| The markets for the Company's services are highly competitive. The Company
believes that competition in the systems integration and programming and
applications development consulting market is based upon quality of service,
responsiveness to client demands, the number and availability of qualified
engineers and programmers, price, project management capability, technical
expertise, size and reputation. Additionally, the Company further believes that
competition in the Internet services market is primarily based upon quality of
service; access to local POPs; range of services; technical support; and
experience. The Company competes with numerous large companies that have substantially greater market presence and financial, technical, marketing and other resources than the Company, including (i) large information technology consulting and service providers and application software firms such as Andersen Consulting, Cambridge Technology Partners, Electronic Data Systems Corporation and American Management Systems; (ii) international, national, regional and commercial Internet service providers such as Performance Systems International, Inc., Digex, Inc. and UUNET; (iii) established on-line services companies such as America Online, Inc. and Prodigy Service Company; (iv) computer hardware and software and other technology companies such as IBM and Microsoft Corp.; (v) national long distance carriers such as AT&T; Corp., MCI Communications Corp. and Sprint Corp. and regional telephone companies, including Bell Atlantic, and
cable operators; and (vi) major accounting firms. Many of the Company's competitors have announced plans to expand their service offerings and increase their focus on the computer networking and Internet related services' markets. As a result, competition is expected to intensify for highly skilled network engineers, programmers and technicians. As a result of increased competition, the Company also expects to encounter significant pricing pressure, which in turn could result in significant reductions in the average selling price of the Company's services. There can be no assurance that the Company will be able to offset the effects of any such price reductions through an increase in the number of clients, higher revenue from enhanced services, cost reductions, or otherwise. In addition, the Company believes that continuing consolidation in the Internet services market could result in increased price and other competition in the industry. Increased price or other competition could make it difficult for the Company to gain additional market share and could have a material adverse effect on the Company. There can be no assurance that the Company will be able to compete successfully. |