

In March 1999 the  Company  entered  into a purchase  agreement  to acquire  the
assets  and  operations  of  Envision  Group  ("Envision"),  a  California-based
partnership  that  provides  Internet  marketing  and  web-based  solutions.  As
consideration,  the Company  issued  477,002  shares of Common  Stock  valued at
$3,500,000.  In  addition,  the former  partners of Envision  are entitled to an
additional payment, on March 1, 2000 of up to $5,500,000 based on the amount, if
any, by which 200% of Envision's  revenues for the year ended  December 31, 1999
exceed $3,500,000. The additional payment will be made by the issuance of shares
of Common  Stock,  valued using the average  price per share of Common Stock for
the five trading  days  preceding  March 1, 2000,  provided,  however,  that the
sellers may elect to receive up to $500,000 of any additional payment in cash.

The acquisition  has been accounted for as a purchase,  with the assets recorded
on the  basis of the  initial  purchase  price  of  $3,551,247,  which  includes
acquisition  costs but excludes any possible  future  contingent  payments.  The
initial  purchase  price  exceeded  the fair  value  of the net (of  liabilities
assumed)  tangible assets acquired by approximately  $3,738,000,  which has been
recorded as goodwill and is being amortized using the straight-line  method over
15 years. The results of Envision have been included in the consolidated results
of operations from February 23, 1999,  representing the effective date specified
in the purchase  agreement (the results of Envision's  operations for the period
February 23, 1999 to March 10, 1999 were not material).

Each of the  acquisitions  of Fathom,  On Ramp, BBG,  Herring/Newman,  Interweb,
UbiCube  and  Envision  have been  accounted  for using the  purchase  method of
accounting.  Accordingly,  the  results of  operations  of these  companies  are
included in the consolidated financial statements from their respective dates of
acquisition.


                           F-12
<PAGE>
The following  unaudited pro forma information for the year ended June 30, 1999,
assumes the  acquisition of Envision had occurred on July 1, 1998. The unaudited
pro forma  information  for the twelve  months  ended June 30, 1998  assumes the
Company had completed the  acquisition  of Envision,  along with the fiscal year
1998 acquisitions of BBG New Media, Inc. ("BBG"), Herring Newman, Inc. ("Herring
Newman"), Interweb, Inc. ("Interweb"), and UbiCube Group, Inc. ("UbiCube") as of
July 1, 1997.  The pro forma  information  has been  prepared for  informational
purposes  only and is not  necessarily  indicative  of the results of operations
that would have occurred had the  transactions  taken place on the basis assumed
above.
<TABLE>
<CAPTION>
                                                                         1999                     1998
                                                               --------------------------------------------------

<S>                                                                         <C>                      <C>
Revenue                                                                     $51,925,526              $57,806,118
Net loss                                                                    $(8,533,585)            $(28,583,329)
Net loss per common shares-basic and diluted                                      $(.96)                  $(4.53)
Weighted-average common shares outstanding                                   $8,844,708               $6,315,087
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at June 30:
<TABLE>
<CAPTION>
                                                  1999                   1998
                                           ------------------------------------------
<S>                                               <C>                    <C>
Equipment                                          $7,565,626             $6,176,440
Furniture and fixtures                              1,600,601              1,307,047
Leasehold improvements                              2,307,695              1,963,924
                                           -------------------    -------------------
                                                   11,473,922              9,447,411
Less accumulated depreciation
 and amortization                                   6,175,186              3,765,352
                                           -------------------    -------------------
Property and equipment, net                        $5,298,736             $5,682,059
                                           ===================    ===================
</TABLE>

Included in  equipment  is capital  leases of  $1,484,308  and  $1,353,145  with
accumulated  depreciation  of $1,254,188 and $503,175 under capital leases as of
June 30, 1999 and June 30, 1998, respectively.

4. CAPITALIZED SOFTWARE

Capitalized software costs included the following at June 30:

<TABLE>
<CAPTION>
                                                      1999                      1998
                                           ----------------------------------------------
<S>                                                 <C>                     <C>
Capitalized software costs                           $ 624,922               $ 1,950,769
Less accumulated amortization                          208,134                    92,399
                                           --------------------      --------------------
Capitalized software costs, net                      $ 416,788               $ 1,858,370
                                           ====================      ====================
</TABLE>



                                      F-13
<PAGE>
At June 30, 1998  capitalized  software costs consist of $1,200,000  relating to
software  acquired on June 3, 1998 in connection with the Interweb  acquisition.
The remaining  $658,000 was for various software  products  developed during the
fiscal year ended June 30, 1998.

In accordance with SFAS No. 86,  "Accounting for the Costs of Computer  Software
to Be Sold, Leased or Otherwise Marketed" and SFAS No. 121,  "Accounting for the
Impairment  of Long Lived  Assets and Long Lived  Assets to be Disposed  Of" the
Company  recognizes the impairment on long-lived  assets used in operations when
indicators of impairment are present and undiscounted cash flows estimated to be
generated  by  those  assets  are  less  than  the  assets'  carrying   amounts.
Accordingly,  in the fourth  fiscal  quarter of 1999,  the Company  recognized a
non-cash  pre-tax  charge of  $989,000  related to the  write-off  of  developed
software  of the  Interweb  acquisition.  There was no such loss  recognized  in
fiscal 1998.

5. CONVERTIBLE PROMISSORY NOTES

During  fiscal  1996,  Dan  Carlisle,  the father of the former  stockholder  of
NetCube,   extended  credit  to  NetCube.   In  connection  with  the  Company's
combination  with  NetCube  in June  1996,  the  Company  issued  a  convertible
promissory  note for the  repayment  of the  principal  amount of $515,760  with
accrued  interest at 8% per annum.  The  principle  and interest on the note was
convertible into shares of Common Stock at a conversion price of $7.00 per share
with respect to principal and $12.00 per share with respect to accrued  interest
on the note.  Principal  and  interest  on the note,  which was due on March 31,
1998, was converted into 73,680 shares of Common Stock (for principal) and 6,017
shares of Common Stock (for interest).


6. BANK PAYABLES

On April 24, 1998, the Company established a line of credit with the Bank of New
York  ("BONY"),  pursuant  to which BONY  agreed to permit the Company to borrow
$5,000,000  through March 31,1999.  Amounts  outstanding from time to time under
the line of credit accrue interest at a floating rate based on the prime lending
rate of the bank and are due and payable (together with interest) on demand. The
line of credit is evidenced by a promissory note and is secured by substantially
all of the assets of the Company.  In addition,  amounts  outstanding  under the
line of credit have been  guaranteed  by each of the Mednick  Group and On Ramp.
During April 1999, BONY agreed to permit the Company to extend the  availability
on the  line of  credit  to July 31,  1999.  At June 30,  1999 the  Company  had
borrowed  $1,164,000 under this line of credit and had $3,836,000  available for
borrowing.  Since July 31, 1999 the Company  has been in  discussions  with BONY
concerning the renewal of the line of credit. BONY has indicated that it desires
to await the  completion  of the  stockholder  vote on the proposed  Merger with
AnswerThink  before  finalizing  any renewal.  However,  in the interim BONY has
verbally  agreed to allow the Company to  continue to borrow  under the terms of
the April 1998 agreement pending the vote on the proposed Merger.

In the second  quarter of fiscal 1999,  the Company's  London office  obtained a
100,000  (POUNDS)  overdraft  line of credit  with  Barclays  Bank PLC.  Amounts
outstanding  from time to time  under the line of credit  accrue  interest  at a
floating rate based on the bank's base rate. The overdraft facility is repayable
on demand but is subject to review in November 1999.  Amounts  outstanding under
the line of credit  have been  guaranteed  by the  Company.  As of June 30, 1999
there was 33,200 (POUNDS) outstanding on this line of credit.

In November 1997, in connection with its acquisition of BBG, the Company entered
into an agreement with Medford Bank, which agreement provides for repayment of a
loan of $117,000.  Amounts  outstanding on the loan accrue interest at a rate of
10% per annum and were paid on May 13, 1999,  when the line was due. The balance
of $91,915 outstanding at June 30, 1998 was repaid in fiscal 1999.


                                      F-14
<PAGE>
7. INCOME TAXES

Taxes on income consist of the following:

<TABLE>
<CAPTION>
                                                    1999                      1998
                                           -------------------------------------------
<S>                                                <C>                     <C>
Current:
 Federal                                           $     --                  $     --
 State                                              259,182                   339,834
                                            -----------------         -----------------
                                                    259,182                   339,834
                                           -----------------         -----------------
Deferred:
 Federal                                                 --                        --
 State                                                   --                        --
                                           -----------------         -----------------
                                                         --                        --
                                           -----------------         -----------------
Taxes on income                                    $259,182                  $339,834
                                           =================         =================
</TABLE>

The difference between the Federal statutory tax rate and the effective tax rate
resulted from the following:

<TABLE>
<CAPTION>
                                                       1999                      1998
                                           ----------------------------------------------
<S>                                               <C>                       <C>
                                                    %                         %
Federal statutory tax rate                              (34.0)                    (34.0)
Nondeductible compensation and
 research and development expense                        10.7                      38.3
State income taxes, net of
 federal tax benefit                                      3.2                       1.2
Change in valuation allowance                            23.6                      (4.3)
Other items, net                                         (0.3)                        -
                                           -------------------       -------------------
Effective tax rate                                        3.2                       1.2
                                           ===================       ===================
</TABLE>


                                      F-15
<PAGE>

Temporary  differences which gave rise to the deferred tax assets  (liabilities)
consisted of the following at June 30:

<TABLE>
<CAPTION>
                                                      1999               1998
                                          --------------------------------------
<S>                                               <C>                   <C>
Current:
 Accounts receivable                                   $  --              $  --
 Allowance for doubtful accounts                     234,000            235,000
 Accounts payable                                         --                 --
 Nondeductible reserves                              126,000            178,000
 Accrued compensation                                738,000            572,000
 Other                                                 6,500                 --
                                          --------------------------------------
Total current                                      1,104,500            985,000
                                          --------------------------------------

Noncurrent:
 Depreciation                                        235,000            168,000
 Software development costs and other
  intangibles                                      (588,000)          (697,000)
 Net operating loss carryfowards                   3,963,000          1,745,000
                                          --------------------------------------
Total noncurrent                                   3,610,000          1,216,000
                                          --------------------------------------

Net deferred tax assets before valuation
 allowance                                         4,714,500          2,201,000
Deferred tax asset valuation allowance           (4,714,500)        (2,201,000)
                                          --------------------------------------

Net deferred tax asset                               $    --            $    --
                                          ======================================
</TABLE>

Management believes that, based on a number of factors,  the available objective
evidence  creates  sufficient  uncertainty  regarding the  realizability  of the
deferred  tax assets such that a full  valuation  allowance  has been  recorded.
These factors  include the lack of  significant  history of profits and the fact
that the market in which the  Company  competes  is  intensely  competitive  and
characterized by rapidly changing technology, and the lack of carryback capacity
to realize these assets.

At June 30, 1999,  the Company had federal net operating loss  carryforwards  of
approximately  $9,603,000.  The net operating loss  carryforwards will expire at
various dates beginning 2011, if not utilized.  Utilization of the net operating
losses may be subject to a substantial  annual  limitation  due to the ownership
change  limitations  provided by the  Internal  Revenue Code of 1986 and similar
state  provisions.  The annual  limitation  may result in the  expiration of net
operating  losses  before   utilization.   The  Company's  pending  Merger  with
AnswerThink  as described in Note 13 may further limit the  utilization of these
net operating loss carryforwards.

                                      F-16
<PAGE>

8. COMMITMENTS AND CONTINGENCIES

(A) LEASES


Future  minimum  payments,  by year and in the  aggregate,  under  operating and
capital leases with initial or remaining  terms of one year or more,  consist of
the following at June 30, 1999:
<TABLE>
<CAPTION>
                                                            OPERATING LEASES     CAPITAL LEASES         TOTAL
                                                       ---------------------------------------------------------
<S>                                                           <C>                   <C>            <C>
2000                                                            $2,680,547            $367,159       $3,047,706
2001                                                             2,686,693             102,352        2,789,045
2002                                                             2,623,008              79,040        2,702,048
2003                                                             1,936,763              30,612        1,967,375
2004                                                             1,664,665                  --        1,664,665
Thereafter                                                       5,025,486                  --        5,025,486
                                                       ---------------------------------------------------------
Total minimum lease payments                                   $16,617,162             579,163      $17,196,325
                                                       ====================                       ==============
Amount representing interest                                                            59,042
                                                                           --------------------
Present value of net minimum lease payments
                                                                                       520,121

Less current portion                                                                   334,403
                                                                           --------------------
Long term portion                                                                     $185,718
                                                                           ====================
</TABLE>

Total rent expense under  operating  leases  amounted to $1,945,922 and $990,019
for fiscal 1999 and 1998, respectively.

(B) CONSULTING AGREEMENTS

On June 30, 1997, the Company entered into a one year consulting  agreement (the
"Consulting  Agreement") pursuant to which the Company was obligated to issue up
to 200,000  shares of Common Stock,  and options to acquire up to 150,000 shares
of common stock, to the consultant in exchange for rendering certain  consulting
services to the Company,  including acquisitions,  investor relations and market
analysis.

In fiscal 1998, the Consulting Agreement was terminated, thereby eliminating the
issuance of any remaining  shares of Common Stock or stock options due under the
original Consulting Agreement.  In connection  therewith,  the Company agreed to
pay the consultant finder's fees for successful  acquisitions  introduced to the
Company by the  consultant.  Fees of $1,520,000  were paid to the  consultant in
fiscal 1998 and have been recorded as acquisition costs.

In December 1998, the Company entered into an oral consulting agreement with Dan
Nicholas to provide investor  relations and public relations advice and services
for a fee of $20,000 per month. Fees of approximately  $140,000 were paid to Mr.
Nicholas in fiscal 1999. The consulting agreement was terminated in August  1999
upon Mr. Nicholas' appointment as the Company's Chief Financial Officer.

(C) EMPLOYMENT AGREEMENTS

The Company is a party to  employment  agreements  with certain of its officers.
The  agreements  have  terms for one to three  years and  include,  among  other
things,  noncompete  agreements  and  salary  and  benefits  continuation.  Some
employment  agreements  provide for bonuses based on division  profitability and
other milestones.  Minimum salary  commitments under the agreements equal in the
aggregate approximately $2,330,000 as of June 30, 1999.


                                      F-17
<PAGE>

(D) LITIGATION

On September 25, 1998, Michael R. Farrell, a shareholder of the Company, filed a
putative  class  action suit,  styled  Farrell v. Think New Ideas,  Inc.,  Scott
Mednick, Melvin Epstein and Ronald Bloom, No. 98 Civ. 6809, against the Company,
Ronald Bloom (an officer of the Company)  Melvin Epstein and Scott Mednick (both
former officers of the Company) (the "Farrell complaint"). The suit was filed in
the United States District Court for the Southern District of New York on behalf
of all persons who  purchased  or  otherwise  acquired  shares of the  Company's
common stock in the class period from November 14, 1997,  through  September 21,
1998.

On various dates in October,  1998, six  additional  putative class action suits
were  filed  in the  same  court  against  the  same  parties  by six  different
individuals,  each  purporting  to represent a class of  purchasers of Think New
Ideas, Inc. Common Stock. These subsequent suits claimed  substantially  similar
class periods (one alleged a class period  starting on November 5, 1997,  rather
than  November  14,  1997) and made  similar  allegations  as those  made in the
Farrell  complaint.  All seven of these lawsuits were ultimately  transferred to
Judge  Sidney H.  Stein of the United  States  District  Court for the  Southern
District of New York and  consolidated  by order of the Court dated December 15,
1998,  into one  action  styled  In Re:  Think  New  Ideas,  Inc.,  Consolidated
Securities Litigation, No. 98 Civ. 6809 (SHS).

Pursuant  to an order of the Court,  the  plaintiffs  filed a  Consolidated  and
Amended  Class  Action  Complaint  on  February  10,  1999  (the   "consolidated
complaint").  The consolidated  complaint supersedes all prior complaints in all
of the cases and shall  serve as the  operative  complaint  in the  consolidated
class action. The consolidated  complaint names fourteen  individual  plaintiffs
and purports to be filed on behalf of a class of individuals who purchased Think
New Ideas, Inc., common stock from November 5, 1997, through September 21, 1998.
The  consolidated  complaint  makes  substantially  similar  allegations  as the
Farrell  complaint.  Like the  Farrell  complaint,  the  consolidated  complaint
alleges  that the Company and  certain of its  current and former  officers  and
directors  disseminated  materially false and misleading  information  about the
Company's  financial  position and results of operations  through certain public
statements  and in certain  documents  filed by the  company  with the SEC.  The
consolidated  complaint  alleges that these  statements and documents caused the
market price of the  Company's  common stock to be  artificially  inflated.  The
plaintiffs  further  allege that they  purchased  shares of common stock at such
artificially inflated prices and suffered damages as a result. The relief sought
in  the  consolidated  complaint  is  unspecified,   but  includes  a  plea  for
compensatory   damages  and  interest,   punitive  damages  where   appropriate,
reasonable costs and expenses  associated with the action (including  attorneys'
fees and  experts'  fees) and such  other  relief as the  court  deems  just and
proper.

Management   believes  that  the  Company  has   meritorious   defenses  to  the
consolidated  complaint  and intends to contest it  vigorously.  The Company has
filed a motion to dismiss the consolidated  complaint on a number of grounds and
the plaintiffs have opposed the motion.  The motion is currently  pending before
the court and the court has not yet  determined  whether oral  arguments will be
heard.  Although  there can be no assurance as to the outcome of these  matters,
unfavorable  resolution  could have a material  adverse effect on the results of
operations and/or financial condition of the Company in the future.

Additionally,  in the  normal  course of  business,  the  Company  is subject to
certain other claims and  litigation,  which the Company is of the opinion that,
based on  information  presently  available,  such legal


                                      F-18
<PAGE>

matters will not have a material  adverse  effect on the  financial  position or
results of operations of the Company.

9. SHAREHOLDERS' EQUITY

(A) EARNINGS PER SHARE

 The following sets forth information  concerning the number of shares of Common
Stock used in the computations of basic and diluted earnings per share.
<TABLE>
<CAPTION>
                                                                           JUNE 30,
                                                                 1999                    1998
                                                   -------------------------------------------------
<S>                                                              <C>                     <C>
Weighted-average shares outstanding used in
 computation of basic and diluted earnings
 per share                                                        8,844,708               6,315,087
Incremented common shares issuable                                       --                      --
Shares assuming dilution                                          8,844,708               6,315,087
</TABLE>

Incremental  common shares were not included in the  computation for fiscal 1999
and 1998 since their  inclusion in periods when the Company  reported a net loss
would be anti-dilutive.

Shares of Common Stock held in escrow related to  acquisitions  are not included
in the  calculation  of  weighted  average  shares  outstanding  for the periods
presented,  as the  conditions  required  to  release  escrow  shares  for these
acquisitions were not fulfilled at the end of the applicable periods presented.

(B) COMMON STOCK ISSUANCE

In  connection  with the Initial  Public  Offering,  the  Company  issued to the
underwriters of the Initial Public Offering  warrants to purchase 215,000 shares
of Common Stock. Such warrants,  which became exercisable in November 1997 at an
exercise  price of $9.80 per  share,  contain  "cashless  exercise"  provisions,
whereby the holders  thereof,  in lieu of paying the exercise price in cash, may
exercise the warrants with shares issuable  thereunder as consideration for part
or all of the remaining shares issuable under the warrants.  During fiscal 1998,
warrants  to  purchase   approximately  203,000  shares  of  Common  Stock  were
exercised.  During fiscal 1999,  no warrants to purchase  shares of Common Stock
were exercised.

(C) ESCROW SHARES

In connection with the Initial Public Offering,  certain  stockholders placed an
aggregate  of 825,000  shares into escrow (the  "Escrow  Shares") to be released
upon the  Company's  attainment of any one of certain  performance  targets (the
"Targets") pursuant to an escrow agreement (the "Escrow Agreement") between such
holders  and  Continental  Stock  Transfer  & Trust  Company,  as escrow  agent.
Pursuant to the Escrow  Agreement,  the Escrow Shares were not  transferable  or
assignable, but could be voted by the holders thereof. During the fourth quarter
of fiscal 1998, one of the Targets (a closing price of at least $20 per share of
Common Stock for forty consecutive  business days from November 1996 to November
1999 as quoted by Nasdaq) was fulfilled and the Escrow Shares were released. The
Company,  therefore,  recorded a non-cash  charge to earnings  of  approximately
$21,700,000,  equal to the fair market  value of the Escrow  Shares on April 24,
1998, the date of release.


                                      F-19
<PAGE>

(D) ACCELERATED STOCK OPTIONS

In the  fourth  quarter  of  fiscal  1998,  the  Company  reached  a  settlement
agreement,  as  amended,  with Scott A.  Mednick,  the  Company's  former  Chief
Executive Officer and Chairman of the Board of Directors,  who left the Company.
Pursuant to the terms of the amended agreement, the Company agreed to accelerate
the exercise dates of Mr.  Mednick's  options to acquire 60,000 shares of Common
Stock. The acceleration of Mr. Mednick's  options resulted in the recognition of
a charge of  $1,400,000  for the  difference  between the exercise  price of the
options and the market value of the  underlying  Common Stock on the date of the
settlement.

(E) DIRECTORS' STOCK OPTIONS

During fiscal 1999, the compensation  committee approved the grant of options to
two  directors,  each for the  purchase of 20,000  shares of Common  Stock at an
exercise  price equal to the closing  price of the shares of Common Stock on the
date of grant. Upon the grant of these  non-employee stock options to directors,
the Company recognized $180,000 in stock compensation  expense equal to the fair
value of the options  granted based on the  Black-Scholes  option pricing model.
The  options  vest one year  after the date of grant,  are  exercisable  after a
four-year period and expire five years from the date of grant.

(F) SECURITIES PURCHASE AGREEMENT

In March 1999,  the Company  entered into a Securities  Purchase  Agreement with
Capital  Ventures  International  and Marshall  Capital  Management,  Inc. ("the
Purchasers")  whereby the  Purchasers  agreed to  purchase  (i) shares of Common
Stock,  and (ii) warrants to acquire  shares of Common  Stock,  for an aggregate
purchase  price of up to  $11,000,000.  The  Company  used the  proceeds  of the
financing for general  working  capital  purposes,  including the funding of its
strategic growth plan. Pursuant to the Securities  Purchase Agreement,  on March
5, 1999 (the  "Initial  Closing  Date") the  Company  issued,  for  proceeds  of
$6,000,000  (i)  871,142  shares  of its Common  Stock at $6.8875 per share (the
"Initial  Closing  Price"),  representing  95% of the  closing  bid price on the
trading day immediately  preceding the date of the Securities Purchase Agreement
and (ii) warrants to purchase an additional 174,230 shares  (representing 20% of
the  number  of shares  issued  on the  Initial  Closing  Date) of Common  Stock
exercisable for a five-year  term, at an exercise price of $10.33,  representing
as 150% of the Initial Closing Price.

At any time  prior to March 5,  2000 the  Purchasers  have the right but not the
obligation to purchase (i) 530,504  additional shares (the "Optional Shares") of
Common Stock at $9.425 per share,  calculated as 130% of the market price on the
date of the Securities Purchase Agreement, together with warrants (the "Optional
Warrants") for 1/5 share for each Optional Share purchased (a maximum of 106,101
warrants) execrable at an exercise price of 150% of the market price on the date
the related Optional Shares are purchased.


                                      F-20
<PAGE>
In connection  with the issuance of the Common Stock and  Warrants,  the Company
and  the  Purchasers   entered  into  a  Registration   Rights   Agreement  (the
"Registration  Rights Agreement")  relating to the shares of Common Stock issued
to the  Purchasers  on the Initial  Closing  Date and any  subsequent  shares of
Common Stock to be issued to the Purchasers  pursuant to the Securities Purchase
Agreement  (including  shares issuable upon exercise of the Closing Warrants and
the Optional Warrants) (collectively, the "Registrable Securities"). Pursuant to
the Registration  Rights Agreement,  the Company agreed to prepare and file with
the SEC a registration  statement covering the Registrable  Securities not later
than June 30,  1999.  The  Purchasers  were also  afforded  certain  "piggyback"
registration  rights.  The Securities  Purchase Agreement also provides that the
Company will issue additional  shares of Common Stock if the market price on the
date the registration  statement covering the Registrable Securities is declared
effective  by the  SEC  (or,  if such  registration  statement  is not  declared
effective  by the SEC on or  before  March 5,  2000,  any date  selected  by the
Purchasers  prior to June 30, 2000),  is less than $6.8875 per share.  The exact
number of Adjustment Shares is to be determined  pursuant to a formula set forth
in the Securities Purchase Agreement. The Company has the right, pursuant to the
Securities  Purchase  Agreement,  at any time prior to the date the registration
statement  covering  the  Registrable  Securities  is  declared  effective,   to
repurchase  all of the shares  sold to the  Purchasers  at a price  equal to the
greater of (i) $9.6425, representing  140% of the Initial  Closing  Price or the
then-current  market price. In connection with the Securities Purchase Agreement
and  the  Registration  Rights  Agreement,  the  Company  filed  a  registration
statement  on  Form  S-3 on  June  30,  1999.  As of  September  9,  1999,  the
registration statement on Form S-3 has not been declare effective by the SEC.

10. EMPLOYEE COMPENSATION PLANS

(A) 401(K) PLAN

The Company  sponsors a defined  contribution  retirement plan, which covers all
employees  meeting  minimum  service  requirements.  Employees of the  companies
acquired  by the  Company  become  eligible  to join the plan over a period  not
exceeding  one year  from  the date of  acquisition.  The  Plan  qualifies  as a
deferred salary  arrangement  under Section 401(k) of the Internal Revenue Code.
The  Company's  contributions  to the  plan  are  based  on  percentages  of the
employees'  contributions.  The charge to operations for the Company's  matching
contribution was  approximately  $200,000 and $86,000 for the fiscal years ended
June 30, 1999 and 1998, respectively.

(B) STOCK COMPENSATION PLAN

In June 1996,  the  stockholders  of the  Company  authorized  adoption of stock
option plans. In July 1996, the Board of Directors adopted the 1996 Stock Option
Plan (the "1996 Plan"),  which was subsequently amended and restated in November
1996.  The 1996 Plan  provided for the grant of options to officers,  directors,
employees and  consultants  of the Company.  A total of 966,667 shares of Common
Stock  were  reserved  for  issuance  under the 1996 Plan.  Options to  purchase
966,667  shares of Common  Stock at an  exercise  price per share of $7.50  (the
estimated fair value of the shares on the date of grant) were granted to certain
employees  in November  1996.  The  options  granted  generally  were to vest in


                                      F-21
<PAGE>

increments of one-fourth at the end of each year,  over a four-year  period from
the date of grant, and expire after ten years.

Pursuant to a resolution of the Board of Directors,  the Company  terminated the
1996 Plan and established the THINK New Ideas,  Inc. 1997 Stock Option Plan (the
"1997 Plan") which provides for the granting of options to officers,  directors,
employees  and  consultants  of the  Company.  All of the  persons  entitled  to
participate  in the 1996 Plan were given the  opportunity  to participate in the
1997 Plan and, in exchange for the  cancellation  of the  outstanding  1996 Plan
options,  received options to purchase the same number of shares,  with the same
terms as the 1996 Plan  options,  of the  Common  Stock  they were  entitled  to
purchase  under the 1996 Plan at a  price-per-share  equal to $4.05 (the  market
price on the date of grant).  Under the 1997 Plan, the Company may grant options
to purchase up to 2,000,000 shares of Common Stock.

In June 1998,  the Board of  Directors  adopted the 1998 Stock  Option Plan (the
"1998  Plan") which  provides  for the grant of options to new  employees of the
Company to acquire up to 1,500,000 shares of Common Stock.

The stock  options  granted  under the 1997 Plan and the 1998 Plan are generally
intended to be "incentive"  stock options under the Internal  Revenue Code. Such
options are  granted  with an  exercise  price equal to the market  price of the
underlying Common Stock on the date of grant and vest ratably over four years.

As of June 30, 1999, there were outstanding  options  exercisable to purchase up
to 2,466,939 shares of Common Stock under both the 1997 and 1998 Plan.

A summary of the  activity in the  Company's  stock option plans for fiscal 1999
and 1998 is as follows:
<TABLE>
<CAPTION>
                                                     1999                                       1998
                                    -----------------------------------------------------------------------------
                                        NUMBER OF     WEIGHTED AVERAGE          NUMBER OF    WEIGHTED AVERAGE
                                          SHARES       EXERCISE PRICE            SHARES       EXERCISE PRICE
                                    -----------------------------------------------------------------------------
<S>                                        <C>             <C>                  <C>               <C>
Options outstanding at beginning
 of year                                   2,204,907       $ 9.99                1,137,796        $ 3.97
Granted                                    1,057,269         7.67                1,576,216         12.68
Exercised                                    297,508         6.03                  181,713         4.07
Forfeited/canceled                           497,729        12.50                  327,392         5.09
                                    -----------------                     -----------------
Options outstanding at end of
 year                                      2,466,939         9.06                2,204,907         9.99
                                    =================                     =================
Options exercisable at end of
 year                                        704,260         8.42                  411,650         5.39
                                    =================                     =================
</TABLE>

Pro forma  information  regarding net income and earnings per share  required by
SFAS  No.  123 has been  determined  as if the  Company  had  accounted  for its
employee  stock  options  under the fair value  method of SFAS No. 123. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model,  with the following  assumptions for vested and non-vested
options:


                                      F-22
<PAGE>

                              PERIOD ENDED JUNE 30

<TABLE>
<CAPTION>
                                                           1999                     1998
                                         ---------------------------------------------------
<S>                                                      <C>                       <C>
ASSUMPTIONS
Risk-free interest rate                                     4.72%                     6.12%
Volatility                                                   1.07                      0.55
Average life                                              3 years                   2 years
</TABLE>

For purpose of pro forma disclosures, the estimated fair value of the options is
amortized  over the vesting  period of the  options.  The pro forma net loss and
loss per share is as follows:
<TABLE>
<CAPTION>
                                                            1999                     1998
                                         ---------------------------------------------------
<S>                                                   <C>                       <C>
Pro forma net loss                                    $10,166,664               $28,298,355
Pro forma net loss per common
 share, basic                                               $1.15                     $4.48
</TABLE>


The following table summarizes  information  about stock options  outstanding at
June 30, 1999.

<TABLE>
<CAPTION>
                           OPTIONS OUTSTANDING                        OPTIONS EXERCISABLE
-----------------------------------------------------------------------------------------------------
    EXERCISE PRICE           NUMBER         WEIGHTED AVERAGE           NUMBER     WEIGHTED AVERAGE
                          OUTSTANDING          REMAINING          EXERCISABLE      EXERCISE PRICE
                                            CONTRACTUAL LIFE
-----------------------------------------------------------------------------------------------------
<S> <C>                   <C>                    <C>              <C>                  <C>
        3.69                207,400                7.9              144,900              3.69
        4.05                375,524                7.6              202,814              4.05
        6.00                  1,000                8.2                  250              6.00
        6.19                 40,108                8.1               11,250              6.19
        6.38                186,169                9.3                9,625              8.25
        7.32                409,347                9.7               52,500              8.88
        7.88                233,000                9.7               20,000              9.22
        8.25                 55,500                8.5               40,000              9.77
        8.88                 90,000                8.6               99,000             11.88
        9.22                 20,000                9.5               20,000             12.75
        9.77                 80,000                8.6                  500             18.00
       11.00                 20,500                9.8               98,871             18.69
       11.88                376,500                8.4                4,550             20.00
       12.75                 20,000                9.7
       18.00                    500                8.9
      </TABLE>


                                      F-23
<PAGE>
<TABLE>
<S>             <C>            <C>               <C>        <C>                     <C>
                 18.69          318,991           8.9
                 18.94           16,000           9.1
                  20.0           16,400           8.9
                              ---------                      ---------
                              2,466,939                        704,260                8.42
                              =========                      =========
</TABLE>

11. RELATED PARTY TRANSACTIONS

In March 1996,  the Company  entered into a two year  consulting  agreement with
Benchmark Equity Group, Inc., a founding and former  significant  stockholder of
the Company.  Under the  agreement,  the Company was  required to pay  Benchmark
$35,000 upon execution and a monthly fee of $7,000. The Company paid $56,000 for
the  fiscal  year  ended  June 30,  1997 to  Benchmark  in  connection  with the
agreement.  During fiscal 1998,  Benchmark ceased performing  services under the
agreement and, as a result thereof, the Company discontinued payment thereunder.
On August 5, 1999, the Company paid  Benchmark  $54,000 in  satisfaction  of all
unpaid fees for  services  Benchmark  had  rendered  pursuant to its  consulting
agreement with the Company.

On March 17, 1998, the Company  entered into a loan  agreement  with Omnicom,  a
shareholder  of the  Company,  whereby the  Company  borrowed  $500,000  payable
January 31, 1998 together  with interest at the rate of 8% per annum.  The loan,
together  with  interest of $42,789,  was repaid in fiscal 1999.  During  fiscal
1998,  the  Company  recorded  revenues  of  $600,000  from  Omnicom for certain
consulting  services.  Such amounts were included in accounts receivable at June
30, 1998, and collected in August 1998.

12. RESTRUCTURING COSTS

As part of the Company's strategic focus on providing  interactive marketing and
business  solutions,  the Company in April 1998 formalized a decision to dispose
of its traditional graphic design departments.  The Company recorded a charge of
$921,000  in order to reflect  the  anticipated  costs to dispose of the graphic
design  departments.  The  charge  recorded  pursuant  to  EITF  94-3   included
severance  and other  personnel-related  costs of  $500,000  and lease and other
occupancy and facilities-related costs of $421,000.

Through  June 30,  1998,  the  Company  had paid  approximately  $614,000 of the
restructuring  costs,  and at June 30,  1998  there  remained  accrued  costs of
approximately  $307,000 remained relating principally to estimated costs for the
termination  of  equipment  and  facility  leases.  The leases were  settled and
terminated in fiscal 1999,  with the  difference  between the amount  accrued at
June 30, 1998 and the actual cost incurred in fiscal 1999 not being material.


                                      F-24
<PAGE>

13. PROPOSED MERGER WITH ANSWERTHINK

On June 24, 1999, the Company  entered into an Agreement and Plan of Merger (the
"Merger Agreement") by and among the Company, AnswerThink Consulting Group, Inc.
("AnswerThink")  and Darwin  Acquisition  Corp.,  a  wholly-owned  subsidiary of
AnswerThink  ("Sub")  pursuant to which Sub will merge with and into the Company
(the  "Merger").  The Company will survive the Merger and become a  wholly-owned
subsidiary  of  AnswerThink.  Under  the  terms  of the  Merger  Agreement,  all
outstanding  shares of the Company will be exchanged for shares of common stock,
par value $.001 per share, of AnswerThink  ("AnswerThink  Common Stock") and all
outstanding  options to  acquire  shares of Common  Stock  will be  assumed  and
converted into options to acquire shares of AnswerThink Common Stock, at a ratio
of 0.70 shares of  AnswerThink  Common  Stock to one share of Common  Stock (the
"Exchange  Ratio").  In addition,  the  securities  issued (and issuable) by the
Company  pursuant to the Securities  Purchase  Agreement  with Capital  Ventures
International and Marshall Capital Management (See Note 9(f)) will be assumed by
AnswerThink and converted  based upon the Exchange Ratio.  The Merger is subject
to certain conditions,  including  shareholder  approval of both companies.  The
Merger  will be  accounted  for as a pooling of  interests  and is  intended  to
qualify as a tax-free reorganization.

Pursuant to the Merger  Agreement,  the Company has agreed to pay  AnswerThink a
termination  fee of $6,000,000  in the event the Merger  Agreement is terminated
under certain  circumstances,  including the withdrawal of the recommendation of
the Board of Directors of the Company, or the Board of Director's recommendation
of a third  party  acquisition  proposal.  The  Company has also agreed to pay a
termination   fee  of  $3,000,000  to   AnswerThink   under  other   termination
circumstances  such  as  the  inability  to  obtain  the  requisite  shareholder
approval.  Pursuant to the Merger  Agreement,  AnswerThink has agreed to pay the
Company a  termination  fee of  $3,000,000  for a material  breach of the Merger
Agreement that has not been properly cured.

In connection  with the Merger  Agreement,  the Company  granted  AnswerThink an
option to  purchase  up to 19.9% of shares of the  Company's  Common  Stock (the
"AnswerThink  Option")  outstanding  on the date of exercise of the  AnswerThink
Option.  The  AnswerThink  Option is  exercisable  following  the  execution  or
consummation of an alternative  business  combination  involving the Company and
the occurrence of certain further triggering events,  none of which has occurred
as of August 13, 1999. The per-share exercise price under the AnswerThink Option
is eighteen dollars and fifty cents ($18.50).

As further  inducement to AnswerThink to enter into the Merger  Agreement,  each
director,  Omnicom  Group,  Inc. and certain  executive  officers of the Company
(who, in the  aggregate,  beneficially  own  approximately  22% of the Company's
outstanding  Common  Stock)  entered  into voting  agreements  with  AnswerThink
pursuant to which they: (i) agreed to vote their shares of Common Stock in favor
of the Merger Agreement and the Merger; and (ii) granted  irrevocable proxies to
AnswerThink to vote such shares in accordance with the voting agreements.  As an
inducement to the Company to enter into the Merger Agreement,  each director and
certain executive  officers of AnswerThink (who, in aggregate,  beneficially own
approximately  39.76% of  AnswerThink's  outstanding  Common Stock) entered into
voting  agreements  with the Company  pursuant to which they: (i) agreed to vote
their shares of AnswerThink Common Stock in favor of the issuance of AnswerThink
Common Stock  pursuant to the Merger  Agreement;  and (ii)  granted  irrevocable
proxies  to the  Company  to vote such  shares  in  accordance  with the  voting
agreements.

                                      F-25
<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURES

         During the fiscal  year ended June 30,  1998 the  Company  changed  its
independent  auditors from BDO Seidman,  LLP to Ernst & Young, LLP as previously
reported on Form 8-K/A filed with the Securities and Exchange  Commission on May
27,  1998  (File No.  000-21775).  There were no  disagreements  with any of the
Company's independent accountants during the fiscal year ended June 30, 1999.








                                       42
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The following table sets forth, as of June 30, 1999,  certain  information  with
respect to the directors and executive officers of the Company:
<TABLE>
<CAPTION>
         NAME              AGE      POSITION WITH THE COMPANY
        -----              ---      -------------------------
         <S>               <C>      <C>

         Ronald Bloom      46       Chairman and Chief Executive Officer

         Melvin Epstein    53       Chief Financial Officer and Secretary
                                    (resigned August, 1999)

         Adam Curry        35       Chief Technology Officer and Director
                                    (terminated as of July 1, 1999)

         Larry Kopald      45       Chief Creative Officer and Director

         Joseph Nicholson  40       Chief Operating Officer

         James Carlisle    52       Executive Vice President
                                            (terminated as of July 1, 1999)

         Susan Goodman     44       Executive Vice President

         Richard Char      40       Director

         Barry Wagner      59       Director

         Scott Metcalf     48       Director

         Ken Orton         48       Director

         Dan Nicholas      41       Chief Financial Officer (commencing
                                    August 1999)
</TABLE>

         RONALD  BLOOM  has been a  Director  since  June  1996.  He  served  as
President  and Chief  Operating  Officer of the Company from June 1996 until May
1998, when he was appointed  Chairman of the Board and Chief Executive  Officer.
Previously,  Mr.  Bloom was Chief  Operating  Officer and General  Manager of On
Ramp, succeeding Scott Mednick, from 1995 to 1996. Prior to joining On Ramp, Mr.
Bloom   founded  and  served  as   President  of   MediaTime   Advertising   and
Communications,  Chicago,  Illinois  from 1979 to 1981;  President  of Prototype
Computer Aided Design from 1980 to 1983; Vice President and Creative Director of
Jeffrey Nemetz and Associates Advertising,  Chicago, Illinois from 1983 to 1985;
President  of TMF  Communications,  Los Angeles,  California  from 1986 to 1989;
President of Ron


                                     43
<PAGE>

Bloom  Productions,  a  production  company and  consulting  firm founded by Mr.
Bloom, from 1989 to 1994.

         MELVIN  EPSTEIN was the Chief  Financial  Officer of the  Company  from
August  1996 until  August  1999.  From 1994 to August  1996,  Mr.  Epstein  was
Managing Director of TN Services,  a unit of True North  Communications,  and an
advertising  agency.  Prior to joining TN  Services,  Mr.  Epstein was the Chief
Financial Officer of Backer Spielvogel Bates, a subsidiary of Saatchi & Saatchi,
P.L.C.,  from 1987 to 1994. Mr.  Epstein holds a B.S. in Accounting  from Queens
College and is a Certified  Public  Accountant.  Mr. Epstein's last day as Chief
Financial  Officer of the Company was August 20, 1999,  and the Company has been
advised  that he has taken the  position as Chief  Financial  Officer of another
company.

         ADAM CURRY was a Director of the Company from June 1996 until July 1999
and the Chief Technology  Officer of the Company from June 1996 until June 1999.
Mr.  Curry  founded and was  Chairman of the Board of Directors of On Ramp since
1994 and was its  President  from March 1996.  Mr. Curry hosted and produced the
nationally  broadcast radio program "Count Down" from 1983 to 1987. From 1987 to
1992,  Mr. Curry served as an On Air  Personality  for MTV Networks in New York.
Mr. Curry's employment  agreement with the Company expired pursuant to its terms
on June 30,1999 and was not renewed.  Subsequently,  Mr. Curry resigned from the
Board of Directors on July10, 1999.

         LARRY KOPALD has been a Director and the Chief Creative  Officer of the
Company since September 1997.  Prior to joining the Company,  Mr. Kopald was the
Executive  Creative  Officer of Fathom,  a division  of Ketchum  Communications,
Inc., from 1995 to 1997.  Prior to joining Fathom,  Mr. Kopald was the Executive
Creative Director/Executive Vice President of Foote, Cone & Belding from 1987 to
1994.  In  1994,  Mr.  Kopald  founded  the  Kopald  Group,  a  consulting  firm
specializing  in  strategic  and  creative  issues.  Mr.  Kopald holds a B.S. in
Pre-Med.  from  Drake  University  and  a  Masters  Degree  in  Journalism  from
Northwestern University.

         JOSEPH NICHOLSON has been Chief Operating  Officer of the Company since
October 1998. In 1985, Mr.  Nicholson  founded and was an officer of BBG , which
was acquired by the Company in November 1997.

         SUSAN GOODMAN has been  Executive  Vice  President of the Company since
June 1996.  Ms.  Goodman  founded the Goodman  Group,  one of the  Subsidiaries,
primarily  engaged in the  provision of strategic  marketing  and  corporate and
brand  positioning  services,  in  1993  as a  strategic  marketing  consultancy
specializing in direct  marketing and new media.  Previously she was Director of
Client  Services at Chiat Day Direct  Marketing  from February 1992 through July
1992.  Prior to that time,  she spent 10 years in  merchandising  in the apparel
industry  with  companies  such as IZOD and Merona  Sport (a  division of Oxford
Industries).  Ms.  Goodman  serves  on the  Operating  Committee  of the  Direct
Marketing  Association's Business to Business Council. Ms. Goodman has a B.A. in
History from Tufts University and received her M.B.A. in Marketing,  Finance and
Strategic Planning from Northwestern University's Kellogg School of Management.

         JAMES CARLISLE was an Executive Vice President of the Company from June
1996 through June 1999. In 1978, Mr. Carlisle founded NetCube Corporation, which
was  acquired  by the  Company  in June 1996 and was  primarily  engaged  in the
provision of database and information  management and


                                       44
<PAGE>

utilization  services.  Mr.  Carlisle's  employment  agreement  with the Company
expired pursuant to its terms on June 30, 1999 and was not renewed.

         RICHARD CHAR has been a Director of the Company since August 1997.  Mr.
Char has been Managing Director, Head of Global  Execution--Technology  Group at
CS First Boston since April 1999.  Prior to joining CS First Boston Mr. Char was
a Managing Director and Head of Technology Investment Banking at Cowen & Company
from May 1997 until  March  1999.  In July  1998,  Cowen & Company  merged  with
Societe Generale and became SG Cowen Securities  Corporation ("SG Cowen"). Prior
to joining SG Cowen,  Mr. Char was an attorney  with Wilson  Sonsini  Goodrich &
Rosati for thirteen  years.  Mr. Char holds an A.B. from Harvard  University and
J.D. from Stanford University.

         BARRY WAGNER Has been a Director of the Company since  September  1996.
Mr. Wagner has been an employee of Omnicom and its  predecessor  companies since
1974 and  currently  serves as  Secretary  and General  Counsel of Omnicom.  Mr.
Wagner also serves as Secretary and Chief Legal Officer of BBDO  Worldwide  Inc.
and is Senior Vice  President and Chief Legal Officer of BBDO New York,  both of
which are part of Omnicom.  Prior to joining Omnicom, Mr. Wagner was an attorney
with the National Broadcasting Company and the Federal Reserve Bank of New York.
Mr. Wagner is a graduate of Hamilton College and Harvard Law School.

         SCOTT  METCALF has been a Director of the Company  since  November 1998
and an independent  consultant  since June 1998. From January 1997 to June 1998,
he was Chairman  and Chief  executive  Officer of  Digitivity,  Inc.,  which was
acquired by Citrix, Inc. From 1991 to 1996, Mr. Metcalf was the President of Hal
Computer Systems, which was acquired by Fujitsu Ltd. Previously, Mr. Metcalf was
the President and Chief Executive Officer of Dynabook, Inc. and held a number of
senior executive positions at Sun Microsystems, Inc.

         KEN ORTON has been a Director  of the Company  since  March  1999.  Mr.
Orton has been the Chief  Strategist,  e-business  of  Cognitiative  since March
1999. He was President and Chief Executive officer of Preview Travel,  Inc. from
June 1997 to  February  1999.  Mr.  Orton is also on the board of  directors  of
Onsale.com, Autobytel.com, and Virtualvineyard.com.

         DAN NICHOLAS  served as a consultant  to the Company from December 1998
until  August 1999.  As a  consultant  for the  Company,  Mr.  Nichols  provided
investor relations and public relations, advice and services. On August 27,1999,
Mr.  Nicholas  was  appointed to act as Chief  Financial  Officer to succeed Mr.
Epstein.  Prior to joining  the  Company,  Mr.  Nicholas  was a Senior  Managing
Director and Director of Research at Gaines  Berlind Inc.  from November 1997 to
November 1998.  From November 1996 to November 1997, Mr. Nicholas was a Managing
Director at Dominick & Dominick,  Inc. From 1988 to November 1996, Mr.  Nicholas
was a partner at W.H. Reaves & Company.

         All  officers of the  Company  are elected to serve in such  capacities
until the next annual meeting of the Board of Directors of the Company and until
their successors are duly elected and qualified.


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

         Section  16(a) of the  Securities  Exchange Act 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 of equity  securities of the Company with the


                                       45

<PAGE>

Commission.  Officers, directors and  greater-than-ten-percent  stockholders are
required by  regulation  to furnish the Company with copies of all Section 16(a)
forms that they file.

         Based solely upon a review of Forms 3, Forms 4 and Forms 5 furnished to
the Company pursuant to Rule 16a-3 under the Securities  Exchange Act, it is the
Company's belief that, other than as set forth below, any such forms required to
be filed pursuant to Section 16(a) of the Securities Exchange Act were filed, as
necessary, by the officers,  directors and security holders required to file the
same.

         A Form 4 covering  the sale of 42,600  shares of Common  Stock in March
1999 was not filed timely by Larry Kopald,  an executive officer and director of
the Company.  The transaction was reported on Form 4 on April 14, 1999.  Forms 4
covering the grant of 20,000 shares of Common Stock to each of Scott Metcalf and
Ken Orton,  directors of the Company  appointed in November 1998 and March 1999,
respectively were not filed timely.


                                       46
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The  following  table sets forth the  aggregate  cash  compensation  awarded to,
earned by, or paid for  services  rendered to the Company  during the last three
fiscal years by each person who served as the Company's chief executive  officer
during the  Company's  fiscal  year ended June 30,  1999 and the four other most
highly compensated  executive officers of the Company whose salary and bonus for
fiscal 1999 was in excess of $100,000 (the "Named Executive Officers").

<TABLE>
<CAPTION>
 NAME AND                YEAR     SALARY     BONUS     OTHER ANNUAL   RESTRICTED          SECURITIES    LTIP          ALL OTHER
PRINCIPAL POSITION                  ($)       ($)      COMPENSATION     STOCK             UNDERLYING                COMPENSATION ($)
                                                            ($)        AWARDS($)           OPTIONS
                                                                                           SARS(#)
------------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>     <C>         <C>                                           <C>                          <C>
Ronald E. Bloom(1)       1999    273,000                                                        0(2)                   4,800(9)
Chairman of the          1998    192,375     67,125                                        80,000(3)                     764(9)
Board and Chief          1997    125,000     69,696                                        20,000(4)                     237(9)
Executive Officer

Adam C. Curry(5)         1999    273,000                                                        0(2)                   4,800(9)
Chief Technology         1998    192,375     67,125                                        80,000(3)                   3,676(9)
Officer                  1997    125,000     81,480                                        20,000(4)

Melvin Epstein(6)        1999    215,000     25,000                                             0                      4,800(9)
Chief Financial          1998    180,000                                                   25,000(3)                   2,521(9)
Officer                  1997    156,923                                                  133,333(4)

Susan Goodman(7)         1999    240,000     91,460                                             0                      4,800(9)
Executive Vice           1998    203,330                                                   25,000(3)                    5162(9)
President                1997    195,000     46,825                                        36,667(4)

Larry Kopald(8)          1999    350,000   200,000(10)                                          0(2)                   4,800(9)
Chief Creative           1998    304,166   150,000(10)                                          0
Officer                  1997    25,000                                                   250,000(4)

</TABLE>

(1) Mr.  Bloom  commenced  his  employment  with the  Company in June 1996,  was
appointed Chairman in July 1996 and was appointed Chief Executive Officer on May
24, 1998 upon the resignation of Scott A. Mednick.

(2) Does not include 20,000 shares of Common Stock issuable upon the exercise of
options,  for service on the Company's Board of Directors in fiscal 1999,  which
have not yet been granted.

(3) Represents  shares of Common Stock issuable upon exercise of options granted
to the noted  officers  pursuant  to the 1997 Stock  Option  Plan at an exercise
price of $8.88 per share for each individual, other than Mr. Bloom, who owned in
excess  of 10% of the  outstanding  Common  Stock on the date of grant and whose
options,  therefore,  have an  exercise  price of 9.77 per share.

(4) Represents  shares of Common Stock issuable upon exercise of options granted
to the noted  officers  pursuant  to the 1997 Stock  Option  Plan at an exercise
price of $4.05 per share for each  individual,  other  than (a) Mr.  Bloom,  who
owned in excess


                                       47
<PAGE>

of 10% of the  outstanding  Common Stock on the date of grant and whose options,
therefore have an exercise price of $4.46 per share;  and (b) Mr. Kopald,  whose
options,  therefore,  have an exercise  price of $3.69 per share.

(5) Mr. Curry  commenced his employment with the Company and was appointed Chief
Technology  Officer in June  1996.  Mr.  Curry's  employment  contract  with the
Company  expired  pursuant to its terms on June 30, 1999, and was not renewed by
the Company.

(6) Mr.  Epstein  commenced his  employment  with the Company in August 1996 and
served his last day as Chief Financial  Officer on August  20,1999.  Mr. Epstein
was  replaced  by Dan  Nicholas.  See Item 9.  "Directors,  Executive  Officers,
Promoter and Control  Persons;  Compliance  with  Section  16(a) of the Exchange
Act."

(7) Ms. Goodman commenced her employment with the Company in June 1996.

(8) Mr. Kopald commenced his employment with the Company effective as of May 31,
1997.  Consequently,  prior to the end of the fiscal 1997,  Mr. Kopald  received
approximately $25,000 of the salary noted above.

(9) Represents contributions to the Company's 401(k) plan on behalf of the named
individual.

(10) Represents a bonus earned pursuant to Mr.  Kopald's  employment  agreement.
See "Employment and Related Agreements".

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR (1999)

         No stock options were granted to the Named  Executive  Officers  during
the  year.  No stock  appreciation  rights  ("SARs")  have been  granted  by the
Company.

AGGREGATE  OPTION/SAR  EXERCISES IN LAST FISCAL YEAR; FISCAL YEAR-END OPTION/SAR
VALUES

         Set  forth  below is the  number  of  options  exercised  by the  Named
Executive Officers during the fiscal year ended June 30, 1999 and the number and
value of exercisable and unexercisable options as of June 30, 1999. No SARs have
been granted by the Company.
<TABLE>
<CAPTION>


                                                  NUMBER OF SECURITIES UNDERLYING         VALUED UNEXERCISED IN-THE-
                                                   UNEXERCISED OPTIONS/SAR'S AT           MONEY OPTIONS/SAR'S AT FY-
        NAME            SHARES         VALUE                FY-END (#)                               END($)(1)
        ----           ACQUIRED       REALIZED    --------------------------------       -----------------------------
                          ON            ($)        EXERCISABLE       UNEXERCISABLE       EXERCISABLE    UNEXERCISABLE
                      EXERCISED(#)   ------------  -----------       -------------       -----------    -------------
                      -----------
<S>                   <C>           <C>            <C>                <C>                  <C>            <C>
Ronald Bloom                 0             0          60,000           40,000                476,950       241,700
Adam Curry                   0             0          60,000           40,000                512,550       277,300
Melvin Epstein               0             0         139,583           18,750              1,611,658       129,984
Susan Goodman            9,167        93,412           6,250           37,084                 43,328       345,638
Larry Kopald            42,600       437,500         144,900           62,500              1,756,550       757,656
</TABLE>

EMPLOYMENT AND RELATED AGREEMENTS

         In June 1996, the Company entered into employment agreements with Scott
Mednick,  Ronald  Bloom,  Adam Curry,  Susan  Goodman,  James  Grannan and James
Carlisle. Each of the Company's agreements with Messrs. Mednick, Curry and Bloom
provided for an initial term of three years,  subject

--------

(1) The  calculations  of the  value of  unexercised  options  are  based on the
difference  between the closing sales price of the $15.8125 as quoted by Nasdaq,
of the  Common  Stock on June  30, 1999 and the  exercise  price of each  option
multiplied by the number of shares of Common Stock covered by such option.


                                       48
<PAGE>

to automatic extension for a period of two years in the absence of notice to the
contrary at the option of the Company.

         In  connection  with Mr.  Mednick's  resignation  as Chairman and Chief
Executive  Officer  of the  Company  in May 1998,  the  Company  entered  into a
settlement  agreement  with Mr.  Mednick  in May 1998,  as amended in July 1998,
thereby terminating Mr. Mednick's employment  agreement.  Under the terms of the
settlement agreement,  as amended, the Company agreed to accelerate the exercise
dates of the options to acquire up to 60,000  shares of Common Stock  granted to
and owned by Mr. Mednick in exchange for Mr. Mednick's  agreement to be bound by
the non-compete and confidentiality  provisions of such agreement.  Although the
original terms of the settlement  agreement  provided for payment to Mr. Mednick
of $936,130  over a 24 month  period,  payment of such amount was  eliminated by
amendment to the agreement.  Acceleration of Mr.  Mednick's  options resulted in
recognition of a charge of $1,400,000  for the  difference  between the exercise
price of the options  and the market  value of the  underlying  shares of Common
Stock  on the  date of  settlement.  See  Note 9 to the  Consolidated  Financial
Statements of the Company and "Certain Relationships and Related Transactions."

         Pursuant to the terms of their  respective  employment  agreements,  as
amended,  each of  Messrs.  Bloom and Curry were  entitled  to receive an annual
salary of $260,000 and bonuses as  determined  by the Board of  Directors.  In a
letter  agreement  dated May 24, 1999,  the Company agreed to extend the term of
Mr. Bloom's employment with the Company for a period of one-year commencing July
1, 1999, at an increased annual salary of $350,000.  Mr. Curry's employment with
the  Company  terminated  when  the  term of his  employment  agreement  expired
unrenewed on June 30, 1999.

         The employment  agreement with Ms. Goodman provided for an initial term
of three years and entitled Ms.  Goodman to receive an annual salary of $215,000
and bonuses as determined by the Board of Directors. In a letter agreement dated
May 24, 1999, the Company agreed to extend the term of Ms. Goodman's  employment
with  the  Company  for a  period  of  one-year  commencing  July 1,  1999 at an
increased annual salary of $350,000.

         The employment  agreement with Mr. Grannan provided for an initial term
of one year,  with the  option to renew for  successive  one-year  periods.  Mr.
Grannan's  employment  agreement was renewed on June 30, 1997 and June 30, 1998.
Under the terms of the  agreement,  as  amended,  Mr.  Grannan  was  entitled to
receive an annual  salary of $125,000 and bonuses as  determined by the Board of
Directors.  Mr.  Grannan's  left  the  Company  in  January  1999  prior  to the
expiration of the term of his employment agreement.

         The employment agreement with Dr. Carlisle provided for an initial term
of three years, with the option to renew for a two-year period.  Under the terms
of the  agreement,  as amended,  Dr.  Carlisle was entitled to receive an annual
salary of $195,000  and bonuses as  determined  by the Board of  Directors.  Dr.
Carlisle's employment agreement expired unrenewed on June 30, 1999.

         In August  1996,  the Company  entered into an  employment  letter with
Melvin Epstein.  Pursuant to the terms of such letter,  Mr. Epstein was entitled
to  receive  an  annual  salary  of  $180,000,  subject  to  annual  review  and
evaluation.  The contract  provided for  termination  by either party upon prior
notice.  Mr.Epstein's employment as Chief Financial Officer of the Company ended
on August 20,1999.


                                       49
<PAGE>

         In May 1997, in  connection  with the Fathom  Acquisition,  the Company
reached an agreement with Larry Kopald, pursuant to which Mr. Kopald is entitled
to receive an annual  salary of $300,000  the first year of his  employment  and
$350,000 the second year of his  employment.  Mr. Kopald:  (i) earned a bonus of
$150,000 in the first year of his employment  based upon a significant  client's
agreement to enter into an advertising  services agreement with the Company; and
(ii) received  options  exercisable  to purchase up to 250,000  shares of Common
Stock in equal  increments  over a period of four years at an exercise  price of
$3.69 per share,  the market price of the Common Stock on the date of grant.  In
addition,  in the second year of his  employment,  Mr.  Kopald earned a bonus of
$200,000 based on the profits on billings on the account of a significant client
in excess of $20 million  dollars.  In a letter agreement dated May 24, 1999 the
Company agreed to extend the term of Mr.  Kopald's  employment  with the Company
for a period of one-year commencing June 1, 1999.

         The Company's  employment  agreements  provide for  termination  by the
Company upon death or disability of the individual and may be terminated with or
without cause (as defined  therein).  Such agreements also provide for severance
payments  upon  termination  without  cause based upon a multiple of the monthly
salaries  provided for therein (for up to twelve months  following the number of
months  otherwise  remaining  under such  agreements).  In addition,  all of the
foregoing   employment   agreements,   other   than   Mr.   Epstein's,   contain
non-competition and confidentiality provisions that extend beyond the respective
terms of such agreements for periods of up to one year.

CONSULTING AND OTHER ARRANGEMENTS

         In March 1996,  the Company  entered into a consulting  agreement  with
Benchmark Equity Group,  Inc.  ("Benchmark")  pursuant to which the Company paid
Benchmark $35,000 upon execution and agreed to pay Benchmark $7,000 per month in
consulting fees. Frank DeLape,  formerly a principal stockholder and director of
the Company, is a principal and director of Benchmark.  The consulting agreement
expired by its terms on March 28, 1998.  Benchmark ceased providing  services to
the Company prior  thereto,  at which time the Company  discontinued  payment to
Benchmark.  Subsequently,  in August 1999  Benchmark and the Company  reached an
agreement  pursuant  to  which  the  Company  paid  amounts  previously  owed to
Benchmark for services  provided prior to  termination  of Benchmark's  services
under the agreement. See Note 11 to the Consolidated Financial Statements of the
Company.

         In June 1997, the Company entered into a consulting agreement, pursuant
to which the consultant agreed to render to the Company for a period of one year
certain consulting services, including, among other things, providing merger and
acquisition and investor and public relations  services.  In exchange therefore,
the Company agreed to issue an aggregate of up to 150,000 shares of Common Stock
and  options to acquire up to 150,000  shares of Common  Stock,  at an  exercise
price per share ranging from $8.64 to $11.56, based upon the closing transaction
price of the  Common  Stock  at the end of each  month  that  the  corresponding
options were issued.

         Pursuant to an agreement to terminate  the  consulting  agreement,  the
Company  agreed  to pay  the  consultant  finder's  fees  upon  consummation  of
transactions  with companies  introduced to the Company by the consultant.  Such
fees are to be negotiated on a case-by-case basis. To date, the Company has paid
$1,520,000 in fees pursuant to this agreement.

         In December 1998, the Company entered into an oral consulting agreement
with Dan Nicholas to provide investor  relations and public relations advice and
services for a fee of $20,000 per month.  Fees


                                      50
<PAGE>

of  approximately  $140,000  were  paid to Mr.  Nicholas  in  fiscal  1999.  The
consulting  agreement  between the Company and Mr.  Nicholas was  terminated  in
August 1999 upon Mr.  Nicholas'  appointment  as the Company's  Chief  Financial
Officer.

DIRECTOR COMPENSATION

         Employee  directors  of the Company  receive no cash  compensation  for
acting as directors or attending  meetings of the Board.  Nonemployee  directors
receive  $1,000  per year for each  year such  director  serves on the Board and
$2,500 per meeting  attended.  All  directors are entitled to  reimbursement  of
reasonable expenses related to attending meetings of the directors.

         In  addition,  on June 30 of each year each  director  is  entitled  to
receive an option to  purchase  an  aggregate  of up to 20,000  shares of Common
Stock. The exercise price of each such option is the last  transaction  price of
the  Common  Stock  as  quoted  on  Nasdaq  on the  date of  grant or on the day
immediately  preceding the date of grant. The options are generally  exercisable
one year after the date of grant,  and are exercisable  over a four-year  period
and  expire  five years from the date of grant.  Notwithstanding  the  Company's
general practice of annually granting options to directors,  based on agreements
between the Company and each  director,  no options were granted to any director
for fiscal 1998. In fiscal 1999, the Company granted options for the purchase of
20,000 shares of Common Stock to each of Scott Metcalf and Ken Orton,  directors
of the Company  appointed  in November  1998 and March  1999,  respectfully.  In
addition,  all directors are eligible to receive options under the 1997 Plan (as
defined below).

STOCK OPTION PLANS

         In June 1996, the stockholders of the Company  authorized the Company's
implementation  of  stock  option  plans  to  compensate  management  and  other
employees.  In July 1996, the Board of Directors adopted and the stockholders of
the Company ratified the THINK New Ideas, Inc. 1996 Stock Option Plan (the "1996
Plan").  Subsequently,  in February  1997, by resolution of the Board,  the 1996
Plan was terminated and the participants therein were granted options (identical
to those  held in the 1996  Plan) in the  THINK  New  Ideas,  Inc.  Amended  and
Restated  1997  Stock  Option  Plan (the  "1997  Plan"),  which was  adopted  by
resolution of the Board in September  1997 and ratified by the  stockholders  of
the Company in December 1997.

         The 1997  Plan  provides  for the  grant of  options  that  qualify  as
incentive stock options ("Incentive  Options") under Section 422 of the Internal
Revenue Code of 1986,  as amended  ("Code"),  to officers  and  employees of the
Company   (and  its   Subsidiaries)   and   options   that  do  not  so  qualify
("Non-Qualified Options") to officers,  directors,  employees and consultants of
the Company (and its Subsidiaries).  Pursuant to the terms of the 1997 Plan, the
Company may grant  options  exercisable  to purchase up to  2,000,000  shares of
Common Stock.  As of June 30, 1999, the Company had granted  options to purchase
up to 1,304,182  shares of Common Stock,  which options had an aggregate  market
value,  based on the closing  sales price of the Common  Stock  underlying  such
options as quoted by Nasdaq on such date, of  $20,622,378.  Such options  become
exercisable  one  year  after  the  date of  grant  and are  exercisable  over a
four-year period in equal annual increments. Options to purchase an aggregate of
565,389 shares of Common Stock are currently exercisable. The exercise prices of
the options granted to date range from $3.69 to $20.00.


                                       51
<PAGE>

         Pursuant  to  its  terms,   the  1997  Plan  is   administered  by  the
Compensation  Committee.  The Compensation  Committee  determines the persons to
whom  options are granted,  the number of shares of stock  subject to an option,
the period during which options may be exercised and the exercise price thereof.
Under the 1997 Plan, the exercise price for any Incentive Option may not be less
than the "fair market value" of the shares of Common Stock at the time of grant.
In  addition,  if an  Incentive  Option to  purchase  shares of Common  Stock is
granted to an optionee who owns more than 10% of the voting power of the capital
stock of the Company,  the minimum exercise price of such option may be not less
than 110% of the "fair  market  value" of the shares of Common Stock on the date
of grant.

         In May 1998,  the Board  adopted  the THINK New  Ideas,  Inc.  1998 New
Employee  Stock  Option  Plan which was later  amended  and called the THINK New
Ideas Amended and Restated  1998 Stock Option Plan (the "1998  Plan").  The 1998
Plan was approved  and  ratified by the  Stockholders  at the  Company's  annual
meeting  held January 7, 1999.  The 1998 Plan  provides for the grant of options
that qualify as incentive stock options ("Incentive Options") under the Code and
options that do not so qualify ("Non-Qualified Options") to officers, directors,
existing employees and consultants of the Company.  Pursuant to the terms of the
1998 Plan, the Company may grant options exercisable to purchase up to 1,500,000
shares of Common Stock.  As of June 30, 1999, the Company had granted options to
purchase up to 1,022,757 shares of Common Stock,  which options had an aggregate
market value,  based on the closing  sales price of the Common Stock  underlying
such  options as quoted by Nasdaq on such date,  of  $16,172,345.  Such  options
become  exercisable one year after the date of grant and are exercisable  over a
four-year period in equal annual increments. Options to purchase an aggregate of
$98,871 shares of Common Stock are currently exercisable. The exercise prices of
the options granted to date range from $6.38 to $18.69.

         Pursuant  to  its  terms,   the  1998  Plan  is   administered  by  the
Compensation  Committee.  The Compensation  Committee  determines the persons to
whom  options are granted,  the number of shares of stock  subject to an option,
the period during which options may be exercised and the exercise price thereof.
Pursuant to the 1998 Plan, the exercise  price for any Incentive  Option may not
be less than the "fair  market  value" of the shares of Common Stock at the time
of grant. In addition, if an Incentive Option to purchase shares of Common Stock
is granted  to an  optionee  who owns more than 10% of the  voting  power of the
capital stock of the Company,  the minimum  exercise price of such option may be
not less than 110% of the "fair  market  value" of the shares of Common Stock on
the date of grant.

LIMITATION ON LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The  Certificate  of  Incorporation  limits the  personal  liability of
directors to the fullest extent  permitted by Section  102(b)(7) of the Delaware
General  Corporation Law.  Section 145 of the Delaware  General  Corporation Law
provides  that a  corporation's  certificate  of  incorporation  may  limit  the
personal  liability of its  directors  for monetary  damages for breach of their
fiduciary  duties as directors  except for liability:  (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders; (ii) for acts
or omissions  not in good faith or which  involve  intentional  misconduct  or a
knowing  violation  of law;  (iii)  arising  under  Section 174 of the  Delaware
General  Corporation  Law; or (iv) for any  transaction  from which the director
derived an improper personal benefit.

         The effect of the  foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such persons
in their official  capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of


                                       52
<PAGE>

the corporation,  and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

         Insofar as indemnification for liabilities arising under the Securities
Act  may  be  permitted  to  directors,  officers  or  persons  controlling  the
registrant  pursuant  to the  foregoing  provisions,  the  registrant  has  been
informed that in the opinion of the Commission such  indemnification  is against
public policy as expressed in the Securities Act and is therefore unenforceable.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain  information as of June 30, 1999
with respect to the beneficial  ownership of the Company's  Common Stock by: (i)
each of the  Company's  directors;  (ii) each of the Named  Executive  Officers;
(iii) each person or entity who is known to the Company to  beneficially  own 5%
or more of the  outstanding  Common Stock;  and (iv) all directors and executive
officers of the Company as a group.



                                       53

<PAGE>
<TABLE>
<CAPTION>
      NAME AND ADDRESS OF BENEFICIAL OWNER               NUMBER OF SHARES         PERCENTAGE OF OUTSTANDING
                                                        BENEFICIALLY OWNED         SHARES BENEFICIALLY OWNED
     -------------------------------------              ------------------        --------------------------
<S>                                                       <C>                          <C>
Ronald Bloom                                                 486,433(1)                       4.82%
 45 West 36th Street
 New York, New York 10018
Adam Curry                                                    97,890(2)                           *
 45 West 36th Street
 New York, New York 10018
James Carlisle                                               228,515(3)                       1.93%
 45 West 36th Street
 New York, New York 10018
Susan Goodman                                                 65,039(4)                           *
 45 West 36th Street
 New York, New York 10018
Melvin Epstein                                               159,333(5)                       1.56%
 45 West 36th Street
 New York, New York 10018
Joseph Nicholson                                             136,951(6)                       1.36%
 45 West 36th Street
 New York, New York 10018
Larry Kopald                                                 144,900(7)                       1.43%
 45 West 36th Street
 New York, New York 10018
</TABLE>
--------------
(1) Includes  60,000  shares of Common Stock  issuable  upon exercise of options
that are  presently  exercisable  within 60 days of June 30,  1999.  ("Presently
Exercisable").  Also  included  are  5,000  shares  owned  by the  Ronald  Bloom
charitable  Foundation.  Does not include 40,000 shares of Common Stock issuable
upon  exercise of options that are not Presently  Exercisable.  Does not include
20,000 shares of Common Stock issuable upon exercise of options,  for service on
the  Company's  Board of  Directors  in  fiscal  1999,  which  have not yet been
granted.

(2) Includes  60,000 shares of Common  Stock,  issuable upon exercise of options
that are Presently Exercisable.  Does not include 20,000 shares of Common Stock,
issuable  upon  exercise  of  options  for  service  on the  Company's  Board of
Directors in fiscal 1999, which have not yet been granted.

(3) Includes  33,333 shares of Common  Stock,  issuable upon exercise of options
that are  Presently  Exercisable.

(4) Includes  6,250 shares of Common  Stock,  issuable  upon exercise of options
that are Presently Exercisable.  Does not include 37,084 shares of Common Stock,
issuable upon exercise of options that are not Presently Exercisable.

(5) Includes  139,583  shares of Common Stock  issuable upon exercise of options
that are Presently Exercisable.  Does not include 18,750 shares of Common Stock,
issuable upon exercise of options that are not Presently Exercisable.

(6) Includes  25,000  shares of Common Stock  issuable  upon exercise of options
that are Presently Exercisable.  Does not include 75,000 shares of Common Stock,
issuable upon exercise of options that are not Presently Exercisable, which such
shares will  immediately  vest upon a change of control.

(7) Includes  144,900  shares of Common Stock  issuable upon exercise of options
that are Presently Exercisable.  Does not include 62,500 shares of Common Stock,
issuable upon exercise of options that are not Presently  Exercisable.  Does not
include  20,000 shares of Common Stock  issuable  upon exercise of options,  for
service on the Company's  Board of Directors in fiscal 1999,  which have not yet
been granted.


                                       54
<PAGE>
<TABLE>
      NAME AND ADDRESS OF BENEFICIAL OWNER               NUMBER OF SHARES         PERCENTAGE OF OUTSTANDING
                                                        BENEFICIALLY OWNED         SHARES BENEFICIALLY OWNED
     -------------------------------------              ------------------        --------------------------


<S>                                                           <C>                          <C>
Omnicom Group                                              1,183,333                         11.71%
437 Madison Avenue
New York, New York 10022
Barry Wagner                                                  20,000(8)                           *
 437 Madison Avenue
 New York, New York 10022
Scott Metcalf                                                      0(9)                           *
 45 West 36th Street
 New York, New York 10018
Richard Char                                                  20,000(10)                          *
 45 West 36th Street
 New York, New York 10018
Ken Orton                                                          0(11)                          *
 45 West 36th Street
 New York, New York 10018
Heights Capital Management                                   840,989(12)                      8.33%
 425 California Avenue, Suite 1100
 San Francisco, California 94104
Marshall Capital Management, Inc.                            840,989(12)                      8.33%
 227 Monroe Street, 42 floor
 Chicago, Illinois 60606
All Directors and Executive Officers as                    1,359,061                         13.45%
 a Group (11 persons)
</TABLE>

* denotes less than one percent.

-------------
(8) Includes  20,000  shares of Common Stock  issuable  upon exercise of options
that are  Presently  Exercisable.  Does not  include  20,000  shares  of  Common
Stock issuable upon exercise of options,  for service on the Company's  Board of
Directors in fiscal 1999, which have not yet been granted.

(9) Does not include  20,000 shares of Common  Stock,  issuable upon exercise of
options,  for service on the Company's Board of Directors in fiscal 1999,  which
have not yet been granted.

(10) Does not include  20,000 shares of Common Stock,  issuable upon exercise of
options that are not Presently  Exercisable.  Does not include  20,000 shares of
Common Stock  issuable  upon  exercise of options,  for service on the Company's
Board of Directors in fiscal 1999, which have not yet been granted.

(11) Does not include  20,000 shares of Common Stock,  issuable upon exercise of
options,  for service on the Company's Board of Directors in fiscal 1999,  which
have not yet been granted.

(12) Includes   405,418  shares of Common  Stock  issuable  upon the exercise of
warrants that are Presently Excercisable.


                                       55
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            During the fiscal year ended June 30, 1998,  Ronald  Bloom  received
advances  for  expenses of  $68,340,  for which  approximately  $18,000 had been
offset  by  expense  reports  as of  June  30,  1998.  As of  the  date  hereof,
approximately  $15,000  remains  outstanding.  To the  extent  the same  remains
outstanding, Mr. Bloom is responsible to reimburse the Company.

         In November  1996,  in  connection  with the Initial  Public  Offering,
certain  stockholders  placed an aggregate of 825,000 shares into the IPO Escrow
pursuant to an escrow  agreement (the "Escrow  Agreement")  between such holders
and Continental Stock Transfer & Trust Company, as escrow agent. Pursuant to the
Escrow  Agreement,  the Escrow Shares were not  transferable or assignable,  but
could be voted by the holder thereof.  During the fourth quarter of fiscal 1998,
one of the Targets (a closing  price of $20 per share of Common  Stock for forty
consecutive  business  day from  November  1996 to  November  1999 as  quoted by
Nasdaq) was achieved and the Escrow  Shares were  released.  Upon release of the
IPO Escrow, the stockholders received their Escrow Shares as follows:  Benchmark
- 204,645  shares;  Christopher  Efird - 27,906 shares;  Scott Mednick - 188,043
shares; Ronald Bloom - 261,256 shares; Adam Curry - 59,774 shares; Susan Goodman
- 14,801 shares; David Hieb - 10,360 shares; and James Carlisle - 58,215 shares.
See  Note  9 to  the  Consolidated  Financial  Statements  of  the  Company  and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

         On March 17,  1998,  the Company  entered  into a loan  agreement  with
Omnicom  pursuant  to which  Omnicom  agreed to lend  $500,000  to the  Company.
Amounts  outstanding  from time to time under the loan accrue interest at 8% per
annum and are due and payable  (together  with interest) on January 31, 1999. As
of September 3, 1998 there was  outstanding  $500,000  under the loan  agreement
with  Omnicom.  See  Note 11 to the  Consolidated  Financial  Statements  of the
Company and  "Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations."

         On April 24, 1998,  the Company  established  a line of credit with the
Bank of New York  ("BONY"),  pursuant to which BONY agreed to make  available to
the Company  $5,000,000 through April 28, 1999. On April 21, 1999 BONY agreed to
extend the  availability  of the line of credit  through July 31, 1999.  Amounts
outstanding  from time to time  under the line of credit  accrue  interest  at a
floating  rate  based  on the  prime  lending  rate of the  bank and are due and
payable (together with interest) on demand. The line of credit is evidenced by a
promissory  note and is secured by the assets of the Mednick  Group and On Ramp.
In addition,  amounts  outstanding under the line of credit have been guaranteed
by each of the Mednick Group and On Ramp.  As of September 9, 1999,  the Company
had borrowed  $1,164,000  under the line of credit with BONY and had  $3,836,000
available for borrowing. Since July 31, 1999 the Company has been in discussions
with BONY concerning the renewal of the line of credit.  BONY has indicated that
it desires  to await the  completion  of the  stockholder  vote on the  proposed
Merger with AnswerThink before finalizing any renewal.  However,  in the interim
BONY has  verbally  agreed to allow the Company to continue to borrow  under the
terms of the April 1998 agreement  pending the vote on the proposed Merger.  See
Note 6 to the Consolidated Financial Statements of the Company and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

         In  connection  with Mr.  Mednick's  resignation  as Chairman and Chief
Executive  Officer  of the  Company  in May 1998,  the  Company  entered  into a
settlement  agreement  with Mr.  Mednick  in May 1998,  as amended in July 1998,
thereby terminating Mr. Mednick's employment  agreement.  Under the terms of the
settlement agreement,  as amended, the Company agreed to accelerate the exercise
dates of the options to acquire up to 60,000  shares of Common Stock  granted to
Mr.  Mednick  in  exchange  for  Mr.  Mednick's  agreement  to be  bound  by the
non-compete  and  confidentiality  provisions  of such  agreement.  Although the
original terms of the settlement  agreement  provided for payment to Mr.


                                       56
<PAGE>

Mednick  of  $936,130  over a 24  month  period,  payment  of  such  amount  was
eliminated  by  amendment  to the  agreement.  See  Note  9 to the  Consolidated
Financial Statements of the Company and "Executive Compensation."

         In December 1998,  the Company  entered into an oral agreement with Dan
Nicholas to provide investor  relations and public relations advice and services
for a fee of $20,000 per month. Fees of approximately  $140,000 were paid to Mr.
Nicholas in fiscal 1999.  The consulting  agreement  between the Company and Mr.
Nicholas was  terminated in August 1999 upon Mr.  Nicholas'  appointment  as the
Company's Chief Financial Officer.








                                       57

<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(A) EXHIBITS

Exhibit

Number   Title of Exhibit

2.1       Asset Purchase and Forbearance  Agreement,  dated May 31, 1997, by and
          between THINK New Ideas, Inc. and Ketchum Communications, Inc.

2.2       Agreement  and Plan of Merger  dated June 27, 1998  between  THINK New
          Ideas, Inc.,  UbiCube Group,  Inc., Ubicube  Acquisition Corp. and the
          Stockholders  of UbiCube  Group,  Inc.,  filed with the Securities and
          Exchange  Commission  on  September  11,  1998  as an  exhibit  to the
          Company's Form 8-K/A (File No.  000-21775) and incorporated  herein by
          reference.

2.3       Agreement  and Plan of Merger  dated  June 2, 1998  between  THINK New
          Ideas, Inc.,  Interweb,  Inc. and the Stockholders of Interweb,  Inc.,
          filed with the Securities and Exchange Commission on August 14,1998 as
          an  exhibit  to the  Company's  Form 8-K/A  (File No.  000-21775)  and
          incorporated herein by reference.

2.4       Agreement  and Plan of Merger  dated April 1, 1998  between  THINK New
          Ideas,  Inc.,  Herring/Newman,  Inc., Phil Herring,  and Daniel Gross,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on Form 10-KSB (File No.  000-21775)  for the
          fiscal year ended June 30, 1998 and incorporated herein by reference.

2.5       Agreement and Plan of Merger dated November 11, 1997 between THINK New
          Ideas,  Inc.,  BBG New  Media,  Inc.,  Daniel  McCartney,  and  Joseph
          Nicholson,  filed  with the  Securities  and  Exchange  Commission  on
          January 16, 1998 as an exhibit to the  Company's  Form 8-K/A (File No.
          000-21775) and incorporated herein by reference.

2.6       Agreement  and Plan of Merger by and among THINK New Ideas,  Inc.,  On
          Ramp,  Inc.  and Adam Curry,  filed with the  Securities  and Exchange
          Commission  on  September  26,  1996 as an  exhibit  to the  Company's
          Registration   Statement  on  Form  SB-2  (File  No.   333-12795)  and
          incorporated herein by reference.

2.7       Agreement  and Plan of  Merger by and among  THINK  New  Ideas,  Inc.,
          NetCube  Corporation  and  James  Carlisle,   Ph.D.,  filed  with  the
          Securities and Exchange Commission on September 26, 1996 as an exhibit
          to the  Company's  Registration  Statement  on  Form  SB-2  (File  No.
          333-12795) and incorporated herein by reference.

2.8       Agreement  and Plan of  Merger by and among  THINK  New  Ideas,  Inc.,
          Creative Resources,  Inc. and James Grannan, filed with the Securities
          and Exchange  Commission  on  September  26, 1996 as an exhibit to the
          Company's Registration Statement on Form SB-2 (File No. 333-12795) and
          incorporated herein by reference.


                                       58
<PAGE>

2.9       Agreement and Plan of Merger by and among THINK New Ideas,  Inc.,  The
          S.D. Goodman Group, Inc. and Susan Goodman,  filed with the Securities
          and Exchange  Commission  on  September  26, 1996 as an exhibit to the
          Company's Registration Statement on Form SB-2 (File No. 333-12795) and
          incorporated herein by reference.

2.10      Agreement  and Plan of  Merger by and among  THINK  New  Ideas,  Inc.,
          Internet One, Inc. and David and Dana Hieb,  filed with the Securities
          and Exchange  Commission  on  September  26, 1996 as an exhibit to the
          Company's Registration Statement on Form SB-2 (File No. 333-12795) and
          incorporated herein by reference.

2.11      Agreement and Plan of Merger by and among THINK New Ideas, Inc., Scott
          Mednick  &  Associates,   Inc.  and  Scott  Mednick,  filed  with  the
          Securities and Exchange Commission on September 26, 1996 as an exhibit
          to the  Company's  Registration  Statement  on  Form  SB-2  (File  No.
          333-12795) and incorporated herein by reference.

2.12      Asset Purchase Agreement by and among THINK New Ideas, Inc.,  Envision
          Group, James Hartley and Paul Ashcraft,  filed with the Securities and
          Exchange  Commission  on March 29, 1999 as an exhibit to the Company's
          Current Report on Form8-K (File  No.000-21775) and incorporated herein
          by reference.

2.13      Merger  Agreement by and among  AnswerThink  Consulting  Group,  Inc.,
          THINK New Ideas,  Inc. and Darwin  Acquisition  Corp.,  filed with the
          Securities  and Exchange  Commission on June 30, 1999 as an exhibit to
          the  Company's  Current  Report on Form 8-K (File No.  000-21775)  and
          incorporated herein by reference.

3.1       Articles  of  Incorporation  of  THINK  New  Ideas,  Inc.   (Delaware)
          (Registrant),  filed with the  Securities  and Exchange  Commission on
          September  26,  1996  as an  exhibit  to  the  Company's  Registration
          Statement on Form SB-2 (File No. 333-12795) and incorporated herein by
          reference.

3.2       Bylaws  of THINK  New  Ideas,  Inc.,  filed  with the  Securities  and
          Exchange  Commission  on  September  26,  1996  as an  exhibit  to the
          Company's Registration Statement on Form SB-2 (File No. 333-12795) and
          incorporated herein by reference.

4.1       Specimen  Common  Stock  Certificate,  filed with the  Securities  and
          Exchange  Commission  on  September  26,  1996  as an  exhibit  to the
          Company's Registration Statement on Form SB-2 (File No. 333-12795) and
          incorporated herein by reference.

4.2       Form of Warrant Agreement among the Company,  Commonwealth  Associates
          and  Continental  Stock  Transfer  and Trust  Company,  filed with the
          Securities and Exchange Commission on September 26, 1996 as an exhibit
          to the  Company's  Registration  Statement  on  Form  SB-2  (File  No.
          333-12795) and incorporated herein by reference.

4.3       THINK  New  Ideas,  Inc.  1996  Stock  Option  Plan,  filed  with  the
          Securities and Exchange Commission on September 26, 1996 as an exhibit
          to the  Company's  Registration  Statement  on  Form  SB-2  (File  No.
          333-12795) and incorporated herein by reference.


                                       59
<PAGE>

4.4       Amended and  Restated  THINK New Ideas,  Inc.  1997 Stock Option Plan,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on Form 10-KSB (File No.  000-21775)  for the
          fiscal year ended June 30, 1998 and incorporated herein by reference.

4.5*      Amended and Restated  THINK New Ideas,  Inc.  1998 Stock Option Plan.

4.6       Securities  Purchase  Agreement  by and among  THINK New Ideas,  Inc.,
          Capital Ventures  International and Marshall Capital Management,  Inc.
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Current  report  on  Form  8-K  (File  No.  000-21775)  and
          incorporated herein by reference.

4.7       Registration  Rights  Agreement  by and among  THINK New Ideas,  Inc.,
          Capital Ventures  International and Marshall Capital Management,  Inc.
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Current  report  on Form 8-K on  March  12,1999  (File  No.
          000-21775) and incorporated herein by reference.

10.1      Employment  Agreement between THINK New Ideas, Inc. and Scott Mednick,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.2      Employment  Agreement  between  THINK New Ideas,  Inc.  and Ron Bloom,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.2(a)   Amendment to Ron Bloom  Employment  Agreement  dated October 28, 1996,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.2(b)   Amendment to Ron Bloom  Employment  Agreement  dated October 23, 1997,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's Quarterly Report on Form 10-QSB (File No. 000-21775) for the
          quarter ended March 31, 1998 and incorporated herein by reference.

10.3      Employment  Agreement  between  THINK New Ideas,  Inc. and Adam Curry,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.3(a)   Amendment to Adam Curry  Employment  Agreement dated October 28, 1996,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement  on Form SB-2 (File  No.333-12795),
          dated September 26, 1996 and incorporated herein by reference.


                                       60
<PAGE>

10.3(b)   Amendment to Adam Curry  Employment  Agreement dated October 23, 1997,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Quarterly Report on Form 10-QSB (File No.000-21775) for the
          quarter ended March 31, 1998 and incorporated herein by reference.

10.4      Employment  Agreement between THINK New Ideas, Inc. and Susan Goodman,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement  on Form SB-2 (File  No.333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.4(a)   Amendment to Susan  Goodman  Employment  Agreement  dated  October 23,
          1997, filed with the Securities and Exchange  Commission as an exhibit
          to the Company's  Quarterly Report on Form 10-QSB (File No. 000-21775)
          for the quarter ended March 31, 1998.

10.5      Employment Agreement between THINK New Ideas, Inc. and James Carlisle,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.5(a)   Amendment to James  Carlisle  Employment  Agreement  dated October 28,
          1996, filed with the Securities and Exchange  Commission as an exhibit
          to the  Company's  Registration  Statement  on  Form  SB-2  (File  No.
          333-12795),  dated  September  26,  1996 and  incorporated  herein  by
          reference.

10.5(b)   Amendment to James Carlisle Employment Agreement dated March 18, 1998,
          filed with the  Securities  and Exchange  Commission as an exhibit for
          the Company's  Annual Report on Form 10-KSB (File No.  000-21775)  for
          the  fiscal  year  ended  June 30,  1998 and  incorporated  herein  by
          reference.

10.6      Employment  Agreement between THINK New Ideas, Inc. and James Grannan,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.6(a)   Letter  Amendment to Employment  Agreement of James Grannan dated July
          30, 1997,  filed with the  Securities  and Exchange  Commission  as an
          exhibit  to the  Company's  Annual  Report  on Form  10-KSB  (File No.
          000-21775)  for the fiscal year ended June 30,  1997 and  incorporated
          herein by reference.

10.7      Employment Agreement between THINK New Ideas, Inc. and Melvin Epstein,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Registration  Statement on Form SB-2 (File No.  333-12795),
          dated September 26, 1996 and incorporated herein by reference.

10.8(a)   Employment  Letter  between  THINK New Ideas,  Inc. and Larry  Kopald,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's  Annual Report on


                                       61
<PAGE>

          Form 10-KSB  (File No.  000-21775)  for the fiscal year ended June 30,
          1997 and incorporated herein by reference.

10.8(b)   Employment  Agreement  between THINK New Ideas, Inc. and Larry Kopald,
          filed with the Securities and Exchange Commission as an exhibit to the
          Company's Annual Report on Form 10-KSB/A (File No.  000-21775) for the
          fiscal year ended June 30, 1997 and incorporated herein by reference.

10.9      Consulting  Agreement,  dated June 30, 1997,  between THINK New Ideas,
          Inc.  and Jason H.  Pollak,  filed with the  Securities  and  Exchange
          Commission  as an exhibit to the Company's  Registration  Statement on
          Form S-8 (File No.  333-31511)  filed with the  Commission on July 17,
          1997 and incorporated herein by reference.

10.10     Termination  Agreement  between THINK New Ideas,  Inc. and David Hieb,
          dated May 20, 1997, filed with the Securities and Exchange  Commission
          as an exhibit to the Company's  Annual Report on Form 10-KSB (File No.
          000-21775)  for the fiscal year ended June 30,  1997 and  incorporated
          herein by reference.

10.11     Settlement  Agreement,  dated as of May 15,  1998,  by and between the
          Company and Scott  Mednick,  filed with the  Securities  and  Exchange
          Commission  as an  exhibit  for the  Company's  Annual  Report on Form
          10-KSB  (File No.  000-21775)  for the fiscal year ended June 30, 1998
          and incorporated herein by reference.

10.12     Settlement  Agreement,  dated as of July 28, 1998,  by and between the
          Company and Scott  Mednick,  filed with the  Securities  and  Exchange
          Commission as an exhibit to the Company's Annual Report on Form 10-KSB
          (File No.  000-21775)  for the fiscal  year  ended  June 30,  1998 and
          incorporated herein by reference.

10.13     Letter  Agreement  between the Company and Scott Mednick dated May 15,
          1998, filed with the Securities and Exchange  Commission as an exhibit
          to the Company's  Quarterly Report on Form 10-QSB (File No. 000-21775)
          for the  quarter  ended  March  31,  1998 and  incorporated  herein by
          reference.

10.14(a)  Loan  Agreement  by and between  Omnicom  Finance  Inc.  and THINK New
          Ideas,  Inc.,  dated March 17,  1998,  filed with the  Securities  and
          Exchange  Commission as an exhibit to the  Company's  Annual Report on
          Form 10-KSB  (File No.  000-21775)  for the fiscal year ended June 30,
          1998 and incorporated herein by reference.

10.14(b)  Promissory  Note in favor  of  Omnicom  Finance  Inc,  filed  with the
          Securities  and  Exchange  Commission  as an exhibit to the  Company's
          Annual Report on Form 10-KSB (File No.  000-21775) for the fiscal year
          ended June 30, 1998 and incorporated herein by reference.

10.15(a)  Letter  Agreement  by and  between  the Bank of New York and THINK New
          Ideas,  Inc.,  dated April 24,  1998,  filed with the  Securities  and
          Exchange  Commission as an exhibit to the  Company's  Annual Report on
          Form 10-KSB  (File No.  000-21775)  for the fiscal year ended June 30,
          1998 and incorporated herein by reference.


                                       62
<PAGE>

10.15(b) Promissory  Note  in  favor  of the Bank of New  York,  filed  with the
         Securities  and   Exchange  Commission  as an exhibit to the  Company's
         Annual Report on  Form 10-KSB (File No.  000-21775) for the fiscal year
         ended June 30, 1998  and incorporated herein by reference.

10.16    Form of General  Guarantee to Bank of New York Loan Agreement  provided
         by On Ramp,  Inc. and  Scott A. Mednick & Associates,  Inc,  filed with
         the Securities and  Exchange  Commission as an exhibit to the Company's
         Annual Report on Form  10-KSB (File No.  000-21775) for the fiscal year
         ended June 30, 1998 and  incorporated herein by reference.

10.17    Form of Security Agreement  to Bank of New York Loan Agreement provided
         by On Ramp,  Inc.,  Scott A. Mednick  & Associates,  Inc. and THINK New
         Ideas,  Inc, filed with the  Securities  and Exchange  Commission as an
         exhibit  to the  Company's  Annual  Report  on  Form  10-KSB  (File No.
         000-21775)  for the fiscal year ended June 30,  1998  and  incorporated
         herein by reference.

10.18*   Employment  Agreement,  dated October 31,1997 between  THINK New Ideas,
         Inc. and Joseph Nicholson.

10.19*   Letter Amendment to the Employment Agreement of Ronald  Bloom dated May
         24, 1999.

10.20*   Letter Amendment to the Employment  Agreement  of  Susan  Goodman dated
         May 24, 1999.

10.21*   Letter Amendement to the Employment Agreement of Larry Kopald dated May
         24, 1999.

10.22*   Letter  Agreement by and between Bank of New York and  THINK New Ideas,
         Inc. dated April 21, 1999.

13.1     Quarterly  Report on Form  10-QSB for quarter  ended   March 31,  1999,
         filed with the Securities and Exchange  Commission on  May 14, 1999 and
         incorporated herein by reference.

16.1     Letter Certifying Change of Accountants, filed with the  Securities and
         Exchange  Commission as an exhibit to the Company's  Current  Report on
         Form  8-K  (File  No.  000-21775),  filed  on  February  27,  1998  and
         incorporated herein by reference.

27*      Financial Data Schedule.

* Denotes documents filed herewith.  Other documents are incorporated  herein by
reference as noted above.

(B)         REPORTS ON FORM 8-K

         On June 30,  1999 the  Company  filed a  Current  Report on Form 8-K to
report the merger with AnswerThink Consulting Group, Inc.


                                       63
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.

                              THINK NEW IDEAS, INC.

Dated: September 14, 1999                      By: /s/ Ronald E. Bloom
                                                   ------------------------
                                                   Ronald E. Bloom, Chairman
                                                   and Chief Executive Officer

         In Accordance  with the  Securities  Exchange Act, this report has been
signed below by the  following  persons on behalf of the  registrant  and in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE                          TITLE                            DATE
---------                          -----                            ----
<S>                     <C>                                  <C>
/s/ Ronald E. Bloom     Chief Executive Officer,             September 14, 1999
-----------------       Chairman of the Board and Director
Ronald E. Bloom


/s/ Dan Nicholas        Chief Financial Officer              September 14, 1999
-----------------
Dan Nicholas


/s/ Barry Wagner        Director                             September 14, 1999
-----------------
Barry Wagner


/s/ Richard Char        Director                             September 14, 1999
-----------------
Richard Char


/s/ Scott Metcalf       Director                             September 14, 1999
-----------------
Scott Metcalf


/s/ Ken Orton           Director                             September 14, 1999
-------------
Ken Orton


/s/ Larry Kopald        Chief Creative Officer and Director  September 14, 1999
----------------
Larry Kopald
</TABLE>
                                       64