<PAGE>   1
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                                 PROVANT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
 
<TABLE>
<S>                               <C>                               <C>
             DELAWARE                            8742                           04-3395167
   (STATE OR OTHER JURISDICTION      (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)    CLASSIFICATION CODE NUMBER)           IDENTIFICATION NO.)
</TABLE>
 
                       67 BATTERYMARCH STREET, SUITE 500
                                BOSTON, MA 02110
                                 (617) 261-1600
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                                PAUL M. VERROCHI
                                 PROVANT, INC.
                       67 BATTERYMARCH STREET, SUITE 500
                                BOSTON, MA 02110
                                 (617) 261-1600
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------
 
                          COPIES OF COMMUNICATIONS TO:
 
<TABLE>
<S>                                                <C>
          CONSTANTINE ALEXANDER, ESQUIRE                        KEITH F. HIGGINS, ESQUIRE
             JAMES E. DAWSON, ESQUIRE                                 ROPES & GRAY
           NUTTER MCCLENNEN & FISH, LLP                          ONE INTERNATIONAL PLACE
              ONE INTERNATIONAL PLACE                               BOSTON, MA 02110
                 BOSTON, MA 02110                               TELEPHONE: (617) 951-7000
             TELEPHONE: (617) 439-2000                          FACSIMILE: (617) 951-7050
             FACSIMILE: (617) 973-9748
</TABLE>
 
                            ------------------------
 
          APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box.  [ ]
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]
    If the Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
=============================================================================================================
                                                        PROPOSED MAXIMUM  PROPOSED MAXIMUM
                                                         OFFERING PRICE       AGGREGATE
  TITLE OF EACH CLASS OF SECURITIES     AMOUNT TO BE           PER            OFFERING          AMOUNT OF
          TO BE REGISTERED              REGISTERED(1)       SHARE(2)          PRICE(2)      REGISTRATION FEE
<S>                                   <C>               <C>               <C>               <C>
-------------------------------------------------------------------------------------------------------------
Common Stock (par value $.01 per
  share).............................     2,990,000          $13.00          $38,870,000         $11,467
=============================================================================================================
</TABLE>
 
(1) Includes 390,000 shares that the Underwriters have the option to purchase to
    cover over-allotments.
(2) Estimated solely for purposes of calculating the registration fee pursuant
    to Rule 457(a) under the Securities Act of 1933, as amended.
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
 
================================================================================
<PAGE>   2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                 SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998
 
                                2,600,000 SHARES
 
                                 PROVANT, INC.
 
                                  COMMON STOCK
 
     All of the 2,600,000 shares of Common Stock offered hereby are being sold
by Provant, Inc.
 
     Prior to this offering (the "Offering"), there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price of the Common Stock will be between $11.00 and $13.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. Application will be made to list
the Common Stock on the New York Stock Exchange (the "NYSE") under the symbol
"POV."
 
     SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
 
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
     EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
        SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
           PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
================================================================================================
                                        Price to           Underwriting         Proceeds to
                                         Public            Discount (1)         Company (2)
------------------------------------------------------------------------------------------------
<S>                               <C>                  <C>                  <C>
Per Share.........................       $                   $                    $
Total (3).........................       $                   $                    $
================================================================================================
</TABLE>
 
(1) See "Underwriting" for information concerning indemnification of the
    Underwriters and other matters.
 
(2) Before deducting expenses payable by the Company, estimated at $2,750,000.
 
(3) The Company has granted to the Underwriters a 30-day option to purchase up
    to 390,000 additional shares of Common Stock solely to cover
    over-allotments, if any. If the Underwriters exercise this option in full,
    the Price to Public will total $          , the Underwriting Discount will
    total $          and the Proceeds to Company will total $          . See
    "Underwriting."
 
     The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the offices of NationsBanc Montgomery Securities LLC on or about
  , 1998.
 
                            ------------------------
 
NationsBanc Montgomery Securities LLC
 
                            Salomon Smith Barney
                                                   Piper Jaffray Inc.
 
                                             , 1998
<PAGE>   3
 
                                  [MAP/PHOTO]
 
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     Simultaneous with and as a condition to the consummation of the Offering
made by this Prospectus, Provant, Inc. will acquire in separate combination
transactions (collectively, the "Combination") seven providers of training and
development services and products (each, a "Founding Company," and collectively,
the "Founding Companies"). See "Combination." Unless otherwise indicated, all
references to the "Company" herein mean Provant, Inc. and the Founding
Companies, and references to "Provant" mean Provant, Inc. and its wholly-owned
subsidiaries prior to the consummation of the Combination. Investors should
carefully consider the information set forth under the heading "Risk Factors."
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes appearing elsewhere in this Prospectus. Unless otherwise
indicated, (i) all share, per share and financial information in this
Prospectus: (a) has been adjusted to give effect to the Combination (excluding
the issuance of up to 1,325,000 shares of Common Stock as Additional
Consideration (as defined herein) for six of the Founding Companies and the
payment in Common Stock and cash of the Star Contingent Consideration (as
defined herein) for the seventh Founding Company), (b) assumes an initial public
offering price of $12.00 per share, (c) gives effect to a stock dividend
(assumed to be 871.5263-for-1) that will be declared by Provant prior to the
consummation of the Offering and (d) assumes no exercise of the Underwriters'
over-allotment option; and (ii) unless otherwise noted, all references to fiscal
years mean the Company's or a Founding Company's fiscal year ending on June 30
in the same calendar year (e.g., "fiscal 1997" means the fiscal year ended June
30, 1997).
 
                                  THE COMPANY
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and "off-the-shelf"
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led classroom
training and seminars, certification of client employees as instructors
("train-the-trainer"), interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
The seven Founding Companies are recognized leaders in their respective fields
and have developed a wide range of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. The Company's objective is to become a leading
single source provider of high-quality training and development services and
products that are distributed through multiple delivery methods.
 
     The Company provided training and development services and products to more
than 1,700 companies and 75 government entities in fiscal 1997, including Abbott
Laboratories, Bank of America, Conoco, Inc., Eli Lilly and Company, Federal
Express, Federated Department Stores, Inc., Hewlett-Packard Company, J.P. Morgan
& Co., Incorporated, Metropolitan Life Insurance Company, Mobil Corporation, the
Department of Defense, the Immigration and Naturalization Service and the
Internal Revenue Service. During this period, the Company generated revenues of
more than $100,000 from each of 75 different corporate clients and from over 15
different federal government entities. For fiscal 1997, the Company had pro
forma revenue of $68.8 million and pro forma income from operations of $8.0
million. From fiscal 1995 through fiscal 1997, the combined revenue of the
Founding Companies grew at a compound annual rate of 21.8%.
 
     The corporate and government training and development market is large and
growing. According to Training Magazine, domestic corporations with over 100
employees budgeted approximately $58.6 billion on training in 1997, compared to
approximately $45.0 billion in 1992, representing a compound annual growth rate
of approximately 5.4%. The size of and growth in the federal government market
can be seen in the Department of Defense's training and development budget,
which for its 1997 fiscal year was approximately $23.9 billion, compared to
approximately $18.0 billion in its 1992 fiscal year, representing a compound
annual
 
                                        3
<PAGE>   5
 
growth rate of approximately 5.8%. The portion of the market devoted to external
training is increasing, as corporations and government agencies focus on their
core competencies, shift fixed training costs to variable costs, and obtain
training and development services, products, technology and expertise that may
not be available internally. The Company believes that corporations and
government entities seek external providers that can meet their overall training
and development needs by: (i) providing a broad range of high-quality services
and products in both customized and off-the-shelf formats; (ii) delivering
training through multiple delivery methods capable of reaching large and
geographically dispersed work forces; and (iii) utilizing the most current
technology available.
 
     The Company intends to capitalize on these industry trends and enhance its
position as a leading provider of training and development services and products
by pursuing a multi-faceted growth strategy. The Company intends to seek
internal growth by: (i) capitalizing on cross-selling opportunities among the
Founding Companies; (ii) implementing an aggressive sales and marketing
strategy; (iii) expanding its service and product offerings; and (iv) leveraging
investments in technology and deploying leading technologies. In addition, the
Company intends to pursue strategic acquisitions of providers of training and
development services and products in order to expand its service and product
offerings, delivery methods and client base. The Company believes that its
senior management team, particularly Paul M. Verrochi, its Chairman and Chief
Executive Officer and co-founder and former Chairman of American Medical
Response, Inc., and John H. Zenger, its President and former Chairman of Times
Mirror Training Group, the nation's largest group of training companies, will
provide the Company with a competitive advantage in implementing its growth
strategy.
 
     Provant is a Delaware corporation. Its principal executive offices are
located at 67 Batterymarch Street, Suite 500, Boston, Massachusetts 02110. Its
telephone number is (617) 261-1600.
 
                                        4
<PAGE>   6
 
                                  THE OFFERING
 
Common Stock offered by the Company.........    2,600,000 shares
 
Common Stock to be outstanding after the
Offering....................................    9,405,605 shares (1)
 
Use of proceeds.............................    To pay the cash portion of the
                                                purchase price for the Founding
                                                Companies and to repay certain
                                                indebtedness. See "Use of
                                                Proceeds."
 
Proposed NYSE Symbol........................    POV
---------------
(1) Includes 3,826,815 shares of Common Stock to be issued to the stockholders
    of the Founding Companies in connection with the Combination. Excludes: (i)
    up to an aggregate of 1,325,000 shares of Common Stock that may be issued as
    Additional Consideration to the stockholders of six of the Founding
    Companies (assuming an initial public offering price of $12.00 per share) as
    well as shares of Common Stock that may be issued as Star Contingent
    Consideration; (ii) 1,100,000 shares of Common Stock reserved for issuance
    under the Company's 1998 Equity Incentive Plan (of which options to purchase
    833,464 shares will be outstanding upon the consummation of the Offering at
    an exercise price per share equal to the initial public offering price);
    (iii) 100,000 shares of Common Stock reserved for issuance under the
    Company's Stock Plan for Non-Employee Directors (of which no options will be
    outstanding upon the consummation of the Offering); (iv) 500,000 shares of
    Common Stock reserved for issuance under the Company's 1998 Employee Stock
    Purchase Plan; (v) 10,000 shares of Common Stock reserved for issuance upon
    the exercise of an outstanding option having an exercise price of $5.00 per
    share; and (vi) an aggregate of 793,656 shares of Common Stock reserved for
    issuance upon the exercise of warrants granted to two of the Company's
    executive officers, as more fully described under "Certain
    Transactions -- Other Transactions; American Business Partners LLC."
 
                                        5
<PAGE>   7
 
                   SUMMARY PRO FORMA COMBINED FINANCIAL DATA
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
     Provant has conducted operations to date only in connection with the
Combination and the Offering, and will acquire the Founding Companies
simultaneously with and as a condition to the consummation of this Offering. For
financial statement presentation purposes, Provant has been designated as the
accounting acquiror. The following table presents summary pro forma combined
financial data of the Company, as adjusted for: (i) the consummation of the
Combination; (ii) certain pro forma adjustments to the historical financial
statements of the Founding Companies; and (iii) the consummation of the Offering
and the application of the net proceeds. See the Company's Unaudited Pro Forma
Combined Financial Statements, each of the Founding Companies' financial
statements and the notes thereto included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                     PRO FORMA COMBINED (1)
                                                               -----------------------------------
                                                                YEAR ENDED
                                                                 JUNE 30,       THREE MONTHS ENDED
                                                                   1997         SEPTEMBER 30, 1997
                                                               ------------     ------------------
<S>                                                            <C>              <C>
STATEMENT OF OPERATIONS DATA:
  Revenue....................................................   $   68,846          $   17,738
  Cost of revenue............................................       30,967               8,056
                                                                   -------             -------
  Gross profit...............................................       37,879               9,682
  Selling, general and administrative expenses (2)...........       28,663               8,319
  Goodwill amortization (3)..................................        1,226                 307
                                                                   -------             -------
  Income from operations.....................................        7,990               1,056
  Interest and other income (expense), net...................          (73)                 23
                                                                   -------             -------
  Income before income taxes.................................        7,917               1,079
  Provision for income taxes (4).............................        3,703                 558
                                                                   -------             -------
  Net income.................................................   $    4,214          $      521
                                                                   =======             =======
  Net income per share.......................................   $     0.45          $     0.06
                                                                   =======             =======
  Shares used in computing net income per share (5)..........    9,405,605           9,405,605
</TABLE>
 
<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30, 1997
                                                               -----------------------------------
                                                                PRO FORMA
                                                               COMBINED (6)      AS ADJUSTED (7)
                                                               ------------     ------------------
<S>                                                            <C>              <C>
BALANCE SHEET DATA:
  Working capital (8)........................................    $(14,357)           $ 11,209
  Total assets...............................................      75,095              74,738
  Long-term debt, net of current maturities..................       1,481               1,481
  Stockholders' equity.......................................      36,523              62,089
</TABLE>
 
---------------
(1) The pro forma combined statement of operations data assumes that the
    Combination and the Offering were consummated on July 1, 1996, and is not
    necessarily indicative of the results the Company would have obtained if
    these events actually then occurred or of the Company's future results. The
    pro forma combined statement of operations data is based on preliminary
    estimates, available information and assumptions that management deems
    appropriate, and should be read in conjunction with the other financial
    statements and notes thereto included elsewhere in this Prospectus.
 
(2) Reflects pro forma adjustments to salary, bonuses and benefits paid to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively (the "Compensation Differential"). For the year ended June 30,
    1997 and the three months ended September 30, 1997, the Compensation
    Differential was approximately $4.8 million and $1.3 million, respectively.
 
                                        6
<PAGE>   8
 
(3) Reflects amortization of the goodwill to be recorded as a result of the
    Combination over a 40-year period and computed on the basis described in the
    Notes to the Unaudited Pro Forma Combined Financial Statements.
 
(4) Assumes that all income is subject to an effective corporate income tax rate
    of 40%, and all goodwill from the Combination is non-deductible.
 
(5) Assumes an initial public offering price of $12.00 per share. Consists of:
    (i) 3,826,815 shares to be issued to the stockholders of the Founding
    Companies (without giving effect to the issuance of Additional Consideration
    or the Star Contingent Consideration); (ii) 2,978,790 shares held by the
    management and founders of Provant; and (iii) 2,600,000 shares to be sold in
    the Offering.
 
(6) The pro forma combined balance sheet data assumes that the Combination was
    consummated on September 30, 1997. The pro forma combined balance sheet data
    is based upon preliminary estimates, available information and assumptions
    that management deems appropriate and should be read in conjunction with the
    other financial statements and notes thereto included elsewhere in this
    Prospectus.
 
(7) Adjusted for the sale of 2,600,000 shares of Common Stock offered hereby
    (assuming an initial public offering price of $12.00 per share) and the
    application of the net proceeds therefrom as described under "Use of
    Proceeds."
 
(8) The pro forma combined data gives effect to $22.5 million representing the
    cash portion of the consideration for the Combination to be paid from a
    portion of the net proceeds of the Offering.
 
                                        7
<PAGE>   9
 
               SUMMARY INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA
                                 (IN THOUSANDS)
 
     The following table presents summary data for each of the Founding
Companies on a historical (and, with respect to Star, consolidated) basis for
the periods indicated. (See "Combination" for the complete name of each Founding
Company.) Three of the Founding Companies, J. Howard, LSS and Star, historically
operated with fiscal years ending on dates other than June 30. For purposes of
the table below, their operating results have been recast to reflect a June 30
fiscal year end, although they have been derived from financial statements
prepared on the same basis as the audited financial statements. As a result of
this presentation, the operating results for these three companies do not
conform with their audited financial statements contained elsewhere in this
Prospectus.
 
<TABLE>
<CAPTION>
                                                                                    THREE MONTHS
                                                                                        ENDED
                                                        YEARS ENDED JUNE 30,        SEPTEMBER 30,
                                                     ---------------------------   ---------------
                                                      1995      1996      1997      1996     1997
                                                     -------   -------   -------   ------   ------
<S>                                                  <C>       <C>       <C>       <C>      <C>
BTI:
  Revenue..........................................  $ 3,803   $ 5,685   $ 7,096   $1,712   $1,977
  Gross profit.....................................    2,754     4,190     5,608    1,325    1,592
  Income from operations...........................      439       142       497      356      286
  Pro forma income from operations (1).............      350       705     1,439      356      623
DECKER:
  Revenue..........................................  $ 8,550   $ 8,620   $ 8,410   $1,930   $2,585
  Gross profit.....................................    6,131     5,965     6,135    1,381    1,925
  Income from operations...........................      461       249       514      120      262
  Pro forma income from operations (1).............      653       441       854      180      372
J. HOWARD:
  Revenue..........................................  $ 5,444   $ 7,388   $ 7,317   $1,861   $1,917
  Gross profit.....................................    3,646     5,084     5,157    1,275    1,256
  Income from operations...........................      519       720       602      459       57
  Pro forma income from operations (1).............      701     1,265     1,548      518      242
LSS (2):
  Revenue..........................................  $ 2,983   $ 4,233   $ 5,599   $1,136   $1,050
  Gross profit.....................................    1,903     2,549     3,671      755      541
  Income (loss) from operations....................      209       381       610      168      (48)
  Pro forma income from operations (1).............      573       940     1,928      381       75
MOHR:
  Revenue..........................................  $ 1,459   $ 2,171   $ 3,015   $  554   $  556
  Gross profit.....................................    1,288     1,494     2,190      367      352
  Income (loss) from operations....................      (26)      343       445      (16)    (210)
  Pro forma income (loss) from operations (1)......       47       487       779       44     (105)
NOVATIONS:
  Revenue..........................................  $ 7,175   $ 9,039   $ 9,018   $2,167   $2,464
  Gross profit.....................................    3,290     4,306     4,179    1,050    1,267
  Income from operations...........................      123       212       864      227      179
  Pro forma income from operations (1).............    1,331     1,683     1,525      401      554
STAR:
  Revenue..........................................  $11,875   $14,361   $20,790   $4,931   $5,770
  Gross profit.....................................    4,507     5,704     8,188    2,431    2,386
  Income from operations...........................    1,286       292     1,127      711      496
  Pro forma income from operations (1).............    1,116       696     1,368      787      541
</TABLE>
 
---------
(1) Reflects adjustments to the compensation of certain executives of the
    Founding Company to reflect the portion of the Compensation Differential
    attributable to such company. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations."
 
(2) Includes 1995 data for LSS for the 12 months ended August 31, 1995.
 
                                        8
<PAGE>   10
 
                                  RISK FACTORS
 
     The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the Company. This
Prospectus contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ significantly from the results discussed in the forward-looking
statements as a result of any number of factors, including the risk factors set
forth below and other factors discussed elsewhere in this Prospectus.
 
ABSENCE OF COMBINED OPERATING HISTORY; RISKS OF INTEGRATION
 
     Provant has conducted no operations and generated no revenues to date.
Provant has entered into definitive agreements to acquire the Founding Companies
simultaneously with, and as a condition to, the consummation of the Offering. To
date, the Founding Companies have operated independently of one another.
Currently, the Company has no centralized financial reporting system and
initially will rely on the existing reporting systems of the Founding Companies.
The Company's senior management group has been assembled only recently, and
there can be no assurance that this group will be successful in managing the
combined operations of the Founding Companies or in implementing the Company's
business and growth strategies. Any failure to do so could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management."
 
     The Founding Companies offer different services and products, use different
capabilities and technologies, target different clients and have different
management styles. Although the Company believes that there are substantial
opportunities to cross-market and integrate the Founding Companies' businesses,
these differences increase the risk inherent in integration. There can be no
assurance that the Company will be able to integrate successfully the operations
of the Founding Companies or institute the necessary Company-wide systems and
procedures to manage successfully the combined enterprise on a profitable basis.
The Company intends to operate the Founding Companies and subsequently acquired
businesses on a decentralized basis. If proper overall business incentives and
controls are not implemented, this decentralized operating strategy could result
in inconsistent operating and financial practices and the Company's overall
profitability could be adversely affected. The failure of the Company to
integrate successfully the operations of the Founding Companies could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Business Strategy."
 
RISKS RELATED TO INTERNAL GROWTH STRATEGY
 
     The central objective of the Company's growth strategy is to increase the
revenues and profitability of the Founding Companies. One of the key components
of this strategy is to cross-sell the services and products of each Founding
Company to other clients of the Company. There can be no assurance that the
Company will be able to expand its sales of services and products to its
existing clients and those of any subsequently acquired businesses. The
Company's growth strategy of broadening its service and product offerings,
implementing an aggressive marketing plan, pursuing strategic acquisitions and
deploying leading technologies has inherent risks and uncertainties. There can
be no assurance that the Company's growth strategy will be successful or that
the Company will be able to generate cash flow sufficient to fund its operations
and to support internal growth. The Company's inability to achieve internal
earnings growth or otherwise execute its growth strategy could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Growth Strategy."
 
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
 
     The Company intends to increase its revenues and its service and product
offerings in part through the acquisition of additional providers of training
and development services and products. There can be no assurance that the
Company will be able to identify and acquire additional businesses or integrate
and manage any acquired businesses without substantial costs, delays or other
operational or financial problems. Certain risks inherent in an acquisition
strategy, such as potentially increasing leverage and debt service requirements,
difficulties associated with combining disparate business systems and cultures,
and the failure to retain key
 
                                        9
<PAGE>   11
 
personnel, could adversely affect the Company's operating results. The process
of integrating acquired companies may involve unforeseen difficulties and
require a disproportionate amount of management's attention and financial and
other resources. Moreover, increased competition for acquisition candidates may
develop, in which event fewer acquisition opportunities may be available to the
Company and acquisition costs may increase. There can be no assurance that any
business acquired in the future will achieve anticipated revenues and earnings.
In addition, the size, timing and integration of acquisitions may cause
substantial fluctuations in the Company's operating results from quarter to
quarter. The inability of the Company to acquire, integrate and manage
successfully providers of training and development services and products could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Growth Strategy."
 
MANAGEMENT OF GROWTH
 
     The Company expects to grow internally and through acquisitions. The
Company expects to spend significant time and effort in expanding its existing
business and identifying, completing and integrating acquisitions. There can be
no assurance that the Company's systems, procedures and controls will be
adequate to support the Company's operations as they expand. Any future growth
also will impose significant added responsibilities on members of senior
management, including the need to identify, recruit and integrate new senior
level managers and executives. There can be no assurance that such additional
management can be identified and retained by the Company. The inability of the
Company to manage its growth or recruit and retain additional qualified
management could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Growth Strategy"
and "Management."
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's operations will depend on the continuing efforts of its
executive officers and the senior management of the Founding Companies. In
particular, the Company will depend on: Paul M. Verrochi, Chairman and Chief
Executive Officer; John H. Zenger, President; and Dominic J. Puopolo, Executive
Vice President and Chief Financial Officer. In addition, the Company relies on
many of the executives of the Founding Companies, whose reputations and client
relationships have contributed in large part to those companies' success. While
the Company will enter into employment agreements with most of these
individuals, there can be no assurance that the Company will be able to retain
the services of any of them. A loss of the services of any of these individuals
following the Offering, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management."
 
DEPENDENCE ON AVAILABILITY OF QUALIFIED PERSONNEL
 
     A significant portion of the Company's revenue is derived from services and
products that are delivered by instructors and consultants. The Company's
success depends upon its ability to continue to attract and retain instructors
and consultants who possess the skills and experience required to meet the
staffing needs of its clients. In order to initiate and develop client
relationships and execute its growth strategy, the Company must maintain and
continue to hire qualified salespeople. There can be no assurance that qualified
personnel will continue to be available to the Company in sufficient numbers,
and any failure to attract or retain qualified instructors, consultants and
salespeople in sufficient numbers could have a material adverse effect on the
Company's business, financial condition and results of operations.
 
RISKS ASSOCIATED WITH CHANGING ECONOMIC CONDITIONS
 
     The Company's revenues and profitability are related to general levels of
economic activity and employment in the United States. As a result, any
significant economic downturn or recession in the United States could have a
material adverse effect on the Company's business, financial condition and
results of operations.
 
                                       10
<PAGE>   12
 
FLUCTUATIONS IN OPERATING RESULTS
 
     The Founding Companies have experienced and expect to continue to
experience fluctuations in quarterly operating results. Results for any quarter
therefore are not necessarily indicative of the results that the Company may
achieve for any subsequent quarter or a full fiscal year. Quarterly results may
vary materially as a result of, among other factors, the level of training and
development services and products sold, the gain or loss of material client
relationships, the timing, structure and magnitude of acquisitions, or the
utilization rates of the Company's salaried trainers, consultants and certain
other employees. The timing or completion of client engagements or custom
services and products also could result in fluctuations in the Company's results
of operations for particular quarterly periods. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
 
RELIANCE ON FEDERAL GOVERNMENT CONTRACTING
 
     Approximately 31% of the Company's pro forma revenue in fiscal 1997 was
generated from services and products provided to over 75 federal government
entities. A general reduction in expenditures by the federal government for
training and development, a Congressional budget impasse, a reduction or
elimination of the use of third party contractors by the federal government, or
an inability of the Company to maintain its relationship with these government
entities could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the government
typically shares equally in the ownership of courseware and materials that the
Company develops with government funds, and may share such courseware or
materials with other entities including the Company's competitors. Risks unique
to contracts with federal government entities including potential government
audits and retroactive downward repricing of sales could, if realized, have a
material adverse effect on the Company's business, financial condition and
results of operations.
 
     Some of the Company's contracts require a security clearance from the
federal government. Foreign beneficial ownership of Common Stock following the
Offering in excess of 5% of outstanding amounts may require the Company to place
restrictions on foreign ownership, control, or influence over these contracts.
If the government deems such controls to be inadequate to prevent foreign
control or influence and terminates the classified contracts, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.
 
RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY
 
     The Company regards many of its training and development services and
products as proprietary and relies primarily on a combination of statutory and
common law copyright, trademark, service mark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. Notwithstanding the foregoing,
a third party or parties could copy or otherwise obtain and use the Company's
products in an unauthorized manner or use these products to develop training and
development processes that are substantially similar to those of the Company.
The Company's products generally do not include any mechanisms to prohibit or
prevent unauthorized use by third parties. If substantial unauthorized use of
the Company's products were to occur, there could be a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company's means of protecting its proprietary
rights will be adequate or that the Company's competitors will not independently
develop similar training products and delivery methods. Additionally, there can
be no assurance that third parties will not claim that the Company's current or
future products or services infringe on the proprietary rights of others. The
Company expects that it will be increasingly subject to such claims as the
number of products and competitors increases in the future. Any such claim could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Intellectual Property."
 
                                       11
<PAGE>   13
 
TECHNOLOGICAL RISK
 
     Traditionally, most of the Company's training and development services and
products have been delivered through instructors, written materials or video.
The Company intends to deliver many of its training and development services and
products, including certain services and products previously delivered in
"traditional" formats, via interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
There can be no assurance that the Company will be successful in marketing its
services and products in multimedia software and distance-based media formats,
nor can there be assurance that services and products delivered in the newer
formats will provide comparable training results. In addition, there can be no
assurance that any successful expansion of the methods of distribution of the
Company's services and products will not be rendered moot by subsequent
technological advances. Finally, adding new distribution channels for its
services and products may entail significant costs. The inability of the Company
to develop new distribution channels due to capital, personnel, technological or
other constraints could result in a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Growth
Strategy."
 
RISKS RELATED TO ACQUISITION FINANCING
 
     The Company may choose to finance future acquisitions by issuing shares of
Common Stock for all or a portion of the consideration to be paid. In the event
that the Common Stock does not maintain a sufficient market value, or potential
acquisition candidates otherwise are unwilling to accept Common Stock as part of
the consideration for the sale of their businesses, the Company might not be
able to utilize Common Stock as consideration for acquisitions and would be
required to utilize more of its cash resources, if available, in order to
maintain its acquisition program. If the Company does not have sufficient cash
resources, its growth could be limited unless it could obtain additional capital
through debt or equity financings. The inability of the Company to use its
Common Stock as consideration for future acquisitions or to obtain additional
financing for acquisitions could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, there can
be no assurance that future issuances of Common Stock in connection with
acquisitions will not be dilutive to the Company's stockholders.
 
INDEPENDENT CONTRACTOR STATUS
 
     The Company uses many contract instructors who are not employees of the
Company. As a result, the Company does not pay federal employment taxes or
withhold income taxes on behalf of such individuals, or include them in its
employee benefit plans. If state or federal taxing authorities were to require
the Company to treat some or all of its contract instructors as employees, the
Company would become responsible for the taxes required to be paid or withheld
and could incur additional costs associated with employee benefits and other
employee costs on both a current and retroactive basis. The aggregate impact of
such costs could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Independent
Contractors."
 
COMPETITION
 
     The training and development industry is highly fragmented and competitive,
with low barriers to entry and no single competitor accounting for a significant
market share. The Company's competitors include several large publicly traded
and privately held companies, and thousands of small privately held training
providers and individuals. In addition, many of the Company's clients maintain
internal training departments. Some of the Company's competitors offer services
and products that are similar to those of the Company at lower prices, and some
competitors have significantly greater financial, managerial, technical,
marketing and other resources than the Company. Moreover, the Company expects
that it will face additional competition from new entrants into the training and
development market due, in part, to the evolving nature of the market and the
relatively low barriers to entry. There can be no assurance that the Company
will be successful against such competition. See "Business -- Competition."
 
                                       12
<PAGE>   14
 
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
 
     Upon completion of the Offering, the Company's directors and executive
officers, together with their affiliates, will beneficially own approximately
47.3% of the Company's outstanding shares of Common Stock (approximately 45.4%
if the Underwriters exercise their over-allotment option in full). As a result,
these stockholders, if they were to act together, would have the ability as a
practical matter to determine the outcome of corporate actions requiring
stockholder approval, including the election of directors and the approval of
significant corporate transactions, such as a merger or sale of substantially
all of the Company's assets, regardless of how other stockholders of the Company
may vote. This concentration of ownership may have the effect of delaying or
preventing a change in control of the Company. See "Management" and "Principal
Stockholders."
 
POSSIBLE FUTURE SALES OF SHARES
 
     Sales of substantial amounts of Common Stock in the public market after the
Offering under Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), or otherwise, or the perception that such sales could occur,
may adversely affect prevailing market prices of the Common Stock and could
impair the future ability of the Company to raise capital through an offering of
its equity securities or to effect acquisitions using shares of its Common
Stock. The shares of Common Stock outstanding prior to the Offering and the
shares to be issued in the Combination will be "restricted securities" within
the meaning of Rule 144. Unless the resale of the shares is registered under the
Securities Act, these shares may not be sold in the open market until after the
first anniversary of the transaction in which they were acquired, and then only
in compliance with the applicable requirements of Rule 144. See "Shares Eligible
for Future Sale." Notwithstanding their right under the Securities Act to sell
shares pursuant to Rule 144, the stockholders of the Founding Companies and the
holders of Provant's Common Stock prior to the Combination and the Offering have
agreed with the Company to certain transfer restrictions for a two-year period
following the Offering on the Common Stock held by them as of the closing of the
Offering and on the Common Stock that may be purchased by them under options and
warrants outstanding as of the closing of the Offering. See "Certain
Transactions -- Organization of the Company" and "-- Other Transactions
Involving Officers and Directors."
 
     The Company, the holders of all shares outstanding prior to the Offering
and all stockholders of the Founding Companies have agreed with the
Representatives of the Underwriters not to sell or otherwise dispose of any
shares of Common Stock, or any securities convertible into or exercisable or
exchangeable for shares of Common Stock, for a period of 180 days after the date
of this Prospectus without the written consent of the Representatives, except
for: (i) in the case of the Company, the grant of options under the Company's
benefit plans or in connection with acquisitions and (ii) in the case of all
such holders, the exercise of stock options pursuant to benefit plans described
herein and shares of Common Stock disposed of as bona fide gifts, subject, in
each case, to any remaining portion of the 180-day period applying to any shares
so issued or transferred. See "Shares Eligible for Future Sale" and
"Underwriting."
 
CERTAIN ANTI-TAKEOVER PROVISIONS
 
     The Company's Certificate of Incorporation requires that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing. Special meetings of stockholders may be
called only by the Chairman of the Board or President of the Company or by the
Board of Directors. In addition, the Board of Directors has the authority,
without further action by the stockholders, to fix the rights and preferences
and issue up to 5,000,000 shares of Preferred Stock. These provisions and other
provisions of the Certificate of Incorporation and By-laws may have the effect
of deterring unsolicited acquisition proposals or hostile takeovers or delaying
or preventing changes in control or management of the Company, including
transactions in which stockholders might otherwise receive a premium over the
then current market price for their shares of Common Stock. In addition, these
provisions may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests. The Company also is subject to
Section 203 of the Delaware General Corporation Law (the "DGCL"), which, subject
to certain exceptions, prohibits a Delaware
 
                                       13
<PAGE>   15
 
corporation from engaging in any of a broad range of business combinations with
any "interested stockholder" for a period of three years following the date that
such stockholder became an interested stockholder. See "Description of Capital
Stock."
 
NO PRIOR MARKET FOR COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK PRICE
 
     Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or continue after the Offering. The initial public offering
price of the Common Stock will be determined by negotiations between the Company
and the Representatives of the Underwriters, and may not be indicative of the
market price for the Common Stock after the Offering. See "Underwriting" for a
description of the factors to be considered in determining the initial public
offering price. After the Offering, the market price of the Common Stock may be
subject to significant fluctuations in response to numerous factors, including
variations in the annual or quarterly financial results of the Company or its
competitors, changes by financial research analysts in their estimates of the
earnings of the Company or the failure of the Company to meet such estimates,
conditions in the economy in general or the training and development industry in
particular, or unfavorable publicity affecting the Company or the industry. The
equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies' securities
and have been unrelated to the operating performance of those companies. Any
such fluctuations following completion of the Offering may adversely affect the
prevailing market price of the Common Stock.
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
     The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
shares of Common Stock in the amount of $10.61 per share, and may experience
further dilution in that value from issuances of Common Stock in connection with
future acquisitions. See "Dilution."
 
ABSENCE OF DIVIDENDS
 
     Provant has never paid dividends on the Common Stock and does not
anticipate paying any dividends in the foreseeable future. Declarations of
dividends on the Common Stock will depend upon, among other things, future
earnings, if any, the operating and financial condition of the Company, its
capital requirements and general business conditions. The Company anticipates
that any future credit facility that it may obtain will prohibit dividend
payments. See "Dividend Policy."
 
                                       14
<PAGE>   16
 
                                  COMBINATION
 
     Provant's objective is to become a leading provider of training and
development services and products. Although Provant has conducted no operations
to date, it has entered into agreements to acquire the Founding Companies
simultaneously with, and as a condition to, the consummation of the Offering.
For a description of the transactions pursuant to which the Founding Companies
will be acquired by Provant, see "Certain Transactions -- Organization of the
Company."
 
THE FOUNDING COMPANIES
 
     The seven Founding Companies are recognized leaders in their respective
fields and have developed a broad array of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. Set forth below is a brief description of each of
the Founding Companies.
 
     Behavioral Technology, Inc.:  Behavioral Technology, Inc. ("BTI") was
founded by Paul C. Green, Ph.D. in 1978. BTI helps clients improve employee
selection and provides managers with a methodology for assessing strengths and
weaknesses of current employees. BTI trains clients to use candidates' and
employees' past actions both as indicators of future performance and as a basis
for discussion regarding improvement in performance. BTI's training services are
delivered through instructor-led training and train-the-trainer programs. The
company's lead product, Behavioral Interviewing(R), accounted for approximately
90% of the company's revenue in fiscal 1997. Dr. Green is credited with
developing the concepts behind behavioral-based interviewing and is widely
acknowledged as a leader in the field. BTI's clients include Hewlett-Packard
Company, Federal Express and Royal Bank of Canada. BTI is headquartered in
Memphis, Tennessee. In its most recent fiscal year, BTI generated revenue of
approximately $7.1 million.
 
     Decker Communications, Inc.:  Decker Communications, Inc. ("Decker") was
founded by Bert Decker in 1979. Decker provides training to improve employees'
business communication skills and communications between management and
employees. Decker's services range from helping senior management to communicate
corporate change to working with employees to improve the effectiveness of their
communication skills. Decker's training services are delivered primarily through
instructor-led workshops, some of which are tailored to meet specific client
objectives. Decker's flagship program, Effective Communicating(TM), and its
custom versions of the same product, accounted for approximately 84% of the
company's revenue in fiscal 1997. Decker's clients include Bank of America,
Coopers & Lybrand L.L.P. and Hewlett-Packard Company. Decker is located in San
Francisco, California and has regional offices in New York, Los Angeles and
Chicago. In its most recent fiscal year, Decker generated revenue of
approximately $8.4 million.
 
     J. Howard & Associates, Inc.:  J. Howard & Associates, Inc. ("J. Howard")
was founded by Jeffrey P. Howard, Ph.D. in 1977. Marc S. Wallace joined the
company in 1986, and became its President in 1991. J. Howard assists clients in
identifying and addressing potential obstacles to improving workplace
productivity, including race and gender issues, sexual harassment and failure of
employees to take measured risks. J. Howard's training services are delivered
primarily through instructor-led seminars that incorporate small and large group
discussions and self-assessment and skills-building exercises. The company's
lead product, Managing Inclusion, which accounted for approximately 57% of the
company's revenue in its fiscal year ended December 31, 1996, is a two-day
program designed to help individual managers and client companies understand the
ways in which diversity in the work force contributes to the productivity of an
organization. Other related programs include Risk Taking for Professional
Development, Efficacy for Professionals of Color, Efficacy for Women and
Exploring Diversity. J. Howard's clients include Bank of America, J.P. Morgan &
Co. Incorporated and Northwest Airlines, Inc. J. Howard is located in Lexington,
Massachusetts. In its fiscal year ended December 31, 1996, J. Howard generated
revenue of approximately $7.1 million.
 
     Learning Systems Sciences:  Robert Steinmetz, Ph.D., and Associates, Inc.,
d/b/a Learning Systems Sciences ("LSS"), was founded in 1979 by Robert A.
Steinmetz, Ph.D. In 1990 John F. King joined the company as President and a 50%
stockholder. LSS designs custom training products primarily for retailers using
multimedia, computer-based formats. LSS's products are designed to facilitate
faster learning of customer interface devices and higher productivity of retail
associates. LSS's training products are delivered
 
                                       15
<PAGE>   17
 
primarily through interactive multimedia software and distance-based media.
LSS's clients include Federated Department Stores, Inc., J.C. Penney Company,
Inc. and The Kroger Co. LSS is located in North Hollywood, California. In its
fiscal year ended December 31, 1996, LSS generated revenue of approximately $5.1
million.
 
     MOHR Retail Learning Systems, Inc.:  MOHR Retail Learning Systems, Inc.
("MOHR") was the retail training division of MOHR Development, Inc. from 1981 to
1991, when the division was purchased by Michael Patrick and one of the
division's founders, Herb Cohen. MOHR's services and products are designed to
help clients in the retail industry improve productivity by fostering a
customer-oriented focus at the sales management and sales associate levels. MOHR
offers its services and products through train-the-trainer seminars and by
licensing its text-based and video-based materials to its clients. MOHR's Retail
Management Series III and Creating Loyal Customers programs, which together
accounted for more than 60% of the company's revenue in fiscal 1997, utilize
well-established learning designs, instructional systems and feedback mechanisms
to train clients' employees to provide superior customer service. In addition,
the company's Bottom-Line Buying Plus program provides negotiation skills
training for buyers at retail organizations. MOHR's clients include Eckerd
Corporation, Victoria's Secret Stores and The Sports Authority, Inc. MOHR is
headquartered in Ridgewood, New Jersey. In its most recent fiscal year, MOHR
generated revenue of approximately $3.0 million.
 
     Novations Group, Inc.:  Novations Group, Inc. ("Novations") was founded in
1986 by Norman Smallwood, Jonathan Younger, Joe Folkman and Randy Stott. Joe
Hanson joined the company as a Managing Director in 1989. Novations assists
clients in, among other things, clarifying and communicating their business
strategies and re-designing their organizations and business processes.
Novations also provides its clients with a variety of organizational assessment
tools that are designed to gather and analyze feedback on either an
organizational or individual basis and to initiate change in response to such
feedback. In its most recent fiscal year, approximately 60% of Novations'
revenue was derived from strategic consulting services provided to organizations
in industries such as the petrochemical, financial services, consumer products,
transportation and telecommunications industries. The balance of the company's
revenue resulted from sales to clients of organizational assessment tools
including the Organizational Analysis Survey, the Strategic Alignment Survey,
Total Quality Survey, Customer Service Survey and Leadership and Managerial
Profiles. Novations' clients include Eli Lilly and Company, Motorola, Inc. and
Yellow Corporation. Novations is headquartered in Provo, Utah, and has offices
in New York and Dallas. In its most recent fiscal year, Novations generated
revenue of approximately $9.0 million.
 
     Star Mountain, Inc.:  Star Mountain, Inc. (together with its subsidiaries,
"Star") was founded by A. Carl von Sternberg in 1987. Star's core business
consists of providing customized training services and products to individuals
within federal, state and local government entities and corporations. In
addition, Star provides a limited amount of computer network design, sales,
installation and support, and computer network security research and
development. Star delivers its training courseware to clients in a variety of
formats (including written materials and interactive multimedia software), but
typically does not directly train its clients. Approximately 32% of Star's
revenue in its fiscal year ended December 31, 1996 was derived from the United
States Department of Defense, 43% from other federal entities, 1% from state and
local government entities, and the remainder from corporations. In addition to
the Department of Defense, Star's largest government clients include the
Internal Revenue Service and the Immigration and Naturalization Service. Star is
headquartered in Alexandria, Virginia and has 17 branch offices located
throughout the United States. In its fiscal year ended December 31, 1996, Star
generated revenue of approximately $16.3 million. In addition, Star acquired
three businesses since September 1996 that, had they been acquired on January 1,
1996, would have contributed an additional $8.5 million to Star's revenue in the
1996 calendar year.
 
MERGER CONSIDERATION
 
     The aggregate consideration to be paid by Provant at the closing of the
Combination is $68.4 million, consisting of $22.5 million in cash (representing
approximately 85.5% of the net proceeds of the Offering) and 3,826,815 shares of
Common Stock (assuming an initial public offering price of $12.00 per share). If
the initial public offering price is other than $12.00 per share, the number of
shares issued to the former stockholders of the Founding Companies will be
increased or decreased so that such stockholders receive an
 
                                       16
<PAGE>   18
 
aggregate of $45.9 million of Common Stock valued at the initial public offering
price. However, the total number of shares of Common Stock outstanding following
the Combination will not vary as a result of an initial public offering price of
other than $12.00 per share because the size of the stock dividend that will be
declared by Provant prior to the consummation of the Combination will increase
as the initial offering price increases and decrease as the initial offering
price decreases. As a result, upon the consummation of the Combination (but
without giving effect to the Offering), there will be outstanding a total of
6,805,605 shares of Common Stock.
 
     In addition to the consideration described above, the former stockholders
of six of the Founding Companies will be eligible to receive up to an aggregate
of 1,325,000 additional shares of Common Stock (assuming an initial public
offering price of $12.00 per share) (the "Additional Consideration") if
specified levels of earnings before interest and taxes ("EBIT") are reached by
their respective companies. In the case of the seventh Founding Company, Star,
Provant has agreed to make a future payment in cash or shares of Common Stock
based on Star's EBIT for fiscal 1999 (the "Star Contingent Consideration"). In
connection with the Combination, the Company will repay approximately $2.9
million of indebtedness of the Founding Companies from the net proceeds of the
Offering. The consideration to be paid by Provant for each Founding Company was
determined by arm's length negotiations between Provant and representatives of
each Founding Company and was based primarily on the pro forma EBIT of each
Founding Company. Additional Consideration paid for a Founding Company and the
Star Contingent Consideration represent, in effect, an upward adjustment in
purchase price. For a more detailed description of these transactions, see
"Certain Transactions -- Organization of the Company."
 
                                       17
<PAGE>   19
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the 2,600,000 shares of
Common Stock offered hereby (assuming an initial public offering price of $12.00
per share), after deducting the estimated underwriting discount and estimated
Offering expenses, are estimated to be approximately $26.3 million ($30.6
million if the Underwriters' over-allotment option is exercised in full). Of the
net proceeds, approximately $22.5 million will be used to pay the cash portion
of the purchase price for the Founding Companies. In addition, the Company
currently intends to use approximately $2.9 million of the net proceeds to repay
certain indebtedness of the Founding Companies assumed in connection with the
Combination (which indebtedness bears interest at a weighted average interest
rate of 9.0% and matures at various dates through February 2001). The Company
also intends to use $750,000 to pay a fee due upon the closing of the Offering
to a third party for information provided to Provant relating to the training
and development industry.
 
     The Company intends to use approximately $193,000 to repay in part a note
payable of the Company to Paul M. Verrochi and Dominic J. Puopolo. See "Certain
Transactions -- Other Transactions; American Business Partners LLC." Of this
amount, approximately $50,000 is attributable to expenses relating to the
Offering. Pending the use of the net proceeds of the Offering for the purposes
described above, the Company will invest such proceeds in short-term,
interest-bearing, investment grade securities.
 
                                DIVIDEND POLICY
 
     The Company intends to retain all of its earnings, if any, to finance the
expansion of its business and for general corporate purposes, including future
acquisitions, and does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. Any future determination as to the payment of
dividends on the Common Stock will be at the discretion of the Board of
Directors and will depend upon, among other things, the Company's future
earnings, if any, the operating and financial condition of the Company, its
capital requirements, general business conditions and any other factors the
Board of Directors of the Company may consider. In addition, in the event that
the Company is successful in obtaining a credit facility at any point in the
future, it is likely that any such facility will include restrictions on the
Company's ability to pay dividends without the consent of the lender.
 
                                       18
<PAGE>   20
 
                                 CAPITALIZATION
 
     The following table sets forth the short-term debt, including the current
maturities of long-term debt, and capitalization of the Company at September 30,
1997: (i) on a pro forma combined basis to give effect to the Combination, the
increase in the Company's authorized shares of Common Stock, the authorization
of a class of preferred stock and the declaration of a stock dividend; and (ii)
as further adjusted to give effect to the issuance of the 2,600,000 shares of
Common Stock offered hereby and the application of the estimated net proceeds.
See "Use of Proceeds." This table should be read in conjunction with the
Unaudited Pro Forma Combined Financial Statements of the Company and the related
notes thereto included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                           SEPTEMBER 30, 1997
                                                                        -------------------------
                                                                         PRO FORMA
                                                                         COMBINED
                                                                            (1)       AS ADJUSTED
                                                                        -----------   -----------
                                                                             (IN THOUSANDS)
<S>                                                                     <C>           <C>
Short-term debt, including current maturities of long-term debt (2)...    $ 2,980       $    80
                                                                           ======        ======
Long-term debt, less current maturities (2)...........................    $ 1,481       $ 1,481
Stockholders' Equity:
  Preferred Stock, $0.01 par value; 5,000,000 shares authorized, none
     issued or outstanding, pro forma and as adjusted.................         --            --
  Common Stock, $0.01 par value; 40,000,000 shares authorized,
     6,805,605 shares issued and outstanding, pro forma; and 9,405,605
     shares issued and outstanding, as adjusted (3)...................         38            64
  Additional paid-in capital..........................................     36,699        62,989
  Retained earnings...................................................       (214)         (964)
                                                                           ------        ------
     Total stockholders' equity.......................................     36,523        62,089
                                                                           ------        ------
          Total capitalization........................................    $38,004       $63,570
                                                                           ======        ======
</TABLE>
 
---------------
(1) Combines the respective accounts of Provant and the Founding Companies at
    September 30, 1997 and gives effect to the reclassification of the Founding
    Companies' common stock as additional paid-in capital.
 
(2) For a description of the Company's debt, see the notes to the financial
    statements of each of the Founding Companies.
 
(3) Excludes: (i) up to an aggregate of 1,325,000 shares of Common Stock
    (assuming an initial public offering price of $12.00 per share) that may be
    issued as Additional Consideration to the former stockholders of six of the
    Founding Companies as well as shares of Common Stock that may be issued as
    Star Contingent Consideration; (ii) 1,100,000 shares of Common Stock
    reserved for issuance under the Company's 1998 Equity Incentive Plan (of
    which options to purchase 833,464 shares will be outstanding upon the
    consummation of the Offering at an exercise price per share equal to the
    Offering price); (iii) 100,000 shares of Common Stock reserved for issuance
    under the Company's Stock Plan for Non-Employee Directors (of which no
    options will be outstanding upon the consummation of the Offering); (iv)
    500,000 shares of Common Stock reserved for issuance under the Company's
    1998 Employee Stock Purchase Plan; (v) 10,000 shares of Common Stock
    reserved for issuance upon the exercise of an outstanding option having an
    exercise price of $5.00 per share; and (vi) an aggregate of 793,656 shares
    of Common Stock reserved for issuance upon the exercise of warrants granted
    to certain of the Company's executive officers, as more fully described
    under "Certain Transactions -- Other Transactions; American Business
    Partners LLC."
 
                                       19
<PAGE>   21
 
                                    DILUTION
 
     The pro forma net tangible book value of the Company as of September 30,
1997 was approximately $(12.5) million, or $(1.84) per share. Net tangible book
value per share represents the book value of the Company's pro forma net
tangible assets less total liabilities divided by the number of shares of Common
Stock outstanding (after giving effect to the Combination). After giving effect
to the sale by the Company of 2,600,000 shares of Common Stock in the Offering
(after deducting the estimated underwriting discount and estimated Offering
expenses) and the application of the net proceeds therefrom, the pro forma net
tangible book value at September 30, 1997 would have been approximately $13.0
million, or $1.39 per share. This represents an immediate increase in pro forma
net tangible book value per share of $3.23 to stockholders as of September 30,
1997, and an immediate dilution in pro forma net tangible book value per share
of $10.61 to new investors purchasing shares of Common Stock in the Offering.
The following table illustrates this per share dilution:
 
<TABLE>
    <S>                                                                    <C>      <C>
    Assumed initial public offering price................................           $12.00
                                                                                    ------
      Pro forma net tangible book value per share before Offering........  $(1.84)
      Increase in pro forma net tangible book value per share
      attributable to new investors......................................    3.23
                                                                           ------
      Pro forma net tangible book value per share after Offering.........             1.39
                                                                                    ------
      Dilution per share to new investors................................           $10.61
                                                                                    ======
</TABLE>
 
     The following table sets forth, on a pro forma basis to give effect to the
Combination, the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average price per share paid by the
Company's existing stockholders and by investors purchasing shares of Common
Stock offered hereby:
 
<TABLE>
<CAPTION>
                                         SHARES PURCHASED                               AVERAGE
                                      ----------------------           TOTAL             PRICE
                                        NUMBER       PERCENT     CONSIDERATION (1)     PER SHARE
                                      ----------     -------     -----------------     ---------
        <S>                           <C>            <C>         <C>                   <C>
        Existing stockholders.......   6,805,605       72.4%       $ (12,527,000)       $ (1.84)
        New investors...............   2,600,000       27.6           31,200,000          12.00
                                      ----------      -----         ------------
                  Total.............   9,405,605      100.0%       $  18,673,000
                                      ==========      =====         ============
</TABLE>
 
---------------
 
(1) Total consideration paid by existing stockholders represents the combined
    stockholders' equity of the Founding Companies before the Offering, adjusted
    to reflect: (i) the cash portion of the consideration payable to the
    stockholders of the Founding Companies in connection with the Combination;
    and (ii) the payment of distributions estimated at approximately $1.4
    million which certain of the Founding Companies are expected to make to
    their stockholders prior to the closing of the Combination. See "Use of
    Proceeds" and "Capitalization."
 
                                       20
<PAGE>   22
 
                            SELECTED FINANCIAL DATA
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
     Provant will acquire the Founding Companies simultaneously with and as a
condition to the consummation of the Offering. For financial reporting purposes,
Provant has been designated as the accounting acquiror. To date, Provant has
conducted operations only in connection with the Combination and the Offering.
As a result, Provant has generated no revenue. The following selected unaudited
pro forma combined financial data present data for the Company, adjusted for:
(i) the consummation of the Combination; (ii) certain pro forma adjustments to
the historical financial statements of the Founding Companies; and (iii) the
consummation of the Offering and the application of the net proceeds. See the
Company's Unaudited Pro Forma Combined Financial Statements, each of the
Founding Companies' financial statements and the notes thereto included
elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                      PRO FORMA COMBINED (1)
                                                              --------------------------------------
                                                               YEAR ENDED        THREE MONTHS ENDED
                                                              JUNE 30, 1997      SEPTEMBER 30, 1997
                                                              -------------     --------------------
<S>                                                           <C>               <C>
STATEMENT OF OPERATIONS DATA:
Revenue.....................................................   $    68,846           $   17,738
Cost of revenue.............................................        30,967                8,056
                                                                   -------              -------
Gross profit................................................        37,879                9,682
Selling, general and administrative expenses (2)............        28,663                8,319
Goodwill amortization (3)...................................         1,226                  307
                                                                   -------              -------
Income from operations......................................         7,990                1,056
Interest and other income (expense), net....................           (73)                  23
                                                                   -------              -------
Income before provision for income taxes....................         7,917                1,079
Provision for income taxes (4)..............................         3,703                  558
                                                                   -------              -------
Net income..................................................   $     4,214           $      521
                                                                   =======              =======
Net income per share........................................   $      0.45           $     0.06
                                                                   =======              =======
Shares used in computing net income per share (5)...........     9,405,605            9,405,605
</TABLE>
 
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30, 1997
                                                                   --------------------------------
                                                                    PRO FORMA
                                                                   COMBINED (6)     AS ADJUSTED (7)
                                                                   ------------     ---------------
<S>                                                                <C>              <C>
BALANCE SHEET DATA:
  Working capital (8)............................................    $(14,357)          $11,209
  Total assets...................................................      75,095            74,738
  Long-term debt, net of current maturities......................       1,481             1,481
  Stockholders' equity...........................................      36,523            62,089
</TABLE>
 
---------------
(1) The pro forma combined statement of operations data assumes that the
    Combination and the Offering were consummated on July 1, 1996, and is not
    necessarily indicative of the results the Company would have obtained if
    these events actually then occurred or of the Company's future results. The
    pro forma combined statement of operations data is based on preliminary
    estimates, available information and assumptions that management deems
    appropriate, and should be read in conjunction with the other financial
    statements and notes thereto included elsewhere in this Prospectus.
 
(2) Reflects pro forma adjustments to salary, bonuses and benefits paid to
    certain of the owners of the Founding Companies for the Compensation
    Differential, which for the year ended June 30, 1997 and the three months
    ended September 30, 1997 was approximately $4.8 million and $1.3 million,
    respectively.
 
(3) Reflects amortization of the goodwill to be recorded as a result of the
    Combination over a 40-year period and computed on the basis described in the
    Notes to the Unaudited Pro Forma Combined Financial Statements.
 
                                       21
<PAGE>   23
 
(4) Assumes that all income is subject to an effective corporate income tax rate
    of 40%, and all goodwill from the Combination is non-deductible.
 
(5) Assumes an initial public offering price of $12.00 per share. Consists of:
    (i) 3,826,815 shares to be issued to the stockholders of the Founding
    Companies (without giving effect to the issuance of Additional Consideration
    or the Star Contingent Consideration); (ii) 2,978,790 shares held by the
    management and founders of Provant; and (iii) 2,600,000 shares to be sold in
    the Offering.
 
(6) The pro forma combined balance sheet data assumes that the Combination was
    consummated on September 30, 1997. The pro forma combined balance sheet data
    is based upon preliminary estimates, available information and assumptions
    that management deems appropriate and should be read in conjunction with the
    other financial statements and notes thereto included elsewhere in this
    Prospectus.
 
(7) Adjusted for the sale of 2,600,000 shares of Common Stock offered hereby
    (assuming an initial public offering price of $12.00 per share) and the
    application of the net proceeds therefrom as described under "Use of
    Proceeds."
 
(8) The pro forma combined data gives effect to $22.5 million representing the
    cash portion of the consideration for the Combination to be paid from a
    portion of the net proceeds of the Offering.
 
                                       22
<PAGE>   24
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     Unless otherwise indicated or the context otherwise requires in this
section, each reference to a year is to the Company's or a Founding Company's
fiscal year which (with the exception of J. Howard, LSS and Star) ends on June
30 of the same calendar year (e.g., "1997" means the fiscal year ended June 30,
1997). The following discussion should be read in conjunction with the Company's
Unaudited Pro Forma Combined Financial Statements and the Founding Companies'
Financial Statements and the related notes thereto appearing elsewhere in this
Prospectus.
 
INTRODUCTION
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and off-the-shelf
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led and
train-the-trainer seminars, interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
 
     The Company receives revenue from five main areas: (i) instructor-led and
train-the-trainer seminars; (ii) license fees; (iii) custom services and
products; (iv) consulting services; and (v) off-the-shelf products. The Company
recognizes revenue from instructor-led training and train-the-trainer seminars,
usually on a participant basis, when the training is delivered. From its
train-the-trainer arrangements, the Company also recognizes license fees on a
per-participant basis when a certified client trainer delivers the Company's
courses and materials to other employees of the client. The Company recognizes
revenue from a site license at the time the license is granted. The Company
generally recognizes revenue from its custom services and products based on the
percentage-of-completion method. The Company recognizes revenue from fees for
its consulting services, for which it charges an hourly or per diem rate, when
the consulting is provided. The Company also recognizes revenue for its
off-the-shelf products, such as books or videotapes, when the products are
delivered.
 
     Cost of revenue primarily consists of: (i) salaries and benefits for the
Company's instructors, consultants and course designers and costs of independent
contractors; and (ii) the cost of developing, designing and producing training
courses and materials, including materials costs. As a result, the Company's
gross margins are affected by the number of instructors, consultants and course
designers and the utilization of such employees during any given period.
Selling, general and administrative expenses consist primarily of salaries,
benefits and bonuses for the Company's corporate, sales, marketing and
administrative personnel, and marketing and advertising expenses for the
Company's services and products. Selling, general and administrative expenses
also include incentive and discretionary bonuses paid to owners and other key
employees. Other selling, general and administrative expenses include travel
expenses, rent, depreciation, telecommunication costs, postage and other
operating costs.
 
     The Founding Companies have operated throughout the periods presented as
independent, privately-owned entities, and their results of operations reflect
varying tax structures (S corporations or C corporations) which have influenced
the historical level of owners' compensation. The owners and key employees of
the Founding Companies have agreed to certain adjustments in their annual
historical salaries, bonuses and benefits in connection with the Combination.
The difference (positive or negative) between the base salary of the owners and
key employees of the Founding Companies immediately after the Combination and
their salaries, bonuses and benefits during any comparable period is referred to
as the "Compensation Differential". The aggregate Compensation Differentials for
1995, 1996 and 1997 and for the three months ended September 30, 1996 and 1997
were $1.8 million, $3.9 million, $4.8 million, $642,000, and $1.3 million,
respectively, and have been reflected as a pro forma adjustment in the Unaudited
Pro Forma Combined
 
                                       23
<PAGE>   25
 
Statements of Operations. The Unaudited Pro Forma Combined Statements of
Operations include a provision for income tax as if the Company was taxed as a C
corporation.
 
     Following the Combination, the Company expects to realize certain savings
as a result of: (i) consolidation of certain expenses, such as travel and
lodging, advertising, employee benefits, communications, insurance and other
general and administrative expenses; and (ii) the Company's ability to borrow at
lower interest rates than most of the Founding Companies. The Company cannot
quantify these savings until the completion of the Combination. It is
anticipated that these savings will be offset partially by the costs of being a
publicly held company and the incremental increase in costs related to the
Company's new management. However, these costs, like the savings that they
offset, cannot be quantified accurately. Neither the anticipated savings nor the
anticipated costs have been included in the pro forma financial information of
the Company.
 
     In July 1996, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 97 ("SAB 97"), relating to business combinations
immediately prior to an initial public offering, which required that business
combinations like the Combination be accounted for using the purchase method of
acquisition accounting. Under the purchase method, Provant has been designated
as the accounting acquiror. Approximately $49.1 million, representing the excess
of the fair value of the consideration received in the Combination over the fair
value of the net assets to be acquired, will be recorded as goodwill on the
Company's balance sheet. Goodwill will be amortized as a non-cash charge to the
Company's income statement over a 40-year period. The pro forma impact of this
amortization expense is approximately $1.2 million per year. The amount
amortized, however, will not be deductible for tax purposes. See "Certain
Transactions -- Organization of the Company."
 
RESULTS OF OPERATIONS -- COMBINED
 
     The summary combined Founding Company statement of operations data for
1995, 1996 and 1997 and the three months ended September 30, 1996 and 1997 set
forth in the table below do not purport to present the combined Founding
Companies in accordance with generally accepted accounting principles, but
represent merely a summation of the data of the individual Founding Companies on
a historical basis and do not include the effects of pro forma adjustments. This
data will not be comparable to and may not be indicative of the Company's
post-Combination results of operations because (i) the Founding Companies
historically were not under common control or management and had different tax
structures during the periods presented; (ii) the Company used the purchase
method of accounting to reflect the Combination, resulting in the recording of
goodwill which will be amortized over 40 years; (iii) the Company will incur
incremental costs related to its new corporate management and the costs of being
a public company; and (iv) the combined data does not reflect potential benefits
and cost savings the Company expects to realize when operating as a combined
entity.
 
     The following table sets forth certain unaudited combined statement of
operations data of the Founding Companies on a historical basis and as a
percentage of revenue and excludes the effects of pro forma adjustments for the
periods indicated. Three of the Founding Companies, J. Howard, LSS and Star,
historically operated with fiscal years ending on dates other than June 30. For
purposes of the table below, their operating results have been recast to reflect
a June 30 fiscal year end, although they have been derived from financial
statements prepared on the same basis as the audited financial statements. As a
result of this presentation, the operating results for these three companies do
not conform with their audited financial statements contained elsewhere in this
Prospectus.
 
<TABLE>
<CAPTION>
                                   FISCAL YEARS ENDED JUNE 30,                    THREE MONTHS ENDED SEPTEMBER 30,
                     -------------------------------------------------------     -----------------------------------
                        1995 (1)              1996                1997                1996                1997
                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                         (DOLLARS IN THOUSANDS)
<S>                  <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Revenue............  $41,289   100.0%    $51,497   100.0%    $61,245   100.0%    $14,291   100.0%    $16,319   100.0%
Cost of revenue....   17,770    43.0      22,205    43.1      26,117    42.6       5,707    39.9       7,000    42.9
                     -------   -----     -------   -----     -------   -----     -------   -----     -------   -----
Gross profit.......  $23,519    57.0%    $29,292    56.9%    $35,128    57.4%    $ 8,584    60.1%    $ 9,319    57.1%
                     =======   =====     =======   =====     =======   =====     =======   =====     =======   =====
</TABLE>
 
---------------
(1) Includes 1995 data for LSS for the 12 months ended August 31, 1995.
 
                                       24
<PAGE>   26
 
COMBINED RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998
PERIOD") COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997
PERIOD")
 
     Revenue.  Revenue increased $2.0 million, or 14.2%, from $14.3 million in
the 1997 Period to $16.3 million in the 1998 Period. This increase primarily was
attributable to increased revenues of Star and Decker.
 
     Cost of Revenue.  Cost of revenue increased $1.3 million, or 22.7%, from
$5.7 million in the 1997 Period to $7.0 million in the 1998 Period. As a
percentage of revenue, cost of revenue increased from 39.9% in the 1997 Period
to 42.9% in the 1998 Period, primarily due to increased cost of revenue of Star
and LSS.
 
COMBINED RESULTS FOR 1997 COMPARED TO 1996
 
     Revenue.  Revenue increased $9.7 million, or 18.9%, from $51.5 million in
1996 to $61.2 million in 1997. This increase primarily was attributable to
increased revenues of Star, BTI, LSS and MOHR.
 
     Cost of Revenue.  Cost of revenue increased $3.9 million, or 17.6%, from
$22.2 million in 1996 to $26.1 million in 1997. As a percentage of revenue, cost
of revenue decreased from 43.1% in 1996 to 42.6% in 1997, primarily due to
improved gross profit margins of BTI, Decker and LSS.
 
COMBINED RESULTS FOR 1996 COMPARED TO 1995
 
     Revenue.  Revenue increased $10.2 million, or 24.7%, from $41.3 million in
1995 to $51.5 million in 1996. This increase primarily was attributable to
increased revenues of Star, J. Howard, BTI and Novations.
 
     Cost of Revenue.  Cost of revenue increased approximately $4.4 million, or
25.0%, from $17.8 million in 1995 to $22.2 million in 1996. As a percentage of
revenue, cost of revenue increased slightly from 43.0% in 1995 to 43.1% in 1996,
primarily due to increased cost of revenue of MOHR, Decker and LSS.
 
COMBINED LIQUIDITY AND CAPITAL RESOURCES
 
     After the consummation of the Combination and the Offering, the Company
will have approximately $2.7 million in cash and approximately $1.6 million of
indebtedness outstanding. The Company anticipates that its cash flow from
operations will provide cash sufficient to satisfy the Company's working capital
needs, debt service requirements and planned capital expenditures for the next
12 months. The Company made capital expenditures of approximately $903,000 in
1997 and approximately $363,000 in the three months ended September 30, 1997 and
currently intends to make capital expenditures of $1.0 million in fiscal 1998,
principally for information systems, facilities, furnishings and equipment.
After the Combination, the Company intends to study the feasibility of upgrading
and integrating certain systems of the Founding Companies. Consequently, the
Company has not yet established its capital needs for such integration and
upgrades. The Company has assessed its various information and technology
systems and does not believe that it will be required to incur significant costs
to correct any Year 2000 deficiencies. To the extent that the Company is
incorrect in this assessment and significant costs will be incurred, the
Company's business, financial condition and results of operations could be
materially adversely affected.
 
     The Company intends to pursue selected acquisition opportunities. The
timing, size or success of any acquisition and the associated potential capital
commitments are unpredictable. The Company expects to fund future acquisitions
primarily through a combination of cash flow from operations and borrowings, as
well as issuances of additional equity. The Company plans to register an
additional 3,000,000 shares of its Common Stock under the Securities Act after
completion of the Offering for use as consideration for future acquisitions.
 
RESULTS OF OPERATIONS -- BTI
 
     BTI primarily provides train-the-trainer programs designed to help its
clients improve employee selection and to provide managers with a methodology
for assessing strengths and weaknesses of current employees. BTI's revenue is
derived primarily from the licensing to clients of the right to use its training
materials.
 
                                       25
<PAGE>   27
 
     The following table sets forth certain selected financial data for BTI on a
historical basis and as a percentage of revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                          YEAR ENDED JUNE 30,                      THREE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1995               1996               1997               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
<S>                       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenue.................  $3,803   100.0%    $5,685   100.0%    $7,096   100.0%    $1,712   100.0%    $1,977   100.0%
Cost of revenue.........   1,049    27.6      1,495    26.3      1,488    21.0        387    22.6        385    19.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   2,754    72.4      4,190    73.7      5,608    79.0      1,325    77.4      1,592    80.5
Selling, general and
  administrative
  expenses..............   2,315    60.9      4,048    71.2      5,111    72.0        969    56.6      1,306    66.0
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  439    11.5%    $  142     2.5%    $  497     7.0%    $  356    20.8%    $  286    14.5%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  (89)   (2.3)%   $  563     9.9%    $  942    13.3%    $    0       0%    $  337    17.0%
</TABLE>
 
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- BTI
 
     Revenue.  Revenue increased $265,000, or 15.5%, from $1.7 million in the
1997 Period to $2.0 million in the 1998 Period, primarily due to increased sales
of existing products as a result of the expansion of the sales force and an
increase in participant fees as a result of an increased base of certified
trainers at the company's clients.
 
     Cost of Revenue.  Cost of revenue remained relatively constant, decreasing
from $387,000 in the 1997 Period to $385,000 in the 1998 Period. As a percentage
of revenue, cost of revenue decreased from 22.6% in the 1997 Period to 19.5% in
the 1998 Period, primarily due to a decrease in the average unit cost of
participant materials.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $337,000, or 34.8%, from
approximately $969,000 in the 1997 Period to $1.3 million in the 1998 Period.
Excluding the Compensation Differential of approximately $337,000 attributable
to BTI in the 1998 Period (there being no Compensation Differential for the 1997
Period), selling, general and administrative expenses would have remained
relatively constant at $1.0 million in the 1997 Period and the 1998 Period. As a
percentage of revenue, selling, general and administrative expenses would have
decreased on an adjusted basis from 56.6% in the 1997 Period to 49.0% in the
1998 Period, primarily due to the company's larger revenue base.
 
RESULTS FOR 1997 COMPARED TO 1996 -- BTI
 
     Revenue.  Revenue increased $1.4 million, or 24.8%, from $5.7 million in
1996 to $7.1 million in 1997, primarily due to increased sales of existing
products as a result of the expansion of the sales force and an increase in
participant fees as a result of an increased base of certified trainers at the
company's clients.
 
     Cost of Revenue.  Cost of revenue remained relatively constant at $1.5
million in 1996 and 1997. As a percentage of revenue, cost of revenue decreased
from 26.3% in 1996 to 21.0% in 1997, primarily due to a decrease in the average
unit cost of participant materials.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.1 million, or 26.3%, from $4.0 million in
1996 to $5.1 million in 1997. Excluding the Compensation Differential
attributable to BTI of approximately $563,000 and approximately $942,000 in 1996
and 1997, respectively, selling, general and administrative expenses would have
increased approximately $684,000, or 19.6%, from $3.5 million in 1996 to $4.2
million in 1997. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 61.3% in 1996 to 58.8%
in 1997. The decrease as a percentage of revenue on an adjusted basis primarily
was due to the company's larger revenue base.
 
                                       26
<PAGE>   28
 
RESULTS FOR 1996 COMPARED TO 1995 -- BTI
 
     Revenue.  Revenue increased $1.9 million, or 49.5%, from $3.8 million in
1995 to $5.7 million in 1996, primarily due to increased sales of existing
products as a result of the expansion of the sales force and an increase in
participant fees as a result of an increased base of certified trainers at the
company's clients.
 
     Cost of Revenue.  Cost of revenue increased approximately $446,000, or
42.5%, from $1.0 million in 1995 to $1.5 million in 1996. As a percentage of
revenue, cost of revenue decreased slightly from 27.6% in 1995 to 26.3% in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.7 million, or 74.9%, from $2.3 million in
1995 to $4.0 million in 1996. Excluding the Compensation Differential
attributable to BTI of approximately $(89,000) and approximately $563,000 in
1995 and 1996, selling, general and administrative expenses would have increased
$1.1 million, or 45.0%, from $2.4 million in 1995 to $3.5 million in 1996. As a
percentage of revenue, selling, general and administrative expenses would have
decreased slightly on an adjusted basis from 63.2% in 1995 to 61.3% in 1996.
 
LIQUIDITY AND CAPITAL RESOURCES -- BTI
 
     BTI generated net cash from operating activities of approximately $641,000
in 1997. In the 1998 Period, BTI used approximately $63,000 in operating
activities, primarily due to an increase in accounts receivable. Net cash used
in investing activities was approximately $33,000 in 1997 and approximately
$3,000 in the 1998 Period for purchases of property and equipment. At September
30, 1997, BTI had working capital of $2.1 million.
 
RESULTS OF OPERATIONS -- DECKER
 
     Decker provides instructor-led training to businesses to improve employees'
business communication skills and communications between management and
employees. Decker's revenue is derived primarily from fees charged to
participants in its instructor-led training programs.
 
     The following table sets forth certain selected financial data for Decker
on a historical basis and as a percentage of revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                          YEAR ENDED JUNE 30,                      THREE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1995               1996               1997               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
<S>                       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenue.................  $8,550   100.0%    $8,620   100.0%    $8,410   100.0%    $1,930   100.0%    $2,585   100.0%
Cost of revenue.........   2,419    28.3      2,655    30.8      2,275    27.1        549    28.4        660    25.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   6,131    71.7      5,965    69.2      6,135    72.9      1,381    71.6      1,925    74.5
Selling, general and
  administrative
  expenses..............   5,670    66.3      5,716    66.3      5,621    66.8      1,261    65.4      1,663    64.4
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  461     5.4%    $  249     2.9%    $  514     6.1%    $  120     6.2%    $  262    10.1%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  192     2.2%    $  192     2.2%    $  340     4.0%    $   60     3.1%    $  110     4.3%
</TABLE>
 
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- DECKER
 
     Revenue.  Revenue increased approximately $655,000, or 33.9%, from $1.9
million in the 1997 Period to $2.6 million in the 1998 Period, primarily due to
an increase in the sales force and organizational initiatives undertaken in 1997
as described below, which resulted in an increase in the number of seminars
delivered during the 1998 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $111,000, or
20.2%, from approximately $549,000 in the 1997 Period to approximately $660,000
in the 1998 Period. As a percentage of revenue, cost of revenue decreased from
28.4% in the 1997 Period to 25.5% in the 1998 Period, primarily due to the
increased utilization of trainers for instructor-led programs.
 
                                       27
<PAGE>   29
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $402,000, or 31.9%, from $1.3
million in the 1997 Period to $1.7 million in the 1998 Period. Excluding the
Compensation Differential of approximately $60,000 and approximately $110,000
attributable to Decker in the 1997 Period and 1998 Period, respectively,
selling, general and administrative expenses would have increased approximately
$352,000, or 29.3%, from $1.2 million in the 1997 Period to $1.6 million in the
1998 Period. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 62.2% in the 1997 Period
to 60.1% in the 1998 Period, primarily due to the company's larger revenue base.
 
RESULTS FOR 1997 COMPARED TO 1996 -- DECKER
 
     Revenue.  Revenue decreased approximately $210,000, or 2.4%, from $8.6
million in 1996 to $8.4 million in 1997, primarily due to a temporary shift in
the focus of Decker's business. During the first six months of 1997, Decker
increased its focus on providing consulting services rather than its traditional
training. This shift in focus resulted in a decline in training revenue and a
high degree of sales force turnover. During the second half of 1997, the company
returned to a business model focused on instructor-led training, and launched
several organizational initiatives, including the hiring of a new president and
the implementation of a new salary structure for its sales force.
 
     Cost of Revenue.  Cost of revenue decreased approximately $380,000, or
14.4%, from $2.7 million in 1996 to $2.3 million in 1997. As a percentage of
revenue, cost of revenue decreased from 30.8% in 1996 to 27.1% in 1997,
primarily due to a reduction in the number of trainers and increased utilization
of trainers.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased approximately $95,000, or 1.7%, from $5.7
million in 1996 to $5.6 million in 1997. Excluding the Compensation Differential
attributable to Decker of approximately $192,000 and approximately $340,000 in
1996 and 1997, respectively, selling, general and administrative expenses would
have decreased approximately $243,000, or 4.4%, from $5.5 million in 1996 to
$5.3 million in 1997. As a percentage of revenue, selling, general and
administrative expenses would have decreased on an adjusted basis from 64.1% in
1996 to 62.8% in 1997.
 
RESULTS FOR 1996 COMPARED TO 1995 -- DECKER
 
     Revenue.  Revenue increased approximately $70,000, or 0.8%, from $8.5
million in 1995 to $8.6 million in 1996.
 
     Cost of Revenue.  Cost of revenue increased approximately $236,000, or
9.8%, from $2.4 million in 1995 to $2.7 million in 1996. As a percentage of
revenue, cost of revenue increased from 28.3% in 1995 to 30.8% in 1996,
primarily due to higher salaries paid to the company's trainers in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses remained relatively constant at $5.7 million 1995 and
1996. Excluding the Compensation Differential attributable to Decker of
approximately $192,000 in both 1995 and 1996, selling, general and
administrative expenses would have remained relatively constant at $5.5 million
in 1995 and 1996. As a percentage of revenue, selling, general and
administrative expenses would have remained constant on an adjusted basis at
64.1% in 1995 and 1996.
 
LIQUIDITY AND CAPITAL RESOURCES -- DECKER
 
     Decker generated net cash from operating activities of approximately
$446,000 in 1997 and $496,000 in the 1998 Period. Net cash used in investing
activities was approximately $11,000 in 1997, primarily for purchases of
property and equipment, and approximately $464,000 in the 1998 Period, primarily
for the purchase of marketable securities. Net cash used in financing activities
was approximately $241,000 in 1997, primarily for the payment of dividends, and
approximately $14,000 in the 1998 Period for payments on notes payable. At
September 30, 1997, Decker had working capital of $1.1 million and approximately
$1.0 million of long-term debt.
 
                                       28
<PAGE>   30
 
RESULTS OF OPERATIONS -- J. HOWARD
 
     J. Howard provides instructor-led training to individual managers and
client companies to identify and address potential obstacles to improving
workplace productivity, including race and gender issues, sexual harassment and
failure of employees to take measured risks. J. Howard's revenue is derived
primarily from fees from instructor-led seminars and, to a lesser extent, from
the rendering of consulting services. J. Howard also occasionally enters into
license agreements and then delivers its programs in the train-the-trainer
format; in these instances, revenue from the license agreements is recognized
when the license is signed. Revenue from the trainer certifications is
recognized on a per event basis when the training is delivered.
 
     The following table sets forth certain selected financial data for J.
Howard on a historical basis and as a percentage of revenue for the periods
indicated:
 
<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31,                     NINE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1994               1995               1996               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
<S>                       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenue.................  $5,087   100.0%    $6,251   100.0%    $7,110   100.0%    $5,814   100.0%    $6,077   100.0%
Cost of revenue.........   1,713    33.7      1,964    31.4      2,166    30.5      1,782    30.7      1,851    30.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   3,374    66.3      4,287    68.6      4,944    69.5      4,032    69.3      4,226    69.5
Selling, general and
  administrative
  expenses..............   3,087    60.7      4,158    66.5      4,559    64.1      2,791    48.0      3,170    52.1
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  287     5.6%    $  129     2.1%    $  385     5.4%    $1,241    21.3%    $1,056    17.4%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  172     3.4%    $  522     8.4%    $  944    13.3%    $  177     3.0%    $  305     5.0%
</TABLE>
 
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- J. HOWARD
 
     Revenue.  Revenue increased approximately $263,000, or 4.5%, from $5.8
million in the 1996 Period to $6.1 million in the 1997 Period, primarily due to
increased license revenue generated from one of the company's clients during the
1997 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $69,000, or 3.9%,
from $1.8 million in the 1996 Period to $1.9 million in the 1997 Period. As a
percentage of revenue, cost of revenue decreased slightly from 30.7% in the 1996
Period to 30.5% in the 1997 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $379,000, or 13.6%, from $2.8
million in the 1996 Period to $3.2 million in the 1997 Period. Excluding the
Compensation Differential of approximately $177,000 and approximately $305,000
attributable to J. Howard in the 1996 Period and 1997 Period, respectively,
selling, general and administrative expenses would have increased approximately
$251,000, or 9.6%, from $2.6 million in the 1996 Period to $2.9 million in the
1997 Period. As a percentage of revenue, selling, general and administrative
expenses would have increased on an adjusted basis from 45.0% in the 1996 Period
to 47.1% in the 1997 Period, primarily due to compensation paid to additional
salespeople hired during the 1997 calendar year who did not generate material
revenue during the 1997 Period.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- J. HOWARD
 
     Revenue.  Revenue increased approximately $859,000, or 13.7%, from $6.3
million in the year ended December 31, 1995 to $7.1 million in the year ended
December 31, 1996, primarily due to a general increase in the number of client
engagements.
 
     Cost of Revenue.  Cost of revenue increased approximately $202,000, or
10.3%, from $2.0 million in the year ended December 31, 1995 to $2.2 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased slightly from 31.4% in the year ended December 31, 1995 to 30.5% in
the year ended December 31, 1996.
 
                                       29
<PAGE>   31
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $401,000, or 9.6%, from $4.2
million in the year ended December 31, 1995 to $4.6 million in the year ended
December 31, 1996. Excluding the Compensation Differential attributable to J.
Howard of approximately $522,000 and approximately $944,000 in the year ended
December 31, 1995 and the year ended December 31, 1996, respectively, selling,
general and administrative expenses would have remained relatively constant at
$3.6 million. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 58.2% in the year ended
December 31, 1995 to 50.8% in the year ended December 31, 1996.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER
31, 1994 -- J. HOWARD
 
     Revenue.  Revenue increased $1.2 million, or 22.9%, from $5.1 million in
the year ended December 31, 1994 to $6.3 million in the year ended December 31,
1995, primarily due to the expansion of two existing client relationships in the
1995 calendar year to include licensing and trainer certifications.
 
     Cost of Revenue.  Cost of revenue increased approximately $251,000, or
14.7%, from $1.7 million in the year ended December 31, 1994 to $2.0 million in
the year ended December 31, 1995. As a percentage of revenue, cost of revenue
decreased from 33.7% in the year ended December 31, 1994 to 31.4% in the year
ended December 31, 1995.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.1 million, or 34.7%, from $3.1 million in
the year ended December 31, 1994 to $4.2 million in the year ended December 31,
1995. Excluding the Compensation Differential attributable to J. Howard of
approximately $172,000 and approximately $522,000 in the year ended December 31,
1994 and the year ended December 31, 1995, respectively, selling, general and
administrative expenses would have increased approximately $721,000, or 24.7%,
from $2.9 million in the year ended December 31, 1994 to $3.6 million in the
year ended December 31, 1995. As a percentage of revenue, selling, general and
administrative expenses would have increased slightly on an adjusted basis from
57.3% in the year ended December 31, 1994 to 58.2% in the year ended December
31, 1995.
 
LIQUIDITY AND CAPITAL RESOURCES -- J. HOWARD
 
     J. Howard generated net cash from operating activities of approximately
$464,000 in the year ended December 31, 1996 and approximately $715,000 in the
1997 Period. Net cash used in investing activities was approximately $248,000 in
the year ended December 31, 1996 and approximately $105,000 in the 1997 Period,
primarily for purchases of property and equipment. Net cash used in financing
activities was approximately $481,000 in the year ended December 31, 1996 for
distributions to stockholders. At September 30, 1997, J. Howard had working
capital of $1.8 million.
 
RESULTS OF OPERATIONS -- LSS
 
     LSS creates customized training products that generally are designed to
facilitate faster learning of customer interface devices and higher productivity
of retail associates. LSS's training products are delivered to clients primarily
through interactive multimedia software and, to a lesser extent, distance-based
media. LSS derives revenue from the design, development and delivery of its
products.
 
                                       30
<PAGE>   32
 
     The following table sets forth certain selected financial data for LSS on a
historical basis and as a percentage of revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                     YEAR ENDED DECEMBER 31,           NINE MONTHS ENDED SEPTEMBER 30,
                                ---------------------------------     ---------------------------------
                                     1995               1996               1996               1997
                                --------------     --------------     --------------     --------------
                                                        (DOLLARS IN THOUSANDS)
<S>                             <C>      <C>       <C>      <C>       <C>      <C>       <C>      <C>
Revenue.......................  $3,332   100.0%    $5,123   100.0%    $3,570   100.0%    $3,960   100.0%
Cost of revenue...............   1,390    41.7      1,696    33.1      1,230    34.5      1,590    40.2
                                ------   -----     ------   -----     ------   -----     ------   -----
Gross profit..................   1,942    58.3      3,427    66.9      2,340    65.5      2,370    59.8
Selling, general and
  administrative expenses.....   1,767    53.0      3,079    60.1      1,713    47.9      1,697    42.8
                                ------   -----     ------   -----     ------   -----     ------   -----
Income from operations........  $  175     5.3%    $  348     6.8%    $  627    17.6%    $  673    17.0%
                                ======   =====     ======   =====     ======   =====     ======   =====
Compensation Differential.....  $  415    12.5%    $1,379    26.9%    $  484    13.6%    $  333     8.4%
</TABLE>
 
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- LSS
 
     Revenue.  Revenue increased approximately $390,000, or 10.9%, from $3.6
million in the 1996 Period to $4.0 million in the 1997 Period, primarily due to
the expansion of the sales force.
 
     Cost of Revenue.  Cost of revenue increased approximately $360,000, or
29.3%, from $1.2 million in the 1996 Period to $1.6 million in the 1997 Period.
As a percentage of revenue, cost of revenue increased from 34.5% in the 1996
Period to 40.2% in the 1997 Period, primarily due to increased video production
costs associated with certain of the company's products during the 1997 Period,
which generally result in lower gross margins.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses remained relatively constant at $1.7 million in the 1996
Period and the 1997 Period. Excluding the Compensation Differential of
approximately $484,000 and approximately $333,000 attributable to LSS in the
1996 Period and 1997 Period, respectively, selling, general and administrative
expenses would have increased approximately $135,000, or 11.0%, from $1.2
million in the 1996 Period to $1.4 million in the 1997 Period. As a percentage
of revenue, selling, general and administrative expenses would have remained
constant on an adjusted basis at approximately 34.4% in the 1996 Period and the
1997 Period.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- LSS
 
     Revenue.  Revenue increased $1.8 million, or 53.8%, from $3.3 million in
the year ended December 31, 1995 to $5.1 million in the year ended December 31,
1996, primarily due to the increased productivity from the company's expanded
sales force.
 
     Cost of Revenue.  Cost of revenue increased approximately $306,000, or
22.0%, from $1.4 million in the year ended December 31, 1995 to $1.7 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased from 41.7% in the year ended December 31, 1995 to 33.1% in the year
ended December 31, 1996, primarily due to several follow-on client engagements
which generally result in lower production costs.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.3 million, or 74.3%, from $1.8 million in
the year ended December 31, 1995 to $3.1 million in the year ended December 31,
1996. Excluding the Compensation Differential attributable to LSS of
approximately $415,000 and $1.4 million in the year ended December 31, 1995 and
the year ended December 31, 1996, respectively, selling, general and
administrative expenses would have increased approximately $348,000, or 25.7%,
from $1.4 million in the year ended December 31, 1995 to $1.7 million in the
year ended December 31, 1996. As a percentage of revenue, selling, general and
administrative expenses would have decreased on an adjusted basis from 40.6% in
the year ended December 31, 1995 to 33.2% in the year ended December 31, 1996,
primarily due to the company's larger revenue base.
 
                                       31
<PAGE>   33
 
LIQUIDITY AND CAPITAL RESOURCES -- LSS
 
     LSS generated net cash from operating activities of approximately $315,000
in the year ended December 31, 1996 and approximately $295,000 in the 1997
Period. Net cash used in investing activities was approximately $85,000 in the
year ended December 31, 1996 and approximately $61,000 in the 1997 Period for
purchases of property and equipment. At September 30, 1997, LSS had working
capital of approximately $887,000.
 
RESULTS OF OPERATIONS -- MOHR
 
     MOHR offers train-the-trainer seminars to help clients in the retail
industry primarily to improve productivity by fostering a customer-oriented
focus at the sales management and sales associate levels. In some of its
programs, MOHR trains employees directly through instructor-led seminars. MOHR's
revenue is derived primarily from the licensing to clients of the right to use
its training programs on a participant or site basis.
 
     The following table sets forth certain selected financial data for MOHR on
a historical basis and as a percentage of revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED SEPTEMBER
                                         YEAR ENDED JUNE 30,                         30,
                                  ---------------------------------     ------------------------------
                                       1996               1997              1996             1997
                                  --------------     --------------     ------------     -------------
                                                         (DOLLARS IN THOUSANDS)
<S>                               <C>      <C>       <C>      <C>       <C>    <C>       <C>     <C>
Revenue.........................  $2,171   100.0%    $3,015   100.0%    $554   100.0%    $ 556   100.0%
Cost of revenue.................     677    31.2        825    27.4      187    33.8       204    36.7
                                  ------   -----     ------   -----     ----   -----     -----   -----
Gross profit....................   1,494    68.8      2,190    72.6      367    66.2       352    63.3
Selling, general and
  administrative expenses.......   1,151    53.0      1,745    57.9      383    69.1       562   101.1
                                  ------   -----     ------   -----     ----   -----     -----   -----
Income (loss) from operations...  $  343    15.8%    $  445    14.7%    $(16)   (2.9)%   $(210)  (37.8)%
                                  ======   =====     ======   =====     ====   =====     =====   =====
Compensation Differential.......  $  144     6.6%    $  334    11.1%    $ 60    10.8%    $ 105    18.9%
</TABLE>
 
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- MOHR
 
     Revenue.  Revenue increased slightly, from approximately $554,000 in the
1997 Period to approximately $556,000 in the 1998 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $17,000, or 9.1%,
from approximately $187,000 in the 1997 Period to approximately $204,000 in the
1998 Period. As a percentage of revenue, cost of revenue increased from 33.8% in
the 1997 Period to 36.7% in the 1998 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $179,000, or 46.7%, from
approximately $383,000 in the 1997 Period to approximately $562,000 in the 1998
Period. Excluding the Compensation Differential of approximately $60,000 and
approximately $105,000 attributable to MOHR in the 1997 Period and 1998 Period,
respectively, selling, general and administrative expenses would have increased
approximately $134,000, or 41.5%, from approximately $323,000 in the 1997 Period
to approximately $457,000 in the 1998 Period. As a percentage of revenue,
selling, general and administrative expenses would have increased on an adjusted
basis from 58.3% in the 1997 Period to 82.2% in the 1998 Period, primarily due
to compensation paid to additional salespeople hired during 1997 who did not
generate material revenue during the 1998 Period and development costs incurred
to update certain of the company's products.
 
RESULTS FOR 1997 COMPARED TO 1996 -- MOHR
 
     Revenue.  Revenue increased approximately $844,000, or 38.9%, from $2.2
million in 1996 to $3.0 million in 1997, primarily due to the hiring of two
additional salespeople and the increase in license fees during 1997.
 
                                       32
<PAGE>   34
 
     Cost of Revenue.  Cost of revenue increased approximately $148,000, or
21.9%, from approximately $677,000 in 1996 to approximately $825,000 in 1997. As
a percentage of revenue, cost of revenue decreased from 31.2% in 1996 to 27.4%
in 1997, primarily due to the increase in license fees, which result in higher
margins than train-the-trainer seminars.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $594,000, or 51.6%, from $1.2
million in 1996 to $1.8 million in 1997. Excluding the Compensation Differential
attributable to MOHR of approximately $144,000 and approximately $334,000 in
1996 and 1997, respectively, selling, general and administrative expenses would
have increased approximately $404,000, or 40.1%, from $1.0 million in 1996 to
$1.4 million in 1997. As a percentage of revenue, selling, general and
administrative expenses would have increased slightly from 46.4% in 1996 to
46.8% in 1997.
 
LIQUIDITY AND CAPITAL RESOURCES -- MOHR
 
     MOHR generated net cash from operating activities of approximately $80,000
in 1997. In the 1998 Period, MOHR used approximately $43,000 in operating
activities. Net cash used in investing activities was approximately $41,000 in
1997 and approximately $6,000 in the 1998 Period for purchases of property and
equipment. At September 30, 1997, MOHR had working capital of approximately
$249,000.
 
RESULTS OF OPERATIONS -- NOVATIONS
 
     Novations assists clients in, among other things, clarifying and
communicating their business strategies and re-designing their organizations and
work systems. Novations also provides its clients with a variety of
organizational assessment tools that are designed to gather and analyze feedback
on either an organizational or individual basis and to initiate change within
the client's organization in response to such feedback. Novations' revenue is
derived primarily from fees from professional services and, to a lesser extent,
from the sale of services and products to support human resource management.
 
     The following table sets forth certain selected financial data for
Novations on a historical basis and as a percentage of revenue for the periods
indicated:
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED SEPTEMBER
                                             YEAR ENDED JUNE 30,                               30,
                               -----------------------------------------------    ------------------------------
                                   1995             1996             1997             1996             1997
                               -------------    -------------    -------------    -------------    -------------
                                                            (DOLLARS IN THOUSANDS)
    <S>                        <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>
    Revenue..................  $7,175  100.0%   $9,039  100.0%   $9,018  100.0%   $2,167  100.0%   $2,464  100.0%
    Cost of revenue..........   3,885   54.1     4,733   52.4     4,839   53.7     1,117   51.5     1,197   48.6
                               ------  -----    ------  -----    ------  -----    ------  -----    ------  -----
    Gross profit.............   3,290   45.9     4,306   47.6     4,179   46.3     1,050   48.5     1,267   51.4
    Selling, general and
      administrative
      expenses...............   3,167   44.2     4,094   45.3     3,315   36.7       823   38.0     1,088   44.1
                               ------  -----    ------  -----    ------  -----    ------  -----    ------  -----
    Income from operations...  $  123    1.7%   $  212    2.3%   $  864    9.6%   $  227   10.5%   $  179    7.3%
                               ======  =====    ======  =====    ======  =====    ======  =====    ======  =====
    Compensation
      Differential...........  $1,208   16.8%   $1,471   16.3%   $  661    7.3%   $  174    8.0%   $  375   15.2%
</TABLE>
 
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- NOVATIONS
 
     Revenue.  Revenue increased approximately $297,000, or 13.7%, from $2.2
million in the 1997 Period to $2.5 million in the 1998 Period, primarily due to
an increase in organizational assessment revenues of $213,000 in the 1998
Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $80,000, or 7.2%
from $1.1 million in the 1997 Period to $1.2 million in the 1998 Period. As a
percentage of revenue, cost of revenue decreased from 51.5% in the 1997 Period
to 48.6% in the 1998 Period, primarily due to the increased utilization of the
company's consultants.
 
                                       33
<PAGE>   35
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $265,000, or 32.2%, from
approximately $823,000 in the 1997 Period to $1.1 million in the 1998 Period.
Excluding the Compensation Differential attributable to Novations of
approximately $174,000 and approximately $375,000 in the 1997 Period and 1998
Period, respectively, selling, general and administrative expenses would have
increased $64,000, or 9.9%, from approximately $649,000 in the 1997 Period to
approximately $713,000 in the 1998 Period. As a percentage of revenue, selling,
general and administrative expenses would have decreased on an adjusted basis
from 29.9% in the 1997 Period to 28.9% in the 1998 Period.
 
RESULTS FOR 1997 COMPARED TO 1996 -- NOVATIONS
 
     Revenue.  Revenue remained relatively constant at $9.0 million in 1996 and
1997.
 
     Cost of Revenue.  Cost of revenue increased approximately $106,000, or
2.2%, from $4.7 million in 1996 to $4.8 million in 1997. As a percentage of
revenue, cost of revenue increased from 52.4% in 1996 to 53.7% in 1997,
primarily due to an increase in the size of the consulting staff.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased by $779,000 or 19.0%, from $4.1 million in
1996 to $3.3 million in 1997. Excluding the Compensation Differential
attributable to Novations of $1.5 million and approximately $661,000 in 1996 and
1997, respectively, selling, general and administrative expenses would have
increased approximately $31,000, or 1.2%, from $2.6 million in 1996 to $2.7
million in 1997. As a percentage of revenue, selling, general and administrative
expenses would have increased slightly on an adjusted basis from 29.0% in 1996
to 29.4% in 1997.
 
RESULTS FOR 1996 COMPARED TO 1995 -- NOVATIONS
 
     Revenue.  Revenue increased $1.9 million, or 26.0%, from $7.2 million in
1995 to $9.0 million in 1996, primarily due to the introduction and marketing of
new services and the hiring of additional consultants.
 
     Cost of Revenue.  Cost of revenue increased approximately $848,000, or
21.8%, from $3.9 million in 1995 to $4.7 million in 1996. As a percentage of
revenue, cost of revenue decreased slightly from 54.1% in 1995 to 52.4% in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $927,000, or 29.3% from $3.2
million in 1995 to $4.1 million in 1996. Excluding the Compensation Differential
attributable to Novations of $1.2 million and $1.5 million in 1995 and 1996,
respectively, selling, general and administrative expenses would have increased
approximately $664,000, or 33.9%, from $2.0 million in 1995 to $2.6 million in
1996. As a percentage of revenue, selling, general and administrative expenses
would have increased on an adjusted basis from 27.3% in 1995 to 29.0%, primarily
due to an expansion of the company's infrastructure to support revenue growth.
 
LIQUIDITY AND CAPITAL RESOURCES -- NOVATIONS
 
     Novations generated net cash from operating activities of approximately
$153,000 in 1997 and $587,000 in the 1998 Period. Net cash used in investing
activities was approximately $137,000 and $9,000 in 1997 and the 1998 Period,
respectively, for purchases of property and equipment. Net cash provided by
financing activities was approximately $55,000 in 1997, from net proceeds of
long-term debt partially offset by distributions to stockholders. Net cash used
in financing activities was approximately $220,000 in the 1998 Period, for the
repayment of notes payable. At September 30, 1997, Novations had working capital
of approximately $544,000 and approximately $361,000 of long term debt.
 
RESULTS OF OPERATIONS -- STAR
 
     Star provides customized training and development services and products to
train individuals primarily within agencies of federal, state and local
government. Star delivers its courseware to clients in a variety of formats
(including written materials and interactive multimedia software), but typically
does not directly train
 
                                       34
<PAGE>   36
 
its clients. Star's revenue is derived primarily from fees received from the
provision of training services as a contractor or subcontractor under government
contracts.
 
     The following table sets forth certain selected financial data for Star on
a historical basis and as a percentage of revenue for the periods indicated:
 
<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED SEPTEMBER 30,
                                        YEAR ENDED DECEMBER 31,
                           -------------------------------------------------    --------------------------------
                               1994              1995              1996              1996              1997
                           -------------    --------------    --------------    --------------    --------------
                                                          (DOLLARS IN THOUSANDS)
    <S>                    <C>     <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
    Revenue..............  $9,731  100.0%   $14,306  100.0%   $16,313  100.0%   $11,785  100.0%   $17,101  100.0%
    Cost of revenue......   6,350   65.3      8,668   60.6      9,457   58.0      6,559   55.7     10,588   61.9
                           ------  -----    -------  -----    -------  -----    -------  -----    -------  -----
    Gross profit.........   3,381   34.7      5,638   39.4      6,856   42.0      5,226   44.3      6,513   38.1
    Selling, general and
      administrative
      expenses...........    3106   31.9      4,611   32.2      5,815   35.6      4,222   35.8      5,638   33.0
                           ------  -----    -------  -----    -------  -----    -------  -----    -------  -----
    Income from
      operations.........  $  275    2.8%   $ 1,027    7.2%   $ 1,041    6.4%   $ 1,004    8.5%   $   875    5.1%
                           ======  =====    =======  =====    =======  =====    =======  =====    =======  =====
    Compensation
      Differential.......  $   36    0.4%   $    64    0.4%   $   304    1.9%   $   228    1.9%   $   135    0.8%
</TABLE>
 
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- STAR
 
     Revenue.  Revenue increased $5.3 million, or 45.1%, from $11.8 million in
the 1996 Period to $17.1 million in the 1997 Period, primarily due to an
increase in the number of federal government contracts undertaken, as well as
revenue of $3.4 million contributed by businesses acquired during the third
calendar quarter of 1996 and the first calendar quarter of 1997. Revenue was
significantly lower during the first half of the 1996 calendar year as a result
of a decline in new client engagements due to prolonged Congressional budget
negotiations.
 
     Cost of Revenue.  Cost of revenue increased approximately $4.0 million, or
61.4%, from $6.6 million in the 1996 Period to $10.6 million in the 1997 Period.
As a percentage of revenue, cost of revenue increased from 55.7% in the 1996
Period to 61.9% in the 1997 Period, primarily due to the increased use of
subcontractors during the 1997 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.4 million, or 33.5%, from $4.2 million in
the 1996 Period to $5.6 million in the 1997 Period. Excluding the Compensation
Differential of approximately $228,000 and approximately $135,000 attributable
to Star in the 1996 Period and 1997 Period, respectively, selling, general and
administrative expenses would have increased $1.5 million, or 37.8%, from $4.0
million in the 1996 Period to $5.5 million in the 1997 Period. As a percentage
of revenue, selling, general and administrative expenses would have decreased on
an adjusted basis from 33.9% in the 1996 Period to 32.2% in the 1997 Period,
primarily due to the company's larger revenue base.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- STAR
 
     Revenue.  Revenue increased $2.0 million, or 14.0%, from $14.3 million in
the year ended December 31, 1995 to $16.3 million in the year ended December 31,
1996, due to revenue of $3.6 million contributed by businesses acquired by Star
in the third calendar quarters of 1995 and 1996. The revenue from the acquired
businesses was offset partially by the decline in business generated from
federal government entities as a result of the Congressional budget negotiations
described above.
 
     Cost of Revenue.  Cost of revenue increased approximately $789,000, or
9.1%, from $8.7 million in the year ended December 31, 1995 to $9.5 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased from 60.6% in the year ended December 31, 1995 to 58.0% in the year
ended December 31, 1996, primarily due to the acquisition in the third calendar
quarter of 1996 of a business with higher gross profit margins than Star's core
business.
 
                                       35
<PAGE>   37
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.2 million, or 26.1%, from $4.6 million in
the year ended December 31, 1995 to $5.8 million in the year ended December 31,
1996. Excluding the Compensation Differential attributable to Star of
approximately $64,000 and approximately $304,000 in the years ended December 31,
1995 and 1996, respectively, selling, general and administrative expenses would
have increased approximately $964,000, or 21.2%, from $4.5 million in the year
ended December 31, 1995 to $5.5 million in the year ended December 31, 1996. As
a percentage of revenue, selling, general and administrative expenses would have
increased on an adjusted basis from 31.8% in the year ended December 31, 1995 to
33.7% in the year ended December 31, 1996.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER
31, 1994 -- STAR
 
     Revenue.  Revenue increased $4.6 million, or 47.0%, from $9.7 million in
the year ended December 31, 1994 to $14.3 million in the year ended December 31,
1995, primarily due to an increase in the number of projects undertaken during
the 1995 calendar year, and revenue of $1.0 million contributed by a business
acquired by Star in the third calendar quarter of 1995.
 
     Cost of Revenue.  Cost of revenue increased $2.3 million, or 36.5%, from
$6.4 million in the year ended December 31, 1994 to $8.7 million in the year
ended December 31, 1995. As a percentage of revenue, cost of revenue decreased
from 65.3% in the year ended December 31, 1994 to 60.6% in the year ended
December 31, 1995, primarily as a result of the acquisition of a business with
higher gross margin percentages than Star and the improvement in operating
results for Star's core business.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.5 million, or 48.5%, from $3.1 million in
the year ended December 31, 1994 to $4.6 million in the year ended December 31,
1995. Excluding the Compensation Differential of approximately $36,000 and
approximately $64,000 attributable to Star in the years ended December 31, 1994
and 1995, respectively, selling, general and administrative expenses would have
increased $1.5 million, or 48.1%, from $3.1 million in the year ended December
31, 1994 to $4.5 million in the year ended December 31, 1995. As a percentage of
revenue, selling, general and administrative expenses would have increased
slightly on an adjusted basis from 31.5% in the year ended December 31, 1994 to
31.8% in the year ended December 31, 1995.
 
LIQUIDITY AND CAPITAL RESOURCES -- STAR
 
     Star generated net cash from operating activities of $1.1 million in the
year ended December 31, 1996 and approximately $999,000 in the 1997 Period. Net
cash used in investing activities was approximately $565,000 in the year ended
December 31, 1996 and $1.1 million in the 1997 Period, primarily for
acquisitions. Net cash used in financing activities was approximately $478,000
in the year ended December 31, 1996, primarily for purchases of treasury stock.
Net cash provided by financing activities was approximately $360,000 in the 1997
Period, primarily from borrowings on the company's line of credit. At September
30, 1997, Star had working capital of approximately $287,000, and long-term debt
of approximately $379,000.
 
                                       36
<PAGE>   38
 
                                    BUSINESS
 
COMPANY OVERVIEW
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and off-the-shelf
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led classroom
training and seminars, certification of client employees as instructors
("train-the-trainer"), interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
The seven Founding Companies are recognized leaders in their respective fields
and have developed a wide range of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. The Company's objective is to become a leading
single source provider of high-quality training and development services and
products that are distributed through multiple delivery methods.
 
     The Company provided training and development services and products to more
than 1,700 companies and 75 government entities in fiscal 1997, including Abbott
Laboratories, Bank of America, Conoco, Inc., Eli Lilly and Company, Federal
Express, Federated Department Stores, Inc., Hewlett-Packard Company, J.P. Morgan
& Co., Incorporated, Metropolitan Life Insurance Company, Mobil Corporation, the
Department of Defense, the Immigration and Naturalization Service and the
Internal Revenue Service. During this period, the Company generated revenues of
more than $100,000 from each of 75 different corporate clients and from over 15
different federal government entities. For fiscal 1997, the Company had pro
forma revenue of $68.8 million and pro forma income from operations of $8.0
million. From fiscal 1995 through fiscal 1997, the combined revenue of the
Founding Companies grew at a compound annual rate of 21.8%.
 
MARKET OVERVIEW
 
     The corporate and government training and development market is large and
growing. According to Training Magazine, domestic corporations with over 100
employees budgeted approximately $58.6 billion on training in 1997, compared to
approximately $45.0 billion in 1992, representing a compound annual growth rate
of approximately 5.4%. The size of and growth in the federal government market
can be seen in the Department of Defense's training and development budget,
which for its 1997 fiscal year was approximately $23.9 billion, compared to
approximately $18.0 billion in its 1992 fiscal year, representing a compound
annual growth rate of approximately 5.8%. Provant believes that this growth has
been and will continue to be driven by: (i) the evolution from a
manufacturing-based to a service-based economy; (ii) the increasing recognition
by businesses that education, training and effective human resource management
are competitive necessities rather than optional expenses; and (iii) the
expanding use of technology throughout all levels of organizations, which has
increased the overall amount of training required and the number of employees
participating in such training.
 
     Corporations and government entities increasingly are utilizing external
providers to meet their training and development needs. Expenditures on external
training and development by domestic corporations with over 100 employees have
increased from approximately $8.8 billion in 1992 to a budgeted $13.6 billion in
1997, representing a compound annual growth rate of 9.1%, and have increased as
a percentage of the total training budgets of such corporations from
approximately 19.6% in 1992 to 23.2% in 1997. The Company believes that federal
government expenditures on external training and development have increased from
approximately $600 million in the federal government's 1992 fiscal year to a
budgeted $3.8 billion in its 1997 fiscal year, representing a compound annual
growth rate of 44.7%. The Company believes that the growth in the external
training and development market has been driven by the desire of organizations
to: (i) focus on their core competencies; (ii) shift fixed training costs to
variable costs; and (iii) obtain training and development services, products,
technology and expertise that may not be available internally.
 
                                       37
<PAGE>   39
 
     As a result of significant advances in computer and communications
technology, the training and development industry is experiencing rapid change
in the delivery of services and products. Historically, training and development
organizations delivered services and products primarily through instructor-led
seminars. Technological advances, however, now permit organizations to provide
training at distant and multiple locations as well as self-paced training,
allowing a far greater number of participants to learn conveniently and
efficiently. Interactive multimedia software (such as CD-ROM) and distance-based
learning media (such as video conferencing, intranets and the Internet) overcome
many of the cost and space constraints of traditional instructor-led training.
The Company believes that corporations increasingly are using technology-driven
alternatives due to their ability to: (i) increase learning and retention; (ii)
minimize the opportunity costs of time spent away from the job by employees;
(iii) provide access to training and development services and products "on
demand"; (iv) lower overall training and development costs, including travel
expenses of employees; and (v) measure and track employees' progress. Although
instructor-led training currently is the primary means of delivery of training
and development services and products, the Company believes that
technology-based delivery increasingly will be used to both supplement and, in
some cases, replace instructor-led training.
 
     The training and development industry is highly fragmented, with no company
having more than a one percent share of the external training market. Many
companies in the industry provide a narrow range of services and products
through limited delivery methods. The Company believes that these companies
generally have made limited investments in content development, marketing and
the technology necessary to develop or utilize alternative delivery methods. As
corporations and government entities increasingly use external training
providers, the Company believes that they will seek providers that can meet
their overall training and development needs by: (i) providing a broad range of
high-quality services and products in both customized and off-the-shelf formats;
(ii) delivering training through multiple delivery methods capable of reaching
large and geographically dispersed work forces; and (iii) utilizing the most
current technology available. As a result, the Company believes that significant
opportunities are available for well-capitalized companies capable of meeting
these needs on a national and international basis.
 
BUSINESS STRATEGY
 
     The Company's objective is to meet a significant portion of the training
and development needs of Fortune 1000 companies, other large and medium-sized
corporations and government entities. To achieve this objective, the Company
intends to pursue a business strategy with the following key elements:
 
     OFFER VALUE-ADDED, HIGH-QUALITY TRAINING.  The Company is committed to
providing value-added training and development services and products that result
in measurable improvement in the workplace performance of employees. The
Company's services and products are based upon well-researched methodologies,
processes and content, and typically have been developed, refined and used
successfully over many years. Most of the Founding Companies' executives have
advanced degrees and are regarded as leaders in their respective areas. The
Company strives to offer high-quality training by continually updating its
content to reflect changing industry trends and client preferences.
 
     PROVIDE A BROAD RANGE OF SERVICES AND PRODUCTS.  The Company seeks to
provide its clients with a broad range of high-quality training and development
services and products in both customized and off-the-shelf formats. These
services and products cover: employee selection, recruitment and retention;
employee work skills enhancement; employee management and leadership skills; and
organizational assessment, direction and change. Specifically, the Company
assists organizations and their employees in, among other things, determining
and implementing hiring criteria, increasing workplace diversity awareness,
improving communication skills, increasing point-of-sale efficiencies, working
in a team environment and soliciting and analyzing employee feedback. In
addition, the Company provides strategic consulting services to its clients,
which are enhanced by the Company's ability to offer complementary training and
development services and products.
 
     UTILIZE MULTIPLE DELIVERY METHODS.  The Company offers multiple delivery
methods for its services and products, including instructor-led seminars,
train-the-trainer, interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
Two of the
 
                                       38
<PAGE>   40
 
Founding Companies, LSS and Star, have substantial expertise in delivery
technology which the Company intends to apply to many of the services and
products of the other Founding Companies. By offering multiple delivery methods,
the Company believes that it can better serve the needs, resource constraints
and cost requirements of its clients.
 
     DEVELOP LONG-TERM CLIENT RELATIONSHIPS.  The Company seeks to develop
long-term relationships with clients to whom it can provide a full complement of
services and products on a recurring basis. Many of the Company's long-term
clients purchase its services and products on an on-going basis after the
initial delivery of services and products. For example, after a
train-the-trainer seminar where the Company certifies a client's instructors,
the Company continues to receive a fee on a participant or site basis as the
certified instructors continue to train the client's employees. The Company also
offers updated, related or new services and products to its clients in order to
generate recurring revenue.
 
     EMPLOY A DECENTRALIZED MANAGEMENT STRUCTURE.  The Company believes that the
experienced management teams of the Founding Companies have a valuable
understanding of their respective training and development markets and have
established strong client relationships. The Company intends to operate with a
decentralized management structure under which management at each of the
Founding Companies will make most of the day-to-day operating decisions and will
have primary responsibility for the profitability and growth of their business.
The Company intends to utilize stock ownership as well as appropriate incentive
compensation to ensure that management's objectives at each of the Founding
Companies are aligned with those of the Company.
 
     IMPLEMENT BEST PRACTICES AND ACHIEVE OPERATING EFFICIENCIES.  The Company
intends to evaluate the operating policies and procedures of the Founding
Companies in order to identify and implement Company-wide best practices in
areas such as marketing, sales, product development, human resource policies and
recruiting. In addition, the Company believes that it can achieve operating
efficiencies and cost savings by more efficiently utilizing the Company's
facilities and gaining greater purchasing power in areas such as travel,
employee benefits and communications.
 
GROWTH STRATEGY
 
     The Company's objective is to become the leading single source provider of
high-quality training and development services and products to Fortune 1000
companies, other large and medium-sized corporations and government entities.
Key elements of the Company's growth strategy include:
 
     CAPITALIZE ON CROSS-SELLING OPPORTUNITIES.  The Company believes that
significant opportunities exist for each Founding Company to cross-sell its
services and products to clients of the other Founding Companies. Each of the
Founding Companies has established strong relationships with its clients but
historically has offered its clients only a limited selection of training and
development services and products. The Company provided training and development
services to more than 1,700 companies and more than 75 government entities in
fiscal 1997, and during that period generated revenue of more than $100,000 from
each of 75 different companies and over 15 different federal government
agencies. The Company intends to capitalize on the services and products of each
of the Founding Companies by emphasizing and aggressively cross-selling its
broad range of training and development services and products to its collective
client base.
 
     IMPLEMENT AGGRESSIVE SALES AND MARKETING STRATEGY.  The Company intends to
pursue an aggressive sales and marketing strategy designed to establish new
client relationships and expand existing relationships. Specifically, the
Company intends to: (i) hire additional salespeople to supplement the existing
sales efforts of the Founding Companies; (ii) establish a nationwide
telemarketing program focusing primarily on medium-sized corporations; and (iii)
participate in a greater number of conferences and trade shows. The Company
intends to direct its centralized marketing campaign to both new clients and
additional contacts within existing clients (e.g., targeting upper levels of
management if previous services provided by a Founding Company were marketed to
middle management). In addition, the Company intends to pursue relationships
with regional colleges and vocational/technical schools in order to market its
services and products to small and medium-sized companies and their employees.
The Company also intends to establish a national brand identification
 
                                       39
<PAGE>   41
 
under the Provant name, while preserving the value of the established names,
trademarks and client relationships of the Founding Companies.
 
     EXPAND SERVICE AND PRODUCT OFFERINGS.  The Company intends to broaden its
offerings of training and development services and products by developing or
acquiring new or complementary services and products. For example, the Company
currently is introducing a new employee recruitment product, based upon its
Behavioral Interviewing(R) process, that teaches clients how to recruit in a
tight labor market. In addition, the Company intends to capitalize on its
expertise in certain industries, such as the retail industry, by customizing
services and products for other similar industries, such as the hospitality,
transportation and healthcare industries.
 
     PURSUE STRATEGIC ACQUISITIONS.  The Company intends to pursue strategic
acquisitions in order to: (i) offer services or products complementary to those
it currently offers; (ii) gain expertise in new areas of training and
development; (iii) access new technology to expand the scope and quality of
delivery methods; and (iv) establish or enhance client relationships. The
Company seeks to acquire companies with strong management, profitable operating
results and leading positions within their respective markets. The Company
believes that acquisitions of this nature will improve its ability to be a
single source provider of high-quality training and development services and
products.
 
     LEVERAGE INVESTMENTS IN TECHNOLOGY AND DEPLOY LEADING TECHNOLOGIES.  A key
element of the Company's strategy is to capitalize on the technology investments
of the Founding Companies in order to deliver training and development services
and products to its clients in the most effective manner. For example, the
Company intends to apply the technical expertise of LSS and Star, which provide
training through interactive multimedia software, to convert certain products of
other Founding Companies to interactive multimedia software formats, such as
CD-ROM. The Company expects to deploy leading technologies in the delivery of
many of its services and products, including delivery through distance-based
media, such as video conferencing, intranets and the Internet, that can provide
interactive training to employees at multiple locations.
 
TRAINING AND DEVELOPMENT SERVICES AND PRODUCTS
 
     The Company's training and development services and products assist
organizations in four principal areas: (i) employee recruitment, selection and
retention; (ii) employee work skills; (iii) employee management and leadership
skills; and (iv) organizational assessment, direction and change. Through these
services and products, the Company's clients can improve the quality of
employees entering the organization, the performance of employees within the
organization, and the ability of the organization as a whole to undergo change.
The Company offers services and products which are off-the-shelf as well as
customized to meet the specialized needs of particular clients. The following
table illustrates the principal training and development areas covered by the
Company's services and products:
 
<TABLE>
<CAPTION>
                                                                                     ORGANIZATIONAL
 EMPLOYEE RECRUITMENT,                                  EMPLOYEE MANAGEMENT            ASSESSMENT,
SELECTION AND RETENTION     EMPLOYEE WORK SKILLS       AND LEADERSHIP SKILLS      DIRECTION AND CHANGE
-----------------------    -----------------------    -----------------------    -----------------------
<S>                        <C>                        <C>                        <C>
Interviewing candidates    Customer service           Analyzing employee         Strategic consulting
Identifying specific       training                   feedback                   Understanding employee
job   competencies         Public speaking            Presentation skills        perceptions
Retaining employees        Spoken communication       training                   Assessing
Addressing sexual          training                   Coaching peers and         organizational
  harassment               Buyer negotiating          colleagues                 abilities and direction
Facilitating diversity     Point-of-sale training     Managing retail stores     Measuring customer
                           General retail sales       Communicating with         satisfaction
                           training                   subordinates               Designing quality
                           Specialized government     Understanding diversity    control
                           job training               issues                     processes
                           Industrial skills                                     Changing corporate
                           training                                              culture
</TABLE>
 
     EMPLOYEE RECRUITMENT, SELECTION AND RETENTION.  The Company offers services
and products designed to assist clients in hiring and retaining effective
employees. In particular, the Company helps clients understand the skills
required of their employees, implement more effective recruitment, selection and
retention processes
 
                                       40
<PAGE>   42
 
to maximize employee productivity, and reduce turnover rates. Through one of the
Company's products, Behavioral Interviewing(R), managers learn how to identify
specific job competencies required for success, interview prospective candidates
and evaluate their skills. For example, when the Behavioral Interviewing(R)
process was implemented at a large accounting firm seeking to refine its
employee selection process, the Company worked with the firm to determine
critical skills and competencies required of candidates and to develop interview
forms designed to elicit information pertaining to those skills and
competencies. Client recruiting directors were certified, and those certified
instructors then taught the Behavioral Interviewing(R) process to the client's
interviewers nationwide. In the year following the implementation of Behavioral
Interviewing(R), the number of candidates invited for office visits who received
offers of employment increased by 10%, reflecting an increase in the
effectiveness and efficiency of the screening and evaluation process.
SkilMatch(R), a related product, is an interactive software program designed to
streamline the process of developing structured interviews and ensure a
consistent selection process. Complementing these products are the Company's
outplacement services, which it provides to several federal government agencies
to assist in work force restructuring, and its diversity enhancement services,
which facilitate employee retention and development.
 
     EMPLOYEE WORK SKILLS.  The Company offers services and products designed to
provide or improve the skills necessary to perform a particular task or job.
These skills include public speaking/presentation, negotiation, general retail
sales, point-of-sale device operation, direct store delivery (receiving) and
customer service. Several of the Company's products, including The POS
Simulator, Direct Store Delivery Simulator, Cashier Ready and Produce
Identification Trainer, are designed to increase employee productivity in the
retail workplace by simulating important retail situations and environments in
interactive multimedia formats. Many of these products allow clients to measure
the effectiveness of the training. For example, a large grocery chain that used
The POS Simulator to improve the efficiency of its cashier training program
reduced the average number of hours required to train cashiers in certain key
competencies from 16 hours of traditional classroom training to six hours with
The POS Simulator. Another Company product, Effective Communicating(TM), is a
two-day workshop designed to enable clients' key staff members to become more
effective in public speaking, sales and other types of oral communication. The
Company also offers specialized industrial skills training for
government and corporate clients.
 
     The Company provides customized work skills training to numerous federal
government entities and various state and local government entities. Most of the
services and products offered in this area involve the training of employees to
perform tasks that are unique to certain government jobs. For instance, the
Company has prepared courses for the Department of Defense covering topics from
technology applications for military aircrews to basic medical care and medical
management information systems for Army and Navy healthcare personnel. Courses
prepared for other federal agencies include Reengineering and Process Mapping
for the Department of Education, Principles of Purchasing for the Postal
Service, Introductory Correctional Training for the Bureau of Prisons, and
Training in the Use of Traffic Records for Problem Identification for the
National Highway Traffic Safety Administration. Typically, these training
courses and course materials are custom-designed by experts from the Company
working closely with members of the respective government entities.
 
     EMPLOYEE MANAGEMENT AND LEADERSHIP SKILLS.  The Company offers services and
products that are designed to improve employees' operational management,
supervisory and leadership skills. In particular, the Company helps managers to
create constructive feedback processes, operate retail stores, monitor, motivate
and communicate with subordinates and understand diversity issues. Managing
Individual and Team Effectiveness (MITE(R)), one of the Company's products, is
designed to provide managers in complex work environments with "360-degree"
feedback on their management skills. Another product, Retail Management Series
III (RMSIII), is a multi-component and highly adaptable program designed to
enhance their retail communication and coaching skills in order to improve the
productivity and profitability of managers' salespeople. For example, RMSIII was
used by a national specialty retailer seeking to increase the productivity of
its sales associates by focusing on its sales managers. The Company tailored
RMSIII to cover the sales management skills important to the retailer's
business, including sales management standards, commitment to goals and coaching
skills. The Company trained and certified district managers of the client to
teach RMSIII,
 
                                       41
<PAGE>   43
 
and those certified instructors trained sales managers and assistant managers in
over 200 of the client's stores. Three months following the introduction of the
Company's RMSIII product, stores using RMSIII reported an average increase in
sales of 27%, as compared to 14% in stores not using RMSIII. A third product,
Managing Inclusion, is a multi-day session designed to help individual managers
and client companies enhance understanding of workplace diversity, build morale
and satisfaction in the work force, and increase productivity through more
effective team relationships.
 
     ORGANIZATIONAL ASSESSMENT, DIRECTION AND CHANGE.  The Company provides
services and products designed to help organizations assess their strategic
direction and implement and manage change. The Company provides strategic
consulting services that help improve overall workplace performance by assisting
clients in, among other things, clarifying and communicating their business
strategies and redesigning their organizations and business processes. For
example, the Company assisted a large trucking company in developing alternative
organization designs and cost reduction initiatives. By using the Company's
recommendations to clarify its operating strategy and determine the core work of
its business, the trucking company was able to undertake significant structural
changes and implement cost-cutting measures that were responsible for
significantly increasing overall efficiency. The Company also provides its
clients with a variety of survey tools by which feedback can be gathered and
analyzed on either an organizational or individual basis. The Company develops
the survey forms and methodologies, conducts the surveys, and collects and
analyzes the data for its corporate clients.
 
DELIVERY METHODS
 
     The Company offers multiple delivery methods for its training services and
products. By doing so, the Company believes that it can better serve the
particular needs, resource constraints, cost requirements and cultures of its
clients. Most of the Company's services and products currently are delivered
through instructor-led and train-the-trainer seminars; however, the Company also
delivers certain of its products on interactive multimedia software or through
distance-based methods. The Company's primary delivery methods are described
below.
 
     INSTRUCTOR-LED TRAINING AND SEMINARS.  The Company delivers its programs to
clients' employees primarily through the use of either dedicated Company
instructors or certified contract instructors. Most of the Company's
instructor-led training is delivered at clients' facilities, although the
Company also delivers certain programs at its own training facilities. In some
cases, the Company's programs are delivered in a public seminar format to a
small group of individuals from multiple client companies. The Company provides
textual materials and, in some cases, video tapes as a part of its
instructor-led programs. In addition, the Company sells related published
materials in connection with these programs. The Company also develops custom
courseware that ultimately is delivered by instructors (often client employees)
who are not certified by or otherwise affiliated with the Company. The Company's
courses and programs generally range in length from a few hours to several days
and include from one to hundreds of participants.
 
     TRAIN-THE-TRAINER.  For several of its services and products, the Company's
instructors train and certify qualified employees of clients in an
instructor-led program. The certified client employees then are licensed to use
the Company's methodologies and materials to train other employees of the client
in instructor-led classes at client sites. The Company supplies training
materials for these classes and on-going training for the certified trainers.
The Company receives fees for the employee-led classes on either a participant
or site basis.
 
     INTERACTIVE MULTIMEDIA SOFTWARE.  The Company delivers several of its
products on interactive multimedia software, such as CD-ROMs. Because of the
demonstrated higher rates of learning and retention achieved through interactive
multimedia training, the Company plans to convert to CD-ROM and other
interactive multimedia software several of its products that to date have been
offered only in the instructor-led or train-the-trainer formats.
 
     DISTANCE-BASED MEDIA.  The Company currently delivers a limited number of
its products through distance-based media, such as satellite or other video
conferencing, intranets and the Internet. The Company intends to seek new
technologies that will allow it to deliver its product offerings to clients more
effectively. In
 
                                       42
<PAGE>   44
 
particular, the Company believes that more of its products will be offered
through the Internet and more clients will seek Internet-delivered training as
the bandwidth of Internet access increases.
 
OTHER SERVICES AND PRODUCTS
 
     In addition to the Company's training and development services and
products, one of the Founding Companies, Star, also provides certain other
services and products including computer network security research and
development (primarily for federal government entities) and computer network
design, sales, installation and support (primarily for corporations). These
services and products contributed 7.3% of pro forma revenue and (4.6)% of pro
forma income from operations for fiscal 1997. The Company does not anticipate
that sales of these services and products will have a material impact on its
future operating results.
 
CLIENTS
 
     The Company seeks to establish long-term relationships with Fortune 1000
companies, other large and medium-sized corporations and government entities
with substantial training and development needs. The Company has developed a
broad client base of over 1,700 corporations, with no corporate client
accounting for more than 5% of the Company's pro forma revenue during fiscal
1997 or the three months ended September 30, 1997. The Company generated revenue
of more than $100,000 from each of 75 different corporate clients during fiscal
1997. The top corporate clients of the Founding Companies by revenue generated
during fiscal 1997 include those presented below.
 
<TABLE>
<S>                             <C>                             <C>
Abbott Laboratories             Federal Express                 Metropolitan Life Insurance
Ameritech Corporation           Federated Department Stores,    Company
Amoco Corporation               Inc.                            Mobil Corporation
Bank of America                 Flexsys                         Motorola, Inc.
BOC Gases                       Fujitsu Business                Northwest Airlines, Inc.
Canadian-Hunter Exploration     Communication Systems,          Norwest Mortgage Inc.
  Ltd.                          Inc.                            PepsiCo., Inc.
Canadian Imperial Bank of       Hewlett-Packard Company         Royal Bank of Canada
  Commerce                      J.C. Penney Company, Inc.       Siemens Business
Conoco, Inc.                    J.P. Morgan & Co.               Communication Systems,
Consolidated Rail               Incorporated                    Inc.
  Corporation                   The Kroger Co.                  U.S. West, Inc.
Coopers & Lybrand L.L.P.        Lukens Steel Company            Venture Stores, Inc.
Dayton Hudson Corporation       McDonnell-Douglas               Victoria's Secret Stores
Deloitte & Touche LLP           Corporation                     Wakefern Food Corporation
Eli Lilly and Company                                           Yellow Corporation
Exxon Corporation
</TABLE>
 
                                       43
<PAGE>   45
 
     Star derives a substantial majority of its revenues from customized
training and development services and products delivered to entities affiliated
with the federal government. During fiscal 1997 and the three months ended
September 30, 1997, Star's training and development work for federal government
clients generated approximately 31.1% and 30.6%, respectively, of the Company's
pro forma combined revenue. Star also provides services and products to state
and local government entities. The Company's top federal government clients by
revenue generated during fiscal 1997 include the following:
 
<TABLE>
        <S>                                      <C>
        Defense Commissary Agency                Food Safety and Inspection
        Defense Logistics Agency                 General Accounting Office
        Department of Army                       General Services Office
        Department of Energy                     Immigration and Naturalization
        Department of Navy                       Service
        Drug Enforcement Administration          Indian Health Service
        Federal Aviation Administration          Internal Revenue Service
        Federal Highway Administration           Pension Benefit Guarantee
        Federal Law Enforcement Training         Corporation
          Center                                 United States Marshals Service
                                                 United States Postal Service
</TABLE>
 
SALES AND MARKETING
 
     Historically, the Founding Companies have used a variety of sales
strategies. The majority of the Founding Companies maintain dedicated
salespersons who seek to identify leads, qualify prospects and close sales
related to their specific training services and products. In some instances, the
salespersons also serve as the instructors or consultants for such services and
products. Generally, each of the Founding Companies targets its prospects
primarily through direct sales, public seminars, client referrals and a variety
of media, including direct mailings, the Founding Companies' web sites and trade
publications. In addition, several of the Founding Companies are able to obtain
clients as a result of the visibility of their principals, who have published
articles and books, appeared on television news shows or otherwise created a
strong reputation in their various fields of training. The Company currently
markets its services and products to its clients mainly through their human
resources personnel, business unit managers or regional managers and, to a
lesser extent, through senior executives. However, the Company intends to focus
increasingly on marketing to senior executives of both existing and targeted
clients through initial contacts made by members of the Company's Board of
Directors and senior management, as well as by the principals of the Founding
Companies.
 
     The Company generates significant revenues through sales of services and
products to government entities. Typically, these sales occur through a
competitive bidding process started by a government entity's issuance of a
request for proposal ("RFP") for a contemplated project. The Company may submit
a proposal on its own behalf or as a subcontractor to another company. Many
services and products delivered to federal government agencies are provided
through orders placed under a General Services Administration ("GSA") Supply
Schedule contract and under Office of Personnel Management/Training Management
Assistance ("OPM"). The Company is one of only a few training providers
authorized under both funding mechanisms. The Company (through Star) benefits
from its status as a preferred provider under certain funding mechanisms
(including the GSA and OPM vehicles) which allow it to negotiate contracts
without an RFP.
 
     Following the consummation of the Offering, the Company expects to
capitalize on cross-selling opportunities among the clients of the Founding
Companies. The Company intends to hire additional salespeople to supplement the
existing sales efforts of the Founding Companies and establish a nationwide
telemarketing program focusing on medium-sized corporations. In addition, the
Company is developing a marketing and advertising program to establish a
national brand identification under the Provant name, while preserving the value
of the established names, trademarks and customer relationships of the Founding
Companies.
 
                                       44
<PAGE>   46
 
COMPETITION
 
     The training and development industry is highly fragmented and competitive,
and the Company expects this competition to increase. The Company believes the
principal competitive factors in the industry are the strength of client
relationships, quality, price and breadth of service and product offerings,
quality and number of delivery methods, reputation, and the ability to provide
customized services and products. Some of the Company's competitors have
significantly greater financial, managerial, technical, marketing and other
resources than the Company. Moreover, the Company expects that it will face
additional competition from new entrants into the training and development
market due, in part, to the evolving nature of the market and the relatively low
barriers to entry.
 
     The Company competes with thousands of privately-held training companies,
most of which provide a limited range of services and products. In addition to
these small competitors, a number of larger companies are engaged in the
business of providing training and development services and products, including
Times Mirror Training Group (a subsidiary of the Times Mirror Company), The
Forum Corporation, Development Dimensions International, Wilson Learning
Corporation and several large publishers of professional reference materials who
recently have entered the industry. The Company also competes with large
professional service companies such as Andersen Consulting, Ernst & Young LLP,
Towers Perrin and others that generally offer training services in conjunction
with strategic consulting and other client assignments of larger scope. In
addition, many of the Company's clients and potential clients have internal
training departments. See "Business -- Market Overview."
 
     The Company's competitors for government contracts include service
companies such as Booz Allen, as well as contract suppliers of equipment to the
government such as Raytheon Company, McDonnell-Douglas Corporation and Lockheed
Martin Corporation.
 
INTELLECTUAL PROPERTY
 
     The Company regards many of its training and development services and
products as proprietary and relies primarily on a combination of statutory and
common law copyright, trademark, service mark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. Notwithstanding this, a third
party or parties could copy or otherwise obtain and use the Company's products
in an unauthorized manner or use these products to develop training and
development processes that are substantially similar to those of the Company.
The Company's products generally do not include any mechanisms to prohibit or
prevent unauthorized use by third parties. There can be no assurance that the
Company's means of protecting its proprietary rights will be adequate or that
the Company's competitors will not independently develop similar training
products and delivery methods. Additionally, there can be no assurance that
third parties will not claim that the Company's current or future products
and/or services infringe on the proprietary rights of others. See "Risk
Factors -- Risks Associated with Intellectual Property."
 
EMPLOYEES
 
     The Company currently employs approximately 600 full-time and part-time
employees and believes that its relationships with its employees are good.
 
INDEPENDENT CONTRACTORS
 
     The Company provides certain of its services and products through
approximately 200 independent contractors. The Company does not pay federal
employment taxes or withhold income taxes with respect to these independent
contractors or include them in the Company's employee benefit plans. See "Risk
Factors -- Independent Contractor Status."
 
                                       45
<PAGE>   47
 
FACILITIES
 
     The Company leases its principal executive office located in Boston,
Massachusetts, and maintains 23 additional leased office locations in 12 states
and one in Canada. The remaining terms of the Company's leases are less than
eight years. The Company believes that these facilities are adequate to serve
its current level of operations. If additional facilities are required, the
Company believes that suitable additional or alternative space will be available
as needed on commercially reasonable terms.
 
LEGAL PROCEEDINGS
 
     The Company is from time to time a party to litigation arising in the
ordinary course of business. Management believes that no pending legal
proceeding will have a material adverse effect on the business, financial
condition or results of operations of the Company.
 
                                       46
<PAGE>   48
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
     The following table sets forth information concerning the Company's
directors and executive officers, and those persons who will become directors
and executive officers upon the consummation of the Offering.
 
<TABLE>
<CAPTION>
               NAME                  AGE                  POST-OFFERING POSITION
-----------------------------------  ---   ----------------------------------------------------
<S>                                  <C>   <C>
Paul M. Verrochi...................  49    Chairman and Chief Executive Officer
John H. Zenger.....................  66    President and Director
Dominic J. Puopolo.................  54    Executive Vice President, Chief Financial Officer
                                           and Director
Rajiv Bhatt........................  40    Senior Vice President, Treasurer and Chief
                                           Accounting Officer
Philip Gardner.....................  34    Vice President
Herbert A. Cohen...................  61    President - MOHR, Director
Bert Decker........................  57    President - Decker, Director
Paul C. Green......................  56    President - BTI, Director
Joe Hanson.........................  40    Managing Director - Novations, Director
John F. King.......................  43    President - LSS, Director
A. Carl von Sternberg..............  69    President - Star, Director
Marc S. Wallace....................  50    President - J. Howard, Director
Michael J. Davies..................  53    Director
</TABLE>
 
     Paul M. Verrochi will become Chairman of the Board and Chief Executive
Officer of the Company upon the consummation of the Offering. Prior to the
Offering, Mr. Verrochi has been President and a director of Provant. Mr.
Verrochi also is Chairman, co-founder and a principal of American Business
Partners LLC ("ABP"). In 1992, Mr. Verrochi co-founded American Medical
Response, Inc. ("AMR"), which prior to its acquisition by Laidlaw Inc. in
January 1997 was the largest provider of ambulance services in the United
States. From August 1992 to January 1996, Mr. Verrochi served as AMR's President
and Chief Executive Officer, and until January 1997 he also served as the
Chairman of the Board of Directors. Mr. Verrochi was selected as the 1995
National Entrepreneur of the Year for Emerging Growth Companies by Inc.
Magazine. Mr. Verrochi serves as an advisory board member to numerous charitable
foundations, including the New England Aquarium and the Boston Symphony
Orchestra. Mr. Verrochi is Chairman of BridgeStreet Accommodations, Inc. and a
director of Coach USA, Inc. Mr. Verrochi received his Bachelor of Science degree
from the United States Merchant Marine Academy at Kings Point, New York.
 
     John H. Zenger will become President and a director of the Company upon the
consummation of the Offering. Prior to the Offering, since May 1997, Mr. Zenger
has been a consultant to Provant. From April 1992 to November 1996, Mr. Zenger
was employed in various capacities, including Vice President and Chairman, by
the Times Mirror Training Group, the nation's largest group of training
companies, consisting of Kaset, Learning International and Zenger Miller, the
company that he founded in 1977. Mr. Zenger has taught at the University of
Southern California School of Business and the Stanford Graduate School of
Business. Mr. Zenger received his Doctorate degree in Business Administration
from the University of Southern California, his Masters in Business
Administration from the University of California, Los Angeles and his Bachelor
of Science degree from Brigham Young University.
 
     Dominic J. Puopolo will become Executive Vice President and Chief Financial
Officer of the Company upon the consummation of the Offering. Prior to the
Offering, Mr. Puopolo has been Treasurer and a director of Provant. Mr. Puopolo
is a co-founder and principal of ABP. In 1992, Mr. Puopolo co-founded AMR. From
August 1992 to January 1996, Mr. Puopolo served as Executive Vice President,
Chief Financial Officer, Treasurer and a member of the Board of Directors of
AMR. Mr. Puopolo serves as a member of the Board of Trustees of Emerson College
of Communications and is Chairman of its Resource Development Committee. Mr.
Puopolo also serves on the Executive Committee of the Boston University School
of Medicine and is a
 
                                       47
<PAGE>   49
 
member of the Board of Trustees of Northeastern University. Mr. Puopolo, a
Certified Public Accountant, is a member of the Massachusetts Society of
Certified Public Accountants, The American Institute of Certified Public
Accountants and the National Association of Accountants. Mr. Puopolo received
his Masters in Business Administration degree from Suffolk University and his
Bachelor of Science degree in Business Administration from Northeastern
University.
 
     Rajiv Bhatt will become Senior Vice President, Treasurer and Chief
Accounting Officer of the Company upon the consummation of the Offering. Prior
to the Offering, since August 1997, Mr. Bhatt has been a consultant to Provant.
From September 1994 to August 1997, Mr. Bhatt was Executive Vice President,
Chief Financial Officer and Treasurer of Summit Technology, Inc., a
publicly-traded manufacturer of ophthalmic laser systems. From September 1988 to
September 1994, Mr. Bhatt was Chief Financial Officer, Secretary and a member of
the Board of Directors of Carlisle Plastics, Inc., a publicly-traded plastics
manufacturer. Also from September 1988 to September 1994, Mr. Bhatt was Chief
Financial Officer of Carlisle Capital Corporation, a privately held mergers and
acquisitions company. Mr. Bhatt is a Certified Public Accountant. Mr. Bhatt
received his Masters in Business Administration degree from the University of
Michigan and his Bachelor of Commerce degree from the University of Bombay.
 
     Philip Gardner will become Vice President of the Company upon the
consummation of the Offering. Prior to the Offering, since February 1997, Mr.
Gardner has been a consultant to Provant. From August 1994 to December 1996, Mr.
Gardner was a consultant for McKinsey & Company ("McKinsey"), a management
consulting firm. Prior to joining McKinsey, from 1985 to 1992, Mr. Gardner was
an officer and a highly decorated strike fighter pilot in the United States
Navy. Mr. Gardner received his Masters in Business Administration degree from
Harvard Graduate School of Business Administration and his Bachelor of Arts
degree in Government from Harvard College.
 
     Herbert A. Cohen will become a director of the Company immediately
following the consummation of the Offering. Mr. Cohen has been Chief Executive
Officer of MOHR since February 1991. From September 1978 to January 1991, Mr.
Cohen was a partner and one of the original principals of MOHR Development,
Inc., a training and consulting company. Mr. Cohen has served as President and
Director of the Instructional Systems Association, an association of over 150
training companies dedicated to improving performance through training. Mr.
Cohen received his Bachelor of Science degree in Psychology from the University
of Maine.
 
     Bert Decker will become a director of the Company immediately following the
consummation of the Offering. Mr. Decker has been Chairman and Chief Executive
Officer of Decker since October 1979. Mr. Decker is the author of the
best-selling books You've Got to be Believed to be Heard and Creating Messages
That Motivate. Mr. Decker also is the personal communications trainer for
Charles Schwab and Olympic gold medalist Bonnie Blair. Mr. Decker has appeared
on several national television programs, including The Today Show and 20/20. Mr.
Decker received his Bachelor of Arts degree in Psychology from Yale University.
 
     Paul C. Green, Ph.D. will become a director of the Company immediately
following the consummation of the Offering. Dr. Green has been Chief Executive
Officer of BTI since May 1979. Dr. Green developed the Behavioral
Interviewing(R) seminar, which has been attended by several hundred thousand
managers worldwide. Dr. Green has also served as Assistant Professor in the
Marketing Department at Memphis State University, where he taught courses in
salesmanship, sales promotion, sales management and consumer behavior. Dr. Green
received his Doctorate degree in Industrial-Organizational Psychology from
Memphis State University, his Master of Science degree in Psychology from
Memphis State University and his Bachelor of Arts degree from Lambuth College.
 
     Joe Hanson will become a director of the Company immediately following the
consummation of the Offering. Mr. Hanson has been a Managing Director of
Novations since August 1989. From September 1983 to June 1987 Mr. Hanson was a
consultant for KPMG Peat Marwick LLP. Mr. Hanson is a Certified Public
Accountant. Mr. Hanson received his Masters in Business Administration degree
from Brigham Young University and his Bachelor of Science degree in Accounting
from Brigham Young University.
 
                                       48
<PAGE>   50
 
     John F. King will become a director of the Company immediately following
the consummation of the Offering. Mr. King has been Chief Executive Officer of
LSS since December 1990. From October 1981 to November 1988, Mr. King was
employed by Wilson Learning where he served in various capacities including
Regional Sales Manager, Account Executive, and Performance Consultant. Mr. King
previously served as Professor of Communications Studies at McKendree College.
Mr. King received his Master of Arts degree in Communication Studies, Mass
Communications from Purdue University and his Bachelor of Arts degree from
California State University, Long Beach.
 
     A. Carl von Sternberg will become a director of the Company immediately
following the consummation of the Offering. Mr. von Sternberg has been President
of Star since September 1987. In 1975, Mr. von Sternberg founded Allen
Corporation of America ("Allen") a firm specializing in training, human factors,
engineering and logistics services. From October 1975 to May 1986, Mr. von
Sternberg was President and Chairman of Allen, which was selected in 1982 by
Inc. Magazine as one of America's 500 fastest growing private companies. Prior
to founding Allen, Mr. von Sternberg served as Executive Vice President and
Chief Operating Officer of Essex Corporation, a behavioral science research
company, which he co-founded in 1969. Mr. von Sternberg received his Bachelor of
Science degree in Industrial Administration from Yale University.
 
     Marc S. Wallace will become a director of the Company immediately following
the consummation of the Offering. Mr. Wallace has been President of J. Howard
since January 1991 and Treasurer since April 1986. Mr. Wallace serves on the
Boards of Directors of Belmont Hill School and the Berklee School of Music, on
the Board of Advisors of First Community Bank in Boston and as a member of the
Northeastern University Corporation. Mr. Wallace also is a member of the Boston
Chamber of Commerce. Mr. Wallace received his Masters in Business Administration
degree with a concentration in Finance from Central Michigan University and his
Bachelor of Arts degree from Adams State College.
 
     Michael J. Davies will become a director of the Company upon the
consummation of the Offering. Mr. Davies has been a consultant to Provant since
February 1997, and will continue to be a consultant following the Offering. From
April 1994 to June 1997, Mr. Davies was a Managing Director of Legg Mason Wood
Walker, Incorporated, specializing in media and communications. From September
1990 to March 1993, Mr. Davies was publisher of The Baltimore Sun. Mr. Davies is
a member of the Board of Directors of Mecklermedia Corporation, a provider of
Internet news, information and analysis through its magazines, trade shows and
web site. Mr. Davies received his Master of Science degree in Journalism from
the Medill School of Journalism at Northwestern University and his Bachelor of
Science degree from Georgia State University.
 
MANAGEMENT OF THE COMPANY FOLLOWING THE COMBINATION
 
     Upon the consummation of the Offering, the Company intends to operate with
a decentralized management structure. Messrs. Verrochi, Zenger, Puopolo, Bhatt
and Gardner will manage the Company's operations and be responsible for areas
including strategic planning, acquisitions, resource allocation, capital
financing, financial reporting, marketing efforts and human resources. They will
work closely with the Founding Companies to coordinate, integrate and expand
their service and product offerings. Messrs. Cohen, Decker, Green, Hanson, King,
von Sternberg and Wallace (together with the other key executives of the
Founding Companies) will continue to make day-to-day operating decisions and be
primarily responsible for the operations of their respective Founding Companies.
 
BOARD OF DIRECTORS
 
     After consummation of the Combination and the Offering, the Board of
Directors will consist of 11 directors. In addition, following the Offering, the
Board expects to elect three outside directors. The term of office of each
director of the Company ends at the next annual meeting of the Company's
stockholders and when his or her successor is elected and qualified. Following
the Offering, the Board of Directors will establish an Audit Committee, a
Compensation Committee and such other committees as the Board may determine. The
Audit Committee, a majority of which will be outside directors, will make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans for and results of the
Company's annual audit, approve professional services provided by and the
independence
 
                                       49
<PAGE>   51
 
of the independent public accountants, consider the range of audit and non-audit
fees, and review the adequacy of the Company's internal accounting controls. The
Compensation Committee, all of which will be outside directors, will establish a
general compensation policy for the Company, approve increases in directors'
fees and salaries paid to officers and senior employees of the Company,
administer the Company's 1998 Equity Incentive Plan, Stock Plan for Non-Employee
Directors and 1998 Employee Stock Purchase Plan, and determine, subject to the
provisions of the Company's employee benefit plans, the directors, officers and
employees of the Company eligible to participate in any of the plans, the extent
of such participation and the terms and conditions under which benefits may be
vested, received or exercised.
 
     Officers of the Company serve at the pleasure of the Board of Directors,
subject to the terms of any employment agreements with the Company.
 
DIRECTOR COMPENSATION
 
     Members of the Board of Directors who also serve as officers of or
full-time consultants to the Company or its subsidiaries do not receive
compensation for serving on the Board. Each other member of the Board will
receive a fee of $3,000 for each Board of Directors meeting attended and an
additional fee of $500 for each committee meeting attended. All directors will
receive reimbursement of reasonable expenses incurred in attending Board and
committee meetings and otherwise carrying out their duties. Non-employee
directors also are entitled to receive an option grant as described in "-- Stock
Plan for Non-Employee Directors."
 
EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS
 
     The Company was incorporated in 1996 and has conducted no operations and
paid no compensation to its officers in fiscal 1997. The Company has entered
into employment agreements, the terms of which are effective upon the closing of
the Offering, with its executive officers. The material terms of these
agreements are summarized below.
 
     The Company's employment agreement with each of Messrs. Verrochi, Zenger,
Puopolo, Bhatt and Gardner has a term of three years, and provides for an
initial base salary (subject to upward adjustment in the sole discretion of the
Company's Board of Directors) and participation in the Company's bonus and
benefit plans. The initial base salaries for Messrs. Verrochi, Zenger, Puopolo,
Bhatt and Gardner are $50,000, $150,000, $50,000, $200,000 and $125,000,
respectively. The salaries to be paid to Messrs. Verrochi and Puopolo after the
first year of the term of their employment agreements will be determined by the
Company's Board of Directors. Each of the five agreements may be terminated
prior to the expiration of the three-year term either in the event of disability
or for cause (as defined). If any of the individuals does not continue to be
employed by the Company upon the expiration of the agreement, the individual is
entitled to receive six months' severance at his base salary as in effect at the
time of expiration. Each of Messrs. Verrochi, Zenger, Puopolo, Bhatt and Gardner
has agreed not to compete with the Company for a period of five years from the
closing date of the Offering. Under their employment agreements, Messrs.
Verrochi and Puopolo are entitled to receive options to purchase 44,092 shares
of Common Stock each. See "-- Equity Incentive Plan."
 
     The principals of the Founding Companies who will become directors of the
Company immediately following the closing of the Combination will enter into a
three-year employment agreement with the Company or a subsidiary of the Company,
the material terms of which are described in "Certain Transactions --
Organization of the Company."
 
EQUITY INCENTIVE PLAN
 
     The Company has adopted the 1998 Equity Incentive Plan (the "Equity
Incentive Plan"), which provides for the award of up to 1,100,000 shares of
Common Stock in the form of incentive stock options ("ISOs"), non-qualified
stock options, stock appreciation rights, performance shares, restricted stock
or stock units (each, an "Award"). All directors and employees of, and all
consultants and advisors to, the Company (including its subsidiaries) are
eligible to participate in the Equity Incentive Plan.
 
                                       50
<PAGE>   52
 
     The Equity Incentive Plan will be administered by the Compensation
Committee (the "Committee"), which determines who shall receive Awards from
those individuals eligible to participate in the Equity Incentive Plan, the type
of Award to be made, the number of shares of Common Stock that may be acquired
pursuant to the Award and the specific terms and conditions of each Award,
including the purchase price, term, vesting schedule, restrictions on transfer
and any other conditions and limitations applicable to the Awards or their
exercise. Options that are ISOs may be exercisable for not more than 10 years
after the date the option is awarded. The Committee may at any time accelerate
the exercisability of all or any portion of an option.
 
     In the event of a merger or consolidation in which the Company is not the
surviving corporation or which results in the acquisition of substantially all
the Company's outstanding shares of capital stock, or in the event of the sale
or transfer of substantially all of the Company's assets, if the Committee so
determines, all outstanding Awards will terminate, provided that on or before 20
days prior to the proposed effective date of any such transaction, the Committee
either (i) makes all outstanding Awards exercisable prior to the consummation of
the transaction or (ii) arranges for the surviving or acquiring corporation, if
any, to assume the Awards or grant to participants replacement Awards.
 
     The Equity Incentive Plan may be amended from time to time or terminated in
its entirety by the Board of Directors; however, no amendment may be made
without stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.
 
     In connection with the Offering, the Company will grant Messrs. Verrochi,
Zenger, Puopolo, Bhatt and Gardner options to purchase 44,092, 100,000, 44,092,
50,000 and 10,000 shares of Common Stock, respectively, each of which will have
a per share exercise price equal to the initial offering price. The options
granted to Messrs. Zenger, Bhatt and Gardner will become exercisable with
respect to one-third of the underlying shares of Common Stock on each of the
first three anniversaries of the date of grant, and the options granted to
Messrs. Verrochi and Puopolo will become exercisable with respect to all of the
underlying shares of Common Stock upon the closing of the Offering. Mr. Davies
also will be granted an option to purchase 50,000 shares of Common Stock, the
terms of which are described in "Certain Transactions."
 
     In addition to the options to be granted to Messrs. Verrochi, Zenger,
Puopolo, Bhatt, Gardner and Davies, the Company will award to employees and
consultants of the Founding Companies and Provant options under the Equity
Incentive Plan to purchase an aggregate of 535,280 shares of Common Stock, with
each such option having a per share exercise price equal to the initial public
offering price.
 
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
 
     The Company's Board of Directors has adopted the Stock Plan for
Non-Employee Directors (the "Directors' Plan"). Subject to adjustment for stock
splits and similar events, a total of 100,000 shares of Common Stock have been
reserved for issuance under the Directors' Plan. Pursuant to the Directors'
Plan, in connection with the Offering, each director and director nominee who is
not an employee of or consultant to the Company or one of its subsidiaries (a
"non-employee director") and is not a stockholder of the Company prior to the
offering will receive an option to purchase 7,500 shares of Common Stock with a
per share exercise price equal to the initial public offering price. Each
non-employee director initially elected following the Offering will be granted
upon such election an option to purchase 7,500 shares of Common Stock. The per
share exercise price of options granted following the Offering will be the fair
market value of the Common Stock on the date of grant. Each option will be
non-transferable except upon death (unless otherwise approved by the Board),
will expire 10 years after the date of grant and will become exercisable with
respect to all of the shares of Common Stock issuable thereunder on the date
that is six months following the date of grant if the individual is a director
at such time. If the director dies or otherwise ceases to be a director prior to
the expiration of an option, the option (if exercisable) will remain exercisable
for a period of one year (following death) or three months (following other
termination of the individual's status as a director), but in no event beyond
the tenth anniversary of the date of grant. The Board of Directors may at any
time or times amend the Directors' Plan for any purpose that at the time may be
permitted by law.
 
     As of the date of the closing of the Offering, no options will have been
granted under the Directors' Plan.
 
                                       51
<PAGE>   53
 
STOCK PURCHASE PLAN
 
     The 1998 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan")
has been approved by the Board of Directors and stockholders of the Company. The
Employee Stock Purchase Plan is designed to enable eligible employees to
purchase shares of Common Stock at a discount on a periodic basis through
payroll deductions. All employees with at least six months of continuous
service, other than employees owning 5% or more of the combined voting power of
all classes of stock of the Company, will be eligible to participate. Purchases
will occur at the end of option periods, each of six months' duration. The first
such option period will begin on July 1, 1998. The purchase price of Common
Stock under the Employee Stock Purchase Plan will be 85% of the lesser of the
value of the Common Stock at the beginning of an option period and the value of
the Common Stock at the end of the option period. Participants may elect under
the Employee Stock Purchase Plan, prior to each option period, to have from 2%
to 10% of their pay withheld and applied to the purchase of shares at the end of
the option period.
 
     Subject to adjustment for stock splits and similar events, a total of
500,000 shares of Common Stock has been reserved for issuance under the Employee
Stock Purchase Plan. None of these shares has been issued to date.
 
LIMITATION OF CERTAIN LIABILITY OF OFFICERS AND DIRECTORS
 
     As permitted by the DGCL, the Company's Certificate of Incorporation
provides for the elimination, subject to certain conditions, of the personal
liability of directors of the Company for monetary damages for breach of their
fiduciary duties. The directors, however, remain subject to equitable remedies
and to liability for breach of their duty of loyalty to the Company or its
stockholders. The Company's Certificate of Incorporation and By-laws also
provide that the Company will indemnify its directors and officers. In addition,
the Company maintains an indemnification insurance policy covering all directors
and officers of the Company. In general, the Company's Certificate of
Incorporation, By-laws and the indemnification insurance policy attempt to
provide the maximum protection permitted by Delaware law with respect to
indemnification and exculpation of directors and officers.
 
     Under the indemnification provisions of the Company's Certificate of
Incorporation and By-laws and the indemnification insurance policy, the Company
will repay certain expenses incurred by a director or officer in connection with
any civil or criminal action or proceeding, specifically including actions by or
in the name of the Company (derivative suits), where the individual's
involvement is by reason of the fact that he or she is or was a director or
officer of the Company. Such indemnifiable expenses include, to the maximum
extent permitted by law, attomey's fees, judgments, civil or criminal fines,
settlement amounts, and other expenses customarily incurred in connection with
legal proceedings. A director or officer will not receive indemnification if he
or she is found not to have acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company.
 
                                       52
<PAGE>   54
 
                             PRINCIPAL STOCKHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, after giving effect to the Combination,
by (i) each director and director nominee of the Company, (ii) certain executive
officers of the Company, (iii) all directors, director nominees and executive
officers as a group, and (iv) each person or entity known to the Company to own
beneficially more than 5% of the outstanding Common Stock. The persons named in
this table have an address c/o the Company's principal executive offices, and,
except as indicated in the footnotes below, have sole investment and voting
power with respect to the shares beneficially owned by them.
 
<TABLE>
<CAPTION>
                                                                               PERCENTAGE OWNED (2)
                                                                               ---------------------
                                                                SHARES          BEFORE       AFTER
                  NAME OF BENEFICIAL OWNER                        (1)          OFFERING     OFFERING
-------------------------------------------------------------  ---------       --------     --------
<S>                                                            <C>             <C>          <C>
Paul M. Verrochi (3)(4)......................................  1,090,591         15.5%        11.3%
John H. Zenger...............................................    262,678          3.9          2.8
Dominic J. Puopolo (3)(5)....................................  1,023,222         14.6         10.6
Rajiv Bhatt..................................................     88,634          1.3            *
Philip Gardner...............................................    302,506          4.4          3.2
Herbert A. Cohen (6).........................................    112,903          1.7          1.2
Bert Decker..................................................    203,047          3.0          2.2
Paul C. Green................................................    425,352          6.3          4.5
Joe Hanson...................................................     74,059          1.1            *
John F. King.................................................    316,627          4.7          3.4
A. Carl von Sternberg (7)....................................    548,710          8.1          5.8
Marc S. Wallace..............................................    152,701          2.2          1.6
Michael J. Davies (8)........................................    335,424          4.9          3.5
All directors, director nominees and executive officers as a
  group (13 persons) (9).....................................  4,936,454         67.7         49.9
</TABLE>
 
---------------
 *  Less than 1%.
 
(1) Share information assumes an initial public offering price of $12.00 per
    share. The Founding Companies' merger agreements specify the aggregate
    dollar values, but not the share amounts, of the Common Stock to be received
    by their stockholders in the Combination. As a result, if the initial public
    offering price is less or greater than $12.00, the Founding Companies'
    stockholders (and in particular, Messrs. Cohen, Decker, Green, Hanson, King,
    von Sternberg and Wallace) will receive a larger or smaller number of shares
    of Common Stock, respectively. In addition, Provant will declare a stock
    dividend on all outstanding Common Stock prior to the closing of the
    Combination such that, without giving effect to the Offering (but giving
    effect to the Combination), there will be outstanding a total of 6,805,605
    shares of Common Stock. The size of the stock dividend (and as a result, the
    number of shares of Common stock held by Messrs. Verrochi, Zenger, Puopolo,
    Bhatt, Gardner and Davies) will vary if the initial offering price is less
    or greater than $12.00, with the size of the dividend increasing if the
    initial public offering price increases and decreasing if the initial public
    offering price decreases.
 
(2) Percentages in the table are based upon 6,805,605 and 9,405,605 shares of
    Common Stock assumed to be outstanding as of the closing of the Combination
    and the Offering, respectively.
 
(3) Includes 176,368 shares (assuming that the individual does not exercise such
    warrant prior to the closing of the Offering) issuable pursuant to a warrant
    that currently is exercisable, and 44,092 shares issuable upon the exercise
    of an option that will become exercisable in full upon the closing of the
    Offering. Excludes 220,460 shares issuable upon the exercise of the
    Contingent Warrant described in "Certain Transactions."
 
(4) Includes 54,035 shares held by Mr. Verrochi's wife, and 125,500 shares held
    by a trust of which Mr. Verrochi is trustee and as to which Mr. Verrochi
    disclaims beneficial ownership.
 
(5) Includes 54,035 shares held by Mr. Puopolo's wife, and 125,500 shares held
    by a trust of which Mr. Puopolo is trustee and as to which Mr. Puopolo
    disclaims beneficial ownership.
 
(6) Includes 56,451 shares held by Mr. Cohen's wife.
 
(7) Includes 38,481 shares held by Mr. von Sternberg's wife.
 
(8) Includes 50,000 shares issuable upon the exercise of an option that will
    become exercisable in full upon the closing of the Offering.
 
(9) See notes 3, 4, 5, 6, 7 and 8 above.
 
                                       53
<PAGE>   55
 
                              CERTAIN TRANSACTIONS
 
ORGANIZATION OF THE COMPANY
 
     The Combination will be accomplished through separate mergers of each
Founding Company with a separate, newly formed subsidiary of the Company. As a
result, after the closing of the Combination and the Offering (the "Closing"),
all of the assets, liabilities and business operations formerly held by each
Founding Company will exist in a separate subsidiary of the Company.
 
     Each of the merger agreements provides for the Company to pay the
stockholders of the Founding Company (i) a fixed amount of cash at the Closing
(subject to certain adjustments which have a neutral economic effect, as
discussed below), (ii) shares of Common Stock at the Closing having a fixed
dollar value, with the final number of shares being determined by the Offering
price, and (iii) with respect to six of the Founding Companies, shares of Common
Stock (the "Additional Consideration") deliverable after the Closing having a
value based on the initial public offering price up to a fixed dollar amount.
The Additional Consideration will be paid in shares of Common Stock, with the
number of those shares determined by a formula based on the relationship of the
EBIT of that Founding Company (including its successor following the Closing)
for the fiscal year ending June 30, 1998 to a specified EBIT target. For the
seventh Founding Company, Star, the stockholders will be entitled to receive
additional shares of Common Stock or cash in accordance with a formula based on
the amount by which the EBIT of Star and its successor following the Closing for
the fiscal year ending June 30, 1999 exceeds a specified EBIT target (the "Star
Contingent Consideration").
 
     The aggregate consideration to be paid by the Company in the Combination
shown below consists of approximately $22.5 million in cash (prior to any
adjustments discussed in the following paragraph) and 3,826,815 shares of Common
Stock at the Closing, and up to a maximum of 1,325,000 shares of Common Stock as
Additional Consideration (assuming the achievement of certain EBIT targets)
following the end of fiscal 1998.
 
<TABLE>
<CAPTION>
                                               AT CLOSING
                               ------------------------------------------
                                                        SHARES                 ADDITIONAL CONSIDERATION
                                              ---------------------------     ---------------------------
      FOUNDING COMPANY          CASH (1)      DOLLAR VALUE     NUMBER (2)     DOLLAR VALUE     NUMBER (2)
-----------------------------  ----------     ------------     ----------     ------------     ----------
<S>                            <C>            <C>              <C>            <C>              <C>
BTI..........................  $5,000,000      $ 5,848,656        487,388      $ 2,000,000        166,666
Decker.......................   1,550,000        4,533,333        377,778        3,000,000        250,000
J. Howard....................   1,700,000        4,072,043        339,337        3,300,000        275,000
LSS..........................   2,625,000        7,677,419        639,785        1,000,000         83,333
MOHR.........................   1,200,000        2,709,677        225,806        2,000,000        166,666
Novations....................   4,987,500        8,887,097        740,592        4,600,000        383,333
Star.........................   5,400,000       12,193,548      1,016,129          *               *
</TABLE>
 
---------------
 *  Excludes the Star Contingent Consideration.
 
(1) Prior to the adjustments discussed below.
 
(2) Assuming an initial public offering price of $12.00 per share.
 
     Each of the mergers in the Combination is conditioned upon the applicable
Founding Company meeting certain specified financial standards as of the Closing
(which vary among the Founding Companies), including a specified minimum net
worth. If a Founding Company's net worth as of the Closing exceeds the specified
minimum, the cash portion of the purchase price set forth above will be
increased by a dollar amount equal to that excess. Each Founding Company may
make a cash dividend to its stockholders prior to the Closing so long as doing
so will not prevent such Founding Company from satisfying the financial
standards specified in its merger agreement.
 
     The consideration to be paid for the Founding Companies was determined
through arm's length negotiations between Provant and representatives of each
Founding Company. The factors considered by the
 
                                       54
<PAGE>   56
 
parties in determining the consideration to be paid included, among others, the
pro forma adjusted EBIT, net worth and future prospects of the Founding
Companies.
 
     In connection with the Combination, the following principals of the
Founding Companies who will become directors of the Company immediately
following the Closing will receive the following: Mr. Cohen, $600,000 and
112,903 shares of Common Stock (including cash and shares issued to his wife);
Mr. Decker, $833,092 and 203,047 shares of Common Stock; Dr. Green, $4,495,414
and 425,352 shares of Common Stock; Mr. Hanson, $498,750 and 74,059 shares of
Common Stock; Mr. King, $968,100 and 316,627 shares of Common Stock; Mr. von
Sternberg, $2,498,655 and 548,710 shares of Common Stock (including cash and
shares issued to his wife); and Mr. Wallace, $765,000 and 152,701 shares of
Common Stock.
 
     The consummation of the Combination is subject to completion of the
Offering and customary conditions including, among others, the continuing
accuracy at the Closing of the representations and warranties made by the
Founding Companies and the Company in the merger agreements, receipt of all
necessary consents and approvals, delivery of opinions of counsel, the
performance of covenants included in the agreements relating to the Combination,
and the nonexistence of a material adverse change in the business, results of
operations or financial condition of each Founding Company. The merger
agreements provide that certain stockholders of the Founding Companies will
indemnify Provant against certain liabilities, including breaches of such
Founding Company's representations and warranties thereunder.
 
     Pursuant to the agreements entered into in connection with the Combination,
the principal stockholders of the Founding Companies have agreed not to compete
with the Company for five years, commencing as of the Closing. In addition, the
principal stockholders and certain other employees of each of the Founding
Companies will enter into three-year employment agreements with the Company.
Each such agreement with a Founding Company's director nominee (i.e., Messrs.
Cohen, Decker, Green, Hanson, King, von Sternberg and Wallace) will provide for
an initial base salary of $175,000 (except for Mr. Decker's agreement which will
provide for a base salary of $125,000), subject to upward adjustment in the sole
discretion of the Company, and in most cases participation in the Company's
bonus and benefit plans. Each agreement may be terminated prior to the
expiration of the three-year term either in the event of disability or for cause
(as defined). If the individual does not continue to be employed by the Company
upon the expiration of the agreement, the individual shall be entitled to
receive six months' severance at his base salary as in effect at the time of
expiration.
 
     Certain of the indebtedness of the Founding Companies currently is
personally guaranteed by their respective stockholders. The Company will repay
such indebtedness at the Closing, and the guarantees will be released. In
particular, the Company will repay amounts owed by Novations (which totalled
approximately $1.0 million as of September 30, 1997) and Star (which totalled
approximately $1.7 million as of September 30, 1997) which are personally
guaranteed by Messrs. Hanson and von Sternberg, respectively. In addition, the
Company will assume in the Combination indebtedness of the Founding Companies
that had an aggregate outstanding balance of $1.5 million as of September 30,
1997.
 
     The former stockholders of the Founding Companies will agree that, for a
period of two years following the Closing, they will not sell any shares of
Common Stock received by them in connection with the Combination other than
pursuant to an effective registration statement under the Securities Act. The
Company has no obligation to provide such a registration statement but, in the
event the Company decides to register any shares received by any stockholder in
the Combination, or any shares of Common Stock issued or issuable pursuant to
options and warrants granted by Provant prior to the Closing, it must give each
of the Company's stockholders (giving effect to the Combination but not the
Offering) the opportunity to register a pro rata amount thereunder. In addition,
between the second and third anniversary of the Closing, these stockholders may
only sell such shares through a broker or brokers designated by the Company.
 
                                       55
<PAGE>   57
 
OTHER TRANSACTIONS
 
  Organization of Provant
 
     In connection with the founding and organization of Provant, Messrs.
Verrochi, Zenger, Puopolo, Gardner, Davies and Donald W. Glazer purchased shares
of Common Stock for an aggregate purchase price of approximately $3,250. As a
result of such purchases, these individuals beneficially own the following: Mr.
Verrochi, 870,131 shares; Mr. Zenger, 262,678 shares; Mr. Puopolo, 802,762
shares; Mr. Gardner, 302,506 shares; Mr. Davies, 285,424 shares; and Mr. Glazer,
303,116 shares. Mr. Glazer will enter into a consulting agreement with the
Company having a term of two years from the Closing, and providing for an annual
consulting fee of $125,000.
 
  American Business Partners LLC
 
     During 1997, members of the management team and certain consultants were
assembled by American Business Partners LLC ("ABP") to pursue the consolidation
of companies in the training and development industry. Mr. Verrochi, Chairman of
the Board and Chief Executive Officer of the Company, and Mr. Puopolo, Executive
Vice President and Chief Financial Officer of the Company, are members of ABP.
ABP provided the Company with expertise regarding the consolidation process.
 
     Expenses paid by the Company prior to the Closing in connection with the
Combination and the Offering have been financed with funds advanced to the
Company by Messrs. Verrochi and Puopolo. Outstanding advanced amounts bear
interest at an annual rate equal to the prime rate of interest as from time to
time published in The Wall Street Journal. The Company will repay certain of the
advanced amounts plus interest to Messrs. Verrochi and Puopolo at the Closing
out of the proceeds of the Offering. See "Use of Proceeds." As of December 31,
1997, Messrs. Verrochi and Puopolo had advanced approximately $1.0 million to
the Company for such expenses.
 
     As partial consideration for their commitment to extend the financing
described above, Messrs. Verrochi and Puopolo each received two warrants. The
first warrant entitles the holder to purchase 176,368 shares of Common Stock at
a per share exercise price equal to the initial public offering price. The
second warrant entitles the holder to purchase 220,460 shares of Common Stock
which will become exercisable only if the market price of the Common Stock
increases to certain threshold levels (except as otherwise described below) (the
"Contingent Warrant"). Specifically, 20% of the total number of shares issuable
under the Contingent Warrant will become exercisable on each of the three
occasions that the market price of the Common Stock increases by 100%, 200%,
300%, respectively, from the initial public offering price, and the remaining
40% of the total number of shares issuable under the Contingent Warrant will
become exercisable if the market price of the Common Stock increases by 400%.
However, under certain circumstances involving the merger or sale of the
Company, the Contingent Warrant will become exercisable to purchase all of the
warrant shares. The exercise price of the Contingent Warrant increases on each
anniversary of the closing of the Offering. Specifically, the exercise price is
equal to the initial public offering price for the first 12 months following the
closing of the Offering and, for each 12 month period thereafter, is equal to
the initial public offering price plus 10% of the initial public offering price
multiplied by the number of full 12 month periods elapsed since the closing of
the Offering. However, once a portion of the Contingent Warrant becomes
exercisable, that portion's exercise price is fixed as of that date. All four
warrants expire on the seventh anniversary of the closing of the Offering. The
holders of the warrants have the right to require the Company to register the
resale of the shares that may be acquired upon exercise of the warrants under
the Securities Act.
 
     In June 1997, Messrs. Verrochi and Puopolo sold to the Company furniture
and equipment for its corporate executive offices for an aggregate purchase
price of $150,000. The Company believes that the purchase price approximated the
fair market value of the furniture and equipment.
 
OTHER TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
 
     Prior to the Offering, Provant had outstanding 2,978,790 shares of Common
Stock. All of such shares currently are beneficially owned by the proposed
management and directors of and consultants to Provant or
 
                                       56
<PAGE>   58
 
members of their families. The holders of all such shares have agreed with the
Company that, for a period of two years following the Closing, they will not
sell any shares of Common Stock held by them as of the Closing (or that may be
purchased by them under options and warrants outstanding as of the Closing)
other than pursuant to an effective registration statement under the Securities
Act.
 
     Michael J. Davies, who will become a director of the Company upon the
consummation of the Offering, also will become a full-time consultant to the
Company. For the performance of his consulting duties, Mr. Davies will be paid
an annual fee of $100,000. In addition, in consideration for his agreement to
become a consultant, Mr. Davies will receive, prior to the Closing, an option to
purchase 50,000 shares of Common Stock, which will become exercisable upon the
Closing for all of the shares issuable thereunder at a per share exercise price
equal to the initial public offering price. Mr. Davies currently is a consultant
to Provant. For information regarding option grants to individuals who will
become executive officers of the Company upon the Closing, see
"Management -- Equity Incentive Plan."
 
     The Company intends to use $750,000 of the net proceeds of the Offering to
pay a fee due upon the Closing to Legg Mason Wood Walker, Incorporated for
proprietary information relating to the training and development industry
developed by Mr. Davies while he served as Managing Director at that company.
See "Use of Proceeds."
 
     As a result of the Combination, the Company will become a party to a
six-year lease of administrative offices, effective January 1, 1996, from Paul
C. Green, Ph.D., who will become a director of the Company immediately after the
Closing. For the years ended June 30, 1995, 1996 and 1997, rent expense paid to
Dr. Green pursuant to the lease was approximately $90,000, $76,000 and $85,000,
respectively. The Company believes that the terms of the lease are no less
favorable to the Company than could be obtained by the Company from
non-affiliated third parties.
 
     As a result of the Combination, the Company will become a party to a
five-year lease of office facilities renewable for an additional five years,
effective March 1997, from Novations Partners, L.L.C., a Utah limited liability
company (the "LLC") which is controlled by the stockholders of Novations. Joe
Hanson, one of the members of the LLC, will become a director of the Company
immediately after the Closing. The annual rent expense to be paid to the LLC is
$300,000 for the first year of the lease and increases 3% per year thereafter.
The Company believes that the terms of the lease are no less favorable to the
Company than could be obtained from non-affiliated third parties. In addition,
Novations has the right to receive amounts loaned by Novations to the LLC. The
balance due totalled approximately $192,000 as of September 30, 1997. All
outstanding amounts owed to Novations pursuant to these arrangements will be
paid by the LLC at or before the Closing.
 
     A. Carl von Sternberg was indebted to Star during 1997 under a promissory
note. Mr. von Sternberg will become a director of the Company immediately after
the Closing. Borrowings by Mr. von Sternberg under the note totalled
approximately $344,000 as of September 30, 1997. Outstanding principal amounts
owed under the note accrue interest from time to time at the prime rate of
interest as reported in The Wall Street Journal. All principal amounts owed
under the note, together with accrued interest, will be repaid by Mr. von
Sternberg on or before the consummation of the Combination.
 
     In December 1997, Marc S. Wallace, who will become a director of the
Company immediately after the Closing, incurred indebtedness to J. Howard
pursuant to two promissory notes in the aggregate principal amount of $75,000.
Outstanding principal amounts owed under the notes accrue interest from time to
time at an annual rate of 7.0%. The notes mature on May 31, 1998.
 
COMPANY POLICY
 
     The Company's policy is that any future transactions with directors,
officers, employees or affiliates of the Company be approved in advance by a
majority of the Company's Board of Directors, including a majority of the
disinterested members of the Board, and be on terms no less favorable to the
Company than the Company could obtain from non-affiliated parties.
 
                                       57
<PAGE>   59
 
                          DESCRIPTION OF CAPITAL STOCK
 
GENERAL
 
     The Company's authorized capital stock consists of 45,000,000 shares of
capital stock, par value $.01 per share, consisting of 40,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock (the "Preferred Stock").
Without giving effect to the issuance of shares in the Offering (but giving
effect to the Combination), the Company has outstanding 6,805,605 shares of
Common Stock held by 70 stockholders, and no shares of Preferred Stock.
 
COMMON STOCK
 
     Immediately following the Combination and the Offering, the Company will
have outstanding 9,405,605 shares of Common Stock and options and warrants to
purchase an aggregate of 11,042,725 shares of Common Stock. A total of 1,100,000
shares of Common Stock are reserved for issuance under the Equity Incentive
Plan, 100,000 shares of Common Stock under the Directors' Plan and 500,000
shares of Common Stock under the Employee Stock Purchase Plan. Holders of Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, and do not have cumulative voting
rights. Subject to preferences that may be applicable to any outstanding shares
of Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors of the Company out of funds legally available therefor. See "Dividend
Policy." All outstanding shares of Common Stock are, and the shares to be issued
in the Combination and sold in the Offering when issued and paid for will be,
fully paid and nonassessable, and the holders thereof will have no preferences
or rights of conversion, exchange or pre-emption. In the event of any
liquidation, dissolution or winding-up of the affairs of the Company, holders of
Common Stock will be entitled to share ratably in the assets of the Company
remaining after payment or provision for payment of all of the Company's debts
and obligations and after liquidation payments to holders of outstanding shares
of Preferred Stock, if any.
 
PREFERRED STOCK
 
     The Preferred Stock, if issued, would have priority over the Common Stock
with respect to dividends and other distributions, including the distribution of
assets upon liquidation. The Board of Directors has the authority, without
further stockholder authorization, to issue from time to time shares of
Preferred Stock in one or more series and to fix the terms, limitations,
relative rights and preferences and variations of each series. Although the
Company has no present plans to issue any shares of Preferred Stock following
the closing of the Offering, the issuance of shares of Preferred Stock, or the
issuance of rights to purchase such shares, could decrease the amount of
earnings and assets available for distribution to the holders of Common Stock,
could adversely affect the rights and powers, including voting rights, of the
Common Stock, and could have the effect of delaying, deterring or preventing a
change in control of the Company or an unsolicited acquisition proposal.
 
WARRANTS TO PURCHASE COMMON STOCK
 
     The Company has issued warrants to Messrs. Verrochi and Puopolo, the terms
of which are more fully described in "Certain Transactions."
 
CERTAIN PROVISIONS
 
     Special Meetings of the Stockholders of the Company.  The Company's By-laws
provide that a special meeting of the stockholders of the Company only may be
called by the President, the Chairman of the Board or by order of the Board of
Directors. The By-laws do not authorize the stockholders to call a special
meeting of stockholders, potentially limiting the stockholders' ability to offer
proposals between annual meetings if no special meetings are otherwise called by
the President, Chairman or the Board.
 
                                       58
<PAGE>   60
 
     No Action by Written Consent.  The Company's Certificate of Incorporation
does not permit the Company's stockholders to act by written consent. As a
result, any action to be taken by the Company's stockholders must be taken at a
duly called meeting of the stockholders.
 
STATUTORY BUSINESS COMBINATIONS PROVISION
 
     The Company is subject to the provisions of Section 203 of the DGCL
("Section 203"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person, or an affiliate or associate of such a person, who is an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder unless: (i) the transaction resulting in a person
becoming an interested stockholder, or the business combination, is approved by
the Board of Directors of the corporation before the person becomes an
interested stockholder; (ii) the interested stockholder acquired 85% or more of
the outstanding voting stock of the corporation in the same transaction that
makes such person an interested stockholder (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66 2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the disinterested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is (i) the owner of 15% or
more of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Company will be selected prior to
the closing of the Offering.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon the consummation of the Combination and the Offering, the Company will
have 9,405,605 shares of Common Stock issued and outstanding, and 1,637,120
shares of Common Stock issuable upon the exercise of outstanding options and
warrants. Of these shares, 2,600,000 shares sold pursuant to the Offering (or
2,990,000 shares, if the Underwriters' over-allotment option is exercised in
full) will be freely tradeable without restriction under the Securities Act,
except any shares purchased by an "affiliate" (as that term is defined under the
rules and regulations of the Securities Act) of the Company, which shares will
be subject to the resale limitations of Rule 144 of the Securities Act. The
remaining shares outstanding upon completion of the Offering may be resold
publicly only upon registration under the Securities Act or in compliance with
an exemption from the registration requirements of the Securities Act, including
the exemption provided by Rule 144.
 
     In general, under Rule 144, if a period of at least one year has elapsed
between the later of the date on which restricted securities were acquired from
the Company and the date on which they were acquired from an affiliate, then the
holder of such restricted securities (including an affiliate) is entitled to
sell that number of shares within any three-month period that does not exceed
the greater of (i) one percent of the then outstanding shares of Common Stock or
(ii) the average weekly reported volume of trading of Common Stock during the
four calendar weeks preceding such sale. Any shares of Common Stock issued as
Additional Consideration and Star Contingent Consideration will be deemed to
have been acquired at the Closing for purposes of Rule 144. Sales under Rule 144
also are subject to certain requirements pertaining to the manner of sales,
notices of sales and the availability of current public information concerning
the Company. Any shares not constituting restricted securities sold by
affiliates must be sold in accordance with the foregoing volume limitations and
other requirements but without regard to the one year holding period. Under Rule
144(k), if a period of at least two years has elapsed from the later of the date
on which restricted securities were acquired from the Company and the date on
which they were acquired from the affiliate, a
 
                                       59
<PAGE>   61
 
holder of such restricted securities who is not an affiliate at the time of the
sale and has not been an affiliate for at least three months prior to the sale
would be entitled to sell the shares immediately without regard to the volume
limitations and other conditions described above.
 
     The Company and the holders of all shares outstanding prior to the Offering
(including the holders of shares issued in connection with the Combination) have
agreed with the Representatives of the Underwriters not to offer, sell, contract
to sell or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for shares of Common Stock, for
a period of 180 days after the date of this Prospectus (the "Lock-up Period")
without the prior written consent of the Representatives, except for: (i) in the
case of the Company, Common Stock issued pursuant to the Company's Equity
Incentive Plan, Directors' Plan and Employee Stock Purchase Plan or in
connection with acquisitions; and (ii) in the case of all such holders, the
exercise of stock options pursuant to the benefit plans described herein and
shares of Common Stock disposed of as bona fide gifts, subject, in each case, to
any remaining portion of the Lock-up Period applying to any shares so issued or
transferred. In evaluating any request for a waiver of the Lock-up Period,
NationsBanc Montgomery Securities LLC will consider, in accordance with its
customary practice, all relevant facts and circumstances at the time of the
request, including, without limitation, the recent trading market for the Common
Stock, the size of the request and, with respect to a request by the Company to
issue additional equity securities, the purpose of such an issuance. See
"Underwriting." In addition, the stockholders of the Founding Companies and all
stockholders of the Company prior to the Offering have agreed to certain
transfer restrictions for a two-year period on all shares of Common Stock held
or to be held by them. See "Certain Transactions -- Organization of the Company"
and "-- Other Transactions Involving Officers and Directors."
 
     In the aggregate, 100,000 shares of Common Stock are reserved for issuance
under the Directors' Plan, 1,100,000 shares are reserved for issuance under the
Equity Incentive Plan and 500,000 shares are reserved for issuance under the
Employee Stock Purchase Plan. The Company presently intends to file a
registration statement under the Securities Act to register Common Stock to be
issued pursuant to the exercise of options or stock granted or to be granted
under the Directors' Plan, Equity Incentive Plan and Employee Stock Purchase
Plan. Common Stock issued after the effective date of such registration
statement upon the exercise of such options (or the purchase of Common Stock
under the Employee Stock Purchase Plan) would be available for immediate resale
in the open market, subject to compliance with Rule 144 in the case of
affiliates.
 
     Prior to the Offering, there has been no public market for the Common Stock
of the Company, and no predictions can be made of the effect, if any, that the
availability of shares for sale or the actual sale of shares will have on market
prices prevailing from time to time. Sales or the availability for sale of
substantial amounts of Common Stock in the public market could adversely affect
prevailing market prices and the ability of the Company to raise equity capital
in the future.
 
     After the Closing, the Company plans to register an additional 3,000,000
shares of Common Stock under the Securities Act for use as consideration for
future acquisitions. Any such shares issued by the Company to affiliates of
companies acquired by the Company will be subject for one year after the
acquisition to the limitations and restrictions on resale imposed by Rule 145
under the Securities Act.
 
                                       60
<PAGE>   62
 
                                  UNDERWRITING
 
     The underwriters named below (the "Underwriters"), represented by
NationsBanc Montgomery Securities LLC, Salomon Smith Barney and Piper Jaffray
Inc. (the "Representatives"), have severally agreed, subject to the terms and
conditions in the underwriting agreement (the "Underwriting Agreement") by and
among the Company and the Underwriters, to purchase from the Company the number
of shares of Common Stock indicated below opposite its name, at the initial
public offering price less the underwriting discount set forth on the cover page
of this Prospectus. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock, if
they purchase any.
 
<TABLE>
<CAPTION>
        UNDERWRITERS                                                   NUMBER OF SHARES
        -------------------------------------------------------------  ----------------
        <S>                                                            <C>
        NationsBanc Montgomery Securities LLC........................
        Smith Barney Inc.............................................
        Piper Jaffray Inc............................................
                                                                             -------
                  Total..............................................      2,600,000
                                                                             =======
</TABLE>
 
     The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow selected dealers a
concession of not more than $          per share; and the Underwriters may
allow, and such dealers may reallow, a concession of not more than $
per share to certain other dealers. After the initial public offering, the
public offering price and other selling terms may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.
 
     The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 390,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise such over-allotment
option, the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.
 
     The Underwriting Agreement provides that the Company, its subsidiaries and
certain stockholders of the Founding Companies will indemnify the Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or will contribute to payments the Underwriters may be required to make in
respect thereof.
 
     The Company's officers and directors and all of the stockholders of the
Company prior to the Offering (including the holders of shares issued in
connection with the Combination) have agreed that during the Lock-up Period they
will not, without the prior written consent of NationsBanc Montgomery Securities
LLC, directly or indirectly sell, offer, contract or grant any option to sell,
pledge, transfer, establish an open put equivalent position or otherwise dispose
of any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable or exercisable for or convertible into shares
of Common Stock. The Company also has agreed not to issue, offer, sell, grant
options to purchase or otherwise dispose of any of the Company's equity
securities during the Lock-up Period without the prior written consent of
NationsBanc Montgomery Securities LLC, except for securities issued by the
Company in connection with acquisitions and for grants and exercises of stock
options, subject in each case to any remaining portion of the Lock-up Period
applying to shares issued or transferred. In evaluating any request for a waiver
of the Lock-up Period, NationsBanc Montgomery Securities LLC will consider, in
accordance with their customary practice, all relevant facts and circumstances
at the time of the request, including, without limitation, the recent trading
market for the Common Stock, the size of the request, and, with respect to a
request by the Company to issue additional equity securities, the purpose of
such an issuance. See "Shares Eligible for Future Sale."
 
                                       61
<PAGE>   63
 
     In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934 (the
"Exchange Act"), pursuant to which such persons may bid for or purchase Common
Stock for the purpose of stabilizing its market price. The Underwriters also may
create a short position for the account of the Underwriters by selling more
Common Stock in connection with the Offering than they are committed to purchase
from the Company and, in such case, may purchase Common Stock in the open market
following completion of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to 390,000 shares of Common Stock, by exercising the Underwriters'
over-allotment option referred to above. In addition, NationsBanc Montgomery
Securities LLC, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the Offering), for the account of the
other Underwriters, the selling concession with respect to Common Stock that is
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
 
     The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts over
which they exercise discretionary authority in excess of 5% of the number of
shares of Common Stock offered hereby.
 
     Prior to the Offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock will be determined by negotiations between the Company and the
Representatives. Among the factors to be considered in such negotiations will be
the results of operations of the Founding Companies in recent periods, the
prospects for the Company and the industry in which the Company competes, an
assessment of the Company's management, its financial condition, the prospects
for future earnings of the Company, the present state of the Company's
development, the general condition of the economy and the securities markets at
the time of the Offering and the market prices of and demand for publicly traded
common stock of comparable companies in recent periods.
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for the Company by Nutter, McClennen & Fish, LLP, Boston,
Massachusetts. Certain legal matters related to the Offering will be passed upon
for the Underwriters by Ropes & Gray, Boston, Massachusetts.
 
                                    EXPERTS
 
     The financial statements of Provant, Inc. as of June 30, 1997 and for the
period from November 16, 1996 (date of inception) to June 30, 1997, and the
financial statements of Behavioral Technology, Inc., Decker Communications,
Inc., J. Howard & Associates, Inc., Robert Steinmetz, Ph.D., and Associates,
Inc. d/b/a Learning Systems Sciences, MOHR Retail Learning Systems, Inc. and
Novations Group, Inc., have been included herein and in the Registration
Statement in reliance on the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, upon the authority of
said firm as experts in giving said reports.
 
     The consolidated financial statements of Star Mountain, Inc. and
subsidiaries included in this Prospectus, to the extent of and for the periods
indicated in the report, have been audited by Friedman & Fuller, P.C.,
independent public accountants, as indicated in its report with respect thereto,
and are included herein in reliance upon the authority of said firm as experts
in giving said reports.
 
                                       62
<PAGE>   64
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (including any and all
amendments thereto, the "Registration Statement") under the Securities Act and
the rules and regulations promulgated thereunder, with respect to the Common
Stock offered hereby. This Prospectus omits certain information contained in the
Registration Statement, and reference is made to the Registration Statement and
the exhibits and schedules thereto for further information with respect to the
Company and the Common Stock offered hereby. Statements contained in this
Prospectus concerning the provisions or contents of any contract, agreement or
any other document referred to herein are not necessarily complete with respect
to each such contract, agreement or document filed as an exhibit to the
Registration Statement, and reference is made to such exhibit for a more
complete description of the matters involved, and each such statement shall be
deemed qualified by such reference. Upon completion of the Offering, the Company
will be subject to the information requirements of the Exchange Act, and in
accordance therewith will file reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information, as
well as the Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained from such offices, upon payment of the fees prescribed
by the Commission. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that submit electronic filings to the Commission.
 
     The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm, and with quarterly reports
for the first three quarters of each fiscal year containing unaudited interim
consolidated financial information.
 
                                       63
<PAGE>   65
 
                         INDEX TO FINANCIAL STATEMENTS
 
                  UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
 
                        HISTORICAL FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
PROVANT, INC. PRO FORMA:
  Basis of Presentation...............................................................  F-3
  Unaudited Pro Forma Combined Balance Sheet..........................................  F-4
  Unaudited Pro Forma Combined Statements of Operations...............................  F-5
  Notes to Unaudited Pro Forma Combined Financial Statements..........................  F-7
 
PROVANT, INC.:
  Independent Auditors' Report........................................................  F-12
  Balance Sheets......................................................................  F-13
  Statements of Operations............................................................  F-14
  Statements of Stockholders' Equity..................................................  F-15
  Statements of Cash Flows............................................................  F-16
  Notes to Financial Statements.......................................................  F-17
 
BEHAVIORAL TECHNOLOGY, INC.:
  Independent Auditors' Report........................................................  F-21
  Balance Sheets......................................................................  F-22
  Statements of Operations............................................................  F-23
  Statements of Stockholders' Equity..................................................  F-24
  Statements of Cash Flows............................................................  F-25
  Notes to Financial Statements.......................................................  F-26
 
DECKER COMMUNICATIONS, INC.:
  Independent Auditors' Report........................................................  F-29
  Balance Sheets......................................................................  F-30
  Statements of Operations............................................................  F-31
  Statements of Stockholders' Equity..................................................  F-32
  Statements of Cash Flows............................................................  F-33
  Notes to Financial Statements.......................................................  F-34
 
J. HOWARD & ASSOCIATES, INC.:
  Independent Auditors' Report........................................................  F-38
  Balance Sheets......................................................................  F-39
  Statements of Operations............................................................  F-40
  Statements of Stockholders' Equity..................................................  F-41
  Statements of Cash Flows............................................................  F-42
  Notes to Financial Statements.......................................................  F-43
 
LEARNING SYSTEMS SCIENCES (ROBERT STEINMETZ, PH.D., AND
  ASSOCIATES, INC. ):
  Independent Auditors' Report........................................................  F-47
  Balance Sheets......................................................................  F-48
  Statements of Operations............................................................  F-49
  Statements of Stockholders' Equity..................................................  F-50
  Statements of Cash Flows............................................................  F-51
  Notes to Financial Statements.......................................................  F-52
</TABLE>
 
                                       F-1
<PAGE>   66
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        -----
<S>                                                                                     <C>
MOHR RETAIL LEARNING SYSTEMS, INC.:
  Independent Auditors' Report........................................................  F-55
  Balance Sheets......................................................................  F-56
  Statements of Operations............................................................  F-57
  Statements of Stockholders' Equity..................................................  F-58
  Statements of Cash Flows............................................................  F-59
  Notes to Financial Statements.......................................................  F-60
 
NOVATIONS GROUP, INC.:
  Independent Auditors' Report........................................................  F-63
  Balance Sheets......................................................................  F-64
  Statements of Operations............................................................  F-65
  Statements of Stockholders' Equity..................................................  F-66
  Statements of Cash Flows............................................................  F-67
  Notes to Financial Statements.......................................................  F-68
 
STAR MOUNTAIN, INC.:
  Independent Auditors' Report........................................................  F-71
  Consolidated Balance Sheets.........................................................  F-72
  Consolidated Statements of Operations...............................................  F-73
  Consolidated Statements of Stockholders' Equity.....................................  F-74
  Consolidated Statements of Cash Flows...............................................  F-75
  Notes to Consolidated Financial Statements..........................................  F-77
</TABLE>
 
                                       F-2
<PAGE>   67
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
                             BASIS OF PRESENTATION
 
     The following unaudited pro forma combined financial statements give effect
to (i) the Combination of Provant and the Founding Companies, (ii) the
consummation of the Offering and the application of the net proceeds therefrom
and (iii) certain other adjustments described below and in the notes to the
unaudited pro forma combined financial statements. See "Combination" and "Use of
Proceeds" included elsewhere herein. In the Combination, subsidiaries of Provant
are merging with the following Founding Companies: Behavioral Technology, Inc.,
Decker Communications, Inc., J. Howard & Associates, Inc., MOHR Retail Learning
Systems, Inc., Novations Group, Inc., Robert Steinmetz, Ph.D., and Associates,
Inc., d/b/a Learning Systems Sciences and Star Mountain, Inc. The Combination
will occur simultaneously with the closing of the Offering and will be accounted
for using the purchase method of accounting. Provant has been identified as the
accounting acquiror in accordance with Securities and Exchange Commission Staff
Accounting Bulletin No. 97. These pro forma statements are based on the
historical financial statements of the Founding Companies included elsewhere in
this Prospectus and the estimates and assumptions set forth below and in the
notes to the unaudited pro forma combined financial statements.
 
     The unaudited pro forma combined balance sheet gives effect to the
Combination and the Offering as if they had occurred on September 30, 1997. The
unaudited pro forma combined statements of operations give effect to these
transactions as if they had occurred on July 1, 1996.
 
     Provant has preliminarily analyzed the benefits that it expects to realize
from reductions in salaries and certain benefits to the owners of the Founding
Companies. To the extent these owners have agreed prospectively to reductions in
salary, bonuses and benefits, these reductions have been reflected in the pro
forma combined statements of operations. With respect to other potential
benefits, Provant cannot quantify these benefits until completion of the
Combination. It is anticipated that these benefits will be offset by costs
related to the Company's new corporate management and by the costs associated
with being a public company. However, because these costs cannot be accurately
quantified at this time, they have not been included in the pro forma financial
information of Provant.
 
     The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The unaudited pro forma combined financial data presented herein does
not purport to represent what the Company's financial position or results of
operations actually would have been had such events occurred at the beginning of
the periods presented, as assumed, or to project the Company's financial
position or results of operations for any future period or the future results of
the Founding Companies. The unaudited pro forma combined financial statements
should be read in conjunction with the historical financial statements of
Provant and the Founding Companies and the related notes thereto included
elsewhere in this Prospectus. Also see "Risk Factors" included elsewhere herein.
 
                                       F-3
<PAGE>   68
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
 
                               SEPTEMBER 30, 1997
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                             BTI     DECKER   J. HOWARD    LSS     MOHR   NOVATIONS    STAR    PROVANT    TOTAL
                                            ------   ------   ---------   ------   ----   ---------   ------   -------   -------
<S>                                         <C>      <C>      <C>         <C>      <C>    <C>         <C>      <C>       <C>
Assets
Current assets:
  Cash and cash equivalents...............  $1,188   $  526    $   811    $  508   $211    $   446    $  275    $   3    $ 3,968
  Investments.............................      --      932         --        --    --          --        --       --        932
  Accounts receivable, net................   1,655    1,441      1,350       697   441       2,364     4,573       --     12,521
  Inventory...............................      --       --         --        --   132          --       151       --        283
  Due from related parties................      --      290         52        --    --         341       344       --      1,027
  Costs in excess of billings.............      --       --         --       359    --          --        --       --        359
  Prepaid expenses and other current
    assets................................     160      102         50        56    22          50       164      143        747
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total current assets..............   3,003    3,291      2,263     1,620   806       3,201     5,507      146     19,837
Property and equipment, net...............     117      359        290       153    46         456       852      153      2,426
Other assets..............................       9       59         44       105    --          --     1,928       50      2,195
Goodwill..................................      --       --         --        --    --          --        --       --         --
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total assets......................  $3,129   $3,709    $ 2,597    $1,878   $852    $ 3,657    $8,287    $ 349    $24,458
                                            ======   ======     ======    ======   =====    ======      ====     ====    =======
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable........................  $  267   $  284    $   116    $   97   $143    $   174    $1,645    $  --    $ 2,726
  Accrued expenses........................     186      459         95       174   304         135       814       --      2,167
  Accrued compensation....................     484      849         97       100    12       1,270        --       --      2,812
  Payable to stockholder/affiliate........      --       --         --        --    --          --        --      560        560
  Billings in excess of costs.............      --       --         --       362    --          --     1,269       --      1,631
  Deferred revenue........................      15      114         24        --    98          --        --       --        251
  State income taxes......................      --       62         38        --    --          --        --       --        100
  Distributions payable...................      --       --        125        --    --          --        --       --        125
  Current portion of long-term debt.......      --      410         --        --    --       1,078     1,492       --      2,980
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total current liabilities.........     952    2,178        495       733   557       2,657     5,220      560     13,352
Long-term debt, net of current portion....      --      615         --        --    --         361       505       --      1,481
Deferred tax liability....................      --       --         --        --    --          --        --       --         --
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total liabilities.................     952    2,793        495       733   557       3,018     5,725      560     14,833
Redeemable common stock...................      --      300         --        --    --          --        --       --        300
Stockholders' equity:
  Common stock............................       1      313        272         3     4           1     2,102       --      2,696
  Additional paid-in capital..............     182       --         --        --    --          --        --        3        185
  Translation adjustments.................      (6)      --         --        --    --          --        --       --         (6)
  Unrealized gain on short-term
    investments...........................      --        9         --        --    --          --        --       --          9
  Note receivable from stock sales........      --     (171)        --        --    --          --        --       --       (171)
  Retained earnings.......................   2,000      465      1,830     1,142   291         638     1,086     (214)     7,238
  Treasury stock..........................      --       --         --        --    --          --      (626)      --       (626)
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total stockholders' equity........   2,177      616      2,102     1,145   295         639     2,562     (211)     9,325
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total liabilities and
          stockholders' equity............  $3,129   $3,709    $ 2,597    $1,878   $852    $ 3,657    $8,287    $ 349    $24,458
                                            ======   ======     ======    ======   =====    ======      ====     ====    =======
 
<CAPTION>
                                            COMBINATION   PRO FORMA    OFFERING
                                            ADJUSTMENTS   COMBINED    ADJUSTMENTS   AS ADJUSTED
                                            -----------   ---------   -----------   -----------
                                             (NOTE 3)                  (NOTE 3)
<S>                                         <C>           <C>         <C>           <C>
Assets
Current assets:
  Cash and cash equivalents...............    $  (943)     $ 3,025     $    (357)     $ 2,668
  Investments.............................         --          932            --          932
  Accounts receivable, net................         --       12,521            --       12,521
  Inventory...............................         --          283            --          283
  Due from related parties................      2,564        3,591            --        3,591
  Costs in excess of billings.............         --          359            --          359
  Prepaid expenses and other current
    assets................................         --          747            --          747
                                              -------      -------      --------     --------
        Total current assets..............      1,621       21,458          (357)      21,101
Property and equipment, net...............         --        2,426            --        2,426
Other assets..............................        (34)       2,161            --        2,161
Goodwill..................................     49,050       49,050            --       49,050
                                              -------      -------      --------     --------
        Total assets......................    $50,637      $75,095     $    (357)     $74,738
                                              =======      =======      ========     ========
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable........................    $    --      $ 2,726     $      --      $ 2,726
  Accrued expenses........................         --        2,167            --        2,167
  Accrued compensation....................         --        2,812            --        2,812
  Payable to stockholder/affiliate........     22,463       23,023       (23,023)          --
  Billings in excess of costs.............         --        1,631            --        1,631
  Deferred revenue........................         --          251            --          251
  State income taxes......................         --          100            --          100
  Distributions payable...................         --          125            --          125
  Current portion of long-term debt.......         --        2,980        (2,900)          80
                                              -------      -------      --------     --------
        Total current liabilities.........     22,463       35,815       (25,923)       9,892
Long-term debt, net of current portion....         --        1,481            --        1,481
Deferred tax liability....................      1,276        1,276            --        1,276
                                              -------      -------      --------     --------
        Total liabilities.................     23,739       38,572       (25,923)      12,649
Redeemable common stock...................       (300)          --            --           --
Stockholders' equity:
  Common stock............................     (2,658)          38            26           64
  Additional paid-in capital..............     36,514       36,699        26,290       62,989
  Translation adjustments.................          6           --            --           --
  Unrealized gain on short-term
    investments...........................         (9)          --            --           --
  Note receivable from stock sales........        171           --            --           --
  Retained earnings.......................     (7,452)        (214)         (750)        (964)
  Treasury stock..........................        626           --            --           --
                                              -------      -------      --------     --------
        Total stockholders' equity........     27,198       36,523        25,566       62,089
                                              -------      -------      --------     --------
        Total liabilities and
          stockholders' equity............    $50,637      $75,095     $    (357)     $74,738
                                              =======      =======      ========     ========
</TABLE>
 
  See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-4
<PAGE>   69
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                            YEAR ENDED JUNE 30, 1997
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                           BTI     DECKER   J. HOWARD    LSS       MOHR      NOVATIONS     STAR     PROVANT
                                          ------   ------   ---------   ------   ---------   ----------   -------   -------
     <S>                                  <C>      <C>      <C>         <C>      <C>         <C>          <C>       <C>
     Total revenue......................  $7,096   $8,410    $ 7,317    $5,599    $ 3,015      $9,018     $20,790   $    --
     Cost of revenue....................   1,488    2,275      2,160     1,928        825       4,839      12,602        --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Gross profit.............   5,608    6,135      5,157     3,671      2,190       4,179       8,188        --
     Selling, general and administrative
       expenses.........................   5,111    5,621      4,555     3,061      1,745       3,315       7,061       149
     Goodwill amortization..............      --       --         --        --         --          --          --        --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Income from operations...     497      514        602       610        445         864       1,127      (149)
     Other income (expense), net........      40       --          4        --         --          --          --        --
     Interest income (expense)..........      31       (9)        26        14          3        (137)        (53)       --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Income before income
                 taxes..................     568      505        632       624        448         727       1,074      (149)
     Provision (benefit) for income
       taxes............................      --       33          8         9          7          20         429       (60)
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Net income (loss)........  $  568   $  472    $   624    $  615    $   441      $  707     $   645   $   (89)
                                          =======  ======     ======    ======     ======      ======      ======    ======
     Net income per share...............
     Shares used in computing net income
       per share (Note 5)...............
 
<CAPTION>
                                                    COMBINATION   PRO FORMA
                                           TOTAL    ADJUSTMENTS    COMBINED
                                          -------   -----------   ----------
                                                     (NOTE 4)
     <S>                                  <C>       <C>           <C>
     Total revenue......................  $61,245     $ 7,601     $   68,846
     Cost of revenue....................   26,117       4,850         30,967
                                          -------     -------        -------
               Gross profit.............   35,128       2,751         37,879
     Selling, general and administrative
       expenses.........................   30,618      (1,955)        28,663
     Goodwill amortization..............       --       1,226          1,226
                                          -------     -------        -------
               Income from operations...    4,510       3,480          7,990
     Other income (expense), net........       44          --             44
     Interest income (expense)..........     (125)          8           (117)
                                          -------     -------        -------
               Income before income
                 taxes..................    4,429       3,488          7,917
     Provision (benefit) for income
       taxes............................      446       3,257          3,703
                                          -------     -------        -------
               Net income (loss)........  $ 3,983     $   231     $    4,214
                                          =======     =======        =======
     Net income per share...............                          $     0.45
                                                                     =======
     Shares used in computing net income
       per share (Note 5)...............                           9,405,605
                                                                  ==========
</TABLE>
 
  See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-5
<PAGE>   70
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                     THREE MONTHS ENDED SEPTEMBER 30, 1997
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                           BTI      DECKER     J. HOWARD    LSS       MOHR      NOVATIONS    STAR    PROVANT
                                          ------   ---------   ---------   ------   ---------   ---------   ------   -------
     <S>                                  <C>      <C>         <C>         <C>      <C>         <C>         <C>      <C>
     Total revenue......................  $1,977    $ 2,585     $ 1,917    $1,050     $ 556      $ 2,464    $5,770   $    --
     Cost of revenue....................     385        660         661       509       204        1,197     3,384        --
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Gross profit.............   1,592      1,925       1,256       541       352        1,267     2,386        --
     Selling, general and administrative
       expenses.........................   1,306      1,663       1,199       589       562        1,088     1,890       200
     Goodwill amortization..............      --         --          --        --        --           --        --        --
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Income (loss) from
                 operations.............     286        262          57       (48)     (210)         179       496      (200)
     Other income (expense), net........      --         --          (3)       --        --           --        --        --
     Interest income (expense)..........       7         (3)          5         5         3          (83)       56        (8)
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Income (loss) before
                 income taxes...........     293        259          59       (43)     (207)          96       552      (208)
     Provision for income taxes.........      --          2           1         2         1           11       206       (83)
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Net income (loss)........  $  293    $   257     $    58    $  (45)    $(208)     $    85    $  346   $  (125)
                                          ======     ======      ======    ======    ======       ======     =====    ======
     Net income per share...............
     Shares used in computing net income
       per share (Note 5)...............
 
<CAPTION>
                                                    COMBINATION   PRO FORMA
                                           TOTAL    ADJUSTMENTS    COMBINED
                                          -------   -----------   ----------
                                                     (NOTE 4)
     <S>                                  <C>       <C>           <C>
     Total revenue......................  $16,319     $ 1,419     $   17,738
     Cost of revenue....................    7,000       1,056          8,056
                                          -------      ------      ---------
               Gross profit.............    9,319         363          9,682
     Selling, general and administrative
       expenses.........................    8,497        (178)         8,319
     Goodwill amortization..............       --         307            307
                                          -------      ------      ---------
               Income (loss) from
                 operations.............      822         234          1,056
     Other income (expense), net........       (3)         --             (3)
     Interest income (expense)..........      (18)         44             26
                                          -------      ------      ---------
               Income (loss) before
                 income taxes...........      801         278          1,079
     Provision for income taxes.........      140         418            558
                                          -------      ------      ---------
               Net income (loss)........  $   661     $  (140)    $      521
                                          =======      ======      =========
     Net income per share...............                          $     0.06
                                                                   =========
     Shares used in computing net income
       per share (Note 5)...............                           9,405,605
                                                                   =========
</TABLE>
 
  See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-6
<PAGE>   71
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
           NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
(1) GENERAL
 
     Concurrently with and as a condition to the closing of the Offering,
Provant will acquire the seven Founding Companies in the Combination. The
acquisitions will be accounted for using the purchase method of accounting with
Provant being treated as the accounting acquiror.
 
     The historical financial statements reflect the financial position and
results of operations of the Founding Companies and were derived from the
respective Founding Companies' financial statements where indicated. The periods
included in these financial statements for the individual Founding Companies are
as of and for the three months ended September 30, 1997 and for the year ended
June 30, 1997. The audited historical financial statements included elsewhere
herein have been included in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 80.
 
(2) ACQUISITION OF FOUNDING COMPANIES
 
     The following table sets forth the consideration to be paid (i) in cash and
(ii) in shares of Common Stock to the stockholders of each of the Founding
Companies. For purposes of computing the estimated purchase price for accounting
purposes, the value of the shares is determined using an estimated fair value of
$9.60 per share, which represents a discount of 20% from the assumed initial
public offering price of $12.00 due to restrictions on the sale and
transferability of the shares issued. The total estimated value of the
consideration of $59.2 million for the acquisitions is based upon preliminary
estimates and is subject to certain purchase price adjustments at the closing.
 
<TABLE>
<CAPTION>
                                                                          COMMON STOCK
                                                                  -----------------------------
                                                       CASH        SHARES       VALUE OF SHARES
                                                      -------     ---------     ---------------
                                                                     (DOLLARS IN THOUSANDS)
    <S>                                               <C>         <C>           <C>
    BTI.............................................  $ 5,000       487,388         $ 4,679
    Decker..........................................    1,550       377,778           3,626
    J. Howard.......................................    1,700       339,337           3,257
    LSS.............................................    2,625       639,785           6,142
    MOHR............................................    1,200       225,806           2,168
    Novations.......................................    4,988       740,592           7,110
    Star............................................    5,400     1,016,129           9,755
                                                      -------     ---------         -------
              Total.................................  $22,463     3,826,815         $36,737
                                                      =======     =========         =======
</TABLE>
 
(3) UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
 
     (a) Records the distributions estimated at $1.4 million which are expected
         to be paid from cash on hand by certain Founding Companies prior to the
         Closing of the Combination.
 
     (b) Records the liability for the cash portion of the consideration to be
         paid to the stockholders of the Founding Companies in connection with
         the Combination.
 
     (c) Reflects the creation of approximately $49.1 million of goodwill from
         the payment of the Common Stock and cash consideration for the Founding
         Companies totaling approximately $59.2 million (see note 2) less net
         assets of the Founding Companies of approximately $10.2 million.
 
     (d) Records the deferred income taxes attributable to the temporary
         differences between the financial reporting and tax basis of assets and
         liabilities held in S corporations.
 
     (e) Records the receipt of cash from certain stockholders in satisfaction
         of certain receivables and transfer of certain assets.
 
                                       F-7
<PAGE>   72
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     (f) Records the aggregate receivable from the stockholders of the Founding
         Companies to reflect the difference between guaranteed minimum net
         worth of each of the Founding Companies and pro forma net worth.
 
     (g) Records the cash proceeds of $26.3 million from the issuance of shares
         of Common Stock, net of the estimated underwriting discount and
         estimated offering costs of $2.8 million (based on an assumed initial
         public offering price of $12.00 per share). Offering costs primarily
         consist of accounting fees, legal fees and printing expenses.
 
     (h) Records the cash portion of the consideration to be paid to
         stockholders of the Founding Companies in connection with the
         Combination, the repayment of funds advanced to Provant by two of its
         executive officers and the repayment of long-term debt of the Founding
         Companies.
 
     (i) Records the payment of fees for information provided to the Company
         related to the training and development industry.
 
     The following table summarizes the adjustments to the unaudited pro forma
combined balance sheet adjustments (in thousands):
 
<TABLE>
<CAPTION>
                                                 Combination Adjustments                       Total
                                 --------------------------------------------------------   Combination
                                   (a)       (b)        (c)       (d)      (e)      (f)     Adjustments
                                 -------   --------   -------   -------   ------   ------   -----------
<S>                              <C>       <C>        <C>       <C>       <C>      <C>      <C>
ASSETS
Cash and cash equivalents......  $(1,442)  $     --   $    --   $    --   $  499       --     $  (943)
Due from related parties.......       --         --        --        --     (344)   2,908       2,564
                                  ------     ------    ------    ------     ----    -----      ------
  Total current assets.........   (1,442)        --        --        --      155    2,908       1,621
Goodwill, net..................       --         --    49,050        --       --       --      49,050
Other assets...................       --         --        --        76     (110)      --         (34)
                                  ------     ------    ------    ------     ----    -----      ------
          Total assets.........  $(1,442)  $     --   $49,050   $    76   $   45   $2,908     $50,637
                                  ======     ======    ======    ======     ====    =====      ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to
  stockholder/affiliate........  $    --   $ 22,463   $    --   $    --   $   --   $   --     $22,463
                                  ------     ------    ------    ------     ----    -----      ------
Long-term debt, net of current
  portion......................       --         --        --        --       --       --          --
Deferred tax liability.........       --         --        --     1,276       --       --       1,276
                                  ------     ------    ------    ------     ----    -----      ------
          Total liabilities....       --     22,463        --     1,276       --       --      23,739
Redeemable common stock........       --         --      (300)       --       --       --        (300)
Stockholders' equity:..........
  Common stock.................       --         --        --        --       --       --          --
  Additional paid-in capital...   (1,442)   (22,463)   49,350    (1,200)      --    2,908      27,153
  Retained earnings............       --         --        --        --       --       --          --
  Treasury stock...............       --         --        --        --       --       --          --
  Note receivable from stock
     sales.....................       --         --        --        --       45       --          45
                                  ------     ------    ------    ------     ----    -----      ------
          Total stockholders'
            equity.............   (1,442)   (22,463)   49,050    (1,200)      45    2,908      27,198
                                  ------     ------    ------    ------     ----    -----      ------
          Total liabilities and
            stockholders'
            equity.............  $(1,442)  $     --   $49,050   $    76   $   45   $2,908     $50,637
                                  ======     ======    ======    ======     ====    =====      ======
</TABLE>
 
                                       F-8
<PAGE>   73
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                              Offering
                                                             Adjustments                  Total
                                                   -------------------------------      Offering
                                                     (g)          (h)         (i)      Adjustments
                                                   --------     --------     -----     -----------
<S>                                                <C>          <C>          <C>       <C>
ASSETS
Cash and cash equivalents........................  $ 26,316     $(25,923)    $(750)     $    (357)
  Other..........................................        --           --        --             --
                                                   --------     --------     -----       --------
  Total current assets...........................    26,316      (25,923)     (750)          (357)
                                                   --------     --------     -----       --------
          Total assets...........................  $ 26,316     $(25,923)    $(750)     $    (357)
                                                   ========     ========     =====       ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt................  $     --     $ (2,900)    $  --      $  (2,900)
Payable to stockholders/affiliate................                (23,023)       --        (23,023)
                                                   --------     --------     -----       --------
          Total current liabilities..............        --      (25,923)       --        (25,923)
                                                   --------     --------     -----       --------
          Total liabilities......................        --      (25,923)       --        (25,923)
                                                   --------     --------     -----       --------
Stockholders' equity:
  Common stock...................................        26           --        --             26
  Additional paid-in capital.....................    26,290           --        --         26,290
  Retained earnings..............................        --           --      (750)          (750)
  Treasury stock.................................        --           --        --             --
                                                   --------     --------     -----       --------
          Total stockholders' equity.............    26,316           --      (750)        25,566
                                                   --------     --------     -----       --------
          Total liabilities and stockholders'
            equity...............................  $ 26,316     $(25,923)    $(750)     $    (357)
                                                   ========     ========     =====       ========
</TABLE>
 
(4) UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
 
YEAR ENDED JUNE 30, 1997
 
(a) Reflects the reduction in salaries, bonuses and benefits of $4.8 million to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively. These reductions in salaries, bonuses and benefits are in
    accordance with the terms of the owners' employment agreements with the
    Company entered into in connection with the Combination. Such employment
    agreements are primarily for three years, contain restrictions related to
    competition and provide severance under certain circumstances.
 
(b) Reflects the amortization of goodwill to be recorded as a result of the
    Combination over a 40-year estimated life.
 
(c) Reflects a pro forma provision for income taxes adjusted to reflect the
    Company's estimated consolidated effective tax rate subsequent to the
    Combination, after considering nondeductible goodwill amortization.
 
(d) Reflects the historical results of operations of companies acquired by Star
    in February 1997 and October 1997.
 
(e) Reflects the reduction in interest expense net of income tax benefit,
    related to the current portion of bank debt and notes payable to
    stockholders that will be repaid with the proceeds of the Offering.
 
                                       F-9
<PAGE>   74
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes the adjustments to the unaudited pro forma
combined statements of operations (in thousands):
 
<TABLE>
<CAPTION>
                                                      Adjustments
                                  ---------------------------------------------------        Total
                                    (a)         (b)         (c)        (d)       (e)      Adjustments
                                  -------     -------     -------     ------     ----     -----------
<S>                               <C>         <C>         <C>         <C>        <C>      <C>
Total revenue...................  $    --     $    --     $    --     $7,601       --       $ 7,601
Cost of revenue.................       --          --          --      4,850       --         4,850
Selling, general and
  administrative expenses.......   (4,782)         --          --      2,827       --        (1,955)
Goodwill amortization...........       --       1,226          --         --       --         1,226
                                  -------     -------     -------     ------     ----     -----------
          Income from
            operations..........    4,782      (1,226)         --        (76)      --         3,480
Interest expense................       --          --          --       (250)     258             8
                                  -------     -------     -------     ------     ----     -----------
          Income before income
            taxes...............    4,782      (1,226)         --       (326)     258         3,488
Provision (benefit) for income
  taxes.........................       --          --       3,284       (130)     103         3,257
                                  -------     -------     -------     ------     ----     -----------
          Net income............  $ 4,782     $(1,226)    $(3,284)    $ (196)    $155       $   231
                                  =======     =======     =======     ======     ====     =========
</TABLE>
 
THREE MONTHS ENDED SEPTEMBER 30, 1997
 
(a) Reflects the reduction in salaries, bonuses and benefits of $1.3 million to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively. These reductions in salaries, bonuses and benefits are in
    accordance with the terms of the owners' employment agreements with the
    Company entered into in connection with the Combination. Such employment
    agreements are primarily for three years, contain restrictions related to
    competition and provide severance under certain circumstances.
 
(b) Reflects the amortization of goodwill to be recorded as a result of the
    Combination over a 40-year estimated life.
 
(c) Reflects a pro forma provision for income taxes adjusted to reflect the
    Company's estimated effective tax rate subsequent to the combination after
    considering nondeductible goodwill amortization.
 
(d) Reflects the historical results of operations of a company acquired by Star
    in October 1997.
 
(e) Reflects the reduction in interest expense, net of income tax benefit,
    related to the current portion of bank debt and notes payable to
    stockholders that will be repaid with the proceeds of the Offering.
 
(f) Reflects the payment of fees for information provided to the Company related
    to the training and development industry, net of tax.
 
                                      F-10
<PAGE>   75
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes the adjustments to the unaudited pro forma
combined statements of operations (in thousands):
 
<TABLE>
<CAPTION>
                                                      Adjustments
                                  ----------------------------------------------------       Total
                                    (a)       (b)      (c)      (d)      (e)      (f)     Adjustments
                                  -------    -----    -----    ------    ----    -----    -----------
<S>                               <C>        <C>      <C>      <C>       <C>     <C>      <C>
Total revenue...................  $    --    $  --    $  --    $1,419    $ --    $  --      $ 1,419
Cost of revenue.................       --       --       --     1,056      --       --        1,056
Selling, general and
  administrative expenses.......   (1,280)      --       --       352      --      750         (178)
Goodwill amortization...........       --      307       --        --      --       --          307
                                    -----     ----     ----     -----     ---    -----      -------
          Income from
            operations..........    1,280     (307)      --        11      --     (750)         234
Other income (expense):
  Interest expense..............       --       --       --       (29)     73       --           44
                                    -----     ----     ----     -----     ---    -----      -------
          Income before income
            taxes...............    1,280     (307)      --       (18)     73     (750)         278
Provision (benefit) for income
  taxes.........................       --       --      696        (7)     29     (300)         418
                                    -----     ----     ----     -----     ---    -----      -------
          Net income............  $ 1,280    $(307)   $(696)   $  (11)   $ 44    $(450)     $  (140)
                                    =====     ====     ====     =====     ===    =====      =======
</TABLE>
 
(5) NET INCOME PER SHARE
 
     The shares used in computing pro forma net income per share consist of (i)
2,978,790 shares held by the stockholders of Provant prior to the Offering (ii)
3,826,815 shares issued to owners of the Founding Companies (excluding shares
issuable as Additional Consideration and pursuant to the Star Contingent
Consideration) and (iii) 2,600,000 shares of Common Stock sold in the Offering.
 
                                      F-11
<PAGE>   76
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors,
Provant, Inc.:
 
     We have audited the accompanying balance sheet of Provant, Inc., as of June
30, 1997 and the related statements of operations, stockholders' equity and cash
flows for the period from November 16, 1996 (date of inception) to June 30,
1997. 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 audit.
 
     We conducted our audit 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Provant, Inc. as of June 30,
1997 and the results of its operations and its cash flows for the period from
November 16, 1996 (date of inception) to June 30, 1997, in conformity with
generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-12
<PAGE>   77
 
                                 PROVANT, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                        JUNE 30,     SEPTEMBER 30,
                                                                          1997           1997
                                                                        --------     -------------
                                                                                      (UNAUDITED)
<S>                                                                     <C>          <C>
                                              ASSETS
Cash and cash equivalents.............................................   $    1          $   3
Deferred income taxes.................................................       60            143
                                                                           ----           ----
          Total current assets........................................       61            146
Property and equipment................................................      150            153
Deferred offering costs...............................................       --             50
                                                                           ----           ----
          Total assets................................................   $  211          $ 349
                                                                           ====           ====
                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Notes payable to stockholders.........................................   $  298          $ 560
                                                                           ----           ----
          Total current liabilities...................................      298            560
Stockholders' equity (deficit):
  Common stock, $.01 per value; 10,000 shares authorized; 1,992.3 and
     3,389.6 shares issued and outstanding at June 30, 1997 and
     September 30, 1997, respectively.................................       --             --
  Paid-in capital.....................................................        2              3
  Accumulated deficit.................................................      (89)          (214)
                                                                           ----           ----
          Total stockholders' equity (deficit)........................      (87)          (211)
                                                                           ----           ----
          Total liabilities and stockholders' equity (deficit)........   $  211          $ 349
                                                                           ====           ====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-13
<PAGE>   78
 
                                 PROVANT, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                             NOVEMBER 16, 1996
                                                                 (DATE OF             THREE MONTHS
                                                               INCEPTION) TO             ENDED
                                                               JUNE 30, 1997       SEPTEMBER 30, 1997
                                                             -----------------     ------------------
                                                                                      (UNAUDITED)
<S>                                                          <C>                   <C>
Revenue....................................................      $      --              $     --
                                                                  --------              --------
General and administrative expenses........................            149                   200
                                                                  --------              --------
Interest expense...........................................             --                     8
Loss before income taxes...................................           (149)                 (208)
                                                                  --------              --------
Income tax benefit.........................................             60                    83
                                                                  --------              --------
Net loss...................................................      $     (89)             $   (125)
                                                                  ========              ========
</TABLE>
 
                 See accompanying notes to financial statements
 
                                      F-14
<PAGE>   79
 
                                 PROVANT, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                          COMMON STOCK
                                                       ------------------     ACCUMULATED
                                                       SHARES      AMOUNT     DEFICIT      TOTAL
                                                       -------     ------     --------     -----
<S>                                                    <C>         <C>        <C>          <C>
Initial capitalization...............................  1,992.3       $2       $     --     $   2
          Net (loss).................................                --            (89)      (89)
                                                       -------      ---       --------     -----
Balance at June 30, 1997.............................  1,992.3        2            (89)      (87)
Issuance of management shares........................  1,397.3        1             --         1
          Net (loss).................................       --       --           (125)     (125)
                                                       -------      ---       --------     -----
Balance, September 30, 1997 (Unaudited)..............  3,389.6       $3       $   (214)     (211)
                                                       =======      ===       ========     =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-15
<PAGE>   80
 
                                 PROVANT, INC.
 
                            STATEMENTS OF CASH FLOWS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                PERIOD FROM
                                                             NOVEMBER 16, 1996
                                                                  (DATE OF               THREE MONTHS
                                                               INCEPTION) TO                ENDED
                                                               JUNE 30, 1997          SEPTEMBER 30, 1997
                                                           ----------------------     ------------------
                                                                                         (UNAUDITED)
<S>                                                        <C>                        <C>
Cash flows from operating activities:
  Net (loss)...........................................            $  (89)                  $ (125)
     Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:
     Changes in assets and liabilities:
       Deferred offering costs.........................                --                      (50)
       Accrued expenses................................                --                        8
       Increase in deferred taxes......................               (60)                     (83)
                                                                     ----                     ----
          Net cash used in operating activities........              (149)                    (250)
                                                                     ----                     ----
Cash flows from investing activities:
  Acquisition of property and equipment................              (150)                      (3)
                                                                     ----                     ----
          Net cash used in investing activities........              (150)                      (3)
                                                                     ----                     ----
Cash flows from financing activities...................
  Issuance of stock....................................                 2                        1
  Increase in notes payable to stockholders............               298                      254
                                                                     ----                     ----
          Net cash provided by financing activities....               300                      255
                                                                     ----                     ----
Net increase in cash and cash equivalents..............                 1                        2
Cash and cash equivalents, beginning of period.........                --                        1
                                                                     ----                     ----
Cash and cash equivalents, end of period...............            $    1                   $    3
                                                                     ====                     ====
</TABLE>
 
                 See accompanying notes to financial statements
 
                                      F-16
<PAGE>   81
 
                                 PROVANT, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                                 (IN THOUSANDS)
 
(1) BUSINESS AND ORGANIZATION
 
     Provant, Inc. (the "Company"), a Delaware corporation, was incorporated on
November 16, 1996. Provant intends to acquire seven providers of training and
development services and products in separate merger transactions (the
"Combination") simultaneously with its initial public offering (the "Offering")
of its Common Stock. The consummation of the Combination is conditioned upon the
closing of the Offering.
 
     The Company has not conducted any operations, and all activities to date
have related to the Offering and the Combination. The Company's cash balances
were generated from the initial capitalization of the Company (see Note 3). All
other expenditures to date have been funded by loans from two of the Company's
principal stockholders.
 
     The stockholders have committed to loan the Company the expenses and costs
of the Offering and the Combination. As of June 30, 1997 and September 30, 1997,
approximately $298 and $560 (unaudited), respectively, have been loaned by the
stockholders in connection with the Offering and the Combination. Certain costs
have been accounted for as deferred offering costs. There is no assurance that
the pending Combination discussed below will be completed or that the Company
will be able to generate future operating revenues.
 
(2) INTERIM FINANCIAL INFORMATION
 
     The interim financial statements as of September 30, 1997 and for the three
months then ended are unaudited, and certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial position, results of operations and
cash flows with respect to the interim financial statements, have been included.
The results of operations for the interim periods are not necessarily indicative
of the results for the entire fiscal year.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
(3) STOCKHOLDERS' EQUITY
 
     In connection with its organization and initial capitalization, the Company
sold 1,992.3 shares of its common stock, $.01 par value per share (the "Common
Stock"), at $1.00 per share. During the three months ended September 30, 1997,
the Company sold 1,397.3 additional shares for $1.00 per share. Holders of
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders, and do not have cumulative
voting rights.
 
     Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," allows entities to choose between a fair value based
method of accounting for employee stock options or similar equity instruments
and the current intrinsic, value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25 (APB No. 25). Entities electing to
remain with the accounting in APB Opinion No. 25 must make pro forma disclosures
of net income and earnings per share as if the fair
 
                                      F-17
<PAGE>   82
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
value method of accounting had been applied. The Company will provide pro forma
disclosure of net income and earnings per share, as applicable, in the notes to
future consolidated financial statements.
 
(4) PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)
 
     The following unaudited, pro forma share and per share data is based on the
Company's intentions with respect to the Offering.
 
     In connection with the Offering, the Company will increase the authorized
shares of stock to 45 million, consisting of 40 million shares of Common Stock
and 5 million shares of Preferred Stock, and will declare a stock split of
871.52633-for-1 in the form of a stock dividend that will result in a total
amount of outstanding shares of Common Stock prior to the offering (but giving
effect to the Combination) of 6,805,605.
 
  Preferred Stock
 
     The Preferred Stock, if issued, would have priority over the Common Stock
with respect to dividends and other distributions, including the distribution of
assets upon liquidation. The Board of Directors has the authority, without
further stockholder authorization, to issued from time to time shares of
Preferred Stock in one or more series and to fix the terms, limitations,
relative rights and preferences and variations of each series.
 
     The following presents stockholders' equity on an actual and pro forma
basis (to give effect to the recapitalization and stock split) as of September
30, 1997 (in thousands).
 
<TABLE>
<CAPTION>
                                                                  ACTUAL      PRO FORMA
                                                                  -----       ---------
        <S>                                                       <C>         <C>
        Preferred Stock
          None authorized (5 million shares authorized, none
             issued and outstanding pro forma)..................  $  --         $  --
        Common Stock
          10,000 shares authorized (40 million shares authorized
             pro forma); 3,389.6 shares issued and outstanding,
             (2,954,125 shares issued and outstanding, pro
             forma).............................................     --             3
        Paid-in capital.........................................      3            --
        Accumulated deficit.....................................   (214)         (214)
                                                                  -----       ---------
                  Total.........................................  $(211)        $(211)
                                                                  =====       =======
</TABLE>
 
  Equity Incentive Plan
 
     The Company will adopt the 1998 Equity Incentive Plan (the "Equity
Incentive Plan"), which provides for the award of up to 1.1 million shares of
Common Stock in the form of incentive stock options ("ISOs"), non-qualified
stock options, stock appreciation rights, performance shares, restricted stock,
or stock units (each, an "Award"). All directors and employees of, and all
consultants and advisors to, the Company (including its subsidiaries) are
eligible to participate in the Equity Incentive Plan.
 
     The Equity Incentive Plan will be administered by the Compensation
Committee (the "Committee"), which determines who shall receive Awards from
those individuals eligible to participate in the Equity Incentive Plan, the type
of Award to be made, the number of shares of Common Stock that may be acquired
pursuant to the Award and the specific terms and conditions of each Award,
including the purchase price, term, vesting schedule, restrictions on transfer
and any other conditions and limitations applicable to the Awards or their
exercise. Options that are ISOs may be exercisable for not more than 10 years
after the date the option is awarded. The Committee may at any time accelerate
the exercisability of all or any portion of an option.
 
                                      F-18
<PAGE>   83
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
  Stock Options
 
     On or prior to the date of the final Prospectus used in connection with the
Offering, the Company has agreed to grant options to purchase an aggregate of
833,464 shares of Common Stock having a per-share exercise price equal to the
initial offering price. Of this amount, options to purchase 665,280 shares will
become exercisable with respect to one-third of the underlying shares of Common
Stock on each of the first three anniversaries of the date of grant. The
remaining options to purchase 168,184 shares will become exercisable with
respect to all of the underlying shares of Common Stock upon the closing of the
Offering.
 
  Stock Warrants
 
     As partial consideration for the extension to the Company of the financing
described in Note 5 below, two of the Company's executive officers each received
two warrants. The first warrant is exercisable for 176,368 shares of common
stock at a per share exercise price equal to the initial public offering price.
The second warrant is a warrant to purchase 220,460 shares of common stock which
will become exercisable only if the market price of the Common Stock increases
to certain threshold levels except as described below (the "Contingent
Warrant"). Specifically, 20% of the total number of shares issuable under the
Contingent Warrants will become exercisable on each of the three occasions that
the market price of the Common Stock increases by 100%, 200%, 300%,
respectively, from the initial public offering price, and the remaining 40% of
the total number of shares issuable under the Contingent Warrant will become
exercisable if the market price of the Common Stock increases by 400%. However,
under certain circumstances involving the merger or sale of the Company, the
Contingent Warrant will become exercisable to purchase all of the warrant
shares. The exercise price of the Contingent Warrant increases on each
anniversary of the closing of the Offering. Specifically, the exercise price is
equal to the initial public offering price for the first 12 months following the
closing of the Offering and, for each 12-month period thereafter, is equal to
the initial public offering price plus 10% of the initial public offering price
multiplied by the number of full 12 month periods elapsed since the closing of
the Offering. However, once a portion of the Contingent Warrant becomes
exercisable, that portion's exercise price is fixed as of that date. All four
warrants expire on the seventh anniversary of the closing of the Offering.
 
     The holders of the warrants have the right to require the Company to
register the resale of the shares that may be acquired upon exercise of the
warrants under the Securities Act of 1933, as amended.
 
  Stock Purchase Plan
 
     The Company will adopt the 1998 Employee Stock Purchase Plan (the "Plan").
The Plan provides for the sale of shares of Common Stock to employees at a
purchase price that is 85% of the lesser of the value of the Common Stock at the
beginning of a purchase period or at the end of a purchase period. The Company
has reserved 500,000 shares of Common Stock for issuance under the Plan.
 
  Non-Employee Directors' Stock Plan
 
     The Company's Board of Directors has adopted the Stock Plan for
Non-Employee Directors (the "Directors' Plan"). A total of 100,000 shares of
Common Stock are reserved for issuance under the Directors' Plan. Pursuant to
the Directors' Plan, on the date of the final Prospectus used in connection with
the Offering, each director and director nominee who is neither an employee of
the Company or one of its subsidiaries (a "non-employee director") will receive
an option to purchase 7,500 shares of Common Stock with a per-share exercise
price equal to the initial public offering price. Each non-employee director
initially elected following the Offering will be granted upon such election an
option to purchase 7,500 shares of Common Stock. Following his or her initial
election, each non-employee director will be granted, immediately following each
annual meeting of stockholders at which he or she is re-elected (and provided he
or she is still is a non-employee director at such time), an option to acquire
an additional 2,500 shares of Common Stock. The per
 
                                      F-19
<PAGE>   84
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
share exercise price of options granted following the Offering will be the fair
market value of the Common Stock on the date of grant. Each option will be
non-transferable except upon death (unless otherwise approved by the Board),
will expire 10 years after the date of grant will become exercisable with
respect to all of the shares of Common Stock issuable thereunder on the date
that is six months following the date of grant if the individual is a director
at such time. If the director dies or otherwise ceases to be a director prior to
the expiration of an option, the option (if exercisable) will remain exercisable
for a period of one year following death or three months following other
termination of the individual's status as a director, but in no event beyond the
tenth anniversary of the date of grant. The Board of Directors may at any time
or times amend the Directors' Plan for any purpose that at the time may be
permitted by law.
 
(5) RELATED PARTY TRANSACTION
 
     Expenses paid by the Company prior to the closing of the Offering have been
advanced under a $3 million line of credit issued on October 6, 1997 by two of
the Company's stockholders.
 
     Amounts payable to stockholders under the line of credit are due on the
earlier of October 6, 2000 or the successful completion of the Offering and bear
interest at the prime rate as from time to time published in the Wall Street
Journal (8.5% at June 30, 1997).
 
     The acquisition Company's property and equipment at June 30, 1997, obtained
from stockholders of the Company, was financed under the line of credit.
 
(6) SUBSEQUENT EVENT (UNAUDITED)
 
     The Company and wholly-owned subsidiaries of the Company have signed
definitive agreements to acquire by merger seven companies ("the Founding
Companies") to be effective contemporaneously with the Offering. The companies
to be acquired are Behavioral Technology, Inc., Decker Communications, Inc., J.
Howard and Associates, Inc., Robert Steinmetz, Ph.D., and Associates, Inc.,
d/b/a, Learning Systems Sciences, MOHR Retail Learning Systems, Inc., Novations
Group, Inc. and Star Mountain, Inc. The aggregate consideration that will be
paid by Provant, Inc. to acquire the Founding Companies is approximately $59.2
million, consisting of $22.5 million in cash and 3,826,815 shares of Common
Stock (assuming an initial public offering price of $12.00 per share).
 
                                      F-20
<PAGE>   85
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Behavioral Technology, Inc.:
 
     We have audited the accompanying balance sheets of Behavioral Technology,
Inc., as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended June 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Behavioral Technology, Inc.
as of June 30, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended June 30, 1997, in
conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-21
<PAGE>   86
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                   JUNE 30,
                                                               -----------------     SEPTEMBER 30,
                                                                1996       1997          1997
                                                               ------     ------     -------------
                                                                                      (UNAUDITED)
<S>                                                            <C>        <C>        <C>
                                              ASSETS
Current assets:
  Cash and cash equivalents..................................  $  652     $1,254        $ 1,188
  Accounts receivable, net of allowance for doubtful accounts
     of $89 at June 30, 1996 and 1997 and September 30,
     1997....................................................     940      1,055          1,655
  Prepaid expenses...........................................      67        143            160
                                                               ------     ------         ------
          Total current assets...............................   1,659      2,452          3,003
                                                               ------     ------         ------
Property and equipment, net..................................     194        135            117
Other assets.................................................       8          7              9
                                                               ------     ------         ------
          Total assets.......................................  $1,861     $2,594        $ 3,129
                                                               ======     ======         ======
 
                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...........................................  $  270     $  268        $   267
  Accrued expenses...........................................     123        148            186
  Accrued compensation.......................................     316        433            484
  Deferred revenue...........................................      12         43             15
                                                               ------     ------         ------
          Total current liabilities..........................     721        892            952
                                                               ------     ------         ------
Commitments and contingencies
Stockholders' equity:
  Common stock, $10 par value; 1,000 shares authorized; 100,
     99 and 104 shares issued and outstanding at June 30,
     1996, June 30, 1997 and September 30, 1997,
     respectively............................................       1          1              1
  Additional paid-in capital.................................      --         --            182
  Translation adjustment.....................................      --         (6)            (6)
  Retained earnings..........................................   1,139      1,707          2,000
                                                               ------     ------         ------
          Total stockholders' equity.........................   1,140      1,702          2,177
                                                               ------     ------         ------
          Total liabilities and stockholders' equity.........  $1,861     $2,594        $ 3,129
                                                               ======     ======         ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-22
<PAGE>   87
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
<S>                                             <C>        <C>        <C>        <C>        <C>
Revenue.......................................  $3,803     $5,685     $7,096     $1,712     $1,977
Cost of revenue...............................   1,049      1,495      1,488        387        385
                                                ------     ------     ------     ------     ------
          Gross profit........................   2,754      4,190      5,608      1,325      1,592
Selling, general and administrative
  expenses....................................   2,315      4,048      5,111        969      1,306
                                                ------     ------     ------     ------     ------
          Income from operations..............     439        142        497        356        286
                                                ------     ------     ------     ------     ------
Other income:
  Royalties...................................      83         82         30         --         --
  Interest....................................      13         27         31          6          7
  Other income, net...........................      43         --         10         --         --
                                                ------     ------     ------     ------     ------
          Total other income..................     139        109         71          6          7
                                                ------     ------     ------     ------     ------
          Net income..........................  $  578     $  251     $  568     $  362     $  293
                                                ======     ======     ======     ======     ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-23
<PAGE>   88
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                     COMMON STOCK        ADDITIONAL
                                   -----------------      PAID-IN       TRANSLATION     RETAINED
                                   SHARES     AMOUNT      CAPITAL       ADJUSTMENT      EARNINGS     TOTAL
                                   ------     ------     ----------     -----------     --------     ------
<S>                                <C>        <C>        <C>            <C>             <C>          <C>
Balance, June 30, 1994...........    100        $1          $ --            $--          $  310      $  311
  Net income.....................     --        --            --             --             578         578
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1995...........    100         1            --             --             888         889
  Net income.....................     --        --            --             --             251         251
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1996...........    100         1            --             --           1,139       1,140
  Net income.....................     --        --            --             --             568         568
  Translation adjustment.........     --        --            --             (6)             --          (6)
  Stock surrender................     (1)       --            --             --              --          --
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1997...........     99         1            --             (6)          1,707       1,702
  Net income.....................     --        --            --             --             293         293
  Stock grant....................      5        --           182             --              --         182
                                                --
                                     ---                    ----           ----          ------      ------
Balance, September 30, 1997
  (Unaudited)....................    104        $1          $182            $(6)         $2,000      $2,177
                                     ===        ==          ====           ====          ======      ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-24
<PAGE>   89
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                       ENDED
                                                        YEAR ENDED JUNE 30,        SEPTEMBER 30,
                                                      ------------------------    ---------------
                                                      1995     1996      1997     1996      1997
                                                      -----    -----    ------    -----    ------
                                                                                    (UNAUDITED)
<S>                                                   <C>      <C>      <C>       <C>      <C>
Cash flows from operating activities:
  Net income........................................  $ 578    $ 251    $  568    $ 362    $  293
                                                      -----    -----    ------    -----    ------
  Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Depreciation and amortization................     57       46        92       65        21
       Non-cash compensation........................     --       --        --       --       182
       Changes in operating assets and liabilities:
          Increase in accounts receivable...........   (176)    (195)     (115)    (205)     (600)
          Increase in prepaid expenses..............     --      (67)      (76)      (1)      (17)
          Decrease in other assets..................     --       --         1        1        (2)
          Increase (decrease) in accounts payable...     90       47        (2)     (66)       (1)
          Increase in accrued expenses..............     19      172       142        4        89
          Increase (decrease) in deferred revenue...     22      (48)       31       --       (28)
                                                      -----    -----    ------    -----    ------
            Total adjustments.......................     12      (45)       73     (202)     (356)
                                                      -----    -----    ------    -----    ------
            Net cash provided by (used in) operating
               activities...........................    590      206       641      160       (63)
                                                      -----    -----    ------    -----    ------
Cash flows from investing activities:
  Purchases of property and equipment...............   (157)    (122)      (42)     (20)       (3)
  Proceeds from sale of property and equipment......     --        5         9       --        --
  Purchase of trademark.............................     --       (7)       --       --        --
                                                      -----    -----    ------    -----    ------
            Net cash used in investing activities...   (157)    (124)      (33)     (20)       (3)
                                                      -----    -----    ------    -----    ------
Cash flows from financing activities:
  Proceeds received on line of credit...............     --       --       200       --        --
  Principal payments on line of credit..............     --       --      (200)      --        --
                                                      -----    -----    ------    -----    ------
            Net cash used in financing activities...     --       --        --       --        --
                                                      -----    -----    ------    -----    ------
Net increase (decrease) in cash and cash
  equivalents.......................................    433       82       608      140       (66)
Effect of exchange rate changes on cash.............     --       --        (6)      (1)       --
Cash and cash equivalents, beginning of period......    137      570       652      652     1,254
                                                      -----    -----    ------    -----    ------
Cash and cash equivalents, end of period............  $ 570    $ 652     1,254    $ 791    $1,188
                                                      =====    =====    ======    =====    ======
Supplemental disclosure:
  Cash paid for interest............................  $  --    $  --    $    2    $  --    $   --
                                                      =====    =====    ======    =====    ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-25
<PAGE>   90
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Behavioral Technology, Inc. (the "Company") was founded in 1978. The
Company primarily provides train-the-trainer programs designed to help its
clients improve employee selection and to provide managers with a methodology
for assessing strengths and weaknesses of current employees. BTI's revenue is
derived primarily from the licensing to clients of the right to use its training
materials.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed. The Company also licenses
to its clients the use of the Company's behavioral interviewing techniques. The
entire sale price is recognized when the noncancellable contract is signed and
the right to use the intellectual property is transferred. Deferred revenue is
recognized for payments received prior to services being performed.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Prepaid Expenses
 
     Prepaid expenses consist of costs incurred in developing videos and
publishing books. The costs of the videos are being amortized over five years
and the costs of the books are expensed as books are sold.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
                                      F-26
<PAGE>   91
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, short-term certificates of deposit, accounts receivable, accounts
payable and accrued expenses. The carrying value of these financial instruments
approximates their fair value due to the short maturity of these instruments.
 
  Foreign Currency Translation
 
     The Company operates a branch in Canada. Assets and liabilities for the
branch are translated into U.S. Dollars at the end of the year using year-end
exchange rates. Income and expenses are translated using the average exchange
rates for the year. Translation gains and losses are reported as a separate
component of stockholders' equity.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 8.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company conducts its administrative operations in a facility leased
from the principal stockholder of the Company. Lease expense for the years ended
June 30, 1995, 1996 and 1997 was $90, $76 and $85, respectively.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
 
<TABLE>
<CAPTION>
                                 YEAR ENDING JUNE 30,
        ----------------------------------------------------------------------
        <S>                                                                     <C>
              1998............................................................  $ 83
              1999............................................................    86
              2000............................................................    89
              2001............................................................    89
              2002............................................................    45
                                                                                ----
                                                                                $392
                                                                                ====
</TABLE>
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                          JUNE 30,
                                                                        -------------
                                                                        1996     1997
                                                                        ----     ----
        <S>                                                             <C>      <C>
        Machinery and equipment.......................................  $272     $307
        Furniture and fixtures........................................    97       95
        Leasehold improvements........................................    18       18
                                                                        ----     ----
                                                                         387      420
        Accumulated depreciation and amortization.....................   193      285
                                                                        ----     ----
                  Property and equipment, net.........................  $194     $135
                                                                        ====     ====
</TABLE>
 
     Depreciation and amortization expense related to property and equipment for
the years ended June 30, 1995, 1996 and 1997 was $57, $46 and $92, respectively.
 
                                      F-27
<PAGE>   92
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(5)  LINE OF CREDIT
 
     The Company entered into a line of credit agreement on October 15, 1996 for
borrowings up to $500. The line bears interest at prime plus 1%, is secured by
the accounts receivable of the Company, and is personally guaranteed by the
principal stockholder. The line of credit had a maturity date of October 15,
1997 and was renewed until October 15, 1998. There were no amounts outstanding
under this agreement at June 30, 1997.
 
(6)  EMPLOYEE BENEFITS
 
     The Company adopted a 401(k) profit sharing plan on January 1, 1996 that
covers all employees above the age of twenty-one who have completed one year of
service. Company contributions are made each year at the discretion of the Board
of Directors. The Company contributed $66 to the plan for the year ended June
30, 1996. No contribution was made for the year ended June 30, 1997.
 
(7)  CONCENTRATION OF CREDIT RISK
 
     The Company's credit risks primarily relate to cash and cash equivalents
and accounts receivable. Cash and cash equivalents are primarily held in bank
accounts. Cash deposits in excess of FDIC insurance limits approximated $1,040
at June 30, 1997. The Company has not incurred losses related to these balances
to date.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-28
<PAGE>   93
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Decker Communications, Inc.:
 
     We have audited the accompanying balance sheets of Decker Communications,
Inc., as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Decker Communications, Inc.,
as of June 30, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended June 30, 1997 in
conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-29
<PAGE>   94
 
                          DECKER COMMUNICATIONS, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                   JUNE 30,
                                                               -----------------     SEPTEMBER 30,
                                                                1996       1997          1997
                                                               ------     ------     -------------
                                                                                      (UNAUDITED)
<S>                                                            <C>        <C>        <C>
                                              ASSETS
Current assets:
  Cash and cash equivalents..................................  $  314     $  508        $   526
  Investments................................................     565        533            932
  Accounts receivable, net of allowance for doubtful accounts
     of $142 at June 30, 1996 and $150 at June 30, 1997 and
     September 30, 1997......................................   1,123      1,489          1,441
  Receivables from related parties...........................      --         --            290
  Prepaid expenses and other current assets..................     170        140            102
                                                               ------     ------         ------
          Total current assets...............................   2,172      2,670          3,291
                                                               ------     ------         ------
Property and equipment, net..................................     497        338            359
Other assets.................................................      47         59             59
                                                               ------     ------         ------
          Total assets.......................................  $2,716     $3,067        $ 3,709
                                                               ======     ======         ======
 
                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...........................................  $  251     $  111        $   284
  Accrued expenses...........................................     368        466            459
  Accrued compensation.......................................     498        668            849
  Taxes payable..............................................      44         35             62
  Current portion of note payable............................      --        416            410
  Deferred revenue...........................................      92         89            114
                                                               ------     ------         ------
          Total current liabilities..........................   1,253      1,785          2,178
                                                               ------     ------         ------
Note payable, net of current portion.........................      --        623            615
Redeemable common stock......................................      --        300            300
Commitments and contingencies
Stockholders' equity:
  Common stock, no par value; 750,000 shares authorized;
     176,972, 138,027 and 143,417 shares issued and
     outstanding at June 30, 1996, June 30, 1997 and
     September 30, 1997, respectively........................     397        269            313
  Unrealized gain on investments.............................       5          9              9
  Note receivable from stock sales...........................     (92)      (127)          (171)
  Retained earnings..........................................   1,153        208            465
                                                               ------     ------         ------
          Total stockholders' equity.........................   1,463        359            616
                                                               ------     ------         ------
          Total liabilities and stockholders' equity.........  $2,716     $3,067        $ 3,709
                                                               ======     ======         ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-30
<PAGE>   95
 
                          DECKER COMMUNICATIONS, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
<S>                                             <C>        <C>        <C>        <C>        <C>
Revenue.......................................  $8,550     $8,620     $8,410     $1,930     $2,585
Cost of revenue...............................   2,419      2,655      2,275        549        660
                                                ------     ------     ------     ------     ------
  Gross profit................................   6,131      5,965      6,135      1,381      1,925
Selling, general and administrative
  expenses....................................   5,670      5,716      5,621      1,261      1,663
                                                ------     ------     ------     ------     ------
  Income from operations......................     461        249        514        120        262
Other (income) expense........................     (54)       (74)         9        (15)         3
                                                ------     ------     ------     ------     ------
  Income before income taxes..................     515        323        505        135        259
State income taxes............................      67         30         33          2          2
                                                ------     ------     ------     ------     ------
  Net income..................................  $  448     $  293     $  472     $  133     $  257
                                                ======     ======     ======     ======     ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-31
<PAGE>   96
 
                          DECKER COMMUNICATIONS, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                             NOTE
                                           COMMON STOCK     UNREALIZED    RECEIVABLE
                                         ----------------     GAIN ON     FROM STOCK   RETAINED
                                         SHARES    AMOUNT   INVESTMENTS     SALES      EARNINGS    TOTAL
                                         -------   ------   -----------   ----------   --------   -------
<S>                                      <C>       <C>      <C>           <C>          <C>        <C>
Balance, June 30, 1994.................  174,000   $ 314        $--         $   --      $  986    $ 1,300
  Sale of stock........................    5,500      49         --            (50)         --         (1)
  Net income...........................       --      --         --             --         448        448
  Dividends............................       --      --         --             --        (300)      (300)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1995.................  179,500     363         --            (50)      1,134      1,447
  Sale of stock........................    4,000      42         --            (42)         --         --
  Repurchase of stock..................   (6,528)     (8)        --             --         (59)       (67)
  Unrealized gain on investments.......       --      --          5             --          --          5
  Net income...........................       --      --         --             --         293        293
  Dividends............................       --      --         --             --        (215)      (215)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1996.................  176,972     397          5            (92)      1,153      1,463
  Sale of stock........................    8,080      35         --            (35)         --         --
  Repurchase of stock..................  (37,850)   (163)        --             --        (963)    (1,126)
  Unrealized gain on investments.......       --      --          4             --          --          4
  Redeemable common stock..............   (9,175)     --         --             --        (300)      (300)
  Net income...........................       --      --         --             --         472        472
  Dividends............................       --      --         --             --        (154)      (154)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1997.................  138,027     269          9           (127)        208        359
  Sale of stock........................    5,390      44         --            (44)         --         --
  Net income...........................       --      --         --             --         257        257
                                         -------   -----        ---          -----      ------    -------
Balance, September 30, 1997
  (Unaudited)..........................  143,417   $ 313        $ 9         $ (171)     $  465    $   616
                                         =======   =====        ===          =====      ======    =======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-32
<PAGE>   97
 
                          DECKER COMMUNICATIONS, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS
                                                                                ENDED SEPTEMBER
                                                     YEAR ENDED JUNE 30,              30,
                                                  -------------------------     ----------------
                                                  1995      1996      1997      1996       1997
                                                  -----     -----     -----     -----      -----
                                                                                  (UNAUDITED)
<S>                                               <C>       <C>       <C>       <C>        <C>
Cash flows from operating activities:
  Net income..................................... $ 448     $ 293     $ 472     $ 133      $ 257
  Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization.............   127       223       194        55         44
       (Gain) loss on disposal of property and
          equipment..............................    --        (3)       12        --         --
       Changes in operating assets and
          liabilities:...........................    --        --        --        --         --
          (Increase) decrease in accounts
            receivable, trade....................  (184)       62      (366)      (11)        48
          (Increase) decrease in prepaid expenses
            and other current assets.............   (38)      (22)       30        (8)      (252)
          (Increase) decrease in other assets....   (18)        7       (12)       --         --
          Increase (decrease) in accounts payable
            and accrued expenses.................   221       (28)      119      (135)       374
          Increase (decrease) in deferred
            revenue..............................   (40)      (61)       (3)       17         25
                                                  -----     -----     -----     -----      -----
            Total adjustments....................    68       178       (26)      (82)       239
                                                  -----     -----     -----     -----      -----
            Net cash provided by operating
               activities........................   516       471       446        51        496
                                                  -----     -----     -----     -----      -----
Cash flows from investing activities:
  Net change in investments......................  (344)      131        36        --       (399)
  Purchases of property and equipment............  (136)     (443)      (56)       (6)       (65)
  Proceeds from sale of property and equipment...    --         6         9        --         --
                                                  -----     -----     -----     -----      -----
            Net cash used in investing
               activities........................  (480)     (306)      (11)       (6)      (464)
                                                  -----     -----     -----     -----      -----
Cash flows from financing activities:
  Dividends......................................  (300)     (215)     (154)       --         --
  Sale (repurchase) of stock.....................    50       (25)      (35)       --         --
  Payments of notes payable......................    (6)       --       (52)      (13)       (14)
                                                  -----     -----     -----     -----      -----
            Net cash used in financing
               activities........................  (256)     (240)     (241)      (13)       (14)
                                                  -----     -----     -----     -----      -----
Net (decrease) increase in cash and cash
  equivalents....................................  (220)      (75)      194        32         18
Cash and cash equivalents, beginning of period...   609       389       314       314        508
                                                  -----     -----     -----     -----      -----
Cash and cash equivalents, end of period......... $ 389     $ 314     $ 508     $ 346      $ 526
                                                  =====     =====     =====     =====      =====
Supplemental disclosure:
  Cash paid for interest......................... $  --     $  --     $  80     $  --      $  19
                                                  =====     =====     =====     =====      =====
Supplemental disclosure of non-cash item:
  Increase (decrease) in market value of
     investments................................. $  19     $ (11)    $   4     $  --      $  --
                                                  =====     =====     =====     =====      =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-33
<PAGE>   98
 
                          DECKER COMMUNICATIONS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Decker Communications, Inc. (the "Company") was founded in 1979. The
Company provides instructor-led training to businesses to improve employees'
business communication skills and communication between management and
employees. Revenue is derived primarily from fees charged to participants in its
instructor-led training programs.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenues are recognized as products and services are provided.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997 are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Marketable Securities
 
     Marketable investment securities consist of U.S. treasury bills and equity
securities in various mutual funds. The investments are stated at fair market
value and are accounted for as available for sale securities under the
provisions of Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities. Unrealized gains are
included as a separate component of stockholders' equity.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the lease term.
 
  Fair Value of Financial instruments
 
     Financial instruments of the Company consist of cash and cash equivalents,
investments, accounts and notes receivable, accounts payable and accrued
liabilities. The carrying value of these financial instruments
 
                                      F-34
<PAGE>   99
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
approximates their fair value because of the short maturity of these
instruments. Based upon borrowing rates currently available to the Company for
issuance of similar debt with similar terms and remaining maturities, the
estimated fair value of the long-term debt approximates its carrying amount.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 10.
 
  Library of Copyrighted Materials
 
     The Company derives a substantial portion of its revenue from training
programs which are based on its library of copyrighted materials and other
materials developed within the Company. Costs associated with the development of
these materials have been expensed as incurred.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company has a note receivable from a stockholder and officer of the
Company for the purchase of stock. The balance of this note was $92 and $127 at
June 30, 1996 and 1997, respectively. The note bears interest at the prevailing
rate and is secured by shares of Company stock and may be repaid by cash or
redemption of the stock to the Company. The note is reflected as a reduction of
stockholders' equity in the accompanying balance sheets.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                     -----------------
                                                                      1996       1997
                                                                     ------     ------
        <S>                                                          <C>        <C>
        Equipment..................................................  $  665        591
        Furniture and fixtures.....................................     336        334
        Software...................................................     129        143
        Leasehold improvements.....................................      17         19
                                                                     ------     ------
                                                                      1,147      1,087
        Accumulated depreciation and amortization..................     650        749
                                                                     ------     ------
                  Property and equipment, net......................  $  497        338
                                                                     ======     ======
</TABLE>
 
     Depreciation and amortization expense related to property and equipment for
the years ended June 30, 1995, 1996 and 1997 was $127, $223 and $194,
respectively.
 
(5)  NOTE PAYABLE
 
     The note payable consists of a secured promissory note to a stockholder in
connection with a stock repurchase agreement. The note bears interest at 7.5%,
with principal and interest due monthly through June 30, 2009. The note is
secured by all tangible and intangible assets of the Company.
 
     In connection with the stock repurchase agreement, the stockholder has the
option to accelerate the payment of a portion of the outstanding balance upon
the occurrence of certain events. One such event has occurred, as discussed in
note 10 (unaudited), giving the stockholder the right to accelerate
approximately
 
                                      F-35
<PAGE>   100
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
$416 of the principal balance. This amount has been classified as current in the
accompanying balance sheet at June 30, 1997. The stockholder has not yet chosen
to accelerate the note.
 
     Also in connection with the stock repurchase agreement, the Company issued
a put option to the stockholder which gave him the right, upon occurrence of a
triggering event, to sell his remaining shares of common stock to the Company at
an arbitrated value per share. Payment pursuant to this put option would be made
by amending the principal balance of the note payable by the amount of the
purchase price, effective July 1, 1999. The stockholder has not yet chosen to
exercise the put option. Common shares held under this option have been
reflected as redeemable common stock in the June 30, 1997 balance sheet.
 
     Principal payments on long-term debt are as follows:
 
<TABLE>
<CAPTION>
                                YEAR ENDING JUNE 30,
                ----------------------------------------------------
                <S>                                                   <C>
                      1998..........................................  $  410
                      1999..........................................      60
                      2000..........................................      64
                      2001..........................................      69
                      2002..........................................      75
                      Thereafter....................................     347
                                                                      ------
                          Total.....................................  $1,025
                                                                      ======
</TABLE>
 
(6)  LINE OF CREDIT
 
     The Company has a $250 line of credit agreement with a bank, with interest
payable at prime plus 1.5%. The line of credit is secured by substantially all
of the Company's assets and is guaranteed by the principal stockholder of the
Company. At June 30, 1996 and 1997, there were no amounts outstanding under the
agreement.
 
(7)  OPERATING LEASES
 
     The Company leases all of its facilities under cancelable and noncancelable
operating leases that expire on various dates through fiscal 2002. Most of these
leases generally provide for rent escalation based upon changes in real estate
taxes and operating expenses.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
 
<TABLE>
<CAPTION>
                                YEAR ENDING JUNE 30,
                ----------------------------------------------------
                <S>                                                   <C>
                      1998..........................................  $  494
                      1999..........................................     502
                      2000..........................................     382
                      2001..........................................     374
                      2002..........................................     108
                                                                      ------
                          Total                                       $1,860
                                                                      ======
</TABLE>
 
     Rent expense for the years ended June 30, 1995, 1996 and 1997 was $505,
$561 and $510, respectively.
 
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee annual
contributions up to $1 per employee. The Company contributed $29, $20 and $28 to
the plan for the years ended June 30, 1995, 1996 and 1997, respectively.
 
                                      F-36
<PAGE>   101
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(9)  CONCENTRATION OF CREDIT RISK
 
     The Company's three largest customers accounted for approximately 16%, 30%,
and 16% of total revenues for the years ended June 30, 1995, 1996 and 1997,
respectively. Accounts receivable from these customers represented approximately
13% and 16% of the total accounts receivable balance at June 30, 1996 and 1997,
respectively.
 
(10)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-37
<PAGE>   102
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
J. Howard & Associates, Inc.:
 
     We have audited the accompanying balance sheets of J. Howard & Associates,
Inc., as of June 30, 1997 and December 31, 1996 and 1995, and the related
statements of operations, stockholders' equity, and cash flows for the six
months ended June 30, 1997 and each of the years in the three-year period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of J. Howard & Associates,
Inc., as of June 30, 1997 and December 31, 1996 and 1995, and the results of its
operations and its cash flows for the six months ended June 30, 1997 and each of
the years in the three-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
 
                                          KPMG Peat Marwick LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-38
<PAGE>   103
 
                          J. HOWARD & ASSOCIATES, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31,
                                                     -----------------     JUNE 30,     SEPTEMBER 30,
                                                      1995       1996        1997           1997
                                                     ------     ------     --------     -------------
                                                                                         (UNAUDITED)
<S>                                                  <C>        <C>        <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents........................  $  466     $  201      $  280         $   811
  Accounts receivable, net of allowance for
     doubtful accounts of $34 at December 31, 1995,
     $84 at December 31, 1996, $108 at June 30,
     1997 and $84 at September 30, 1997............     761        724       1,688           1,350
  Due from employees and related parties...........      68         17           6              52
  Prepaid expenses.................................       4         14          85              50
                                                      -----      -----       -----          ------
          Total current assets.....................   1,299        956       2,059           2,263
                                                      -----      -----       -----          ------
Property and equipment, net........................     170        365         299             290
Other assets.......................................      53         44          44              44
                                                      -----      -----       -----          ------
          Total assets.............................  $1,522     $1,365      $2,402         $ 2,597
                                                      =====      =====       =====          ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.................................  $   23     $   12      $  151         $   116
  Accrued expenses.................................      37        106          87              95
  Accrued compensation.............................     372         32          34              97
  Deferred revenue.................................     117        135          48              24
  Accrued state income taxes.......................      27         38          38              38
  Distributions payable............................     138         --          --             125
                                                      -----      -----       -----          ------
          Total current liabilities................     714        323         358             495
                                                      -----      -----       -----          ------
Commitments and contingencies
Stockholders' equity:
  Class A voting common stock, no par value;
     authorized 100,000 shares; issued and
     outstanding 66,667 shares at December 31, 1995
     and 72,533 shares at December 31, 1996, June
     30, 1997 and September 30, 1997...............      64        175         175             175
  Class B non-voting common stock, no par value;
     authorized 25,000 shares; issued and
     outstanding 13,333 shares at December 31, 1995
     and 16,267 shares at December 31, 1996, June
     30, 1997 and September 30, 1997...............      42         97          97              97
  Retained earnings................................     702        770       1,772           1,830
                                                      -----      -----       -----          ------
          Total stockholders' equity...............     808      1,042       2,044           2,102
                                                      -----      -----       -----          ------
          Total liabilities and stockholders'
            equity.................................  $1,522     $1,365      $2,402         $ 2,597
                                                      =====      =====       =====          ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-39
<PAGE>   104
 
                          J. HOWARD & ASSOCIATES, INC.
 
                            STATEMENTS OF OPERATIONS
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                     SIX MONTHS      NINE MONTHS ENDED
                                      YEAR ENDED DECEMBER 31,           ENDED          SEPTEMBER 30,
                                    ----------------------------      JUNE 30,       -----------------
                                     1994       1995       1996         1997          1996       1997
                                    ------     ------     ------     -----------     ------     ------
                                                                                        (UNAUDITED)
<S>                                 <C>        <C>        <C>        <C>             <C>        <C>
Revenue...........................  $5,087     $6,251     $7,110       $ 4,160       $5,814     $6,077
Cost of revenue...................   1,713      1,964      2,166         1,190        1,782      1,851
                                    ------     ------     ------        ------       ------     ------
  Gross profit....................   3,374      4,287      4,944         2,970        4,032      4,226
Selling, general, and
  administrative expenses.........   3,087      4,158      4,559         1,971        2,791      3,170
                                    ------     ------     ------        ------       ------     ------
  Income from operations..........     287        129        385           999        1,241      1,056
                                    ------     ------     ------        ------       ------     ------
Other income (expense):
  Interest and dividend income....       4          6         31             4           18          9
  Interest expense................     (12)        (9)        --            --           --         --
  Other income....................      --         --          3             3            1         --
                                    ------     ------     ------        ------       ------     ------
          Total other income
            (expense).............      (8)        (3)        34             7           19          9
                                    ------     ------     ------        ------       ------     ------
          Income before income
            taxes.................     279        126        419         1,006        1,260      1,065
State income taxes................      --         10          8             4            4          5
                                    ------     ------     ------        ------       ------     ------
          Net income..............  $  279     $  116     $  411       $ 1,002       $1,256     $1,060
                                    ======     ======     ======        ======       ======     ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-40
<PAGE>   105
 
                          J. HOWARD & ASSOCIATES, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                 CLASS B
                                       CLASS A VOTING          NON-VOTING
                                        COMMON STOCK          COMMON STOCK
                                      -----------------     -----------------     RETAINED
                                      SHARES     AMOUNT     SHARES     AMOUNT     EARNINGS     TOTAL
                                      ------     ------     ------     ------     --------     ------
<S>                                   <C>        <C>        <C>        <C>        <C>          <C>
Balance, December 31, 1993..........  66,667      $ 64      13,333      $ 42       $  861      $  967
  Net income........................      --        --          --        --          279         279
  Distributions to stockholders.....      --        --          --        --          (81)        (81)
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1994..........  66,667        64      13,333        42        1,059       1,165
  Net income........................      --        --          --        --          116         116
  Distributions to stockholders.....      --        --          --        --         (473)       (473)
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1995..........  66,667        64      13,333        42          702         808
  Net income........................      --        --          --        --          411         411
  Distributions to stockholders.....      --        --          --        --         (343)       (343)
  Stock grant.......................   5,866       111       2,934        55           --         166
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1996..........  72,533       175      16,267        97          770       1,042
  Net income........................      --        --          --        --        1,002       1,002
                                      ------      ----      ------      ----       ------      ------
Balance, June 30, 1997..............  72,533       175      16,267        97        1,772       2,044
  Net income........................      --        --          --        --           58          58
                                      ------      ----      ------      ----       ------      ------
Balance, September 30, 1997
  (Unaudited).......................  72,533      $175      16,267      $ 97       $1,830      $2,102
                                      ======      ====      ======      ====       ======      ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-41
<PAGE>   106
 
                          J. HOWARD & ASSOCIATES, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                              YEAR ENDED                            NINE MONTHS ENDED
                                             DECEMBER 31,        SIX MONTHS ENDED     SEPTEMBER 30,
                                         ---------------------       JUNE 30,       -----------------
                                         1994    1995    1996          1997          1996       1997
                                         -----   -----   -----   ----------------   ------     ------
                                                                                       (UNAUDITED)
<S>                                      <C>     <C>     <C>     <C>                <C>        <C>
Cash flows from operating activities:
  Net income............................ $ 279   $ 116   $ 411        $1,002        $1,256     $1,060
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Depreciation and amortization....    83      95     104            75            69        130
       Non-cash compensation............    --      --     166            --            --         --
       Loss on sale of property and
          equipment.....................    --      --      --            15            --         15
       Changes in operating assets and
          liabilities:
          (Increase) decrease in
            accounts receivable.........   181    (116)     37          (964)         (344)      (626)
          (Increase) decrease in prepaid
            expenses....................     7      10     (10)          (71)           --        (36)
          (Increase) decrease in other
            assets......................   (12)     12       9            --            11         --
          Increase (decrease) in
            accounts payable and accrued
            expenses....................    21     153    (282)          122          (199)       158
          Increase (decrease) in state
            income taxes................    --       8      11            --            --         --
          Increase (decrease) in
            deferred revenue............   (17)     91      18           (87)           28         14
                                         -----   -----   -----        ------        ------     ------
            Total adjustments...........   263     253      53          (910)         (435)      (345)
                                         -----   -----   -----        ------        ------     ------
            Net cash provided by
               operating activities.....   542     369     464            92           821        715
                                         -----   -----   -----        ------        ------     ------
Cash flows from investing activities:
  Purchases of property and equipment...  (133)    (50)   (299)          (52)         (224)       (98)
  Proceeds from sale of property and
     equipment..........................    --      --      --            28            --         28
  Net (increase) decrease in amounts due
     from employees and related
     parties............................    41      (8)     51            11            22        (35)
                                         -----   -----   -----        ------        ------     ------
            Net cash used in investing
               activities...............   (92)    (58)   (248)          (13)         (202)      (105)
                                         -----   -----   -----        ------        ------     ------
Cash flows from financing activities:
  Payments on long-term debt............   (50)    (42)     --            --            --         --
  Distributions to stockholders.........   (81)   (335)   (481)           --          (449)        --
                                         -----   -----   -----        ------        ------     ------
            Net cash used in financing
               activities...............  (131)   (377)   (481)           --          (449)        --
                                         -----   -----   -----        ------        ------     ------
Net increase (decrease) in cash and cash
  equivalents...........................   319     (66)   (265)           79           170        610
Cash and cash equivalents, beginning of
  period................................   213     532     466           201           466        201
                                         -----   -----   -----        ------        ------     ------
Cash and cash equivalents, end of
  period................................ $ 532   $ 466   $ 201        $  280        $  636     $  811
                                         =====   =====   =====        ======        ======     ======
Supplemental disclosure:
  Cash paid for interest................ $  11   $   9   $  --        $   --        $   --     $   --
                                         =====   =====   =====        ======        ======     ======
</TABLE>
 
                                      F-42
<PAGE>   107
 
                          J. HOWARD & ASSOCIATES, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     J. Howard & Associates, Inc. (the "Company") was founded in 1977. The
Company provides instructor-led training to individual managers and client
companies to identify and address potential obstacles to improving workplace
productivity, including race and gender issues, sexual harassment and failure of
employees to take measured risks. Revenue is derived primarily from
instructor-led seminars and, to a lesser extent, from rendering consulting
services.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as products and services are provided.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles, have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using accelerated
and straight-line methods over periods ranging from three to seven years.
Leasehold improvements are amortized over the term of the lease.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses. The
carrying value of these financial instruments approximates their fair value
because of the short maturity of these instruments.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the
 
                                      F-43
<PAGE>   108
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
financial statements. Only certain state taxes are paid by its Company. The
Company will terminate its S corporation status concurrently with the
combination described in note 11.
 
(3)  RELATED PARTY TRANSACTIONS
 
     Due from employees and related parties consists of the following at:
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                                -------------     JUNE 30,
                                                                1995     1996       1997
                                                                ----     ----     --------
        <S>                                                     <C>      <C>      <C>
        Due from The Efficacy Institute, Inc..................  $ 9      $14        $  7
        Due from (to) stockholders............................   47       (9)        (12)
        Due from employees....................................   12       12          11
                                                                ---      ---        ----
                                                                 68       17           6
                                                                ===      ===        ====
</TABLE>
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                            ---------------     JUNE 30,
                                                            1995      1996        1997
                                                            ----     ------     --------
        <S>                                                 <C>      <C>        <C>
        Equipment.........................................  $512     $  677      $  631
        Furniture and fixtures............................   255        255         255
        Leasehold improvements............................    49         49          49
        Investment art....................................    21         21          21
        Computer software.................................    16        113         156
        Vehicles..........................................    --         38          38
                                                            ----     ------      ------
                                                             853      1,153       1,150
        Accumulated depreciation and amortization.........   683        788         851
                                                            ----     ------      ------
                  Property and equipment, net.............  $170     $  365      $  299
                                                            ====     ======      ======
</TABLE>
 
     Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1994, 1995 and 1996 was $83, $95 and $104,
respectively, and $75 for the six months ended June 30, 1997.
 
(5)  LINE OF CREDIT
 
     The Company has a secured revolving line of credit agreement which permits
borrowings of up to $500 at the bank's base rate plus one percent. No amounts
were outstanding under this agreement at December 31, 1995, 1996 and June 30,
1997. Substantially all assets of the Company are pledged as collateral under
this agreement.
 
(6)  DISTRIBUTIONS TO STOCKHOLDERS
 
     As discussed in note 2, the stockholders are taxed on their proportionate
share of the Company's taxable income. It has been the Company's policy to make
distributions to the stockholders for the purpose of funding these income tax
obligations.
 
                                      F-44
<PAGE>   109
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(7)  LEASE COMMITMENTS
 
     The Company is committed under various noncancelable operating leases for
office space and equipment through January 2002. Lease expense charged to
operations was $239 in 1994, $256 in 1995, $247 in 1996 and $72 for the six
months ended June 30, 1997.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
 
<TABLE>
<CAPTION>
                                 YEAR ENDING JUNE 30,
                ------------------------------------------------------
                <S>                                                     <C>
                1998..................................................  $102
                1999..................................................    71
                2000..................................................    69
                2001..................................................    55
                2002..................................................    35
                                                                        ----
                                                                        $332
                                                                        ====
</TABLE>
 
(8)  STOCKHOLDERS' EQUITY
 
     During the year ended December 31, 1996, 5,866 shares of Class A common
stock (voting) no par value and 2,934 shares of Class B common stock
(non-voting) no par value were issued 50% each to two new shareholders in
recognition of compensation expense of $111 and $55, respectively.
 
     On June 30, 1995, the Company approved an increase in the authorized common
stock Class A (voting) from 12,500 shares to 100,000 shares and common stock
Class B (non-voting) from 1,000 shares to 25,000 shares. Additionally, the
Company approved an exchange of 40 shares of the newly authorized shares for
each share of the previously authorized shares (or a 40 for 1 stock split). All
share data has been retroactively adjusted to reflect the stock split.
 
(9)  EMPLOYEE BENEFITS
 
     The Company maintains a defined contribution retirement plan for all
eligible employees. Company contributions are at the discretion of the Board of
Directors, but cannot exceed the maximum amount deductible under applicable
provisions of the Internal Revenue Code.
 
     Contributions to the plan during the years ended December 31, 1994, 1995
and 1996 amounted to $23, $34 and $34, respectively. Contributions to the plan
during the six months ended June 30, 1997 totaled $19.
 
(10)  CONCENTRATION OF CREDIT RISK
 
     The Company's three largest customers accounted for approximately 38%, 30%,
63% and 43% of net program revenues for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1997, respectively. Accounts
receivable from these customers approximated $319, $514 and $532 at December 31,
1995 and 1996 and June 30, 1997, respectively.
 
     The Company maintains cash deposits in two banks located in eastern
Massachusetts and in a money market mutual fund account sponsored by a
registered broker-dealer. Cash deposits in excess of FDIC insurance limits
approximated $140 and $46 at December 31, 1996 and June 30, 1997, respectively.
 
                                      F-45
<PAGE>   110
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(11)  SUBSEQUENT EVENTS (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
     In December 1997, the Company entered into a five-year lease of office
space in Burlington, Massachusetts, commencing on April 1, 1998. At that time,
the Company will move its Lexington headquarters to Burlington.
 
                                      F-46
<PAGE>   111
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Robert Steinmetz, Ph.D., and Associates, Inc.
d/b/a Learning Systems Sciences:
 
     We have audited the accompanying balance sheets of Robert Steinmetz, Ph.D.,
and Associates, Inc., d/b/a Learning Systems Sciences as of June 30, 1997 and
December 31, 1996 and the related statements of operations, stockholders' equity
and cash flows for the six months ended June 30, 1997 and for each of the years
in the two-year period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Robert Steinmetz, Ph.D., and
Associates, Inc., d/b/a Learning Systems Sciences as of June 30, 1997 and
December 31, 1996 and the results of its operations and its cash flows for the
six months ended June 30, 1997 and for each of the years in the two-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-47
<PAGE>   112
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                           DECEMBER 31,     JUNE 30,     SEPTEMBER 30,
                                                               1996           1997           1997
                                                           ------------     --------     -------------
                                                                                          (UNAUDITED)
<S>                                                        <C>              <C>          <C>
                                                ASSETS
Current assets:
  Cash and cash equivalents..............................     $  274         $  599         $   508
  Accounts receivable, net of allowance for doubtful
     accounts of $88.....................................        703            729             697
  Costs in excess of billings............................        267            276             359
  Prepaid expenses and other current assets..............         53             81              56
                                                              ------         ------          ------
          Total current assets...........................      1,297          1,685           1,620
                                                              ------         ------          ------
Property and equipment, net..............................        129            144             153
Other assets.............................................        103            105             105
                                                              ------         ------          ------
          Total assets...................................     $1,529         $1,934         $ 1,878
                                                              ======         ======          ======
                                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................     $   64         $   91         $    97
  Accrued expenses.......................................        166            191             174
  Accrued compensation...................................        124            109             100
  Billings in excess of costs............................        710            353             362
                                                              ------         ------          ------
          Total current liabilities......................      1,064            744             733
                                                              ------         ------          ------
Commitments and contingencies
Stockholders' equity:
  Common stock, $3 par value; 1,000 shares authorized,
     issued and outstanding..............................          3              3               3
  Retained earnings......................................        462          1,187           1,142
                                                              ------         ------          ------
          Total stockholders' equity.....................        465          1,190           1,145
                                                              ------         ------          ------
          Total liabilities and stockholders' equity.....     $1,529         $1,934         $ 1,878
                                                              ======         ======          ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-48
<PAGE>   113
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                      NINE MONTHS
                                                 YEAR ENDED         SIX MONTHS           ENDED
                                                DECEMBER 31,          ENDED          SEPTEMBER 30,
                                              -----------------      JUNE 30,      -----------------
                                               1995       1996         1997         1996       1997
                                              ------     ------     ----------     ------     ------
                                                                                      (UNAUDITED)
<S>                                           <C>        <C>        <C>            <C>        <C>
Revenue.....................................  $3,332     $5,123       $2,910       $3,570     $3,960
Cost of revenue.............................   1,390      1,696        1,081        1,230      1,590
                                              ------     ------       ------       ------     ------
  Gross profit..............................   1,942      3,427        1,829        2,340      2,370
Selling, general and administrative
  expenses..................................   1,767      3,079        1,108        1,713      1,697
                                              ------     ------       ------       ------     ------
          Income from operations............     175        348          721          627        673
                                              ------     ------       ------       ------     ------
Other income (expense):
  Other.....................................     (49)        --           --           --         --
  Interest income, net......................       2          9            7            4         12
                                              ------     ------       ------       ------     ------
          Total other income (expense)......     (47)         9            7            4         12
                                              ------     ------       ------       ------     ------
          Income before income taxes........     128        357          728          631        685
Income taxes................................      86          7            3            1          5
                                              ------     ------       ------       ------     ------
          Net income........................  $   42     $  350       $  725       $  630     $  680
                                              ======     ======       ======       ======     ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-49
<PAGE>   114
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                            COMMON STOCK
                                                          ----------------     RETAINED
                                                          SHARES    AMOUNT     EARNINGS     TOTAL
                                                          -----     ------     --------     ------
<S>                                                       <C>       <C>        <C>          <C>
Balance, December 31, 1994..............................  1,000       $3        $   70      $   73
  Net income............................................     --       --            42          42
                                                          -----      ---        ------      ------
Balance, December 31, 1995..............................  1,000        3           112         115
  Net income............................................     --       --           350         350
                                                          -----      ---        ------      ------
Balance, December 31, 1996..............................  1,000        3           462         465
  Net income............................................     --       --           725         725
                                                          -----      ---        ------      ------
Balance, June 30, 1997..................................  1,000        3         1,187       1,190
  Net loss..............................................     --       --           (45)        (45)
                                                          -----      ---        ------      ------
Balance, September 30, 1997 (Unaudited).................  1,000       $3        $1,142      $1,145
                                                          =====      ===        ======      ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-50
<PAGE>   115
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                     NINE MONTHS
                                               YEAR ENDED                               ENDED
                                              DECEMBER 31,     SIX MONTHS ENDED     SEPTEMBER 30,
                                             --------------        JUNE 30,        ----------------
                                             1995     1996           1997          1996       1997
                                             -----    -----    ----------------    ----       -----
                                                                                     (UNAUDITED)
<S>                                          <C>      <C>      <C>                 <C>        <C>
Cash flows from operating activities:
  Net income...............................  $  42    $ 350         $  725         $630       $ 680
                                             -----    -----          -----         ----       -----
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Depreciation and amortization.......     48       43             25           38          37
       Changes in operating assets and
          liabilities:
          (Increase) decrease in accounts
            receivable.....................   (467)    (195)           (26)          44           6
          (Increase) decrease in prepaid
            expenses and other current
            assets.........................     12      (30)           (28)         (55)         (3)
          (Increase) decrease in costs in
            excess of billings.............   (184)      14             (9)         229         (92)
          (Increase) decrease in other
            assets.........................    (17)     (19)            (2)         (19)         (2)
          Increase (decrease) in accounts
            payable and accrued expenses...     50      115             37          (39)         17
          Increase (decrease) in billings
            in excess of costs.............    560       37           (357)         (59)       (348)
                                             -----    -----          -----         ----       -----
            Total adjustments..............      2      (35)          (360)         139        (385)
                                             -----    -----          -----         ----       -----
            Net cash provided by operating
               activities..................     44      315            365          769         295
                                             -----    -----          -----         ----       -----
Cash flows from investing activities:
  Purchases of property and equipment......    (84)     (85)           (40)         (59)        (61)
                                             -----    -----          -----         ----       -----
            Net (decrease) increase in cash
               and cash equivalents........    (40)     230            325          710         234
Cash and cash equivalents, beginning of
  period...................................     84       44            274           44         274
                                             -----    -----          -----         ----       -----
Cash and cash equivalents, end of period...  $  44    $ 274         $  599         $754       $ 508
                                             =====    =====          =====         ====       =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-51
<PAGE>   116
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Robert Steinmetz, Ph.D., and Associates, Inc., d/b/a Learning Systems
Sciences, was founded in 1979. The Company creates customized training products
that generally are designed to facilitate faster learning of customer interface
devices and higher productivity of retail associates. Revenue is derived
primarily from the design, development and delivery of its products.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     The Company follows the percentage-of-completion method of accounting for
contracts. Accordingly, income is recognized in the ratio that costs incurred
bear to estimated total costs. Adjustments to cost estimates are made
periodically, and losses expected to be incurred on contracts in progress are
charged to operations in the period such losses are determined. The aggregate of
costs incurred and income recognized on uncompleted contracts in excess of
related billings is shown as a current asset, and the aggregate of billings on
uncompleted contracts in excess of related costs incurred and income recognized
is shown as a current liability.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles, have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are recorded at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
                                      F-52
<PAGE>   117
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
                                 (IN THOUSANDS)
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities. The
carrying value of these financial instruments approximates their fair value
because of the short maturity of these instruments.
 
  Income Taxes
 
     Effective August 31, 1995, the Company elected to be treated as an S
corporation. Therefore, the net income of the Company is reported by the
stockholders. Accordingly, no provision for federal income taxes has been
included in the financial statements for the periods subsequent to that date.
Only certain state income taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 8.
 
(3)  RELATED PARTY TRANSACTIONS
 
     At June 30, 1997, the Company has unsecured, non-interest bearing loans
receivable from its stockholders in the amount of $22. This amount is included
in prepaid expenses and other current assets.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,     JUNE 30,
                                                                     1996           1997
                                                                 ------------     --------
        <S>                                                      <C>              <C>
        Machinery and equipment................................      $248           $283
        Furniture and fixtures.................................        48             53
        Automobiles............................................        10             10
        Leasehold improvements.................................        12             12
                                                                     ----           ----
                                                                      318            358
        Less accumulated depreciation and amortization.........       189            214
                                                                     ----           ----
                  Property and equipment, net..................      $129            144
                                                                     ====           ====
</TABLE>
 
     Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1995 and 1996 and the six months ended June 30,
1997 was $48, $43 and $25, respectively.
 
(5)  OPERATING LEASES
 
     Operating lease commitments consist of facility and automobile rentals.
Future minimum lease payments under all noncancelable operating leases are as
follows:
 
<TABLE>
<CAPTION>
                                YEAR ENDING JUNE 30,
                <S>                                                     <C>
                1998................................................    $135
                1999................................................     103
                                                                        ----
                                                                        $238
                                                                        ====
</TABLE>
 
     Lease expense for the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997 totaled $93, $112 and $57, respectively.
 
                                      F-53
<PAGE>   118
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
                                 (IN THOUSANDS)
 
(6)  EMPLOYEE BENEFITS
 
     The Company has established a profit sharing plan for the benefit of its
employees. Company contributions are made at the discretion of the Board of
Directors. The Company contributed $83 to the plan in 1995. No contribution was
made for the year ended December 31, 1996 or the six months ended June 30, 1997.
 
(7)  CONCENTRATION OF CREDIT RISK
 
     The Company had three customers that accounted for 41% of total revenue and
one customer that accounted for 15% of total revenue for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively. Accounts
receivable from these customers represented approximately 50% and 41% of the
total accounts receivable balance at December 31, 1996 and June 30, 1997,
respectively.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-54
<PAGE>   119
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
MOHR Retail Learning Systems, Inc.:
 
     We have audited the accompanying balance sheets of MOHR Retail Learning
Systems, Inc., as of June 30, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
two-year period ended June 30, 1997. These financial statements are the
responsibility of MOHR Retail Learning Systems, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MOHR Retail Learning
Systems, Inc. as of June 30, 1997 and 1996, and the results of its operations
and its cash flows for each of the years in the two-year period ended June 30,
1997, in conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-55
<PAGE>   120
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                    JUNE 30,
                                                                  -------------     SEPTEMBER 30,
                                                                  1996     1997         1997
                                                                  ----     ----     -------------
                                                                                     (UNAUDITED)
<S>                                                               <C>      <C>      <C>
                                             ASSETS
Current assets:
  Cash and cash equivalents.....................................  $221     $260         $ 211
  Accounts receivable, net of allowance for doubtful accounts of
     $46 at June 30, 1996 and 1997 and September 30, 1997.......   211      548           441
  Inventory.....................................................    99      133           132
  Prepaid expenses..............................................    11       14            22
                                                                  ----     ----          ----
          Total current assets..................................   542      955           806
Property and equipment, net.....................................    18       44            46
                                                                  ----     ----          ----
          Total assets..........................................  $560     $999         $ 852
                                                                  ====     ====          ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..............................................  $118     $ 74         $ 143
  Accrued expenses..............................................   320      295           304
  Accrued compensation..........................................    12       54            12
  Deferred revenue..............................................    48       73            98
                                                                  ----     ----          ----
          Total current liabilities.............................   498      496           557
                                                                  ----     ----          ----
Commitments and contingencies
Stockholders' equity:
  Common stock, no par value; 2,500 shares authorized; 100
     shares issued and outstanding..............................     4        4             4
  Retained earnings.............................................    58      499           291
                                                                  ----     ----          ----
          Total stockholders' equity............................    62      503           295
                                                                  ----     ----          ----
          Total liabilities and stockholders' equity............  $560     $999         $ 852
                                                                  ====     ====          ====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-56
<PAGE>   121
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                               YEAR ENDED             ENDED
                                                                JUNE 30,          SEPTEMBER 30,
                                                            -----------------     --------------
                                                             1996       1997      1996     1997
                                                            ------     ------     ----     -----
                                                                                   (UNAUDITED)
<S>                                                         <C>        <C>        <C>      <C>
Revenue...................................................  $2,171     $3,015     $554     $ 556
Cost of revenue...........................................     677        825      187       204
                                                            ------     ------     ----     -----
  Gross profit............................................   1,494      2,190      367       352
Selling, general and administrative expenses..............   1,151      1,745      383       562
                                                            ------     ------     ----     -----
  Income (loss) from operations...........................     343        445      (16)     (210)
Interest income (expense).................................      (3)         3       --         3
                                                            ------     ------     ----     -----
  Income (loss) before income taxes.......................     340        448      (16)     (207)
State income taxes........................................       1          7       --         1
                                                            ------     ------     ----     -----
          Net income (loss)...............................  $  339     $  441     $(16)    $(208)
                                                            ======     ======     ====     =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-57
<PAGE>   122
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                   COMMON STOCK
                                                 -----------------       RETAINED EARNINGS
                                                 SHARES     AMOUNT     (ACCUMULATED DEFICIT)     TOTAL
                                                 ------     ------     ---------------------     -----
<S>                                              <C>        <C>        <C>                       <C>
Balance, June 30, 1995.........................    100       $  4              $(281)            $(277)
  Net income...................................     --         --                339               339
                                                   ---        ---              -----             -----
Balance, June 30, 1996.........................    100          4                 58                62
  Net income...................................     --         --                441               441
                                                   ---        ---              -----             -----
Balance, June 30, 1997.........................    100          4                499               503
  Net loss.....................................     --         --               (208)             (208)
                                                   ---        ---              -----             -----
Balance, September 30, 1997 (Unaudited)........    100       $  4              $ 291             $ 295
                                                   ===        ===              =====             =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-58
<PAGE>   123
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                 THREE MONTHS
                                                              YEAR ENDED             ENDED
                                                               JUNE 30,          SEPTEMBER 30,
                                                            ---------------     ---------------
                                                            1996      1997      1996      1997
                                                            -----     -----     -----     -----
                                                                                  (UNAUDITED)
<S>                                                         <C>       <C>       <C>       <C>
Cash flows from operating activities:
  Net income (loss).......................................  $ 339     $ 441     $ (16)    $(208)
                                                            -----     -----     -----     -----
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
       Depreciation and amortization......................     10        15         2         4
       Changes in operating assets and liabilities:
          (Increase) decrease in accounts receivable......    (99)     (337)     (107)      107
          (Increase) decrease in inventory................      4       (34)      (12)        1
          (Increase) decrease in prepaid expenses.........      3        (3)       (9)       (8)
          Increase (decrease) in accounts payable.........     (1)      (44)      (23)       69
          Increase in accrued expenses....................    (15)       17        (6)      (33)
          Increase (decrease) in deferred revenue.........    (29)       25        46        25
                                                            -----     -----     -----     -----
            Total adjustments.............................   (127)     (361)     (109)      165
                                                            -----     -----     -----     -----
            Net cash provided by (used in) operating
               activities.................................    212        80      (125)      (43)
                                                            -----     -----     -----     -----
Cash flows from investing activities:
  Purchases of property and equipment.....................     (8)      (41)       (8)       (6)
                                                            -----     -----     -----     -----
            Net cash used in investing activities.........     (8)      (41)       (8)       (6)
                                                            -----     -----     -----     -----
Net increase (decrease) in cash and cash equivalents......    204        39      (133)      (49)
Cash and cash equivalents, beginning of period............     17       221       221       260
                                                            -----     -----     -----     -----
Cash and cash equivalents, end of period..................  $ 221     $ 260     $  88     $ 211
                                                            =====     =====     =====     =====
Supplemental disclosure:
  Cash paid for interest..................................  $  --     $   3     $  --     $   3
                                                            =====     =====     =====     =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-59
<PAGE>   124
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     MOHR Retail Learning Systems, Inc. (the "Company") was founded in 1991. The
Company offers train-the-trainer seminars to help clients in the retail industry
to improve productivity by fostering a customer oriented focus at the sales
management and associate levels. In some of its programs, the Company trains
employees directly through instructor-led seminars. Revenue is derived primarily
from the licensing to clients of the right to use the Company's training
programs. Revenue is received on a participant or site basis.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed. The Company contracts with
customers to provide materials and training seminars. Deferred revenue is
recognized for payments received prior to services being performed.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Inventory
 
     The Company owns training supplies and manuals which are accounted for
using the lower of cost first-in, first-out (FIFO) or market basis of
accounting.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over five years. Leasehold improvements are amortized over
the term of the lease.
 
                                      F-60
<PAGE>   125
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Fair Value of Financial Instruments
 
     The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses. The
carrying amount of these financial instruments approximates fair value because
of the short maturity of those instruments.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination discussed
in note 8.
 
(3)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                           JUNE 30,
                                                                         -------------
                                                                         1996     1997
                                                                         ----     ----
        <S>                                                              <C>      <C>
        Equipment......................................................  $34       61
        Furniture......................................................    9       19
        Leasehold improvements.........................................   --        4
                                                                         ---      ---
                                                                          43       84
        Accumulated depreciation and amortization......................   25       40
                                                                         ---      ---
                  Property and equipment, net..........................  $18       44
                                                                         ===      ===
</TABLE>
 
     Depreciation and amortization expense related to property and equipment was
$10 and $15 in the years ended June 30, 1996 and 1997, respectively.
 
(4)  LEASE COMMITMENTS
 
     The Company is committed under various noncancelable operating leases for
office space and equipment through February 2000. Lease expense for the years
ended June 30, 1996 and 1997 was $18 and $34, respectively. Future minimum lease
payments under all noncancelable operating leases are as follows:
 
<TABLE>
<CAPTION>
                                 YEAR ENDING JUNE 30,
                <S>                                                      <C>
                      1998.............................................  $41
                      1999.............................................   40
                      2000.............................................    1
                                                                         ---
                           Total.......................................  $82
                                                                         ===
</TABLE>
 
(5)  EMPLOYEE BENEFITS
 
     Eligible employees of the Company participate in a profit sharing plan
sponsored by the Company. The Plan provides that the Company make discretionary
contributions to the Plan. The Company made contributions of $145 and $104 for
the years ended June 30, 1996 and 1997, respectively.
 
                                      F-61
<PAGE>   126
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(6)  CONCENTRATION OF CREDIT RISK
 
     The Company's credit risks primarily relate to cash and cash equivalents
and accounts receivable. Cash and cash equivalents are primarily held in bank
accounts. Cash deposits in excess of FDIC insurance limits approximated $108 at
June 30, 1997. The Company has not incurred losses related to these balances to
date.
 
     For the year ended June 30, 1996, the Company had one customer that
accounted for 11 percent of total revenue. For the year ended June 30, 1997, no
customer represented greater than 10 percent of total revenue.
 
(7)  LITIGATION
 
     The Company is involved in legal actions arising in the ordinary course of
business. Management believes that adequate provision has been made for any
liabilities which may result from such matters.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-62
<PAGE>   127
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Novations Group, Inc.:
 
     We have audited the accompanying balance sheets of Novations Group, Inc.,
as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 1997. 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. The audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. The audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Novations Group, Inc., as of
June 30, 1997 and 1996, and the results of its operations and its cash flows for
each of the years in the three-year period ended June 30, 1997 in conformity
with generally accepted accounting principles.
 
                                          KPMG Peat Marwick LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-63
<PAGE>   128
 
                             NOVATIONS GROUP, INC.
 
                                 BALANCE SHEETS
 
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                   JUNE 30,
                                                               -----------------  SEPTEMBER 30,
                                                                1996       1997       1997
                                                               ------     ------  -------------
                                                                                   (UNAUDITED)
<S>                                                            <C>        <C>     <C>
                                            ASSETS
Current assets:
  Cash and cash equivalents..................................  $   17     $   88     $   446
  Accounts receivable, net of allowance for doubtful accounts
     of $158.................................................   1,976      2,202       2,364
  Receivable from related parties............................     179        414         341
  Prepaid expenses...........................................      63        115          50
                                                               ------     ------      ------
          Total current assets...............................   2,235      2,819       3,201
Property and equipment, net..................................     552        492         456
                                                               ------     ------      ------
          Total assets.......................................  $2,787     $3,311     $ 3,657
                                                               ======     ======      ======
                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of notes payable...........................   1,079      1,298       1,078
  Accounts payable...........................................     225        118         174
  Accrued compensation.......................................     836        803       1,270
  Accrued expenses...........................................     275        177         135
                                                               ------     ------      ------
          Total current liabilities..........................   2,415      2,396       2,657
                                                               ------     ------      ------
Notes payable................................................     459        361         361
Commitments and contingencies
Stockholders' equity:
  Common stock, $1.00 par value; 1,000,000 shares authorized;
     922, 1,000 and 1,000 shares issued and outstanding at
     June 30, 1996, 1997 and September 30, 1997,
     respectively............................................       1          1           1
  Retained earnings..........................................     (88)       553         638
                                                               ------     ------      ------
          Total stockholders' equity.........................     (87)       554         639
                                                               ------     ------      ------
          Total liabilities and stockholders' equity.........  $2,787     $3,311     $ 3,657
                                                               ======     ======      ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-64
<PAGE>   129
 
                             NOVATIONS GROUP, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
<S>                                             <C>        <C>        <C>        <C>        <C>
Revenue.......................................  $7,175     $9,039     $9,018     $2,167     $2,464
Cost of revenue...............................   3,885      4,733      4,839      1,117      1,197
                                                ------     ------     ------     ------     ------
          Gross profit........................   3,290      4,306      4,179      1,050      1,267
Selling, general, and administrative
  expenses....................................   3,167      4,094      3,315        823      1,088
                                                ------     ------     ------     ------     ------
          Income from operations..............     123        212        864        227        179
                                                ------     ------     ------     ------     ------
Interest expense, net.........................      98         98        137         43         83
          Income before income taxes..........      25        114        727        184         96
Income taxes..................................      22         40         20         --         11
                                                ------     ------     ------     ------     ------
          Net income..........................  $    3     $   74     $  707     $  184     $   85
                                                ======     ======     ======     ======     ======
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-65
<PAGE>   130
 
                             NOVATIONS GROUP, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                               RETAINED
                                                         COMMON STOCK          EARNINGS
                                                       -----------------     (ACCUMULATED
                                                       SHARES     AMOUNT       DEFICIT)       TOTAL
                                                       ------     ------     ------------     -----
<S>                                                    <C>        <C>        <C>              <C>
Balance, June 30, 1994...............................     896      $  1         $  (45)       $ (44)
  Net income.........................................      --        --              3            3
  Distributions to stockholders......................      --        --            (79)         (79)
                                                        -----       ---          -----        -----
Balance, June 1995...................................     896         1           (121)        (120)
  Net income.........................................      --        --             74           74
  Distributions to stockholders......................      --        --            (26)         (26)
  Stock issued.......................................      63        --             --           --
  Stock buy back.....................................     (37)       --            (15)         (15)
                                                        -----       ---          -----        -----
Balance, June 30, 1996...............................     922         1            (88)         (87)
  Net income.........................................      --        --            707          707
  Distributions to stockholders......................      --        --            (66)         (66)
  Stock issued.......................................      78        --             --           --
                                                        -----       ---          -----        -----
Balance, June 30, 1997...............................   1,000         1            553          554
  Net income.........................................      --        --             85           85
                                                        -----       ---          -----        -----
Balance, September 30, 1997 (Unaudited)..............   1,000      $  1         $  638        $ 639
                                                        =====       ===          =====        =====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-66
<PAGE>   131
 
                             NOVATIONS GROUP, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                   THREE MONTHS
                                                                                       ENDED
                                                            YEAR ENDED JUNE 30,    SEPTEMBER 30,
                                                           ---------------------   -------------
                                                           1995    1996    1997    1996    1997
                                                           -----   -----   -----   -----   -----
                                                                                    (UNAUDITED)
<S>                                                        <C>     <C>     <C>     <C>     <C>
Cash flows from operating activities:
  Net income.............................................  $   3   $  74   $ 707   $ 184   $  85
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization.......................    203     167     197      45      45
     Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable........   (670)   (357)   (226)    (92)   (162)
       (Increase) decrease in prepaid expenses and other
          current assets.................................   (250)     86    (287)    (45)    138
       Increase (decrease) in accounts payable and
          accrued expenses...............................    358     (88)   (238)    165     481
                                                            ----    ----    ----    ----    ----
          Total adjustments..............................   (359)   (192)   (554)     73     502
                                                            ----    ----    ----    ----    ----
          Net cash (used by) provided by operating
            activities...................................   (356)   (118)    153     257     587
                                                            ----    ----    ----    ----    ----
Cash flows from investing activities:
  Purchases of property and equipment....................   (217)   (427)   (137)   (143)     (9)
                                                            ----    ----    ----    ----    ----
Cash flows from financing activities:
  Net repayments/proceeds from long-term debt............    340     117     121       2    (220)
  Capital distribution...................................    (40)    (41)    (66)     --      --
                                                            ----    ----    ----    ----    ----
          Net cash provided by financing activities......    300      76      55       2    (220)
                                                            ----    ----    ----    ----    ----
Net (decrease) increase in cash and cash equivalents.....   (273)   (469)     71     116     358
Cash and cash equivalents, beginning of period...........    759     486      17      17      88
                                                            ----    ----    ----    ----    ----
Cash and cash equivalents, end of period.................  $ 486   $  17   $  88   $ 133   $ 446
                                                            ====    ====    ====    ====    ====
Supplemental disclosure:
  Cash paid for interest.................................  $ 120   $ 120   $ 151   $  47   $  87
                                                            ====    ====    ====    ====    ====
</TABLE>
 
                See accompanying notes to financial statements.
 
                                      F-67
<PAGE>   132
 
                             NOVATIONS GROUP, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Novations Group, Inc. (the "Company") was founded in 1986. The Company
assists clients in, among other things, clarifying and communicating their
business strategies and re-designing their organizations and work systems.
Revenue is derived primarily from fees for professional services and, to a
lesser extent, from the sale of services and products to support human resources
management.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed and products are provided.
 
  Use of Estimates
 
     The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using the
straight-line method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist of cash, marketable
securities, accounts receivable, accounts payable and accrued liabilities and
debt. The carrying value of these financial instruments approximates their fair
value due to the short maturity of these instruments. The carrying value of debt
approximates fair value because the interest rates on the debt approximate the
rates currently available to the Company.
 
                                      F-68
<PAGE>   133
 
                             NOVATIONS GROUP, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 10.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company advanced cash to an entity controlled by the stockholders of
the Company. The balance due to the Company as of June 30, 1996, 1997 and
September 30, 1997 was $140, $332 and $192, respectively. Also included in
receivables from related parties are employee advances of $39, $82 and 149 at
June 30, 1996, 1997 and September 30, 1997, respectively.
 
     The Company leases certain office facilities from a partnership controlled
by the Company's stockholders.
 
     The terms of the lease require annual payments of $300,000, increasing by
3% per year, through March 2002. The Company has an option to renew the lease
for an additional five-year term. The Company has guaranteed a $1.2 million note
payable to a financial institution by the partnership.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
 
<TABLE>
<CAPTION>
                                                                         JUNE 30,
                                                                     -----------------
                                                                      1996       1997
                                                                     ------     ------
        <S>                                                          <C>        <C>
        Computer equipment and software............................  $  922        945
        Leasehold improvements.....................................     167        198
        Office equipment...........................................     108        170
        Furniture and fixtures.....................................      94        115
                                                                     ------     ------
                                                                      1,291      1,428
        Accumulated depreciation and amortization..................     739        936
                                                                     ------     ------
             Property and equipment, net...........................  $  552        492
                                                                     ======     ======
</TABLE>
 
     Depreciation and amortization expense related to property and equipment for
the years ended June 1995, 1996 and 1997, was $203, $167 and $197, respectively.
 
(5)  NOTES PAYABLE
 
     Notes payable consist of notes to former stockholders, with interest
imputed at 8.75%. Payments are due monthly or annually through March 2002.
 
     Aggregate maturities required on these notes at June 30, are as follows:
 
<TABLE>
            <S>                                                             <C>
                  1998....................................................  $ 59
                  1999....................................................    97
                  2000....................................................    98
                  2001....................................................    98
                  2002....................................................    68
                                                                            -----
                                                                               -
                       Total..............................................  $420
                                                                            ======
</TABLE>
 
                                      F-69
<PAGE>   134
 
                             NOVATIONS GROUP, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(6)  OPERATING LEASES
 
     The Company leases all of its facilities and certain office equipment under
cancelable and noncancelable operating leases that expire on various dates
through 2003.
 
     Future minimum lease payments under all noncancelable operating leases,
including leases to related parties, are as follows:
 
<TABLE>
<CAPTION>
                                YEAR ENDING JUNE 30:
            ------------------------------------------------------------
            <S>                                                           <C>
                  1998..................................................  $  585
                  1999..................................................     654
                  2000..................................................     632
                  2001..................................................     534
                  2002..................................................     334
                  Thereafter............................................      48
                                                                          ------
                       Total............................................  $2,787
                                                                          ======
</TABLE>
 
     Lease expense for the years ended June 30, 1995, 1996 and 1997 was $71,
$211 and $385, respectively.
 
(7)  LINE OF CREDIT
 
     The Company has a $1,500 line of credit agreement with a bank, with
interest payable at the bank's prime rate. The interest rate at June 30, 1996
and 1997 was 10 percent. The line of credit is secured by substantially all of
the Company's assets and is guaranteed by the principal stockholders of the
Company.
 
     The Company had $1,000 and $1,239 at June 30, 1996 and 1997, respectively,
outstanding under the agreement.
 
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee
contributions up to a maximum of 4%. The Company contributed $44, $60 and $75 to
the plan for the years ended June 30, 1995, 1996 and 1997, respectively.
 
(9)  CONCENTRATION OF CREDIT RISK
 
     For the year ended June 30, 1995, the Company had two customers that each
accounted for greater than 10 percent of revenue. For each of the years ended
June 30, 1996 and 1997, the Company had one customer that accounted for greater
than 10 percent of revenue.
 
(10)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant
will acquire the Company upon completion of the proposed initial public
offering.
 
                                      F-70
<PAGE>   135
 
                          INDEPENDENT AUDITOR'S REPORT
 
Board of Directors
Star Mountain, Inc. and Subsidiaries:
 
     We have audited the accompanying consolidated balance sheets of Star
Mountain, Inc. and Subsidiaries as of December 31, 1995 and 1996, and June 30,
1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three year period ended
December 31, 1996, and the six month period ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Star Mountain,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and June 30, 1997, and
the consolidated results of their operations and their cash flows for each of
the years in the three year period ended December 31, 1996, and the six month
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
 
                                          Friedman & Fuller, P.C.
 
Rockville, Maryland
December 5, 1997
 
                                      F-71
<PAGE>   136
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                  -----------------------------     JUNE 30,     SEPTEMBER 30,
                                                      1995             1996           1997           1997
                                                  ------------     ------------     --------     -------------
                                                                                                  (UNAUDITED)
<S>                                               <C>              <C>              <C>          <C>
ASSETS
Current assets:
  Cash..........................................     $    4           $   39         $  233         $   275
  Accounts receivable...........................      3,758            4,395          5,240           4,573
  Current portion of notes receivable, related
     parties....................................         60              181            307             344
  Inventory.....................................         --              100            161             151
  Other current assets..........................         36               71            170             122
  Deferred income taxes.........................         --               29             42              42
                                                     ------           ------         ------          ------
          Total current assets..................      3,858            4,815          6,153           5,507
                                                     ------           ------         ------          ------
Property and equipment:
  Furniture and fixtures........................         69               65            531             672
  Office equipment..............................        611              746          1,406           1,444
  Computer software.............................         69               69             75              91
  Leasehold improvements........................         15               16             81              86
  Automobiles...................................         21               31             31              41
                                                     ------           ------         ------          ------
                                                        785              927          2,124           2,334
  Less accumulated depreciation and
     amortization...............................        385              423          1,416           1,482
                                                     ------           ------         ------          ------
                                                        400              504            708             852
                                                     ------           ------         ------          ------
Other assets:
  Notes receivable, related parties, net of
     current portion............................        292              267            317             317
  Other assets..................................         71              140            318             604
  Land held for investment......................         --              110            110             110
  Goodwill, net of accumulated amortization of
     $16, $23, $40, and $51.....................        154              147            918             897
                                                     ------           ------         ------          ------
                                                        517              664          1,663           1,928
                                                     ------           ------         ------          ------
                                                     $4,775           $5,983         $8,524         $ 8,287
                                                     ======           ======         ======          ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable, bank............................     $  991           $  905         $1,144         $ 1,360
  Current portion of notes payable..............         35               95            222             132
  Accounts payable..............................      1,127            1,295          2,028           1,645
  Accrued expenses..............................        439              573            732             814
  Billings in excess of costs and earnings......        324            1,076          1,681           1,269
                                                     ------           ------         ------          ------
          Total current liabilities.............      2,916            3,944          5,807           5,220
                                                     ------           ------         ------          ------
Long-term liabilities:
  Notes payable, net of current portion.........         --               --            379             379
  Deferred income taxes.........................         --               29            126             126
                                                                      ------         ------          ------
          Total long-term liabilities...........         --               29            505             505
                                                                      ------         ------          ------
          Total liabilities.....................      2,916            3,973          6,312           5,725
                                                     ------           ------         ------          ------
Commitments and contingencies
Stockholders' equity:
  Common stock..................................          8                8          2,098           2,102
  Additional paid-in capital....................      1,991            2,058             --              --
  Retained earnings (deficit)...................        (75)             529            740           1,086
                                                     ------           ------         ------          ------
                                                      1,924            2,595          2,838           3,188
  Less common stock held in treasury at cost....        (65)            (585)          (626)           (626)
                                                     ------           ------         ------          ------
                                                      1,859            2,010          2,212           2,562
                                                     ------           ------         ------          ------
                                                     $4,775           $5,983         $8,524         $ 8,287
                                                     ======           ======         ======          ======
</TABLE>
 
          See accompanying notes to consolidated financial statements
 
                                      F-72
<PAGE>   137
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                       SIX MONTHS         NINE MONTHS ENDED
                                   YEAR ENDED DECEMBER 31,               ENDED              SEPTEMBER 30,
                          ------------------------------------------    JUNE 30,    -----------------------------
                              1994           1995           1996          1997          1996            1997
                          ------------   ------------   ------------   ----------   -------------   -------------
                                                                                             (UNAUDITED)
<S>                       <C>            <C>            <C>            <C>          <C>             <C>
Revenue.................     $9,731        $ 14,306       $ 16,313      $ 11,331       $11,785         $17,101
Direct costs............      6,350           8,668          9,457         7,204         6,559          10,588
                             ------         -------        -------       -------       -------         -------
  Gross profit..........      3,381           5,638          6,856         4,127         5,226           6,513
Operating expenses......      2,973           4,411          5,476         3,674         4,085           5,647
                             ------         -------        -------       -------       -------         -------
Income from
  operations............        408           1,227          1,380           453         1,141             866
                             ------         -------        -------       -------       -------         -------
Other income (expense):
  Interest income.......         25              19             25            37             7             100
  Interest expense......        (86)            (54)           (65)          (80)          (45)            (87)
  Other, net............       (133)           (200)          (339)          (74)         (137)              9
                             ------         -------        -------       -------       -------         -------
                               (194)           (235)          (379)         (117)         (175)             22
                             ------         -------        -------       -------       -------         -------
Income before income
  taxes.................        214             992          1,001           336           966             888
Income taxes............          0               0            397           125           360             331
                             ------         -------        -------       -------       -------         -------
Net income..............     $  214        $    992       $    604      $    211       $   606         $   557
                             ======         =======        =======       =======       =======         =======
</TABLE>
 
          See accompanying notes to consolidated financial statements
                                      F-73
<PAGE>   138
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                    COMMON STOCK      ADDITIONAL   RETAINED     TREASURY STOCK
                                 ------------------    PAID-IN     EARNINGS   -------------------
                                  SHARES     AMOUNT    CAPITAL     (DEFICIT)    SHARES     AMOUNT   TOTAL
                                 ---------   ------   ----------   --------   ----------   ------   ------
<S>                              <C>         <C>      <C>          <C>        <C>          <C>      <C>
Balance, December 31, 1993.....    729,257   $    7    $  1,916     $ (902)           --   $  --    $1,021
Issuance of common stock upon
  exercise of options..........     11,595        1          39         --            --      --        40
Net income.....................         --       --          --        214            --      --       214
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1994.....    740,852        8       1,955       (688)           --      --     1,275
Issuance of common stock upon
  exercise of options..........     11,827       --          36         --            --      --        36
Distributions to
  shareholders.................         --       --          --       (379)           --      --      (379)
Purchase of treasury stock.....         --       --          --         --        22,700     (65)      (65)
Net income.....................         --       --          --        992            --      --       992
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1995.....    752,679        8       1,991        (75)       22,700     (65)    1,859
Issuance of common stock upon
  exercise of options..........      9,414       --          67         --            --      --        67
Purchase of treasury stock.....         --       --          --         --        65,671    (520)     (520)
Net income.....................         --       --          --        604            --      --       604
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1996.....    762,093        8       2,058        529        88,371    (585)    2,010
Issuance of common stock upon
  exercise of options..........     87,621       32          --         --            --      --        32
Purchase of treasury stock.....         --       --          --         --        12,584     (41)      (41)
Stock split, conversion to no
  par stock....................  7,272,518    2,058      (2,058)        --     1,110,505      --        --
Net income.....................         --       --          --        211            --      --       211
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, June 30, 1997.........  8,122,232    2,098           0        740     1,211,460    (626)    2,212
Issuance of common stock upon
  exercise of options..........      5,100        4          --         --            --      --         4
Net income (unaudited).........         --       --          --        346            --      --       346
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, September 30, 1997
  (unaudited)..................  8,127,332   $2,102    $      0     $1,086     1,211,460   $(626)   $2,562
                                 =========   ======     =======     ======    ==========   =====    ======
</TABLE>
 
          See accompanying notes to consolidated financial statements
                                      F-74
<PAGE>   139
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                            SIX MONTHS      NINE MONTHS ENDED
                                               YEAR ENDED DECEMBER 31,        ENDED           SEPTEMBER 30,
                                            -----------------------------    JUNE 30,    ------------------------
                                             1994       1995       1996        1997        1996         1997
                                            -------   --------   --------   ----------   --------   -------------
                                                                                               (UNAUDITED)
<S>                                         <C>       <C>        <C>        <C>          <C>        <C>
Cash flows from operating activities:
  Cash received from customers............  $ 9,381   $ 13,419   $ 16,428    $ 11,189    $ 12,742     $  17,626
  Cash paid to suppliers and employees....   (9,401)   (12,620)   (14,890)    (10,210)    (10,862)      (16,354)
  Interest received.......................       25         19         25          37           7           100
  Interest paid...........................      (86)       (54)       (65)        (80)        (45)          (87)
  Income taxes paid.......................       --         --       (420)        (96)       (358)         (286)
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            operating activities..........      (81)       764      1,078         840       1,484           999
                                            -------   --------   --------    --------    --------      --------
Cash flows from investing activities:
  Issuance of notes receivable............     (113)       (64)       (96)       (176)       (247)         (213)
  Acquisition of property and equipment...      (60)      (159)       (61)        (79)        (41)         (289)
  Business acquisitions...................       --       (100)      (300)       (621)       (300)         (621)
  Purchase of land held for investment....       --         --       (110)         --        (110)           --
  Other...................................      174         (8)         2          --          15            --
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            investing activities..........        1       (331)      (565)       (876)       (683)       (1,123)
                                            -------   --------   --------    --------    --------      --------
Cash flows from financing activities:
  Net borrowings (payments) on
     line-of-credit.......................      122        (15)       (86)        239        (241)          455
  Principal payments on long-term debt....     (178)        --         --          --          --           (90)
  Proceeds from other notes payable.......      100         25         95          --          --            --
  Payments on other notes payable.........       (3)       (34)       (35)         --         (35)           --
  Proceeds from issuance of common
     stock................................       39         35         68          32          33            36
  Purchase of treasury stock..............       --        (65)      (520)        (41)       (520)          (41)
  Distributions to shareholders...........       --       (378)        --          --          --            --
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            financing activities..........       80       (432)      (478)        230        (763)          360
                                            -------   --------   --------    --------    --------      --------
Net increase (decrease) in cash...........        0          1         35         194          38           236
Cash, beginning of year...................        3          3          4          39           4            39
                                            -------   --------   --------    --------    --------      --------
Cash, end of year.........................  $     3   $      4   $     39    $    233    $     42     $     275
                                            =======   ========   ========    ========    ========      ========
</TABLE>
 
          See accompanying notes to consolidated financial statements
                                      F-75
<PAGE>   140
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                              SIX MONTHS     NINE MONTHS ENDED
                                                   YEAR ENDED DECEMBER 31,      ENDED          SEPTEMBER 30,
                                                   ------------------------    JUNE 30,    ----------------------
                                                   1994     1995      1996       1997       1996        1997
                                                   -----   -------   ------   ----------   ------   -------------
                                                                                                (UNAUDITED)
<S>                                                <C>     <C>       <C>      <C>          <C>      <C>
Reconciliation of net income to net cash provided
  by (used in) operating activities:
  Net income.....................................  $ 214   $   992   $  604     $  211     $  606       $ 557
                                                   -----   -------    -----      -----     ------       -----
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization..................     72        96      139        110         92         197
  Loss on sale of assets.........................     --        --        4         12          4          12
  Deferred income taxes..........................     --        --       --         17         --          17
  Changes in assets and liabilities:
     (Increase) decrease in:
     Accounts receivable.........................   (344)   (1,053)    (637)      (142)       372         525
     Inventory...................................     --        --       18        (61)       (45)        (51)
     Other current assets........................     (3)       47      (34)       (62)         5         (14)
     Other assets................................     (2)      (25)     (69)      (105)      (275)       (391)
  Increase (decrease) in:
     Accounts payable............................    (45)      425      168        474         50          86
     Accrued expenses............................     33       116      133       (219)        90        (132)
     Billings in excess of costs and anticipated
       profits...................................     (6)      166      752        605        585         193
                                                   -----   -------    -----      -----     ------       -----
  Total adjustments..............................   (295)     (228)     474        629        878         442
                                                   -----   -------    -----      -----     ------       -----
  Net cash provided by (used in) operating
     activities..................................  $ (81)  $   764   $1,078     $  840     $1,484       $ 999
                                                   =====   =======    =====      =====     ======       =====
</TABLE>
 
Non cash investing and financing activities: During the period ended June 30,
1997, the Company issued a note payable for $506,000 for a portion of the
purchase price of ORA.
 
          See accompanying notes to consolidated financial statements
                                      F-76
<PAGE>   141
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Star Mountain, Inc. (the "Company") was founded in 1987. The Company is
primarily engaged in contracting with the U.S. Government to provide technical
and professional services in the form of computer-based training, software
development and computer applications support. In August 1996, the Company
formed a wholly-owned subsidiary, Star Digital, Inc. ("Star") to acquire the
assets of Computer Visions, Inc. Star is primarily a value added distributor of
computer equipment. In February 1997, the Company acquired the stock of Odyssey
Research Associates, Inc. ("ORA"). ORA is primarily engaged in contracting with
the U.S. Government to perform research relating to computer access and
security. ORA includes the accounts of 168004 Canada, Inc. ("ORA Canada"), a
wholly-owned subsidiary. ORA Canada performs similar contracts for the Canadian
Government.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     A major portion of the Company's revenue results from services performed
under U.S. government contracts, either directly or through subcontracts. The
majority of the Company's contracts are fixed-price contracts. Revenue on fixed
price contracts is recognized using the percentage of completion method based on
costs incurred in relation to total estimated costs. Revenue on
time-and-materials contracts is recognized to the extent of fixed billable rates
for hours delivered plus reimbursable costs. Revenue on cost-plus-fee contracts
is recognized based on reimbursable costs incurred plus estimated fees earned
thereon. At the time it is recognized that it is probable that a contract will
result in a loss and the loss can be reasonably estimated, the entire estimated
loss is included in the determination of net income. In accordance with industry
practice, amounts relating to long-term contracts are classified as current
assets although an indeterminable portion of these amounts is not expected to be
realized within one year.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997, and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Credit Risk
 
     The Company's accounts receivable consist principally of unsecured amounts
due from the U.S. Government.
 
  Cash Equivalents
 
     Cash equivalents are defined as highly liquid short-term investments whose
maturity dates do not extend past three months from the original date of
purchase. The Company has held no such instruments.
 
                                      F-77
<PAGE>   142
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Property and Equipment
 
     Property and equipment are stated at cost and include additions and major
replacements or betterments. Depreciation and amortization are provided for in
amounts which amortize the cost of properties utilizing the straight-line method
over estimated useful lives of three to seven years. Maintenance, repairs and
minor renewals are expensed as incurred. Any gain or loss on disposition is
included in the determination of net income.
 
  Goodwill
 
     Goodwill represents the excess of the cost of business acquisitions,
accounted for by the purchase method, over the fair value of the net assets
thereof. Goodwill is being amortized on a straight-line basis principally over
14 years.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, note payable, bank, accounts payable and
accrued expenses. The carrying value of these financial instrument approximates
their fair value because of the short maturity of these instruments.
 
  Income Taxes
 
     Through December 31, 1995, the Company had elected to be taxed as an S
Corporation and, accordingly, the financial statements for 1994 and 1995 do not
reflect any provision for income taxes since elements of income and deduction
passed through directly to the shareholders. Effective January 1, 1996, the
Company terminated its election to be taxed as an S corporation.
 
     Deferred income tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial reporting and
tax bases of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be settled. Future
tax benefits recognized as deferred tax assets must be reduced by a valuation
allowance where it is more likely than not that the benefits may not be
realized.
 
(3)  ACQUISITIONS
 
     On June 19, 1995, the Company acquired all of the assets of BZ Academy,
Inc. (BZ). The acquisition has been accounted for as a purchase and has operated
as the AIT division of the Company. Tangible assets were recorded at their book
value at the date of purchase, which approximated their fair value. The
difference between the purchase price and the assets' book value was recorded as
goodwill.
 
     On August 1, 1996, the Company formed a new corporation, Star Digital,
Inc., to acquire the assets of Computer Visions, Inc. The acquisition has been
accounted for as a purchase. Computer Visions' tangible assets were recorded at
their fair value, which approximated the purchase price. No goodwill was
recorded.
 
     On February 21, 1997, the Company acquired the outstanding stock of ORA.
The acquisition has been accounted for as a purchase. The excess of the purchase
price over the book value of the net assets of ORA at the purchase date has been
recorded as goodwill.
 
     On September 30, 1997, the Company acquired certain assets of Simms
Industries. The assets acquired consisted primarily of accounts receivable and
fixed assets.
 
                                      F-78
<PAGE>   143
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     See Note 13 regarding an additional acquisition after September 30, 1997,
and the pro forma acquisition information.
 
(4)  ACCOUNTS RECEIVABLE
 
     Accounts receivable consist of the following:
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                                 -----------------     JUNE 30,     SEPTEMBER 30,
                                                  1995       1996        1997           1997
                                                 ------     ------     --------     -------------
                                                                                     (UNAUDITED)
    <S>                                          <C>        <C>        <C>          <C>
    Government contracts:
      Billed...................................  $2,304     $3,333      $3,961         $ 3,268
      Unbilled.................................     958        698         833             896
    Other......................................     496        364         446             409
                                                 ------     ------      ------          ------
                                                 $3,758     $4,395      $5,240         $ 4,573
                                                 ======     ======      ======          ======
</TABLE>
 
     Included in unbilled accounts receivable are retainages due upon completion
of the contracts of approximately $54, $65, $70, and $55.
 
(5)  NOTES RECEIVABLE
 
     Notes receivable consist of the following:
 
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                                    -------------     JUNE 30,     SEPTEMBER 30,
                                                    1995     1996       1997           1997
                                                    ----     ----     --------     -------------
                                                                                    (UNAUDITED)
    <S>                                             <C>      <C>      <C>          <C>
    Due to/from majority shareholder, unsecured
      interest at prime, due December 1997........  $ 10     $131       $307           $ 344
    Due from former employee, secured, interest at
      10 percent, due December 31, 1998...........   342      317        317             317
                                                    ----     ----       ----            ----
                                                     352      448        624             661
    Less current portion..........................    60      181        307             344
                                                    ----     ----       ----            ----
                                                    $292     $267       $317           $ 317
                                                    ====     ====       ====            ====
</TABLE>
 
(6)  NOTE PAYABLE, BANK
 
     The Company maintains a bank line of credit arrangement that provides for
borrowings of 90% of billed accounts receivable less than 90 days old, not to
exceed $3,500 in total. Advances bear interest at LIBOR plus 250 basis points.
The line is collateralized by substantially all of the Company's assets. The
agreement requires the Company to meet certain covenants including limitations
on dividends, and maintenance of adjusted tangible net worth, as defined. The
Company has been in compliance with the lender's covenants during each of the
periods presented. At December 31, 1995 and 1996, June 30, 1997, and September
30, 1997, overdrafts in the payroll and operating bank accounts amounting to
$722, $236, $346, and $217, respectively, have been included in the outstanding
balance on the line since such overdrafts are automatically covered by the bank
as checks are presented for payment.
 
                                      F-79
<PAGE>   144
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
(7)  OTHER NOTES PAYABLE
 
<TABLE>
<CAPTION>
                                                             DECEMBER
                                                                31,
                                                            -----------   JUNE 30,   SEPTEMBER 30,
                                                            1995   1996     1997         1997
                                                            ----   ----   --------   -------------
                                                                                      (UNAUDITED)
    <S>                                                     <C>    <C>    <C>        <C>
    Note payable, shareholder, representing temporary
      advances of working capital, interest at LIBOR plus
      250 basis points, due on demand. Unsecured..........  $35    $95      $ 95         $   5
    Note payable, purchase of subsidiary, ORA, interest at
      9%, payable in four annual installments of $126,500
      beginning February 1998. ...........................   --     --       506           506
                                                            ---    ---      ----          ----
    Total.................................................   35     95       601           511
    Less current portion..................................   35     95       222           132
                                                            ---    ---      ----          ----
    Long-term portion.....................................  $ 0    $ 0      $379         $ 379
                                                            ===    ===      ====          ====
</TABLE>
 
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee
contributions, up to a maximum of 3% of each employee's gross annual
compensation. In addition, the Company may contribute a discretionary amount
annually. Total expense under the plan for the years ended December 31, 1994,
1995 and 1996, was $97, $121, and $123, respectively. Expense for the periods
ended June 30, 1997, September 30, 1996, and September 30, 1997, was $47, $91
and $75, respectively.
 
(9)  COMMITMENTS AND CONTINGENCIES
 
     Substantially all of the Company's revenue and costs for all periods since
December 31, 1995, are subject to audit by agencies of the U.S. Government.
Management does not expect the results of these audits to have a material impact
on the financial position or future results of operations of the Company.
 
     The Company leases equipment and office space under various noncancellable
operating leases. The office leases provide for future rental increases based on
the Company's pro-rata share of increases in building operating expenses and
real estate taxes, and for inflation adjustments based on increases in the
Consumer Price Index. Rent expense, including month-to-month leases, for the
years ended December 31, 1994, 1995, and 1996, totalled $372, $557 and $595,
respectively. Rent expense for the periods ended June 30, 1997, September 30,
1996, and September 30, 1997, were $399, $558 and $653, respectively. Future
minimum lease commitments under non-cancellable operating leases for years
ending June 30, are as follows:
 
<TABLE>
<CAPTION>
                                                                OFFICE/
                                                               WAREHOUSE   EQUIPMENT   TOTAL
                                                               ---------   ---------   ------
    <S>                                                        <C>         <C>         <C>
    1998.....................................................   $   604      $ 166     $  770
    1999.....................................................       496         88        584
    2000.....................................................       492         26        518
    2001.....................................................       469         14        483
    2002.....................................................       403         --        403
                                                                 ------       ----     ------
                                                                $ 2,464      $ 294     $2,758
                                                                 ======       ====     ======
</TABLE>
 
                                      F-80
<PAGE>   145
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
(10)  COMMON STOCK
 
     Common stock consists of the following:
 
<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                            ---------------------------    JUNE 30,    SEPTEMBER 30,
                                                1995           1996          1997          1997
                                            ------------   ------------   ----------   -------------
                                                                                        (UNAUDITED)
    <S>                                     <C>            <C>            <C>          <C>
    Par value.............................   $      .01            .01           N/A            N/A
    Shares:
      Authorized..........................    1,000,000      1,000,000    15,000,000     15,000,000
      Issued..............................      752,679        762,093     8,122,232      8,127,332
</TABLE>
 
     Effective February 14, 1997, the Company's voting common stock was
increased from 800,000 shares of $.01 par value to 12,000,000 shares of no par
value, and the non-voting stock was increased from 200,000 shares of $.01 par
value to 3,000,000 shares of no par value.
 
(11)  STOCK OPTIONS
 
     The Company offers key employees the opportunity to purchase stock through
the Star Mountain Key Person Stock Option Plan (the "Plan"). Under the Plan, the
Company issues options to eligible employees who must have one year of service
with the Company. The exercise price for the options is at or above the current
market price of the Company's shares, as determined by management. Management
has applied a consistent formula which includes gross revenue and net income in
determining the Company's share price. Options are exercisable upon issuance for
periods of 3 to 5 years from the date of the grant.
 
     The activity in the Plan since 1994 is presented below. All options and
option prices have been restated to reflect the 12:1 stock split in February
1997.
 
<TABLE>
<CAPTION>
                                                            NUMBER OF OPTIONS        WEIGHTED
                                                             OUTSTANDING AND         AVERAGE
                                                               EXERCISABLE        EXERCISE PRICE
                                                            -----------------     --------------
    <S>                                                     <C>                   <C>
    Balance, December 31, 1993............................        828,000             $ 0.26
      Granted.............................................        264,000               0.42
      Exercised...........................................       (127,356)              0.23
      Forfeited...........................................        (52,644)              0.23
                                                                ---------
    Balance, December 31, 1994............................        912,000               0.31
      Granted.............................................        384,000               0.47
      Forfeited...........................................       (360,000)              0.21
                                                                ---------
    Balance, December 31, 1995............................        936,000               0.42
      Granted.............................................        936,000               0.49
      Forfeited...........................................       (348,000)              0.46
                                                                ---------
    Balance, December 31, 1996............................      1,524,000               0.45
      Granted.............................................        123,000               1.00
      Exercised...........................................        (73,200)              0.24
      Forfeited...........................................       (120,000)              0.49
                                                                ---------
    Balance, June 30, 1997................................      1,453,800               0.50
      Granted.............................................         60,000               1.00
                                                                ---------
    Balance, September 30, 1997...........................      1,513,800               0.52
                                                                =========
</TABLE>
 
                                      F-81
<PAGE>   146
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The weighted average price for options outstanding and exercisable at June
30, 1997, was $.50 and at September 30, 1997, was $.52. The weighted average
remaining term of the outstanding options is 3.2 years.
 
     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 defines a "fair value based method" of accounting
for an employee stock option. Under this method, compensation cost is measured
at the grant date based on the value of the award and is recognized over the
service period. The Company has historically accounted for employee stock
options under the "intrinsic value method" as defined by APB Opinion No. 25,
"Accounting for Stock Issued to Employees". Under the intrinsic value method,
compensation cost is the excess, if any, of the quoted market price of the stock
at grant date over the amount an employee must pay to acquire the stock. The
Company's Plan, accounted for under APB Opinion No. 25, does not result in any
compensation cost.
 
     SFAS No. 123 allows an entity to continue to use the intrinsic value method
and management has elected to do so. However, entities electing to remain on the
intrinsic value method must make pro forma disclosures of net income, as if the
fair value based method of accounting had been applied. Because the method of
accounting in SFAS No. 123 has not been applied to options granted prior to
January 1, 1994, the resulting pro forma compensation costs may not be
representative of the cost to be expected in future years.
 
     Under SFAS No. 123, net income would have been as follows:
 
<TABLE>
<CAPTION>
                                                                                    SEPTEMBER
                                                   DECEMBER 31,                        30,
                                               --------------------    JUNE 30,    ------------
                                               1994    1995    1996      1997      1996    1997
                                               ----    ----    ----    --------    ----    ----
                                                                                   (UNAUDITED)
    <S>                                        <C>     <C>     <C>     <C>         <C>     <C>
    Net income, as reported................... $214    $992    $604      $211      $606    $557
    Pro forma net income...................... $211    $984    $586      $200      $593    $539
</TABLE>
 
     The fair value of each option is estimated on the date of grant using the
following assumptions: no dividend yield, no volatility, risk-free interest
rates approximating 6% and expected lives of 3 to 5 years. The weighted average
grant date fair value of the options was as follows:
 
<TABLE>
<CAPTION>
                    DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 30,    SEPTEMBER 30,    SEPTEMBER 30,
                        1994            1995            1996          1997          1996             1997
                    ------------    ------------    ------------    --------    -------------    -------------
                                                                                         (UNAUDITED)
    <S>             <C>             <C>             <C>             <C>         <C>              <C>
    Weighted
      average fair
      value........     $.11            $.11            $.13          $.16          $ .13            $ .16
</TABLE>
 
(12)  INCOME TAXES
 
     Income tax expense consists of the following amounts:
 
<TABLE>
<CAPTION>
                                                                                   SEPTEMBER 30,
                                                     DECEMBER 31,     JUNE 30,     -------------
                                                         1996           1997       1996     1997
                                                     ------------     --------     ----     ----
                                                                                    (UNAUDITED)
    <S>                                              <C>              <C>          <C>      <C>
    Current:
      Federal......................................      $313           $139       $302     $322
      State........................................        84             30         58       53
    Deferred:
      Federal......................................        --            (41)        --      (41)
      State........................................        --             (3)        --       (3)
                                                         ----           ----       ----     ----
                                                         $397           $125       $360     $331
                                                         ====           ====       ====     ====
</TABLE>
 
                                      F-82
<PAGE>   147
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The differences between the effective income tax rate and the statutory
federal income tax rates are as follows:
 
<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30,
                                         DECEMBER 31,     JUNE 30,     -------------------------------
                                             1996           1997           1996              1997
                                         ------------     --------     -------------     -------------
                                                                                 (UNAUDITED)
    <S>                                  <C>              <C>          <C>               <C>
    Computed "expected" tax on
      income...........................       34.0%          34.0%          34.0%             34.0%
    State taxes, net of federal
      benefit..........................        4.1            4.1            4.1               4.1
         Other, net....................        1.6           (0.9)          (0.8)             (0.8)
                                              ----           ----           ----              ----
    Taxes on income....................       39.7%          37.2%          37.3%             37.3%
                                              ====           ====           ====              ====
</TABLE>
 
     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below:
 
<TABLE>
<CAPTION>
                                                       DECEMBER 31,     JUNE 30,     SEPTEMBER 30,
                                                           1996           1997           1997
                                                       ------------     --------     -------------
                                                                                      (UNAUDITED)
    <S>                                                <C>              <C>          <C>
    Deferred tax assets result from
      accrued employee benefits,
      principally vacation...........................      $ 29           $ 42           $  42
                                                           ====           ====            ====
    Deferred tax liabilities result from:
      Differences in depreciation methods............      $ 29           $ 27           $  27
      Change in accounting method from cash to
         accrual for ORA.............................        --             99              99
                                                           ----           ----            ----
                                                           $ 29           $126           $ 126
                                                           ====           ====            ====
</TABLE>
 
(13)  SUBSEQUENT EVENT (UNAUDITED)
 
     On October 1, 1997, the Company acquired the net assets of the Systems
Effectiveness Division (SED) of Essex Corporation for a total price of $1,475.
The net assets represent substantially all of the operating assets of the
division. The excess of the purchase price over the book value of the tangible
assets acquired of approximately $930 has been recorded as goodwill.
 
     The following table sets forth the pro forma information assuming that all
acquisitions had occurred on January 1, 1995 (the earliest date information is
available). The pro forma information takes into account amortization of
goodwill and additional interest costs, net of tax benefits.
 
<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,         SIX MONTHS
                                                   -----------------------------         ENDED
                                                       1995             1996         JUNE 30, 1997
                                                   ------------     ------------     -------------
    <S>                                            <C>              <C>              <C>
    Gross revenue................................    $ 22,668         $ 24,818          $14,520
    Operating income.............................       1,081            1,524            1,087
    Net income...................................         723              529              121
</TABLE>
 
     In November 1997, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-83
<PAGE>   148
 
======================================================
 
  No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with the
Offering other than those contained in this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any securities
other than the shares of Common Stock to which it relates or an offer to, or a
solicitation of, any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or that information
contained herein is correct as of any time subsequent to the date hereof.
                          ----------------------------
                               TABLE OF CONTENTS
                          ----------------------------
 
<TABLE>
<CAPTION>
                                            Page
                                            ----
<S>                                         <C>
Prospectus Summary.......................     3
Risk Factors.............................     9
Combination..............................    15
Use of Proceeds..........................    18
Dividend Policy..........................    18
Capitalization...........................    19
Dilution.................................    20
Selected Financial Data..................    21
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations.............................    23
Business.................................    37
Management...............................    47
Principal Stockholders...................    53
Certain Transactions.....................    54
Description of Capital Stock.............    58
Shares Eligible for Future Sale..........    59
Underwriting.............................    61
Legal Matters............................    62
Experts..................................    62
Additional Information...................    63
Index to Financial Statements............   F-1
</TABLE>
 
  Until           , 1998 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities offered hereby,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as Underwriters and with respect to their unsold
allotments or subscriptions.
 
======================================================
======================================================
                                2,600,000 SHARES
 
                                 PROVANT, INC.
 
                                  COMMON STOCK
 
                            ------------------------
                                   PROSPECTUS
                            ------------------------
 
                             NationsBanc Montgomery
 
                                 Securities LLC
 
                              Salomon Smith Barney
 
                               Piper Jaffray Inc.
 
                                           , 1998
 
======================================================
<PAGE>   149
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
  ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission registration fee and the NASD
filing fee.
 
<TABLE>
    <S>                                                                        <C>
    SEC registration fee.....................................................  $   11,467
    NASD filing fee..........................................................       4,387
    Blue Sky fees and expenses...............................................       1,500
    New York Stock Exchange listing fee......................................     100,000
    Printing and engraving expenses..........................................     275,000
    Legal fees and expenses..................................................     950,000
    Accounting fees and expenses.............................................     900,000
    Transfer agent and registrar fees........................................       5,000
    Premium for directors' and officers' insurance...........................     100,000
    Miscellaneous............................................................     402,646
                                                                               ----------
              Total..........................................................  $2,750,000
                                                                               ==========
</TABLE>
 
     To the extent the foregoing fees and expenses are incurred prior to the
Closing, certain of the Company's executive officers will advance to the Company
the funds required to pay such fees and expenses, and the Company will reimburse
those individuals for such fees and expenses out of the proceeds of the
Offering.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Company is a Delaware corporation. Reference is made to Section 145 of
the DGCL, as amended, which provides that a corporation may indemnify any person
who was or is a party to or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his or her conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite an adjudication of liability, but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper. The
Company's Certificate of Incorporation further provides that the Company shall
indemnify its directors and officers to the full extent permitted by the law of
the State of Delaware.
 
                                      II-1
<PAGE>   150
 
     The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the DGCL as in effect at the
time such liability is determined.
 
     The Certificate of Incorporation and By-laws also provide that each person
who was or is made a party to, or is involved in, any action, suit, proceeding
or claim by reason of the fact that he or she is or was a director or officer of
the Registrant (or is or was serving at the request of the Registrant as a
director or officer of any other enterprise including service with respect to
employee benefit plans) shall be indemnified and held harmless by the
Registrant, to the full extent permitted by Delaware law, as in effect from time
to time, against all expenses (including attorneys' fees and expenses),
judgments, fines, penalties and amounts to be paid in settlement incurred by
such person in connection with the investigation, preparation to defend or
defense of such action, suit, proceeding or claim. The Company's By-laws allow
for similar rights of indemnification to be afforded, in the Company's
discretion, to its employees and agents.
 
     The rights to indemnification and the payment of expenses provided by the
Certificate of Incorporation and By-laws do not apply to any action, suit,
proceeding or claim initiated by or on behalf of a person otherwise entitled to
the benefit of such provisions. Any person seeking indemnification under the
Certificate of Incorporation shall be deemed to have met the standard of conduct
required for such indemnification unless the contrary shall be established. Any
repeal or modification of such indemnification provisions shall not adversely
affect any right or protection of a director or officer with respect to any
conduct of such director or officer occurring prior to such repeal or
modification.
 
     The Company maintains an indemnification insurance policy covering all
directors and officers of the Company and its subsidiaries.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     In December 1996, the Company issued (i) 298.8, 762 and 762.1 shares of
Common Stock, respectively, at a purchase price of $1.00 per share, to the
Company's initial stockholders and (ii) 169.4 shares of Common Stock at a
purchase price of $1.00 per share to a consultant. In July 1997, the Company
issued 80.5, 260.4 and 351.6 shares of Common Stock, respectively, at a purchase
price of $1.00 per share, to additional consultants. In September 1997, the
Company issued (i) 134.2 and 201.4 shares of Common Stock, respectively, at a
purchase price of $1.00 per share, to two of the Company's initial stockholders
and (ii) 67.1, 100.7 and 201.4 shares of Common Stock, respectively, at a
purchase price of $1.00 per share, to consultants. In November 1997, the Company
issued 27.3 shares and one share of Common Stock, respectively, at a purchase
price of $1.00 per share, to two consultants.
 
     In September 1997, the Company issued to a consultant an option to purchase
10,000 shares of Common Stock of the Company at a purchase price of $5.00 per
share, exercisable immediately upon the Closing. The option shall terminate
three years following the Closing.
 
     As partial consideration for an agreement to extend financing to the
Company in connection with the Offering and the Combination, on October 6, 1997,
the Company issued two warrants to each of Paul M. Verrochi and Dominic J.
Puopolo. The first warrant entitles the holder to purchase (i) 68 shares of
Common Stock at $1.00 per share prior to the Offering or (ii) following the
Offering 2.0% of the Common Stock outstanding immediately prior to the Offering
(but giving effect to the Combination) at a per share exercise price equal to
the initial public offering price. The second warrant entitles the holder
following the Offering to purchase 2.5% of the Common Stock immediately prior to
the Offering (but giving effect to the Combination). The second warrant will be
exercisable only if the market price of the Common Stock increases to certain
threshold levels, or earlier under certain circumstances involving the merger or
sale of the Company.
 
     All such issuances of Common Stock have been made in reliance upon the
exemption from registration afforded by Section 4(2) under the Securities Act.
 
                                      II-2
<PAGE>   151
 
     The foregoing amounts (except with respect to the option granted in
September 1997) have not been adjusted for the stock dividend that will be
declared by the Board of Directors of Provant prior to the consummation of the
Offering.
 
ITEM 16.  EXHIBITS
 
<TABLE>
<CAPTION>
                                                                                       SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
<C>       <S>                                                                          <C>
  +1      Form of Underwriting Agreement.............................................
  *2.1    Agreement and Plan of Merger by and among Provant, Inc., Behavioral
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Behavioral
          Technology, Inc. and Paul C. Green, Ph.D. .................................
  *2.2    Agreement and Plan of Merger by and among Provant, Inc., Decker Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Decker Communications, Inc.,
          Bert Decker and Kenneth Taylor.............................................
  *2.3    Agreement and Plan of Merger by and among Provant, Inc., Howard Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, J. Howard & Associates, Inc.,
          Jeffrey P. Howard and Marc S. Wallace......................................
  *2.4    Agreement and Plan of Merger by and among Provant, Inc., LSS Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Robert Steinmetz, Ph.D., and
          Associates, Inc., Edwin Bauch as Trustee of the Steinmetz Children's Trust
          u/d/t dated December 31, 1996, Edwin Bauch as Trustee of the King
          Children's Trust u/d/t dated December 31, 1996, John F. King and Robert A.
          Steinmetz, Ph.D. ..........................................................
  *2.5    Agreement and Plan of Merger by and among Provant, Inc., MOHR Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, MOHR Retail Learning Systems,
          Inc., Herbert Cohen, Judith Cohen and Michael Patrick......................
  *2.6    Agreement and Plan of Merger by and among Provant, Inc., Paul M. Verrochi,
          Dominic J. Puopolo, Star Mountain, Inc., Star Acquisition Corp. and Carl
          von Sternberg..............................................................
  *2.7    Agreement and Plan of Merger by and among Provant, Inc., Novations
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Novations Group,
          Inc., Joseph Folkman, Joseph Hanson, Kurt Sandholtz, Norman Smallwood,
          Randy Stott and Jonathan Younger...........................................
  *3.1    Certificate of Incorporation of the Company................................
  *3.2    By-laws of the Company.....................................................
  *4.1    Form of Specimen Stock Certificate.........................................
  *5      Opinion of Nutter, McClennen & Fish, LLP...................................
 *10.1    1998 Equity Incentive Plan.................................................
 *10.2    Stock Plan for Non-Employee Directors......................................
 *10.3    1998 Employee Stock Purchase Plan..........................................
 *10.4    Form of Warrants to Messrs. Verrochi and Puopolo...........................
 *10.5    Form of Contingent Warrants to Messrs. Verrochi and Puopolo................
 *10.6    Form of Employment Agreement between Rajiv Bhatt and Provant, Inc. ........
 *10.7    Form of Employment Agreement between MOHR Acquisition Corp., Herbert A.
          Cohen, and Provant, Inc. ..................................................
 *10.8    Form of Employment Agreement between Decker Acquisition Corp., Bert Decker,
          and Provant, Inc. .........................................................
 *10.9    Form of Employment Agreement between Philip Gardner and Provant, Inc. .....
 *10.10   Form of Employment Agreement between Behavioral Acquisition Corp., Paul C.
          Green, and Provant, Inc. ..................................................
 *10.11   Form of Employment Agreement between Novations Acquisition Corp., Joe
          Hanson, and Provant, Inc. .................................................
 *10.12   Form of Employment Agreement between LSS Acquisition Corp., John F. King,
          and Provant, Inc. .........................................................
</TABLE>
 
                                      II-3
<PAGE>   152
 
<TABLE>
<CAPTION>
                                                                                       SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
<C>       <S>                                                                          <C>
 *10.13   Form of Employment Agreement between Dominic J. Puopolo and Provant,
          Inc. ......................................................................
 *10.14   Form of Employment Agreement between A. Carl von Sternberg and Provant,
          Inc. ......................................................................
 *10.15   Form of Employment Agreement between Paul M. Verrochi and Provant, Inc. ...
 *10.16   Form of Employment Agreement between Howard Acquisition Corp., Marc S.
          Wallace, and Provant, Inc. ................................................
 *10.17   Form of Employment Agreement between John H. Zenger and Provant, Inc. .....
 *10.18   Form of Consulting Agreement between Michael J. Davies and Provant, Inc....
 *10.19   Lease Agreement between Behavioral Technology, Inc. and Paul C. Green,
          Ph.D.......................................................................
 *10.20   Lease Agreement between Novations Group, Inc. and Novations Partners,
          L.L.C. ....................................................................
 *10.21   Promissory note of A. Carl von Sternberg...................................
 *10.22   Form of Consulting Agreement between Donald W. Glazer and Provant, Inc.....
 +21      Subsidiaries of the Registrant.............................................
 +23.1    Consent of KPMG Peat Marwick LLP...........................................
 +23.2    Consent of Friedman & Fuller, P.C..........................................
 *23.3    Consent of Nutter, McClennen & Fish, LLP (contained in Exhibit 5)..........
 +24      Power of Attorney (contained in the signature page to this Registration
          Statement).................................................................
 +27      Financial Data Schedule....................................................
 +99.1    Consent of Rajiv Bhatt.....................................................
 +99.2    Consent of Herbert A. Cohen................................................
 +99.3    Consent of Michael J. Davies...............................................
 +99.4    Consent of Bert Decker.....................................................
 +99.5    Consent of Philip Gardner..................................................
 +99.6    Consent of Paul C. Green...................................................
 +99.7    Consent of Joe Hanson......................................................
 +99.8    Consent of John F. King....................................................
 +99.9    Consent of Dominic J. Puopolo..............................................
 +99.10   Consent of A. Carl von Sternberg...........................................
 +99.11   Consent of Paul M. Verrochi................................................
 +99.12   Consent of Marc S. Wallace.................................................
 +99.13   Consent of John H. Zenger..................................................
</TABLE>
 
---------------
* To be filed by amendment.
 
+ Filed herewith.
 
ITEM 17.  UNDERTAKINGS
 
     The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-
 
                                      II-4
<PAGE>   153
 
tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
 
     The undersigned Registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this Registration Statement in reliance upon Rule 430A under the
     Securities Act and contained in a form of prospectus filed by the
     Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
     Act shall be deemed to be part of this Registration Statement as of the
     time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new Registration Statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-5
<PAGE>   154
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston, the
Commonwealth of Massachusetts, on the 12th day of February 1998.
 
                                          PROVANT, INC.
 
                                          By: /s/   PAUL M. VERROCHI
                                            ------------------------------------
                                            Paul M. Verrochi
                                            President
 
                               POWER OF ATTORNEY
 
     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below on this Registration Statement hereby constitutes and appoints
Paul M. Verrochi, Dominic J. Puopolo, Constantine Alexander and James E. Dawson,
and each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments (including post-effective
amendments and amendments thereto) to this Registration Statement on Form S-1 of
the registrant, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary fully to all intents and purposes as he might or could do in person
thereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
 
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
 
<TABLE>
<CAPTION>
                SIGNATURE                                TITLE                      DATE
------------------------------------------  -------------------------------  ------------------
<C>                                         <S>                              <C>
 
           /s/ PAUL M. VERROCHI             Chief Executive Officer and       February 12, 1998
------------------------------------------    Director
             Paul M. Verrochi
 
          /s/ DOMINIC J. PUOPOLO            Chief Financial Officer and       February 12, 1998
------------------------------------------    Director
            Dominic J. Puopolo
 
             /s/ RAJIV BHATT                Chief Accounting Officer          February 12, 1998
------------------------------------------
               Rajiv Bhatt
</TABLE>
 
                                      II-6
<PAGE>   155
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
                                                                                       SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
<C>       <S>                                                                          <C>
  +1      Form of Underwriting Agreement.............................................
  *2.1    Agreement and Plan of Merger by and among Provant, Inc., Behavioral
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Behavioral
          Technology, Inc. and Paul C. Green, Ph.D. .................................
  *2.2    Agreement and Plan of Merger by and among Provant, Inc., Decker Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Decker Communications, Inc.,
          Bert Decker and Kenneth Taylor.............................................
  *2.3    Agreement and Plan of Merger by and among Provant, Inc., Howard Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, J. Howard & Associates, Inc.,
          Jeffrey P. Howard and Marc S. Wallace......................................
  *2.4    Agreement and Plan of Merger by and among Provant, Inc., LSS Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Robert Steinmetz, Ph.D., and
          Associates, Inc., Edwin Bauch as Trustee of the Steinmetz Children's Trust
          u/d/t dated December 31, 1996, Edwin Bauch as Trustee of the King
          Children's Trust u/d/t dated December 31, 1996, John F. King and Robert A.
          Steinmetz, Ph.D. ..........................................................
  *2.5    Agreement and Plan of Merger by and among Provant, Inc., MOHR Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, MOHR Retail Learning Systems,
          Inc., Herbert Cohen, Judith Cohen and Michael Patrick......................
  *2.6    Agreement and Plan of Merger by and among Provant, Inc., Paul M. Verrochi,
          Dominic J. Puopolo, Star Mountain, Inc., Star Acquisitions Corp. and Carl
          von Sternberg..............................................................
  *2.7    Agreement and Plan of Merger by and among Provant, Inc., Novations
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Novations Group,
          Inc., Joseph Folkman, Joseph Hanson, Kurt Sandholtz, Norman Smallwood,
          Randy Stott and Jonathan Younger...........................................
  *3.1    Certificate of Incorporation of the Company................................
  *3.2    By-laws of the Company.....................................................
  *4.1    Form of Specimen Stock Certificate.........................................
  *5      Opinion of Nutter, McClennen & Fish, LLP...................................
 *10.1    1998 Equity Incentive Plan.................................................
 *10.2    Stock Plan for Non-Employee Directors......................................
 *10.3    1998 Employee Stock Purchase Plan..........................................
 *10.4    Form of Warrants to Messrs. Verrochi and Puopolo...........................
 *10.5    Form of Contingent Warrants to Messrs. Verrochi and Puopolo................
 *10.6    Form of Employment Agreement between Rajiv Bhatt and Provant, Inc. ........
 *10.7    Form of Employment Agreement between MOHR Acquisition Corp., Herbert A.
          Cohen, and Provant, Inc. ..................................................
 *10.8    Form of Employment Agreement between Decker Acquisition Corp., Bert Decker,
          and Provant, Inc. .........................................................
 *10.9    Form of Employment Agreement between Philip Gardner and Provant, Inc. .....
 *10.10   Form of Employment Agreement between Behavioral Acquisition Corp., Paul C.
          Green, and Provant, Inc. ..................................................
 *10.11   Form of Employment Agreement between Novations Acquisition Corp., Joe
          Hanson, and Provant, Inc. .................................................
 *10.12   Form of Employment Agreement between LSS Acquisition Corp., John F. King,
          and Provant, Inc. .........................................................
 *10.13   Form of Employment Agreement between Dominic J. Puopolo and Provant,
          Inc. ......................................................................
 *10.14   Form of Employment Agreement between A. Carl von Sternberg and Provant,
          Inc. ......................................................................
 *10.15   Form of Employment Agreement between Paul M. Verrochi and Provant, Inc. ...
</TABLE>
<PAGE>   156
 
<TABLE>
<CAPTION>
                                                                                       SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
<C>       <S>                                                                          <C>
 *10.16   Form of Employment Agreement between Howard Acquisition Corp., Marc S.
          Wallace, and Provant, Inc. ................................................
 *10.17   Form of Employment Agreement between John H. Zenger and Provant, Inc. .....
 *10.18   Form of Consulting Agreement between Michael J. Davies and Provant, Inc....
 *10.19   Lease Agreement between Behavioral Technology, Inc. and Paul C. Green,
          Ph.D.......................................................................
 *10.20   Lease Agreement between Novations Group, Inc. and Novations Partners,
          L.L.C. ....................................................................
 *10.21   Promissory note of A. Carl von Sternberg...................................
 *10.22   Form of Consulting Agreement between Donald W. Glazer and Provant, Inc.....
 +21      Subsidiaries of the Registrant.............................................
 +23.1    Consent of KPMG Peat Marwick LLP...........................................
 +23.2    Consent of Friedman & Fuller, P.C..........................................
 *23.3    Consent of Nutter, McClennen & Fish, LLP (contained in Exhibit 5)..........
 +24      Power of Attorney (contained in the signature page to this Registration
          Statement).................................................................
 +27      Financial Data Schedule....................................................
 +99.1    Consent of Rajiv Bhatt.....................................................
 +99.2    Consent of Herbert A. Cohen................................................
 +99.3    Consent of Michael J. Davies...............................................
 +99.4    Consent of Bert Decker.....................................................
 +99.5    Consent of Philip Gardner..................................................
 +99.6    Consent of Paul C. Green...................................................
 +99.7    Consent of Joe Hanson......................................................
 +99.8    Consent of John F. King....................................................
 +99.9    Consent of Dominic J. Puopolo..............................................
 +99.10   Consent of A. Carl von Sternberg...........................................
 +99.11   Consent of Paul M. Verrochi................................................
 +99.12   Consent of Marc S. Wallace.................................................
 +99.13   Consent of John H. Zenger..................................................
</TABLE>
 
---------------
* To be filed by amendment.
 
+ Filed herewith.
[{"type": "S-1", "sequence": "1", "description": "PROVANT, INC.", "secsgml_size_bytes": 588392}]
{"company-data": {"conformed-name": "PROVANT INC", "cik": "0001054853", "assigned-sic": "", "irs-number": "043395167", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-46157", "film-number": "98534162"}, "business-address": {"street1": "67 BATTERYMARCH ST SUITE 500", "city": "BOSTON", "state": "MA", "zip": "02110", "phone": "6172611600"}, "mail-address": {"street1": "67 BATTERMARCH STREET SUITE 500", "city": "BOSTON", "state": "MA", "zip": "02110"}}
1
 
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                                 PROVANT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
DELAWARE                            8742                           04-3395167
   (STATE OR OTHER JURISDICTION      (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)    CLASSIFICATION CODE NUMBER)           IDENTIFICATION NO.)
67 BATTERYMARCH STREET, SUITE 500
                                BOSTON, MA 02110
                                 (617) 261-1600
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                                PAUL M. VERROCHI
                                 PROVANT, INC.
                       67 BATTERYMARCH STREET, SUITE 500
                                BOSTON, MA 02110
                                 (617) 261-1600
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------
 
                          COPIES OF COMMUNICATIONS TO:
CONSTANTINE ALEXANDER, ESQUIRE                        KEITH F. HIGGINS, ESQUIRE
             JAMES E. DAWSON, ESQUIRE                                 ROPES & GRAY
           NUTTER MCCLENNEN & FISH, LLP                          ONE INTERNATIONAL PLACE
              ONE INTERNATIONAL PLACE                               BOSTON, MA 02110
                 BOSTON, MA 02110                               TELEPHONE: (617) 951-7000
             TELEPHONE: (617) 439-2000                          FACSIMILE: (617) 951-7050
             FACSIMILE: (617) 973-9748
------------------------
 
          APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
 
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box.  [ ]
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]
    If the Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
=============================================================================================================
                                                        PROPOSED MAXIMUM  PROPOSED MAXIMUM
                                                         OFFERING PRICE       AGGREGATE
  TITLE OF EACH CLASS OF SECURITIES     AMOUNT TO BE           PER            OFFERING          AMOUNT OF
          TO BE REGISTERED              REGISTERED(1)       SHARE(2)          PRICE(2)      REGISTRATION FEE
-------------------------------------------------------------------------------------------------------------
Common Stock (par value $.01 per
  share).............................     2,990,000          $13.00          $38,870,000         $11,467
=============================================================================================================
(1) Includes 390,000 shares that the Underwriters have the option to purchase to
    cover over-allotments.
(2) Estimated solely for purposes of calculating the registration fee pursuant
    to Rule 457(a) under the Securities Act of 1933, as amended.
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
 
================================================================================
2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                 SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998
 
                                2,600,000 SHARES
 
                                 PROVANT, INC.
 
                                  COMMON STOCK
 
     All of the 2,600,000 shares of Common Stock offered hereby are being sold
by Provant, Inc.
 
     Prior to this offering (the "Offering"), there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price of the Common Stock will be between $11.00 and $13.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. Application will be made to list
the Common Stock on the New York Stock Exchange (the "NYSE") under the symbol
"POV."
 
     SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
 
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
     EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
        SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
        COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
           PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
               CRIMINAL OFFENSE.
================================================================================================
                                        Price to           Underwriting         Proceeds to
                                         Public            Discount (1)         Company (2)
------------------------------------------------------------------------------------------------
Per Share.........................       $                   $                    $
Total (3).........................       $                   $                    $
================================================================================================
(1) See "Underwriting" for information concerning indemnification of the
    Underwriters and other matters.
 
(2) Before deducting expenses payable by the Company, estimated at $2,750,000.
 
(3) The Company has granted to the Underwriters a 30-day option to purchase up
    to 390,000 additional shares of Common Stock solely to cover
    over-allotments, if any. If the Underwriters exercise this option in full,
    the Price to Public will total $          , the Underwriting Discount will
    total $          and the Proceeds to Company will total $          . See
    "Underwriting."
 
     The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the offices of NationsBanc Montgomery Securities LLC on or about
  , 1998.
 
                            ------------------------
 
NationsBanc Montgomery Securities LLC
 
                            Salomon Smith Barney
                                                   Piper Jaffray Inc.
 
                                             , 1998
3
 
                                  [MAP/PHOTO]
 
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION IN THE COMMON STOCK
MAINTAINED BY THE UNDERWRITERS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
                                        2
4
 
                               PROSPECTUS SUMMARY
 
     Simultaneous with and as a condition to the consummation of the Offering
made by this Prospectus, Provant, Inc. will acquire in separate combination
transactions (collectively, the "Combination") seven providers of training and
development services and products (each, a "Founding Company," and collectively,
the "Founding Companies"). See "Combination." Unless otherwise indicated, all
references to the "Company" herein mean Provant, Inc. and the Founding
Companies, and references to "Provant" mean Provant, Inc. and its wholly-owned
subsidiaries prior to the consummation of the Combination. Investors should
carefully consider the information set forth under the heading "Risk Factors."
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
related notes appearing elsewhere in this Prospectus. Unless otherwise
indicated, (i) all share, per share and financial information in this
Prospectus: (a) has been adjusted to give effect to the Combination (excluding
the issuance of up to 1,325,000 shares of Common Stock as Additional
Consideration (as defined herein) for six of the Founding Companies and the
payment in Common Stock and cash of the Star Contingent Consideration (as
defined herein) for the seventh Founding Company), (b) assumes an initial public
offering price of $12.00 per share, (c) gives effect to a stock dividend
(assumed to be 871.5263-for-1) that will be declared by Provant prior to the
consummation of the Offering and (d) assumes no exercise of the Underwriters'
over-allotment option; and (ii) unless otherwise noted, all references to fiscal
years mean the Company's or a Founding Company's fiscal year ending on June 30
in the same calendar year (e.g., "fiscal 1997" means the fiscal year ended June
30, 1997).
 
                                  THE COMPANY
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and "off-the-shelf"
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led classroom
training and seminars, certification of client employees as instructors
("train-the-trainer"), interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
The seven Founding Companies are recognized leaders in their respective fields
and have developed a wide range of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. The Company's objective is to become a leading
single source provider of high-quality training and development services and
products that are distributed through multiple delivery methods.
 
     The Company provided training and development services and products to more
than 1,700 companies and 75 government entities in fiscal 1997, including Abbott
Laboratories, Bank of America, Conoco, Inc., Eli Lilly and Company, Federal
Express, Federated Department Stores, Inc., Hewlett-Packard Company, J.P. Morgan
& Co., Incorporated, Metropolitan Life Insurance Company, Mobil Corporation, the
Department of Defense, the Immigration and Naturalization Service and the
Internal Revenue Service. During this period, the Company generated revenues of
more than $100,000 from each of 75 different corporate clients and from over 15
different federal government entities. For fiscal 1997, the Company had pro
forma revenue of $68.8 million and pro forma income from operations of $8.0
million. From fiscal 1995 through fiscal 1997, the combined revenue of the
Founding Companies grew at a compound annual rate of 21.8%.
 
     The corporate and government training and development market is large and
growing. According to Training Magazine, domestic corporations with over 100
employees budgeted approximately $58.6 billion on training in 1997, compared to
approximately $45.0 billion in 1992, representing a compound annual growth rate
of approximately 5.4%. The size of and growth in the federal government market
can be seen in the Department of Defense's training and development budget,
which for its 1997 fiscal year was approximately $23.9 billion, compared to
approximately $18.0 billion in its 1992 fiscal year, representing a compound
annual
 
                                        3
5
 
growth rate of approximately 5.8%. The portion of the market devoted to external
training is increasing, as corporations and government agencies focus on their
core competencies, shift fixed training costs to variable costs, and obtain
training and development services, products, technology and expertise that may
not be available internally. The Company believes that corporations and
government entities seek external providers that can meet their overall training
and development needs by: (i) providing a broad range of high-quality services
and products in both customized and off-the-shelf formats; (ii) delivering
training through multiple delivery methods capable of reaching large and
geographically dispersed work forces; and (iii) utilizing the most current
technology available.
 
     The Company intends to capitalize on these industry trends and enhance its
position as a leading provider of training and development services and products
by pursuing a multi-faceted growth strategy. The Company intends to seek
internal growth by: (i) capitalizing on cross-selling opportunities among the
Founding Companies; (ii) implementing an aggressive sales and marketing
strategy; (iii) expanding its service and product offerings; and (iv) leveraging
investments in technology and deploying leading technologies. In addition, the
Company intends to pursue strategic acquisitions of providers of training and
development services and products in order to expand its service and product
offerings, delivery methods and client base. The Company believes that its
senior management team, particularly Paul M. Verrochi, its Chairman and Chief
Executive Officer and co-founder and former Chairman of American Medical
Response, Inc., and John H. Zenger, its President and former Chairman of Times
Mirror Training Group, the nation's largest group of training companies, will
provide the Company with a competitive advantage in implementing its growth
strategy.
 
     Provant is a Delaware corporation. Its principal executive offices are
located at 67 Batterymarch Street, Suite 500, Boston, Massachusetts 02110. Its
telephone number is (617) 261-1600.
 
                                        4
6
 
                                  THE OFFERING
 
Common Stock offered by the Company.........    2,600,000 shares
 
Common Stock to be outstanding after the
Offering....................................    9,405,605 shares (1)
 
Use of proceeds.............................    To pay the cash portion of the
                                                purchase price for the Founding
                                                Companies and to repay certain
                                                indebtedness. See "Use of
                                                Proceeds."
 
Proposed NYSE Symbol........................    POV
---------------
(1) Includes 3,826,815 shares of Common Stock to be issued to the stockholders
    of the Founding Companies in connection with the Combination. Excludes: (i)
    up to an aggregate of 1,325,000 shares of Common Stock that may be issued as
    Additional Consideration to the stockholders of six of the Founding
    Companies (assuming an initial public offering price of $12.00 per share) as
    well as shares of Common Stock that may be issued as Star Contingent
    Consideration; (ii) 1,100,000 shares of Common Stock reserved for issuance
    under the Company's 1998 Equity Incentive Plan (of which options to purchase
    833,464 shares will be outstanding upon the consummation of the Offering at
    an exercise price per share equal to the initial public offering price);
    (iii) 100,000 shares of Common Stock reserved for issuance under the
    Company's Stock Plan for Non-Employee Directors (of which no options will be
    outstanding upon the consummation of the Offering); (iv) 500,000 shares of
    Common Stock reserved for issuance under the Company's 1998 Employee Stock
    Purchase Plan; (v) 10,000 shares of Common Stock reserved for issuance upon
    the exercise of an outstanding option having an exercise price of $5.00 per
    share; and (vi) an aggregate of 793,656 shares of Common Stock reserved for
    issuance upon the exercise of warrants granted to two of the Company's
    executive officers, as more fully described under "Certain
    Transactions -- Other Transactions; American Business Partners LLC."
 
                                        5
7
 
                   SUMMARY PRO FORMA COMBINED FINANCIAL DATA
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
     Provant has conducted operations to date only in connection with the
Combination and the Offering, and will acquire the Founding Companies
simultaneously with and as a condition to the consummation of this Offering. For
financial statement presentation purposes, Provant has been designated as the
accounting acquiror. The following table presents summary pro forma combined
financial data of the Company, as adjusted for: (i) the consummation of the
Combination; (ii) certain pro forma adjustments to the historical financial
statements of the Founding Companies; and (iii) the consummation of the Offering
and the application of the net proceeds. See the Company's Unaudited Pro Forma
Combined Financial Statements, each of the Founding Companies' financial
statements and the notes thereto included elsewhere in this Prospectus.
PRO FORMA COMBINED (1)
                                                               -----------------------------------
                                                                YEAR ENDED
                                                                 JUNE 30,       THREE MONTHS ENDED
                                                                   1997         SEPTEMBER 30, 1997
                                                               ------------     ------------------
STATEMENT OF OPERATIONS DATA:
  Revenue....................................................   $   68,846          $   17,738
  Cost of revenue............................................       30,967               8,056
                                                                   -------             -------
  Gross profit...............................................       37,879               9,682
  Selling, general and administrative expenses (2)...........       28,663               8,319
  Goodwill amortization (3)..................................        1,226                 307
                                                                   -------             -------
  Income from operations.....................................        7,990               1,056
  Interest and other income (expense), net...................          (73)                 23
                                                                   -------             -------
  Income before income taxes.................................        7,917               1,079
  Provision for income taxes (4).............................        3,703                 558
                                                                   -------             -------
  Net income.................................................   $    4,214          $      521
                                                                   =======             =======
  Net income per share.......................................   $     0.45          $     0.06
                                                                   =======             =======
  Shares used in computing net income per share (5)..........    9,405,605           9,405,605
SEPTEMBER 30, 1997
                                                               -----------------------------------
                                                                PRO FORMA
                                                               COMBINED (6)      AS ADJUSTED (7)
                                                               ------------     ------------------
BALANCE SHEET DATA:
  Working capital (8)........................................    $(14,357)           $ 11,209
  Total assets...............................................      75,095              74,738
  Long-term debt, net of current maturities..................       1,481               1,481
  Stockholders' equity.......................................      36,523              62,089
---------------
(1) The pro forma combined statement of operations data assumes that the
    Combination and the Offering were consummated on July 1, 1996, and is not
    necessarily indicative of the results the Company would have obtained if
    these events actually then occurred or of the Company's future results. The
    pro forma combined statement of operations data is based on preliminary
    estimates, available information and assumptions that management deems
    appropriate, and should be read in conjunction with the other financial
    statements and notes thereto included elsewhere in this Prospectus.
 
(2) Reflects pro forma adjustments to salary, bonuses and benefits paid to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively (the "Compensation Differential"). For the year ended June 30,
    1997 and the three months ended September 30, 1997, the Compensation
    Differential was approximately $4.8 million and $1.3 million, respectively.
 
                                        6
8
 
(3) Reflects amortization of the goodwill to be recorded as a result of the
    Combination over a 40-year period and computed on the basis described in the
    Notes to the Unaudited Pro Forma Combined Financial Statements.
 
(4) Assumes that all income is subject to an effective corporate income tax rate
    of 40%, and all goodwill from the Combination is non-deductible.
 
(5) Assumes an initial public offering price of $12.00 per share. Consists of:
    (i) 3,826,815 shares to be issued to the stockholders of the Founding
    Companies (without giving effect to the issuance of Additional Consideration
    or the Star Contingent Consideration); (ii) 2,978,790 shares held by the
    management and founders of Provant; and (iii) 2,600,000 shares to be sold in
    the Offering.
 
(6) The pro forma combined balance sheet data assumes that the Combination was
    consummated on September 30, 1997. The pro forma combined balance sheet data
    is based upon preliminary estimates, available information and assumptions
    that management deems appropriate and should be read in conjunction with the
    other financial statements and notes thereto included elsewhere in this
    Prospectus.
 
(7) Adjusted for the sale of 2,600,000 shares of Common Stock offered hereby
    (assuming an initial public offering price of $12.00 per share) and the
    application of the net proceeds therefrom as described under "Use of
    Proceeds."
 
(8) The pro forma combined data gives effect to $22.5 million representing the
    cash portion of the consideration for the Combination to be paid from a
    portion of the net proceeds of the Offering.
 
                                        7
9
 
               SUMMARY INDIVIDUAL FOUNDING COMPANY FINANCIAL DATA
                                 (IN THOUSANDS)
 
     The following table presents summary data for each of the Founding
Companies on a historical (and, with respect to Star, consolidated) basis for
the periods indicated. (See "Combination" for the complete name of each Founding
Company.) Three of the Founding Companies, J. Howard, LSS and Star, historically
operated with fiscal years ending on dates other than June 30. For purposes of
the table below, their operating results have been recast to reflect a June 30
fiscal year end, although they have been derived from financial statements
prepared on the same basis as the audited financial statements. As a result of
this presentation, the operating results for these three companies do not
conform with their audited financial statements contained elsewhere in this
Prospectus.
THREE MONTHS
                                                                                        ENDED
                                                        YEARS ENDED JUNE 30,        SEPTEMBER 30,
                                                     ---------------------------   ---------------
                                                      1995      1996      1997      1996     1997
                                                     -------   -------   -------   ------   ------
BTI:
  Revenue..........................................  $ 3,803   $ 5,685   $ 7,096   $1,712   $1,977
  Gross profit.....................................    2,754     4,190     5,608    1,325    1,592
  Income from operations...........................      439       142       497      356      286
  Pro forma income from operations (1).............      350       705     1,439      356      623
DECKER:
  Revenue..........................................  $ 8,550   $ 8,620   $ 8,410   $1,930   $2,585
  Gross profit.....................................    6,131     5,965     6,135    1,381    1,925
  Income from operations...........................      461       249       514      120      262
  Pro forma income from operations (1).............      653       441       854      180      372
J. HOWARD:
  Revenue..........................................  $ 5,444   $ 7,388   $ 7,317   $1,861   $1,917
  Gross profit.....................................    3,646     5,084     5,157    1,275    1,256
  Income from operations...........................      519       720       602      459       57
  Pro forma income from operations (1).............      701     1,265     1,548      518      242
LSS (2):
  Revenue..........................................  $ 2,983   $ 4,233   $ 5,599   $1,136   $1,050
  Gross profit.....................................    1,903     2,549     3,671      755      541
  Income (loss) from operations....................      209       381       610      168      (48)
  Pro forma income from operations (1).............      573       940     1,928      381       75
MOHR:
  Revenue..........................................  $ 1,459   $ 2,171   $ 3,015   $  554   $  556
  Gross profit.....................................    1,288     1,494     2,190      367      352
  Income (loss) from operations....................      (26)      343       445      (16)    (210)
  Pro forma income (loss) from operations (1)......       47       487       779       44     (105)
NOVATIONS:
  Revenue..........................................  $ 7,175   $ 9,039   $ 9,018   $2,167   $2,464
  Gross profit.....................................    3,290     4,306     4,179    1,050    1,267
  Income from operations...........................      123       212       864      227      179
  Pro forma income from operations (1).............    1,331     1,683     1,525      401      554
STAR:
  Revenue..........................................  $11,875   $14,361   $20,790   $4,931   $5,770
  Gross profit.....................................    4,507     5,704     8,188    2,431    2,386
  Income from operations...........................    1,286       292     1,127      711      496
  Pro forma income from operations (1).............    1,116       696     1,368      787      541
---------
(1) Reflects adjustments to the compensation of certain executives of the
    Founding Company to reflect the portion of the Compensation Differential
    attributable to such company. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations."
 
(2) Includes 1995 data for LSS for the 12 months ended August 31, 1995.
 
                                        8
10
 
                                  RISK FACTORS
 
     The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the Company. This
Prospectus contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ significantly from the results discussed in the forward-looking
statements as a result of any number of factors, including the risk factors set
forth below and other factors discussed elsewhere in this Prospectus.
 
ABSENCE OF COMBINED OPERATING HISTORY; RISKS OF INTEGRATION
 
     Provant has conducted no operations and generated no revenues to date.
Provant has entered into definitive agreements to acquire the Founding Companies
simultaneously with, and as a condition to, the consummation of the Offering. To
date, the Founding Companies have operated independently of one another.
Currently, the Company has no centralized financial reporting system and
initially will rely on the existing reporting systems of the Founding Companies.
The Company's senior management group has been assembled only recently, and
there can be no assurance that this group will be successful in managing the
combined operations of the Founding Companies or in implementing the Company's
business and growth strategies. Any failure to do so could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management."
 
     The Founding Companies offer different services and products, use different
capabilities and technologies, target different clients and have different
management styles. Although the Company believes that there are substantial
opportunities to cross-market and integrate the Founding Companies' businesses,
these differences increase the risk inherent in integration. There can be no
assurance that the Company will be able to integrate successfully the operations
of the Founding Companies or institute the necessary Company-wide systems and
procedures to manage successfully the combined enterprise on a profitable basis.
The Company intends to operate the Founding Companies and subsequently acquired
businesses on a decentralized basis. If proper overall business incentives and
controls are not implemented, this decentralized operating strategy could result
in inconsistent operating and financial practices and the Company's overall
profitability could be adversely affected. The failure of the Company to
integrate successfully the operations of the Founding Companies could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Business Strategy."
 
RISKS RELATED TO INTERNAL GROWTH STRATEGY
 
     The central objective of the Company's growth strategy is to increase the
revenues and profitability of the Founding Companies. One of the key components
of this strategy is to cross-sell the services and products of each Founding
Company to other clients of the Company. There can be no assurance that the
Company will be able to expand its sales of services and products to its
existing clients and those of any subsequently acquired businesses. The
Company's growth strategy of broadening its service and product offerings,
implementing an aggressive marketing plan, pursuing strategic acquisitions and
deploying leading technologies has inherent risks and uncertainties. There can
be no assurance that the Company's growth strategy will be successful or that
the Company will be able to generate cash flow sufficient to fund its operations
and to support internal growth. The Company's inability to achieve internal
earnings growth or otherwise execute its growth strategy could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Growth Strategy."
 
RISKS ASSOCIATED WITH ACQUISITION STRATEGY
 
     The Company intends to increase its revenues and its service and product
offerings in part through the acquisition of additional providers of training
and development services and products. There can be no assurance that the
Company will be able to identify and acquire additional businesses or integrate
and manage any acquired businesses without substantial costs, delays or other
operational or financial problems. Certain risks inherent in an acquisition
strategy, such as potentially increasing leverage and debt service requirements,
difficulties associated with combining disparate business systems and cultures,
and the failure to retain key
 
                                        9
11
 
personnel, could adversely affect the Company's operating results. The process
of integrating acquired companies may involve unforeseen difficulties and
require a disproportionate amount of management's attention and financial and
other resources. Moreover, increased competition for acquisition candidates may
develop, in which event fewer acquisition opportunities may be available to the
Company and acquisition costs may increase. There can be no assurance that any
business acquired in the future will achieve anticipated revenues and earnings.
In addition, the size, timing and integration of acquisitions may cause
substantial fluctuations in the Company's operating results from quarter to
quarter. The inability of the Company to acquire, integrate and manage
successfully providers of training and development services and products could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Growth Strategy."
 
MANAGEMENT OF GROWTH
 
     The Company expects to grow internally and through acquisitions. The
Company expects to spend significant time and effort in expanding its existing
business and identifying, completing and integrating acquisitions. There can be
no assurance that the Company's systems, procedures and controls will be
adequate to support the Company's operations as they expand. Any future growth
also will impose significant added responsibilities on members of senior
management, including the need to identify, recruit and integrate new senior
level managers and executives. There can be no assurance that such additional
management can be identified and retained by the Company. The inability of the
Company to manage its growth or recruit and retain additional qualified
management could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Growth Strategy"
and "Management."
 
DEPENDENCE ON KEY PERSONNEL
 
     The Company's operations will depend on the continuing efforts of its
executive officers and the senior management of the Founding Companies. In
particular, the Company will depend on: Paul M. Verrochi, Chairman and Chief
Executive Officer; John H. Zenger, President; and Dominic J. Puopolo, Executive
Vice President and Chief Financial Officer. In addition, the Company relies on
many of the executives of the Founding Companies, whose reputations and client
relationships have contributed in large part to those companies' success. While
the Company will enter into employment agreements with most of these
individuals, there can be no assurance that the Company will be able to retain
the services of any of them. A loss of the services of any of these individuals
following the Offering, could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management."
 
DEPENDENCE ON AVAILABILITY OF QUALIFIED PERSONNEL
 
     A significant portion of the Company's revenue is derived from services and
products that are delivered by instructors and consultants. The Company's
success depends upon its ability to continue to attract and retain instructors
and consultants who possess the skills and experience required to meet the
staffing needs of its clients. In order to initiate and develop client
relationships and execute its growth strategy, the Company must maintain and
continue to hire qualified salespeople. There can be no assurance that qualified
personnel will continue to be available to the Company in sufficient numbers,
and any failure to attract or retain qualified instructors, consultants and
salespeople in sufficient numbers could have a material adverse effect on the
Company's business, financial condition and results of operations.
 
RISKS ASSOCIATED WITH CHANGING ECONOMIC CONDITIONS
 
     The Company's revenues and profitability are related to general levels of
economic activity and employment in the United States. As a result, any
significant economic downturn or recession in the United States could have a
material adverse effect on the Company's business, financial condition and
results of operations.
 
                                       10
12
 
FLUCTUATIONS IN OPERATING RESULTS
 
     The Founding Companies have experienced and expect to continue to
experience fluctuations in quarterly operating results. Results for any quarter
therefore are not necessarily indicative of the results that the Company may
achieve for any subsequent quarter or a full fiscal year. Quarterly results may
vary materially as a result of, among other factors, the level of training and
development services and products sold, the gain or loss of material client
relationships, the timing, structure and magnitude of acquisitions, or the
utilization rates of the Company's salaried trainers, consultants and certain
other employees. The timing or completion of client engagements or custom
services and products also could result in fluctuations in the Company's results
of operations for particular quarterly periods. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
 
RELIANCE ON FEDERAL GOVERNMENT CONTRACTING
 
     Approximately 31% of the Company's pro forma revenue in fiscal 1997 was
generated from services and products provided to over 75 federal government
entities. A general reduction in expenditures by the federal government for
training and development, a Congressional budget impasse, a reduction or
elimination of the use of third party contractors by the federal government, or
an inability of the Company to maintain its relationship with these government
entities could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the government
typically shares equally in the ownership of courseware and materials that the
Company develops with government funds, and may share such courseware or
materials with other entities including the Company's competitors. Risks unique
to contracts with federal government entities including potential government
audits and retroactive downward repricing of sales could, if realized, have a
material adverse effect on the Company's business, financial condition and
results of operations.
 
     Some of the Company's contracts require a security clearance from the
federal government. Foreign beneficial ownership of Common Stock following the
Offering in excess of 5% of outstanding amounts may require the Company to place
restrictions on foreign ownership, control, or influence over these contracts.
If the government deems such controls to be inadequate to prevent foreign
control or influence and terminates the classified contracts, there could be a
material adverse effect on the Company's business, financial condition and
results of operations.
 
RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY
 
     The Company regards many of its training and development services and
products as proprietary and relies primarily on a combination of statutory and
common law copyright, trademark, service mark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. Notwithstanding the foregoing,
a third party or parties could copy or otherwise obtain and use the Company's
products in an unauthorized manner or use these products to develop training and
development processes that are substantially similar to those of the Company.
The Company's products generally do not include any mechanisms to prohibit or
prevent unauthorized use by third parties. If substantial unauthorized use of
the Company's products were to occur, there could be a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company's means of protecting its proprietary
rights will be adequate or that the Company's competitors will not independently
develop similar training products and delivery methods. Additionally, there can
be no assurance that third parties will not claim that the Company's current or
future products or services infringe on the proprietary rights of others. The
Company expects that it will be increasingly subject to such claims as the
number of products and competitors increases in the future. Any such claim could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Intellectual Property."
 
                                       11
13
 
TECHNOLOGICAL RISK
 
     Traditionally, most of the Company's training and development services and
products have been delivered through instructors, written materials or video.
The Company intends to deliver many of its training and development services and
products, including certain services and products previously delivered in
"traditional" formats, via interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
There can be no assurance that the Company will be successful in marketing its
services and products in multimedia software and distance-based media formats,
nor can there be assurance that services and products delivered in the newer
formats will provide comparable training results. In addition, there can be no
assurance that any successful expansion of the methods of distribution of the
Company's services and products will not be rendered moot by subsequent
technological advances. Finally, adding new distribution channels for its
services and products may entail significant costs. The inability of the Company
to develop new distribution channels due to capital, personnel, technological or
other constraints could result in a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Growth
Strategy."
 
RISKS RELATED TO ACQUISITION FINANCING
 
     The Company may choose to finance future acquisitions by issuing shares of
Common Stock for all or a portion of the consideration to be paid. In the event
that the Common Stock does not maintain a sufficient market value, or potential
acquisition candidates otherwise are unwilling to accept Common Stock as part of
the consideration for the sale of their businesses, the Company might not be
able to utilize Common Stock as consideration for acquisitions and would be
required to utilize more of its cash resources, if available, in order to
maintain its acquisition program. If the Company does not have sufficient cash
resources, its growth could be limited unless it could obtain additional capital
through debt or equity financings. The inability of the Company to use its
Common Stock as consideration for future acquisitions or to obtain additional
financing for acquisitions could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, there can
be no assurance that future issuances of Common Stock in connection with
acquisitions will not be dilutive to the Company's stockholders.
 
INDEPENDENT CONTRACTOR STATUS
 
     The Company uses many contract instructors who are not employees of the
Company. As a result, the Company does not pay federal employment taxes or
withhold income taxes on behalf of such individuals, or include them in its
employee benefit plans. If state or federal taxing authorities were to require
the Company to treat some or all of its contract instructors as employees, the
Company would become responsible for the taxes required to be paid or withheld
and could incur additional costs associated with employee benefits and other
employee costs on both a current and retroactive basis. The aggregate impact of
such costs could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Independent
Contractors."
 
COMPETITION
 
     The training and development industry is highly fragmented and competitive,
with low barriers to entry and no single competitor accounting for a significant
market share. The Company's competitors include several large publicly traded
and privately held companies, and thousands of small privately held training
providers and individuals. In addition, many of the Company's clients maintain
internal training departments. Some of the Company's competitors offer services
and products that are similar to those of the Company at lower prices, and some
competitors have significantly greater financial, managerial, technical,
marketing and other resources than the Company. Moreover, the Company expects
that it will face additional competition from new entrants into the training and
development market due, in part, to the evolving nature of the market and the
relatively low barriers to entry. There can be no assurance that the Company
will be successful against such competition. See "Business -- Competition."
 
                                       12
14
 
CONTROL BY DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS
 
     Upon completion of the Offering, the Company's directors and executive
officers, together with their affiliates, will beneficially own approximately
47.3% of the Company's outstanding shares of Common Stock (approximately 45.4%
if the Underwriters exercise their over-allotment option in full). As a result,
these stockholders, if they were to act together, would have the ability as a
practical matter to determine the outcome of corporate actions requiring
stockholder approval, including the election of directors and the approval of
significant corporate transactions, such as a merger or sale of substantially
all of the Company's assets, regardless of how other stockholders of the Company
may vote. This concentration of ownership may have the effect of delaying or
preventing a change in control of the Company. See "Management" and "Principal
Stockholders."
 
POSSIBLE FUTURE SALES OF SHARES
 
     Sales of substantial amounts of Common Stock in the public market after the
Offering under Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), or otherwise, or the perception that such sales could occur,
may adversely affect prevailing market prices of the Common Stock and could
impair the future ability of the Company to raise capital through an offering of
its equity securities or to effect acquisitions using shares of its Common
Stock. The shares of Common Stock outstanding prior to the Offering and the
shares to be issued in the Combination will be "restricted securities" within
the meaning of Rule 144. Unless the resale of the shares is registered under the
Securities Act, these shares may not be sold in the open market until after the
first anniversary of the transaction in which they were acquired, and then only
in compliance with the applicable requirements of Rule 144. See "Shares Eligible
for Future Sale." Notwithstanding their right under the Securities Act to sell
shares pursuant to Rule 144, the stockholders of the Founding Companies and the
holders of Provant's Common Stock prior to the Combination and the Offering have
agreed with the Company to certain transfer restrictions for a two-year period
following the Offering on the Common Stock held by them as of the closing of the
Offering and on the Common Stock that may be purchased by them under options and
warrants outstanding as of the closing of the Offering. See "Certain
Transactions -- Organization of the Company" and "-- Other Transactions
Involving Officers and Directors."
 
     The Company, the holders of all shares outstanding prior to the Offering
and all stockholders of the Founding Companies have agreed with the
Representatives of the Underwriters not to sell or otherwise dispose of any
shares of Common Stock, or any securities convertible into or exercisable or
exchangeable for shares of Common Stock, for a period of 180 days after the date
of this Prospectus without the written consent of the Representatives, except
for: (i) in the case of the Company, the grant of options under the Company's
benefit plans or in connection with acquisitions and (ii) in the case of all
such holders, the exercise of stock options pursuant to benefit plans described
herein and shares of Common Stock disposed of as bona fide gifts, subject, in
each case, to any remaining portion of the 180-day period applying to any shares
so issued or transferred. See "Shares Eligible for Future Sale" and
"Underwriting."
 
CERTAIN ANTI-TAKEOVER PROVISIONS
 
     The Company's Certificate of Incorporation requires that any action
required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing. Special meetings of stockholders may be
called only by the Chairman of the Board or President of the Company or by the
Board of Directors. In addition, the Board of Directors has the authority,
without further action by the stockholders, to fix the rights and preferences
and issue up to 5,000,000 shares of Preferred Stock. These provisions and other
provisions of the Certificate of Incorporation and By-laws may have the effect
of deterring unsolicited acquisition proposals or hostile takeovers or delaying
or preventing changes in control or management of the Company, including
transactions in which stockholders might otherwise receive a premium over the
then current market price for their shares of Common Stock. In addition, these
provisions may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests. The Company also is subject to
Section 203 of the Delaware General Corporation Law (the "DGCL"), which, subject
to certain exceptions, prohibits a Delaware
 
                                       13
15
 
corporation from engaging in any of a broad range of business combinations with
any "interested stockholder" for a period of three years following the date that
such stockholder became an interested stockholder. See "Description of Capital
Stock."
 
NO PRIOR MARKET FOR COMMON STOCK AND POSSIBLE VOLATILITY OF STOCK PRICE
 
     Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or continue after the Offering. The initial public offering
price of the Common Stock will be determined by negotiations between the Company
and the Representatives of the Underwriters, and may not be indicative of the
market price for the Common Stock after the Offering. See "Underwriting" for a
description of the factors to be considered in determining the initial public
offering price. After the Offering, the market price of the Common Stock may be
subject to significant fluctuations in response to numerous factors, including
variations in the annual or quarterly financial results of the Company or its
competitors, changes by financial research analysts in their estimates of the
earnings of the Company or the failure of the Company to meet such estimates,
conditions in the economy in general or the training and development industry in
particular, or unfavorable publicity affecting the Company or the industry. The
equity markets have, on occasion, experienced significant price and volume
fluctuations that have affected the market prices for many companies' securities
and have been unrelated to the operating performance of those companies. Any
such fluctuations following completion of the Offering may adversely affect the
prevailing market price of the Common Stock.
 
IMMEDIATE AND SUBSTANTIAL DILUTION
 
     The purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution in the net tangible book value of their
shares of Common Stock in the amount of $10.61 per share, and may experience
further dilution in that value from issuances of Common Stock in connection with
future acquisitions. See "Dilution."
 
ABSENCE OF DIVIDENDS
 
     Provant has never paid dividends on the Common Stock and does not
anticipate paying any dividends in the foreseeable future. Declarations of
dividends on the Common Stock will depend upon, among other things, future
earnings, if any, the operating and financial condition of the Company, its
capital requirements and general business conditions. The Company anticipates
that any future credit facility that it may obtain will prohibit dividend
payments. See "Dividend Policy."
 
                                       14
16
 
                                  COMBINATION
 
     Provant's objective is to become a leading provider of training and
development services and products. Although Provant has conducted no operations
to date, it has entered into agreements to acquire the Founding Companies
simultaneously with, and as a condition to, the consummation of the Offering.
For a description of the transactions pursuant to which the Founding Companies
will be acquired by Provant, see "Certain Transactions -- Organization of the
Company."
 
THE FOUNDING COMPANIES
 
     The seven Founding Companies are recognized leaders in their respective
fields and have developed a broad array of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. Set forth below is a brief description of each of
the Founding Companies.
 
     Behavioral Technology, Inc.:  Behavioral Technology, Inc. ("BTI") was
founded by Paul C. Green, Ph.D. in 1978. BTI helps clients improve employee
selection and provides managers with a methodology for assessing strengths and
weaknesses of current employees. BTI trains clients to use candidates' and
employees' past actions both as indicators of future performance and as a basis
for discussion regarding improvement in performance. BTI's training services are
delivered through instructor-led training and train-the-trainer programs. The
company's lead product, Behavioral Interviewing(R), accounted for approximately
90% of the company's revenue in fiscal 1997. Dr. Green is credited with
developing the concepts behind behavioral-based interviewing and is widely
acknowledged as a leader in the field. BTI's clients include Hewlett-Packard
Company, Federal Express and Royal Bank of Canada. BTI is headquartered in
Memphis, Tennessee. In its most recent fiscal year, BTI generated revenue of
approximately $7.1 million.
 
     Decker Communications, Inc.:  Decker Communications, Inc. ("Decker") was
founded by Bert Decker in 1979. Decker provides training to improve employees'
business communication skills and communications between management and
employees. Decker's services range from helping senior management to communicate
corporate change to working with employees to improve the effectiveness of their
communication skills. Decker's training services are delivered primarily through
instructor-led workshops, some of which are tailored to meet specific client
objectives. Decker's flagship program, Effective Communicating(TM), and its
custom versions of the same product, accounted for approximately 84% of the
company's revenue in fiscal 1997. Decker's clients include Bank of America,
Coopers & Lybrand L.L.P. and Hewlett-Packard Company. Decker is located in San
Francisco, California and has regional offices in New York, Los Angeles and
Chicago. In its most recent fiscal year, Decker generated revenue of
approximately $8.4 million.
 
     J. Howard & Associates, Inc.:  J. Howard & Associates, Inc. ("J. Howard")
was founded by Jeffrey P. Howard, Ph.D. in 1977. Marc S. Wallace joined the
company in 1986, and became its President in 1991. J. Howard assists clients in
identifying and addressing potential obstacles to improving workplace
productivity, including race and gender issues, sexual harassment and failure of
employees to take measured risks. J. Howard's training services are delivered
primarily through instructor-led seminars that incorporate small and large group
discussions and self-assessment and skills-building exercises. The company's
lead product, Managing Inclusion, which accounted for approximately 57% of the
company's revenue in its fiscal year ended December 31, 1996, is a two-day
program designed to help individual managers and client companies understand the
ways in which diversity in the work force contributes to the productivity of an
organization. Other related programs include Risk Taking for Professional
Development, Efficacy for Professionals of Color, Efficacy for Women and
Exploring Diversity. J. Howard's clients include Bank of America, J.P. Morgan &
Co. Incorporated and Northwest Airlines, Inc. J. Howard is located in Lexington,
Massachusetts. In its fiscal year ended December 31, 1996, J. Howard generated
revenue of approximately $7.1 million.
 
     Learning Systems Sciences:  Robert Steinmetz, Ph.D., and Associates, Inc.,
d/b/a Learning Systems Sciences ("LSS"), was founded in 1979 by Robert A.
Steinmetz, Ph.D. In 1990 John F. King joined the company as President and a 50%
stockholder. LSS designs custom training products primarily for retailers using
multimedia, computer-based formats. LSS's products are designed to facilitate
faster learning of customer interface devices and higher productivity of retail
associates. LSS's training products are delivered
 
                                       15
17
 
primarily through interactive multimedia software and distance-based media.
LSS's clients include Federated Department Stores, Inc., J.C. Penney Company,
Inc. and The Kroger Co. LSS is located in North Hollywood, California. In its
fiscal year ended December 31, 1996, LSS generated revenue of approximately $5.1
million.
 
     MOHR Retail Learning Systems, Inc.:  MOHR Retail Learning Systems, Inc.
("MOHR") was the retail training division of MOHR Development, Inc. from 1981 to
1991, when the division was purchased by Michael Patrick and one of the
division's founders, Herb Cohen. MOHR's services and products are designed to
help clients in the retail industry improve productivity by fostering a
customer-oriented focus at the sales management and sales associate levels. MOHR
offers its services and products through train-the-trainer seminars and by
licensing its text-based and video-based materials to its clients. MOHR's Retail
Management Series III and Creating Loyal Customers programs, which together
accounted for more than 60% of the company's revenue in fiscal 1997, utilize
well-established learning designs, instructional systems and feedback mechanisms
to train clients' employees to provide superior customer service. In addition,
the company's Bottom-Line Buying Plus program provides negotiation skills
training for buyers at retail organizations. MOHR's clients include Eckerd
Corporation, Victoria's Secret Stores and The Sports Authority, Inc. MOHR is
headquartered in Ridgewood, New Jersey. In its most recent fiscal year, MOHR
generated revenue of approximately $3.0 million.
 
     Novations Group, Inc.:  Novations Group, Inc. ("Novations") was founded in
1986 by Norman Smallwood, Jonathan Younger, Joe Folkman and Randy Stott. Joe
Hanson joined the company as a Managing Director in 1989. Novations assists
clients in, among other things, clarifying and communicating their business
strategies and re-designing their organizations and business processes.
Novations also provides its clients with a variety of organizational assessment
tools that are designed to gather and analyze feedback on either an
organizational or individual basis and to initiate change in response to such
feedback. In its most recent fiscal year, approximately 60% of Novations'
revenue was derived from strategic consulting services provided to organizations
in industries such as the petrochemical, financial services, consumer products,
transportation and telecommunications industries. The balance of the company's
revenue resulted from sales to clients of organizational assessment tools
including the Organizational Analysis Survey, the Strategic Alignment Survey,
Total Quality Survey, Customer Service Survey and Leadership and Managerial
Profiles. Novations' clients include Eli Lilly and Company, Motorola, Inc. and
Yellow Corporation. Novations is headquartered in Provo, Utah, and has offices
in New York and Dallas. In its most recent fiscal year, Novations generated
revenue of approximately $9.0 million.
 
     Star Mountain, Inc.:  Star Mountain, Inc. (together with its subsidiaries,
"Star") was founded by A. Carl von Sternberg in 1987. Star's core business
consists of providing customized training services and products to individuals
within federal, state and local government entities and corporations. In
addition, Star provides a limited amount of computer network design, sales,
installation and support, and computer network security research and
development. Star delivers its training courseware to clients in a variety of
formats (including written materials and interactive multimedia software), but
typically does not directly train its clients. Approximately 32% of Star's
revenue in its fiscal year ended December 31, 1996 was derived from the United
States Department of Defense, 43% from other federal entities, 1% from state and
local government entities, and the remainder from corporations. In addition to
the Department of Defense, Star's largest government clients include the
Internal Revenue Service and the Immigration and Naturalization Service. Star is
headquartered in Alexandria, Virginia and has 17 branch offices located
throughout the United States. In its fiscal year ended December 31, 1996, Star
generated revenue of approximately $16.3 million. In addition, Star acquired
three businesses since September 1996 that, had they been acquired on January 1,
1996, would have contributed an additional $8.5 million to Star's revenue in the
1996 calendar year.
 
MERGER CONSIDERATION
 
     The aggregate consideration to be paid by Provant at the closing of the
Combination is $68.4 million, consisting of $22.5 million in cash (representing
approximately 85.5% of the net proceeds of the Offering) and 3,826,815 shares of
Common Stock (assuming an initial public offering price of $12.00 per share). If
the initial public offering price is other than $12.00 per share, the number of
shares issued to the former stockholders of the Founding Companies will be
increased or decreased so that such stockholders receive an
 
                                       16
18
 
aggregate of $45.9 million of Common Stock valued at the initial public offering
price. However, the total number of shares of Common Stock outstanding following
the Combination will not vary as a result of an initial public offering price of
other than $12.00 per share because the size of the stock dividend that will be
declared by Provant prior to the consummation of the Combination will increase
as the initial offering price increases and decrease as the initial offering
price decreases. As a result, upon the consummation of the Combination (but
without giving effect to the Offering), there will be outstanding a total of
6,805,605 shares of Common Stock.
 
     In addition to the consideration described above, the former stockholders
of six of the Founding Companies will be eligible to receive up to an aggregate
of 1,325,000 additional shares of Common Stock (assuming an initial public
offering price of $12.00 per share) (the "Additional Consideration") if
specified levels of earnings before interest and taxes ("EBIT") are reached by
their respective companies. In the case of the seventh Founding Company, Star,
Provant has agreed to make a future payment in cash or shares of Common Stock
based on Star's EBIT for fiscal 1999 (the "Star Contingent Consideration"). In
connection with the Combination, the Company will repay approximately $2.9
million of indebtedness of the Founding Companies from the net proceeds of the
Offering. The consideration to be paid by Provant for each Founding Company was
determined by arm's length negotiations between Provant and representatives of
each Founding Company and was based primarily on the pro forma EBIT of each
Founding Company. Additional Consideration paid for a Founding Company and the
Star Contingent Consideration represent, in effect, an upward adjustment in
purchase price. For a more detailed description of these transactions, see
"Certain Transactions -- Organization of the Company."
 
                                       17
19
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the 2,600,000 shares of
Common Stock offered hereby (assuming an initial public offering price of $12.00
per share), after deducting the estimated underwriting discount and estimated
Offering expenses, are estimated to be approximately $26.3 million ($30.6
million if the Underwriters' over-allotment option is exercised in full). Of the
net proceeds, approximately $22.5 million will be used to pay the cash portion
of the purchase price for the Founding Companies. In addition, the Company
currently intends to use approximately $2.9 million of the net proceeds to repay
certain indebtedness of the Founding Companies assumed in connection with the
Combination (which indebtedness bears interest at a weighted average interest
rate of 9.0% and matures at various dates through February 2001). The Company
also intends to use $750,000 to pay a fee due upon the closing of the Offering
to a third party for information provided to Provant relating to the training
and development industry.
 
     The Company intends to use approximately $193,000 to repay in part a note
payable of the Company to Paul M. Verrochi and Dominic J. Puopolo. See "Certain
Transactions -- Other Transactions; American Business Partners LLC." Of this
amount, approximately $50,000 is attributable to expenses relating to the
Offering. Pending the use of the net proceeds of the Offering for the purposes
described above, the Company will invest such proceeds in short-term,
interest-bearing, investment grade securities.
 
                                DIVIDEND POLICY
 
     The Company intends to retain all of its earnings, if any, to finance the
expansion of its business and for general corporate purposes, including future
acquisitions, and does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. Any future determination as to the payment of
dividends on the Common Stock will be at the discretion of the Board of
Directors and will depend upon, among other things, the Company's future
earnings, if any, the operating and financial condition of the Company, its
capital requirements, general business conditions and any other factors the
Board of Directors of the Company may consider. In addition, in the event that
the Company is successful in obtaining a credit facility at any point in the
future, it is likely that any such facility will include restrictions on the
Company's ability to pay dividends without the consent of the lender.
 
                                       18
20
 
                                 CAPITALIZATION
 
     The following table sets forth the short-term debt, including the current
maturities of long-term debt, and capitalization of the Company at September 30,
1997: (i) on a pro forma combined basis to give effect to the Combination, the
increase in the Company's authorized shares of Common Stock, the authorization
of a class of preferred stock and the declaration of a stock dividend; and (ii)
as further adjusted to give effect to the issuance of the 2,600,000 shares of
Common Stock offered hereby and the application of the estimated net proceeds.
See "Use of Proceeds." This table should be read in conjunction with the
Unaudited Pro Forma Combined Financial Statements of the Company and the related
notes thereto included elsewhere in this Prospectus.
SEPTEMBER 30, 1997
                                                                        -------------------------
                                                                         PRO FORMA
                                                                         COMBINED
                                                                            (1)       AS ADJUSTED
                                                                        -----------   -----------
                                                                             (IN THOUSANDS)
Short-term debt, including current maturities of long-term debt (2)...    $ 2,980       $    80
                                                                           ======        ======
Long-term debt, less current maturities (2)...........................    $ 1,481       $ 1,481
Stockholders' Equity:
  Preferred Stock, $0.01 par value; 5,000,000 shares authorized, none
     issued or outstanding, pro forma and as adjusted.................         --            --
  Common Stock, $0.01 par value; 40,000,000 shares authorized,
     6,805,605 shares issued and outstanding, pro forma; and 9,405,605
     shares issued and outstanding, as adjusted (3)...................         38            64
  Additional paid-in capital..........................................     36,699        62,989
  Retained earnings...................................................       (214)         (964)
                                                                           ------        ------
     Total stockholders' equity.......................................     36,523        62,089
                                                                           ------        ------
          Total capitalization........................................    $38,004       $63,570
                                                                           ======        ======
---------------
(1) Combines the respective accounts of Provant and the Founding Companies at
    September 30, 1997 and gives effect to the reclassification of the Founding
    Companies' common stock as additional paid-in capital.
 
(2) For a description of the Company's debt, see the notes to the financial
    statements of each of the Founding Companies.
 
(3) Excludes: (i) up to an aggregate of 1,325,000 shares of Common Stock
    (assuming an initial public offering price of $12.00 per share) that may be
    issued as Additional Consideration to the former stockholders of six of the
    Founding Companies as well as shares of Common Stock that may be issued as
    Star Contingent Consideration; (ii) 1,100,000 shares of Common Stock
    reserved for issuance under the Company's 1998 Equity Incentive Plan (of
    which options to purchase 833,464 shares will be outstanding upon the
    consummation of the Offering at an exercise price per share equal to the
    Offering price); (iii) 100,000 shares of Common Stock reserved for issuance
    under the Company's Stock Plan for Non-Employee Directors (of which no
    options will be outstanding upon the consummation of the Offering); (iv)
    500,000 shares of Common Stock reserved for issuance under the Company's
    1998 Employee Stock Purchase Plan; (v) 10,000 shares of Common Stock
    reserved for issuance upon the exercise of an outstanding option having an
    exercise price of $5.00 per share; and (vi) an aggregate of 793,656 shares
    of Common Stock reserved for issuance upon the exercise of warrants granted
    to certain of the Company's executive officers, as more fully described
    under "Certain Transactions -- Other Transactions; American Business
    Partners LLC."
 
                                       19
21
 
                                    DILUTION
 
     The pro forma net tangible book value of the Company as of September 30,
1997 was approximately $(12.5) million, or $(1.84) per share. Net tangible book
value per share represents the book value of the Company's pro forma net
tangible assets less total liabilities divided by the number of shares of Common
Stock outstanding (after giving effect to the Combination). After giving effect
to the sale by the Company of 2,600,000 shares of Common Stock in the Offering
(after deducting the estimated underwriting discount and estimated Offering
expenses) and the application of the net proceeds therefrom, the pro forma net
tangible book value at September 30, 1997 would have been approximately $13.0
million, or $1.39 per share. This represents an immediate increase in pro forma
net tangible book value per share of $3.23 to stockholders as of September 30,
1997, and an immediate dilution in pro forma net tangible book value per share
of $10.61 to new investors purchasing shares of Common Stock in the Offering.
The following table illustrates this per share dilution:
Assumed initial public offering price................................           $12.00
                                                                                    ------
      Pro forma net tangible book value per share before Offering........  $(1.84)
      Increase in pro forma net tangible book value per share
      attributable to new investors......................................    3.23
                                                                           ------
      Pro forma net tangible book value per share after Offering.........             1.39
                                                                                    ------
      Dilution per share to new investors................................           $10.61
                                                                                    ======
The following table sets forth, on a pro forma basis to give effect to the
Combination, the number of shares of Common Stock purchased from the Company,
the total consideration paid and the average price per share paid by the
Company's existing stockholders and by investors purchasing shares of Common
Stock offered hereby:
SHARES PURCHASED                               AVERAGE
                                      ----------------------           TOTAL             PRICE
                                        NUMBER       PERCENT     CONSIDERATION (1)     PER SHARE
                                      ----------     -------     -----------------     ---------
Existing stockholders.......   6,805,605       72.4%       $ (12,527,000)       $ (1.84)
        New investors...............   2,600,000       27.6           31,200,000          12.00
                                      ----------      -----         ------------
                  Total.............   9,405,605      100.0%       $  18,673,000
                                      ==========      =====         ============
---------------
 
(1) Total consideration paid by existing stockholders represents the combined
    stockholders' equity of the Founding Companies before the Offering, adjusted
    to reflect: (i) the cash portion of the consideration payable to the
    stockholders of the Founding Companies in connection with the Combination;
    and (ii) the payment of distributions estimated at approximately $1.4
    million which certain of the Founding Companies are expected to make to
    their stockholders prior to the closing of the Combination. See "Use of
    Proceeds" and "Capitalization."
 
                                       20
22
 
                            SELECTED FINANCIAL DATA
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
     Provant will acquire the Founding Companies simultaneously with and as a
condition to the consummation of the Offering. For financial reporting purposes,
Provant has been designated as the accounting acquiror. To date, Provant has
conducted operations only in connection with the Combination and the Offering.
As a result, Provant has generated no revenue. The following selected unaudited
pro forma combined financial data present data for the Company, adjusted for:
(i) the consummation of the Combination; (ii) certain pro forma adjustments to
the historical financial statements of the Founding Companies; and (iii) the
consummation of the Offering and the application of the net proceeds. See the
Company's Unaudited Pro Forma Combined Financial Statements, each of the
Founding Companies' financial statements and the notes thereto included
elsewhere in this Prospectus.
PRO FORMA COMBINED (1)
                                                              --------------------------------------
                                                               YEAR ENDED        THREE MONTHS ENDED
                                                              JUNE 30, 1997      SEPTEMBER 30, 1997
                                                              -------------     --------------------
STATEMENT OF OPERATIONS DATA:
Revenue.....................................................   $    68,846           $   17,738
Cost of revenue.............................................        30,967                8,056
                                                                   -------              -------
Gross profit................................................        37,879                9,682
Selling, general and administrative expenses (2)............        28,663                8,319
Goodwill amortization (3)...................................         1,226                  307
                                                                   -------              -------
Income from operations......................................         7,990                1,056
Interest and other income (expense), net....................           (73)                  23
                                                                   -------              -------
Income before provision for income taxes....................         7,917                1,079
Provision for income taxes (4)..............................         3,703                  558
                                                                   -------              -------
Net income..................................................   $     4,214           $      521
                                                                   =======              =======
Net income per share........................................   $      0.45           $     0.06
                                                                   =======              =======
Shares used in computing net income per share (5)...........     9,405,605            9,405,605
SEPTEMBER 30, 1997
                                                                   --------------------------------
                                                                    PRO FORMA
                                                                   COMBINED (6)     AS ADJUSTED (7)
                                                                   ------------     ---------------
BALANCE SHEET DATA:
  Working capital (8)............................................    $(14,357)          $11,209
  Total assets...................................................      75,095            74,738
  Long-term debt, net of current maturities......................       1,481             1,481
  Stockholders' equity...........................................      36,523            62,089
---------------
(1) The pro forma combined statement of operations data assumes that the
    Combination and the Offering were consummated on July 1, 1996, and is not
    necessarily indicative of the results the Company would have obtained if
    these events actually then occurred or of the Company's future results. The
    pro forma combined statement of operations data is based on preliminary
    estimates, available information and assumptions that management deems
    appropriate, and should be read in conjunction with the other financial
    statements and notes thereto included elsewhere in this Prospectus.
 
(2) Reflects pro forma adjustments to salary, bonuses and benefits paid to
    certain of the owners of the Founding Companies for the Compensation
    Differential, which for the year ended June 30, 1997 and the three months
    ended September 30, 1997 was approximately $4.8 million and $1.3 million,
    respectively.
 
(3) Reflects amortization of the goodwill to be recorded as a result of the
    Combination over a 40-year period and computed on the basis described in the
    Notes to the Unaudited Pro Forma Combined Financial Statements.
 
                                       21
23
 
(4) Assumes that all income is subject to an effective corporate income tax rate
    of 40%, and all goodwill from the Combination is non-deductible.
 
(5) Assumes an initial public offering price of $12.00 per share. Consists of:
    (i) 3,826,815 shares to be issued to the stockholders of the Founding
    Companies (without giving effect to the issuance of Additional Consideration
    or the Star Contingent Consideration); (ii) 2,978,790 shares held by the
    management and founders of Provant; and (iii) 2,600,000 shares to be sold in
    the Offering.
 
(6) The pro forma combined balance sheet data assumes that the Combination was
    consummated on September 30, 1997. The pro forma combined balance sheet data
    is based upon preliminary estimates, available information and assumptions
    that management deems appropriate and should be read in conjunction with the
    other financial statements and notes thereto included elsewhere in this
    Prospectus.
 
(7) Adjusted for the sale of 2,600,000 shares of Common Stock offered hereby
    (assuming an initial public offering price of $12.00 per share) and the
    application of the net proceeds therefrom as described under "Use of
    Proceeds."
 
(8) The pro forma combined data gives effect to $22.5 million representing the
    cash portion of the consideration for the Combination to be paid from a
    portion of the net proceeds of the Offering.
 
                                       22
24
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     Unless otherwise indicated or the context otherwise requires in this
section, each reference to a year is to the Company's or a Founding Company's
fiscal year which (with the exception of J. Howard, LSS and Star) ends on June
30 of the same calendar year (e.g., "1997" means the fiscal year ended June 30,
1997). The following discussion should be read in conjunction with the Company's
Unaudited Pro Forma Combined Financial Statements and the Founding Companies'
Financial Statements and the related notes thereto appearing elsewhere in this
Prospectus.
 
INTRODUCTION
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and off-the-shelf
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led and
train-the-trainer seminars, interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
 
     The Company receives revenue from five main areas: (i) instructor-led and
train-the-trainer seminars; (ii) license fees; (iii) custom services and
products; (iv) consulting services; and (v) off-the-shelf products. The Company
recognizes revenue from instructor-led training and train-the-trainer seminars,
usually on a participant basis, when the training is delivered. From its
train-the-trainer arrangements, the Company also recognizes license fees on a
per-participant basis when a certified client trainer delivers the Company's
courses and materials to other employees of the client. The Company recognizes
revenue from a site license at the time the license is granted. The Company
generally recognizes revenue from its custom services and products based on the
percentage-of-completion method. The Company recognizes revenue from fees for
its consulting services, for which it charges an hourly or per diem rate, when
the consulting is provided. The Company also recognizes revenue for its
off-the-shelf products, such as books or videotapes, when the products are
delivered.
 
     Cost of revenue primarily consists of: (i) salaries and benefits for the
Company's instructors, consultants and course designers and costs of independent
contractors; and (ii) the cost of developing, designing and producing training
courses and materials, including materials costs. As a result, the Company's
gross margins are affected by the number of instructors, consultants and course
designers and the utilization of such employees during any given period.
Selling, general and administrative expenses consist primarily of salaries,
benefits and bonuses for the Company's corporate, sales, marketing and
administrative personnel, and marketing and advertising expenses for the
Company's services and products. Selling, general and administrative expenses
also include incentive and discretionary bonuses paid to owners and other key
employees. Other selling, general and administrative expenses include travel
expenses, rent, depreciation, telecommunication costs, postage and other
operating costs.
 
     The Founding Companies have operated throughout the periods presented as
independent, privately-owned entities, and their results of operations reflect
varying tax structures (S corporations or C corporations) which have influenced
the historical level of owners' compensation. The owners and key employees of
the Founding Companies have agreed to certain adjustments in their annual
historical salaries, bonuses and benefits in connection with the Combination.
The difference (positive or negative) between the base salary of the owners and
key employees of the Founding Companies immediately after the Combination and
their salaries, bonuses and benefits during any comparable period is referred to
as the "Compensation Differential". The aggregate Compensation Differentials for
1995, 1996 and 1997 and for the three months ended September 30, 1996 and 1997
were $1.8 million, $3.9 million, $4.8 million, $642,000, and $1.3 million,
respectively, and have been reflected as a pro forma adjustment in the Unaudited
Pro Forma Combined
 
                                       23
25
 
Statements of Operations. The Unaudited Pro Forma Combined Statements of
Operations include a provision for income tax as if the Company was taxed as a C
corporation.
 
     Following the Combination, the Company expects to realize certain savings
as a result of: (i) consolidation of certain expenses, such as travel and
lodging, advertising, employee benefits, communications, insurance and other
general and administrative expenses; and (ii) the Company's ability to borrow at
lower interest rates than most of the Founding Companies. The Company cannot
quantify these savings until the completion of the Combination. It is
anticipated that these savings will be offset partially by the costs of being a
publicly held company and the incremental increase in costs related to the
Company's new management. However, these costs, like the savings that they
offset, cannot be quantified accurately. Neither the anticipated savings nor the
anticipated costs have been included in the pro forma financial information of
the Company.
 
     In July 1996, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 97 ("SAB 97"), relating to business combinations
immediately prior to an initial public offering, which required that business
combinations like the Combination be accounted for using the purchase method of
acquisition accounting. Under the purchase method, Provant has been designated
as the accounting acquiror. Approximately $49.1 million, representing the excess
of the fair value of the consideration received in the Combination over the fair
value of the net assets to be acquired, will be recorded as goodwill on the
Company's balance sheet. Goodwill will be amortized as a non-cash charge to the
Company's income statement over a 40-year period. The pro forma impact of this
amortization expense is approximately $1.2 million per year. The amount
amortized, however, will not be deductible for tax purposes. See "Certain
Transactions -- Organization of the Company."
 
RESULTS OF OPERATIONS -- COMBINED
 
     The summary combined Founding Company statement of operations data for
1995, 1996 and 1997 and the three months ended September 30, 1996 and 1997 set
forth in the table below do not purport to present the combined Founding
Companies in accordance with generally accepted accounting principles, but
represent merely a summation of the data of the individual Founding Companies on
a historical basis and do not include the effects of pro forma adjustments. This
data will not be comparable to and may not be indicative of the Company's
post-Combination results of operations because (i) the Founding Companies
historically were not under common control or management and had different tax
structures during the periods presented; (ii) the Company used the purchase
method of accounting to reflect the Combination, resulting in the recording of
goodwill which will be amortized over 40 years; (iii) the Company will incur
incremental costs related to its new corporate management and the costs of being
a public company; and (iv) the combined data does not reflect potential benefits
and cost savings the Company expects to realize when operating as a combined
entity.
 
     The following table sets forth certain unaudited combined statement of
operations data of the Founding Companies on a historical basis and as a
percentage of revenue and excludes the effects of pro forma adjustments for the
periods indicated. Three of the Founding Companies, J. Howard, LSS and Star,
historically operated with fiscal years ending on dates other than June 30. For
purposes of the table below, their operating results have been recast to reflect
a June 30 fiscal year end, although they have been derived from financial
statements prepared on the same basis as the audited financial statements. As a
result of this presentation, the operating results for these three companies do
not conform with their audited financial statements contained elsewhere in this
Prospectus.
FISCAL YEARS ENDED JUNE 30,                    THREE MONTHS ENDED SEPTEMBER 30,
                     -------------------------------------------------------     -----------------------------------
                        1995 (1)              1996                1997                1996                1997
                     ---------------     ---------------     ---------------     ---------------     ---------------
                                                         (DOLLARS IN THOUSANDS)
Revenue............  $41,289   100.0%    $51,497   100.0%    $61,245   100.0%    $14,291   100.0%    $16,319   100.0%
Cost of revenue....   17,770    43.0      22,205    43.1      26,117    42.6       5,707    39.9       7,000    42.9
                     -------   -----     -------   -----     -------   -----     -------   -----     -------   -----
Gross profit.......  $23,519    57.0%    $29,292    56.9%    $35,128    57.4%    $ 8,584    60.1%    $ 9,319    57.1%
                     =======   =====     =======   =====     =======   =====     =======   =====     =======   =====
---------------
(1) Includes 1995 data for LSS for the 12 months ended August 31, 1995.
 
                                       24
26
 
COMBINED RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998
PERIOD") COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997
PERIOD")
 
     Revenue.  Revenue increased $2.0 million, or 14.2%, from $14.3 million in
the 1997 Period to $16.3 million in the 1998 Period. This increase primarily was
attributable to increased revenues of Star and Decker.
 
     Cost of Revenue.  Cost of revenue increased $1.3 million, or 22.7%, from
$5.7 million in the 1997 Period to $7.0 million in the 1998 Period. As a
percentage of revenue, cost of revenue increased from 39.9% in the 1997 Period
to 42.9% in the 1998 Period, primarily due to increased cost of revenue of Star
and LSS.
 
COMBINED RESULTS FOR 1997 COMPARED TO 1996
 
     Revenue.  Revenue increased $9.7 million, or 18.9%, from $51.5 million in
1996 to $61.2 million in 1997. This increase primarily was attributable to
increased revenues of Star, BTI, LSS and MOHR.
 
     Cost of Revenue.  Cost of revenue increased $3.9 million, or 17.6%, from
$22.2 million in 1996 to $26.1 million in 1997. As a percentage of revenue, cost
of revenue decreased from 43.1% in 1996 to 42.6% in 1997, primarily due to
improved gross profit margins of BTI, Decker and LSS.
 
COMBINED RESULTS FOR 1996 COMPARED TO 1995
 
     Revenue.  Revenue increased $10.2 million, or 24.7%, from $41.3 million in
1995 to $51.5 million in 1996. This increase primarily was attributable to
increased revenues of Star, J. Howard, BTI and Novations.
 
     Cost of Revenue.  Cost of revenue increased approximately $4.4 million, or
25.0%, from $17.8 million in 1995 to $22.2 million in 1996. As a percentage of
revenue, cost of revenue increased slightly from 43.0% in 1995 to 43.1% in 1996,
primarily due to increased cost of revenue of MOHR, Decker and LSS.
 
COMBINED LIQUIDITY AND CAPITAL RESOURCES
 
     After the consummation of the Combination and the Offering, the Company
will have approximately $2.7 million in cash and approximately $1.6 million of
indebtedness outstanding. The Company anticipates that its cash flow from
operations will provide cash sufficient to satisfy the Company's working capital
needs, debt service requirements and planned capital expenditures for the next
12 months. The Company made capital expenditures of approximately $903,000 in
1997 and approximately $363,000 in the three months ended September 30, 1997 and
currently intends to make capital expenditures of $1.0 million in fiscal 1998,
principally for information systems, facilities, furnishings and equipment.
After the Combination, the Company intends to study the feasibility of upgrading
and integrating certain systems of the Founding Companies. Consequently, the
Company has not yet established its capital needs for such integration and
upgrades. The Company has assessed its various information and technology
systems and does not believe that it will be required to incur significant costs
to correct any Year 2000 deficiencies. To the extent that the Company is
incorrect in this assessment and significant costs will be incurred, the
Company's business, financial condition and results of operations could be
materially adversely affected.
 
     The Company intends to pursue selected acquisition opportunities. The
timing, size or success of any acquisition and the associated potential capital
commitments are unpredictable. The Company expects to fund future acquisitions
primarily through a combination of cash flow from operations and borrowings, as
well as issuances of additional equity. The Company plans to register an
additional 3,000,000 shares of its Common Stock under the Securities Act after
completion of the Offering for use as consideration for future acquisitions.
 
RESULTS OF OPERATIONS -- BTI
 
     BTI primarily provides train-the-trainer programs designed to help its
clients improve employee selection and to provide managers with a methodology
for assessing strengths and weaknesses of current employees. BTI's revenue is
derived primarily from the licensing to clients of the right to use its training
materials.
 
                                       25
27
 
     The following table sets forth certain selected financial data for BTI on a
historical basis and as a percentage of revenue for the periods indicated:
YEAR ENDED JUNE 30,                      THREE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1995               1996               1997               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
Revenue.................  $3,803   100.0%    $5,685   100.0%    $7,096   100.0%    $1,712   100.0%    $1,977   100.0%
Cost of revenue.........   1,049    27.6      1,495    26.3      1,488    21.0        387    22.6        385    19.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   2,754    72.4      4,190    73.7      5,608    79.0      1,325    77.4      1,592    80.5
Selling, general and
  administrative
  expenses..............   2,315    60.9      4,048    71.2      5,111    72.0        969    56.6      1,306    66.0
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  439    11.5%    $  142     2.5%    $  497     7.0%    $  356    20.8%    $  286    14.5%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  (89)   (2.3)%   $  563     9.9%    $  942    13.3%    $    0       0%    $  337    17.0%
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- BTI
 
     Revenue.  Revenue increased $265,000, or 15.5%, from $1.7 million in the
1997 Period to $2.0 million in the 1998 Period, primarily due to increased sales
of existing products as a result of the expansion of the sales force and an
increase in participant fees as a result of an increased base of certified
trainers at the company's clients.
 
     Cost of Revenue.  Cost of revenue remained relatively constant, decreasing
from $387,000 in the 1997 Period to $385,000 in the 1998 Period. As a percentage
of revenue, cost of revenue decreased from 22.6% in the 1997 Period to 19.5% in
the 1998 Period, primarily due to a decrease in the average unit cost of
participant materials.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $337,000, or 34.8%, from
approximately $969,000 in the 1997 Period to $1.3 million in the 1998 Period.
Excluding the Compensation Differential of approximately $337,000 attributable
to BTI in the 1998 Period (there being no Compensation Differential for the 1997
Period), selling, general and administrative expenses would have remained
relatively constant at $1.0 million in the 1997 Period and the 1998 Period. As a
percentage of revenue, selling, general and administrative expenses would have
decreased on an adjusted basis from 56.6% in the 1997 Period to 49.0% in the
1998 Period, primarily due to the company's larger revenue base.
 
RESULTS FOR 1997 COMPARED TO 1996 -- BTI
 
     Revenue.  Revenue increased $1.4 million, or 24.8%, from $5.7 million in
1996 to $7.1 million in 1997, primarily due to increased sales of existing
products as a result of the expansion of the sales force and an increase in
participant fees as a result of an increased base of certified trainers at the
company's clients.
 
     Cost of Revenue.  Cost of revenue remained relatively constant at $1.5
million in 1996 and 1997. As a percentage of revenue, cost of revenue decreased
from 26.3% in 1996 to 21.0% in 1997, primarily due to a decrease in the average
unit cost of participant materials.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.1 million, or 26.3%, from $4.0 million in
1996 to $5.1 million in 1997. Excluding the Compensation Differential
attributable to BTI of approximately $563,000 and approximately $942,000 in 1996
and 1997, respectively, selling, general and administrative expenses would have
increased approximately $684,000, or 19.6%, from $3.5 million in 1996 to $4.2
million in 1997. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 61.3% in 1996 to 58.8%
in 1997. The decrease as a percentage of revenue on an adjusted basis primarily
was due to the company's larger revenue base.
 
                                       26
28
 
RESULTS FOR 1996 COMPARED TO 1995 -- BTI
 
     Revenue.  Revenue increased $1.9 million, or 49.5%, from $3.8 million in
1995 to $5.7 million in 1996, primarily due to increased sales of existing
products as a result of the expansion of the sales force and an increase in
participant fees as a result of an increased base of certified trainers at the
company's clients.
 
     Cost of Revenue.  Cost of revenue increased approximately $446,000, or
42.5%, from $1.0 million in 1995 to $1.5 million in 1996. As a percentage of
revenue, cost of revenue decreased slightly from 27.6% in 1995 to 26.3% in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.7 million, or 74.9%, from $2.3 million in
1995 to $4.0 million in 1996. Excluding the Compensation Differential
attributable to BTI of approximately $(89,000) and approximately $563,000 in
1995 and 1996, selling, general and administrative expenses would have increased
$1.1 million, or 45.0%, from $2.4 million in 1995 to $3.5 million in 1996. As a
percentage of revenue, selling, general and administrative expenses would have
decreased slightly on an adjusted basis from 63.2% in 1995 to 61.3% in 1996.
 
LIQUIDITY AND CAPITAL RESOURCES -- BTI
 
     BTI generated net cash from operating activities of approximately $641,000
in 1997. In the 1998 Period, BTI used approximately $63,000 in operating
activities, primarily due to an increase in accounts receivable. Net cash used
in investing activities was approximately $33,000 in 1997 and approximately
$3,000 in the 1998 Period for purchases of property and equipment. At September
30, 1997, BTI had working capital of $2.1 million.
 
RESULTS OF OPERATIONS -- DECKER
 
     Decker provides instructor-led training to businesses to improve employees'
business communication skills and communications between management and
employees. Decker's revenue is derived primarily from fees charged to
participants in its instructor-led training programs.
 
     The following table sets forth certain selected financial data for Decker
on a historical basis and as a percentage of revenue for the periods indicated:
YEAR ENDED JUNE 30,                      THREE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1995               1996               1997               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
Revenue.................  $8,550   100.0%    $8,620   100.0%    $8,410   100.0%    $1,930   100.0%    $2,585   100.0%
Cost of revenue.........   2,419    28.3      2,655    30.8      2,275    27.1        549    28.4        660    25.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   6,131    71.7      5,965    69.2      6,135    72.9      1,381    71.6      1,925    74.5
Selling, general and
  administrative
  expenses..............   5,670    66.3      5,716    66.3      5,621    66.8      1,261    65.4      1,663    64.4
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  461     5.4%    $  249     2.9%    $  514     6.1%    $  120     6.2%    $  262    10.1%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  192     2.2%    $  192     2.2%    $  340     4.0%    $   60     3.1%    $  110     4.3%
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- DECKER
 
     Revenue.  Revenue increased approximately $655,000, or 33.9%, from $1.9
million in the 1997 Period to $2.6 million in the 1998 Period, primarily due to
an increase in the sales force and organizational initiatives undertaken in 1997
as described below, which resulted in an increase in the number of seminars
delivered during the 1998 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $111,000, or
20.2%, from approximately $549,000 in the 1997 Period to approximately $660,000
in the 1998 Period. As a percentage of revenue, cost of revenue decreased from
28.4% in the 1997 Period to 25.5% in the 1998 Period, primarily due to the
increased utilization of trainers for instructor-led programs.
 
                                       27
29
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $402,000, or 31.9%, from $1.3
million in the 1997 Period to $1.7 million in the 1998 Period. Excluding the
Compensation Differential of approximately $60,000 and approximately $110,000
attributable to Decker in the 1997 Period and 1998 Period, respectively,
selling, general and administrative expenses would have increased approximately
$352,000, or 29.3%, from $1.2 million in the 1997 Period to $1.6 million in the
1998 Period. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 62.2% in the 1997 Period
to 60.1% in the 1998 Period, primarily due to the company's larger revenue base.
 
RESULTS FOR 1997 COMPARED TO 1996 -- DECKER
 
     Revenue.  Revenue decreased approximately $210,000, or 2.4%, from $8.6
million in 1996 to $8.4 million in 1997, primarily due to a temporary shift in
the focus of Decker's business. During the first six months of 1997, Decker
increased its focus on providing consulting services rather than its traditional
training. This shift in focus resulted in a decline in training revenue and a
high degree of sales force turnover. During the second half of 1997, the company
returned to a business model focused on instructor-led training, and launched
several organizational initiatives, including the hiring of a new president and
the implementation of a new salary structure for its sales force.
 
     Cost of Revenue.  Cost of revenue decreased approximately $380,000, or
14.4%, from $2.7 million in 1996 to $2.3 million in 1997. As a percentage of
revenue, cost of revenue decreased from 30.8% in 1996 to 27.1% in 1997,
primarily due to a reduction in the number of trainers and increased utilization
of trainers.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased approximately $95,000, or 1.7%, from $5.7
million in 1996 to $5.6 million in 1997. Excluding the Compensation Differential
attributable to Decker of approximately $192,000 and approximately $340,000 in
1996 and 1997, respectively, selling, general and administrative expenses would
have decreased approximately $243,000, or 4.4%, from $5.5 million in 1996 to
$5.3 million in 1997. As a percentage of revenue, selling, general and
administrative expenses would have decreased on an adjusted basis from 64.1% in
1996 to 62.8% in 1997.
 
RESULTS FOR 1996 COMPARED TO 1995 -- DECKER
 
     Revenue.  Revenue increased approximately $70,000, or 0.8%, from $8.5
million in 1995 to $8.6 million in 1996.
 
     Cost of Revenue.  Cost of revenue increased approximately $236,000, or
9.8%, from $2.4 million in 1995 to $2.7 million in 1996. As a percentage of
revenue, cost of revenue increased from 28.3% in 1995 to 30.8% in 1996,
primarily due to higher salaries paid to the company's trainers in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses remained relatively constant at $5.7 million 1995 and
1996. Excluding the Compensation Differential attributable to Decker of
approximately $192,000 in both 1995 and 1996, selling, general and
administrative expenses would have remained relatively constant at $5.5 million
in 1995 and 1996. As a percentage of revenue, selling, general and
administrative expenses would have remained constant on an adjusted basis at
64.1% in 1995 and 1996.
 
LIQUIDITY AND CAPITAL RESOURCES -- DECKER
 
     Decker generated net cash from operating activities of approximately
$446,000 in 1997 and $496,000 in the 1998 Period. Net cash used in investing
activities was approximately $11,000 in 1997, primarily for purchases of
property and equipment, and approximately $464,000 in the 1998 Period, primarily
for the purchase of marketable securities. Net cash used in financing activities
was approximately $241,000 in 1997, primarily for the payment of dividends, and
approximately $14,000 in the 1998 Period for payments on notes payable. At
September 30, 1997, Decker had working capital of $1.1 million and approximately
$1.0 million of long-term debt.
 
                                       28
30
 
RESULTS OF OPERATIONS -- J. HOWARD
 
     J. Howard provides instructor-led training to individual managers and
client companies to identify and address potential obstacles to improving
workplace productivity, including race and gender issues, sexual harassment and
failure of employees to take measured risks. J. Howard's revenue is derived
primarily from fees from instructor-led seminars and, to a lesser extent, from
the rendering of consulting services. J. Howard also occasionally enters into
license agreements and then delivers its programs in the train-the-trainer
format; in these instances, revenue from the license agreements is recognized
when the license is signed. Revenue from the trainer certifications is
recognized on a per event basis when the training is delivered.
 
     The following table sets forth certain selected financial data for J.
Howard on a historical basis and as a percentage of revenue for the periods
indicated:
YEAR ENDED DECEMBER 31,                     NINE MONTHS ENDED SEPTEMBER 30,
                          ----------------------------------------------------     ---------------------------------
                               1994               1995               1996               1996               1997
                          --------------     --------------     --------------     --------------     --------------
                                                            (DOLLARS IN THOUSANDS)
Revenue.................  $5,087   100.0%    $6,251   100.0%    $7,110   100.0%    $5,814   100.0%    $6,077   100.0%
Cost of revenue.........   1,713    33.7      1,964    31.4      2,166    30.5      1,782    30.7      1,851    30.5
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Gross profit............   3,374    66.3      4,287    68.6      4,944    69.5      4,032    69.3      4,226    69.5
Selling, general and
  administrative
  expenses..............   3,087    60.7      4,158    66.5      4,559    64.1      2,791    48.0      3,170    52.1
                          ------   -----     ------   -----     ------   -----     ------   -----     ------   -----
Income from
  operations............  $  287     5.6%    $  129     2.1%    $  385     5.4%    $1,241    21.3%    $1,056    17.4%
                          ======   =====     ======   =====     ======   =====     ======   =====     ======   =====
Compensation
  Differential..........  $  172     3.4%    $  522     8.4%    $  944    13.3%    $  177     3.0%    $  305     5.0%
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- J. HOWARD
 
     Revenue.  Revenue increased approximately $263,000, or 4.5%, from $5.8
million in the 1996 Period to $6.1 million in the 1997 Period, primarily due to
increased license revenue generated from one of the company's clients during the
1997 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $69,000, or 3.9%,
from $1.8 million in the 1996 Period to $1.9 million in the 1997 Period. As a
percentage of revenue, cost of revenue decreased slightly from 30.7% in the 1996
Period to 30.5% in the 1997 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $379,000, or 13.6%, from $2.8
million in the 1996 Period to $3.2 million in the 1997 Period. Excluding the
Compensation Differential of approximately $177,000 and approximately $305,000
attributable to J. Howard in the 1996 Period and 1997 Period, respectively,
selling, general and administrative expenses would have increased approximately
$251,000, or 9.6%, from $2.6 million in the 1996 Period to $2.9 million in the
1997 Period. As a percentage of revenue, selling, general and administrative
expenses would have increased on an adjusted basis from 45.0% in the 1996 Period
to 47.1% in the 1997 Period, primarily due to compensation paid to additional
salespeople hired during the 1997 calendar year who did not generate material
revenue during the 1997 Period.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- J. HOWARD
 
     Revenue.  Revenue increased approximately $859,000, or 13.7%, from $6.3
million in the year ended December 31, 1995 to $7.1 million in the year ended
December 31, 1996, primarily due to a general increase in the number of client
engagements.
 
     Cost of Revenue.  Cost of revenue increased approximately $202,000, or
10.3%, from $2.0 million in the year ended December 31, 1995 to $2.2 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased slightly from 31.4% in the year ended December 31, 1995 to 30.5% in
the year ended December 31, 1996.
 
                                       29
31
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $401,000, or 9.6%, from $4.2
million in the year ended December 31, 1995 to $4.6 million in the year ended
December 31, 1996. Excluding the Compensation Differential attributable to J.
Howard of approximately $522,000 and approximately $944,000 in the year ended
December 31, 1995 and the year ended December 31, 1996, respectively, selling,
general and administrative expenses would have remained relatively constant at
$3.6 million. As a percentage of revenue, selling, general and administrative
expenses would have decreased on an adjusted basis from 58.2% in the year ended
December 31, 1995 to 50.8% in the year ended December 31, 1996.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER
31, 1994 -- J. HOWARD
 
     Revenue.  Revenue increased $1.2 million, or 22.9%, from $5.1 million in
the year ended December 31, 1994 to $6.3 million in the year ended December 31,
1995, primarily due to the expansion of two existing client relationships in the
1995 calendar year to include licensing and trainer certifications.
 
     Cost of Revenue.  Cost of revenue increased approximately $251,000, or
14.7%, from $1.7 million in the year ended December 31, 1994 to $2.0 million in
the year ended December 31, 1995. As a percentage of revenue, cost of revenue
decreased from 33.7% in the year ended December 31, 1994 to 31.4% in the year
ended December 31, 1995.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.1 million, or 34.7%, from $3.1 million in
the year ended December 31, 1994 to $4.2 million in the year ended December 31,
1995. Excluding the Compensation Differential attributable to J. Howard of
approximately $172,000 and approximately $522,000 in the year ended December 31,
1994 and the year ended December 31, 1995, respectively, selling, general and
administrative expenses would have increased approximately $721,000, or 24.7%,
from $2.9 million in the year ended December 31, 1994 to $3.6 million in the
year ended December 31, 1995. As a percentage of revenue, selling, general and
administrative expenses would have increased slightly on an adjusted basis from
57.3% in the year ended December 31, 1994 to 58.2% in the year ended December
31, 1995.
 
LIQUIDITY AND CAPITAL RESOURCES -- J. HOWARD
 
     J. Howard generated net cash from operating activities of approximately
$464,000 in the year ended December 31, 1996 and approximately $715,000 in the
1997 Period. Net cash used in investing activities was approximately $248,000 in
the year ended December 31, 1996 and approximately $105,000 in the 1997 Period,
primarily for purchases of property and equipment. Net cash used in financing
activities was approximately $481,000 in the year ended December 31, 1996 for
distributions to stockholders. At September 30, 1997, J. Howard had working
capital of $1.8 million.
 
RESULTS OF OPERATIONS -- LSS
 
     LSS creates customized training products that generally are designed to
facilitate faster learning of customer interface devices and higher productivity
of retail associates. LSS's training products are delivered to clients primarily
through interactive multimedia software and, to a lesser extent, distance-based
media. LSS derives revenue from the design, development and delivery of its
products.
 
                                       30
32
 
     The following table sets forth certain selected financial data for LSS on a
historical basis and as a percentage of revenue for the periods indicated:
YEAR ENDED DECEMBER 31,           NINE MONTHS ENDED SEPTEMBER 30,
                                ---------------------------------     ---------------------------------
                                     1995               1996               1996               1997
                                --------------     --------------     --------------     --------------
                                                        (DOLLARS IN THOUSANDS)
Revenue.......................  $3,332   100.0%    $5,123   100.0%    $3,570   100.0%    $3,960   100.0%
Cost of revenue...............   1,390    41.7      1,696    33.1      1,230    34.5      1,590    40.2
                                ------   -----     ------   -----     ------   -----     ------   -----
Gross profit..................   1,942    58.3      3,427    66.9      2,340    65.5      2,370    59.8
Selling, general and
  administrative expenses.....   1,767    53.0      3,079    60.1      1,713    47.9      1,697    42.8
                                ------   -----     ------   -----     ------   -----     ------   -----
Income from operations........  $  175     5.3%    $  348     6.8%    $  627    17.6%    $  673    17.0%
                                ======   =====     ======   =====     ======   =====     ======   =====
Compensation Differential.....  $  415    12.5%    $1,379    26.9%    $  484    13.6%    $  333     8.4%
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- LSS
 
     Revenue.  Revenue increased approximately $390,000, or 10.9%, from $3.6
million in the 1996 Period to $4.0 million in the 1997 Period, primarily due to
the expansion of the sales force.
 
     Cost of Revenue.  Cost of revenue increased approximately $360,000, or
29.3%, from $1.2 million in the 1996 Period to $1.6 million in the 1997 Period.
As a percentage of revenue, cost of revenue increased from 34.5% in the 1996
Period to 40.2% in the 1997 Period, primarily due to increased video production
costs associated with certain of the company's products during the 1997 Period,
which generally result in lower gross margins.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses remained relatively constant at $1.7 million in the 1996
Period and the 1997 Period. Excluding the Compensation Differential of
approximately $484,000 and approximately $333,000 attributable to LSS in the
1996 Period and 1997 Period, respectively, selling, general and administrative
expenses would have increased approximately $135,000, or 11.0%, from $1.2
million in the 1996 Period to $1.4 million in the 1997 Period. As a percentage
of revenue, selling, general and administrative expenses would have remained
constant on an adjusted basis at approximately 34.4% in the 1996 Period and the
1997 Period.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- LSS
 
     Revenue.  Revenue increased $1.8 million, or 53.8%, from $3.3 million in
the year ended December 31, 1995 to $5.1 million in the year ended December 31,
1996, primarily due to the increased productivity from the company's expanded
sales force.
 
     Cost of Revenue.  Cost of revenue increased approximately $306,000, or
22.0%, from $1.4 million in the year ended December 31, 1995 to $1.7 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased from 41.7% in the year ended December 31, 1995 to 33.1% in the year
ended December 31, 1996, primarily due to several follow-on client engagements
which generally result in lower production costs.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.3 million, or 74.3%, from $1.8 million in
the year ended December 31, 1995 to $3.1 million in the year ended December 31,
1996. Excluding the Compensation Differential attributable to LSS of
approximately $415,000 and $1.4 million in the year ended December 31, 1995 and
the year ended December 31, 1996, respectively, selling, general and
administrative expenses would have increased approximately $348,000, or 25.7%,
from $1.4 million in the year ended December 31, 1995 to $1.7 million in the
year ended December 31, 1996. As a percentage of revenue, selling, general and
administrative expenses would have decreased on an adjusted basis from 40.6% in
the year ended December 31, 1995 to 33.2% in the year ended December 31, 1996,
primarily due to the company's larger revenue base.
 
                                       31
33
 
LIQUIDITY AND CAPITAL RESOURCES -- LSS
 
     LSS generated net cash from operating activities of approximately $315,000
in the year ended December 31, 1996 and approximately $295,000 in the 1997
Period. Net cash used in investing activities was approximately $85,000 in the
year ended December 31, 1996 and approximately $61,000 in the 1997 Period for
purchases of property and equipment. At September 30, 1997, LSS had working
capital of approximately $887,000.
 
RESULTS OF OPERATIONS -- MOHR
 
     MOHR offers train-the-trainer seminars to help clients in the retail
industry primarily to improve productivity by fostering a customer-oriented
focus at the sales management and sales associate levels. In some of its
programs, MOHR trains employees directly through instructor-led seminars. MOHR's
revenue is derived primarily from the licensing to clients of the right to use
its training programs on a participant or site basis.
 
     The following table sets forth certain selected financial data for MOHR on
a historical basis and as a percentage of revenue for the periods indicated:
THREE MONTHS ENDED SEPTEMBER
                                         YEAR ENDED JUNE 30,                         30,
                                  ---------------------------------     ------------------------------
                                       1996               1997              1996             1997
                                  --------------     --------------     ------------     -------------
                                                         (DOLLARS IN THOUSANDS)
Revenue.........................  $2,171   100.0%    $3,015   100.0%    $554   100.0%    $ 556   100.0%
Cost of revenue.................     677    31.2        825    27.4      187    33.8       204    36.7
                                  ------   -----     ------   -----     ----   -----     -----   -----
Gross profit....................   1,494    68.8      2,190    72.6      367    66.2       352    63.3
Selling, general and
  administrative expenses.......   1,151    53.0      1,745    57.9      383    69.1       562   101.1
                                  ------   -----     ------   -----     ----   -----     -----   -----
Income (loss) from operations...  $  343    15.8%    $  445    14.7%    $(16)   (2.9)%   $(210)  (37.8)%
                                  ======   =====     ======   =====     ====   =====     =====   =====
Compensation Differential.......  $  144     6.6%    $  334    11.1%    $ 60    10.8%    $ 105    18.9%
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- MOHR
 
     Revenue.  Revenue increased slightly, from approximately $554,000 in the
1997 Period to approximately $556,000 in the 1998 Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $17,000, or 9.1%,
from approximately $187,000 in the 1997 Period to approximately $204,000 in the
1998 Period. As a percentage of revenue, cost of revenue increased from 33.8% in
the 1997 Period to 36.7% in the 1998 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $179,000, or 46.7%, from
approximately $383,000 in the 1997 Period to approximately $562,000 in the 1998
Period. Excluding the Compensation Differential of approximately $60,000 and
approximately $105,000 attributable to MOHR in the 1997 Period and 1998 Period,
respectively, selling, general and administrative expenses would have increased
approximately $134,000, or 41.5%, from approximately $323,000 in the 1997 Period
to approximately $457,000 in the 1998 Period. As a percentage of revenue,
selling, general and administrative expenses would have increased on an adjusted
basis from 58.3% in the 1997 Period to 82.2% in the 1998 Period, primarily due
to compensation paid to additional salespeople hired during 1997 who did not
generate material revenue during the 1998 Period and development costs incurred
to update certain of the company's products.
 
RESULTS FOR 1997 COMPARED TO 1996 -- MOHR
 
     Revenue.  Revenue increased approximately $844,000, or 38.9%, from $2.2
million in 1996 to $3.0 million in 1997, primarily due to the hiring of two
additional salespeople and the increase in license fees during 1997.
 
                                       32
34
 
     Cost of Revenue.  Cost of revenue increased approximately $148,000, or
21.9%, from approximately $677,000 in 1996 to approximately $825,000 in 1997. As
a percentage of revenue, cost of revenue decreased from 31.2% in 1996 to 27.4%
in 1997, primarily due to the increase in license fees, which result in higher
margins than train-the-trainer seminars.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $594,000, or 51.6%, from $1.2
million in 1996 to $1.8 million in 1997. Excluding the Compensation Differential
attributable to MOHR of approximately $144,000 and approximately $334,000 in
1996 and 1997, respectively, selling, general and administrative expenses would
have increased approximately $404,000, or 40.1%, from $1.0 million in 1996 to
$1.4 million in 1997. As a percentage of revenue, selling, general and
administrative expenses would have increased slightly from 46.4% in 1996 to
46.8% in 1997.
 
LIQUIDITY AND CAPITAL RESOURCES -- MOHR
 
     MOHR generated net cash from operating activities of approximately $80,000
in 1997. In the 1998 Period, MOHR used approximately $43,000 in operating
activities. Net cash used in investing activities was approximately $41,000 in
1997 and approximately $6,000 in the 1998 Period for purchases of property and
equipment. At September 30, 1997, MOHR had working capital of approximately
$249,000.
 
RESULTS OF OPERATIONS -- NOVATIONS
 
     Novations assists clients in, among other things, clarifying and
communicating their business strategies and re-designing their organizations and
work systems. Novations also provides its clients with a variety of
organizational assessment tools that are designed to gather and analyze feedback
on either an organizational or individual basis and to initiate change within
the client's organization in response to such feedback. Novations' revenue is
derived primarily from fees from professional services and, to a lesser extent,
from the sale of services and products to support human resource management.
 
     The following table sets forth certain selected financial data for
Novations on a historical basis and as a percentage of revenue for the periods
indicated:
THREE MONTHS ENDED SEPTEMBER
                                             YEAR ENDED JUNE 30,                               30,
                               -----------------------------------------------    ------------------------------
                                   1995             1996             1997             1996             1997
                               -------------    -------------    -------------    -------------    -------------
                                                            (DOLLARS IN THOUSANDS)
Revenue..................  $7,175  100.0%   $9,039  100.0%   $9,018  100.0%   $2,167  100.0%   $2,464  100.0%
    Cost of revenue..........   3,885   54.1     4,733   52.4     4,839   53.7     1,117   51.5     1,197   48.6
                               ------  -----    ------  -----    ------  -----    ------  -----    ------  -----
    Gross profit.............   3,290   45.9     4,306   47.6     4,179   46.3     1,050   48.5     1,267   51.4
    Selling, general and
      administrative
      expenses...............   3,167   44.2     4,094   45.3     3,315   36.7       823   38.0     1,088   44.1
                               ------  -----    ------  -----    ------  -----    ------  -----    ------  -----
    Income from operations...  $  123    1.7%   $  212    2.3%   $  864    9.6%   $  227   10.5%   $  179    7.3%
                               ======  =====    ======  =====    ======  =====    ======  =====    ======  =====
    Compensation
      Differential...........  $1,208   16.8%   $1,471   16.3%   $  661    7.3%   $  174    8.0%   $  375   15.2%
THREE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1998 PERIOD") COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996 (THE "1997 PERIOD") -- NOVATIONS
 
     Revenue.  Revenue increased approximately $297,000, or 13.7%, from $2.2
million in the 1997 Period to $2.5 million in the 1998 Period, primarily due to
an increase in organizational assessment revenues of $213,000 in the 1998
Period.
 
     Cost of Revenue.  Cost of revenue increased approximately $80,000, or 7.2%
from $1.1 million in the 1997 Period to $1.2 million in the 1998 Period. As a
percentage of revenue, cost of revenue decreased from 51.5% in the 1997 Period
to 48.6% in the 1998 Period, primarily due to the increased utilization of the
company's consultants.
 
                                       33
35
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $265,000, or 32.2%, from
approximately $823,000 in the 1997 Period to $1.1 million in the 1998 Period.
Excluding the Compensation Differential attributable to Novations of
approximately $174,000 and approximately $375,000 in the 1997 Period and 1998
Period, respectively, selling, general and administrative expenses would have
increased $64,000, or 9.9%, from approximately $649,000 in the 1997 Period to
approximately $713,000 in the 1998 Period. As a percentage of revenue, selling,
general and administrative expenses would have decreased on an adjusted basis
from 29.9% in the 1997 Period to 28.9% in the 1998 Period.
 
RESULTS FOR 1997 COMPARED TO 1996 -- NOVATIONS
 
     Revenue.  Revenue remained relatively constant at $9.0 million in 1996 and
1997.
 
     Cost of Revenue.  Cost of revenue increased approximately $106,000, or
2.2%, from $4.7 million in 1996 to $4.8 million in 1997. As a percentage of
revenue, cost of revenue increased from 52.4% in 1996 to 53.7% in 1997,
primarily due to an increase in the size of the consulting staff.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses decreased by $779,000 or 19.0%, from $4.1 million in
1996 to $3.3 million in 1997. Excluding the Compensation Differential
attributable to Novations of $1.5 million and approximately $661,000 in 1996 and
1997, respectively, selling, general and administrative expenses would have
increased approximately $31,000, or 1.2%, from $2.6 million in 1996 to $2.7
million in 1997. As a percentage of revenue, selling, general and administrative
expenses would have increased slightly on an adjusted basis from 29.0% in 1996
to 29.4% in 1997.
 
RESULTS FOR 1996 COMPARED TO 1995 -- NOVATIONS
 
     Revenue.  Revenue increased $1.9 million, or 26.0%, from $7.2 million in
1995 to $9.0 million in 1996, primarily due to the introduction and marketing of
new services and the hiring of additional consultants.
 
     Cost of Revenue.  Cost of revenue increased approximately $848,000, or
21.8%, from $3.9 million in 1995 to $4.7 million in 1996. As a percentage of
revenue, cost of revenue decreased slightly from 54.1% in 1995 to 52.4% in 1996.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased approximately $927,000, or 29.3% from $3.2
million in 1995 to $4.1 million in 1996. Excluding the Compensation Differential
attributable to Novations of $1.2 million and $1.5 million in 1995 and 1996,
respectively, selling, general and administrative expenses would have increased
approximately $664,000, or 33.9%, from $2.0 million in 1995 to $2.6 million in
1996. As a percentage of revenue, selling, general and administrative expenses
would have increased on an adjusted basis from 27.3% in 1995 to 29.0%, primarily
due to an expansion of the company's infrastructure to support revenue growth.
 
LIQUIDITY AND CAPITAL RESOURCES -- NOVATIONS
 
     Novations generated net cash from operating activities of approximately
$153,000 in 1997 and $587,000 in the 1998 Period. Net cash used in investing
activities was approximately $137,000 and $9,000 in 1997 and the 1998 Period,
respectively, for purchases of property and equipment. Net cash provided by
financing activities was approximately $55,000 in 1997, from net proceeds of
long-term debt partially offset by distributions to stockholders. Net cash used
in financing activities was approximately $220,000 in the 1998 Period, for the
repayment of notes payable. At September 30, 1997, Novations had working capital
of approximately $544,000 and approximately $361,000 of long term debt.
 
RESULTS OF OPERATIONS -- STAR
 
     Star provides customized training and development services and products to
train individuals primarily within agencies of federal, state and local
government. Star delivers its courseware to clients in a variety of formats
(including written materials and interactive multimedia software), but typically
does not directly train
 
                                       34
36
 
its clients. Star's revenue is derived primarily from fees received from the
provision of training services as a contractor or subcontractor under government
contracts.
 
     The following table sets forth certain selected financial data for Star on
a historical basis and as a percentage of revenue for the periods indicated:
NINE MONTHS ENDED SEPTEMBER 30,
                                        YEAR ENDED DECEMBER 31,
                           -------------------------------------------------    --------------------------------
                               1994              1995              1996              1996              1997
                           -------------    --------------    --------------    --------------    --------------
                                                          (DOLLARS IN THOUSANDS)
Revenue..............  $9,731  100.0%   $14,306  100.0%   $16,313  100.0%   $11,785  100.0%   $17,101  100.0%
    Cost of revenue......   6,350   65.3      8,668   60.6      9,457   58.0      6,559   55.7     10,588   61.9
                           ------  -----    -------  -----    -------  -----    -------  -----    -------  -----
    Gross profit.........   3,381   34.7      5,638   39.4      6,856   42.0      5,226   44.3      6,513   38.1
    Selling, general and
      administrative
      expenses...........    3106   31.9      4,611   32.2      5,815   35.6      4,222   35.8      5,638   33.0
                           ------  -----    -------  -----    -------  -----    -------  -----    -------  -----
    Income from
      operations.........  $  275    2.8%   $ 1,027    7.2%   $ 1,041    6.4%   $ 1,004    8.5%   $   875    5.1%
                           ======  =====    =======  =====    =======  =====    =======  =====    =======  =====
    Compensation
      Differential.......  $   36    0.4%   $    64    0.4%   $   304    1.9%   $   228    1.9%   $   135    0.8%
NINE MONTHS ENDED SEPTEMBER 30, 1997 (THE "1997 PERIOD") COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996 (THE "1996 PERIOD") -- STAR
 
     Revenue.  Revenue increased $5.3 million, or 45.1%, from $11.8 million in
the 1996 Period to $17.1 million in the 1997 Period, primarily due to an
increase in the number of federal government contracts undertaken, as well as
revenue of $3.4 million contributed by businesses acquired during the third
calendar quarter of 1996 and the first calendar quarter of 1997. Revenue was
significantly lower during the first half of the 1996 calendar year as a result
of a decline in new client engagements due to prolonged Congressional budget
negotiations.
 
     Cost of Revenue.  Cost of revenue increased approximately $4.0 million, or
61.4%, from $6.6 million in the 1996 Period to $10.6 million in the 1997 Period.
As a percentage of revenue, cost of revenue increased from 55.7% in the 1996
Period to 61.9% in the 1997 Period, primarily due to the increased use of
subcontractors during the 1997 Period.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.4 million, or 33.5%, from $4.2 million in
the 1996 Period to $5.6 million in the 1997 Period. Excluding the Compensation
Differential of approximately $228,000 and approximately $135,000 attributable
to Star in the 1996 Period and 1997 Period, respectively, selling, general and
administrative expenses would have increased $1.5 million, or 37.8%, from $4.0
million in the 1996 Period to $5.5 million in the 1997 Period. As a percentage
of revenue, selling, general and administrative expenses would have decreased on
an adjusted basis from 33.9% in the 1996 Period to 32.2% in the 1997 Period,
primarily due to the company's larger revenue base.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER
31, 1995 -- STAR
 
     Revenue.  Revenue increased $2.0 million, or 14.0%, from $14.3 million in
the year ended December 31, 1995 to $16.3 million in the year ended December 31,
1996, due to revenue of $3.6 million contributed by businesses acquired by Star
in the third calendar quarters of 1995 and 1996. The revenue from the acquired
businesses was offset partially by the decline in business generated from
federal government entities as a result of the Congressional budget negotiations
described above.
 
     Cost of Revenue.  Cost of revenue increased approximately $789,000, or
9.1%, from $8.7 million in the year ended December 31, 1995 to $9.5 million in
the year ended December 31, 1996. As a percentage of revenue, cost of revenue
decreased from 60.6% in the year ended December 31, 1995 to 58.0% in the year
ended December 31, 1996, primarily due to the acquisition in the third calendar
quarter of 1996 of a business with higher gross profit margins than Star's core
business.
 
                                       35
37
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.2 million, or 26.1%, from $4.6 million in
the year ended December 31, 1995 to $5.8 million in the year ended December 31,
1996. Excluding the Compensation Differential attributable to Star of
approximately $64,000 and approximately $304,000 in the years ended December 31,
1995 and 1996, respectively, selling, general and administrative expenses would
have increased approximately $964,000, or 21.2%, from $4.5 million in the year
ended December 31, 1995 to $5.5 million in the year ended December 31, 1996. As
a percentage of revenue, selling, general and administrative expenses would have
increased on an adjusted basis from 31.8% in the year ended December 31, 1995 to
33.7% in the year ended December 31, 1996.
 
RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER
31, 1994 -- STAR
 
     Revenue.  Revenue increased $4.6 million, or 47.0%, from $9.7 million in
the year ended December 31, 1994 to $14.3 million in the year ended December 31,
1995, primarily due to an increase in the number of projects undertaken during
the 1995 calendar year, and revenue of $1.0 million contributed by a business
acquired by Star in the third calendar quarter of 1995.
 
     Cost of Revenue.  Cost of revenue increased $2.3 million, or 36.5%, from
$6.4 million in the year ended December 31, 1994 to $8.7 million in the year
ended December 31, 1995. As a percentage of revenue, cost of revenue decreased
from 65.3% in the year ended December 31, 1994 to 60.6% in the year ended
December 31, 1995, primarily as a result of the acquisition of a business with
higher gross margin percentages than Star and the improvement in operating
results for Star's core business.
 
     Selling, General and Administrative Expenses.  Selling, general and
administrative expenses increased $1.5 million, or 48.5%, from $3.1 million in
the year ended December 31, 1994 to $4.6 million in the year ended December 31,
1995. Excluding the Compensation Differential of approximately $36,000 and
approximately $64,000 attributable to Star in the years ended December 31, 1994
and 1995, respectively, selling, general and administrative expenses would have
increased $1.5 million, or 48.1%, from $3.1 million in the year ended December
31, 1994 to $4.5 million in the year ended December 31, 1995. As a percentage of
revenue, selling, general and administrative expenses would have increased
slightly on an adjusted basis from 31.5% in the year ended December 31, 1994 to
31.8% in the year ended December 31, 1995.
 
LIQUIDITY AND CAPITAL RESOURCES -- STAR
 
     Star generated net cash from operating activities of $1.1 million in the
year ended December 31, 1996 and approximately $999,000 in the 1997 Period. Net
cash used in investing activities was approximately $565,000 in the year ended
December 31, 1996 and $1.1 million in the 1997 Period, primarily for
acquisitions. Net cash used in financing activities was approximately $478,000
in the year ended December 31, 1996, primarily for purchases of treasury stock.
Net cash provided by financing activities was approximately $360,000 in the 1997
Period, primarily from borrowings on the company's line of credit. At September
30, 1997, Star had working capital of approximately $287,000, and long-term debt
of approximately $379,000.
 
                                       36
38
 
                                    BUSINESS
 
COMPANY OVERVIEW
 
     The Company provides a broad range of training and development services and
products to Fortune 1000 companies, other large and medium-sized corporations
and government entities. The Company's services and products are designed to
increase the productivity of organizations by improving employee selection,
recruitment and retention; enhancing employee work skills; developing employee
management and leadership skills; and facilitating organizational assessment,
direction and change. The Company offers both customized and off-the-shelf
services and products that are designed to provide measurable improvements in
employee performance and productivity. The Company delivers its services and
products through multiple delivery methods, including instructor-led classroom
training and seminars, certification of client employees as instructors
("train-the-trainer"), interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
The seven Founding Companies are recognized leaders in their respective fields
and have developed a wide range of services and products, a substantial
knowledge base created from years of research and development, and a
well-established client base. The Company's objective is to become a leading
single source provider of high-quality training and development services and
products that are distributed through multiple delivery methods.
 
     The Company provided training and development services and products to more
than 1,700 companies and 75 government entities in fiscal 1997, including Abbott
Laboratories, Bank of America, Conoco, Inc., Eli Lilly and Company, Federal
Express, Federated Department Stores, Inc., Hewlett-Packard Company, J.P. Morgan
& Co., Incorporated, Metropolitan Life Insurance Company, Mobil Corporation, the
Department of Defense, the Immigration and Naturalization Service and the
Internal Revenue Service. During this period, the Company generated revenues of
more than $100,000 from each of 75 different corporate clients and from over 15
different federal government entities. For fiscal 1997, the Company had pro
forma revenue of $68.8 million and pro forma income from operations of $8.0
million. From fiscal 1995 through fiscal 1997, the combined revenue of the
Founding Companies grew at a compound annual rate of 21.8%.
 
MARKET OVERVIEW
 
     The corporate and government training and development market is large and
growing. According to Training Magazine, domestic corporations with over 100
employees budgeted approximately $58.6 billion on training in 1997, compared to
approximately $45.0 billion in 1992, representing a compound annual growth rate
of approximately 5.4%. The size of and growth in the federal government market
can be seen in the Department of Defense's training and development budget,
which for its 1997 fiscal year was approximately $23.9 billion, compared to
approximately $18.0 billion in its 1992 fiscal year, representing a compound
annual growth rate of approximately 5.8%. Provant believes that this growth has
been and will continue to be driven by: (i) the evolution from a
manufacturing-based to a service-based economy; (ii) the increasing recognition
by businesses that education, training and effective human resource management
are competitive necessities rather than optional expenses; and (iii) the
expanding use of technology throughout all levels of organizations, which has
increased the overall amount of training required and the number of employees
participating in such training.
 
     Corporations and government entities increasingly are utilizing external
providers to meet their training and development needs. Expenditures on external
training and development by domestic corporations with over 100 employees have
increased from approximately $8.8 billion in 1992 to a budgeted $13.6 billion in
1997, representing a compound annual growth rate of 9.1%, and have increased as
a percentage of the total training budgets of such corporations from
approximately 19.6% in 1992 to 23.2% in 1997. The Company believes that federal
government expenditures on external training and development have increased from
approximately $600 million in the federal government's 1992 fiscal year to a
budgeted $3.8 billion in its 1997 fiscal year, representing a compound annual
growth rate of 44.7%. The Company believes that the growth in the external
training and development market has been driven by the desire of organizations
to: (i) focus on their core competencies; (ii) shift fixed training costs to
variable costs; and (iii) obtain training and development services, products,
technology and expertise that may not be available internally.
 
                                       37
39
 
     As a result of significant advances in computer and communications
technology, the training and development industry is experiencing rapid change
in the delivery of services and products. Historically, training and development
organizations delivered services and products primarily through instructor-led
seminars. Technological advances, however, now permit organizations to provide
training at distant and multiple locations as well as self-paced training,
allowing a far greater number of participants to learn conveniently and
efficiently. Interactive multimedia software (such as CD-ROM) and distance-based
learning media (such as video conferencing, intranets and the Internet) overcome
many of the cost and space constraints of traditional instructor-led training.
The Company believes that corporations increasingly are using technology-driven
alternatives due to their ability to: (i) increase learning and retention; (ii)
minimize the opportunity costs of time spent away from the job by employees;
(iii) provide access to training and development services and products "on
demand"; (iv) lower overall training and development costs, including travel
expenses of employees; and (v) measure and track employees' progress. Although
instructor-led training currently is the primary means of delivery of training
and development services and products, the Company believes that
technology-based delivery increasingly will be used to both supplement and, in
some cases, replace instructor-led training.
 
     The training and development industry is highly fragmented, with no company
having more than a one percent share of the external training market. Many
companies in the industry provide a narrow range of services and products
through limited delivery methods. The Company believes that these companies
generally have made limited investments in content development, marketing and
the technology necessary to develop or utilize alternative delivery methods. As
corporations and government entities increasingly use external training
providers, the Company believes that they will seek providers that can meet
their overall training and development needs by: (i) providing a broad range of
high-quality services and products in both customized and off-the-shelf formats;
(ii) delivering training through multiple delivery methods capable of reaching
large and geographically dispersed work forces; and (iii) utilizing the most
current technology available. As a result, the Company believes that significant
opportunities are available for well-capitalized companies capable of meeting
these needs on a national and international basis.
 
BUSINESS STRATEGY
 
     The Company's objective is to meet a significant portion of the training
and development needs of Fortune 1000 companies, other large and medium-sized
corporations and government entities. To achieve this objective, the Company
intends to pursue a business strategy with the following key elements:
 
     OFFER VALUE-ADDED, HIGH-QUALITY TRAINING.  The Company is committed to
providing value-added training and development services and products that result
in measurable improvement in the workplace performance of employees. The
Company's services and products are based upon well-researched methodologies,
processes and content, and typically have been developed, refined and used
successfully over many years. Most of the Founding Companies' executives have
advanced degrees and are regarded as leaders in their respective areas. The
Company strives to offer high-quality training by continually updating its
content to reflect changing industry trends and client preferences.
 
     PROVIDE A BROAD RANGE OF SERVICES AND PRODUCTS.  The Company seeks to
provide its clients with a broad range of high-quality training and development
services and products in both customized and off-the-shelf formats. These
services and products cover: employee selection, recruitment and retention;
employee work skills enhancement; employee management and leadership skills; and
organizational assessment, direction and change. Specifically, the Company
assists organizations and their employees in, among other things, determining
and implementing hiring criteria, increasing workplace diversity awareness,
improving communication skills, increasing point-of-sale efficiencies, working
in a team environment and soliciting and analyzing employee feedback. In
addition, the Company provides strategic consulting services to its clients,
which are enhanced by the Company's ability to offer complementary training and
development services and products.
 
     UTILIZE MULTIPLE DELIVERY METHODS.  The Company offers multiple delivery
methods for its services and products, including instructor-led seminars,
train-the-trainer, interactive multimedia software (such as CD-ROM) and
distance-based media (such as video conferencing, intranets and the Internet).
Two of the
 
                                       38
40
 
Founding Companies, LSS and Star, have substantial expertise in delivery
technology which the Company intends to apply to many of the services and
products of the other Founding Companies. By offering multiple delivery methods,
the Company believes that it can better serve the needs, resource constraints
and cost requirements of its clients.
 
     DEVELOP LONG-TERM CLIENT RELATIONSHIPS.  The Company seeks to develop
long-term relationships with clients to whom it can provide a full complement of
services and products on a recurring basis. Many of the Company's long-term
clients purchase its services and products on an on-going basis after the
initial delivery of services and products. For example, after a
train-the-trainer seminar where the Company certifies a client's instructors,
the Company continues to receive a fee on a participant or site basis as the
certified instructors continue to train the client's employees. The Company also
offers updated, related or new services and products to its clients in order to
generate recurring revenue.
 
     EMPLOY A DECENTRALIZED MANAGEMENT STRUCTURE.  The Company believes that the
experienced management teams of the Founding Companies have a valuable
understanding of their respective training and development markets and have
established strong client relationships. The Company intends to operate with a
decentralized management structure under which management at each of the
Founding Companies will make most of the day-to-day operating decisions and will
have primary responsibility for the profitability and growth of their business.
The Company intends to utilize stock ownership as well as appropriate incentive
compensation to ensure that management's objectives at each of the Founding
Companies are aligned with those of the Company.
 
     IMPLEMENT BEST PRACTICES AND ACHIEVE OPERATING EFFICIENCIES.  The Company
intends to evaluate the operating policies and procedures of the Founding
Companies in order to identify and implement Company-wide best practices in
areas such as marketing, sales, product development, human resource policies and
recruiting. In addition, the Company believes that it can achieve operating
efficiencies and cost savings by more efficiently utilizing the Company's
facilities and gaining greater purchasing power in areas such as travel,
employee benefits and communications.
 
GROWTH STRATEGY
 
     The Company's objective is to become the leading single source provider of
high-quality training and development services and products to Fortune 1000
companies, other large and medium-sized corporations and government entities.
Key elements of the Company's growth strategy include:
 
     CAPITALIZE ON CROSS-SELLING OPPORTUNITIES.  The Company believes that
significant opportunities exist for each Founding Company to cross-sell its
services and products to clients of the other Founding Companies. Each of the
Founding Companies has established strong relationships with its clients but
historically has offered its clients only a limited selection of training and
development services and products. The Company provided training and development
services to more than 1,700 companies and more than 75 government entities in
fiscal 1997, and during that period generated revenue of more than $100,000 from
each of 75 different companies and over 15 different federal government
agencies. The Company intends to capitalize on the services and products of each
of the Founding Companies by emphasizing and aggressively cross-selling its
broad range of training and development services and products to its collective
client base.
 
     IMPLEMENT AGGRESSIVE SALES AND MARKETING STRATEGY.  The Company intends to
pursue an aggressive sales and marketing strategy designed to establish new
client relationships and expand existing relationships. Specifically, the
Company intends to: (i) hire additional salespeople to supplement the existing
sales efforts of the Founding Companies; (ii) establish a nationwide
telemarketing program focusing primarily on medium-sized corporations; and (iii)
participate in a greater number of conferences and trade shows. The Company
intends to direct its centralized marketing campaign to both new clients and
additional contacts within existing clients (e.g., targeting upper levels of
management if previous services provided by a Founding Company were marketed to
middle management). In addition, the Company intends to pursue relationships
with regional colleges and vocational/technical schools in order to market its
services and products to small and medium-sized companies and their employees.
The Company also intends to establish a national brand identification
 
                                       39
41
 
under the Provant name, while preserving the value of the established names,
trademarks and client relationships of the Founding Companies.
 
     EXPAND SERVICE AND PRODUCT OFFERINGS.  The Company intends to broaden its
offerings of training and development services and products by developing or
acquiring new or complementary services and products. For example, the Company
currently is introducing a new employee recruitment product, based upon its
Behavioral Interviewing(R) process, that teaches clients how to recruit in a
tight labor market. In addition, the Company intends to capitalize on its
expertise in certain industries, such as the retail industry, by customizing
services and products for other similar industries, such as the hospitality,
transportation and healthcare industries.
 
     PURSUE STRATEGIC ACQUISITIONS.  The Company intends to pursue strategic
acquisitions in order to: (i) offer services or products complementary to those
it currently offers; (ii) gain expertise in new areas of training and
development; (iii) access new technology to expand the scope and quality of
delivery methods; and (iv) establish or enhance client relationships. The
Company seeks to acquire companies with strong management, profitable operating
results and leading positions within their respective markets. The Company
believes that acquisitions of this nature will improve its ability to be a
single source provider of high-quality training and development services and
products.
 
     LEVERAGE INVESTMENTS IN TECHNOLOGY AND DEPLOY LEADING TECHNOLOGIES.  A key
element of the Company's strategy is to capitalize on the technology investments
of the Founding Companies in order to deliver training and development services
and products to its clients in the most effective manner. For example, the
Company intends to apply the technical expertise of LSS and Star, which provide
training through interactive multimedia software, to convert certain products of
other Founding Companies to interactive multimedia software formats, such as
CD-ROM. The Company expects to deploy leading technologies in the delivery of
many of its services and products, including delivery through distance-based
media, such as video conferencing, intranets and the Internet, that can provide
interactive training to employees at multiple locations.
 
TRAINING AND DEVELOPMENT SERVICES AND PRODUCTS
 
     The Company's training and development services and products assist
organizations in four principal areas: (i) employee recruitment, selection and
retention; (ii) employee work skills; (iii) employee management and leadership
skills; and (iv) organizational assessment, direction and change. Through these
services and products, the Company's clients can improve the quality of
employees entering the organization, the performance of employees within the
organization, and the ability of the organization as a whole to undergo change.
The Company offers services and products which are off-the-shelf as well as
customized to meet the specialized needs of particular clients. The following
table illustrates the principal training and development areas covered by the
Company's services and products:
ORGANIZATIONAL
 EMPLOYEE RECRUITMENT,                                  EMPLOYEE MANAGEMENT            ASSESSMENT,
SELECTION AND RETENTION     EMPLOYEE WORK SKILLS       AND LEADERSHIP SKILLS      DIRECTION AND CHANGE
-----------------------    -----------------------    -----------------------    -----------------------
Interviewing candidates    Customer service           Analyzing employee         Strategic consulting
Identifying specific       training                   feedback                   Understanding employee
job   competencies         Public speaking            Presentation skills        perceptions
Retaining employees        Spoken communication       training                   Assessing
Addressing sexual          training                   Coaching peers and         organizational
  harassment               Buyer negotiating          colleagues                 abilities and direction
Facilitating diversity     Point-of-sale training     Managing retail stores     Measuring customer
                           General retail sales       Communicating with         satisfaction
                           training                   subordinates               Designing quality
                           Specialized government     Understanding diversity    control
                           job training               issues                     processes
                           Industrial skills                                     Changing corporate
                           training                                              culture
EMPLOYEE RECRUITMENT, SELECTION AND RETENTION.  The Company offers services
and products designed to assist clients in hiring and retaining effective
employees. In particular, the Company helps clients understand the skills
required of their employees, implement more effective recruitment, selection and
retention processes
 
                                       40
42
 
to maximize employee productivity, and reduce turnover rates. Through one of the
Company's products, Behavioral Interviewing(R), managers learn how to identify
specific job competencies required for success, interview prospective candidates
and evaluate their skills. For example, when the Behavioral Interviewing(R)
process was implemented at a large accounting firm seeking to refine its
employee selection process, the Company worked with the firm to determine
critical skills and competencies required of candidates and to develop interview
forms designed to elicit information pertaining to those skills and
competencies. Client recruiting directors were certified, and those certified
instructors then taught the Behavioral Interviewing(R) process to the client's
interviewers nationwide. In the year following the implementation of Behavioral
Interviewing(R), the number of candidates invited for office visits who received
offers of employment increased by 10%, reflecting an increase in the
effectiveness and efficiency of the screening and evaluation process.
SkilMatch(R), a related product, is an interactive software program designed to
streamline the process of developing structured interviews and ensure a
consistent selection process. Complementing these products are the Company's
outplacement services, which it provides to several federal government agencies
to assist in work force restructuring, and its diversity enhancement services,
which facilitate employee retention and development.
 
     EMPLOYEE WORK SKILLS.  The Company offers services and products designed to
provide or improve the skills necessary to perform a particular task or job.
These skills include public speaking/presentation, negotiation, general retail
sales, point-of-sale device operation, direct store delivery (receiving) and
customer service. Several of the Company's products, including The POS
Simulator, Direct Store Delivery Simulator, Cashier Ready and Produce
Identification Trainer, are designed to increase employee productivity in the
retail workplace by simulating important retail situations and environments in
interactive multimedia formats. Many of these products allow clients to measure
the effectiveness of the training. For example, a large grocery chain that used
The POS Simulator to improve the efficiency of its cashier training program
reduced the average number of hours required to train cashiers in certain key
competencies from 16 hours of traditional classroom training to six hours with
The POS Simulator. Another Company product, Effective Communicating(TM), is a
two-day workshop designed to enable clients' key staff members to become more
effective in public speaking, sales and other types of oral communication. The
Company also offers specialized industrial skills training for
government and corporate clients.
 
     The Company provides customized work skills training to numerous federal
government entities and various state and local government entities. Most of the
services and products offered in this area involve the training of employees to
perform tasks that are unique to certain government jobs. For instance, the
Company has prepared courses for the Department of Defense covering topics from
technology applications for military aircrews to basic medical care and medical
management information systems for Army and Navy healthcare personnel. Courses
prepared for other federal agencies include Reengineering and Process Mapping
for the Department of Education, Principles of Purchasing for the Postal
Service, Introductory Correctional Training for the Bureau of Prisons, and
Training in the Use of Traffic Records for Problem Identification for the
National Highway Traffic Safety Administration. Typically, these training
courses and course materials are custom-designed by experts from the Company
working closely with members of the respective government entities.
 
     EMPLOYEE MANAGEMENT AND LEADERSHIP SKILLS.  The Company offers services and
products that are designed to improve employees' operational management,
supervisory and leadership skills. In particular, the Company helps managers to
create constructive feedback processes, operate retail stores, monitor, motivate
and communicate with subordinates and understand diversity issues. Managing
Individual and Team Effectiveness (MITE(R)), one of the Company's products, is
designed to provide managers in complex work environments with "360-degree"
feedback on their management skills. Another product, Retail Management Series
III (RMSIII), is a multi-component and highly adaptable program designed to
enhance their retail communication and coaching skills in order to improve the
productivity and profitability of managers' salespeople. For example, RMSIII was
used by a national specialty retailer seeking to increase the productivity of
its sales associates by focusing on its sales managers. The Company tailored
RMSIII to cover the sales management skills important to the retailer's
business, including sales management standards, commitment to goals and coaching
skills. The Company trained and certified district managers of the client to
teach RMSIII,
 
                                       41
43
 
and those certified instructors trained sales managers and assistant managers in
over 200 of the client's stores. Three months following the introduction of the
Company's RMSIII product, stores using RMSIII reported an average increase in
sales of 27%, as compared to 14% in stores not using RMSIII. A third product,
Managing Inclusion, is a multi-day session designed to help individual managers
and client companies enhance understanding of workplace diversity, build morale
and satisfaction in the work force, and increase productivity through more
effective team relationships.
 
     ORGANIZATIONAL ASSESSMENT, DIRECTION AND CHANGE.  The Company provides
services and products designed to help organizations assess their strategic
direction and implement and manage change. The Company provides strategic
consulting services that help improve overall workplace performance by assisting
clients in, among other things, clarifying and communicating their business
strategies and redesigning their organizations and business processes. For
example, the Company assisted a large trucking company in developing alternative
organization designs and cost reduction initiatives. By using the Company's
recommendations to clarify its operating strategy and determine the core work of
its business, the trucking company was able to undertake significant structural
changes and implement cost-cutting measures that were responsible for
significantly increasing overall efficiency. The Company also provides its
clients with a variety of survey tools by which feedback can be gathered and
analyzed on either an organizational or individual basis. The Company develops
the survey forms and methodologies, conducts the surveys, and collects and
analyzes the data for its corporate clients.
 
DELIVERY METHODS
 
     The Company offers multiple delivery methods for its training services and
products. By doing so, the Company believes that it can better serve the
particular needs, resource constraints, cost requirements and cultures of its
clients. Most of the Company's services and products currently are delivered
through instructor-led and train-the-trainer seminars; however, the Company also
delivers certain of its products on interactive multimedia software or through
distance-based methods. The Company's primary delivery methods are described
below.
 
     INSTRUCTOR-LED TRAINING AND SEMINARS.  The Company delivers its programs to
clients' employees primarily through the use of either dedicated Company
instructors or certified contract instructors. Most of the Company's
instructor-led training is delivered at clients' facilities, although the
Company also delivers certain programs at its own training facilities. In some
cases, the Company's programs are delivered in a public seminar format to a
small group of individuals from multiple client companies. The Company provides
textual materials and, in some cases, video tapes as a part of its
instructor-led programs. In addition, the Company sells related published
materials in connection with these programs. The Company also develops custom
courseware that ultimately is delivered by instructors (often client employees)
who are not certified by or otherwise affiliated with the Company. The Company's
courses and programs generally range in length from a few hours to several days
and include from one to hundreds of participants.
 
     TRAIN-THE-TRAINER.  For several of its services and products, the Company's
instructors train and certify qualified employees of clients in an
instructor-led program. The certified client employees then are licensed to use
the Company's methodologies and materials to train other employees of the client
in instructor-led classes at client sites. The Company supplies training
materials for these classes and on-going training for the certified trainers.
The Company receives fees for the employee-led classes on either a participant
or site basis.
 
     INTERACTIVE MULTIMEDIA SOFTWARE.  The Company delivers several of its
products on interactive multimedia software, such as CD-ROMs. Because of the
demonstrated higher rates of learning and retention achieved through interactive
multimedia training, the Company plans to convert to CD-ROM and other
interactive multimedia software several of its products that to date have been
offered only in the instructor-led or train-the-trainer formats.
 
     DISTANCE-BASED MEDIA.  The Company currently delivers a limited number of
its products through distance-based media, such as satellite or other video
conferencing, intranets and the Internet. The Company intends to seek new
technologies that will allow it to deliver its product offerings to clients more
effectively. In
 
                                       42
44
 
particular, the Company believes that more of its products will be offered
through the Internet and more clients will seek Internet-delivered training as
the bandwidth of Internet access increases.
 
OTHER SERVICES AND PRODUCTS
 
     In addition to the Company's training and development services and
products, one of the Founding Companies, Star, also provides certain other
services and products including computer network security research and
development (primarily for federal government entities) and computer network
design, sales, installation and support (primarily for corporations). These
services and products contributed 7.3% of pro forma revenue and (4.6)% of pro
forma income from operations for fiscal 1997. The Company does not anticipate
that sales of these services and products will have a material impact on its
future operating results.
 
CLIENTS
 
     The Company seeks to establish long-term relationships with Fortune 1000
companies, other large and medium-sized corporations and government entities
with substantial training and development needs. The Company has developed a
broad client base of over 1,700 corporations, with no corporate client
accounting for more than 5% of the Company's pro forma revenue during fiscal
1997 or the three months ended September 30, 1997. The Company generated revenue
of more than $100,000 from each of 75 different corporate clients during fiscal
1997. The top corporate clients of the Founding Companies by revenue generated
during fiscal 1997 include those presented below.
Abbott Laboratories             Federal Express                 Metropolitan Life Insurance
Ameritech Corporation           Federated Department Stores,    Company
Amoco Corporation               Inc.                            Mobil Corporation
Bank of America                 Flexsys                         Motorola, Inc.
BOC Gases                       Fujitsu Business                Northwest Airlines, Inc.
Canadian-Hunter Exploration     Communication Systems,          Norwest Mortgage Inc.
  Ltd.                          Inc.                            PepsiCo., Inc.
Canadian Imperial Bank of       Hewlett-Packard Company         Royal Bank of Canada
  Commerce                      J.C. Penney Company, Inc.       Siemens Business
Conoco, Inc.                    J.P. Morgan & Co.               Communication Systems,
Consolidated Rail               Incorporated                    Inc.
  Corporation                   The Kroger Co.                  U.S. West, Inc.
Coopers & Lybrand L.L.P.        Lukens Steel Company            Venture Stores, Inc.
Dayton Hudson Corporation       McDonnell-Douglas               Victoria's Secret Stores
Deloitte & Touche LLP           Corporation                     Wakefern Food Corporation
Eli Lilly and Company                                           Yellow Corporation
Exxon Corporation
43
45
 
     Star derives a substantial majority of its revenues from customized
training and development services and products delivered to entities affiliated
with the federal government. During fiscal 1997 and the three months ended
September 30, 1997, Star's training and development work for federal government
clients generated approximately 31.1% and 30.6%, respectively, of the Company's
pro forma combined revenue. Star also provides services and products to state
and local government entities. The Company's top federal government clients by
revenue generated during fiscal 1997 include the following:
Defense Commissary Agency                Food Safety and Inspection
        Defense Logistics Agency                 General Accounting Office
        Department of Army                       General Services Office
        Department of Energy                     Immigration and Naturalization
        Department of Navy                       Service
        Drug Enforcement Administration          Indian Health Service
        Federal Aviation Administration          Internal Revenue Service
        Federal Highway Administration           Pension Benefit Guarantee
        Federal Law Enforcement Training         Corporation
          Center                                 United States Marshals Service
                                                 United States Postal Service
SALES AND MARKETING
 
     Historically, the Founding Companies have used a variety of sales
strategies. The majority of the Founding Companies maintain dedicated
salespersons who seek to identify leads, qualify prospects and close sales
related to their specific training services and products. In some instances, the
salespersons also serve as the instructors or consultants for such services and
products. Generally, each of the Founding Companies targets its prospects
primarily through direct sales, public seminars, client referrals and a variety
of media, including direct mailings, the Founding Companies' web sites and trade
publications. In addition, several of the Founding Companies are able to obtain
clients as a result of the visibility of their principals, who have published
articles and books, appeared on television news shows or otherwise created a
strong reputation in their various fields of training. The Company currently
markets its services and products to its clients mainly through their human
resources personnel, business unit managers or regional managers and, to a
lesser extent, through senior executives. However, the Company intends to focus
increasingly on marketing to senior executives of both existing and targeted
clients through initial contacts made by members of the Company's Board of
Directors and senior management, as well as by the principals of the Founding
Companies.
 
     The Company generates significant revenues through sales of services and
products to government entities. Typically, these sales occur through a
competitive bidding process started by a government entity's issuance of a
request for proposal ("RFP") for a contemplated project. The Company may submit
a proposal on its own behalf or as a subcontractor to another company. Many
services and products delivered to federal government agencies are provided
through orders placed under a General Services Administration ("GSA") Supply
Schedule contract and under Office of Personnel Management/Training Management
Assistance ("OPM"). The Company is one of only a few training providers
authorized under both funding mechanisms. The Company (through Star) benefits
from its status as a preferred provider under certain funding mechanisms
(including the GSA and OPM vehicles) which allow it to negotiate contracts
without an RFP.
 
     Following the consummation of the Offering, the Company expects to
capitalize on cross-selling opportunities among the clients of the Founding
Companies. The Company intends to hire additional salespeople to supplement the
existing sales efforts of the Founding Companies and establish a nationwide
telemarketing program focusing on medium-sized corporations. In addition, the
Company is developing a marketing and advertising program to establish a
national brand identification under the Provant name, while preserving the value
of the established names, trademarks and customer relationships of the Founding
Companies.
 
                                       44
46
 
COMPETITION
 
     The training and development industry is highly fragmented and competitive,
and the Company expects this competition to increase. The Company believes the
principal competitive factors in the industry are the strength of client
relationships, quality, price and breadth of service and product offerings,
quality and number of delivery methods, reputation, and the ability to provide
customized services and products. Some of the Company's competitors have
significantly greater financial, managerial, technical, marketing and other
resources than the Company. Moreover, the Company expects that it will face
additional competition from new entrants into the training and development
market due, in part, to the evolving nature of the market and the relatively low
barriers to entry.
 
     The Company competes with thousands of privately-held training companies,
most of which provide a limited range of services and products. In addition to
these small competitors, a number of larger companies are engaged in the
business of providing training and development services and products, including
Times Mirror Training Group (a subsidiary of the Times Mirror Company), The
Forum Corporation, Development Dimensions International, Wilson Learning
Corporation and several large publishers of professional reference materials who
recently have entered the industry. The Company also competes with large
professional service companies such as Andersen Consulting, Ernst & Young LLP,
Towers Perrin and others that generally offer training services in conjunction
with strategic consulting and other client assignments of larger scope. In
addition, many of the Company's clients and potential clients have internal
training departments. See "Business -- Market Overview."
 
     The Company's competitors for government contracts include service
companies such as Booz Allen, as well as contract suppliers of equipment to the
government such as Raytheon Company, McDonnell-Douglas Corporation and Lockheed
Martin Corporation.
 
INTELLECTUAL PROPERTY
 
     The Company regards many of its training and development services and
products as proprietary and relies primarily on a combination of statutory and
common law copyright, trademark, service mark and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. Notwithstanding this, a third
party or parties could copy or otherwise obtain and use the Company's products
in an unauthorized manner or use these products to develop training and
development processes that are substantially similar to those of the Company.
The Company's products generally do not include any mechanisms to prohibit or
prevent unauthorized use by third parties. There can be no assurance that the
Company's means of protecting its proprietary rights will be adequate or that
the Company's competitors will not independently develop similar training
products and delivery methods. Additionally, there can be no assurance that
third parties will not claim that the Company's current or future products
and/or services infringe on the proprietary rights of others. See "Risk
Factors -- Risks Associated with Intellectual Property."
 
EMPLOYEES
 
     The Company currently employs approximately 600 full-time and part-time
employees and believes that its relationships with its employees are good.
 
INDEPENDENT CONTRACTORS
 
     The Company provides certain of its services and products through
approximately 200 independent contractors. The Company does not pay federal
employment taxes or withhold income taxes with respect to these independent
contractors or include them in the Company's employee benefit plans. See "Risk
Factors -- Independent Contractor Status."
 
                                       45
47
 
FACILITIES
 
     The Company leases its principal executive office located in Boston,
Massachusetts, and maintains 23 additional leased office locations in 12 states
and one in Canada. The remaining terms of the Company's leases are less than
eight years. The Company believes that these facilities are adequate to serve
its current level of operations. If additional facilities are required, the
Company believes that suitable additional or alternative space will be available
as needed on commercially reasonable terms.
 
LEGAL PROCEEDINGS
 
     The Company is from time to time a party to litigation arising in the
ordinary course of business. Management believes that no pending legal
proceeding will have a material adverse effect on the business, financial
condition or results of operations of the Company.
 
                                       46
48
 
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
     The following table sets forth information concerning the Company's
directors and executive officers, and those persons who will become directors
and executive officers upon the consummation of the Offering.
NAME                  AGE                  POST-OFFERING POSITION
-----------------------------------  ---   ----------------------------------------------------
Paul M. Verrochi...................  49    Chairman and Chief Executive Officer
John H. Zenger.....................  66    President and Director
Dominic J. Puopolo.................  54    Executive Vice President, Chief Financial Officer
                                           and Director
Rajiv Bhatt........................  40    Senior Vice President, Treasurer and Chief
                                           Accounting Officer
Philip Gardner.....................  34    Vice President
Herbert A. Cohen...................  61    President - MOHR, Director
Bert Decker........................  57    President - Decker, Director
Paul C. Green......................  56    President - BTI, Director
Joe Hanson.........................  40    Managing Director - Novations, Director
John F. King.......................  43    President - LSS, Director
A. Carl von Sternberg..............  69    President - Star, Director
Marc S. Wallace....................  50    President - J. Howard, Director
Michael J. Davies..................  53    Director
Paul M. Verrochi will become Chairman of the Board and Chief Executive
Officer of the Company upon the consummation of the Offering. Prior to the
Offering, Mr. Verrochi has been President and a director of Provant. Mr.
Verrochi also is Chairman, co-founder and a principal of American Business
Partners LLC ("ABP"). In 1992, Mr. Verrochi co-founded American Medical
Response, Inc. ("AMR"), which prior to its acquisition by Laidlaw Inc. in
January 1997 was the largest provider of ambulance services in the United
States. From August 1992 to January 1996, Mr. Verrochi served as AMR's President
and Chief Executive Officer, and until January 1997 he also served as the
Chairman of the Board of Directors. Mr. Verrochi was selected as the 1995
National Entrepreneur of the Year for Emerging Growth Companies by Inc.
Magazine. Mr. Verrochi serves as an advisory board member to numerous charitable
foundations, including the New England Aquarium and the Boston Symphony
Orchestra. Mr. Verrochi is Chairman of BridgeStreet Accommodations, Inc. and a
director of Coach USA, Inc. Mr. Verrochi received his Bachelor of Science degree
from the United States Merchant Marine Academy at Kings Point, New York.
 
     John H. Zenger will become President and a director of the Company upon the
consummation of the Offering. Prior to the Offering, since May 1997, Mr. Zenger
has been a consultant to Provant. From April 1992 to November 1996, Mr. Zenger
was employed in various capacities, including Vice President and Chairman, by
the Times Mirror Training Group, the nation's largest group of training
companies, consisting of Kaset, Learning International and Zenger Miller, the
company that he founded in 1977. Mr. Zenger has taught at the University of
Southern California School of Business and the Stanford Graduate School of
Business. Mr. Zenger received his Doctorate degree in Business Administration
from the University of Southern California, his Masters in Business
Administration from the University of California, Los Angeles and his Bachelor
of Science degree from Brigham Young University.
 
     Dominic J. Puopolo will become Executive Vice President and Chief Financial
Officer of the Company upon the consummation of the Offering. Prior to the
Offering, Mr. Puopolo has been Treasurer and a director of Provant. Mr. Puopolo
is a co-founder and principal of ABP. In 1992, Mr. Puopolo co-founded AMR. From
August 1992 to January 1996, Mr. Puopolo served as Executive Vice President,
Chief Financial Officer, Treasurer and a member of the Board of Directors of
AMR. Mr. Puopolo serves as a member of the Board of Trustees of Emerson College
of Communications and is Chairman of its Resource Development Committee. Mr.
Puopolo also serves on the Executive Committee of the Boston University School
of Medicine and is a
 
                                       47
49
 
member of the Board of Trustees of Northeastern University. Mr. Puopolo, a
Certified Public Accountant, is a member of the Massachusetts Society of
Certified Public Accountants, The American Institute of Certified Public
Accountants and the National Association of Accountants. Mr. Puopolo received
his Masters in Business Administration degree from Suffolk University and his
Bachelor of Science degree in Business Administration from Northeastern
University.
 
     Rajiv Bhatt will become Senior Vice President, Treasurer and Chief
Accounting Officer of the Company upon the consummation of the Offering. Prior
to the Offering, since August 1997, Mr. Bhatt has been a consultant to Provant.
From September 1994 to August 1997, Mr. Bhatt was Executive Vice President,
Chief Financial Officer and Treasurer of Summit Technology, Inc., a
publicly-traded manufacturer of ophthalmic laser systems. From September 1988 to
September 1994, Mr. Bhatt was Chief Financial Officer, Secretary and a member of
the Board of Directors of Carlisle Plastics, Inc., a publicly-traded plastics
manufacturer. Also from September 1988 to September 1994, Mr. Bhatt was Chief
Financial Officer of Carlisle Capital Corporation, a privately held mergers and
acquisitions company. Mr. Bhatt is a Certified Public Accountant. Mr. Bhatt
received his Masters in Business Administration degree from the University of
Michigan and his Bachelor of Commerce degree from the University of Bombay.
 
     Philip Gardner will become Vice President of the Company upon the
consummation of the Offering. Prior to the Offering, since February 1997, Mr.
Gardner has been a consultant to Provant. From August 1994 to December 1996, Mr.
Gardner was a consultant for McKinsey & Company ("McKinsey"), a management
consulting firm. Prior to joining McKinsey, from 1985 to 1992, Mr. Gardner was
an officer and a highly decorated strike fighter pilot in the United States
Navy. Mr. Gardner received his Masters in Business Administration degree from
Harvard Graduate School of Business Administration and his Bachelor of Arts
degree in Government from Harvard College.
 
     Herbert A. Cohen will become a director of the Company immediately
following the consummation of the Offering. Mr. Cohen has been Chief Executive
Officer of MOHR since February 1991. From September 1978 to January 1991, Mr.
Cohen was a partner and one of the original principals of MOHR Development,
Inc., a training and consulting company. Mr. Cohen has served as President and
Director of the Instructional Systems Association, an association of over 150
training companies dedicated to improving performance through training. Mr.
Cohen received his Bachelor of Science degree in Psychology from the University
of Maine.
 
     Bert Decker will become a director of the Company immediately following the
consummation of the Offering. Mr. Decker has been Chairman and Chief Executive
Officer of Decker since October 1979. Mr. Decker is the author of the
best-selling books You've Got to be Believed to be Heard and Creating Messages
That Motivate. Mr. Decker also is the personal communications trainer for
Charles Schwab and Olympic gold medalist Bonnie Blair. Mr. Decker has appeared
on several national television programs, including The Today Show and 20/20. Mr.
Decker received his Bachelor of Arts degree in Psychology from Yale University.
 
     Paul C. Green, Ph.D. will become a director of the Company immediately
following the consummation of the Offering. Dr. Green has been Chief Executive
Officer of BTI since May 1979. Dr. Green developed the Behavioral
Interviewing(R) seminar, which has been attended by several hundred thousand
managers worldwide. Dr. Green has also served as Assistant Professor in the
Marketing Department at Memphis State University, where he taught courses in
salesmanship, sales promotion, sales management and consumer behavior. Dr. Green
received his Doctorate degree in Industrial-Organizational Psychology from
Memphis State University, his Master of Science degree in Psychology from
Memphis State University and his Bachelor of Arts degree from Lambuth College.
 
     Joe Hanson will become a director of the Company immediately following the
consummation of the Offering. Mr. Hanson has been a Managing Director of
Novations since August 1989. From September 1983 to June 1987 Mr. Hanson was a
consultant for KPMG Peat Marwick LLP. Mr. Hanson is a Certified Public
Accountant. Mr. Hanson received his Masters in Business Administration degree
from Brigham Young University and his Bachelor of Science degree in Accounting
from Brigham Young University.
 
                                       48
50
 
     John F. King will become a director of the Company immediately following
the consummation of the Offering. Mr. King has been Chief Executive Officer of
LSS since December 1990. From October 1981 to November 1988, Mr. King was
employed by Wilson Learning where he served in various capacities including
Regional Sales Manager, Account Executive, and Performance Consultant. Mr. King
previously served as Professor of Communications Studies at McKendree College.
Mr. King received his Master of Arts degree in Communication Studies, Mass
Communications from Purdue University and his Bachelor of Arts degree from
California State University, Long Beach.
 
     A. Carl von Sternberg will become a director of the Company immediately
following the consummation of the Offering. Mr. von Sternberg has been President
of Star since September 1987. In 1975, Mr. von Sternberg founded Allen
Corporation of America ("Allen") a firm specializing in training, human factors,
engineering and logistics services. From October 1975 to May 1986, Mr. von
Sternberg was President and Chairman of Allen, which was selected in 1982 by
Inc. Magazine as one of America's 500 fastest growing private companies. Prior
to founding Allen, Mr. von Sternberg served as Executive Vice President and
Chief Operating Officer of Essex Corporation, a behavioral science research
company, which he co-founded in 1969. Mr. von Sternberg received his Bachelor of
Science degree in Industrial Administration from Yale University.
 
     Marc S. Wallace will become a director of the Company immediately following
the consummation of the Offering. Mr. Wallace has been President of J. Howard
since January 1991 and Treasurer since April 1986. Mr. Wallace serves on the
Boards of Directors of Belmont Hill School and the Berklee School of Music, on
the Board of Advisors of First Community Bank in Boston and as a member of the
Northeastern University Corporation. Mr. Wallace also is a member of the Boston
Chamber of Commerce. Mr. Wallace received his Masters in Business Administration
degree with a concentration in Finance from Central Michigan University and his
Bachelor of Arts degree from Adams State College.
 
     Michael J. Davies will become a director of the Company upon the
consummation of the Offering. Mr. Davies has been a consultant to Provant since
February 1997, and will continue to be a consultant following the Offering. From
April 1994 to June 1997, Mr. Davies was a Managing Director of Legg Mason Wood
Walker, Incorporated, specializing in media and communications. From September
1990 to March 1993, Mr. Davies was publisher of The Baltimore Sun. Mr. Davies is
a member of the Board of Directors of Mecklermedia Corporation, a provider of
Internet news, information and analysis through its magazines, trade shows and
web site. Mr. Davies received his Master of Science degree in Journalism from
the Medill School of Journalism at Northwestern University and his Bachelor of
Science degree from Georgia State University.
 
MANAGEMENT OF THE COMPANY FOLLOWING THE COMBINATION
 
     Upon the consummation of the Offering, the Company intends to operate with
a decentralized management structure. Messrs. Verrochi, Zenger, Puopolo, Bhatt
and Gardner will manage the Company's operations and be responsible for areas
including strategic planning, acquisitions, resource allocation, capital
financing, financial reporting, marketing efforts and human resources. They will
work closely with the Founding Companies to coordinate, integrate and expand
their service and product offerings. Messrs. Cohen, Decker, Green, Hanson, King,
von Sternberg and Wallace (together with the other key executives of the
Founding Companies) will continue to make day-to-day operating decisions and be
primarily responsible for the operations of their respective Founding Companies.
 
BOARD OF DIRECTORS
 
     After consummation of the Combination and the Offering, the Board of
Directors will consist of 11 directors. In addition, following the Offering, the
Board expects to elect three outside directors. The term of office of each
director of the Company ends at the next annual meeting of the Company's
stockholders and when his or her successor is elected and qualified. Following
the Offering, the Board of Directors will establish an Audit Committee, a
Compensation Committee and such other committees as the Board may determine. The
Audit Committee, a majority of which will be outside directors, will make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans for and results of the
Company's annual audit, approve professional services provided by and the
independence
 
                                       49
51
 
of the independent public accountants, consider the range of audit and non-audit
fees, and review the adequacy of the Company's internal accounting controls. The
Compensation Committee, all of which will be outside directors, will establish a
general compensation policy for the Company, approve increases in directors'
fees and salaries paid to officers and senior employees of the Company,
administer the Company's 1998 Equity Incentive Plan, Stock Plan for Non-Employee
Directors and 1998 Employee Stock Purchase Plan, and determine, subject to the
provisions of the Company's employee benefit plans, the directors, officers and
employees of the Company eligible to participate in any of the plans, the extent
of such participation and the terms and conditions under which benefits may be
vested, received or exercised.
 
     Officers of the Company serve at the pleasure of the Board of Directors,
subject to the terms of any employment agreements with the Company.
 
DIRECTOR COMPENSATION
 
     Members of the Board of Directors who also serve as officers of or
full-time consultants to the Company or its subsidiaries do not receive
compensation for serving on the Board. Each other member of the Board will
receive a fee of $3,000 for each Board of Directors meeting attended and an
additional fee of $500 for each committee meeting attended. All directors will
receive reimbursement of reasonable expenses incurred in attending Board and
committee meetings and otherwise carrying out their duties. Non-employee
directors also are entitled to receive an option grant as described in "-- Stock
Plan for Non-Employee Directors."
 
EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS
 
     The Company was incorporated in 1996 and has conducted no operations and
paid no compensation to its officers in fiscal 1997. The Company has entered
into employment agreements, the terms of which are effective upon the closing of
the Offering, with its executive officers. The material terms of these
agreements are summarized below.
 
     The Company's employment agreement with each of Messrs. Verrochi, Zenger,
Puopolo, Bhatt and Gardner has a term of three years, and provides for an
initial base salary (subject to upward adjustment in the sole discretion of the
Company's Board of Directors) and participation in the Company's bonus and
benefit plans. The initial base salaries for Messrs. Verrochi, Zenger, Puopolo,
Bhatt and Gardner are $50,000, $150,000, $50,000, $200,000 and $125,000,
respectively. The salaries to be paid to Messrs. Verrochi and Puopolo after the
first year of the term of their employment agreements will be determined by the
Company's Board of Directors. Each of the five agreements may be terminated
prior to the expiration of the three-year term either in the event of disability
or for cause (as defined). If any of the individuals does not continue to be
employed by the Company upon the expiration of the agreement, the individual is
entitled to receive six months' severance at his base salary as in effect at the
time of expiration. Each of Messrs. Verrochi, Zenger, Puopolo, Bhatt and Gardner
has agreed not to compete with the Company for a period of five years from the
closing date of the Offering. Under their employment agreements, Messrs.
Verrochi and Puopolo are entitled to receive options to purchase 44,092 shares
of Common Stock each. See "-- Equity Incentive Plan."
 
     The principals of the Founding Companies who will become directors of the
Company immediately following the closing of the Combination will enter into a
three-year employment agreement with the Company or a subsidiary of the Company,
the material terms of which are described in "Certain Transactions --
Organization of the Company."
 
EQUITY INCENTIVE PLAN
 
     The Company has adopted the 1998 Equity Incentive Plan (the "Equity
Incentive Plan"), which provides for the award of up to 1,100,000 shares of
Common Stock in the form of incentive stock options ("ISOs"), non-qualified
stock options, stock appreciation rights, performance shares, restricted stock
or stock units (each, an "Award"). All directors and employees of, and all
consultants and advisors to, the Company (including its subsidiaries) are
eligible to participate in the Equity Incentive Plan.
 
                                       50
52
 
     The Equity Incentive Plan will be administered by the Compensation
Committee (the "Committee"), which determines who shall receive Awards from
those individuals eligible to participate in the Equity Incentive Plan, the type
of Award to be made, the number of shares of Common Stock that may be acquired
pursuant to the Award and the specific terms and conditions of each Award,
including the purchase price, term, vesting schedule, restrictions on transfer
and any other conditions and limitations applicable to the Awards or their
exercise. Options that are ISOs may be exercisable for not more than 10 years
after the date the option is awarded. The Committee may at any time accelerate
the exercisability of all or any portion of an option.
 
     In the event of a merger or consolidation in which the Company is not the
surviving corporation or which results in the acquisition of substantially all
the Company's outstanding shares of capital stock, or in the event of the sale
or transfer of substantially all of the Company's assets, if the Committee so
determines, all outstanding Awards will terminate, provided that on or before 20
days prior to the proposed effective date of any such transaction, the Committee
either (i) makes all outstanding Awards exercisable prior to the consummation of
the transaction or (ii) arranges for the surviving or acquiring corporation, if
any, to assume the Awards or grant to participants replacement Awards.
 
     The Equity Incentive Plan may be amended from time to time or terminated in
its entirety by the Board of Directors; however, no amendment may be made
without stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.
 
     In connection with the Offering, the Company will grant Messrs. Verrochi,
Zenger, Puopolo, Bhatt and Gardner options to purchase 44,092, 100,000, 44,092,
50,000 and 10,000 shares of Common Stock, respectively, each of which will have
a per share exercise price equal to the initial offering price. The options
granted to Messrs. Zenger, Bhatt and Gardner will become exercisable with
respect to one-third of the underlying shares of Common Stock on each of the
first three anniversaries of the date of grant, and the options granted to
Messrs. Verrochi and Puopolo will become exercisable with respect to all of the
underlying shares of Common Stock upon the closing of the Offering. Mr. Davies
also will be granted an option to purchase 50,000 shares of Common Stock, the
terms of which are described in "Certain Transactions."
 
     In addition to the options to be granted to Messrs. Verrochi, Zenger,
Puopolo, Bhatt, Gardner and Davies, the Company will award to employees and
consultants of the Founding Companies and Provant options under the Equity
Incentive Plan to purchase an aggregate of 535,280 shares of Common Stock, with
each such option having a per share exercise price equal to the initial public
offering price.
 
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
 
     The Company's Board of Directors has adopted the Stock Plan for
Non-Employee Directors (the "Directors' Plan"). Subject to adjustment for stock
splits and similar events, a total of 100,000 shares of Common Stock have been
reserved for issuance under the Directors' Plan. Pursuant to the Directors'
Plan, in connection with the Offering, each director and director nominee who is
not an employee of or consultant to the Company or one of its subsidiaries (a
"non-employee director") and is not a stockholder of the Company prior to the
offering will receive an option to purchase 7,500 shares of Common Stock with a
per share exercise price equal to the initial public offering price. Each
non-employee director initially elected following the Offering will be granted
upon such election an option to purchase 7,500 shares of Common Stock. The per
share exercise price of options granted following the Offering will be the fair
market value of the Common Stock on the date of grant. Each option will be
non-transferable except upon death (unless otherwise approved by the Board),
will expire 10 years after the date of grant and will become exercisable with
respect to all of the shares of Common Stock issuable thereunder on the date
that is six months following the date of grant if the individual is a director
at such time. If the director dies or otherwise ceases to be a director prior to
the expiration of an option, the option (if exercisable) will remain exercisable
for a period of one year (following death) or three months (following other
termination of the individual's status as a director), but in no event beyond
the tenth anniversary of the date of grant. The Board of Directors may at any
time or times amend the Directors' Plan for any purpose that at the time may be
permitted by law.
 
     As of the date of the closing of the Offering, no options will have been
granted under the Directors' Plan.
 
                                       51
53
 
STOCK PURCHASE PLAN
 
     The 1998 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan")
has been approved by the Board of Directors and stockholders of the Company. The
Employee Stock Purchase Plan is designed to enable eligible employees to
purchase shares of Common Stock at a discount on a periodic basis through
payroll deductions. All employees with at least six months of continuous
service, other than employees owning 5% or more of the combined voting power of
all classes of stock of the Company, will be eligible to participate. Purchases
will occur at the end of option periods, each of six months' duration. The first
such option period will begin on July 1, 1998. The purchase price of Common
Stock under the Employee Stock Purchase Plan will be 85% of the lesser of the
value of the Common Stock at the beginning of an option period and the value of
the Common Stock at the end of the option period. Participants may elect under
the Employee Stock Purchase Plan, prior to each option period, to have from 2%
to 10% of their pay withheld and applied to the purchase of shares at the end of
the option period.
 
     Subject to adjustment for stock splits and similar events, a total of
500,000 shares of Common Stock has been reserved for issuance under the Employee
Stock Purchase Plan. None of these shares has been issued to date.
 
LIMITATION OF CERTAIN LIABILITY OF OFFICERS AND DIRECTORS
 
     As permitted by the DGCL, the Company's Certificate of Incorporation
provides for the elimination, subject to certain conditions, of the personal
liability of directors of the Company for monetary damages for breach of their
fiduciary duties. The directors, however, remain subject to equitable remedies
and to liability for breach of their duty of loyalty to the Company or its
stockholders. The Company's Certificate of Incorporation and By-laws also
provide that the Company will indemnify its directors and officers. In addition,
the Company maintains an indemnification insurance policy covering all directors
and officers of the Company. In general, the Company's Certificate of
Incorporation, By-laws and the indemnification insurance policy attempt to
provide the maximum protection permitted by Delaware law with respect to
indemnification and exculpation of directors and officers.
 
     Under the indemnification provisions of the Company's Certificate of
Incorporation and By-laws and the indemnification insurance policy, the Company
will repay certain expenses incurred by a director or officer in connection with
any civil or criminal action or proceeding, specifically including actions by or
in the name of the Company (derivative suits), where the individual's
involvement is by reason of the fact that he or she is or was a director or
officer of the Company. Such indemnifiable expenses include, to the maximum
extent permitted by law, attomey's fees, judgments, civil or criminal fines,
settlement amounts, and other expenses customarily incurred in connection with
legal proceedings. A director or officer will not receive indemnification if he
or she is found not to have acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
Company.
 
                                       52
54
 
                             PRINCIPAL STOCKHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, after giving effect to the Combination,
by (i) each director and director nominee of the Company, (ii) certain executive
officers of the Company, (iii) all directors, director nominees and executive
officers as a group, and (iv) each person or entity known to the Company to own
beneficially more than 5% of the outstanding Common Stock. The persons named in
this table have an address c/o the Company's principal executive offices, and,
except as indicated in the footnotes below, have sole investment and voting
power with respect to the shares beneficially owned by them.
PERCENTAGE OWNED (2)
                                                                               ---------------------
                                                                SHARES          BEFORE       AFTER
                  NAME OF BENEFICIAL OWNER                        (1)          OFFERING     OFFERING
-------------------------------------------------------------  ---------       --------     --------
Paul M. Verrochi (3)(4)......................................  1,090,591         15.5%        11.3%
John H. Zenger...............................................    262,678          3.9          2.8
Dominic J. Puopolo (3)(5)....................................  1,023,222         14.6         10.6
Rajiv Bhatt..................................................     88,634          1.3            *
Philip Gardner...............................................    302,506          4.4          3.2
Herbert A. Cohen (6).........................................    112,903          1.7          1.2
Bert Decker..................................................    203,047          3.0          2.2
Paul C. Green................................................    425,352          6.3          4.5
Joe Hanson...................................................     74,059          1.1            *
John F. King.................................................    316,627          4.7          3.4
A. Carl von Sternberg (7)....................................    548,710          8.1          5.8
Marc S. Wallace..............................................    152,701          2.2          1.6
Michael J. Davies (8)........................................    335,424          4.9          3.5
All directors, director nominees and executive officers as a
  group (13 persons) (9).....................................  4,936,454         67.7         49.9
---------------
 *  Less than 1%.
 
(1) Share information assumes an initial public offering price of $12.00 per
    share. The Founding Companies' merger agreements specify the aggregate
    dollar values, but not the share amounts, of the Common Stock to be received
    by their stockholders in the Combination. As a result, if the initial public
    offering price is less or greater than $12.00, the Founding Companies'
    stockholders (and in particular, Messrs. Cohen, Decker, Green, Hanson, King,
    von Sternberg and Wallace) will receive a larger or smaller number of shares
    of Common Stock, respectively. In addition, Provant will declare a stock
    dividend on all outstanding Common Stock prior to the closing of the
    Combination such that, without giving effect to the Offering (but giving
    effect to the Combination), there will be outstanding a total of 6,805,605
    shares of Common Stock. The size of the stock dividend (and as a result, the
    number of shares of Common stock held by Messrs. Verrochi, Zenger, Puopolo,
    Bhatt, Gardner and Davies) will vary if the initial offering price is less
    or greater than $12.00, with the size of the dividend increasing if the
    initial public offering price increases and decreasing if the initial public
    offering price decreases.
 
(2) Percentages in the table are based upon 6,805,605 and 9,405,605 shares of
    Common Stock assumed to be outstanding as of the closing of the Combination
    and the Offering, respectively.
 
(3) Includes 176,368 shares (assuming that the individual does not exercise such
    warrant prior to the closing of the Offering) issuable pursuant to a warrant
    that currently is exercisable, and 44,092 shares issuable upon the exercise
    of an option that will become exercisable in full upon the closing of the
    Offering. Excludes 220,460 shares issuable upon the exercise of the
    Contingent Warrant described in "Certain Transactions."
 
(4) Includes 54,035 shares held by Mr. Verrochi's wife, and 125,500 shares held
    by a trust of which Mr. Verrochi is trustee and as to which Mr. Verrochi
    disclaims beneficial ownership.
 
(5) Includes 54,035 shares held by Mr. Puopolo's wife, and 125,500 shares held
    by a trust of which Mr. Puopolo is trustee and as to which Mr. Puopolo
    disclaims beneficial ownership.
 
(6) Includes 56,451 shares held by Mr. Cohen's wife.
 
(7) Includes 38,481 shares held by Mr. von Sternberg's wife.
 
(8) Includes 50,000 shares issuable upon the exercise of an option that will
    become exercisable in full upon the closing of the Offering.
 
(9) See notes 3, 4, 5, 6, 7 and 8 above.
 
                                       53
55
 
                              CERTAIN TRANSACTIONS
 
ORGANIZATION OF THE COMPANY
 
     The Combination will be accomplished through separate mergers of each
Founding Company with a separate, newly formed subsidiary of the Company. As a
result, after the closing of the Combination and the Offering (the "Closing"),
all of the assets, liabilities and business operations formerly held by each
Founding Company will exist in a separate subsidiary of the Company.
 
     Each of the merger agreements provides for the Company to pay the
stockholders of the Founding Company (i) a fixed amount of cash at the Closing
(subject to certain adjustments which have a neutral economic effect, as
discussed below), (ii) shares of Common Stock at the Closing having a fixed
dollar value, with the final number of shares being determined by the Offering
price, and (iii) with respect to six of the Founding Companies, shares of Common
Stock (the "Additional Consideration") deliverable after the Closing having a
value based on the initial public offering price up to a fixed dollar amount.
The Additional Consideration will be paid in shares of Common Stock, with the
number of those shares determined by a formula based on the relationship of the
EBIT of that Founding Company (including its successor following the Closing)
for the fiscal year ending June 30, 1998 to a specified EBIT target. For the
seventh Founding Company, Star, the stockholders will be entitled to receive
additional shares of Common Stock or cash in accordance with a formula based on
the amount by which the EBIT of Star and its successor following the Closing for
the fiscal year ending June 30, 1999 exceeds a specified EBIT target (the "Star
Contingent Consideration").
 
     The aggregate consideration to be paid by the Company in the Combination
shown below consists of approximately $22.5 million in cash (prior to any
adjustments discussed in the following paragraph) and 3,826,815 shares of Common
Stock at the Closing, and up to a maximum of 1,325,000 shares of Common Stock as
Additional Consideration (assuming the achievement of certain EBIT targets)
following the end of fiscal 1998.
AT CLOSING
                               ------------------------------------------
                                                        SHARES                 ADDITIONAL CONSIDERATION
                                              ---------------------------     ---------------------------
      FOUNDING COMPANY          CASH (1)      DOLLAR VALUE     NUMBER (2)     DOLLAR VALUE     NUMBER (2)
-----------------------------  ----------     ------------     ----------     ------------     ----------
BTI..........................  $5,000,000      $ 5,848,656        487,388      $ 2,000,000        166,666
Decker.......................   1,550,000        4,533,333        377,778        3,000,000        250,000
J. Howard....................   1,700,000        4,072,043        339,337        3,300,000        275,000
LSS..........................   2,625,000        7,677,419        639,785        1,000,000         83,333
MOHR.........................   1,200,000        2,709,677        225,806        2,000,000        166,666
Novations....................   4,987,500        8,887,097        740,592        4,600,000        383,333
Star.........................   5,400,000       12,193,548      1,016,129          *               *
---------------
 *  Excludes the Star Contingent Consideration.
 
(1) Prior to the adjustments discussed below.
 
(2) Assuming an initial public offering price of $12.00 per share.
 
     Each of the mergers in the Combination is conditioned upon the applicable
Founding Company meeting certain specified financial standards as of the Closing
(which vary among the Founding Companies), including a specified minimum net
worth. If a Founding Company's net worth as of the Closing exceeds the specified
minimum, the cash portion of the purchase price set forth above will be
increased by a dollar amount equal to that excess. Each Founding Company may
make a cash dividend to its stockholders prior to the Closing so long as doing
so will not prevent such Founding Company from satisfying the financial
standards specified in its merger agreement.
 
     The consideration to be paid for the Founding Companies was determined
through arm's length negotiations between Provant and representatives of each
Founding Company. The factors considered by the
 
                                       54
56
 
parties in determining the consideration to be paid included, among others, the
pro forma adjusted EBIT, net worth and future prospects of the Founding
Companies.
 
     In connection with the Combination, the following principals of the
Founding Companies who will become directors of the Company immediately
following the Closing will receive the following: Mr. Cohen, $600,000 and
112,903 shares of Common Stock (including cash and shares issued to his wife);
Mr. Decker, $833,092 and 203,047 shares of Common Stock; Dr. Green, $4,495,414
and 425,352 shares of Common Stock; Mr. Hanson, $498,750 and 74,059 shares of
Common Stock; Mr. King, $968,100 and 316,627 shares of Common Stock; Mr. von
Sternberg, $2,498,655 and 548,710 shares of Common Stock (including cash and
shares issued to his wife); and Mr. Wallace, $765,000 and 152,701 shares of
Common Stock.
 
     The consummation of the Combination is subject to completion of the
Offering and customary conditions including, among others, the continuing
accuracy at the Closing of the representations and warranties made by the
Founding Companies and the Company in the merger agreements, receipt of all
necessary consents and approvals, delivery of opinions of counsel, the
performance of covenants included in the agreements relating to the Combination,
and the nonexistence of a material adverse change in the business, results of
operations or financial condition of each Founding Company. The merger
agreements provide that certain stockholders of the Founding Companies will
indemnify Provant against certain liabilities, including breaches of such
Founding Company's representations and warranties thereunder.
 
     Pursuant to the agreements entered into in connection with the Combination,
the principal stockholders of the Founding Companies have agreed not to compete
with the Company for five years, commencing as of the Closing. In addition, the
principal stockholders and certain other employees of each of the Founding
Companies will enter into three-year employment agreements with the Company.
Each such agreement with a Founding Company's director nominee (i.e., Messrs.
Cohen, Decker, Green, Hanson, King, von Sternberg and Wallace) will provide for
an initial base salary of $175,000 (except for Mr. Decker's agreement which will
provide for a base salary of $125,000), subject to upward adjustment in the sole
discretion of the Company, and in most cases participation in the Company's
bonus and benefit plans. Each agreement may be terminated prior to the
expiration of the three-year term either in the event of disability or for cause
(as defined). If the individual does not continue to be employed by the Company
upon the expiration of the agreement, the individual shall be entitled to
receive six months' severance at his base salary as in effect at the time of
expiration.
 
     Certain of the indebtedness of the Founding Companies currently is
personally guaranteed by their respective stockholders. The Company will repay
such indebtedness at the Closing, and the guarantees will be released. In
particular, the Company will repay amounts owed by Novations (which totalled
approximately $1.0 million as of September 30, 1997) and Star (which totalled
approximately $1.7 million as of September 30, 1997) which are personally
guaranteed by Messrs. Hanson and von Sternberg, respectively. In addition, the
Company will assume in the Combination indebtedness of the Founding Companies
that had an aggregate outstanding balance of $1.5 million as of September 30,
1997.
 
     The former stockholders of the Founding Companies will agree that, for a
period of two years following the Closing, they will not sell any shares of
Common Stock received by them in connection with the Combination other than
pursuant to an effective registration statement under the Securities Act. The
Company has no obligation to provide such a registration statement but, in the
event the Company decides to register any shares received by any stockholder in
the Combination, or any shares of Common Stock issued or issuable pursuant to
options and warrants granted by Provant prior to the Closing, it must give each
of the Company's stockholders (giving effect to the Combination but not the
Offering) the opportunity to register a pro rata amount thereunder. In addition,
between the second and third anniversary of the Closing, these stockholders may
only sell such shares through a broker or brokers designated by the Company.
 
                                       55
57
 
OTHER TRANSACTIONS
 
  Organization of Provant
 
     In connection with the founding and organization of Provant, Messrs.
Verrochi, Zenger, Puopolo, Gardner, Davies and Donald W. Glazer purchased shares
of Common Stock for an aggregate purchase price of approximately $3,250. As a
result of such purchases, these individuals beneficially own the following: Mr.
Verrochi, 870,131 shares; Mr. Zenger, 262,678 shares; Mr. Puopolo, 802,762
shares; Mr. Gardner, 302,506 shares; Mr. Davies, 285,424 shares; and Mr. Glazer,
303,116 shares. Mr. Glazer will enter into a consulting agreement with the
Company having a term of two years from the Closing, and providing for an annual
consulting fee of $125,000.
 
  American Business Partners LLC
 
     During 1997, members of the management team and certain consultants were
assembled by American Business Partners LLC ("ABP") to pursue the consolidation
of companies in the training and development industry. Mr. Verrochi, Chairman of
the Board and Chief Executive Officer of the Company, and Mr. Puopolo, Executive
Vice President and Chief Financial Officer of the Company, are members of ABP.
ABP provided the Company with expertise regarding the consolidation process.
 
     Expenses paid by the Company prior to the Closing in connection with the
Combination and the Offering have been financed with funds advanced to the
Company by Messrs. Verrochi and Puopolo. Outstanding advanced amounts bear
interest at an annual rate equal to the prime rate of interest as from time to
time published in The Wall Street Journal. The Company will repay certain of the
advanced amounts plus interest to Messrs. Verrochi and Puopolo at the Closing
out of the proceeds of the Offering. See "Use of Proceeds." As of December 31,
1997, Messrs. Verrochi and Puopolo had advanced approximately $1.0 million to
the Company for such expenses.
 
     As partial consideration for their commitment to extend the financing
described above, Messrs. Verrochi and Puopolo each received two warrants. The
first warrant entitles the holder to purchase 176,368 shares of Common Stock at
a per share exercise price equal to the initial public offering price. The
second warrant entitles the holder to purchase 220,460 shares of Common Stock
which will become exercisable only if the market price of the Common Stock
increases to certain threshold levels (except as otherwise described below) (the
"Contingent Warrant"). Specifically, 20% of the total number of shares issuable
under the Contingent Warrant will become exercisable on each of the three
occasions that the market price of the Common Stock increases by 100%, 200%,
300%, respectively, from the initial public offering price, and the remaining
40% of the total number of shares issuable under the Contingent Warrant will
become exercisable if the market price of the Common Stock increases by 400%.
However, under certain circumstances involving the merger or sale of the
Company, the Contingent Warrant will become exercisable to purchase all of the
warrant shares. The exercise price of the Contingent Warrant increases on each
anniversary of the closing of the Offering. Specifically, the exercise price is
equal to the initial public offering price for the first 12 months following the
closing of the Offering and, for each 12 month period thereafter, is equal to
the initial public offering price plus 10% of the initial public offering price
multiplied by the number of full 12 month periods elapsed since the closing of
the Offering. However, once a portion of the Contingent Warrant becomes
exercisable, that portion's exercise price is fixed as of that date. All four
warrants expire on the seventh anniversary of the closing of the Offering. The
holders of the warrants have the right to require the Company to register the
resale of the shares that may be acquired upon exercise of the warrants under
the Securities Act.
 
     In June 1997, Messrs. Verrochi and Puopolo sold to the Company furniture
and equipment for its corporate executive offices for an aggregate purchase
price of $150,000. The Company believes that the purchase price approximated the
fair market value of the furniture and equipment.
 
OTHER TRANSACTIONS INVOLVING OFFICERS AND DIRECTORS
 
     Prior to the Offering, Provant had outstanding 2,978,790 shares of Common
Stock. All of such shares currently are beneficially owned by the proposed
management and directors of and consultants to Provant or
 
                                       56
58
 
members of their families. The holders of all such shares have agreed with the
Company that, for a period of two years following the Closing, they will not
sell any shares of Common Stock held by them as of the Closing (or that may be
purchased by them under options and warrants outstanding as of the Closing)
other than pursuant to an effective registration statement under the Securities
Act.
 
     Michael J. Davies, who will become a director of the Company upon the
consummation of the Offering, also will become a full-time consultant to the
Company. For the performance of his consulting duties, Mr. Davies will be paid
an annual fee of $100,000. In addition, in consideration for his agreement to
become a consultant, Mr. Davies will receive, prior to the Closing, an option to
purchase 50,000 shares of Common Stock, which will become exercisable upon the
Closing for all of the shares issuable thereunder at a per share exercise price
equal to the initial public offering price. Mr. Davies currently is a consultant
to Provant. For information regarding option grants to individuals who will
become executive officers of the Company upon the Closing, see
"Management -- Equity Incentive Plan."
 
     The Company intends to use $750,000 of the net proceeds of the Offering to
pay a fee due upon the Closing to Legg Mason Wood Walker, Incorporated for
proprietary information relating to the training and development industry
developed by Mr. Davies while he served as Managing Director at that company.
See "Use of Proceeds."
 
     As a result of the Combination, the Company will become a party to a
six-year lease of administrative offices, effective January 1, 1996, from Paul
C. Green, Ph.D., who will become a director of the Company immediately after the
Closing. For the years ended June 30, 1995, 1996 and 1997, rent expense paid to
Dr. Green pursuant to the lease was approximately $90,000, $76,000 and $85,000,
respectively. The Company believes that the terms of the lease are no less
favorable to the Company than could be obtained by the Company from
non-affiliated third parties.
 
     As a result of the Combination, the Company will become a party to a
five-year lease of office facilities renewable for an additional five years,
effective March 1997, from Novations Partners, L.L.C., a Utah limited liability
company (the "LLC") which is controlled by the stockholders of Novations. Joe
Hanson, one of the members of the LLC, will become a director of the Company
immediately after the Closing. The annual rent expense to be paid to the LLC is
$300,000 for the first year of the lease and increases 3% per year thereafter.
The Company believes that the terms of the lease are no less favorable to the
Company than could be obtained from non-affiliated third parties. In addition,
Novations has the right to receive amounts loaned by Novations to the LLC. The
balance due totalled approximately $192,000 as of September 30, 1997. All
outstanding amounts owed to Novations pursuant to these arrangements will be
paid by the LLC at or before the Closing.
 
     A. Carl von Sternberg was indebted to Star during 1997 under a promissory
note. Mr. von Sternberg will become a director of the Company immediately after
the Closing. Borrowings by Mr. von Sternberg under the note totalled
approximately $344,000 as of September 30, 1997. Outstanding principal amounts
owed under the note accrue interest from time to time at the prime rate of
interest as reported in The Wall Street Journal. All principal amounts owed
under the note, together with accrued interest, will be repaid by Mr. von
Sternberg on or before the consummation of the Combination.
 
     In December 1997, Marc S. Wallace, who will become a director of the
Company immediately after the Closing, incurred indebtedness to J. Howard
pursuant to two promissory notes in the aggregate principal amount of $75,000.
Outstanding principal amounts owed under the notes accrue interest from time to
time at an annual rate of 7.0%. The notes mature on May 31, 1998.
 
COMPANY POLICY
 
     The Company's policy is that any future transactions with directors,
officers, employees or affiliates of the Company be approved in advance by a
majority of the Company's Board of Directors, including a majority of the
disinterested members of the Board, and be on terms no less favorable to the
Company than the Company could obtain from non-affiliated parties.
 
                                       57
59
 
                          DESCRIPTION OF CAPITAL STOCK
 
GENERAL
 
     The Company's authorized capital stock consists of 45,000,000 shares of
capital stock, par value $.01 per share, consisting of 40,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock (the "Preferred Stock").
Without giving effect to the issuance of shares in the Offering (but giving
effect to the Combination), the Company has outstanding 6,805,605 shares of
Common Stock held by 70 stockholders, and no shares of Preferred Stock.
 
COMMON STOCK
 
     Immediately following the Combination and the Offering, the Company will
have outstanding 9,405,605 shares of Common Stock and options and warrants to
purchase an aggregate of 11,042,725 shares of Common Stock. A total of 1,100,000
shares of Common Stock are reserved for issuance under the Equity Incentive
Plan, 100,000 shares of Common Stock under the Directors' Plan and 500,000
shares of Common Stock under the Employee Stock Purchase Plan. Holders of Common
Stock are entitled to one vote for each share held of record on all matters
submitted to a vote of the stockholders, and do not have cumulative voting
rights. Subject to preferences that may be applicable to any outstanding shares
of Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors of the Company out of funds legally available therefor. See "Dividend
Policy." All outstanding shares of Common Stock are, and the shares to be issued
in the Combination and sold in the Offering when issued and paid for will be,
fully paid and nonassessable, and the holders thereof will have no preferences
or rights of conversion, exchange or pre-emption. In the event of any
liquidation, dissolution or winding-up of the affairs of the Company, holders of
Common Stock will be entitled to share ratably in the assets of the Company
remaining after payment or provision for payment of all of the Company's debts
and obligations and after liquidation payments to holders of outstanding shares
of Preferred Stock, if any.
 
PREFERRED STOCK
 
     The Preferred Stock, if issued, would have priority over the Common Stock
with respect to dividends and other distributions, including the distribution of
assets upon liquidation. The Board of Directors has the authority, without
further stockholder authorization, to issue from time to time shares of
Preferred Stock in one or more series and to fix the terms, limitations,
relative rights and preferences and variations of each series. Although the
Company has no present plans to issue any shares of Preferred Stock following
the closing of the Offering, the issuance of shares of Preferred Stock, or the
issuance of rights to purchase such shares, could decrease the amount of
earnings and assets available for distribution to the holders of Common Stock,
could adversely affect the rights and powers, including voting rights, of the
Common Stock, and could have the effect of delaying, deterring or preventing a
change in control of the Company or an unsolicited acquisition proposal.
 
WARRANTS TO PURCHASE COMMON STOCK
 
     The Company has issued warrants to Messrs. Verrochi and Puopolo, the terms
of which are more fully described in "Certain Transactions."
 
CERTAIN PROVISIONS
 
     Special Meetings of the Stockholders of the Company.  The Company's By-laws
provide that a special meeting of the stockholders of the Company only may be
called by the President, the Chairman of the Board or by order of the Board of
Directors. The By-laws do not authorize the stockholders to call a special
meeting of stockholders, potentially limiting the stockholders' ability to offer
proposals between annual meetings if no special meetings are otherwise called by
the President, Chairman or the Board.
 
                                       58
60
 
     No Action by Written Consent.  The Company's Certificate of Incorporation
does not permit the Company's stockholders to act by written consent. As a
result, any action to be taken by the Company's stockholders must be taken at a
duly called meeting of the stockholders.
 
STATUTORY BUSINESS COMBINATIONS PROVISION
 
     The Company is subject to the provisions of Section 203 of the DGCL
("Section 203"). Section 203 provides, with certain exceptions, that a Delaware
corporation may not engage in any of a broad range of business combinations with
a person, or an affiliate or associate of such a person, who is an "interested
stockholder" for a period of three years from the date that such person became
an interested stockholder unless: (i) the transaction resulting in a person
becoming an interested stockholder, or the business combination, is approved by
the Board of Directors of the corporation before the person becomes an
interested stockholder; (ii) the interested stockholder acquired 85% or more of
the outstanding voting stock of the corporation in the same transaction that
makes such person an interested stockholder (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) on or after the date the
person becomes an interested stockholder, the business combination is approved
by the corporation's board of directors and by the holders of at least 66 2/3%
of the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the disinterested stockholder. Under Section 203, an
"interested stockholder" is defined as any person who is (i) the owner of 15% or
more of the outstanding voting stock of the corporation or (ii) an affiliate or
associate of the corporation and who was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Company will be selected prior to
the closing of the Offering.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon the consummation of the Combination and the Offering, the Company will
have 9,405,605 shares of Common Stock issued and outstanding, and 1,637,120
shares of Common Stock issuable upon the exercise of outstanding options and
warrants. Of these shares, 2,600,000 shares sold pursuant to the Offering (or
2,990,000 shares, if the Underwriters' over-allotment option is exercised in
full) will be freely tradeable without restriction under the Securities Act,
except any shares purchased by an "affiliate" (as that term is defined under the
rules and regulations of the Securities Act) of the Company, which shares will
be subject to the resale limitations of Rule 144 of the Securities Act. The
remaining shares outstanding upon completion of the Offering may be resold
publicly only upon registration under the Securities Act or in compliance with
an exemption from the registration requirements of the Securities Act, including
the exemption provided by Rule 144.
 
     In general, under Rule 144, if a period of at least one year has elapsed
between the later of the date on which restricted securities were acquired from
the Company and the date on which they were acquired from an affiliate, then the
holder of such restricted securities (including an affiliate) is entitled to
sell that number of shares within any three-month period that does not exceed
the greater of (i) one percent of the then outstanding shares of Common Stock or
(ii) the average weekly reported volume of trading of Common Stock during the
four calendar weeks preceding such sale. Any shares of Common Stock issued as
Additional Consideration and Star Contingent Consideration will be deemed to
have been acquired at the Closing for purposes of Rule 144. Sales under Rule 144
also are subject to certain requirements pertaining to the manner of sales,
notices of sales and the availability of current public information concerning
the Company. Any shares not constituting restricted securities sold by
affiliates must be sold in accordance with the foregoing volume limitations and
other requirements but without regard to the one year holding period. Under Rule
144(k), if a period of at least two years has elapsed from the later of the date
on which restricted securities were acquired from the Company and the date on
which they were acquired from the affiliate, a
 
                                       59
61
 
holder of such restricted securities who is not an affiliate at the time of the
sale and has not been an affiliate for at least three months prior to the sale
would be entitled to sell the shares immediately without regard to the volume
limitations and other conditions described above.
 
     The Company and the holders of all shares outstanding prior to the Offering
(including the holders of shares issued in connection with the Combination) have
agreed with the Representatives of the Underwriters not to offer, sell, contract
to sell or otherwise dispose of any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for shares of Common Stock, for
a period of 180 days after the date of this Prospectus (the "Lock-up Period")
without the prior written consent of the Representatives, except for: (i) in the
case of the Company, Common Stock issued pursuant to the Company's Equity
Incentive Plan, Directors' Plan and Employee Stock Purchase Plan or in
connection with acquisitions; and (ii) in the case of all such holders, the
exercise of stock options pursuant to the benefit plans described herein and
shares of Common Stock disposed of as bona fide gifts, subject, in each case, to
any remaining portion of the Lock-up Period applying to any shares so issued or
transferred. In evaluating any request for a waiver of the Lock-up Period,
NationsBanc Montgomery Securities LLC will consider, in accordance with its
customary practice, all relevant facts and circumstances at the time of the
request, including, without limitation, the recent trading market for the Common
Stock, the size of the request and, with respect to a request by the Company to
issue additional equity securities, the purpose of such an issuance. See
"Underwriting." In addition, the stockholders of the Founding Companies and all
stockholders of the Company prior to the Offering have agreed to certain
transfer restrictions for a two-year period on all shares of Common Stock held
or to be held by them. See "Certain Transactions -- Organization of the Company"
and "-- Other Transactions Involving Officers and Directors."
 
     In the aggregate, 100,000 shares of Common Stock are reserved for issuance
under the Directors' Plan, 1,100,000 shares are reserved for issuance under the
Equity Incentive Plan and 500,000 shares are reserved for issuance under the
Employee Stock Purchase Plan. The Company presently intends to file a
registration statement under the Securities Act to register Common Stock to be
issued pursuant to the exercise of options or stock granted or to be granted
under the Directors' Plan, Equity Incentive Plan and Employee Stock Purchase
Plan. Common Stock issued after the effective date of such registration
statement upon the exercise of such options (or the purchase of Common Stock
under the Employee Stock Purchase Plan) would be available for immediate resale
in the open market, subject to compliance with Rule 144 in the case of
affiliates.
 
     Prior to the Offering, there has been no public market for the Common Stock
of the Company, and no predictions can be made of the effect, if any, that the
availability of shares for sale or the actual sale of shares will have on market
prices prevailing from time to time. Sales or the availability for sale of
substantial amounts of Common Stock in the public market could adversely affect
prevailing market prices and the ability of the Company to raise equity capital
in the future.
 
     After the Closing, the Company plans to register an additional 3,000,000
shares of Common Stock under the Securities Act for use as consideration for
future acquisitions. Any such shares issued by the Company to affiliates of
companies acquired by the Company will be subject for one year after the
acquisition to the limitations and restrictions on resale imposed by Rule 145
under the Securities Act.
 
                                       60
62
 
                                  UNDERWRITING
 
     The underwriters named below (the "Underwriters"), represented by
NationsBanc Montgomery Securities LLC, Salomon Smith Barney and Piper Jaffray
Inc. (the "Representatives"), have severally agreed, subject to the terms and
conditions in the underwriting agreement (the "Underwriting Agreement") by and
among the Company and the Underwriters, to purchase from the Company the number
of shares of Common Stock indicated below opposite its name, at the initial
public offering price less the underwriting discount set forth on the cover page
of this Prospectus. The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock, if
they purchase any.
UNDERWRITERS                                                   NUMBER OF SHARES
        -------------------------------------------------------------  ----------------
NationsBanc Montgomery Securities LLC........................
        Smith Barney Inc.............................................
        Piper Jaffray Inc............................................
                                                                             -------
                  Total..............................................      2,600,000
                                                                             =======
The Representatives have advised the Company that the Underwriters propose
initially to offer the Common Stock to the public on the terms set forth on the
cover page of this Prospectus. The Underwriters may allow selected dealers a
concession of not more than $          per share; and the Underwriters may
allow, and such dealers may reallow, a concession of not more than $
per share to certain other dealers. After the initial public offering, the
public offering price and other selling terms may be changed by the
Representatives. The Common Stock is offered subject to receipt and acceptance
by the Underwriters, and to certain other conditions, including the right to
reject orders in whole or in part.
 
     The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 390,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise such over-allotment
option, the Underwriters will be committed, subject to certain conditions, to
purchase such additional shares in approximately the same proportion as set
forth in the above table. The Underwriters may purchase such shares only to
cover over-allotments made in connection with the Offering.
 
     The Underwriting Agreement provides that the Company, its subsidiaries and
certain stockholders of the Founding Companies will indemnify the Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or will contribute to payments the Underwriters may be required to make in
respect thereof.
 
     The Company's officers and directors and all of the stockholders of the
Company prior to the Offering (including the holders of shares issued in
connection with the Combination) have agreed that during the Lock-up Period they
will not, without the prior written consent of NationsBanc Montgomery Securities
LLC, directly or indirectly sell, offer, contract or grant any option to sell,
pledge, transfer, establish an open put equivalent position or otherwise dispose
of any shares of Common Stock, options or warrants to acquire shares of Common
Stock or securities exchangeable or exercisable for or convertible into shares
of Common Stock. The Company also has agreed not to issue, offer, sell, grant
options to purchase or otherwise dispose of any of the Company's equity
securities during the Lock-up Period without the prior written consent of
NationsBanc Montgomery Securities LLC, except for securities issued by the
Company in connection with acquisitions and for grants and exercises of stock
options, subject in each case to any remaining portion of the Lock-up Period
applying to shares issued or transferred. In evaluating any request for a waiver
of the Lock-up Period, NationsBanc Montgomery Securities LLC will consider, in
accordance with their customary practice, all relevant facts and circumstances
at the time of the request, including, without limitation, the recent trading
market for the Common Stock, the size of the request, and, with respect to a
request by the Company to issue additional equity securities, the purpose of
such an issuance. See "Shares Eligible for Future Sale."
 
                                       61
63
 
     In connection with the Offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934 (the
"Exchange Act"), pursuant to which such persons may bid for or purchase Common
Stock for the purpose of stabilizing its market price. The Underwriters also may
create a short position for the account of the Underwriters by selling more
Common Stock in connection with the Offering than they are committed to purchase
from the Company and, in such case, may purchase Common Stock in the open market
following completion of the Offering to cover all or a portion of such short
position. The Underwriters may also cover all or a portion of such short
position, up to 390,000 shares of Common Stock, by exercising the Underwriters'
over-allotment option referred to above. In addition, NationsBanc Montgomery
Securities LLC, on behalf of the Underwriters, may impose "penalty bids" under
contractual arrangements with the Underwriters whereby it may reclaim from an
Underwriter (or dealer participating in the Offering), for the account of the
other Underwriters, the selling concession with respect to Common Stock that is
distributed in the Offering but subsequently purchased for the account of the
Underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the Common Stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.
 
     The Representatives have informed the Company that the Underwriters do not
expect to make sales of Common Stock offered by this Prospectus to accounts over
which they exercise discretionary authority in excess of 5% of the number of
shares of Common Stock offered hereby.
 
     Prior to the Offering, there has been no public trading market for the
Common Stock. Consequently, the initial public offering price of the Common
Stock will be determined by negotiations between the Company and the
Representatives. Among the factors to be considered in such negotiations will be
the results of operations of the Founding Companies in recent periods, the
prospects for the Company and the industry in which the Company competes, an
assessment of the Company's management, its financial condition, the prospects
for future earnings of the Company, the present state of the Company's
development, the general condition of the economy and the securities markets at
the time of the Offering and the market prices of and demand for publicly traded
common stock of comparable companies in recent periods.
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for the Company by Nutter, McClennen & Fish, LLP, Boston,
Massachusetts. Certain legal matters related to the Offering will be passed upon
for the Underwriters by Ropes & Gray, Boston, Massachusetts.
 
                                    EXPERTS
 
     The financial statements of Provant, Inc. as of June 30, 1997 and for the
period from November 16, 1996 (date of inception) to June 30, 1997, and the
financial statements of Behavioral Technology, Inc., Decker Communications,
Inc., J. Howard & Associates, Inc., Robert Steinmetz, Ph.D., and Associates,
Inc. d/b/a Learning Systems Sciences, MOHR Retail Learning Systems, Inc. and
Novations Group, Inc., have been included herein and in the Registration
Statement in reliance on the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, upon the authority of
said firm as experts in giving said reports.
 
     The consolidated financial statements of Star Mountain, Inc. and
subsidiaries included in this Prospectus, to the extent of and for the periods
indicated in the report, have been audited by Friedman & Fuller, P.C.,
independent public accountants, as indicated in its report with respect thereto,
and are included herein in reliance upon the authority of said firm as experts
in giving said reports.
 
                                       62
64
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (including any and all
amendments thereto, the "Registration Statement") under the Securities Act and
the rules and regulations promulgated thereunder, with respect to the Common
Stock offered hereby. This Prospectus omits certain information contained in the
Registration Statement, and reference is made to the Registration Statement and
the exhibits and schedules thereto for further information with respect to the
Company and the Common Stock offered hereby. Statements contained in this
Prospectus concerning the provisions or contents of any contract, agreement or
any other document referred to herein are not necessarily complete with respect
to each such contract, agreement or document filed as an exhibit to the
Registration Statement, and reference is made to such exhibit for a more
complete description of the matters involved, and each such statement shall be
deemed qualified by such reference. Upon completion of the Offering, the Company
will be subject to the information requirements of the Exchange Act, and in
accordance therewith will file reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information, as
well as the Registration Statement, including the exhibits and schedules
thereto, may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and at 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained from such offices, upon payment of the fees prescribed
by the Commission. The Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that submit electronic filings to the Commission.
 
     The Company intends to furnish its stockholders with annual reports
containing audited consolidated financial statements and an opinion thereon
expressed by an independent public accounting firm, and with quarterly reports
for the first three quarters of each fiscal year containing unaudited interim
consolidated financial information.
 
                                       63
65
 
                         INDEX TO FINANCIAL STATEMENTS
 
                  UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
 
                        HISTORICAL FINANCIAL STATEMENTS
PAGE
                                                                                        -----
PROVANT, INC. PRO FORMA:
  Basis of Presentation...............................................................  F-3
  Unaudited Pro Forma Combined Balance Sheet..........................................  F-4
  Unaudited Pro Forma Combined Statements of Operations...............................  F-5
  Notes to Unaudited Pro Forma Combined Financial Statements..........................  F-7
 
PROVANT, INC.:
  Independent Auditors' Report........................................................  F-12
  Balance Sheets......................................................................  F-13
  Statements of Operations............................................................  F-14
  Statements of Stockholders' Equity..................................................  F-15
  Statements of Cash Flows............................................................  F-16
  Notes to Financial Statements.......................................................  F-17
 
BEHAVIORAL TECHNOLOGY, INC.:
  Independent Auditors' Report........................................................  F-21
  Balance Sheets......................................................................  F-22
  Statements of Operations............................................................  F-23
  Statements of Stockholders' Equity..................................................  F-24
  Statements of Cash Flows............................................................  F-25
  Notes to Financial Statements.......................................................  F-26
 
DECKER COMMUNICATIONS, INC.:
  Independent Auditors' Report........................................................  F-29
  Balance Sheets......................................................................  F-30
  Statements of Operations............................................................  F-31
  Statements of Stockholders' Equity..................................................  F-32
  Statements of Cash Flows............................................................  F-33
  Notes to Financial Statements.......................................................  F-34
 
J. HOWARD & ASSOCIATES, INC.:
  Independent Auditors' Report........................................................  F-38
  Balance Sheets......................................................................  F-39
  Statements of Operations............................................................  F-40
  Statements of Stockholders' Equity..................................................  F-41
  Statements of Cash Flows............................................................  F-42
  Notes to Financial Statements.......................................................  F-43
 
LEARNING SYSTEMS SCIENCES (ROBERT STEINMETZ, PH.D., AND
  ASSOCIATES, INC. ):
  Independent Auditors' Report........................................................  F-47
  Balance Sheets......................................................................  F-48
  Statements of Operations............................................................  F-49
  Statements of Stockholders' Equity..................................................  F-50
  Statements of Cash Flows............................................................  F-51
  Notes to Financial Statements.......................................................  F-52
F-1
66
PAGE
                                                                                        -----
MOHR RETAIL LEARNING SYSTEMS, INC.:
  Independent Auditors' Report........................................................  F-55
  Balance Sheets......................................................................  F-56
  Statements of Operations............................................................  F-57
  Statements of Stockholders' Equity..................................................  F-58
  Statements of Cash Flows............................................................  F-59
  Notes to Financial Statements.......................................................  F-60
 
NOVATIONS GROUP, INC.:
  Independent Auditors' Report........................................................  F-63
  Balance Sheets......................................................................  F-64
  Statements of Operations............................................................  F-65
  Statements of Stockholders' Equity..................................................  F-66
  Statements of Cash Flows............................................................  F-67
  Notes to Financial Statements.......................................................  F-68
 
STAR MOUNTAIN, INC.:
  Independent Auditors' Report........................................................  F-71
  Consolidated Balance Sheets.........................................................  F-72
  Consolidated Statements of Operations...............................................  F-73
  Consolidated Statements of Stockholders' Equity.....................................  F-74
  Consolidated Statements of Cash Flows...............................................  F-75
  Notes to Consolidated Financial Statements..........................................  F-77
F-2
67
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
               UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
                             BASIS OF PRESENTATION
 
     The following unaudited pro forma combined financial statements give effect
to (i) the Combination of Provant and the Founding Companies, (ii) the
consummation of the Offering and the application of the net proceeds therefrom
and (iii) certain other adjustments described below and in the notes to the
unaudited pro forma combined financial statements. See "Combination" and "Use of
Proceeds" included elsewhere herein. In the Combination, subsidiaries of Provant
are merging with the following Founding Companies: Behavioral Technology, Inc.,
Decker Communications, Inc., J. Howard & Associates, Inc., MOHR Retail Learning
Systems, Inc., Novations Group, Inc., Robert Steinmetz, Ph.D., and Associates,
Inc., d/b/a Learning Systems Sciences and Star Mountain, Inc. The Combination
will occur simultaneously with the closing of the Offering and will be accounted
for using the purchase method of accounting. Provant has been identified as the
accounting acquiror in accordance with Securities and Exchange Commission Staff
Accounting Bulletin No. 97. These pro forma statements are based on the
historical financial statements of the Founding Companies included elsewhere in
this Prospectus and the estimates and assumptions set forth below and in the
notes to the unaudited pro forma combined financial statements.
 
     The unaudited pro forma combined balance sheet gives effect to the
Combination and the Offering as if they had occurred on September 30, 1997. The
unaudited pro forma combined statements of operations give effect to these
transactions as if they had occurred on July 1, 1996.
 
     Provant has preliminarily analyzed the benefits that it expects to realize
from reductions in salaries and certain benefits to the owners of the Founding
Companies. To the extent these owners have agreed prospectively to reductions in
salary, bonuses and benefits, these reductions have been reflected in the pro
forma combined statements of operations. With respect to other potential
benefits, Provant cannot quantify these benefits until completion of the
Combination. It is anticipated that these benefits will be offset by costs
related to the Company's new corporate management and by the costs associated
with being a public company. However, because these costs cannot be accurately
quantified at this time, they have not been included in the pro forma financial
information of Provant.
 
     The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The unaudited pro forma combined financial data presented herein does
not purport to represent what the Company's financial position or results of
operations actually would have been had such events occurred at the beginning of
the periods presented, as assumed, or to project the Company's financial
position or results of operations for any future period or the future results of
the Founding Companies. The unaudited pro forma combined financial statements
should be read in conjunction with the historical financial statements of
Provant and the Founding Companies and the related notes thereto included
elsewhere in this Prospectus. Also see "Risk Factors" included elsewhere herein.
 
                                       F-3
68
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
 
                               SEPTEMBER 30, 1997
                                 (IN THOUSANDS)
BTI     DECKER   J. HOWARD    LSS     MOHR   NOVATIONS    STAR    PROVANT    TOTAL
                                            ------   ------   ---------   ------   ----   ---------   ------   -------   -------
Assets
Current assets:
  Cash and cash equivalents...............  $1,188   $  526    $   811    $  508   $211    $   446    $  275    $   3    $ 3,968
  Investments.............................      --      932         --        --    --          --        --       --        932
  Accounts receivable, net................   1,655    1,441      1,350       697   441       2,364     4,573       --     12,521
  Inventory...............................      --       --         --        --   132          --       151       --        283
  Due from related parties................      --      290         52        --    --         341       344       --      1,027
  Costs in excess of billings.............      --       --         --       359    --          --        --       --        359
  Prepaid expenses and other current
    assets................................     160      102         50        56    22          50       164      143        747
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total current assets..............   3,003    3,291      2,263     1,620   806       3,201     5,507      146     19,837
Property and equipment, net...............     117      359        290       153    46         456       852      153      2,426
Other assets..............................       9       59         44       105    --          --     1,928       50      2,195
Goodwill..................................      --       --         --        --    --          --        --       --         --
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total assets......................  $3,129   $3,709    $ 2,597    $1,878   $852    $ 3,657    $8,287    $ 349    $24,458
                                            ======   ======     ======    ======   =====    ======      ====     ====    =======
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable........................  $  267   $  284    $   116    $   97   $143    $   174    $1,645    $  --    $ 2,726
  Accrued expenses........................     186      459         95       174   304         135       814       --      2,167
  Accrued compensation....................     484      849         97       100    12       1,270        --       --      2,812
  Payable to stockholder/affiliate........      --       --         --        --    --          --        --      560        560
  Billings in excess of costs.............      --       --         --       362    --          --     1,269       --      1,631
  Deferred revenue........................      15      114         24        --    98          --        --       --        251
  State income taxes......................      --       62         38        --    --          --        --       --        100
  Distributions payable...................      --       --        125        --    --          --        --       --        125
  Current portion of long-term debt.......      --      410         --        --    --       1,078     1,492       --      2,980
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total current liabilities.........     952    2,178        495       733   557       2,657     5,220      560     13,352
Long-term debt, net of current portion....      --      615         --        --    --         361       505       --      1,481
Deferred tax liability....................      --       --         --        --    --          --        --       --         --
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total liabilities.................     952    2,793        495       733   557       3,018     5,725      560     14,833
Redeemable common stock...................      --      300         --        --    --          --        --       --        300
Stockholders' equity:
  Common stock............................       1      313        272         3     4           1     2,102       --      2,696
  Additional paid-in capital..............     182       --         --        --    --          --        --        3        185
  Translation adjustments.................      (6)      --         --        --    --          --        --       --         (6)
  Unrealized gain on short-term
    investments...........................      --        9         --        --    --          --        --       --          9
  Note receivable from stock sales........      --     (171)        --        --    --          --        --       --       (171)
  Retained earnings.......................   2,000      465      1,830     1,142   291         638     1,086     (214)     7,238
  Treasury stock..........................      --       --         --        --    --          --      (626)      --       (626)
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total stockholders' equity........   2,177      616      2,102     1,145   295         639     2,562     (211)     9,325
                                            ------   ------     ------    ------   -----    ------      ----     ----    -------
        Total liabilities and
          stockholders' equity............  $3,129   $3,709    $ 2,597    $1,878   $852    $ 3,657    $8,287    $ 349    $24,458
                                            ======   ======     ======    ======   =====    ======      ====     ====    =======
COMBINATION   PRO FORMA    OFFERING
                                            ADJUSTMENTS   COMBINED    ADJUSTMENTS   AS ADJUSTED
                                            -----------   ---------   -----------   -----------
                                             (NOTE 3)                  (NOTE 3)
Assets
Current assets:
  Cash and cash equivalents...............    $  (943)     $ 3,025     $    (357)     $ 2,668
  Investments.............................         --          932            --          932
  Accounts receivable, net................         --       12,521            --       12,521
  Inventory...............................         --          283            --          283
  Due from related parties................      2,564        3,591            --        3,591
  Costs in excess of billings.............         --          359            --          359
  Prepaid expenses and other current
    assets................................         --          747            --          747
                                              -------      -------      --------     --------
        Total current assets..............      1,621       21,458          (357)      21,101
Property and equipment, net...............         --        2,426            --        2,426
Other assets..............................        (34)       2,161            --        2,161
Goodwill..................................     49,050       49,050            --       49,050
                                              -------      -------      --------     --------
        Total assets......................    $50,637      $75,095     $    (357)     $74,738
                                              =======      =======      ========     ========
Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable........................    $    --      $ 2,726     $      --      $ 2,726
  Accrued expenses........................         --        2,167            --        2,167
  Accrued compensation....................         --        2,812            --        2,812
  Payable to stockholder/affiliate........     22,463       23,023       (23,023)          --
  Billings in excess of costs.............         --        1,631            --        1,631
  Deferred revenue........................         --          251            --          251
  State income taxes......................         --          100            --          100
  Distributions payable...................         --          125            --          125
  Current portion of long-term debt.......         --        2,980        (2,900)          80
                                              -------      -------      --------     --------
        Total current liabilities.........     22,463       35,815       (25,923)       9,892
Long-term debt, net of current portion....         --        1,481            --        1,481
Deferred tax liability....................      1,276        1,276            --        1,276
                                              -------      -------      --------     --------
        Total liabilities.................     23,739       38,572       (25,923)      12,649
Redeemable common stock...................       (300)          --            --           --
Stockholders' equity:
  Common stock............................     (2,658)          38            26           64
  Additional paid-in capital..............     36,514       36,699        26,290       62,989
  Translation adjustments.................          6           --            --           --
  Unrealized gain on short-term
    investments...........................         (9)          --            --           --
  Note receivable from stock sales........        171           --            --           --
  Retained earnings.......................     (7,452)        (214)         (750)        (964)
  Treasury stock..........................        626           --            --           --
                                              -------      -------      --------     --------
        Total stockholders' equity........     27,198       36,523        25,566       62,089
                                              -------      -------      --------     --------
        Total liabilities and
          stockholders' equity............    $50,637      $75,095     $    (357)     $74,738
                                              =======      =======      ========     ========
See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-4
69
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                            YEAR ENDED JUNE 30, 1997
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
BTI     DECKER   J. HOWARD    LSS       MOHR      NOVATIONS     STAR     PROVANT
                                          ------   ------   ---------   ------   ---------   ----------   -------   -------
Total revenue......................  $7,096   $8,410    $ 7,317    $5,599    $ 3,015      $9,018     $20,790   $    --
     Cost of revenue....................   1,488    2,275      2,160     1,928        825       4,839      12,602        --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Gross profit.............   5,608    6,135      5,157     3,671      2,190       4,179       8,188        --
     Selling, general and administrative
       expenses.........................   5,111    5,621      4,555     3,061      1,745       3,315       7,061       149
     Goodwill amortization..............      --       --         --        --         --          --          --        --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Income from operations...     497      514        602       610        445         864       1,127      (149)
     Other income (expense), net........      40       --          4        --         --          --          --        --
     Interest income (expense)..........      31       (9)        26        14          3        (137)        (53)       --
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Income before income
                 taxes..................     568      505        632       624        448         727       1,074      (149)
     Provision (benefit) for income
       taxes............................      --       33          8         9          7          20         429       (60)
                                          -------  ------     ------    ------     ------      ------      ------    ------
               Net income (loss)........  $  568   $  472    $   624    $  615    $   441      $  707     $   645   $   (89)
                                          =======  ======     ======    ======     ======      ======      ======    ======
     Net income per share...............
     Shares used in computing net income
       per share (Note 5)...............
COMBINATION   PRO FORMA
                                           TOTAL    ADJUSTMENTS    COMBINED
                                          -------   -----------   ----------
                                                     (NOTE 4)
Total revenue......................  $61,245     $ 7,601     $   68,846
     Cost of revenue....................   26,117       4,850         30,967
                                          -------     -------        -------
               Gross profit.............   35,128       2,751         37,879
     Selling, general and administrative
       expenses.........................   30,618      (1,955)        28,663
     Goodwill amortization..............       --       1,226          1,226
                                          -------     -------        -------
               Income from operations...    4,510       3,480          7,990
     Other income (expense), net........       44          --             44
     Interest income (expense)..........     (125)          8           (117)
                                          -------     -------        -------
               Income before income
                 taxes..................    4,429       3,488          7,917
     Provision (benefit) for income
       taxes............................      446       3,257          3,703
                                          -------     -------        -------
               Net income (loss)........  $ 3,983     $   231     $    4,214
                                          =======     =======        =======
     Net income per share...............                          $     0.45
                                                                     =======
     Shares used in computing net income
       per share (Note 5)...............                           9,405,605
                                                                  ==========
See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-5
70
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
 
                     THREE MONTHS ENDED SEPTEMBER 30, 1997
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
BTI      DECKER     J. HOWARD    LSS       MOHR      NOVATIONS    STAR    PROVANT
                                          ------   ---------   ---------   ------   ---------   ---------   ------   -------
Total revenue......................  $1,977    $ 2,585     $ 1,917    $1,050     $ 556      $ 2,464    $5,770   $    --
     Cost of revenue....................     385        660         661       509       204        1,197     3,384        --
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Gross profit.............   1,592      1,925       1,256       541       352        1,267     2,386        --
     Selling, general and administrative
       expenses.........................   1,306      1,663       1,199       589       562        1,088     1,890       200
     Goodwill amortization..............      --         --          --        --        --           --        --        --
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Income (loss) from
                 operations.............     286        262          57       (48)     (210)         179       496      (200)
     Other income (expense), net........      --         --          (3)       --        --           --        --        --
     Interest income (expense)..........       7         (3)          5         5         3          (83)       56        (8)
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Income (loss) before
                 income taxes...........     293        259          59       (43)     (207)          96       552      (208)
     Provision for income taxes.........      --          2           1         2         1           11       206       (83)
                                          ------     ------      ------    ------    ------       ------     -----    ------
               Net income (loss)........  $  293    $   257     $    58    $  (45)    $(208)     $    85    $  346   $  (125)
                                          ======     ======      ======    ======    ======       ======     =====    ======
     Net income per share...............
     Shares used in computing net income
       per share (Note 5)...............
COMBINATION   PRO FORMA
                                           TOTAL    ADJUSTMENTS    COMBINED
                                          -------   -----------   ----------
                                                     (NOTE 4)
Total revenue......................  $16,319     $ 1,419     $   17,738
     Cost of revenue....................    7,000       1,056          8,056
                                          -------      ------      ---------
               Gross profit.............    9,319         363          9,682
     Selling, general and administrative
       expenses.........................    8,497        (178)         8,319
     Goodwill amortization..............       --         307            307
                                          -------      ------      ---------
               Income (loss) from
                 operations.............      822         234          1,056
     Other income (expense), net........       (3)         --             (3)
     Interest income (expense)..........      (18)         44             26
                                          -------      ------      ---------
               Income (loss) before
                 income taxes...........      801         278          1,079
     Provision for income taxes.........      140         418            558
                                          -------      ------      ---------
               Net income (loss)........  $   661     $  (140)    $      521
                                          =======      ======      =========
     Net income per share...............                          $     0.06
                                                                   =========
     Shares used in computing net income
       per share (Note 5)...............                           9,405,605
                                                                   =========
See accompanying notes to unaudited pro forma combined financial statements.
 
                                       F-6
71
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
           NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
 
(1) GENERAL
 
     Concurrently with and as a condition to the closing of the Offering,
Provant will acquire the seven Founding Companies in the Combination. The
acquisitions will be accounted for using the purchase method of accounting with
Provant being treated as the accounting acquiror.
 
     The historical financial statements reflect the financial position and
results of operations of the Founding Companies and were derived from the
respective Founding Companies' financial statements where indicated. The periods
included in these financial statements for the individual Founding Companies are
as of and for the three months ended September 30, 1997 and for the year ended
June 30, 1997. The audited historical financial statements included elsewhere
herein have been included in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 80.
 
(2) ACQUISITION OF FOUNDING COMPANIES
 
     The following table sets forth the consideration to be paid (i) in cash and
(ii) in shares of Common Stock to the stockholders of each of the Founding
Companies. For purposes of computing the estimated purchase price for accounting
purposes, the value of the shares is determined using an estimated fair value of
$9.60 per share, which represents a discount of 20% from the assumed initial
public offering price of $12.00 due to restrictions on the sale and
transferability of the shares issued. The total estimated value of the
consideration of $59.2 million for the acquisitions is based upon preliminary
estimates and is subject to certain purchase price adjustments at the closing.
COMMON STOCK
                                                                  -----------------------------
                                                       CASH        SHARES       VALUE OF SHARES
                                                      -------     ---------     ---------------
                                                                     (DOLLARS IN THOUSANDS)
BTI.............................................  $ 5,000       487,388         $ 4,679
    Decker..........................................    1,550       377,778           3,626
    J. Howard.......................................    1,700       339,337           3,257
    LSS.............................................    2,625       639,785           6,142
    MOHR............................................    1,200       225,806           2,168
    Novations.......................................    4,988       740,592           7,110
    Star............................................    5,400     1,016,129           9,755
                                                      -------     ---------         -------
              Total.................................  $22,463     3,826,815         $36,737
                                                      =======     =========         =======
(3) UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
 
     (a) Records the distributions estimated at $1.4 million which are expected
         to be paid from cash on hand by certain Founding Companies prior to the
         Closing of the Combination.
 
     (b) Records the liability for the cash portion of the consideration to be
         paid to the stockholders of the Founding Companies in connection with
         the Combination.
 
     (c) Reflects the creation of approximately $49.1 million of goodwill from
         the payment of the Common Stock and cash consideration for the Founding
         Companies totaling approximately $59.2 million (see note 2) less net
         assets of the Founding Companies of approximately $10.2 million.
 
     (d) Records the deferred income taxes attributable to the temporary
         differences between the financial reporting and tax basis of assets and
         liabilities held in S corporations.
 
     (e) Records the receipt of cash from certain stockholders in satisfaction
         of certain receivables and transfer of certain assets.
 
                                       F-7
72
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     (f) Records the aggregate receivable from the stockholders of the Founding
         Companies to reflect the difference between guaranteed minimum net
         worth of each of the Founding Companies and pro forma net worth.
 
     (g) Records the cash proceeds of $26.3 million from the issuance of shares
         of Common Stock, net of the estimated underwriting discount and
         estimated offering costs of $2.8 million (based on an assumed initial
         public offering price of $12.00 per share). Offering costs primarily
         consist of accounting fees, legal fees and printing expenses.
 
     (h) Records the cash portion of the consideration to be paid to
         stockholders of the Founding Companies in connection with the
         Combination, the repayment of funds advanced to Provant by two of its
         executive officers and the repayment of long-term debt of the Founding
         Companies.
 
     (i) Records the payment of fees for information provided to the Company
         related to the training and development industry.
 
     The following table summarizes the adjustments to the unaudited pro forma
combined balance sheet adjustments (in thousands):
Combination Adjustments                       Total
                                 --------------------------------------------------------   Combination
                                   (a)       (b)        (c)       (d)      (e)      (f)     Adjustments
                                 -------   --------   -------   -------   ------   ------   -----------
ASSETS
Cash and cash equivalents......  $(1,442)  $     --   $    --   $    --   $  499       --     $  (943)
Due from related parties.......       --         --        --        --     (344)   2,908       2,564
                                  ------     ------    ------    ------     ----    -----      ------
  Total current assets.........   (1,442)        --        --        --      155    2,908       1,621
Goodwill, net..................       --         --    49,050        --       --       --      49,050
Other assets...................       --         --        --        76     (110)      --         (34)
                                  ------     ------    ------    ------     ----    -----      ------
          Total assets.........  $(1,442)  $     --   $49,050   $    76   $   45   $2,908     $50,637
                                  ======     ======    ======    ======     ====    =====      ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to
  stockholder/affiliate........  $    --   $ 22,463   $    --   $    --   $   --   $   --     $22,463
                                  ------     ------    ------    ------     ----    -----      ------
Long-term debt, net of current
  portion......................       --         --        --        --       --       --          --
Deferred tax liability.........       --         --        --     1,276       --       --       1,276
                                  ------     ------    ------    ------     ----    -----      ------
          Total liabilities....       --     22,463        --     1,276       --       --      23,739
Redeemable common stock........       --         --      (300)       --       --       --        (300)
Stockholders' equity:..........
  Common stock.................       --         --        --        --       --       --          --
  Additional paid-in capital...   (1,442)   (22,463)   49,350    (1,200)      --    2,908      27,153
  Retained earnings............       --         --        --        --       --       --          --
  Treasury stock...............       --         --        --        --       --       --          --
  Note receivable from stock
     sales.....................       --         --        --        --       45       --          45
                                  ------     ------    ------    ------     ----    -----      ------
          Total stockholders'
            equity.............   (1,442)   (22,463)   49,050    (1,200)      45    2,908      27,198
                                  ------     ------    ------    ------     ----    -----      ------
          Total liabilities and
            stockholders'
            equity.............  $(1,442)  $     --   $49,050   $    76   $   45   $2,908     $50,637
                                  ======     ======    ======    ======     ====    =====      ======
F-8
73
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Offering
                                                             Adjustments                  Total
                                                   -------------------------------      Offering
                                                     (g)          (h)         (i)      Adjustments
                                                   --------     --------     -----     -----------
ASSETS
Cash and cash equivalents........................  $ 26,316     $(25,923)    $(750)     $    (357)
  Other..........................................        --           --        --             --
                                                   --------     --------     -----       --------
  Total current assets...........................    26,316      (25,923)     (750)          (357)
                                                   --------     --------     -----       --------
          Total assets...........................  $ 26,316     $(25,923)    $(750)     $    (357)
                                                   ========     ========     =====       ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt................  $     --     $ (2,900)    $  --      $  (2,900)
Payable to stockholders/affiliate................                (23,023)       --        (23,023)
                                                   --------     --------     -----       --------
          Total current liabilities..............        --      (25,923)       --        (25,923)
                                                   --------     --------     -----       --------
          Total liabilities......................        --      (25,923)       --        (25,923)
                                                   --------     --------     -----       --------
Stockholders' equity:
  Common stock...................................        26           --        --             26
  Additional paid-in capital.....................    26,290           --        --         26,290
  Retained earnings..............................        --           --      (750)          (750)
  Treasury stock.................................        --           --        --             --
                                                   --------     --------     -----       --------
          Total stockholders' equity.............    26,316           --      (750)        25,566
                                                   --------     --------     -----       --------
          Total liabilities and stockholders'
            equity...............................  $ 26,316     $(25,923)    $(750)     $    (357)
                                                   ========     ========     =====       ========
(4) UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
 
YEAR ENDED JUNE 30, 1997
 
(a) Reflects the reduction in salaries, bonuses and benefits of $4.8 million to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively. These reductions in salaries, bonuses and benefits are in
    accordance with the terms of the owners' employment agreements with the
    Company entered into in connection with the Combination. Such employment
    agreements are primarily for three years, contain restrictions related to
    competition and provide severance under certain circumstances.
 
(b) Reflects the amortization of goodwill to be recorded as a result of the
    Combination over a 40-year estimated life.
 
(c) Reflects a pro forma provision for income taxes adjusted to reflect the
    Company's estimated consolidated effective tax rate subsequent to the
    Combination, after considering nondeductible goodwill amortization.
 
(d) Reflects the historical results of operations of companies acquired by Star
    in February 1997 and October 1997.
 
(e) Reflects the reduction in interest expense net of income tax benefit,
    related to the current portion of bank debt and notes payable to
    stockholders that will be repaid with the proceeds of the Offering.
 
                                       F-9
74
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes the adjustments to the unaudited pro forma
combined statements of operations (in thousands):
Adjustments
                                  ---------------------------------------------------        Total
                                    (a)         (b)         (c)        (d)       (e)      Adjustments
                                  -------     -------     -------     ------     ----     -----------
Total revenue...................  $    --     $    --     $    --     $7,601       --       $ 7,601
Cost of revenue.................       --          --          --      4,850       --         4,850
Selling, general and
  administrative expenses.......   (4,782)         --          --      2,827       --        (1,955)
Goodwill amortization...........       --       1,226          --         --       --         1,226
                                  -------     -------     -------     ------     ----     -----------
          Income from
            operations..........    4,782      (1,226)         --        (76)      --         3,480
Interest expense................       --          --          --       (250)     258             8
                                  -------     -------     -------     ------     ----     -----------
          Income before income
            taxes...............    4,782      (1,226)         --       (326)     258         3,488
Provision (benefit) for income
  taxes.........................       --          --       3,284       (130)     103         3,257
                                  -------     -------     -------     ------     ----     -----------
          Net income............  $ 4,782     $(1,226)    $(3,284)    $ (196)    $155       $   231
                                  =======     =======     =======     ======     ====     =========
THREE MONTHS ENDED SEPTEMBER 30, 1997
 
(a) Reflects the reduction in salaries, bonuses and benefits of $1.3 million to
    certain of the owners of the Founding Companies to which they have agreed
    prospectively. These reductions in salaries, bonuses and benefits are in
    accordance with the terms of the owners' employment agreements with the
    Company entered into in connection with the Combination. Such employment
    agreements are primarily for three years, contain restrictions related to
    competition and provide severance under certain circumstances.
 
(b) Reflects the amortization of goodwill to be recorded as a result of the
    Combination over a 40-year estimated life.
 
(c) Reflects a pro forma provision for income taxes adjusted to reflect the
    Company's estimated effective tax rate subsequent to the combination after
    considering nondeductible goodwill amortization.
 
(d) Reflects the historical results of operations of a company acquired by Star
    in October 1997.
 
(e) Reflects the reduction in interest expense, net of income tax benefit,
    related to the current portion of bank debt and notes payable to
    stockholders that will be repaid with the proceeds of the Offering.
 
(f) Reflects the payment of fees for information provided to the Company related
    to the training and development industry, net of tax.
 
                                      F-10
75
 
                      PROVANT, INC. AND FOUNDING COMPANIES
 
   NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes the adjustments to the unaudited pro forma
combined statements of operations (in thousands):
Adjustments
                                  ----------------------------------------------------       Total
                                    (a)       (b)      (c)      (d)      (e)      (f)     Adjustments
                                  -------    -----    -----    ------    ----    -----    -----------
Total revenue...................  $    --    $  --    $  --    $1,419    $ --    $  --      $ 1,419
Cost of revenue.................       --       --       --     1,056      --       --        1,056
Selling, general and
  administrative expenses.......   (1,280)      --       --       352      --      750         (178)
Goodwill amortization...........       --      307       --        --      --       --          307
                                    -----     ----     ----     -----     ---    -----      -------
          Income from
            operations..........    1,280     (307)      --        11      --     (750)         234
Other income (expense):
  Interest expense..............       --       --       --       (29)     73       --           44
                                    -----     ----     ----     -----     ---    -----      -------
          Income before income
            taxes...............    1,280     (307)      --       (18)     73     (750)         278
Provision (benefit) for income
  taxes.........................       --       --      696        (7)     29     (300)         418
                                    -----     ----     ----     -----     ---    -----      -------
          Net income............  $ 1,280    $(307)   $(696)   $  (11)   $ 44    $(450)     $  (140)
                                    =====     ====     ====     =====     ===    =====      =======
(5) NET INCOME PER SHARE
 
     The shares used in computing pro forma net income per share consist of (i)
2,978,790 shares held by the stockholders of Provant prior to the Offering (ii)
3,826,815 shares issued to owners of the Founding Companies (excluding shares
issuable as Additional Consideration and pursuant to the Star Contingent
Consideration) and (iii) 2,600,000 shares of Common Stock sold in the Offering.
 
                                      F-11
76
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors,
Provant, Inc.:
 
     We have audited the accompanying balance sheet of Provant, Inc., as of June
30, 1997 and the related statements of operations, stockholders' equity and cash
flows for the period from November 16, 1996 (date of inception) to June 30,
1997. 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 audit.
 
     We conducted our audit 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 audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Provant, Inc. as of June 30,
1997 and the results of its operations and its cash flows for the period from
November 16, 1996 (date of inception) to June 30, 1997, in conformity with
generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-12
77
 
                                 PROVANT, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30,     SEPTEMBER 30,
                                                                          1997           1997
                                                                        --------     -------------
                                                                                      (UNAUDITED)
ASSETS
Cash and cash equivalents.............................................   $    1          $   3
Deferred income taxes.................................................       60            143
                                                                           ----           ----
          Total current assets........................................       61            146
Property and equipment................................................      150            153
Deferred offering costs...............................................       --             50
                                                                           ----           ----
          Total assets................................................   $  211          $ 349
                                                                           ====           ====
                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Notes payable to stockholders.........................................   $  298          $ 560
                                                                           ----           ----
          Total current liabilities...................................      298            560
Stockholders' equity (deficit):
  Common stock, $.01 per value; 10,000 shares authorized; 1,992.3 and
     3,389.6 shares issued and outstanding at June 30, 1997 and
     September 30, 1997, respectively.................................       --             --
  Paid-in capital.....................................................        2              3
  Accumulated deficit.................................................      (89)          (214)
                                                                           ----           ----
          Total stockholders' equity (deficit)........................      (87)          (211)
                                                                           ----           ----
          Total liabilities and stockholders' equity (deficit)........   $  211          $ 349
                                                                           ====           ====
See accompanying notes to financial statements.
 
                                      F-13
78
 
                                 PROVANT, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
PERIOD FROM
                                                             NOVEMBER 16, 1996
                                                                 (DATE OF             THREE MONTHS
                                                               INCEPTION) TO             ENDED
                                                               JUNE 30, 1997       SEPTEMBER 30, 1997
                                                             -----------------     ------------------
                                                                                      (UNAUDITED)
Revenue....................................................      $      --              $     --
                                                                  --------              --------
General and administrative expenses........................            149                   200
                                                                  --------              --------
Interest expense...........................................             --                     8
Loss before income taxes...................................           (149)                 (208)
                                                                  --------              --------
Income tax benefit.........................................             60                    83
                                                                  --------              --------
Net loss...................................................      $     (89)             $   (125)
                                                                  ========              ========
See accompanying notes to financial statements
 
                                      F-14
79
 
                                 PROVANT, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK
                                                       ------------------     ACCUMULATED
                                                       SHARES      AMOUNT     DEFICIT      TOTAL
                                                       -------     ------     --------     -----
Initial capitalization...............................  1,992.3       $2       $     --     $   2
          Net (loss).................................                --            (89)      (89)
                                                       -------      ---       --------     -----
Balance at June 30, 1997.............................  1,992.3        2            (89)      (87)
Issuance of management shares........................  1,397.3        1             --         1
          Net (loss).................................       --       --           (125)     (125)
                                                       -------      ---       --------     -----
Balance, September 30, 1997 (Unaudited)..............  3,389.6       $3       $   (214)     (211)
                                                       =======      ===       ========     =====
See accompanying notes to financial statements.
 
                                      F-15
80
 
                                 PROVANT, INC.
 
                            STATEMENTS OF CASH FLOWS
 
                                 (IN THOUSANDS)
PERIOD FROM
                                                             NOVEMBER 16, 1996
                                                                  (DATE OF               THREE MONTHS
                                                               INCEPTION) TO                ENDED
                                                               JUNE 30, 1997          SEPTEMBER 30, 1997
                                                           ----------------------     ------------------
                                                                                         (UNAUDITED)
Cash flows from operating activities:
  Net (loss)...........................................            $  (89)                  $ (125)
     Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:
     Changes in assets and liabilities:
       Deferred offering costs.........................                --                      (50)
       Accrued expenses................................                --                        8
       Increase in deferred taxes......................               (60)                     (83)
                                                                     ----                     ----
          Net cash used in operating activities........              (149)                    (250)
                                                                     ----                     ----
Cash flows from investing activities:
  Acquisition of property and equipment................              (150)                      (3)
                                                                     ----                     ----
          Net cash used in investing activities........              (150)                      (3)
                                                                     ----                     ----
Cash flows from financing activities...................
  Issuance of stock....................................                 2                        1
  Increase in notes payable to stockholders............               298                      254
                                                                     ----                     ----
          Net cash provided by financing activities....               300                      255
                                                                     ----                     ----
Net increase in cash and cash equivalents..............                 1                        2
Cash and cash equivalents, beginning of period.........                --                        1
                                                                     ----                     ----
Cash and cash equivalents, end of period...............            $    1                   $    3
                                                                     ====                     ====
See accompanying notes to financial statements
 
                                      F-16
81
 
                                 PROVANT, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
                                 (IN THOUSANDS)
 
(1) BUSINESS AND ORGANIZATION
 
     Provant, Inc. (the "Company"), a Delaware corporation, was incorporated on
November 16, 1996. Provant intends to acquire seven providers of training and
development services and products in separate merger transactions (the
"Combination") simultaneously with its initial public offering (the "Offering")
of its Common Stock. The consummation of the Combination is conditioned upon the
closing of the Offering.
 
     The Company has not conducted any operations, and all activities to date
have related to the Offering and the Combination. The Company's cash balances
were generated from the initial capitalization of the Company (see Note 3). All
other expenditures to date have been funded by loans from two of the Company's
principal stockholders.
 
     The stockholders have committed to loan the Company the expenses and costs
of the Offering and the Combination. As of June 30, 1997 and September 30, 1997,
approximately $298 and $560 (unaudited), respectively, have been loaned by the
stockholders in connection with the Offering and the Combination. Certain costs
have been accounted for as deferred offering costs. There is no assurance that
the pending Combination discussed below will be completed or that the Company
will be able to generate future operating revenues.
 
(2) INTERIM FINANCIAL INFORMATION
 
     The interim financial statements as of September 30, 1997 and for the three
months then ended are unaudited, and certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial position, results of operations and
cash flows with respect to the interim financial statements, have been included.
The results of operations for the interim periods are not necessarily indicative
of the results for the entire fiscal year.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
(3) STOCKHOLDERS' EQUITY
 
     In connection with its organization and initial capitalization, the Company
sold 1,992.3 shares of its common stock, $.01 par value per share (the "Common
Stock"), at $1.00 per share. During the three months ended September 30, 1997,
the Company sold 1,397.3 additional shares for $1.00 per share. Holders of
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the stockholders, and do not have cumulative
voting rights.
 
     Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation," allows entities to choose between a fair value based
method of accounting for employee stock options or similar equity instruments
and the current intrinsic, value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25 (APB No. 25). Entities electing to
remain with the accounting in APB Opinion No. 25 must make pro forma disclosures
of net income and earnings per share as if the fair
 
                                      F-17
82
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
value method of accounting had been applied. The Company will provide pro forma
disclosure of net income and earnings per share, as applicable, in the notes to
future consolidated financial statements.
 
(4) PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)
 
     The following unaudited, pro forma share and per share data is based on the
Company's intentions with respect to the Offering.
 
     In connection with the Offering, the Company will increase the authorized
shares of stock to 45 million, consisting of 40 million shares of Common Stock
and 5 million shares of Preferred Stock, and will declare a stock split of
871.52633-for-1 in the form of a stock dividend that will result in a total
amount of outstanding shares of Common Stock prior to the offering (but giving
effect to the Combination) of 6,805,605.
 
  Preferred Stock
 
     The Preferred Stock, if issued, would have priority over the Common Stock
with respect to dividends and other distributions, including the distribution of
assets upon liquidation. The Board of Directors has the authority, without
further stockholder authorization, to issued from time to time shares of
Preferred Stock in one or more series and to fix the terms, limitations,
relative rights and preferences and variations of each series.
 
     The following presents stockholders' equity on an actual and pro forma
basis (to give effect to the recapitalization and stock split) as of September
30, 1997 (in thousands).
ACTUAL      PRO FORMA
                                                                  -----       ---------
Preferred Stock
          None authorized (5 million shares authorized, none
             issued and outstanding pro forma)..................  $  --         $  --
        Common Stock
          10,000 shares authorized (40 million shares authorized
             pro forma); 3,389.6 shares issued and outstanding,
             (2,954,125 shares issued and outstanding, pro
             forma).............................................     --             3
        Paid-in capital.........................................      3            --
        Accumulated deficit.....................................   (214)         (214)
                                                                  -----       ---------
                  Total.........................................  $(211)        $(211)
                                                                  =====       =======
Equity Incentive Plan
 
     The Company will adopt the 1998 Equity Incentive Plan (the "Equity
Incentive Plan"), which provides for the award of up to 1.1 million shares of
Common Stock in the form of incentive stock options ("ISOs"), non-qualified
stock options, stock appreciation rights, performance shares, restricted stock,
or stock units (each, an "Award"). All directors and employees of, and all
consultants and advisors to, the Company (including its subsidiaries) are
eligible to participate in the Equity Incentive Plan.
 
     The Equity Incentive Plan will be administered by the Compensation
Committee (the "Committee"), which determines who shall receive Awards from
those individuals eligible to participate in the Equity Incentive Plan, the type
of Award to be made, the number of shares of Common Stock that may be acquired
pursuant to the Award and the specific terms and conditions of each Award,
including the purchase price, term, vesting schedule, restrictions on transfer
and any other conditions and limitations applicable to the Awards or their
exercise. Options that are ISOs may be exercisable for not more than 10 years
after the date the option is awarded. The Committee may at any time accelerate
the exercisability of all or any portion of an option.
 
                                      F-18
83
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
  Stock Options
 
     On or prior to the date of the final Prospectus used in connection with the
Offering, the Company has agreed to grant options to purchase an aggregate of
833,464 shares of Common Stock having a per-share exercise price equal to the
initial offering price. Of this amount, options to purchase 665,280 shares will
become exercisable with respect to one-third of the underlying shares of Common
Stock on each of the first three anniversaries of the date of grant. The
remaining options to purchase 168,184 shares will become exercisable with
respect to all of the underlying shares of Common Stock upon the closing of the
Offering.
 
  Stock Warrants
 
     As partial consideration for the extension to the Company of the financing
described in Note 5 below, two of the Company's executive officers each received
two warrants. The first warrant is exercisable for 176,368 shares of common
stock at a per share exercise price equal to the initial public offering price.
The second warrant is a warrant to purchase 220,460 shares of common stock which
will become exercisable only if the market price of the Common Stock increases
to certain threshold levels except as described below (the "Contingent
Warrant"). Specifically, 20% of the total number of shares issuable under the
Contingent Warrants will become exercisable on each of the three occasions that
the market price of the Common Stock increases by 100%, 200%, 300%,
respectively, from the initial public offering price, and the remaining 40% of
the total number of shares issuable under the Contingent Warrant will become
exercisable if the market price of the Common Stock increases by 400%. However,
under certain circumstances involving the merger or sale of the Company, the
Contingent Warrant will become exercisable to purchase all of the warrant
shares. The exercise price of the Contingent Warrant increases on each
anniversary of the closing of the Offering. Specifically, the exercise price is
equal to the initial public offering price for the first 12 months following the
closing of the Offering and, for each 12-month period thereafter, is equal to
the initial public offering price plus 10% of the initial public offering price
multiplied by the number of full 12 month periods elapsed since the closing of
the Offering. However, once a portion of the Contingent Warrant becomes
exercisable, that portion's exercise price is fixed as of that date. All four
warrants expire on the seventh anniversary of the closing of the Offering.
 
     The holders of the warrants have the right to require the Company to
register the resale of the shares that may be acquired upon exercise of the
warrants under the Securities Act of 1933, as amended.
 
  Stock Purchase Plan
 
     The Company will adopt the 1998 Employee Stock Purchase Plan (the "Plan").
The Plan provides for the sale of shares of Common Stock to employees at a
purchase price that is 85% of the lesser of the value of the Common Stock at the
beginning of a purchase period or at the end of a purchase period. The Company
has reserved 500,000 shares of Common Stock for issuance under the Plan.
 
  Non-Employee Directors' Stock Plan
 
     The Company's Board of Directors has adopted the Stock Plan for
Non-Employee Directors (the "Directors' Plan"). A total of 100,000 shares of
Common Stock are reserved for issuance under the Directors' Plan. Pursuant to
the Directors' Plan, on the date of the final Prospectus used in connection with
the Offering, each director and director nominee who is neither an employee of
the Company or one of its subsidiaries (a "non-employee director") will receive
an option to purchase 7,500 shares of Common Stock with a per-share exercise
price equal to the initial public offering price. Each non-employee director
initially elected following the Offering will be granted upon such election an
option to purchase 7,500 shares of Common Stock. Following his or her initial
election, each non-employee director will be granted, immediately following each
annual meeting of stockholders at which he or she is re-elected (and provided he
or she is still is a non-employee director at such time), an option to acquire
an additional 2,500 shares of Common Stock. The per
 
                                      F-19
84
 
                                 PROVANT, INC.
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
share exercise price of options granted following the Offering will be the fair
market value of the Common Stock on the date of grant. Each option will be
non-transferable except upon death (unless otherwise approved by the Board),
will expire 10 years after the date of grant will become exercisable with
respect to all of the shares of Common Stock issuable thereunder on the date
that is six months following the date of grant if the individual is a director
at such time. If the director dies or otherwise ceases to be a director prior to
the expiration of an option, the option (if exercisable) will remain exercisable
for a period of one year following death or three months following other
termination of the individual's status as a director, but in no event beyond the
tenth anniversary of the date of grant. The Board of Directors may at any time
or times amend the Directors' Plan for any purpose that at the time may be
permitted by law.
 
(5) RELATED PARTY TRANSACTION
 
     Expenses paid by the Company prior to the closing of the Offering have been
advanced under a $3 million line of credit issued on October 6, 1997 by two of
the Company's stockholders.
 
     Amounts payable to stockholders under the line of credit are due on the
earlier of October 6, 2000 or the successful completion of the Offering and bear
interest at the prime rate as from time to time published in the Wall Street
Journal (8.5% at June 30, 1997).
 
     The acquisition Company's property and equipment at June 30, 1997, obtained
from stockholders of the Company, was financed under the line of credit.
 
(6) SUBSEQUENT EVENT (UNAUDITED)
 
     The Company and wholly-owned subsidiaries of the Company have signed
definitive agreements to acquire by merger seven companies ("the Founding
Companies") to be effective contemporaneously with the Offering. The companies
to be acquired are Behavioral Technology, Inc., Decker Communications, Inc., J.
Howard and Associates, Inc., Robert Steinmetz, Ph.D., and Associates, Inc.,
d/b/a, Learning Systems Sciences, MOHR Retail Learning Systems, Inc., Novations
Group, Inc. and Star Mountain, Inc. The aggregate consideration that will be
paid by Provant, Inc. to acquire the Founding Companies is approximately $59.2
million, consisting of $22.5 million in cash and 3,826,815 shares of Common
Stock (assuming an initial public offering price of $12.00 per share).
 
                                      F-20
85
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Behavioral Technology, Inc.:
 
     We have audited the accompanying balance sheets of Behavioral Technology,
Inc., as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended June 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Behavioral Technology, Inc.
as of June 30, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended June 30, 1997, in
conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-21
86
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30,
                                                               -----------------     SEPTEMBER 30,
                                                                1996       1997          1997
                                                               ------     ------     -------------
                                                                                      (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents..................................  $  652     $1,254        $ 1,188
  Accounts receivable, net of allowance for doubtful accounts
     of $89 at June 30, 1996 and 1997 and September 30,
     1997....................................................     940      1,055          1,655
  Prepaid expenses...........................................      67        143            160
                                                               ------     ------         ------
          Total current assets...............................   1,659      2,452          3,003
                                                               ------     ------         ------
Property and equipment, net..................................     194        135            117
Other assets.................................................       8          7              9
                                                               ------     ------         ------
          Total assets.......................................  $1,861     $2,594        $ 3,129
                                                               ======     ======         ======
 
                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...........................................  $  270     $  268        $   267
  Accrued expenses...........................................     123        148            186
  Accrued compensation.......................................     316        433            484
  Deferred revenue...........................................      12         43             15
                                                               ------     ------         ------
          Total current liabilities..........................     721        892            952
                                                               ------     ------         ------
Commitments and contingencies
Stockholders' equity:
  Common stock, $10 par value; 1,000 shares authorized; 100,
     99 and 104 shares issued and outstanding at June 30,
     1996, June 30, 1997 and September 30, 1997,
     respectively............................................       1          1              1
  Additional paid-in capital.................................      --         --            182
  Translation adjustment.....................................      --         (6)            (6)
  Retained earnings..........................................   1,139      1,707          2,000
                                                               ------     ------         ------
          Total stockholders' equity.........................   1,140      1,702          2,177
                                                               ------     ------         ------
          Total liabilities and stockholders' equity.........  $1,861     $2,594        $ 3,129
                                                               ======     ======         ======
See accompanying notes to financial statements.
 
                                      F-22
87
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
Revenue.......................................  $3,803     $5,685     $7,096     $1,712     $1,977
Cost of revenue...............................   1,049      1,495      1,488        387        385
                                                ------     ------     ------     ------     ------
          Gross profit........................   2,754      4,190      5,608      1,325      1,592
Selling, general and administrative
  expenses....................................   2,315      4,048      5,111        969      1,306
                                                ------     ------     ------     ------     ------
          Income from operations..............     439        142        497        356        286
                                                ------     ------     ------     ------     ------
Other income:
  Royalties...................................      83         82         30         --         --
  Interest....................................      13         27         31          6          7
  Other income, net...........................      43         --         10         --         --
                                                ------     ------     ------     ------     ------
          Total other income..................     139        109         71          6          7
                                                ------     ------     ------     ------     ------
          Net income..........................  $  578     $  251     $  568     $  362     $  293
                                                ======     ======     ======     ======     ======
See accompanying notes to financial statements.
 
                                      F-23
88
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK        ADDITIONAL
                                   -----------------      PAID-IN       TRANSLATION     RETAINED
                                   SHARES     AMOUNT      CAPITAL       ADJUSTMENT      EARNINGS     TOTAL
                                   ------     ------     ----------     -----------     --------     ------
Balance, June 30, 1994...........    100        $1          $ --            $--          $  310      $  311
  Net income.....................     --        --            --             --             578         578
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1995...........    100         1            --             --             888         889
  Net income.....................     --        --            --             --             251         251
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1996...........    100         1            --             --           1,139       1,140
  Net income.....................     --        --            --             --             568         568
  Translation adjustment.........     --        --            --             (6)             --          (6)
  Stock surrender................     (1)       --            --             --              --          --
                                                --
                                     ---                    ----           ----          ------      ------
Balance, June 30, 1997...........     99         1            --             (6)          1,707       1,702
  Net income.....................     --        --            --             --             293         293
  Stock grant....................      5        --           182             --              --         182
                                                --
                                     ---                    ----           ----          ------      ------
Balance, September 30, 1997
  (Unaudited)....................    104        $1          $182            $(6)         $2,000      $2,177
                                     ===        ==          ====           ====          ======      ======
See accompanying notes to financial statements.
 
                                      F-24
89
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                       ENDED
                                                        YEAR ENDED JUNE 30,        SEPTEMBER 30,
                                                      ------------------------    ---------------
                                                      1995     1996      1997     1996      1997
                                                      -----    -----    ------    -----    ------
                                                                                    (UNAUDITED)
Cash flows from operating activities:
  Net income........................................  $ 578    $ 251    $  568    $ 362    $  293
                                                      -----    -----    ------    -----    ------
  Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Depreciation and amortization................     57       46        92       65        21
       Non-cash compensation........................     --       --        --       --       182
       Changes in operating assets and liabilities:
          Increase in accounts receivable...........   (176)    (195)     (115)    (205)     (600)
          Increase in prepaid expenses..............     --      (67)      (76)      (1)      (17)
          Decrease in other assets..................     --       --         1        1        (2)
          Increase (decrease) in accounts payable...     90       47        (2)     (66)       (1)
          Increase in accrued expenses..............     19      172       142        4        89
          Increase (decrease) in deferred revenue...     22      (48)       31       --       (28)
                                                      -----    -----    ------    -----    ------
            Total adjustments.......................     12      (45)       73     (202)     (356)
                                                      -----    -----    ------    -----    ------
            Net cash provided by (used in) operating
               activities...........................    590      206       641      160       (63)
                                                      -----    -----    ------    -----    ------
Cash flows from investing activities:
  Purchases of property and equipment...............   (157)    (122)      (42)     (20)       (3)
  Proceeds from sale of property and equipment......     --        5         9       --        --
  Purchase of trademark.............................     --       (7)       --       --        --
                                                      -----    -----    ------    -----    ------
            Net cash used in investing activities...   (157)    (124)      (33)     (20)       (3)
                                                      -----    -----    ------    -----    ------
Cash flows from financing activities:
  Proceeds received on line of credit...............     --       --       200       --        --
  Principal payments on line of credit..............     --       --      (200)      --        --
                                                      -----    -----    ------    -----    ------
            Net cash used in financing activities...     --       --        --       --        --
                                                      -----    -----    ------    -----    ------
Net increase (decrease) in cash and cash
  equivalents.......................................    433       82       608      140       (66)
Effect of exchange rate changes on cash.............     --       --        (6)      (1)       --
Cash and cash equivalents, beginning of period......    137      570       652      652     1,254
                                                      -----    -----    ------    -----    ------
Cash and cash equivalents, end of period............  $ 570    $ 652     1,254    $ 791    $1,188
                                                      =====    =====    ======    =====    ======
Supplemental disclosure:
  Cash paid for interest............................  $  --    $  --    $    2    $  --    $   --
                                                      =====    =====    ======    =====    ======
See accompanying notes to financial statements.
 
                                      F-25
90
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Behavioral Technology, Inc. (the "Company") was founded in 1978. The
Company primarily provides train-the-trainer programs designed to help its
clients improve employee selection and to provide managers with a methodology
for assessing strengths and weaknesses of current employees. BTI's revenue is
derived primarily from the licensing to clients of the right to use its training
materials.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed. The Company also licenses
to its clients the use of the Company's behavioral interviewing techniques. The
entire sale price is recognized when the noncancellable contract is signed and
the right to use the intellectual property is transferred. Deferred revenue is
recognized for payments received prior to services being performed.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Prepaid Expenses
 
     Prepaid expenses consist of costs incurred in developing videos and
publishing books. The costs of the videos are being amortized over five years
and the costs of the books are expensed as books are sold.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
                                      F-26
91
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, short-term certificates of deposit, accounts receivable, accounts
payable and accrued expenses. The carrying value of these financial instruments
approximates their fair value due to the short maturity of these instruments.
 
  Foreign Currency Translation
 
     The Company operates a branch in Canada. Assets and liabilities for the
branch are translated into U.S. Dollars at the end of the year using year-end
exchange rates. Income and expenses are translated using the average exchange
rates for the year. Translation gains and losses are reported as a separate
component of stockholders' equity.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 8.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company conducts its administrative operations in a facility leased
from the principal stockholder of the Company. Lease expense for the years ended
June 30, 1995, 1996 and 1997 was $90, $76 and $85, respectively.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
YEAR ENDING JUNE 30,
        ----------------------------------------------------------------------
1998............................................................  $ 83
              1999............................................................    86
              2000............................................................    89
              2001............................................................    89
              2002............................................................    45
                                                                                ----
                                                                                $392
                                                                                ====
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
JUNE 30,
                                                                        -------------
                                                                        1996     1997
                                                                        ----     ----
Machinery and equipment.......................................  $272     $307
        Furniture and fixtures........................................    97       95
        Leasehold improvements........................................    18       18
                                                                        ----     ----
                                                                         387      420
        Accumulated depreciation and amortization.....................   193      285
                                                                        ----     ----
                  Property and equipment, net.........................  $194     $135
                                                                        ====     ====
Depreciation and amortization expense related to property and equipment for
the years ended June 30, 1995, 1996 and 1997 was $57, $46 and $92, respectively.
 
                                      F-27
92
 
                          BEHAVIORAL TECHNOLOGY, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(5)  LINE OF CREDIT
 
     The Company entered into a line of credit agreement on October 15, 1996 for
borrowings up to $500. The line bears interest at prime plus 1%, is secured by
the accounts receivable of the Company, and is personally guaranteed by the
principal stockholder. The line of credit had a maturity date of October 15,
1997 and was renewed until October 15, 1998. There were no amounts outstanding
under this agreement at June 30, 1997.
 
(6)  EMPLOYEE BENEFITS
 
     The Company adopted a 401(k) profit sharing plan on January 1, 1996 that
covers all employees above the age of twenty-one who have completed one year of
service. Company contributions are made each year at the discretion of the Board
of Directors. The Company contributed $66 to the plan for the year ended June
30, 1996. No contribution was made for the year ended June 30, 1997.
 
(7)  CONCENTRATION OF CREDIT RISK
 
     The Company's credit risks primarily relate to cash and cash equivalents
and accounts receivable. Cash and cash equivalents are primarily held in bank
accounts. Cash deposits in excess of FDIC insurance limits approximated $1,040
at June 30, 1997. The Company has not incurred losses related to these balances
to date.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-28
93
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Decker Communications, Inc.:
 
     We have audited the accompanying balance sheets of Decker Communications,
Inc., as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Decker Communications, Inc.,
as of June 30, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended June 30, 1997 in
conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-29
94
 
                          DECKER COMMUNICATIONS, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30,
                                                               -----------------     SEPTEMBER 30,
                                                                1996       1997          1997
                                                               ------     ------     -------------
                                                                                      (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents..................................  $  314     $  508        $   526
  Investments................................................     565        533            932
  Accounts receivable, net of allowance for doubtful accounts
     of $142 at June 30, 1996 and $150 at June 30, 1997 and
     September 30, 1997......................................   1,123      1,489          1,441
  Receivables from related parties...........................      --         --            290
  Prepaid expenses and other current assets..................     170        140            102
                                                               ------     ------         ------
          Total current assets...............................   2,172      2,670          3,291
                                                               ------     ------         ------
Property and equipment, net..................................     497        338            359
Other assets.................................................      47         59             59
                                                               ------     ------         ------
          Total assets.......................................  $2,716     $3,067        $ 3,709
                                                               ======     ======         ======
 
                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...........................................  $  251     $  111        $   284
  Accrued expenses...........................................     368        466            459
  Accrued compensation.......................................     498        668            849
  Taxes payable..............................................      44         35             62
  Current portion of note payable............................      --        416            410
  Deferred revenue...........................................      92         89            114
                                                               ------     ------         ------
          Total current liabilities..........................   1,253      1,785          2,178
                                                               ------     ------         ------
Note payable, net of current portion.........................      --        623            615
Redeemable common stock......................................      --        300            300
Commitments and contingencies
Stockholders' equity:
  Common stock, no par value; 750,000 shares authorized;
     176,972, 138,027 and 143,417 shares issued and
     outstanding at June 30, 1996, June 30, 1997 and
     September 30, 1997, respectively........................     397        269            313
  Unrealized gain on investments.............................       5          9              9
  Note receivable from stock sales...........................     (92)      (127)          (171)
  Retained earnings..........................................   1,153        208            465
                                                               ------     ------         ------
          Total stockholders' equity.........................   1,463        359            616
                                                               ------     ------         ------
          Total liabilities and stockholders' equity.........  $2,716     $3,067        $ 3,709
                                                               ======     ======         ======
See accompanying notes to financial statements.
 
                                      F-30
95
 
                          DECKER COMMUNICATIONS, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
Revenue.......................................  $8,550     $8,620     $8,410     $1,930     $2,585
Cost of revenue...............................   2,419      2,655      2,275        549        660
                                                ------     ------     ------     ------     ------
  Gross profit................................   6,131      5,965      6,135      1,381      1,925
Selling, general and administrative
  expenses....................................   5,670      5,716      5,621      1,261      1,663
                                                ------     ------     ------     ------     ------
  Income from operations......................     461        249        514        120        262
Other (income) expense........................     (54)       (74)         9        (15)         3
                                                ------     ------     ------     ------     ------
  Income before income taxes..................     515        323        505        135        259
State income taxes............................      67         30         33          2          2
                                                ------     ------     ------     ------     ------
  Net income..................................  $  448     $  293     $  472     $  133     $  257
                                                ======     ======     ======     ======     ======
See accompanying notes to financial statements.
 
                                      F-31
96
 
                          DECKER COMMUNICATIONS, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
NOTE
                                           COMMON STOCK     UNREALIZED    RECEIVABLE
                                         ----------------     GAIN ON     FROM STOCK   RETAINED
                                         SHARES    AMOUNT   INVESTMENTS     SALES      EARNINGS    TOTAL
                                         -------   ------   -----------   ----------   --------   -------
Balance, June 30, 1994.................  174,000   $ 314        $--         $   --      $  986    $ 1,300
  Sale of stock........................    5,500      49         --            (50)         --         (1)
  Net income...........................       --      --         --             --         448        448
  Dividends............................       --      --         --             --        (300)      (300)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1995.................  179,500     363         --            (50)      1,134      1,447
  Sale of stock........................    4,000      42         --            (42)         --         --
  Repurchase of stock..................   (6,528)     (8)        --             --         (59)       (67)
  Unrealized gain on investments.......       --      --          5             --          --          5
  Net income...........................       --      --         --             --         293        293
  Dividends............................       --      --         --             --        (215)      (215)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1996.................  176,972     397          5            (92)      1,153      1,463
  Sale of stock........................    8,080      35         --            (35)         --         --
  Repurchase of stock..................  (37,850)   (163)        --             --        (963)    (1,126)
  Unrealized gain on investments.......       --      --          4             --          --          4
  Redeemable common stock..............   (9,175)     --         --             --        (300)      (300)
  Net income...........................       --      --         --             --         472        472
  Dividends............................       --      --         --             --        (154)      (154)
                                         -------   -----        ---          -----      ------    -------
Balance, June 30, 1997.................  138,027     269          9           (127)        208        359
  Sale of stock........................    5,390      44         --            (44)         --         --
  Net income...........................       --      --         --             --         257        257
                                         -------   -----        ---          -----      ------    -------
Balance, September 30, 1997
  (Unaudited)..........................  143,417   $ 313        $ 9         $ (171)     $  465    $   616
                                         =======   =====        ===          =====      ======    =======
See accompanying notes to financial statements.
 
                                      F-32
97
 
                          DECKER COMMUNICATIONS, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                ENDED SEPTEMBER
                                                     YEAR ENDED JUNE 30,              30,
                                                  -------------------------     ----------------
                                                  1995      1996      1997      1996       1997
                                                  -----     -----     -----     -----      -----
                                                                                  (UNAUDITED)
Cash flows from operating activities:
  Net income..................................... $ 448     $ 293     $ 472     $ 133      $ 257
  Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization.............   127       223       194        55         44
       (Gain) loss on disposal of property and
          equipment..............................    --        (3)       12        --         --
       Changes in operating assets and
          liabilities:...........................    --        --        --        --         --
          (Increase) decrease in accounts
            receivable, trade....................  (184)       62      (366)      (11)        48
          (Increase) decrease in prepaid expenses
            and other current assets.............   (38)      (22)       30        (8)      (252)
          (Increase) decrease in other assets....   (18)        7       (12)       --         --
          Increase (decrease) in accounts payable
            and accrued expenses.................   221       (28)      119      (135)       374
          Increase (decrease) in deferred
            revenue..............................   (40)      (61)       (3)       17         25
                                                  -----     -----     -----     -----      -----
            Total adjustments....................    68       178       (26)      (82)       239
                                                  -----     -----     -----     -----      -----
            Net cash provided by operating
               activities........................   516       471       446        51        496
                                                  -----     -----     -----     -----      -----
Cash flows from investing activities:
  Net change in investments......................  (344)      131        36        --       (399)
  Purchases of property and equipment............  (136)     (443)      (56)       (6)       (65)
  Proceeds from sale of property and equipment...    --         6         9        --         --
                                                  -----     -----     -----     -----      -----
            Net cash used in investing
               activities........................  (480)     (306)      (11)       (6)      (464)
                                                  -----     -----     -----     -----      -----
Cash flows from financing activities:
  Dividends......................................  (300)     (215)     (154)       --         --
  Sale (repurchase) of stock.....................    50       (25)      (35)       --         --
  Payments of notes payable......................    (6)       --       (52)      (13)       (14)
                                                  -----     -----     -----     -----      -----
            Net cash used in financing
               activities........................  (256)     (240)     (241)      (13)       (14)
                                                  -----     -----     -----     -----      -----
Net (decrease) increase in cash and cash
  equivalents....................................  (220)      (75)      194        32         18
Cash and cash equivalents, beginning of period...   609       389       314       314        508
                                                  -----     -----     -----     -----      -----
Cash and cash equivalents, end of period......... $ 389     $ 314     $ 508     $ 346      $ 526
                                                  =====     =====     =====     =====      =====
Supplemental disclosure:
  Cash paid for interest......................... $  --     $  --     $  80     $  --      $  19
                                                  =====     =====     =====     =====      =====
Supplemental disclosure of non-cash item:
  Increase (decrease) in market value of
     investments................................. $  19     $ (11)    $   4     $  --      $  --
                                                  =====     =====     =====     =====      =====
See accompanying notes to financial statements.
 
                                      F-33
98
 
                          DECKER COMMUNICATIONS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Decker Communications, Inc. (the "Company") was founded in 1979. The
Company provides instructor-led training to businesses to improve employees'
business communication skills and communication between management and
employees. Revenue is derived primarily from fees charged to participants in its
instructor-led training programs.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenues are recognized as products and services are provided.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997 are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Marketable Securities
 
     Marketable investment securities consist of U.S. treasury bills and equity
securities in various mutual funds. The investments are stated at fair market
value and are accounted for as available for sale securities under the
provisions of Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities. Unrealized gains are
included as a separate component of stockholders' equity.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the lease term.
 
  Fair Value of Financial instruments
 
     Financial instruments of the Company consist of cash and cash equivalents,
investments, accounts and notes receivable, accounts payable and accrued
liabilities. The carrying value of these financial instruments
 
                                      F-34
99
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
approximates their fair value because of the short maturity of these
instruments. Based upon borrowing rates currently available to the Company for
issuance of similar debt with similar terms and remaining maturities, the
estimated fair value of the long-term debt approximates its carrying amount.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 10.
 
  Library of Copyrighted Materials
 
     The Company derives a substantial portion of its revenue from training
programs which are based on its library of copyrighted materials and other
materials developed within the Company. Costs associated with the development of
these materials have been expensed as incurred.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company has a note receivable from a stockholder and officer of the
Company for the purchase of stock. The balance of this note was $92 and $127 at
June 30, 1996 and 1997, respectively. The note bears interest at the prevailing
rate and is secured by shares of Company stock and may be repaid by cash or
redemption of the stock to the Company. The note is reflected as a reduction of
stockholders' equity in the accompanying balance sheets.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
JUNE 30,
                                                                     -----------------
                                                                      1996       1997
                                                                     ------     ------
Equipment..................................................  $  665        591
        Furniture and fixtures.....................................     336        334
        Software...................................................     129        143
        Leasehold improvements.....................................      17         19
                                                                     ------     ------
                                                                      1,147      1,087
        Accumulated depreciation and amortization..................     650        749
                                                                     ------     ------
                  Property and equipment, net......................  $  497        338
                                                                     ======     ======
Depreciation and amortization expense related to property and equipment for
the years ended June 30, 1995, 1996 and 1997 was $127, $223 and $194,
respectively.
 
(5)  NOTE PAYABLE
 
     The note payable consists of a secured promissory note to a stockholder in
connection with a stock repurchase agreement. The note bears interest at 7.5%,
with principal and interest due monthly through June 30, 2009. The note is
secured by all tangible and intangible assets of the Company.
 
     In connection with the stock repurchase agreement, the stockholder has the
option to accelerate the payment of a portion of the outstanding balance upon
the occurrence of certain events. One such event has occurred, as discussed in
note 10 (unaudited), giving the stockholder the right to accelerate
approximately
 
                                      F-35
100
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
$416 of the principal balance. This amount has been classified as current in the
accompanying balance sheet at June 30, 1997. The stockholder has not yet chosen
to accelerate the note.
 
     Also in connection with the stock repurchase agreement, the Company issued
a put option to the stockholder which gave him the right, upon occurrence of a
triggering event, to sell his remaining shares of common stock to the Company at
an arbitrated value per share. Payment pursuant to this put option would be made
by amending the principal balance of the note payable by the amount of the
purchase price, effective July 1, 1999. The stockholder has not yet chosen to
exercise the put option. Common shares held under this option have been
reflected as redeemable common stock in the June 30, 1997 balance sheet.
 
     Principal payments on long-term debt are as follows:
YEAR ENDING JUNE 30,
                ----------------------------------------------------
1998..........................................  $  410
                      1999..........................................      60
                      2000..........................................      64
                      2001..........................................      69
                      2002..........................................      75
                      Thereafter....................................     347
                                                                      ------
                          Total.....................................  $1,025
                                                                      ======
(6)  LINE OF CREDIT
 
     The Company has a $250 line of credit agreement with a bank, with interest
payable at prime plus 1.5%. The line of credit is secured by substantially all
of the Company's assets and is guaranteed by the principal stockholder of the
Company. At June 30, 1996 and 1997, there were no amounts outstanding under the
agreement.
 
(7)  OPERATING LEASES
 
     The Company leases all of its facilities under cancelable and noncancelable
operating leases that expire on various dates through fiscal 2002. Most of these
leases generally provide for rent escalation based upon changes in real estate
taxes and operating expenses.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
YEAR ENDING JUNE 30,
                ----------------------------------------------------
1998..........................................  $  494
                      1999..........................................     502
                      2000..........................................     382
                      2001..........................................     374
                      2002..........................................     108
                                                                      ------
                          Total                                       $1,860
                                                                      ======
Rent expense for the years ended June 30, 1995, 1996 and 1997 was $505,
$561 and $510, respectively.
 
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee annual
contributions up to $1 per employee. The Company contributed $29, $20 and $28 to
the plan for the years ended June 30, 1995, 1996 and 1997, respectively.
 
                                      F-36
101
 
                          DECKER COMMUNICATIONS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(9)  CONCENTRATION OF CREDIT RISK
 
     The Company's three largest customers accounted for approximately 16%, 30%,
and 16% of total revenues for the years ended June 30, 1995, 1996 and 1997,
respectively. Accounts receivable from these customers represented approximately
13% and 16% of the total accounts receivable balance at June 30, 1996 and 1997,
respectively.
 
(10)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-37
102
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
J. Howard & Associates, Inc.:
 
     We have audited the accompanying balance sheets of J. Howard & Associates,
Inc., as of June 30, 1997 and December 31, 1996 and 1995, and the related
statements of operations, stockholders' equity, and cash flows for the six
months ended June 30, 1997 and each of the years in the three-year period ended
December 31, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of J. Howard & Associates,
Inc., as of June 30, 1997 and December 31, 1996 and 1995, and the results of its
operations and its cash flows for the six months ended June 30, 1997 and each of
the years in the three-year period ended December 31, 1996 in conformity with
generally accepted accounting principles.
 
                                          KPMG Peat Marwick LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-38
103
 
                          J. HOWARD & ASSOCIATES, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31,
                                                     -----------------     JUNE 30,     SEPTEMBER 30,
                                                      1995       1996        1997           1997
                                                     ------     ------     --------     -------------
                                                                                         (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents........................  $  466     $  201      $  280         $   811
  Accounts receivable, net of allowance for
     doubtful accounts of $34 at December 31, 1995,
     $84 at December 31, 1996, $108 at June 30,
     1997 and $84 at September 30, 1997............     761        724       1,688           1,350
  Due from employees and related parties...........      68         17           6              52
  Prepaid expenses.................................       4         14          85              50
                                                      -----      -----       -----          ------
          Total current assets.....................   1,299        956       2,059           2,263
                                                      -----      -----       -----          ------
Property and equipment, net........................     170        365         299             290
Other assets.......................................      53         44          44              44
                                                      -----      -----       -----          ------
          Total assets.............................  $1,522     $1,365      $2,402         $ 2,597
                                                      =====      =====       =====          ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.................................  $   23     $   12      $  151         $   116
  Accrued expenses.................................      37        106          87              95
  Accrued compensation.............................     372         32          34              97
  Deferred revenue.................................     117        135          48              24
  Accrued state income taxes.......................      27         38          38              38
  Distributions payable............................     138         --          --             125
                                                      -----      -----       -----          ------
          Total current liabilities................     714        323         358             495
                                                      -----      -----       -----          ------
Commitments and contingencies
Stockholders' equity:
  Class A voting common stock, no par value;
     authorized 100,000 shares; issued and
     outstanding 66,667 shares at December 31, 1995
     and 72,533 shares at December 31, 1996, June
     30, 1997 and September 30, 1997...............      64        175         175             175
  Class B non-voting common stock, no par value;
     authorized 25,000 shares; issued and
     outstanding 13,333 shares at December 31, 1995
     and 16,267 shares at December 31, 1996, June
     30, 1997 and September 30, 1997...............      42         97          97              97
  Retained earnings................................     702        770       1,772           1,830
                                                      -----      -----       -----          ------
          Total stockholders' equity...............     808      1,042       2,044           2,102
                                                      -----      -----       -----          ------
          Total liabilities and stockholders'
            equity.................................  $1,522     $1,365      $2,402         $ 2,597
                                                      =====      =====       =====          ======
See accompanying notes to financial statements.
 
                                      F-39
104
 
                          J. HOWARD & ASSOCIATES, INC.
 
                            STATEMENTS OF OPERATIONS
 
                                 (IN THOUSANDS)
SIX MONTHS      NINE MONTHS ENDED
                                      YEAR ENDED DECEMBER 31,           ENDED          SEPTEMBER 30,
                                    ----------------------------      JUNE 30,       -----------------
                                     1994       1995       1996         1997          1996       1997
                                    ------     ------     ------     -----------     ------     ------
                                                                                        (UNAUDITED)
Revenue...........................  $5,087     $6,251     $7,110       $ 4,160       $5,814     $6,077
Cost of revenue...................   1,713      1,964      2,166         1,190        1,782      1,851
                                    ------     ------     ------        ------       ------     ------
  Gross profit....................   3,374      4,287      4,944         2,970        4,032      4,226
Selling, general, and
  administrative expenses.........   3,087      4,158      4,559         1,971        2,791      3,170
                                    ------     ------     ------        ------       ------     ------
  Income from operations..........     287        129        385           999        1,241      1,056
                                    ------     ------     ------        ------       ------     ------
Other income (expense):
  Interest and dividend income....       4          6         31             4           18          9
  Interest expense................     (12)        (9)        --            --           --         --
  Other income....................      --         --          3             3            1         --
                                    ------     ------     ------        ------       ------     ------
          Total other income
            (expense).............      (8)        (3)        34             7           19          9
                                    ------     ------     ------        ------       ------     ------
          Income before income
            taxes.................     279        126        419         1,006        1,260      1,065
State income taxes................      --         10          8             4            4          5
                                    ------     ------     ------        ------       ------     ------
          Net income..............  $  279     $  116     $  411       $ 1,002       $1,256     $1,060
                                    ======     ======     ======        ======       ======     ======
See accompanying notes to financial statements.
 
                                      F-40
105
 
                          J. HOWARD & ASSOCIATES, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
CLASS B
                                       CLASS A VOTING          NON-VOTING
                                        COMMON STOCK          COMMON STOCK
                                      -----------------     -----------------     RETAINED
                                      SHARES     AMOUNT     SHARES     AMOUNT     EARNINGS     TOTAL
                                      ------     ------     ------     ------     --------     ------
Balance, December 31, 1993..........  66,667      $ 64      13,333      $ 42       $  861      $  967
  Net income........................      --        --          --        --          279         279
  Distributions to stockholders.....      --        --          --        --          (81)        (81)
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1994..........  66,667        64      13,333        42        1,059       1,165
  Net income........................      --        --          --        --          116         116
  Distributions to stockholders.....      --        --          --        --         (473)       (473)
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1995..........  66,667        64      13,333        42          702         808
  Net income........................      --        --          --        --          411         411
  Distributions to stockholders.....      --        --          --        --         (343)       (343)
  Stock grant.......................   5,866       111       2,934        55           --         166
                                      ------      ----      ------      ----       ------      ------
Balance, December 31, 1996..........  72,533       175      16,267        97          770       1,042
  Net income........................      --        --          --        --        1,002       1,002
                                      ------      ----      ------      ----       ------      ------
Balance, June 30, 1997..............  72,533       175      16,267        97        1,772       2,044
  Net income........................      --        --          --        --           58          58
                                      ------      ----      ------      ----       ------      ------
Balance, September 30, 1997
  (Unaudited).......................  72,533      $175      16,267      $ 97       $1,830      $2,102
                                      ======      ====      ======      ====       ======      ======
See accompanying notes to financial statements.
 
                                      F-41
106
 
                          J. HOWARD & ASSOCIATES, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
YEAR ENDED                            NINE MONTHS ENDED
                                             DECEMBER 31,        SIX MONTHS ENDED     SEPTEMBER 30,
                                         ---------------------       JUNE 30,       -----------------
                                         1994    1995    1996          1997          1996       1997
                                         -----   -----   -----   ----------------   ------     ------
                                                                                       (UNAUDITED)
Cash flows from operating activities:
  Net income............................ $ 279   $ 116   $ 411        $1,002        $1,256     $1,060
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Depreciation and amortization....    83      95     104            75            69        130
       Non-cash compensation............    --      --     166            --            --         --
       Loss on sale of property and
          equipment.....................    --      --      --            15            --         15
       Changes in operating assets and
          liabilities:
          (Increase) decrease in
            accounts receivable.........   181    (116)     37          (964)         (344)      (626)
          (Increase) decrease in prepaid
            expenses....................     7      10     (10)          (71)           --        (36)
          (Increase) decrease in other
            assets......................   (12)     12       9            --            11         --
          Increase (decrease) in
            accounts payable and accrued
            expenses....................    21     153    (282)          122          (199)       158
          Increase (decrease) in state
            income taxes................    --       8      11            --            --         --
          Increase (decrease) in
            deferred revenue............   (17)     91      18           (87)           28         14
                                         -----   -----   -----        ------        ------     ------
            Total adjustments...........   263     253      53          (910)         (435)      (345)
                                         -----   -----   -----        ------        ------     ------
            Net cash provided by
               operating activities.....   542     369     464            92           821        715
                                         -----   -----   -----        ------        ------     ------
Cash flows from investing activities:
  Purchases of property and equipment...  (133)    (50)   (299)          (52)         (224)       (98)
  Proceeds from sale of property and
     equipment..........................    --      --      --            28            --         28
  Net (increase) decrease in amounts due
     from employees and related
     parties............................    41      (8)     51            11            22        (35)
                                         -----   -----   -----        ------        ------     ------
            Net cash used in investing
               activities...............   (92)    (58)   (248)          (13)         (202)      (105)
                                         -----   -----   -----        ------        ------     ------
Cash flows from financing activities:
  Payments on long-term debt............   (50)    (42)     --            --            --         --
  Distributions to stockholders.........   (81)   (335)   (481)           --          (449)        --
                                         -----   -----   -----        ------        ------     ------
            Net cash used in financing
               activities...............  (131)   (377)   (481)           --          (449)        --
                                         -----   -----   -----        ------        ------     ------
Net increase (decrease) in cash and cash
  equivalents...........................   319     (66)   (265)           79           170        610
Cash and cash equivalents, beginning of
  period................................   213     532     466           201           466        201
                                         -----   -----   -----        ------        ------     ------
Cash and cash equivalents, end of
  period................................ $ 532   $ 466   $ 201        $  280        $  636     $  811
                                         =====   =====   =====        ======        ======     ======
Supplemental disclosure:
  Cash paid for interest................ $  11   $   9   $  --        $   --        $   --     $   --
                                         =====   =====   =====        ======        ======     ======
F-42
107
 
                          J. HOWARD & ASSOCIATES, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     J. Howard & Associates, Inc. (the "Company") was founded in 1977. The
Company provides instructor-led training to individual managers and client
companies to identify and address potential obstacles to improving workplace
productivity, including race and gender issues, sexual harassment and failure of
employees to take measured risks. Revenue is derived primarily from
instructor-led seminars and, to a lesser extent, from rendering consulting
services.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as products and services are provided.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles, have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using accelerated
and straight-line methods over periods ranging from three to seven years.
Leasehold improvements are amortized over the term of the lease.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses. The
carrying value of these financial instruments approximates their fair value
because of the short maturity of these instruments.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the
 
                                      F-43
108
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
financial statements. Only certain state taxes are paid by its Company. The
Company will terminate its S corporation status concurrently with the
combination described in note 11.
 
(3)  RELATED PARTY TRANSACTIONS
 
     Due from employees and related parties consists of the following at:
DECEMBER 31,
                                                                -------------     JUNE 30,
                                                                1995     1996       1997
                                                                ----     ----     --------
Due from The Efficacy Institute, Inc..................  $ 9      $14        $  7
        Due from (to) stockholders............................   47       (9)        (12)
        Due from employees....................................   12       12          11
                                                                ---      ---        ----
                                                                 68       17           6
                                                                ===      ===        ====
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
DECEMBER 31,
                                                            ---------------     JUNE 30,
                                                            1995      1996        1997
                                                            ----     ------     --------
Equipment.........................................  $512     $  677      $  631
        Furniture and fixtures............................   255        255         255
        Leasehold improvements............................    49         49          49
        Investment art....................................    21         21          21
        Computer software.................................    16        113         156
        Vehicles..........................................    --         38          38
                                                            ----     ------      ------
                                                             853      1,153       1,150
        Accumulated depreciation and amortization.........   683        788         851
                                                            ----     ------      ------
                  Property and equipment, net.............  $170     $  365      $  299
                                                            ====     ======      ======
Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1994, 1995 and 1996 was $83, $95 and $104,
respectively, and $75 for the six months ended June 30, 1997.
 
(5)  LINE OF CREDIT
 
     The Company has a secured revolving line of credit agreement which permits
borrowings of up to $500 at the bank's base rate plus one percent. No amounts
were outstanding under this agreement at December 31, 1995, 1996 and June 30,
1997. Substantially all assets of the Company are pledged as collateral under
this agreement.
 
(6)  DISTRIBUTIONS TO STOCKHOLDERS
 
     As discussed in note 2, the stockholders are taxed on their proportionate
share of the Company's taxable income. It has been the Company's policy to make
distributions to the stockholders for the purpose of funding these income tax
obligations.
 
                                      F-44
109
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(7)  LEASE COMMITMENTS
 
     The Company is committed under various noncancelable operating leases for
office space and equipment through January 2002. Lease expense charged to
operations was $239 in 1994, $256 in 1995, $247 in 1996 and $72 for the six
months ended June 30, 1997.
 
     Future minimum lease payments under all noncancelable operating leases are
as follows:
YEAR ENDING JUNE 30,
                ------------------------------------------------------
1998..................................................  $102
                1999..................................................    71
                2000..................................................    69
                2001..................................................    55
                2002..................................................    35
                                                                        ----
                                                                        $332
                                                                        ====
(8)  STOCKHOLDERS' EQUITY
 
     During the year ended December 31, 1996, 5,866 shares of Class A common
stock (voting) no par value and 2,934 shares of Class B common stock
(non-voting) no par value were issued 50% each to two new shareholders in
recognition of compensation expense of $111 and $55, respectively.
 
     On June 30, 1995, the Company approved an increase in the authorized common
stock Class A (voting) from 12,500 shares to 100,000 shares and common stock
Class B (non-voting) from 1,000 shares to 25,000 shares. Additionally, the
Company approved an exchange of 40 shares of the newly authorized shares for
each share of the previously authorized shares (or a 40 for 1 stock split). All
share data has been retroactively adjusted to reflect the stock split.
 
(9)  EMPLOYEE BENEFITS
 
     The Company maintains a defined contribution retirement plan for all
eligible employees. Company contributions are at the discretion of the Board of
Directors, but cannot exceed the maximum amount deductible under applicable
provisions of the Internal Revenue Code.
 
     Contributions to the plan during the years ended December 31, 1994, 1995
and 1996 amounted to $23, $34 and $34, respectively. Contributions to the plan
during the six months ended June 30, 1997 totaled $19.
 
(10)  CONCENTRATION OF CREDIT RISK
 
     The Company's three largest customers accounted for approximately 38%, 30%,
63% and 43% of net program revenues for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1997, respectively. Accounts
receivable from these customers approximated $319, $514 and $532 at December 31,
1995 and 1996 and June 30, 1997, respectively.
 
     The Company maintains cash deposits in two banks located in eastern
Massachusetts and in a money market mutual fund account sponsored by a
registered broker-dealer. Cash deposits in excess of FDIC insurance limits
approximated $140 and $46 at December 31, 1996 and June 30, 1997, respectively.
 
                                      F-45
110
 
                          J. HOWARD & ASSOCIATES, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(11)  SUBSEQUENT EVENTS (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
     In December 1997, the Company entered into a five-year lease of office
space in Burlington, Massachusetts, commencing on April 1, 1998. At that time,
the Company will move its Lexington headquarters to Burlington.
 
                                      F-46
111
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Robert Steinmetz, Ph.D., and Associates, Inc.
d/b/a Learning Systems Sciences:
 
     We have audited the accompanying balance sheets of Robert Steinmetz, Ph.D.,
and Associates, Inc., d/b/a Learning Systems Sciences as of June 30, 1997 and
December 31, 1996 and the related statements of operations, stockholders' equity
and cash flows for the six months ended June 30, 1997 and for each of the years
in the two-year period ended December 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Robert Steinmetz, Ph.D., and
Associates, Inc., d/b/a Learning Systems Sciences as of June 30, 1997 and
December 31, 1996 and the results of its operations and its cash flows for the
six months ended June 30, 1997 and for each of the years in the two-year period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-47
112
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31,     JUNE 30,     SEPTEMBER 30,
                                                               1996           1997           1997
                                                           ------------     --------     -------------
                                                                                          (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents..............................     $  274         $  599         $   508
  Accounts receivable, net of allowance for doubtful
     accounts of $88.....................................        703            729             697
  Costs in excess of billings............................        267            276             359
  Prepaid expenses and other current assets..............         53             81              56
                                                              ------         ------          ------
          Total current assets...........................      1,297          1,685           1,620
                                                              ------         ------          ------
Property and equipment, net..............................        129            144             153
Other assets.............................................        103            105             105
                                                              ------         ------          ------
          Total assets...................................     $1,529         $1,934         $ 1,878
                                                              ======         ======          ======
                                 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.......................................     $   64         $   91         $    97
  Accrued expenses.......................................        166            191             174
  Accrued compensation...................................        124            109             100
  Billings in excess of costs............................        710            353             362
                                                              ------         ------          ------
          Total current liabilities......................      1,064            744             733
                                                              ------         ------          ------
Commitments and contingencies
Stockholders' equity:
  Common stock, $3 par value; 1,000 shares authorized,
     issued and outstanding..............................          3              3               3
  Retained earnings......................................        462          1,187           1,142
                                                              ------         ------          ------
          Total stockholders' equity.....................        465          1,190           1,145
                                                              ------         ------          ------
          Total liabilities and stockholders' equity.....     $1,529         $1,934         $ 1,878
                                                              ======         ======          ======
See accompanying notes to financial statements.
 
                                      F-48
113
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
NINE MONTHS
                                                 YEAR ENDED         SIX MONTHS           ENDED
                                                DECEMBER 31,          ENDED          SEPTEMBER 30,
                                              -----------------      JUNE 30,      -----------------
                                               1995       1996         1997         1996       1997
                                              ------     ------     ----------     ------     ------
                                                                                      (UNAUDITED)
Revenue.....................................  $3,332     $5,123       $2,910       $3,570     $3,960
Cost of revenue.............................   1,390      1,696        1,081        1,230      1,590
                                              ------     ------       ------       ------     ------
  Gross profit..............................   1,942      3,427        1,829        2,340      2,370
Selling, general and administrative
  expenses..................................   1,767      3,079        1,108        1,713      1,697
                                              ------     ------       ------       ------     ------
          Income from operations............     175        348          721          627        673
                                              ------     ------       ------       ------     ------
Other income (expense):
  Other.....................................     (49)        --           --           --         --
  Interest income, net......................       2          9            7            4         12
                                              ------     ------       ------       ------     ------
          Total other income (expense)......     (47)         9            7            4         12
                                              ------     ------       ------       ------     ------
          Income before income taxes........     128        357          728          631        685
Income taxes................................      86          7            3            1          5
                                              ------     ------       ------       ------     ------
          Net income........................  $   42     $  350       $  725       $  630     $  680
                                              ======     ======       ======       ======     ======
See accompanying notes to financial statements.
 
                                      F-49
114
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK
                                                          ----------------     RETAINED
                                                          SHARES    AMOUNT     EARNINGS     TOTAL
                                                          -----     ------     --------     ------
Balance, December 31, 1994..............................  1,000       $3        $   70      $   73
  Net income............................................     --       --            42          42
                                                          -----      ---        ------      ------
Balance, December 31, 1995..............................  1,000        3           112         115
  Net income............................................     --       --           350         350
                                                          -----      ---        ------      ------
Balance, December 31, 1996..............................  1,000        3           462         465
  Net income............................................     --       --           725         725
                                                          -----      ---        ------      ------
Balance, June 30, 1997..................................  1,000        3         1,187       1,190
  Net loss..............................................     --       --           (45)        (45)
                                                          -----      ---        ------      ------
Balance, September 30, 1997 (Unaudited).................  1,000       $3        $1,142      $1,145
                                                          =====      ===        ======      ======
See accompanying notes to financial statements.
 
                                      F-50
115
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
NINE MONTHS
                                               YEAR ENDED                               ENDED
                                              DECEMBER 31,     SIX MONTHS ENDED     SEPTEMBER 30,
                                             --------------        JUNE 30,        ----------------
                                             1995     1996           1997          1996       1997
                                             -----    -----    ----------------    ----       -----
                                                                                     (UNAUDITED)
Cash flows from operating activities:
  Net income...............................  $  42    $ 350         $  725         $630       $ 680
                                             -----    -----          -----         ----       -----
  Adjustments to reconcile net income to
     net cash provided by operating
     activities:
       Depreciation and amortization.......     48       43             25           38          37
       Changes in operating assets and
          liabilities:
          (Increase) decrease in accounts
            receivable.....................   (467)    (195)           (26)          44           6
          (Increase) decrease in prepaid
            expenses and other current
            assets.........................     12      (30)           (28)         (55)         (3)
          (Increase) decrease in costs in
            excess of billings.............   (184)      14             (9)         229         (92)
          (Increase) decrease in other
            assets.........................    (17)     (19)            (2)         (19)         (2)
          Increase (decrease) in accounts
            payable and accrued expenses...     50      115             37          (39)         17
          Increase (decrease) in billings
            in excess of costs.............    560       37           (357)         (59)       (348)
                                             -----    -----          -----         ----       -----
            Total adjustments..............      2      (35)          (360)         139        (385)
                                             -----    -----          -----         ----       -----
            Net cash provided by operating
               activities..................     44      315            365          769         295
                                             -----    -----          -----         ----       -----
Cash flows from investing activities:
  Purchases of property and equipment......    (84)     (85)           (40)         (59)        (61)
                                             -----    -----          -----         ----       -----
            Net (decrease) increase in cash
               and cash equivalents........    (40)     230            325          710         234
Cash and cash equivalents, beginning of
  period...................................     84       44            274           44         274
                                             -----    -----          -----         ----       -----
Cash and cash equivalents, end of period...  $  44    $ 274         $  599         $754       $ 508
                                             =====    =====          =====         ====       =====
See accompanying notes to financial statements.
 
                                      F-51
116
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Robert Steinmetz, Ph.D., and Associates, Inc., d/b/a Learning Systems
Sciences, was founded in 1979. The Company creates customized training products
that generally are designed to facilitate faster learning of customer interface
devices and higher productivity of retail associates. Revenue is derived
primarily from the design, development and delivery of its products.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     The Company follows the percentage-of-completion method of accounting for
contracts. Accordingly, income is recognized in the ratio that costs incurred
bear to estimated total costs. Adjustments to cost estimates are made
periodically, and losses expected to be incurred on contracts in progress are
charged to operations in the period such losses are determined. The aggregate of
costs incurred and income recognized on uncompleted contracts in excess of
related billings is shown as a current asset, and the aggregate of billings on
uncompleted contracts in excess of related costs incurred and income recognized
is shown as a current liability.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles, have been omitted.
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary to present fairly the financial position,
results of operations and cash flows with respect to the interim financial
statements have been included. The results of operations for the interim periods
are not necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are recorded at cost and depreciated using an
accelerated method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
                                      F-52
117
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
                                 (IN THOUSANDS)
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities. The
carrying value of these financial instruments approximates their fair value
because of the short maturity of these instruments.
 
  Income Taxes
 
     Effective August 31, 1995, the Company elected to be treated as an S
corporation. Therefore, the net income of the Company is reported by the
stockholders. Accordingly, no provision for federal income taxes has been
included in the financial statements for the periods subsequent to that date.
Only certain state income taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 8.
 
(3)  RELATED PARTY TRANSACTIONS
 
     At June 30, 1997, the Company has unsecured, non-interest bearing loans
receivable from its stockholders in the amount of $22. This amount is included
in prepaid expenses and other current assets.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
DECEMBER 31,     JUNE 30,
                                                                     1996           1997
                                                                 ------------     --------
Machinery and equipment................................      $248           $283
        Furniture and fixtures.................................        48             53
        Automobiles............................................        10             10
        Leasehold improvements.................................        12             12
                                                                     ----           ----
                                                                      318            358
        Less accumulated depreciation and amortization.........       189            214
                                                                     ----           ----
                  Property and equipment, net..................      $129            144
                                                                     ====           ====
Depreciation and amortization expense related to property and equipment for
the years ended December 31, 1995 and 1996 and the six months ended June 30,
1997 was $48, $43 and $25, respectively.
 
(5)  OPERATING LEASES
 
     Operating lease commitments consist of facility and automobile rentals.
Future minimum lease payments under all noncancelable operating leases are as
follows:
YEAR ENDING JUNE 30,
1998................................................    $135
                1999................................................     103
                                                                        ----
                                                                        $238
                                                                        ====
Lease expense for the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997 totaled $93, $112 and $57, respectively.
 
                                      F-53
118
 
                 ROBERT STEINMETZ, PH.D., AND ASSOCIATES, INC.
                        D/B/A LEARNING SYSTEMS SCIENCES
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
                                 (IN THOUSANDS)
 
(6)  EMPLOYEE BENEFITS
 
     The Company has established a profit sharing plan for the benefit of its
employees. Company contributions are made at the discretion of the Board of
Directors. The Company contributed $83 to the plan in 1995. No contribution was
made for the year ended December 31, 1996 or the six months ended June 30, 1997.
 
(7)  CONCENTRATION OF CREDIT RISK
 
     The Company had three customers that accounted for 41% of total revenue and
one customer that accounted for 15% of total revenue for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively. Accounts
receivable from these customers represented approximately 50% and 41% of the
total accounts receivable balance at December 31, 1996 and June 30, 1997,
respectively.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-54
119
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
MOHR Retail Learning Systems, Inc.:
 
     We have audited the accompanying balance sheets of MOHR Retail Learning
Systems, Inc., as of June 30, 1997 and 1996, and the related statements of
operations, stockholders' equity and cash flows for each of the years in the
two-year period ended June 30, 1997. These financial statements are the
responsibility of MOHR Retail Learning Systems, Inc.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MOHR Retail Learning
Systems, Inc. as of June 30, 1997 and 1996, and the results of its operations
and its cash flows for each of the years in the two-year period ended June 30,
1997, in conformity with generally accepted accounting principles.
 
                                          KPMG PEAT MARWICK LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-55
120
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30,
                                                                  -------------     SEPTEMBER 30,
                                                                  1996     1997         1997
                                                                  ----     ----     -------------
                                                                                     (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents.....................................  $221     $260         $ 211
  Accounts receivable, net of allowance for doubtful accounts of
     $46 at June 30, 1996 and 1997 and September 30, 1997.......   211      548           441
  Inventory.....................................................    99      133           132
  Prepaid expenses..............................................    11       14            22
                                                                  ----     ----          ----
          Total current assets..................................   542      955           806
Property and equipment, net.....................................    18       44            46
                                                                  ----     ----          ----
          Total assets..........................................  $560     $999         $ 852
                                                                  ====     ====          ====
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..............................................  $118     $ 74         $ 143
  Accrued expenses..............................................   320      295           304
  Accrued compensation..........................................    12       54            12
  Deferred revenue..............................................    48       73            98
                                                                  ----     ----          ----
          Total current liabilities.............................   498      496           557
                                                                  ----     ----          ----
Commitments and contingencies
Stockholders' equity:
  Common stock, no par value; 2,500 shares authorized; 100
     shares issued and outstanding..............................     4        4             4
  Retained earnings.............................................    58      499           291
                                                                  ----     ----          ----
          Total stockholders' equity............................    62      503           295
                                                                  ----     ----          ----
          Total liabilities and stockholders' equity............  $560     $999         $ 852
                                                                  ====     ====          ====
See accompanying notes to financial statements.
 
                                      F-56
121
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
THREE MONTHS
                                                               YEAR ENDED             ENDED
                                                                JUNE 30,          SEPTEMBER 30,
                                                            -----------------     --------------
                                                             1996       1997      1996     1997
                                                            ------     ------     ----     -----
                                                                                   (UNAUDITED)
Revenue...................................................  $2,171     $3,015     $554     $ 556
Cost of revenue...........................................     677        825      187       204
                                                            ------     ------     ----     -----
  Gross profit............................................   1,494      2,190      367       352
Selling, general and administrative expenses..............   1,151      1,745      383       562
                                                            ------     ------     ----     -----
  Income (loss) from operations...........................     343        445      (16)     (210)
Interest income (expense).................................      (3)         3       --         3
                                                            ------     ------     ----     -----
  Income (loss) before income taxes.......................     340        448      (16)     (207)
State income taxes........................................       1          7       --         1
                                                            ------     ------     ----     -----
          Net income (loss)...............................  $  339     $  441     $(16)    $(208)
                                                            ======     ======     ====     =====
See accompanying notes to financial statements.
 
                                      F-57
122
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK
                                                 -----------------       RETAINED EARNINGS
                                                 SHARES     AMOUNT     (ACCUMULATED DEFICIT)     TOTAL
                                                 ------     ------     ---------------------     -----
Balance, June 30, 1995.........................    100       $  4              $(281)            $(277)
  Net income...................................     --         --                339               339
                                                   ---        ---              -----             -----
Balance, June 30, 1996.........................    100          4                 58                62
  Net income...................................     --         --                441               441
                                                   ---        ---              -----             -----
Balance, June 30, 1997.........................    100          4                499               503
  Net loss.....................................     --         --               (208)             (208)
                                                   ---        ---              -----             -----
Balance, September 30, 1997 (Unaudited)........    100       $  4              $ 291             $ 295
                                                   ===        ===              =====             =====
See accompanying notes to financial statements.
 
                                      F-58
123
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS
                                                              YEAR ENDED             ENDED
                                                               JUNE 30,          SEPTEMBER 30,
                                                            ---------------     ---------------
                                                            1996      1997      1996      1997
                                                            -----     -----     -----     -----
                                                                                  (UNAUDITED)
Cash flows from operating activities:
  Net income (loss).......................................  $ 339     $ 441     $ (16)    $(208)
                                                            -----     -----     -----     -----
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
       Depreciation and amortization......................     10        15         2         4
       Changes in operating assets and liabilities:
          (Increase) decrease in accounts receivable......    (99)     (337)     (107)      107
          (Increase) decrease in inventory................      4       (34)      (12)        1
          (Increase) decrease in prepaid expenses.........      3        (3)       (9)       (8)
          Increase (decrease) in accounts payable.........     (1)      (44)      (23)       69
          Increase in accrued expenses....................    (15)       17        (6)      (33)
          Increase (decrease) in deferred revenue.........    (29)       25        46        25
                                                            -----     -----     -----     -----
            Total adjustments.............................   (127)     (361)     (109)      165
                                                            -----     -----     -----     -----
            Net cash provided by (used in) operating
               activities.................................    212        80      (125)      (43)
                                                            -----     -----     -----     -----
Cash flows from investing activities:
  Purchases of property and equipment.....................     (8)      (41)       (8)       (6)
                                                            -----     -----     -----     -----
            Net cash used in investing activities.........     (8)      (41)       (8)       (6)
                                                            -----     -----     -----     -----
Net increase (decrease) in cash and cash equivalents......    204        39      (133)      (49)
Cash and cash equivalents, beginning of period............     17       221       221       260
                                                            -----     -----     -----     -----
Cash and cash equivalents, end of period..................  $ 221     $ 260     $  88     $ 211
                                                            =====     =====     =====     =====
Supplemental disclosure:
  Cash paid for interest..................................  $  --     $   3     $  --     $   3
                                                            =====     =====     =====     =====
See accompanying notes to financial statements.
 
                                      F-59
124
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     MOHR Retail Learning Systems, Inc. (the "Company") was founded in 1991. The
Company offers train-the-trainer seminars to help clients in the retail industry
to improve productivity by fostering a customer oriented focus at the sales
management and associate levels. In some of its programs, the Company trains
employees directly through instructor-led seminars. Revenue is derived primarily
from the licensing to clients of the right to use the Company's training
programs. Revenue is received on a participant or site basis.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed. The Company contracts with
customers to provide materials and training seminars. Deferred revenue is
recognized for payments received prior to services being performed.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Inventory
 
     The Company owns training supplies and manuals which are accounted for
using the lower of cost first-in, first-out (FIFO) or market basis of
accounting.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using an
accelerated method over five years. Leasehold improvements are amortized over
the term of the lease.
 
                                      F-60
125
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Fair Value of Financial Instruments
 
     The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses. The
carrying amount of these financial instruments approximates fair value because
of the short maturity of those instruments.
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination discussed
in note 8.
 
(3)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
JUNE 30,
                                                                         -------------
                                                                         1996     1997
                                                                         ----     ----
Equipment......................................................  $34       61
        Furniture......................................................    9       19
        Leasehold improvements.........................................   --        4
                                                                         ---      ---
                                                                          43       84
        Accumulated depreciation and amortization......................   25       40
                                                                         ---      ---
                  Property and equipment, net..........................  $18       44
                                                                         ===      ===
Depreciation and amortization expense related to property and equipment was
$10 and $15 in the years ended June 30, 1996 and 1997, respectively.
 
(4)  LEASE COMMITMENTS
 
     The Company is committed under various noncancelable operating leases for
office space and equipment through February 2000. Lease expense for the years
ended June 30, 1996 and 1997 was $18 and $34, respectively. Future minimum lease
payments under all noncancelable operating leases are as follows:
YEAR ENDING JUNE 30,
1998.............................................  $41
                      1999.............................................   40
                      2000.............................................    1
                                                                         ---
                           Total.......................................  $82
                                                                         ===
(5)  EMPLOYEE BENEFITS
 
     Eligible employees of the Company participate in a profit sharing plan
sponsored by the Company. The Plan provides that the Company make discretionary
contributions to the Plan. The Company made contributions of $145 and $104 for
the years ended June 30, 1996 and 1997, respectively.
 
                                      F-61
126
 
                       MOHR RETAIL LEARNING SYSTEMS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(6)  CONCENTRATION OF CREDIT RISK
 
     The Company's credit risks primarily relate to cash and cash equivalents
and accounts receivable. Cash and cash equivalents are primarily held in bank
accounts. Cash deposits in excess of FDIC insurance limits approximated $108 at
June 30, 1997. The Company has not incurred losses related to these balances to
date.
 
     For the year ended June 30, 1996, the Company had one customer that
accounted for 11 percent of total revenue. For the year ended June 30, 1997, no
customer represented greater than 10 percent of total revenue.
 
(7)  LITIGATION
 
     The Company is involved in legal actions arising in the ordinary course of
business. Management believes that adequate provision has been made for any
liabilities which may result from such matters.
 
(8)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-62
127
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Novations Group, Inc.:
 
     We have audited the accompanying balance sheets of Novations Group, Inc.,
as of June 30, 1997 and 1996, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 1997. 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. The audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. The audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Novations Group, Inc., as of
June 30, 1997 and 1996, and the results of its operations and its cash flows for
each of the years in the three-year period ended June 30, 1997 in conformity
with generally accepted accounting principles.
 
                                          KPMG Peat Marwick LLP
 
Boston, Massachusetts
January 9, 1998
 
                                      F-63
128
 
                             NOVATIONS GROUP, INC.
 
                                 BALANCE SHEETS
 
                       (IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30,
                                                               -----------------  SEPTEMBER 30,
                                                                1996       1997       1997
                                                               ------     ------  -------------
                                                                                   (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents..................................  $   17     $   88     $   446
  Accounts receivable, net of allowance for doubtful accounts
     of $158.................................................   1,976      2,202       2,364
  Receivable from related parties............................     179        414         341
  Prepaid expenses...........................................      63        115          50
                                                               ------     ------      ------
          Total current assets...............................   2,235      2,819       3,201
Property and equipment, net..................................     552        492         456
                                                               ------     ------      ------
          Total assets.......................................  $2,787     $3,311     $ 3,657
                                                               ======     ======      ======
                             LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of notes payable...........................   1,079      1,298       1,078
  Accounts payable...........................................     225        118         174
  Accrued compensation.......................................     836        803       1,270
  Accrued expenses...........................................     275        177         135
                                                               ------     ------      ------
          Total current liabilities..........................   2,415      2,396       2,657
                                                               ------     ------      ------
Notes payable................................................     459        361         361
Commitments and contingencies
Stockholders' equity:
  Common stock, $1.00 par value; 1,000,000 shares authorized;
     922, 1,000 and 1,000 shares issued and outstanding at
     June 30, 1996, 1997 and September 30, 1997,
     respectively............................................       1          1           1
  Retained earnings..........................................     (88)       553         638
                                                               ------     ------      ------
          Total stockholders' equity.........................     (87)       554         639
                                                               ------     ------      ------
          Total liabilities and stockholders' equity.........  $2,787     $3,311     $ 3,657
                                                               ======     ======      ======
See accompanying notes to financial statements.
 
                                      F-64
129
 
                             NOVATIONS GROUP, INC.
 
                            STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                       ENDED
                                                    YEAR ENDED JUNE 30,            SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1995       1996       1997       1996       1997
                                                ------     ------     ------     ------     ------
                                                                                    (UNAUDITED)
Revenue.......................................  $7,175     $9,039     $9,018     $2,167     $2,464
Cost of revenue...............................   3,885      4,733      4,839      1,117      1,197
                                                ------     ------     ------     ------     ------
          Gross profit........................   3,290      4,306      4,179      1,050      1,267
Selling, general, and administrative
  expenses....................................   3,167      4,094      3,315        823      1,088
                                                ------     ------     ------     ------     ------
          Income from operations..............     123        212        864        227        179
                                                ------     ------     ------     ------     ------
Interest expense, net.........................      98         98        137         43         83
          Income before income taxes..........      25        114        727        184         96
Income taxes..................................      22         40         20         --         11
                                                ------     ------     ------     ------     ------
          Net income..........................  $    3     $   74     $  707     $  184     $   85
                                                ======     ======     ======     ======     ======
See accompanying notes to financial statements.
 
                                      F-65
130
 
                             NOVATIONS GROUP, INC.
 
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
RETAINED
                                                         COMMON STOCK          EARNINGS
                                                       -----------------     (ACCUMULATED
                                                       SHARES     AMOUNT       DEFICIT)       TOTAL
                                                       ------     ------     ------------     -----
Balance, June 30, 1994...............................     896      $  1         $  (45)       $ (44)
  Net income.........................................      --        --              3            3
  Distributions to stockholders......................      --        --            (79)         (79)
                                                        -----       ---          -----        -----
Balance, June 1995...................................     896         1           (121)        (120)
  Net income.........................................      --        --             74           74
  Distributions to stockholders......................      --        --            (26)         (26)
  Stock issued.......................................      63        --             --           --
  Stock buy back.....................................     (37)       --            (15)         (15)
                                                        -----       ---          -----        -----
Balance, June 30, 1996...............................     922         1            (88)         (87)
  Net income.........................................      --        --            707          707
  Distributions to stockholders......................      --        --            (66)         (66)
  Stock issued.......................................      78        --             --           --
                                                        -----       ---          -----        -----
Balance, June 30, 1997...............................   1,000         1            553          554
  Net income.........................................      --        --             85           85
                                                        -----       ---          -----        -----
Balance, September 30, 1997 (Unaudited)..............   1,000      $  1         $  638        $ 639
                                                        =====       ===          =====        =====
See accompanying notes to financial statements.
 
                                      F-66
131
 
                             NOVATIONS GROUP, INC.
 
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
THREE MONTHS
                                                                                       ENDED
                                                            YEAR ENDED JUNE 30,    SEPTEMBER 30,
                                                           ---------------------   -------------
                                                           1995    1996    1997    1996    1997
                                                           -----   -----   -----   -----   -----
                                                                                    (UNAUDITED)
Cash flows from operating activities:
  Net income.............................................  $   3   $  74   $ 707   $ 184   $  85
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization.......................    203     167     197      45      45
     Changes in operating assets and liabilities:
       (Increase) decrease in accounts receivable........   (670)   (357)   (226)    (92)   (162)
       (Increase) decrease in prepaid expenses and other
          current assets.................................   (250)     86    (287)    (45)    138
       Increase (decrease) in accounts payable and
          accrued expenses...............................    358     (88)   (238)    165     481
                                                            ----    ----    ----    ----    ----
          Total adjustments..............................   (359)   (192)   (554)     73     502
                                                            ----    ----    ----    ----    ----
          Net cash (used by) provided by operating
            activities...................................   (356)   (118)    153     257     587
                                                            ----    ----    ----    ----    ----
Cash flows from investing activities:
  Purchases of property and equipment....................   (217)   (427)   (137)   (143)     (9)
                                                            ----    ----    ----    ----    ----
Cash flows from financing activities:
  Net repayments/proceeds from long-term debt............    340     117     121       2    (220)
  Capital distribution...................................    (40)    (41)    (66)     --      --
                                                            ----    ----    ----    ----    ----
          Net cash provided by financing activities......    300      76      55       2    (220)
                                                            ----    ----    ----    ----    ----
Net (decrease) increase in cash and cash equivalents.....   (273)   (469)     71     116     358
Cash and cash equivalents, beginning of period...........    759     486      17      17      88
                                                            ----    ----    ----    ----    ----
Cash and cash equivalents, end of period.................  $ 486   $  17   $  88   $ 133   $ 446
                                                            ====    ====    ====    ====    ====
Supplemental disclosure:
  Cash paid for interest.................................  $ 120   $ 120   $ 151   $  47   $  87
                                                            ====    ====    ====    ====    ====
See accompanying notes to financial statements.
 
                                      F-67
132
 
                             NOVATIONS GROUP, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Novations Group, Inc. (the "Company") was founded in 1986. The Company
assists clients in, among other things, clarifying and communicating their
business strategies and re-designing their organizations and work systems.
Revenue is derived primarily from fees for professional services and, to a
lesser extent, from the sale of services and products to support human resources
management.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     Revenue is recognized as services are performed and products are provided.
 
  Use of Estimates
 
     The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997 and for the three
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Cash Equivalents
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
  Property and Equipment
 
     Property and equipment are stated at cost and depreciated using the
straight-line method over periods ranging from five to seven years. Leasehold
improvements are amortized over the term of the lease.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist of cash, marketable
securities, accounts receivable, accounts payable and accrued liabilities and
debt. The carrying value of these financial instruments approximates their fair
value due to the short maturity of these instruments. The carrying value of debt
approximates fair value because the interest rates on the debt approximate the
rates currently available to the Company.
 
                                      F-68
133
 
                             NOVATIONS GROUP, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Income Taxes
 
     The Company has elected to be treated as an S corporation. Therefore, the
net income of the Company is reported by the stockholders. Accordingly, no
provision for federal income taxes has been included in the financial
statements. Only certain state taxes are paid by the Company. The Company will
terminate its S corporation status concurrently with the combination described
in note 10.
 
(3)  RELATED PARTY TRANSACTIONS
 
     The Company advanced cash to an entity controlled by the stockholders of
the Company. The balance due to the Company as of June 30, 1996, 1997 and
September 30, 1997 was $140, $332 and $192, respectively. Also included in
receivables from related parties are employee advances of $39, $82 and 149 at
June 30, 1996, 1997 and September 30, 1997, respectively.
 
     The Company leases certain office facilities from a partnership controlled
by the Company's stockholders.
 
     The terms of the lease require annual payments of $300,000, increasing by
3% per year, through March 2002. The Company has an option to renew the lease
for an additional five-year term. The Company has guaranteed a $1.2 million note
payable to a financial institution by the partnership.
 
(4)  PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following at:
JUNE 30,
                                                                     -----------------
                                                                      1996       1997
                                                                     ------     ------
Computer equipment and software............................  $  922        945
        Leasehold improvements.....................................     167        198
        Office equipment...........................................     108        170
        Furniture and fixtures.....................................      94        115
                                                                     ------     ------
                                                                      1,291      1,428
        Accumulated depreciation and amortization..................     739        936
                                                                     ------     ------
             Property and equipment, net...........................  $  552        492
                                                                     ======     ======
Depreciation and amortization expense related to property and equipment for
the years ended June 1995, 1996 and 1997, was $203, $167 and $197, respectively.
 
(5)  NOTES PAYABLE
 
     Notes payable consist of notes to former stockholders, with interest
imputed at 8.75%. Payments are due monthly or annually through March 2002.
 
     Aggregate maturities required on these notes at June 30, are as follows:
1998....................................................  $ 59
                  1999....................................................    97
                  2000....................................................    98
                  2001....................................................    98
                  2002....................................................    68
                                                                            -----
                                                                               -
                       Total..............................................  $420
                                                                            ======
F-69
134
 
                             NOVATIONS GROUP, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
(6)  OPERATING LEASES
 
     The Company leases all of its facilities and certain office equipment under
cancelable and noncancelable operating leases that expire on various dates
through 2003.
 
     Future minimum lease payments under all noncancelable operating leases,
including leases to related parties, are as follows:
YEAR ENDING JUNE 30:
            ------------------------------------------------------------
1998..................................................  $  585
                  1999..................................................     654
                  2000..................................................     632
                  2001..................................................     534
                  2002..................................................     334
                  Thereafter............................................      48
                                                                          ------
                       Total............................................  $2,787
                                                                          ======
Lease expense for the years ended June 30, 1995, 1996 and 1997 was $71,
$211 and $385, respectively.
 
(7)  LINE OF CREDIT
 
     The Company has a $1,500 line of credit agreement with a bank, with
interest payable at the bank's prime rate. The interest rate at June 30, 1996
and 1997 was 10 percent. The line of credit is secured by substantially all of
the Company's assets and is guaranteed by the principal stockholders of the
Company.
 
     The Company had $1,000 and $1,239 at June 30, 1996 and 1997, respectively,
outstanding under the agreement.
 
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee
contributions up to a maximum of 4%. The Company contributed $44, $60 and $75 to
the plan for the years ended June 30, 1995, 1996 and 1997, respectively.
 
(9)  CONCENTRATION OF CREDIT RISK
 
     For the year ended June 30, 1995, the Company had two customers that each
accounted for greater than 10 percent of revenue. For each of the years ended
June 30, 1996 and 1997, the Company had one customer that accounted for greater
than 10 percent of revenue.
 
(10)  SUBSEQUENT EVENT (UNAUDITED)
 
     In February 1998, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant
will acquire the Company upon completion of the proposed initial public
offering.
 
                                      F-70
135
 
                          INDEPENDENT AUDITOR'S REPORT
 
Board of Directors
Star Mountain, Inc. and Subsidiaries:
 
     We have audited the accompanying consolidated balance sheets of Star
Mountain, Inc. and Subsidiaries as of December 31, 1995 and 1996, and June 30,
1997, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three year period ended
December 31, 1996, and the six month period ended June 30, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Star Mountain,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and June 30, 1997, and
the consolidated results of their operations and their cash flows for each of
the years in the three year period ended December 31, 1996, and the six month
period ended June 30, 1997, in conformity with generally accepted accounting
principles.
 
                                          Friedman & Fuller, P.C.
 
Rockville, Maryland
December 5, 1997
 
                                      F-71
136
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
DECEMBER 31,
                                                  -----------------------------     JUNE 30,     SEPTEMBER 30,
                                                      1995             1996           1997           1997
                                                  ------------     ------------     --------     -------------
                                                                                                  (UNAUDITED)
ASSETS
Current assets:
  Cash..........................................     $    4           $   39         $  233         $   275
  Accounts receivable...........................      3,758            4,395          5,240           4,573
  Current portion of notes receivable, related
     parties....................................         60              181            307             344
  Inventory.....................................         --              100            161             151
  Other current assets..........................         36               71            170             122
  Deferred income taxes.........................         --               29             42              42
                                                     ------           ------         ------          ------
          Total current assets..................      3,858            4,815          6,153           5,507
                                                     ------           ------         ------          ------
Property and equipment:
  Furniture and fixtures........................         69               65            531             672
  Office equipment..............................        611              746          1,406           1,444
  Computer software.............................         69               69             75              91
  Leasehold improvements........................         15               16             81              86
  Automobiles...................................         21               31             31              41
                                                     ------           ------         ------          ------
                                                        785              927          2,124           2,334
  Less accumulated depreciation and
     amortization...............................        385              423          1,416           1,482
                                                     ------           ------         ------          ------
                                                        400              504            708             852
                                                     ------           ------         ------          ------
Other assets:
  Notes receivable, related parties, net of
     current portion............................        292              267            317             317
  Other assets..................................         71              140            318             604
  Land held for investment......................         --              110            110             110
  Goodwill, net of accumulated amortization of
     $16, $23, $40, and $51.....................        154              147            918             897
                                                     ------           ------         ------          ------
                                                        517              664          1,663           1,928
                                                     ------           ------         ------          ------
                                                     $4,775           $5,983         $8,524         $ 8,287
                                                     ======           ======         ======          ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable, bank............................     $  991           $  905         $1,144         $ 1,360
  Current portion of notes payable..............         35               95            222             132
  Accounts payable..............................      1,127            1,295          2,028           1,645
  Accrued expenses..............................        439              573            732             814
  Billings in excess of costs and earnings......        324            1,076          1,681           1,269
                                                     ------           ------         ------          ------
          Total current liabilities.............      2,916            3,944          5,807           5,220
                                                     ------           ------         ------          ------
Long-term liabilities:
  Notes payable, net of current portion.........         --               --            379             379
  Deferred income taxes.........................         --               29            126             126
                                                                      ------         ------          ------
          Total long-term liabilities...........         --               29            505             505
                                                                      ------         ------          ------
          Total liabilities.....................      2,916            3,973          6,312           5,725
                                                     ------           ------         ------          ------
Commitments and contingencies
Stockholders' equity:
  Common stock..................................          8                8          2,098           2,102
  Additional paid-in capital....................      1,991            2,058             --              --
  Retained earnings (deficit)...................        (75)             529            740           1,086
                                                     ------           ------         ------          ------
                                                      1,924            2,595          2,838           3,188
  Less common stock held in treasury at cost....        (65)            (585)          (626)           (626)
                                                     ------           ------         ------          ------
                                                      1,859            2,010          2,212           2,562
                                                     ------           ------         ------          ------
                                                     $4,775           $5,983         $8,524         $ 8,287
                                                     ======           ======         ======          ======
See accompanying notes to consolidated financial statements
 
                                      F-72
137
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
SIX MONTHS         NINE MONTHS ENDED
                                   YEAR ENDED DECEMBER 31,               ENDED              SEPTEMBER 30,
                          ------------------------------------------    JUNE 30,    -----------------------------
                              1994           1995           1996          1997          1996            1997
                          ------------   ------------   ------------   ----------   -------------   -------------
                                                                                             (UNAUDITED)
Revenue.................     $9,731        $ 14,306       $ 16,313      $ 11,331       $11,785         $17,101
Direct costs............      6,350           8,668          9,457         7,204         6,559          10,588
                             ------         -------        -------       -------       -------         -------
  Gross profit..........      3,381           5,638          6,856         4,127         5,226           6,513
Operating expenses......      2,973           4,411          5,476         3,674         4,085           5,647
                             ------         -------        -------       -------       -------         -------
Income from
  operations............        408           1,227          1,380           453         1,141             866
                             ------         -------        -------       -------       -------         -------
Other income (expense):
  Interest income.......         25              19             25            37             7             100
  Interest expense......        (86)            (54)           (65)          (80)          (45)            (87)
  Other, net............       (133)           (200)          (339)          (74)         (137)              9
                             ------         -------        -------       -------       -------         -------
                               (194)           (235)          (379)         (117)         (175)             22
                             ------         -------        -------       -------       -------         -------
Income before income
  taxes.................        214             992          1,001           336           966             888
Income taxes............          0               0            397           125           360             331
                             ------         -------        -------       -------       -------         -------
Net income..............     $  214        $    992       $    604      $    211       $   606         $   557
                             ======         =======        =======       =======       =======         =======
See accompanying notes to consolidated financial statements
                                      F-73
138
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
COMMON STOCK      ADDITIONAL   RETAINED     TREASURY STOCK
                                 ------------------    PAID-IN     EARNINGS   -------------------
                                  SHARES     AMOUNT    CAPITAL     (DEFICIT)    SHARES     AMOUNT   TOTAL
                                 ---------   ------   ----------   --------   ----------   ------   ------
Balance, December 31, 1993.....    729,257   $    7    $  1,916     $ (902)           --   $  --    $1,021
Issuance of common stock upon
  exercise of options..........     11,595        1          39         --            --      --        40
Net income.....................         --       --          --        214            --      --       214
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1994.....    740,852        8       1,955       (688)           --      --     1,275
Issuance of common stock upon
  exercise of options..........     11,827       --          36         --            --      --        36
Distributions to
  shareholders.................         --       --          --       (379)           --      --      (379)
Purchase of treasury stock.....         --       --          --         --        22,700     (65)      (65)
Net income.....................         --       --          --        992            --      --       992
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1995.....    752,679        8       1,991        (75)       22,700     (65)    1,859
Issuance of common stock upon
  exercise of options..........      9,414       --          67         --            --      --        67
Purchase of treasury stock.....         --       --          --         --        65,671    (520)     (520)
Net income.....................         --       --          --        604            --      --       604
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, December 31, 1996.....    762,093        8       2,058        529        88,371    (585)    2,010
Issuance of common stock upon
  exercise of options..........     87,621       32          --         --            --      --        32
Purchase of treasury stock.....         --       --          --         --        12,584     (41)      (41)
Stock split, conversion to no
  par stock....................  7,272,518    2,058      (2,058)        --     1,110,505      --        --
Net income.....................         --       --          --        211            --      --       211
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, June 30, 1997.........  8,122,232    2,098           0        740     1,211,460    (626)    2,212
Issuance of common stock upon
  exercise of options..........      5,100        4          --         --            --      --         4
Net income (unaudited).........         --       --          --        346            --      --       346
                                 ---------   ------     -------     ------    ----------   -----    ------
Balance, September 30, 1997
  (unaudited)..................  8,127,332   $2,102    $      0     $1,086     1,211,460   $(626)   $2,562
                                 =========   ======     =======     ======    ==========   =====    ======
See accompanying notes to consolidated financial statements
                                      F-74
139
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
SIX MONTHS      NINE MONTHS ENDED
                                               YEAR ENDED DECEMBER 31,        ENDED           SEPTEMBER 30,
                                            -----------------------------    JUNE 30,    ------------------------
                                             1994       1995       1996        1997        1996         1997
                                            -------   --------   --------   ----------   --------   -------------
                                                                                               (UNAUDITED)
Cash flows from operating activities:
  Cash received from customers............  $ 9,381   $ 13,419   $ 16,428    $ 11,189    $ 12,742     $  17,626
  Cash paid to suppliers and employees....   (9,401)   (12,620)   (14,890)    (10,210)    (10,862)      (16,354)
  Interest received.......................       25         19         25          37           7           100
  Interest paid...........................      (86)       (54)       (65)        (80)        (45)          (87)
  Income taxes paid.......................       --         --       (420)        (96)       (358)         (286)
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            operating activities..........      (81)       764      1,078         840       1,484           999
                                            -------   --------   --------    --------    --------      --------
Cash flows from investing activities:
  Issuance of notes receivable............     (113)       (64)       (96)       (176)       (247)         (213)
  Acquisition of property and equipment...      (60)      (159)       (61)        (79)        (41)         (289)
  Business acquisitions...................       --       (100)      (300)       (621)       (300)         (621)
  Purchase of land held for investment....       --         --       (110)         --        (110)           --
  Other...................................      174         (8)         2          --          15            --
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            investing activities..........        1       (331)      (565)       (876)       (683)       (1,123)
                                            -------   --------   --------    --------    --------      --------
Cash flows from financing activities:
  Net borrowings (payments) on
     line-of-credit.......................      122        (15)       (86)        239        (241)          455
  Principal payments on long-term debt....     (178)        --         --          --          --           (90)
  Proceeds from other notes payable.......      100         25         95          --          --            --
  Payments on other notes payable.........       (3)       (34)       (35)         --         (35)           --
  Proceeds from issuance of common
     stock................................       39         35         68          32          33            36
  Purchase of treasury stock..............       --        (65)      (520)        (41)       (520)          (41)
  Distributions to shareholders...........       --       (378)        --          --          --            --
                                            -------   --------   --------    --------    --------      --------
          Net cash provided by (used in)
            financing activities..........       80       (432)      (478)        230        (763)          360
                                            -------   --------   --------    --------    --------      --------
Net increase (decrease) in cash...........        0          1         35         194          38           236
Cash, beginning of year...................        3          3          4          39           4            39
                                            -------   --------   --------    --------    --------      --------
Cash, end of year.........................  $     3   $      4   $     39    $    233    $     42     $     275
                                            =======   ========   ========    ========    ========      ========
See accompanying notes to consolidated financial statements
                                      F-75
140
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (IN THOUSANDS)
SIX MONTHS     NINE MONTHS ENDED
                                                   YEAR ENDED DECEMBER 31,      ENDED          SEPTEMBER 30,
                                                   ------------------------    JUNE 30,    ----------------------
                                                   1994     1995      1996       1997       1996        1997
                                                   -----   -------   ------   ----------   ------   -------------
                                                                                                (UNAUDITED)
Reconciliation of net income to net cash provided
  by (used in) operating activities:
  Net income.....................................  $ 214   $   992   $  604     $  211     $  606       $ 557
                                                   -----   -------    -----      -----     ------       -----
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization..................     72        96      139        110         92         197
  Loss on sale of assets.........................     --        --        4         12          4          12
  Deferred income taxes..........................     --        --       --         17         --          17
  Changes in assets and liabilities:
     (Increase) decrease in:
     Accounts receivable.........................   (344)   (1,053)    (637)      (142)       372         525
     Inventory...................................     --        --       18        (61)       (45)        (51)
     Other current assets........................     (3)       47      (34)       (62)         5         (14)
     Other assets................................     (2)      (25)     (69)      (105)      (275)       (391)
  Increase (decrease) in:
     Accounts payable............................    (45)      425      168        474         50          86
     Accrued expenses............................     33       116      133       (219)        90        (132)
     Billings in excess of costs and anticipated
       profits...................................     (6)      166      752        605        585         193
                                                   -----   -------    -----      -----     ------       -----
  Total adjustments..............................   (295)     (228)     474        629        878         442
                                                   -----   -------    -----      -----     ------       -----
  Net cash provided by (used in) operating
     activities..................................  $ (81)  $   764   $1,078     $  840     $1,484       $ 999
                                                   =====   =======    =====      =====     ======       =====
Non cash investing and financing activities: During the period ended June 30,
1997, the Company issued a note payable for $506,000 for a portion of the
purchase price of ORA.
 
          See accompanying notes to consolidated financial statements
                                      F-76
141
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)
 
(1)  NATURE OF OPERATIONS
 
     Star Mountain, Inc. (the "Company") was founded in 1987. The Company is
primarily engaged in contracting with the U.S. Government to provide technical
and professional services in the form of computer-based training, software
development and computer applications support. In August 1996, the Company
formed a wholly-owned subsidiary, Star Digital, Inc. ("Star") to acquire the
assets of Computer Visions, Inc. Star is primarily a value added distributor of
computer equipment. In February 1997, the Company acquired the stock of Odyssey
Research Associates, Inc. ("ORA"). ORA is primarily engaged in contracting with
the U.S. Government to perform research relating to computer access and
security. ORA includes the accounts of 168004 Canada, Inc. ("ORA Canada"), a
wholly-owned subsidiary. ORA Canada performs similar contracts for the Canadian
Government.
 
(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Revenue Recognition
 
     A major portion of the Company's revenue results from services performed
under U.S. government contracts, either directly or through subcontracts. The
majority of the Company's contracts are fixed-price contracts. Revenue on fixed
price contracts is recognized using the percentage of completion method based on
costs incurred in relation to total estimated costs. Revenue on
time-and-materials contracts is recognized to the extent of fixed billable rates
for hours delivered plus reimbursable costs. Revenue on cost-plus-fee contracts
is recognized based on reimbursable costs incurred plus estimated fees earned
thereon. At the time it is recognized that it is probable that a contract will
result in a loss and the loss can be reasonably estimated, the entire estimated
loss is included in the determination of net income. In accordance with industry
practice, amounts relating to long-term contracts are classified as current
assets although an indeterminable portion of these amounts is not expected to be
realized within one year.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
  Interim Financial Information
 
     The interim financial statements as of September 30, 1997, and for the nine
months ended September 30, 1996 and 1997, are unaudited, and certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been omitted. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows with respect to the interim financial statements have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
 
  Credit Risk
 
     The Company's accounts receivable consist principally of unsecured amounts
due from the U.S. Government.
 
  Cash Equivalents
 
     Cash equivalents are defined as highly liquid short-term investments whose
maturity dates do not extend past three months from the original date of
purchase. The Company has held no such instruments.
 
                                      F-77
142
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Property and Equipment
 
     Property and equipment are stated at cost and include additions and major
replacements or betterments. Depreciation and amortization are provided for in
amounts which amortize the cost of properties utilizing the straight-line method
over estimated useful lives of three to seven years. Maintenance, repairs and
minor renewals are expensed as incurred. Any gain or loss on disposition is
included in the determination of net income.
 
  Goodwill
 
     Goodwill represents the excess of the cost of business acquisitions,
accounted for by the purchase method, over the fair value of the net assets
thereof. Goodwill is being amortized on a straight-line basis principally over
14 years.
 
  Fair Value of Financial Instruments
 
     Financial instruments of the Company consist primarily of cash and cash
equivalents, accounts receivable, note payable, bank, accounts payable and
accrued expenses. The carrying value of these financial instrument approximates
their fair value because of the short maturity of these instruments.
 
  Income Taxes
 
     Through December 31, 1995, the Company had elected to be taxed as an S
Corporation and, accordingly, the financial statements for 1994 and 1995 do not
reflect any provision for income taxes since elements of income and deduction
passed through directly to the shareholders. Effective January 1, 1996, the
Company terminated its election to be taxed as an S corporation.
 
     Deferred income tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial reporting and
tax bases of assets and liabilities. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be settled. Future
tax benefits recognized as deferred tax assets must be reduced by a valuation
allowance where it is more likely than not that the benefits may not be
realized.
 
(3)  ACQUISITIONS
 
     On June 19, 1995, the Company acquired all of the assets of BZ Academy,
Inc. (BZ). The acquisition has been accounted for as a purchase and has operated
as the AIT division of the Company. Tangible assets were recorded at their book
value at the date of purchase, which approximated their fair value. The
difference between the purchase price and the assets' book value was recorded as
goodwill.
 
     On August 1, 1996, the Company formed a new corporation, Star Digital,
Inc., to acquire the assets of Computer Visions, Inc. The acquisition has been
accounted for as a purchase. Computer Visions' tangible assets were recorded at
their fair value, which approximated the purchase price. No goodwill was
recorded.
 
     On February 21, 1997, the Company acquired the outstanding stock of ORA.
The acquisition has been accounted for as a purchase. The excess of the purchase
price over the book value of the net assets of ORA at the purchase date has been
recorded as goodwill.
 
     On September 30, 1997, the Company acquired certain assets of Simms
Industries. The assets acquired consisted primarily of accounts receivable and
fixed assets.
 
                                      F-78
143
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     See Note 13 regarding an additional acquisition after September 30, 1997,
and the pro forma acquisition information.
 
(4)  ACCOUNTS RECEIVABLE
 
     Accounts receivable consist of the following:
DECEMBER 31,
                                                 -----------------     JUNE 30,     SEPTEMBER 30,
                                                  1995       1996        1997           1997
                                                 ------     ------     --------     -------------
                                                                                     (UNAUDITED)
Government contracts:
      Billed...................................  $2,304     $3,333      $3,961         $ 3,268
      Unbilled.................................     958        698         833             896
    Other......................................     496        364         446             409
                                                 ------     ------      ------          ------
                                                 $3,758     $4,395      $5,240         $ 4,573
                                                 ======     ======      ======          ======
Included in unbilled accounts receivable are retainages due upon completion
of the contracts of approximately $54, $65, $70, and $55.
 
(5)  NOTES RECEIVABLE
 
     Notes receivable consist of the following:
DECEMBER 31,
                                                    -------------     JUNE 30,     SEPTEMBER 30,
                                                    1995     1996       1997           1997
                                                    ----     ----     --------     -------------
                                                                                    (UNAUDITED)
Due to/from majority shareholder, unsecured
      interest at prime, due December 1997........  $ 10     $131       $307           $ 344
    Due from former employee, secured, interest at
      10 percent, due December 31, 1998...........   342      317        317             317
                                                    ----     ----       ----            ----
                                                     352      448        624             661
    Less current portion..........................    60      181        307             344
                                                    ----     ----       ----            ----
                                                    $292     $267       $317           $ 317
                                                    ====     ====       ====            ====
(6)  NOTE PAYABLE, BANK
 
     The Company maintains a bank line of credit arrangement that provides for
borrowings of 90% of billed accounts receivable less than 90 days old, not to
exceed $3,500 in total. Advances bear interest at LIBOR plus 250 basis points.
The line is collateralized by substantially all of the Company's assets. The
agreement requires the Company to meet certain covenants including limitations
on dividends, and maintenance of adjusted tangible net worth, as defined. The
Company has been in compliance with the lender's covenants during each of the
periods presented. At December 31, 1995 and 1996, June 30, 1997, and September
30, 1997, overdrafts in the payroll and operating bank accounts amounting to
$722, $236, $346, and $217, respectively, have been included in the outstanding
balance on the line since such overdrafts are automatically covered by the bank
as checks are presented for payment.
 
                                      F-79
144
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
(7)  OTHER NOTES PAYABLE
DECEMBER
                                                                31,
                                                            -----------   JUNE 30,   SEPTEMBER 30,
                                                            1995   1996     1997         1997
                                                            ----   ----   --------   -------------
                                                                                      (UNAUDITED)
Note payable, shareholder, representing temporary
      advances of working capital, interest at LIBOR plus
      250 basis points, due on demand. Unsecured..........  $35    $95      $ 95         $   5
    Note payable, purchase of subsidiary, ORA, interest at
      9%, payable in four annual installments of $126,500
      beginning February 1998. ...........................   --     --       506           506
                                                            ---    ---      ----          ----
    Total.................................................   35     95       601           511
    Less current portion..................................   35     95       222           132
                                                            ---    ---      ----          ----
    Long-term portion.....................................  $ 0    $ 0      $379         $ 379
                                                            ===    ===      ====          ====
(8)  EMPLOYEE BENEFITS
 
     The Company has a 401(k) plan in which it matches 50% of employee
contributions, up to a maximum of 3% of each employee's gross annual
compensation. In addition, the Company may contribute a discretionary amount
annually. Total expense under the plan for the years ended December 31, 1994,
1995 and 1996, was $97, $121, and $123, respectively. Expense for the periods
ended June 30, 1997, September 30, 1996, and September 30, 1997, was $47, $91
and $75, respectively.
 
(9)  COMMITMENTS AND CONTINGENCIES
 
     Substantially all of the Company's revenue and costs for all periods since
December 31, 1995, are subject to audit by agencies of the U.S. Government.
Management does not expect the results of these audits to have a material impact
on the financial position or future results of operations of the Company.
 
     The Company leases equipment and office space under various noncancellable
operating leases. The office leases provide for future rental increases based on
the Company's pro-rata share of increases in building operating expenses and
real estate taxes, and for inflation adjustments based on increases in the
Consumer Price Index. Rent expense, including month-to-month leases, for the
years ended December 31, 1994, 1995, and 1996, totalled $372, $557 and $595,
respectively. Rent expense for the periods ended June 30, 1997, September 30,
1996, and September 30, 1997, were $399, $558 and $653, respectively. Future
minimum lease commitments under non-cancellable operating leases for years
ending June 30, are as follows:
OFFICE/
                                                               WAREHOUSE   EQUIPMENT   TOTAL
                                                               ---------   ---------   ------
1998.....................................................   $   604      $ 166     $  770
    1999.....................................................       496         88        584
    2000.....................................................       492         26        518
    2001.....................................................       469         14        483
    2002.....................................................       403         --        403
                                                                 ------       ----     ------
                                                                $ 2,464      $ 294     $2,758
                                                                 ======       ====     ======
F-80
145
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
(10)  COMMON STOCK
 
     Common stock consists of the following:
DECEMBER 31,
                                            ---------------------------    JUNE 30,    SEPTEMBER 30,
                                                1995           1996          1997          1997
                                            ------------   ------------   ----------   -------------
                                                                                        (UNAUDITED)
Par value.............................   $      .01            .01           N/A            N/A
    Shares:
      Authorized..........................    1,000,000      1,000,000    15,000,000     15,000,000
      Issued..............................      752,679        762,093     8,122,232      8,127,332
Effective February 14, 1997, the Company's voting common stock was
increased from 800,000 shares of $.01 par value to 12,000,000 shares of no par
value, and the non-voting stock was increased from 200,000 shares of $.01 par
value to 3,000,000 shares of no par value.
 
(11)  STOCK OPTIONS
 
     The Company offers key employees the opportunity to purchase stock through
the Star Mountain Key Person Stock Option Plan (the "Plan"). Under the Plan, the
Company issues options to eligible employees who must have one year of service
with the Company. The exercise price for the options is at or above the current
market price of the Company's shares, as determined by management. Management
has applied a consistent formula which includes gross revenue and net income in
determining the Company's share price. Options are exercisable upon issuance for
periods of 3 to 5 years from the date of the grant.
 
     The activity in the Plan since 1994 is presented below. All options and
option prices have been restated to reflect the 12:1 stock split in February
1997.
NUMBER OF OPTIONS        WEIGHTED
                                                             OUTSTANDING AND         AVERAGE
                                                               EXERCISABLE        EXERCISE PRICE
                                                            -----------------     --------------
Balance, December 31, 1993............................        828,000             $ 0.26
      Granted.............................................        264,000               0.42
      Exercised...........................................       (127,356)              0.23
      Forfeited...........................................        (52,644)              0.23
                                                                ---------
    Balance, December 31, 1994............................        912,000               0.31
      Granted.............................................        384,000               0.47
      Forfeited...........................................       (360,000)              0.21
                                                                ---------
    Balance, December 31, 1995............................        936,000               0.42
      Granted.............................................        936,000               0.49
      Forfeited...........................................       (348,000)              0.46
                                                                ---------
    Balance, December 31, 1996............................      1,524,000               0.45
      Granted.............................................        123,000               1.00
      Exercised...........................................        (73,200)              0.24
      Forfeited...........................................       (120,000)              0.49
                                                                ---------
    Balance, June 30, 1997................................      1,453,800               0.50
      Granted.............................................         60,000               1.00
                                                                ---------
    Balance, September 30, 1997...........................      1,513,800               0.52
                                                                =========
F-81
146
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The weighted average price for options outstanding and exercisable at June
30, 1997, was $.50 and at September 30, 1997, was $.52. The weighted average
remaining term of the outstanding options is 3.2 years.
 
     In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation". SFAS No. 123 defines a "fair value based method" of accounting
for an employee stock option. Under this method, compensation cost is measured
at the grant date based on the value of the award and is recognized over the
service period. The Company has historically accounted for employee stock
options under the "intrinsic value method" as defined by APB Opinion No. 25,
"Accounting for Stock Issued to Employees". Under the intrinsic value method,
compensation cost is the excess, if any, of the quoted market price of the stock
at grant date over the amount an employee must pay to acquire the stock. The
Company's Plan, accounted for under APB Opinion No. 25, does not result in any
compensation cost.
 
     SFAS No. 123 allows an entity to continue to use the intrinsic value method
and management has elected to do so. However, entities electing to remain on the
intrinsic value method must make pro forma disclosures of net income, as if the
fair value based method of accounting had been applied. Because the method of
accounting in SFAS No. 123 has not been applied to options granted prior to
January 1, 1994, the resulting pro forma compensation costs may not be
representative of the cost to be expected in future years.
 
     Under SFAS No. 123, net income would have been as follows:
SEPTEMBER
                                                   DECEMBER 31,                        30,
                                               --------------------    JUNE 30,    ------------
                                               1994    1995    1996      1997      1996    1997
                                               ----    ----    ----    --------    ----    ----
                                                                                   (UNAUDITED)
Net income, as reported................... $214    $992    $604      $211      $606    $557
    Pro forma net income...................... $211    $984    $586      $200      $593    $539
The fair value of each option is estimated on the date of grant using the
following assumptions: no dividend yield, no volatility, risk-free interest
rates approximating 6% and expected lives of 3 to 5 years. The weighted average
grant date fair value of the options was as follows:
DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    JUNE 30,    SEPTEMBER 30,    SEPTEMBER 30,
                        1994            1995            1996          1997          1996             1997
                    ------------    ------------    ------------    --------    -------------    -------------
                                                                                         (UNAUDITED)
Weighted
      average fair
      value........     $.11            $.11            $.13          $.16          $ .13            $ .16
(12)  INCOME TAXES
 
     Income tax expense consists of the following amounts:
SEPTEMBER 30,
                                                     DECEMBER 31,     JUNE 30,     -------------
                                                         1996           1997       1996     1997
                                                     ------------     --------     ----     ----
                                                                                    (UNAUDITED)
Current:
      Federal......................................      $313           $139       $302     $322
      State........................................        84             30         58       53
    Deferred:
      Federal......................................        --            (41)        --      (41)
      State........................................        --             (3)        --       (3)
                                                         ----           ----       ----     ----
                                                         $397           $125       $360     $331
                                                         ====           ====       ====     ====
F-82
147
 
                      STAR MOUNTAIN, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The differences between the effective income tax rate and the statutory
federal income tax rates are as follows:
SEPTEMBER 30,
                                         DECEMBER 31,     JUNE 30,     -------------------------------
                                             1996           1997           1996              1997
                                         ------------     --------     -------------     -------------
                                                                                 (UNAUDITED)
Computed "expected" tax on
      income...........................       34.0%          34.0%          34.0%             34.0%
    State taxes, net of federal
      benefit..........................        4.1            4.1            4.1               4.1
         Other, net....................        1.6           (0.9)          (0.8)             (0.8)
                                              ----           ----           ----              ----
    Taxes on income....................       39.7%          37.2%          37.3%             37.3%
                                              ====           ====           ====              ====
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities are presented below:
DECEMBER 31,     JUNE 30,     SEPTEMBER 30,
                                                           1996           1997           1997
                                                       ------------     --------     -------------
                                                                                      (UNAUDITED)
Deferred tax assets result from
      accrued employee benefits,
      principally vacation...........................      $ 29           $ 42           $  42
                                                           ====           ====            ====
    Deferred tax liabilities result from:
      Differences in depreciation methods............      $ 29           $ 27           $  27
      Change in accounting method from cash to
         accrual for ORA.............................        --             99              99
                                                           ----           ----            ----
                                                           $ 29           $126           $ 126
                                                           ====           ====            ====
(13)  SUBSEQUENT EVENT (UNAUDITED)
 
     On October 1, 1997, the Company acquired the net assets of the Systems
Effectiveness Division (SED) of Essex Corporation for a total price of $1,475.
The net assets represent substantially all of the operating assets of the
division. The excess of the purchase price over the book value of the tangible
assets acquired of approximately $930 has been recorded as goodwill.
 
     The following table sets forth the pro forma information assuming that all
acquisitions had occurred on January 1, 1995 (the earliest date information is
available). The pro forma information takes into account amortization of
goodwill and additional interest costs, net of tax benefits.
YEAR ENDED DECEMBER 31,         SIX MONTHS
                                                   -----------------------------         ENDED
                                                       1995             1996         JUNE 30, 1997
                                                   ------------     ------------     -------------
Gross revenue................................    $ 22,668         $ 24,818          $14,520
    Operating income.............................       1,081            1,524            1,087
    Net income...................................         723              529              121
In November 1997, the Company entered into a definitive merger agreement
with Provant, Inc. ("Provant") and one of its subsidiaries, whereby Provant will
acquire the Company upon completion of the proposed initial public offering.
 
                                      F-83
148
 
======================================================
 
  No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with the
Offering other than those contained in this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any securities
other than the shares of Common Stock to which it relates or an offer to, or a
solicitation of, any person in any jurisdiction where such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or that information
contained herein is correct as of any time subsequent to the date hereof.
                          ----------------------------
                               TABLE OF CONTENTS
                          ----------------------------
Page
                                            ----
Prospectus Summary.......................     3
Risk Factors.............................     9
Combination..............................    15
Use of Proceeds..........................    18
Dividend Policy..........................    18
Capitalization...........................    19
Dilution.................................    20
Selected Financial Data..................    21
Management's Discussion and Analysis of
  Financial Condition and Results of
  Operations.............................    23
Business.................................    37
Management...............................    47
Principal Stockholders...................    53
Certain Transactions.....................    54
Description of Capital Stock.............    58
Shares Eligible for Future Sale..........    59
Underwriting.............................    61
Legal Matters............................    62
Experts..................................    62
Additional Information...................    63
Index to Financial Statements............   F-1
Until           , 1998 (25 days after the date of this Prospectus), all
dealers effecting transactions in the registered securities offered hereby,
whether or not participating in this distribution, may be required to deliver a
Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as Underwriters and with respect to their unsold
allotments or subscriptions.
 
======================================================
======================================================
                                2,600,000 SHARES
 
                                 PROVANT, INC.
 
                                  COMMON STOCK
 
                            ------------------------
                                   PROSPECTUS
                            ------------------------
 
                             NationsBanc Montgomery
 
                                 Securities LLC
 
                              Salomon Smith Barney
 
                               Piper Jaffray Inc.
 
                                           , 1998
 
======================================================
149
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
  ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimated
except the Securities and Exchange Commission registration fee and the NASD
filing fee.
SEC registration fee.....................................................  $   11,467
    NASD filing fee..........................................................       4,387
    Blue Sky fees and expenses...............................................       1,500
    New York Stock Exchange listing fee......................................     100,000
    Printing and engraving expenses..........................................     275,000
    Legal fees and expenses..................................................     950,000
    Accounting fees and expenses.............................................     900,000
    Transfer agent and registrar fees........................................       5,000
    Premium for directors' and officers' insurance...........................     100,000
    Miscellaneous............................................................     402,646
                                                                               ----------
              Total..........................................................  $2,750,000
                                                                               ==========
To the extent the foregoing fees and expenses are incurred prior to the
Closing, certain of the Company's executive officers will advance to the Company
the funds required to pay such fees and expenses, and the Company will reimburse
those individuals for such fees and expenses out of the proceeds of the
Offering.
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     The Company is a Delaware corporation. Reference is made to Section 145 of
the DGCL, as amended, which provides that a corporation may indemnify any person
who was or is a party to or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his or her conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite an adjudication of liability, but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper. The
Company's Certificate of Incorporation further provides that the Company shall
indemnify its directors and officers to the full extent permitted by the law of
the State of Delaware.
 
                                      II-1
150
 
     The Company's Certificate of Incorporation provides that the Company's
directors shall not be liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the DGCL as in effect at the
time such liability is determined.
 
     The Certificate of Incorporation and By-laws also provide that each person
who was or is made a party to, or is involved in, any action, suit, proceeding
or claim by reason of the fact that he or she is or was a director or officer of
the Registrant (or is or was serving at the request of the Registrant as a
director or officer of any other enterprise including service with respect to
employee benefit plans) shall be indemnified and held harmless by the
Registrant, to the full extent permitted by Delaware law, as in effect from time
to time, against all expenses (including attorneys' fees and expenses),
judgments, fines, penalties and amounts to be paid in settlement incurred by
such person in connection with the investigation, preparation to defend or
defense of such action, suit, proceeding or claim. The Company's By-laws allow
for similar rights of indemnification to be afforded, in the Company's
discretion, to its employees and agents.
 
     The rights to indemnification and the payment of expenses provided by the
Certificate of Incorporation and By-laws do not apply to any action, suit,
proceeding or claim initiated by or on behalf of a person otherwise entitled to
the benefit of such provisions. Any person seeking indemnification under the
Certificate of Incorporation shall be deemed to have met the standard of conduct
required for such indemnification unless the contrary shall be established. Any
repeal or modification of such indemnification provisions shall not adversely
affect any right or protection of a director or officer with respect to any
conduct of such director or officer occurring prior to such repeal or
modification.
 
     The Company maintains an indemnification insurance policy covering all
directors and officers of the Company and its subsidiaries.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     In December 1996, the Company issued (i) 298.8, 762 and 762.1 shares of
Common Stock, respectively, at a purchase price of $1.00 per share, to the
Company's initial stockholders and (ii) 169.4 shares of Common Stock at a
purchase price of $1.00 per share to a consultant. In July 1997, the Company
issued 80.5, 260.4 and 351.6 shares of Common Stock, respectively, at a purchase
price of $1.00 per share, to additional consultants. In September 1997, the
Company issued (i) 134.2 and 201.4 shares of Common Stock, respectively, at a
purchase price of $1.00 per share, to two of the Company's initial stockholders
and (ii) 67.1, 100.7 and 201.4 shares of Common Stock, respectively, at a
purchase price of $1.00 per share, to consultants. In November 1997, the Company
issued 27.3 shares and one share of Common Stock, respectively, at a purchase
price of $1.00 per share, to two consultants.
 
     In September 1997, the Company issued to a consultant an option to purchase
10,000 shares of Common Stock of the Company at a purchase price of $5.00 per
share, exercisable immediately upon the Closing. The option shall terminate
three years following the Closing.
 
     As partial consideration for an agreement to extend financing to the
Company in connection with the Offering and the Combination, on October 6, 1997,
the Company issued two warrants to each of Paul M. Verrochi and Dominic J.
Puopolo. The first warrant entitles the holder to purchase (i) 68 shares of
Common Stock at $1.00 per share prior to the Offering or (ii) following the
Offering 2.0% of the Common Stock outstanding immediately prior to the Offering
(but giving effect to the Combination) at a per share exercise price equal to
the initial public offering price. The second warrant entitles the holder
following the Offering to purchase 2.5% of the Common Stock immediately prior to
the Offering (but giving effect to the Combination). The second warrant will be
exercisable only if the market price of the Common Stock increases to certain
threshold levels, or earlier under certain circumstances involving the merger or
sale of the Company.
 
     All such issuances of Common Stock have been made in reliance upon the
exemption from registration afforded by Section 4(2) under the Securities Act.
 
                                      II-2
151
 
     The foregoing amounts (except with respect to the option granted in
September 1997) have not been adjusted for the stock dividend that will be
declared by the Board of Directors of Provant prior to the consummation of the
Offering.
 
ITEM 16.  EXHIBITS
SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
+1      Form of Underwriting Agreement.............................................
  *2.1    Agreement and Plan of Merger by and among Provant, Inc., Behavioral
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Behavioral
          Technology, Inc. and Paul C. Green, Ph.D. .................................
  *2.2    Agreement and Plan of Merger by and among Provant, Inc., Decker Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Decker Communications, Inc.,
          Bert Decker and Kenneth Taylor.............................................
  *2.3    Agreement and Plan of Merger by and among Provant, Inc., Howard Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, J. Howard & Associates, Inc.,
          Jeffrey P. Howard and Marc S. Wallace......................................
  *2.4    Agreement and Plan of Merger by and among Provant, Inc., LSS Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Robert Steinmetz, Ph.D., and
          Associates, Inc., Edwin Bauch as Trustee of the Steinmetz Children's Trust
          u/d/t dated December 31, 1996, Edwin Bauch as Trustee of the King
          Children's Trust u/d/t dated December 31, 1996, John F. King and Robert A.
          Steinmetz, Ph.D. ..........................................................
  *2.5    Agreement and Plan of Merger by and among Provant, Inc., MOHR Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, MOHR Retail Learning Systems,
          Inc., Herbert Cohen, Judith Cohen and Michael Patrick......................
  *2.6    Agreement and Plan of Merger by and among Provant, Inc., Paul M. Verrochi,
          Dominic J. Puopolo, Star Mountain, Inc., Star Acquisition Corp. and Carl
          von Sternberg..............................................................
  *2.7    Agreement and Plan of Merger by and among Provant, Inc., Novations
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Novations Group,
          Inc., Joseph Folkman, Joseph Hanson, Kurt Sandholtz, Norman Smallwood,
          Randy Stott and Jonathan Younger...........................................
  *3.1    Certificate of Incorporation of the Company................................
  *3.2    By-laws of the Company.....................................................
  *4.1    Form of Specimen Stock Certificate.........................................
  *5      Opinion of Nutter, McClennen & Fish, LLP...................................
 *10.1    1998 Equity Incentive Plan.................................................
 *10.2    Stock Plan for Non-Employee Directors......................................
 *10.3    1998 Employee Stock Purchase Plan..........................................
 *10.4    Form of Warrants to Messrs. Verrochi and Puopolo...........................
 *10.5    Form of Contingent Warrants to Messrs. Verrochi and Puopolo................
 *10.6    Form of Employment Agreement between Rajiv Bhatt and Provant, Inc. ........
 *10.7    Form of Employment Agreement between MOHR Acquisition Corp., Herbert A.
          Cohen, and Provant, Inc. ..................................................
 *10.8    Form of Employment Agreement between Decker Acquisition Corp., Bert Decker,
          and Provant, Inc. .........................................................
 *10.9    Form of Employment Agreement between Philip Gardner and Provant, Inc. .....
 *10.10   Form of Employment Agreement between Behavioral Acquisition Corp., Paul C.
          Green, and Provant, Inc. ..................................................
 *10.11   Form of Employment Agreement between Novations Acquisition Corp., Joe
          Hanson, and Provant, Inc. .................................................
 *10.12   Form of Employment Agreement between LSS Acquisition Corp., John F. King,
          and Provant, Inc. .........................................................
II-3
152
SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
*10.13   Form of Employment Agreement between Dominic J. Puopolo and Provant,
          Inc. ......................................................................
 *10.14   Form of Employment Agreement between A. Carl von Sternberg and Provant,
          Inc. ......................................................................
 *10.15   Form of Employment Agreement between Paul M. Verrochi and Provant, Inc. ...
 *10.16   Form of Employment Agreement between Howard Acquisition Corp., Marc S.
          Wallace, and Provant, Inc. ................................................
 *10.17   Form of Employment Agreement between John H. Zenger and Provant, Inc. .....
 *10.18   Form of Consulting Agreement between Michael J. Davies and Provant, Inc....
 *10.19   Lease Agreement between Behavioral Technology, Inc. and Paul C. Green,
          Ph.D.......................................................................
 *10.20   Lease Agreement between Novations Group, Inc. and Novations Partners,
          L.L.C. ....................................................................
 *10.21   Promissory note of A. Carl von Sternberg...................................
 *10.22   Form of Consulting Agreement between Donald W. Glazer and Provant, Inc.....
 +21      Subsidiaries of the Registrant.............................................
 +23.1    Consent of KPMG Peat Marwick LLP...........................................
 +23.2    Consent of Friedman & Fuller, P.C..........................................
 *23.3    Consent of Nutter, McClennen & Fish, LLP (contained in Exhibit 5)..........
 +24      Power of Attorney (contained in the signature page to this Registration
          Statement).................................................................
 +27      Financial Data Schedule....................................................
 +99.1    Consent of Rajiv Bhatt.....................................................
 +99.2    Consent of Herbert A. Cohen................................................
 +99.3    Consent of Michael J. Davies...............................................
 +99.4    Consent of Bert Decker.....................................................
 +99.5    Consent of Philip Gardner..................................................
 +99.6    Consent of Paul C. Green...................................................
 +99.7    Consent of Joe Hanson......................................................
 +99.8    Consent of John F. King....................................................
 +99.9    Consent of Dominic J. Puopolo..............................................
 +99.10   Consent of A. Carl von Sternberg...........................................
 +99.11   Consent of Paul M. Verrochi................................................
 +99.12   Consent of Marc S. Wallace.................................................
 +99.13   Consent of John H. Zenger..................................................
---------------
* To be filed by amendment.
 
+ Filed herewith.
 
ITEM 17.  UNDERTAKINGS
 
     The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-
 
                                      II-4
153
 
tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
 
     The undersigned Registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this Registration Statement in reliance upon Rule 430A under the
     Securities Act and contained in a form of prospectus filed by the
     Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
     Act shall be deemed to be part of this Registration Statement as of the
     time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new Registration Statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-5
154
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston, the
Commonwealth of Massachusetts, on the 12th day of February 1998.
 
                                          PROVANT, INC.
 
                                          By: /s/   PAUL M. VERROCHI
                                            ------------------------------------
                                            Paul M. Verrochi
                                            President
 
                               POWER OF ATTORNEY
 
     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below on this Registration Statement hereby constitutes and appoints
Paul M. Verrochi, Dominic J. Puopolo, Constantine Alexander and James E. Dawson,
and each of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments (including post-effective
amendments and amendments thereto) to this Registration Statement on Form S-1 of
the registrant, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary fully to all intents and purposes as he might or could do in person
thereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
 
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE                                TITLE                      DATE
------------------------------------------  -------------------------------  ------------------
/s/ PAUL M. VERROCHI             Chief Executive Officer and       February 12, 1998
------------------------------------------    Director
             Paul M. Verrochi
 
          /s/ DOMINIC J. PUOPOLO            Chief Financial Officer and       February 12, 1998
------------------------------------------    Director
            Dominic J. Puopolo
 
             /s/ RAJIV BHATT                Chief Accounting Officer          February 12, 1998
------------------------------------------
               Rajiv Bhatt
II-6
155
 
                                 EXHIBIT INDEX
SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
+1      Form of Underwriting Agreement.............................................
  *2.1    Agreement and Plan of Merger by and among Provant, Inc., Behavioral
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Behavioral
          Technology, Inc. and Paul C. Green, Ph.D. .................................
  *2.2    Agreement and Plan of Merger by and among Provant, Inc., Decker Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Decker Communications, Inc.,
          Bert Decker and Kenneth Taylor.............................................
  *2.3    Agreement and Plan of Merger by and among Provant, Inc., Howard Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, J. Howard & Associates, Inc.,
          Jeffrey P. Howard and Marc S. Wallace......................................
  *2.4    Agreement and Plan of Merger by and among Provant, Inc., LSS Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, Robert Steinmetz, Ph.D., and
          Associates, Inc., Edwin Bauch as Trustee of the Steinmetz Children's Trust
          u/d/t dated December 31, 1996, Edwin Bauch as Trustee of the King
          Children's Trust u/d/t dated December 31, 1996, John F. King and Robert A.
          Steinmetz, Ph.D. ..........................................................
  *2.5    Agreement and Plan of Merger by and among Provant, Inc., MOHR Acquisition
          Corp., Paul M. Verrochi, Dominic J. Puopolo, MOHR Retail Learning Systems,
          Inc., Herbert Cohen, Judith Cohen and Michael Patrick......................
  *2.6    Agreement and Plan of Merger by and among Provant, Inc., Paul M. Verrochi,
          Dominic J. Puopolo, Star Mountain, Inc., Star Acquisitions Corp. and Carl
          von Sternberg..............................................................
  *2.7    Agreement and Plan of Merger by and among Provant, Inc., Novations
          Acquisition Corp., Paul M. Verrochi, Dominic J. Puopolo, Novations Group,
          Inc., Joseph Folkman, Joseph Hanson, Kurt Sandholtz, Norman Smallwood,
          Randy Stott and Jonathan Younger...........................................
  *3.1    Certificate of Incorporation of the Company................................
  *3.2    By-laws of the Company.....................................................
  *4.1    Form of Specimen Stock Certificate.........................................
  *5      Opinion of Nutter, McClennen & Fish, LLP...................................
 *10.1    1998 Equity Incentive Plan.................................................
 *10.2    Stock Plan for Non-Employee Directors......................................
 *10.3    1998 Employee Stock Purchase Plan..........................................
 *10.4    Form of Warrants to Messrs. Verrochi and Puopolo...........................
 *10.5    Form of Contingent Warrants to Messrs. Verrochi and Puopolo................
 *10.6    Form of Employment Agreement between Rajiv Bhatt and Provant, Inc. ........
 *10.7    Form of Employment Agreement between MOHR Acquisition Corp., Herbert A.
          Cohen, and Provant, Inc. ..................................................
 *10.8    Form of Employment Agreement between Decker Acquisition Corp., Bert Decker,
          and Provant, Inc. .........................................................
 *10.9    Form of Employment Agreement between Philip Gardner and Provant, Inc. .....
 *10.10   Form of Employment Agreement between Behavioral Acquisition Corp., Paul C.
          Green, and Provant, Inc. ..................................................
 *10.11   Form of Employment Agreement between Novations Acquisition Corp., Joe
          Hanson, and Provant, Inc. .................................................
 *10.12   Form of Employment Agreement between LSS Acquisition Corp., John F. King,
          and Provant, Inc. .........................................................
 *10.13   Form of Employment Agreement between Dominic J. Puopolo and Provant,
          Inc. ......................................................................
 *10.14   Form of Employment Agreement between A. Carl von Sternberg and Provant,
          Inc. ......................................................................
 *10.15   Form of Employment Agreement between Paul M. Verrochi and Provant, Inc. ...
156
SEQUENTIAL
EXHIBIT                                   DESCRIPTION                                   PAGE NO.
-------   ---------------------------------------------------------------------------  ----------
*10.16   Form of Employment Agreement between Howard Acquisition Corp., Marc S.
          Wallace, and Provant, Inc. ................................................
 *10.17   Form of Employment Agreement between John H. Zenger and Provant, Inc. .....
 *10.18   Form of Consulting Agreement between Michael J. Davies and Provant, Inc....
 *10.19   Lease Agreement between Behavioral Technology, Inc. and Paul C. Green,
          Ph.D.......................................................................
 *10.20   Lease Agreement between Novations Group, Inc. and Novations Partners,
          L.L.C. ....................................................................
 *10.21   Promissory note of A. Carl von Sternberg...................................
 *10.22   Form of Consulting Agreement between Donald W. Glazer and Provant, Inc.....
 +21      Subsidiaries of the Registrant.............................................
 +23.1    Consent of KPMG Peat Marwick LLP...........................................
 +23.2    Consent of Friedman & Fuller, P.C..........................................
 *23.3    Consent of Nutter, McClennen & Fish, LLP (contained in Exhibit 5)..........
 +24      Power of Attorney (contained in the signature page to this Registration
          Statement).................................................................
 +27      Financial Data Schedule....................................................
 +99.1    Consent of Rajiv Bhatt.....................................................
 +99.2    Consent of Herbert A. Cohen................................................
 +99.3    Consent of Michael J. Davies...............................................
 +99.4    Consent of Bert Decker.....................................................
 +99.5    Consent of Philip Gardner..................................................
 +99.6    Consent of Paul C. Green...................................................
 +99.7    Consent of Joe Hanson......................................................
 +99.8    Consent of John F. King....................................................
 +99.9    Consent of Dominic J. Puopolo..............................................
 +99.10   Consent of A. Carl von Sternberg...........................................
 +99.11   Consent of Paul M. Verrochi................................................
 +99.12   Consent of Marc S. Wallace.................................................
 +99.13   Consent of John H. Zenger..................................................
---------------
* To be filed by amendment.
 
+ Filed herewith.