(State or Other Jurisdiction

of Incorporation)

(IRS Employer

Identification No.)

Exhibit

December 31,

ASSETS

Current assets:

Cash

Accounts receivable, net

Costs in excess of billings

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Other assets

Total assets

LIABILITIES AND SHAREHOLDER’S EQUITY

Current liabilities:

Current portion of long-term debt

Current portion of obligations under capital leases

Accounts payable and accrued expenses

Billings in excess of costs

Loan payable - shareholder

Deferred income taxes payable

Total current liabilities

Deferred rent

Long-term debt

Long-term obligations under capital leases

Total liabilities

Commitments and contingencies (Note 9)

Shareholder’s Equity:

Common stock - $.01 par value/voting; authorized 20,000,000 shares, 7,590,000 shares issued at December 31, 2003 and 8,000,000 shares issued at December 31, 2002

Common stock - $.01 par value/nonvoting; authorized 5,000,000 shares, none issued at December 31, 2003 and 2002

Additional paid-in capital

Retained earnings

Total shareholder’s equity

Total liabilities and shareholder’s equity

Year ended December 31,

Revenues:

Consulting

Billable expenses

Total revenues

Cost of revenues:

Cost of consulting

Cost of client billed expenses

Total cost of revenues

Gross profit

Selling, general and administrative expenses

Income (loss) from operations

Interest expense - net of interest income of $447 in 2003 and $5,989 in 2002

Loss before income tax (benefit) expense

Income tax (benefit) expense

Net loss

Net loss per common share

Weighted-average number of shares outstanding - basic

Year ended December 31,

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

Bad debt expense

Adjustment to variable stock-based compensation

Deferred income taxes

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(Increase) decrease in prepaid expenses and other current assets

Increase in costs in excess of billings

Decrease in other assets

Increase (decrease) in accounts payable and accrued expenses

Increase in deferred revenue

Increase in deferred rent

Cash flows used in investing activity - purchases of property and equipment

Cash flows from financing activities:

Principal payments on capital lease obligations

Principal payments on note payable

Proceeds from (payments on) shareholder’s loan

Capital contribution

Shareholder distribution

Net decrease in cash

Cash at beginning of year

Cash at end of year

Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest

Income taxes

Supplemental schedule of noncash financing activity:

Capital lease obligation incurred in connection with the acquisition of property and equipment

Number of

Shares

Outstanding

Additional

Paid-in

Capital

Retained

Earnings

Total

Shareholder’s

Equity

Balance at January 1, 2002

Net loss

Distributions to shareholder

Adjustment on variable stock-based compensation

Balance at December 31, 2002

Net loss

Distributions to shareholder

Capital contribution by shareholder

Cancelation of shares issued

Adjustment on variable stock-based compensation

Balance at December 31, 2003

Description of Company

Tigris Corp. provides consulting services, primarily to major corporations located throughout the United States. Services include evaluation of sourcing infrastructure, expenditure analysis, and data management.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Tigris Corp. and its wholly owned subsidiary, Tigris Consulting UK, LTD. (collectively referred to as the “Company”). All inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

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

Cash

The Company maintains cash in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses on these accounts.

Accounts Receivable

Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible. The Company performs ongoing credit evaluations of its customers and generally does not require collateral.

Property and Equipment

Property and equipment is recorded at cost. Depreciation of computers, furniture and fixtures, and computer software is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the term of the lease.

Capitalized Software

The costs of computer software developed or acquired for internal use incurred during the preliminary project stage are expensed as incurred. Costs incurred during the application development stage are capitalized. Costs incurred during the post-implementation or operation stage are expensed as incurred. There were no software costs capitalized during the years ended December 31, 2003 and 2002.

Other Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition exceeds its carrying amount. The amount of impairment loss, if any, is measured as the difference between the net book value of the asset and its estimated fair value.

Revenue Recognition

In accordance with the Securities and Exchange Commission (the “SEC”) Staff Accounting Bulletin (“SAB”) No. 104, revenue is recognized when the following criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the contract price is fixed or determinable, and collectibility is reasonably assured. For arrangements which include customer acceptance provisions, revenue is not recognized until the terms of acceptance are met.

For time and materials contracts, revenue is recognized as services are performed, based on standard daily rates charged to customers for work by the Company’s employees. Revenue on fixed-fee contracts is recognized as services are performed, based on proportional performance.

Where certain activities under a contract are not completed, revenue recognition will not be precluded if those activities are inconsequential or perfunctory. Activities are considered inconsequential or perfunctory if the failure to complete the actions would not result in the customer receiving a refund or rejecting the services performed to date, and the Company has a demonstrated history of completing the remaining tasks in a timely manner and reliably estimating and accruing the remaining costs.

For revenue contracts that contain multiple elements, the Company determines whether the contract includes multiple units of accounting in accordance with Emerging Issues Task Force (“EITF”) No. 00-21, Revenue Arrangements with Multiple Deliverables. Under that guidance, revenue arrangements with multiple deliverables are divided into separate units of accounting if the delivered item has value to the customer on a standalone basis and there is objective and reliable evidence of the fair value of the undelivered item.

Software development contracts that involve significant production, modification, or customization of software are accounted for in conformity with SOP No. 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts. For software revenue arrangements that include multiple elements, the fee is allocated to the various elements based on vendor-specific objective evidence of fair value. If sufficient vendor-specific objective evidence does not exist, all revenue from the arrangement is deferred until all elements of the arrangement have been delivered. However, if the only undelivered element is post-contract customer support, the entire fee is recognized ratably. Additionally, if the only undelivered element is services that do not involve significant production, modification, or customization of software, such as training or installation, the entire fee is recognized over the period during which the services are expected to be performed.

In accordance with EITF No. 01-14, Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses Incurred, reimbursements received for out-of-pocket expenses incurred are characterized as revenue.

Advertising Costs

The Company expenses advertising costs as incurred. There were no advertising expenses during the years ended December 31, 2003 and 2002.

Income Taxes

The Company has elected to be treated as an S Corporation for federal income tax purposes and as a small business corporation under New York State corporate franchise tax law. Accordingly, there is no provision for federal income taxes as such earnings will flow through directly to the shareholder. Income taxes expense (benefit) reflects New York City general corporation tax and New York State franchise tax at reduced rates.

The Company’s S Corporation status will be terminated in conjunction with the acquisition described in Note 14. In accordance with SAB Topic 4B, undistributed S Corporation earnings will be reclassified to additional paid-in capital.

Deferred income taxes represent the tax effect of temporary differences between the bases of assets and liabilities for income tax and financial reporting purposes. Such temporary differences relate to the utilization of the cash basis method of accounting for income tax purposes and the accrual basis for financial reporting purposes.

Stock Options

The Company has elected to apply Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its stock options granted to employees and has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. Had the Company elected to recognize compensation cost based on the fair value of the options granted at the grant date as prescribed by SFAS No. 123, the Company’s net loss and loss per share would have been as follows:

Year ended December 31,

Net loss as reported

Deduct: stock-based employee compensation expense determined under fair-value-based method, net of income tax effect

Pro forma net loss

Basic loss per share:

As reported

Pro forma

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model using the following weighted-average assumptions for the years ended December 31, 2003 and 2002: 2003 - expected volatility of 0%; risk-free interest rate of 3.17%; expected option life of 10 years; and no expected dividends. 2002 - expected volatility of 0%; risk-free interest rate of 5.2%; expected option life of 10 years; and no expected dividends.

Options issued to non-employees are accounted for in accordance with EITF 96-18, Accounting for Equity Instruments that Are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services.

Recent Accounting Pronouncements

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, required that gains and losses from extinguishments of debt be included in the determination of net income and be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. SFAS No. 145 is effective beginning January 1, 2003. SFAS No. 145 did not have a significant impact on the Company’s financial position, results of operations, or cash flows.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses the financial accounting and reporting of expenses related to restructurings initiated after 2002, and applies to costs associated with an exit activity (including a restructuring) or with a disposal of long-lived assets. Those activities can include eliminating or reducing product lines, terminating employees and contracts, and relocating plan facilities or personnel. Under SFAS No. 146, a company will record a liability for a cost associated with an exit or disposal activity when the liability is incurred and can be measured at fair value. The provisions of SFAS No. 146 are effective prospectively for exit or disposal activities initiated after December 31, 2002. SFAS No. 146 did not have a significant impact on the Company’s financial position, results of operations, or cash flows.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which amends SFAS No. 123, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002. SFAS No. 148 did not have a significant impact on the Company’s results of operations, financial position or cash flows because the Company did not adopt the fair value method of accounting.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of SFAS No. 150 are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. The remaining provisions of SFAS No. 150 are consistent with the FASB’s proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity shares, depending on the nature of the relationship established between the holder and the issuer. While the FASB still plans to revise that definition through an amendment to Concepts Statement 6, it has decided to defer issuing that amendment until it has concluded its deliberations on the next phase of this project. That next phase will deal with certain compound financial instruments including puttable shares, convertible bonds, and dual-indexed financial instruments. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. SFAS No. 150 did not have a significant impact on the Company’s financial position, results of operations, or cash flows.

December 31,

Billed receivables

Unbilled receivables

Less: allowance for doubtful accounts

Accounts receivable, net

December 31,

Computers

Furniture and fixtures

Computer software

Leasehold improvements

Less: accumulated depreciation and amortization

Property and equipment, net

December 31,

Trade accounts payable

Accrued payroll costs

Other

Year ending December 31,

2004

2005

2006

Total minimum lease payments

Less: amount representing interest

Present value of minimum lease payments

Less: current portion

Long-term portion of obligations under capital leases

Total borrowings under note payable

Less: current portion

Long-term debt

The Company has a revolving credit agreement (the “Agreement”) for a line of credit, and standby letter of credit with a bank. Total credit line borrowings available under the Agreement are the lesser of $1,000,000 or the borrowing base, a percentage of accounts receivable, as defined in the Agreement. No borrowings were outstanding under this line at December 31, 2003. The Agreement expires on May 31, 2004. The credit line incurs interest at the bank’s prime rate (4.0% at December 31, 2003) plus 1%.

In conjunction with the acquisition of the Company, the line of credit agreement was terminated (see Note 14).

The Agreement also provides for a standby letter of credit of $850,000. The standby letter of credit was executed in favor of the Company’s landlord in lieu of a security deposit. At December 31, 2003, unused portion of this letter of credit was approximately $539,000.

December 31,

Current

Deferred

Year ended December 31,

Tax at federal statutory rate

Flow-through of S Corporation taxable income to shareholder

Adjustment to tax accounts

Local taxes computed on alternative method

Year ending December 31,

Original

Lease

Obligations

Restructured

Lease

Obligations

2004

2005

2006

2007

2008

Thereafter

The leases are subject to escalation for the Company’s proportionate share of increases in real estate taxes and other operating expenses. Rent expense charged to operations amounted to approximately $996,000 and $677,000 for the years ended December 31, 2003 and 2002, respectively.

The leases provide for rent abatements and scheduled increases in base rent. Rent expense is charged to operations ratably over the terms of the leases which results in deferred rent which represents cumulative rent expense charged to operations from inception of these leases in excess of required lease payments.

Concurrently with the acquisition of the Company (see Note 14), the Company renegotiated its lease for the New York office resulting in a substantial reduction in future rental costs. The renegotiated New York lease expires in December 2010.

The Company has a defined contribution plan under Section 401(k) of the Internal Revenue Code covering all qualified employees. This plan is primarily funded by employee contributions with a provision for a matching contribution by the Company. Contributions by the Company to the plan for the years ended December 31, 2003 and 2002 were approximately $124,000 and $128,000, respectively.

December 31,

Outstanding at beginning of year

Granted

Canceled

Outstanding at end of year

Range of

Exercise Prices

Customer

A

B

Current assets:

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts

Costs and estimated gross profit in excess of billings

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Other investments

Goodwill

Intangible assets, net

Other assets

Total assets

Current liabilities:

Current portion of long-term debt and convertible notes

Accounts payable and accrued expenses

Deferred revenues

Billings in excess of costs and estimated gross profit

Loan payable - shareholder

Deferred income taxes payable

Other current liabilities

Total current liabilities

Deferred rent

Long-term debt

Total liabilities

Total shareholders’ equity

Total liabilities and shareholders’ equity