================================================================================
                                  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, 1999

                                       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: 333-5753

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

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

                 1225 Evans Road, Melbourne, Florida 32904-2314
               (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, 2000, the aggregate  market value of the Common Stock of
the Registrant (based upon the average bid and ask prices of the Common Stock as
reported by the market  makers) held by  non-affiliates  of the  Registrant  was
approximately $32,608,342.

         The number of shares  outstanding of the  registrant's  Common Stock on
March 1, 2000 was 5,715,411.

                       Documents Incorporated by Reference

         Portions  of the  Proxy  Statement  for  the  2000  Annual  Meeting  of
Stockholders  to be held  June 23,  2000 (to be filed  with the  Securities  and
Exchange Commission on or before May 1, 2000) are incorporated by reference into
Part III hereof.

================================================================================


<PAGE>
<TABLE>
<CAPTION>


                                                               TABLE OF CONTENTS

PART I                                                                                                  Page No.
                                                                                                        --------
<S>  <C>                                                                                                    <C>
Item 1.    Business                                                                                           3

Item 2.    Properties                                                                                        21

Item 3.    Legal Proceedings                                                                                 21

Item 4.    Submission of Matters to a Vote of Security Holders                                               21

PART II

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters                             22

Item 6.    Selected Financial Data                                                                           23

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations             24

Item 7a.   Quantitative and Qualitative Disclosures about Market Risk                                        28

Item 8.    Financial Statements and Supplementary Data                                                       28

Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosures             51

PART III

Item 10.   Directors and Executive Officers of the Registrant                                                51

Item 11.   Executive Compensation                                                                            51

Item 12.   Security Ownership of Certain Beneficial Owners and Management                                    51

Item 13.   Certain Relationships and Related Transactions                                                    51

PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K                                  52

SIGNATURES                                                                                                   56

</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
Software  Technology,  Inc., a Florida corporation  ("STI"), to acquire and hold
all of its issued and outstanding  stock. On January 30, 1997,  Exigent acquired
all of the issued and  outstanding  STI stock in exchange for 3,486,600  Exigent
Common  Shares,  par value  $0.01 per share (the  "Common  Shares")  and 697,320
Exigent  Class A Preferred  Shares,  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 STI, a Florida corporation,  FotoTag,
Inc., a Delaware corporation  ("FotoTag"),  and Exigent Solutions Group, Inc., a
Nevada corporation ("ESG"):

                           Exigent International, Inc.
          |-----------------------------|-------------------------------|
          |                             |                               |
Software Technology, Inc.    Exigent Solutions Group, Inc.        FotoTag, Inc.


         Exigent,  through STI, 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  has
increased,  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

         In June 1999,  we suspended  system  engineering  work on the Teledesic
satellite program in response to the decreased  activity in the commercial space
industry   during  the  fiscal  year  ended  December  31,  1999.  We  had  been
participating  in a Strategic  Alliance  Agreement  with Motorola since February
1998 under which we supplied system design and command and control  architecture
services for Motorola's  future  satellite  constellations  which included their
activities in support of the Teledesic  program.  The  subsequent  financial and
financing difficulties  experienced by other 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 (STI); information technology ("IT")(ESG);  and airport operations
     (FotoTag);

o    To strengthen our management  team, we hired Larry  Whitfield  (formally of
     Lockheed,  Tektronix  and Harris  Corporation)  as  President of STI and we
     expanded  STI's sales and marketing team to position us to grow revenues at
     a faster pace;
<PAGE>

o    As a  result  of our  strategy  to place  more  emphasis  on  international
     markets, we recently received our first overseas contracts in Australia and
     Korea;

o    As a result of our  software-defined  radio (SDR)  Domain  Manager Tool Kit
     being  selected  by  a   Raytheon-lead   consortium  as  the  backbone  for
     development of a new  generation of digital radio for the U.S.  military in
     the 21st century, we set up a special business unit to pursue opportunities
     in this technology; and

o    Finally,  in order to  expand  our reach  into the  commercial  sector  and
     develop new vertical market opportunities for our products and services, we
     acquired GEC North America  Corporation  ("GEC"),  a systems  integrator of
     Oracle(R)  -based   solutions.   This  marked  an  important  step  in  the
     implementation of our IT initiative, resulting in the combination of our IT
     business  units  with  GEC  to  form  ESG.  GEC  complements  our  existing
     government   IT   business,    our   enterprise    engineering    and   our
     command-and-control software IT.

Software Technology Inc.

         Since its formation in 1978, STI 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 Global Positioning System ("GPS").  Iridium is a
global wireless  communication system built by a consortium of investors lead by
Motorola.  Iridium offers  customers  local voice calling and paging anywhere on
the planet  through a  constellation  of 66 LEO  satellites  (plus six  on-orbit
spares).  We were also selected by Motorola to become its preferred  supplier of
command  and  control  software  for  its  Celestri  project  and  other  future
communication  systems  projects  (including   Teledesic,   a  constellation  of
broadband  satellites  conceived to be the "Internet in the Sky") because of our
long standing relationship with them.

         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.

         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

<PAGE>

"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
are identical to actual spacecraft.  Pluto's object-oriented architecture breaks
a   satellite   into  a  set  of   user-defined   sub-systems   using   standard
object-oriented programming techniques.

Exigent Solutions Group

         In  1999,  we  formed  ESG as an  information  technology  service  and
products  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;  design and
development of Internet commerce  solutions;  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).

         ESG also carries the products developed by MiddleWare  Solutions,  Inc.
("Mware").   Mware  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 mail. MWare's first product was ActiveMTM for
Windows.   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 topologies,  whether local-area networks (LAN),  wide-area
network  (WAN),  or the  WorldWide  Web.  ActiveM is included in the ESG product
offering.

FotoTag

         FotoTag was formed in 1997 to provide improved  efficiency and security
in the  public  transportation  environment.  FotoTag  develops  and  markets  a
passenger/baggage  reconciliation  system,  "FotoTag(R)",  for use by  airlines,
airports,  and other commercial  transportation systems such as cruise lines and
railroads.  FotoTag  products  and  services may be sold to foreign and domestic
airlines,  as well as foreign and domestic  agencies  that control  airports and
airport   security.   The  FotoTag  system  is  primarily  used  as  an  airport
passenger/baggage reconciliation system.

         In the future,  we expect that FotoTag will provide enhanced  departure
control facilities to improve passenger servicing and reduce airline and airport
management  costs.  The current system utilizes  IATA-standard  barcode,  "smart
card"  technology,   radio-frequency   identification  (RFID)  technology,   and
compressed digital photography. The FotoTag system captures passenger images and
reconciles this visual  information with a traveler's  itinerary,  baggage,  and
travel related documents.

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 STI subsidiary is
developing for the ground and space segments of the aerospace/defense  industry.

<PAGE>

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  $2,144,253,  $3,905,349,  and  $1,149,685  of  product
development in our fiscal years ended  December 31, 1999,  December 31, 1998 and
January 31, 1998,  respectively.  These amounts include investments allocated to
each of: the OS/COMET family of products, ActiveM, and FotoTag.

         We expensed $271,576,  $180,671,  and $47,854, on internally  sponsored
research  and  development  during our fiscal  years ended  December  31,  1999,
December 31, 1998, and January 31, 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 the past two years to  develop  advanced
systems  engineering  for future  constellations  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  extensively in various  industry  publications  and
participate in numerous trade shows.

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

REVENUE SOURCES

         Our revenues are currently dependent on four significant customers, the
Naval  Research  Laboratory  (the  "NRL"),   Allied  Signal  Technical  Services
("Allied"),   Lockheed  Martin   Corporation   ("Lockheed")  and  a  proprietary
government organization.  Three of which, individually,  accounted for more than
10%,  and in the  aggregate,  accounted  for more  than 73% of our  consolidated
revenues for the fiscal year ended  December 31, 1999.  The loss of any of these
customers  would have a materially  adverse  affect on our business,  results of
operations  and financial  condition.  (See Risk Factors -  Significant  Revenue
Derived from Government Contracts).

         During  1998,  we  entered  into a contract  with a fourth  proprietary
government  customer,  for a period which may extend  through  October 2003. The
initial estimated value of this contract was $7,500,000. We are currently in the
second full year of the contract and our relationship with this client continues
to be  good.  Under  the  contract  we  primarily  provide  applications  system
engineering  related to the client's  MIS.  (See Risk Factors -  Performance  of
Government Contracts may require Security Clearance).

         STI 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,
STI  provides  the NRL  with IT  development  and  maintenance  services.  STI's
principal IT assignment has been replacing NRL's Job Cost Accounting system. STI
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 five
years, with a total estimated cost of $57,167,518 and a fixed fee of $4,370,901.
As of December 31, 1999, STI received cost payments and fees in the aggregate of
$27,049,161   under  the   contract.   Fees  on  this  contract  are  billed  at
approximately 7.5% of costs.

         STI also receives  revenues from Allied under various  purchase orders.
For the fiscal  year ended  December  31,  1999,  Allied  paid us  approximately
$3,952,065,  while  approximately  $1,686,553  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.  The  contract  commenced  August  1995  and
terminates  September  30,  2000,  unless  modified by  Lockheed.  STI  received
$2,848,465  under this contract for the fiscal year ended December 31, 1999 with
a funded  backlog at that time of  approximately  $404,986.  (See Risk Factors -
Risks Specific to STI).
<PAGE>

         ESG  currently  has two revenue  sources,  an IT "task  order" that was
appended to the STI contract with the NRL and GEC's IT business. The performance
of IT services for the NRL resulted in  approximately  $5,000,000 in revenue for
the fiscal year ended  December 31, 1999.  The GEC portion,  for the fiscal year
ended  December 31, 1999,  was nominal due to the  mid-December  closing of that
acquisition.  GEC  revenues  for the entire  year ended  December  31, 1999 were
approximately $5,400,000.

         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 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.  Revenues  generated from
contracts with the federal  government or its prime  contractors  for the fiscal
year ended December 31, 1999, were approximately  73.7% from  cost-reimbursement
contracts,   approximately   20.2%  from  time  and   materials   contracts  and
approximately  6.1% from fixed  price  contracts  of total  revenues.  (See Risk
Factors - Contracts Subject to U.S. Government Regulation).

         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 1997.

         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  its  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.


<PAGE>

         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 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 STI).

         Over the past  five  years,  STI has  entered  several  contracts  with
Motorola.  Some of the contracts  were fixed price  contracts and some were time
and material  contracts.  Most of the revenues  generated by Motorola  contracts
during the past five years were received under an agreement executed in February
1994,  pursuant to which,  STI agreed to provide  Motorola  with  satellite  and
ground  control   software  for  the  system  control  segment  of  the  Iridium
Communications  System.  As of December  31, 1999,  STI  received  approximately
$45,447,645  from Motorola under this and other  contracts.  The  development on
Iridium was  completed  during the eleven  months ended  December 31, 1998.  STI
continued to be covered  under a  maintenance  agreement  and through a time and
material  contract for the year ended  December 31, 1999 with  Motorola.  We are
unable to accurately  predict the  continuance  of coverage  under a maintenance
agreement  with Motorola  because of the  uncertain  situation  surrounding  the
Iridium reorganization.  In addition to STI's business with Motorola, we entered
into a strategic  alliance  agreement with Motorola in the pursuit of developing
space program technology,  particularly the Teledesic project.  Over a period of
eighteen  months  we  invested  more than  $1,500,000  in  connection  with this
agreement.   After  thoroughly  reviewing  the  circumstances   related  to  our
investment as well as discussing  the matter with  Motorola,  we determined  the
investment was impaired.  As a result,  we chose to write down $1,000,000 in the
fourth  quarter of the fiscal year ended  December 31, 1999, to account for such
impairment.

         FotoTag  generated  limited  revenues in the fiscal year ended December
31, 1999,  based on the development  plans and schedule to incorporate  customer
features  and  functionality.  The  revenues  generated  were through a contract
testing the FotoTag product with the Federal Aviation Administration (the "FAA")
and an  international  airline.  We  completed  testing  with  the  FAA  and are
currently  discussing an ongoing relationship with them. Because we view this as
a limited  opportunity  we have  adjusted  the carrying  value by  approximately
$380,000 during the fourth quarter ended December 31, 1999.

Backlog

         As of December 31, 1999,  and December 31, 1998,  we estimate  that our
firm   backlog   orders  were   $19,011,492   and   $14,040,033,   respectively.
Approximately  $13,188,846  of our backlog in the fiscal year ended December 31,
1999 relates to the unfunded portion of awarded government  contracts.  Over the
next two to three years we expect that $27,370,117 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, 1999,  we had 307  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 STI

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 and by
one particular agency of the U.S. government,  the NRL for fiscal years 1998(A),
the year ended January 31, 1998,  1998(B),  the eleven months ended December 31,
1998, and 1999.

<TABLE>
<CAPTION>

                                           Year ended            Eleven months ended            Year ended
                                            12/31/99                   12/31/98                 1/31/1998
                                        ---------------------  -------------------------    -------------------
Government:
<S>                                          <C>                        <C>                      <C>
         Revenue                             $    31,498,070            $    24,698,289          $  23,113,510
         Cost of Sales                           (22,755,716)               (18,512,619)           (17,842,830)
                                        ---------------------  -------------------------    -------------------
         Gross Profit                        $     8,742,354            $     6,185,670          $   5,270,680
                                        =====================  =========================    ===================
         Gross profit as % of sales                     27.8%                      25.0%                  22.8%

                                           Year ended            Eleven months ended            Year ended
                                            12/31/99                   12/31/98                 1/31/1998
                                        ---------------------  -------------------------    -------------------
Commercial:
         Revenue                                   4,653,208                  6,440,794             12,635,209
         Cost of Sales                            (5,432,387)                (4,887,718)            (8,578,956)
                                        ---------------------  -------------------------    -------------------
         Gross Profit                        $      (779,179)            $    1,553,076           $  4,056,253
                                        =====================  =========================    ===================
         Gross profit as % of sales                    -16.7%                      24.1%                  32.1%
</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) and 62.6% of our
revenues for the fiscal year 1999.  This  includes one contract  that  generated
approximately  47.3% of our  revenues  for fiscal year  1998(B) and 49.1% of our
revenues  for  fiscal  year  1999.  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.
<PAGE>

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

         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.

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

<PAGE>

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 clearance.

         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.

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        AlliedSignal;
o        Computer Sciences Corporation;
o        Alcatel Espace;
o        Matra Marconi Space; and
o        Aerospatiale.
<PAGE>

          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.

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.

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

         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,  if at all.  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.

Industry Related Risks Specific to STI

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

         Since our customers are primarily  concentrated  in the space industry,
our success will depend on the continued  growth in the space industry  software
market.  The space  industry has grown rapidly in the past few years as a result
of technological advancements.  These 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  "broad  band"
communication  services has caused  growth in the space  industry.  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.


<PAGE>


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.

Our planned international operations may be expensive and may not succeed.

         We have limited  experience in marketing,  selling and  supporting  our
services in foreign countries.  Development of such skills may be more difficult
or take longer than we anticipate, especially due to language barriers, currency
exchange  risks  and the  fact  that  the  Internet  infrastructure  in  foreign
countries may be less advanced than the United States' Internet  infrastructure.
To date,  we have not  generated  significant  revenues  from  engagements  with
international clients. We recently opened offices in London and Singapore and we
intend to expand our  operations  internationally  in future  periods by opening
other  international  offices and hiring  international  management,  strategic,
technical, design, sales, marketing and support personnel.

         We may be unable to successfully  market, sell, deliver and support our
services  internationally.   If  we  are  unable  to  expand  our  international
operations  successfully  and  in  a  timely  manner,  our  business,  financial
condition  and  operating  results  could be seriously  harmed.  We will need to
devote  significant  management  and  financial  resources to our  international
expansion.  In  particular,  we will  have to  attract  and  retain  experienced
management,   strategic,   technical,  design,  sales,  marketing,  and  support
personnel  for our  international  offices.  Competition  for such  personnel is
intense, and we may be unable to attract and retain qualified staff.

         Moreover,   international  operations  are  subject  to  a  variety  of
additional risks that could seriously harm our financial condition and operating
results. These risks include the following:

o   problems in collecting accounts receivable;
o   the impact of recessions in economies outside the United States;
o   longer payment cycles;
o   fluctuations in currency exchange rates;
o   political instability;
o   unfamiliar governmental structures and laws;
o   restrictions  on  the import and export of certain  sensitive  technologies,
    including ground control  systems for satellite  communications (see below);
    and
o   seasonal reductions in business activity in certain parts of the world, such
    as during the summer months in Europe.

         Various  agencies and departments of the U.S.  government  regulate our
ability to pursue business  opportunities outside the United States.  Exports of
space-related  products,  services,  and technical  information require licenses
granted by the U.S. government.  We do not currently have blanket  authorization
to export our products and services  internationally.  We cannot assure you that
we will be able  to  obtain  blanket  export  authorization  in the  future.  In
addition, we cannot assure you that we will be able to obtain necessary licenses
or approvals on a per-  transaction  basis,  and our  inability to do so, or our
failure to comply with the terms of the authorization when granted, could have a
material  adverse  effect on our business,  financial  condition,  or results of
operations.
<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.  As a result,  the  likelihood  and
consequences  of mistakes  increase.  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.

         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

<PAGE>

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.

If  businesses  do not  increase  their  use  of the  Internet  as a  means  for
conducting commerce, our revenues will be adversely affected.

         Our future success  depends on the increased  acceptance and use of the
Internet as a means for conducting  commerce.  In the future, we intend to focus
our services on the development and  implementation  of Internet  strategies and
solutions.  If Internet commerce does not continue to grow, or grows more slowly
than we  expect,  our  revenue  growth  may slow or  decline.  As a result,  our
business,  financial  condition  and  results of  operations  may be  materially
adversely  affected.  Consumers and businesses may also reject the Internet as a
viable medium for commerce for a number of reasons, including:

o    inadequate network infrastructure;
o    delays in the development of Internet enabling technologies and performance
     improvements;
o    delays in  the  development  or  adoption of new  standards  and  protocols
     required  to handle  increased  levels of Internet activity;
o    delays  in  the  development  of  security  and  authentication  technology
     necessary to effect secure  transmission of confidential information;
o    changes in, or insufficient  availability of,  telecommunications  services
     to support  the  Internet;  and
o    failure of  companies  to meet  their customers' expectations in delivering
     goods and services over the Internet.

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

         Our revenues have  increased  significantly  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 way, 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.

The demand for our  services may diminish if  government  regulation  interferes
with the acceptance of the Internet and electronic commerce.

         Any new laws and regulations  applicable to the Internet and electronic
commerce  which may be adopted by federal,  state or foreign  governments  could
hinder  the growth of the  Internet  and  decrease  its  acceptance  as a viable
commercial  medium.  If this occurs,  companies  may decide in the future not to
pursue  Internet  initiatives,  thereby  decreasing  demand for our services.  A
decrease in the demand for our services would have a material  adverse effect on
our business, financial condition and results of operations.

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.
<PAGE>

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

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.

Our Risks and the Market for our Publicly Traded Securities

We depend on the services of our key personnel.

         Our  success  depends  to a  significant  degree on the  following  key
members of management:

o    B.R. "Bernie" Smedley, Chairman and Chief Executive Officer; and
o    Larry W. Whitfield, President, Software Technology, Inc.

         The loss of either one of these  members of our  management  team could
have a material adverse effect on our business,  financial condition, or results
of  operations.  We have an  employment,  non-competition,  and  confidentiality
agreement with Mr. Smedley. We also maintain a key man life insurance policy for
Mr. Smedley.

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

         As of March 1, 2000, we had 5,715,411 Common Shares outstanding.  As of
March  1,  2000,  the  following  Common  Shares  are  freely  tradable  without
restriction or limitation  under the Securities Act of 1933 (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  2,346,272  Common  Shares  granted but not yet issued  under our stock
     option plans;
o    the 5,861 Common Shares issued under the employee stock purchase plan; and

         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 2,763,822  Common
Shares  under  our  stock  option  plans,  of  which  2,346,272  have  yet to be
exercised.  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 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 quarterly
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.
<PAGE>

Adverse changes in any of these items would likely result in a material  adverse
effect on the market price of our Common Shares.

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.

Future acquisitions may cause our management to encounter numerous problems.

         Our  management  tasks may be complicated  by future  acquisitions.  An
acquisition  may  require  us to  integrate  widely  dispersed  operations  with
distinct  corporate  cultures.  Such integration  efforts may not succeed or may
distract our management from satisfactorily  servicing our existing clients. Our
failure to manage  future  acquisitions  successfully  could harm our  operating
results.  Acquisition costs could also cause our quarterly  operating results to
vary significantly. Further, our shareholders would become diluted if we finance
future acquisitions by incurring debt or issuing additional equity securities.

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 which our board of directors does
not  approve,  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 earning
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.
<PAGE>

          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.

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 are 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.

We may encounter Year 2000 risks.

         Historically,  installed  computer  systems and software  products were
coded to accept only  two-digit  entries in the date code field.  To distinguish
21st century dates from 20th century dates,  these date code fields must be able
to accept  four-digit  entries.  We have  evaluated our  information  technology
infrastructure for Year 2000 compliance and made certain modifications.  To this
date, we have not  experienced any material  systems  disruptions as a result of
Year 2000 issues and we do not anticipate  such material  disruption.  We cannot
assure you,  however,  that  unanticipated or undiscovered  Year 2000 compliance
problems  would not have a material  adverse  effect on our business,  financial
condition,  or results of operations.  In addition,  we have limited information
concerning  the compliance  status of our customers and suppliers.  In the event
that any of our significant customers or third-party suppliers are not Year 2000
compliant,  our financial condition or results of operations could be materially
adversely affected.

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  prospectus,  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, economic conditions,
integration of acquisitions,  Y2K issues 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 are 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 STI, entered into a 10 year lease
expiring  on  February  28,  2007 to occupy a 30,000  square  foot  building  in
Melbourne,  FL. This  building  houses our corporate  headquarters,  our product
development facility and FotoTag. STI also leases an adjacent 29,000 square foot
building under a ten-year lease expiring  December 1, 2005. This facility houses
many of our technical employees.

         We also have three offices in the greater Washington,  D.C. area. These
offices are predominantly  staffed with technical  employees.  Exigent,  through
STI,  renewed our existing  lease of 15,296 square feet,  located in Alexandria,
Virginia, for five years expiring on August 31, 2003. In December 1998, Exigent,
through STI,  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.  We have  entered  into a lease for an expanded  facility in
Chantilly, Virginia to meet the growth requirements for our anticipated business
in this area.

         We also lease  office  space in LaPlata,  Maryland;  Colorado  Springs,
Colorado; Aurora, Colorado;  Boulder,  Colorado;  Charlotte, North Carolina; and
Mesa, Arizona.

         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 incur  minimal  manufacturing  requirements  because  it is
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.  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 year ended  December
31, 1999, and each of the second,  third and fourth  quarters of the fiscal year
ended December 31, 1998, as reported in the Nasdaq daily report:

                                                        Common Stock
                              Common Shares          Purchase Warrants
Fiscal Year Ended 12/31/99    High      Low            High       Low

    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

Fiscal  Year Ended 12/31/98

    4th Quarter              $4.13      $2.44        $1.125     $0.625
    3rd Quarter              $4.38      $2.75        $1.875     $0.53125
    2nd Quarter              $6.00      $3.81        $3.375     $1.375
    1st Quarter              $4.00      $2.94        $1.5625    $0.6875


         As of March 1, 2000, we have approximately  1,110 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. As of March 1, 2000 we have no Warrant holders.

         Our  Board of  Directors  determined  during  our  fiscal  years  ended
December 31, 1998, and 1999 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         ended                     Years Ended January 31
(Amounts in thousands except per share amounts)  12/31/99         12/31/98           1998             1997            1996
                                               -------------   ---------------   --------------   -------------   --------------

<S>                                             <C>            <C>                <C>              <C>             <C>
Revenues                                        $    36,151    $     31,139       $    35,749      $    29,936     $    25,292
   Cost of Sales                                    (28,188)        (23,401)          (26,422)         (24,689)        (19,408)
                                               -------------   ---------------   --------------   -------------   --------------
Gross Profit                                          7,963           7,738             9,327            5,247           5,884
   General and Administrative Expenses               (8,617)         (6,823)           (7,050)          (5,344)         (3,841)
   Research and Development Costs                      (272)           (181)              (48)            (240)           (155)
                                               -------------   ---------------   --------------   -------------   --------------
Operating Income (loss)                                (926)            734             2,229             (337)          1,888
   Total Other Income (Expense)                         (13)           (136)              (53)               1              (1)
                                               -------------   ---------------   --------------   -------------   --------------
Income (loss) before Taxes                             (939)            598             2,176             (336)          1,887
   Income Tax Expense                                   460            (180)             (831)            (150)           (755)
                                               -------------   ---------------   --------------   -------------   --------------
Net Income (loss)                               $      (479)    $       418       $     1,345      $      (486)     $    1,132
                                                =============   ===============   ==============   =============   ==============
Income (loss) per Weighted Average Common
   Shares Outstanding - Diluted                 $     (0.11)    $      0.08       $      0.29      $     (0.13)     $     0.29
Cash Dividends                                  $         -    $          -       $         -      $      (310)           (178)
Cash Dividends Paid per Share Outstanding       $         -    $          -       $         -      $      0.08      $     0.05
Total Assets                                    $    18,016     $    15,664       $    14,693      $    10,949      $    8,328
Total Long-Term Liabilities
   (Excluding Deferred Income Taxes)            $     1,019     $       428       $       467      $       317      $       10
Total Stockholders' Equity                      $     8,785     $     8,629       $     7,781      $     6,258      $    4,893
Stockholders' Equity per Weighted Average
   Common Share, Outstanding - Diluted          $      1.96     $      1.67       $      1.67      $      1.72      $     1.27
Dividends Declared per Weighted Average
   Common Share, Outstanding - Diluted          $         -     $         -       $         -      $      0.08      $     0.05

</TABLE>

See Note 1 to the  Consolidated  Financial  Statements  for the  results for the
twelve months ended December 31, 1998.

<PAGE>


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

         We had a challenging  year with respect to revenue and earnings growth.
At the beginning of the year, we expected  record-breaking  commercial satellite
business from STI due to our support of the Teledesic program.  Our expectations
changed,  however,  when Teledesic  experienced numerous delays. As a result, we
ceased working on the Motorola Strategic Agreement. We decided that we could not
recover  our  complete  investment  in  Teledesic  and  that  it was  no  longer
financially prudent to continue to carry that asset on our books.  Consequently,
we  wrote  off  approximately  $1,000,000  and  decided  to close  our  facility
supporting  the  project  in  Mesa,  Arizona.  Further,  Iridium,  our  flagship
constellation and revenue-producing  project, filed for reorganization under the
U.S.  Bankruptcy Laws during the third quarter.  As a result of these facts, our
commercial  satellite business declined  significantly.  Based on the decreasing
STI  government  space  services  business,  and  our  projections  of  revenues
therefrom,  we decided to  replace  our  decreasing  commercial  and  government
satellite  service  revenue with IT and  Enterprise  Engineering  (EE)  business
thereby utilizing our core tracking and control engineering resources.

         We were able to continue to grow our overall revenues in 1999 year over
year,  continue to invest in new product  development,  maintain  positive  cash
flows and  initiate an  acquisition  program for a commercial  IT business.  Our
first  acquisition was successfully  completed in December 1999 when we acquired
GEC, an Oracle services provider.

         We developed a tracking and control COTS product family (OS/COMET) that
was designed to manage a single  Geostationery  Earth Orbit ("GEO") satellite or
several  hundred  satellites  in a  constellation.  No company  has ever  before
demonstrated that capability.

         Our management  believes that these financial  changes  position us for
greater revenues and earnings growth in the future.

         We have  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, 1999 and  December  31,  1998,  our ratio of current
assets to current  liabilities was 1.2 and 1.7,  respectively.  This decrease is
due to our  December  9,  1999  acquisition  of GEC.  Current  liabilities  were
increased by approximately $1,700,000 in connection with this acquisition.

         Our cash portfolio (cash and cash equivalents)  increased  $144,398 for
the fiscal 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.  By  comparison,  our cash  portfolio  decreased  $3,210,538 for the
eleven  months ended  December 31, 1998.  This  decrease was due to cash used in
investing  activities  of  $4,900,806  and by operating  activities of $204,878,
offset by cash provided by financing activities of $1,895,146.  The cash used in
investing activities was due to a $2,144,253 investment in software development,
a $35,020  investment in our facilities and capital  equipment and net cash paid
for GEC of  $1,912,484.  The  acquisition  of GEC was booked  using the purchase
method  of  accounting  resulting  in  goodwill  of  $2,861,416,  which  will be
amortized  over ten years.  The cash used in investing  activities in the eleven
months ended  December 31, 1998 was  attributable  to an  investment in software
development  of $3,905,349  and an investment in Company  facilities and capital
equipment of $1,002,041.

         In our fiscal  years ended  December  31,  1999,  December 31, 1998 and
January 31, 1998, we invested  $35,020,  $1,002,041,  and  $1,306,693 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.  The expenditure in the fiscal year ended January 31, 1998
was due  primarily to an investment  made in computing  resources to support the
demonstration of our products and capabilities in an integrated  control center.
The expenditures in prior fiscal years were made to support programs and for the
modernization of office equipment. In the fiscal year ended January 31, 1998, we
decided to lease new computer  equipment and furnishings for our facilities.  We
continued  to lease new items  through the fiscal year ended  December 31, 1999.
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, 1999,  December 31, 1998 and
January 31, 1998, we spent $2,144,253, $3,905,349 and $1,149,685,  respectively,
in capitalized  software  development  costs to develop new products  considered
essential in maintaining a strong market  position in the satellite  command and
control industry as well as to test the market for enhanced airport security.

         Cash  provided  by  financing  activities  for the fiscal  years  ended
December 31,  1999,  December  31,  1998,  and January 31, 1998 was  $1,932,561,
$1,895,146, and $413,759,  respectively. This was comprised of $575,641 borrowed
against a line of credit to finance  operations,  $203,504  borrowed through two
capital  lease lines with  Oliver-Allen  Corporation,  and  $1,000,000  borrowed
through Huntington Bank to finance the acquisition of GEC, offset by $325,939 in
principal  payments on long-term debt. In addition,  $479,355 was raised through
the exercise of stock options and Warrants.

         For the fiscal  years ended  December 31, 1999 and 1998 and January 31,
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,  1999,  December 31, 1998 and
January 31, 1998  principal  payments on  long-term  debt  amounted to $325,939,
$345,506  and  $382,108,  respectively.  On August  12,  1999,  we  obtained  an
additional  $2,000,000 to our existing line of credit with  Huntington  National
Bank.  As of December 31, 1999 and  December  31, 1998,  we had a line of credit
with Huntington National Bank of $5,000,000 and $3,000,000,  respectively. As of
December 31, 1999 and 1998, draws against the line of credit were $2,386,734 and
$1,811,093,  respectively.  All accounts receivable,  equipment,  furniture, and
fixtures of STI are pledged as collateral  against  amounts  borrowed  under the
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.

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  prospectus,  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,  Y2K issues 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, 1999 was a
credit of 50.9%,  while the effective  rate for the eleven months ended December
31, 1998 and the year ended January 31, 1998 was 30.1% and 38.2%,  respectively.
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,  2000. As of December 31, 1999, our funded backlog for
commercial and government contracts  respectively was $2,607,352 and $3,215,294.
We invested in excess of  $9,000,000  during the last two years in our  software
product  OS/COMET.  We believe this investment  facilitated many of our contract
awards.  We are  committed  to  maintain  OS/COMET  during  fiscal year 2000 and
beyond.

         The commercial  constellation  business has been stationary through the
year ended December 31, 1999, as commercial  projects worked to finance both the
development and the deployment of their satellites.

         In the fourth  quarter ended  December 31, 1999,  Exigent,  through its
acquisition of GEC, began expanding its range of business activities into the IT
business and formed ESG for this purpose.  This expansion is expected to provide
new customer  opportunities  in both the  government  as well as the  commercial
sectors.

         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
struggling with the need to minimize costs while  maintaining  superior employee
benefits.

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

         As of  the  fiscal  year  ended  December  31,  1999,  our  sales  were
$36,151,278, up 16.1% from sales of $31,139,083 for the eleven-month fiscal year
ended  December 31, 1998.  Sales were up 6.0% after  adjusting for the fact that
the period ended December 31, 1998  consisted of only eleven  months.  Our sales
for the eleven-month  fiscal year ended December 31, 1998,  decreased 12.9% from
sales of  $35,748,719  for our fiscal year ended January 31, 1998. The breakdown
between government and commercial sales for these periods is as follows:

               Year ended           Eleven months             Year ended
                12/31/99            ended 12/31/98              1/31/98
             ---------------        ---------------        --------------
Government   $  31,498,070     87%  $  24,698,289     79%  $  23,113,510     65%
Commercial       4,653,208     13%      6,440,794     21%     12,635,209     35%
             --------------- -----  ---------------  ----  --------------   ----
             $  36,151,278    100%  $  31,139,083    100%   $ 35,748,719    100%
             =============== =====  ===============  ====  ==============   ====

         These sales reflect a 87% to 13% government to commercial  split in our
fiscal  year ended  December  31,  1999,  compared  to a 79% to 21% split in our
fiscal  year ended  December  31, 1998 and a 65% to 35% split in our fiscal year
ended January 31, 1998. Government contract revenue increased in our fiscal year
ended December 31, 1999 due to our obtaining  additional  from the NRL and other
government entities,  while we completed a major commercial sector contract. Our
sales in its fiscal year ended December 31, 1998 increased from our sales in the
fiscal year ended  January 31, 1998 due largely to  obtaining a contract  with a
new government agency as well as sales of OS/Comet.

         Gross profit as a percentage of sales  decreased to 22.0%  ($7,963,175)
for the fiscal  year ended  December  31, 1999 from 24.9%  ($7,738,362)  for the
fiscal year ended  December  31,  1998.  This  decrease  was due  primarily to a
write-down of work  performed with respect to the Strategic  Alliance  Agreement
with Motorola. Upon complete review of the circumstances, this was determined to
be an impaired asset and we wrote down approximately  $1,000,000. In addition, a
complete  review of the FotoTag asset  resulted in an adjustment in the carrying
value of the asset of  approximately  $380,000.  Gross profit as a percentage of
sales  for  our  fiscal  year  ended   January  31,  1998  was  26.1%  of  sales
($9,326,933).  As a  result  of the  aforementioned  writeoffs,  we were  not in
compliance  with  certain  financial  covenants  under our credit  agreement  at
December 31, 1999. Huntington Bank has waived this event of default.


<PAGE>


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

                                               Year ended            Eleven months ended            Year ended
                                                12/31/99                   12/31/98                 1/31/1998
                                        -------------------------  -------------------------    -------------------
Government:
<S>                                              <C>                        <C>                      <C>
         Revenue                                 $    31,498,070            $    24,698,289          $  23,113,510
         Cost of Sales                               (22,755,716)               (18,512,619)           (17,842,830)
                                        -------------------------  -------------------------    -------------------
         Gross Profit                            $     8,742,354            $     6,185,670          $   5,270,680
                                        =========================  =========================    ===================
         Gross profit as % of sales                        27.8%                      25.0%                  22.8%

                                               Year ended            Eleven months ended            Year ended
                                                12/31/99                   12/31/98                 1/31/1998
                                        -------------------------  -------------------------    -------------------
Commercial:
         Revenue                                       4,653,208                  6,440,794             12,635,209
         Cost of Sales                                (5,432,387)                (4,887,718)            (8,578,956)
                                        -------------------------  -------------------------    -------------------
         Gross Profit                            $      (779,179)            $    1,553,076          $   4,056,253
                                        =========================  =========================    ===================
         Gross profit as % of sales                       -16.7%                      24.1%                  32.1%
</TABLE>

     General  and  administrative  expenses  ("G&A")  for the fiscal  year ended
December 31, 1999 were $8,617,157,  26.3% or $1,793,959  higher than expenses of
$6,823,198  for the eleven  months ended  December  31,  1998.  After taking the
shortened  fiscal year into account,  our expenses were 4.4% or $360,799  higher
than for the eleven  months  ended  December 31, 1998.  This  increase  resulted
primarily from staffing a Chief  Technical  Officer  ($450,000),  staffing other
positions  which  had not  previously  been  staffed  such as a Chief  Financial
Office,  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). General and administrative expenses for
the eleven  months  ended  December 31, 1998 were  $6,823,198,  3.2% or $226,872
lower than our  expenses of  $7,050,070  for the fiscal  year ended  January 31,
1998.  Again,  taking into  consideration  the eleven-month  year, versus a full
twelve-month  year, G&A expenses were 17.1% or $1,206,288  higher than those for
the fiscal year ended January 31, 1998.  This increase  resulted  primarily from
$250,000 in costs associated with a potential  acquisition,  an increase in rent
expense  of  $200,000,  and the  complete  staffing  of  corporate  officers  of
approximately $500,000.

         We incurred a net loss of  $478,665  (1.3% of sales) in the fiscal year
ended  December  31,  1999,  which was down  significantly  from a net income of
$418,160 in the eleven months ended December 31, 1998. We attribute this loss to
a one-time charge for two impaired assets equal to approximately  $1,400,000. In
addition, there was a significant reduction in commercial revenue as development
on a major  commercial  effort was completed in the eleven months ended December
31, 1998. We continued  maintenance  on the Iridium  contract,  but at a greatly
reduced rate from our previous  rate. We also  attribute our loss to a reduction
in  commercial  constellation  projects as a result of financing  and  marketing
issues.  The net income in the eleven months ended  December 31, 1998  decreased
significantly  from the fiscal year ended January 31, 1998 of  $1,345,429.  This
decrease  was  due  primarily  to  the  reduction  in  commercial  constellation
projects.

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  additional  acquisitions,  sales  of  products  for
commercial applications, and leveraging our existing technologies and products.


<PAGE>


         Product  Development.  We  are  developing  new  products  and  product
offerings, including the next generation of OS/COMET, the Active Tracking Engine
("ATE") and the OS/ICC.  We plan to  investigate  other new product  development
opportunities as part of its effort to expand its product offerings and market.

Year 2000 Issues

         Some  existing  computer  programs  will be unable to  recognize  dates
properly in the Year 2000  ("Y2K") and beyond.  During  1997,  we  conducted  an
informal study of our products, systems and operations, including products under
development,  to improve our business  functionality,  to identify  those of our
computer  hardware,  software and process  control  systems that do not properly
recognize  dates after  December  31,  1999,  and those that are linked to third
parties' systems.  Based on this informal study, we recognized that the OS/COMET
product   required  certain   modifications  to  become  Y2K  compliant.   Those
modifications  have been made to the software  and are  available in the current
release,  Version 3.5.  Communications  with these  certain  third parties whose
computer  systems'  functionality  could  adversely  impact our  operation  were
completed during the third quarter of 1999. These communications will facilitate
coordination of any necessary Y2K conversions and will, additionally,  permit us
to determine  the extent to which we may be  vulnerable  to the failure of third
parties  to  address  their  own Y2K  issues.  We  completed  our  review of all
desktop-computing  resources  during the third quarter of 1999.  Due to the fact
that we believe we have secured  sufficient  resources to address the Y2K issue,
as it relates to our own  computer  systems  and  certain  third  parties  whose
computer  systems'  functionality  could adversely  impact us, we do not believe
that  contingency  planning is warranted at this time.  We believe that Y2K will
not have a material and adverse impact on our desktop-computing resources.

         The costs of our Y2K  compliance  efforts  are being  funded  with cash
flows from operations.  Some of these costs relate solely to the modification of
existing  systems,  while others are for new systems that will improve  business
functionality.  In total,  these  costs  are not  expected  to be  substantially
different  from the  normal,  recurring  costs  that are  incurred  for  systems
development  and  implementation,  in part due to the  reallocation  of internal
resources and the deferral of other projects.  As a result,  these costs are not
expected to have a material  adverse effect on our overall results of operations
or cash flows.

         The  assessment  of our  Y2K  compliance  costs  constitutes  our  best
estimate.  These estimates were based upon numerous assumptions regarding future
events,  including  assumptions  as to the  continued  availability  of  certain
resources, and, in particular,  personnel with expertise in this area, and as to
the ability of such  personnel to locate and either  re-program or replace,  and
test, all affected  computer  hardware,  software and process control systems in
accordance with our planned schedule.  We cannot therefore  guarantee that these
estimates will prove  accurate,  and actual  results could differ  significantly
from those estimated if these assumptions prove inaccurate.

         Based upon  progress to date,  however,  we believe that it is unlikely
that the  foregoing  factors will cause actual  results to differ  significantly
from those  estimated.  As to our  systems  linked to third  parties,  we cannot
guarantee  that such systems are  Y2K-compliant  and will be compliant  within a
timely manner. Additionally,  there can be no guarantee that our important third
party vendors will successfully and timely test,  reprogram and/or replace,  and
test, all of their computer hardware, software and process control systems.

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,  1999  and  1998,  and  the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the year ended  December 31, 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, 1999 and 1998, and the consolidated results
of its  operations  and its cash flows for the year ended  December 31, 1999 and
the eleven  months ended  December  31,  1998,  in  conformity  with  accounting
principles generally accepted in the United States.

                                                     Ernst & Young LLP


Orlando, Florida
February 11, 2000


<PAGE>







Report of Independent Auditors

Board of Directors and Stockholders
Exigent International, Inc.

We  have  audited  the  accompanying   consolidated  statements  of  operations,
stockholders' equity and cash flows of Exigent International,  Inc. for the year
ended  January  31,  1998.  These  consolidated  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated statements of operations,  stockholders' equity
and cash flows referred to above present fairly, in all material  respects,  the
consolidated results of Exigent International,  Inc.'s voperations vand its cash
flows for the year ended January 31, 1998 in conformity with generally  accepted
accounting principles.


Hoyman, Dobson & Company, P.A.
Melbourne, Florida
April 4, 1998

<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                       ASSETS
<TABLE>
<CAPTION>

                                                                           December 31,         December 31,
                                                                               1999                 1998
                                                                        -------------------  --------------------
CURRENT ASSETS
<S>                                                                            <C>                  <C>
      Cash and cash equivalents                                                $   574,368          $    429,970
      Accounts receivable, pledged                                               2,616,727             1,873,772
      Costs and estimated earnings in excess of
          billings on uncompleted contracts, pledged                             4,790,742             5,072,788
      Prepaid expenses                                                              42,492                10,677
      Income taxes receivable                                                      803,188               843,938
      Deferred income taxes                                                        336,000               595,000
                                                                        -------------------  --------------------
      TOTAL CURRENT ASSETS                                                       9,163,517             8,826,145
                                                                        -------------------  --------------------

PROPERTY AND EQUIPMENT
      Cost                                                                       6,240,397             6,265,709
      Accumulated depreciation                                                  (4,699,750)           (3,982,347)
                                                                        -------------------  --------------------
      PROPERTY AND EQUIPMENT, NET                                                1,540,647             2,283,362
                                                                        -------------------  --------------------

OTHER ASSETS
      Software development costs, net                                            4,275,113             4,463,729
      Capitalized patent costs, net                                                 85,116                     -
      Goodwill, net                                                              2,848,220                     -
      Deposits                                                                      86,165                74,179
      Cash surrender value of life insurance                                        17,028                17,028
                                                                        -------------------  --------------------
      TOTAL OTHER ASSETS                                                         7,311,642             4,554,936
                                                                        -------------------  --------------------
      TOTAL ASSETS                                                            $ 18,015,806         $  15,664,443
                                                                        ===================  ====================
</TABLE>



























         The accompanying notes are an integral part of this statement.

<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)


<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                          December 31,          December 31,
                                                                              1999                  1998
                                                                        ------------------   -------------------
CURRENT LIABILITIES
<S>                                                                          <C>                  <C>
      Line of credit                                                         $  2,386,734         $   1,811,093
      Accounts payable                                                            715,976               227,750
      Accrued expenses                                                          2,187,690             2,734,200
      Billings in excess of costs and estimated earnings
          on uncompleted contracts                                                891,557               270,418
      Income taxes payable                                                         17,827                 5,098
      Current portion, long-term debt                                           1,256,817               204,456
      Current portion, subordinated debt                                          250,000                     -
                                                                        ------------------   -------------------
      TOTAL CURRENT LIABILITIES                                                 7,706,601             5,253,015
                                                                        ------------------   -------------------

LONG-TERM LIABILITIES
      Long-term debt, less current portion                                        268,897               427,816
      Subordinated debt, less current portion                                     750,000                     -
      Deferred income taxes                                                       505,000             1,355,000
      Other liabilities                                                                 -                    44
                                                                        ------------------   -------------------
      TOTAL LONG-TERM LIABILITIES                                               1,523,897             1,782,860
                                                                        ------------------   -------------------

      TOTAL LIABILITIES                                                         9,230,498             7,035,875
                                                                        ------------------   -------------------

COMMITMENTS AND CONTINGENCIES                                                           -                     -

STOCKHOLDERS' EQUITY
      Class A Preferred  Shares,  $.01 par value,  5,000,000 shares  authorized,
        68,841 and 609,882 issued and outstanding at December 31, 1999 and 1998,
        respectively, at $2.50 per share liquidation/dissolution
        preference                                                                    688                 6,099
      Common Shares,  $.01 par value, 40,000,000 shares
        authorized, 4,845,149 and 4,130,103 issued and
        outstanding at December 31, 1999 and 1998,
        respectively                                                               48,452                41,301
      Class B common stock, $.01 par value; 600,000 shares
        authorized, no shares issued or outstanding                                     -                     -
      Paid in capital                                                           2,646,445             2,012,780
      Retained earnings                                                         6,089,723             6,568,388
                                                                        ------------------   -------------------
      TOTAL STOCKHOLDERS' EQUITY                                                8,785,308             8,628,568
                                                                        ------------------   -------------------
      TOTAL LIABILITIES & STOCKHOLDERS' EQUITY                               $ 18,015,806         $  15,664,443
                                                                        ==================   ===================


</TABLE>







         The accompanying notes are an integral part of this statement.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                For the year          For the eleven       For the year
                                                                    ended               months ended           ended
                                                                 December 31,           December 31,        January 31,
                                                                     1999                  1998                 1998
                                                               ------------------   -------------------   -----------------
<S>                                                                 <C>                  <C>                  <C>
REVENUES                                                            $ 36,151,278         $  31,139,083        $ 35,748,719
COST OF SALES                                                         28,188,103            23,400,721          26,421,786
                                                               ------------------   -------------------   -----------------
GROSS PROFIT                                                           7,963,175             7,738,362           9,326,933

GENERAL AND ADMINISTRATIVE EXPENSES                                    8,617,157             6,823,198           7,050,070
RESEARCH AND DEVELOPMENT COSTS                                           271,576               180,671              47,854
                                                               ------------------   -------------------   -----------------

OPERATING INCOME (LOSS)                                                 (925,558)              734,493           2,229,009
                                                               ------------------   -------------------   -----------------

OTHER INCOME (EXPENSE)
      Interest income                                                     35,201                42,786              36,887
      Interest expense                                                   (52,004)             (172,035)            (91,276)
      Gain (loss) on disposal of fixed assets                             (6,613)                3,292              (4,655)
      Other, net                                                          10,309               (10,376)              6,229
                                                               ------------------   -------------------   -----------------
TOTAL OTHER INCOME (EXPENSE)                                             (13,107)             (136,333)            (52,815)
                                                               ------------------   -------------------   -----------------
INCOME (LOSS) BEFORE INCOME TAXES                                       (938,665)              598,160           2,176,194

INCOME TAX EXPENSE (BENEFIT)                                            (460,000)              180,000             830,765
                                                               ------------------   -------------------   -----------------
NET INCOME (LOSS)                                                   $   (478,665)         $    418,160        $  1,345,429
                                                               ==================   ===================   =================
EARNINGS (LOSS) PER SHARE - BASIC                                    $     (0.11)          $      0.10          $     0.36
                                                               ==================   ===================   =================
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC                            4,484,177             4,034,039           3,787,639
                                                               ==================   ===================   =================
EARNINGS (LOSS) PER SHARE - DILUTED                                  $     (0.11)          $      0.08          $     0.29
                                                               ==================   ===================   =================
WEIGHTED AVERAGE SHARES OUTSTANDING - DILUTED                          4,484,177             5,157,531           4,647,290
                                                               ==================   ===================   =================

</TABLE>
















         The accompanying notes are an integral part of this statement.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                             Class A
                                       Common Stock         Preferred        Paid In      Retained
                                     Shares    Amount    Shares   Amount     Capital      Earnings      Total
                                   -------------------------------------------------------------------------------

<S>                                 <C>        <C>        <C>      <C>       <C>          <C>          <C>
BALANCE FEBRUARY 1, 1997           3,786,600  $ 37,866   697,320  $ 6,973   $ 1,407,915  $ 4,804,799  $ 6,257,553
    Exercise of convertible
     securities                       77,652       776         -        -       177,092            -      177,868
    Shares retired                      (125)       (1)        -        -             -            -           (1)
    Class A preferred converted
     to common                         8,528        85    (8,528)     (85)            -            -            -
    Net income                             -         -         -        -             -    1,345,429    1,345,429
                                   -------------------------------------------------------------------------------

BALANCE JANUARY 31, 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 DECEMBER 31, 1998          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 loss                              -         -          -       -             -     (478,665)    (478,665)
                                   -------------------------------------------------------------------------------

BALANCE DECEMBER 31, 1999          4,845,149  $ 48,452     68,841  $  688    $2,646,445   $6,089,723    8,785,308
                                   ===============================================================================

</TABLE>
























         The accompanying notes are an integral part of this statement.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>


                                                               For the year ended  For the eleven months   For the year ended
                                                                  December 31,       ended December 31,        January 31,
                                                                      1999                  1998                  1998
                                                               ------------------   -------------------   -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                               <C>                   <C>                 <C>
      Net income (loss)                                           $    (478,665)        $      418,160      $    1,345,429
                                                               ------------------   -------------------   -----------------
      Adjustments to reconcile net income (loss) to net
      cash provided (used) by operating activities:
      Depreciation and amortization                                    3,150,293             1,845,239           1,271,878
      Accretion of unearned stock compensation                            25,050                     -                   -
      (Gain) loss on disposal of fixed assets                              6,613                (3,292)              4,655
      Deferred income taxes                                             (500,750)              778,000              69,000
      Changes in operating assets and liabilities:
         Accounts receivable                                            (389,588)              873,611             162,363
         Costs and estimated earnings in excess of
            billings on uncompleted contracts                            411,282            (1,249,020)             13,060
         Prepaid expenses                                                (19,485)               53,611              (3,860)
         Inventory                                                             -                 5,288              (5,288)
         Income taxes receivable                                          40,750              (843,938)            796,143
         Deposits                                                         (5,296)              (30,713)             (2,855)
         Cash surrender value of life insurance                                -                     -               3,241
         Accounts payable                                                163,506              (165,049)           (707,324)
         Accrued expenses                                               (624,217)             (667,111)          1,222,111
         Billings in excess of costs and estimated earnings
            on uncompleted  contracts                                    621,139              (982,282)            834,274
         Income taxes payable                                            (11,878)             (237,426)            242,524
         Other liabilities                                                   (44)                   44              (5,541)
                                                               ------------------   -------------------   -----------------
      Total adjustments                                                2,867,375              (623,038)          3,894,381
                                                               ------------------   -------------------   -----------------
NET CASH  PROVIDED (USED) BY OPERATING ACTIVITIES                      2,388,710              (204,878)          5,239,810
                                                               ------------------   -------------------   -----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Cash paid for acquisition of capital assets                        (35,020)           (1,002,041)         (1,306,693)
      Cash proceeds from the sale of capital assets                            -                 6,584              14,612
      Cash paid for capitalized software development                  (2,144,253)           (3,905,349)         (1,149,685)
      Cash paid for acquisition, net of cash                          (1,912,484)                    -                   -
      Cash paid for capitalized patent costs                             (85,116)                    -                   -
                                                               ------------------   -------------------   -----------------
NET CASH USED BY INVESTING ACTIVITIES                                 (4,176,873)           (4,900,806)         (2,441,766)
                                                               ------------------   -------------------   -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net borrowings (payments) under line of credit                     575,641             1,811,093            (182,000)
      Proceeds from issuance of bridge loan                            1,000,000                     -                   -
      Proceeds from issuance of long-term debt                           203,504               511,111             800,000
      Principal payments on long-term debt                              (325,939)             (856,617)           (382,108)
      Proceeds from exercise of stock options and warrants               479,355               429,559             177,867
                                                               ------------------   -------------------   -----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                              1,932,561             1,895,146             413,759
                                                               ------------------   -------------------   -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     144,398            (3,210,538)          3,211,803

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                           429,970             3,640,508             428,705
                                                               ------------------   -------------------   -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                           $     574,368        $      429,970      $    3,640,508
                                                               ==================   ===================   =================
</TABLE>


         The accompanying notes are an integral part of this statement.


<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. (STI) in exchange for stock of
Exigent,  the "Exchange".  STI,  therefore,  became a wholly owned subsidiary of
Exigent.  STI,  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.  STI also  produces  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 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 products  developed by  MiddleWare  Solutions,  Inc., 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.

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 1999 and 1998  include the twelve
months of operations ended December 31, 1999,  (fiscal "1999"),  and January 31,
1998, (fiscal "1998"), 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  -  The  cost  of  property,  plant  and  equipment  is
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.

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 $13,196 at December  31, 1999.  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 1999,
1998B,  and 1998,  advertising  costs  included  in general  and  administrative
expenses were $188,795, $196,036, and $223,142, 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. Accumulated amortization was $0 at December 31, 1999.


<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.

AMORTIZATION - The costs of capitalized  software development are amortized over
their  estimated  useful  lives of two years.  Amortization  is  computed on the
straight-line  method. The Company periodically reviews the capitalized software
development cost to ensure that future anticipated gross revenues related to the
products exceeds the unamortized cost.

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 does not  anticipate  that the
adoption  of this  Statement  will have a  significant  effect on its results of
operations or financial position.

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.

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,  1999  and 1998 was  $596,000  and  $766,000,
respectively.

Most of the Company's  revenues are derived primarily from products and services
related to satellite  command and control.  Should the demand for such  services
take a substantial  downturn and the number of satellites deployed is materially
reduced, the Company's business opportunities would be limited significantly.

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.

<PAGE>
                          EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - ACCOUNTS RECEIVABLE

The following is a summary of accounts receivable:

                                             December 31,         December 31,
                                                 1999                 1998
                                           ----------------     ----------------
        Contract receivables               $      2,426,667     $      1,784,205
        Retainage receivable                        183,870               80,404
        Other receivables                             6,190                9,163
                                           ----------------     ----------------
                Total accounts receivable  $      2,616,727     $      1,873,772
                                           ================     ================

The  retainage  receivable  balance  represents  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 receivables within the next fiscal year.

NOTE 3 - PROPERTY AND EQUIPMENT

The following is a summary of property and equipment:
<TABLE>
<CAPTION>

                                           December 31,          December 31,            Estimated
                                              1999                   1998                   Life
                                       -------------------    -------------------    -----------------
<S>                                    <C>                    <C>                           <C>
Furniture and equipment                $        784,788       $         879,960             3-8 years
Vehicles                                         15,703                  15,703               5 years
Computer equipment                            4,633,380               4,823,732             3-5 years
Leasehold improvements                          462,350                 416,395              10 years
Capital leases                                  344,176                 129,919               5 years
                                       -- ----------------    -- ----------------
     Total cost                               6,240,397               6,265,709
     Less accumulated depreciation           (4,699,750)             (3,982,347)
                                       -------------------    -------------------
     Net property and equipment        $      1,540,647        $      2,283,362
                                       ===================    ===================
</TABLE>

Depreciation  expense  charged to general and  administrative  expense for 1999,
1998B, and 1998 was $633,535, $636,395, and $394,116, respectively. Depreciation
expense  charged to applied  overhead for 1999,  1998B,  and 1998 was  $180,626,
$196,558, and $359,528,  respectively.  Depreciation expense charged directly to
cost of  sales in  1999,  1998B,  and 1998  was  $228,  $51,141,  and  $213,077,
respectively.

NOTE 4 - LINE OF CREDIT

On August 12, 1999,  STI  completed a $2,000,000  increase in its line of credit
with a bank supplementing the existing  $3,000,000 line. As of December 31, 1999
and  1998,  the  outstanding   draws  against  the  lines  were  $2,386,734  and
$1,811,093, respectively. The outstanding balances accrue interest at LIBOR plus
2.5%. The interest rate at December 31, 1999 and December 31, 1998 was 8.97% and
7.56%,  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 STI are pledged as collateral on the line of credit.

The Company was not in  compliance  with the working  capital and current  ratio
covenants at December  31, 1999.  The Bank has waived these events of default at
December 31, 1999 and the Company expects that it is reasonably possible it will
be in compliance with these covenants at measurement dates during 2000.

The weighted average interest rate on short-term  borrowings during 1999, 1998B,
and 1998 were 8.19%, 7.56% and 8.25%, respectively.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5 - ACCRUED EXPENSES

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

                                                                                             December 31,
                                                                                     1999                   1998
                                                                               ------------------     ------------------

<S>                                                                             <C>                   <C>
       Accrued payroll and payroll taxes                                        $        678,532      $         526,920
       Accrued fringe benefits                                                           888,788              1,626,370
       Accrued pension and profit sharing                                                477,083                270,910
       Accrued ESOP payment                                                               95,416                101,735
       Accrued 401K payable                                                               47,871                 98,481
       Accrued severance pay                                                                   -                103,428
       Other accrued expenses                                                                  -                  6,356
                                                                                   --------------        ---------------
           Total accrued expenses                                               $      2,187,690      $       2,734,200
                                                                               ==================     ==================
</TABLE>

NOTE 6 - LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long term debt outstanding consists of the following:
<TABLE>
<CAPTION>
                                                                                   December 31,        December 31,
                                                                                       1999                  1998
                                                                                 -----------------     -----------------
<S>                                                                                <C>                   <C>
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,
equipment, furniture and fixtures of STI.                                        $      306,856         $     511,111

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               1,000,000                     -
subsidiaries.

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               1,000,000
all senior indebtedness of the Company.

Capital lease for furniture and equipment  payable to lessor in monthly
installments of $2,681 through August 2003.                                             100,607               121,161

Capital lease for furniture and equipment  payable to lessor in monthly
installments of $2,680 through June 2004.                                               105,244                     -

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

                                                                                 -----------------     -----------------
     TOTAL LONG-TERM DEBT                                                             2,525,714               632,272
     Less: current portion of long-term  debt                                        (1,506,817)             (204,456)
                                                                                 -----------------     -----------------

     TOTAL LONG-TERM DEBT, less current portion                                  $    1,018,897        $      427,816
                                                                                 =================     =================
</TABLE>

Future maturities of long-term debt as of December 31, 1999 are as follows:

                                       Amount
                                -----------------
                    2000        $    1,506,817
                    2001               401,641
                    2002               303,952
                    2003               295,648
                    2004                17,656
                                =================
                                $    2,525,714
                                =================


Interest  paid for  1999, 1998B, and 1998 was $228,071,  $172,035,  and $91,276,
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.
Total  Warrants  outstanding  at December  31, 1999 and  December  31, 1998 were
996,336,  and 1,036,080,  respectively.  Warrants  exercised in 1999, 1998B, and
1998 were 39,744, 28,674, and 3,852, respectively.

The Warrants  expired on  January 30, 2000. In January  2000,  726,290  Warrants
were exercised.

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  1999,
1998B and 1998. For fiscal 1999,  1998B, and 1998, the amount of pension expense
was $1,970,364, $1,763,632, and $1,381,023, 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 contributions were made in fiscal 1999, 1998B and 1998.

NOTE 10 - EMPLOYEE STOCK OWNERSHIP PLAN

The Company  has an employee  stock  ownership  plan (ESOP) for the  majority of
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 $ 405,343,
respectively,  for 1999, $0 and $692,241,  respectively,  for 1998B,  and $0 and
$552,409,  respectively,  for 1998. The ESOP had 1,836,525, and 1,891,694 shares
of the total issued and outstanding  stock,  respectively,  at December 31, 1999
and December 31, 1998.

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  258,416,  93,833,  and 62,000 shares during 1999,  1998B, and
1998,  respectively,  from  shareholders.  Shares distributed from the plan as a
result of termination of employment were 160,901,  306,548,  and 51,174,  during
1999,  1998B,  and  1998,  respectively.  The  shares'  fair  market  value  was
determined  based on the  trading  value of  Common  Shares  of the  Company  at
December 31, 1999 and 1998.
<PAGE>
                           EXIGENT INTERNATION, INC.
                  NOTEST 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  are 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.

In addition to the corporate headquarters, the Company leases 15,296 square feet
of space in  Alexandria,  Virginia  which  lease will  expire  August  31,  2003
(subject to the right to renew for up to three  additional one year terms),  and
approximately 11,188 square feet in Chantilly,  virginia which lease will expire
November  30,  2003.  The  Company  leases  addtional  office  space in  Aurora,
Colorado;  Colorado Springs, Colorado; Boulder, Colorado; LaPlata, Maryland; and
Mesa, Arizona.

Minimum future rental  payments  under  non-cancelable  operating  leases having
remaining  terms in excess of one year as of  December  31, 1999 for each of the
next five years and in the aggregate are:

Year ending December 31:
          2000                                                    $  1,865,608
          2001                                                       1,878,028
          2002                                                       1,596,140
          2003                                                       1,468,699
          2004                                                       1,208,998
          Subsequent to 2004                                         1,238,668
                                                                  --------------
             Total minimum future rental payments                 $  9,256,141
                                                                  ==============

Rent expense for 1999, 1998B, and 1998 was $1,513,273,  $1,211,795 and $830,609,
respectively.  Rent expense was offset by sublease  rental income of $15,064 for
1998.




<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  1999,  1998B,  and 1998 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>

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)


1998B                                                             Customer 1             Customer 2             Customer 3
-----                                                          -------------------    --------------------    ------------------
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)


1998                                                              Customer 1             Customer 2             Customer 3
----                                                           -------------------    --------------------    ------------------
Revenues                                                      $      11,700,279      $      11,435,270       $      5,157,842
Accounts receivable - at year end                                       913,281                737,996                642,109
Costs and estimated earnings in excess of billings
    on uncompleted contracts - at year end                            1,904,120                623,662                415,899
Billings in excess of costs and estimated earnings
   on  uncompleted contracts - at year end                                    -               (363,766)               (30,061)

</TABLE>

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 .

NOTE 13 - SOFTWARE DEVELOPMENT COSTS

Some software  development costs are charged to operations when incurred and are
included in operating  expenses.  The amounts  charged for 1999,  1998B and 1998
were $271,576, $180,671, and $47,854, respectively.

During  1999,   1998B,   and  1998,   $2,144,253,   $3,905,349  and  $1,149,685,
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 was $2,332,869,  $950,507,
and $304,397  for 1999,  1998B,  and 1998,  respectively.  Capitalized  software
development  costs includes  $163,465,  $0, and $0 of  capitalized  interest for
1999, 1998B and 1998, 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>

                                                                  1999                  1998B                     1998
                                                           ----------------    ---------------------    --------------------
Current expense (benefit)
<S>                                                        <C>                 <C>                      <C>
     Federal                                               $          -0-      $          (444,000)     $          593,000
     State                                                            -0-                 (154,000)                150,000
Deferred tax expense (benefit)
     Federal                                                    (415,000)                  575,000                  63,765
     State                                                       (45,000)                  203,000                  24,000
                                                           ================    =====================    ====================
Total provision for income taxes                           $    (460,000)      $           180,000      $          830,765
                                                           ================    =====================    ====================
</TABLE>

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

<TABLE>
<CAPTION>
                                                                  1999                  1998B                 1998
                                                            -----------------     ------------------    ------------------
<S>                                                                <C>                   <C>                   <C>
Expected statutory amount                                          34.0%                 34.0%                 34.0%
State income taxes                                                  3.3                   5.4                   4.6
Nondeductible meals and entertainment                              (1.8)                  4.2                   0.6
Tax penalties                                                      (0.5)                  2.1                     -
Nondeductible officers life insurance                              (0.1)                  0.2                   0.1
Research and experimental credit                                   14.7                 (15.8)                 (0.8)
Nondeductible amortization of goodwill                             (0.5)
Other                                                              (0.1)                    -                  (0.3)
                                                            =================     ==================    ==================
Actual tax provision                                               49.0                  30.1%                 38.2%
                                                            =================     ==================    ==================
</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.

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

                                             December 31,        December 31,
                                                 1999                1998
                                         ----------------     ----------------
Deferred tax assets
       Accrued vacation and sick pay     $       301,000      $      554,000
       NOL carryforwards                         813,000             337,000
       Tax credit carryforwards                  496,000             346,000
       Other                                      58,000               9,000
       Accrued severance pay                           -              32,000
                                         -----------------    ----------------
                                         $     1,668,000      $    1,278,000
                                         =================    ================
Deferred tax liabilities
       Depreciation                             (163,000)           (304,000)
       Amortization                           (1,651,000)         (1,734,000)
       Other                                     (23,000)                  -
                                         -----------------    ----------------
                                         $    (1,837,000)     $   (2,038,000)
                                         ==================   ================

At December  31,  1999,  the Company had net  operating  loss  carryforwards  of
$2,160,000 expiring in 2019. The tax credit carryforwards expire in 2019.



<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14 - INCOME TAXES (CONTINUED)

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  1999,  1998B,  and 1998 the Company made income tax payments of $29,360,
$463,450 and $6,230, 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.

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.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - STOCK OPTIONS (CONTINUED)

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 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, 1999, no
stock appreciation rights had been granted.

At December 31, 1999, there were 0, 5,950,  10,000,  18,550, 0, 0, and 1,615,978
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 1999,  1998B, and 1998, where exercise price equals
the  market  price of the stock on the grant  date was  $2.27,  $1.57 and $0.86,
respectively. No stock options were granted prior to fiscal 1998.
<PAGE>

                          EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 15 - STOCK OPTIONS (CONTINUED)

The following weighted average assumptions were used:
<TABLE>
<CAPTION>
                                                                                  1999            1998B            1998
                                                                      --------------------------------------------------
         Exercise price equal to market price on grant date
<S>                                                                              <C>              <C>             <C>
         Expected risk-free interest rate                                        5.61%            6.22%           6.21%
         Expected life in years                                                  6.72             4.72            3.05
         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>
                                                                                  1999            1998B            1998
                                                                      --------------------------------------------------
         Net income (loss):
<S>                                                                       <C>                 <C>           <C>
         As reported                                                      $   (478,665)      $   418,160     $ 1,345,429
         Pro forma                                                        $ (1,580,805)      $  (552,077)    $   951,559
         Earnings (loss) per share- diluted:
         As reported                                                      $      (0.11)      $      0.08     $      0.29
         Pro forma                                                        $      (0.35)      $     (0.11)    $      0.21
</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.

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

                                           1999                          1998B                           1998
                             -----------------------------------------------------------------------------------------------
                                               Weighted                        Weighted                         Weighted
                                                Average                         Average                         Average
                                Options     Exercise Price      Options     Exercise Price      Options      Exercise Price
                             -----------------------------------------------------------------------------------------------
Outstanding - beginning of
<S>                               <C>           <C>               <C>            <C>                 <C>          <C>
 year                             2,079,454     $      3.04         726,350      $     2.45                -      $        -
Granted                             746,005            3.97       1,522,854            3.30          836,400            2.32
Exercised                          (128,400)           2.65        (149,050)           2.28          (73,800)           2.45
Forfeited                          (288,787)           3.11        ( 20,700)           3.35          (36,250)           2.53
                             ---------------                ----------------                -----------------
Outstanding - end of year         2,408,272     $      3.34       2,079,454      $     3.04          726,350       $    2.45
                              ===============================================================================================
Exercisable at end of year        1,761,252                       1,380,594                          689,750

Weighted-average fair value
 of options granted during
 the year                         $    3.34                      $     1.57                       $     0.86

</TABLE>


At  December  31,  1999,  the  range of  exercise  prices  and  weighted-average
remaining  contractual  life of outstanding  options was $2.25 to $4.38 and 2.55
years to 9.78 years,  respectively,  with the weighted average at $3.34 and 4.66
years.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 16 - EARNINGS (LOSS) PER SHARE

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

                                                            1999               1998B              1998
                                                      ------------------ ------------------ ------------------
Numerator:
  Net income (loss) (numerator for basic
<S>                                                        <C>                  <C>               <C>
     and diluted earnings per share)                       $  (478,665)         $  418,160        $ 1,345,429
                                                      ================== ================== ==================
Denominator:
  Denominator for basic earnings per share-
     weighted average  common shares                          4,484,177          4,034,039          3,787,639
  Effect of dilutive securities:
    Convertible preferred stock                                       -            632,041            695,899
    Stock options and warrants                                        -            491,451            163,752
                                                      ------------------ ------------------ ------------------
  Denominator for diluted earnings per share-
      adjusted weighted average shares                        4,484,177          5,157,531          4,647,290
                                                      ------------------ ------------------ ------------------
Basic earnings (loss) per share                             $     (0.11)         $    0.10          $    0.36
                                                      ================== ================== ==================
Diluted earnings (loss) per share                           $     (0.11)         $    0.08          $    0.29
                                                      ================== ================== ==================

</TABLE>

In computing  diluted Earnings (Loss) per Shares ("EPS") for 1999,  1,005,484 of
common share  equivalents  were  excluded  from the  computation  because  their
effects would have been antidilutive.


NOTE 17 - COMMITMENTS AND CONTINGENCIES

The Company has  outstanding  purchase  commitments of $2,258,150 as of December
31, 1999. These represent outstanding purchase orders for which neither the item
nor invoice has been received.


NOTE 18 - RELATED PARTY TRANSACTIONS

During  1999,  1998B,  and 1998  Exigent  paid  $53,152,  $38,603,  and $45,485,
respectively in fees to directors of Exigent for consulting
services.


<PAGE>


                           EXIGENT INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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>


Intangible Asset       Assigned Value               Amortization Period
----------------    ---------------------       ---------------------------
Goodwill                  2,861,416                       10 years

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),  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, 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
Income (loss) before income taxes                           256,718             76,543            249,753          (1,521,679)
Net income                                                  154,031             45,926            149,851            (828,473)
Basic earnings per share                                       0.04               0.01               0.03               (0.17)
Diluted earnings 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>
<TABLE>
<CAPTION>

                                                                        Quarter ended                             Two months
                                                  ----------------------------------------------------------        Ended
 Eleven months ended December 31, 1998                  30-Apr-98          31-Jul-98           31-Oct-98          31-Dec-98
                                                  ------------------  -----------------   ----------------  ------------------
<S>                                                   <C>                 <C>                <C>                <C>
Revenue                                               $   7,685,375       $  8,811,196       $  9,361,584       $   5,280,928
Income before income taxes                                  161,751            380,734            122,420             (66,745)
Net income                                                   97,618            227,949             73,479              19,114
Basic earnings per share                                       0.02               0.05               0.02                0.00
Diluted earnings per share *                                   0.02               0.04               0.01                0.00
Market price per share
     High                                                      4.00               6.00               4.38                4.13
     Low                                                       2.94               3.81               2.75                2.44
</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

         On March  18,  1998,  our  Board of  Directors  approved  changing  our
certifying  accountant to Ernst & Young LLP. The change became effective for the
fiscal year ended December 31, 1998. The certifying  accountant for the previous
years and the fiscal year ended  January  31,  1998,  Hoyman,  Dobson & Company,
P.A.,  continues to provide us with various accounting  services.  The directors
determined a change was  warranted  because the new  certifying  accountant  has
greater national resources to serve our growing needs.

         The principal  accountant's report on the financial  statements for the
previous two 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 two 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.

         By  letter  dated  March  27,  1998,  Hoyman,  Dobson &  Company,  P.A.
confirmed  its  agreement  with the  foregoing,  as  disclosed  in Item 4 of our
Current  Report on Form 8-K filed with the  Securities  and Exchange  Commission
(the "Commission") on March 30, 1998.
This letter is attached as Exhibit 16 to the March 30, 1998, Current Report Form
8-K.

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 1999 Annual
Meeting of Shareholders to be filed with the Commission on or before May 1, 2000
(the "2000 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 2000 Definitive Proxy Statement are
hereby incorporated by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         "Principal  Stockholders"  in  the 2000  Definitive  Proxy Statement is
hereby incorporated by reference.


Item 13.  Certain Relationships and Related Transactions

         "Certain Relationships and Related Transactions" in the 2000 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)
           Reports of Independent Auditors - February 11, 2000 and April 4, 1998
           Consolidated   Balance  Sheets -  December 31, 1999  and December 31,
           1998
           Consolidated  Statements  of  Operations  -  For  December  31,  1999
           and for the Eleven Months Ended December 31, 1998, and the Year ended
           January 31, 1998
           Consolidated  Statements  of Stockholders' Equity - For  December 31,
           1999 and for the Eleven  Months  Ended  December 31, 1998,  and  Year
           Ended January 31, 1998
           Consolidated Statements of Cash Flows  - For  December  31, 1999  and
           for  the  Eleven   Months  Ended  December 31, 1998,  and  Year Ended
           January 31, 1998
           Notes to  Financial  Statements  For  December  31, 1999 and  for the
           Eleven   Months  Ended  December 31, 1998, and Year Ended January 31,
           1998
(2)        Financial  statement  schedules.   All  schedules  have  been omitted
           because they are inapplicable or not material.
(3)        Exhibits Index

Exhibit
Number     Exhibit

           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.

10.1       Contract    between     Motorola,   Inc.   Government   and   Systems
           Technology  Group,  Satellite  Communications  Division  and Software
           Technology, Inc. (6)

10.2       Contract between Naval Research  Laboratory  And Software Technology,
           Inc.dated April 30, 1998 (7)

10.3       Subcontract/Purchase  Order  between Lockheed-Martin  Federal Systems
           Company and Software Technology, Inc. (8)

10.4       Purchase Orders from Allied Signal Technical Services Corporation (9)

10.5       Lease  Agreement,  dated May 14, 1993, between Henderson Evans,  L.C.
           and  Software Technology, Inc. (10)

10.6       Lease  Agreement,  dated March 31,  1997,  between  Henderson  Comet,
           L.C. and Software Technology, Inc. (11)

10.7       Agreement of Lease,  dated August 15, 1994, between  Alexandria South
           Associates,  L.P. and Software Technology, Inc. (12)
<PAGE>

10.8       Addendum  Number One to Agreement of Lease, dated  September 1, 1998,
           between  Hunting Creek, LLC and Software Technology, Inc. (13)

10.9       Incentive Stock Option Plan 1Q (nonqualified) (14)

10.10      Independent Director Stock Option Plan (5NQ) (15)

10.11      Employment   Agreement    dated   June  11,  1997   between   Exigent
           International,  Inc.  and William K. Presley (16)

10.12      Employment   Agreement    dated   June 11,  1997    between   Exigent
           International,  Inc.  and  Bernard R. Smedley (17)

10.13      Employment   Agreement    dated   June 11,  1997    between   Exigent
           International,  Inc. and Don F. Riordan, Jr. (18)

10.14      Loan Agreement, dated December 31, 1998, between Software Technology,
           Inc. and the Huntington National Bank (19)

10.15      Unlimited  Continuing  and  Unconditional  Guaranty,  dated  December
           31, 1998,  between Exigent International,  Inc.  and  the  Huntington
           National Bank (20)

10.16      Amendment  to  Employment  Agreement,  dated  May 13,  1998,  between
           Bernard R. Smedley and Exigent International, Inc. (21)

10.17      Amendment to Employment Agreement,  dated September 14, 1998, between
           Bernard R. Smedley and Exigent International, Inc.  (22)

10.18      Amendment to Employment  Agreement,  dated October 27, 1998,  between
           Bernard R. Smedley and Exigent International, Inc.  (23)

10.19      Employment   Agreement,   dated December 17, 1998, between Jeffrey B.
           Weinress and Exigent International, Inc.  (24)

10.20      Form  of  Employment  Agreement  for  selected   employees of Exigent
           International, Inc. (25)

10.21      Amendment to Employment  Agreement,  dated  May 13, 1998, between Don
           F. Riordan, Jr. and Exigent International, Inc. (26)

10.22      Amendment  to  Employment   Agreement,   dated   September  14, 1998,
           between Don F. Riordan, Jr. and Exigent International, Inc.  (27)

10.23      Amendment to Employment  Agreement,  dated October  27, 1998, between
           Don R. Riordan, Jr. and Exigent International, Inc.  (28)

10.24      Amendment  to Employment  Agreement,  dated  May  13,  1998,  between
           William K. Presley and Exigent International, Inc.  (29)

10.25      Amendment to Employment Agreement,  dated September 14, 1998, between
           William K. Presley and Exigent International, Inc.  (30)

10.26      Amendment to Employment  Agreement,  dated October 27, 1998,  between
           William K. Presley and Exigent International, Inc.  (31)

10.27      Incentive Stock Option Plan 3Q (32)

10.28      Incentive Stock Option Plan 4Q (33)
<PAGE>

10.29      Stock Option Plan 6NQ (34)

10.30      The Software Technology, Inc. Restated Employee Stock Ownership  Plan
           (35)

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

10.32      Amended and Re-Stated Loan  Agreement,  dated March 1,  2000,  by and
           between  Exigent International, Inc., eXGNT, FotoTag, GEC Acquisition
           Corporation, GEC North  America  Corporation,  Middleware  Solutions,
           Inc., Software Technology,  Inc. and The Huntington National Bank.

10.33      Amended and Re-Stated Loan  Agreement,  dated March 1,  2000,  by and
           between  Exigent International, Inc., eXGNT, FotoTag, GEC Acquisition
           Corporation, GEC   North   America Corporation, Middleware Solutions,
           Inc., Software Technology,  Inc. and The Huntington National Bank.

10.34      Omnibus Stock Option and Incentive Plan (36)

10.35      Employee Stock Purchase Plan (37)

10.36      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. (38)

10.39      Incentive Stock Option Plan 2Q (39)

16         Letter re Change in Certifying Accountant (40)

21         Subsidiaries

23.1       Consent of Independent  Certified  Public  Accountants, Ernst & Young
           LLP, dated March 20, 2000

23.2       Consent of Independent Certified Public Accountants, Hoyman, Dobson &
           Company, P.A., dated March 21, 2000

27         Financial Data Schedule

          (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   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.*
          (7)  Exhibit 10.17 to Form 10-Q filed June 12, 1998.*
          (8)  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.*
          (9)  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.*
          (10) Exhibit 10.8 to Form 10-K filed on April 30, 1998.*
          (11) Exhibit 10.9 to Form 10-K filed on April 30, 1998.*
          (12) Exhibit 10.10 to Form 10-K filed on April 30, 1998.*
          (13) Exhibit 10.10 to Form 10-K filed on March 31, 1999.*
          (14) Exhibit 4 to Form 8-K filed on October  27,  1997 and to Form S-8
               filed on October 27, 1997.*

<PAGE>

          (15) Exhibit  4 to Form 8-K  filed on March  30,  1998 and to Form S-8
               filed on April 1, 1998.*
          (16) Exhibit 10.14 to Form 10-K filed on April 30, 1998.*
          (17) Exhibit 10.15 to Form 10-K filed on April 30, 1998.*
          (18) Exhibit 10.16 to Form 10-K filed on April 30, 1998.*
          (19) Exhibit 10.18 to Form 10-K filed on March 31, 1999.*
          (20) Exhibit 10.19 to Form 10-K filed on March 31, 1999.*
          (21) Exhibit 10.21 to Form 10-K filed on March 31,  1999.*
          (22) Exhibit 10.22 to Form 10-K filed on March 31, 1999.*
          (23) Exhibit 10.23 to Form 10-K filed on March 31, 1999.*
          (24) Exhibit 10.24 to Form 10-K filed on March 31, 1999.*
          (25) Exhibit 10.25 to Form 10-K filed on March 31, 1999.*
          (26) Exhibit 10.26 to Form 10-K filed on March 31, 1999.*
          (27) Exhibit 10.27 to Form 10-K filed on March 31, 1999.*
          (28) Exhibit 10.28 to Form 10-K filed on March 31, 1999.*
          (29) Exhibit 10.29 to Form 10-K filed on March 31, 1999.*
          (30) Exhibit 10.30 to Form 10-K filed on March 31, 1999.*
          (31) Exhibit 10.31 to Form 10-K filed on March 31, 1999.*
          (32) Exhibit 4 to Form 8-K and to Form S-8 filed on January 2, 1998.*
          (33) Exhibit 4 to Form 8-K and to Form S-8 filed on April 21, 1998.*
          (34) Exhibit 4 to Form 8-K and to Form S-8 filed on May 21, 1998.*
          (35) Exhibit 10.35 to Form 10-K filed on March 31, 1999.*
          (36) Exhibit 99.1 to Proxy Statement filed April 30, 1999.*
          (37) Exhibit 99.2 to Proxy Statement filed April 30, 1999.*
          (38) Exhibit 2.1 to Form 8-K/A filed on December 30, 1999.*
          (39) Exhibit 4 to Form 8-K filed on June 24, 1997.*
          (40) Exhibit 16 to Form 8-K filed March 30, 1998.*
          *    Incorporated by reference


 (b)     Reports on Form 8-K:

         A Current Report on Form 8-K was filed on November 15, 1999  announcing
         that Larry W. Whitfield was named President of STI subsidiary.

         A Current  Report on Form 8-K was filed on November 22, 1999  reporting
         that we entered  into an  agreement  to  acquire  all of the issued and
         outstanding  shares  of  GEC,  a  systems  integrator  of  Oracle-based
         solutions, at a purchase price of $3.27M.

         A Current  Report on Form 8-K was filed on December 14, 1999  reporting
         that we consummated the GEC acquisition.

         A Current  Report on Form 8-K was filed on December 28, 1999  reporting
         the  appointment  of Gordon J.  Comerford to the Board of Directors and
         other executive promotions.

         A Current  Report on Form 8-K/A was filed on December 30, 1999 amending
         the  Current  Report  on Form 8-K filed on  December  14,  1999,  which
         reported that we consummated the GEC  acquisition.  The amended Current
         Report on Form 8-K included the required  financial  statements and pro
         forma financial  statements relative to the acquisition were filed with
         this report.

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




<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 21, 2000    By:   /s/ B.R. Smedley
--------------        --------------------------------------------------------
Date                  Bernard R. Smedley, Chief Executive Officer


March 21, 2000    By:  /s/ Jeffery B. Weinress
--------------       ---------------------------------------------------------
Date                  Jeffery B. Weinress, Executive Vice President, Chief
                      Financial Officer


March 21, 2000    By:  /s/ Sally Ball
--------------       ---------------------------------------------------------
Date                  Sally Ball, Vice President, Principal Accounting 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 21, 2000    By:  /s/ B.R. Smedley
--------------        --------------------------------------------------------
Date                  Bernard R. Smedley, Director


March 21, 2000    By:  /s/ Arthur H. Collier
--------------        --------------------------------------------------------
Date                  Arthur H. Collier, Director


March 21, 2000    By:  /s/ Scott B. Helm
--------------        --------------------------------------------------------
Date                    Scott B. Helm, Director


March 21, 2000    By:  /s/ Robert M. Janowiak
--------------        --------------------------------------------------------
Date                  Robert M. Janowiak, Director


March 21, 2000    By:  /s/ William R. Usher
--------------        --------------------------------------------------------
Date                  William R. Usher, Director


March 21, 2000    By:  /s/ Don F. Riordan, Jr.
--------------        --------------------------------------------------------
Date                  Don F. Riordan, Jr., Director


March 21, 2000    By:  /s/ Daniel J. Stark
--------------        --------------------------------------------------------
Date                  Daniel J. Stark, Director


March 21, 2000    By:  /s/ Gordon J. Comerford
--------------        --------------------------------------------------------
Date                  Gordon J. Comerford, Director