35. On June 15, 1998, defendants once again reported false financial results. Defendants again characterized the results as "record". Defendants reported revenues for the fourth quarter of $31.7 million compared with $17.5 million for the previous year - - a purported increase of 81%. Defendants reported net income for the fourth quarter of $2.2. million, or $0.10 per share, compared with $1.3 million or $0.06 per share for the fourth quarter ended April 30, 1997.

36. For the fiscal year ended April 30, 1998, defendants reported revenues of $109.5 million compared with $64.1 million for the previous year - - an increase of 71%. Defendants announced a 50% increase in net income, to $7.6 million, or $0.33 per share, compared with $5.1 million, or $0.23 per share for fiscal 1997.

37. Defendant Bryant stated with respect to the "record" financial results:

"We are pleased to report these strong results which were in line with analysts' estimates. During the fourth quarter, SCB continued to implement its strategy of focusing on the higher margin information technology consulting, and outsourcing services ...areas of our business. We received several important contracts while continuing to capitalize on opportunities resulting from our acquisitions and Year 2000 services."

38. On June 16, 1998, SCB shares traded at approximately $12 per share. Had the truth been known about SCB's false financial reporting and accounting violations, SCB stock would not have traded at such artificially inflated prices.

39. The financial results detailed in ¶¶ 35 and 36 above, were repeated in defendants' annual report on Form 10-K for the fourth quarter and fiscal year ended April 30, 1998, signed by defendants Cobb, Bryant, and McCarter, .

40. On August 28, 1998, November 19, 1998, and February 18, 1999, defendants reported "record" financial results and significantly increased profits for the first, second, and third quarters of fiscal year 1999, respectively. For the first quarter, defendants announced a 66% increase in revenues and a 35% increase in earnings. For the second quarter of fiscal year 1999, defendants reported a 40% increase in revenues and a 31% increase in earnings. Defendant Bryant characterized the second quarter results as "a tremendous success." For the third quarter of fiscal year 1999, defendants announced a 47% increase in net income.

41. Defendants false financial reports for the first, second, and third quarters of fiscal year 1999 were repeated in quarterly reports filed with the SEC on September 14, 1998, December 15, 1998, and March 17, 1999, respectively, signed by defendant McCarter.

42. On February 19, 1999, SCB stock traded at $7.75 per share.

43. On June 18, 1999, defendants reported "record" year-end results and revenue increases. For the fourth quarter and year ended April 30, 1999, revenues increased 43% to $156.7 million, compared with $109.5 million for the year ended April 30, 1998. Defendants reported a 41% increase in earnings to $10.7 million, or $0.43 per share.

44. Commenting on the results, defendant Bryant stated:

"We are pleased to report record results for our most recent fiscal year. These results further demonstrate the Company's ability to capitalize on the many opportunities occurring in the Information Technology industry....Our services showed increases across the board in fiscal 1999."

45. On August 19, 1999, SCB issued a press release announcing its financial results for the first quarter of fiscal year 2000, the quarter ending July 31, 1999. Defendants announced a 25% increase in revenues, to $44.3 million from $35.5 million during the previous year. Defendants reported a rise in earnings to $2.2 million, or 9 cents per share, from $896,000 or 4 cents a share for the same period in 1998. These results were repeated in the Company's quarterly report on Form 10-Q for the period ended July 31, 1999, signed by defendant McCarter.

46. During a September, 1999 shareholders meeting, defendant Bryant emphasized the Company's record financial performance during its latest fiscal year, in which revenues purportedly rose 43% to $156.7 million. During the same meeting, defendant Cobb characterized this growth as "phenomenal."

47. On September 17, 1999, SCB shares traded at approximately $6 per share.

48. On November 18, 1999, SCB reported results for the second quarter of fiscal year 2000. Revenues for the second quarter increased 9% to $42.8 million compared with $39.3 million in the previous year. Earnings for the quarter were $1.4 million, or $0.06 per share, compared with $2.2 million, or $0.09 per share in the second quarter of fiscal 1999. Defendant Bryant characterized the lower revenues and earnings as attributable to factors which would only have a "short-term, adverse impact" on SCB's results. If the truth regarding SCB's actual financial results had been reported, SCB's financial results for the quarter would have reflected even lower revenues and earnings.

49. The Company's false financial results for the second quarter of fiscal year 2000 were repeated in its quarterly report on Form 10-Q filed with the SEC on December 15, 1999 and signed by defendant Boling.

50. On January 22, 2000, SCB announced that its earnings for the quarter ending January 31, 2000, would be less than expected. Defendant Bryant attributed the impending shortfall to the impact of Year 2000 issues on clients' information technology projects. In response, SCB stock fell 18 3/4 cents, closing at $3.375 per share.

51. On February 17, 2000, SCB announced results for the third quarter and nine months ended January 31, 2000. As a result of "organizational changes and resulting refocused priorities", the Company recorded one-time charges of $2.8 million before taxes, or $0.07 per share. Before the charges, the Company reported a loss of $2.3 million, or $0.09 per share. For the nine months ended January 31, 2000, revenues increased to $123.9 million compared with $113.4 million for the nine months ended January 31, 1999. Before the charges incurred in the third quarter, the Company reported net income of $1.3 million, or $0.06 per share. Including the charges, the Company reported a net loss of $363,000, or $0.01 per share, compared with net income of $5.3 million, or $0.21 per share for the nine months ended January 31, 1999.

52. At the time of the issuance of the statement in ¶ 51, above, the magnitude and severity of the impact of the fraudulent accounting practices prevalent at SCB must have been known to defendants, absent a reckless disregard for the truth.

53. The financial results reported in ¶ 51 were repeated in the Company's quarterly report on Form 10-Q for the period ended January 31, 2000, filed on March 14, 2000, signed by defendant Boling.

54. On March 10, 2000, SCB announced that the State of Rhode Island had awarded a SCB subsidiary a contract to oversee operations of a state network. SCB stock soared from $2.50 per share on March 10, 2000, to over $4 per share the following day, after the news was disclosed. Had the truth been known about SCB's financial condition, SCB stock would not have traded at such artificially inflated prices.

55. On April 14, 2000, defendants shocked the market by announcing in a press release and simultaneous report on Form 8-K, that the audit committee of its board of directors is conducting an independent investigation into allegations of accounting irregularities affecting SCB's financial statements. As a result, SCB's independent auditor, Ernst & Young, resigned. The Company further revealed that it will restate its audited financial statements for fiscal 1998 and 1999 and its unaudited financial statements for the first three quarters of fiscal 2000.

56. According to defendants' press release dated April 14, 2000, five SCB employees informed the audit committee of their concerns regarding potential accounting irregularities affecting SCB's financial statements. The "irregularities" relate to the appropriateness and timing of the recognition by SCB of certain items of revenue and expense during the periods at issue. Ernst & Young advised the audit committee that the restatements could "materially impact the fairness and reliability of SCB's audited financial statements for the fiscal years 1998-2000."

57. In response to the Company's news, Nasdaq halted trading of SCB shares at a last sale price of $2 per share, pending the receipt of additional information from the Company. As a result of the Company's disclosure, SCB investors are currently unable to trade their shares in SCB and recoup any possible value, and are instead forced to await the impact of defendants' restatements.

58. The Company's financial statements issued through press releases and filed in their reports with the SEC above, were materially false and misleading when made, because, as the Company has yet to fully reveal, each and every one of the financial statements contained false information regarding the Company's revenues, net income and earnings.

FALSE FINANCIAL REPORTING DURING THE CLASS PERIOD

59. During the Class Period, SCB reported false and misleading financial results for the entire fiscal year of 1998, 1999, and for the first three quarters of fiscal year 2000. The deceptive accounting practices described herein were perpetrated in clear violation of GAAP. GAAP are those principles recognized by the accounting profession as the conventions, rules and procedures necessary to define accepted accounting practice at a particular time. SEC Regulation S-X (17 C.F.R. and section 210.4-01(a)(1)) states that financial statements filed with the SEC which are not prepared in compliance with GAAP are presumed to be misleading and inaccurate, despite footnote or other disclosure. Regulation S-X requires that interim financial statements must also comply with GAAP, with the exception that interim financial statements need not include disclosure which would be duplicative of disclosures accompanying annual financial statements (17 C.F.R. section 210.10-01(a)).

60. The Form 10-Qs for each quarter detailed herein filed by SCB falsely represented that "[i]n the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of interim periods."

61. Due to the accounting improprieties described above, which the Company has yet to fully disclose, the Company presented its financial results and statements in a manner which violated GAAP including the following fundamental accounting principles:

(a) The principle that financial reporting should provide information that is useful to present and potential investors and creditors and other users in making rational investment, credit and similar decisions (FASB Statement of Concepts No. 1, ¶ 34);

(b) The principle that financial reporting should provide information about the economic resources of an enterprise, the claims to those resources, and effects of transactions, events and circumstances that change resources and claims to those resources (FASB Statement of Concepts No. 1, ¶ 40);

(c) The principle that financial reporting should be reliable in that it represents what it purports to represent (FASB Statement of Concepts No. 2, ¶¶ 58-59);

(d) The principle of completeness, which means that nothing is left out of the information that may be necessary to insure that it validly represents underlying events and conditions (FASB Statement of Concepts No. 2, ¶ 79); and

(e) The principle that conservatism be used as a prudent reaction to uncertainty to try to ensure that uncertainties and risks inherent in business situations are adequately considered (FASB Statement of Concepts No. 2, ¶¶ 95, 97).

MANAGEMENT'S RESPONSIBILITY FOR,
AND KNOWING OR RECKLESS FAILURE TO, IMPLEMENT
AND MAINTAIN ADEQUATE INTERNAL ACCOUNTING CONTROLS

62. Defendants had a responsibility to maintain sufficient accounting controls to accurately report its financial results. It is well settled that the representations made by a company in its financial statements and in other financial disclosures to the public are the representations of that company's management. Indeed, even when a company issues audited financial statements together with the report of that company's independent auditors, that report always expressly provides that "the financial statements are the responsibility of [the company's] management."

63. According to SEC rules, to accomplish the objectives of accurately recording, processing, summarizing and reporting financial data, a company must establish an internal control structure. Pursuant to section 13(b)(2) of the Exchange Act, SCB was required to:

(a) [M]ake and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization; and that

(b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles . . . .

64. Moreover, according to Appendix D to Statement on Auditing Standards No. 55, "Consideration of the Internal Control Structure in a Financial Statement Audit" ("SAS 55"), management should consider, among other things, such objectives as (i) making certain that "[t]ransactions are recorded as necessary . . . to permit preparation of financial statements in conformity with generally accepted accounting principles . . . [and] to maintain accountability for assets," and (ii) making certain that "[t]he recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences."

65. Indeed, according to SAS 55:

Establishing and maintaining an internal control structure is an important management responsibility. To provide reasonable assurance that an entity's objectives will be achieved, the internal control structure should be under ongoing supervision by management to determine that it is operating as intended and that it is modified as appropriate for changes in conditions.

66. Contrary to the requirements of GAAP and SEC rules, SCB failed to implement and maintain an adequate internal accounting control system. Since at least the first quarter of 1998, SCB management knowingly or recklessly tolerated the existence of inadequate internal controls and/or recklessly disregarded its obligation to implement adequate controls to ensure that revenues were properly recorded in compliance with GAAP.

FIRST CLAIM FOR RELIEF FOR
VIOLATION OF SECTION 10(b) OF THE
EXCHANGE ACT AND SEC RULE 10b-5

67. Plaintiff repeats and realleges each and every allegation contained in the paragraphs above of the Complaint as if fully set forth herein.

68. During the Class Period, the defendants engaged in a course of conduct, described above, pursuant to which they knowingly or recklessly engaged in acts, transactions, practices, and a course of business which operated as a fraud upon plaintiff and the other members of the Class; made various untrue statements of material facts and omitted to state material facts necessary to make statements made, in light of the circumstances under which they were made, not misleading to plaintiff and the other Class members; and employed manipulative and deceptive devices and contrivances in connection with the purchase of SCB securities.

69. The purpose and effect of the defendants' course of conduct was to artificially inflate the price of SCB securities and then artificially maintain the market price of the stock.

70. The Individual Defendants, through their positions as senior officers of SCB had actual knowledge of the material omissions and/or the falsity of the statements set forth above, and intended to deceive plaintiff and the other members of the Class or, in the alternative, acted with reckless disregard for the truth when they failed or refused to ascertain and disclose in the aforementioned documents the true facts to plaintiff and the other members of the Class.

71. The defendants had actual knowledge of the material omissions and/or the falsity of the statements set forth above, and intended to deceive plaintiff and the other members of the Class or, in the alternative, acted with reckless disregard for the truth when they failed or refused to ascertain and disclose in the aforementioned documents the true facts to plaintiff and the other members of the Class.

72. As a result of the foregoing, the market price of SCB stock was artificially inflated during the Class Period. In ignorance of the materially false and misleading nature of the misrepresentations made by defendants and the deceptive and manipulative devices and contrivances employed by the defendants, plaintiff and the other members of the Class relied, to their detriment, on the integrity of the market price of the stock in purchasing SCB securities. Had plaintiff and the other members of the Class known of the material adverse information not disclosed by the defendants, they would not have purchased SCB securities at the artificially inflated prices that they did.

73. Plaintiff and the other members of the Class have suffered substantial damages as a result of the wrongs alleged herein.

74. By reason of the foregoing, defendants have violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, in that they: (a) employed devices, schemes and artifices to defraud; (b) made untrue statements of material fact or omitted to state material facts necessary to make the statements made not misleading; and (c) engaged in acts, practices and a course of business which operated as a fraud or deceit upon plaintiff and the other members of the Class in connection with their purchases of SCB securities during the Class Period.

SECOND CLAIM FOR RELIEF FOR VIOLATION
OF SECTION 20(a) OF THE EXCHANGE ACT

75. Plaintiff repeats and realleges each and every allegation set forth in the paragraphs above, as if set forth fully herein.

76. The Individual Defendants (by virtue of their positions within SCB and specific acts) were, at the time of the wrongs alleged herein, controlling persons of SCB within the meaning of Section 20(a) of the Exchange Act. They had the power and influence and exercised the same to cause SCB to engage in the illegal conduct and practices complained of herein by causing the Company to disseminate to the public the materially false and misleading information referred to above.

77. The Individual Defendants through their positions made them privy to, and provided them with, actual knowledge of the material facts concealed from plaintiff and the Class by SCB during the Class Period.

78. By reason of the conduct alleged in the First Claim for Relief, the Individual Defendants are liable for the aforesaid wrongful conduct and liable to the plaintiff and the other members of the Class for the substantial damages which they suffered in connection with their purchases of SCB securities during the Class Period.

WHEREFORE, plaintiff on his own behalf, and on behalf of the other members of the Class, prays for judgment as follows:

A. Declaring this action to be a proper class action, and certifying the plaintiff as the Class representative and his counsel as Class Counsel;

B. Declaring and determining that the defendants violated the federal securities laws by reason of their conduct as alleged herein;

C. Awarding money damages against the defendants, jointly and severally, in favor of the plaintiffs and the other members of the Class for all losses and injuries suffered as a result of the acts and transactions complained of herein, together with prejudgment interest on all of the aforesaid damages which the Court shall award from the date of said wrongs to the date of judgment herein at a rate the Court shall fix;

D. Awarding plaintiff his costs and expenses incurred in this action, including reasonable attorneys', accountants' and experts' fees; and

E. Awarding such other relief as may be just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.