UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                   FORM 10-KSB
(Mark one)
         X          Annual Report Pursuant to Section 13 or 15(d) of the
                    Securities Exchange Act of 1934
       ------
                    FOR THE FISCAL YEAR ENDED AUGUST 31, 1999
       ______       Transition Report Pursuant to Section 13 or 15(d) of the
                    Securities Exchange Act of 1934

                         Commission File Number 0-22969
                                 Paladyne Corp.
                 (Name of Small Business Issuer in its charter)

                             Delaware                      59-3562953
                 (State or other jurisdiction of        (I.R.S. Employer
                 incorporation or organization)        Identification No.)

          610 Crescent Executive Court, Suite 124, Lake Mary, FL 32746
       (Address of principal executive offices)                 (Zip Code)

                    Issuer's telephone number: (407) 333-2488


Securities to be registered under Section 12(b) of the Exchange Act:  None

      Securities to be registered under Section 12(g) of the Exchange Act:
                     Common Stock, par value $.001 per share
                                (Title of Class)

          Check whether the issuer (1) filed all reports required to be filed
under Section 13 or 15(d) of the Exchange Act during the past 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
   ---   ---

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation SB contained in this form, and no disclosure will 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-KSB
or any amendment to this form 10-KSB. Yes X  No
                                         ---   ---

State the issuer's revenue for its most recent fiscal year:$4,365,852

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask prices of such stock as of December 10, 1999: $10,412,490

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.

--------------------------------------------------------------------------------
                                                     Outstanding as of
                   Class                             December 10, 1999
--------------------------------------------------------------------------------
Common Stock, par value $.001 per share                   7,356,229
--------------------------------------------------------------------------------

                    Documents Incorporated by Reference: None
Transitional Small business Disclosure Format. Yes    No X
                                                  ---   ---


<PAGE>

PALADYNE CORP.

FORM 10-KSB

TABLE OF CONTENTS
                                                                           PAGE
                                                                           ----
                                      PART I

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

ITEM 2.   Description of Property........................................... 8

ITEM 3.   Legal Proceedings................................................. 9

ITEM 4.   Submission of Matters to a Vote of Security
          Holders........................................................... 9

                                     PART II

ITEM 5.   Market for Common Equity and Other Shareholder
          Matters........................................................... 9

ITEM 6.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations......................................... 12

ITEM 7.   Financial Statements. ............................................ 13

ITEM 8.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure............................... 44

                                    PART III

ITEM 9.   Directors, Executive Officers, Promoters
          and Control Persons; Compliance with Section
          16(a) of the Exchange Act..........................................45

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

ITEM 11.  Security Ownership of Certain Beneficial
          Owners and Management..............................................50

ITEM 12.  Certain Relationships and Related Transactions.....................52

                                    PART IV

ITEM 13.  Exhibits and Reports on Form 8-K...................................54

Signatures...................................................................56


<PAGE>


RISK FACTORS AND CAUTIONARY STATEMENTS

Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by the statements, including, but not limited to, the
following: the ability of the Company to provide for its debt obligations, to
provide working capital needs from operating revenues, to obtain additional
financing needed for any future acquisitions, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange Commission.

ITEM  1.

The following information relates to Paladyne Corp., a Delaware corporation. On
March 5, 1999, the Company merged with and into Paladyne Corp., its wholly owned
subsidiary, in a migratory merger, and Paladyne Corp. is the successor Company.
The purpose of the merger was simply to change the name of the Company and
re-incorporate the Company in Delaware to utilize more favorable corporate
taxation regulations. The financial statements in this report are of Synaptx
Worldwide, Inc. for all periods through the date of the migratory merger, and of
Paladyne Corp. since that date.

DESCRIPTION OF BUSINESS

Paladyne Corporation (the "Company") through its operating subsidiaries provides
seamless data integration and data quality software and services that enable its
customers to carryout customer-centric mailing, marketing and e-commerce
initiatives. The company also provides the database-related services of customer
identification, customer and prospect database development and management, data
integration and marketing campaign management.

Currently, the Company provides these services by engaging subcontractors to
perform the bulk of the activity, but management has undertaken an initiative to
build these capabilities internally via the acquisition of "Bradas", a company
formed to develop database software tools. In February, 1999, the Company agreed
to purchase the intellectual property of Bradas, including the initial framework
of what has become the Datagration e-Business Suite, a collection of software
tools that enable clients to effectively and efficiently build high data quality
databases, for 60,000 shares of common stock, 45,000 of which have been issued
at a value of approximately $49,000 and 15,000 shares of common stock and
400,000 stock warrants that will be issued based on the attainment of certain
predefined milestones. Additionally, the Company agreed to assume approximately


<PAGE>


$32,000 of debt incurred by Bradas' founder in the initial stages of creating
this tool. The Company agreed to fund the completion of the product including
providing necessary funding for both equipment and personnel to complete the
product and maintain and upgrade it.


The Company intends to build its business through internal growth as well as
seek acquisitions, should opportunities become available, of existing companies.
Except for the acquisition consummated, as described above, the Company has no
agreements or understandings regarding possible future acquisitions. The
Company's fiscal year ends August 31.

HISTORY

The predecessor Company was incorporated on June 25, 1981 under the laws of the
State of Utah and initially engaged in the acquisition and development of
mineral resource prospects. The predecessor Company subsequently ceased its
operations and became inactive for several years. In 1995, the predecessor
Company began to actively investigate and seek mergers with or acquisitions of
operating businesses.

On February 10, 1997, the predecessor Company entered into a merger agreement
(the "Merger") with Worldwide Applied Telecom Technology, Inc., a Delaware
corporation, ("WWATT"). As a result of the Merger, WWATT was merged with and
into the predecessor Company with the predecessor Company being the surviving
corporation, and the predecessor Company changed its corporate name to Synaptx
Worldwide, Inc. For accounting purposes, the transaction has been treated as a
recapitalization of WWATT, or a reverse merger, with WWATT being treated as the
acquirer.

Effective March 5, 1999, Synaptx Worldwide, Inc., a Utah Corporation, merged
with and into Paladyne Corp., in a migratory merger, and Paladyne Corp. is the
surviving Company.

In fiscal year 1998, the Company changed its strategy from one of acquiring and
growing mainly distribution companies to one of developing, both through
internal creation or through outsource arrangements, the database services
described above. This shift is a result of what Management feels is a greater
opportunity and a greater chance of achieving profitable operations on a
long-term basis.

The prior strategy was to initially build a nationwide sales force that would be
in place to support the products manufactured by the companies the Company hoped
to someday acquire. In support of that strategy, the Company acquired three
manufacturers' representative companies, and opened and staffed an additional
two offices, all between June 1997 and June 1998. Due to the underperformance of
these companies as a whole, and the shift in business focus and strategy, all of
the Company's manufacturers' representative companies discontinued operations


<PAGE>


and were sold in fiscal 1999. A summary of these transactions, from a
chronological standpoint is below.

         Wholly-Owned               Acquired/                 Disposed/
         Subsidiaries               Opened                    Closed
         ------------               --------                  ---------
         ORAYCOM                    June, 1997                November, 1998
         WG Controls                January, 1998             May, 1999
         Primus Marketing           June, 1998                May, 1999

         Offices Opened
         --------------
         dba Advantage
           Technologies             October, 1997             November, 1998
         dba Patterson
           Communications           January, 1998             July, 1999

Throughout financial presentations and discussions in this document, the results
of these businesses are reflected as discontinued operations in accordance with
generally accepted accounting principles.

The Company's principal executive offices were moved in October, 1999 to 610
Crescent Executive Court, Suite 124, Lake Mary, FL 32746 and its telephone
number is (407) 333-2488.

PRODUCTS AND SERVICES:

The Company's products and services fulfill the data integration and data
quality needs of clients in the Telecommunications, Direct Marketing, Internet,
Cable TV and Utility industries. The Company currently offers these services via
subcontractor arrangements with third party vendors. As described above, the
Company is developing these capabilities internally, and plans to be offering
the internally generated product in fiscal 2000.

The Company's software product under development, the Datagration e-Business
Suite, is a component-based data integration and data quality solution built
upon an open, multi-tiered, cross platform architecture. Other significant
services being offered are outsourced marketing and prospecting database
development and management, and customer identification and householding. These
services enable clients to more effectively find new and retain existing
customers.

BUSINESS DEVELOPMENT AND STRATEGY:

Through the development of its internal capabilities to service its clients'
database needs, Paladyne's vision is to help businesses fully realize the
financial rewards of e-commerce by providing enterprise class web-enabled
e-business solutions. Management believes the Company will achieve this vision
by becoming a leading provider of e-business software and services that enable
the enterprise to achieve true customer-centric data integration and data
quality over the Internet.


<PAGE>


The Company intends to fulfill its mission by solving data integration and data
quality business problems initially within the Telecommunications and Direct
Marketing industries. While the Company currently does provide this, it is
provided via outsource arrangements with third party vendors.

The telecommunications ("telco") industry has grown from a regulated,
monopolistic environment to a government-mandated, competitive environment. As a
result of its regulated history, the Telco Industry is by nature a
network-centric industry since the regulatory environment previously rewarded
high quality universal service. The network providers are, out of necessity,
beginning the movement from a network to a customer focus.

Management believes the market for both network and customer management software
and services will grow tremendously over the next several years as a result of
this shift to a customer-centric industry. In that same period, Management
expects the market for the software and services subset to grow
disproportionately faster. The intended focus will be on developing software and
services that enable the client to correctly identify its customers across the
enterprise and enhance the value of the services the client offers, identify,
target, and acquire prospective customers for the client's services, and
ultimately retain desirable customers of that service.

The Direct Marketing Industry, and more specifically the potential of one-to-one
relationship selling, has grown extraordinarily fast with the general market
acceptance of the Internet as a means to obtain products and services. Direct
marketers must integrate data from disparate sources to complete transactions,
produce contact and mailing lists and build customer and prospect databases. In
addition to managing traditional internal and external data sources, direct
marketers must now obtain and exchange data via the Internet.

STRATEGIC ALLIANCE

Strategic Alliance: Direct Services, Inc.

The Company has formed a strategic alliance with Direct Services, Inc. of
Miramar, Florida ("DSI"). DSI is currently the key provider of database analysis
services provided by the Company. Though not currently supported by a long-term
contract, the companies worked together throughout fiscal years 1998 and 1999 to
provide these services and are working toward formalization of the relationship.
This vendor represented approximately 61% and 29% of cost of service revenues
for fiscal 1999 and 1998 respectively. The Company hopes to become less
dependent on this supplier as it develops its own internal capabilities. Should
this relationship terminate, management believes that such services can be
readily obtained from other sources as well as provided internally with minimal
interruption in service at a similar cost.


<PAGE>


POTENTIAL NEW ACQUISITIONS AND PRODUCT LINES

The above are the stated future goals of the Company, and the existing
subsidiaries and strategic relationships in place to pursue those goals.
However, there can be no assurance that the Company will ever achieve its
expressed goals.

The Company intends to investigate, should opportunities arise, strategic
acquisitions that fit its long-term objectives as financing and business
conditions warrant, although there can be no assurance that the Company will be
able to finalize any future acquisitions. The Company anticipates making future
acquisitions by primarily using its capital stock, employing tax-free exchanges
for the stock of the to-be-acquired companies. If necessary, the Company plans
to finance or seek outside financing for potential requirements of cash.
Although the Company occasionally explores additional acquisition opportunities,
the Company has no agreements regarding such possible future acquisitions. There
can be no assurances that financing for any future acquisitions will be
available on terms acceptable to the Company or at all, or that any future
acquisitions will be consummated.

SALES AND MARKETING

The Company markets and sells its products and services through its professional
employees. All the Company's contractual services and sales relationships are
sold by its professional staff based on past and ongoing relationships with
purchasing decision-makers who normally work in the marketing and sales and
information technologies organizations of clients. These long-term relationships
within the Telecommunications and Direct Marketing industries are the basis for
past and future business.

COMPETITION

The industries to which the Company currently offers and intends to offer its
products and services are highly competitive and characterized by rapidly
changing technologies, evolving industry standards, frequent new product
introductions, and rapid changes in customer requirements. The Company's
competitors will vary from market to market depending upon what companies and
technologies are acquired. Principal competitive factors affecting the market
for products and services include product reputation, quality, performance,
price, professional service, and customer support. Features such as
adaptability, scalability, ability to integrate with other products,
functionality, and ease of use are key product differentiators.

EMPLOYEES

As of December 10, 1999, the Company employed 25 individuals, consisting of 5
executives, 19 professionals and sales representatives, and 1 office staff
personnel. In addition to its full-time employees, the Company uses the services


<PAGE>


of certain outsourced professionals on an as-needed basis. Management presently
anticipates hiring additional employees as business conditions warrant and as
funds become available.

INDUSTRY SEGMENTS

The Company operates in one business segment which is providing software and
services enabling customer-centric data integration and data quality supported
by software development and database, consulting and sales services.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company's principal executive offices were moved effective December 1, 1998
to 615 Crescent Executive Court, Suite 128, Lake Mary, FL 32746. Subsequently,
the space was expanded within the same office park to 610 Crescent Executive
Court, Suite 124. The current lease, the term of which extends for three years,
covers approximately 1,640 square feet at an approximate annual rental rate of
$35,000.

The Company maintains its software and services development center in suburban
Washington D.C., located at 14100 Parke Long Court, Suite H, Chantilly, VA
20151. The lease covers approximately 3,100 square feet of space. The lease
extends for 39 months, from March, 1999 to May, 2002. Monthly rents start at
$3,645 and have a fixed escalation of approximately three and one-half percent
(3.5%) per year on each anniversary date of the lease. On a straight-line basis,
the monthly cost of the lease is approximately $3,900.

The Company also maintains an office in suburban Chicago at 168 E. Highland Ave,
Suite 300, Elgin, IL 60120. The lease covers approximately 19,760 square feet of
space. The lease extends for seven years, from January, 1998 to December, 2004.
Monthly rents start at $10,597 and have a fixed escalation of approximately
three and one-half percent (3.5%) per year on each anniversary date of the
lease. On a straight-line basis, the monthly cost of the lease is approximately
$12,000. The minimum future lease payments on this space are approximately
$775,000 through the end of the lease term.

In November, 1999 the Company shifted corporate administrative functions to
Florida. As a result, the Company anticipates vacating its Elgin, IL office in
fiscal 2000. Management believes there will be minimal cost to vacate this
space, primarily related to the write-off of unamortized leasehold improvements.
In anticipation of this loss, the leasehold improvements have been fully
amortized as of August 31, 1999, resulting in a write off of approximately
$39,000.

The Company believes its current premises are adequate for current purposes and
if necessary would be able to obtain alternative or additional space.


<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

Neither the Company nor any of its subsidiaries is a party to any material
pending legal proceedings.

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

There were no matters submitted to a vote of security holders in the fourth
quarter of Fiscal 1999.

PART II

ITEM 5.  MARKET PRICE FOR COMMON EQUITY AND OTHER RELATED SHAREHOLDER MATTERS

The Company's Common Stock has been traded on a limited basis in the
over-the-counter market and quotations are published on the OTC Bulletin Board
under the symbol "PLDY", and in the National Quotation Bureau, Inc. "pink
sheets" under Paladyne Corp. Prior to the migratory merger discussed previously,
these identifying marks were "SYTX" and Synaptx Worldwide, Inc.

The following table sets forth the range of high and low bid prices of the
Common Stock for each fiscal quarterly period. Prices reported represent prices
between dealers, do not include retail markups, markdowns or commissions and do
not represent actual transactions.

                                        Fiscal Year
                                     1999                 1998
                                     ----                 ----
                                High     Low         High       Low
                                ----     ---         ----       ---
         First Quarter          $2.75    $0.88       $5.00      $2.50
         Second Quarter         $2.00    $0.88       $3.00      $1.50
         Third Quarter          $1.13    $0.31       $3.00      $2.00
         Fourth Quarter         $0.97    $0.25       $3.00      $2.00

(The price information above was obtained from an independent quotation
service).

There is no active secondary market for the Company's stock options or stock
warrants.

The ability of individual shareholders to trade their shares in a particular
state may be subject to various rules and regulations of that state. A number of
states require that an issuer's securities be registered in their state or
appropriately exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to register its
securities in any particular state. Further, most likely the Company's shares
will be subject to the provisions of Section 15(g) and Rule 15g-9 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly


<PAGE>


referred to as the "penny stock" rule. Section 15(g) sets forth certain
requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

The Commission generally defines penny stock to be any equity security that has
a market price less than $5.00 per share, subject to certain exceptions. Rule
3a51-1 provides that any equity security is considered to be a penny stock
unless that security is: registered and traded on a national securities exchange
meeting specified criteria set by the Commission; authorized for quotation on
The NASDAQ Stock Market; issued by a registered investment company; excluded
from the definition on the basis of price (at least $5.00 per share) or the
issuer's net tangible assets; or exempted from the definition by the Commission.
If the Company's shares are deemed to be a penny stock, trading in the shares
will be subject to additional sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors, generally persons with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with their spouse.

For transactions covered by these rules, broker-dealers must make a special
suitability determination for the purchase of such securities and must have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the first transaction, of a
risk disclosure document relating to the penny stock market. A broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of broker-dealers to
trade and/or maintain a market in the Company's Common stock and may affect the
ability of shareholders to sell their shares.

As of December 10, 1999 there were 163 holders of record of the Company's Common
Stock. This amount does not take into account those shareholders whose
certificates are held in the name of broker-dealers or otherwise in street or
nominee name.

Any shares issued on or after March 12, 1997 and/or presently held by affiliates
or controlling shareholders of the Company may be sold pursuant to Rule 144,
subject to the volume and other limitations set forth under Rule 144. In
general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated) who has beneficially owned restricted shares of the
Company for at least one year, including any person who may be deemed to be an
"affiliate" of the Company (as the term "affiliate" is defined under the Act),


<PAGE>


is entitled to sell, within any three-month period, an amount of shares that
does not exceed the greater of (i) the average weekly trading volume in the
Company's Common Stock during the four calendar weeks preceding such sale or
(ii) 1% of the shares then outstanding. A person who is not deemed to be an
"affiliate" of the Company and who has held restricted shares for at least three
years would be entitled to sell such shares without regard to the resale
limitations of Rule 144.

DIVIDEND POLICY

The Company has not declared or paid cash dividends or made distributions in the
past, and the Company does not anticipate that it will pay cash dividends or
make distributions in the foreseeable future, other than preferred dividends
described below. The Company currently intends to retain and invest future
earnings to finance its operations.

As part of the acquisition of WG Controls in January, 1998, the Company issued
Series A Preferred Stock which provides for annual dividends of $0.2975 per
share or $40,800 per year. If the Company's profits are insufficient to pay such
dividends, they will be cumulative and accrued for payment when Company profits
are adequate to fund payment. Accordingly, the Company must meet this obligation
before any dividends can be declared for the benefit of Common Stock
shareholders.

TRANSFER AGENT

The Company has designated American Stock Transfer and Trust, 40 Wall Street,
New York, NY, 10005 as its transfer
agent.


<PAGE>


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

The following information should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this Form 10-KSB.

RESULTS OF OPERATIONS

The following selected financial information has been derived from the Company's
consolidated financial statements. The information set forth below is not
necessarily indicative of results of future operations and should be read in
conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Form 10-KSB.

The following table sets forth the percentage relationships to net sales and
revenues of principal items contained in the Company's Consolidated Statements
of Operations for the two fiscal years ended August 31, 1999 and 1998. The
percentages discussed throughout this analysis are stated on an approximate
basis. Results for both periods presented have been restated to reflect all
disposed of businesses as discontinued operations consistent with the discussion
throughout this report.

                                                      Fiscal Years Ended
                                                          August 31,
                                                      1999        1998
                                                       ----        ----
         Net Service Revenues                        100.0%      100.0%
         Cost of Service Revenues                     79.5%       79.1%
                                                     ------      ------
              Gross Profit                            20.5%       20.9%
         Selling, general and
           administrative expenses                    36.6%       76.8%
                                                     ------       -----
              Operating loss                         (16.1%)    (55.9%)
                  Interest expense                    (1.4%)     (1.5%)
                                                     ------      ------
         Net loss from continuing operations         (17.5%)    (57.4%)

         Net loss from discontinued operations       (13.9%)    (25.5%)

         Net Loss                                    (31.4%)    (82.9%)
                                                     =======    =======

Year Ended August 31, 1999 Compared to Year Ended August 31, 1998

The Company's net service revenues increased by $588,655 or 15.6%, from
$3,777,196 for the fiscal year ended August 31, 1998 ("1998") to $4,365,852 for
the fiscal year ended August 31, 1999 ("1999"). The increase was reflective of
the Company's expanding database capabilities.

One multi - divisional customer in the telecommunications industry accounted for
approximately 87% of sales in the year ended August 31, 1999. Receivables from
this customer represented approximately 94% of total receivables at August 31,
1999. The same customer represented 28% of sales in the year ended August 31,
1998. Receivables from this customer represented approximately 4% of total
receivables at August 31, 1998.


<PAGE>


Cost of service revenues increased by $481,161 in 1999, or 16.1%, from
$2,991,425 in 1998 to $3,472,586 in 1999. This increase is consistent with the
increase in revenues and is mainly attributable to staffing of personnel in the
Company's Database Software and Services center outside Washington, D.C.

The Company is highly reliant on one vendor who performs the bulk of the work
related to database processing activities the Company performs for its clients.
While the Company does intend to develop the capabilities internally to offset
some of the dependence on this vendor, there will be significant need for the
services of this vendor going forward. This vendor represented approximately 61%
and 29% of cost of service revenues for fiscal 1999 and 1998 respectively.

The Company's gross profit margin, was 20.5% and 20.9% for 1999 and 1998,
respectively.

Selling, General and Administrative expenses ("SG&A"), including depreciation
and amortization, decreased by $1,302,749 in 1999 or 44.9%, from $2,899,218 in
1998 to $1,596,469 in 1999. The decrease was primarily related to a write-off in
1998 of goodwill related to the Company's marketing communications subsidiary,
Synaptx Impulse, Inc., of $1,092,894 was non-recurring in 1999.

In fiscal 1999, the Company discontinued its operations of manufacturers'
representative companies. The following table sets forth the results of
operations from these operations in fiscal 1999 and 1998.

                                                  1999               1998
                                                  ----               ----

         Sales                                 $ 2,346,053       $ 2,020,988
         Cost of sales                           1,723,867         1,795,924
                                                 ---------         ---------
           Gross margin                            622,186           225,064
         General and administrative
                  expenses                         551,829         1,187,250
                                                   -------         ---------

         Income (loss) from operations              70,357         (962,186)

         Loss on disposal                          675,194                 -
                                                   -------        ----------

         Net Loss on discontinued
                  operations                     (604,837)         (962,186)
                                                 =========         =========


The results of these operations have been reflected as discontinued operations
throughout this report in accordance with generally accepted accounting
principles.

The increase in gross margin percentage in 1999 is due to the Company closing
the operations of Oraycom and Advantage Technologies in the first quarter
of 1999.  These firms historically operated at negative gross margin.

General and Administrative expenses decreased primarily because of
non-recurring amortization of goodwill related to Oraycom that was written off
in Fiscal 1998 and fewer months of Rep firm operations in 1999. (See
"Description of Business - History)

Net interest expense increased from $55,560 in 1998 to $61,454 for 1999. The
increase of approximately $6,000 is consistent with higher average borrowings
throughout the current year.


<PAGE>


NET OPERATING LOSSES

The Company has accumulated approximately $2,400,000 of net operating loss
carryforwards as of August 31, 1999, which may be offset against taxable income
and income taxes in future years. The use of these losses to reduce future
income taxes will depend on the generation of sufficient taxable income prior to
the expiration of the net operating loss carryforwards. The carryforwards expire
through the year 2019. In the event of certain changes in control of the
Company, there will be an annual limitation on the amount of net operating loss
carryforwards which can be used. No tax benefit has been reported in the
financial statements for the years ended August 31, 1999 or 1998 because there
is a 50% or greater chance that the carryforward will not be utilized.
Accordingly, the potential tax benefit of the loss carryforward is offset by a
valuation allowance of the same amount.

LIQUIDITY AND CAPITAL RESOURCES

The Company's ability to continue as a going concern is contingent upon its
ability to secure additional financing, raise additional equity capital, and
attain profitable operations. In addition, the Company's ability to continue as
a going concern must be considered in light of the problems, expenses and
complications frequently encountered by entrance into established markets and
the competitive environment in which the Company operates. Management believes
that sufficient capital resources will be generated from operations, equity
investment and refinancing of outstanding debt to provide necessary working
capital for fiscal year 2000. The report of the Company's Independent Certified
Public Accountants' includes an explanatory paragraph expressing substantial
doubt regarding the Company's ability to continue as a going concern.

The Company's principal cash requirements are for software development, selling,
general and administrative expenses, outside consultants such as independent
contractors who provide database services, employee costs, funding of accounts
receivable, capital expenditures and funding of acquisitions. The Company's
primary sources of cash have been from private placements of the Company's
Common Stock which raised $1,128,147 of net proceeds in the year ended August
31, 1998, and $476,555 in the current year, plus cash derived from operations.
The Company is investigating various sources for additional financing, including
both equity infusion and debt facility arrangements, though no representation is
made as to the Company's ability to secure either.

For the year ended August 31, 1999, cash decreased from $126,532 at the
beginning of the year to $0 at the end of the year. Net cash used in operating
activities was $529,856 due to the net loss of approximately $1,369,000 and a
net decrease in non-cash working capital items of approximately $175,000, offset


<PAGE>


by non-cash depreciation and amortization expenses of approximately $209,000,
the non-cash loss on discontinued operations of approximately $675,000, and the
non-cash impact of stock options and warrants issued to outside parties for
services of approximately $130,000.

Net cash provided by investing activities in Fiscal 1999 was $53,332
attributable to net cash raised from asset dispositions of approximately
$100,000, and reductions in other assets of approximately $76,000, offset by
fixed asset additions of approximately $122,000.

Net cash provided by financing activities in Fiscal 1999 was $349,992 due
primarily to net proceeds from stock issuance of approximately $482,000 and
additions to short term debt of approximately $19,000, offset by reductions in
bank lines of credit of approximately $42,000 and reductions to long term debt
of approximately $109,000.

In the year ended August 31, 1999, the Company sold 520,538 shares of its Common
Stock via private placements, resulting in net proceeds of $476,555. The
exercise of outstanding options and warrants during the current fiscal year
resulted in net proceeds to the Company of $5,500. Total cash therefore raised
as a result of the issuance of Common Stock was $482,055.

For the year ended August 31, 1998, cash increased from $58,265 at the beginning
of the year to $126,532 at the end of the year. Net cash used in operations was
$1,015,637 attributable to the net loss of $3,131,193, a decrease in accounts
payable of $210,993, and a decrease in deferred revenue of $264,273, offset by
non-cash expense items (depreciation, amortization and goodwill impairment) of
$2,054,418, a decrease in accounts receivable of $356,742, a decrease in other
current assets of $25,284, and an increase in accrued expenses of $154,378.

Net cash used in investing activities in Fiscal 1998 was $341,490, attributable
to net fixed asset additions of $124,114, additions to other assets of $828, and
cash paid for acquisitions of $216,548.

Net cash provided by financing activities in Fiscal 1998 was $1,425,394
attributable to the issuance of Common Stock of $1,184,021, increases in
short-term and long-term debt of $51,316 and $182,123, respectively, and an
increase in bank lines of credit of $7,934.

In the year ended August 31, 1998, the Company sold 590,016 shares of its Common
Stock via private placements, resulting in net proceeds of $1,128,147. The
exercise of outstanding options and warrants during the current fiscal year
resulted in net proceeds to the Company of $32,755. Additionally, vendors
accepted shares of Common Stock and stock options in lieu of cash totaling
$20,755, warrants valued at $2,500 were issued as interest to a short term


<PAGE>


lender, and preferred shares with a par value of $137 were issued in relation to
the WG acquisition. Total cash therefore, raised as a result of the issuance of
stock was $1,184,021.

The Company has a revolving line-of-credit with a bank with maximum available
borrowings of $250,000, due to expire December 31, 1999. The Company intends to
refinance this debt prior to its due date. Borrowings under the line-of-credit
and the outstanding principal and interest on the note are collateralized by
substantially all of the Company's assets and bear interest at the prime rate
(currently 8.25%) plus 1 1/4%. The line-of-credit is further secured by a
personal commercial guaranty of the Company's Chairman and CEO.

The Company also has a note payable to the Chairman and CEO of the Company (see
Note 11 to the financial statements in Part II, Item 7). This balance due on the
note is $150,000 as of the report date and bears interest at 12%.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". This standard
establishes accounting and reporting standards for derivative instruments and
for hedging contracts. This standard is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000. When the Company adopts this
statement, it is not expected to have a material impact on the Company's
financial statements or their presentation.

YEAR 2000 ISSUE

The "Year 2000 Issue" is whether the Company's computer systems will properly
recognize date sensitive information when the year changes to 2000, or "00."
Systems that do not properly recognize such information could generate erroneous
data or cause a system to fail. The Company has conducted reviews of its
computer systems and its purchased software programs (including accounting
software) and does not believe the Year 2000 Issue will pose any significant
operational problems for its systems or software or any significant costs to the
Company.

In addition, the Company intends to make similar reviews of the systems of
potential acquisition candidates for any financial or operational impact the
Year 2000 Issue may pose.

INFLATION

In the opinion of management, inflation has not had a material effect on the
operations of the Company.

ITEM 7.  FINANCIAL STATEMENTS


<PAGE>


The consolidated financial statements for Paladyne Corp. and subsidiaries for
the fiscal years ended August 31, 1999 and 1998 have been audited to the extent
indicated in their report (which contains an explanatory paragraph regarding the
Company's ability to continue as a going concern and an emphasis of a matter
paragraph regarding the Company's reliance on a significant customer and a
significant vendor) by BDO Seidman, LLP, independent certified public
accountants', and have been prepared in accordance with generally accepted
accounting principles and pursuant to Regulation S-B as promulgated by the
Securities and Exchange Commission and are included herein in response to Item 7
of this Form 10-KSB.


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'

To the Board of Directors
Paladyne Corp.
Lake Mary, Florida

         We have audited the accompanying consolidated balance sheets of
Paladyne Corp. and subsidiaries as of August 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years then ended. 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.

         As described in Note 12, 87% of the Company's sales in the year ended
August 31, 1999 are concentrated in one customer. In addition, the Company is
highly reliant on one vendor who performs the bulk of the work related to data
processing activities of the Company's clients. This vendor represented
approximately 61% of cost of service revenues in the year ended August 31, 1999.
The loss of either this customer or this vendor could have a material adverse
effect on the Company's financial condition and results of operations.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Paladyne Corp. and subsidiaries at August 31, 1999 and 1998, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.


<PAGE>


         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a working capital deficit and a stockholders' deficit. In addition, the
Company's line of credit agreement expires on December 31, 1999. The Company
does not have the ability to pay such debt should the lender demand payment.
These factors raise substantial doubt about the Company's ability to continue as
a going concern. Management's plans in regard to these matters are also
discussed in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

BDO SEIDMAN, LLP
Chicago, Illinois
October 15, 1999


<PAGE>


PALADYNE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1999 AND 1998

                                                    1999          1998
                                                    ----          ----
ASSETS
CURRENT ASSETS
   Cash                                        $         -    $    126,532
   Accounts receivable (net of allowance
    for doubtful accounts of $9,263 and
    $37,736)                                       392,933         918,785
   Prepaid expenses and deposits                    32,641          44,861
                                                ----------      ----------
      Total current assets                         425,574       1,090,178

PROPERTY AND EQUIPMENT                             429,420         462,725
   Less accumulated depreciation                  (301,035)       (162,045)
                                                ----------      ----------
      Net property and equipment                   128,385         300,680

COSTS IN EXCESS OF NET ASSETS ACQUIRED
  (net of accumulated amortization of
   $4,333 and $1,878,834)                           77,367         868,881
OTHER ASSETS                                        45,669          96,839
                                                ----------      ----------

TOTAL ASSETS                                   $   676,995    $ 2,356,578
                                                ==========    ============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
      Accounts payable                         $   330,516    $    490,726
      Accrued expenses                             278,137         438,737
      Notes payable                                243,600         303,417
      Current portion of long-term debt                  -         175,521
      Deferred revenue                              95,700         150,427
                                                -----------     ----------
      Total current liabilities                    947,953       1,558,828

LONG-TERM DEBT, NET OF CURRENT PORTION             150,000         331,502

COMMITMENTS                                              -               -

STOCKHOLDERS' EQUITY (DEFICIT)
      Cumulative, convertible
     preferred stock; $.001 par value;
     10,000,000 shares authorized,
     137,143 issued and outstanding                    137             137
   Common stock; $.001 par value;
     25,000,000 shares authorized,
          6,782,229 and 6,378,503
          issued and outstanding                     6,783           6,379
   Additional paid in capital                    4,766,418       4,284,534
   Deficit                                     (5,194,296)     (3,824,802)
                                                -----------     ----------
      Total stockholders' equity (deficit)       (420,958)         466,248
                                                -----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)                               $   676,995     $ 2,356,578
                                                ===========     ==========


See accompanying summary of accounting policies and notes to consolidated
                              financial statements


<PAGE>


PALADYNE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED AUGUST 31, 1999 AND 1998

                                                    1999          1998
                                                    ----          ----

Service revenues                               $ 4,365,852    $  3,777,196

Cost of service revenues                         3,472,586       2,991,425
                                                ----------     -----------
Gross profit                                       893,266         785,771

Selling, general and administrative expenses     1,429,376       1,633,341
Depreciation and amortization                      167,093       1,265,877
                                                ----------     -----------

Loss from operations                             (703,203)     (2,113,447)
Interest expense                                    61,454          55,560
                                                ----------     -----------

Net  loss from continuing operations             (764,657)     (2,169,007)

Discontinued operations
 Income (loss) from operations of sales
   representative subsidiaries                      70,357       (962,186)
 Loss on disposal                                (675,194)               -
                                                 ---------      ----------

Loss from discontinued operations                (604,837)       (962,186)
                                                ----------     -----------

Net loss                                       (1,369,494)   $ (3,131,193)

Cumulative convertible preferred stock
dividend requirements                               40,800         27,200
                                                ----------    ------------

Net loss applicable to common
   shareholders                               $(1,410,294)   $(3,158,393)
                                               ===========   ============


Weighted average shares outstanding              6,555,056       5,559,297
                                               ===========   =============

Basic and diluted net loss per share -
 Continuing operations                        $     (0.13)    $     (0.40)
                                               ===========     ===========

Basic and diluted net loss per share -
 Discontinued operations                      $     (0.09)    $     (0.17)
                                               ===========     ===========

Basic and diluted net loss per share          $     (0.22)    $     (0.57)
                                               ===========     ===========


See accompanying summary of accounting policies and notes to consolidated
                              financial statements


<PAGE>


PALADYNE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE TWO YEARS ENDED AUGUST 31, 1998 AND 1997
<TABLE>
<CAPTION>

                                     Common Stock               Preferred Stock                Additional
                                                Par                   Par       Paid-in        Accumulated
                                 Shares       Value        Shares     Value     Capital        Deficit            Total
                                 ------       -----        ------     -----     -------         -------           -----
<S>                              <C>          <C>          <C>        <C>      <C>              <C>               <C>
BALANCES, AUGUST 31, 1997         5,193,660   $ 5,194        -       $  -       $2,052,977      $(693,609)        $1,364,562
                                                                                                                       =
Shares issued for business
  acquisitions                      537,501       537      137,143    137        1,048,048                         1,048,722

Warrants exercised                   31,012        31                               14,058                            14,089

Options exercised                    20,544        21                               18,645                            18,666

Vendor settlements for stock          5,770         6                               10,014                            10,020

Vendor settlements for options                                                      10,735                            10,735

Warrants issued to lender                                                            2,500                             2,500

Private placement sales, net        590,016       590                            1,127,557                         1,128,147

NET LOSS FOR THE YEAR                                                                          ($3,131,193)      (3,131,193)
                                ------------------------------------------------------------------------------------------------
BALANCES, AUGUST 31, 1998         6,378,503     $6,379    137,143    $137       $4,284,534      ($3,824,802)        $466,248
Shares retired in business
  dispositions                    (187,143)      (187)                            (159,992)                         (160,179)

Options exercised                    55,581         56                               5,444                             5,500

Noteholder settlement for stock      15,050         15                              30,085                            30,100

Warrants issued as compensation                                                    130,312                           130,312

Private placement sales, net        520,238        520                             476,035                           476,555

NET LOSS FOR THE YEAR                                                                           (1,369,494)     ( 1,369,494)
                                ------------------------------------------------------------------------------------------------
BALANCES, AUGUST 31, 1999         6,782,229     $6,783    137,143    $137        4,766,418      ($5,194,296)        $(420,958)

</TABLE>


See accompanying summary of accounting policies and notes to consolidated
                              financial statements


<PAGE>


PALADYNE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED AUGUST 31, 1999 AND 1998
<TABLE>
<CAPTION>

                                                            1999                1998
                                                            ----                ----
Cash flows from operating activities

   <S>                                                 <C>                <C>
   Net loss                                            $ (1,369,494)      $  (3,131,193)
   Adjustments to reconcile net loss to
       net cash used in operating
       activities:
        Depreciation                                        161,535              98,288
        Goodwill amortization                                47,390             228,514
        Loss on disposal of discontinued operations         675,194                  -
        Non-cash warrants and options issued                130,312                  -
           Impairment of goodwill                                 -           1,520,948
        Non-compete agreement amortization                        -             206,668

Changes in assets and liabilities net of
  assets and liabilities acquired and
  disposed of:
     Decrease in accounts receivable                         109,764            356,742
     Increase in other current assets                        174,095             25,284
     Decrease in accounts payable                         (160,210)            (210,993)
     (Decrease) increase in accrued expenses               (243,715)            154,378
     Decrease in deferred revenue                           (54,727)           (264,273)
                                                        ----------------      ----------

Net cash used in operating
activities                                                 (529,856)         (1,015,637)

Cash flows from investing activities

   Additions to property, plant and equipment              (121,916)           (124,114)
   Cash paid for business acquisitions                             -           (216,548)
   Cash received from business disposals (net)                99,078                  -
   Reductions in (additions to) other assets                  76,170               (828)
                                                        ------------          ----------

Net cash provided by (used in) investing
   activities                                                 53,332           (341,490)

Cash flows from financing activities
  Reductions in bank lines of credit                       (41,899)               7,934
  (Reductions in) additions to long-term debt-net          (109,158)            182,123
  Additions to short-term debt                                18,994             51,316
  Proceeds from issuance of common stock-net                482,055           1,184,021
                                                       ------------         -----------
    Cash provided by financing activities                   349,992           1,425,394
                                                       ------------         -----------

Net (decrease) increase in cash                           (126,532)              68,267

Cash at beginning of year                                   126,532              58,265
                                                       ------------         ------------

Cash at end of year                                     $          -       $    126,532
                                                         ===========        ============
</TABLE>


See accompanying summary of accounting policies and notes to consolidated
                              financial statements


<PAGE>


PALADYNE CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  SUMMARY OF ACCOUNTING POLICIES

OPERATIONS

     Paladyne Corp.,(the "Company"), is a holding company incorporated in the
     State of Delaware. The Company has four wholly owned subsidiaries, Synaptx
     Access, Inc. ("Access"), which was incorporated in Florida, Synaptx
     Impulse, Inc. ("Impulse"), which was incorporated in Illinois, WG Controls,
     Inc. ("WG") which was incorporated in Illinois, and Primus Marketing
     Associates, Inc. ("Primus") which was incorporated in Minnesota. (See Note
     2 for a complete discussion of business acquisitions and dispositions).
     These subsidiary entities are inactive. The Company previously had a fifth
     wholly owned subsidiary, ORAYCOM, Inc., a Texas Corporation, but this
     company was disposed of in November 1998. The Company operates in one
     business segment which is providing software and services enabling
     customer-centric data integration and data quality supported by software
     development and database, consulting and sales services. The Company's
     primary offices are in Lake Mary, Florida. It also has operations in
     Chantilly, VA and Elgin, IL. Its customers are located throughout the
     continental United States.

BASIS OF REPORTING

     The Company's financial statements are presented on a going concern basis,
     which contemplates the realization of assets and satisfaction of
     liabilities in the normal course of business.

     The Company has experienced recurring losses from operations as a result of
     its investment in personnel necessary to achieve its operating plan which
     is long-range in nature. For the years ending August 31, 1999, 1998 and
     1997 the Company realized net losses of $1,369,494, $3,131,193, and,
     602,555 respectively. At August 31, 1999, the Company has a working capital
     deficit of $522,379 and a stockholders' equity (deficit) of ($420,958). In
     addition the Company's line of credit agreement expires on December 31,
     1999.

     The Company's ability to continue as a going concern is contingent upon its
     ability to secure additional financing and attain profitable operations. In
     addition, the Company's ability to continue as a going concern must be
     considered in light of the problems, expenses and complications frequently
     encountered by entrance into established markets and the competitive
     environment in which the Company operates.


<PAGE>


     Although the Company recently completed an additional private placement,
     raising in excess of $400,000, ($125,000, for which 250,000 shares of
     Common Stock were issued, through August 31, 1999, and an additional
     $287,000 and 574,000 shares subsequent to year-end, for a total of $412,000
     and 824,000 shares being issued in total), and has refinanced existing debt
     and is continually pursuing additional refinancing outstanding debt at more
     favorable terms, there can be no assurance that the Company will be able to
     secure financing when needed or obtain such terms satisfactory to the
     Company, if at all, or raise additional private placement investment.
     Failure to secure such financing or to raise additional private placement
     investment may result in the Company rapidly depleting its available funds
     and not being able to comply with its payment obligations under its bank
     loans. In addition, if the Company is unable to meet its obligations under
     its credit agreements, such creditors shall have the right to foreclose on
     the assets of the Company, which will be prior to the interests of the
     holders of Common Stock.

     In fiscal year 1998, the Company changed its strategy from one of acquiring
     and growing mainly manufacturers representative organizations to one of
     developing, both through internal creation or through outsource
     arrangements, the database services described above. This shift is a result
     of what Management feels is a greater opportunity and a greater chance of
     achieving profitable operations on a long-term basis.

     The prior strategy was to initially build a nationwide sales force that
     would be in place to support the products manufactured by the companies the
     Company hoped to someday acquire. In support of that strategy, the Company
     acquired three manufacturers' representative companies, and opened and
     staffed an additional two offices, all between June 1997 and June 1998. Due
     to the underperformance of these companies as a whole, and the shift in
     business focus and strategy, all of the wholly-owned subsidiaries were
     sold, and the two offices opened by the Company were closed, all in fiscal
     1999. The results of operations of these businesses have been treated as
     discontinued operations in the Company's financial statements. (See Note
     15).

     The financial statements do not include any adjustments to reflect the
     possible future effects on the recoverability and classification of assets
     or the amounts and classification of liabilities that may result from the
     possible inability of the Company to continue as a going concern.


<PAGE>


RECLASSIFICATION OF PREVIOUS FINANCIAL STATEMENTS

     Certain amounts in the 1998 financial statements were reclassified to
     conform to the 1999 presentation.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
     and its wholly owned subsidiaries. Upon consolidation, significant
     intercompany accounts, transactions and profits are eliminated.

REVENUE RECOGNITION

     Professional fees, made up primarily of database service revenues,
     represent the principal sources of revenue of the Company. Revenues are
     recognized when fees are earned based on work performed.

DEFERRED REVENUE

     The Company often receives prepayments for professional services to be
     rendered. This revenue is deferred and as the services are provided, a
     proportionate share of the deferred revenue is recognized as income.

PROPERTY AND EQUIPMENT; DEPRECIATION AND AMORTIZATION

     Property and equipment are stated at cost and depreciated over their
     estimated useful lives of three to five years using the straight-line
     method.

COST IN EXCESS OF NET ASSETS ACQUIRED

     Cost in excess of net assets acquired ("goodwill") resulting from the
     acquisitions of Impulse, ORAYCOM, WG, and Primus was being amortized on the
     straight line method over 10 years, but was fully amortized upon the
     dispositions of these subsidiaries.

     It is the Company's policy to periodically evaluate the carrying value of
     its operating assets, including goodwill, and to recognize impairments when
     the estimated future net operating cash flows to be generated from the use
     of the assets are less than their carrying value. The Company measures
     impairment using a number of factors, which include the future business
     outlook, turnover of key personnel and estimated future discounted cash
     flows. In fiscal 1998, goodwill related to the purchases of ORAYCOM and
     Impulse was fully written off as these assets were deemed to have been
     permanently impaired. In fiscal year 1999, remaining goodwill related to
     the purchases of Primus, and WG Controls, was fully written off as these


<PAGE>


     businesses were sold off as part of the Company's strategic refocusing.
     Additional goodwill was created in fiscal 1999 as a result of the purchase
     of intellectual property from Bradas. (See Note 2).

INCOME TAXES

     Paladyne Corp. is a "C" Corporation as are all of its wholly owned
     subsidiaries. A deferred tax asset was created as a result of the estimated
     future tax consequences of temporary differences between the financial
     statement and tax basis of assets given the provisions of the enacted tax
     laws. (See Note 5). The Company records a valuation allowance when
     management determines it is more likely than not that the net deferred tax
     asset will not be realized.

ESTIMATES

     The accompanying financial statements include estimated amounts and
     disclosures based on management's assumptions about future events. Actual
     results may differ from those estimates.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting for Derivative Instruments and Hedging Activities". This
     standard establishes accounting and reporting standards for derivative
     instruments and for hedging contracts. This standard is effective for all
     fiscal quarters of all fiscal years beginning after June 15, 2000. When the
     Company adopts this statement, it is not expected to have a material impact
     on the Company's financial statements or their presentation.

FINANCIAL INSTRUMENTS

     Financial instruments which potentially subject the Company to
     concentrations of risk consist principally of temporary cash investments
     and accounts receivable. The Company invests its temporary cash balances in
     financial instruments of highly rated financial institutions with
     maturities of less than three months.

     The carrying values reflected in the balance sheets reasonably approximate
     the fair values for cash, accounts receivable, payables and debt.

NET LOSS PER SHARE

     In Fiscal 1998, the Company adopted the provisions of Statement of
     Financial Accounting Standards No. 128, Earnings Per Share. Statement No.


<PAGE>


     128 replaces the previously reported primary and fully-diluted earnings per
     share with basic and diluted earnings per share. Unlike primary earnings
     per share, basic earnings per share excludes any dilutive effects of
     options and convertible securities. Diluted earnings per share is computed
     similarly to fully diluted earnings per share. All earnings per share
     amounts for all periods presented have been restated to conform to the
     requirements of Statement No. 128.

     Basic and diluted net loss per share is computed by dividing net loss by
     the weighted average number of common shares outstanding, after giving
     effect to the stock dividend described below. Outstanding Common Stock
     options, warrants and shares of Common Stock issuable upon the conversion
     of preferred stock have been excluded from the computation as their effect
     would be anti-dilutive.

BUSINESS MERGER

     On March 5, 1999, the Company merged with and into Paladyne Corp., its
     wholly owned subsidiary, in a migratory merger, and Paladyne Corp. is the
     successor Company. The purpose of the merger was simply to change the name
     of the Company and re-incorporate the Company in Delaware to utilize more
     favorable corporate taxation regulations.

NOTE 2.  BUSINESS COMBINATIONS AND DISPOSITIONS

     IMPULSE
     On October 1, 1996, the Company acquired all of the existing outstanding
     Common Stock of Impulse in exchange for 759,401 shares of its Common Stock,
     valued at $690,000. The acquisition was accounted for using the purchase
     method of accounting. Impulse was primarily engaged in marketing to the
     telecommunications and information industries.

     See Note 14 for discussion of the Company's decision in 1998 to write off
     the remaining goodwill related to the purchase of Impulse, totaling
     $1,092,894, as it was deemed to have been permanently impaired in
     compliance with Statement of Financial Accounting Standards No. 121. The
     Company still maintains ownership of this subsidiary.

     ORAYCOM
     On June 1, 1997, the Company exchanged 142,858 shares of its Common Stock,
     valued at $500,000, for all of the existing outstanding Common Stock of
     ORAYCOM. In addition, the Company paid $65,625 of additional consideration
     as additional compensation for meeting specified revenue and earnings
     targets. The acquisition was accounted for using the purchase method of


<PAGE>


     accounting. The results of operations of ORAYCOM are included in the
     accompanying financial statements for the three months from June 1, 1997 to
     August 31, 1997 for the fiscal year ended August 31, 1997.

     Subsequent to the close of business on November 30, 1998, the Company sold
     all the capital stock in ORAYCOM, Inc. ("ORAYCOM") to O. Ray Strickland and
     O. Ray Strickland IRA, (collectively, the "Strickland Group"). Mr.
     Strickland was an employee of the Company and the General Manager of
     ORAYCOM. He was the sole shareholder of ORAYCOM when the Company acquired
     it from him in June, 1997. The agreement called for Strickland Group to
     convey to the Company, 80,000 shares of the Company's Common Stock, valued
     at $120,000, in exchange for all of the issued and outstanding shares of
     ORAYCOM and waiver of the non-compete agreement in place with Mr.
     Strickland. As a result, the Company took a charge in the fourth quarter of
     fiscal 1998 of $428,054 to write off the remaining balance of the goodwill
     related to the purchase of ORAYCOM. Upon closing, the Company recognized a
     gain on the transaction of $63,501 in fiscal 1999.

     WG CONTROLS, INC.
     On January 1 1998, the Company acquired WG Controls, Inc., a sales
     representative firm based in Arlington Heights, Illinois. WG was acquired
     for 285,715 shares of the Company's $ .001 par value Common Stock, 137,143
     shares of the Company's $ .001, Series A, cumulative convertible preferred
     stock and $270,000 in cash payable as follows: $125,000 on the first
     anniversary date of the Agreement, $125,000 on the second anniversary date
     of the Agreement, and $20,000 on the third anniversary date of the
     Agreement, for a total purchase price of $896,628. Additionally, on
     closing, the Agreement called for the payment of $250,000 to key employees
     related to noncompetition agreements.

     The Series A Preferred Stock paid at closing provides for annual dividends
     of $0.2975 per share or $40,800 per year. If the Company's profits are
     insufficient to pay such dividends, they will be cumulative and accrued for
     payment when Company profits are adequate to fund payment. The conversion
     provision on the preferred stock calls for each of the 137,143 preferred
     shares to be converted into .67361 shares of the Company's Common Stock or
     92,381 shares of Common Stock when the Company's Common Stock achieves an
     average closing price of $5.25 per share for a consecutive 60 day trading
     period.

     On May 31, 1999, the Company closed an agreement to sell the assets of WG
     Controls, Inc. to the management of WG. The terms of the transaction were


<PAGE>


     $250,000 in cash, $25,000 in a long-term note receivable, and the
     assumption of approximately $196,000 in debt. The total sale price was
     approximately $471,000. The Company recognized a loss on the transaction of
     approximately $427,000 which included the write-off of approximately
     $624,000 of goodwill related to the acquisition of WG in January, 1998.

     PRIMUS MARKETING ASSOCIATES, INC.
     On June 1, 1998, the Company acquired Primus Marketing Associates, Inc., a
     sales representative firm based in Minnetonka, Minnesota for 214,286 shares
     of the Company's $.001 par value Common Stock valued at $321,429. Primus is
     a sales representative firm that provides field sales and business
     development support for specified product lines and/or territories for
     clients under contract who include cable TV and telecommunications (both
     voice and data networking) original equipment manufacturers, Commonly
     referred to as OEMs, located primarily in the north central section of the
     United States.


     Effective May 31, 1999 the Company sold the assets of Primus to the
     management of Primus. The terms of the transaction were $12,500 in cash,
     the return of 107,143 shares of the Company's stock, valued at $40,179, and
     a 1% override on commission receipts for a period of twenty four months
     following the transaction. The total sale price was approximately $53,000.
     The Company recognized a loss on the transaction of approximately $311,000
     which included the write-off of approximately $176,000 of goodwill related
     to the acquisition of Primus in June, 1998.

     The financial statements of all periods presented include the operations of
     these disposed of operations as discontinued operations in accordance with
     generally accepted accounting principles.

     The following summarizes the financial implications in 1999 of the
subsidiaries disposed of:

<TABLE>
<CAPTION>

                                       ORAYCOM            WG             Primus              Total
     <S>                               <C>               <C>             <C>                 <C>
     Stock redeemed                    $  120,000                 -       $  40,179          $160,179
     Cash(paid)received                    (922)-         $ 100,000               -            99,078
     Note receivable                            -           175,000          12,500           187,500
     Debt assumed                               -           195,764               -           195,764
     Net assets
       disposed of                       (55,577)         (249,120)       (187,192)         (491,889)
     Goodwill written off                       -         (623,556)       (176,436)         (799,992)
                                       ----------         ---------       ---------        ----------
     Gain (loss) on
        disposal                       $   63,501        $(401,912)      $(310,949)        $(649,360)
                                       ==========        ==========      ==========        ==========
           Additional amortization of non
              compete agreements                                                             (25,834)

           Net loss on disposal of sales rep companies                                     $(675,194)
                                                                                           ==========
</TABLE>


<PAGE>


     Additionally, goodwill was written off related to ORAYCOM in fiscal 1998 of
     $428,054 as it was deemed to have been permanently impaired as of that
     date.

     BRADAS
     In February, 1999, the Company agreed to purchase intellectual property,
     including the initial framework of what has become the Datagration
     e-Business Suite, from Bradas, Inc. for 60,000 shares of common stock,
     45,000 of which have been issued with a value of approximately $49,000 and
     15,000 shares of common stock and 400,000 stock warrants that will be
     issued based on the attainment of certain predefined milestones.
     Additionally, the Company agreed to assume approximately $32,000 of debt
     incurred by the founder of Bradas in the initial stages of creating this
     tool. The Company agreed to fund the completion of the product including
     providing necessary funding for both equipment and personnel to complete
     the product and maintain and upgrade it. Management estimates that beyond
     what has been spent in 1999, an additional $200,000 in costs will be
     incurred to complete the first release of the product.


NOTE 3.  PROPERTY AND EQUIPMENT

      Major classes of property and equipment consist of the following:


                                            1999                  1998
                                            ----                  ----
 Leasehold improvements               $   51,182            $   58,598
 Furniture and fixtures                   98,994               187,126
 Computer equipment                      279,244               176,819
 Automobiles                                   -                40,183
                                      ----------            ----------
                                         429,420               462,726
 Less accumulated depreciation           301,035               162,046
                                      ----------            ----------
 Net property and equipment           $  128,385            $  300,680
                                      ==========            ==========


<PAGE>


NOTE 4.  NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>

Description                       % Rate          Payment Terms                    1999            1998
-----------                       ------          -------------                    ----            ----
      <S>                         <C>             <C>                              <C>             <C>

      Line of                     Varies          Due on demand                    $243,600        $250,000
      Credit                                      or Dec 31,1999,
                                                  see (a) below

      WG Acquisition              Imputed         Various, see                         -0-          249,021
      Debt                        @ 8.75%         Note 2

      Shareholder &               Various         See Note 11                       150,000         210,100
      Employee Loans

      Term note                   10.79           Due October 30,                      -0-           26,107
                                                  1998, see (a) below

      Line of                     13.25           Due on demand, see                    -0-          18,218
      Credit                                      (b) below

      Line of                     17.90           Due on demand, see                    -0-           9,092
      Credit                                      (b) below

      Term notes &                Various         Various                              -0-           47,902
                                                                                   -------           ------
      Capital leases

         Total                                                                      393,600         810,440

         Less current maturities                                                    243,600         478,938
                                                                                    -------         -------

         Long-term portion                                                         $150,000        $331,502
                                                                                   ========        ========
</TABLE>

(a)   The notes payable consist of borrowings under a revolving line-of-credit
      and, in fiscal 1998, a term note as well. The lender for both the line of
      credit and the term note in fiscal 1998 was fully paid off and a new
      lender was secured in 1999. Both notes due to the original bank are fully
      released. The note previously bore interest at prime plus approximately 3
      percentage points. The current line bears interest at prime rate,
      currently 8.25%, plus 1 1/4 %.

      (b)The notes payable also consisted of unsecured borrowings under
      revolving lines-of-credit with banks which were assumed when ORAYCOM and
      Primus were acquired. The existing balance on the ORAYCOM line was assumed
      by the buyer of ORAYCOM. The balance on the Primus line was paid off prior
      to the sale of the Primus division.

NOTE 5.  INCOME TAXES

      The following table sets forth the approximate deferred tax assets and
      liabilities resulting from temporary differences between the financial
      reporting and tax bases of assets and liabilities:

                                                  1999                1998
                                                  ----                 ----

      Net operating loss carryforwards           $ 960,000         $ 770,000
      Valuation allowance for deferred
       tax asset                                  (960,000)         (770,000)
                                                 ---------         ---------
      Net deferred tax asset                     $       -        $        -
                                                 =========         =========


<PAGE>


      As of August 31, 1999, the Company has a net operating loss carryforward
      of approximately $2,400,000 which may be used to reduce taxable income and
      income taxes in future years. The primary difference between tax and book
      reporting is non-deductible goodwill amortization. The carryforwards
      expire at various dates through 2019.

NOTE 6.  EMPLOYEE BENEFIT PLANS

      The Company sponsors a qualified employee savings plan for all eligible
      employees, commonly referred to as a 401-K plan. Participants may make
      contributions from their gross pay (limited to 15% of the employee's
      compensation, as defined), with the Company matching such contributions
      (subject to certain limitations) at the rate of 25% of the first 6% of
      each participant's contribution.

     Employer matching contributions to the plan were approximately $8,000 and
     $18,000 for the years ended August 31, 1999 and 1998, respectively.

NOTE 7.  LEASE OBLIGATIONS

      The Company leases office space, equipment, and vehicles under operating
      leases which expire at various dates. As of August 31, 1999, the Company's
      future minimum lease payments under operating leases are as follows:


                               Year ending August 31,            Amount
                                                                 ------
                               2000                         $   235,163
                               2001                             225,412
                               2002                             219,391
                               2003                             188,049
                               2004                             155,384
                               2005 and beyond                   52,165
                                                            -----------

     Total minimum rent commitments                         $ 1,075,564
                                                            ===========

      Total rental expense for the Company's facilities and equipment was
      approximately $231,000 and $324,000 for the years ended August 31, 1999
      and 1998, respectively. While the Company anticipates closing its Elgin,
      IL office, Management believes there will no material impact to the
      Company as a result of such a move.

NOTE 8.  PRIVATE PLACEMENTS

      On October 2, 1997, the Company sold 15,000 shares to an employee of the
      Company for $2.00 per share, realizing total proceeds of $30,000. This
      sale was outside of any of the formal private placements with the price
      being determined as the market price of the shares as of that point in
      time.


<PAGE>


      On October 22, 1997, the Board of Directors authorized a private placement
      of up to $2,000,000 in either shares of the Company's Common Stock at
      $2.30 per share or of units at $3.00 per unit consisting of one share of
      the Company's Common Stock and a warrant to purchase an additional share
      of the Company's Common Stock at $2.30 per share with an exercisable life
      of five years. This offering resulted in proceeds of $119,900 for which
      43,000 shares of Common Stock were issued. On May 14, 1998, in conjunction
      with the offering of Common Stock at $1.75, as described below, the Board
      of Directors approved an option whereby these investors could convert
      their investment as if they had subscribed for Common Stock at $1.75 per
      share, including conversion of their warrants. All the investors elected
      to do so, and as a result, the Company issued 25,516 more shares of Common
      Stock, bringing the total Common Stock under this offering to 68,516
      shares.

      On May 14, 1998 the Board of Directors approved an additional private
      placement of up to $1,050,000 in shares Company's Common Stock at $1.75
      per share. This offering resulted in proceeds of $230,125 for which
      131,500 shares of Common Stock were issued.

      On June 18, 1998 the Board of Directors authorized a private placement of
      up to $2,275,000 originally priced at $2.00 per share but subsequently
      re-priced to $1.75 per share, in units (minimum subscription 50,000 units)
      consisting of one share of the Company's Common Stock and a callable stock
      warrant to purchase the Company's Common Stock at $3.00 per share but
      callable at $0.25 per share if the closing trading price of the Company's
      Common Stock closes at or above $4.50 per share for ten consecutive
      trading days. The period of this offering extended through September 20,
      1998 and was subsequently extended by the Board of Directors until
      December 1, 1998 with the President of the Company authorized to extend
      this offer for 30 more days or to December 31, 1998. This offering
      resulted in proceeds of $1,040,000, for which 594,581 units were issued.

      On August 19, 1999 the Board of Directors authorized a private placement
      of up to $400,000 priced at $0.50 per unit, with a unit consisting of one
      share of the Company's Common Stock and a callable stock warrant to
      purchase the Company's Common Stock at $1.00 per share but callable at
      $0.05 per share if the closing trading price of the Company's Common Stock
      closes at or above $2.00 per share for sixty consecutive trading days when
      25,000 shares trade. The period of this offering extended through
      September 30, 1999. This offering resulted in proceeds of $125,000, for


<PAGE>


      which 250,000 units were issued, through August 31, 1999, and an
      additional $287,000 and 574,000 units subsequent to year-end, for a total
      of $412,000 and 824,000 units being issued in total. Of the $412,000
      raised, $187,000 was invested by Management and Directors of the Company

NOTE 9.  STOCK INCENTIVE PLAN

      The Company has a stock incentive plan (the "Plan") adopted by the
      shareholders on March 3, 1999 as part of the conversion to Paladyne that
      replaced the Company's previous 1996 Stock Option Plan as amended. The
      Plan authorizes the issuance of up to 2,500,000 shares of common stock.

      The Plan provides for the issuance of both qualified and nonqualified
      incentive stock options at an exercise price approximating the fair market
      value, defined as the average bid and ask price over the prior five days'
      trading in which at least 1,000 shares have traded, of the Company's stock
      at the date of grant (or 110% of such fair market value in the case of
      substantial stockholders). Options generally vest over two years, with
      one-third being vested immediately, one-third vesting on the one year
      anniversary of the issuance, and the final one-third vesting on the two
      year anniversary date of the issuance. The maximum life of the options is
      five years in the case of qualified incentive stock options and ten years
      in the case of non-qualified incentive stock options.

      A total of 2,500,000 shares of the Company's Common Stock have been
      reserved pursuant to the Plan. As of August 31, 1999, 2,194,357 options
      are outstanding: 2,099,342 shares issued inside the Plan, and 95,015
      shares issued outside the Plan. As of August 31, 1999, 607,862 shares are
      exercisable.

      Transactions during the fiscal years ended August 31, 1998 and 1999 are
summarized as follows:


<PAGE>


<TABLE>
<CAPTION>

                                                Number of          Price per           Weighted            Weighted
                                                   Shares              Share            Average             Average
                                                                                      Price per           Remaining
                                                                                         Share                 Life
                                                                                                             -Years
                                                ---------          ----------         ----------          ---------

         <S>                                    <C>                  <C>                <C>                    <C>
         Outstanding as of
         August 31, 1997                          328,055             $ .09-             $ 0.93                2.07
                                                                      $ 2.18

           Granted                              1,469,500             $2.35-             $ 2.80                3.91
                                                                      $ 3.70
           Exercised                            (20,544)              $  .91             $ 0.91
           Cancelled                             (99,223)             $ .91-             $ 2.32
                                                ---------
                                                                       $3.36
         Outstanding as of
         August 31, 1998                        1,677,788          $.09-3.70             $ 2.49                3.65
                                                ---------


             Granted                            1,604,750             $ .38-              $ .73                4.16
                                                                      $ 1.85
           Exercised                            (55,581)           $.09 -.91             $ 0.10
           Cancelled                          (1,032,600)             $ .91-              $2.60
                                             ------------
                                                                       $3.36


         Outstanding as of
         August 31, 1999                        2,194,357              $.09-             $ 1.21                3.73
                                                =========
                                                                       $3.70

         Exercisable as of
         August 31, 1998                          571,021                                $ 2.16                3.19
                                                  =======

         Exercisable as of
         August 31, 1999                          607,862                                $ 2.08                2.82
                                                  =======
</TABLE>

      In July and October 1996, the Company granted nonqualified options
      (included above), outside the Plan, to purchase 33,018 and 55,030 shares
      of Common Stock at prices of $.91 and $.09, respectively. Options to
      purchase 16,509 and 55,030 of these shares at $.91 and $.09, respectively,
      have been exercised. The remaining 16,509 have expired as of the date of
      this filing.

      Additionally, in October, 1998 the Board of Directors converted all
      options held by the former CFO of the Company, totaling 78,506 shares, to
      be fully vested and to be options outside the plan as part of a severance
      arrangement. These options were priced from $0.91 - $3.36 per share. These
      options remain outstanding.

      In May, 1998, the Company granted nonqualified options to purchase 675,000
      and 37,500 shares of Common Stock, to officers and Directors of the
      Company, outside the Plan. These options were priced between $2.55 and
      $2.81. In June, 1999, these options were recalled and retired.

      The Company applies APB Opinion No. 25, Accounting for Stock Issued to
      Employees, and related interpretations, in accounting for options granted
      to employees. Under APB Opinion No. 25, because the exercise price of the
      options equals the market price of the underlying stock on the measurement
      date, no compensation expense is recognized.

      The weighted-average grant-date fair value of stock options granted to


<PAGE>


      employees and directors during the year and the weighted-average
      significant assumptions used to determine those fair values, using a
      modified Black-Scholes option pricing model, and the pro forma effect on
      earnings of the fair value accounting for employee stock options under
      Statement of Financial Accounting Standards No. 123 are as follows:

                                                          1999         1998
                                                          ----         ----
    Grant-date fair value per share                     $ 0.93       $ 1.05
    Significant assumptions (weighted-average):
      Risk-free interest rate at
        grant date                                       5.01%        5.61%
      Expected stock price
      volatility                                        80.00%       40.00%
      Expected dividend payout                               -            -
      Expected option life-years(a)                        2.9         4.20
    Net loss:
      As reported                                 $(1,369,493)   $(3,131,193)
      Pro forma                                   $(2,033,318)   $(4,613,333)
    Net loss per share:
      As reported                                     $ (0.22)      $(0.57)
      Pro forma                                      $ (0.31)       $(0.83)

      (a) The expected option life is based on the exercise of options by their
      contractual expiration dates assuming that all options are so exercised
      since the Company has no historical option exercise patterns on which to
      base an alternative scenario.

      In addition to the options described above, the Company has issued
      warrants in conjunction with private placements, private placement
      support, and acquisitions, a summary of which is below:


<TABLE>
<CAPTION>

                                             Number of          Price per          Weighted            Weighted
                                              Shares              Share            Average             Average
                                                                                   Price per           Remaining
                                                                                   Share               Life
                                                                                                       -Years

          <S>                                <C>                <C>                <C>                 <C>
          Outstanding as of
          August 31, 1997                     200,006           $0.45-1.36            $ .84            2.44

          Granted                              900,000           $1.75-4.00            $2.93

          Exercised                           (31,012)           $0.45-0.91            $ .45
          Cancelled                                  -                    -                -
                                              -------
          Outstanding as of
           August 31, 1998                  1,068,994            $0.45-4.00            $2.62           4.22
                                            ---------


          Granted                             863,365           $1.00-3.00            $1.51

          Exercised                                 -                    -                -
          Cancelled                                 -                    -                -
                                              -------
          Outstanding as of
           August 31, 1999                  1,932,359           $0.45-4.00            $2.18            4.48
                                            =========


          Exercisable as of
           August 31, 1998                  1,068,994                                 $2.62            4.22
                                            =========

          Exercisable as of
           August 31, 1999                  1,932,359                                  $2.18           4.48
                                            =========
</TABLE>


<PAGE>


      In Fiscal 1999, the Company recognized expense related to the granting of
      stock options and warrants to non-employees and non-directors. These
      options and warrants were granted in lieu of cash compensation for
      services performed. These options and warrants were valued using a
      Black-Scholes pricing model. The amount of the expense was $130,312.

NOTE 10.  EMPLOYMENT AGREEMENTS

      The Company has employment agreements with two employees. The aggregate
      commitment for future salaries, excluding bonuses, under these employment
      agreements is approximately $185,000. The following amounts apply to each
      of the fiscal years ending August 31, as follows: 2000-$147,292,
      2001-$37,500. These agreements shall be automatically renewed for
      successive one-year terms unless canceled by either party at least 30 days
      prior to the current term's expiration. The agreements also contain
      severance provisions ranging from six months and up to three years in case
      of early termination without cause.

NOTE 11.  RELATED PARTY TRANSACTIONS

      During the fiscal year ended August 31, 1998, various related parties
      advanced the Company funds to meet cash flow needs. These advances ranged
      in term from one month to two years and bore interest rates ranging from
      10% - 12%. Total funds advanced totaled $265,100, of which $210,100 was
      outstanding as of August 31, 1998. In fiscal 1999, an additional $60,000
      net, was paid off, leaving a balance due of $150,000 as of August 31,
      1999. This amount is entirely due to a trust controlled by the Chairman
      and CEO of the Company, bears interest at 12% per annum, and is due June
      30, 2001.

      A company controlled by a former officer and director served as the
      primary contractor for the leasehold improvements on the new office space
      located in Elgin, Illinois. Materials and labor for services totaled
      approximately $31,000 of which $4,320 was paid by issuance of 2,470 shares
      of the Company's Common Stock and the remainder in cash.


<PAGE>


NOTE 12.  SIGNIFICANT CUSTOMERS AND VENDORS

      One multi - divisional customer in the telecommunications industry
      accounted for approximately 87% and 28% of sales in the years ended August
      31, 1999 and 1998, respectively. Receivables from this customer
      represented approximately 94% and 4% of total receivables at August 31,
      1999 and 1998, respectively.

      The Company is highly reliant on one vendor who performs the bulk of the
      work related to database processing activities the Company performs for
      its clients. While the Company does intend to develop the capabilities
      internally to offset some of the dependence on this vendor, there will be
      significant need for the services of this vendor going forward. This
      vendor represented approximately 61% and 29% of cost of service revenues
      for fiscal 1999 and 1998 respectively.

NOTE 13.  SUPPLEMENTAL CASH FLOW DISCLOSURES

     Cash paid during the year for interest was approximately $72,400 and
     $42,300 for the years ended August 31, 1999 and 1998, respectively.

     During fiscal year 1999, the Company disposed of all the assets of WG
     Controls, Primus Marketing Associates, and ORAYCOM. The following
     summarizes the financial implications in 1999 of the subsidiaries disposed
     of:


<TABLE>
<CAPTION>

                                             ORAYCOM           WG              Primus            Total

     <S>                                    <C>               <C>             <C>                <C>
     Stock redeemed                         $  120,000                -       $  40,179          $160,179
     Cash(paid)received                          (922)         $ 100,000               -            99,078
     Note receivable                                 -           175,000          12,500           187,500
     Debt assumed                                    -           195,764               -           195,764
     Net assets
       disposed of                            (55,577)         (249,120)       (187,192)         (491,889)
     Goodwill written off                            -         (623,556)       (176,436)         (799,992)
                                            ----------         ---------       ---------        ----------
     Gain (loss) on
        disposal                            $   63,501        $(401,912)      $(310,949)        $(649,360)
                                             =========         =========       =========         =========
           Additional amortization of non
              compete agreements                                                                  (25,834)

           Net loss on disposal of sales rep companies                                          $(675,194)
                                                                                                 =========
</TABLE>

      Additionally, goodwill was written off related to ORAYCOM in fiscal 1998
      of $428,054 as it was deemed to have been permanently impaired as of that
      date.

      In February, 1999, the Company agreed to purchase intellectual property,


<PAGE>


      including the initial framework of what has become the Datagration
      e-Business Suite, from Bradas for 60,000 shares of common stock, 45,000 of
      which have been issued valued at approximately $49,000, and 15,000 shares
      of common stock and 400,000 stock warrants that will be issued based on
      the attainment of certain predefined milestones. Additionally, the Company
      agreed to assume approximately $32,000 of debt incurred by Bradas' founder
      in the initial stages of creating this tool. The Company agreed to fund
      the completion of the product including providing necessary funding for
      both equipment and personnel to complete the product and maintain and
      upgrade it. The Company has accrued expenses related to the issuance of
      stock that has been earned of approximately $82,000 and has an offsetting
      intangible asset on its records as of August 31, 1999.

      During fiscal 1999 the Company retired a note payable to a former employee
      of the Company in the amount of $30,100 by issuing 15,050 shares of its
      common stock.

      During fiscal 1998, the Company purchased all of the capital stock of WG
      Controls, Inc., and Primus Marketing Associates, Inc. for $896,628 and
      $321,429, respectively. Additionally, 37,500 shares of Common Stock were
      issued as a result of additional earn-out related to a previous purchase.

      In conjunction with the acquisitions, liabilities assumed were as follows:

      Fair Value of assets acquired              $ 1,550,866
      Cash paid for acquisitions                   (216,548)
      Notes payable issued                         (234,960)
      Value of stock issued                        (983,097)
                                                   ---------

          Liabilities assumed                    $   116,261
                                                  ==========

NOTE 14. COSTS IN EXCESS OF ASSETS ACQUIRED

      Due to the increasing uncertainty of realization of the goodwill on the
      Company's books related to the acquisition of Impulse, the Company,
      deeming the value of the asset permanently impaired in accordance with
      Statement of Financial Accounting Standard No. 121, "Accounting for the
      Impairment of Long-Lived Assets", took a non-recurring charge of
      $1,092,894 as of August 31, 1998 to write off the remaining balance of
      goodwill related to Impulse. This decision has been made due to recurring
      losses from operations resulting in the refocusing on the direction of the
      Impulse unit, significantly different than the focus at the time of
      acquisition and significant turnover of key employees.


<PAGE>


      Additionally, as of August 31, 1998, the Company wrote off the goodwill
      related to ORAYCOM, amounting to $428,054, as it also was deemed to have
      been permanently impaired due to the recurring losses sustained by ORAYCOM
      and the subsequent loss of a major customer representing nearly 40% of
      ORAYCOM revenues. The goodwill related to the other manufacturers'
      representative companies was fully amortized in Fiscal 1999 as a result of
      the disposition of each of these subsidiaries. The goodwill related to
      these entities amortized in the current year amounted to $868,881 and was
      included in the loss from discontinued operations.

NOTE 15.  DISCONTINUED OPERATIONS

      In fiscal 1999, the Company discontinued its operations of manufacturers'
      representative companies due to underperformance and a shift in the
      Company's strategy. The following table sets forth the results of
      operations from these subsidiaries in fiscal 1999 and 1998.

                                      1999                   1998
                                      ----                   ----

  Sales                          $ 2,346,053             $ 2,020,988
  Cost of sales                    1,723,867               1,795,924
                                   ---------               ---------
           Gross margin              622,186                 225,064
  General and administrative
           expenses                  551,829               1,187,250
                                     -------               ---------

  Income (loss) from
           Operations                 70,357               (962,186)

  Loss on disposal                 (675,194)                       -
                                    --------              ----------

  Net Loss on discontinued
           operations              (604,837)               (962,186)
                                   =========               =========


The increase in gross margin percentage in 1999 is due to the Company closing
the operations of Oraycom and Advantage Technologies in the first quarter
of 1999.  These firms historically operated at negative gross margin.

General and Administrative expenses decreased primarily because of
non-recurring amortization of goodwill related to Oraycom that was written off
in Fiscal 1998 and fewer months of Rep firm operations in 1999. (See
"Description of Business - History)

NOTE 16.  SUBSEQUENT EVENTS

      In November, 1999, the Company decided to move its corporate
      administrative functions to its office in Lake Mary, Florida and
      concentrate its resources on the needs of the Company's software
      development center in Chantilly, Virginia. As a result, the Company is
      currently in negotiations with the landlord of its Elgin, IL facility to
      vacate the space. The Company has analyzed the future usefulness of all
      assets and has taken a charge of $72,300 as of August 31, 1999 for
      leasehold improvements and equipment that will not be utilized after the
      closing of the Elgin location. Based on the progress of the negotiations
      as of the date of this report, Management does not foresee encountering


<PAGE>


      any material costs related to terminating the lease and thus no provision
      has been made for such costs. Total remaining future commitments related
      to this lease were approximately $775,000 as of August 31, 1999.

      Staff reductions as a result of this decision will be accomplished through
      attrition and the Company will not generate any additional costs
      necessitating accruals to complete this shutdown procedure.

      The Company does not anticipate any additional material costs related to
      closing the Elgin office.

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

      There have been no changes in or disagreements with the Company's
      accountants on accounting or financial disclosure during the past two
      fiscal years.


<PAGE>


PART III

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

Executive Officers and Directors

      As of August 31, 1999, the executive officers and directors of the Company
were as follows:

             NAME                                    AGE          POSITION
             ----                                    ---          --------
      Ronald L. Weindruch....................        52           President,
                                                                  C.E.O.and
                                                                  Chairman
      William N. Kashul, Sr...................       66           Director
      Stewart B. Harris.......................       58           Director
      Kenneth Horn............................       59           Director
      Peter B. Atwal..........................       43           Director
      James L. McGovern.......................       57           Director
      John D. Foster..........................       56           Director

    All directors hold office until the next annual meeting of stockholders and
    until their successors have been duly elected and qualified. There are no
    agreements with respect to the election of directors. The Company has not
    compensated its directors in cash for service on the Board of Directors or
    any committee thereof, but directors are reimbursed for expenses incurred
    for attendance at meetings of the Board of Directors and any committee of
    the Board of Directors. Certain directors have been compensated with options
    in recognition of their service on the Board, as described further below.
    Officers are appointed annually by the Board of Directors and each executive
    officer serves at the discretion of the Board of Directors. The Board of
    Directors has two standing committees: an audit committee and a compensation
    committee.

    None of the officers and/or directors of the Company are officers or
    directors of any other publicly traded corporation, except for John Foster
    who is a Director of Aerial Communications, Inc., nor have any of the
    directors and/or officers, nor have any of the affiliates or promoters of
    the Company filed any bankruptcy petition, been convicted in or been the
    subject of any pending criminal proceedings, or the subject or any order,
    judgment, or decree involving the violation of any state or federal
    securities laws within the past five years.

    The business experience of each of the persons listed above during the past
five years is as follows:

     RONALD L. WEINDRUCH has been the President, Chairman and Chief Executive


<PAGE>


     Officer of Paladyne as well as the founder of Access, in 1994. Mr.
     Weindruch was the Chairman of the Sanford Airport Authority in Sanford,
     Florida from 1993 to 1996. Prior thereto, he held a variety of senior
     management positions with Siemens, including senior vice-president of
     operations at Siemens Stromberg-Carlson. Prior to beginning with Siemens in
     1984, Mr. Weindruch served as director of marketing for the Nortel
     (formerly Northern Telecom) DMS 100 switching system and was also group
     director of business development for Nortel's digital switching group. Mr.
     Weindruch holds an M.B.A. degree from George Washington University and a
     B.S. degree from the University of Illinois.

     JOHN D. FOSTER is President of Vedra International Associates, Inc., which
     he founded in 1996. Mr. Foster retired from AT&T where he was a Corporate
     Officer. He served as Vice President - Marketing and Sales, Southeast
     Region, President and CEO of AT&T American Transtech, and as President and
     Managing Director of AT&T Communications Services Group - Europe. Mr.
     Foster is also a board member of Aerial Communications. He hold a B.S.
     degree from Purdue University and a Masters from the University of
     Illinois.

     WILLIAM N. KASHUL, SR. is Vice - President of Sales of Home Wireless
     Networks. Prior to that, Mr. Kashul was a regional vice president of
     Strategic Account Development, North America, for Northern Telecom, Inc.
     Mr. Kashul began his telecommunications career in the U.S. Army in 1953. He
     joined BTE Automated Electric as an engineer in 1956 and went to ITT
     Kellogg as a project engineer in 1959. He joined Stromberg-Carlson as a
     senior sales engineer in 1967 before going to Northern Telecom in 1972. Mr.
     Kashul is a member of the International Engineering Consortium's Executive
     Advisory Council and holds an M.B.A. from the University of Chicago.

     PETER B. ATWAL has over twenty-two years experience in the
     telecommunications and data communications industry and has worked in
     research and development, switching systems and operations support systems.
     Currently Mr. Atwal is the Vice President of Business Development for
     Milcomm Communications. Prior to his current position, Mr. Atwal was Chief
     Technology Officer for ISR Global Telecom, a network management provider.
     Mr. Atwal previously worked as a research and development manager for
     Siemens, from 1985 - 1991, and as a consultant for Logica, Inc., from 1977
     to 1985. Mr. Atwal holds a BSC degree in computer science from London
     University.


<PAGE>


     JAMES L. MCGOVERN recently retired from Norstan where he was Executive Vice
     President and General Manager for the Communications Systems Division.
     Norstan is a $300-million communications systems integrator of voice, data,
     video, and image communications products and services focused on business
     solutions. McGovern also held a number of key sales management and General
     Manager positions at Xerox Corporation. McGovern is a marketing-oriented,
     enthusiastic leader with an uncanny ability to inspire all levels of an
     organization. His values-based management philosophy, vision, and
     leadership qualities have been key to a successful career in a rapidly
     changing industry. McGovern's understanding of the emerging technologies,
     the underpinnings of business processes, and the intelligent application of
     technology to those processes have earned him an excellent reputation among
     Norstan's customers, suppliers, and business partners. Mr. McGovern holds a
     B.S. degree from Northeastern University.

     STEWART B. HARRIS is Executive Vice President of Carlson Marketing Group.
     Mr. Harris founded and was President and Chief Executive Officer of S&H
     Citadel, an incentive marketing company, and its predecessors from 1982
     until February 1998 when it was acquired by Carlson Marketing. During his
     career, Mr. Harris also held various sales, marketing, and executive
     positions with IBM Corporation, HERS Apparel Industries, and MDB Holding.

     KENNETH W. HORN is Managing Director of KNH Associates. He recently retired
     as a Corporate Officer of Nortel Networks where he served a Vice
     Presidents, Independents. Mr. Horn is widely credited with establishing
     Nortel's industry leading position with the Independent Telecommunication
     companies and the Competitive Local Exchange Carriers by generating many
     billions in sales. Prior to joining Nortel, Mr. Horn was employed by Huyck
     Corporation where he held various positions including Vice President and
     General Manager of its largest division. Mr. Horn holds a B.S. degree from
     Villanova University and a M.B.A. from Iona University.

ITEM 10.  EXECUTIVE COMPENSATION

      Compensation

      The following table sets forth all compensation actually paid or accrued
      by the Company for services rendered to the Company for the years ended
      August 31, 1997, 1998 and 1999 to the Company's Chief Executive Officer
      and Executive Vice President. No other executive officer of the Company
      has earned a salary greater than $100,000 annually for any of the periods
      depicted.


<PAGE>


<TABLE>
<CAPTION>

      Summary Compensation Table                                               ALL           STOCK
                                                                               OTHER         WRNTS &
      NAME AND PRINCIPAL                                                       COMPEN        OPTNS
      POSITION                            YEAR      SALARY       BONUS         SATION(A)     ISSUED(B)
                                          ----      ------       -----         ------        ---------
      <S>                                 <C>      <C>           <C>           <C>           <C>
      Ronald L. Weindruch,                1997     $108,000      $  -0-        $126,000             -
      President, C.E.O.                   1998     $122,292      $3,000        $ 81,700       67,500
                                          1999     $137,500      $  -0-        $ 36,034      208,784
</TABLE>

      (a)All other compensation includes consulting and commission income.

      (b) Of the total options and warrants outstanding to Mr. Weindruch, 64,790
      were exercisable at August 31, 1999 and 185,000 were unexercisable. The
      value of unexercised in the money options and warrants was $0 for
      exercisable and approximately $7,000 for unexercisable. In addition to
      cash compensation, the individual named above participates in the
      Company's stock option plan. The following table details options granted
      in fiscal year 1999:

                                                % of
                                                total
                               # of shares     options
                               underlying      granted    Exer.      Exp.
      Name                     options        in FY 99    Price      Date
      -------------------     -------         --------    -----      ----
      Ronald L. Weindruch     150,000          9.3%       $.74   4/13/04
      Ronald L. Weindruch      25,000         1.6%         .42   6/14/03

      No stock options held by this individual were exercised in the current
      fiscal year whether the options were issued in the current year or in
      years prior.

      In fiscal 1999, Mr. Weindruch was granted warrants by the Board of
      Directors to purchase 33,784 shares of the Company's Common Stock at
      $0.74. These warrants have a life of five years. These were granted as
      compensation for Mr. Weindruch's personal guaranty of the Company's line
      of credit.

      Employee Stock Option Plan

      The Company's 1999 Stock Option Plan (the "Plan"), replaced the 1996 Stock
      Option Plan, as amended, which was adopted in 1996 and amended in October,
      1997 to increase the number of issuable shares under the Plan and to
      clarify the basis for determining fair market value of shares in
      conjunction with setting the exercise price of options at issuance. The
      purpose of the Plan is to encourage stock ownership by management and
      employees of the Company, to provide an additional incentive for those
      employees to contribute to the success of the Company and to provide the
      Company with the opportunity to use stock options as a means of recruiting
      new managerial personnel where appropriate.


<PAGE>


      The Plan authorizes the grant of options which qualify as incentive stock
      options under Section 422A of the Internal Revenue Code ("qualified
      options"), as well as stock options which do not qualify under that
      section of the Code ("nonqualified options"). The Plan is administered by
      the Board of Directors of the Company. The Board is authorized to select
      the individual employees to receive options under the Plan, the number of
      shares subject to each option, the option term and other matters specified
      in the Plan.

      The Plan provides that the exercise price of any option may not be less
      than 100% of the fair market value of the Company's stock at the date of
      grant, defined as the average bid and ask price over the prior five days'
      trading in which at least 1,000 shares have traded. Options must be
      granted within ten years from the date the Plan was approved by the
      Company's shareholders.

      A maximum of 2,500,000 shares of the Company's Common Stock are authorized
      for issuance pursuant to options granted under the Plan, subject to
      adjustments to prevent dilution or enlargement of rights of participants
      in certain circumstances. As of December 10, 1999 there were 2,214,515
      options issued and outstanding under the Plan of which 751,022 options are
      exercisable at an option price per share ranging from $0.38 to $3.36 per
      share and with expiration dates from November, 1999 through October, 2003.

      In addition to options granted under the Plan, the Company has also issued
      nonqualified stock options outside the Plan. In July 1996, nonqualified
      options to purchase 33,018 shares of the Company's Common Stock at an
      option price of $0.9086 per share were granted to the outside members of
      the Board of Directors for their services. In October 1996, one of the
      outside directors was granted nonqualified options to purchase 55,030
      shares of the Company's Common Stock at an option price of $0.0909 per
      share for his services in identifying the Impulse acquisition. In May,
      1998 nonqualified options to purchase 712,500 shares of the Company's
      Common Stock at option prices ranging from $2.55 - $2.81 share were issued
      to the members of the Board of Directors for their services, with outside
      Directors being issued 150,000 shares each and inside Directors being
      issued 37,500 shares each. These shares were subsequently recalled and
      replacement options were issued.

      Profit Sharing Plan


<PAGE>


      The Company sponsors a qualified employee savings plan (commonly referred
      to as a "401K plan") for all eligible employees, including all the
      officers of the Company. Participants may make contributions from their
      gross pay (limited to 15% of the employee's compensation, as defined),
      with Synaptx matching such contributions (subject to certain limitations)
      at the rate of 25% of the first 6% of each participant's contribution. No
      other deferred compensation plan is currently in place.

      Employment Agreements

      The Company has employment agreements with two employees. The aggregate
      commitment for future salaries, excluding bonuses, under these employment
      agreements is approximately $185,000. The following amounts apply to each
      of the fiscal years ending August 31, as follows: 2000-$147,292,
      2000-$37,500. These agreements shall be automatically renewed for
      successive one-year terms unless canceled by either party at least 30 days
      prior to the current term's expiration. The agreements also contain
      severance provisions ranging from six months and up to three years in case
      of early termination without cause.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth information, to the best of the Company's
      knowledge, as of December 10, with respect to each person known by the
      Company to own beneficially more than 5% of the outstanding Common Stock,
      each director and all directors and officers as a group.
                                                                     PERCENT
      NAME AND ADDRESS                 AMOUNT AND NATURE OF             OF
      OF BENEFICIAL OWNER              BENEFICIAL OWNERSHIP(1)       CLASS(2)
      Ronald L. Weindruch *            2,045,005(3)                  26.77%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746

      Kenneth H. Horn                    174,918(4)                   2.34%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746

      William N. Kashul, Sr. *           223,128(5)                   2.99%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746

      Peter B. Atwal *                    43,334(6)                   0.59%
      610 Crescent Executive Court


<PAGE>


      Suite 124
      Lake Mary, FL 32746

      James L. McGovern  *               207,721(7)                  2.78%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746

      John D. Foster  *                  185,849(8)                   2.49%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746

      Stewart B. Harris*                 125,000(9)                   1.68%
      610 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746


      All directors and
      executive officers as a          3,004,955(9)                  36.60%
      group (7 persons in group)

      Webbmont Holdings                 911,567(10)                  11.61%
      615 Crescent Executive Court
      Suite 124
      Lake Mary, FL 32746


      *     Director and/or executive officer

      Note:    Unless otherwise indicated in the footnotes below, the Company
               has been advised that each person above has sole voting and
               investment power over the shares indicated above.

         (1) Share amounts include, where indicated, Common Stock issuable upon
         the exercise of certain stock options and stock warrants held by the
         Company's directors and executive officers at exercise prices ranging
         from $0.38 to $3.70 per share which are exercisable within sixty days.

         (2) Based upon 7,356,229 shares of Common Stock outstanding on December
         10, 1999. Percentage ownership is calculated separately for each person
         on the basis of the actual number of outstanding shares as of December
         10, 1999 and assumes the exercise of certain stock options and warrants
         held by such person (but not by anyone else) exercisable within sixty
         days.

         (3) Includes 100,000 shares of stock held in the names of Mr.
         Weindruch's children, and 1,500,000 held in a trust for which Mr.
         Weindruch acts as trustee. Includes 283,124 shares which may be


<PAGE>


         acquired by Mr. Weindruch pursuant to the exercise of stock purchase
         options and warrants exercisable within sixty days at exercise prices
         from $0.42 to $3.70 per share.

         (4) Includes 50,000 shares held by a corporation controlled by Mr.
         Horn. Includes 114,918 shares which may be acquired by Mr. Horn
         pursuant to the exercise of stock purchase options and warrants
         exercisable within sixty days at exercise prices from $0.38 to $1.00
         per share.

         (5) Includes 110,834 shares which may be acquired by Mr. Kashul
         pursuant to the exercise of stock purchase options and warrants
         exercisable within sixty days at exercise prices from $0.38 to $3.36
         per share.

         (6) Includes 43,334 shares which may be acquired by Mr. Atwal pursuant
         to the exercise of stock purchase options and warrants exercisable
         within sixty days at exercise prices from $0.38 to $3.36 per share.

         (7) Includes 9,906 shares held in the names of Mr. McGovern's children.
         Also includes 117,917 shares which may be acquired by Mr. McGovern
         pursuant to the exercise of stock purchase options and warrants
         exercisable within sixty days at exercise prices from $0.38 to $1.00
         per share.

         (8) Includes 108,334 shares which may be acquired by Mr. Foster
         pursuant to the exercise of stock purchase options and warrants
         exercisable within sixty days at exercise prices from $0.67 to $1.00
         per share.

         (9) Includes 75,000 shares which may be acquired by Mr. Harris pursuant
         to the exercise of stock purchase warrants exercisable within sixty
         days at an exercise price of $1.00 per share.

         (10) Includes 496,429 shares which may be acquired by Webbmont Holdings
         pursuant to the exercise of stock purchase warrants exercisable within
         sixty days at the exercise prices from $1.00 to $3.00 per share.

      Richard E. Hanik, formerly the Secretary and Chief Financial Officer of
      the Company is not included above as he is no longer an officer of the
      Company as of the date of this filing, although he was as of fiscal year
      end 1998.

      William E. Morris, formerly the Secretary and Controller of the Company is
      not included above as he is no longer an officer of the Company as of the
      date of this filing, although he was as of fiscal year end 1999.


<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED
           TRANSACTIONS

      During the fiscal year ended August 31, 1998, various related parties
      advanced the Company funds to meet cash flow needs. These advances ranged
      in term from one month to two years and bore interest rates ranging from
      10% - 12%. Total funds advanced totaled $265,100, of which $210,100 was
      outstanding as of August 31, 1998. In fiscal 1999, an additional $60,000
      net, was paid off, leaving a balance due of $150,000 as of August 31,
      1999. This amount is entirely due to a trust controlled by the Chairman
      and CEO of the Company, bears interest at 12% per annum, and is due June
      30, 2001.


<PAGE>


PART IV

     NEED TO REVIEW WHAT EXHIBITS TO INCLUDE HERE WITH BRUCE. PROBABLY REVIEW
     ALL FILINGS FOR YEAR AND LIST ALL EXHIBITS FILED WITH THEM HERE.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-KSB

(A) EXHIBITS

Exhibit No.                     Exhibit Name
----------                      ------------

2.1    Merger Agreement and Plan of  Reorganization  previously filed as
       Exhibit 2.1 to Form 10-SB/A
       dated December 31, 1997

3.1    Certificate of Incorporation previously filed as Exhibit 3.1 to
       Form 8-K for an event of March 5, 1999

3.2    By-Laws of Registrant previously filed as Exhibit 3.2 to Form 8-K
       for an event of March 5, 1999

3.3    Articles of Merger of Synaptx Worldwide Inc. ("Synaptx") into the
       Company, as filed with the State of Utah, previously filed as Exhibit
       3.3 to Form 8-K for an event of March 5, 1999

3.4    Certificate of Merger of Synaptx into the Company, as filed with the
       State of Delaware, previously filed as Exhibit 3.4 to Form 8-K for an
       event of March 5, 1999

3.5    Agreement and Plan of Merger between Synaptx and the Company, previously
       filed as Exhibit 3.5 to Form 8-K for an event of March 5, 1999

4.1    1999 Stock Option Plan, previously filed as Exhibit 10.2 to Form 8-K for
       an event of March 5, 1999

9.1    Specimen of Common Stock Certificate previously filed as Exhibit 4.1 to
       Form 10-SB/A dated December 31, 1997

9.2    Certificate of Series A Cumulative Convertible Preferred Stock
       Certificate, previously filed as Exhibit 10 to Form 10-KSB for fiscal
       year ended August 31, 1998

10.1   Lease Agreement on registrant's previous principal place of business
       previously filed as Exhibit 10.1 to Form 10-SB/A dated December 31, 1997

10.2   Purchase Agreement of Synaptx Access, Inc. f.k.a.
       North American Telco/Cable Representatives, Inc. previously filed as
       Exhibit 10.2 to Form 10-SB/A dated December 31, 1997

10.3   Purchase Agreement for Synaptx Impulse, Inc., f.k.a. Maxwell Partners,
       Inc. previously  filed as  Exhibit  10.3 to Form  10-SB/A  dated
       December 31, 1997

10.4   Purchase Agreement for ORAYCOM, Inc. previously filed as Exhibit 10.4
       to Form 10-SB/A dated December 31, 1997

10.5   Employment Agreement for Ronald L. Weindruch previously filed as
       Exhibit  10.5 to Form 10-SB/A dated December 31, 1997


<PAGE>


10.6   Employment Agreement for D. Mike Maxwell previously filed as Exhibit 10.6
       to Form 10-SB/A dated December 31, 1997

10.7   New Lease Agreement on Principal Place of Business, previously filed as
       Exhibit 10.7 to Form 10-KSB for fiscal year ended August 31, 1998

10.8   Agreement and Plan of Merger for WG Controls, Inc. between Synaptx
       Worldwide, Inc. and the WG Controls, Inc.shareholders as follows:
       James M.  Gleason, Shirley Gleason, Michael Concialdi, and James Gammon
       previously filed as Exhibit 10.1 to Form 8-K dated March 23, 1998

10.9   Employment Agreement,  dated January 1, 1998, between WG Controls,
       Inc. and James M. Gleason previously filed as Exhibit 10.2 to Form 8-K
       dated March 23, 1998

10.10   Agreement and Plan of Stock for Stock Exchange, dated June 1, 1998
        between Synaptx Worldwide, Inc. (the "Company") and John Primus and
        Jannine Primus previously filed as Exhibit 10.1 to Form 8-K dated
        August 14, 1998

10.11   Employment Agreement, dated June 1, 1998, between Primus Marketing
        Associates, Inc. and John E.Primus previously filed as Exhibit 10.2 to
        Form 8-K dated August 14, 1998

10.12   Non-compete Agreement, dated June 1, 1998, between the Company and
        John E. Primus previously filed as Exhibit 10.3 to Form 8-K dated
        August 14, 1998

10.13   Non-compete Agreement, dated June 1, 1998, between the
        Company and Jannine E. Primus previously filed as Exhibit
        10.4 to Form 8-K dated August 14, 1998

10.14   Letter  Agreement to Sell 100% of ORAYCOM stock to O. Ray  Strickland
        and O.Ray Strickland IRA ("Strickland Group") previously filed as
        Exhibit 10.14 to Form 10-KSB for fiscal year ended August 31, 1998

10.15   Acquisition or Disposition of Assets for sale of WG Controls, Inc. to WG
        Technologies, filed as Exhibit to Form 10-QSB for fiscal quarters ended
        May 31, 1999

27      Financial Data Schedule

(b)    Reports on Form 8-K
                None

<PAGE>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly organized.

                                            PALADYNE CORP.
                                            (Registrant)



                                      By:  /s/  Ronald L. Weindruch
                                         --------------------------------
Date: December 27, 1999                    RONALD L. WEINDRUCH
                                           CEO, President, Chairman Principal
                                           Financial Office

     In accordance with 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.

Name                             Position                   Date
----                             --------                   ----

                              CEO, President
                              Chairman & Principal
/s/ Ronald L. Weindruch       Financial Officer        December 27, 1999
-----------------------       ----------------------   -----------------
Ronald L. Weindruch


/s/ William N. Kashul, Sr.    Director                 December 27, 1999
-----------------------       ---------------------   ------------------
William N. Kashul, Sr.



                              Director
-----------------------       ---------------------   ------------------
Kenneth Horn


/s/ John D. Foster            Director                 December 27, 1999
-----------------------       ---------------------   ------------------
John D. Foster


/s/ Peter B. Atwal            Director                 December 27, 1999
-----------------------       ---------------------   ------------------
Peter B. Atwal


                              Director
-----------------------       ---------------------   ------------------
James L. McGovern


/s/ Stewart Harris            Director                 December 27, 1999
-----------------------       ---------------------   ------------------
Stewart Harris