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

                                    FORM 10-K
(Mark One)
     [X]     Annual  report  pursuant  to Section 13 or 15(d) of the  Securities
             and  Exchange Act of 1934 For the  fiscal  year ended  December 31,
             2000

                                       OR

     [  ]    Transition report pursuant to Section 13 or 15(d) of the Securities
             and Exchange Act of 1934

For the transition period from. . . . . . . .  . . . . . to . . . . . . . . . .

                        Commission file number: 001-13519

                           Exigent International, Inc.
             (Exact name of Registrant as specified in its charter)

        Delaware                                               59-3379927
(State of Incorporation)                                    (I.R.S. Employer
                                                         Identification Number)

                   1830 Penn Street, Melbourne, Florida 32901
               (Address of principal executive offices) (Zip code)

        (Registrant's telephone number including area code) 321-952-7550

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

Title of securities                                Exchanges on which registered
--------------------                               -----------------------------
Common Shares, $0.01 par value per share              Nasdaq SmallCap Market
                                                    The Chicago Stock Exchange

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

                    Common Shares, $0.01 par value per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. ___

         As of March 1, 2001, the aggregate  market value of the Common Stock of
the  Registrant  (based on the closing  price of the Common Stock as reported by
the Nasdaq Small Cap Market,  which was $1.6250) held by  non-affiliates  of the
Registrant was approximately $6,185,998.

         The number of shares  outstanding of the  registrant's  Common Stock on
March 1, 2001 was 6,035,428.

                       Documents Incorporated by Reference

         Portions  of our  Proxy  Statement  for  the  2001  Annual  Meeting  of
Stockholders  to be held  June 22,  2001 (to be filed  with the  Securities  and
Exchange Commission on or before May 1, 2001) are incorporated by reference into
Part III hereof.

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<TABLE>
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                                                        TABLE OF CONTENTS

PART I                                                                                                              Page No.
                                                                                                                    --------
<S>         <C>                                                                                                           <C>
Item 1.     Business                                                                                                       3
Item 2.     Properties                                                                                                    20
Item 3.     Legal Proceedings                                                                                             20
Item 4.     Submission of Matters to a Vote of Security Holders                                                           20
PART II
Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters                                         21
Item 6.     Selected Financial Data                                                                                       22
Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations                         23
Item 7a.    Quantitative and Qualitative Disclosures about Market Risk                                                    27
Item 8.     Financial Statements and Supplementary Data                                                                   27
Item 9.     Changes in and Disagreements With Accountants on Accounting and Financial Disclosures                         50
PART III
Item 10.    Directors and Executive Officers of the Registrant                                                            50
Item 11.    Executive Compensation                                                                                        50
Item 12.    Security Ownership of Certain Beneficial Owners and Management                                                50
Item 13.    Certain Relationships and Related Transactions                                                                50
PART IV
Item 14.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                              51
SIGNATURES                                                                                                                55

</TABLE>


<PAGE>


PART I

Item 1.  Business

         The Business section, Management's Discussion and Analysis of Financial
Condition  and Results of  Operations  and other parts of this Form 10-K contain
certain statements that are not historical facts, but which are "forward-looking
statements,"  and can be  identified by the use of  forward-looking  terminology
such as "believes,"  "expects," "may," "will,"  "should," or "anticipates,"  the
negatives  thereof or other variations  thereon or comparable  terminology,  and
include statements as to the intent,  belief or current  expectations of Exigent
International,  Inc.,  a Delaware  corporation,  and its  subsidiaries,  and its
directors,  officers  and  management,  with  respect to its future  operations,
performance or position.  These forward-looking  statements are predictions.  No
assurances can be given that the future results  indicated,  whether  express or
implied, will be achieved.  All references to "Exigent" or "we" or "our" or "us"
refer to Exigent International, Inc. or its subsidiaries.

The Company

         Exigent  is a  holding  company,  incorporated  on  March  25,  1996 to
capitalize  on  emerging  high-technology  opportunities.  Exigent was formed by
Exigent Software Technology,  Inc., a Florida corporation  ("ESTI"),  to acquire
and hold all of its issued and outstanding  stock. On January 30, 1997,  Exigent
acquired all of the issued and outstanding  ESTI stock in exchange for 3,486,600
shares of Exigent common stock,  par value $0.01 per share (the "Common Shares")
and 697,320  shares of Exigent Class A preferred  common stock,  par value $0.01
per share (the "Preferred  Shares") (the "Exchange").  In the Exchange,  Exigent
also issued 1,070,270 Common Share Purchase  Warrants (the "Warrants")  expiring
on January 30, 2000. Each Warrant was convertible into one Common Share at $3.00
per Warrant.  Prior to the expiration  date,  the holders of Warrants  converted
798,560 Warrants into a like number of Common Shares thereby raising  $2,395,680
in additional capital.

     As shown in the following chart,  Exigent presently  operates through three
wholly-owned  subsidiaries.  These are ESTI,  Exigent Digital Telecom & Wireless
Networks,  Inc., a Delaware corporation ("EDTWN"),  and Exigent Solutions Group,
Inc., a Nevada corporation ("ESG"):

                           Exigent International, Inc.
          |----------------------------|------------------------------|
          |                            |                              |
         ESTI                         ESG                           EDTWN

         Exigent,  through ESTI, has designed and deployed satellite command and
control  and  telecommunications  systems for more than  twenty  years.  We have
provided  ground  control  solutions  for dozens of  commercial  and  government
projects,   ranging   from   single   spacecraft   to  the   largest   satellite
constellations.   As  worldwide  demand  for  satellite-based  applications  was
projected  to   increase,   we  have   responded   by   developing  a  suite  of
commercial-off-the-shelf  ("COTS")  products based on our experience in building
such  systems.  Our  engineers  also  provide  system  integration  support  for
customers throughout the United States.

Recent Developments

         The  financial  and financing  difficulties  experienced  by commercial
satellite  constellation  operators and developers  resulted in Exigent taking a
series of actions to reposition itself:

o    To enhance our focus on developing and supporting our leading  products and
     technical services in the three distinct  marketplaces in which we operate,
     Exigent  was  reorganized  into three  business  units:  space and  defense
     services (ESTI); information technology ("IT")(ESG); and telecommunications
     and wireless networks (EDTWN);

o    To strengthen our management  team, we hired Larry  Whitfield  (formerly of
     Lockheed,  Tektronix and Harris Corporation) as President of ESTI, expanded
     ESTI's sales and marketing team to position us to grow revenues at a faster
     pace, and hired Glenn Dennis  (formerly of Softmed  Systems and GE Capital)
     as President of ESG;

o    As a result of our  software-defined  radio (SDR)  Domain  Manager Tool Kit
     being selected by a Raytheon-lead  consortium,  as well as the Harris team,
     as the backbone for  development of a new generation of software  definable
     digital radios for the U.S.  military in the 21st century,  we formed a new
     subsidiary (EDTWN) to pursue opportunities in this technology; and

o    To further our efforts in the EDTWN business we have entered into contracts
     to develop custom software for several telecommunications companies.

o    To assist in the evaluation of strategic alternatives we engaged CIBC World
     Markets in October of 2000.
<PAGE>

Exigent Software Technology Inc.

         Since  its  formation  in  1978,  ESTI  has  provided  custom  and COTS
software, systems engineering, and software engineering services to a wide range
of industrial and government entities, including:

o    agencies  and  departments  of  the U.S. government that use satellites for
     research,  communication,  or in defense programs;
o    commercial telecommunication companies,  particularly those focused on low-
     earth-orbit ("LEO") satellite systems providing wireless telephone services
     and paging;
o    commercial and government  customers  that require  Management  Information
     Systems ("MIS") and data base development services;
o    commercial launch facilities and contractors that provide commercial launch
     services;
o    aerospace and defense  contractors that develop  computerized  weaponry and
     defense  systems  employing  satellite   technology,   especially  embedded
     software systems;
o    Value Added Resellers  ("VARs") and strategic  partners that develop custom
     or specialized computer applications; and
o    engineering firms that require software design and development services.

         In addition to providing  general-purpose  and  customized  engineering
solutions,  we have developed the OS/COMET(TM) family of products. This suite of
COTS command and control software  products is our flagship  software  offering.
This  related  group of software  products was  originally  developed to support
satellite ground stations and to integrate and test spacecraft systems. Over the
years, however,  OS/COMET has evolved into a multi-dimensional  general purpose,
integrated tool set. These COTS programs provide a real-time  command,  control,
and data  acquisition  environment  for  government  and  commercial  solutions.
OS/COMET products can be further adapted for use in many complex ground or space
control situations. OS/COMET executes on POSIX-compliant UNIXTM workstations and
makes extensive use of the "X Window System" and the "OSF/Motif"  graphical user
environment  standards.  OS/COMET  currently  includes the  following  family of
products:

         OS/COMET  is  currently  used in two of the world's  largest  satellite
constellations, Iridium(R) and the Global Positioning System ("GPS"). Iridium is
a global  wireless  communication  system  recently  acquired by a consortium of
investors.  Iridium offers  customers local voice calling and paging anywhere on
the planet  through a  constellation  of 66 LEO  satellites  (plus six  on-orbit
spares).

         Our OS/COMET  products were also selected to upgrade the ground station
software  for the  U.S.  Air  Force's  NAVSTAR  GPS  project.  NAVSTAR  GPS is a
24-satellite GPS constellation which provides worldwide all-weather positioning,
and navigation data.  NAVSTAR GPS's 24 satellites  provide worldwide  navigation
data for  military  and  civilian  aircraft,  spacecraft  and  land  and  marine
applications.

         We also produce OS/COMET Solo,  which is specifically  designed for the
user  who  requires  just  one  satellite,  one test  fixture,  or some  similar
single-use application.  It offers a straightforward migration path to OS/COMET,
ensuring simple and easy future expansion of the system.

         In order to fully address the entire satellite market we have developed
a tiered  product  offering  which meets the needs of satellite  operators  from
single GEO satellites to very large  constellations.  This offering is scaled in
functionality as well as in pricing.

         OS/ICC ("Integrated  Control Center") is a versatile,  extensible,  and
scaleable  suite  of  services  and  equipment  that  combines  industry-leading
hardware and software products into an integrated  solution.  OS/ICC may be used
"out of the box" in its standard form, or may be customized for special customer
use  applications.  OS/ICC is intended to provide seamless software and hardware
reuse and automation across a satellite's entire mission life-cycle,  from early
mission planning and modeling,  through vehicle testing and on-orbit  spacecraft
management. OS/ICC is designed to handle projects ranging from single satellites
to large constellations.

         Calypso and Calypso Pro products are telemetry data  decommutation  and
distribution  tools;  the "Pro" suffix  indicates an  extensible  version of the
basic product.  These products are cost-effective,  easy-to-use and are designed
for  single-node  applications  and test beds that do not  require  the  complex
functionality of the more advanced products such as OS/COMET or OS/COMET Solo.

         The  Pluto   Satellite  Tool  Kit  ("Pluto")   deploys   complex  model
architecture   and  numerous  core  components  for  the  creation  of  "virtual
satellites." The satellite models generated by Pluto can be crafted so that they
simulate  actual  spacecraft  subsystems  and systems.  Pluto's  object-oriented
architecture  breaks a satellite into a set of  user-defined  sub-systems  using
standard object-oriented programming techniques.
<PAGE>

Exigent Solutions Group

         In 1999, we formed ESG as an information technology service company. In
December  1999,  ESG  began  offering   Enterprise   Resource  Planning  ("ERP")
implementation  services  following  its  acquisition  of GEC. GEC, a Charlotte,
NC-based   consulting  and  systems   integration  firm,  is  recognized  as  an
implementor of ERP solutions using Oracle  applications.  ESG currently provides
the following services:  integrated  management  consulting;  implementation and
integration of packaged  software  solutions;  design and  development of custom
software  solutions;  and implementation of ERP systems and production  support.
(See Risk Factors - Risk specific to ESG and Industry  Related Risks Specific to
ESG).

Exigent Digital Telecom & Wireless Networks

         EDTWN develops and markets the software  defined radio product,  Domain
Manager  Tool Kit  ("DMTK").  This  product was chosen by both the  Raytheon and
Harris  teams for  inclusion  in their  prototype  radio  offerings to the Joint
Program Office of the Pentagon.  Through this offering EDTWN offers solutions in
core  technologies such as resource  management,  automatic failure recovery and
dynamic  system  reconfiguration.  EDTWN is at the  heart of this  revolutionary
generation of reconfigurable wireless services, an emerging technology featuring
universal coverage,  better performance and easier technology  upgrading through
software rather than hardware.

         EDTWN  also  develops  inexpensive,  high-performance  message-oriented
products and  distributes  them directly to the end-user over the Internet or on
compact disks  ("CD's")  through the U.S.  mail. The first product was ActiveMTM
for  Windows(R).  ActiveM is a  publishing  subscribing  tool that  provides  an
application-transparent  messaging  facility  for ActiveX  environments  such as
Microsoft(R) Visual C++ and Inprise's C++ Builder 3. ActiveM makes sophisticated
cost-effective  networking  available to millions of application  developers who
currently work in the Windows  world.  ActiveM's  target  customer base includes
computer  programmers  who  develop  software  for  the  high-volume  commercial
marketplace (business  applications,  games, etc.), as well as those programmers
producing various scales of in-house  applications.  ActiveM supports  virtually
all  network  types and also  topologies,  whether  local-area  networks  (LAN),
wide-area  network (WAN),  or the WorldWide Web.  ActiveM is included in the ESG
product offering.

         Recently EDTWN  completed the ActiveM/XP  product which is an extension
of the ActiveM product.  The ActiveM/XP product supports multiple platforms (NT,
Unix,  Windows,  etc.) as well as larger messages.  Applications  with a need to
share information in real time can do so easily through this product.

SOFTWARE DEVELOPMENT

         During the last three years, we have invested substantial  resources to
develop and  enhance the  software  products  which we believe are  commercially
marketable.  Generally,  most of our software  development  relates to tracking,
command and control systems,  "horizontal  products",  which our ESTI subsidiary
has  developed  for the  ground  and  space  segments  of the  aerospace/defense
industry.  Currently  our  "horizontal"  product  suite is  applied  only in one
"vertical" market. We believe that other "vertical" market applications, such as
utilities  and  inventory  intensive  applications,  as well as providers in the
telecommunications industry, can utilize these products. (See Risk Factors - Our
Products may not be accepted by the market).

         We  capitalized  $1,166,686,  $2,144,253,  and  $3,905,349  of  product
development  in our  fiscal  years  ended  December  31,  2000,  1999 and  1998,
respectively.  These  amounts  include  investments  allocated  to each of:  the
OS/COMET family of products, DMTK, and ActiveM.
<PAGE>

         We expensed $60,999,  $271,576,  and $180,671,  on internally sponsored
research and development  during our fiscal years ending December 31, 2000, 1999
and 1998,  respectively.  These expenditures were made so that we could evaluate
new products and services as well as update and expand our current technologies.

         In  addition  to the funds we  invested  in  software  development,  we
invested more than $1,500,000 during fiscal years 1998B (the eleven months ended
December  31,1998)  and 1999 to develop  advanced  systems for future very large
constellations  of  satellites  (more than 300  vehicles) in  accordance  with a
Strategic Alliance Agreement with Motorola.  (See Risk Factors - Length of Sales
Cycle).

MARKETING AND SALES

         We rely upon our  senior  corporate  management,  sales  and  marketing
personnel,  project  managers  and  senior  technical  staff  to  carry  out our
marketing program.  Our marketing program includes the development and execution
of marketing  plans,  proposal  presentations  and the  performance of marketing
related tasks.  These  individuals are  responsible  for collecting  information
concerning  requirements  of current and  potential  customers  in the course of
contract   performance  and  formal  and  informal  briefings,   from  published
literature and through participation in professional and industry organizations.
Our senior  management  then evaluates this  information,  identifies  potential
business  opportunities and coordinates  proposal efforts. The primary source of
business  in our  existing  markets is  referred  to us by  existing  customers.
Additionally,  we advertise in various industry  publications and participate in
numerous trade shows.

         We  distribute  our  products  and  services  and license our  products
indirectly,  through Value Added Resellers ("VARs"),  and directly to end-users.
(See Risk Factors - Proprietary Rights).

REVENUE SOURCES

         Our revenues are currently  dependent on three  significant  customers,
the  Naval  Research   Laboratory  (the  "NRL"),   Lockheed  Martin  Corporation
("Lockheed")   and  a   proprietary   government   organization.   These  three,
individually,  accounted for more than 10%, and in the aggregate,  accounted for
more than 66% of our  consolidated  revenues for the fiscal year ended  December
31,  2000.  The loss of any of these  customers  would have a material,  adverse
affect on our business, results of operations and financial condition. (See Risk
Factors - Significant Revenue Derived from Government Contracts).

         ESTI has several  contracts with the NRL. Our largest contract with the
NRL relates to space systems applications and operations, and was renewed in May
1998 for five years. In addition to space  applications and operation  services,
ESG  provides  the NRL  with IT  development  and  maintenance  services.  ESG's
principal IT assignment has been replacing NRL's Job Cost Accounting system. ESG
has developed a  state-of-the-art  Oracle-based  information system running on a
cluster of UNIX database  servers,  employing  multiple NT and LINUX Web servers
with user  interfaces  implemented  on Web-centric  technologies.  Our principal
contract  with the NRL provides for us to perform  services  during the next two
years, with a total estimated cost of $57,167,518 and a fixed fee of $4,370,901.
As of December 31, 2000,  ESTI  received cost payments and fees in the aggregate
of  $41,872,710  under  the  contract.  Fees  on this  contract  are  billed  at
approximately 7.5% of costs.
<PAGE>

         ESTI also receives  revenues  from  Honeywell  under  various  purchase
orders.  For  the  fiscal  year  ended  December  31,  2000,  Honeywell  paid us
approximately  $2,192,086,  while  approximately  $2,607,753  remains in backlog
under  existing  purchase  orders.  The contract with Lockheed  relates to a GPS
project  with the  U.S.  Air  Force  for  which  Lockheed  serves  as one of the
subcontractors  and  Boeing  serves  as  the  prime  contractor.  ESTI  received
$4,044,245 under this contract for the fiscal year ended December 31, 2000. (See
Risk Factors - Risks Specific to ESTI).

         ESG  currently  has two revenue  sources,  an IT "task  order" that was
appended to the ESTI contract  with the NRL and the  commercial  ERP  consulting
business.  The performance of IT services for the NRL resulted in  approximately
$5,100,000  in  revenue  for the  fiscal  year  ended  December  31,  2000.  The
commercial   portion,   for  the  fiscal  year  ended  December  31,  2000,  was
approximately $2,700,000.

         See  "Item  7.  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations" and Note 12 to the Financial Statements for
additional information on our dependence on certain customers.

CONTRACTS

         A  substantial  portion of our revenues are derived from  contracts and
subcontracts  with the United States Department of Defense (the "DOD") and other
federal  government  agencies.  Many of our contracts are  competitively bid and
awarded on the basis of technical merit,  personnel  qualifications,  experience
and price. Recently, the Federal Acquisition Streamlining Act of 1994 encouraged
the use of "commercial"  type pricing on dual use products.  Our future revenues
and income could be materially  affected by changes in procurement  policies,  a
reduction in government  expenditures  for our products and services,  and other
risks generally associated with federal government contracts. (See the following
Risk  Factors -  "Contracts  Subject to  Termination"  and  "Funding  Subject to
Government Regulation").

         Our contracts with the federal government range from one to five years.
Such contracts may be conditioned  upon continued  availability of congressional
appropriations. Any variance between anticipated budget and actual congressional
appropriations  may  result  in  a  delay,  reduction  or  termination  of  such
contracts.  Until  differences  between budget requests and  appropriations  are
resolved,  contractors often experience  revenue  uncertainties  with respect to
available  contract funding during the first quarter of the government's  fiscal
year beginning October 1.

         Our   federal    government    contracts   may   be   structured    as:
cost-reimbursement  contracts,  time and  materials  contracts  and fixed  price
contracts.  Cost-reimbursement  contracts provide for reimbursement of costs (to
the  extent  allowable,  allocable  and  reasonable  under  Federal  Acquisition
Regulations)  and the  payment  of a fee.  The fee may  either  be  fixed by the
contract  (cost plus fixed fee) or variable,  based upon cost control,  quality,
delivery and the customer's  subjective  evaluation of the work (cost-plus-award
fee).  Under time and  materials  contracts,  we receive a fixed amount by labor
category for services  performed and are reimbursed  (generally without fee) for
the cost of materials  purchased and other direct costs such as travel  required
to perform  the  contract.  Under a fixed  price  contract,  we agree to perform
certain  work  for a fixed  price  and,  accordingly,  realize  the  benefit  or
detriment to the extent that the actual cost of performing the work differs from
the contract  price.  The percentage of total revenues  generated from contracts
with the federal  government or its prime  contractors for the fiscal year ended
December 31, 2000, were 62.6% from cost-reimbursement contracts, 27.8% from time
and materials contracts and 9.6% from fixed price contracts. (See Risk Factors -
Contracts Subject to U.S. Government Regulation).
<PAGE>

         Our allowable federal government contract costs and fees are subject to
audit  by  the   Defense   Contract   Audit   Agency.   Audits   may  result  in
non-reimbursement of some contract costs and fees. While the government reserves
the right to conduct further  audits,  we have not experienced any material cost
recovery disallowances for audits conducted through fiscal 1998B.

         Our federal  government  contracts  may be  terminated,  in whole or in
part, at the  convenience of the  government.  If a termination  for convenience
occurs,  the  government  is  generally  obligated  to pay our  costs  under the
contract plus a pro rata fee based upon the work completed.  When we participate
as a subcontractor,  we risk termination of the contract if the prime contractor
does  not  perform  its  contract  duties.  Similarly,  when  we act as a  prime
contractor,  or employ subcontractors,  we risk termination of the contract if a
subcontractor  does not perform its subcontracting  duties.  (See Risk Factors -
Contracts Subject to Termination without Cause).

         Some of our contracts with the federal  government contain options that
are exercisable at it's the  government's  discretion.  An option may extend the
period of  performance  for one or more years for  additional  consideration  on
terms and conditions  similar to those  contained in the original  contract.  An
option may also increase our duties and assign us new tasks.  In our experience,
options are commonly exercised by the government.

         Our federal  government  contracts  require  that we maintain  adequate
security measures.  We have implemented  security procedures that we believe are
adequate to satisfy the requirements of our federal government contracts.

         All of our  commercial  contracts are either time and material or fixed
price  agreements.  These  agreements  generally  call  for a  specified  set of
requirements  to be delivered at a negotiated  price.  Under time and  materials
contracts,  we receive a fixed amount by labor  category for services  performed
and we are  reimbursed  (generally  without  fee)  for  the  cost  of  materials
purchased  and  other  direct  costs  such as travel  required  to  perform  the
contract.  Under a fixed price contract,  we agree to perform certain work for a
fixed price and,  accordingly,  realize the benefit or  detriment  to the extent
that the actual cost of  performing  the work differs  from the contract  price.
These contract  types are typically  broken down into  milestones  with payments
made at each  milestone.  These  milestones are generally  referred to as earned
value  milestones and are commonly used to benchmark  progress,  help a customer
track  status,  and provide  trigger  points for  payments.  (See Risk Factors -
Industry Related Risks of ESTI).

Backlog

         As of December 31, 2000,  and December 31, 1999,  we estimate  that our
firm   backlog   orders  were   $17,474,050   and   $19,011,492,   respectively.
Approximately  $8,029,121  of our backlog in the fiscal year ended  December 31,
2000 relates to the funded  portion of awarded  government  contracts.  Over the
next two to three years we expect that $13,903,151 in unawarded task orders will
be funded and awarded in connection  with our direct contract with the NRL. (See
Risk Factors - Estimated Backlog under Government Contracts).

Regulatory Environment

         Pluto and OS/COMET are subject to export control  regulations  pursuant
to the  International  Trafficking and Arms Regulation  administered by the U.S.
Department of State.  Regulatory  changes could materially  adversely affect our
operations  by  restricting  sales and  marketing  efforts.  Changes  in, or our
failure to distribute products in compliance with, applicable export regulations
could have a material  adverse effect on our business,  financial  condition and
results of operations. The delays inherent in this governmental approval process
have  in the  past  caused,  and  may  in the  future  cause  the  cancellation,
postponement or  rescheduling of the  installation of ground station systems for
our  customers.  This  may have a  material  adverse  effect  on the sale of our
products to such customers. (See Risk Factors - Planned International Operations
May Not Succeed).

         We believe that our business operations are in material compliance with
applicable governmental regulations. We are not aware of any pending legislation
that if enacted could have a material adverse effect on our business,  financial
condition and results of operations.

Employees

         As of December 31, 2000,  we had 267  employees.  None of our employees
are represented by a union and we consider our relationship with employees to be
good.
<PAGE>

RISK FACTORS

Risks Specific to ESTI

A significant  portion of our revenue is derived from contracts or  subcontracts
funded by the U.S. government.

         The following table lists the approximate  revenues, as a percentage of
our total  revenues,  derived from contracts  funded by the U.S.  government for
fiscal years ending December 31, 2000, 1999, and 1998.

<TABLE>
<CAPTION>

                                               Year ended                 Year ended             Eleven months ended
                                                12/31/00                   12/31/99                   12/31/98
                                        -------------------------  -------------------------    ----------------------
Government:
<S>                                              <C>                        <C>                 <C>
         Revenue                                 $    31,799,994            $    31,498,070     $          24,698,289
         Cost of Sales                               (22,738,872)               (22,755,716)              (18,512,619)
                                        -------------------------  -------------------------    ----------------------
         Gross Profit                            $     9,061,122            $     8,742,354     $           6,185,670
                                        =========================  =========================    ======================

         Gross profit as % of sales                        28.5%                      27.8%                     25.0%


                                               Year ended                 Year ended             Eleven months ended
                                                12/31/00                   12/31/99                   12/31/98
                                        -------------------------  -------------------------    ----------------------
Commercial:
         Revenue                                       6,400,716                  4,653,208                 6,440,794
         Cost of Sales                                (6,039,858)                (5,432,387)               (4,887,718)
                                        -------------------------  -------------------------    ----------------------
         Gross Profit (Loss)                       $     360,858            $      (779,179)      $         1,553,076
                                        =========================  =========================    ======================

         Gross profit (loss) as % of sales                  5.6%                     (16.7%)                    24.1%

</TABLE>

         We expect  that U.S.  government  contracts  are likely to  continue to
account  for  a  significant  portion  of  our  revenues  in  the  near  future.
Accordingly,  our financial  performance  may be adversely  affected by changing
U.S.  government  procurement  practices  and  policies  as well as  declines in
defense agency  spending.  The factors that could have a material adverse effect
on our ability to win new contracts with the U.S. government, or retain existing
contracts, include the following:  budgetary constraints;  changes in government
funding levels, programs, policies or requirements;  technological developments;
the adoption of new laws or regulations; and general economic conditions.

         In  addition,   some  of  our  contracts   individually   contribute  a
significant  percentage of our revenues.  Two of our largest contracts generated
approximately  66.5% of our  revenues  for  fiscal  year  1998(B),  62.6% of our
revenues for the fiscal year 1999, and 55.7% of our revenue in fiscal year 2000.
This includes one contract that  generated  approximately  47.3% of our revenues
for fiscal year 1998(B),  49.1% of our revenues for fiscal year 1999,  and 41.3%
of our revenues  for fiscal year 2000.  A relatively  small number of large U.S.
government  contracts  are  likely to  continue  to  account  for a  significant
percentage of our revenues in the future.  Termination of any of these contracts
or our inability to renew or replace  these  contracts  when they expire,  could
have a material adverse effect on our business,  financial condition, or results
of operations.

Our  contracts  and  subcontracts  that are  funded by the U.S.  government  are
subject to termination without cause by the government.

         All of our  contracts  and  subcontracts  that are  funded  by the U.S.
government are subject to termination  for  "convenience,"  meaning  termination
without  cause.  Should a contract  be  terminated  without  cause,  we would be
reimbursed  for allowable  costs incurred  through the date of  termination  and
would  be  paid  a  proportionate  amount  of the  stipulated  profits  or  fees
attributable  to  work  actually  performed.  Termination  of any  of our  large
government  contracts  could have a  material  adverse  effect on our  business,
financial condition, or results of operations.

Our  contracts  and  subcontracts  that are  funded by the U.S.  government  are
subject to government regulations.
<PAGE>

         Government   contracts   require   compliance  with  various   contract
provisions  and  procurement  regulations.  The  adoption  of  new  or  modified
procurement  regulations  could have a material  adverse effect on our business,
financial  condition,  and  results  of  operations  or  increase  the  costs of
competing  for or  performing  government  contracts.  Any  violation  of  these
regulations  could result in the  termination  of the  contracts,  imposition of
fines and/or  exclusion  from  government  contracting  and  government-approved
subcontracting  for some specific  time period.  Most  government  contracts are
subject to modification  or termination in the event of changes in funding,  and
our contract  costs and revenues are subject to adjustment as a result of audits
by the Defense Contract Audit Agency and other government  auditors.  We reflect
any adjustments required by such audits in our financial statements. Although we
have not yet been required to make any material audit  adjustments,  there is no
assurance that such adjustments will not be required in the future. The award of
government contracts also is subject to protest by competitors, which can result
in the  re-opening of the bidding  process,  unanticipated  legal costs,  or the
award of a contract to a competitor.

Our  contracts  and  subcontracts  that are  funded by the U.S.  government  are
subject to a competitive bidding process.

         Government  contracts  generally  are  awarded  to us  through a formal
competitive  process  in which we may have many  competitors.  Upon  expiration,
government contracts may be subject,  once again, to the competitive process. We
cannot  assure  you that we will be  successful  in winning  contract  awards or
renewals in the future.  Our failure to renew or replace  these  contracts  when
they expire  could have a material  adverse  effect on our  business,  financial
condition, or results of operations.

         Our contracts and  subcontracts  with federal  government  agencies are
subject  to  competition  and are  awarded  on the  basis  of  technical  merit,
personnel  qualifications,   experience,  and  price.  Our  business,  financial
condition and results of operations  could be materially  affected by changes in
procurement  policies,  a reduction in funds  available for the services that we
provide, and other risks generally associated with federal government contracts.
New government contract awards are also subject to protest by competitors at the
time  of  award.  This  can  result  in the  re-opening  of the  competition  or
evaluation  process or the award of a contract to a competitor.  We consider bid
protests  to be a  customary  element  in the  process of  procuring  government
contracts.
<PAGE>

Our  contracts  and  subcontracts  that are  funded by the U.S.  government  are
subject to the budget and funding process of the U.S. government.

         Many of the U.S.  government  programs  in which  we  participate  as a
contractor or subcontractor  extend for several years, but are funded only on an
annual  basis.  Accordingly,  our  contracts  and  subcontracts  are  subject to
termination,  reduction,  or  modification  in  the  event  of  changes  in  the
government's  requirements  or  budgetary  constraints.  Additionally,  when  we
participate in a project as a  subcontractor,  we are subject to the risk that a
prime contractor may fail or be unable to perform the prime contract.

         In  addition  to the  right  to  terminate,  government  contracts  are
conditioned upon the continuing availability of Congressional funding.  Congress
usually allocates funds on a fiscal-year basis even though contract  performance
may take several  years.  Consequently,  at the outset of a major  program,  the
contract is usually  incrementally  funded,  and  additional  funds are normally
committed to the contract by the procuring agency as funds are made available by
Congress for future  fiscal years.  In addition,  contractors  often  experience
revenue  uncertainties during the first quarter of the U.S.  government's fiscal
year,  which begins October 1, until  differences  between  budget  requests and
appropriations  are  resolved.  To date,  Congress  has  funded all years of the
multi-year major program  contracts for which we have served as prime contractor
or  subcontractor,  although there is no assurance that this will be the case in
the future.

The  estimated  backlog  under  our  government  contracts  is  not  necessarily
indicative of revenues that will actually be realized under the contracts.

         Many of our government contracts are multi-year contracts and contracts
with option years,  and portions of these contracts are carried forward from one
year to the next as part of our contract backlog.  Backlog means the total value
of all contracts less the revenues earned on those same contracts. The estimated
backlog under a government  contract is not  necessarily  indicative of revenues
that  will  actually  be  realized  under  that  contract.   Congress   normally
appropriates  funds for a given  program on a  fiscal-year  basis,  even  though
actual  contract  performance  may  take  many  years.  As a  result,  contracts
ordinarily are only partially funded at the time of award, and additional monies
are normally  committed to the  contract by the  contracting  agency as Congress
makes  appropriations in subsequent fiscal years. There can be no assurance that
Congress will appropriate funds or that procuring  agencies will commit funds to
our government  contracts for their anticipated terms. In addition,  most of our
government  contracts  have an initial  term of one year plus a number of option
years. We cannot assure that the government  will extend a contract  through its
option years.  Certain of our large  contracts  provide that we will not receive
payment until the services  under those  contracts are requested and  performed.
There is no assurance  that  cancellations  or adjustments in the terms of these
contracts might not occur.  In addition,  our services under these contracts may
not be requested at the anticipated levels in the future.

Performance of some of our government contracts may require security clearances.

         Some of our contracts with government agencies require that some of our
employees and procedures meet security clearance requirements. If problems, such
as delays or denials,  develop in  connection  with meeting  security  clearance
requirements, the government could materially limit our ability to perform these
contracts.



<PAGE>


Our  commercial  contracts  are subject to  competition  and strict  performance
requirements.

         Although a significant  portion of our revenues are generated  from the
sale of our services and products in commercial  markets,  there is no assurance
that we will  continue to compete  successfully  in these  markets.  Many of our
commercial  contracts  are  for a  fixed  price.  We are  therefore  subject  to
substantial  risks  relating to  unexpected  cost  increases  and other  factors
outside of our control. We may fail to anticipate  technical problems,  estimate
costs accurately, or control costs during performance of a fixed price contract.
Any of these failures may reduce our profit or cause a loss under our commercial
contracts.  In addition, our revenues on fixed price contracts are recognized on
a percentage-of-completion basis. This means that the company calculates a ratio
of costs  incurred to costs expected to be incurred for each fixed price job and
then  multiplies  that same ratio by the fixed price contract value to determine
total  revenue for each fixed price job.  As a result,  contract  price and cost
estimates  on  fixed  price  contracts  are  reviewed  periodically  as the work
progresses,  and  adjustments  are  reflected  in income in the period  when the
estimates are revised.  To the extent that these  adjustments  result in a loss,
reduction,  or elimination of previously  reported profits, we would recognize a
charge  against  current  earnings,  which could be material and have a material
adverse effect on our business, financial condition, or results of operations.

         In connection with certain commercial contracts,  we may be required to
obtain bonds,  letters of credit, and similar guarantees.  There is no assurance
that we will be  successful  in obtaining  these types of guarantees or that the
guarantees available will be affordable in the future.

         We  typically  must agree to meet strict  performance  obligations  and
project  milestones,  which we may not be able to  satisfy.  Our failure to meet
these  performance  obligations  and  milestones  may permit the other  party to
terminate the contract  and,  under certain  circumstances,  recover  liquidated
damages or other penalties from us.

Intense  competition  in the  satellite  ground system  industry  could harm our
financial performance.

         We experience significant competition.  We believe that we are one of a
few companies in the United  States,  which derive the majority of their revenue
from  the  development  of  satellite  ground  systems.  In  addition  to  these
companies,   approximately  twelve  large  aerospace/defense   contractors  have
developed  satellite  control systems either in-house as primary  contractors or
through subcontractors. As a result, some of our competitors are also current or
potential customers. Our competitors, which in many cases are customers as well,
include the following:

o        Lockheed Martin Corporation;
o        Integral Systems;
o        Hughes Space Company;
o        Loral Space & Communications Ltd.;
o        Orbital Sciences Corporation;
o        Honeywell;
o        Computer Sciences Corporation;
o        Alcatel Espace;
o        Matra Marconi Space; and
o        Aerospatiale.

         Many of our  competitors  are  significantly  larger  and have  greater
financial resources.  Some of these competitors are divisions or subsidiaries of
large,  diversified  companies  that have access to the  financial  resources of
their parent  companies.  We may not be able to compete  effectively  with these
companies  or maintain  them as  customers  while  competing  with them on other
projects. In addition,  several smaller companies have specialized  capabilities
in similar areas. Our products also face competition from certain  off-the-shelf
products  developed by the  government  for  satellite  command and control.  We
cannot  accurately  predict  how our  competitive  position  may be  affected by
changing  economic  or  competitive   conditions,   customer  requirements,   or
technological  developments.  We principally  obtain  contracts and subcontracts
through  competitive  procurements  offered by the U.S. government or commercial
enterprises. We cannot assure you that we will be able to compete successfully.



<PAGE>


Our major products may not be accepted by the market.

         Our earnings  growth  depends upon market  acceptance of our commercial
off-the-shelf  satellite  telemetry,  command  and  control  software  products,
including our base  product,  OS/COMET and related  products.  Because the space
industry has historically used customized software  solutions,  we cannot assure
you that our potential customers will be interested in licensing these products.
Whether  potential  customers  will  license  our  software  depends  on several
factors, including:

o        how well our products perform;
o how  well  our  products  can  be  integrated  into  our  customers'  existing
technologies;  and o whether our  customers  can achieve cost savings and become
more efficient by using our software.

The failure of potential customers to license our products would have a material
adverse effect on our business, financial condition and results of operations.

The length of our sales  cycle  increases  our costs and  hinders our ability to
procure contracts.

         We believe that the period of time between initial customer contact and
the sale of software to the customer is typically  between 12 to 18 months,  and
may sometimes take as long as 24 months. The reason for this is that a potential
customer will conduct  extensive and lengthy  tests before  deciding  whether to
purchase or license our product.  While the customer is making its decision, our
sales and marketing expenses may be significant.  In addition,  during this time
period,  there is a risk that space  missions  or  projects  will be cut back or
terminated,  that  customer  budgets  will be reduced,  or that a customer  will
decide  that it no longer  wants to purchase  or license  our  product.  If this
occurs unexpectedly,  particularly if the potential contract is significant, our
business,  financial  condition  and results of  operations  could be  adversely
effected.

We may not be able to protect our  proprietary  rights.  We may  infringe on the
proprietary rights of other persons.

         Our success and ability to compete are dependent,  in large part,  upon
our  proprietary  rights.  To  protect  those  rights,  we rely  primarily  on a
combination  of copyrights,  trade secret laws,  trademarks,  patents,  employee
confidentiality,    non-competition   and   invention   assignment   agreements,
third-party  non-disclosure  agreements and other methods. The steps taken by us
may not be  adequate  and third  parties  may  infringe  or  misappropriate  our
copyrights,  patents  and  other  proprietary  rights.  In  addition,  effective
trademark, patent, copyright and trade secret protection may not be available in
every country in which our products  will be sold or licensed.  We may be forced
to bring lawsuits to enforce our rights, which could result in substantial costs
and take time and attention away from our business.

         We  also  may  be  accused  of  infringing  or   misappropriating   the
intellectual  property  rights of other  persons.  In our  licenses and software
development and distribution  agreements with our resellers,  we generally agree
to indemnify  those third  parties for any expenses  and  liabilities  that they
incur  from  claims  of  infringement  or  misappropriation.  The  amount of our
indemnity  obligation  may be greater  than the  revenues  we receive  under the
contract.  If we are sued for possible  infringement or  misappropriation of the
rights of other  persons,  even if the claims are not valid,  the lawsuit  could
result in  substantial  costs,  take time and attention  away from our business,
cause us to delay  shipments  of  products  or require  us to enter into  costly
royalty  or  licensing  agreements.  If a  royalty  or  licensing  agreement  is
required,  and we cannot  enter into a  satisfactory  agreement,  our  business,
financial condition and results of operations could be adversely affected.
<PAGE>

         We also license certain  technologies and software  products from third
party   developers.   The  agreements   with  these   developers  are  generally
non-exclusive  and may be  terminated  at any time by either  party upon written
notice.  If the developers  terminate these  agreements,  develop other products
that compete with our products or provide  their  products and  expertise to our
competitors, our business, financial condition or results of operations could be
adversely affected. Further, we may be accused of infringing or misappropriating
the  intellectual  property  rights of other  persons  by using  these  licensed
products.  If we are sued for possible  infringement or  misappropriation of the
rights of other  persons,  even if the claims are  invalid,  the  lawsuit  could
result in  substantial  costs,  take time and attention  away from our business,
cause us to delay shipments of products or require us to enter into a new costly
royalty or  licensing  agreements.  If a new royalty or  licensing  agreement is
required,  and we cannot  enter into a  satisfactory  agreement,  our  business,
financial condition and results of operations could be adversely affected.

         Any one of these  consequences  could have a material adverse effect on
our business, financial condition or results of operations.

         Under some government contracts, we have developed software that (i) we
are  commercializing,  or (ii) in the future we may decide to commercialize.  In
order to  commercialize  that  software,  we  might  need to  invest  additional
research  and  development  funds to  re-market  the  software  as a  commercial
product. If the product was developed using any government  funding,  government
regulations  and contract  provisions  may prevent us from selling the resulting
product to any  government  agencies.  If the  primary  market  for a  potential
product is government  agencies,  we may not be able to recover  invested  funds
through sale of the product.  In addition,  the government  may acquire  certain
rights to those software programs developed by us under government  contracts or
subcontracts.  Information relating to the programs or products may be disclosed
to third parties, including our competitors.

We depend upon attracting and retaining a highly skilled professional staff.

         Our success depends in part upon our ability to attract, retain, train,
and motivate highly skilled  employees,  particularly in the area of information
technology.  We face significant competition for employees with the computer and
technology  skills required to perform our services and create our products.  In
addition,  we must often comply with provisions in government  contracts,  which
require our employees to have specified  levels of education,  work  experience,
and security  clearances.  We cannot  guarantee  that we will be  successful  in
attracting a sufficient number of highly skilled and qualified  employees in the
future. The loss of our key technical personnel,  or our inability in the future
to attract key  employees or to relocate  them as required by  customers,  could
have a material adverse effect on our business,  financial condition, or results
of operations.
<PAGE>

Industry Related Risks Specific to ESTI

Our success is dependent on the growth of the space industry.

         Since our customers are primarily  concentrated  in the space industry,
our success  will depend on the growth in the space  industry  software  market.
Technological  advancements  have lead to lower launch and satellite  production
costs and the  decreased  safety  risks  related  to  satellites.  Further,  the
increased demand for advanced  wireless and "broadband"  communication  services
has  caused  the need for  growth  in the  space  industry.  Growth in the space
industry, and more specifically in the commercial space industry is dependent on
the  availability  of funding.  If the space industry ceases to grow, the demand
for our products will decrease.  This may have a material  adverse effect on our
business,  financial  condition and results of  operations.  Further,  we cannot
accurately predict the space industry's potential size or future growth rate. We
are also unable to  accurately  predict the future needs for  satellite  command
software and related services.

We may be exposed to product  liability  or related  claims with  respect to our
products.

         Our products are mission-critical  parts of sophisticated and extremely
expensive  satellite  systems.  Should a satellite  mission  fail, or should the
system's  service  become  unavailable,  due to a failure or  malfunction in the
ground system,  we could be sued for product  liability or related  claims.  Any
products  liability or related claim could have a material adverse effect on our
business, financial condition, or results of operations. We have found obtaining
insurance to cover products liability claims to be impractical.

Our  products  may  become  obsolete  due to rapid  technological  change in the
satellite industry.

         Any of our products could become  obsolete at any time due to the rapid
technological  changes in the satellite  industry.  We may not be able to update
our  products  quickly  enough  to  remain   competitive.   The  rapid  pace  of
technological  change  in our  industry  exposes  us to risk of loss  due to the
development of superior  technologies by our competitors.  We are also dependent
upon technologies  developed by third parties for integrating our ground systems
with a variety of satellite systems. As land-based  telecommunications  services
expand, demand for certain types of satellite-based services may be reduced. New
technology used by our competitors  could render  satellite-based  services less
competitive by satisfying  consumer  demand in alternative  ways,  such as fiber
optic and wire-based versus wireless,  or through the use of  telecommunications
standards that are incompatible with existing  satellite  systems.  In addition,
our  success  depends  upon our ability to  introduce  innovative  products  and
services to the market on a cost-effective and timely basis.



<PAGE>


Risks Specific to ESG

We may not be able to adjust our fixed operating costs if our revenues decline.

         A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result, unanticipated
variations  in the number or  progress  of our  projects  may cause  significant
variations in operating  results in any  particular  quarter and could result in
quarterly losses.

         An unanticipated  termination of a major project,  a client's  decision
not to proceed with a project we anticipated, or the completion during a quarter
of several  major client  projects  could  require us to maintain  underutilized
employees which could have a material adverse effect on our business,  financial
condition  and  results  of  operations.  Our  revenues  and  earnings  may also
fluctuate from quarter to quarter based on such factors as:

o        the contractual terms and timing of completion of projects;
o        delays incurred in connection with projects;
o        the adequacy of provisions for losses;
o        the accuracy of our estimates of resources required to complete ongoing
         projects; and
o        general economic conditions.

Our  reputation  and business may be damaged if we are unable to satisfy  client
expectations  as a result of the increased  size and  complexity of the software
solutions that we implement.

         The average dollar size of our solutions has grown significantly, while
the timeframe for delivering  solutions has generally  decreased.  As our client
engagements become larger, more complex, and more time sensitive the development
process becomes more difficult to manage. Any inability by us to complete client
solutions in a timely manner,  any defects contained in the solutions we deliver
and any  other  failure  by us to  achieve  client  expectations,  would  have a
material adverse effect on our reputation with the affected client and generally
within our industry.  This could have a material adverse effect on our business,
and our results of operations and our financial condition may suffer.

Our  operating  results  may suffer as a result of our  dependence  on a limited
number of client projects.

         We  currently  derive and expect to  continue in the future to derive a
significant  portion of our annual and quarterly  revenues from a limited number
of clients for whom we perform  large  projects.  Consequently,  the loss of any
principal client could have a material adverse effect on our business, financial
condition and results of operations.

Competition from bigger, more established competitors who have greater financial
resources could result in price  reductions,  reduced  profitability and loss of
market share.

         Competition in the eBusiness services market is intense.  If we fail to
compete  successfully  against our current or future competitors,  our business,
financial  condition and operating  results may be seriously  harmed. We compete
against companies selling electronic commerce software and services,  as well as
against corporate in-house  development  efforts seeking to engage in electronic
commerce.  We expect competition to persist and intensify in the future. We also
cannot be certain that we will be able to compete  successfully with existing or
new competitors.

         Because  relatively low barriers  exist for companies  seeking to enter
our market,  we expect many new companies to enter without much  difficulty.  We
expect that  competition  will continue to intensify and increase in the future.
Some large IT consulting firms have recently announced that they intend to focus
more resources on eBusiness engagements. We are unable to guarantee that we will
be retained by our existing or our future clients for later stages of work.
<PAGE>

         The vast  majority of our  current  competitors  have longer  operating
histories,  a larger  client base,  larger  professional  staffs,  greater brand
recognition and greater financial, technical, marketing and other resources than
we do. This may place us at a  disadvantage  in responding  to our  competitors'
pricing strategies,  technological  advances,  advertising campaigns,  strategic
partnerships and other  initiatives.  In addition,  many of our competitors have
well-established  relationships  with our current and potential clients and have
extensive knowledge of our industry. As a result, our competitors may be able to
respond  more  quickly  to new or  emerging  technologies  as well as changes in
customer requirements. Our competitors may also be able to devote more resources
to the  development,  promotion and sale of their  services  than we can.  Those
competitors who offer more  standardized or less customized  services than we do
may have a substantial cost advantage,  which could force us to lower our prices
thereby adversely affecting our operating margins.

         Some of our current and potential  competitors also have established or
may in the future establish  cooperative  relationships among themselves or with
third parties to increase their ability to address customer needs.  Accordingly,
it is possible that new  competitors or alliances  among  competitors may emerge
and  rapidly  acquire  significant  market  share.  In  addition,  some  of  our
competitors  may develop  services that are superior to, or have greater  market
acceptance than ours.

Our revenues may decline as a result of our client  agreements  which prevent us
from providing services to their competitors.

         We  sometimes  agree not to perform  services  for  competitors  of our
clients for limited periods of time, which have been as long as two years. These
non-compete  agreements reduce the number of our prospective  clients as well as
the number of  potential  sources of  revenue.  In  addition,  these  agreements
increase the  significance of our client  selection  process because many of our
clients  compete  in  markets  where  only a  limited  number of  entities  gain
meaningful  market share.  If we agree not to perform  services for a particular
client's  competitors  and our client fails to capture a significant  portion of
its market,  we are  unlikely  to receive  future  revenues  in that  particular
market.

Our efforts to develop brand awareness of our services may not be successful.

         An  important  element  of our  business  strategy  is to  develop  and
maintain widespread  awareness of the ESG brand name. To promote our brand name,
we plan to increase our advertising and marketing expenditures,  which may cause
our operating margins to decline.  Moreover, our brand may be closely associated
with the business success or failure of some of our high-profile  clients,  many
of whom are pursuing  unproven  business  models in  competitive  markets.  As a
result, if one of our high-profile  clients  experiences  great  difficulties or
fails, our brand may be damaged.  Our operating  margins and our growth rate may
decline if we fail to  successfully  promote and maintain our brand name as well
as if we incur significant expenses related to our brand.

We may not be able to effectively manage any continued growth.

         Our revenues have increased over the past three fiscal years. Continued
growth could place a significant  strain on our limited  personnel,  management,
financial controls, and other resources. Any future expansion will require us to
attract,  retain, train,  motivate,  and manage new employees  successfully.  We
would also need to  integrate  new  management  and  employees  into our overall
operations,  and continue to improve our operational,  financial, and management
systems  and  controls  and  facilities.  Our  failure to manage  any  expansion
effectively  could have a material  adverse  effect on our  business,  financial
condition, or results of operations.
<PAGE>

Industry related risks specific to ESG

Our  business  is  dependent  upon our  ability  to keep  pace  with the  latest
technological changes.

         Our market and the technologies  used by our clients are  characterized
by  rapid  technological  change.  Failure  to  respond  successfully  to  these
technological developments,  or to respond in a timely or cost-effective manner,
may result in serious harm to our business and operating  results.  We currently
derive,  and  expect to derive  in the  future,  a  substantial  portion  of our
revenues from  creating  eBusiness  systems that are based upon today's  leading
technologies  and that are  capable of  adapting  to future  technologies.  As a
result,  our success will depend, in part, on our ability to offer services that
keep pace with continuing changes in technology, evolving industry standards and
changing  client  preferences.  In  addition,  we must  hire,  train and  retain
technologically  adept  professionals  so that we can  continue  to fulfill  the
sophisticated needs of our clients.

The  professional  computer  services  industry  is  highly  competitive  and is
characterized by low barriers to entry. If we cannot  effectively  compete,  our
revenues may decline.

         The professional computer services market is intensely competitive.  We
expect competition to intensify as this market evolves.  Many of our competitors
have longer operating histories,  more clients,  longer relationships with their
clients,  greater brand or name recognition and significantly greater financial,
technical, marketing and public relations resources than we do. As a result, our
competitors may be in a stronger  position to respond quickly to new or emerging
technologies  and  changes in client  requirements.  They may also  develop  and
promote their products and services more effectively than we do.

         There  are  relatively  low  barriers  to entry  into the  professional
computer  services  market.  As a result,  we anticipate many new competitors to
pose a  threat  to our  existing  operations.  In  addition,  we do not  own any
patented  technology  that may prevent our competitors  from providing  services
similar to ours. As a result,  new and unknown market  entrants pose a threat to
our business.  Current or future  competitors may also develop or offer services
that  are  comparable  or  superior  to  ours  at  a  lower  price.  This  could
significantly decrease our revenues and the value of your investment.

We face significant competition in relatively new and changing markets.

         The markets for the  services  we provide  are highly  competitive.  We
believe that we  principally  compete with "Big 5"  consulting  firms,  Internet
professional  services firms, systems integration firms,  technology vendors and
internal information systems groups. Many of the companies that provide services
in our markets have  significantly  greater  financial,  technical and marketing
resources  than  we do and  generate  greater  revenues  and  have  better  name
recognition.  In addition,  because of the relatively low barriers to entry into
our markets we expect to face competition from new entrants. We believe that the
principal competitive factors in our markets include:

o    ability  to integrate strategy, experience  modeling,  creative  design and
     technology  services;

o    quality of  service,  speed of  delivery  and price;

o    industry knowledge;

o    sophisticated project and program management capability; and

o    Internet technology expertise and talent.

We  believe  that our  ability to  compete  also  depends in part on a number of
competitive factors outside our control, including:

o    the ability of our competitors to hire, retain  and  motivate  professional
     staff;

o    the development by others of services or software that is  competitive with
     our  solutions;  and

o    the  extent of our  competitors'  responsiveness  to client needs.

There can be no assurance  that we will be able to compete  successfully  in our
markets.
<PAGE>

We may not have the right to resell or reuse  solutions  that we  developed  for
specific clients.

         A portion  of our  business  involves  the  development  of  technology
solutions or specific  client  engagements.  Ownership of these solutions is the
subject of negotiation and is frequently  assigned to the client.  Under certain
circumstances,  however,  we may be  permitted  to retain a license  for certain
uses. Some clients have prohibited us from marketing the applications  developed
for them for specified  periods of time or to specified  third parties and there
can be no assurance that clients will not demand similar or other  restrictions.
Issues  relating  to  the  ownership  of and  rights  to  use  solutions  can be
complicated  and there can be no  assurance  that  disputes  will not arise that
affect our ability to resell or reuse these  solutions.  Any  limitation  on our
ability  to resell or reuse a  solution  could  require  us to incur  additional
expenses to develop new solutions for future projects.

Risks Specific to EDTWN

We  may  not  be  able  to  accurately  predict  the  success  of  our  wireless
communications systems and services.

A number of our commercial product markets in the wireless  communications area,
including our SDR products,  have only recently begun to develop.  Because these
markets are  relatively  new, it is difficult to predict the rate at which these
markets will grow and over what time  period.  If the market for our products in
the  commercial  wireless  communications  area fails to grow,  or it grows more
slowly  than  anticipated,  our  business,  financial  condition  and results of
operations could be materially  adversely  affected.  Conversely,  to the extent
that growth in these  markets  results in capacity  limitations  in the wireless
communications area, our business, financial condition and results of operations
could also be materially adversely affected.

Our products may not be readily accepted by the market.

We are competing  against several  established radio providers who may choose to
develop their own software product.  There can be no assurances that our product
will be recommended as the standard or accepted by other suppliers.

We may not be able to  raise  sufficient  capital  to  provide  the  appropriate
marketing and distribution teams to grow the business.

The capital  markets are beginning to embrace this market,  however there can be
no assurances  that our business  plan will be accepted by the capital  markets.
There will be additional capital required to complete the product development as
well as hire and retain the  necessary  talent to fully  address this market via
both direct and indirect marketing channels.

We may not be able to raise sufficient capital to keep up with industry standard
changes and product development so that we are able to keep our product offering
current with the next generation standard changes.

The  business  must put  together a business  plan  which is  attractive  to the
capital  markets and will therefore be able to raise the capital  required.  The
technology is changing  rapidly and new capital will be required to keep up with
these changes.
<PAGE>

Industry related risks specific to EDTWN

The next  generation  wireless  markets may be moved out in time putting greater
pressure on the company to financially  support the  development  team until the
market matures and materializes.

Consumers may hold off on the demand for the next generation  wireless  products
until financial markets stabilize and the economy improves.

Personnel risk factor.

We have  assembled  a  world-class  technical  team to develop  and pursue  this
market.  However,  there can be no  assurance  that they  will  remain  with the
company if the vision, funding, and support changes.

Risks and the Market for our Publicly Traded Securities

Shares held by our current  shareholders  may adversely  effect our Common Share
price.

         As of March 1, 2001, we had 6,035,428 Common Shares outstanding.  As of
March  1,  2001,  the  following  Common  Shares  are  freely  tradable  without
restriction  or  limitation  under the  Securities  Act of 1933, as amended (the
"Act"),  except for the Common Shares purchased by "affiliates," as that term is
defined in Rule 144 as promulgated under the Act:

o    the 1,050,189  Common  Shares  granted  but not  yet issued under our stock
     option plans;

o    the 45,654 Common Shares issued under the employee stock purchase plan.

         Our remaining  Common Shares may be sold in the public market,  subject
in some cases to the restrictions set forth in Rule 144 as promulgated under the
Act. We have  reserved  4,410,000  Common  Shares for  issuance  under our stock
option plans. We have issued options to purchase a total of 4,527,869 (including
cancellations)  Common Shares under our stock option plans,  of which  2,636,410
have yet to be exercised and 1,168,058 have been cancelled. Sales of substantial
amounts of our  Common  Shares in the public  markets,  pursuant  to Rule 144 or
otherwise,  or the  availability  of our Common Shares for sale could  adversely
affect the prevailing market prices for our Common Shares and further impair our
ability to raise additional capital through the sale of equity securities in the
future.  In the past, our Common Shares have traded at low volumes.  Future sale
of our Common Shares into the public market could have an adverse  effect on the
prevailing market price of our Common Shares.

The market price of our Common Shares may be volatile.

         The  market  price  for   securities   of   technology   companies  has
historically  faced significant  volatility.  Like technology stocks in general,
the trading  price of our Common  Shares is  volatile.  In  addition,  the stock
market in recent years has experienced significant price and volume fluctuations
that often have been unrelated or disproportionate to the operating  performance
of particular  companies.  The following  factors may influence our Common Share
trading price:

o        actual or anticipated operating results;
o        growth rates;
o        changes in estimates by analysts;
o        market conditions in the industry;
o        announcements by competitors;
o        regulatory actions; and
o        general economic conditions.

Adverse changes in any of these items may result in a material adverse effect on
the market price of our Common Shares.
<PAGE>

Our quarterly operating results may vary significantly from quarter to quarter.

         Our  quarterly  revenues and earnings may  fluctuate as a result of the
following factors:

o        the number, size, and scope of our projects;
o        equipment purchases and other expenditures required for our business;
o        bid and proposal efforts undertaken;
o        delays in the award of projects;
o        employee productivity;
o        adequacy of provisions for losses;
o        accuracy  of  estimates  of  resources  required  to  complete  ongoing
         projects; and
o        general economic conditions.

         Demand for our  products  and  services in each of the markets we serve
can vary  significantly  from  quarter to quarter due to  revisions  in customer
budgets or schedules as well as other factors  beyond our control.  As a result,
our results of operations may fall below the expectations of securities analysts
and  investors in a particular  period.  Consequently,  the trading price of our
Common Shares may be materially adversely affected.

Our anti-takeover provisions may hinder a potential change of control.

         Our Second  Amended  and  Restated  Certificate  of  Incorporation  and
Amended  and  Restated  ByLaws  contain  certain   provisions  that  reduce  the
probability of any change of control or acquisition:

o        our board of directors can issue blank check  preferred stock with such
         rights,  obligations and preferences as they may determine  without any
         further vote or action by the shareholders;

o        beginning  with the election of directors at our 1999 Annual Meeting of
         Shareholders,  our board was classified into three classes,  each class
         of  directors  serving for a period of three years,  thus  requiring at
         least two years for any change of control of our board; and

o        directors may only be removed by holders of at least 60% of our  Common
         Shares, with cause.

Further,  in  October  1998,  our board of  directors  adopted  a "poison  pill"
shareholder  rights plan which may tend to  discourage a third party from making
an unsolicited  proposal to acquire us unless our board of directors  amends the
plan and approves  the  proposal,  even if such  acquisition  proposal  would be
beneficial  to  our  shareholders.   As  a  result,  shareholders  who  wish  to
participate  in such a  transaction  may  not  have an  opportunity.  Under  our
shareholder rights plan,  preferred share purchase rights, which are attached to
our Common Shares, may be triggered upon an acquisition,  or actions that result
in the acquisition,  of 15% or more of our Common Shares by any person or group.
If triggered,  these share purchase rights entitle our shareholders,  other than
the acquiror,  to purchase,  for the exercise price,  our Common Shares having a
market value of two times the exercise price. In addition, if a company acquires
us in a  business  combination  transaction,  or if we sell more than 50% of our
consolidated  assets or earnings power, these share purchase rights will entitle
our shareholders,  other than the acquiror,  to purchase for the exercise price,
the  acquiror's  Common  Shares  having a market value of two times the exercise
price. Thus, our shareholder  rights plan, if triggered,  will cause substantial
dilution to a person or group  attempting to acquire us on terms not approved by
our board of directors.

         In addition,  Section 203 of the Delaware  General  Corporation Law and
our  stock  option  plans  may also  discourage,  delay or  prevent  a change in
control.
<PAGE>

We may require additional capital resources to develop additional  technologies,
and these resources may not be available.

         We may need to raise additional funds, and we cannot be certain that we
will be able to obtain additional funds on favorable terms or at all. If we need
additional  capital and cannot raise it on acceptable  terms, we may not be able
to:

o    open  new  offices  in the  United  States  or  abroad;

o    create  additional market-specific  business  units;

o    enhance our  infrastructure  and leveragable assets;

o    hire, train and retain employees;

o    respond to competitive  pressures or unanticipated requirements; or

o    pursue acquisition opportunities.

Failure  to  obtain  additional  capital  resources  may  adversely  impact  our
long-term financial condition.

Our Common Shares may be illiquid.

         Our Common Shares are thinly traded on the NASDAQ SmallCap Market. They
should  only be  purchased  by  investors  that can afford to lose their  entire
investment.  Our Common  Share  trading  price is highly  volatile and may trade
significantly  below the book value per Common  Share.  Until an orderly  market
develops,  if at all,  the  trading  price of our Common  Shares  may  fluctuate
significantly.   Prices  for  our  Common  Shares  will  be  determined  in  the
marketplace  and may be  influenced  by many  factors,  including  the depth and
liquidity of the market,  investor  perception of our business and our industry,
and general economic and market conditions.

Forward-looking statements contained in this Report may prove inaccurate.

         This   annual   report  on  Form   10-K   includes   and   incorporates
forward-looking   statements   that  are  subject  to  a  number  of  risks  and
uncertainties.  All  statements,  other  than  statements  of  historical  facts
included or  incorporated  in this  annual  report on Form 10-K,  regarding  our
strategy, future operations,  financial position,  estimated revenues, projected
costs,  prospects,  plans  and  objectives  of  management  are  forward-looking
statements.   Our  forward  looking  statements  oftentimes  relate  to  matters
regarding  our  management,  retention of  employees,  technology,  governmental
factors,  aerospace and technology industry economic conditions,  integration of
acquisitions,   and  our  competition.  When  used  herein,  the  words  "will",
"believe",  "anticipate",  "intend", "estimate", "expect", "project" and similar
expressions are intended to identify  forward-looking  statements,  although not
all  forward-looking  statements  contain  these  identifying  words.  We cannot
guarantee  future results,  levels of activity,  performance or achievements and
investors should not place undue reliance on our forward-looking statements. Our
forward-looking  statements  do not reflect the  potential  impact of any future
acquisitions,  mergers,  dispositions,  joint ventures or strategic investments.
Actual  results  could  differ   materially  from  those  anticipated  in  these
forward-looking  statements as a result of various factors,  including the risks
described in "Risk  Factors" and  elsewhere.  We do not assume any obligation to
update any of the forward-looking statements we make.



<PAGE>



Item 2.  Properties

           Our corporate  headquarters  is located in Melbourne,  Florida.  This
area is commonly  referred to as the "Space  Coast"  because of its proximity to
NASA's  Kennedy Space  Center.  Exigent,  through ESTI,  entered into a ten-year
lease  expiring on February 28, 2007 to occupy a 30,000  square foot building in
Melbourne,  Florida.  This building  houses our corporate  headquarters  and our
EDTWN team.  ESTI also leases an adjacent  29,000 square foot  building  under a
ten-year  lease  expiring  December 1, 2005.  This  facility  houses most of our
technical employees in ESTI as well as the ESTI product development team.

         We also have three offices in the greater Washington,  D.C. area. These
offices are predominantly  staffed with technical  employees.  Exigent,  through
ESTI,  renewed our existing  lease of 15,296  square feet, of which 6,154 square
feet are sublet to a third  party,  located in  Alexandria,  Virginia,  for five
years  expiring on August 31, 2003.  In December  1998,  Exigent,  through ESTI,
occupied an  additional  leased  building of  approximately  11,188 square feet,
located in Chantilly, Virginia, under a five-year lease expiring on November 30,
2003. This facility is sublet entirely to a third party. During fiscal year 1999
we entered into a new lease for an expanded facility in Chantilly,  Virginia, of
approximately  27,670  square  feet  to meet  the  growth  requirements  for our
anticipated business in this area.

         We also lease  office  space in  Colorado  Springs,  Colorado;  Aurora,
Colorado; and Charlotte, North Carolina.

         We believe that our occupancy needs will be met through our next fiscal
year.  Due to the  nature  of  our  business,  there  are  no  special  facility
requirements to consider,  other than security requirements placed on certain of
our  facilities,  given that software  development  can be conducted in standard
office space and we require minimal manufacturing capacity because such services
are mostly outsourced.

Item 3.  Legal Proceedings

         We may, from time to time, be involved in litigation  incidental to the
conduct of our  business.  We are not  currently a party to any  material  legal
proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders

         During the fourth quarter of the fiscal year covered by this report, we
did  not  submit  any  matters  to a  vote  of  security  holders,  through  the
solicitation of proxies or otherwise.




<PAGE>



PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

         Until February 26, 1999 our Common Shares and Warrants were reported on
the NASDAQ Electronic  Bulletin Board ("Bulletin  Board") under the symbols XGNT
and XGNTW, respectively.  On March 1, 1999, our Common Shares and Warrants began
trading on the Nasdaq Small Cap Market.  Our Common Shares and Warrants are also
traded  on  the  Chicago  Stock   Exchange  under  the  symbols  XNT  and  XNTW,
respectively.  The Warrants traded as specified on both Exchanges until expiring
on January 30, 2000.  There is no  established  trading market for the Company's
Class A Preferred Shares.  (See Risk Factors - Risks Specific to the Company and
the Market for its Publicly Traded Securities).

         The  following  table  represents  the high and low bid  prices for our
Common  Shares and Warrants for each quarter of our fiscal years ended  December
31, 2000 and 1999, as reported in the Nasdaq daily report:

                                                                    Common Stock
                                         Common Shares         Purchase Warrants
                                      --------------------    ------------------
 Fiscal Year Ended 12/31/00           High         Low        High         Low

   4th Quarter                       $2.72        $0.75       N/A          N/A
   3rd Quarter                       $3.47        $2.00       N/A          N/A
   2nd Quarter                       $4.75        $1.91       N/A          N/A
   1st Quarter                       $7.50        $3.13       $2.969     $0.125

 Fiscal  Year Ended 12/31/99

   4th Quarter                       $4.75        $3.13       $1.500     $0.4375
   3rd Quarter                       $6.25        $3.25       $3.000     $0.875
   2nd Quarter                       $6.50        $3.63       $3.875     $1.0625
   1st Quarter                       $7.00        $2.47       $3.000     $0.625

         As of March 1, 2001, we had  approximately  1,112 holders of our Common
Shares  (based  upon  the  number  of  record  holders).  This  number  excludes
shareholders  whose Common Shares are held in nominee or street name by brokers.
Our Warrants  expired on January 30,  2000.  Prior to  expiration,  798,560 were
exercised at a price of $3.00 per share,  and we raised a total of $2,395,680 in
capital.

         Our Board of Directors determined during our fiscal year ended December
31, 1998 that dividends would not be paid in the foreseeable  future.  The Board
determined that our resources should be devoted to funding acquisitions, product
development and operations.




<PAGE>



Item 6.  Selected Financial Data

<TABLE>
<CAPTION>

                                                                                    Eleven
                                                                                    months
                                                Year ended       Year ended          ended           Years Ended January 31
(Amounts in thousands except per share amounts)  12/31/00         12/31/99         12/31/98           1998            1997
                                               -------------   ---------------   --------------   -------------   --------------

<S>                                              <C>               <C>              <C>             <C>              <C>
Revenues                                         $   38,201        $   36,151       $   31,139      $   35,749       $   29,936
   Cost of sales                                    (28,779)          (28,188)         (23,401)        (26,422)         (24,689)
                                               -------------   ---------------   --------------   -------------   --------------
Gross profit                                          9,422             7,963            7,738           9,327            5,247
   General and administrative expenses *            (10,453)           (8,617)          (6,823)         (7,050)          (5,344)
   Research and development costs                       (61)             (272)            (181)            (48)            (240)
                                               -------------   ---------------   --------------   -------------   --------------
Operating income (loss)                              (1,092)             (926)             734           2,229             (337)
   Total other income (expense)                         (21)              (13)            (136)            (53)               1
                                               -------------   ---------------   --------------   -------------   --------------
Income (Loss) before taxes                           (1,113)             (939)             598           2,176             (336)
   Income tax expense (benefit)                        (398)             (460)             180             831              150
                                               -------------   ---------------   --------------   -------------   --------------
Net Income (Loss)                                $     (715)        $    (479)      $      418       $   1,345       $     (486)
                                               =============   ===============   ==============   =============   ==============
Income (Loss) per Weighted Average Common
   Shares Outstanding - Diluted                  $    (0.12)        $   (0.11)      $     0.08       $    0.29       $    (0.13)
Cash Dividends                                   $        -         $       -       $        -       $       -       $     (310)
Cash Dividends Paid per Share Outstanding        $        -         $       -       $        -       $       -       $     0.08
Total Assets                                     $   16,749         $  18,016       $   15,664       $  14,693       $   10,949
Total Long-Term Liabilities
   (Excluding Deferred Income Taxes)             $      750         $   1,019       $      428       $     467       $      317
Total Stockholders' Equity                       $   11,274         $   8,785       $    8,629       $   7,781       $    6,258
Stockholders' Equity per Weighted Average
   Common Share, Outstanding - Diluted           $     1.94         $    1.96       $     1.67       $    1.67       $     1.72
Dividends Declared per Weighted Average
   Common Share, Outstanding - Diluted             $      -          $      -         $      -         $     -        $    0.08

</TABLE>

See Note 1 to the  Consolidated  Financial  Statements  for the  results for the
twelve months ended December 31, 2000.

* General and Administrative  Expenses includes  Restructuring  Costs as well as
Amortization of Goodwill.


<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

         We moved into several new and promising  businesses during the year. We
experienced   another  year  of  modest   revenue   growth  across  all  of  our
subsidiaries.  Our most disappointing  results were in ESG. We had anticipated a
much  stronger  contribution  to revenue and  earnings  from the new  commercial
Oracle(R) ERP business we purchased in December 1999.  However,  ESG experienced
the same slow  down/no  growth  scenario  in 2000 as the IT industry as a whole.
Although this first year was  disappointing  for our  commercial  ERP consulting
business  (ESG) the future  looks very  encouraging  with the  addition of a new
management  team,  as well as a much  stronger  relationship  with Oracle.  This
relationship  started with the focus on opportunities  in the Southeastern  U.S.
and has begun to spread into the  Midwest.  In  addition to this new  commercial
start,  we launched  another  exciting new  business in the digital  telecom and
wireless network  industries.  We completed the development of our DMTK product,
while adding several new customers in both the product  business and development
work for established as well as "start-ups" in the telecom  business.  The third
new  business  which we began  addressing  during  the year is in the  broadband
satellite  network  business.  This  business,  like the  other  two  discussed,
provides a solid new market for our engineering  team to address.  Management is
optimistic  regarding prospects for these new start ups and the enhanced product
offerings  in the ESTI and  EDTWN  businesses.  Our  product  family is ready to
handle  satellites  from  single  GEO's to the largest  constellations  of up to
hundreds of vehicles.  The latest  release of OS/Comet  (OS/Comet  4.0) presents
unrivalled  scalability and other distinct  features and is poised and ready for
the commercial as well as government satellite business.

         In 1998 we changed the last day of our fiscal  year from  January 31 to
December 31. Hence,  our fiscal year 1998B was an eleven-month  period ending on
December 31, 1998.

Liquidity

         As of December 31, 2000 and  December  31,  1999,  our ratio of current
assets to current  liabilities was 2.0 and 1.2,  respectively.  This increase is
due to the increase in cash as well as a  significant  decrease in the bank debt
including the Line of Credit.  Current liabilities were decreased by almost $3.0
million while cash increased by $1.5 million.

         Our cash portfolio (cash and cash equivalents) increased $1,451,997 for
the fiscal year ended  December 31, 2000.  This increase was due to cash used in
investing  activities  of  $1,352,511  and cash used in financing  activities of
$822,171 offset by cash provided by operating activities of $3,626,679. The cash
used in  investing  activities  was due to a $1,166,686  investment  in software
development,  a $193,650 investment in our facilities and capital equipment, and
a net decrease in capitalized  patent cost of $7,825.  By  comparison,  our cash
portfolio increased $144,398 for the year ended December 31, 1999. This increase
was due to cash  used in  investing  activities  of  $4,176,873  offset  by cash
provided by operating  activities of $2,388,710,  and cash provided by financing
activities  of  $1,932,561.  The cash used in investing  activities  in the year
ended  December  31,  1999  was   attributable  to  an  investment  in  software
development  of  $2,144,253,  an  investment in Company  facilities  and capital
equipment of $35,020 and the cash used  associated  with the  acquisition of GEC
North America of $1,912,484.  In addition there was an investment in capitalized
patent cost of $85,116.

         In our fiscal  years  ended  December  31,  2000,  1999,  and 1998,  we
invested $193,650, $35,020, and $1,002,041 in capital assets, respectively.  The
expenditure  in the eleven months ended December 31, 1998 was due largely to the
completion  of  remodeling   and  furnishing  our  facilities  as  well  as  the
installation of a wide area network serving all of our principal facilities.  In
accordance  with our FY 1998  decision  to lease  new  computing  equipment,  we
continue leasing items through the fiscal year ended December 31, 2000.  Capital
for  equipment  purchases  is expected to remain  stable for the next two fiscal
years because of our recent computer  acquisition and modernization  efforts. We
will  continue our policy of leasing  resources for office  computing  needs and
furnishings.
<PAGE>

         During our fiscal years ended  December 31, 2000,  1999,  and 1998,  we
spent  $1,166,686,  $2,144,253  and  $3,905,349,  respectively,  in  capitalized
software  development  costs to develop new  products  considered  essential  in
maintaining  market position in the satellite  command and control  industry and
the new Software Defined Radio market.

         Cash (used) provided by financing activities for the fiscal years ended
December 31, 2000,  1999, and 1998 was ($822,171),  $1,932,561,  and $1,895,146,
respectively. This cash used in FY 2000 was comprised of $2,386,734 paid against
a line of credit and  $1,615,329  in principal  payments on long-term as well as
short-term  debt. This leaves Exigent with a zero balance on all bank debt as of
December 31, 2000. In addition,  $3,179,892  was raised  through the exercise of
stock options and Warrants during fiscal year 2000.

         For the fiscal years ended December 31, 2000, 1999, and 1998, our Board
of Directors determined not to pay any shareholder dividends, but instead to use
cash for acquisitions, product development and operations.

         In our fiscal years ended  December 31, 2000,  1999, and 1998 principal
payments on  long-term  debt  amounted to  $1,615,329,  $325,939  and  $856,617,
respectively.  On  November  7,  2000  Exigent  obtained  a line  of  credit  of
$1,000,000  to be used for  acquisitions  in  addition to the  existing  line of
$5,000,000 through ESTI. As of December 31, 2000 and December 31, 1999, we had a
line of credit with Huntington  National Bank  ("Huntington")  of $6,000,000 and
$5,000,000,  respectively.  As of December 31, 2000 and 1999,  draws against the
line of credit were $0 and $2,386,734,  respectively.  All accounts  receivable,
equipment,  furniture,  and fixtures of ESTI are pledged as  collateral  against
amounts borrowed under the ESTI line of credit while cash invested in short-term
securities with Huntington are pledged against the Exigent line of credit.

         Our  management  believes  that  capital in addition to that  available
through  operations  and the available  line of credit will be necessary to fund
our plans for expansion  and growth  during our next fiscal year and beyond.  We
may seek debt or equity financing.  However, there can be no assurance that such
financing  will be available on  acceptable  terms,  if at all, or that adequate
amounts  of  financing  will be  obtained.  In  addition,  in October of 2000 we
engaged CIBC World Markets to assist in evaluating  strategic  alternatives  for
the execution of the business plan.

Forward-looking statements contained in this Report may prove inaccurate.

         This   annual   report  on  Form   10-K   includes   and   incorporates
forward-looking   statements   that  are  subject  to  a  number  of  risks  and
uncertainties.  All  statements,  other  than  statements  of  historical  facts
included or  incorporated  in this  annual  report on Form 10-K,  regarding  our
strategy, future operations,  financial position,  estimated revenues, projected
costs,  prospects,  plans  and  objectives  of  management  are  forward-looking
statements.   Our  forward-looking   statements  oftentimes  relate  to  matters
regarding our management, technology, governmental factors, economic conditions,
retention of employees,  integration of acquisitions,  and our competition. When
used herein, the words "will", "believe",  "anticipate",  "intend",  "estimate",
"expect",   "project"   and  similar   expressions   are  intended  to  identify
forward-looking statements,  although not all forward-looking statements contain
these identifying words. We cannot guarantee future results, levels of activity,
performance or achievements and investors should not place undue reliance on our
forward-looking  statements.  Our forward-looking  statements do not reflect the
potential  impact  of any  future  acquisitions,  mergers,  dispositions,  joint
ventures or strategic  investments.  Actual results could differ materially from
those  anticipated  in these  forward-looking  statements as a result of various
factors,  including the risks  described in "Risk Factors" and elsewhere.  We do
not assume any  obligation  to update any of the  forward-looking  statements we
make.

Provision for Income Taxes

         The effective rate for our fiscal year ended December 31, 2000 and 1999
was a credit of 35.8% and 49.0%,  respectively  while the effective rate for the
eleven  months  ended  December  31,  1998 was 30.1%.  See Note 14 to  Financial
Statements  describing the differences  between the U.S. statutory and effective
income tax rates.



<PAGE>



Analysis of Operations

Overview

         Our current contract base provides  sufficient  backlog to maintain our
operations  through  June 2001.  As of  December  31,  2000,  our total  backlog
(including  funded and unfunded) for  commercial  and  government  contracts was
$17,474,050.  There is additional  backlog associated with  nondefinitized  task
orders on our  government  contracts  of  $13,903,151.  We invested in excess of
$10,000,000 during the last three years in our software product OS/COMET as well
as other product  offerings,  including the recently  completed DMTK. We believe
this investment  facilitated  many of our contract  awards.  We are committed to
maintain our products during the next fiscal year and beyond.

         The commercial  constellation business has remained on hold through the
year ended December 31, 2000, as commercial  carriers worked to finance both the
development and the deployment of their satellites.

         During the year ended  December  31, 2000 we expanded  into the Digital
Telecom  and  Wireless  Networks   business.   This  new  business  presents  an
opportunity to sell both COTS as well as custom software into the government and
commercial  marketplace for Software Defined Radios and next generation wireless
systems (2.5G and 3G).

         We expect  demand  for  software  engineers  to  provide  new  customer
opportunities, but this demand places a premium on efforts to retain our current
workforce. (See Risk Factors - Highly Competitive Market for Computer Services).
As with all companies in our industry,  this places  additional  pressure on our
overall  payroll  costs.  We believe  that our benefits  package is  competitive
within our  industry  and this  should  help to recruit  workers  and retain our
current workforce. As our indirect costs funding benefits increase,  pressure is
placed on our indirect rates. We believe that maintaining  superior  benefits is
critical while the demand for software engineers remains high. We are constantly
challenged with the need to minimize costs while  maintaining  superior employee
benefits.

Comparison of Years Ended December 31, 2000, 1999, and 1998

         As of  the  fiscal  year  ended  December  31,  2000,  our  sales  were
$38,200,710,  up 5.7%  from  sales of  $36,151,278  for the  fiscal  year  ended
December  31,  1999.  Our sales for the fiscal  year ended  December  31,  1999,
increased 16.1% from sales of $31,139,083 for our eleven-month fiscal year ended
December 31, 1998.  The  increase  was 6% after  adjusting  for the eleven month
year. The breakdown between government and commercial sales for these periods is
as follows:

               Year ended            Year ended           Eleven months
                12/31/00              12/31/99            ended 12/31/98
             --------------       ---------------         ---------------
Government   $  31,799,994   83%  $   31,498,070    87%   $   24,698,289    79%
Commercial       6,400,716   17%       4,653,208    13%        6,440,794    21%
             -------------- ----- --------------- ------  --------------- ------
             $  38,200,710  100%  $   36,151,278   100%   $   31,139,083   100%
             ============== ===== =============== ======  =============== ======

         These sales reflect a 83% to 17% government to commercial  split in our
fiscal  year ended  December  31,  2000,  compared to an 87% to 13% split in our
fiscal year ended  December 31, 1999,  and a 79% to 21% split in our fiscal year
ended December 31, 1998.  Commercial  contract  revenue  increased in our fiscal
year ended  December 31, 2000 due to the addition of the  commercial IT business
as well as the start of EDTWN.  Our  government  sales in the fiscal  year ended
December  31, 1999  increased  from the fiscal year ended  December 31, 1998 due
largely to expanding our business with a new proprietary government agency.

         Gross profit as a percentage of sales  increased to 24.7%  ($9,421,980)
for the fiscal  year ended  December  31, 2000 from 22.0%  ($7,963,175)  for the
fiscal year ended  December  31,  1999.  This  increase  was due  primarily to a
decrease in the amortization of capitalized software of approximately $1,000,000
due largely to the write-down  during the fiscal year ended December 31, 1999 of
work performed with respect to the Strategic Alliance Agreement with Motorola as
well  as an  adjustment  to the  carrying  value  of  FotoTag  of  approximately
$380,000.  Included  in the FY 2000  cost of sales is a write  down of  $810,993
associated with the Saturn and ActiveTrack(TM) products. Upon complete review of
current  circumstances,  it was  determined  that these  products  were impaired
assets.  Gross  profit as a  percentage  of sales for the  eleven  months  ended
December 31, 1998 was 24.9% of sales ($7,738,362).
<PAGE>

The following  chart shows the gross profit  breakdown  between  government  and
commercial contracts during the periods indicated:

<TABLE>
<CAPTION>
                                                                                                  Eleven months
                                               Year ended                 Year ended                  ended
                                                12/31/00                   12/31/99                  12/31/98
                                        -------------------------  -------------------------    -------------------
Government:
<S>                                              <C>                        <C>                 <C>
         Revenue                                 $    31,799,994            $    31,498,070     $      24,698,289
         Cost of Sales                               (22,738,872)               (22,755,716)          (18,512,619)
                                        -------------------------  -------------------------    -------------------
         Gross Profit                             $    9,061,122             $    8,742,354     $       6,185,670
                                        =========================  =========================    ===================

         Gross profit as % of sales                        28.5%                      27.8%                 25.0%

                                                                                                  Eleven months
                                               Year ended                 Year ended                  ended
                                                12/31/00                   12/31/99                  12/31/98
                                        -------------------------  -------------------------    -------------------
Commercial:
         Revenue                                       6,400,716                  4,653,208             6,440,794
         Cost of Sales                                (6,039,858)                (5,432,387)           (4,887,718)
                                        -------------------------  -------------------------    -------------------
         Gross Profit (Loss)                       $     360,858            $      (779,179)     $      1,553,076
                                        =========================  =========================    ===================

         Gross profit (loss) as % of
         sales                                              5.6%                     (16.7%)                24.1%

</TABLE>

         General and  administrative  expenses ("G&A")  (including  Research and
Development  Costs,  Restructuring  Costs, and Amortization of Goodwill) for the
fiscal  year  ended  December  31,  2000  were  $10,513,933,  18.3%  of sales or
$1,625,200 higher than expenses of $8,888,733 for the fiscal year ended December
31, 1999. This increase resulted from the addition of the commercial IT business
($1,130,941)  as well as the staffing of key sales and  management  positions in
each of our three subsidiaries ($502,500). In addition there was a non-recurring
charge taken of $422,803 for the  restructuring  during the first quarter of the
fiscal year ended  December  31,  2000.  G&A  expenses for the fiscal year ended
December  31, 1999 were  $8,888,733,  26.9% of sales or  $1,884,864  higher than
expenses of  $7,003,869  for the eleven  months ended  December 31, 1998.  After
taking  the  shortened  fiscal  year into  account,  our  expenses  were 5.0% or
$420,617  higher  than for the eleven  months  ended  December  31,  1998.  This
increase resulted  primarily from staffing a Chief Technical Office  ($450,000),
staffing other positions which had not previously been staffed,  such as a Chief
Financial Officer,  expenses  associated with financial  advisory services,  and
expenses  associated with the acquisition of GEC ($550,000),  in addition to the
increased  marketing effort  associated with the new products  introduced during
the fiscal year ended December 31, 1999 ($180,000).

         We incurred a net loss of  $714,275  (1.9% of sales) in the fiscal year
ended December 31, 2000,  which was an increase from the net loss of $478,665 in
the fiscal year ended December 31, 1999. We attribute the loss to a slow year in
the  commercial IT market in the current  year.  The net loss in the fiscal year
ended  December 31, 1999 of $478,665  represents  a $896,825  decrease in income
over the net income in the eleven  months  ended  December 31, 1998 of $418,160.
This decrease was due  primarily to the write off of the two impaired  assets of
$1,415,489 in 1999.

Outlook

         This section captioned  "Outlook" and other parts of this Annual Report
on Form 10-K include certain  forward-looking  statements  within the meaning of
the federal  securities  laws.  Actual  results and the  occurrence or timing of
certain  events  could  differ  materially  from those  projected in any of such
forward-looking statements due to a number of factors, including those set forth
below and elsewhere in this Form 10-K. See "Other Forward-Looking Statements."

Diversification and Long Term Growth.

We expect to  diversify  our  business  through  sales of COTS  products in both
commercial  and  government  markets  and  expand  our  information   technology
offerings in both the  commercial as well as the government  markets.  Our first
step in this strategy was the  acquisition  of GEC.  Additionally,  we currently
plan to seek  opportunities  for long term growth through the development of our
Digital   Telecom  And  Wireless   Networks   business  as  well  as  additional
acquisitions,  sales of products for commercial applications, and leveraging our
existing technologies and products.

<PAGE>


Product Development

We have  developed  new  products  and  product  offerings,  including  the next
generation  of OS/COMET,  the ActiveM and Active M/XP  products and the recently
completed and deployed DMTK product.  We plan to  investigate  other new product
development  opportunities as part of our effort to expand product offerings and
expand into new markets.


Item 7a.  Quantitative and Qualitative Disclosures about Market Risk

         Not Applicable

Item 8.  Financial Statements and Supplementary Data



<PAGE>





Report of Independent Auditors

Board of Directors and Stockholders
Exigent International, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Exigent
International,  Inc.  as  of  December  31,  2000  and  1999,  and  the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years ended  December 31, 2000 and 1999 and the eleven months ended December
31, 1998.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  consolidated   financial  position  of  Exigent
International,  Inc. at December 31, 2000 and 1999, and the consolidated results
of its  operations  and its cash flows for the years ended December 31, 2000 and
1999,  and the eleven  months  ended  December  31,  1998,  in  conformity  with
accounting principles generally accepted in the United States.


Jacksonville, Florida               /s/ Ernst & Young LLP
February 9, 2001



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                ASSETS
<TABLE>
<CAPTION>

                                                                                 December 31,
                                                                             2000             1999
                                                                        ---------------  ---------------
CURRENT ASSETS
<S>                                                                        <C>           <C>
      Cash and cash equivalents                                            $ 2,026,365   $     574,368
      Accounts receivable, pledged                                           3,054,644       2,616,727
      Costs and estimated earnings in excess of
          billings on uncompleted contracts, pledged                         4,424,044       4,790,742
      Prepaid expenses                                                         115,539          42,492
      Income taxes receivable                                                    8,419         803,188
      Deferred income taxes                                                          -         336,000
                                                                        ---------------  ---------------
      TOTAL CURRENT ASSETS                                                   9,629,011       9,163,517
                                                                        ---------------  ---------------
PROPERTY AND EQUIPMENT
      Cost                                                                   6,434,047       6,240,397
      Accumulated depreciation                                              (5,212,827)     (4,699,750)
                                                                        ---------------  ---------------
      PROPERTY AND EQUIPMENT, NET                                            1,221,220       1,540,647
                                                                        ---------------  ---------------
OTHER ASSETS
      Software development costs, net                                        3,107,143       4,275,113
      Capitalized patent costs, net                                             77,291          85,116
      Goodwill, net                                                          2,561,068       2,848,220
      Deposits and other assets                                                153,659         103,193
                                                                        ---------------  ---------------
      TOTAL OTHER ASSETS                                                     5,899,161       7,311,642
                                                                        ---------------  ---------------
      TOTAL ASSETS                                                        $ 16,749,392     $18,015,806
                                                                        ===============  ===============

</TABLE>


   The accompanying notes are an integral part of these financial statements.

<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)



                                  LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                                   December 31,
                                                                              2000             1999
                                                                        ---------------  ----------------
CURRENT LIABILITIES
<S>                                                                     <C>              <C>
      Line of credit                                                    $            -   $   2,386,734
      Accounts payable                                                         361,277         715,976
      Accrued payroll and other expenses                                     2,432,508       2,187,690
      Billings in excess of costs and estimated earnings
          on uncompleted contracts                                           1,639,731         891,557
      Income taxes payable                                                           -          17,827
      Current portion, long-term debt                                           41,331       1,256,817
      Current portion, subordinated debt                                       250,000         250,000
                                                                        ---------------  ----------------
      TOTAL CURRENT LIABILITIES                                              4,724,847       7,706,601
                                                                        ---------------  ----------------
LONG-TERM LIABILITIES
      Long-term debt, less current portion                                     119,054         268,897
      Subordinated debt, less current portion                                  500,000         750,000
      Deferred income taxes                                                          -         505,000
      Other liabilities                                                        131,176               -
                                                                        ---------------  ----------------
      TOTAL LONG-TERM LIABILITIES                                              750,230       1,523,897
                                                                        ---------------  ----------------

      TOTAL LIABILITIES                                                      5,475,077       9,230,498
                                                                        ---------------  ----------------
STOCKHOLDERS' EQUITY
      Class A Preferred  Shares,  $.01 par value,  5,000,000 shares  authorized,
        15,132 and 68,841  issued  and  outstanding  at  December  31,  2000 and
        December 31, 1999, respectively, at $2.50 per share liquidation/
        dissolution preference                                                     151             688

      Common Shares, $.01 par value, 40,000,000 shares authorized, 6,035,428 and
        4,845,149 issued and outstanding at December 31, 2000 and
        December 31, 1999, respectively,                                        60,354          48,452
      Paid in capital                                                        5,838,362       2,646,445
      Retained earnings                                                      5,375,448       6,089,723
                                                                        ---------------  ----------------
      TOTAL STOCKHOLDERS' EQUITY                                            11,274,315       8,785,308
                                                                        ---------------  ----------------
      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                            $ 16,749,392    $ 18,015,806
                                                                        ===============  ================

</TABLE>


The accompanying notes are an integral part of these financial statements.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                                            For the eleven
                                                                                                                 months
                                                                        For the year ended December 31,    ended December 31,
                                                                             2000             1999               1998
                                                                        ---------------  ----------------  ------------------

<S>                                                                         <C>          <C>                    <C>
REVENUES                                                                $   38,200,710   $  36,151,278          $ 31,139,083
COST OF SALES                                                               28,778,730      28,188,103            23,400,721
                                                                        ---------------  ----------------  ------------------
GROSS PROFIT                                                                 9,421,980       7,963,175             7,738,362

GENERAL AND ADMINISTRATIVE EXPENSES                                          9,742,980       8,617,157             6,823,198
RESEARCH AND DEVELOPMENT COSTS                                                  60,999         271,576               180,671
RESTRUCTURING COSTS                                                            422,803               -                     -
AMORTIZATION OF GOODWILL                                                       287,151               -                     -
                                                                        ---------------  ----------------  ------------------
OPERATING INCOME (LOSS)                                                     (1,091,953)       (925,558)              734,493
                                                                        ---------------  ----------------  ------------------

OTHER INCOME (EXPENSE)
      Interest income                                                           98,721          35,201                42,786
      Interest expense                                                        (159,480)        (52,004)             (172,035)
      Gain (loss) on disposal of fixed assets                                        -          (6,613)                3,292
      Other, net                                                                40,102          10,309               (10,376)
                                                                        ---------------  ----------------  ------------------
TOTAL OTHER INCOME (EXPENSE)                                                   (20,657)        (13,107)             (136,333)
                                                                        ---------------  ----------------  ------------------
INCOME (LOSS) BEFORE INCOME TAXES                                           (1,112,610)       (938,665)              598,160

INCOME TAX EXPENSE (BENEFIT)                                                 (398,335)        (460,000)              180,000
                                                                        ---------------  ----------------  ------------------
NET INCOME (LOSS)                                                       $    (714,275)   $    (478,665)          $   418,160
                                                                        ===============  ================  ==================
EARNINGS (LOSS) PER SHARE - BASIC                                       $       (0.12)   $       (0.11)          $      0.10
                                                                        ===============  ================  ==================

EARNINGS (LOSS) PER SHARE - DILUTED                                     $       (0.12)   $       (0.11)          $      0.08
                                                                        ===============  ================  ==================

</TABLE>
   The accompanying notes are an integral part of these financial statements.


<PAGE>



                           EXIGENT INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                               Common Stock          Class A Preferred
                                               -------------        -------------------     Paid in     Retained
                                            Shares       Amount       Shares     Amount     Capital     Earnings        Total
                                         ---------------------------------------------------------------------------------------
<S>                                       <C>          <C>          <C>         <C>       <C>          <C>          <C>
BALANCE FEBRUARY 1, 1998                   3,872,655    $ 38,726     688,792     $6,888    $ 1,585,007  $ 6,150,228  $ 7,780,849
    Exercise of convertible securities       178,788       1,788           -          -        427,771            -      429,559
    Class A preferred converted to common     78,910         789     (78,910)      (789)             -            -            -
    Cancelled shares                            (250)         (2)          -          -              2            -            -
    Net income                                     -              -        -          -              -      418,160      418,160
                                         ---------------------------------------------------------------------------------------
BALANCE JANUARY 1, 1999                    4,130,103      41,301     609,882      6,099      2,012,780    6,568,388    8,628,568
    Exercise of convertible securities       174,005       1,740           -          -        477,615            -      479,355
    Class A preferred converted to common    541,041       5,411    (541,041)    (5,411)             -            -            -
   Accretion of unearned stock
   compensation                                    -           -           -          -         25,050            -       25,050
   Compensatory stock option tax benefit                                                       131,000                   131,000
    Net income (loss)                              -           -           -          -              -     (478,665)    (478,665)
                                         ---------------------------------------------------------------------------------------
BALANCE JANUARY 1, 2000                    4,845,149      48,452      68,841        688      2,646,445    6,089,723    8,785,308
   Exercise of convertible options           411,944       4,119           -          -      1,001,895            -    1,006,014
   Exercise of convertible stock warrants    724,626       7,246           -          -      2,166,632            -    2,173,878
   Class A preferred converted to common      53,709         537     (53,709)      (537)             -            -            -
   Accretion of unearned stock
   compensation                                    -           -           -          -         23,390            -       23,390
   Net loss                                        -           -           -          -              -     (714,275)    (714,275)
                                         ---------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 2000                  6,035,428    $ 60,354      15,132      $ 151    $ 5,838,362  $ 5,375,448  $11,274,315
                                         =======================================================================================

</TABLE>
   The accompanying notes are an integral part of these financial statements.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                                           For the eleven
                                                                                                            months ended
                                                                        For the year ended December 31,     December 31,
                                                                             2000             1999              1998
                                                                        ---------------  ----------------  ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                     <C>              <C>                  <C>
      Net income (loss)                                                 $    (714,275)   $   (478,665)        $   418,160
                                                                        ---------------  ----------------  ---------------
      Adjustments to reconcile net income (loss) to net cash
         provided (used) by operating activities:
      Depreciation and amortization                                         3,134,884       3,150,293           1,845,239
      Accretion of unearned stock compensation                                 23,390          25,050                   -
      (Gain) loss on disposal of fixed assets                                       -           6,613              (3,292)
      Deferred income taxes                                                  (169,000)       (500,750)            778,000
      Changes in operating assets and liabilities:
         Accounts receivable                                                 (437,917)       (389,588)            873,611
         Costs and estimated earnings in excess of
            billings on uncompleted contracts                                 366,699         411,282          (1,249,020)
         Prepaid expenses                                                     (73,047)        (19,485)             53,611
         Inventory                                                                  -               -               5,288
         Income taxes receivable                                              794,769          40,750            (843,938)
         Deposits                                                             (50,466)         (5,296)            (30,713)
         Accounts payable                                                    (354,699)        163,506            (165,049)
         Accrued expenses                                                     244,818        (624,217)           (667,111)
         Billings in excess of costs and estimated earnings
            on uncompleted  contracts                                         748,174         621,139            (982,282)
         Income taxes payable                                                 (17,827)        (11,878)           (237,426)
         Other liabilities                                                    131,176             (44)                 44
                                                                        ---------------  ----------------  ---------------
      Total adjustments                                                      4,340,954      2,867,375            (623,038)
                                                                        ---------------  ----------------  ---------------
NET CASH  PROVIDED (USED) BY OPERATING ACTIVITIES                            3,626,679      2,388,710            (204,878)
                                                                        ---------------  ----------------  ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Cash paid for acquisition of capital assets                             (193,650)       (35,020)         (1,002,041)
      Cash proceeds from the sale of capital assets                                  -              -               6,584
      Cash paid for capitalized software development                        (1,166,686)    (2,144,253)         (3,905,349)
      Cash paid for acquisition, net of cash acquired                                -     (1,912,484)                  -
      Cash paid for capitalized patent costs                                     7,825        (85,116)                  -
                                                                        ---------------  ----------------  ---------------
NET CASH USED BY INVESTING ACTIVITIES                                      (1,352,511)       (4,176,873)      (4,900,806)
                                                                        ---------------  ----------------  ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net borrowings under line of credit                                  (2,386,734)           575,641        1,811,093
      Proceeds from issuance of bridge loan                                         -          1,000,000                -
      Proceeds from issuance of long-term debt                                      -            203,504          511,111
      Principal payments on long-term debt                                 (1,615,329)          (325,939)        (856,617)
      Proceeds from exercise of stock options and warrants                  3,179,892            479,355          429,559
                                                                        ---------------  ----------------  ---------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES                             (822,171)         1,932,561        1,895,146
                                                                        ---------------  ----------------  ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                   1,451,997            144,398       (3,210,538)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                574,368            429,970        3,640,508
                                                                        ---------------  ----------------  ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                  $ 2,026,365         $  574,368      $   429,970
                                                                        ===============  ================  ===============

   The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS - Exigent  International,  Inc.  (Exigent or the Company) was formed on
March 25, 1996 as a holding company. On January 30, 1997, it acquired all of the
outstanding stock of Software  Technology,  Inc. (ESTI) in exchange for stock of
Exigent, the "Exchange".  ESTI, therefore,  became a wholly-owned  subsidiary of
Exigent.  ESTI,  formed  in 1978  in  Florida,  provides  systems  and  software
engineering  services  and  commercial  off the  shelf  products  for  real-time
command,  control,  and data  acquisition  systems for  government  and industry
throughout the U.S. ESTI also  distributes  OS/COMET - a commercially  available
command and control development and support system. In March 1997, FotoTag, Inc.
(FotoTag) was formed as a  wholly-owned  subsidiary of Exigent.  FotoTag Inc., a
Delaware corporation,  was created as a subsidiary of Exigent in 1997 to provide
the structure for  concentration  on tracking and control  system  solutions for
international high technology applications. The subsidiary's first product, also
called FotoTag(R), is used for tracking airport and airline passengers and their
checked bags. In 2000 FotoTag's name was changed to Exigent  Digital Telecom and
Wireless Networks ("EDTWN").

In 1999, Exigent Solutions Group ("ESG") was formed as a wholly-owned subsidiary
to provide integrated management consulting,  design and development of Internet
commerce   solutions,   implementation  and  integration  of  packaged  software
solutions,  design and development of custom software solutions,  implementation
of ERP systems and production  support.  ESG began offering  Enterprise Resource
Planning   (ERP)   implementation   services  in  December  1999  following  its
acquisition of all of the  outstanding  shares of GEC North America  Corporation
("GEC"),  a  Charlotte,   NC-based   consulting  and  systems  integration  firm
recognized as a leader in implementing ERP solutions using Oracle  Applications.
ESG's  services  now  include  integrated  management  consulting,   design  and
development of Internet commerce  solutions,  implementation  and integration of
packaged  software   solutions,   design  and  development  of  custom  software
solutions,  implementation  of ERP  systems  and  production  support.  ESG also
includes the distributed rights for products developed by MiddleWare  Solutions,
Inc.  ("M-Ware"),  a  corporation  formed in 1998  which  develops  inexpensive,
high-performance  message-oriented  middleware  products,  and distributes  them
directly to the end-user  over the  Internet or on CD through the mail.  In 2000
M-Ware merged into ESG and was dissolved.

CONSOLIDATION  POLICY  -  The  accompanying  consolidated  financial  statements
include  the  accounts  of  the  Company  and  its  wholly-owned   subsidiaries.
Intercompany transactions and balances have been eliminated in consolidation.

FISCAL  YEAR - The  financial  statements  for 2000 and 1999  include the twelve
months of operations ended December 31, 2000, (fiscal "2000"),  and December 31,
1999 (fiscal "1999"),  respectively.  During 1998 the Company changed its fiscal
year end from January 31 to December 31. Accordingly,  the financial  statements
for the period  ended  December 31, 1998  (fiscal  "1998B")  include only eleven
months of  operations.  Consolidated  unaudited  results of  operations  for the
twelve months ended December 31, 1998 are as follows:

                  Total revenue                               $  34,121,431

                  Cost of sales                                  24,592,648
                  G&A expenses                                    8,256,358
                  R&D expenses                                      211,758
                                                       ---------------------
                  Operating income                                1,060,667

                  Interest income                                    47,828
                  Interest expense                                 (179,808)
                  Other expense                                      (7,536)
                                                       ---------------------
                  Net income before taxes                           921,151
                  Income tax expense                                271,365
                                                       ---------------------
                  Net income                                    $   649,786
                                                       =====================




<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE  AND COST  RECOGNITION  - The  Company  recognizes  revenues on time and
material  and cost plus fixed fee  contracts  as time is expended  and costs are
incurred.  The fee on cost plus fixed fee and award fee  contracts is recognized
ratably  over total costs as they are  incurred.  Revenues  and costs from fixed
price contracts are recognized on the percentage-of-completion  method, measured
by the percentage of total costs incurred to date to total  estimated  costs for
each contract. This method is used, as management considers total expended costs
to be the best available measure of progress on these contracts.

Contract  costs include all direct  material and labor costs and those  indirect
costs related to contract performance such as indirect labor, supplies, repairs,
and depreciation costs.

Certain  general  and  administrative   expenses  (including  bid  and  proposal
expenses) allowable in accordance with U.S. Government procurement practices are
included in contract costs where they are identifiable with contract revenue.

Adjustments to cost estimates are made  periodically,  and losses expected to be
incurred on contracts in progress are charged to  operations  in the period such
losses are determined.  The aggregate of costs incurred and income recognized on
uncompleted contracts in excess of related billings is shown as a current asset,
and the  aggregate  of billings on  uncompleted  contracts  in excess of related
costs incurred and income recognized is shown as a current liability.

The  Company  sells  a  number  of  software  products.  Generally,  revenue  is
recognized  upon  shipment  of the  software.  After  the sale,  if  significant
obligations remain or significant  uncertainties exist about customer acceptance
of the software,  revenue is deferred until the obligations are satisfied or the
uncertainties are resolved.  When  collectibility of the receivable is in doubt,
revenue is recognized  under the  installment  method or cost  recovery  method.
Revenue from  software  services is  recognized  as the  services are  provided.
Revenue from software  maintenance  contracts is  recognized on a  straight-line
basis over the life of the contract.

CASH EQUIVALENTS - For purposes of the statement of cash flows, cash equivalents
include  time  deposits,  certificates  of deposit,  and all highly  liquid debt
instruments with original maturities of three months or less.

PROPERTY AND  EQUIPMENT - Property,  plant and  equipment are valued at cost and
depreciated over the estimated useful lives of the related assets.  Depreciation
is computed on the  straight-line  method,  accelerated cost recovery system and
the modified  accelerated  cost  recovery  system as  appropriate.  Depreciation
includes the cost of  amortization  associated with capital leases which is done
on a straight-line basis.

GOODWILL - Goodwill  represents  the excess of the purchase  price over the fair
value  of  the   identifiable   net  assets  acquired  and  is  amortized  on  a
straight-line   basis  over  the  expected  period  of  benefit  of  ten  years.
Accumulated  amortization  was $300,347 at December 31, 2000.  Periodically  the
Company   evaluates  the  goodwill  for  impairment  and  estimates  the  future
undiscounted  cash flows of the  acquired  business to ensure that the  carrying
value has not been impaired,

ADVERTISING COSTS - The costs of advertising are expensed as incurred. For 2000,
1999,  and 1998B,  advertising  costs  included  in general  and  administrative
expenses were $83,429, $188,795, and $196,036, respectively.

PATENTS - Legal  costs  incurred  related to  obtaining  patents on  proprietary
products and technology are  capitalized  and amortized over the estimated lives
of  the  patents  which  is two  years  for  all  patents  granted.  Accumulated
amortization was $31,664 and $0 at December 31, 2000 and 1999, respectively. The
Company  periodically  evaluates  the patents for  impairment to ensure that the
carrying value has not been impaired.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SOFTWARE DEVELOPMENT COSTS - In accordance with SFAS No. 86, "Accounting for the
Costs of  Computer  Software  to be Sold,  Leased or  Otherwise  Marketed,"  the
Company  capitalizes the direct costs and allocated indirect expenses associated
with the  development  of  software  products.  Initial  costs  are  charged  to
operations as research prior to the development of a detailed  program design or
a working  model.  Costs  incurred  subsequent  to the  product's  release,  and
research and development  performed as contractual  requirements  are charged to
operations.  The costs of capitalized  software  development  are amortized over
their  estimated  useful  lives of the product  ranging  from two to four years.
Amortization is computed on the straight-line method.  Accumulated  amortization
was $3,139,927 and $1,931,561 at December 31, 2000 and 1999,  respectively.  The
Company periodically reviews the capitalized software development cost to ensure
that future  anticipated  gross  revenues  related to the  products  exceeds the
unamortized  cost. During the fourth quarter of fiscal year 2000, in conjunction
with  management's  review of the software  market and the future gross revenues
associated  with its software  products,  it was determined  that the market for
Saturn and ActiveTrack was no longer viable,  therefore the Company discontinued
its marketing effort for these two products.  In accordance with Company policy,
management expensed the remaining unamortized cost for Saturn and ActiveTrack of
$686,453 and $124,540,  respectively. The cost associated with this write off is
included in amortization  expense which is included in cost of goods sold on the
statement of operations.

RETIREMENT BENEFITS - Retirement benefits include an unfunded limited healthcare
plan for a limited number of Exigent's  retirees.  Exigent accrues the estimated
cost of these medical  benefits,  which are not material,  during the employees'
active service life.

EARNINGS  (LOSS) PER SHARE - Earnings (loss) per share is computed and presented
in accordance with SFAS No. 128, "Earnings per Share".

COMPREHENSIVE  INCOME - There is no  difference  between  net income  (loss) and
comprehensive income (loss) for any of the periods presented.

NEW  ACCOUNTING  PRONOUNCEMENTS  -  SFAS  No.  133,  Accounting  for  Derivative
Instruments  and Hedging  Activities is effective for financial  statements  for
fiscal years beginning after June 15, 2000. SFAS 133 requires the recognition of
all  derivatives  in  the  consolidated   balance  sheet  as  either  assets  or
liabilities measured as fair value. The Company will adopt FAS 133 as of January
1,  2001.  The  adoption  of FAS 133 will not have an  effect  on the  Company's
operations or financial position.

In December 1999, the  Securities and Exchange  Commission  ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB  101"),  "Revenue  Recognition  in Financial
Statements." SAB 101 summarizes the SEC's views in applying  generally  accepted
accounting  principles to revenue recognition in financial  statements.  Exigent
adopted SAB 101 as of the fourth quarter of 2000. The adoption of SAB 101 had no
effect on Exigent's operations or financial position.

In April 2000, the Financial  Accounting  Standards  Board ("FASB')  issued FASB
Interpretation  No. 44 ("FIN No.  44"),  "Accounting  for  Certain  Transactions
Involving Stock  Compensation,  an  Interpretation of APB Opinion No. 25." Among
other issues,  this  interpretation  clarifies  the  definition of employees for
purposes of applying Opinion No. 25, the criteria for determining whether a plan
qualifies as a  non-compensatory  plan,  the  accounting  consequence of various
modifications  to the terms of a previously fixed stock option or award, and the
accounting  for  an  exchange  of  stock  compensation   awards  in  a  business
combination.  Exigent has adopted FIN No. 44 for fiscal  2000.  The adoption did
not have a material effect on Exigent's financial statements.

DISCLOSURE  ABOUT FAIR VALUE OF  FINANCIAL  INSTRUMENTS  - The  carrying  amount
reported  in  the  balance  sheets  for  cash  and  cash  equivalents,  accounts
receivable,  accounts  payable  and  accrued  expenses  approximates  fair value
because of the immediate or short-term  maturity of these instruments.  The fair
value of indebtedness  approximates  its carrying value as interest rates on the
debt are market rates.

<PAGE>



                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CONCENTRATIONS OF CREDIT RISK - Financial  instruments that potentially  subject
the Company to  concentrations  of credit risk  consists  primarily of temporary
cash  investments.  The Company  places its temporary  cash  investments  with a
financial  institution.  The amount of credit  exposure  in excess of  federally
insured  limits at  December  31,  2000 and 1999 was  $1,785,000  and  $596,000,
respectively.

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

The   Company    recognizes    revenue   on   certain    contracts   using   the
percentage-of-completion  method,  which is based upon total estimated costs for
each contract.  The estimate is subject to change as the work progresses on each
contract.

STOCK BASED  COMPENSATION  - The Company  follows APB 25  "Accounting  for Stock
Issued to Employees",  and related  interpretations  in accounting for its stock
based  compensation  rather than the alternative fair value accounting  provided
under SFAS No. 123, "Accounting for Stock-Based Compensation".

IMPAIRMENT  OF  LONG-LIVED  ASSETS - In the event that  facts and  circumstances
indicate  that the cost of assets may be  impaired,  an  evaluation  of recovery
would  be  performed.  If  an  evaluation  is  required,  the  estimated  future
undiscounted  cash flows  associated  with the asset  would be  compared  to the
asset's  carrying  amount  to  determine  if a write  down to  market  value  or
discounted cash flow value is required.

SEGMENT REPORTING - With respect to the segment  disclosure  requirement of SFAS
131,  Disclosures about Segments of an Enterprise and Related  Information,  the
Company operates in one reportable business segment, the manufacture and sale of
software products and services.

RESTRUCTURING  COSTS  -  During  the  first  quarter  of  fiscal  year  2000  in
conjunction  with the early  termination of two facility leases as well as a 10%
reduction in workforce,  the Company incurred  restructuring  costs of $422,803.
These  restructuring  costs were all  expensed  and paid out during  fiscal year
2000. There is no balance remaining to be paid.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2 - ACCOUNTS RECEIVABLE

The following is a summary of accounts receivable:


                                        December 31, 2000    December 31, 1999
                                        -----------------    ------------------
        Contract receivables            $       3,048,454    $        2,610,537
        Other receivables                           6,190                 6,190
                                        -----------------    ------------------
        Total accounts receivable       $       3,054,644    $        2,616,727
                                        =================    ==================

There is a retainage  receivable  balance of $196,108 and  $183,870  included in
unbilled  receivables at December 31, 2000 and 1999,  respectively  representing
contracts,  which provide for retainage  provisions against billable amounts and
are due upon completion of the contracts and acceptance by the customer.

The Company expects to collect all contract  receivables  within the next fiscal
year.

NOTE 3 - PROPERTY AND EQUIPMENT

The following is a summary of property and equipment:

<TABLE>
<CAPTION>

                                                                                        Estimated
                                       December 31, 2000      December 31, 1999            Life
                                      -------------------    -------------------    -----------------

<S>                                   <C>                    <C>                           <C>
Furniture and equipment               $          802,623     $          784,788            3-8 years
Vehicles                                          15,703                 15,703              5 years
Computer equipment                             4,710,261              4,633,380            3-5 years
Leasehold improvements                           561,284                462,350             10 years
Capital leases                                   344,176                344,176              5 years
                                      -------------------    -------------------
     Total cost                                6,434,047              6,240,397
     Less accumulated depreciation            (5,212,827)            (4,699,750)
                                      -------------------    -------------------
     Net property and equipment       $        1,221,220     $        1,540,647
                                      ===================    ===================
</TABLE>

Depreciation  expense  charged to general and  administrative  expense for 2000,
1999, and 1998B was $362,144, $633,535, and $636,395, respectively. Depreciation
expense  charged to applied  overhead for 2000,  1999,  and 1998B was  $150,932,
$180,626, and $196,558,  respectively.  Depreciation expense charged directly to
cost of sales in 2000, 1999, and 1998B was $0, $228, and $51,141, respectively.

NOTE 4 - LINE OF CREDIT

ESTI has a line of credit available for operations of $5,000,000 with a bank. In
addition on November 7, 2000 Exigent  completed a $1,000,000 line of credit with
a bank secured by its short-term investment account. As of December 31, 2000 and
1999,  the  outstanding   draws  against  the  lines  were  $0  and  $2,386,734,
respectively.  The outstanding  balances accrue interest at LIBOR plus 2.5%. The
interest  rate at December  31, 2000 and  December 31, 1999 was 9.16% and 8.97%,
respectively.  The line of credit  requires  that the Company  maintain  various
financial covenants including leverage,  working capital, current ratio and debt
coverage  requirements.  Advances  under  the  line of  credit  are  based  on a
borrowing base computation.  All accounts receivable,  equipment,  furniture and
fixtures of ESTI are pledged as collateral on the line of credit.

The weighted average interest rate on short-term  borrowings  during 2000, 1999,
and 1998B was 8.87%, 8.19% and 7.56%, respectively.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - ACCRUED EXPENSES

Accrued expenses consist of the following:
<TABLE>
<CAPTION>

                                                                                             December 31,
                                                                                     2000                   1999
                                                                               ------------------     ------------------

<S>                                                                             <C>                   <C>
       Accrued payroll and payroll taxes                                        $        638,341      $         678,532
       Accrued fringe benefits                                                         1,208,777                888,788
       Accrued pension and profit sharing                                                346,347                477,083
       Accrued ESOP payment                                                                    -                 95,416
       Accrued other liabilities                                                         239,043                 47,871
                                                                                   --------------        ---------------
           Total accrued expenses                                               $      2,432,508      $       2,187,690
                                                                                =================     ==================
</TABLE>

NOTE 6 - LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long term debt outstanding consists of the following:
<TABLE>
<CAPTION>
                                                                                   December 31,            December
                                                                                       2000                31, 1999
                                                                                 ------------------     ----------------
Note  payable  to bank in monthly  installments  of  $17,038  through  June 2001
including  interest at either the bank's prime rate or LIBOR plus 2.5%. The note
is collateralized by all accounts receivable,
<S>                                                                                    <C>                 <C>
equipment, furniture and fixtures of ESTI.                                           $          -           $    306,856

Note  payable to bank in interest  only  through  July 2000 at either the bank's
prime  rate or LIBOR  plus  2.5%.  The note is  collateralized  by all  accounts
receivable, equipment and furniture of Exigent and its
subsidiaries.                                                                                   -              1,000,000

Subordinated  note payable to holder in quarterly  installments  of $62,500 plus
accrued interest through December 2003 at the interest rate of 8.0% per annum.
Payments under this note are subordinated to all senior indebtedness of the Company.      750,000              1,000,000

Capital lease for furniture and equipment  payable to lessor in monthly
installments  of $2,681  through  August 2003 with an interest  rate of 6.29%.             72,406                100,607

Capital lease for furniture and equipment  payable to lessor in monthly
installments of $2,680 through June 2004 with an interest rate of 9.66%.                   87,979                105,244

Capital  leases  for  furniture  and  equipment  payable  to lessor  in  monthly
installments through August 2002.                                                               -                 13,007

                                                                                 ------------------     -----------------
     TOTAL LONG-TERM DEBT                                                                 910,385              2,525,714
     Less: current portion of long-term  debt                                            (291,331)            (1,506,817)
                                                                                 ------------------     -----------------
     TOTAL LONG-TERM DEBT, less current portion                                  $        619,054       $      1,018,897
                                                                                 ==================     =================
</TABLE>

Future maturities of long-term debt as of December 31, 2000 are as follows:
<TABLE>
<CAPTION>

                                                                                                      Amount
                                                                                                      -----------------
<S>                 <C>                                                                               <C>
                    2001                                                                              $        291,331
                    2002                                                                                       304,364
                    2003                                                                                       295,963
                    2004                                                                                        18,727
                    2005
                                                                                                                     -
                                                                                                      -----------------
                                                                                                      $        910,385
                                                                                                      =================
</TABLE>


Interest paid for 2000,  1999, and 1998B was $170,850,  $228,071,  and $172,035,
respectively.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7 - CLASS A PREFERRED STOCK

Each share of Class A preferred  stock is convertible to a share of common stock
at the option of the holder.  Each share of Class A preferred stock participates
equally with each share of common stock upon declaration of dividends and voting
rights. Upon liquidation or dissolution,  the Class A preferred stockholders are
entitled  to receive  $2.50 per share  prior to any  distribution  to holders of
Common  Shares.  The  Class  A  preferred  shares  are  not  subject  to call or
redemption. The dividends of the Class A preferred stock are noncumulative.

NOTE 8 - STOCK WARRANTS

Each Common Stock Purchase Warrant ("Warrants")  entitles the holder to purchase
one share of Exigent's Common Stock at an exercise price of $3.00 per share. The
Warrants expired on January 30, 2000. Total Warrants outstanding at December 31,
2000 and December 31, 1999 were 0, and 996,336, respectively. Warrants exercised
in 2000, 1999, and 1998B were 724,626, 39,744, and 28,674, respectively.

NOTE 9 - EMPLOYEE RETIREMENT PLANS

The Company has a defined  contribution pension plan that covers the majority of
employees  who  have  met  certain  age  and  length  of  service  requirements.
Contributions  to the plan were 10% of eligible  compensation  for fiscal  2000,
1999 and 1998B.  For fiscal 2000, 1999, and 1998B, the amount of pension expense
was $1,730,535, $1,970,364, and $1,765,194, respectively.

The Company also sponsors a profit-sharing  plan which allows  substantially all
full-time  employees to defer  compensation under Section 401(k) of the Internal
Revenue Code and the employer to  electively  contribute  to the plan.  Employer
contributions  to the plan are made at the discretion of the Board of Directors.
No employer contributions were made in fiscal 2000, 1999 and 1998B.

NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN

The Company has an employee stock  ownership plan (ESOP) for the majority of its
employees.  Contributions  to this  plan are at the  discretion  of the Board of
Directors.  Full-time employees who have attained the age of twenty-one (21) are
eligible to  participate  in the plan.  Contributions  to the plan are allocated
annually  to  eligible  employees  proportionate  to  their  compensation,   not
including  overtime and bonuses.  Employee stock  ownership  plan  contributions
charged to  operations  and  applied to  overhead  amounted to $0 and $ 269,485,
respectively,  for 2000, $0 and $ 405,343,  respectively,  for 1999,  and $0 and
$693,205,  respectively, for 1998B. The ESOP had 1,453,891, and 1,836,525 shares
of the total issued and outstanding  stock,  respectively,  at December 31, 2000
and December 31, 1999.

Dividends paid on the ESOP shares,  as well as other shares are considered to be
reductions in retained earnings.  The shares owned by the ESOP are considered to
be  outstanding  shares  and  therefore  included  in  the  earnings  per  share
calculation.

The plan acquired  94,145,  258,416,  and 93,833 shares during 2000,  1999,  and
1998B,  respectively,  from shareholders.  Shares distributed from the plan as a
result of termination of employment were 476,779,  160,901, and 306,548,  during
2000,  1999,  and  1998B,  respectively.  The  shares'  fair  market  value  was
determined  based on the  trading  value of  Common  Shares  of the  Company  at
December 31, 2000 and 1999.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11 - OPERATING LEASE OBLIGATIONS

Office space and equipment is leased under operating  leases expiring in various
years through 2007.

The  Company's  corporate  headquarters  is located in Melbourne,  Florida.  The
Company  is  currently  leasing a 29,000  square  foot  building  pursuant  to a
ten-year lease,  which will expire on December 1, 2005, and a 30,000 square foot
building  pursuant to a ten-year lease,  which will expire on February 28, 2007.
It has the right to renew the aforementioned leases for two additional five-year
terms and has an option to purchase the property  which may be exercised  during
certain  periods prior to the expiration of the fifth year and of the tenth year
of the  lease.  The  purchase  price is the fair  market  value of the  property
determined by appraisal,  but in no event less than the  outstanding  balance on
the mortgage.

We also have three offices in the greater  Washington,  D.C. area. These offices
are  predominantly  staffed with  technical  employees.  Exigent,  through ESTI,
renewed our existing lease of 15,296 square feet, of which 6,154 square feet are
sublet  to a third  party,  located  in  Alexandria,  Virginia,  for five  years
expiring on August 31, 2003. In December 1998,  Exigent,  through ESTI, occupied
an additional  leased building of approximately  11,188 square feet,  located in
Chantilly, Virginia, under a five-year lease expiring on November 30, 2003. This
facility is sublet entirely to a third party. During fiscal year 1999 we entered
into  a  new  lease  for  an  expanded   facility  in  Chantilly,   Virginia  of
approximately  27,670  square  feet  to meet  the  growth  requirements  for our
anticipated business in this area.

We also lease office space in Colorado Springs,  Colorado; Aurora, Colorado; and
Charlotte, North Carolina.

Minimum future rental  payments  under  non-cancelable  operating  leases having
remaining  terms in excess of one year as of  December  31, 2000 for each of the
next five years and in the aggregate are:

  Year ending December 31:                  Rental Payments      Rental Income
                                          -------------------  -----------------
  2001                                    $        1,939,862   $        267,454
  2002                                             1,852,872            275,479
  2003                                             1,756,719            224,445
  2004                                             1,185,055                  -
  2005                                               892,094                  -
  Subsequent to 2005                               2,689,775                  -
                                          -------------------  -----------------
  Total minimum future rental payments    $       10,316,377   $        767,378
                                          ===================  =================

Rent  expense  for  2000,  1999,  and  1998B  was  $2,071,483,   $1,513,273  and
$1,211,795,  respectively.  Rent expense was offset by sublease rental income of
$113,495 for 2000.




<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - ECONOMIC DEPENDENCY

The Company  sold a  substantial  portion of its  products and services to three
major  customers  2000,  1999,  and 1998B in the  Satellite  Command and Control
Industry.  Transactions  with these major customers;  a government  customer,  a
government contractor and a group of U.S. Government agencies,  consisted of the
following:
<TABLE>
<CAPTION>

2000                                                               Customer 1             Customer 2             Customer 3
----                                                          -------------------    --------------------    ------------------
<S>                                                            <C>                    <C>                     <C>
Revenues                                                       $       15,781,947     $        5,505,709      $      4,044,245
Accounts receivable - at year end                                          86,891                370,997             1,081,702
Costs and estimated earnings in excess of billings
   on uncompleted contracts - at year end                               2,536,032                550,761                40,877
Billings in excess of costs and estimated earnings
   on  uncompleted contracts - at year end                                (5,000)                      -            (1,219,410)

</TABLE>
<TABLE>
<CAPTION>

1999                                                              Customer 1              Customer 2             Customer 3
----                                                          -------------------    --------------------    ------------------
<S>                                                           <C>                    <C>                     <C>
Revenues                                                      $        17,758,846     $        4,866,138      $      3,952,065
Accounts receivable - at year end                                         850,815                 32,157               195,731
Costs and estimated earnings in excess of billings
    on uncompleted contracts - at year end                              2,170,541                546,781               532,697
Billings in excess of costs and estimated earnings
   on  uncompleted contracts - at year end                                 (6,331)                     -               (66,772)

</TABLE>
<TABLE>
<CAPTION>

1998B                                                             Customer 1              Customer 2             Customer 3
-----                                                         -------------------    --------------------    ------------------
<S>                                                           <C>                     <C>                     <C>
Revenues                                                      $        14,735,309     $        5,985,651      $      3,744,421
Accounts receivable - at year end                                         584,252                416,524                37,837
Costs and estimated earnings in excess of billings
    on uncompleted contracts - at year end                              2,117,731                297,137               444,411
Billings in excess of costs and estimated earnings
   on  uncompleted contracts - at year end                                      -                (40,738)             (172,235)

</TABLE>

NOTE 13 - SOFTWARE DEVELOPMENT COSTS

Certain software  development  costs are charged to operations when incurred and
are included in operating expenses. The amounts charged for 2000, 1999 and 1998B
were $60,999, $271,576, and $180,671, respectively.

During  2000,   1999,  and  1998B,   $1,166,686,   $2,144,253  and   $3,905,349,
respectively,  of software development costs for computer software to be sold or
otherwise  marketed  were  capitalized.  The  amortization  of costs  related to
computer software product development held for sale were $2,334,656, $2,332,869,
and $950,507  for 2000,  1999,  and 1998B,  respectively.  Capitalized  software
development costs includes $193,083,  $163,465,  and $0 of capitalized  interest
for 2000, 1999 and 1998B, respectively.





<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109
"Accounting for Income Taxes."

The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>

                                                                  2000                  1999                     1998
                                                           ----------------    ---------------------    --------------------
Current expense (benefit)
<S>                                                        <C>                 <C>             <C>      <C>
     Federal                                               $       1,420       $             - 0 -      $         (444,000)
     State                                                           243                     - 0 -                (154,000)

Deferred tax expense (benefit)
     Federal                                                    (372,324)                (415,000)                 575,000
     State                                                       (27,674)                 (45,000)                 203,000
                                                           ----------------    ---------------------    --------------------
Total provision (benefit) for income taxes                 $    (398,335)      $         (460,000)      $          180,000
                                                           ================    =====================    ====================
</TABLE>

The  following is a  reconciliation  of the  provisions  for income taxes to the
expected amounts using the statutory rate:
<TABLE>
<CAPTION>

                                                                                                           For the eleven
                                                                                                               Months
                                                                       For the Years Ended                     ended
                                                                          December 31,                      December 31,
                                                                  2000                   1999                   1998
                                                            -----------------     --------------------   -------------------
<S>                                                                <C>                   <C>                    <C>
Expected statutory amount                                          34.0%                 34.0%                  34.0%
State income taxes                                                  2.5                   3.3                    5.4
Nondeductible meals and entertainment                              (1.7)                 (1.8)                   4.2
Tax penalties                                                      (0.1)                 (0.5)                   2.1
Nondeductible officers life insurance                              (0.1)                 (0.1)                   0.2
Research and experimental credit                                    -                    14.7                  (15.8)
Nondeductible amortization of goodwill                             (8.8)                 (0.5)
Change in valuation allowance                                     (37.7)
Change in valuation allowance attributable to tax
     benefits of stock option exercise                             25.4                   -                        -
Federal income tax recovery from carryback claims                  23.3
Other                                                              (1.0)                 (0.1)                     -
                                                            -----------------     --------------------   -------------------
Actual tax provision                                               35.8%                 49.0%                  30.1%
                                                            =================     ====================   ===================
</TABLE>

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and amounts used for income tax purposes.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - INCOME TAXES (CONTINUED)

The  following  is a summary  of the  significant  components  of the  Company's
deferred tax assets and liabilities:

                                   December 31,       December 31,
                                       2000               1999
                                ----------------    ---------------
Deferred tax assets
  Accrued vacation and sick pay  $     297,000      $     301,000
  NOL carryforwards                    667,000            813,000
  Tax credit carryforwards             486,000            496,000
  Other                                111,000             58,000
  Accrued Self Insurance               167,000                  -
  Valuation Allowance                 (419,000)                 -
                                ----------------    ---------------
                                 $   1,309,000      $   1,668,000
                                ================    ===============
Deferred tax liabilities
  Depreciation                         (68,000)          (163,000)
  Amortization                      (1,188,000)        (1,651,000)
  Other                                (53,000)           (23,000)
                                ----------------    ---------------
                                 $  (1,309,000)     $  (1,837,000)
                                ================    ===============

In  accordance  with  SFAS No.  109,  Accounting  for  Income  Taxes,  valuation
allowances are provided  against  deferred tax assets if, based on the weight of
available evidence,  it is more likely than not that some or all of the deferred
tax assets will not be realized.  The Company has evaluated the realizability of
the deferred tax assets on its balance  sheets and has  established  a valuation
allowance  in the amounts of $419,000  against  its net  deferred  tax assets at
December 31, 2000.  At December 31,  2000,  the Company had net  operating  loss
carryforwards  of $1,770,000,  of which $410,000  expires in 2018 and $1,360,000
expires in 2019.

In 1999,  the Company's  deferred tax asset  related to the net  operating  loss
carry  forward  and its paid in capital  were both  increased  by  $131,000 as a
result of transactions involving stock options.

During  2000,  1999,  and 1998B the Company made income tax payments of $10,007,
$29,360, and $463,450, respectively.

NOTE 15 - STOCK OPTIONS

On June 11, 1997, the Company  reserved 600,000 shares of Exigent's common stock
for its  nonqualified  stock option plan (Plan 1NQ).  The terms of these options
provide that the options are  exercisable  on the date of grant and expire three
years after the date the options were granted.  Plan 1NQ is  administered by the
Company's  CEO.  Plan  1NQ  gives  broad  powers  to the CEO to  administer  and
interpret  the Plan,  including the  authority to select the  individuals  to be
granted  options and the particular  form and conditions of each option granted.
All options  are granted at an exercise  price of not less than 100% of the fair
market  value on the date of grant.  Awards may be granted  pursuant to Plan 1NQ
through  June 11,  2007.  Plan 1NQ may be  terminated  earlier  by the  Board of
Directors at its sole discretion.

On March 10, 1997, the Company reserved 200,000 shares of Exigent's common stock
for its  qualified  incentive  stock  option plan (Plan 2Q).  The terms of these
options provide that the options are exercisable on the date of grant and expire
three years after the date of grant.  Plan 2Q is  administered  by the Company's
CEO. Plan 2Q gives broad powers to the CEO to administer and interpret the Plan,
including the authority to select the  individuals to be granted options and the
particular form and conditions of each option  granted.  All options are granted
at an exercise  price of not less than 100% of the fair market value at the date
of grant.  Awards may be granted pursuant to Plan 2Q through March 9, 2007. Plan
2Q may be terminated earlier by the Board of Directors at its sole discretion.



<PAGE>



                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - STOCK OPTIONS (CONTINUED)

On July 30, 1997, the Company  reserved  240,000  shares for a second  qualified
stock  incentive plan (Plan 3Q) under terms similar to the first qualified plan.
The terms of these  options  provide that the options are  exercisable  one year
from the date of grant and expire  three years after the date of grant.  Plan 3Q
is  administered  by the Company's CEO. Plan 3Q gives broad powers to the CEO to
administer  and  interpret  the Plan,  including  the  Authority  to select  the
individuals  to be granted  options and to  prescribe  the  particular  form and
conditions  of each  option  granted.  However,  a  Committee  of the  Board  of
Directors  shall approve each grant of an option  pursuant to Plan 3Q in advance
of issuance.  In addition,  the Plan  stipulates  that the  aggregate  number of
shares of stock for which  options may be granted  shall be allocated 50% to new
hire  employees and the remaining 50% to such  employees as the CEO shall select
at his  discretion.  All options are granted at an exercise  price not less than
100%  percent of the fair market  value at date of grant.  Awards may be granted
pursuant to Plan 3Q through July 29, 2007. Plan 3Q may be terminated  earlier by
the Board of Directors at its sole discretion.

On September 30, 1997, the Company  reserved  120,000 shares of common stock for
its  non-qualified  non-employee  director  stock  option plan (Plan 5NQ).  Each
optionee  who is granted  options  will  receive the option to  purchase  40,000
shares of common stock.  The terms of these options provide that the options are
exercisable on a quarterly basis following grant at the rate of 2,500 shares per
quarter  for  the 16  quarters  following  grant  date,  provided  the  optionee
continues  to serve on the Board of  Directors.  Optionees  will be  eligible to
receive a grant of options upon their initial election to the Board. All options
will expire ten years after the date of grant.  Plan 5NQ is  administered by the
Company's Board of Directors or a committee thereof.  All options are granted at
an exercise  price equal to the fair market value of the Company's  common stock
on the date of the grant.  Awards may be granted  pursuant  to Plan 5NQ  through
September 30, 2007. Plan 5NQ may be terminated earlier by the Board of Directors
at its sole discretion.

On April 4, 1998,  the Company  reserved  250,000  shares of common  stock for a
qualified  non-officer  stock option plan (Plan 4Q). The terms of these  options
provide that the options are  exercisable  on the date of grant and expire three
years after the options were granted.  Plan 4Q is  administered by the Company's
CEO. Plan 4Q gives broad powers to the CEO to administer and interpret the plan,
including the authority to select the  individuals to be granted options and the
particular form and conditions of each option granted. Options granted are to be
tied to the corporate  financial  performance  goals of the officer's  plan. All
options  are  granted  at an  exercise  price of not less  than 100% of the fair
market value on the date of grant of such option.  Awards may be granted  within
10 years from the date the plan is adopted. Plan 4Q may be terminated earlier by
the Board of Directors at its sole discretion.

On May 8, 1998, the Company  reserved  500,000 shares of Exigent's  common stock
for its  nonqualified  stock option plan (Plan 6NQ).  The terms of these options
provide that the options are  exercisable  on the date of grant and expire three
years after the date the options were granted.  Plan 6NQ is  administered by the
Company's CEO,  except with respect to options granted to the CEO, in which case
the Board of Directors of the Company shall  administer the grants in accordance
with the applicable  approved  Compensation  Committee  award program.  Plan 6NQ
gives broad powers to the CEO to administer  and  interpret the plan,  including
the authority to select the individuals to be granted options and the particular
form and  conditions  of each  option  granted.  All  options  are granted at an
exercise price equal to the fair market value on the day of grant. Awards may be
granted  pursuant  to Plan 6NQ  through  May 7, 2008.  Plan 6NQ may be  amended,
modified or terminated earlier by the Board of Directors at its sole discretion.

On December 17, 1998, the Company reserved  2,500,000 shares of Exigent's common
stock for an Omnibus Stock Option and Incentive  Plan (the "Plan").  The Plan is
administered by the Compensation Committee of the Board of Directors and subject
to  the  recommendations  of  the  CEO.  The  Plan  gives  broad  powers  to the
Compensation  Committee to  administer  and  interpret  the Plan,  including the
authority to select the  individuals to be granted  options and to prescribe the
particular  form and  conditions  of each grant.  The Plan sets forth  automatic
stock option grants to Independent Directors of the Board of Directors, whom are
no longer  participating  in  Non-Qualified  Stock  Option  Plan 5NQ, a grant of
10,000  shares of stock on January 1 of each year,  each such grant shall become
exercisable at the rate of 2,500 shares per quarter, vesting on the last day


<PAGE>

                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - STOCK OPTIONS (CONTINUED)

of the quarter. Options will vest if an Independent Director is still serving on
the Board of Directors at quarterly  vesting date. The Committee may at any time
discontinue  granting  awards under the Plan (except to Independent  Directors).
The Board of Directors may at any time,  prospectively or  retroactively,  amend
the Plan,  including  the  provisions  with  respect  to  grants to  Independent
Directors,  or for any purpose  that may at the time be permitted by law, or may
at any time  terminate the Plan as to further grants of awards by law, or may at
any time terminate the Plan as to further grants of awards.

All  plans  were  approved  by the  shareholders  at the June 30,  1999 and 1998
Shareholders' Meetings.

Each plan noted above allows the plan  administrator  the  discretion,  to grant
stock appreciation  rights with each option granted. As of December 31, 2000, no
stock appreciation rights had been granted.

At December  31,  2000,  there were  93,756,  67,050,  85,947,  74,008,  40,000,
133,719,  and 540,780 additional shares available for grant under Plan 1NQ, Plan
2Q, Plan 3Q, Plan 4Q, Plan 5NQ,  Plan 6NQ and the  Omnibus  Stock  Option  Plan,
respectively.  Using  the  Black  Scholes  option-pricing  model,  the per share
weighted-average  fair value of stock options  granted  during 2000,  1999,  and
1998B,  where  exercise  price equals the market price of the stock on the grant
date was $1.61, $2.27 and $1.57, respectively.

The following weighted average assumptions were used:
<TABLE>
<CAPTION>

                                                                                  2000             1999           1998B
                                                                      --------------------------------------------------
         Exercise price equal to market price on grant date
<S>                                                                              <C>              <C>             <C>
         Expected risk-free interest rate                                        5.85%            5.61%           6.22%
         Expected life in years                                                   7.98             6.72            4.72
         Expected volatility                                                       50%              50%             50%
         Expected dividend yield                                                 0.00%            0.00%           0.00%
</TABLE>

The Company  applies APB Opinion No. 25 in accounting  for its option plans and,
accordingly,  no compensation  cost has been recognized for its stock options in
the financial  statements for stock options granted.  Had the Company determined
compensation  cost  based on the  fair  value at the  grant  date for its  stock
options under SFAS No. 123, the Company's net income (loss) and earnings  (loss)
per share would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>

                                                                                  2000             1999           1998B
                                                                      --------------------------------------------------
         Net income (loss):
<S>                                                                        <C>             <C>               <C>
         As reported                                                       $  (714,275)    $   (478,665)     $   418,160
         Pro forma                                                         $(1,384,133)    $ (1,580,805)     $  (552,077)
         Earnings (loss) per share- diluted:
         As reported                                                       $     (0.12)    $      (0.11)     $      0.08
         Pro forma                                                         $     (0.24)    $      (0.35)     $     (0.11)
</TABLE>

The effect of applying SFAS No. 123 in the calculation of proforma net income is
not likely to be representative of the effects on reported net income for future
years.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - STOCK OPTIONS (CONTINUED)

Stock option activity, during the periods indicated, is as follows:
<TABLE>
<CAPTION>

                                           2000                          1999                            1998B
                             -----------------------------------------------------------------------------------------------
                                               Weighted                        Weighted                         Weighted
                                                Average                         Average                         Average
                                Options     Exercise Price      Options     Exercise Price      Options      Exercise Price
                             -----------------------------------------------------------------------------------------------
<S>                               <C>          <C>              <C>           <C>                <C>          <C>
Outstanding - beginning of year   2,408,272    $      3.34      2,079,454     $     3.04         726,350      $    2.45
Granted                           1,381,110           2.57        746,005           3.97       1,522,854           3.30
Exercised                          (372,151)          2.49       (128,400)          2.65        (149,050)          2.28
Forfeited                          (765,892)          3.28       (288,787)          3.11         (20,700)          3.35
                             ---------------                ----------------                 ---------------
Outstanding - end of year         2,651,339    $      3.08      2,408,272     $     3.34       2,079,454      $    3.04
                             ===============================================================================================
</TABLE>
<TABLE>

<S>                               <C>                           <C>                            <C>
Exercisable at end of year        1,194,799                     1,761,252                      1,380,594

Weighted-average fair value
of options granted during
the year                          $    1.61                     $    2.27                     $     1.57
</TABLE>


The following table summarizes  information  about stock options  outstanding at
December 31, 2001.
<TABLE>
<CAPTION>

                                    OPTIONS OUTSTANDING               |   OPTIONS EXERCISABLE
                                            Weighted        Weighted  |                   Weighted
       Range of              Number   Avg. Remaining         Average  |     Number        Average
   Exercise Prices      Outstanding Contractual Life  Exercise Price  |  Exercisable  Exercise Price
----------------------------------------------------------------------|-----------------------------
<S>   <C>        <C>        <C>                 <C>            <C>             <C>            <C>
      $1.25      $2.50      140,000             9.74           $2.02  |        56,250         $2.41
      $2.56      $2.56    1,059,500             9.63           $2.56  |             0         $0.00
      $2.63      $3.44      805,195             3.55           $3.24  |       677,695         $3.26
      $3.56      $4.38      646,644             6.96           $3.94  |       460,854         $3.96
----------------------------------------------------------------------|-----------------------------
      $1.25      $4.38    2,651,339             7.14           $3.08  |     1,194,799         $3.49
</TABLE>

NOTE 16 - EARNINGS (LOSS) PER SHARE

The following  table sets forth the  computation  of basis and diluted  earnings
(loss) per share:
<TABLE>
<CAPTION>

                                                            2000               1999               1998B
                                                      ------------------ ------------------ ------------------
Numerator:
  Net income (loss) (numerator for basic
<S>                                                        <C>                <C>                  <C>
     and diluted earnings per share)                       $  (714,275)       $  (478,665)         $  418,160
                                                      ================== ================== ==================
Denominator:
  Denominator for basic earnings per share-
     weighted average  common shares                          5,820,868          4,484,177          4,034,039
  Effect of dilutive securities:
    Convertible preferred stock                                       -                  -            632,041
    Stock options and warrants                                        -                  -            491,451
                                                      ------------------ ------------------ ------------------

  Denominator for diluted earnings per share-
      adjusted weighted average shares                        5,820,868          4,484,177          5,157,531
                                                      ------------------ ------------------ ------------------
Basic earnings (loss) per share                             $    (0.12)        $    (0.11)          $    0.10
                                                      ================== ================== ==================
Diluted earnings (loss) per share                           $    (0.12)        $    (0.11)          $    0.08
                                                      ================== ================== ==================
</TABLE>
<PAGE>

                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - EARNINGS (LOSS) PER SHARE (CONTINUED)

In  computing  diluted  Earnings  (Loss) per Share  ("EPS")  for the years ended
December 31, 2000 and 1999,  117,095 and 1,005,484 of common share  equivalents,
respectively were excluded from the computation because their effects would have
been antidilutive.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

The Company has  outstanding  purchase  commitments of $1,651,321 as of December
31, 2000. These represent outstanding purchase orders for which neither the item
nor invoice has been received.

NOTE 18 - RELATED PARTY TRANSACTIONS

During 2000, 1999, and 1998B Exigent paid $0, $53,152, and $38,603, respectively
in fees to directors of Exigent for consulting services.

NOTE 19 - ACQUISITION

On December 9, 1999, Exigent completed the acquisition of GEC by exchanging cash
and subordinated promissory notes for all of the voting and non-voting shares of
GEC common stock.  The  acquisition of the assets and  liabilities was accounted
for using the purchase method of accounting  whereby the  consideration  paid of
$3,525,694 was allocated  based on the fair values of the assets and liabilities
acquired with the excess  consideration  over the fair value of tangible  assets
recorded as intangible assets (goodwill).  The purchase price, the allocation of
the  purchase  price and the  amortization  period of the  goodwill are detailed
below:

<TABLE>
<CAPTION>

Consideration                                                Allocation of purchase price:
<S>                                        <C>               <C>                                                  <C>
Cash paid                                  $ 2,013,879       Cash and cash equivalents                            $  120,549
Promissory note                              1,000,000       Deferred tax asset                                        9,000
Other current liabilities                      418,304       Accounts receivable                                     353,367
Deferred tax liability                          49,750       Other current assets                                    148,256
Net accrued taxes                               24,607       Property, plant and equipment                            33,106
                                                                                                           ------------------
Acquisition costs                               19,154       Total tangible assets acquired                          664,278
                                  ---------------------
                                                             Goodwill                                              2,861,416
                                                                                                           ------------------

Total purchase price                       $ 3,525,694       Total assets acquired                               $ 3,525,694
                                  =====================                                                    ==================

</TABLE>
<TABLE>
<CAPTION>

Intangible Asset                     Assigned Value                       Amortization Period
-----------------                 ---------------------      ----------------------------------------------

<S>                                        <C>                                 <C>
Goodwill                                   $ 2,861,416                         10 years
</TABLE>

The operating  results of GEC have been included in the consolidated  results of
operations from the date of the acquisition.  On a pro forma basis as if the GEC
acquisition had taken place at the beginning of 1999,  consolidated net revenue,
net income (loss),  and earnings  (loss) per share would have been  $41,280,289,
($331,135), and ($0.07) per share, respectively, for the year ended December 31,
1999.  On a pro  forma  basis  as if the  acquisition  had  taken  place  at the
beginning of 1998,  consolidated net revenue, net income, and earnings per share
would have been $35,940,476,  $651,232, and $0.13 per share,  respectively,  for
the period ended December 31, 1998.  Such pro forma amounts are not  necessarily
indicative  of what the actual  results would have been if the  acquisition  had
been  effective  at the  beginning of the 1998 and 1999 fiscal years and are not
audited.

<PAGE>



                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 20 - Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>

                                                                                 Quarter ended
                                                  ----------------------------------------------------------------------------
Year ended December 31, 2000                            31-Mar-00          30-Jun-00           30-Sep-00          31-Dec-00
                                                  ------------------  -----------------   ----------------  ------------------
<S>                                                  <C>                  <C>                <C>               <C>
Revenue                                              $   10,309,995       $  8,994,275       $  8,704,022      $   10,192,418
Gross profit                                              2,759,216          1,791,980          1,905,927           2,964,857
Income (loss) before income taxes                         (671,004)           (678,663)          (233,232)            470,289
Net income (loss)                                         (409,313)           (413,984)          (233,232)            342,254
Basic earnings (loss) per share                              (0.08)              (0.07)             (0.04)               0.06
Diluted earnings (loss) per share *                          (0.08)              (0.07)             (0.04)               0.06
Market price per share
     High                                                     7.50                4.75               3.47                2.72
     Low                                                      3.13                1.91               2.00                0.75

</TABLE>

<TABLE>
<CAPTION>

                                                                                 Quarter ended
                                                  ----------------------------------------------------------------------------
Year ended December 31, 1999                           31-Mar-99           30-Jun-99           30-Sep-99          31-Dec-99
                                                  ------------------  -----------------   ----------------  ------------------
<S>                                                   <C>                 <C>                <C>                <C>
Revenue                                               $   9,090,881       $  9,199,081       $  9,121,721       $   8,739,595
Gross profit                                              2,392,829          2,337,242          2,493,150             739,954
Income (loss) before income taxes                           256,718             76,543            249,753          (1,521,679)
Net income (loss)                                           154,031             45,926            149,851            (828,473)
Basic earnings (loss) per share                                0.04               0.01               0.03               (0.17)
Diluted earnings (loss) per share *                            0.03               0.01               0.03               (0.17)
Market price per share
     High                                                      7.00               6.50               6.25                4.75
     Low                                                       2.47               3.63               3.25                3.13
</TABLE>

*  Due to rounding Diluted earnings per share does not tie to the sum of the
   quarters






<PAGE>



Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosures

         The principal  accountant's report on the financial  statements for the
previous  three years has not  contained  an adverse  opinion or  disclaimer  of
opinion nor were such  reports  qualified or modified as to  uncertainty,  audit
scope  or  accounting  principles.  We have not had any  disagreements  with our
principle  accountants  on any matter of  accounting  principles  or  practices,
financial  statement  disclosure or auditing  scope or procedure  during its two
most  recent  fiscal  years or since then.  During our three most recent  fiscal
years or since then, we have not been advised by our principal  accountant:  (i)
that the  internal  controls  necessary  for us to  develop  reliable  financial
information do not exist;  (ii) that  information  has come to the  accountant's
attention  that  has  led  the  accountant  to no  longer  be  able  to  rely on
management's  representations  or that have made the accountant  unwilling to be
associated with the financial  statements  prepared by management;  (iii) of the
need to expand  significantly  the scope of its audit,  or that  information has
come to the accountant's  attention that if further  investigated may materially
impact the fairness or reliability of either a previously issued audit report or
the underlying  financial  statements,  or the financial  statements  covering a
period subsequent to the date of the most recent financial statements covered by
an audit report or cause the accountant to be unwilling to rely on  management's
representations  or be associated with the Company's  financial  statements;  or
(iv) that information has come to the accountant's attention that the accountant
has  concluded  materially  impacts  the  fairness  or  reliability  of either a
previously issued audit report or the underlying  financial  statements,  or the
financial  statements  issued  or to  be  issued  covering  the  fiscal  periods
subsequent  to the date of the most recent  financial  statements  covered by an
audit report.

PART III

Item 10.  Directors and Executive Officers of the Registrant

         "Election  of  Directors"  and  "Section  16(a)  Beneficial   Ownership
Reporting  Compliance"  in our  Definitive  Proxy  Statement for the 2001 Annual
Meeting of Shareholders to be filed with the Commission on or before May 1, 2001
(the "2001 Definitive Proxy Statement") are hereby incorporated by reference.

Item 11.  Executive Compensation

         "Compensation  of  Executive  Officers"  and  "Compensation   Committee
Interlocks and Insider Participation" in the 2001 Definitive Proxy Statement are
hereby incorporated by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         "Principal  Stockholders"  in the 2001  Definitive  Proxy  Statement is
hereby incorporated by reference.


Item 13.  Certain Relationships and Related Transactions

         "Certain Relationships and Related Transactions" in the 2001 Definitive
Proxy Statement is hereby incorporated by reference.



<PAGE>



PART IV

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

(a)(1)     Financial Statements (See Item 8 of this Report)
           Report of Independent Auditors - February 9, 2000
           Consolidated Balance Sheets - December 31, 2000 and December 31, 1999
           Consolidated  Statements of Operations - For December 31, 2000,  1999
           and for the  Eleven  Months  Ended  December  31,  1998  Consolidated
           Statements of Stockholders'  Equity - For December 31, 2000, 1999 and
           for the Eleven Months Ended December 31, 1998 Consolidated Statements
           of Cash Flows - For December 31, 2000, 1999 and for the Eleven Months
           Ended  December 31, 1998 Notes to Financial  Statements  For December
           31, 2000, 1999 and for the Eleven Months Ended December 31, 1998
    (2)    Financial  statement  schedules.  All  schedules  have  been  omitted
           because they are inapplicable or not material.
    (3)    Exhibits Index
<TABLE>
<CAPTION>

Exhibit Number     Exhibit
--------------     -------

<S>                <C>
2.1                Stock Purchase  Agreement and Plan of  Reorganization  (including  all Schedules  except
                   1.1) (1)

2.2                Amendment to Stock Purchase Agreement and Plan of Reorganization (2)

3.1                Second Amended and Restated Certificate of Incorporation of Exigent International,  Inc.
                   (3)

3.2                Amended and Restated Bylaws of Exigent International, Inc. (4)

4                  Form of Rights Agreement between Exigent International,  Inc. and Reliance Trust Company
                   (Rights Agent) dated as of October 27, 1998 (5)

4.1                Amendment  to  Rights   Agreement,   dated  March  2,  2000,  by  and  between   Exigent
                   International, Inc. and Registrar and Transfer Company. (6)

10.1               Contract between  Motorola,  Inc.  Government and Systems  Technology  Group,  Satellite
                   Communications Division and Software Technology, Inc. (7)

10.2               Contract  between Naval Research  Laboratory and Software  Technology,  Inc. dated April
                   30, 1998 (8)

10.3               Subcontract/Purchase  Order between Lockheed-Martin Federal Systems Company and Software
                   Technology, Inc. (9)

10.4               Purchase Orders from Allied Signal Technical Services Corporation (10)

10.5               Lease  Agreement,  dated May 14,  1993,  between  Henderson  Evans,  L.C.  and  Software
                   Technology, Inc. (11)

10.6               Lease  Agreement,  dated March 31,  1997,  between  Henderson  Comet,  L.C. and Software
                   Technology, Inc. (12)

10.7               Agreement of Lease,  dated August 15, 1994,  between  Alexandria South Associates,  L.P.
                   and Software Technology, Inc. (13)

10.8               Addendum  Number One to Agreement of Lease,  dated  September 1, 1998,  between  Hunting
                   Creek, LLC and Software Technology, Inc. (14)

10.9               Incentive Stock Option Plan 1Q (nonqualified) (15)

10.10              Independent Director Stock Option Plan (5NQ) (16)

10.11              Loan  Agreement,  dated December 31, 1998,  between  Software  Technology,  Inc. and the
                   Huntington National Bank (17)

10.12              Unlimited  Continuing  and  Unconditional  Guaranty,  dated  December 31, 1998,  between
                   Exigent International, Inc. and the Huntington National Bank (18)

10.13              Form of Employment Agreement for selected  employees of Exigent International, Inc. (19)

10.14              Incentive Stock Option Plan 3Q (20)

10.15              Incentive Stock Option Plan 4Q (21)

10.16              Stock Option Plan 6NQ (22)

10.17              Deed of Lease  Agreement,  dated  January 3, 2000,  between  Enterprise  Center  Limited
                   Partnership Number Two and Software Technology, Inc. (23)

10.18              Omnibus Stock Option and Incentive Plan (24)

10.19              Employee Stock Purchase Plan (25)

10.20              Agreement  for  Purchase  and Sale of Stock  dated as of  November  19,  1999  among GEC
                   Acquisition  Corporation,  Exigent  International,  Inc., GEC North America Corporation,
                   Roger A. Gilmartin, Deborah M. Bowen and Mark W. Bridges. (26)

10.21              Incentive Stock Option Plan 2Q (27)

10.22              Employment Agreement between Exigent International, Inc. and Bernard R. Smedley (28)

10.23              Exigent International,  Inc. Employee 401(K) Profit Sharing and Employee Stock Ownership
                   Plan as Amended and Restated Effective January 1, 1999

10.24              Exigent  International,  Inc.  Money  Purchase  Pension  Plan and Trust as  Amended  and
                   Restated Effective January 1, 1999

10.25              Employment  Agreement  between Exigent  International,  Inc. and Sally Ball effective on
                   August 18, 2000

10.26              Sublease  Agreement  between  Software  Technology,  Inc. and Raytheon Company under the
                   Office Lease dated August 7, 1992 entered into by  Massachusetts  Mutual Life  Insurance
                   Company

10.27              Sublease  Agreement  between  Software  Technology,  Inc.  and  Ronson  Communication  &
                   Information  Systems,  L.C. under the Office Lease dated August 15, 1994 entered into by
                   Alexandria South Associates, L.P.

10.28              $1M Business Loan  Agreement  between  Exigent  International,  Inc. and The  Huntington
                   National Bank executed on November 7, 2000

10.29              Addendum to $1M Business  Loan  Agreement  Between  Exigent  International,  Inc.and The
                   Huntington National Bank executed on November 7, 2000

10.30              $2M  Business  Loan  Agreement  between  Exigent  Software  Technology,   Inc.  and  The
                   Huntington National Bank executed on November 7, 2000

10.31              Addendum to $2M Business Loan Agreement  Between Exigent Software  Technology,  Inc. and
                   The Huntington National Bank executed on November 7, 2000

21                 Subsidiaries

23.1               Consent of Independent Auditors, Ernst & Young LLP, dated March 23, 2000

27                 Financial Data Schedule

</TABLE>
<TABLE>


<S>      <C>
 (1)     Exhibit 2 to the Registration Statement on Form S-1 of Exigent International, Inc., declared effective on
         January 30, 1997.*
 (2)     Exhibit  2(ii)  to  Pre-Effective  Amendment  No.  1 to the  Registration  Statement  on  Form  S-1  of  Exigent
         International, Inc., declared effective on January 30, 1997*
 (3)     Exhibit 3.1 to Form 10-Q filed on September 14, 1998.*
 (4)     Exhibit 3.2 to Form 10-Q filed on September 14, 1998.*
 (5)     Exhibit 4.1 to Form 8-K and to Form 8-A filed November 3, 1998.*
 (6)     Exhibit 4.1 to Form 10-K filed on March 22, 2000.*
 (7)     Exhibit  10(iii)  to  Pre-Effective  Amendment  No. 2 and  Pre-Effective  Amendment  No.  3 to the  Registration
         Statement on Form S-1 of Exigent International, Inc., declared effective on January 30, 1997.*
 (8)     Exhibit 10.17 to Form 10-Q filed June 12, 1998.*
 (9)     Exhibit  10.6  to  Pre-Effective  Amendment  No.  2 to  the  Registration  Statement  on  Form  S-1  of  Exigent
         International, Inc., declared effective on January 30, 1997.*
(10)     Exhibit  10(vi)  to  Pre-Effective  Amendment  No.  1 to the  Registration  Statement  on  Form  S-1 of  Exigent
         International, Inc., declared effective on January 30, 1997.*
(11)     Exhibit 10.8 to Form 10-K filed on April 30, 1998.*
(12)     Exhibit 10.9 to Form 10-K filed on April 30, 1998.*
(13)     Exhibit 10.10 to Form 10-K filed on April 30, 1998.*
(14)     Exhibit 10.10 to Form 10-K filed on March 31, 1999.*
(15)     Exhibit 4 to Form 8-K filed on October 27, 1997 and to Form S-8 filed on October 27, 1997.*
(16)     Exhibit 4 to Form 8-K filed on March 30, 1998 and to Form S-8 filed on April 1, 1998.*
(17)     Exhibit 10.18 to Form 10-K filed on March 31, 1999.*
(18)     Exhibit 10.19 to Form 10-K filed on March 31, 1999.*
(19)     Exhibit 10.25 to Form 10-K filed on March 31, 1999.*
(20)     Exhibit 4 to Form 8-K and to Form S-8 filed on January 2, 1998.*
(21)     Exhibit 4 to Form 8-K and to Form S-8 filed on April 21, 1998.*
(22)     Exhibit 4 to Form 8-K and to Form S-8 filed on May 21, 1998.*
(23)     Exhibit 10.31 to Form 10-K filed on March 22, 2001 *
(24)     Exhibit 99.1 to Proxy Statement filed April 30, 1999.*
(25)     Exhibit 99.2 to Proxy Statement filed April 30, 1999.*
(26)     Exhibit 2.1 to Form 8-K/A filed on December 30, 1999.*
(27)     Exhibit 4 to Form 8-K filed on June 24, 1997.*
(28)     Exhibit 99 to Form 8-K filed on December 28, 2000. *
</TABLE>

     *   Incorporated by reference
<PAGE>


 (b)     Reports on Form 8-K:

A Current Report on Form 8-K was filed on February 28, 2000  announcing  that we
had written down the carrying value of certain assets determined to be impaired.

A Current Report on Form 8-K was filed on March 31, 2000  announcing a corporate
restructuring.

A Current  Report on Form 8-K was filed on July 17, 2000  announcing  that Glenn
Dennis had been named President of its subsidiary Exigent Solutions Group, Inc.

A Current Report on Form 8-K was filed on November 9, 2000  announcing  that our
Board of Directors had authorized  management to explore strategic  alternatives
to enhance shareholder value and engaged CIBC World Markets, Inc.

A Current Report on Form 8-K was filed on December 28, 2000  announcing  that we
had executed a one-year  employment  agreement with Bernard R. Smedley, to serve
as Chairman of the Board, Chief Executive Officer and President  effective as of
June 13, 2000 which contract runs until July 1, 2001.



<PAGE>



SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Exigent International, Inc.

March 23, 2001       By:  /s/ B.R. Smedley
--------------           -------------------------------------------------------
Date                     Bernard R. Smedley, Chief Executive Officer


March 23, 2001       By   /s/ Sally Ball
--------------         ---------------------------------------------------------
Date                     Sally Ball, Executive VP, Chief Financial Officer


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


March 23, 2001       By:  /s/ B.R. Smedley
--------------          --------------------------------------------------------
Date                     Bernard R. Smedley, Director


March 23, 2001       By:  /s/ Arthur H. Collier
--------------          --------------------------------------------------------
Date                     Arthur H. Collier, Director


March 23, 2001       By:  /s/ Robert M. Janowiak
--------------          --------------------------------------------------------
Date                     Robert M. Janowiak, Director


March 23, 2001       By:  /s/ William R. Usher
--------------          --------------------------------------------------------
Date                     William R. Usher, Director


                     By:
                        --------------------------------------------------------
Date                     Stephen S. Wolff, Director


March 23, 2001       By:  /s/ Joseph S. Kraemer
--------------          --------------------------------------------------------
Date                     Joseph S. Kraemer, Director


March 23, 2001       By:  /s/ Gordon J. Comerford
--------------          --------------------------------------------------------
Date                     Gordon J. Comerford, Director