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

                                   FORM 10-K/A
                                 AMENDMENT NO. 2


(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 or the fiscal year ended December 31, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 or the transition period from _______ to _______

                         Commission File Number 0-27190

                           5B TECHNOLOGIES CORPORATION
                   (formerly Paramount Financial Corporation)
             (Exact Name of Registrant as Specified in Its Charter)


             Delaware                                      11-3529387
   (State or Other Jurisdiction of                       (I.R.S. Employer
   Incorporation or Organization)                      Identification No.)

                                One Jericho Plaza
                             Jericho, New York 11753
                    (Address of Principal Executive Offices)
                                 (516) 938-3400
              (Registrant's Telephone Number, Including Area Code)


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

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

                     Units, each consisting of two shares of
                      Common Stock and two Class A Warrants
                      -------------------------------------
                                (Title of class)

          Class A Warrants, each to purchase one share of Common Stock
          ------------------------------------------------------------
                                (Title of class)

                     Common Stock, $0.04 par value per share
                     ---------------------------------------
                                (Title of class)

         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 the  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. |X|

         The aggregate  market value of the voting stock (Common  Stock) held by
non-affiliates  of  the  Registrant  on  February  25,  2000  was  approximately
$16,425,842  based on the  closing  sales  price of such stock on such date,  as
reported by the Nasdaq SmallCap Market.

         The number of shares  outstanding of the  Registrant's Common Stock, as
of February 25, 2000 was: 2,160,004 shares of Common Stock, $0.04 par value.

              --------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

<PAGE>


Explanatory Note:

5B Technologies Corporation (formerly Paramount Financial Corporation), pursuant
to Rule 12b-15  under the  Securities  Exchange Act of 1934,  is hereby  filing,
under the cover of Form  10-K/A,  Amendment  No. 2, its  Consolidated  Financial
Statements  for the  year  ended  December  31,  1998,  in order  to  correct  a
typographical   error  contained  in  Note  1  to  the  Consolidated   Financial
Statements.  Specifically,  the fifth sentence of the second paragraph of Note 1
to the Consolidated Financial Statements should read as follows:

        "Four class A warrants entitle the holder to purchase one share
        of common stock at $16.00 per share (after  giving  effect to a
        one-for-four  reverse stock split of the common stock  effected
        May  19,  1998  (see  Note 9) and  subject  to  adjustment  for
        anti-dilution)  during the four year period commencing one year
        from the Effective Date."

The foregoing correction to Note 1 to the Consolidated Financial Statements does
not have any impact on reported  earnings or earnings  per share for any periods
presented.

<PAGE>
                 PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


                                                                            Page

Report of Independent Public Accountants                                     F-2

Consolidated Balance Sheets as of December 31, 1997 and 1998                 F-3

Consolidated Statements of Operations for each of the three years ended
         December 31, 1998                                                   F-4

Consolidated Statements of Shareholders' Equity for each of the three
         years in the period ended December 31, 1998                         F-5

Consolidated Statements of Cash Flows for each of the three years
         in the period ended December 31, 1998                               F-6

Notes to Consolidated Financial Statement                             F-7 - F-24









Information  required by schedules called for under Regulation S-X is either not
applicable or is included in the financial statements or notes thereto.


                                      F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Paramount Financial Corporation:


We have  audited  the  accompanying  consolidated  balance  sheets of  Paramount
Financial Corporation and subsidiaries as of December 31, 1997 and 1998, and the
related  consolidated  statements of operations,  shareholders'  equity and cash
flows for each of the three years in the period 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  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Paramount Financial Corporation
and  subsidiaries  as of December  31,  1997 and 1998,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.




                                                             ARTHUR ANDERSEN LLP

Melville, New York
March 12, 1999



                                     F-2
<PAGE>

                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------
                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------

                                                               December 31,
                                                        ------------------------
                  ASSETS                                   1997         1998
                  ------                                   ----         ----


Cash and cash equivalents                               $2,209,649   $1,495,082
Investments available for sale                           3,524,456      613,188
Accounts receivable, net                                 1,138,479    2,632,258
Net investment in direct finance and sales-type leases  39,941,764   30,059,378
Assets held under operating leases, net of accumulated
 depreciation                                            5,459,895    7,263,181
Other assets                                               788,218    3,183,523
                                                       -----------  -----------
                  Total assets                         $53,062,461  $45,246,610
                                                       ===========  ===========
                      LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES:
   Notes payable                                        $2,656,365   $4,313,189
   Accounts payable                                      1,307,496      942,431
   Accounts payable - leases                               708,568      100,000
   Accrued expenses                                        383,097      658,392
   Obligations for financed equipment - non-recourse    40,287,404   33,435,459
   Deferred income taxes                                    73,848            -
                                                        ----------   ----------
                  Total liabilities                     45,416,778   39,449,471
                                                        -----------  ----------
COMMITMENTS (Note 14)

SHAREHOLDERS' EQUITY:
   Preferred stock, $.01 par value; 5,000,000 shares
     authorized, none outstanding outstanding                    -            -
   Common stock, $.04 par value; 17,500,000 shares
     authorized, 1,997,500 and 2,160,000 shares issued
     and outstanding, respectively                          79,900       86,400
   Additional paid-in capital                           13,644,228   14,456,728
   Stock subscription receivable                                 -     (812,500)
   Accumulated deficit                                  (6,049,080)  (7,882,884)
   Treasury stock, 12,500 and 24,500 shares,
     respectively                                          (29,365)     (50,605)
                                                       -----------   ----------
       Total shareholders' equity                        7,645,683    5,797,139
                                                       -----------   ----------
       Total liabilities and shareholders' equity      $53,062,461  $45,246,610
                                                       ===========  ===========


The  accompanying  notes  are an  integral  part of these  consolidated  balance
sheets.



                                       F-3
<PAGE>


                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

                                                     Years Ended December 31,
      --------------------- ---------------------- -----------------------------
                                               1996        1997         1998
                                               ----        ----         ----
REVENUES:
  Sales and Service                       $27,159,894  $21,405,788  $30,391,446
  Lease revenue                             3,680,924    9,829,991    7,478,750
  Fee, interest and other income              511,698    1,159,062      615,295
                                          -----------  -----------  -----------
              Total revenues               31,352,516   32,394,841   38,485,491
                                          -----------  -----------  -----------

COSTS AND EXPENSES:
  Cost of sales                            25,785,022   19,933,213   28,157,266
  Lease expense                             3,419,600    9,499,365    7,172,273
  Selling, general and administrative
    expenses                                2,447,884    3,746,712    4,947,718
  Interest expense                              6,209           --       51,324
                                          -----------  -----------  -----------

    Total costs and expenses               31,658,715   33,179,290   40,328,581
                                          -----------  -----------  -----------

    Loss before provision for (benefit
      from) income taxes                     (306,199)    (784,449)  (1,843,090)

  Provision For (Benefit From) Income
      Taxes                                   498,212     (288,111)      (9,286)
                                          -----------  -----------  -----------
    Net loss                                $(804,411)   $(496,338) $(1,833,804)
                                          ===========  ===========  ===========

Basic loss per common share                    $(0.41)      $(0.25)      $(0.89)
                                          ===========  ===========  ===========
Diluted loss per common share                  $(0.41)      $(0.25)      $(0.89)
                                          ===========  ===========  ===========

Shares used in computing net loss per share:
     Basic                                  1,954,493    1,991,117    2,067,842
                                          ===========  ===========  ===========
     Diluted                                1,954,493    1,991,117    2,067,842
                                          ===========  ===========  ===========


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


                                       F-4
<PAGE>


                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 -----------------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
              ----------------------------------------------------



<TABLE>

                                                                       Paid-In   Subscription  Accumulated   Treasury
                                                  Common Stock         Capital    Receivable      Deficit      Stock        Total
                                            -----------------------  -----------  -----------  -----------  -----------  -----------
                                                Shares       Amount
<S>               <C> <C>                     <C>           <C>       <C>          <C>         <C>                       <C>
BALANCE, December 31, 1995                    3,500,000     $35,000   $5,282,049   $    -      $(4,748,331)          -   $  568,718

Issuance of common stock in the initial       2,990,000      29,900    8,377,179            -            -           -    8,407,079
  public offering, net of offering costs of
  approximately $2,057,921
Issuance of common stock to bridge lenders    1,500,000      15,000      (15,000)           -            -           -            -
Current year net loss                                 -           -            -            -     (804,411)          -     (804,411)
                                            -----------  ----------  -----------  -----------  -----------   ---------  -----------

BALANCE, December 31, 1996                    7,990,000      79,900   13,644,228            -   (5,552,742)          -    8,171,386
Purchase of treasury stock                            -           -            -            -            -     (29,365)     (29,365)
Current year net loss                                 -           -            -            -     (496,338)          -     (496,338)
                                            ----------- -----------  -----------  -----------  -----------   ---------  -----------
BALANCE, December 31, 1997                    7,990,000      79,900   13,644,228            -   (6,049,080)    (29,365)   7,645,683

  One-for-four reverse stock split           (5,992,500)          -            -            -            -           -            -
  Issuances of common stock                     162,500       6,500      812,500     (812,500)           -           -        6,500
  Purchase of treasury stock                          -           -            -            -            -     (21,240)     (21,240)
  Current year net loss                               -           -            -            -   (1,833,804)          -   (1,833,804)
                                            ----------- -----------  -----------  -----------  -----------  ----------  -----------
BALANCE, December 31, 1998                    2,160,000     $86,400  $14,456,728    $(812,500) $(7,882,884)   $(50,605)  $5,797,139
                                            ==========  ===========  ===========  ===========  ===========  ==========  ===========
</TABLE>

  The accompanying notes arean integral part of these consolidated statements.


                                       F-5
<PAGE>


                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                                                 Years Ended December 31,
                                           -------------------------------------
                                               1996         1997       1998
                                               ----         ----       ----
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss                                   $(804,411)   $(496,338) $(1,833,804)
 Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Deferred income taxes                       425,662     (351,814)     (73,848)
  Depreciation and amortization             2,037,472    6,721,854    5,558,520
  Amortization of discounts on investments   (162,296)    (205,082)     (26,953)
  Amortization of unearned operating lease
   revenue from sublease transactions         (19,928)           -            -
  Amortization of prepaid operating lease
   expense from sublease transactions          25,067            -            -

Changes in operating assets and liabilities:
  Accounts receivable                      (2,153,219)   1,121,534   (1,493,779)
  Other assets                                279,659     (396,901)  (1,556,671)
  Accounts payable                            642,602      245,270     (365,065)
  Accrued expenses                           (105,576)     194,928      275,295
                                             --------   ----------  -----------
Net cash provided by operating activities     165,032    6,833,451      483,695
                                             --------   ----------  -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Accounts payable - leases                18,107,528  (17,525,950)    (608,568)
  Purchase of equipment for direct finance
   leases and sales-type leases           (21,773,460) (38,158,975) (11,787,818)
  Termination of direct finance leases      1,591,822    4,499,046    3,159,587
  Proceeds applied to direct finance
   leases and sales-type leases             5,685,159   12,327,521   18,159,432
  Purchase of equipment for operating
   leases                                 (31,913,845)    (346,733)  (8,178,032)
  Termination of operating leases          12,749,549    6,972,505      481,980
  Residual value sharing arrangements               -    4,628,698      856,969
  Payments for acquisitions, net of
   cash acquired                                    -            -   (1,010,172)
  Purchases of investments                (19,495,594) (14,187,250)  (3,697,782)
  Proceeds from sale/maturity of
   investments                             16,494,049   14,031,717    6,636,003
                                           ----------  -----------  -----------
Net cash (used in) provided by
  investing activities                    (18,554,792) (27,759,421)   4,011,599
                                          -----------  -----------  -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of common stock        8,407,079            -        6,500
  Repurchase of common stock                        -      (29,365)     (21,240)
  Proceeds from notes payable                       -    3,894,286    5,183,606
  Repayment of notes payable               (1,593,313)  (1,256,305)  (3,526,782)
  Increase in non-recourse lease financing 31,559,769   38,818,439   19,139,928
  Termination of non-recourse lease
   financing                               (9,978,194)  (3,463,973)  (2,864,077)
  Repayments and interest amortization
   applied to non-recourse lease financing (7,458,283) (18,528,237) (23,127,796)
                                           ----------  -----------  -----------
Net cash provided by (used in) financing
  activities                               20,937,058   19,434,845   (5,209,861)
                                           ----------  -----------  -----------
Net increase (decrease) in cash and cash
  equivalents                               2,547,298   (1,491,125)    (714,567)

CASH AND CASH EQUIVALENTS, beginning
  of period                                 1,153,476    3,700,774    2,209,649
                                           ----------  -----------  -----------
CASH AND CASH EQUIVALENTS, end of period  $ 3,700,774  $ 2,209,649  $ 1,495,082
                                          ===========  ===========  ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for income taxes              $    24,437  $    48,574  $    87,232
                                          ===========  ===========  ===========
  Cash paid for interest                  $ 1,358,539  $ 2,936,823  $ 2,714,790
                                          ===========  ===========  ===========

DETAILS OF ACQUISITIONS:
  Fair value of assets acquired           $         -  $         -  $ 2,365,376
  Liabilities assumed                               -            -   (2,570,194)
  Notes issued                                      -            -     (262,500)
  Purchase price in excess of net
   assets acquired                                  -            -    1,477,490
                                          -----------   ----------  -----------
   Cash paid for acquisitions             $         -  $         -  $ 1,010,172
                                          ===========  ===========  ===========


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



                                       F-6
<PAGE>

                PARAMOUNT FINANCIAL CORPORATION AND SUBSIDIARIES
                ------------------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.       COMPANY BACKGROUND:

Paramount Financial Corporation  ("Paramount" or the "Company") was incorporated
in the state of Delaware in July 1991.  Paramount  is a  comprehensive  business
solutions  provider,  offering  customers  a wide range of  integrated  services
including lease finance,  network design and implementation.  The Company is not
tied to any one  manufacturer  and thus can  provide  customers  with  available
technical  and  financial  alternatives  regardless  of  the  specific  hardware
platform.  Paramount's  customer  base is mostly  comprised of large,  domestic,
creditworthy  customers in a variety of  industries.  Prior to 1996, the Company
generated most of its revenue from wholesale  trading of new and used equipment.
However,  in 1996,  the Company  aggressively  expanded its leasing  operations,
which now accounts for most of its revenue. In July 1996, Paramount formed a new
wholly owned  subsidiary,  Paratech  Resources Inc.  ("Paratech"),  which offers
comprehensive  information  technology  solutions,  including network design and
integration,  software applications,  training and value added support services.
In January  1998,  the Company  acquired  Deltaforce  Personnel  Services,  Inc.
("Deltaforce"), which offers temporary and permanent legal support staff.

On January 22, 1996  ("Effective  Date"),  the  Company  consummated  an initial
public offering of its securities.  In connection with the offering, the Company
issued a total of 1,495,000 units inclusive of the underwriter's  over-allotment
option which was exercised in full, at a price of $7.00 per unit. Each unit sold
in the offering consisted of two shares of common stock and two redeemable class
A warrants.  The common  stock and class A warrants  were  detachable  and trade
separately.  The class A warrants are  exercisable  commencing one year from the
Effective Date.  Four class A warrants  entitle the holder to purchase one share
of common  stock at $16.00  per share  (after  giving  effect to a  one-for-four
reverse  stock split of the common stock  effected May 19, 1998 (see Note 9) and
subject to adjustment for anti-dilution)  during the four year period commencing
one year from the  Effective  Date.  The class A warrants are  redeemable by the
Company  for $0.05 per  warrant,  in the event that the closing bid price of the
Company's  common stock  exceeds  $36.00 per share (after  giving  effect to the
one-for-four  reverse  stock split) for twenty  consecutive  trading days ending
within ten days of the notice of redemption.  With the prior written  consent of
the  underwriter,  upon thirty days written notice to all holders of the class A
warrants,  the Company shall have the right to reduce the exercise  price and/or
extend the term of the class A warrants.  None of the class A warrants issued in
connection  with the initial  public  offering have been  exercised to date. Net
proceeds of the  offering  totaled  approximately  $8,400,000,  after  deducting
underwriting  discount and commissions,  underwriter's  non-accountable  expense
allowance and other offering expenses.

In  connection  with the offering,  300,000  shares of common stock owned by the
Company's two original  shareholders (the "Selling  Securityholders")  were also
offered and sold to the public. Additionally,  there was a secondary offering of
securities  by certain  non-affiliated  lenders  of the  Company  (the  "Selling


                                       F-7
<PAGE>

Lenders").  The Selling  Lenders  registered  750,000  units,  identical  to the
initial  public  offering  units  described  above,  as  well  as an  additional
1,500,000  shares of common stock issuable upon the exercise of class B warrants
(Note 8). The class B warrants are  identical  to class A warrants,  except that
their   exercise  price  is  $16.80  per  share  (after  giving  effect  to  the
one-for-four  reverse  stock  split),  they are not  included for listing on any
public  trading  market and there is no  solicitation  fee payable in connection
with their exercise. None of the aforementioned class A or class B warrants have
been exercised to date.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements as of and for the years ended December 31,
1996  and 1997  includes  the  accounts  of the  Company  and its  wholly  owned
subsidiary,  Paratech Resources Inc. The consolidated financial statements as of
and for the year ended  December  31, 1998  includes the accounts of the Company
and its wholly  owned  subsidiaries,  Paratech  Resources  Inc.  and  Deltaforce
Personnel  Services,  Inc. All  intercompany  balances and transaction have been
eliminated in consolidation.

Cash Equivalents

The Company  considers  all highly  liquid debt and equity  instruments  with an
original  maturity  of  three  months  or  less  to be  cash  equivalents.  Cash
equivalents  include  investments  in money market funds and are stated at cost,
which approximates market value.

Investments Available for Sale

Statement of Financial  Accounting  Standards No. 115 ("SFAS 115"),  "Accounting
for Certain Investments in Debt and Equity Securities"  addresses the accounting
and  reporting  for  investments  in  debt  and  equity  securities.  Securities
classified  as available  for sale are reported at fair value,  with  unrealized
gains and losses excluded from earnings and reported as a separate  component of
stockholders'  equity  (on  an  after  tax  basis).  Gains  and  losses  on  the
disposition of securities are recognized on the specific  identification  method
in the period in which they occur.

At December 31, 1997 and 1998,  investments available for sale consist of United
States government and agency bonds with original  maturities of one year or less
and a mutual fund.  The cost of debt  securities  is adjusted  for  accretion of
discount to maturity  and  recorded as interest  income and  interest  income is
recorded on the mutual fund as earned.  At December 31, 1997 and 1998,  the cost
basis of these securities approximates market value.

Net Investment in Direct Finance and Sales-Type Leases

The net investment in direct finance and  sales-type  leased assets  consists of
the present value of the future minimum lease payments plus the present value of


                                       F-8
<PAGE>

the residual value, if any (collectively  referred to as the "net  investment").
The residual  value is the  estimated  fair market value of the leased assets at
lease expiration.

Completed lease contracts which qualify as direct finance and sales-type leases,
as defined by Statement of Financial  Accounting  Standards  No. 13, ("SFAS 13")
"Accounting for Leases", are accounted for on the balance sheet by recording the
total minimum lease  payments  receivable,  the estimated  residual value of the
leased equipment and the unearned income.  The unearned lease income  represents
the excess of the total minimum lease payments and the estimated  residual value
expected to be realized,  over the cost of the related  equipment.  The unearned
income is  recognized  as  revenue  over the term of each  lease by  applying  a
constant periodic rate of return to the declining net investment in each lease.

Lease revenue  includes that portion of unearned  income  amortized  into income
during the current period.  Revenue  recognized at the inception of a sales-type
lease is recorded in sales.

Assets Held Under Operating Leases

Assets held under  operating  leases  consist of the  equipment at cost,  net of
accumulated  depreciation.  Depreciation is recognized on a straight-line  basis
over the lease term up to the  Company's  estimate of the  equipment's  residual
value at lease expiration. Accumulated depreciation was approximately $5,148,000
and $4,453,000 at December 31, 1997 and 1998, respectively.

Lease revenue  includes the  contractual  lease  payments and is recognized on a
straight-line basis over the lease term.

Residual Values

The Company's  residual value  estimates are based on current market  conditions
and published residual value projections,  as determined at lease inception.  On
an ongoing  basis,  the Company  compares its residual value  estimates  against
currently  published   independent   forecasts  of  equipment  values  at  lease
expiration as well as other known market  conditions.  If the residual  value is
determined  to be  excessive  and the decline in residual  value is judged to be
other than temporary,  the Company revises its residual values  accordingly with
corresponding  adjustments to income and unearned income. During the years ended
December 31, 1997 and 1998,  the Company  entered into  residual  value  sharing
agreements whereby an equipment investor or a financial  institution purchased a
portion of the  residual  value of the  equipment  on lease in exchange  for the
right to share in  re-marketing  proceeds  received upon lease  expiration.  The
proceeds  received were used to reduce the cost basis and the residual  value in
the leased assets.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that


                                       F-9
<PAGE>

affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company  records  revenues when products are shipped and title  transfers to
the customers or services are provided to customers.  When  equipment is sold to
another computer leasing and trading company (a "broker"), the transfer of title
and recognition of revenue  generally occur upon the receipt of payment from the
broker.

From time to time,  the Company  will receive  payment  prior to the transfer of
title or purchase of the related inventory.  The Company records such amounts as
unearned  sales  revenue on the balance  sheet.  Upon  shipment  and transfer of
title, unearned sales revenue is reversed and recorded as equipment sales.

The Company  records  revenue from the sale of leased  equipment to an equipment
investor upon transfer of title to the  equipment.  Subsequent to a sale of this
variety,  the Company  generally is a party to a  re-marketing  agreement  under
which it may earn  additional  income from the asset's  future  re-lease or sale
value upon lease termination or expiration.

See Net Investment in Direct Finance and Sales-Type Leases and Assets Held Under
Operating Leases for a discussion of revenues earned under leasing transactions.

Sublease Transactions

From time to time, the Company enters into certain transactions in which it acts
as both lessee and sublessor of equipment. Since both the lease and sublease are
operating leases, no related assets or liabilities are recorded on the Company's
balance sheet, other than transactions that are prepaid.

Lease Expense

Lease  expense  includes  depreciation  on assets held under  operating  leases,
interest  expense on  obligations  for financed  equipment  and sublease  rental
expense. The cost of equipment recognized at the inception of a sales-type lease
is reflected in cost of sales.

Income Taxes

At its inception, the Company elected status as an S corporation and, therefore,
through  December  31, 1995 was not subject to federal  income tax as a separate
entity. Instead, the shareholders were taxed on the Company's income, whether or
not distributed, and they were entitled to deduct Company losses, if any, to the
extent of the tax basis each  shareholder had in the Company's common stock. The
Company  had been  subject to certain  corporate  taxes on the state  level.  In
connection  with its  initial  public  offering  described  above,  the  Company


                                       F-10
<PAGE>

terminated  its S election  and is  currently  taxable as a C  corporation.  The
adjustment to record deferred  income taxes upon  termination of the Company's S
election was to record a net  deferred  income tax  liability  of  approximately
$430,000 in 1996.

Deferred  income  taxes are  provided  for  temporary  differences  between  the
carrying  values of assets  and  liabilities  for  financial  reporting  and tax
purposes at the enacted rate at which these  differences are expected to reverse
in  accordance  with  Statement  of  Financial  Accounting  Standards  No.  109,
"Accounting for Income Taxes".

Net Loss Per Common Share

Effective December 31, 1997, the Company adopted the  disclosure-only  Statement
of Financial  Accounting Standards No. 128 ("SFAS 128") "Earnings per Share". In
accordance  with SFAS 128,  basic loss per common  share is computed by dividing
net loss by the weighted  average  number of common shares  outstanding.  Common
stock  equivalents  are  excluded  from the  computation  as they  would have an
anti-dilutive effect.

Stock-Based Compensation

In 1996,  the Company  adopted the  disclosure-only  provisions  of Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation",  by continuing to apply the  provisions of Accounting  Principles
Board ("APB") Opinion No. 25,  "Accounting for Stock Issued to Employees," while
providing  the  required pro forma  disclosures  as if the fair value method had
been applied (Note 10).

Reclassifications

Certain  prior year amounts have been  reclassified  to conform with the current
year presentation.

3.       ACQUISITIONS

Deltaforce Personnel Services, Inc.

On January 9, 1998,  the  Company  acquired  100% of the  outstanding  shares of
Deltaforce Personnel Services,  Inc.  ("Deltaforce"),  a privately held New York
City-based staffing company, for approximately $560,000, which included $162,500
of  notes   payable.   The   acquisition   agreement   provides  for  additional
consideration  of  $162,500  to be  paid if the  acquired  entity's  results  of
operations exceed certain targeted levels. This additional consideration will be
recorded when earned as additional purchase price. The acquisition was accounted
for as a purchase and accordingly the operating  results of Deltaforce have been
included in the Company's  consolidated  financial  statements since the date of
the acquisition.  The excess of the aggregate purchase price over the net assets
acquired of approximately $463,500 is being amortized over 15 years.



                                       F-11
<PAGE>

RBW Staffing Resources, Inc.

On July 28, 1998, Deltaforce, a wholly owned subsidiary of the Company, acquired
certain   assets  from  RBW  Staffing   Resources,   Inc.   (d/b/a   WordSmiths)
("WordSmiths"),  a privately  held New York  City-based  staffing  company,  for
approximately   $440,000,   which  included  $100,000  of  notes  payable.   The
acquisition  was  accounted  for as a purchase  and  accordingly  the  operating
results of WordSmiths have been included in the Company's consolidated financial
statements  since  the date of the  acquisition.  The  excess  of the  aggregate
purchase price over the net assets acquired, of approximately $440,000, is being
amortized over 15 years. In connection with this acquisition, Deltaforce entered
into  non-compete  agreements  with  two key  executives  of  WordSmiths  for an
aggregate  consideration of $460,000,  $60,000 of which was paid at closing with
$150,000  due on  July  28,  1999  and  $250,000  due on  July  28,  2000.  Such
non-compete agreements are included in other assets and are being amortized over
the term of the agreement of 5 years. In addition, simultaneous with the closing
of the  transaction,  the Company entered into an employment  agreement with the
former  shareholder of WordSmiths (the  "Shareholder").  Under the terms of this
agreement, the Company sold 162,500 shares of newly issued $.04 par value common
stock to the Shareholder as follows:  (1) 81,250 shares at $4.00 per share,  and
(2) 81,250 shares at $6.00 per share.  The  Shareholder  paid for the stock with
cash equal to the par value of the shares issued ($6,500) and by the issuance of
two  non-recourse   secured   promissory  notes  and  stock  pledge   agreements
restricting  the  issuance  of the stock  until the notes are paid in full.  The
notes  mature on July 27,  2000 and July 27,  2001,  respectively  (Note 7). The
operations of WordSmiths were merged into Deltaforce to create The DeltaGroup.

Abbey, Garrett and Seth, Ltd.

On October 23, 1998, Paratech Resources,  Inc., a wholly owned subsidiary of the
Company,  acquired 100% of the  outstanding  shares of Abbey,  Garrett and Seth,
Ltd.  (d/b/a:  Comptech  Resources)  ("Comptech"),   a  privately  held  systems
consulting,  software  applications and Internet commerce  development firm, for
approximately  $272,000.  The  acquisition  was  accounted for as a purchase and
accordingly  the  operating  results  of  Comptech  have  been  included  in the
Company's  consolidated  financial statements since the date of the acquisition.
The excess of the  aggregate  purchase  price over the net  assets  acquired  of
approximately $574,000 is being amortized over 10 years. In connection with this
acquisition,  the Company  entered into  non-compete  agreements  with three key
executives  for an aggregate  consideration  of $380,000,  $105,000 of which was
paid at closing with $25,000 due quarterly through October 23, 2001.


                                       F-12
<PAGE>

4.       DIRECT FINANCE AND SALES-TYPE LEASES:

The net investment in direct finance and sales-type  leases at December 31, 1997
and 1998 was comprised of the following:

                                                            1997         1998
                                                            ----         ----

Total minimum lease payments receivable                 $39,434,601  $30,895,900
Estimated residual value of equipment                     3,777,595    1,727,787
                                                        -----------  -----------
                                                         43,212,196   32,623,687

Less: unearned income                                     3,270,432    2,564,309
                                                        -----------  -----------
Net investment in direct finance and sales-type leases  $39,941,764  $30,059,378

5.       FUTURE MINIMUM LEASE PAYMENTS:

Future minimum lease rentals to be received by the Company under  non-cancelable
direct finance,  sales-type and operating  leases  expiring  through 2003 are as
follows:

            Years Ending      Direct Finance and        Operating
            December 31,       Sales-Type Leases        Leases
            ------------       -----------------        ------

            1999                     $24,351,494         $4,247,253
            2000                      12,736,497          1,123,815
            2001                       4,942,645            447,032
            2002                         857,975                  -
            2003                         451,393                  -

6.       OBLIGATIONS FOR FINANCED EQUIPMENT - NON-RECOURSE:

Under various  arrangements with banks and financial  institutions,  the Company
finances  substantially  all of its equipment  leases with  non-recourse  notes.
These  notes  provide  for an  assignment  of  future  lease  rentals  to  these
institutions  at fixed interest  rates (which range between 6.0% and 10.8%).  In
exchange  for these  future  rentals,  the Company  receives a  discounted  cash
payment.  In the event of default by a lessee,  the financial  institution has a
first lien on the underlying  equipment,  with no further  recourse  against the
Company.  The underlying  equipment securing these non-recourse notes represents


                                       F-13
<PAGE>

the Company's  assets under direct  finance,  sales-type  and operating  leases,
which book value  totalled  approximately  $45.3  million  and $37.3  million at
December 31, 1997 and 1998, respectively.

Future maturities  through 2003 on the non-recourse notes described above are as
follows:



           Years Ending December 31,                    Lease Payments

           1999                                            $19,631,397
           2000                                              9,632,886
           2001                                              5,034,509
           2002                                                866,600
           2003                                                452,918
                                                           -----------
                                                            35,618,310
     Less: Interest                                          2,182,851
                                                           $33,435,459
                                                           ===========

7.       NOTES PAYABLE AND OTHER FINANCING:

Notes payable were comprised of the following at December 31, 1997 and 1998:

                                                        1997             1998
                                                        ----             ----

    Notes payable to financial institutions (a)      $2,324,611       $1,601,990
    Credit facilities (b)                               331,754        1,773,699
    Notes payable related to acquisitions (c)                 -          937,500
                                                     ----------       ----------
                                                     $2,656,365       $4,313,189
                                                     ==========       ==========

(a)      During 1997 and 1998,  the Company  entered  into a total of nine notes
         payable agreements totalling approximately  $2,925,000 with a financial
         institution  to finance  the  residual  value of certain  equipment  on
         lease,  at an interest  rate of prime (8.50% at December 31, 1998) plus
         0.25%. Interest is payable quarterly and the principal amount is due 60
         days after lease expiration.  These notes mature through the year 2001.
         The equipment on lease and the related  lease serve as  collateral  for
         the notes payable.

         Also in 1997, the Company entered into a similar  arrangement  with the
         same  institution  for  $238,056 of residual  value  financing  bearing
         interest  at prime  (8.50% at  December  31,  1998) plus 0.50%  payable


                                       F-14
<PAGE>

         semi-annually.  The entire  principal amount is due 60 days after lease
         expiration  (November 30, 1999). The equipment on lease and the related
         lease serve as collateral for this note payable.

         The  Company  entered  into  similar  notes payable  in  the  amount of
         $1,254,000  and  $18,036 with the  same institution in  early 1997  and
         1998, and repaid the loans in the same year.

(b)      In December 1997, the Company entered into a loan agreement with a bank
         for a $2,000,000  credit facility,  which expires on December 30, 1998,
         to finance the purchase of equipment on leases that are approved by the
         bank. The bank will issue notes equal to the discounted rental payments
         under the leases being financed using the bank's current interest rate.
         The notes are  payable  monthly as the lease  payments  become  due. As
         collateral  for the  notes,  the  bank  has a first  priority  security
         interest in the equipment and the underlying lease. Under the agreement
         the Company is required to maintain  certain  financial  ratios.  As of
         December  31,  1998,  the Company was not in  compliance  with the debt
         covenant requiring  tangible net worth of at least $6.7 million.  As of
         December 31, 1998,  the Company had $106,000  outstanding  at a rate of
         8.08%.  Annual  maturities  are  $87,000  and $19,000 in 1999 and 2000,
         respectively.

         The Company  maintains a $2,000,000  revolving line of credit agreement
         with a  finance  company,  for it's  subsidiary  Paratech,  secured  by
         accounts  receivable of Paratech.  Interest on  outstanding  borrowings
         accrues at the prime rate  (8.50% at  December  31,  1998) plus 1 1/2%.
         Borrowings  are limited to 85% of eligible  accounts  receivable.  This
         facility  allows the Company to  purchase  computer  hardware  from its
         vendors with net 30-day terms  interest  free. At the expiration of the
         net 30-day period,  the Company has the option of paying the amount due
         or, provided the Company has sufficient eligible collateral,  borrowing
         under the credit  facility.  As of  December  31,  1998,  Paratech  had
         $464,000  outstanding under this line, of which $194,000 was classified
         as debt.

         In addition,  in  connection  with the  acquisition  of  Comptech,  the
         Company assumed all outstanding obligations under a similar arrangement
         between Comptech and the same finance company. As of December 31, 1998,
         approximately  $440,000 remained outstanding under this facility.  This
         facility must be repaid in full by July 23, 1999.

         In April 1998,  the Company  entered  into a $500,000  term loan with a
         bank  collateralized  by $600,000 in cash  maintained  in an investment
         account.  Interest accrues at a rate of 8.03% and principal payments of
         approximately $41,600 and interest are due on a quarterly basis through
         April 20, 2001. As of December 31, 1998, approximately $417,000 remains
         outstanding under this agreement.

         In January 1998, the Company entered into a $750,000  revolving line of
         credit  agreement  with a bank  secured by  accounts  receivable  which
         expires on June 30, 1999. Interest on outstanding borrowings accrues at
         the  bank's  prime  rate  (8.50% at  December  31,  1998)  plus 1%, and
         interest  is paid  monthly.  Borrowings  are limited to 80% of eligible
         accounts receivable.  As of December 31, 1998, $600,000 was outstanding
         under this line.

                                       F-15
<PAGE>

(c)      In connection  with the  acquisitions  described in Note 3, the Company
         entered into  promissory  notes with several  individuals.  Interest on
         such notes ranges from 0% to 8.50%.  The interest  components  of those
         non-interest  bearing  notes  are  immaterial.  Annual  maturities  are
         $512,500, $350,000 and $75,000 in 1999, 2000 and 2001, respectively.

Additional Financing

During 1997, the Company entered into several residual value sharing  agreements
whereby a financial  institution  agreed to  purchase a portion of the  residual
values of the  equipment on lease for  approximately  $4,629,000 in exchange for
the right to share in re-marketing proceeds received upon lease expiration.  The
proceeds  received  were used to reduce the  Company's  cost basis and  residual
value in the leased assets.

Secured Bridge Line

This  facility  has been  arranged  with  three  banks in the  total  amount  of
$1,250,000,  for the purpose of financing  the cost of equipment  purchased  for
sale or lease, on a short-term  basis,  generally  payable in 30 to 90 days. The
lending banks are given a first security  interest in both the equipment and the
contract  for sale or lease.  The above  secured  line also  includes a $100,000
unsecured  working capital line. The interest rate charged for these  borrowings
is a floating 1% over the banks' prime lending rate, 8.5% and 9% at December 31,
1997 and 1998,  respectively.  As of December 31, 1997 and 1998, no amounts were
outstanding under these facilities. Both lines expired on June 30, 1998.

8.       INCOME TAXES:

The provision for (benefit from) income taxes is comprised of the following:

                                       F-16
<PAGE>

                                                  Years Ended December 31,
                                            ------------------------------------
                                             1996           1997          1998
                                             ----           ----          ----
   Current:
         Federal                            $    --      $     --       $     --
         State                               72,550        63,703         43,328
                                            -------      --------       --------
                                             72,550        63,703         43,328
                                            -------      --------       --------
   Deferred:
         Federal                            (82,583)     (251,928)     (532,055)
                                            -------      --------       --------
         State                              (12,145)      (99,886)      (82,362)
                                            -------      --------       --------
                                            (94,728)     (351,814)     (614,417)
                                            -------      --------       --------
   Valuation allowance                       90,000            --       561,803
                                   ==        -------      --------      --------
   Termination of Subchapter "S" election   430,390            --             --
                                            --------      --------      --------
                  Total                    $498,212      $(288,111)     $(9,286)
                                           ========      =========     =========

Significant  components of deferred income tax assets and  (liabilities)  are as
follows:

                                                         1997          1998
                                                         ----          ----

  Depreciation                                         $263,757     $655,323
  Lease transactions treated differently for tax
   and financial reporting purposes                    (803,095)    (726,226)
  Net operating loss carry forward                      471,698      600,320
  Other                                                  83,792      122,386
  Valuation allowance                                   (90,000)    (651,803)
                                                       --------    ---------

Net deferred income tax (liability)                   $ (73,848)   $      --
                                                      =========    =========

The following  reconciliation  presents the principal reasons for the difference
between income taxes  calculated at the United States federal  statutory  income
tax rate (34%) and the provision for (benefit from) income taxes:


                                       F-17
<PAGE>

                                                   Years Ended December 31,
                                              ----------------------------------

                                                 1996       1997         1998
                                                 ----       ----         ----

Federal income tax benefit at U.S statutory
  rate                                        $(104,108)  $(266,713)  $(626,651)
Subchapter "C" impact of SFAS 109               430,390           -           -
Change in valuation allowance                    90,000           -     561,803
State taxes, net of federal benefit              36,583      39,547      43,328
All other, net                                   45,347     (60,945)     12,234
                                              ---------   ---------  ----------

Provision for (benefit from) income taxes      $498,212   $(288,111) $   (9,286)
                                               ========   =========  ===========

The  Company  has net  operating  loss  carryforwards  for income tax  reporting
purposes of  approximately  $1,539,000  expiring  through 2013. A full valuation
allowance  has been  provided  against  the net  deferred  tax  asset due to the
uncertainty at December 31, 1998 as to their future realization.

9. SHAREHOLDERS' EQUITY:

In connection with the  recapitalization  of the Company in contemplation of its
initial  public  offering,  in August  1995,  the  Company's  Board of Directors
approved a stock split of  approximately  33,018.86792-to-one,  in the form of a
stock dividend to the Company's common shareholders.  Par value changed to $0.01
per share from $1.00 per share.  The stock dividend  resulted in the issuance of
3,499,894  additional  shares of common stock,  for a total of 3,500,000  shares
outstanding  subsequent to the split.  This action  required an amendment to the
Company's  Articles of  Incorporation,  which increased the number of authorized
shares of common stock from 1,000 to 35,000,000 and authorized  5,000,000 shares
of preferred  stock.  Effective May 19, 1998, the Board of Directors  approved a
reduction of the authorized  number of shares of common stock from 35,000,000 to
17,500,000 and  authorized a  one-for-four  reverse stock split of the Company's
common  stock.  The par value of the common  stock was  increased  from $0.01 to
$0.04 per share.  The preferred  stock  remained  unchanged.  All  shareholders'
equity accounts and per share data have been  retroactively  adjusted to reflect
this reverse split.

See Note 1 for a description  of the Company's  initial  public  offering of its
securities.

During the year ended  December 31, 1997,  the Board of Directors of the Company
approved a plan that would allow for the  repurchase of up to $500,000  worth of
common stock of the Company.  The repurchase program took effect immediately and
is  authorized  to  continue  for a period of two years.  Subject to  applicable
rules,  the plan allows the Company to repurchase  shares at any time during the
authorized  period in any  increments it deems  appropriate.  As of December 31,


                                       F-18
<PAGE>

1997 and 1998, the Company had  repurchased  12,500 and 24,500 shares for a cash
purchase price of $29,365 and $21,240, respectively.

10.      STOCK OPTION PLANS:

Employee Stock Option Plan

On  August  28,  1995,  the  Board  of  Directors   adopted  and  the  Company's
shareholders  approved the Employee  Stock Option Plan (the "Stock Option Plan")
for all senior executive officers,  key employees and consultants of the Company
pursuant to which 187,500 shares of common stock were reserved for issuance.  In
June  1997,  the Board of  Directors  approved  an  amendment  to  increase  the
aggregate  number of shares of common  stock  reserved  for  issuance by 187,500
shares, for a total of 375,000.  Options granted under the Stock Option Plan may
be either  incentive  stock  options  ("ISO's"),  which are intended to meet the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options ("NSO's"). Under the Stock Option Plan, the Board of
Directors  may grant (i) ISO's at an exercise  price per share which is not less
than the fair market  value of a share of common stock on the date on which such
ISO's are granted  (and not less than 110% of the fair market  value in the case
of any optionee who beneficially owns more than 10% of the total combined voting
power of the  Company),  and (ii) NSO's at an exercise  price per share which is
determined by the Board of Directors (and which may be less than the fair market
value of a share of common  stock on the date on which such NSO's are  granted).
The Stock Option Plan further  provides that the maximum period in which options
may be exercised will be determined by the Board of Directors, except that ISO's
may not be exercised after the expiration of ten years from the date the ISO was
initially  granted (and five years in the case of any optionee who  beneficially
owns more than 10% of the  total  combined  voting  power of the  Company).  Any
option  granted under the Stock Option Plan will be  nontransferable  and may be
exercised  upon payment of the option price in cash, a cash  equivalent,  common
stock or any other form of  consideration  which is  acceptable  to the Board of
Directors.

Of the total options  granted,  21,250 options in 1997 and 0 options in 1998 are
exercisable  after one year and the  remaining  20,000 and  144,750  options are
exercisable  in  whole  or in  part  20%  per  year  from  the  date  of  grant,
respectively. As of December 31, 1998, none of the options were exercisable.

The following table reflects  activity under the Stock Option Plan for the years
ended December 31, 1997 and 1998 :

                                       F-19
<PAGE>

                                                                     Weighted
                                                                      Average
                                  Shares        Exercise Price    Exercise Price
Outstanding, December 31, 1996          -                    -        $    -
Granted                            52,500       $0.59 -- $2.38          1.81
Canceled                          (11,250)       0.59 --  1.76          1.11
                                 --------

Outstanding, December 31, 1997     41,250        1.50 --  2.38          2.00
                                 --------       --------------        ------
Granted                           150,000        0.44 --  2.50          1.02
Canceled                           (5,250)       0.44 --  1.50           .99
                                 --------       --------------        ------

Outstanding, December 31, 1998    186,000       $0.44 -- $2.38         $1.24
                                 ========       ==============        ======

The 186,000 options  outstanding as of December 31, 1998 have a weighted average
remaining contractual life of 9.25 years.

The Company  accounts  for these plans under APB Opinion No. 25,  under which no
compensation  has  been  recorded.  Had  compensation  cost  for the  plan  been
determined  in  accordance  with SFAS 123, the Company's net loss and basic loss
per common share would have been decreased to the following pro forma amounts:

                                                     1997           1998
                                                     ----           ----

    Net Loss                     As Reported       $496,338      $1,833,804
                                 Pro Forma          518,148       1,849,110

   Basic loss per common share   As Reported           $.25            $.89
                                 Pro Forma             $.26            $.89

The fair value of each stock  option  grant is estimated as of the date of grant
using the Black-Scholes option pricing model with the following weighted average
assumptions:

                                                  1997             1998
                                                  ----             ----
               Fair value                         $0.25            $0.59
               Expected life (years)              3.45             3.87
               Risk-free interest rate            6.5%             4.8%
               Volatility                         71%              73%
               Dividend yield                     0%               0%


                                       F-20
<PAGE>

The pro form effects of applying SFAS 123 are not  indicative of future  amounts
because stock option awards are anticipated in future years.

Director Option Plan

On October 1, 1995,  the Board of  Directors  of the  Company  adopted,  and the
Company's  shareholders approved, the Director Option Plan (the "Director Plan")
pursuant to which 12,500 shares of common stock of the Company were reserved for
issuance upon the exercise of options granted to  non-employee  directors of the
Company.  Under the Director  Plan,  an eligible  director of the Company  will,
after  having  served  as  a  director  for  one  year,   automatically  receive
non-qualified  stock options to purchase 500 shares of common stock per annum at
an exercise  price equal to the fair market  value of such shares at the time of
grant of such options.  Each option is immediately  exercisable  for a period of
ten years from the date of grant but generally may not be exercised more than 90
days after the date an optionee  ceases to serve as a director  of the  Company.
The Company has adopted SFAS 123 to account for stock-based  compensation awards
granted to non-employee directors, under which a compensation cost is recognized
for the fair  value  of the  options  granted  as of the  date of  grant.  As of
December 31, 1998, there were no options granted to directors under the Director
Plan.

11.      EMPLOYEE SAVINGS PLAN

The Company has an employee  savings  plan which covers all  employees  who have
completed at least one year of service with the Company and permits participants
to make  contributions  by salary  reduction  pursuant to section  401(k) of the
Internal Revenue Code. Company  contributions are discretionary.  As of December
31, 1997 and 1998, the Company did not make any contributions to the plan.

12.      SEGMENT INFORMATION

Effective  December 31,  1998,  the Company  adopted SFAS No. 131,  "Disclosures
about Segments of an Enterprise and Related  Information".  Reportable operating
segments  are  determined  based upon the  Company's  management  approach.  The
management  approach,  as defined by SFAS No.  131, is based on the way that the
chief  operating  decision maker organizes the segments within an enterprise for
making  operating  decisions  and  assessing  performance.  While the  Company's
results of operations are primarily reviewed on a consolidated  basis, the chief
operating decision maker also manages the enterprise in three segments: (i) high
technology   equipment   leasing   ("Paramount"),   (ii)  business   integration
("Paratech"),  and (iii)  legal  support  staff  ("DeltaGroup").  The  following
represents  selected  financial  information for the Company's  segments for the
years ended December 31, 1996, 1997 and 1998:


                                       F-21
<PAGE>


                       Paramount     Paratech    DeltaGroup    Total
                       ---------     --------    ----------    -----
    1996
    ----

    Revenues           $31,195,984   $156,532    $       --    $31,352,516
    Cost of sales       25,643,426     141,596           --     25,785,022
    Net loss              (783,271)    (21,140)          --       (804,411)
    Assets              51,181,503     380,017           --     51,561,520

    1997
    ----
    Revenues            28,620,168    3,774,673          --    32,394,841
    Cost of Sales       16,871,078    3,062,135                19,933,213
    Net income (loss)      231,251     (727,589)         --      (496,338)
    Assets              51,956,164    1,106,297          --    53,062,461

    1998                                                       Total
    ----                                                       -----
    Revenues            29,090,851    5,411,945   3,982,695    38,485,491
    Cost of sales       20,536,854    4,453,016   3,167,396    28,157,266
    Net loss              (784,797)    (545,290)   (503,717)   (1,833,804)
    Assets              40,559,376    2,581,710   2,105,524    45,246,610


                                       F-22
<PAGE>


13.      SIGNIFICANT CUSTOMERS AND CONCENTRATION OF CREDIT:

For the years ended December 31, 1996,  1997 and 1998,  the following  customers
represented in excess of 10% of total revenues for the respective years:

      Customer           1996                1997               1998
      --------           ----                ----               ----

      A                  40%                 -                  -
      B                  25%                 -                  -
      C                  -                   47%                -
      D                  -                   14%                51%
      E                  -                   -                  11%


The  Company's  net  investment  in  direct  finance  and  sales-type  leases is
concentrated primarily with end users of the computer equipment. The Company has
various  arrangements  with  banks and  financial  institutions  in which  lease
receivables  are assigned to the  institutions in exchange for a discounted cash
payment.  This  financing  is in the form of  non-recourse  notes,  in which the
financial  institution  has a first  lien on the  underlying  equipment  with no
further  recourse  against  the  Company.  Therefore,  the Company has no credit
exposure from these assigned leases.

14.      COMMITMENTS:

Operating Leases

The Company leases two office  facilities and office  equipment  under operating
leases  expiring   through   November  2002.  Total  rent  expense  amounted  to
approximately   $45,000,   $90,000  and   $184,000  in  1996,   1997  and  1998,
respectively.  Total minimum lease payments due under  non-cancelable  operating
leases are as follows:

                     1999                            $202,480
                     2000                             156,000
                     2001                             156,000
                     2002                             143,000

Employment Agreements

In 1998, the Company has entered into employment  agreements with two executives
expiring  through  the end of 1999 with  aggregate  minimum  payments  totalling
$655,000.

                                       F-23
<PAGE>

In connection  with the acquisitions  described in Note 3, the Company  has also
entered into employment agreements, with five executives through the end of 1999
with aggregate minimum payments totaling $770,000.

15.      SUBSEQUENT EVENT (UNAUDITED)

On March 3, 1999,  Paratech  acquired  certain  assets of Web Business  Systems,
Inc., a privately held New York based web hosting and development company, for a
total  purchase  price of $80,000.  The  acquisition  will be accounted for as a
purchase;  accordingly  the purchase  price will be allocated to the  underlying
assets and liabilities  based on their  respective  estimated fair values at the
date of acquisition.



                                      F-24
<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of Section 23 or 15(d) of the Securities
Exchange Act of 1934,  the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                              PARAMOUNT FINANCIAL CORPORATION


Dated:  February 29, 2000                     By: /s/
                                                  Glenn Nortman,
                                                  Chief Executive Officer