E NET INC, SB-2/A, 1996-06-14

E NET INC
SB-2/A, 1996-06-14
COMPUTER PROGRAMMING SERVICES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 1996.

REGISTRATION NO. 333-3860
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

E-NET, INC.
(Name of Small Business Issuer in Its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 1711 52-1929282
(State or other jurisdiction of (Primary standard industrial (IRS employer
incorporation or organization) classification code number) identification number)
</TABLE>

7-4 METROPOLITAN COURT
GAITHERSBURG, MARYLAND 20878
(301) 548-8880

(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

7-4 METROPOLITAN COURT
GAITHERSBURG, MARYLAND 20878
(301) 548-8880

(Address of principal place of business or intended principal place of business)

ROBERT A. VESCHI, PRESIDENT AND CHIEF EXECUTIVE OFFICER
E-NET, INC.
7-4 METROPOLITAN COURT
GAITHERSBURG, MARYLAND 20878
(301) 548-8880

(Name, address, including zip code, and telephone number, including
area code, of agent for service)
------------------------

COPIES TO:

<TABLE>
<S> <C>
THOMAS T. PROUSALIS, JR., ESQ. STEVEN F. WASSERMAN, ESQ.
1919 Pennsylvania Avenue, N.W. Berstein & Wasserman, LLP
Suite 800 950 Third Avenue
Washington, D.C. 20006 New York, NY 10022
(202) 296-9400 (212) 826-0730
(202) 296-9403 Fax (212) 371-4730 Fax
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUING BASIS, PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, AS AMENDED, CHECK THE FOLLOWING BOX: /X/

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<PAGE>
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Units........................... 1,150,000 $ 7.00 $ 8,050,000 $ 2,776
Common Stock, $.01 Par Value.... 2,300,000 -- -- --
Class A Warrants................ 2,300,000 -- -- --
Common Stock, $.01 Par Value,
Underlying Class A Warrants.... 2,300,000 $ 4.00 $ 9,200,000 $ 3,172
Underwriters' Purchase Option... 100,000 $11.55 $ 1,155,000 $ 398
Common Stock $.01, Par Value, in
Underwriters' Purchase
Option......................... 200,000 -- -- --
Class A Warrants in
Underwriters' Purchase
Option......................... 200,000 -- -- --
Common Stock, $.01 Par Value,
Underlying Class A Warrants in
Underwriters' Purchase
Option......................... 200,000 $ 4.80 $ 960,000 $ 331
Common Stock, $.01 Par Value,
Offered by Selling
Security-holders............... 2,000,000 $ 3.50 $ 7,000,000 $ 2,414
Class A Warrants Offered by
Selling Security-holders....... 2,000,000 -- -- --
Common Stock, $.01 Par Value,
Underlying Class A Warrants
Offered by Selling
Security-holders............... 2,000,000 $ 4.00 $ 8,000,000 $ 2,759
Common Stock, $.01 Par Value,
Underlying Class B Warrants.... 2,000,000 $ 4.20 $ 8,400,000 $ 2,897
Total Registration and Fee.... $42,765,000 $14,747
</TABLE>

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.

ii
<PAGE>
E-NET, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B)
SHOWING LOCATION IN PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM SB-2

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEM CAPTION IN PROSPECTUS
- --------------------------------------------- ---------------------------------
<C> <S> <C>
1. Front of Registration Statement and
Outside Front Cover of Prospectus...... Facing Page; Cross-Reference
Sheet; Prospectus Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... Prospectus Cover Page; Prospectus
Back Cover Page
3. Summary Information and Risk Factors.... Prospectus Summary; The Company;
Risk Factors
4. Use of Proceeds......................... Use of Proceeds
5. Determination of Offering Price......... Risk Factors; Underwriting
6. Dilution................................ Dilution and Other Comparative
Data
7. Selling Security-holders................ Description of Securities;
Selling Security-holders
8. Plan of Distribution.................... Prospectus Cover Page;
Underwriting
9. Legal Proceedings....................... Legal Proceedings
10. Directors, Executive Officers, Promoters
and Control Persons.................... Management; Principal
Shareholders
11. Security Ownership of Certain Beneficial
Owners and Management.................. Principal Shareholders
12. Description of Securities............... Description of Securities
13. Interest of Named Experts and Counsel... Legal Matters; Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................ Certain Transactions
15. Organization Within Five Years.......... Prospectus Summary; Business
16. Description of Business................. Business
17. Management's Discussion and Analysis or
Plan of Operation...................... Management's Discussion and
Analysis or Plan of Operation
18. Description of Property................. Business
19. Certain Relations and Related
Transactions........................... Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters.................... Description of Securities
21. Executive Compensation.................. Management
22. Financial Statements.................... Financial Statements
23. Changes in and Disagreements With
Accountants on Accounting and Financial
Disclosure............................. Not applicable
</TABLE>

iii
<PAGE>
EXPLANATORY NOTE

This registration statement covers the primary offering of Units by e-NET,
Inc. ("Company") and the offering of securities by certain selling
security-holders ("Selling Security-holders"). The Company is registering, under
the primary prospectus ("Primary Prospectus"), 1,150,000 Units, each Unit
consisting of two shares of Common Stock and two Class A Warrants. The Selling
Security-holders are registering, under an alternate prospectus ("Alternate
Prospectus"), 2,000,000 shares of Common Stock and 2,000,000 Class A Warrants.
The Alternate Prospectus pages, which follow the Primary Prospectus, contain
certain sections which are to be combined with all of the sections contained in
the Primary Prospectus, with the following exceptions: the front and back cover
pages, and the sections entitled "The Offering" and "Selling Security-holders."
In addition, the sections entitled "Concurrent Sales" and "Plan of Distribution"
will be added to the Alternate Prospectus. Furthermore, all references contained
in the Alternate Prospectus to the "offering" shall refer to the Company's
offering of securities under the Primary Prospectus.

iv
<PAGE>
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.
<PAGE>

SUBJECT TO COMPLETION, DATED JUNE 14, 1996.

PROSPECTUS
1,000,000 UNITS
E-NET, INC.

e-NET, Inc. ("Company"), a Delaware corporation, is offering 1,000,000 units
("Units") at a price of $7.00 per Unit. Each Unit consists of two shares of
common stock ("Common Stock"), $.01 par value, and two redeemable Class A
warrants ("Class A Warrants"). The Common Stock and Class A Warrants are
detachable and may trade separately immediately upon issuance. See "Risk
Factors" and "Description of Securities."
The Class A Warrants shall be exercisable commencing one year after the date
of this Prospectus ("Effective Date"). Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $4.00 per share during the four year
period commencing one year from the Effective Date hereof. The Class A Warrants
are redeemable by the Company for $.05 per Warrant, at any time after
, 1998, upon thirty (30) days' prior written notice, if the average
closing price or bid price of the Common Stock, as reported by the principal
exchange on which the Common Stock is quoted, the Nasdaq SmallCap Market
("Nasdaq") or the National Quotation Bureau, Incorporated, as the case may be,
equals or exceeds $9.00 per share, for any twenty (20) consecutive trading days
within a period of thirty (30) days ending within ten (10) days of the notice of
redemption. Upon thirty (30) days' prior written notice to all holders of the
Class A Warrants, the Company shall have the right to reduce the exercise price
and/or extend the term of the Class A Warrants in compliance with the
requirements of Rule 13e-4 to the extent applicable. See "Description of
Securities."
Also, the registration statement of which this Prospectus forms a part
covers the offering of 2,000,000 shares of Common Stock and 2,000,000 Class A
Warrants owned by four persons who are nonaffiliated with the Underwriter and
the Company, hereinafter collectively referred to as "Selling Security-holders."
The Class A Warrants are identical to the Class A Warrants included in the Units
being offered by the Company. The shares of Common Stock and Class A Warrants
held by the Selling Security-holders may be sold commencing eighteen (18) months
from the date of this Prospectus, subject to earlier release at the sole
discretion of Stratton Oakmont, Inc. ("Underwriter"), and such securities
include a legend with such restrictions. The Underwriter may release the
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired.
The resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities in the Over-allotment Option and the early
release of the Selling Security-holder shares, which has occurred in previous
offerings underwritten by the Underwriter, or the potential of such sales at any
time may have an adverse effect on the market prices of the securities offered
hereby. See "Selling Security-holders" and "Underwriting."
The Company has applied for inclusion of the Units, Common Stock and Class A
Warrants on Nasdaq, although there can be no assurances that an active trading
market will develop, even if the securities are accepted for quotation.
Additionally, if the Company's securities are accepted for quotation and active
trading develops, the Company is required to maintain certain minimum criteria
established by Nasdaq, of which there can be no assurance that the Company will
be able to continue to fulfill such criteria. The Company has been advised that
the Company's securities offered hereby will be listed on upon the
Effective Date of this offering under the symbols "EENTU," "EENT" and "EENTW."
See "Risk Factors."
Prior to this offering, there has been no public market for the Units,
Common Stock and Class A Warrants. The price of the Units, as well as the
exercise price of the Class A Warrants, was arbitrarily determined by
negotiations between the Company and the Underwriter, and do not bear any
relationship to the Company's assets, book value, net worth or results of
operations or any other established criteria of value. For additional
information regarding the factors considered in determining the initial public
offering price of the Units and the exercise price of the Class A Warrants, see
"Risk Factors -- Arbitrary Offering Price," "Description of Securities" and
"Underwriting."
The Underwriter from time to time will become a market maker and otherwise
effect transactions in the securities of this offering. The Underwriter, if it
participates in the market, may become an influence and thereafter a factor of
increasing importance in the market for the securities. However, there is no
assurance that the Underwriter will or will continue to be a dominating
influence. The prices and liquidity of the Units may be significantly affected
by the degree, if any, of the Underwriter's participation in such market as a
market maker. The Underwriter may discontinue such market making activities at
any time or from time to time.
The Company does not presently file reports and other information with the
Securities and Exchange Commission. However, following completion of this
offering, the Company intends to furnish its stockholders with annual reports
containing audited financial statements and such interim reports, in each case
as it may determine to furnish or as may be required by law.
On February 28, 1995, the Underwriter became subject to a court-imposed
permanent injunction to comply with certain procedures recommended by an
independent consultant arising out of the settlement of a Securities and
Exchange Commission ("Commission") proceeding. The failure by the Underwriter to
comply with the permanent injunction may adversely affect the Underwriter's
activities in that the court may issue a further order restricting the ability
of the Underwriter to act as a market maker of the Company's securities. See
"Risk Factors."

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
INCLUDED IN THE UNITS AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS,"
PAGE 6, AND "DILUTION."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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>
UNDERWRITING DISCOUNTS PROCEEDS TO THE
PRICE TO PUBLIC AND COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Unit................................. $7.00 $.70 $6.30
Total(3)................................. $7,000,000 $700,000 $6,300,000
</TABLE>

(SEE "NOTES," NEXT PAGE)
THE SECURITIES ARE OFFERED BY THE UNDERWRITER ON A "FIRM COMMITMENT" BASIS
SUBJECT TO PRIOR SALE WHEN, AS AND IF DELIVERED TO AND ACCEPTED BY THE
UNDERWRITER, AND SUBJECT TO THE UNDERWRITER'S RIGHT TO REJECT ORDERS IN WHOLE OR
IN PART AND TO CERTAIN OTHER CONDITIONS. IT IS EXPECTED THAT DELIVERY OF
CERTIFICATES REPRESENTING THE SECURITIES OF THE OFFERING WILL BE MADE ON OR
ABOUT , 1996.
------------------------------
STRATTON OAKMONT, INC.

The date of this Prospectus is , 1996.
<PAGE>
NOTES

(1) Does not include additional compensation to be received by the Underwriter
in the form of (i) a nonaccountable expense allowance of $210,000 if
1,000,000 Units are sold (or $241,500 if the Underwriter's Over-allotment
Option is fully exercised); and (ii) an option (exercisable for a period of
four years commencing one year after the date of this Prospectus) entitling
the Underwriter to purchase 100,000 Units at $11.55 per Unit ("Underwriter's
Purchase Option"). In addition, the Company and the Underwriter have agreed
to indemnity and contribution provisions regarding certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Principal Stockholders" and "Underwriting."

(2) Before deducting expenses of this offering payable by the Company, estimated
at $1,000,000, including the Underwriter's nonaccountable expense allowance.
The Company has agreed to pay all of the expenses related to the
registration of the securities by the Selling Security-holders, which are
included in the expenses of this offering. See "Underwriting."

(3) The Company has granted the Underwriter a 30-day Over-allotment Option from
the date of this Prospectus to purchase up to 150,000 additional Units upon
the same terms and conditions as set forth above, solely to cover
over-allotments, if any. If such Underwriter's Over-allotment Option is
exercised in full, the total Price to the Public, Underwriting Discounts and
Proceeds to the Company will be $8,050,000, $805,000 and $7,245,000,
respectively. See "Underwriting."

(4) The Company will not receive any of the proceeds from the sale of the
securities offered by the Selling Security-holders. See "Selling
Security-holders" and "Underwriting."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ SMALL-CAP MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. SEE "RISK FACTORS."

THE SECURITIES TO BE SOLD IN THIS OFFERING MAY, IN THE ORDINARY COURSE OF
BUSINESS, BE SOLD ONLY TO CUSTOMERS OF THE UNDERWRITER, AND THE CONCENTRATION OF
SECURITIES IN CUSTOMERS OF THE UNDERWRITER MAY ADVERSELY AFFECT THE MARKET FOR
AND LIQUIDITY OF THE COMPANY'S SECURITIES SINCE THE UNDERWRITER MAY BE THE ONLY
MARKET MAKER. IN THE EVENT THAT ADDITIONAL BROKER-DEALERS DO NOT MAKE A MARKET
IN THE COMPANY'S SECURITIES AND THE UNDERWRITER BECOMES A MARKET MAKER, THE
UNDERWRITER MAY BECOME A DOMINATING INFLUENCE ON THE MARKET. NO OTHER BROKER-
DEALER HAS INDICATED THAT IT WILL MAKE A MARKET IN THE COMPANY'S SECURITIES. THE
UNDERWRITER DOES NOT HAVE ANY CURRENT PLANS OR AGREEMENTS TO OFFER AND/OR SELL
ANY OF THE SECURITIES TO A SPECIFIC CUSTOMER OR CUSTOMERS. SUCH PURCHASERS, AS
CUSTOMERS OF THE UNDERWRITER, SUBSEQUENTLY MAY ENGAGE IN TRANSACTIONS FOR THE
SALE OR PURCHASE OF THE SECURITIES THROUGH AND/OR WITH THE UNDERWRITER, ALTHOUGH
NO AGREEMENTS OR UNDERSTANDINGS, WRITTEN OR ORAL, EXIST FOR SUCH TRANSACTIONS,
AND SUCH TRANSACTIONS MAY FURTHER ENHANCE THE UNDERWRITER'S DOMINATING INFLUENCE
ON THE MARKET. SEE "RISK FACTORS -- LITIGATION INVOLVEMENT OF UNDERWRITER MAY
HAVE ADVERSE CONSEQUENCES -- UNDERWRITER'S INFLUENCE ON THE MARKET MAY HAVE
ADVERSE CONSEQUENCES."

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission
("Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2,
pursuant to the Securities Act of 1933, as amended, with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth in said Registration Statement, and the exhibits
thereto. For further information with respect to the Company and the securities
offered hereby, reference is made to said Registration Statement and exhibits
which may be inspected without charge at the Commission's principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company intends to furnish its security-holders with annual reports
containing audited financial statements and the audit report of the independent
certified public accountants, and such interim reports as it deems appropriate
or as may be required by law. The Company's fiscal year ends March 31.

The Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference herein (excluding exhibits) by
contacting the Company at 7-4 Metropolitan Court, Gaithersburg, Maryland 20878,
telephone (301) 548-8880, attention: chief financial officer.

SPECIAL STANDARDS FOR SECURITIES SOLD IN CALIFORNIA

Each California investor, and each transferee thereof who also is a
California investor, must have an annual gross income of at least $65,000 and a
net worth, exclusive of home, furnishings and automobiles, of at least $250,000,
or in the alternative, a net worth exclusive of home, furnishings and
automobiles, of at least $500,000. In addition, an investor's total purchase may
not exceed 10% of such investor's net worth.

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere in this Prospectus.

THE COMPANY

e-Net, Inc. develops, markets and supports open client, server and
integrated applications software that enables local, national and international
telephone communications, information exchange and commerce over the Internet
and private Internet Protocol ("IP") networks. The Company's software products
are designed to deliver high levels of performance, ease of use and security.
These software products allow individuals and organizations to execute secure,
or private, voice communications across the Internet, through the use of
authentication technology, for local national and international telephone
communications, information exchange and commerce. In addition, through the use
of the Company's software, organizations can extend their internal information
systems and enterprise applications to geographically dispersed facilities,
remote offices and mobile employees.

In March 1996, the Company acquired all rights, title and interest in the
first U.S. patent, U.S. Patent No. 5,526,353, for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet, enabling free worldwide high fidelity and clear transmission of
ordinary telephone communications over the Internet. The Company acquired all
rights, title and interest in the patent from the inventors, Messrs. Arthur
Henley and Scott Grau, who are original stockholders of the Company, in
consideration of a five percent overriding royalty interest against gross
profits involving the use of the patent. The Company has agreed to allocate
$1,000,000 of capital to develop and exploit the market opportunities for the
patent by December 31, 1996, or the patent will be subject to repurchase by the
inventors of the patent. The Company believes that its patent is the first
patent awarded of its kind, specifically involving the transmission of audio or
voice over the Internet. The Company also believes that its patent may provide
certain strategic and technological advantages in the new and burgeoning area of
audio or voice over the Internet. The Company can make no assurances, however,
as to the extent of the advantages or protection, if any, that may be granted to
the Company as a result of its patent or as to the future success of the Company
in bringing products related to this technology to market. The Company's first
product utilizing its patent is Telecom-2000-TM-, a hardware and software suite
designed for voice over the Internet, which is in the final testing stage and
projected to be available to market by the end of the Company's third quarter of
fiscal 1997.

Also, in March 1996, e-Net entered into an agreement with Sprint ("Sprint"),
a leading telecommunications company, under which e-Net will deliver certain
services known as Sprint Internet Protocol Dial Services support. Sprint, to
date, has been the Company's largest customer. Under the agreement, e-Net will
use its services to provide security and field support to Sprint customers who
use Sprint as a means of accessing the Internet. e-Net's agreement provides that
e-Net will generate all of the revenues associated with the number of authorized
Sprint Internet Protocol Dial Service user identity codes. e-Net shall also
perform password administration, customer service administration and emergency
help desk administration under the terms of the agreement. The agreement has a
duration of one year, with automatic one year renewals, subject to mutual
consent. e-Net intends to seek additional strategic alliances with the Regional
Bell Operating Companies (RBOC's) for the use of its technologies, products and
services. The Company has not entered into any negotiations to enter into any
strategic alliances with the RBOC's. The Company can make no assurances that it
will be able to enter into any agreements with such concerns for its
technologies, products and services.

In addition to the compensation to be received by the Underwriter in the
form of commissions in the amount of $700,000 if 1,000,000 Units are sold (or
$805,000 if the Underwriter's Over-allotment Option is fully exercised), the
Underwriter will receive (i) a nonaccountable expense allowance of $210,000 if
1,000,000 Units are sold (or $241,500 if the Underwriter's Over-allotment Option
is fully exercised); and (ii) an option (exercisable for a period of four years
commencing one year after the date

3
<PAGE>
of this Prospectus) entitling the Underwriter to purchase 100,000 Units at
$11.55 per unit ("Underwriter's Purchase Option"). The Company has granted the
Underwriter a 30-day Over-allotment Option from the date of this Prospectus to
purchase up to 150,000 additional Units upon the same terms and conditions as
set forth above, solely to cover over-allotments, if any. If such Over-allotment
Option is exercised in full, the total Price to the Public, Underwriting
Discounts and Proceeds to the Company will be $8,050,000, $805,000 and
$7,245,000, respectively. See "Underwriting."

As a result of this offering, certain members of management will
substantially benefit in the amount of remuneration to be paid to them from the
proceeds of this offering in fiscal 1997. See "Management -- Remuneration."

In March and April 1996, the Company borrowed $1,000,000 in a bridge loan
from four persons who are nonaffiliated with the Underwriter and the Company, to
wit: Edward Ratkovich ($500,000), Robert Foise ($250,000), Armstrong Industries
($200,000) and Martin Sumichrast ($50,000), at the rate of eight percent simple
annual interest, which is due and payable at the closing of this offering from
the net proceeds of this offering. General Ratkovich and Mr. Sumichrist are
officers, directors and principal stockholders of Nasdaq listed companies
recently underwritten by the Underwriter. In further consideration of the bridge
loan, the Company issued 2,000,000 shares of Common Stock, 2,000,000 Class A
Warrants and 2,000,000 Class B Warrants to the Selling Security-holders. The
shares of Common Stock and Class A Warrants issued to the Selling
Security-holders are being registered in this offering. The Class A Warrants
issued to the Selling Security-holders are identical to the Class A Warrants
included in the Units being offered by the Company. The Class B Warrants, which
are not being registered in this offering, are identical to the Class A Warrants
included in the Units being offered by the Company except that the exercise
price if $4.20. The securities held by the Selling Security-holders may be sold
commencing eighteen (18) months from the date of this Prospectus, subject to
earlier release at the sole discretion of the Underwriter, and such securities
include a legend with such restrictions. The Underwriter may release the
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired,
which release has occurred in recent offerings underwritten by the Underwriter.
The resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.
The Company will not receive any of the proceeds from the sale of the securities
being offered by the Selling Security-holders. The Class A Warrants are
redeemable upon certain conditions. Should the Class A Warrants offered by the
Selling Security-holders be exercised, of which there is no assurance, the
Company will receive the proceeds therefrom aggregating up to an additional
$8,000,000. Prior to making the bridge loan to the Company, the Selling
Security-holders did not own any other securities of the Company. None of the
Selling Security-holders of the Company are otherwise affiliated with the
Company, at the time of making the bridge loan, at the time of this offering or
at any other time. The Company believes that its financial transactions with the
Selling Security-holders served a legitimate business purpose, I.E., providing
needed working capital for the Company, and were fair and reasonable under the
circumstances since the transactions are highly speculative. The Company's
financial transactions with the Selling Security-holders were arranged by the
Underwriter and no commissions or other remuneration were paid or will be paid
to the Underwriter in connection with such transactions. See "Selling
Security-holders" and "Description of Securities."

Also, as a result of this offering, after deducting underwriting discounts
of $700,000 and other expenses of the offering estimated to be $1,000,000, which
includes the Underwriter's nonaccountable expense allowance of $210,000,
assuming an offering price of $7.00 per Unit, the Company will receive net
proceeds from the offering of approximately $5,300,000. The Company will not
receive any of the proceeds from the sale of the securities by the Selling
Security-holders. These proceeds, excluding the exercise of any of the Warrants,
will be utilized by the Company for approximately 12 months. See "Use of
Proceeds."

4
<PAGE>
The Company was incorporated in the State of Delaware on January 9, 1995,
and began its operations on June 8, 1995. The principal executive offices of the
Company are located at 7-4 Metropolitan Court, Gaithersburg, Maryland 20878, and
its telephone number is (301) 548-8880. Unless the context otherwise indicates,
the terms "Company" and "e-Net" as used in this Prospectus refer to e-Net, Inc.

SEE "RISK FACTORS," "MANAGEMENT" AND "CERTAIN TRANSACTIONS" FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING THE COMPANY AND ITS
BUSINESS.

5
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered by Company(1)(4)..... 1,000,000 Units
Securities Offered by Selling 2,000,000 Shares
Security-holders(2)..................... 2,000,000 Class A Warrants
Shares of Common Stock Outstanding Prior 8,500,000 Shares
to Offering.............................
Shares of Common Stock Outstanding After 10,500,000 Shares
Offering(3).............................
Comparative Share Ownership Upon
Completion of Offering:
Present Stockholders (8,500,000 80.95%
Shares)(2)(5)........................
Public Stockholders (2,000,000 19.05%
Shares)(2)(5)........................
Use of Net Proceeds of Sale of Administrative expenses, operating
Securities Offered by Company........... costs and working capital, including
software support and development,
capital equipment, marketing and
sales, mergers and acquisitions and
the repayment of debt. See "Use of
Proceeds."
Nasdaq SmallCap Market Symbols.......... EENTU
EENT
EENTW
</TABLE>

- ------------------------
(1) The Company is offering 1,000,000 Units at a price of $7.00 per Unit. Each
Unit consists of two shares of Common Stock and two redeemable Class A
Warrants. The Class A Warrants shall be exercisable commencing one year
after the date of the Prospectus. Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $4.00 per share during the four
year period commencing one year from the Effective Date hereof. The Class A
Warrants are redeemable upon certain conditions. Should the Class A Warrants
be exercised, of which there is no assurance, the Company will receive the
proceeds therefrom aggregating up to an additional $8,000,000. See
"Description of Securities."

(2) This offering also includes 2,000,000 shares of Common Stock and 2,000,000
Class A Warrants owned by the Selling Security-holders. The Class A Warrants
are identical to the Class A Warrants included in the Units being offered by
the Company. The shares of Common Stock and Class A Warrants held by the
Selling Security-holders may be sold commencing eighteen (18) months from
the date of this Prospectus, subject to earlier release at the sole
discretion of the Underwriter, and such securities include a legend with
such restrictions. The Underwriter may release the securities held by the
Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities or the potential of such sales at any time may have
an adverse effect on the market prices of the securities offered hereby.
Should the Class A Warrants be exercised, of which there is no assurance,
the Company will receive the proceeds therefrom aggregating up to an
additional $8,000,000. See "Certain Transactions," "Description of
Securities," "Selling Security-holders" and "Underwriting."

(3) Assumes no exercise of (i) the Class A Warrants offered hereby; (ii) the
Underwriter's Over-allotment Option to purchase up to 150,000 Units; and
(iii) the Underwriter's Purchase Option to purchase up to 100,000 Units. See
"Description of Securities" and "Underwriting."

(4) The public offering price of the Units and the exercise price and other
terms of the Class A Warrants were arbitrarily determined by negotiations
between the Company and the Underwriter and does not necessarily relate to
the assets, book value or results of operations of the Company or any other
established criteria of value. See "Underwriting."

(5) See "Dilution."

6
<PAGE>
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATE)

<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 8, 1995 (BEGINNING OF
OPERATIONS)
TO MARCH 31, 1996
------------------------------------
<S> <C>
Statement of Operations Data:
Revenue.............................................. $ 294
Income from operations............................... 90
Loss before income taxes............................. (537)
Net loss............................................. (537)
Pro forma net loss................................... (775)
Pro forma loss per share............................. (.12)
Average number of common shares outstanding.......... 6,464,188
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------
HISTORICAL AS ADJUSTED (1)
----------- ---------------
<S> <C> <C>
Balance Sheet Data:
Working capital...................................... $ 519 $ 5,319
Total assets......................................... 746 5,546
Long-term debt....................................... 500 --
Stockholders' equity................................. 153 5,453
</TABLE>

- ------------------------
(1) Adjusted to reflect the sale of the Units offered hereby, less underwriting
discounts and the payment by the Company of expenses of this offering
estimated at $1,000,000. See "Use of Proceeds."

7
<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE
THESE SECURITIES. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN INVESTMENT DECISION,
SHOULD CAREFULLY READ THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS
REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS:

DEVELOPMENT STAGE COMPANY

The Company was incorporated in Delaware on January 9, 1995 and, as such,
faces the risks and problems associated with businesses in their early stages of
development and has a limited operating history upon which to base an evaluation
of its prospects. Such prospects should be considered in light of the risks,
expenses and difficulties frequently encountered in the expansion of a business
in an industry characterized by a substantial number of market entrants and
intense competition. As of March 31, 1996, the Company had an accumulated
deficit of $537,056. See "Business."

BRIDGE FINANCING COSTS WILL NEGATIVELY IMPACT EARNINGS

The Company did not report earnings for the year ending March 31, 1996,
principally as a result of the costs attributed to the issuance of 2,000,000
shares of Common Stock, 2,000,000 Class A Warrants and 2,000,000 Class B
Warrants, as additional consideration for a bridge loan of $1,000,000 provided
by the Selling Security-holders, the proceeds of which were received in March
and April 1996. Interest expense of $7,000,000 related to the issuance of the
securities will be accrued during the period from March 19, 1996 through the
date of the offering and a corresponding credit will be credited to paid in
capital. Consequently, earnings will be negatively impacted by this cost;
however, net stockholders' equity will not be impacted by the corresponding
increase in paid in capital. In addition, there will be no cash outlay
associated with the issuance of such securities. See "Certain Transactions,"
"Selling Security-holders" and "Financial Statements."

8
<PAGE>

Selling Security-holders be exercised, of which there is no assurance, the
Company will receive the proceeds therefrom aggregating up to an additional
$8,000,000. Prior to making the bridge loan to the Company, the Selling
Security-holders did not own any other securities of the Company. None of the
Selling Security-holders of the Company are otherwise affiliated with the
Company, at the time of making the bridge loan, at the time of this offering or
at any other time. The Company believes that its financial transactions with the
Selling Security-holders served a legitimate business purpose, I.E., providing
needed working capital for the Company, and were fair and reasonable under the
circumstances since transactions are highly speculative. The Company's financial
transactions with the Selling Security-holders were arranged by the Underwriter
and no commissions or other remuneration were paid or will be paid to the
Underwriter in connection with such transactions. See "Selling Security-holders"
and "Description of Securities."

NO ASSURANCE OF FUTURE PROFITABILITY OR PAYMENT OF DIVIDENDS

The Company can make no assurances that the future operations of the Company
will result in additional revenues or will be profitable. Should the operations
of the Company be profitable, it is likely that the Company would retain much or
all of its earnings in order to finance future growth and expansion. Therefore,
the Company does not presently intend to pay dividends, and it is not likely
that any dividends will be paid in the foreseeable future. See "Dividend
Policy."

IMMEDIATE AND SUBSTANTIAL DILUTION

An investor in this offering will experience immediate and substantial
dilution. As of March 31, 1996, the Company had a net tangible book value of
$152,809 or $.02 per share derived from the Company's balance sheet as of March
31, 1996 and the total common stock outstanding at March 31, 1996 and the
issuance in April 1996 related to the bridge financing. After giving effect to
the sale of the Units offered hereby at an assumed offering price of $7.00 per
Unit, after deducting underwriting discounts and estimated offering expenses,
pro forma net tangible book value would have been $5,452,809, or $.52 per share.
The result will be an immediate increase in net tangible book value per share of
$.50 (2,789%) to existing shareholders and an immediate dilution to new
investors of $2.98 (85%) per share. As a result, public investors will bear most
of the risk of loss since their shares are being purchased at a cost
substantially above the price that existing shareholders acquired their shares.
See "Dilution."

POSSIBLE NEED FOR ADDITIONAL FINANCING

The Company intends to fund its operations and other capital needs for the
next 12 months substantially from the proceeds of this offering, but there can
be no assurance that such funds will be sufficient for these purposes. The
Company may require substantial amounts of the proceeds of this offering for its
future expansion, operating costs and working capital. The Company has made no
arrangements to obtain future additional financing, if required, and there can
be no assurance that such financing will be available, or that it will be
available on acceptable terms. See "Use of Proceeds."

DEPENDENCE ON MAJOR CUSTOMERS

For the period ending March 31, 1996, the Company derived 32% (Sprint), 29%
(Comsat), 16% (First Data Resources) and 13% (Documenta) of its sales from four
customers, respectively. The dependence on major customers subjects the Company
to significant financial risks in the operation of its business should a major
customer terminate, for any reason, its business relationship with the Company.
In such event, the financial condition of the Company may be adversely affected
and the Company may be required to obtain additional financing, of which there
is no assurance. The Company is not aware of any adverse developments with
respect to its major customers. Also, dependence on major customers
significantly increases the Company's costs, E.G., travel, communication and
delivery of products and services, which are reflected in the Company's
financial performance. See "Business" and "Financial Statements."

9
<PAGE>
DEPENDENCE ON MANAGEMENT

The Company's success is principally dependent on its current management
personnel for the operation of its business. In particular, Robert A. Veschi,
the Company's president and chief executive officer, has played a substantial
role in the development and management of the Company, although there is no
assurance that additional managerial assistance will not be required. The
analysis of new business opportunities will be undertaken by or under the
supervision of the management of the Company. The Company has recently entered
into an employment agreement with Mr. Veschi. However, if the employment by the
Company of Mr. Veschi terminates, or he is unable to perform his duties, the
Company may be substantially affected. The agreement also contains non-compete
provi-
sions but are limited in geographical scope, I.E., the Washington, D.C.
metropolitan area. The Company has agreed to purchase key-man life insurance on
Mr. Veschi in the amount of $1 million prior to the closing of this offering.
The Company will be the owner and beneficiary of the term insurance policy. See
"Use of Proceeds," "Business" and "Management."

DEPENDENCE ON HIGHLY QUALIFIED TECHNICAL PERSONNEL

The Company believes that its future success will depend in large part upon
its continued ability to recruit and retain highly qualified technical
personnel. Competition for highly qualified technical personnel is significant,
particularly in the geographic area in which the Company's operations are
located. No assurances can be made that the Company's relationship with its
employees will remain good. See "Management."

PRODUCT SECURITY RISKS

The Company has included in certain of its products an implementation of a
security protocol which operates in conjunction with authentication technology
that it has developed. Despite the existence of this technology, the Company's
products may be vulnerable to break-ins and similar disruptive problems caused
by certain Internet users. Such computer break-ins and other disruptions would
jeopardize the security of information stored in and transmitted through the
computer systems of end users of the Company's products, which may result in
significant liability to the Company and may also deter potential customers.
Persistent security problems continue to plague public and private data
networks. Recent break-ins at major government institutions, banks and
corporations have involved hackers bypassing firewalls and missappropriating
confidential information. Alleviating problems caused by third parties may
require significant expenditures of capital and resources by the Company and may
cause interruptions, delays or cessation of service to the Company's customers;
such expenditures or interruptions may have a material adverse effect on the
Company's business, operating results and financial condition. Moreover, the
security and privacy concerns of existing and potential customers, as well as
concerns related to computer viruses, may inhibit the growth of the Internet
marketplace, generally, and the Company's customer base and revenues,
specifically. The Company intends to limit its liability to customers, including
liability arising from a failure of the security features contained in the
Company's products, through provisions in its future contracts. However, the
Company can make no assurances that such contractual limitations will be
enforceable. The Company currently does not have liability insurance to protect
against these risks and there can be no assurance that such insurance will be
available to the Company on commercially reasonable terms, or available on any
terms.

UNCERTAINTY OF PROPOSED MERGERS AND ACQUISITIONS CAMPAIGN

Following the closing of this offering, the Company intends to engage in a
mergers and acquisitions campaign in order to merge with or acquire companies
engaged in a similar business. The Company has not entered into any negotiations
to merge with or acquire any such target companies, but the Company has
identified several such companies engaged in a complementary business. The
Company can make no assurances that it will be able to merge with or acquire any
companies. Although the Company intends to utilize approximately $500,000 of the
net proceeds of this offering in its mergers and acquisitions activities during
the 12 months following the date of this Prospectus, no assurances can be made
that such funds will enable the Company to expand its base or realize

10
<PAGE>
profitable consolidated operations. In addition, the Company's stockholders may
not have the opportunity to review the financial statements of any of the
companies that may be acquired or have the opportunity to vote on any proposed
acquisitions since Delaware law does not require such review and approval.
Should such funds not be utilized in its mergers and acquisitions activities,
the Company intends to utilize the funds in equal amounts in working capital,
capital equipment and marketing and sales. See "Use of Proceeds."

LITIGATION INVOLVEMENT OF UNDERWRITER MAY HAVE ADVERSE CONSEQUENCES.

RECENT NASD ACTION INVOLVING UNDERWRITER

The Company has been advised by the Underwriter that the NASD (District 10)
filed a complaint (No. C10950081) on October 5, 1995 ("Complaint") against the
Underwriter, Steven Sanders, the head trader of the Underwriter, Daniel M.
Porush, the president of the Underwriter, and Paul F. Byrne, formerly the
Underwriter's director of compliance (collectively, the "Respondents"), alleging
various violations of the NASD Rules of Fair Practice. The complaint consisted
of three causes. The first cause alleged that the Underwriter and Sanders
effected principal retail sales of securities at prices that were fraudulently
excessive. The second cause alleged that the Underwriter and Sanders charged
excessive markups. The third cause alleged that the Underwriter, Porush and
Byrne failed to establish, maintain and enforce reasonable supervisory
procedures designed to assure compliance with the NASD's rules and policies.

On April 15, 1996 the NASD in its decision found all of the Respondents
except Paul Byrne in violation of all three causes and imposed the following
sanctions:

-Sanders was censured, fined $25,000 and was suspended from association with
any member of the NASD in any capacity for a period of one year.

-Underwriter was censured, fined $500,000 and was required to disgorge its
excess profits to its customers, totaling $1,876,205, plus prejudgment
interest. In addition, the Underwriter was suspended for a period of one
year from effecting any principal retail transactions.

-Porush was censured, fined $250,000 and barred from association with any
member of the NASD in any capacity.

The Underwriter, Porush and Sanders have appealed the NASD's decision
thereby staying imposition of the sanctions.

If the sanctions imposed on the Underwriter are not reversed on appeal, the
Underwriter's ability to act as a market maker of the Company's securities will
be restricted. The Company cannot ensure that other broker dealers will make a
market in the Company's securities. In the event that other broker dealers fail
to make a market in the Company's securities, the possibility exists that the
market for and the liquidity of the Company's securities may be adversely
affected to such an extent that public security holders may not have anyone to
purchase their securities when offered for sale at any price. In such event, the
market for and liquidity of the Company's securities may not exist. It should be
noted that although the Underwriter may not be the sole market maker in the
Company's securities, it may likely be the dominant market maker in the
Company's securities. See "Underwriting."

In addition, in April 1996 the NASD settled an action whereby it fined
Stratton Oakmont $325,000 for fraud and other violations (which were neither
admitted or denied) in connection with its underwriting of an initial public
offering. Steven Sanders was fined $50,000 and was suspended for a period of 45
days from associating with an NASD member and agreed not to engage in any
trading-related activities for any NASD member for a period of 50 days. The
settlement also requires that Stratton Oakmont file certain new supervisory
procedures with the NASD. See "Underwriting."

11
<PAGE>
PERMANENT INJUNCTION GRANTED -- STRATTON OAKMONT ENJOINED TO COMPLY WITH
RECOMMENDATIONS OF AN INDEPENDENT CONSULTANT AND AN INDEPENDENT AUDITOR
APPOINTED PURSUANT TO AN ADMINISTRATION ORDER

The Company has been advised by Stratton Oakmont that the Commission
instituted an action on December 14, 1994 in the United States District Court
for the District of Columbia against Stratton Oakmont. The complaint alleged
that Stratton Oakmont was not complying with the Administrative Order entered by
the Commission on March 17, 1994 ("Administrative Order") by failing to adopt
the recommendations of an independent consultant. The Administrative Order was
previously consented to by Stratton Oakmont, without admitting or denying the
findings contained therein, as settlement of an action commenced against
Stratton Oakmont by the Commission in March 1992, which found willful violations
of the anti-fraud provisions of the securities laws such that Stratton Oakmont:

-engaged in fraudulent sales practices;

-engaged in and/or permitted unauthorized trading in customer accounts;

-knowingly and recklessly manipulated the market price of a company's
securities by dominating and controlling the market for those securities;

-made improper and unsupported price predictions with regard to recommended
over-the-counter securities; and

-made material misrepresentations and omissions regarding certain securities
and its experience in the securities industry.

Pursuant to the Administrative Order, Stratton Oakmont was censured and an
independent consultant ("Stratton Consultant") was chosen by the Commission to
advise and consult with Stratton Oakmont and to review and recommend new
supervisory and compliance procedures. The complaint sought:

-to enjoin Stratton Oakmont from violating the Administrative Order;

-an order commanding Stratton Oakmont to comply with the Administrative
Order; and

-to have a Special Compliance Monitor appointed to ensure compliance with
the Administrative Order. Stratton Oakmont claimed that the Stratton
Consultant exceeded his authority under the Administrative Order and had
violated the terms of the Administrative Order.

On February 28, 1995, the court granted the Commission's motion for a
permanent injunction ("Permanent Injunction") and ordered Stratton Oakmont to
comply with the Administrative Order, which required the appointment of an
independent consultant and a separate independent auditor and required that all
recommendations be complied with, including the taping of all telephone
conversations between Stratton Oakmont's brokers and their customers. In
granting the Commission's motion for a Permanent Injunction, the court
determined that Stratton Oakmont's conduct unequivocally demonstrated that there
is a substantial likelihood that it will continue to evade its responsibilities
under the Administrative Order. On April 20, 1995, Stratton Oakmont filed an
appeal to the United States Court of Appeals for the District of Columbia, and
on April 24, 1995 filed a motion to stay the Permanent Injunction pending the
outcome of the appeal. The motion to stay was denied. Subsequently, Stratton
Oakmont voluntarily dismissed its appeal. The failure by Stratton Oakmont to
comply with the Administrative Order or Permanent Injunction may adversely
effect Stratton Oakmont's activities in that the court may enter a further order
restricting the ability of Stratton Oakmont to act as a market maker of the
Company's securities. The effect of such action may prevent the holders of the
Company's securities from selling such securities since Stratton Oakmont may be
restricted from acting as a market maker of the Company's securities and, in
such event, will not be able to execute a sale of such securities. Also, if
other broker dealers fail to make a market in the Company's securities, the
public security holders may not have anyone to purchase their securities when
offered for sale at any price and the security holders may suffer the loss of
their entire investment.

12
<PAGE>
RECENT STATE ACTIONS INVOLVING STRATTON OAKMONT -- POSSIBLE LOSS OF
LIQUIDITY

As a result of the Permanent Injunction, the states of Pennsylvania, Indiana
and Illinois have commenced administrative proceedings seeking, among other
things, to revoke Stratton Oakmont's license to do business in such states. In
Indiana, the Commissioner suspended Stratton Oakmont's license for a three year
period. Stratton Oakmont has appealed the decision and has requested a stay
pending appeal. The requested stay would maintain the status quo pending appeal.
For Illinois, Stratton Oakmont intends to file an answer to the administrative
complaint changing the basis for revocation. The states of Alabama, North
Carolina, South Carolina and Arkansas also have suspended Stratton Oakmont's
license pending a resolution of the proceedings in those states. The states of
Minnesota, Vermont, and Nevada have served upon Stratton Oakmont notices of
intent to revoke Stratton Oakmont's license in such states. The state of Rhode
Island has served on Stratton Oakmont a Notice of Intent to suspend its license
in that state. In the state of Mississippi, Stratton Oakmont has agreed to a
suspension of its license pending resolution of certain claims and review of its
procedures and practices by the state authorities. In addition, Stratton Oakmont
withdrew its registration in the state of New Hampshire (with the right of
reapplication) and in the state of Maryland. There may be further administrative
action against the firm in Maryland. The firm withdrew its registration in
Massachusetts with a right to reapply for registration after two years, withdrew
its registration in Delaware with a right to reapply in three years and agreed
to a temporary cessation of business in Utah pending an on-site inspection and
further administrative proceedings. Stratton Oakmont's license in the state of
New Jersey was revoked by an administrative judge pursuant to an administrative
hearing and an appeal has been filed (and such decision is not final). The state
of Georgia has lifted its suspension and has granted Stratton Oakmont a
conditional license. Such conditional license was granted pursuant to an order,
which Stratton Oakmont has proposed to various states, which provides provisions
for: (i) the suspension of revocation, (ii) compliance with recommendations of
the Consultant, (iii) an expedited claims mediation arbitration process, (iv)
resolution of claims seeking compensatory damages, (v) restrictions on use of
operating revenue, (vi) the limitation on selling group members in offerings
underwritten by Stratton Oakmont and the prohibition of participating as a
selling group member in offerings underwritten by certain other NASD member
firms, (vii) the periodic review of Stratton Oakmont's agents, (viii) the
retention of an accounting firm, and (ix) supervision and training, restrictions
on trading, discretionary accounts and other matters. The state of Oregon, as a
result of the Permanent Injunction, has filed a notice of intent to revoke
Stratton Oakmont's license subject to the holding of a hearing to determine
definitively Stratton Oakmont's license status, and Stratton Oakmont, in this
proceeding as well as other proceedings, expects to be able to demonstrate that
the Permanent Injunction is not of a nature as to be a lawful basis to revoke
Stratton Oakmont's license permanently. Finally, Stratton Oakmont has received
an order limiting license in the state of Nebraska. Such proceedings, if
ultimately successful, may adversely affect the market for and liquidity of the
Company's securities if additional broker-dealers do not make a market in the
Company's securities. Moreover, should investors purchase any of the securities
in this offering from Stratton Oakmont prior to a revocation of Stratton
Oakmont's license in their state, such investors will not be able to resell such
securities in such state through Stratton Oakmont but will be required to retain
a new broker-dealer firm for such purpose. The Company cannot ensure that other
broker-dealers will make a market in the Company's securities. In the event that
other broker-dealers fail to make a market in the Company's securities, the
possibility exists that the market for and the liquidity of the Company's
securities may be adversely affected to such an extent that public security
holders may not have anyone to purchase their securities when offered for sale
at any price. In such event, the market for, and liquidity and prices of the
Company's securities may not exist. It should be noted that although Stratton
Oakmont may not be the sole market maker in the Company's securities, it will
most likely be the dominant market maker in the Company's securities. In
addition, in the event that the Underwriter's license to do business is revoked
in the states set forth above, the Underwriter has advised the Company that the
members of the selling syndicate in this offering may be able to make a market
in the Company's securities in such states and that such an event will not have
a materially adverse effect on this offering, although no assurance can be made
that such an

13
<PAGE>

event will not have a materially adverse effect on this offering. The Company
has applied to register this offering for the offer and sale of its securities
in the following states: California, Colorado, Connecticut, Delaware, District
of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana, New York, Rhode
Island and Virginia. The offer and sale of the securities of this offering are
not available in any other state, absent an exemption from registration. See
"Underwriting."

FOR ADDITIONAL INFORMATION REGARDING STRATTON OAKMONT, INVESTORS MAY CALL
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. AT 1-800-289-9999.

PAUL CARMICHAEL V. STRATTON OAKMONT.

The Company has been advised by Stratton Oakmont that Honorable John E.
Sprizzo, United States Judge for the Southern District of New York, on May 6,
1994 denied the class certification motion in PAUL CARMICHAEL V. STRATTON
OAKMONT, INC., ET AL., Civ. 0720 (JES), of the plaintiff Paul Carmichael. The
class action complaint alleges manipulation and fraudulent sales practices in
connection with a number of securities. The allegations were substantially
similar and involve much of the same time period as the Commission's civil
complaint (discussed above). The Company has further been informed that counsel
for the class action plaintiff sought to re-argue the motion for class
certification, which motion for re-argument was denied.

BROAD DISCRETION IN APPLICATION OF PROCEEDS

The management of the Company has broad discretion to adjust the application
and allocation of the net proceeds of this offering, including funds received
upon exercise of the Class A Warrants, of which there is no assurance, in order
to address changed circumstances and opportunities. As a result of the
foregoing, the success of the Company will be substantially dependent upon the
discretion and judgment of the management of the Company with respect to the
application and allocation of the net proceeds hereof. Pending use of such
proceeds, the net proceeds of this offering will be invested by the Company in
temporary, short-term interest-bearing obligations. See "Use of Proceeds."

UNCERTAIN PROTECTION OF PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS

In March 1996, the Company acquired all rights, title and interest in the
first U.S. patent, U.S. Patent No. 5,526,353, for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet, enabling free worldwide transmission of ordinary telephone
communications over the Internet. The Company acquired all rights, title and
interest in the patent from the inventors, Messrs. Arthur Henley and Scott Grau,
who are original stockholders of the Company, in consideration of a five percent
overriding royalty interest against gross profits involving the use of the
patent. The Company has agreed to allocate $1,000,000 of paid in capital to
develop and exploit the market opportunities of the patent by December 31, 1996,
or the patent will be subject to repurchase by the inventors of the patent. The
Company believes that its patent is the first patent awarded of its kind,
specifically involving the transmission of audio or voice over the Internet. The
Company also believes that its patent may provide certain strategic and
technological advantages in the new and burgeoning area of audio or voice over
the Internet. The Company can make no assurances, however, as to the extent of
the advantages or protection, if any, that may be granted to the Company as a
result of its patent.

14
<PAGE>
execution of nondisclosure agreements by key Company personnel and may also
include the imposition of restrictive agreements on purchasers of the Company's
products and services. There is no assurance that the execution of such
agreements will be effective to protect the Company, that the Company will be
able to enforce the provisions of such nondisclosure agreements or that
technology and other information acquired by the Company pursuant to its
development activities will be deemed to constitute trade secrets by any court
of competent jurisdiction.

SUBSTANTIAL COMPETITION

Businesses in the United States and abroad that are engaged in Internet
technologies, products and services are substantial in number and highly
competitive. Many of the companies with which the Company intends to compete are
substantially larger and have substantially greater resources than the Company.
It is also likely that other competitors will emerge in the future. The Company
will compete with companies that have greater market recognition, greater
resources and broader capabilities than the Company. As a consequence, there is
no assurance that the Company will be able to successfully compete in the
marketplace. See "Business."

LIMITATION ON DIRECTOR LIABILITY

As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the liability of directors to the Company or
its stockholders for monetary damages for breach of a director's fiduciary duty
except for liability in four specific instances. These are for (i) any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, (iii) unlawful payments of dividends or unlawful stock
purchases or redemptions as provided in Section 174 of the Delaware General
Corporation Law, or (iv) any transaction from which the director derived an
improper personal benefit. As a result of the Company's charter provision and
Delaware law, stockholders may have more limited rights to recover against
directors for breach of fiduciary duty. See "Management -- Limitation on
Liability of Directors."

ARBITRARY OFFERING PRICE

There has been no prior public market for the Company's securities. The
price to the public of the Units offered hereby has been arbitrarily determined
by negotiations between the Company and the Underwriter and bears no
relationship to the Company's earnings, book value or any other recognized
criteria of value. The offering price of $7.00 per Unit ($3.50 per share) is
substantially in excess of the net tangible book value of $.02 per share,
derived from the Company's balance sheet as of March 31, 1996, and in excess of
the price received by the Company for shares sold in prior transactions. See
"Prospectus Summary -- Selected Financial Data," "Underwriting," "Dilution and
Other Comparative Data" and "Certain Transactions."

REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE WARRANTS

The Company will be able to issue the securities offered hereby, shares of
its Common Stock upon the exercise of the Warrants and the Underwriters' Unit
Purchase Option only if (i) there is a current prospectus relating to the
securities offered hereby under an effective registration statement filed with
the Securities and Exchange Commission, and (ii) such Common Stock is then
qualified for sale or exempt therefrom under applicable state securities laws of
the jurisdictions in which the various holders of Warrants reside. Although the
Company intends to maintain a current registration statement, there can be no
assurance, however, that the Company will be successful in maintaining a current
registration statement. After a registration statement becomes effective, it may
require updating by the filing of a post-effective amendment. A post-effective
amendment is required (i) anytime after nine months subsequent to the Effective
Date when any information contained in the prospectus is over sixteen months
old; (ii) when facts or events have occurred which represent a fundamental
change in the information contained in the registration statement; or (iii) when
any material change occurs in the information relating to the plan or
distribution of the securities registered by such registration statement. The
Company anticipates that this Registration Statement

15
<PAGE>
will remain effective for not more than nine months following the date of this
Prospectus or until , 1997, assuming a post-effective amendment is
not filed by the Company, which may be required. The Company intends to qualify
the sale of the Class A Warrants in a limited number of states, although certain
exemptions under certain state securities ("Blue Sky") laws may permit the
Warrants to be transferred to purchasers in states other than those in which the
Warrants were initially qualified. Qualification for the exercise or sale of the
Class A Warrants in the states is essential for the establishment of a trading
market in the securities. The Company can make no assurances that it will be
able to qualify its securities in any state. The Company will be prevented,
however, from issuing Common Stock upon exercise of the Warrants in those states
where exemptions are unavailable and the Company has failed to qualify the
Common Stock issuable upon exercise of the Warrants. The Company may decide not
to seek, or may not be able to obtain qualification of the issuance of such
Common Stock in all of the states in which the ultimate purchasers of the
Warrants reside. In such a case, the Warrants of those purchasers will expire
and have no value if such Warrants cannot be exercised or sold. Accordingly, the
market for the Warrants may be limited because of the Company's obligation to
fulfill both of the foregoing requirements. See "Description of Securities," and
"Underwriting."

ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET

The Company is authorized to issue 50,000,000 shares of its Common Stock,
$.01 par value. If all of the 1,000,000 Units offered hereby are sold, there
will be a total of 10,500,000 shares of Common Stock issued and outstanding.
However, the total number of shares of Common Stock issued and outstanding does
not include the exercise of up to 4,000,000 Class A Warrants and 2,000,000 Class
B Warrants to purchase up to 6,000,000 shares of the Company's Common Stock.
Moreover, the Underwriters have been granted an option to purchase 100,000 Units
in connection with this offering, which has been authorized by the Company for
issuance. Also, this does not include the exercise of the Underwriters'
Over-allotment Option to purchase up to 150,000 Units in connection with this
offering, which has been authorized by the Company for issuance. After reserving
a total of 6,500,000 shares of Common Stock for issuance upon the exercise of
all the Warrants, if all of the Warrants are exercised, the Company will have at
least 33,000,000 shares of authorized but unissued capital stock available for
issuance without further shareholder approval. As a result, any issuance of
additional shares of Common Stock may cause current shareholders of the Company
to suffer significant dilution which may adversely affect the market. Pursuant
to the terms of the Underwriting Agreement, the Company's restricted
stockholders and the Company have agreed not to sell any of their restricted
shares of Common Stock for a period of 24 months following the date of this
Prospectus without the consent of the Underwriter. Also, the Company has agreed
not to issue any additional securities for a period of 24 months following the
date of this Prospectus without the consent of the Underwriter. The sale of a
significant number of these shares in the public market may adversely affect
prevailing market prices of the Company's securities following this offering.
See "Dilution," "Principal Stockholders," "Certain Transactions," "Description
of Securities" and "Underwriting."

LACK OF PRIOR MARKET FOR SECURITIES OF THE COMPANY

No prior market existed for the securities being offered hereby and no
assurance can be given that a market will develop subsequent to this offering.
The Underwriter may make a market in the securities of the Company upon the
closing of this offering, but there is no assurance that it will be successful
in its efforts. See "Description of Securities" and "Underwriting."

WARRANTS SUBJECT TO REDEMPTION

The Class A Warrants shall be exercisable commencing one year after the date
of this Prospectus ("Effective Date"). Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $4.00 per share during the four year
period commencing one year from the Effective Date hereof. The Class A Warrants
are redeemable by the Company for $.05 per Warrant, at any time after
, 1998, upon thirty (30) days' prior written notice, if the average
closing price or bid price of the Common Stock, as reported by the principal
exchange on which the Common Stock is quoted, the Nasdaq SmallCap Market or the
National Quotation Bureau, Incorporated, as the case

16
<PAGE>
may be, equals or exceeds $9.00 per share, for any twenty (20) consecutive
trading days within a period of thirty (30) days ending within ten (10) days of
the notice of redemption. Upon thirty (30) days' prior written notice to all
holders of the Class A Warrants, the Company shall have the right to reduce the
exercise price and/or extend the term of the Class A Warrants. Redemption of the
Warrants will force holders thereof to either (i) exercise such Warrants and pay
the exercise price at a time when it may be less than advantageous economically
to do so, or (ii) accept the redemption price, which may be substantially less
than the market value thereof at the time of redemption. This offering also
includes 2,000,000 shares of Common Stock and 2,000,000 Class A Warrants owned
by the Selling Security-holders. The Class A Warrants are identical to the Class
A Warrants included in the Units being offered by the Company. The securities
held by the Selling Security-holders may be sold commencing eighteen (18) months
from the date of this Prospectus, subject to earlier release at the sole
discretion of the Underwriter, and such securities include a legend with such
restrictions. The Underwriter may release the securities held by the Selling
Security-holders at any time after all securities subject to the Over-allotment
Option have been sold or such option has expired. The resale of the securities
of the Selling Security-holders are subject to Prospectus delivery and other
requirements of the Securities Act of 1933, as amended. Sales of such securities
or the potential of such sales at any time may have an adverse effect on the
market prices of the securities offered hereby. See "Certain Transactions,"
"Description of Securities," "Selling Security-holders" and "Underwriting."

The Company intends to qualify the sale of the securities in a limited
number of states, although certain exemptions under certain state securities
("Blue Sky") laws may permit the Warrants to be transferred to purchasers in
states other than those in which the Warrants were initially qualified. The
Company will be prevented, however, from issuing Common Stock upon exercise of
the Warrants in those states where exemptions are unavailable and the Company
has failed to qualify the Common Stock issuable upon exercise of the Warrants.
The Company may decide not to seek, or may not be able to obtain qualification
of the issuance of such Common Stock in all of the states in which the ultimate
purchasers of the Warrants reside. In such case, the Warrants of those
purchasers will expire and have no value if such Warrants cannot be exercised or
sold. Accordingly, the market for the Warrants may be limited because of the
Company's obligation to fulfill the foregoing requirements.

UNDERWRITER'S INFLUENCE ON THE MARKET MAY HAVE ADVERSE CONSEQUENCES

A significant number of securities may be sold to customers of the
Underwriter. Such customers of the Underwriter of this offering subsequently may
engage in transactions for the sale or purchase of such securities through or
with the Underwriter. Although they have no legal obligation to do so, the
Underwriter from time to time in the future will make a market in and otherwise
effect transactions in the Company's securities. To the extent the Underwriter
acts as marketmaker in the securities, it may be a dominating influence in that
market. The price and liquidity of such securities may be affected by the
degree, if any, of the Underwriter's participation in the market, inasmuch as a
significant amount of such securities may be sold to customers of the
Underwriter. Such customers, as customers of the Underwriter of this offering,
subsequently may engage in transactions for the sale or purchase of such
securities through or with the Underwriter, although no agreements or
understandings, written or oral, exist for such transactions, and such
transactions may further enhance the Underwriter's dominating influence on the
market. Such market making activities, if commenced, may be discontinued at any
time or from time to time by the Underwriter without obligation or prior notice.
If a dominating influence at such time, the Underwriter's discontinuance may
adversely affect the price and liquidity of the securities.

Further, unless granted an exemption by the Securities and Exchange
Commission to its Rule 10b-6, the Underwriter may be prohibited from engaging in
any market making activities with regard to the Company's securities for the
period from two or nine business days prior to any solicitation of the exercise
of Warrants until the later of the termination of such solicitation activity or
the termination, by waiver or otherwise, of any right that the Underwriter may
have to receive a fee

17
<PAGE>
for the exercise of Warrants following the solicitation. As a result, the
Underwriter may be unable to continue to provide a market for the Company's
securities during certain periods while the Warrants are exercisable, which may
adversely affect the price and liquidity of the securities.

CONTRACTUAL OBLIGATIONS TO UNDERWRITER MAY REDUCE PROCEEDS AVAILABLE TO THE
COMPANY

The Company has also agreed to pay fees to the Underwriter, aggregating up
to five percent of the consideration involved in the transaction, if the
Underwriter arranges equity financing, debt financing and assistance with
mergers and acquisitions, for the Company other than this offering during a
period of five years after the date of this Prospectus, or if the Underwriter
obtains or are influential in increasing any lines of credit the Company may
have, provided such financing or increase is accepted by the Company. Such fees
will reduce the amount of proceeds available to the Company from such financing
or line of credit. Further, in addition to an ten percent underwriting discount,
the Company has also agreed to pay the Underwriter a nonaccountable expense
allowance of three percent of the gross proceeds of this offering, as well as a
fee of four percent of the exercise price of the Warrants (which includes all
Class A Warrants and Class B Warrants owned by the Selling Security-holders), if
certain conditions are met. To the extent the foregoing compensation is paid
from the proceeds of this offering, the amounts available to the Company, will
be reduced. On the closing date, the Company will sell to the Underwriter for a
purchase price of $100, an option to purchase 100,000 Units at 165% of the
initial offering price of $7.00 per Unit, or $11.55 per Unit, on the date of
this Prospectus. See "Underwriting."

EXERCISE OF CLASS A WARRANTS MAY HAVE DILUTIVE EFFECT ON MARKET

The Class A Warrants will provide, during their term, an opportunity for the
holder to profit from a rise in the market price, of which there is no
assurance, with resulting dilution in the ownership interest in the Company held
by the then present stockholders. Holders of the Warrants most likely would
exercise the Warrants and purchase the underlying Common Stock at a time when
the Company may be able to obtain capital by a new offering of securities on
terms more favorable than those provided by such Warrants, in which event the
terms on which the Company may be able to obtain additional capital would be
affected adversely. See "Description of Securities" and "Underwriting."

"PENNY STOCK" REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF
SECURITIES

The Securities and Exchange Commission ("Commission") has adopted
regulations which generally define "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Upon authorization
of the securities offered hereby for quotation on Nasdaq, such securities will
initially be exempt from the definition of "penny stock." If the securities
offered hereby are removed from listing by Nasdaq at any time following the
Effective Date, the Company's securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the Commission relating to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell the
Company's securities and may affect the ability of purchasers in this Offering
to sell the Company's securities in the secondary market.

The Company has applied for inclusion of the Units, Common Stock and Class A
Warrants on the Nasdaq SmallCap Market System ("Nasdaq"), although there can be
no assurances that an active trading market will develop, even if the securities
are accepted for quotation. Additionally, if the

18
<PAGE>
Company's securities are accepted for quotation and active trading develops, the
Company is required to maintain certain minimum criteria established by Nasdaq,
of which there can be no assurance that the Company will be able to continue to
fulfill such criteria. The Company has been advised that the Company's
securities offered hereby will be listed on Nasdaq upon the Effective Date of
this offering. Generally, to qualify for a Nasdaq listing, the Company must have
$4 million in total assets, $2 million in total stockholders' equity and 300 or
more shareholders of record. The Company believes that it will meet these
minimum criteria upon the closing of this offering, but no assurances can be
made that the Company will be able to satisfy the criteria to maintain its
listing. Should the Company fail to maintain its listing, the Company's
securities will be traded in the over-the-counter market on the Electronic
Bulletin Board as maintained by the National Quotation Bureau, Incorporated,
which may pose for the investor potentially greater difficulty in purchasing
and/or selling the Company's securities.

SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET

All of the Company's currently outstanding shares of Common Stock are
"restricted securities" and, in the future, may be sold upon compliance with
Rule 144, adopted under the Securities Act of 1933, as amended. Rule 144
provides, in essence, that a person holding "restricted securities" for a period
of two years may sell only an amount every three months equal to the greater of
(a) one percent of the Company's issued and outstanding shares, or (b) the
average weekly volume of sales during the four calendar weeks preceding the
sale. The amount of "restricted securities" which a person who is not an
affiliate of the Company may sell is not so limited, since nonaffiliates may
sell without volume limitation their shares held for three years if there is
adequate current public information available concerning the Company. Upon the
sale of the securities, and assuming that there is no exercise of any issued and
outstanding Warrants, the Company will have 10,500,000 shares of its common
stock issued and outstanding, of which 6,500,000 shares will be "restricted
securities." Therefore, during each three month period, beginning January 9,
1997, a holder of restricted securities who has held them for at least the two
year period may sell under Rule 144 a number of shares up to 105,000 shares.
Non-affiliated persons who hold for the three-year period described above may
sell unlimited shares once their holding period is met. Pursuant to the terms of
the Underwriting Agreement, the officers, directors and principal stockholders
of the Company and the Company have agreed not to sell, transfer, assign or
issue any securities of the Company for a period of 24 months following the date
of this Prospectus without the consent of the Underwriter. The sale of a
significant number of these shares in the public market may adversely affect
prevailing market prices of the Company's securities following this offering.
See "Dilution," "Principal Stockholders," "Certain Transactions," "Description
of Securities" and "Underwriting."

This offering also includes 2,000,000 shares of Common Stock and 2,000,000
Class A Warrants owned by the Selling Security-holders. The Class A Warrants are
identical to the Class A Warrants included in the Units being offered by the
Company. The shares of Common Stock and Class A Warrants held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date of
this Prospectus, subject to earlier release at the sole discretion of the
Underwriter, and such securities include a legend with such restrictions. The
Underwriter may release the securities held by the Selling Security-holders at
any time after all securities subject to the Over-allotment Option have been
sold or such option has expired. The resale of the securities of the Selling
Security-holders are subject to Prospectus delivery and other requirements of
the Securities Act of 1933, as amended. Sales of such securities in the
Over-allotment Option and the early release of the Selling Security-holder
shares, which has occurred in previous offerings underwritten by the
Underwriter, or the potential of such sales at any time may have an adverse
effect on the market prices of the securities offered hereby. See "Certain
Transactions," "Selling Security-holders" and "Underwriting."

Prospective investors should be aware that the possibility of sales may, in
the future, have a depressive effect on the price of the Company's Common Stock
in any market which may develop and, therefore, the ability of any investor to
market his shares may be dependent directly upon the number of shares that are
offered and sold. Affiliates of the Company may sell their shares during a
favorable movement in the market price of the Company's Common Stock which may
have a depressive effect on its price per share. See "Description of
Securities."

19
<PAGE>
USE OF PROCEEDS

After deducting underwriting discounts of $700,000 and other expenses of the
offering estimated to be $1,000,000, which includes the Underwriter's
nonaccountable expense allowance of $210,000, assuming an offering price of
$7.00 per Unit, the Company will receive net proceeds from the offering of
approximately $5,300,000. The Company will not receive any of the proceeds from
the sale of the securities by the Selling Security-holders. These proceeds,
excluding the exercise of any of the Warrants, will be utilized in order of
priority by the Company as listed below for approximately 12 months
substantially as follows:

<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT OF NET
ADMINISTRATIVE EXPENSES PROCEEDS %
--------------- ---------
<S> <C> <C>
Management Compensation(1)............................. $ 750,000 14.15
Employee Salaries and Overhead(2)...................... 750,000 14.15

OPERATING COSTS AND WORKING CAPITAL
Software Support and Development(3).................... 750,000 14.15
Capital Equipment(4)................................... 500,000 9.43
Marketing and Sales(5)................................. 750,000 14.15
Mergers and Acquisitions(6)............................ 500,000 9.43
Working Capital(7)..................................... 300,000 5.67
Debt Retirement(8)..................................... 1,000,000 18.87
--------------- ---------
TOTAL.............................................. $ 5,300,000 100.00
--------------- ---------
--------------- ---------
</TABLE>

- ------------------------
(1) The officers and employees of the Company also intend to receive
remuneration as part of an overall group insurance plan providing health,
life and disability insurance benefits for employees of the Company. The
amount allocable to each individual officer and employee cannot be
specifically or precisely ascertained, but, in any event, will not exceed
$25,000 per annum as to each individual. "See Management -- Remuneration."

(2) Includes annual general and administrative employee salaries, exclusive of
management salaries, associated benefits, related office rent and
miscellaneous office expenses.

(3) Includes annual salaries for software and engineering support personnel.
Also, includes approximately $500,000 for product development related to the
Company's commitment to allocate $1,000,000 of capital by December 31, 1996
to develop and exploit the market opportunities of the patent acquired in
March 1996.

(4) The Company intends to purchase and/or lease certain additional capital
equipment including, but not limited to, engineering and manufacturing
equipment, computer hardware/software and systems, telephone and facsimile
systems, security systems and office equipment and furniture.

(5) The amount allocated by the Company for marketing and sales includes
marketing materials, advertising, business travel and a significant
expansion of its marketing and sales staff. Also, includes approximately
$500,000 for marketing and sales related to the Company's commitment to
allocate $1,000,000 of capital by December 31, 1996 to develop and exploit
the market opportunities of the patent acquired in March 1996.

(6) Following the closing of this offering, the Company intends to engage in a
mergers and acquisitions campaign in order to merge with or acquire
complementary companies in the $10 million to $25 million revenue range. The
Company has not entered into any negotiations, agreements, arrangements or
understandings with respect to the merger with or acquisition of any such
target companies, or has any such agreement or understandings with any
brokers or finders regarding same. The Company can make no assurances that
it will be able to merge with or acquire any companies. Although the Company
intends to utilize not more than $500,000 in its mergers and acquisitions
activities during the 12 months following the date of this Prospectus, no
assurances can be made that such funds will enable the Company to expand its
base or realize profitable

20
<PAGE>

consolidated operations. Whenever possible, the Company intends to issue its
securities rather than use such cash funds to consummate a merger or
acquisition. The ability of the Company to engage in a mergers and
acquisitions campaign in view of the Company's resources is uncertain.
Should such funds not be utilized in its mergers and acquisitions
activities, the Company intends to utilize the funds in equal amounts in
capital equipment and marketing and sales.

(7) Working capital will be utilized by the Company to enhance and, otherwise,
stabilize cash flow during the initial 12 months of operations following the
closing of this offering, such that any shortfalls between cash generated by
operating revenues and costs will be covered by working capital. Although
the Company prefers to retain its working capital in reserve, the Company
may be required to expend part or all of these proceeds as financial demands
dictate.

(8) In March and April 1996, the Company borrowed $1,000,000 in a bridge loan
from the Selling Security-holders at the rate of eight percent simple annual
interest, which is due and payable at the closing of this offering from the
net proceeds of this offering. The bridge loan has been used for working
capital, the repayment of debt and to pay for certain expenses of the
offering, including legal fees and accounting fees. The 2,000,000 shares of
Common Stock, 2,000,000 Class A Warrants and 2,000,000 Class B Warrants were
issued to the Selling Security-holders in further consideration of the
bridge loan. The Class A Warrants issued to the Selling Security-holders are
identical to the Class A Warrants included in the Units being offered by the
Company. The Class B Warrants, which are not being registered in this
offering, are identical to the Class A Warrants included in the Units being
offered by the Company except that the exercise price is $4.20. The
2,000,000 shares of Common Stock and 2,000,000 Class A Warrants are being
registered as part of this offering. The securities held by the Selling
Security-holders may be sold commencing eighteen (18) months from the date
of this Prospectus, subject to earlier release by the Underwriter, and such
securities include a legend with such restrictions. The Underwriter may
release the securities held by the Selling Security-holders at any time
after all securities subject to the Over-allotment Option have been sold or
such 30-day option has expired. The Company will not receive any of the
proceeds from the sale of the securities being offered by the Selling
Security-holders. The Class A Warrants are redeemable upon certain
conditions. See "Certain Transactions," "Description of Securities" and
"Selling Security-holders."

Although it is uncertain that the Company's shares of Common Stock will rise
to a level at which the Warrants would be exercised, in the event subscribers in
this offering elect to exercise all of the Warrants herein (not including the
Underwriter's Over-allotment Option or the Underwriter's Purchase Option), the
Company will realize gross proceeds of approximately $8,000,000. Management
anticipates that the proceeds from the exercise of the Warrants would be
contributed to working capital of the Company. Nonetheless, the Company may at
the time of exercise allocate a portion of the proceeds to any other corporate
purposes. Accordingly, investors who exercise their Warrants will entrust their
funds to management, whose specific intentions regarding the use of such funds
are not presently and specifically known.

The Company is unable to predict the precise period for which this offering
will provide financing, although management believes that the Company should
have sufficient working capital to meet its cash requirements for the 12 months
period following the date of this offering. Accordingly, the Company may need to
seek additional funds through loans or other financing arrangements during this
period of time. No such arrangements exist or are currently contemplated and
there can be no assurance that they may be obtained in the future should the
need arise.

Pending utilization, management intends to make temporary investment of the
proceeds in bank certificates of deposit, interest-bearing savings accounts,
prime commercial paper or federal government securities.

21
<PAGE>
DILUTION

As of March 31, 1996, the Company had a net tangible book value of $152,809
or $.02 per share, derived from the Company's balance sheet as of March 31, 1996
and the total common stock outstanding at March 31, 1996 and the issuances in
April 1996 related to the bridge financing. Net tangible book value per share
means the tangible assets of the Company, less all liabilities, divided by the
number of shares of Common Stock outstanding. After giving effect to the sale of
the Units offered hereby at an assumed price of $7.00 per Unit, or $3.50 per
share of Common Stock after deducting underwriting discounts and estimated
offering expenses, pro forma net tangible book value would have been $5,452,809
or $.52 per share. The result will be an immediate increase in net tangible book
value per share of $.50 (2,789%) to existing shareholders and an immediate
dilution to new investors of $2.98 (85%) per share. As a result, public
investors will bear most of the risk of loss since their shares are being
purchased at a cost substantially above the price that existing shareholders
acquired their shares. "Dilution" is determined by subtracting net tangible book
value per share after the offering from the offering price to investors. The
following table illustrates this dilution assuming no exercise of the
over-allotment option:

<TABLE>
<S> <C> <C>
Public offering price of the Common Stock offered hereby.............. $ 3.50
Pro forma net tangible book value per share, before the offering.... $ .02
Increase per share attributable to the sale by the Company of the
Units offered hereby............................................... $ .50
---
Pro forma net tangible book value per share, after the offering....... $ .52
---------
Dilution per share to new investors................................... $ 2.98
---------
---------
</TABLE>

The above table assumes no exercise of the Class A Warrants, the
Over-allotment Option or the Underwriter's Purchase Option. See "Description of
Securities."

The following table summarizes the investments of all existing stockholders
and new investors after giving effect to the sale of the Units offered hereby
assuming no exercise of the Over-allotment Option:

<TABLE>
<CAPTION>
PERCENTAGE PERCENT OF AVERAGE
SHARES OF TOTAL AGGREGATE TOTAL PRICE PER
PURCHASED SHARES CONSIDERATION INVESTED SHARE
------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Present Stockholders(1)......................... 8,500,000 80.95% $ 310,000 4.24% $ .04
-----
-----
Public Stockholders............................. 2,000,000 19.05% $ 7,000,000 95.76% $ 3.50
------------- ----------- ------------- ----------- -----
-----
Total....................................... 10,500,000 100.00% $ 7,310,000 100.00% $ .69
------------- ----------- ------------- ----------- -----
------------- ----------- ------------- ----------- -----
</TABLE>

If the Over-allotment Option is exercised in full, the public stockholders
will have paid $8,050,000 and will hold 2,300,000 shares of Common Stock,
representing 96.99 percent of the total consideration and 21.30 percent of the
total number of outstanding shares of Common Stock. See "Description of
Securities" and "Underwriting."
- ------------------------
(1) This offering also includes 2,000,000 shares of Common Stock and 2,000,000
Class A Warrants owned by the Selling Security-holders. The Class A Warrants
are identical to the Class A Warrants included in the Units being offered by
the Company. The shares of Common Stock and Class A Warrants held by the
Selling Security-holders may be sold commencing eighteen (18) months from
the date of this Prospectus, subject to earlier release at the sole
discretion of the Representative, and such securities include a legend with
such restrictions. The Underwriter may release the securities held by the
Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities in the Over-allotment Option and the early release
of the Selling Security-holder shares, which has occurred in previous
offerings underwritten by the Underwriter, or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby. Should the Class A Warrants be exercised, of which there is
no assurance, the Company will receive the proceeds therefrom aggregating up
to an additional $8,000,000. See "Certain Transactions," "Description of
Securities" and "Selling Security-holders."

22
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)

The following table sets forth the capitalization of the Company as of March
31, 1996, and as adjusted to reflect the sale of the Units offered hereby. The
table should be read in conjunction with the Financial Statements, and the notes
thereto.

<TABLE>
<CAPTION>
MARCH 31,
1996 PRO FORMA(2) AS ADJUSTED(1)
----------- ------------- --------------
<S> <C> <C> <C>
Long-term debt......................................... $ 500 $ 1,000 $ --
----------- -------------
Stockholders' equity
Common Stock, $.01 par value, 50,000,000 shares
authorized, 7,500,000 shares outstanding; pro forma
8,500,000 shares outstanding reflecting the issuance
of units in connection with the April 1996 bridge
loan; 10,500,000 shares outstanding, as adjusted.... $ 75 $ 85 $ 105
Stock subscriptions and notes receivable............... (310) (310) (310)
Unamortized cost of bridge financing................... (2,885) (6,385) (6,385)
Additional paid-in capital............................. 3,810 7,300 12,580
Retained deficit....................................... (537) (537) (537)
----------- ------------- -------
Total stockholders' equity......................... $ 153 $ 153 $ 5,453
----------- ------------- -------
Total capitalization............................... $ 653 $ 1,153 $ 5,453
----------- ------------- -------
----------- ------------- -------
</TABLE>

- ------------------------
(1) As adjusted to reflect this offering. Assumes no exercise of (i) the Class A
Warrants; (ii) the Underwriter's Over-allotment Option to purchase up to
150,000 Units; or (iii) the Underwriter's Purchase Option to purchase up to
100,000 Units. See "Description of Securities" and "Underwriting."

(2) The pro forma capitalization illustrates the effect of the bridge loan
received in April 1996.

DIVIDEND POLICY

Holders of the Company's Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Company does not anticipate the declaration or payment of any dividends in
the foreseeable future. The Company intends to retain earnings, if any, to
finance the development and expansion of its business. Future dividend policy
will be subject to the discretion of the Board of Directors and will be
contingent upon future earnings, if any, the Company's financial condition,
capital requirements, general business conditions and other factors. Therefore,
there can be no assurance that any dividends of any kind will ever be paid by
the Company.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

PLAN OF OPERATION

e-NET, Inc. ("Company"), develops, markets and supports open client, server
and integrated applications software that enables local, national and
international telephone communications, information exchange and commerce over
the Internet and private Internet Protocol ("IP") networks. The Company's
software products allow individuals and organizations to execute secure, or
private, voice communications across the Internet, through the use of
authentication technology, for local, national and international telephone
communications, information exchange and commerce. In addition, through the use
of the Company's software, organizations can extend their internal information
systems and enterprise applications to geographically dispersed facilities,
remote offices and mobile employees. A number of companies, some with greater
resources than the Company, manufacture similar system products which may
compete with the Company's products. See "Risk Factors" and "Business --
Competition."

In March 1996, the Company acquired all rights title and interest in the
first U.S. patent, U.S. Patent No. 5,526,353, for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet, enabling free worldwide high fidelity and clear transmission of
ordinary telephone communications over the Internet. The Company acquired all
rights, title and interest in the patent from the inventors, Messrs. Arthur
Henley and Scott Grau, who are original stockholders of the Company, in
consideration of a five percent overriding royalty interest against gross profit
involving the use of the patent. The Company has agreed to allocate $1,000,000
of paid in capital to develop and exploit the market opportunities of the patent
by December 31, 1996, or the patent will be subject to repurchase by the
inventors of the patent. The Company believes that its patent is the first
patent awarded of its kind, specifically involving the transmission of audio or
voice over the Internet. The Company also believes that its patent may provide
certain strategic and technological advantages in the new and burgeoning area of
audio or voice over the Internet. The Company can make no assurances, however,
as to the extent of the advantages or protection, if any, that may be granted to
the Company as a result of its patent. See "Business," "Management" and
"Financial Statements."

The Company's operations to date have concentrated on continuing development
of its technologies, products and services, establishing acceptance of its
software products in the telecommunications industry, providing services to its
existing customer base, and securing financing necessary to fund development,
operations, and expansion of its business. The Company's products include:

TELECOM-2000-TM-

e-NET's Telecom-2000 product is based on the patent rights acquisition
described above and consists of voice/data integration and authentication
protocol, voice packetization software, prototype interfaces to Ethernet
telephony hardware, address resolution and call handling software, and
interfaces to the traditional telephone network through a PC, or personal
computer. The Telecom-2000 is designed to allow individuals and organizations to
execute secure, or private, voice communications across the Internet, such as
local, national and international telephone communications. Due to the
economical and highly scalable architecture that e-NET has developed,
Telecom-2000 can be utilized for integrated data and telephony communications in
very small offices, enterprise networks, national reseller networks and for the
consumer. The product is in the final test stages of its initial development,
and the Company believes the product will be ready for release by the end of the
Company's third quarter of fiscal 1997. Depending on the precise configuration
and volume, the Company intends to offer the Telecom-2000 at a price of
approximately $750 per unit, which includes a one year warranty and technical
service, training and support.

INTELLICD-TM-

The IntelliCD product was developed by e-NET to meet a strategic need of
Sprint. Sprint's larger customers have reported a critical need to receive
monthly billing information (call detail reports) in an easily accessible,
computer acceptable input format, which would allow direct access, search and

24
<PAGE>
retrieval to meet a wide variety of requirements. The CD-ROM medium provides
rapid access to data, uses ubiquitous PC equipment for access, and requires
minimal storage requirements. The e-NET approach includes the design and
development of an ergonomic, SQL-based search and retrieval software engine that
permits users with little knowledge of data processing to easily define and
generate a wide variety of searches and reports. Since e-NET's software design
is highly generalized, the IntelliCD process is readily adapted to any
requirement involving repeated use of large volume, non-volatile data sets.
Depending on precise configuration and volume, the Company offers the IntelliCD
at a price of approximately $300 per unit, which includes a one year warranty
and technical service, training and support. At March 31, 1996, the Company
realized $74,500 in sales of the IntelliCD product, representing approximately
25 percent of its total sales.

E-NET NMS-TM-

The e-Net Network Management System ("e-Net NMS") is a proprietary expert
systems-based, user friendly, object-oriented network and system management
product that is offered by the Company. Through the introduction of automated
problem, configuration, accounting, performance and security management, the
Company's e-Net NMS product provides corporate and government enterprises with
flexibility for the management of global telephone and data networks, including
networks connected by the Internet. The e-Net NMS product also provides network
traffic optimization and re-routing, real-time configuration and database
management, generation of all needed reports, and system failure detection and
prediction. Depending on precise configuration and volume, the Company offers
the e-Net NMS product at a price of approximately $60,000 per unit, which
includes a one year warranty and technical service, training and support. At
March 31, 1996, the Company realized $43,000 in sales of the e-Net NMS product,
representing approximately 15 percent of its total sales.

DEBITBILL-TM-

The telephone debit card business has experienced strong growth in response
to customer acceptance and increasing demand. e-Net's experience with its own
proprietary debit billing card product, called DebitBill-TM-, has indicated that
there may be significant market demand for this technology, although the Company
can make no assurances of the extent of any demand. The Company intends to use
its current market position to sell its debit card product to the Internet
service delivery market. DebitBill-TM- interfaces with standard telephone
switches and related accounting management software to identify the customer and
to record and manage amounts owed. The Company believes that DebitBill-TM- may
be a significant product in its suite of products because of the ease-of-use and
cash flow implications of this technology. e-Net has specifically designed
DebitBill-TM- for the Internet and private IP networks. Depending on precise
configuration and volume, the Company has recently begun to offer the DebitBill
product at a price of approximately $60,000 per unit, which includes a one year
warranty and technical service, training and support. At March 31, 1996, the
Company has not realized any sales of this product.

SERVICES

In addition to the products listed above, e-NET provides technology services
to its customers in a number of other areas. The Company has made a commitment
to provide timely, high quality technical support to meet the diverse needs of
its customers and partners and to facilitate the adoption and use of its
technologies, products and services. These services include e-NET Helpdesk
support, consulting on software programming and network management systems and
training. At March 31, 1996, the Company realized $176,376 in sales related to
its technology support services, representing approximately 60 percent of its
total sales.

The Company's plans for the next fiscal year center around continuing
efforts to complete the first phase development and test marketing of
Telecom-2000. Management believes that the market for such a product is only now
being defined and customers are waiting for a product which can deliver voice
quality equivalent to existing telephony at a reduced cost. While no assurances
can be made of Telecom-2000's success, management believes this product's
potential in the marketplace may be significant. To date, no installations of
Telecom-2000 have been sold. As a result, the Company's operating results may
fluctuate significantly based upon future sales.

25
<PAGE>

The Company also intends to continue internal development of additional
versions of Telecom-2000, as well as, other software products. Management
believes that, as the market matures, different market segments will require
slightly modified versions of its Telecom-2000. Management also believes that
additional software product requirements will be recognized while working with
its customers and installing its existing products or providing its existing
expert services.

Following the closing of this offering, the Company intends to engage in a
mergers and acquisitions campaign in order to merge with or acquire
complementary companies in the $10 million to $25 million revenue range. The
Company has not entered into any negotiations, agreements, arrangements or
understandings with respect to the merger with or acquisition of any such target
companies, or has any such agreement or understandings with any brokers or
finders regarding same. The Company can make no assurances that it will be able
to merge with or acquire any companies. Although the Company intends to utilize
not more than $500,000 in its mergers and acquisitions activities during the 12
months following the date of this Prospectus, no assurances can be made that
such funds will enable the Company to expand its base or realize profitable
consolidated operations. Whenever possible, the Company intends to issue its
securities rather than use such cash funds to consummate a merger or
acquisition. The ability of the Company to engage in a mergers and acquisitions
campaign in view of the Company's resources is uncertain. Should such funds not
be utilized in its mergers and acquisitions activities, the Company intends to
utilize the funds in equal amounts in capital equipment and marketing and sales.

The Company's objective is to market and distribute its products worldwide,
in part by disseminating its products through multiple national and
international distribution channels. However, there can be no assurances that
the Company will be able to meet this objective. The Company has designed its
distribution strategy to address the particular requirements of its diverse
institutional and individual target customers. The Company's direct distribution
efforts will consist of a direct sales force and telesales as well as marketing
directly VIA the e-Net home page on the Internet. The Company's products are
currently distributed indirectly through OEMs, systems integrators, VARs and
software retailers.

As described in Note B to the Financial Statements, the Company issued
1,000,000 bridge units, comprising 2,000,000 shares of Common Stock, 2,000,000
Class A Warrants, and 2,000,000 Class B Warrants as additional consideration for
a bridge loan of $1,000,000, the proceeds of which were received in March and
April 1996. In addition to the payment of interest of 8% per annum on the bridge
loan, interest expense of $7,000,000 related to the issuance of the bridge units
will be accrued during the period from the date of each loan through the
effective date of this offering and a corresponding credit will be credited to
paid in capital; of this amount $614,865 has been accrued as of March 31, 1996.

In addition, operating results for the year ended March 31, 1997 and
thereafter, will be negatively impacted by the expenditure of funds for
continuing development of the Company's technologies, products and services.

RESULTS OF OPERATIONS

PERIOD FROM BEGINNING OF OPERATIONS (JUNE 8, 1995) TO MARCH 31, 1996

The Company reported sales for the period of $293,876. For the period ending
March 31, 1996, the Company derived 32% (Sprint), 29% (Comsat), 16% (First Data
Resources) and 13% (Documenta) of its sales from four customers, respectively.
The sales is attributable to its three main business areas: sales of software
products, integration and support of software products, integration and support
of enterprise computer networks. The cost of product sales and service consists
of salaries and wages, support costs and other expenses. The gross margin for
its products and services was approximately 70% of sales.

The Company reported selling, general and administrative expenses of
$115,171 which consisted of salaries of officer and employees, support costs,
legal fees, the cost of product development charged to expense during the
period, and other administrative expenses.

26
<PAGE>
Interest and financing charges were $621,749 including an interest charge of
$614,865 associated with the issuance of bridge units as additional
consideration for a $500,000 bridge loan originating in March 1996, as well as
interest on loans from the president of the Company.

INCOME TAXES

As a result of operating losses generated during the period from beginning
of operations (June 8, 1995) to March 31, 1996, the Company has no income taxes
due. Currently, the Company maintains a tax year ending on December 31, while
its fiscal year ends on March 31. The Company is also able to file its returns
using the cash basis method of accounting.

CAPITAL RESOURCES, LIQUIDITY AND BACKLOG

The Company has a cash balance available to fund operations as of March 31,
1996, since $500,000 of the $1,000,000 in bridge loans had already been received
at that time. The Company believes that these funds are sufficient to continue
operations until the closing of this offering. The Company is also in the
process of establishing a credit facility to provide additional financing for
equipment purchases and for service and support contract operations funding. The
Underwriter is playing no role in the Company's efforts to establish a credit
facility. No assurance can be given as the ultimate success of the Company in
establishing such a facility.

The Company received $500,000 in March 1996 and $500,000 in April 1996 under
bridge loan transactions wherein the Company issued 1,000,000 units (each unit
consisting of two shares of Common Stock, two Class A Warrants and two Class B
Warrants) as additional financing costs in consideration for making the loans.
These loans become due at the earlier of the completion of the Company's
proposed initial public offering or June 1, 1997. See "Certain Transactions,"
"Description of Securities" and "Selling Security-holders."

In addition to the loan proceeds received in March and April 1996, it is
anticipated that the Company will raise approximately $5,160,000 through its
proposed initial public offering of securities. These funds are intended to fund
continuing operations, including its administrative expenses and management
compensation, as well as retire the bridge loan debt. The Company believes that
the proceeds from the bridge loans and this offering will be sufficient to meet
its cash flow needs for the 12-month period following the closing of this
offering.

The Company's commitments currently include an agreement to allocate
$1,000,000 of capital by December 31, 1996 to develop and exploit the market
opportunities of the patent acquired in March 1996, or the patent will be
subject to repurchase by the inventors of the patent. In addition, the Company
is also committed under an employment agreement effective April 1, 1996 with an
officer which calls for an annual salary and bonus of $262,500. Other than the
lease commitment described below, the Company has no other significant firm
commitments.

The Company leases approximately 1,500 square feet for its principal
executive offices located at 7-4 Metropolitan Court, Gaithersburg, Maryland
20878. The Company intends to expand its facilities to 3,000 square feet
following the closing of this offering. Base rental for the current premises is
approximately $1,900 per month. The lease requires the Company to pay certain
property taxes and certain operating expenses. The Company believes that its
current and anticipated facilities are suitable and adequate for its operations.

IMPACT OF INFLATION

The Company does not believe that inflation has had a material adverse
effect on sales or income since its inception. Increases in supplies or other
operating costs may adversely affect the Company's operations; however, the
Company believes it may increase prices of its technologies, products and
services to offset increases in costs of goods sold or other operating costs.

TECHNOLOGY CHANGES

Based on its limited experience to date, the Company believes that its
future operating results may be subject to quarterly variations based on a
variety of factors, including technology changes and advances, especially in the
Internet. Such effects may not be apparent in the Company's operating results
during a period of expansion. However, the Company can make no assurances that
its business can be significantly expanded under any circumstances.

27
<PAGE>
BUSINESS

OVERVIEW

e-Net, Inc. develops, markets and supports open client, server and
integrated applications software that enables local, national and international
telephone communications, information exchange and commerce over the Internet
and private Internet Protocol ("IP") networks. The Company's software products
are designed to deliver high levels of performance, ease of use and security.
These software products allow individuals and organizations to execute secure,
private, voice communications across the Internet, through the use of
authentication technology, for local, national and international telephone
communications, information exchange and commerce. In addition, through the use
of the Company's software, organizations can extend their internal information
systems and enterprise applications to geographically dispersed facilities,
remote offices and mobile employees.

In March 1996, the Company acquired all rights, title and interest in the
first U.S. patent, U.S. Patent No. 5,526,353 for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet, enabling free worldwide high fidelity and clear transmission of
ordinary telephone communications over the Internet. The Company acquired all
rights, title and interest in the patent from the inventors, Messrs. Arthur
Henley and Scott Grau, who are original stockholders of the Company, in
consideration of a five percent overriding royalty interest against gross
profits involving the use of the patent. The Company has agreed to allocate
$1,000,000 of capital to develop and exploit the market opportunities for the
patent by December 31, 1996, or the patent will be subject to repurchase by the
inventors of the patent. The Company believes that its patent is the first
patent awarded of its kind, specifically involving the transmission of audio or
voice over the Internet. The Company also believes that its patent may provide
certain strategic and technological advantages in the new and burgeoning area of
audio or voice over the Internet. The Company can make no assurances, however,
as to the extent of the advantages or protection, if any, that may be granted to
the Company as a result of its patent. The Company's first product utilizing its
patent is Telecom-2000-TM-, a hardware and software suite designed for voice
over the Internet, which is in the final testing stage and projected to be
available to market by the end of the Company's third quarter of fiscal 1997.

INDUSTRY BACKGROUND

INTERNET

The Internet is a global web of computer networks. Developed over 25 years
ago, this "network of networks" allows any computer attached to the Internet to
talk to any other using the Internet Protocol. The Internet has traditionally
been subsidized by the U.S. federal government. As the number of commercial
entities that rely on the Internet for business communications and commerce has
increased, the level of federal subsidies has significantly diminished, and
funding for the Internet

28
<PAGE>
infrastructure and backbone operations has shifted primarily to the private
sector. Further, the Internet has historically been used by academic
institutions, defense contractors and government agencies primarily for remote
access to host computers and for sending and receiving e-mail.

Further, individuals are connecting directly to the Internet through
Internet access services such as those provided by MCI, NETCOM, Performance
Systems International, Inc. ("PSI"), and UUNET Technologies, Inc. ("UUNET").
These services are growing as easy-to-use software packages make accessing the
Internet as easy as getting onto the popular online services. To compete with
these direct Internet access providers, consumer online services including
America Online, Inc. ("AOL"), CompuServe, Inc. ("CompuServe"), and Prodigy
Services Co. ("Prodigy"), have also introduced Internet access gateways for
their existing subscribers. With these gateways, the online services effectively
become large Internet "on-ramps," bringing large numbers of subscribers onto the
Internet.

WORLD WIDE WEB

Much of the recent growth in Internet use by businesses and individuals has
been driven by the emergence of a network of servers and information available
on the Internet called the World Wide Web ("Web"). The Web, based on a
client/server model and a set of standards for information access and
navigation, can be accessed using software that allows non-technical users to
exploit the capabilities of the Internet. The Web enables users to find,
retrieve and link information on the Internet in a consistent way that makes the
underlying complexities transparent to the user. Electronic documents are
published on Web servers in a common format described by the Hypertext Markup
Language ("HTML"). Web client software can retrieve these documents across the
Internet by making requests using a standard protocol called Hypertext Transfer
Protocol ("HTTP"). The first Web client (or "browser") with a graphical user
interface to utilize these protocols was NCSA Mosaic, first released in April
1993 by the National Center for Supercomputing Applications at the University of
Illinois ("NCSA").

The proliferation of Web clients has created significant demand for software
to enable Internet servers and private servers on corporate networks to function
as Web servers. These servers are used by organizations to offer their products
and services on the Internet and to publish confidential company information to
employees inside the enterprise. Web usage is expected to be further fueled by
advances in Web client, server and application software, in concert with
technological developments that drive cost reductions and performance
enhancements.

INTERNET COMMERCE

The Internet provides organizations and individuals with new means to
conduct business. Commercial uses of the Internet include business-to-business
and business-to-consumer transactions, product marketing, advertising,
entertainment, electronic publishing, electronic services and customer support.
The Internet offers a new and powerful medium for traditional retail and mail
order businesses to target and manage a wider customer base more rapidly,
economically and productively. The Company believes that only a small fraction
of this retail business is currently conducted electronically. Another important
application for Internet commerce is electronic publishing through advertiser
supported and fee-based Internet services. Electronic publishing offers
substantial savings as compared to publishing on paper or computer discs. In
addition, Web software permits the publishing of audio files and video clips as
well as text and graphical data.

In addition to retailers and publishers, other new businesses are appearing
on the Web as it provides access to a growing base of home, business and
education customers. Business information providers such as Dow Jones & Company,
Inc., Individual, Inc. and Reuters Ltd. have started customizing news services
on the Web. Financial service institutions are providing online banking
information, stock information and trading services. Examples of popular
consumer information services recently introduced include ESPNet,
Knight-Ridder's Mercury Center and Sportsline U.S.A. Companies from many
industries are publishing product and company information to their channel
partners and customers, providing customer support via the Web, allowing
customers to immediately buy products online, and collecting customer feedback
and demographic information interactively.

29
<PAGE>
APPLICATIONS

As an increasing number of organizations provide their employees with Web
access from their desktops, an opportunity is emerging for internal information
systems and enterprise applications hosted on internal Web servers. The Internet
enables organizations to extend their internal information systems and
enterprise applications to geographically dispersed facilities, remote offices,
and mobile employees using Web client and server software.

e-Net develops, markets and supports open client, server and integrated
applications software that enables local, national and international telephone
communications, information exchange and commerce over the Internet and private
IP networks. The Company's software products are designed to deliver high levels
of performance, ease of use and security. These software products allow
individuals and organizations to execute secure voice transactions across the
Internet, through the use of authentication technology, for local, national and
international telephone communications, information and commerce. In addition,
through the use of the Company's software, organizations can extend their
internal information systems and enterprise applications to geographically
dispersed facilities, remote offices and mobile employees.

The Company believes that one of its key competitive advantages is its
technical experience and expertise. The Company's core development group
includes individuals who have developed and implemented telecommunications
network management software and other Internet and network related products and
services as they have emerged as a recognized application continuously for the
last 12 years.

PRODUCTS

The Company provides a comprehensive line of telecommunications
science-based products for business and consumers for use in the transmission,
management and billing of network telephone and computer usage, including the
Internet. These products enable the improved usage, recording, monitoring and
accounting of network operations. The following material sets forth certain
information with respect to the Company's line of products:

TELECOM-2000-TM-

The Company's most sophisticated technology is a software and hardware
product suite known as Telecom-2000. Telecom-2000 on the Internet, as well as on
private wide area networks, is designed to deliver basic telephone service, in a
technically different and improved way, without lag time, in terms of voice
quality compared to product offerings in the market today. The Company's product
is based on Ethernet switching and Virtual LAN technology completed with low
cost voice packetization technology. The proliferation of affordable ATM
adapters, switch nodes and Wide Area Network ATM services by the Local Exchange
Carriers (LEC's) and Interexchange Carriers (IXC's) has provided a significant
cost incentive to utilize ATM for voice transport on the Internet and other wide
area networks.

Telecom-2000 consists of voice/data integration and authentication protocol,
voice packetization software, prototype interfaces to Ethernet telephony
hardware, address resolution and call handling software, and interfaces to the
traditional telephone network through a PC, or personal computer. Due to the
economical and highly scaleable architecture developed by the Company,
Telecom-2000 can be utilized for secure, or private, data and telephony
communications in very small offices, enterprise networks, national reseller
networks and for the individual consumer. The technological basis for the
Telecom-2000 is the Company's patent, U.S. Patent No. 5,526,353, which provides
for a system and method for communicating high fidelity and clear transmission
of audio or voice over the Internet, enabling free worldwide high fidelity and
clear transmission of ordinary telephone communications over the Internet. The
Company is not aware of any other company that possesses the technological
ability for communicating high fidelity and clear transmissions of audio or
voice over the Internet. Although the Company is aware of other companies
providing a suite of hardware and software products that enable audio or voice
over the Internet, the quality of the audio or voice is regarded by the Company
as poor to fair in comparison to its suite of hardware and software
(Telecom-2000) that provides for communicating high fidelity and clear
transmission of audio or voice over the Internet.

30
<PAGE>
However, the Company is well aware that this technology is rapidly advancing and
although the Company believes that its patent may provide certain strategic and
technological advantages in the new and burgeoning area of audio or voice over
the Internet, the Company can make no assurances as to the extent of the
advantages or protection, if any, that may be granted to the Company as a result
of its patented technology. See "Business -- Patent, Trademark, Copyright and
Proprietary Rights."

Telecom-2000 elements include an integrated Ethernet adapter and desktop
telephone, a PC ISA plug in card to provide desktop telephone access via a
standard Ethernet interface, a PC ISA plug-in card to terminate four standard
telephone lines or a PC ISA plug-in card to provide four telephone station lines
for desktop computers not equipped with a PC or LAN connection.

The use of Microsoft's TAPI assures maximum flexibility in providing the
latest CTI features both in hardware and software. The provision of the hardware
assures a unique product with traditional telephone system reliability. The TAPI
compliance assures use of Telecom-2000 for unique applications, as well as third
party software for specialty requirements and ease of value added reseller
software products to quickly open up new markets. All of the hardware, software
and protocols being developed and utilized comply with both international
telephony and ATM standards. This flexibility allows e-Net to compete in both
hardware and software markets. Depending on the precise configuration and
volume, the Company offers the Telecom-2000 at a price of approximately $750 per
unit, which includes a one year warranty and technical service, training and
support.

INTELLICD-TM-

e-Net has recently developed IntelliCD, a product to provide the market a
simpler and less expensive network usage and billing capability. IntelliCD has
been designed to utilize state-of-the-art imaging technology. e-Net has designed
and developed a standards compliant, general purpose search and retrieval engine
which can be used unaltered in a wide variety of user applications in any
industry. This product is distributed by e-Net clients under their own trade
names. One of e-Net's clients, Sprint, uses IntelliCD to provide its clients
with database access to their monthly Call Detail Record (CDR) data. Based upon
the strong market position of Sprint, and that e-Net is not contractually
prohibited from selling this product to the other long distance carriers or the
regional telephone operating companies, the Company believes that this unique
product may have wide utilization in the telecommunications industry, but the
Company can make no assurances of its utilization. Depending on precise
configuration and volume, the Company offers the IntelliCD as a price of
approximately $300 per unit, which includes a one year warranty and technical
service, training and support. At March 31, 1996, the Company realized $74,500
in sales of the IntelliCD product, representing approximately 25 percent of its
total sales.

E-NET NMS-TM-

The e-Net Network Management System ("e-Net NMS") is a proprietary expert
systems-based, user friendly, object-oriented network and system management
product that is offered by the Company. Through the introduction of automated
problem, configuration, accounting, performance and security management, the
Company's e-Net NMS product provides corporate and government enterprises with
flexibility for the management of global telephone and data networks, including
networks connected by the Internet. The e-Net NMS product also provides network
traffic optimization and re-routing, real-time configuration and database
management, generation of all needed reports, and system failure detection and
prediction. Depending on precise configuration and volume, the Company offers
the e-Net NMS product in a price range of approximately $40,000 to $80,000 per
unit, which includes a one-year warranty and technical service, training and
support. At March 31, 1996, the Company realized $43,000 in sales of the e-Net
NMS product, representing approximately 15 percent of its total sales.

DEBITBILL-TM-

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although the Company can make no assurances of the extent of any demand. The
Company intends to use its current market position to sell its debit card
product to the Internet service delivery market. DebitBill interfaces with
standard telephone switches and related accounting management software to
identify the customer and to record and manage amounts owed. The Company
believes that DebitBill may be a significant product in its suite of products
because of the ease-of-use and cash flow implications of this technology. e-Net
has specifically designed DebitBill for the Internet and private IP networks.
Depending on precise configuration and volume, the Company has recently begun to
offer the DebitBill product at a price of approximately $60,000 per unit, which
includes a one year warranty and technical service, training and support. At
March 31, 1996, the Company has not realized any sales of this product.

SERVICES

The Company has made a commitment to provide timely, high quality technical
support to meet the diverse needs of its customers and partners and to
facilitate the adoption and use of its products, systems and services. The
Company offers the following technical services:

E-NET HELPDESK SUPPORT. The Company offers an annual support program
intended for organizations who need to internally support large-scale deployment
of e-Net's products and for authorized VARs and systems integrators providing
direct support to their customers. This program offers a full spectrum of
support, including access to technical experts, support and training materials,
support tools, call histories, maintenance releases and software updates.

E-NET CONSULTATION SUPPORT. For individuals and for small groups using
e-Net's products, the Company offers support through a toll-free telephone
number on a time and materials payment basis. This service provides on-line
technical support and bug fixes or software releases as required. e-Net
consultation support is particularly economical for self-supporting departments
that consolidate questions through a department system administrator. The
Company also offers consulting services for particularly complex application
design, integration and installation. Consulting services are provided at
negotiated rates, and typically include on-site support during the installation
process by Company engineers.

TRAINING

e-Net offers hands-on training courses and materials to resellers and end
users covering installation configuration and troubleshooting. In addition,
courses and materials cover user support, data loading and content creation,
user interface design, template scripting and integration with the data base.

At March 31, 1996, the Company realized $176,376 in sales related to its
technology support services, representing approximately 60 percent of its total
sales.

MARKETING AND DISTRIBUTION

The Company's marketing and distribution strategy targets markets such as
Internet commerce, enterprise-wide private IP wide area networks, enterprise
local area networks, individual PC users and the individual telephone consumer.

INTERNET COMMERCE MARKET. The Company believes that many major corporations
may begin to communicate data and manage information on the Internet or on
private IP wide area networks. Corporations likely to use such products and
services include telecommunications companies, information service providers,
mail order and traditional retailers, publishers, and financial service
providers. Any or all of these corporations may wish to utilize the advantages
of telephone usage on the Internet or their private IP networks.

ENTERPRISE MARKET. Medium and large-sized enterprises, particularly those
with geographically disbursed employee bases, are expected to increasingly use
the Internet in conjunction with private IP

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networks to facilitate internal communications. Many Fortune 500 companies
already maintain extensive private communication networks, which can be enhanced
and extended through use of the Internet.

INDIVIDUAL PC BUSINESS AND HOME USERS. While the number of business desktop
computer users accessing the Internet is increasing rapidly, the Company
believes that only a small fraction of business computer uses currently use the
Internet. The corporate employer, even for small proprietorships will give due
consideration to the cost and other advantages of the Company's products. Demand
can be measured by the growth in usage of Prodigy, CompuServe and America Online
("AOL"), as well as home shopping services, such as QVC and Home Shopping
Network, which suggests that the home market for commercial applications on the
Internet will be substantial. The accessibility and ease of use of the Company's
systems and products are designed to address the demands of this marketplace.

The market for the Company's software and services has only recently begun
to develop, is rapidly evolving and is characterized by an increasing number of
market entrants who have introduced or developed products and services for
communication and commerce over the Internet and private IP networks. As is
typical in the case of a new and rapidly evolving industry, demand and market
acceptance for recently introduced products and services are subject to a high
level of uncertainty. The industry is young and has few proven products.
Moreover, critical issues concerning the commercial use of the Internet
(including security, reliability, cost ease of use and access, and quality of
service) remain unresolved and may impact the growth of Internet use. While the
Company believes that its software products offer significant advantages for
commerce and communication over the Internet and private IP networks, there can
be no assurance that Internet commerce and communication will become widespread,
or that the Company's systems and products for commerce and communication over
the Internet and private IP networks will become adopted for these purposes.

MARKETING

The Company uses direct marketing of its technologies, products and
services, and intends to use a variety of other marketing programs to stimulate
demand for its technologies, products and services. These programs are focused
on the target markets mentioned above and are designed to leverage the Internet
itself as a powerful marketing vehicle. In addition, the Company intends to
develop co-marketing programs with strategic corporate partners designed to take
advantage of complementary marketing capabilities. Due to a lack of resources,
the Company has only recently begun to implement its marketing strategy. The
Company can make no assurances as to the success of its marketing strategy. The
key elements of the Company's marketing strategy include:

MARKETING ON THE INTERNET. e-Net will be accessible with its own Web
site. This Web site will provide directories to a variety of product and
technical support information. The Company will make its products available for
evaluation and purchase through Web site.

TARGET MARKETING. The Company will focus direct marketing efforts on
enterprise network users, companies now publishing on the Web and decision
makers using the Internet for internal use in medium and large-sized
enterprises, and vertically targeted small offers. Outbound telemarketing,
direct response advertising and seminar programs. The goal of these efforts is
to identify potential buyers of the Company's products, create awareness of the
Company's product offerings and generate leads for follow-on sales.

MARKETING TO PC USERS. Client products will be marketed widely to PC
users in both the business and home PC market segments. Distribution through
national resellers, reseller agreements with Internet access providers, and
bundling arrangements with PC hardware and software OEMs will be used to make
Company's products rapidly available to a large number of potential customers.
In order to stimulate demand for its products, the Company will advertise in PC
industry publications and engage in sales promotions with distribution partners,
with particular emphasis on trade shows and technology expositions at convention
centers.

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DISTRIBUTION

The Company's objective is to market and distribute its products worldwide,
in part by disseminating its products through multiple national and
international distribution channels. However, the Company has only recently
begun to implement its distribution strategy and has not yet entered into any
distribution agreements for its products. The Company can make no assurances as
to the success of its distribution strategy. Furthermore, the Company has
limited resources to achieve the distribution of its products and no assurances
can be made that the Company will not require additional financing, which may
not be available, to achieve such objective. The Company has designed its
distribution strategy to address the particular requirements of its diverse
institutional and individual target customers. The Company's direct distribution
efforts will consist of a direct sales force and telesales as well as marketing
directly VIA the e-Net home page on the Internet. The Company's products are
currently distributed indirectly through OEMs, systems integrators, VARs and
software retailers.

DIRECT SALES. The Company's direct sales force targets primarily medium to
large-sized enterprises, including telecommunications companies and public
sector network users. The Company currently has only three employees in
marketing and sales, but intends to add three more employees in marketing and
sales following the closing of this offering. The Company believes that these
organizations are most likely to become large network users interconnected to
the Internet. In addition, these organizations have a substantial installed base
of private IP networks and are expected to employ Web servers for internal
enterprise applications.

TELESALES. The Company's telesales organization, based in the Washington,
D.C. metropolitan area, receives customer orders as well as contacts potential
customers. The organization comprises three telesales representatives, who also
are employed in marketing and sales, on behalf of the Company. Following the
closing of this offering, the Company intends to add three employees to its
telesales force.

INTERNET SALES. The Company will offer its products and services
electronically VIA the Internet. Internet sales and distribution is particularly
well suited to address the large base of Internet users who may choose the
Company's products and services for many of their telephone needs.

OEMS, VARS AND SYSTEMS INTEGRATORS. OEMs, VARs and systems integrators may
customize, configure and install the Company's products with complementary
hardware, software and services. In combining these products and services, these
resellers are able to deliver more complete solutions to address specific
customer needs, deriving maximum benefit from the Company's products while
tailoring system solutions, which allows e-Net to avoid customization costs and
invest in focused product improvement.

The Company has historically sold its products only through direct sales.
The Company intends to increasingly utilize the Internet, OEMs, systems
integrators and VARs. The Company expects that any material increase in sales
through resellers as a percentage of total revenues, especially in the
percentage of sales through OEMs and VARs, will adversely affect the Company's
average selling prices and gross margins due to the discounts that are typically
extended when selling through indirect channels. Moreover, there can be no
assurance that the Company will be able to attract resellers that will be able
to market the Company's products effectively and will be qualified to provide
timely and cost-effective customer support and service or that the Company will
be able to manage conflicts among its resellers. In addition, the agreements
with resellers in Company's industry typically do not restrict resellers from
distributing competing products, and in many cases will be terminable by either
party without cause. It is ordinary in the Company's industry to grant exclusive
distribution rights which are limited by territory and in duration.
Consequently, the Company may be adversely affected should any reseller fail to
adequately penetrate its market segment. The inability to recruit, manage and
retain important resellers, or their inability to penetrate their respective
market segments, may materially adversely affect the Company's business,
operating results or financial condition.

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The Company intends to expand its field sales force and its telesales
organization. There can be no assurance that such internal expansion will be
successfully completed, that the cost of such expansion will not exceed the
revenues generated, or that the Company's sales and marketing organization will
be able to successfully compete against the significantly more extensive and
well-funded sales and marketing operations of many of the Company's current or
potential competitors. The Company's inability to effectively manage its
internal expansion may have a material adverse effect on the Company's business,
operating results or financial condition.

In addition to expanding its direct sales channels, the Company will
distribute its products electronically through the Internet. Distributing the
Company's products through the Internet makes the Company's software more
susceptible than other software to unauthorized copying and use. The Company
intends to continue to allow potential customers to electronically download its
software for a free evaluation period. There can be no assurance that, upon
expiration of the evaluation period, the Company will be able to collect payment
from users that retain a copy of the Company's software. In addition, by
distributing its products for free evaluation over the Internet, the Company may
have reduced the future demand for its products. If, as a result of changing
legal interpretations of liability for unauthorized use of the Company's
software or otherwise, users were to become less sensitive to avoiding copyright
infringement, the Company's business, operating results and financial condition
may be materially adversely affected. Any such export restrictions, new
legislation or regulation or unlawful exportation may have a material adverse
impact on the Company's business, operating results or financial condition.

PRODUCT DEVELOPMENT

The Company's current development efforts are focused on new products,
product enhancements and implementing existing products into new enterprise
networks. In particular, e-Net is in the final testing stages of Telecom-2000.
This testing is currently on schedule and it is estimated by the Company to be
successfully concluded, resulting in product market readiness, by the end of the
Company's third quarter of fiscal 1997. There can be no assurance, however, that
any Company products will be made commercially available as expected or
otherwise on a timely and cost-effective basis, or that if introduced, that
these products will achieve market acceptance.

The Company's ability to attract and retain highly qualified technical
employees will be the principal determinant of its success in maintaining
technological leadership. e-Net intends to develop a policy of using
equity-based compensation programs, which have not yet been instituted, to
reward and motivate significant contributors among its employees.

To date, all product development costs have been expensed as incurred. The
Company believes that significant investments in research and development are
required to remain competitive. As a consequence, the Company intends to
increase the amount of its research and development expenditures in the future.

Substantially all of the Company's revenues have been derived, and
substantially all of the Company's future revenues are expected to be derived,
from the license of its software and sale of its associated services.
Accordingly, broad acceptance of the Company's products and services by
customers is critical to the Company's future success, as is the Company's
ability to design, develop, test and support new software products and
enhancements on a timely basis that meet changing customer needs and respond to
technological developments and emerging industry standards. There can be no
assurance that the Company will be successful in developing and marketing new
products and enhancements that meet changing customer needs. Current products
are designed around certain standards, and current and future sales of the
Company's products will be dependent, in part, on industry acceptance of such
standards. In addition, there can be no assurance that the Company will not
experience difficulties that may delay or prevent the successful development,
introduction and marketing of new products and enhancements, or that its new
products and enhancements will adequately meet the requirements of the
marketplace and achieve market acceptance. Further,

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because the Company has only recently commenced shipment of its products, there
can be no assurance that, despite testing by the Company and by current and
potential customers, errors will not be found in the Company's products, or, if
discovered, successfully corrected in a timely manner. If the Company is unable
to develop on a timely basis new software products, enhancements to existing
products or error corrections, or if such new products or enhancements do not
achieve market acceptance, the Company's business, operating results and
financial condition will be materially adversely affected.

PATENT, TRADEMARK, COPYRIGHT AND PROPRIETARY RIGHTS

In March 1996, the Company acquired all rights, title and interest in the
first U.S. patent, U.S. Patent No. 5,526,353, for a system and method for
communicating high fidelity and clear transmission of audio or voice over the
Internet, enabling free worldwide high fidelity and clear transmission of
ordinary telephone communications over the Internet. The Company acquired all
rights, title and interest in the patent from the inventors, Messrs. Arthur
Henley and Scott Grau, who are original stockholders of the Company, in
consideration of a five percent overriding royalty interest against gross sales
involving the use of the patent. The Company has agreed to allocate $1,000,000
of capital to develop and exploit the market opportunities for the patent by
December 31, 1996, or the patent will be subject to repurchase by the inventors
of the patent. The Company believes that its patent is the first patent awarded
of its kind, specifically involving the transmission of audio or voice over the
Internet. The Company also believes that its patent may provide certain
strategic and technological advantages in the new and burgeoning area of audio
or voice over the Internet. The Company can make no assurances, however, as to
the extent of the advantages or protection, if any, that may be granted to the
Company as a result of its patent.

The Company currently does not have any other patent, trademark or copyright
applications pending. However, the Company may file patent, trademark and
copyright applications relating to certain of the Company's software products.
If patents, registered trademarks or copyrights were to be issued, there can be
no assurance as to the extent of the protection that will be granted to the
Company as a result of having such patents, trademarks or copyrights or that the
Company will be able to afford the expenses of any complex litigation which may
be necessary to enforce its proprietary rights. Failure of the Company's
patents, trademark and copyright applications may have a material adverse impact
on the Company's business. Except as may be required by the filing of patent,
trademark and copyright applications, the Company will attempt to keep all other
proprietary information secret and to take such actions as may be necessary to
insure the results of its development activities are not disclosed and are
protected under the common law concerning trade secrets. Such steps will include
the execution of nondisclosure agreements by key Company personnel and may also
include the imposition of restrictive agreements on purchasers of the Company's
products and services. There is no assurance that the execution of such
agreements will be effective to protect the Company, that the Company will be
able to enforce the provisions of such nondisclosure agreements or that
technology and other information acquired by the Company pursuant to its
development activities will be deemed to constitute trade secrets by any court
of competent jurisdiction.

SECURITY RISKS

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such expenditures or interruptions may have a material adverse effect on the
Company's business, operating results and financial condition. Moreover, the
security and privacy concerns of existing and potential customers, as well as
concerns related to computer viruses, may inhibit the growth of the Internet
marketplace, generally, and the Company's customer base and revenues,
specifically. The Company intends to limit its liability to customers, including
liability arising from a failure of the security features contained in the
Company's products, through provisions in its future contracts. However, the
Company can make no assurances that such contractual limitations will be
enforceable. The Company currently does not have liability insurance to protect
against these risks and there can be no assurance that such insurance will be
available to the Company on commercially reasonable terms, or available on any
terms.

GOVERNMENT REGULATION

The Company is not currently subject to direct regulation by any government
agency, other than regulations applicable to businesses generally, and there are
currently few laws or regulations directly applicable to access to or commerce
on the Internet. However, due to the increasing popularity and use of the
Internet, it is possible that a number of laws and regulations may be adopted
with respect to the Internet, covering issues such as user privacy, pricing and
characteristics and quality of products and services. For example, the Exon Bill
(which was recently approved by the Senate) would prohibit distribution of
obscene, lascivious or indecent communications on the Internet. The adoption of
any such laws or regulations may decrease the growth of the Internet, which may
in turn decrease the demand for the Company's products and increase the
Company's cost of doing business or otherwise have an adverse effect on the
Company's business, operating results or financial condition. Moreover, the
applicability to the Internet of existing laws governing issues such as property
ownership, libel and personal privacy is uncertain.

The Company's success and ability to compete is dependent in part upon its
proprietary technology. While the Company relies on patent, trademark, trade
secret and copyright law to protect its technology, the Company believes that
factors such as the technological and creative skills of its personnel, new
product developments, frequent product enhancements, name recognition and
reliable product maintenance are more essential to establishing and maintaining
a technology position. The source code for the Company's proprietary software is
protected both as a trade secret and as a copyrighted work. The Company
generally enters into confidentiality or license agreements with its employees,
consultants and vendors, and generally controls access to an distribution of its
software, documentation and other proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Company's products or technology without authorization, or to
develop similar technology independently. In addition, effective copyright and
trade secret protection may be unavailable or limited in certain foreign
countries, and the global nature of the Internet makes it virtually impossible
to control the ultimate designation of the Company's products. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's products to "reverse engineer" the
Company's designs, or to obtain and use information that the Company regards as
proprietary. In addition, litigation may be necessary in the future to enforce
the Company's intellectual property rights, to protect the Company's trade
secrets, to determine the validity and scope of the proprietary rights of
others, or to defend against claims of infringement or invalidity. Such
litigation may result in substantial costs and diversion of resources and may
have a material adverse effect on the Company's business, operating results or
financial condition.

The Company also relies on certain technology which it licenses from third
parties, including software which is integrated with internally developed
software and used in the Company's products to perform key functions. There can
be no assurance that these third party technology licenses will continue to be
available to the Company on commercially reasonable terms. The loss of or
inability to maintain any of these technology licenses may result in delays or
reductions in product shipments

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until equivalent technology may be identified, licensed and integrated. Any such
delays or reductions in product shipments may materially adversely affect the
Company's business, operating results and financial condition.

COMPETITION

The market for Internet-based software and services is new, intensely
competitive, rapidly evolving and subject to rapid technological change. The
Company expects competition to persist, intensify and increase in the future,
from start-up companies to major technology companies. Almost all of the
Company's current and potential competitors have longer operating histories,
greater name recognition, larger installed customer bases and significantly
greater financial, technical and marketing resources than the Company. Such
competition may materially adversely affect the Company's business, operating
results or financial condition. The Company's current and potential competitors
can be divided into several groups: Microsoft, browser software vendors, Web
server software and service vendors, PC and Unix software vendors and online
service providers.

MICROSOFT CORPORATION. Microsoft has licensed browser software from
Spyglass and has announced its intention to improve and bundle the browser with
its Windows 95 operating system. Microsoft's browser will access the Microsoft
Network, its announced online service, and will also offer Internet access.
While the anticipated penetration of this software into Microsoft's installed
base of PC users will increase the size and usefulness of the Internet, it may
have a material adverse impact on e-Net's ability to sell client software. In
addition, because the Company's client software products will not be able to
access Microsoft Network, the Company's client software products may be at a
competitive disadvantage VERSUS Microsoft's browser. Further, Microsoft may
choose to develop Web server, applications software and software products
specifically designed to deliver high levels of performance that enables local,
material and international telephone communications, information exchange and
commerce over the Internet as a complement to its product line and to support
the Microsoft Network, which may materially adversely affect e-Net's ability to
sell its technologies, products and services. To the extent that Microsoft's
browser gains market acceptance, Microsoft will be better positioned than the
Company to sell Web server and applications products. Microsoft has a longer
operating history, a much larger installed base and number of employees, and
substantially greater financial, technical and marketing resources, access to
distribution channels and name recognition than the Company.

BROWSER SOFTWARE VENDORS. Several companies are currently offering
client-based Web browser products, including Netscape Communications
Corporation, Spry, Inc. (a subsidiary of CompuServe), Spyglass, Booklink
Technologies, Inc. ("Booklink," a subsidiary of AOL), NetManage Inc., Network
Computing Devices, Inc. and Quarterdeck Office Systems, Inc. In addition, the
NCSA at the University of Illinois distributes its product, NCSA Mosaic, for
free for noncommercial use. Further, Spyglass has an exclusive license for NCSA
Mosaic and is actively sublicensing it to other commercial vendors. These
sublicensees are expected to offer derivative products that will compete with
the Company's product line.

SERVER SOFTWARE AND SERVICE VENDORS. Some companies are offering Web server
software that they install and operate on behalf of their customers, and other
companies are offering services using Web serves. Companies offering Web server
software include Open Market, Inc. ("Open Market"), which has a Web server for
various Unix platforms, Process Software Corp. and O'Reilly & Associates, Inc.,
which have Windows NT Web server products, Spyglass, which has announced a Web
server for Windows NT and various Unix platforms, and Terisa, which offers a
toolkit for adding security functions to the existing NCSA and CERN Web servers.
Service companies include Open Market and Internet Media Services, which publish
content from third parties on their own Web servers. In the future, software
companies which have server products in other product categories may choose to
enhance the functionality of existing products or develop new products which are
competitive with the Company's Web server and integrated applications products.
These companies include Lotus (which IBM recently acquired), which may extend
Notes in this manner, and Novell, which may choose to

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provide add-ons to Netware for Web publishing. In addition, Oracle, Sybase and
Informix may incorporate Web server functionality into their database products.
Oracle has recently announced a technology licensing agreement with Spyglass and
its intention to introduce Web-based software that enables electronic commerce
and communication.

PC AND UNIX SOFTWARE VENDORS. The Company believes that PC software vendors
may become particularly formidable competitors. In addition to Microsoft, IBM
has incorporated client software in its OS/2 operating system, and the Company
believes that other PC operating system vendors, including Apple, will also
eventually incorporate some Web client functionality into their operating
systems as standard features. This may also be true of Unix operating systems
vendors, such as Sun, HP, IBM, Digital, SCO and SGI. If these companies
incorporate Web browser functionality into their software products, they could
subsequently offer this functionality at little or no additional cost to
customers. Further, in the event that client products incorporated into
operating systems by Microsoft or other PC or Unix software vendors gain market
acceptance, these organizations will be better positioned than the Company to
sell Web server and applications software products.

ONLINE SERVICE PROVIDERS. Although the online services provided by
companies such as Prodigy, CompuServe and AOL are not Internet-based services,
these services currently present an alternative medium to organizations
considering Internet-based publishing. In addition, due to the appeal of the
Internet to content publishers and end users, these companies are adapting their
service offerings to provide Internet access. At least two of these companies
compete directly with the Company in the Internet-based software and services
market: AOL, which acquired Booklink, and CompuServe, which acquired Spry. The
Company's client software products do not offer access to any online services,
including Microsoft Network, and are at a competitive disadvantage VERSUS
browser products which offer both access to the Internet and to an online
service.

Additional competition could come from client/server applications and tools
vendors, other database companies, multimedia companies, document management
companies, networking software companies, network management companies and
educational software companies. Further, the Company's current products are
designed around certain standards, and industry acceptance of competing
standards could decrease the demand for the Company's products. For example,
Microsoft and IBM are each proposing an alternative security standard, and
widespread adoption of either standard may have a material adverse effect on the
Company's business, operating results or financial condition.

Competitive factors in the Internet-based software and services market
include core technology, breadth of product features, product quality, marketing
and distribution resources, and customer service and support. However, the
market and competition are still new and rapidly emerging, and there can be no
assurance that the Company will be able to compete successfully against current
or future competitors, or that this competition will not adversely affect the
Company's business, operating results or financial condition.

EMPLOYEES

As of the date of this prospectus, the Company has a total of nine
employees, all of whom are full time employees. Of the total number of
employees, three are engaged in software development, three are engaged in
marketing, sales and customer support and three are engaged in administration
and finance. Five of these employees were hired in May 1996. Certain software
development activities and additional financial and administrative support
required to date have been purchased on an as needed basis from independent
consultants. Following the closing of this offering, the Company intends to hire
approximately ten additional employees, including five in software development,
three in marketing and sales and two in administration and finance. The
Company's future success depends in significant part upon the continued service
of its key technical and senior management personnel and its continuing ability
to attract and retain highly qualified technical and managerial personnel.
Competition for highly qualified technical personnel is intense and there can be
no assurance that the Company will be able to retain its key managerial and
technical employees or that it will be able to

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attract and retain additional highly qualified technical and managerial
personnel in the future. None of the Company's employees is represented by labor
union. The Company has not experienced any work stoppages and considers its
relations with its employees to be good.

The rapid execution necessary for the Company to fully exploit the market
window for its products and services requires an effective planning and
management process. The Company's growth has placed, and is expected to continue
to place, a significant strain on the Company's managerial, operational and
financial resources. In addition, most of the Company's management, development
and engineering staff was only recently hired. To manage its growth, the Company
must continue to implement and improve its operational and financial systems and
to expand, train and manage its employee base. For example, the Company is
currently in the process of building its internal maintenance and support
organization. Although the Company believes that it has made adequate allowances
for the costs and risks associated with this expansion, there can be no
assurance that the Company's systems, procedures or controls will be adequate to
support the Company's operations or that Company management will be able to
achieve the rapid execution necessary to fully exploit the market window for the
Company's products and services. If the Company is unable to manage growth
effectively, the Company's business, operating results and financial condition
will be materially adversely affected.

FACILITIES

The Company leases approximately 1,500 square feet for its principal
executive offices located at 7-4 Metropolitan Court, Gaithersburg, Maryland
20878. The Company intends to expand its facilities to 3,000 square feet
following the closing of this offering. Base rental for the current premises is
approximately $1,900 per month and will be approximately $3,800 per month in the
expanded facilities. The lease requires the Company to pay certain property
taxes and certain operating expenses. The Company believes that its current and
anticipated facilities are suitable and adequate for its operations.

40
<PAGE>
MANAGEMENT

The officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME TITLE
- --------------------------- ----------------------------------------
<S> <C>
Alonzo E. Short, Jr., Chairman of the Board
Lt. Gen., USA (ret.)
Robert A. Veschi President, Chief Executive Officer,
Secretary, Director
George Porta Vice President, Operations
William L. Hooton Director
</TABLE>

Each of the directors of the Company hold office for a one-year period
expiring December 31, 1996. At present, the Company's By-laws provide for not
less than one director nor more than nine directors. Currently, there are three
directors in the Company. The By-laws permit the Board of Directors to fill any
vacancy and such director may serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Officers serve at
the discretion of the Board of Directors. There are no family relationships
among any officers or directors of the Company. Mr. Veschi has served as a
promoter of the Company and the consideration received for such services has
been limited to the compensation disclosed under "Remuneration." The officers of
the Company devote full time to the business of the Company. See "Certain
Transactions."

The principal occupation and business experience for each officer and
director of the Company for at least the last five years are as follows:

ALONZO E. SHORT, JR., LT. GEN., USA (RET.), 57, has been chairman of the
board of the Company since January 1996. General Short has more than 30 years
experience in executive management, operations and the engineering, design and
development of large scale telecommunications and data systems. General DShort
retired from the service in 1994 following a career that included serving as
deputy commanding general (1988-1990) and commanding general (1990-1991) of the
U.S. Army Information Systems Command, a major information technology
organization, which was responsible for all telecommunications during the Desert
Shield/Desert Storm operation, among other responsibilities. From 1991 to 1994,
General Short was director of the Defense Information Systems Agency, a major
information technology organization which is responsible for telecommunications
and related services to the President of the United States, Secret Service,
Joint Chiefs of Staff, Secretary of Defense, among other high level federal
entities. Since 1994, General Short has been president and chief executive
officer of MICAH Systems, Inc., a Washington, D.C. metropolitan area based
information, technologies management and consulting firm. Since January 1996,
General Short has been instrumental in the organization and development of the
business of the Company.

ROBERT A. VESCHI, 34, has been president, chief executive officer, secretary
and a director of the Company since January 1995. Mr. Veschi is the founder of
the Company, which began its operations in June 1995. Mr. Veschi has significant
experience in executive management, operations and the engineering, design and
development of telecommunications and computer products and systems. From 1986
to 1990, Mr. Veschi was manager of systems engineering for International
Telemanagement, Inc., a Washington, D.C. metropolitan area based information,
data and network systems firm. From 1990 to 1994, Mr. Veschi was a group
president of I-Net, Inc., a Washington, D.C. metropolitan area based
information, data and network systems firm. From December 1994 to May 1995, for
approximately six months, Mr. Veschi was president and chief executive officer
of Octacom, Inc., a Washington, D.C. metropolitan area based information, data
and network systems firm, and a wholly-owned subsidiary of Octagon, Inc., an
Orlando, Florida metropolitan area based publicly held technical services firm.
From July 1994 to May 1995, for approximately nine months, Mr. Veschi was a vice

41
<PAGE>

president of telecommunications for Octagon, Inc., and from January 1995 to May
1995, for approximately four months, Mr. Veschi was a member of the board of
directors of such company. Since June 1995, Mr. Veschi has been instrumental in
the organization, development and promotion of the Company.

GEORGE PORTA, 35, has been vice president of operations of the Company since
May 1996. Mr. Porta has significant experience in management, operations and the
engineering, design and development of telecommunications and computer products
and systems. From 1987 to 1994, Mr. Porta was a senior network planner and
manager, sales engineering for Sprint Corp., a major telecommunications company.
From 1994 to 1996, Mr. Porta was senior director, network operations and vice
president, global networks of I-Net, Inc., a Washington, D.C. metropolitan area
based information, data and network systems firm. Since May 1996, Mr. Porta has
been vice president of operations of the Company and has been instrumental in
the organization and development of the Company. Mr. Porta holds B.S. degrees in
electrical engineering and computer science from Washington University.

WILLIAM L. HOOTON, 45, has been a director of the Company since January
1996. Mr. Hooton has substantial experience in the management, design,
operation, marketing and sales of image conversion systems, electronic imaging
system integration, data automation and high performance data storage
subsystems. From 1990 to 1993, Mr. Hooton was vice president of operations and
technical and business development of the Electronic Information Systems Group
of I-Net, Inc., a Washington, D.C. metropolitan area based information, data and
network systems firm. Since 1993, Mr. Hooton has been president and chief
executive officer of Q Corp., a Washington, D.C. metropolitan area high
technology consulting firm specializing in digital imaging systems and other
complex imagery in media. Since January 1996, Mr. Hooton has been a director of
the Company and has been instrumental in the organization and development of the
Company. Mr. Hooton holds a B.B.A. degree from the University of Texas.

42
<PAGE>
REMUNERATION

EXECUTIVE COMPENSATION

The following table sets forth remuneration paid for the fiscal year ended
March 31, 1996 and proposed to be paid for the fiscal year ended March 31, 1997
to the officers and directors of the Company:

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE (1)(2)
------------------------------------------------
OTHER
NAME OF INDIVIDUAL OR ANNUAL
NUMBER OF PERSONS IN GROUP POSITION WITH COMPANY YEAR SALARY BONUS COMPENSATION
- --------------------------- ------------------------------- --------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Alonzo E. Short, Jr., Chairman of the Board 1997 $ -- $ -- $ 42,000
Lt. Gen., USA (ret.) 1996 $ -- $ -- $ --
Robert A. Veschi President, Chief Executive 1997 $ 175,000 $ 87,500 $ --
Officer, Secretary, Director 1996 $ 25,000 $ -- $ --
George Porta Vice President, Operations 1997 $ 100,000 $ 50,000 $ --
1996 $ -- $ -- $ --
William L. Hooton Director 1997 $ -- $ -- $ 24,000
1996 $ -- $ -- $ --
</TABLE>

- ------------------------
(1) The persons named in the table immediately above reflect the management of
the Company as of the date hereof. The Company has agreed to purchase
key-man term life insurance on Mr. Veschi in the amount of $1 million
following the closing of this offering. The Company will be the owner and
beneficiary of such life insurance policy.

(2) The officers of the Company may receive remuneration as part of an overall
group insurance plan providing health, life and disability insurance
benefits for employees of the Company. The amount allocable to each
individual officer cannot be specifically ascertained, but, in any event,
will not exceed $25,000 as to each individual.

(3) Each outside director of the Company is entitled to receive reasonable
expenses incurred in attending meetings of the Board of Directors of the
Company. The members of the Board of Directors intend to meet at least
quarterly during the Company's fiscal year, and at such other times duly
called. The Company presently has two outside directors.

EMPLOYMENT AGREEMENT

The Company has entered into an employment agreement ("Agreement") with
Robert A. Veschi, the president and chief executive officer of the Company,
dated as of April 1, 1996. The Agreement will expire on March 31, 2001. The
current annual salary under the Agreement is $175,000. The salary under the
Agreement may be increased to reflect annual cost of living increases and may be
supplemented by discretionary merit and performance increases as determined by
the Board of Directors of the Company, except that during the first three years
following the date of the Prospectus with respect to the offering, no
executive's salary may exceed $200,000. Mr. Veschi is entitled to an annual
bonus equal to 50 percent of the salary provided under his Agreement, which is
not subject to any performance criteria.

The Agreement provides, among other things, for participation in an
equitable manner in any profit-sharing or retirement plan for employees or
executives and for participation in other employee benefits applicable to
employees and executives of the Company. The Agreement provides for the use of
an automobile, payment of club dues and other fringe benefits commensurate with
his duties and responsibilities. The Agreement also provides for benefits in the
event of disability. The Agreement also contains non-compete provisions but are
limited in geographical scope, I.E., the Washington, D.C. metropolitan area.

Pursuant to the Agreement, employment may be terminated by the Company with
cause or by the executive with or without good reason. Termination by the
Company without cause, or by the

43
<PAGE>
executive for good reason, would subject the Company to liability for liquidated
damages in an amount equal to the terminated executive's current salary and a
PRO RATA portion of their bonus for the remaining term of the Agreement, payable
in a lump sum cash payment, without any set-off for compensation received from
any new employment. In addition, the terminated executive would be entitled to
continue to participate in and accrue benefits under all employee benefit plans
and to receive supplemental retirement benefits to replace benefits under any
qualified plan for the remaining term of the Agreement to the extent permitted
by law.

LIMITATION ON LIABILITY OF DIRECTORS

As permitted by Delaware law, the Company's Certificate of Incorporation
includes a provision which provides that a director of the Company shall not be
personally liable to the Company or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the General Corporation Law of
the State of Delaware, which prohibits the unlawful payment of dividends or the
unlawful repurchase or redemption of stock, or (iv) for any transaction from
which the director derives an improper personal benefit. This provision is
intended to afford directors protection against, and to limit their potential
liability for monetary damages resulting from, suits alleging a breach of the
duty of care by a director. As a consequence of this provision, stockholders of
the Company will be unable to recover monetary damages against directors for
action taken by them that may constitute negligence or gross negligence in
performance of their duties unless such conduct falls within one of the
foregoing exceptions. The provision, however, does not alter the applicable
standards governing a director's fiduciary duty and does not eliminate or limit
the right of the Company or any stockholder to obtain an injunction or any other
type of nonmonetary relief in the event of a breach of fiduciary duty.
Management of the Company believes this provision will assist the Company in
securing and retaining qualified persons to serve as directors. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.

Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors although the Company
may attempt to acquire such insurance in the future. The Company believes that
the substantial increase in the number of lawsuits being threatened or filed
against corporations and their directors and the general unavailability of
directors liability insurance to provide protection against the increased risk
of personal liability resulting from such lawsuits have combined to result in a
growing reluctance on the part of capable persons to serve as members of boards
of directors of public companies. The Company also believes that the increased
risk of personal liability without adequate insurance or other indemnity
protection for its directors could result in overcautious and less effective
direction and management of the Company. Although no directors have resigned or
have threatened to resign as a result of the Company's failure to provide
insurance or other indemnity protection from liability, it is uncertain whether
the Company's directors would continue to serve in such capacities if improved
protection from liability were not provided.

The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its shareholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interest of the Company and
those of the director) or

44
<PAGE>
for violations of the federal securities laws. The provisions also limit or
indemnify against liability resulting from grossly negligent decisions including
grossly negligent business decisions relating to attempts to change control of
the Company.

The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future although
the Company may attempt to obtain such insurance.

The provisions diminish the potential rights of action which might otherwise
be available to shareholders by limiting the liability of officers and directors
to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company stock may be adversely affected. In the opinion of the
Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act of 1933 is contrary to public policy and, therefore, is
unenforceable.

45
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the Company's
Common Stock owned on the date of this Prospectus and, as adjusted, to reflect
the sale of shares offered by this Prospectus, by (i) each person who is known
by the Company to own beneficially more than five percent of the Company's
Common Stock; (ii) each of the Company's officers and directors; and (iii) all
officers and directors as a group:

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES NUMBER OF
---------------------------- NUMBER OF SHARES
NUMBER BEFORE AFTER SHARES AFTER
NAME AND ADDRESS (1) POSITION WITH COMPANY OF SHARES OFFERING OFFERING (2)(3) OFFERED OFFERING
- ----------------------------------- ------------------------- --------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Alonzo E. Short, Jr., Lt. Gen., USA Chairman of the Board 180,000 2.12 1.71 -- 180,000
(ret.)
Robert A. Veschi President, Chief 2,600,000 30.59 24.76 -- 2,600,000
Executive Officer,
Secretary, Director
George Porta Vice President, 100,000 1.18 .95 -- 100,000
Operations
William L. Hooton Director 100,000 1.18 .95 -- 100,000
Edward Ratkovich, Maj. Gen., USAF Stockholder 1,000,000 11.76 9.52 1,000,000 --
(ret.) (4)
Arthur Henley (5) Stockholder 950,000 11.18 9.05 -- 950,000
Thomas T. Prousalis, Jr., Esq. (6) Stockholder 900,000 10.59 8.57 -- 900,000
Robert Foise (7) Stockholder 500,000 5.88 4.76 500,000 --
ATG Group, Inc. (8) Stockholder 500,000 5.88 4.76 -- 500,000
All Officers and Directors as a 2,980,000 35.06 28.38 -- 2,980,000
Group (4 persons)
</TABLE>

- ------------------------------
(1) c/o e-Net, Inc., 7-4 Metropolitan Court, Gaithersburg, Maryland 20878.
(2) Does not include the exercise of up to 2,000,000 Class A Warrants offered
herein. The Company is offering 1,000,000 Units at a price of
$7.00 per Unit. Each Unit consists of two shares of Common Stock and two
redeemable Class A Warrants. The Class A Warrants shall be exercisable
commencing one year after the Effective Date of this Prospectus. Each Class
A Warrant entitles the holder to purchase one share of Common Stock at
$4.00 per share during the four year period commencing one year from the
Effective Date. The Class A Warrants are redeemable upon certain
conditions. Should the Class A Warrants be exercised, of which there is no
assurance, the Company will receive the proceeds therefrom, aggregating up
to an additional $8,000,000. See "Description of Securities."
(3) This offering also includes 2,000,000 shares of Common Stock and 2,000,000
Class A Warrants owned by the Selling Security-holders. The Class A
Warrants are identical to the Class A Warrants included in the Units being
offered by the Company. The securities held by the Selling Security-holders
may be sold commencing eighteen (18) months from the date of this
Prospectus, subject to earlier release at the sole discretion of the
Underwriter, and such securities include a legend with such restrictions.
The Underwriter may release the securities held by the Selling
Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended.
Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered
hereby. See "Certain Transactions," "Description of Securities," "Selling
Security-holders" and "Underwriting."
(4) 1030 Delf Drive, McLean, Virginia 22101. General Ratkovich also owns
1,000,000 Class A Warrants and 1,000,000 Class B Warrants. See "Certain
Transactions" and "Selling Security-holders."
(5) 10705 Bay Laurel Trail, Austin, Texas 78750.
(6) 1919 Pennsylvania Avenue, N.W., Suite 800, Washington, D.C. 20006. See
"Legal Matters."
(7) Executive Air Center, Brainard Airport, Hartford, Connecticut 06114. Mr.
Foise also owns 500,000 Class A Warrants and 500,000 Class B Warrants. See
"Certain Transactions" and "Selling Security-holders."

(8) 2 Farmstead Lane, Brookville, New York 11545. See "Certain Transactions."

46
<PAGE>
CERTAIN TRANSACTIONS

The Company was incorporated in the State of Delaware on January 9, 1995,
and began its operations on June 8, 1995. The Company has authorized capital of
50,000,000 shares of Common Stock, $.01 par value. The Company currently has
8,500,000 shares of Common Stock issued and outstanding. See "Principal
Stockholders" and "Description of Securities."

In January 1995, the Company issued 6,000,000 shares of its Common Stock
(which includes a 600:1 stock split in January 1996) to 16 persons, including
the officers and directors of the Company, in a private placement transaction in
consideration of $100, or its par value at the time of issuance.

In March 1996, the Company issued 500,000 shares of its Common Stock to ATG
Group, Inc., a Brookville, New York based investment firm, in a private
placement transaction for aggregate consideration of $250,000, represented by a
full recourse promissory note for the entire purchase price. The promissory note
is due in full in March 2001 and bears interest, payable upon maturity at 8% per
annum. Andrew T. Greene, a former officer and director of the Underwriter, is
the officer, director and stockholder of ATG Group, Inc. At the time of the
acquisition of the shares of Common Stock of the Company by ATG Group, Inc.,
neither ATG Group, Inc. nor Mr. Greene had an association or affiliation, in any
manner whatsoever, with the Underwriter or any other member firm of the National
Association of Securities Dealers, Inc.

Also, in March and April 1996, the Company borrowed $1,000,000 in a bridge
loan from four persons who are nonaffiliated with the Underwriter and the
Company, to wit: Edward Ratkovich ($500,000), Robert Foise ($250,000), Sid
Ripman ($200,000) and Martin Sumichrast ($50,000), at the rate of eight percent
simple annual interest, which is due and payable at the closing of this offering
from the net proceeds of this offering. General Ratkovich and Mr. Sumichrast are
officers, directors and principal stockholders of Nasdaq listed companies
recently underwritten by the Underwriter. In further consideration of the bridge
loan, the Company issued 2,000,000 shares of Common Stock, 2,000,000 Class A
Warrants and 2,000,000 Class B Warrants to the Selling Security-holders. The
shares of Common Stock and Class A Warrants issued to the Selling
Security-holders are being registered in this offering. The Class A Warrants
issued to the Selling Security-holders are identical to the Class A Warrants
included in the Units being offered by the Company. The Class B Warrants, which
are not being registered in this offering, are identical to the Class A Warrants
included in the Units being offered by the Company except that the exercise
price if $4.20. The securities held by the Selling Security-holders may be sold
commencing eighteen (18) months from the date of this Prospectus, subject to
earlier release at the sole discretion of the Underwriter, and such securities
include a legend with such restrictions. The Underwriter may release the
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired,
which release has occurred in recent offerings underwritten by the Underwriter.
The resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.
The Company will not receive any of the proceeds from the sale of the securities
being offered by the Selling Security-holders. The Class A Warrants are
redeemable upon certain conditions. Should the Class A Warrants offered by the
Selling Security-holders be exercised, of which there is no assurance, the
Company will receive the proceeds therefrom aggregating up to an additional
$8,000,000. Prior to making the bridge loan to the Company, the Selling
Security-holders did not own any other securities of the Company. None of the
Selling Security-holders of the Company are otherwise affiliated with the
Company, at the time of making the bridge loan, at the time of this offering or
at any other time. The Company believes that its financial transactions with the
Selling Security-holders served a legitimate business purpose, I.E., providing
needed working capital for the Company, and were fair and reasonable under the
circumstances since the transactions were highly speculative. The Company's
financial transactions with the Selling Security-holders were arranged by the
Underwriter and no commissions

47
<PAGE>
or other remuneration were paid or will be paid to the Underwriter in connection
with such transactions. However, should the Underwriter participate in the sale
of the securities owned by the Selling Security-holders in the future, the
Underwriter will be paid commissions commensurate with industry standards in
connection with such sales. See "Selling Security-holders" and "Description of
Securities."

All unregistered securities issued by the Company prior to this offering are
deemed "restricted securities" within the meaning of that term as defined in
Rule 144 and have been issued pursuant to certain "private placement" exemptions
under Section 4(2) of the Securities Act of 1933, as amended, and the rules and
regulations as promulgated by the Securities and Exchange Commission,
Washington, D.C. 20549, such that the sales of the securities were transactions
by an issuer not involving any public offering. See "Description of Securities."

In March 1996, the Company acquired all rights, title and interest in the
first U.S. patent for a system and method for communicating high fidelity and
clear transmission of audio or voice over the Internet, enabling free worldwide
transmission of ordinary telephone communications over the Internet. The Company
acquired all rights, title and interest in the patent from the inventors,
Messrs. Arthur Henley and Scott Grau, who are original stockholders of the
Company, in consideration of a five percent overriding royalty interest against
gross profits involving the use of the patent. The Company believes that its
patent is the first patent awarded of its kind, specifically involving the
transmission of audio or voice over the Internet. The Company also believes that
its patent may provide certain strategic and technological advantages in the new
and burgeoning area of audio or voice over the Internet. The Company can make no
assurances, however, as to the extent of the advantages or protection, if any,
that may be granted to the Company as a result of its patent.

The Company intends to indemnify its officers and directors to the full
extent permitted by Delaware law. Under Delaware law, a corporation may
indemnify its agents for expenses and amounts paid in third party actions and,
upon court approval in derivative actions, if the agents acted in good faith and
with reasonable care. A majority vote of the Board of Directors, approval of the
shareholders or court approval is required to effectuate indemnification.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, Washington, D.C. 20549, such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by an officer, director or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
officer, director or controlling person in connection with the securities being
registered, the Company 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 indemnification by it is against public
policy as expressed in such Act and will be governed by the final adjudication
of such issue.

Any future transactions with affiliates will be on terms no less favorable
than could be obtained from nonaffiliated parties and will be approved by a
majority of the independent and disinterested directors, as required by a
resolution of the Board of Directors. Any future loans to Company officers,
directors, affiliates and/or shareholders will be approved by a majority of the
independent and disinterested directors, as required by a resolution of the
Board of Directors.

48
<PAGE>
DESCRIPTION OF SECURITIES

UNITS

Each of the 1,000,000 Units offered hereby at $7.00 per Unit consists of two
shares of the Company's Common Stock, $.01 par value, and two redeemable Class A
Warrants. The Common Stock and Class A Warrants are detachable and may trade
separately immediately upon issuance. Should the Class A Warrants be exercised,
of which there is no assurance, the Company will receive the proceeds therefrom,
aggregating up to an additional $8,000,000.

COMMON STOCK

The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, $.01 par value. There are presently 8,500,000 issued and
outstanding shares of Common Stock. Holders of the Common Stock do not have
preemptive rights to purchase additional shares of Common Stock or other
subscription rights. The Common Stock carries no conversion rights and is not
subject to redemption or to any sinking fund provisions. All shares of Common
Stock are entitled to share equally in dividends from sources legally available
therefor when, as and if declared by the Board of Directors and, upon
liquidation or dissolution of the Company, whether voluntary or involuntary, to
share equally in the assets of the Company available for distribution to
stockholders. All outstanding shares of Common Stock are validly authorized and
issued, fully paid and nonassessable, and all shares to be sold and issued as
contemplated hereby, will be validly authorized and issued, fully paid and
nonassessable. The Board of Directors is authorized to issue additional shares
of Common Stock, not to exceed the amount authorized by the Company's
Certificate of Incorporation, and to issue options and warrants for the purchase
of such shares, on such terms and conditions and for such consideration as the
Board may deem appropriate without further stockholder action. The above
description concerning the Common Stock of the Company does not purport to be
complete. Reference is made to the Company's Certificate of Incorporation and
By-laws which are available for inspection upon proper notice at the Company's
offices, as well as to the applicable statutes of the State of Delaware for a
more complete description concerning the rights and liabilities of stockholders.

Prior to this offering, there has been no market for the Common Stock of the
Company, and no predictions can be made of the effect, if any, that market sales
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of significant amounts of the
Common Stock of the Company in the public market may adversely affect prevailing
market prices, and may impair the Company's ability to raise capital at that
time through the sale of its equity securities.

Each holder of Common Stock is entitled to one vote per share on all matters
on which such stockholders are entitled to vote. Since the shares of Common
Stock do not have cumulative voting rights, the holders of more than 50 percent
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.

CLASS A AND CLASS B WARRANTS

The Company is offering 1,000,000 Units at a price of $7.00 per Unit. Each
Unit consists of two shares of Common Stock, $.01 par value, and two redeemable
Class A Warrants. The Common Stock and Class A Warrants are detachable and may
trade separately immediately upon issuance.

The Class A Warrants shall be exercisable commencing one year after the date
of this Prospectus ("Effective Date"). Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $4.00 per share during the four year
period commencing one year from the Effective Date. The Class A Warrants are
redeemable by the Company for $.05 per Warrant, at any time after ,
1998, upon thirty (30) days' prior written notice, if the average closing price
or bid price of the Common Stock, as reported by the principal exchange on which
the Common Stock is traded, the Nasdaq National Market System or the National
Quotation Bureau, Incorporated, as the case may be, equals or exceeds $8.00 per
share, for any twenty (20) consecutive trading days within a

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period of thirty (30) days ending within ten (10) days of the notice of
redemption. Upon thirty (30) days' written notice to all holders of the Class A
Warrants, the Company shall have the right to reduce the exercise price and/or
extend the term of the Class A Warrants.

In March and April 1996, the Company borrowed $1,000,000 in a bridge loan
from four persons who are nonaffiliated with the Underwriter and the Company, to
wit: Edward Ratkovich ($500,000), Robert Foise ($250,000), Armstrong Industries
($200,000) and Martin Sumichrast ($50,000), at the rate of eight percent simple
annual interest, which is due and payable at the closing of this offering from
the net proceeds of this offering. General Ratkovich and Mr. Sumichrast are
officers, directors and principal stockholders of Nasdaq listed companies
recently underwritten by the Underwriter. In further consideration of the bridge
loan, the Company issued 2,000,000 shares of Common Stock, 2,000,000 Class A
Warrants and 2,000,000 Class B Warrants to the Selling Security-holders. The
shares of Common Stock and Class A Warrants issued to the Selling
Security-holders are being registered in this offering. The Class A Warrants
issued to the Selling Security-holders are identical to the Class A Warrants
included in the Units being offered by the Company. The Class B Warrants, which
are not being registered in this offering, are identical to the Class A Warrants
included in the Units being offered by the Company except that the exercise
price if $4.20. The securities held by the Selling Security-holders may be sold
commencing eighteen (18) months from the date of this Prospectus, subject to
earlier release at the sole discretion of the Underwriter, and such securities
include a legend with such restrictions. The Underwriter may release the
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired,
which release has occurred in recent offerings underwritten by the Underwriter.
Should the Underwriter release the securities held by the Selling
Security-holders for resale, it is uncertain whether the securities will be
offered for sale. The resale of the securities of the Selling Security-holders
are subject to Prospectus delivery and other requirements of the Securities Act
of 1933, as amended. Sales of such securities or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby. The Company will not receive any of the proceeds from the sale
of the securities being offered by the Selling Security-holders. The Class A
Warrants are redeemable upon certain conditions. Should the Class A Warrants
offered by the Selling Security-holders be exercised, of which there is no
assurance, the Company will receive the proceeds therefrom aggregating up to an
additional $8,000,000. Prior to making the bridge loan to the Company, the
Selling Security-holders did not own any other securities of the Company. None
of the Selling Security-holders of the Company are otherwise affiliated with the
Company, at the time of making the bridge loan, at the time of this offering or
at any other time. The Company believes that its financial transactions with the
Selling Security-holders served a legitimate business purpose, I.E., providing
needed working capital for the Company, and were fair and reasonable under the
circumstances since the transactions are highly speculative. The Company's
financial transactions with the Selling Security-holders were arranged by the
Underwriter and no commissions or other remuneration were paid or will be paid
to the Underwriter in connection with such transactions. However, should the
Underwriter participate in the sale of the securities owned by the Selling
Security-holders in the future, the Underwriter will be paid commissions
commensurate with industry standards in connection with such sales. See "Selling
Security-holders."

The Warrants can only be exercised when there is a current effective
registration statement covering the shares of common stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement the Warrant holders will be unable to exercise the
Warrants and the Warrants may become valueless. Moreover, if the shares of
common stock underlying the Warrants are not registered or qualified for sale in
the state in which a Warrant holder resides, such holder might not be permitted
to exercise the Warrants.

The Company will deliver Warrant certificates to the purchasers of Units
representing two Warrants for each Unit purchased. Thereafter, Warrant
certificates may be exchanged for new certificates of different denominations,
and may be exercised or transferred by presenting them at the offices of the
Transfer Agent. Holders of the Warrants may sell the Warrants if a market exists
rather

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than exercise them. However, there can be no assurance that a market will
develop or continue as to such Warrants. If the Company is unable to qualify its
common stock underlying such Warrants for sale in certain states, holders of the
Company's Warrants in those states will have no choice but to either sell such
Warrants or allow them to expire.

Each Warrant may be exercised by surrendering the Warrant certificate, with
the form of election to purchase on the reverse side of the Warrant certificate
properly completed and executed, together with payment of the exercise price to
the Warrant Agent. The Warrants may be exercised in whole or from time to time
in part. If less than all of the Warrants evidenced by a Warrant certificate are
exercised, a new Warrant certificate will be issued for the remaining number of
Warrants. Upon the exercise of the Warrants, the shares of Common Stock when
issued will be fully paid and nonassessable.

Holders of the Warrants are protected against dilution of the equity
interest represented by the underlying shares of common stock upon the
occurrence of certain events, including, but not limited to, issuance of stock
dividends. If the Company merges, reorganizes or is acquired in such a way as to
terminate the Warrants, the Warrants may be exercised immediately prior to such
action. In the event of liquidation, dissolution or winding up of the Company,
holders of the Warrants are not entitled to participate in the Company's assets.

For the life of the Warrants, the holders thereof are given the opportunity,
at nominal cost, to profit from a rise in the market price of the common stock
of the Company. The exercise of the Warrants will result in the dilution of the
then book value of the Common Stock of the Company held by the public investors
and would result in a dilution of their percentage ownership of the Company. The
terms upon which the Company may obtain additional capital may be adversely
affected through the period that the Warrants remain exercisable. The holders of
these Warrants may be expected to exercise them at a time when the Company
would, in all likelihood, be able to obtain equity capital on terms more
favorable than those provided for by the Warrants.

Because the Warrants included in the Units being offered hereby may be
transferred, it is possible that the Warrants may be acquired by persons
residing in states where the Company has not registered, or is not exempt from
registration such that the shares of common stock underlying the Warrants may
not be sold or transferred upon exercise of the Warrants. Warrantholders
residing in those states would have no choice but to attempt to sell their
Warrants or to let them expire unexercised. Also, it is possible that the
Company may be unable, for unforeseen reasons, to cause a registration statement
covering the shares underlying the Warrants to be in effect when the Warrants
are exercisable. In that event, the Warrants may expire unless extended by the
Company as permitted by the Warrant because a registration statement must be in
effect, including audited financial statements for companies acquired, in order
for warrantholders to exercise their Warrants.

The Company will be able to issue the securities offered hereby, shares of
its Common Stock upon the exercise of the Warrants and the Underwriter's
Purchase Option only if (i) there is a current prospectus relating to the
securities offered hereby under an effective registration statement filed with
the Securities and Exchange Commission, and (ii) such Common Stock is then
qualified for sale or exempt therefrom under applicable state securities laws of
the jurisdictions in which the various holders of Warrants reside. Although the
Company intends to maintain a current registration statement, there can be no
assurance, however, that the Company will be successful in maintaining a current
registration statement. After a registration statement becomes effective, it may
require updating by the filing of a post-effective amendment. A post-effective
amendment is required (i) anytime after nine months subsequent to the Effective
Date when any information contained in the prospectus is over sixteen months
old; (ii) when facts or events have occurred which represent a fundamental
change in the information contained in the registration statement; or (iii) when
any material change occurs in the information relating to the plan or
distribution of the securities registered by such registration statement. The
Company anticipates that this Registration Statement will remain effective for
not more than nine months following the date of this Prospectus or until
, 1997, assuming a post-effective amendment is not filed by the
Company, which may be

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<PAGE>
required. The Company intends to qualify the sale of the Units in a limited
number of states, although certain exemptions under certain state securities
("Blue Sky") laws may permit the Warrants to be transferred to purchasers in
states other than those in which the Warrants were initially qualified. The
Company will be prevented, however, from issuing Common Stock upon exercise of
the Warrants in those states where exemptions are unavailable and the Company
has failed to qualify the Common Stock issuable upon exercise of the Warrants.
The Company may decide not to seek, or may not be able to obtain qualification
of the issuance of such Common Stock in all of the states in which the ultimate
purchasers of the Warrants reside. In such case, the Warrants of those
purchasers will expire and have no value if such Warrants cannot be exercised or
sold. Accordingly, the market for the Warrants may be limited because of the
Company's obligation to fulfill both of the foregoing requirements.

As a result of the Permanent Injunction, the states of Pennsylvania, Indiana
and Illinois have commenced administrative proceedings seeking, among other
things, to revoke Stratton Oakmont's license to do business in such states. In
Indiana, the Commissioner suspended Stratton Oakmont's license for a three year
period. Stratton Oakmont has appealed the decision and has requested a stay
pending appeal. The requested stay would maintain the status quo pending appeal.
In Illinois, Stratton Oakmont intends to file an answer to the administrative
complaint denying the basis for revocation. The states of Alabama, North
Carolina, South Carolina and Arkansas also have suspended Stratton Oakmont's
license pending a resolution of the proceedings in those states. The states of
Minnesota, Vermont, and Nevada have served upon Stratton Oakmont notices of
intent to revoke Stratton Oakmont's license in such states. The state of Rhode
Island has served on Stratton Oakmont a Notice of Intent to suspend its license
in that state. In the state of Mississippi, Stratton Oakmont has agreed to a
suspension of its license pending resolution of certain claims and review of its
procedures and practices by the state authorities. In addition, Stratton Oakmont
withdrew its registration in the state of New Hampshire (with the right of
reapplication) and in the state of Maryland. There may be further administrative
action against the firm in Maryland. The firm withdrew its registration in
Massachusetts with a right to reapply for registration after two years, withdrew
its registration in Delaware with a right to reapply in three years and agreed
to a temporary cessation of business in Utah pending an on-site inspection and
further administrative proceedings. Stratton Oakmont's license in the state of
New Jersey was revoked by an administrative judge pursuant to an administrative
hearing and an appeal has been filed (and such decision is not final). The state
of Georgia has lifted its suspension and has granted Stratton Oakmont a
conditional license. Such conditional license was granted pursuant to an order,
which Stratton Oakmont has proposed to various states, which provides provisions
for: (i) the suspension of revocation, (ii) compliance with recommendations of
the Consultant, (iii) an expedited claims mediation arbitration process, (iv)
resolution of claims seeking compensatory damages, (v) restrictions on use of
operating revenue, (vi) the limitation on selling group members in offerings
underwritten by Stratton Oakmont and the prohibition of participating as a
selling group member in offerings underwritten by certain other NASD member
firms, (vii) the periodic review of Stratton Oakmont's agents, (viii) the
retention of an accounting firm, and (ix) supervision and training, restrictions
on trading, discretionary accounts and other matters. The state of Oregon, as a
result of the Permanent Injunction, has filed a notice of intent to revoke
Stratton Oakmont's license subject to the holding of a hearing to determine
definitively Stratton Oakmont's license status, and Stratton Oakmont, in this
proceeding as well as other proceedings, expects to be able to demonstrate that
the Permanent Injunction is not of a nature as to be a lawful basis to revoke
Stratton Oakmont's license permanently. Finally, Stratton Oakmont has received
an order limiting license in the state of Nebraska. Such proceedings, if
ultimately successful, may adversely affect the market for and liquidity of the
Company's securities if additional broker-dealers do not make a market in the
Company's securities. Moreover, should investors purchase any of the securities
in this offering from Stratton Oakmont prior to a revocation of Stratton
Oakmont's license in their state, such investors will not be able to resell such
securities in such state through Stratton Oakmont but will be required to retain
a new broker-dealer firm for such purpose. The Company cannot ensure that other
broker-dealers will make a market in the Company's securities. In the event that
other broker-dealers fail to make a market in the Company's securities, the
possibility exists that the market for and the

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<PAGE>

liquidity of the Company's securities may be adversely affected to such an
extent that public security holders may not have anyone to purchase their
securities when offered for sale at any price. In such event, the market for,
and liquidity and prices of the Company's securities may not exist. It should be
noted that although Stratton Oakmont may not be the sole market maker in the
Company's securities, it will most likely be the dominant market maker in the
Company's securities. In addition, in the event that the Underwriter's license
to do business is revoked in the states set forth above, the Underwriter has
advised the Company that the members of the selling syndicate in this offering
may be able to make a market in the Company's securities in such states and that
such an event will not have a materially adverse effect on this offering,
although no assurance can be made that such an event will not have a materially
adverse effect on this offering. The Company has applied to register this
offering for the offer and sale of its securities in the following states:
California, Colorado, Connecticut, Delaware, District of Columbia, Florida,
Georgia, Hawaii, Illinois, Louisiana, New York, Rhode Island and Virginia. The
offer and sale of the securities of this offering are not available in any other
state, absent an exemption from registration. See "Underwriting."

RESTRICTED SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 10,500,000 shares of
Common Stock issued and outstanding. Of these shares of Common Stock, 2,000,000
shares are being sold in this offering, in addition to the registration of
2,000,000 shares of Common Stock on behalf of the Selling Stockholders. Of the
remaining shares, 6,500,000 shares ("Restricted Shares") were issued and sold by
the Company in a private transaction in reliance upon certain private placement
exemptions as promulgated by the Securities and Exchange Commission, Washington,
D.C. 20549. See "Selling Security-holders" and "Certain Transactions."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned his or her Restricted
Shares for at least two years, including persons who may be deemed "affiliates"
of the Company, as that term is defined under the Act, would be entitled to sell
in broker's transactions within any three month period a number of shares that
does not exceed the greater of one percent of the then outstanding shares of the
Company's common stock, or the average weekly trading volume in the
over-the-counter market in the Company's common stock during the four calendar
weeks preceding such sale. Therefore, during each three month period, beginning
January 9, 1997, a holder of restricted securities who has held them for at
least the two year period may sell under Rule 144 a number of shares at least
equal to 105,000 shares. A person who is not deemed to have been an affiliate of
the Company at any time during the 90 days preceding a sale, and who has
beneficially owned his or her Restricted Shares for at least three years, would
be entitled to sell such shares under Rule 144 without regard to the volume
limitations described above, provided that certain public information concerning
the Company as required by the Rule is available.

Prior to this offering, there has been no market for the Common Stock of the
Company, and no precise predictions can be made of the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price prevailing from time to time. Nevertheless, sales of substantial
amounts of the Common Stock of the Company in the public market may adversely
affect prevailing market prices and may impair the Company's ability to raise
capital at the time through the sale of its equity securities.

Pursuant to the terms of the Underwriting Agreement, the Company's
restricted stockholders and the Company have agreed not to sell, transfer,
assign or issue any restricted shares of Common Stock for a period of 24 months
following the date of this Prospectus without the prior consent of the
Underwriter. The sale of a significant number of these shares in the public
market in the future may adversely affect prevailing market prices of the
Company's securities following this offering. See "Principal Stockholders" and
"Certain Transactions."

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No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on
the market, if any, prevailing from time to time. Sales of significant amounts
of the Company's shares of Common Stock pursuant to Rule 144 or otherwise may
adversely affect the market price of the securities offered hereby.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the securities of the Company is
American Stock Transfer & Trust Company located at 40 Wall Street, New York, New
York 10005.

REPORTS TO SECURITY-HOLDERS

The Company will furnish to holders of its securities annual reports
containing audited financial statements. The Company may issue other unaudited
interim reports to its security-holders as it deems appropriate.

Contemporaneously, with this offering, the Company intends to register its
securities with the Securities and Exchange Commission, Washington, D.C. 20549,
under the provisions of Section 12(g) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), and, in accordance therewith, the Company will be
required to comply with certain reporting, proxy solicitation and other
requirements of the Exchange Act.

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<PAGE>
SELLING SECURITY-HOLDERS

The registration statement, of which this Prospectus forms a part, also
covers the registration of 2,000,000 shares of Common Stock and 2,000,000 Class
A Warrants offered by four persons who are nonaffiliated with the Underwriter
and the Company, hereinafter collectively referred to as "Selling
Security-holders," to wit: Edward Ratkovich ($500,000), Robert Foise ($250,000),
Armstrong Industries ($200,000) and Martin Sumichrast ($50,000). General
Ratkovich and Mr. Sumichrast are officers, directors and principal stockholders
of Nasdaq listed companies recently underwritten by the Underwriter. The Class A
Warrants are identical to the Class A Warrants included in the Units being
offered by the Company. The securities held by the Selling Security-holders may
be sold commencing eighteen (18) months from the date of this Prospectus,
subject to earlier release at the sole discretion of the Underwriter, and such
securities include a legend with such restrictions. The Underwriter may release
the securities held by the Selling Security-holders at any time after all
securities subject to the Over-allotment Option have been sold or such option
has expired. Should the Underwriter release the securities held by the Selling
Security-holders for resale, it is uncertain whether the securities will be
offered for sale. The resale of the securities of the Selling Security-holders
are subject to Prospectus delivery and other requirements of the Securities Act
of 1933, as amended. Sales of such securities or the potential of such sales at
any time may have an adverse effect on the market prices of the securities
offered hereby.

In March 1996, the Company borrowed $1,000,000 in a bridge loan from the
Selling Security-holders at the rate of eight percent simple annual interest,
which is due and payable at the closing of this offering from the net proceeds
of this offering. 2,000,000 shares of Common Stock, 2,000,000 Class A Warrants
and 2,000,000 Class B Warrants were issued to the Selling Security-holders in
further consideration of the bridge loan. The Class A Warrants issued to the
Selling Security-holders are identical to the Class A Warrants included in the
Units being offered by the Company. The Class B Warrants, which are not being
registered in this offering, are identical to the Class A Warrants included in
the Units being offered by the Company except that the exercise price is $4.20.
The shares of Common Stock and Class A Warrants are being registered as part of
this offering. The Company will not receive any of the proceeds from the sale of
the securities by the Selling Security-holders. The Class A Warrants are
redeemable upon certain conditions. Should the Class A Warrants be exercised, of
which there is no assurance, the Company will receive the proceeds therefrom
aggregating up to an additional $8,000,000.

The 2,000,000 shares of Common Stock and 2,000,000 Class A Warrants are
being offered by the Selling Security-holders under an alternate Prospectus.
Prior to making the bridge loan to the Company, the Selling Security-holders did
not own any other securities of the Company. None of the Selling
Security-holders of the Company are otherwise affiliated with the Company, at
the time of making the bridge loan, at the time of this offering or at any other
time. The Company believes that its financial transactions with the Selling
Security-holders served a legitimate business purpose, I.E., providing needed
working capital for the Company, and were fair and reasonable under the
circumstances. The Company's financial transactions with the Selling
Security-holders were managed by the Underwriter and no commissions or other
remuneration were paid to the Underwriter in connection with such transactions.
See "Certain Transactions" and "Description of Securities."

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<PAGE>
Security-holders in connection with such sales of securities. The Selling
Security-holders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.

At the time a particular offer of securities is made by or on behalf of a
Selling Security-holder, to the extent required, a Prospectus will be
distributed which will set forth the number of shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for shares
purchased from the Selling Security-holder and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public.

Under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
the regulations thereto, any person engaged in a distribution of the securities
of the Company offered by this Prospectus may not simultaneously engage in
market-making activities with respect to such securities of the Company during
the applicable "cooling off" period (nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Security-holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including without limitation, Rule
10b-6 and 10b-7, in connection with transactions in such securities, which
provisions may limit the timing of purchases and sales of such securities by the
Selling Security-holders.

Sales of securities by the Selling Security-holders or even the potential of
such sales may likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the publicly
tradeable securities of the Company ("public float"), including this offering,
will be 4,000,000 shares of Common Stock and 4,000,000 Class A Warrants,
provided, however, that 2,000,000 shares of Common Stock and 2,000,000 Class A
Warrants owned by the Selling Security-holders are not transferable for eighteen
(18) months commencing on the effective date of this Prospectus, or at such
earlier date as may be permitted by the Underwriter, and such securities include
a legend with such restrictions. The Underwriter may release such securities
held by the Selling Security-holders at any time after all securities subject to
the Over-allotment Option have been sold or such option has expired. The resale
of the securities of the Selling Security-holders are subject to Prospectus
delivery and other requirements of the Securities Act of 1933, as amended. Sales
of such securities or the potential of such sales at any time may have an
adverse effect on the market prices of the securities offered hereby. See
"Description of Securities" and "Underwriting."

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UNDERWRITING

Subject to the terms and conditions of the underwriting agreement
("Underwriting Agreement") by and between the Company and the Underwriter, the
Company has agreed to sell to the Underwriter 1,000,000 Units on a "firm
commitment" basis. The Underwriter has advised the Company that it proposes to
offer the Units to the public at $7.00 per Unit as set forth on the cover page
of this Prospectus and that it may allow to certain dealers who are NASD members
concessions not to exceed $. per Unit. After the initial public offering, the
public offering price, concession and reallowance may be changed by the
Underwriter. The Underwriter has informed the Company that it does not intend to
confirm sales to any accounts over which it exercises discretionary authority.

In addition to underwriting discounts and commissions of ten percent of the
entire offering, the Underwriter will receive additional compensation in the
form of (i) a nonaccountable expense allowance of $210,000 if 1,000,000 Units
are sold (or $241,500 if the Underwriter's Over-allotment Option is fully
exercised); and (ii) an option (exercisable for a period of four years
commencing one year after the date of this Prospectus) entitling the Underwriter
to purchase 100,000 Units at $11.55 per Unit ("Underwriter's Purchase Option").

The public offering price of the Units and the exercise price and other
terms of the Warrants were arbitrarily determined by negotiations between the
Company and the Underwriter and do not necessarily relate to the assets, book
value or results of operations of the Company or any other established criteria
of value.

The Company has granted an option to the Underwriter, exercisable during the
30-day period from the date of this Prospectus, to purchase up to a maximum of
150,000 additional Units at the offering price, less the underwriting discount,
to cover over-allotments, if any.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act of
1933, as amended ("1933 Act"). Insofar as indemnification for liabilities
arising under the 1933 Act may be provided to officers, directors or persons
controlling the Company, the Company has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy and is therefore unenforceable.

The Company will also pay a warrant solicitation fee to the Underwriter
equal to four percent of the exercise price of the Warrants (which includes all
Class A Warrants and Class B Warrants owned by the Selling Security-holders),
beginning one year from the date of this Prospectus, if the Underwriter solicits
the exercise of such Warrants prior to the expiration thereof as set forth in
the Warrant Agreement, subject to the Underwriter's compliance with the rules
and regulations of the NASD. In accordance with NASD Notice to Members 81-38, no
warrant solicitation fee shall be paid (i) upon exercise where the market price
of the underlying Common Stock is lower than the exercise price; (ii) for the
exercise of warrants held in any discretionary account; (iii) upon the exercise
of warrants where disclosure of compensation arrangements has not been made in
documents provided to customers both as part of the original offering and at the
time of exercise; and (iv) upon the exercise of warrants in unsolicited
transactions. The broker-dealer to receive the warrant solicitation fee will be
designated, in writing, as the soliciting broker. See "Risk Factors -- Exercise
of Class A Warrants May Have Dilutive Effect on Market and Underwriter's
Influence on the Market May Have Adverse Consequences."

The Company has agreed to sell to the Underwriter, or its designees, for an
aggregate purchase price of $100, an option ("Underwriter's Purchase Option") to
purchase up to an aggregate of 100,000 Units. The Underwriter's Purchase Option
shall be exercisable during the four-year period commencing one year after the
effective date of this offering. The Underwriter's Purchase Option may not be
assigned, transferred, sold or hypothecated by the Underwriter until 12 months
after the effective date of this Prospectus, except to officers or partners of
the Underwriter and selling group members in this offering. Any profits realized
by the Underwriter upon the sale of the Units issuable

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upon exercise of the Underwriter's Purchase Option may be deemed to be
additional underwriting compensation. The exercise price of the Units issuable
upon exercise of the Underwriter's Purchase Option during the period of
exercisability shall be 165 percent of the initial public offering price of the
Units. The exercise price of the warrants underlying the Units in the
Underwriter's Purchase Option is $4.00. The exercise price of the Underwriter's
Purchase Option and the number of shares covered thereby are subject to
adjustment in certain events to prevent dilution. For the life of the
Underwriter's Purchase Option, the holders thereof are given, at a nominal cost,
the opportunity to profit from a rise in the market price of the Company's
securities with a resulting dilution in the interest of other stockholders. The
Company may find it more difficult to raise capital for its business if the need
should arise while the Underwriter's Purchase Option is outstanding. At any time
when the holders of the Underwriter's Purchase Option might be expected to
exercise it, the Company would probably be able to obtain additional capital on
more favorable terms.

If the Company enters into a transaction (including a merger, joint venture
or the acquisition of another entity) introduced to the Company by the
Underwriter, the Company has agreed to pay the Underwriter a maximum finder's
fee equal to five percent of the first $3,000,000 of consideration involved in
the transaction, four percent of the next $3,000,000, three percent of the next
$2,000,000, two percent of the next $2,000,000 and one percent of the excess, if
any, over $10,000,000.

The Underwriter has the right to designate a non-director observer to attend
meetings of the Company's Board of Directors for three years from the date of
this offering. The Underwriter does not have a right to designate or nominate a
director to the Company's Board of Directors. The observer will be reimbursed
for reasonable expenses incurred by him in connection with his activities.

Pursuant to the terms of the Underwriting Agreement, the Company's
restricted stockholders and the Company have agreed not to sell, transfer,
assign or issue any restricted shares of Common Stock for a period of 24 months
following the date of this Prospectus without the prior consent of the
Underwriter. The sale of a significant number of these shares in the public
market may adversely affect prevailing market prices of the Company's securities
following this offering. See "Principal Stockholders" and "Certain
Transactions."

The foregoing is a summary of certain provisions of the Underwriting
Agreement and the Underwriter's Purchase Option which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

The Company has been advised by the Underwriter that the NASD (Direct 10)
filed a complaint (No. C10950081) on October 5, 1995 ("Complaint") against the
Underwriter, Steven Sanders, the head trader of the Underwriter, Daniel M.
Porush, the president of the Underwriter, and Paul F. Byrne, formerly the
Underwriter's director of compliance (collectively, the "Respondents"), alleging
various violations of the NASD Rules of Fair Practice. The complaint consisted
of three causes. The first cause alleged that the Underwriter and Sanders
effected principal retail sales of securities at prices that were fraudulently
excessive. The second cause alleged that the Underwriter and Sanders charged
excessive markups. The third cause alleged that the Underwriter, Porush and
Byrne failed to establish, maintain and enforce reasonable supervisory
procedures designed to assure compliance with the NASD's rules and policies.

On April 15, 1996 the NASD in its decision found all of the Respondents
except Paul Byrne in violation of all three causes and imposed the following
sanctions:

- Sanders was censured, fined $25,000 and was suspended from association
with any member of the NASD in any capacity for a period of one year.

- The Underwriter was censured, fined $500,000 and was required to disgorge
its excess profits to its customers, totaling $1,876,205, plus prejudgment
interest. In addition, the Underwriter was suspended for a period of one
year from effecting any principal retail transactions.

58
<PAGE>
- Porush was censured, fined $250,000 and barred from association with any
member of the NASD in any capacity.

The Underwriter, Porush and Sanders have appealed the NASD's decision
thereby staying imposition of the sanctions.

The Company has been advised by Stratton Oakmont, Inc. that the Commission
instituted an action on December 14, 1994 in the United States District Court
for the District of Columbia against Stratton Oakmont. The complaint alleged
that Stratton Oakmont was not complying with the March 17, 1994 Administrative
Order by failing to adopt the recommendations of an independent consultant. The
Administrative Order was previously consented to by Stratton Oakmont, without
admitting or denying the findings contained therein, as settlement of an action
commenced against Stratton Oakmont by the Commission in March 1992, which found
willful violations of the anti-fraud provisions of the securities laws such that
Stratton Oakmont:

-engaged in fraudulent sales practices;

-engaged in and/or permitted unauthorized trading in customer accounts;

-knowingly and recklessly manipulated the market price of a company's
securities by dominating and controlling the market for those securities;

-made improper and unsupported price predictions with regard to recommended
over-the-counter securities; and

-made material misrepresentations and omissions regarding certain securities
and its experience in the securities industry.

Pursuant to the Administrative Order, Stratton Oakmont was censured and the
Stratton Consultant was chosen by the Commission to advise and consult with
Stratton Oakmont and to review and recommend new supervisory and compliance
procedures. The complaint sought:

-a to enjoin Stratton Oakmont from violating the Administrative Order;

-an order commanding Stratton Oakmont to comply with the Administrative
Order; and

59
<PAGE>
On February 28, 1995, the court granted the Commission's motion for the
Permanent Injunction and ordered Stratton Oakmont to comply with the
Administrative Order, which required the appointment of an independent
consultant, and a separate independent auditor and required that all
recommendations be complied with, including the taping of all telephone
conversations between the Stratton Oakmont's brokers and their customers. In
granting the Commission's motion for a Permanent Injunction, the Court
determined that Stratton Oakmont's conduct unequivocally demonstrated that there
is a substantial likelihood that it will continue to evade its responsibilities
under the Administrative Order. On April 20, 1995, Stratton Oakmont also filed
an appeal to the United States Court of Appeals for the District of Columbia,
and on April 24, 1995 filed a motion to stay the permanent injunction pending
the outcome of the appeal. The motion to stay was denied. Subsequently, Stratton
Oakmont voluntarily dismissed its appeal. The failure by Stratton Oakmont to
comply with the Administrative Order or Permanent Injunction may adversely
effect Stratton Oakmont's activities in that the court may enter a further order
restricting the ability of Stratton Oakmont to act as a market maker of the
Company's securities. The effect of such action may prevent the holders of the
Company's securities from selling such securities since Stratton Oakmont may be
restricted from acting as a market maker of the Company's securities and, in
such event, will not be able to execute a sale of such securities. Also, if
other broker dealers fail to make a market in the Company's securities, the
public security holders may not have anyone to purchase their securities when
offered for sale at any price and the security holders may suffer the loss of
their entire investment.

60
<PAGE>

able to demonstrate that the Permanent Injunction is not of a nature as to be a
lawful basis to revoke Stratton Oakmont's license permanently. Finally, Stratton
Oakmont has received an order limiting license in the state of Nebraska. Such
proceedings, if ultimately successful, may adversely affect the market for and
liquidity of the Company's securities if additional broker-dealers do not make a
market in the Company's securities. Moreover, should investors purchase any of
the securities in this offering from Stratton Oakmont prior to a revocation of
Stratton Oakmont's license in their state, such investors will not be able to
resell such securities in such state through Stratton Oakmont but will be
required to retain a new broker-dealer firm for such purpose. The Company cannot
ensure that other broker-dealers will make a market in the Company's securities.
In the event that other broker-dealers fail to make a market in the Company's
securities, the possibility exists that the market for and the liquidity of the
Company's securities may be adversely affected to such an extent that public
security holders may not have anyone to purchase their securities when offered
for sale at any price. In such event, the market for, and liquidity and prices
of the Company's securities may not exist. It should be noted that although
Stratton Oakmont may not be the sole market maker in the Company's securities,
it will most likely be the dominant market maker in the Company's securities. In
addition, in the event that the Underwriter's license to do business is revoked
in the states set forth above, the Underwriter has advised the Company that the
members of the selling syndicate in this offering may be able to make a market
in the Company's securities in such states and that such an event will not have
a materially adverse effect on this offering, although no assurance can be made
that such an event will not have a materially adverse effect on this
offering.The Company has applied to register this offering for the offer and
sale of its securities in the following states: California, Colorado,
Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Illinois,
Louisiana, New York, Rhode Island and Virginia. The offer and sale of the
securities of this offering are not available in any other state, absent an
exemption from registration. See "Underwriting."

DETERMINATION OF PUBLIC OFFERING PRICE

Prior to this offering, there has been no public market for the securities
of the Company. The initial public offering price for the Units and the exercise
price of the Class A Warrants have been determined by negotiations between the
Company and the Underwriter. Among the factors considered in the negotiations
were an analysis of the areas of activity in which the Company is engaged, the
present state of the Company's business, the Company's financial condition, the
Company's prospects, an assessment of management, the general condition of the
securities market at the time of this offering and the demand for similar
securities of comparable companies. The public offering price of the Units and
the exercise prices of the Class A Warrants do not necessarily bear any
relationship to assets, earnings, book value or other criteria of value
applicable to the Company.

LEGAL PROCEEDINGS

e-Net, Inc. is not a party to any legal proceedings and, to the best of its
information, knowledge and belief, none is contemplated or has been threatened.

61
<PAGE>
LEGAL MATTERS

The validity of the securities being offered hereby will be passed upon for
the Company by Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue, N.W.,
Suite 800, Washington, D.C. 20006. Mr. Prousalis is the beneficial owner of
900,000 shares of Common Stock of the Company. See "Principal Stockholders."
Certain legal matters will be passed upon for the Underwriter by Bernstein &
Wasserman, LLP, 950 Third Avenue, New York, New York 10022.

EXPERTS

The financial statements of e-Net, Inc. as of March 31, 1996, included in
the Registration Statement and this Prospectus have been included herein in
reliance on the report dated April 12, 1996, of Grant Thornton LLP, Independent
Certified Public Accountants, and upon the authority of such firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission an SB-2 Registration Statement
under the Securities Act of 1933, as amended, with respect to the securities
offered by this Prospectus. This Prospectus does not contain all of the
information set forth in the Registration Statement and exhibits, to all of
which reference is hereby made. Statements contained in this Prospectus as to
the contents of any contract or other document referred to are not necessarily
complete; with respect to each such contract or other document filed or
incorporated by reference as an exhibit to the Registration Statement, reference
is made to the exhibit for a more complete description of the matter involved,
and each such statement shall be deemed to be qualified in its entirety by such
reference. All of these documents may be inspected without charge at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549.

62
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS........................ F-2

FINANCIAL STATEMENTS

Balance Sheet........................................................... F-3

Statement of Operations................................................. F-4

Statement of Cash Flows................................................. F-5

Statement of Stockholders' Equity....................................... F-6

Notes to Financial Statements........................................... F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
e-Net, Inc.

We have audited the accompanying balance sheet of e-Net, Inc. (a Delaware
Corporation) as of March 31, 1996, and the related statements of operations,
stockholders' equity and cash flows for the period from beginning of operations
(June 8, 1995) to March 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of e-Net, Inc.
as of March 31, 1996, and the results of its operations and its cash flows for
the period from beginning of operations (June 8, 1995) to March 31, 1996, in
conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Vienna, Virginia
April 12, 1996

F-2
<PAGE>
E-NET, INC.
BALANCE SHEET
MARCH 31, 1996
ASSETS

<TABLE>
<S> <C>
CURRENT ASSETS
Cash and cash equivalents.................................................... $ 557,960
Accounts receivable.......................................................... 53,677
-----------
TOTAL CURRENT ASSETS........................................................... 611,637
PROPERTY, PLANT AND EQUIPMENT, NET............................................. 134,285
-----------
$ 745,922
-----------
-----------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Stockholder/Officer notes payable............................................ $ 45,000
Accounts payable -- trade.................................................... 5,326
Accrued liabilities.......................................................... 22,787
Deferred revenue............................................................. 20,000
-----------
TOTAL CURRENT LIABILITIES...................................................... 93,113
LONG-TERM DEBT................................................................. 500,000
-----------
TOTAL LIABILITIES.............................................................. 593,113

STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 50,000,000 shares authorized, 7,500,000 shares
outstanding................................................................. 75,000
Stock subscriptions and notes receivable..................................... (310,000)
Unamortized cost of bridge financing......................................... (2,885,135)
Additional paid-in capital................................................... 3,810,000
Retained deficit............................................................. (537,056)
-----------
TOTAL STOCKHOLDERS' EQUITY..................................................... 152,809
-----------
$ 745,922
-----------
-----------
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE>
E-NET, INC.
STATEMENT OF OPERATIONS
PERIOD FROM BEGINNING OF OPERATIONS (JUNE 8, 1995) TO MARCH 31, 1996

<TABLE>
<S> <C>
SALES.......................................................................... $ 293,876

OPERATING EXPENSES
Cost of product sales and service............................................ 88,360
Selling, general and administrative.......................................... 115,171
----------
INCOME FROM OPERATIONS......................................................... 90,345

INTEREST AND FINANCING CHARGES
Interest expense -- private placement........................................ (614,865)
Interest expense............................................................. (6,884)
Other expenses............................................................... (6,143)
Interest Income.............................................................. 491
----------
LOSS BEFORE INCOME TAXES....................................................... (537,056)

INCOME TAX PROVISION........................................................... --
----------
NET LOSS....................................................................... $ (537,056)
----------
----------
PRO FORMA ADJUSTMENT TO REFLECT ADDITIONAL COMPENSATION EXPENSE................ (237,500)
----------
PRO FORMA NET LOSS............................................................. (774,556)
----------
----------
PRO FORMA LOSS PER SHARE....................................................... $ (.12)
----------
----------

WEIGHTED AVERAGE SHARES OUTSTANDING............................................ 6,464,188
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE>
E-NET, INC.
STATEMENTS OF CASH FLOWS
PERIOD FROM BEGINNING OF OPERATIONS (JUNE 8, 1995) TO MARCH 31, 1996

<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss...................................................................... $(537,056)
---------
Adjustments to reconcile net loss to net cash from operating activities
Interest expense -- private placement....................................... 614,865
Depreciation and amortization............................................... 30,715
Changes in operating assets and liabilities
(Increase) in accounts receivable......................................... (53,677)
Increase in accounts payable and accrued liabilities...................... 28,113
Increase in deferred revenue.............................................. 20,000
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES....................................... 102,960
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shareholder/officer loans....................................... 30,000
Payment of shareholder/officer loans.......................................... (25,000)
Payment of notes payable arising from asset acquisition....................... (50,000)
Proceeds from Issuance of bridge notes payable................................ 500,000
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES....................................... 455,000
---------
NET INCREASE IN CASH............................................................ 557,960
CASH AT BEGINNING OF PERIOD..................................................... --
---------
CASH AT END OF PERIOD........................................................... $ 557,960
---------
---------

SUPPLEMENTAL DISCLOSURES:
Income Taxes Paid............................................................. $ --
---------
---------
Interest Paid................................................................. $ 688
---------
---------
</TABLE>

NONCASH INVESTING AND FINANCING ACTIVITIES

The Company acquired fixed assets of $165,000 in exchange for notes payable of
$90,000 and a capital contribution of $75,000.

The Company issued 6,500,000 shares of common stock for notes receivable of
$310,000.

The accompanying notes are an integral part of this statement.

F-5
<PAGE>
E-NET, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM BEGINNING OF OPERATIONS (JUNE 8, 1995) TO MARCH 31, 1996

<TABLE>
<CAPTION>
COMMON STOCK STOCK UNAMORTIZED
------------------ SUBSCRIPTIONS COST OF ADDITIONAL TOTAL
NO. OF AND NOTES BRIDGE PAID IN RETAINED STOCKHOLDERS
SHARES AMOUNT RECEIVABLE FINANCING CAPITAL DEFICIT EQUITY
--------- ------- ------------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, inception
Initial capitalization....................... 6,000,000 $60,000 $ (60,000) $ -- $ -- $ -- $ --
Contribution of assets from
stockholder/officer......................... -- -- -- -- 75,000 -- 75,000
Sale of common stock for note................ 500,000 5,000 (250,000) -- 245,000 -- --
Issuance of common stock and additional
capital associated with the financing cost
from the issuance of bridge units........... 1,000,000 10,000 -- (2,885,135) 3,490,000 -- 614,865
Net loss..................................... -- -- -- -- -- (537,056) (537,056)
--------- ------- ------------- ----------- ---------- --------- ------------
Balance, March 31, 1996...................... 7,500,000 $75,000 $(310,000) $(2,885,135) $3,810,000 $(537,056) $ 152,809
--------- ------- ------------- ----------- ---------- --------- ------------
--------- ------- ------------- ----------- ---------- --------- ------------
</TABLE>

The accompanying notes are an integral part of this statement.

F-6
<PAGE>
E-NET, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

e-Net, Inc. was incorporated on January 9, 1995 with an initial
capitalization of 6,000,000 shares of Common Stock after giving effect to a
600:1 stock split in January 1996. The Company commenced operations on June 8,
1995. The Company develops, markets, and supports open client, server and
integrated applications software that enables local, national and international
telephone communications, information exchange and commerce over the Internet
and private networks. The Company also sells other products used in the
management and billing of computer network, telephone and computer usage.

The Company's operations to date have concentrated on continuing development
of its products, establishing acceptance of its software products in the
telecommunications industry, providing services to its existing customer base
and securing financing necessary to fund development, operations and expansion
of its business. Management believes cash flow provided by operations and
proceeds of $1,000,000 from bridge financing described in Note B will be
sufficient to sustain operations in fiscal 1997. Additional financing may be
necessary to provide for continued product development and further expansion of
operations. While assurance cannot be given as to its success, the Company has
entered into a letter of intent in March 1996 with an underwriter for a firm
commitment offering of securities as described in Note G.

REVENUE RECOGNITION

Revenue is recognized on the sale of software products upon shipment unless
future obligations exist wherein a portion of the revenue is deferred until the
obligation is satisfied. Revenue from services rendered is recognized either as
the services are rendered based upon fixed hourly rates or at contractually
determined fixed monthly fees. Approximately 20% of the total revenue recognized
was derived from the sale of software products. The remaining revenue was the
result of providing services.

For the period ending March 31, 1996, the Company derived 32%, 29%, 16% and
13% of its sales from four customers, respectively.

ACCOUNTS RECEIVABLE

Accounts receivable are stated at the unpaid balances, less allowance on
uncollectible accounts, if any. Management periodically reviews its outstanding
accounts receivable to assess collectibility of balances based on past
experience and evaluation of current adverse situations which may affect
collectibility of receivables. At March 31, 1996, management deemed all balances
fully collectible and did not establish an allowance for uncollectible accounts.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

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.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost, net of an allowance for
accumulated depreciation and amortization. Depreciation is computed on equipment
and furniture, using a declining balance method over a five-year period.

F-7
<PAGE>
E-NET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE

Earnings per share for each period presented are based upon weighted average
shares outstanding during the period from June 1995, the date operations
commenced, through March 31, 1996, adjusted retroactively, where applicable, for
the effect of a 600:1 stock split in January 1996. Weighted average shares
outstanding includes the effect (428,571 shares) of the issuance of 500,000
shares of Common Stock in March 1996 using the treasury stock method. The
weighted average shares outstanding also includes the weighted average effect
(35,617 shares) of 1,000,000 shares of Common Stock issued in March 1996
pursuant to the issuance of the Bridge Units. The Class A Warrants issued in
conjunction with these Bridge Units are excluded from the earnings per share
computation as their effect is anti-dilutive when measured using the treasury
stock method.

NOTE B -- SIGNIFICANT TRANSACTIONS

PRIVATE PLACEMENT TRANSACTIONS

In March 1996, the Company issued 500,000 shares of Common Stock to a
nonaffiliated investment banking firm in a private placement transaction for
aggregate consideration of $250,000, represented by a full recourse promissory
note for the entire purchase price. The promissory note is due in full in March
2001 and bears interest, payable upon maturity at 8% per annum.

In March 1996, in a transaction arranged by the underwriter of the Company's
initial public offering, the Company was loaned $500,000 by a nonaffiliated
person. Principal and interest computed at the rate of eight percent per annum
becomes due at the earlier of June 1, 1997, or the closing date of an initial
public offering of securities of the Company which is expected to occur in June
1996. As additional consideration for making such loan, the Company issued
500,000 Units ("Bridge Units") each containing two shares of Common Stock, two
Class A Warrants and two Class B Warrants to the lender. The Bridge Units are
intended to be registered in the proposed public offering described in Note G
and will be restricted from sale or other transfer by the underwriter for a
period of 18 months following the offering. Inasmuch as these Bridge Units have
been issued in contemplation of the proposed offering, financing expense, valued
using the proposed offering price per share, related to the issuance of these
securities of $3,500,000 will be recorded between the date of issuance and the
anticipated offering date, with a corresponding credit to paid-in capital. As of
March 31, 1996, the Company had accrued $614,865 of this financing expense. The
Company has recorded the loan of $500,000 as a noncurrent liability at March 31,
1996. It is not practicable to estimate the fair value of this debt as there are
no quoted market prices for debt with similar terms.

In April 1996, in a transaction arranged by the underwriter of the Company's
initial public offering, the Company was loaned $500,000 by three nonaffiliated
persons. Principal and interest computed at the rate of eight percent per annum
becomes due at the earlier of June 1, 1997, or the closing date of an initial
public offering of securities of the Company which is expected to occur in June
1996. As additional consideration for making such loan, the Company issued
500,000 Bridge Units identical to those issued in March 1996 as described above.
Inasmuch as these Bridge Units have been issued in contemplation of the proposed
offering, financing expense related to the issuance of these securities of
$3,500,000 will be recorded between the date of issuance and the anticipated
offering date, with a corresponding credit to paid-in capital.

ACQUISITIONS

In June 1995, the Company acquired the rights and title to certain tangible
assets comprised primarily of computer equipment and peripherals, certain
products and intangible assets related thereto, and contract rights in return
for a promissory note of $50,000 and the release of the seller's

F-8
<PAGE>
E-NET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996

NOTE B -- SIGNIFICANT TRANSACTIONS (CONTINUED)
obligation valued at $75,000 for compensation formerly due to the president of
the Company. The Company allocated the entire purchase price of $125,000 to the
tangible assets acquired based upon their fair value. The portion of the
purchase price attributable to the release of the compensation obligation due to
the stockholder/officer was credited to additional paid in capital. The entire
principal balance due under the promissory note and interest thereon was repaid
by the Company in March 1996.

In March 1996, the Company acquired the right, title and interest to certain
inventions and related patents ("Technology") from two individuals who are also
stockholders of the Company in an assignment of patent rights in return for
future royalties to each individual computed quarterly equal to 2 1/2% of gross
profit from products sold related to the acquired Technology. Royalties will be
expensed in the period in which related sales are recognized. The assignment
agreement provides for the right of the individuals to repurchase the Technology
if the Company fails to make reasonable efforts to develop and exploit the
market opportunities made available by the Technology. The agreement provides
that the Company allocate $1,000,000 of paid in capital to develop and exploit
the market opportunities of the Technology by December 31, 1996, or the
Technology will be subject to repurchase by the inventors of the Technology.

NOTE C -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at March 31, 1996:

<TABLE>
<S> <C>
Furniture and office equipment................................... $ 125,000
Airplane......................................................... 40,000
---------
165,000
Less accumulated depreciation.................................... (30,715)
---------
Property and equipment -- net.................................... $ 134,285
---------
---------
</TABLE>

NOTE D -- STOCKHOLDER/OFFICER NOTES PAYABLE
Stockholder notes payable consist of the following as of March 31, 1996:

<TABLE>
<S> <C>
Loan from an officer of the Company, bearing interest at 8% per
annum with principal and interest due June 3, 1996. The note is
collateralized by an airplane.................................... $ 40,000
Loan from an officer of the Company, bearing interest at 10% per
annum with payment of principal and interest due June 15,
1996............................................................. 5,000
---------
$ 45,000
---------
---------
</TABLE>

Management's estimate of the fair value of these liabilities is the carrying
value.

NOTE E -- INCOME TAXES
The income tax provision consists of the following for the period ended
March 31, 1996:

<TABLE>
<S> <C>
Deferred
Federal......................................................... $ 2,267
State........................................................... 426
Valuation allowance............................................. (2,693)
---------
Net provision..................................................... $ --
---------
---------
</TABLE>

F-9
<PAGE>
E-NET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996

NOTE E -- INCOME TAXES (CONTINUED)
The effective tax rate for the period ended March 31, 1996 was (7.4)%. A
reconciliations between the United States federal statutory rate and the
effective tax rate follows:

<TABLE>
<S> <C>
Tax (benefit) at U.S. federal statutory rates................... $(182,599)
Increase (decrease) resulting from:
State tax (benefit)........................................... (21,267)
Permanent difference -- interest expense private placement.... 200,812
Other permanent differences................................... 361
Valuation allowance........................................... 2,693
---------
Income tax provision.......................................... $ --
---------
---------
</TABLE>

The Company's reporting period for tax purposes is the calendar year. Taxes
on the net loss for the period January through March is reflected in the
calculation of the deferred tax asset. A valuation allowance has been recognized
in an amount equal to the deferred tax asset.

The tax effect of temporary differences between the financial statement
amounts and tax bases of assets and liabilities which give rise to a deferred
tax asset is as follows at March 31, 1996:

<TABLE>
<S> <C>
Net loss for January 1 through March 31, 1996..................... $ 31,997
Accounts Receivable............................................... (28,704)
Accounts Payable and Accrued Expenses............................. 893
Depreciation expense.............................................. (1,493)
Valuation allowance............................................... (2,693)
---------
Deferred taxes payable............................................ $ --
---------
---------
</TABLE>

NOTE F -- COMMITMENTS AND CONTINGENT LIABILITIES

LEASE COMMITMENT

The Company leases office space under an month to month operating lease
which provides for monthly rent payments of $1,900.

EMPLOYMENT AGREEMENT

The Company entered into an employment agreement effective April 1, 1996
with an officer. Minimum future annual salary commitments of the Company under
the agreements are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
MARCH 31, SALARY BONUS TOTAL
- ---------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
1997................................. $ 175,000 $ 87,500 $ 262,500
1998................................. 175,000 87,500 262,500
1999................................. 175,000 87,500 262,500
2000................................. 175,000 87,500 262,500
2001................................. 175,000 87,500 262,500
----------- ----------- -------------
$ 875,000 $ 437,500 $ 1,312,500
----------- ----------- -------------
----------- ----------- -------------
</TABLE>

The agreement also provides for bonuses upon certain performance criteria of
the Company and the determination of the Board of Directors. Pursuant to the
agreement, employment may be terminated by the Company with cause or by the
executive with or without good reason. Termination by the

F-10
<PAGE>
E-NET, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996

NOTE F -- COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Company without cause, or by the executive for good reason, would subject the
Company to liability for in an amount equal to six months of the terminated
executive's salary at the date of termination plus comparable insurance benefits
being received prior to termination.

The accompanying financial statements reflect compensation paid and accrued
for services rendered, if any, by the officer at the salary level which the
Company believes is reasonable under the circumstances. PRO FORMA data presented
in the accompanying statement of operations reflects the result of operations on
a PRO FORMA basis had the officer been employed by the Company for the entire
period at a compensation level equal to that contained in the above agreement.

NOTE G -- PROPOSED INITIAL PUBLIC OFFERING
In March 1996, the Company entered into a letter of intent with an
underwriter for a firm commitment offering of 1,000,000 Units at a price of
$7.00 per Unit. Each Unit consists of two shares of Common Stock and two
redeemable Class A Warrants. The Class A Warrants shall be exercisable
commencing one year after the date of the prospectus and entitles the holder to
purchase one share of Common Stock at $4.00 per share during the four year
period commencing one year from the effective date of the offering. The Class A
Warrants are redeemable under certain conditions.

The Company paid $50,000 in April 1996 to an attorney who is also a
stockholder of the Company in return for services rendered in connection with
the offering.

NOTE H -- SUBSEQUENT EVENT
In January 1996, the Company signed a letter of intent to purchase certain
assets from an entity of which two of the three owners are also stockholders of
the Company. These assets are prototype boards, proprietary software code and
existing research and development relating to specific computer software
products. In May 1996, the Company completed the purchase for cash of $50,000.
Management intends to allocate the entire purchase price of $50,000 to research
and development expense and therefore, record a charge to operations in fiscal
year 1997 for that amount. The entity from which the assets are intended to be
acquired is dormant and contains no assets other than the above intangible
assets. As a result, condensed financial statements of this entity have not been
presented.

F-11
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH AN OFFER WOULD BE UNLAWFUL. ANY MATERIAL MODIFICATION OF THE OFFERING
WILL BE ACCOMPLISHED BY MEANS OF AN AMENDMENT TO THE REGISTRATION STATEMENT. IN
ADDITION, THE RIGHT IS RESERVED BY THE COMPANY TO CANCEL ANY CONFIRMATION OF
SALE PRIOR TO THE RELEASE OF FUNDS, IF, IN THE OPINION OF THE COMPANY,
COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE
OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., WASHINGTON,
D.C. 20006.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 20
Dilution.................................................................. 22
Capitalization............................................................ 23
Dividend Policy........................................................... 23
Management's Discussion and Analysis or Plan of Operation................. 24
Business.................................................................. 28
Management................................................................ 41
Principal Stockholders.................................................... 46
Certain Transactions...................................................... 47
Description of Securities................................................. 49
Selling Security-holders.................................................. 55
Underwriting.............................................................. 57
Legal Proceedings......................................................... 61
Legal Matters............................................................. 62
Experts................................................................... 62
Additional Information.................................................... 62
Index to Financial Statements............................................. F-1
Report of Independent Certified Public Accountants........................ F-2
</TABLE>

------------------------

UNTIL , 1996 (25 DAYS AFTER THE EFFECTIVE DATE OF THIS
PROSPECTUS), ALL BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, 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 WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1,000,000 UNITS

E-NET, INC.

---------------------

PROSPECTUS

---------------------

STRATTON OAKMONT, INC.

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PROSPECTUS

2,000,000 SHARES
2,000,000 CLASS A WARRANTS

E-NET, INC.

This Prospectus relates to the offering of 2,000,000 shares of Common Stock
and 2,000,000 Class A Warrants offered by persons who are nonaffiliated with
the Company, hereinafter collectively referred to as "Selling Security-holders,"
in connection with a bridge loan to the Company of $1,000,000 in March and April
1996. The Common Stock and Class A Warrants may not be transferred for eighteen
(18) months from the date hereof unless permitted sooner by Stratton Oakmont,
Inc., and such securities include a legend with such restrictions. Stratton
Oakmont, Inc. may release the securities held by the Selling Security-holders at
any time after all securities subject to the Over-allotment Option have been
sold or such option has expired. One Class A Warrant entitles the holder thereof
to purchase one share of Common Stock at a price of $4.00 per share for a period
of four years commencing one year from the date hereof ("Class A Warrant
Exercise Date") at which time the Class A Warrants will expire. The Class A
Warrants are redeemable by the Company for $.05 per Warrant, at any time after
, 1998, upon thirty (30) days' prior written notice, if the average
closing price or bid price of the Common Stock, as reported by the principal
exchange on which the Common Stock is traded, Nasdaq SmallCap Market ("Nasdaq")
or the National Quotation Bureau, Incorporated, as the case may be, equals or
exceeds $9.00 per share, for any twenty (20) trading days within a period of
thirty (30) days ending within ten (10) days of the notice of redemption. Upon
thirty (30) days' written notice to all holders of the Class A Warrants, the
Company shall have the right to reduce the exercise price and/or extend the term
of the Class A Warrants in compliance with the requirements of Rule 13e-4 to the
extent applicable. See "Description of Securities" and "Selling
Security-holders."

The Common Stock and Class A Warrants offered by this Prospectus may be sold
from time to time by the Selling Security-holders, or by their transferees. No
underwriting arrangements have been entered into by the Selling Security-
holders. The distribution of the securities by the Selling Security-holders may
be effected in one or more transactions that may take place on the
over-the-counter market including ordinary broker's transactions,
privately-negotiated transactions or through sales to one or more dealers for
resale of such shares as principals at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Security-holders in connection with sales
of such securities.

The Selling Security-holders and intermediaries through whom such securities
may be sold may be deemed "underwriters" within the meaning of the Security Act
of 1933, as amended ("Securities Act") with respect to the securities offered
and any profits realized or commissions received may be deemed underwriting
compensation. The Company has agreed to indemnify the Selling Security-holders
against certain liabilities, including liabilities under the Securities Act.

On the date hereof, the Company commenced pursuant to this registration
statement an initial public offering of 1,000,000 Units, each Unit comprising
two shares of Common Stock and two Class A Warrants. See "Concurrent Sales."

The Company will not receive any of the proceeds from the sale of the
securities by the Selling Security-holders. All costs incurred in the
registration of the securities of the Selling Security-holders are being borne
by the Company. See "Selling Security-holders."

Stratton Oakmont, Inc. from time to time will become a market maker and
otherwise effect transactions in the securities of this offering. Stratton
Oakmont, Inc., if it participates in the market, may become an influence and
thereafter a factor of increasing importance in the market for the securities.
However, there is no assurance that Stratton Oakmont, Inc. will or will continue
to be a dominating influence. The prices and liquidity of the Units may be
significantly affected by the degree, if any, of Stratton Oakmont, Inc.'s
participation in such market as a market maker. Stratton Oakmont, Inc. may
discontinue such market making activities at any time or from time to time.

The Company does not presently file reports and other information with the
Securities and Exchange Commission ("Commission"). However, following completion
of the initial public offering, the Company intends to furnish its stockholders
with annual reports containing audited financial statements and such interim
reports, in each case as it may determine to furnish or as may be required by
law.

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK AND
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" AND "DILUTION."

------------------------

The date of this Prospectus is , 1996.
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered by Company(1)(4)..... 1,000,000 Units
Securities Offered by Selling 2,000,000 Shares
Security-holders(2)..................... 2,000,000 Class A Warrants
Shares of Common Stock Outstanding Prior 8,500,000 Shares
to Offering.............................
Shares of Common Stock Outstanding After 10,500,000 Shares
Offering(3).............................
Comparative Share Ownership Upon
Completion of Offering:
Present Stockholders (8,500,000 80.95%
Shares)(2)(5)........................
Public Stockholders (2,000,000 19.05%
Shares)(2)(5)........................
Use of Net Proceeds of Sale of Administrative expenses, operating
Securities Offered by Company........... costs and working capital, including
software support and development,
marketing and sales, mergers and
acquisitions and the repayment of
debt. See "Use of Proceeds."
Proposed Nasdaq SmallCap Market EENTU
Symbols................................. EENT
EENTW
</TABLE>

- ------------------------
(1) The Company is offering 1,000,000 Units at a price of $7.00 per Unit. Each
Unit consists of two shares of Common Stock and two redeemable Class A
Warrants. The Class A Warrants shall be exercisable commencing one year
after the date of the Prospectus. Each Class A Warrant entitles the holder
to purchase one share of Common Stock at $4.00 per share during the four
year period commencing one year from the effective date hereof. The Class A
Warrants are redeemable upon certain conditions. Should the Class A Warrants
be exercised, of which there is no assurance, the Company will receive the
proceeds therefrom aggregating up to an additional $8,000,000. See
"Description of Securities."

(2) This offering also includes 2,000,000 shares of Common Stock and 2,000,000
Class A Warrants offered by the Selling Security-holders. The Class A
Warrants are identical to the Class A Warrants included in the Units being
offered by the Company. The shares of Common Stock and Class A Warrants held
by the Selling Security-holders may be sold commencing eighteen (18) months
from the date of this Prospectus, subject to earlier release at the sole
discretion of Stratton Oakmont, Inc., and such securities include a legend
with such restrictions. Stratton Oakmont, Inc. may release the securities
held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has
expired. The resale of the securities of the Selling Security-holders are
subject to Prospectus delivery and other requirements of the Securities Act
of 1933, as amended. Sales of such securities or the potential of such sales
at any time may have an adverse effect on the market prices of the
securities offered hereby. See "Selling Security-holders."

(4) The public offering price of the Units and the exercise price and other
terms of the Class A Warrants were arbitrarily determined by negotiations
between the Company and the Underwriter and do not necessarily relate to the
assets, book value or results of operations of the Company or any other
established criteria of value. See "Underwriting."

(5) See "Dilution."

2
<PAGE>
CONCURRENT SALES

On the date of this Prospectus, a registration statement under the
Securities Act with respect to an underwritten public offering ("Offering") of
1,000,000 Units ("Units") by the Company was declared effective by the
Securities and Exchange Commission ("Commission"), Washington, D.C. 20549, and
the Company commenced the sale of Units offered thereby. The Units are comprised
of 2,000,000 shares of Common Stock and 2,000,000 Class A Warrants to purchase
an additional 2,000,000 shares of Common Stock (without giving effect to the
Over-allotment Option granted to the Underwriter of the offering). Sales of
securities under this Prospectus by the Selling Security-holders or even the
potential of such sales may have an adverse effect on the market price of the
Company's securities.

SELLING SECURITY-HOLDERS

The registration statement, of which this Prospectus forms a part, also
covers the registration of 2,000,000 shares of Common Stock and 2,000,000 Class
A Warrants offered by four persons who are nonaffiliated with the Company,
hereinafter collectively referred to as "Selling Security-holders," to wit:
Edward Ratkovich ($500,000), Robert Foise ($250,000), Armstrong Industries
($200,000) and Martin Sumichrast ($50,000). General Ratkovich and Mr. Sumichrast
are officers, directors and principal stockholders of Nasdaq listed companies
recently underwritten by the Underwriter. The Class A Warrants are identical to
the Class A Warrants included in the Units being offered by the Company. The
securities held by the Selling Security-holders may be sold commencing eighteen
(18) months from the date of this Prospectus, subject to earlier release at the
sole discretion of the Underwriter, and such securities include a legend with
such restrictions. The Underwriter may release the securities held by the
Selling Security-holders at any time after all securities subject to the
Over-allotment Option have been sold or such option has expired. Should the
Underwriter release the securities held by the Selling Security-holders for
resale, it is uncertain whether the securities will be offered for sale. The
resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.

In March and April 1996, the Company borrowed $1,000,000 in a bridge loan
from the Selling Security-holders at the rate of eight percent simple annual
interest, which is due and payable at the closing of this offering from the net
proceeds of this offering. 2,000,000 shares of Common Stock, 2,000,000 Class A
Warrants and 2,000,000 Class B Warrants were issued to the Selling Security-
holders in further consideration of the bridge loan. The Class A Warrants issued
to the Selling Security-holders are identical to the Class A Warrants included
in the Units being offered by the Company. The Class B Warrants, which are not
being registered in this offering, are identical to the Class A Warrants
included in the Units being offered by the Company except that the exercise
price is $4.20. The shares of Common Stock and Class A Warrants are being
registered as part of this offering. The Company will not receive any of the
proceeds from the sale of the securities being offered by the Selling
Security-holders. The Class A Warrants are redeemable upon certain conditions.
Should the Class A Warrants be exercised, of which there is no assurance, the
Company will receive the proceeds therefrom aggregating up to an additional
$8,000,000.

The 2,000,000 shares of Common Stock and 2,000,000 Class A Warrants are
being offered by the Selling Security-holders under an alternate Prospectus.
Prior to making the bridge loan to the Company, the Selling Security-holders did
not own any other securities of the Company. None of the Selling
Security-holders of the Company are otherwise affiliated with the Company, at
the time of making the bridge loan, at the time of this offering or at any other
time. The Company believes that its financial transactions with the Selling
Security-holders served a legitimate business purpose, I.E., providing needed
working capital for the Company, and were fair and reasonable under the
circumstances since the transactions were highly speculative. The Company's
financial transactions with the

3
<PAGE>
Selling Security-holders were managed by Stratton Oakmont, Inc. and no
commissions or other remuneration were paid to Stratton Oakmont, Inc. in
connection with such transactions. See "Certain Transactions" and "Description
of Securities."

The securities offered hereby may be sold from time to time directly by the
Selling Security-holders. Alternatively, the Selling Security-holders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Security-holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Security-holders in connection with such sales of securities. The Selling
Security-holders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.

Sales of securities by the Selling Security-holders or even the potential of
such sales may likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the publicly
tradeable securities of the Company ("public float"), including this offering,
will be 4,000,000 shares of Common Stock and 4,000,000 Class A Warrants,
provided, however, that 2,000,000 shares of Common Stock and 2,000,000 Class A
Warrants owned by the Selling Security-holders are not transferable for eighteen
(18) months commencing on the effective date of this Prospectus or at such
earlier date as may be permitted by Stratton Oakmont, Inc., and such securities
include a legend with such restrictions. Stratton Oakmont, Inc. may release such
securities held by the Selling Security-holders at any time after all securities
subject to the Over-allotment Option have been sold or such option has expired.
The resale of the securities of the Selling Security-holders are subject to
Prospectus delivery and other requirements of the Securities Act of 1933, as
amended. Sales of such securities or the potential of such sales at any time may
have an adverse effect on the market prices of the securities offered hereby.

4
<PAGE>
PLAN OF DISTRIBUTION

The securities offered hereby may be sold from time to time directly by the
Selling Security-holders. Alternatively, the Selling Security-holders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Security-holders may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, including Stratton Oakmont, Inc., at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the Selling Security-holders in connection with
such sales of securities. The Selling Security-holders and intermediaries
through whom such securities are sold may be deemed "underwriters" within the
meaning of the Securities Act with respect to the securities offered, and any
profits realized or commissions received may be deemed underwriting
compensation.

At the time a particular offer of securities is made by or on behalf of a
Selling Security-holder, to the extent required, a Prospectus will be
distributed which will set forth the number of shares and warrants being offered
and the terms of the offering, including the name or names of any underwriters,
dealers or agents, if any, the purchase price paid by any underwriter for shares
and warrants purchased from the Selling Security-holder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers, and the
proposed selling price to the public.

5
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 20
Dilution.................................................................. 22
Capitalization............................................................ 23
Dividend Policy........................................................... 23
Management's Discussion and Analysis or Plan of Operation................. 24
Business.................................................................. 28
Management................................................................ 41
Principal Stockholders.................................................... 46
Certain Transactions...................................................... 47
Description of Securities................................................. 49
Selling Security-holders.................................................. 55
Plan of Distribution......................................................
Legal Proceedings......................................................... 61
Legal Matters............................................................. 62
Experts................................................................... 62
Additional Information.................................................... 62
Index to Financial Statements............................................. F-1
Report of Independent Certified Public Accountants........................ F-2
</TABLE>

------------------------

UNTIL , 1996 (25 DAYS AFTER THE EFFECTIVE DATE OF THIS PROSPECTUS),
ALL BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, 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 WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

2,000,000 SHARES
2,000,000 CLASS A WARRANTS

E-NET, INC.

---------------------

PROSPECTUS

---------------------

, 1996

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

II-1
<PAGE>
out of the director's status as a director of the Company, including actions
brought by or on behalf of the Company (shareholder derivative actions). The
provisions do not require a showing of good faith. Moreover, they do not provide
indemnification for liability arising out of willful misconduct, fraud, or
dishonesty, for "short-swing" profits violations under the federal securities
laws, or for the receipt of illegal remuneration. The provisions also do not
provide indemnification for any liability to the extent such liability is
covered by insurance. One purpose of the provisions is to supplement the
coverage provided by such insurance. However, as mentioned above, the Company
does not currently provide such insurance to its directors, and there is no
guarantee that the Company will provide such insurance to its directors in the
near future although the Company may attempt to obtain such insurance.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following is an itemization of expenses, payable by the Company from the
net proceeds of this offering, incurred by the Company in connection with the
issuance and distribution of the securities of the Company being offered hereby.
The Company has agreed to pay all of the expenses related to the registration of
the securities by the Selling Security-holders, which are included herein. All
expenses are estimated except the SEC and NASD Registration and Filing Fees. See
"Use of Proceeds."

<TABLE>
<S> <C>
SEC Registration and Filing Fee(1)............................. $ 14,638
NASD Registration and Filing Fee(1)............................ 4,745
Nasdaq Registration and Filing Fee............................. 10,000
Financial Printing............................................. 150,000
Transfer Agent Fees............................................ 10,000
Accounting Fees and Expenses................................... 100,000
Legal Fees and Expenses........................................ 375,000
Blue Sky Fees and Expenses..................................... 85,000
Underwriter's Nonaccountable Expense Allowance................. 241,500
Miscellaneous.................................................. 9,117
----------
TOTAL...................................................... $1,000,000
----------
----------
</TABLE>

- ------------------------
(1) Paid upon initial filing of this Registration Statement and related
Prospectus.

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

The following information sets forth all securities of the Company sold by
it within the past three years, which securities were not registered under the
Securities Act of 1933, as amended.

II-2
<PAGE>
In January 1995, the Company issued 6,000,000 shares of its common stock
(which includes a 600:1 stock split in January 1996) to 15 persons, including
the officers and directors of the Company, in a private placement transaction in
consideration of $100, or its par value at the time of issuance.

Also, in March and April 1996, the Company borrowed $1,000,000 in a bridge
loan from four persons who are nonaffiliated with the Underwriter and the
Company, each of whom is an accredited investor, to wit: Edward Ratkovich
($500,000), Robert Foise ($250,000), Armstrong Industries ($200,000) and Martin
Sumichrast ($50,000), at the rate of eight percent simple annual interest, which
is due and payable at the closing of this offering from the net proceeds of this
offering. General Ratkovich and Mr. Sumichrast are officers, directors and
principal stockholders of Nasdaq listed companies recently underwritten by the
Underwriter. In further consideration of the bridge loan, the Company issued
2,000,000 shares of Common Stock, 2,000,000 Class A Warrants and 2,000,000 Class
B Warrants to the Selling Security-holders. The shares of Common Stock and Class
A Warrants issued to the Selling Security-holders are being registered in this
offering. The Class A Warrants issued to the Selling Security-holders are
identical to the Class A Warrants included in the Units being offered by the
Company. The Class B Warrants, which are not being registered in this offering,
are identical to the Class A Warrants included in the Units being offered by the
Company except that the exercise price is $4.20. The securities held by the
Selling Security-holders may be sold commencing eighteen (18) months from the
date of this Prospectus, subject to earlier release at the sole discretion of
the Underwriter, and such securities include a legend with such restrictions.
The Underwriter may release the securities held by the Selling Security-holders
at any time after all securities subject to the Over-allotment Option have been
sold or such option has expired, which release has occurred in recent offerings
underwritten by the Underwriter. Should the Underwriter release the securities
held by the Selling Security-holders for resale, it is uncertain whether the
securities will be offered for sale. The resale of the securities of the Selling
Security-holders are subject to Prospectus delivery and other requirements of
the Securities Act of 1933, as amended. Sales of such securities or the
potential of such sales at any time may have an adverse effect on the market
prices of the securities offered hereby. The Company will not receive any of the
proceeds from the sale of the securities being offered by the Selling
Security-holders. The Class A Warrants are redeemable upon certain conditions.
Should the Class A Warrants offered by the Selling Security-holders be
exercised, of which there is no assurance, the Company will receive the proceeds
therefrom aggregating up to an additional $8,000,000. Prior to making the bridge
loan to the Company, the Selling Security-holders did not own any other
securities of the Company. None of the Selling Security-holders of the Company
are otherwise affiliated with the Company, at the time of making the bridge
loan, at the time of this offering or at any other time. The Company believes
that its financial transactions with the Selling Security-holders served a
legitimate business purpose, I.E., providing needed working capital for the
Company, and were fair and reasonable under the circumstances since the
transactions were highly speculative. The Company's financial transactions with
the Selling Security-holders were arranged by the Underwriter and no commissions
or other remuneration were paid to the Underwriter in connection with such
transactions. See "Description of Securities."

II-3
<PAGE>
and the rules and regulations as promulgated by the Securities and Exchange
Commission, Washington, D.C. 20549, such that the sales of the securities were
transactions by an issuer not involving any public offering. See "Description of
Securities."

Reference is also made hereby to "Dilution," "Principal Stockholders,"
"Certain Transactions" and "Description of Securities" in the Prospectus for
more information with respect to the previous
issuance and sale of the Company's securities.

All of the aforesaid securities have been appropriately marked with a
restricted legend and are "restricted securities," as defined in Rule 144 of the
rules and regulations of the Securities and Exchange Commission, Washington,
D.C. 20549. All of the aforesaid securities were issued for investment purposes
only and not with a view to redistribution, absent registration. All of the
aforesaid persons have been fully informed and advised concerning the
Registrant, its business, financial and other matters. Transactions by the
Registrant involving the sales of these securities set forth above were issued
pursuant to the "private placement" exemptions under the Securities Act of 1933,
as amended, as transactions by an issuer not involving any public offering. The
Registrant has been informed that each person is able to bear the economic risk
of his investment and is aware that the securities were not registered under the
Securities Act of 1933, as amended, and cannot be re-offered or re-sold until
they have been so registered or until the availability of an exemption
therefrom. The transfer agent and registrar of the Registrant will be instructed
to mark "stop transfer" on its ledgers to assure that these securities will not
be transferred absent registration or until the availability of an exemption
therefrom is determined.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

This following is a list of Exhibits marked by an asterisk (*) filed
herewith by e-Net, Inc. as part of Amendment No. 2 to the SB-2 Registration
Statement and related Prospectus:

<TABLE>
<C> <S>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealers Agreement.
3.0 Certificate of Incorporation, filed January 9, 1995.
3.1 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Form of Class A Warrant Certificate.
4.2 Form of Class B Warrant Certificate.
4.3 Form of Underwriter's Purchase Option.
4.4 Form of Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Employment Agreement, Robert A. Veschi, dated April 1, 1996.
10.1 United States Patent, Notice of Allowance, dated January 23, 1996.
10.2 Assignment of Patent Rights, dated March 22, 1996.
10.3 Sprint Agreement, dated March 1, 1996.
11.0 Computation of Per Share Loss.*
23.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on page II-7 of
the Registration Statement.
24.0 Consent of Grant Thornton LLP is contained on page II-8 of the
Registration Statement.
25.0 Power of Attorney appointing Robert A. Veschi is contained on page II-6
of the Registration Statement.
</TABLE>

ITEM 28. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to participating
broker-dealers, at the closing, certificates in such denominations and
registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.

II-4
<PAGE>
The undersigned Registrant also undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii)To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement:

(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

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 indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

This Registration Statement consists of the following:

<TABLE>
<C> <S>
1. Facing page.
2. Cross-Reference Sheet.
3. Prospectus.
4. Complete text of Items 24-28 in Part Two of Registration Statement.
5. Exhibits.
6. Signature page.
7. Consents of:
Thomas T. Prousalis, Jr., Esq.
Grant Thornton LLP
</TABLE>

II-5
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Washington, District of Columbia, on June 12, 1996.

e-NET, INC.

By: ROBERT A. VESCHI
-------------------------------------------
Robert A. Veschi
President

In accordance with the requirements of the Securities Act of 1933, 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>
ALONZO E. SHORT, JR., LT. GEN., USA (RET.)*
------------------------------------------- Chairman of the Board June 12, 1996
Alonzo E. Short, Jr., Lt. Gen., USA (ret.)

President, Chief Executive
ROBERT A. VESCHI Officer, Chief Financial
------------------------------------------- Officer, Controller, June 12, 1996
Robert A. Veschi Secretary, Director

GEORGE PORTA*
------------------------------------------- Vice President, Operations June 12, 1996
George Porta

WILLIAM L. HOOTON*
------------------------------------------- Director June 12, 1996
William L. Hooton

By: ROBERT A. VESCHI*
------------------------------------------
Robert A. Veschi
ATTORNEY-IN-FACT
</TABLE>

II-6
<PAGE>
CONSENT OF COUNSEL

The consent of Thomas T. Prousalis, Jr., Esq., 1919 Pennsylvania Avenue,
N.W., Suite 800, Washington, D.C. 20006, to the use of his name in this Form
SB-2 Registration Statement, and related Prospectus, as amended, of e-Net, Inc.
is contained in his opinion filed as Exhibit 5.0 hereto.

II-7
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated April 12, 1996 accompanying the Financial
Statements of e-Net, Inc. contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, and to the use of our name as it appears
under the caption "Experts."

GRANT THORNTON LLP

Washington, D.C.
June 12, 1996

II-8
<PAGE>
E-NET, INC.
INDEX TO EXHIBITS

The following is a list of Exhibits marked by an asterisk (*) filed herewith
by e-Net, Inc. as part of Amendment No. 2 to the SB-2 Registration Statement and
related Prospectus:

<TABLE>
<C> <S> <C>
1.0 Form of Underwriting Agreement.
1.1 Selected Dealers Agreement.
3.0 Certificate of Incorporation, filed January 9, 1995.
3.1 By-laws, as amended.
4.0 Specimen Copy of Common Stock Certificate.
4.1 Form of Class A Warrant Certificate.
4.2 Form of Class B Warrant Certificate.
4.3 Form of Underwriter's Purchase Option.
4.4 Form of Warrant Agreement.
5.0 Opinion of Thomas T. Prousalis, Jr., Esq. for Registrant.
10.0 Employment Agreement, Robert A. Veschi, dated April 1, 1996.
10.1 United States Patent, Notice of Allowance, dated January 23, 1996.
10.2 Assignment of Patent Rights, dated March 22, 1996.
10.3 Sprint Agreement, dated March 1, 1996.
11.0 Computation of Per Share Loss.*
23.0 Consent of Thomas T. Prousalis, Jr., Esq. is contained on page II-7 of
the Registration Statement.
24.0 Consent of Grant Thornton LLP is contained on page II-8 of the
Registration Statement.
25.0 Power of Attorney appointing Robert A. Veschi is contained on page II-6
of the Registration Statement.
</TABLE>

<PAGE>

EXHIBIT 11.0

E-NET, INC.
COMPUTATION OF PER SHARE LOSS

<TABLE>
<S> <C>
Pro Forma Net Loss............................................................. $ (774,556)

Weighted Average Shares:

Weighted average number of common shares outstanding from inception (1)........ 6,035,617

Common shares issued in March 1996 in contemplation of public offering, assumed
outstanding for the entire period............................................. 428,571
----------
6,464,188
----------
----------

Pro Forma net loss per share................................................... $ (.12)
----------
----------
</TABLE>

- ------------------------

(1) Reflects retroactive effect of stock split in January 1996 and the weighted
average effect (35,617 shares) of the issuance of 1,000,000 shares of Common
Stock in March 1996. The Class A Warrants issued in conjunction with these
shares are excluded from the computation as their effect is anti-dilutive
when measured using the treasury stock method.