NETLIVE COMMUNICATIONS INC, SB-2/A, 1996-08-07

NETLIVE COMMUNICATIONS INC
SB-2/A, 1996-08-07
AMUSEMENT & RECREATION SERVICES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 7, 1996

REGISTRATION NO. 333-4057
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------

AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------

NETLIVE COMMUNICATIONS, INC.
(Name of small business issuer in its charter)
-------------------

<TABLE>
<S> <C> <C>
DELAWARE 7373 13-3848652
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>

-------------------
584 BROADWAY
NEW YORK, NEW YORK 10012
(212) 343-7082
(Address and telephone number of principal executive offices)
-------------------
584 BROADWAY
NEW YORK, NEW YORK 10012
(Address of principal place of business or intended principal place of business)
-------------------
LAURENCE ROSEN, PRESIDENT
NETLIVE COMMUNICATIONS, INC.
584 BROADWAY
NEW YORK, NEW YORK 10012
(212) 343-7082
(Name, address and telephone number of agent for service)
-------------------
COPIES TO:

<TABLE>
<S> <C>
LAWRENCE G. NUSBAUM, ESQ. JAY M. KAPLOWITZ, ESQ.
RICHARD A. FRIEDMAN, ESQ. GERSTEN SAVAGE KAPLOWITZ
GUSRAE, KAPLAN & BRUNO & CURTIN, LLP
120 WALL STREET 575 LEXINGTON AVENUE
NEW YORK, NEW YORK 10005 NEW YORK, NEW YORK 10022
(212) 269-1400 (212) 752-9700
(212) 809-5449 (FAX) (212) 752-9713 (FAX)
</TABLE>

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

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. /X/

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
-------------------
CALCULATION OF REGISTRATION FEE

<TABLE><CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $.0001 par value........ 1,092,500(2) $ 5.50 $6,008,750 $ 2,071.98
Common Stock Purchase Warrants........ 839,500(3) $ .10 $ 83,950 $ 28.95
Common Stock, $.0001 par value(4)..... 839,500 $ 5.50 $4,617,250 $ 1,592.16
Underwriter's Warrants(5)............. 1 $10.00 $ 10 $ 0.01
Common Stock, $.0001 par value(6)..... 95,000 $ 6.60 $ 627,000 $ 216.21
Common Stock Purchase Warrants(7)..... 73,000 $ .12 $ 8,760 $ 3.02
Common Stock, $.0001 par value(8)..... 73,000 $ 6.60 $ 481,800 $ 166.14
Common Stock, $.0001 par value(9)..... 417,500 $ 5.50 $2,296,250 $ 791.81
Common Stock Purchase Warrants(9)..... 1,000,000 $ .10 $ 100,000 $ 34.48
Common Stock, $.0001 par value(10).... 1,000,000 $ 5.50 $5,500,000 $ 1,896.55
TOTAL.............................. $ 6,801.31
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457.

(2) Includes 142,500 shares of Common Stock subject to the Underwriter's
over-allotment option.

(3) Includes 109,500 Common Stock Purchase Warrants subject to the
Underwriter's over-allotment option.

(4) Issuable upon exercise of the Common Stock Purchase Warrants. Includes
shares of Common Stock issuable upon exercise of the Underwriter's
over-allotment option.

(5) To be issued to the Underwriter, entitling the Underwriter to purchase up
to 95,000 Shares of Common Stock and 73,000 Common Stock Purchase Warrants.

(6) Issuable upon the exercise of the Underwriter's Warrants.

(7) Issuable upon exercise of the Underwriter's Warrants, entitling the
Underwriter to purchase up to 73,000 Common Stock Purchase Warrants.

(8) Issuable upon the exercise of the Warrants included in the Underwriter's
Warrants.
(9) To be sold by the Selling Securityholders.
(10) Issuable upon the exercise of the Common Stock Purchase Warrants to be sold
by the Selling Securityholders.

Pursuant to Rule 416, there are also being registered such additional shares
as may become issuable pursuant to anti-dilution provisions of the Common Stock
Purchase Warrants and the Underwriters' Stock Warrants and Underwriters'
Warrants.
-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering by the Company of shares of Common Stock and
Common Stock Purchase Warrants (the "Prospectus") and one to be used in
connection with the sale of shares of Common Stock and Common Stock Purchase
Warrants by certain selling securityholders (the "Selling Securityholder
Prospectus"). The Prospectus and the Selling Securityholder Prospectus will be
identical in all respects except for the alternate pages for the Selling
Securityholder Prospectus included herein which are labeled "Alternate Page for
Selling Securityholder Prospectus."
<PAGE>
NETLIVE COMMUNICATIONS, INC.

<TABLE>
<CAPTION>
FORM SB-2 ITEM CAPTION IN PROSPECTUS
- -------------------------------------------------- -----------------------------------------
<C> <S> <C>

PART I
1. Forepart of the Registration Statement and
Outside Front Cover of Prospectus.......... Cover Page; Outside Front Page of
Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information and Risk Factors....... Prospectus Summary; Risk Factors
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ Risk Factors; Underwriting
6. Dilution................................... Dilution
7. Selling Security Holders................... Selling Securityholders
8. Plan of Distribution....................... Underwriting
9. Legal Proceedings.......................... Business--Legal Proceedings
10. Directors, Executive Officers, Promoters
and Control Persons........................ Management and Principal Stockholders
11. Security Ownership of Certain Beneficial
Owners and Management...................... Principal Stockholders
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................................ Not Applicable
15. Organization within Last Five Years........ Not Applicable
16. Description of Business.................... Business
17. Management's Discussion and Analysis or
Plan of Operation.......................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property.................... Business--Facilities
19. Certain Relationships and Related
Transactions............................... Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters........................ Not Applicable
21. Executive Compensation..................... Executive Compensation
22. Financial Statements....................... Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure................................. Not Applicable

PART II
24. Indemnification of Directors and
Officers................................... Indemnification of Directors and Officers
25. Other Expenses of Issuance and Other Expenses of Issuance and
Distribution............................... Distribution
26. Recent Sales of Unregistered Securities.... Recent Sales of Unregistered Securities
27. Exhibits................................... Exhibits
28. Undertakings............................... Undertakings
</TABLE>
<PAGE>

SUBJECT TO COMPLETION, DATED AUGUST 7, 1996

[NETLIVE LOGO]

950,000 SHARES OF COMMON STOCK AND
730,000 COMMON STOCK PURCHASE WARRANTS

NetLive Communications, Inc., a Delaware corporation (the "Company") hereby
offers 950,000 shares of common stock, $.0001 par value (the "Common Stock") of
the Company and 730,000 Common Stock Purchase Warrants (the "Warrants"). The
Common Stock and the Warrants offered hereby (sometimes hereinafter collectively
referred to as the "Securities") will be separately tradeable immediately upon
issuance and may be purchased separately. Investors will not be required to
purchase shares of Common Stock and Warrants together or in any particular
ratio. Each Warrant entitles the holder to purchase one share of Common Stock at
an exercise price of $5.50 (the "Exercise Price"), subject to adjustment,
commencing two years after the date of this Prospectus (the "Effective Date") or
sooner if the Warrants are called for redemption until the close of business on
the fifth year after the Effective Date.

Prior to this offering (the "Offering"), there has been no public market for
the Company's Common Stock and Warrants, and there can be no assurance that such
a public market will develop or be sustained after the completion of the
Offering. The Offering price of the Common Stock and the exercise price and
other terms of the Warrants were established by negotiations between the Company
and May Davis Group, Inc. (the "Underwriter") and do not bear any direct
relationship to the Company's assets, book value, results of operations or any
other criteria of value. The Company has applied for the listing of the Common
Stock and Warrants on the NASDAQ SmallCap Market ("NASDAQ") under the symbols
"NETL" and "NETLW," respectively.
-------------------

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS," COMMENCING ON PAGE 7 AND
"DILUTION".
-------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "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
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share................................... $5.50 $.55 $4.95
Per Warrant................................. $.10 $.01 $.09
Total(3).................................... $5,298,000 $529,800 $4,768,200
</TABLE>

(1) Does not include additional compensation to the Underwriter consisting of
(i) a non-accountable expense allowance equal to 3% of the aggregate
purchase price of the Securities, or $158,940 ($182,781 if the Underwriter's
over-allotment option is exercised in full) of which $25,000 has been paid
to date; (ii) warrants to purchase 95,000 shares of Common Stock at $6.60
per share and 73,000 Common Stock Purchase Warrants at $.12 per Warrant; and
(iii) a three year consulting agreement providing for fees totalling
$90,000, which is payable to the Underwriter in full on the closing of this
Offering. For additional information concerning further agreements between
the Company and the Underwriter, including an agreement to indemnify the
Underwriter against certain civil liabilities, including liabilities under
the Securities Act of 1933, see "Underwriting".

(2) After deducting Underwriting discounts and commissions, but before the
payment of the Underwriter's non-accountable expense allowance in the amount
of $158,940 ($182,781 if the Underwriter's over-allotment option is
exercised in full) and other expenses of the Offering payable by the Company
(estimated at $385,000).

(3) The Company has granted the Underwriter an option to purchase up to 142,500
additional shares of Common Stock and 109,500 additional Warrants, upon the
same terms and conditions set forth above, solely to cover over-allotments,
if any (the "Over-allotment Option"). If the Over-allotment Option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be increased to $6,092,700,
$609,270, and $5,483,430 respectively.

The Common Stock and Warrants are being offered on a "firm commitment" basis,
subject to prior sale, when, as, and if delivered to and accepted by the
Underwriter, and subject to certain other conditions and legal matters. The
Underwriter reserves the right to withdraw, cancel or modify the Offering and to
reject orders in whole or in part. It is expected that delivery of the
certificates representing the shares of Common Stock and Warrants will be made
at the offices of the Underwriter, in New York City, on or about ,
1996.

MAY DAVIS GROUP, INC.

THE DATE OF THIS PROSPECTUS IS , 1996
<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>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND THE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
-------------------

The Company intends to distribute to its stockholders annual reports
containing financial statements audited and reported upon by its independent
public accountants after the close of each fiscal year, and will make such other
periodic reports as the Company may determine to be appropriate or as may be
required by law. The Company's fiscal year ends March 31st of each year.

2
<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including financial statements and notes thereto appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Except as otherwise indicated herein, the
information contained in this Prospectus gives no effect to the exercise of (i)
the Over-allotment Option, (ii) the Underwriter's Warrants, (iii) Warrants
offered hereby or issued to private investors, or (iv) options granted under the
Company's stock option plan. All per share information in this Prospectus has
been adjusted to reflect an 837.14 for one stock split of the Company's Common
Stock effected in March 1996.

THE COMPANY

NetLive Communications, Inc. (the "Company") is a development stage company
recently organized to provide live, one-on-one, videoconferenced entertainment,
educational and counseling services over the Internet. The Company is developing
and intends to utilize technologies that will allow customers to view and
communicate with the Company's professionals and entertainment performers over
the Internet in an interactive and user-friendly environment. It is intended
that, at such time as the Company either develops or licenses technology from
others, customers will be able to simultaneously view and speak with the
Company's live professionals. The Company plans to bill its customers according
to the length of time that they remain on-line. No assurance can be given as to
when, if ever, such technology will be ready to be used commercially or that it
will be commercially accepted. To date, other than the continued development of
its technology and business plan and raising financing, the Company has not
conducted any business nor generated any revenues or profits and no assurance
can be given, that it will be able to do so in the future.

The Internet is a global web of computer networks. The expansion of this
information and communications medium has created a new consumer market. The
Company plans to service this market by providing live videoconferenced
one-on-one entertainment, educational and counseling services through the use of
technology designed to enable users to view live, individual, video broadcasts
over the Internet. The Company believes that the convergence of the growing
Internet medium and Internet-based videoconferencing technology presents a
unique opportunity to bring the Company's services directly into consumers'
homes.

The Company's proposed entertainment services are initially intended to
include Jeane Dixon's PsychicNet ("PsychicNet") and HolisticVisions. It is
intended that PsychicNet will employ professional psychics to provide live
videoconferenced psychic advice including tarot card readings, astrological
chart analysis and general psychic guidance. It is intended that
HolisticVisions, in addition to PsychicNet, will employ professional psychics to
provide live videoconferenced psychic advice including tarot card readings,
astrological chart analysis and general psychic guidance. In addition, the
Company's proposed HolisticVisions World Wide Web ("WWW") site will offer
consumers information on holistic health, spirituality, personal fulfillment and
other "New Age" related issues.

The Company's proposed educational services are initially intended to
include TutorNet, which will provide customers with instruction in a variety of
academic subjects over the Internet. It is intended that TutorNet will provide
tutoring services for students ranging from elementary school to graduate
school.

The Company's proposed counseling services are initially intended to include
TherapyNet, which will provide customers with a variety of psychological advice
and counseling over the Internet. It is intended that TherapyNet will provide
clients with a full range of psychological counseling from experienced mental
health professionals, who videoconference directly with the patient in the
privacy of his home or office.

3
<PAGE>
With the exception of having retained the services of certain consultants,
on a part-time basis, who are helping the Company develop its proposed TutorNet
and TherapyNet services and WWW sites, the Company has not, as of the date
hereof, entered into any agreements with any professional tutors or mental
health professionals.

Additional proposed entertainment, educational and counseling services which
the Company is considering include FantasyNet, ModelNet, WebClinic and CookNet.
See "Business."

The Company is continuously monitoring and evaluating the proposed services
it has under development in order to establish priorities and determine the
probabilities of success. In addition, the Company is reviewing additional
services which it may consider offering. No assurance can be given that the
Company will fully develop or offer its currently proposed services, or that, if
developed and offered, such proposed services will be accepted by consumers.

It is intended that computer users will be able to access the Company's
services over the Internet using a Netscape browser based user interface. The
Company intends for its integrated WWW commerce server to provide for secure
transaction processing, efficient scheduling, and automated billing. The Company
also is designing its system to automatically collect and process market data.

The Company is developing and plans to maintain databases containing
profiles of all customers utilizing the Company's services. The Company believes
that this information will enable the Company to better understand its customer
base, to develop new and innovative services and to create targeted marketing
programs geared toward efficiently selling the Company's services. The Company
also intends to employ focused consumer marketing techniques and to track
marketing effectiveness utilizing advanced database and analytical methods. It
is intended that the Company will initially market its services worldwide over
the Internet and through traditional media in targeted markets throughout North
America. In addition, the Company plans, in the future, to market through
traditional media in targeted markets throughout Europe and Asia.

The Company was organized in the State of Delaware on August 23, 1995. The
Company's executive offices are located at 584 Broadway, New York, New York
10012, and its telephone number at that address is (212) 343-7082.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered(1)........................ 950,000 shares of Common Stock and 730,000
Warrants. Each Warrant entitles the holder to
purchase one share of Common Stock at a price
of $5.50 during a three year period
commencing two years after the date of this
Prospectus. The exercise price and the number
of shares issuable upon exercise of the
Warrants are subject to adjustment in certain
circumstances. See "Description of
Securities."

Common Stock Outstanding Before Offering..... 1,700,000 shares.

Common Stock Outstanding After
Offering(1)(2)............................. 2,650,000 shares.

Warrants Outstanding Before Offering......... 1,000,000.

Warrants Outstanding After Offering.......... 1,730,000 Warrants.
</TABLE>

4
<PAGE>

<TABLE>
<S> <C>
Exercise Terms............................... Each Warrant entitles the holder thereof to
purchase one share of Common Stock for $5.50,
during the three year period commencing two
years after the Effective Date, subject to
adjustment in certain circumstances. See
"Description of Securities--Warrants."

Expiration Date.............................. , 2001 (five years after the Effective Date).

Redemption................................... Redeemable by the Company, in whole or in
part, at a price of $.05 per Warrant,
commencing one year after the Effective Date
upon not less than 30 days prior written
notice to the holders of such Warrants,
provided that the closing bid price (as
defined) of the Company's Common Stock for
the twenty consecutive trading days
immediately prior to the date on which the
notice of redemption is given, shall have
exceeded $7.50 per share.

Use of Proceeds.............................. Expansion of operations, development of
proposed business, capital expenditures and
working capital. See "Use of Proceeds".

Risk Factors................................. Investment in the securities offered hereby
involves a high degree of risk and immediate
substantial dilution. See "Risk Factors" and
"Dilution".

Proposed NASDAQ Symbols:(2)

Common Stock............................... NETL

Warrants................................... NETLW
</TABLE>

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

(1) Does not include (i) 142,500 shares of Common Stock and 109,500 Warrants,
subject to the Underwriter's Over-allotment Option; (ii) 1,000,000 shares of
Common Stock issuable upon the exercise of the outstanding Warrants, (iii)
168,000 shares of Common Stock issuable upon the exercise of the
Underwriter's Warrants; (iv) 800,000 shares of Common Stock reserved for
issuance pursuant to the Company's incentive stock option plan; or (v)
260,000 shares of Common Stock reserved for issuance pursuant to certain
other options. See "Management", "Underwriting" and "Description of
Securities".

(2) The proposed trading symbols do not imply that a liquid and active market
will be developed or sustained for the securities upon completion of the
Offering.

5
<PAGE>
SUMMARY FINANCIAL INFORMATION

The following summary of financial information should be read in conjunction
with the Unaudited Financial Statements and notes thereto appearing elsewhere in
this Memorandum.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 23, 1995
(DATE OF
INCEPTION)
TO MARCH 31, 1996
-----------------
<S> <C>
Selling, General and Administrative Expenses............... $243,129
Net loss................................................... (243,129)
Net loss per share......................................... (0.16)
Weighted average number of common shares outstanding(1).... 1,543,385
</TABLE>

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

(1) Reflects incorporation of the Company on August 23, 1995. See "Certain
Transactions."

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
MARCH 31, 1996
-------------------------------
(ACTUAL) (AS ADJUSTED)(1)(2)
-------- -------------------
<S> <C> <C>
Current Assets................................... $162,166 $ 4,475,176
Total Assets..................................... 282,438 4,587,469
Total Liabilities................................ 250,631 143,033
Deficit Accumulated During the Development
Stage............................................ (243,129) (431,760)
</TABLE>

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

(1) Adjusted to give effect to the sale of 950,000 shares of Common Stock and
730,000 Warrants offered hereby and the receipt of $4,159,760 of net
proceeds, after giving effect to $25,500 of previously paid Offering costs.

(2) Reflects the issuance of 200,000 shares of Common Stock in connection with
the May 1996 private placement and the use of a portion of the proceeds of
such private placement to repay notes payable.

6
<PAGE>
RISK FACTORS

An investment in the securities offered hereby is speculative in nature,
involves a high degree of risk and should not be made by any investor who cannot
afford the loss of his entire investment. Each prospective purchaser should
carefully consider the following risks and speculative factors associated with
this Offering, as well as other factors described elsewhere in this Prospectus,
before making an investment.

DEVELOPMENT STAGE COMPANY. The Company is in the development stage, has been
engaged primarily in organizational activities and has had limited operations.
As a result, the likelihood of success of the Company's operations must be
considered in view of all of the risks, expenses and delays inherent in the
establishment of a new business, including, but not limited to, unforeseen
expenses, complications and delays, the initiation of marketing activities, the
uncertainty of market acceptance of new services, intense competition from
larger more established competitors and other factors. Accordingly, there can be
no assurance that the business of the Company will be successful. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

EXPLANATORY PARAGRAPH IN INDEPENDENT AUDITORS REPORT; DEPENDENCE UPON
OFFERING PROCEEDS. The Company incurred a net loss of $243,129 for the period
from August 23, 1995 (date of inception) to March 31, 1996. In addition, the
Company had a working capital deficiency of $76,185 and a deficit accumulated
during the development state of $243,129 at such date. As a result of the
Company's working capital deficiency and deficit accumulated during the
development stage, the Company's independent auditors' report on the Company's
financial statements for the period from August 23, 1995 (date of inception) to
March 31, 1996 contains an explanatory paragraph discussing the fact that there
is substantial doubt about the Company's ability to continue as a going concern.
The Company has an immediate need for the net proceeds of this Offering, or
other financing in order to continue the development of its proposed services,
and to commence its operations and the marketing of its services. The Company
believes that the proceeds of this Offering will be sufficient to fund the
Company's operations for a period of approximately one year from the date of
this Prospectus, including the commencement of its operations and marketing of
its services. This estimate is based upon the Company's limited operations to
date and its estimates as to cash flow. However, in the event that such
estimates are inaccurate or future events prevent the Company from implementing
its plans as anticipated, the Company may be materially and adversely effected.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Financial Statements."

ANTICIPATED INITIAL LOSSES; WORKING CAPITAL DEFICIT; NO ASSURANCE OF
PROFITABILITY. During the period from August 23, 1995 (date of inception) to
March 31, 1996, the Company incurred a net loss of $243,129. In addition, at
March 31, 1996, the Company had a working capital deficit of $76,185 and a
deficit accumulated during the development stage of $243,129. The Company has
not derived any revenues and has continued to incur losses. There can be no
assurance that the Company will be able to profitably implement and market its
proposed services. It is anticipated that until the Company is able to generate
significant revenues, the Company will sustain additional losses. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Use of Proceeds" and "Proposed Business."

NEED FOR ADDITIONAL FINANCING. Although the Company believes that the net
proceeds from the sale of the Securities offered hereby will be sufficient to
fund the Company's operations for a period of approximately one year, such
belief cannot give rise to an assumption that the Company's cost estimates are
accurate or that the proceeds to be received from this Offering will provide
sufficient working capital for at least one year of operations. In addition, in
the event of delays or unanticipated costs or problems in the development and
marketing of the Company's proposed services, the Company may require
substantial additional financing. Further, the Company's ability to continue
operations after one year

7
<PAGE>
will depend substantially upon the availability of cash flow from its operations
or the ability of the Company to raise additional funds through alternative
financing methods, if necessary. There can be no assurance that the Company will
be able to obtain additional funding when needed, or that such funding, if
available, will be obtained on terms acceptable to the Company. In the event
that the Company's operations do not generate sufficient cash flow, or the
Company cannot obtain additional funds if and when needed, the Company may be
forced to curtail or cease its activities, which would likely result in loss to
investors of all or a substantial portion of their investment. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Use of Proceeds."

NEW AND UNCERTAIN MARKET; POSSIBLE LACK OF MARKET ACCEPTANCE. The market for
Internet services has only recently begun to develop, is rapidly evolving and is
characterized by an increasing number of market entrants who have developed
products and services for communication and commerce over the Internet. The
Company's future success will depend, in part, upon increased commercial use of
the Internet. In addition, the market for and success of the Company's proposed
services will also depend upon acceptance by its potential customers. While many
commercial, educational and governmental networks are currently connected to the
Internet, increased commercial use of the Internet will depend upon several
critical issues (i.e., security, reliability, cost, ease of use and access, and
quality of service). There can be no assurance that widespread commercial use of
the Internet or the Company's services will develop or be accepted.

TECHNOLOGICAL CHANGE AND NEW SERVICES. The market for Internet services is
characterized by rapidly changing technology, evolving industry standards,
changing customer needs and demands, and frequent new product and service
introductions. The Company's future success will depend, in part, on its ability
to develop, maintain and improve new and existing technology for use in
connection with the provision of its videoconferenced services over the
Internet, as well as on its ability to develop and provide new and desirable
services that capitalize on the increased use of the Internet. In addition, the
Company's success will also depend on its ability to attract and retain talented
professionals, and on its ability to provide extensive support and services to
its customers. There can be no assurance that the Company will be successful in
effectively developing or providing new technologies or services on a timely
basis or that such technologies or services will achieve market acceptance.

DEPENDENCE ON THE INTERNET. Although it is anticipated that some sales of
the Company's products will be to PC users who are able to use the Company's
services by connecting directly to the Company's network using a modem, sales of
the Company's services will depend in large part upon a robust industry and
infrastructure for providing Internet access and carrying Internet traffic. The
Internet may not prove to be a viable commercial marketplace because of
inadequate development of the necessary infrastructure, such as a reliable
network backbone or timely development of complementary products, such as high
speed modems. Because global commerce and on-line exchange of information on the
Internet and other similar open wide area networks are new and evolving, it is
difficult to predict with any assurance whether the Internet will prove to be a
viable commercial marketplace. There can be no assurance that the infrastructure
or complementary products necessary to make the Internet a viable commercial
marketplace will be developed, or, even if developed, that the Internet
necessarily will become a viable commercial marketplace. If the necessary
infrastructure or complementary products are not developed, or if the Internet
does not become a viable commercial marketplace, the Company's business,
operating results and financial condition will be materially adversely affected.

CUSTOMER CHARGEBACKS. The Company intends to utilize "900" numbers in
connection with its proposed telephone entertainment services and may therefore
be subject to the risk of non-collection of charges made on such numbers which
are not paid by the callers. In the event of nonpayment by the caller, the
Company may be required to pay the service bureau which it has engaged for such
service, which, in turn, is obligated to pay the telephone company. In addition,
the Company may be required to maintain a reserve for consumer chargebacks with
regard to its proposed telephone entertainment

8
<PAGE>
services. Although the Company has not created such reserve, the Company
believes that such reserve will be based on estimated refunds, credits and
uncollectible charges. In the event that such reserve is implemented, there can
be no assurance that the Company's proposed reserves will be adequate to cover
actual chargebacks. Although the Company will attempt to minimize any failure to
collect and the resulting chargebacks upon implementing the proposed telephone
entertainment service, the possibility of significant loss of revenues related
to nonpayment of charges could have a material adverse effect on the Company's
financial condition and results of operations.

DEPENDENCE ON THIRD PARTY SERVICE BUREAUS. The Company will be dependent
upon service bureaus to provide the Company's billing and collection services
and accounts receivable financing for the Company's proposed telephone
entertainment services. The Company believes that it will also be dependent upon
such service bureaus to provide other services including call processing and
inbound telemarketing. The Company believes that it will be able to obtain a
service bureau, however, no assurance can be given that it will be able to do so
on reasonable terms or otherwise. While the Company believes that there are a
sufficient number of service bureaus able to extend credit and provide services
to the Company in connection with its proposed telephone entertainment services,
a decline in the financial condition or economic prospects of the service
bureaus with which the Company will do business, resulting in their inability to
advance funds to the Company or otherwise pay amounts owed, under certain
circumstances could have a material adverse effect on the Company.

DEPENDENCE ON THIRD PARTY CARRIERS. For its proposed telephone entertainment
services, the Company will be dependent upon long distance, regional and local
telephone carriers ("Carriers") to transmit "900" number calls and to bill and
collect telephone charges. Failure by Carriers to provide such services may have
a material adverse effect on the Company's proposed telephone entertainment
services. Moreover, changes in billing and collection practices of Carriers
could create substantial additional costs to the Company, which could have a
significant impact on the Company and exacerbate the risks inherent in its
business.

LIMITATIONS ON PRICE AND ACCESS TO TELEPHONE SERVICES. In response to
pressure from and monitoring by regulatory authorities, the Company believes
that Carriers have voluntarily imposed limitations on amounts billed to
consumers for per minute and flat rate calls. Although the Company intends to
implement per minute rates which will be below such limits, there can be no
assurance that Carriers will not further reduce these limits or implement other
billing restrictions that would require the Company to alter its proposed
pricing structure or other methods of operations. In addition, the Company
believes that the rates charged by Carriers for telephone services have
increased and future increases may adversely affect the Company's proposed
operating margins. Furthermore, consumers may request that Carriers block their
ability to access "900" number services and Carriers may involuntarily block
consumer access to such services if the consumer fails to pay for "900" number
billed service. Blocking of substantial consumer access to "900" number services
could limit the market for the Company's proposed telephone entertainment
services and may adversely affect the Company's results of operations.

GOVERNMENT REGULATION. The Company's proposed telephone entertainment
services will be subject to extensive regulation at the federal, state and local
levels, and the effect and extent of such regulations has not been fully
reviewed or addressed by the Company. There can be no assurance that the Company
will be able to comply with applicable laws and regulations, that such laws and
regulations will not change, or that regulatory authorities will not take action
to limit or prevent the Company from advertising, marketing, promoting or
offering its proposed telephone entertainment services. Failure to comply with
applicable laws and regulations could prevent the Company from offering its
proposed telephone entertainment services and could subject the Company to civil
remedies, including substantial fines, penalties and injunctions, as well as
possible criminal sanctions, which could have a material adverse effect on the
Company. See "Business--Government Regulations."

9
<PAGE>
POTENTIAL LIABILITY AND INSURANCE. The Company may be subject to substantial
liability as a result of claims made by consumers arising out of services
provided by the Company's independent contractors and employees. The Company is
aware that claims have been made against other companies engaged in providing
telephone entertainment services on the basis of advice or prognostications
disseminated through such services. While the Company does not currently
maintain insurance, the Company intends to attempt to purchase such insurance at
such time as it has sufficient funds available for such purpose. There can be no
assurance that the Company will be able to obtain such insurance, or if
obtained, that such insurance will be sufficient to cover potential claims or
that an adequate level of coverage will be available in the future at a
reasonable cost. The Company will seek to limit any such potential liability by
providing disclaimers in connection with its services. There can be no
assurance, however, that the Company will not face claims resulting in
substantial liability for which the Company is partially or completely
uninsured. A partially or completely uninsured claim against the Company, if
successful and of sufficient magnitude, would have a material adverse effect on
the Company.

COMPETITION. The market for Internet services is new, intensely competitive,
rapidly evolving and subject to rapid technological change. The Company expects
to encounter significant competition from numerous companies, many of which may
possess substantially greater technical, financial, sales and marketing
resources than the Company. The Company believes that competition from new
entrants is expected to increase as commercial acceptance and use of the
Internet expands. Such increased competition may have a material adverse effect
on the Company's ability to successfully market its services.

The Company's entertainment, educational and counseling services will also
face intense competition from numerous other competing services and products
including, but not limited to, telephone services, in-person consultations,
newspapers, magazines, books, audio and video cassettes, as well as various
other forms of services which may be less expensive or provide other advantages
to consumers. There can be no assurance that the Company will be able to compete
successfully with other such products and services.

IMMEDIATE AND SUBSTANTIAL DILUTION. This Offering involves immediate and
substantial dilution to investors. As of March 31, 1996, the negative net
tangible book value of the Company was $40,392, or approximately, ($.03) per
share of Common Stock. Purchasers of shares of Common Stock in the Offering will
incur immediate dilution in net tangible book value of $3.82 per share of Common
Stock (attributing no value to the Warrants), which is approximately 69.5% based
on the initial public offering price of $5.50 per share. All of the Company's
present stockholders purchased their shares at a price substantially less than
the initial public offering price of the Common Stock. Accordingly, to the
extent that the Company incurs losses, the public investors will bear most of
the risk of such losses. See "Dilution".

BROAD DISCRETION IN USE OF PROCEEDS. Approximately 22.5% of the net proceeds
of this Offering will be applied to working capital and other general corporate
purposes. Accordingly, management of the Company will have broad discretion as
to the application of such proceeds. See "Use of Proceeds."

DEPENDENCE UPON MANAGEMENT; "KEY MAN LIFE INSURANCE"; ATTRACTION AND
RETENTION OF KEY PERSONNEL. The success of the Company will be dependent on the
efforts of Laurence Rosen, the Company's President and Chief Executive Officer.
The loss of the services of Mr. Rosen could have a material adverse effect on
the Company. The Company maintains "key man life insurance" on the life of Mr.
Rosen in the amount of $1,000,000. The Company's future success will depend in
part on its ability to attract and retain qualified personnel to manage the
development and future growth of the Company. There can be no assurance that the
Company will be successful in attracting and retaining such personnel.

10
<PAGE>

CONTROL BY MANAGEMENT. The Company's officers and directors currently own
and have the power to vote in excess of 61% of the total outstanding shares of
Common Stock. In addition, upon completion of this Offering, management of the
Company will continue to beneficially own shares of Common Stock representing in
excess of 39% of all votes entitled to be cast. Accordingly, management of the
Company will, as a practical matter, be in a position to elect a majority of the
directors of the Company and to control the Company's affairs.

POTENTIAL CONFLICTS OF INTEREST. The Company's advisors and service
providers may be employed by or work for others, and, accordingly, may devote
only a small portion of their time to the Company. In addition, these
individuals may have entered or may enter into employment, consulting or other
advisory arrangements with other entities and, as a result, their obligations to
these other entities may conflict or compete with their obligations to the
Company. The Company will seek to enter into non-compete and confidentiality
agreements with such persons. See "Management".

SHARES ELIGIBLE FOR FUTURE SALE. The Company currently has 1,700,000 shares
of Common Stock outstanding that are "restricted securities", as that term is
defined under Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). In general, under Rule 144, a person who has satisfied a
two-year holding period may, under certain circumstances, sell within any three
month period a number of shares of Common Stock that does not exceed the greater
of 1% of the then outstanding shares of Common Stock or the average weekly
trading volume in such shares during the four calendar weeks prior to such sale.
Rule 144 also permits, under certain circumstances, the sale of shares without
any quantity or other limitation by a person who is not an affiliate of the
Company and who has satisfied a three-year holding period. All stockholders of
the Company have agreed not to publicly sell shares of the Company's Common
Stock for a period of two years from the date of this Prospectus. Commencing one
year from the date of this Prospectus, such stockholders may be released from
their lock-up agreements with the prior written consent of the Underwriter. Any
substantial sale of restricted securities under Rule 144 could have a
significant adverse effect on the market price of the Company's securities. See
"Shares Eligible for Future Sale."

NO DIVIDENDS AND NONE ANTICIPATED. The holders of Common Stock are entitled
to receive dividends when, as and if declared by the Board of Directors, out of
funds legally available therefor. To date, no dividends have been declared or
paid on the Common Stock, and the Company does not intend to declare any
dividends in the foreseeable future. It is currently anticipated that earnings,
if any, will be used to develop and finance the Company's proposed business
operations. See "Dividend Policy."

NO ASSURANCE OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; VOLATILITY
OF STOCK PRICE. Prior to this Offering, there has been no market for any of the
Company's securities. There can be no assurance that a trading market will
develop after this Offering for any of the Company's securities or that, if
developed, it will be sustained. The initial public offering price of the
Securities and the exercise price and other terms of the Warrants were
established by negotiations between the Company and the Underwriter and do not
bear any direct relationship to the Company's assets, book value, results of
operations or any other criteria of value. See "Underwriting".

The stock market has, from time to time, experienced significant price and
volume fluctuations that may be unrelated to the operating performance of any
particular company. In addition, the market prices of the securities of many
publicly-traded companies in the Internet industry have in the past been, and
can in the future be expected to be, especially volatile. Various factors and
events, including future announcements of new service offerings by the Company
or its competitors, developments or disputes concerning, among other things,
government regulations in the United States, and economic and other external
factors, as well as fluctuations in the Company's financial results, could have
a significant impact on the market price of the Company's securities.

11
<PAGE>
NASDAQ ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF
SECURITIES FROM NASDAQ MARKET; RISKS OF LOW-PRICED STOCKS. Prior to this
Offering, there has been no established public trading market for the Company's
securities and there is no assurance that a public trading market for the
Company's securities will develop after the completion of this Offering. If a
trading market does in fact develop for the securities offered hereby, there can
be no assurance that it will be sustained.

The Company has applied for listing of the Common Stock and Warrants on the
NASDAQ small capitalization market upon the Effective Date. The Commission has
approved rules for imposing criteria for listing of securities on NASDAQ,
including standards for maintenance of such listing. In order to qualify for
initial quotation of securities on the NASDAQ small capitalization market, a
company, among other things, must have at least $4,000,000 in total assets,
$2,000,000 in stockholders' equity, $1,000,000 in market value of the public
float and a minimum bid price of $3.00 per share. For continued listing, a
company, among other things, must have at least $2,000,000 in total assets,
$1,000,000 in stockholders' equity, $1,000,000 in market value of the public
float and a minimum bid price of $1.00 per share. If the Company is unable to
satisfy NASDAQ maintenance criteria for listing in the future, its securities
may be delisted from NASDAQ. In such event, trading, if any, in the Company's
securities would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or the NASD's "Electronic Bulletin Board." As a
consequence of such delisting, an investor would likely find it more difficult
to dispose of, or to obtain quotations as to, the price of the Company's
securities.

PENNY STOCK REGULATION. In the event that the Company is unable to satisfy
the maintenance criteria requirements for NASDAQ, or its Common Stock falls
below the minimum bid price of $3.00 per share for the initial quotation,
trading would be conducted in the "Pink Sheets" or the NASD's Electronic
Bulletin Board. In the absence of the Common Stock being quoted on NASDAQ or the
Company's having $2,000,000 in stockholders' equity, trading in the Common Stock
would be covered by Rule 15g-9 promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), for non-NASDAQ and non-exchange listed securities.
Under such rule, broker-dealers who recommend such securities to persons other
than established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to a transaction prior to sale. Securities are exempt from this rule
if the market price is at least $5.00 per share.

The Commission has adopted regulations that generally define a "penny stock"
to be any equity security that has a market price of less than $5.00 per share
or an exercise price of less than $5.00 per share, subject to certain
exceptions. Such exceptions include an equity security listed on NASDAQ, and an
equity security issued by an issuer that has (i) net tangible assets of at least
$2,000,000, if such issuer has been in continuous operation for three years,
(ii) net tangible assets of at least $5,000,000, if such issuer has been in
continuous operation for less than three years, or (iii) average revenue of at
least $6,000,000 for the preceding three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a risk disclosure schedule explaining the penny
stock market and the risks associated therewith.

If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of purchasers in this Offering to sell their securities in the
secondary market. There is no assurance that trading in the Company's securities
will not be subject to these or other regulations that would adversely affect
the market for such securities.

POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS. The Warrants offered
hereby are redeemable, in whole or in part, at a price of $.05 per Warrant,
commencing one year after the Effective Date and prior to their expiration;
provided that (i) prior notice of not less than 30 days is given to the

12
<PAGE>
Warrantholders; (ii) the closing bid price of the Company's Common Stock for the
twenty (20) consecutive trading days immediately prior to the date on which the
notice of redemption is given, shall have exceeded $7.50 per share; and (iii)
Warrantholders shall have exercise rights until the close of the business day
preceding the date fixed for redemption. Notice of redemption of the Warrants
could force the holders to exercise the Warrants and pay the Exercise Price at a
time when it may be disadvantageous for them to do so, or to sell the Warrants
at the current market price when they might otherwise wish to hold them, or to
accept the redemption price, which may be substantially less than the market
value of the Warrants at the time of redemption. The Warrants may not be
exercised unless the registration statement pursuant to the Securities Act
covering the underlying shares of Common Stock is current and such shares have
been qualified for sale, or there is an exemption from applicable qualification
requirements, under the securities laws of the state of residence of the holder
of the Warrants. Although the Company does not presently intend to do so, the
Company reserves the right to call the Warrants for redemption whether or not a
current prospectus is in effect or such underlying shares are not, or cannot be,
registered in the applicable states. Such restrictions could have the effect of
preventing certain Warrantholders from liquidating their Warrants. See
"Description of Securities-- Warrants."

CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION REQUIRED TO EXERCISE
WARRANTS. Holders of the Warrants will have the right to exercise the Warrants
for the purchase of shares of Common Stock only if a current prospectus relating
to such shares is then in effect and only if the shares are qualified for sale
under the securities laws of the applicable state or states. The Company has
undertaken and intends to file and keep current a prospectus which will permit
the purchase and sale of the Common Stock underlying the Warrants, but there can
be no assurance that the Company will be able to do so. Although the Company
intends to seek to qualify for sale the shares of Common Stock underlying the
Warrants in those states in which the securities are to be offered, no assurance
can be given that such qualification will occur. In addition, purchasers may buy
Warrants in the aftermarket or may move to jurisdictions in which the shares of
Common Stock issuable upon exercise of the Warrants are not so registered or
qualified during the period that the Warrants are exercisable. In such event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants unless and until the shares could be registered or
qualified for sale in the jurisdiction in which such purchasers reside, or an
exemption to such qualification exists or is granted in such jurisdiction. The
Warrants may lose or be of no value if a prospectus covering the shares issuable
upon the exercise thereof is not kept current or if such underlying shares are
not, or cannot be, registered in the applicable states. See "Description of
Securities--Warrants."

LACK OF EXPERIENCE OF THE UNDERWRITER. The Underwriter was organized in
August 1993, was registered as a broker dealer in June 1995, and became a member
firm of the NASD in June 1995. The Underwriter is principally engaged in retail
brokerage and market making activities and various corporate finance projects.
Although the Underwriter has acted as a placement agent in private offerings and
has participated as a member of the underwriting syndicate or as a selected
dealer in one public offering, it has not acted as the lead managing underwriter
in any public offerings of securities. While certain of the officers of the
Underwriter have significant experience in corporate finance and the
underwriting of securities, the Underwriter has not previously underwritten any
public offerings. No assurance can be given that the Underwriter's lack of
experience as a lead managing underwriter of public offerings will not adversely
affect this Offering and the subsequent development of a liquid public trading
market in the Company's securities.

RELATIONSHIP OF UNDERWRITER TO TRADING. The Underwriter may act as a broker
or dealer with respect to the purchase or sale of the Common Stock and the
Warrants in the over-the-counter market where each is expected to trade. The
Underwriter also has the right to act as the Company's exclusive agent in
connection with any future solicitation of warrantholders to exercise their
Warrants. Unless granted an exemption by the Commission from Rule 10b-6 under
the Exchange Act, the Underwriter

13
<PAGE>
will be prohibited from engaging in any market-making activities or solicited
brokerage activities with regard to the Company's securities during a period
beginning nine business days prior to the commencement of any such solicitation
and ending on the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Underwriter may have to
receive a fee for the exercise of the Warrants following such solicitation. As a
result, the Underwriter and soliciting broker/dealers may be unable to continue
to make a market in the Company's securities during certain periods while the
exercise of Warrants is being solicited. Such a limitation, while in effect,
could impair the liquidity and market price of the Company's securities.

ISSUANCE OF PREFERRED STOCK: ANTI-TAKEOVER PROVISIONS. The Company's
Certificate of Incorporation permits its Directors to designate the terms of and
issue shares of Preferred Stock. The issuance of shares of Preferred Stock by
the Board of Directors could adversely effect the rights of holders of Common
Stock by, among other matters, establishing preferential dividends, liquidation
rights and voting power. Although the Company has no present intention to issue
shares of Preferred Stock (and is prohibited from issuing shares of Preferred
Stock for two years from the closing date of this Offering without the consent
of the Underwriter), the issuance thereof might render it more difficult, and
therefore discourage, an unsolicited takeover proposal such as a tender offer,
proxy contest or the removal of incumbent management, even if such actions would
be in the best interest of the Company's stockholders. See "Description of
Securities."

UNDERWRITER'S WARRANTS AND REGISTRATION RIGHTS. In connection with this
Offering, the Company has agreed to sell to the Underwriter, for $10, the
Underwriter's Warrants which entitle the Underwriter to purchase up to 95,000
shares of Common Stock and/or 73,000 Warrants, respectively. The securities
issuable upon exercise of the Underwriter's Warrants are identical to those
offered pursuant to this prospectus. The Underwriter's Warrants are exercisable
at $6.60 and $.12, respectively, for a period of four years commencing one year
from the Effective Date. The exercise of the Underwriter's Warrants and the
Warrants contained in the Underwriter's Warrants may dilute the value of the
shares of Common Stock to be acquired by holders of the Warrants, may adversely
affect the Company's ability to obtain equity capital, and, if the Common Stock
issuable upon the exercise of the Underwriter's Warrants and the Warrants
contained in the Underwriter's Warrants are sold in the public market, may
adversely affect the market price of the Common Stock. The Underwriter has been
granted certain "piggyback" and demand registration rights for a period of five
years from the Effective Date with respect to the registration under the
Securities Act of the securities directly or indirectly issuable upon exercise
of the Underwriter's Stock Warrants and Underwriter's warrants. The exercise of
such rights could result in substantial expense to the Company. See
"Underwriting."

DILUTION

The difference between the initial public offering price per share of Common
Stock and the pro forma net tangible book value per share of Common Stock after
this Offering constitutes the dilution to investors in this Offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total tangible assets less total liabilities) by the
number of outstanding shares of Common stock. The following discussions allocate
no value to the Class A Warrants.

At March 31, 1996, the Company's liabilities exceeded its tangible assets by
$40,392 (giving effect to expenses of the Offering paid at such date) and
accordingly the Company's Common Stock had a negative net tangible book value of
($.03) per share. After giving effect to the receipt of the net proceeds from
the sale of the Common Stock offered hereby at an initial public offering price
of $5.50 per share of Common Stock (less underwriting discount and offering
expenses) the pro forma net tangible book value of the Company at March 31, 1996
would have been $4,440,216 or $1.68 per share, representing an immediate
increase in net tangible book value of $1.71 per share to the existing
stockholders, and

14
<PAGE>

immediate dilution of $3.82 per share (69.5%) to new investors. The table on the
following page illustrates dilution to new investors on a per share basis:

<TABLE><CAPTION>
<S> <C> <C>
Public offering price per share............................. $5.50
Net tangible book value (deficit) per share before
offering.................................................... ($.03)
Increase attributable to public investors................... $1.71
Pro forma net tangible book value per share after
offering.................................................... $1.68
-----
Dilution per share to public investors...................... $3.82
-----
-----
</TABLE>

In the event the Underwriter exercises its Over-allotment Option in full,
the pro forma net tangible book value per share would be $1.84 which would
result in dilution to the public investors of $3.66.

The following table sets forth with respect to the existing stockholders and
public investors, a comparison of the number of shares of Common stock owned by
the existing stockholders, the number of shares of Common Stock to be purchased
from the Company by the purchasers of the Securities offered hereby and the
respective aggregate consideration paid to the Company and the average price per
share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------ ------------------------- AVERAGE
APPROXIMATE APPROXIMATE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
--------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Public Investors................... 950,000 35.85% $5,225,000 87.08% $5.50
Present Stockholders............... 1,700,000 64.15% $ 774,936 12.92% $0.46
--------- ----------- ---------- -----------
Totals....................... 2,650,000 100.00% $5,999,936 100.00%
--------- ----------- ---------- -----------
--------- ----------- ---------- -----------
</TABLE>

15
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 950,000 Shares of
Common Stock and 730,000 Warrants offered hereby are estimated to be
approximately $4,159,760 ($4,851,149 if the Underwriter's Over-allotment Option
is exercised in full) after deducting underwriting commissions and discounts and
other expenses of the Offering and after giving effect to $25,500 of previously
paid Offering costs. The Company expects to use the net proceeds over the next
twelve months approximately as follows:

<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE
AMOUNT OF NET PROCEEDS
---------- ---------------
<S> <C> <C>
Advertising, Marketing and Promotion(1)......... $1,650,000 39.7%
On-Line Content Development(2).................. 400,000 9.6%
Software Development(3)......................... 700,000 16.8%
Capital Expenditures(4)......................... 275,000 6.6%
Licensing Fees(5)............................... 200,000 4.8%
Working Capital................................. 934,760 22.5%
---------- -------
TOTAL..................................... $4,159,760 100.0%
---------- -------
---------- -------
</TABLE>

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

(1) Represents anticipated costs associated with advertising and promotion,
including purchase of broadcast media, commercials, infomercials,
telemarketing and direct mail advertising in connection with the Company's
proposed videoconferencing and telephone entertainment services.

(2) Includes costs associated with development of multi-media resources related
to content of specific services proposed to be offered by the Company,
including payment of salaries, costs and fees for writers, artists and
materials to be incorporated as part of the Company's WWW sites.

(3) Includes costs associated with development of proprietary Internet software,
including payment of salaries for technical staff.

(4) Represents anticipated costs associated with purchasing equipment, including
computer hardware and videoconferencing equipment.

(5) Includes fees to be paid to celebrities and trademark owners for use of
their names and/or trademarks.

The foregoing represents the Company's current estimate of the allocation of
the net proceeds of the Offering based upon certain assumptions relating to the
costs associated with the implementation of the Company's proposed business
operations. Future events, including the problems, delays, expenses and
complications frequently encountered by companies which seek to develop new
technologies or establish new services or introduce services to a new market, as
well as changes in economic conditions, regulatory or competitive conditions,
and the success of the Company's marketing activities, may make shifts in the
allocation of funds necessary or desirable. There can be no assurance that the
Company's estimates will prove to be accurate or that unforeseen expenses will
not be incurred.

The Company believes that the net proceeds of this Offering will satisfy the
Company's capital requirements for approximately twelve months. During those
twelve months, the Company's efforts will be directed at developing and
implementing its proposed business operations.

Prior to expenditure, the net proceeds of this Offering will be invested
principally in high grade short-term interest-bearing investments. Any proceeds
received upon exercise of the Over-allotment Option or any of the Company's
warrants will be used for working capital.

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DIVIDEND POLICY

The Company has never paid any cash dividends. The payment of dividends, if
any, in the future is within the discretion of the Board of Directors and will
depend upon the Company's earnings, its capital requirements and financial
condition, and other relevant factors. The Board does not presently intend to
declare any dividends in the foreseeable future, but instead intends to retain
all earnings, if any, for use in the Company's business operations. See
"Description of Securities".

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CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1996 and such capitalization as adjusted to give effect to (i) the sale of
the Securities offered hereby, and (ii) the anticipated use of the net proceeds
of this Offering in the manner contemplated under "Use of Proceeds". This table
should be read in conjunction with the historical financial statements and notes
thereto appearing elsewhere in this Prospectus.

<TABLE><CAPTION>
MARCH 31, 1996
------------------------------
ACTUAL AS ADJUSTED(1) (2)
-------- ------------------
<S> <C> <C>
Liabilities
Total liabilities.............................. $250,631 $ 143,033
-------- ------------------
-------- ------------------
Stockholders' Equity
Preferred Stock, $.0001 par value: Authorized
1,000,000 shares; none issued.................. -- --
Common Stock, $.0001 par value: Authorized
19,000,000 shares; Issued and Outstanding--
1,500,000 and 2,650,000, respectively.......... 150 265
Additional paid in capital....................... 289,661 4,875,931
Deficit accumulated during the development
stage.......................................... (243,129) (431,760)
Deferred offering costs relating to Common Stock
issued for services related to intended IPO.... (14,875) 0
-------- ------------------
Stockholders' equity............................. $ 31,807 $4,444,436
-------- ------------------
-------- ------------------
</TABLE>

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

(1) Gives effect to the sale of the Common Stock and Warrants offered hereby and
the receipt of $4,159,760 of net proceeds therefrom, after giving effect to
$25,500 of previously paid Offering costs.

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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Prospectus.

OVERVIEW

The Company was incorporated on August 23, 1995. The Company is currently
developing an integrated World Wide Web commerce and videoconferencing system
that the Company intends to use to deliver live one-on-one videoconferenced
entertainment, educational and counseling services over the Internet. In tandem
with its ongoing technology development, the Company is developing the content
of the services that it proposes to deliver to consumers over the Internet. It
is anticipated that the Company's revenues will predominantly consist of fees
paid by consumers for delivery of entertainment, educational and counseling
services over the Internet. The Company intends, as part of its research and
development process, to continually evaluate the market viability of its
proposed services and a number of new and innovative services. This process
includes engaging experts in various disciplines to conduct preliminary analyses
and build prototypes of the various services that the Company is considering
introducing into the marketplace.

From inception on August 23, 1995 to the present time, the Company's
operating activities have related primarily to recruiting personnel, raising
capital, purchasing operating assets and performing research and development.

The Company has not yet completed development of its integrated web commerce
and videoconferencing system. Consequently, the Company has not had any sales or
revenues to date.

The basic component of the Company's business is the delivery of live
one-on-one videoconferenced entertainment, educational and counseling services
on a pay per minute basis to consumers via the Internet. The Company's strategy
is to identify certain niche service areas that offer consumers high added value
and therefore produce high profit margins for the Company. This strategy is
designed to maximize the revenue per minute that the Company's service
professionals will generate when they are on-line with customers.

All of the Company's planned videoconferencing services will utilize the
same integrated web commerce and videoconferencing system that the Company is
currently developing. The Company also plans to seek licensees for its web
commerce and videoconferencing system for use in service content areas that do
not compete with those in which the Company intends to operate.

In addition to the Company's planned videoconferencing services, the Company
also plans, in connection with its exclusive licensing agreement with Jeane
Dixon, to develop and market telephone entertainment services which will permit
customers to engage in live one-on-one conversations with psychics and to
receive personalized information responsive to their requests.

RESULTS OF OPERATIONS

Operating Expenses: The Company's operating expenses for the period from
August 23, 1995 (date of inception) to March 31, 1996 were $243,129. The Company
believes that continued expansion of operations is essential to achieving and
maintaining market leadership. As a consequence, the Company expects its
operating expenses to increase.

As of March 31, 1996, the Company has recorded accrued compensation of
approximately $90,000 related to the difference between the stated salaries and
consulting fees for certain of the Company's

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employees and consultants and the actual cash compensation that has been paid to
such persons to date. Such compensation continues to accrue. See Notes to
Consolidated Financial Statements.

Research and Development: Research and development expenses consist
primarily of salaries and consulting fees to support technology and services
content development. To date all of the software development costs have been
expensed as incurred. The Company believes that significant investment in
research and development will be required to remain competitive with respect to
its technology and the content of its services. As a consequence, the Company
intends to increase the absolute amount of its research and development
expenditures in the future.

Sales and Marketing: Sales and marketing expenses currently consist
primarily of salaries and consulting fees paid to develop the Company's
marketing strategy. It is anticipated that marketing expenses will in the future
include salaries, as well as an extensive national advertising campaign in both
traditional media such as direct sales, television, radio and print media, as
well as a significant expenditure on Internet advertising. The Company expects
that marketing expense will be the single largest expense for the Company,
averaging approximately $1,650,000 annually, including salaries, once the
Company begins to market its services to consumers.

INCOME TAXES

As of March 31, 1996, the Company had federal net operating loss
carryforwards of approximately $240,000. The federal net operating loss
carryforwards will expire in 2011 if not utilized. See Notes to Consolidated
Financial Statements.

FACTORS AFFECTING OPERATING RESULTS

As a result of the Company's limited operating history, the Company does not
have historical financial data for a significant number of periods on which to
base planned operating expenses. Additionally, the Company has not yet generated
any revenues from operations. Accordingly, the company's expense levels are
based entirely on its expectations as to future revenues and to a large extent
are fixed. The Company may be unable to adjust spending in a timely manner to
compensate for any unexpected delay in the development of its web commerce and
videoconferencing system or for any delay in the commencement of revenues from
operations. Accordingly, any unexpected delay in the completion of the
development of the Company's web commerce and videoconferencing system will have
a material adverse impact on the Company's business, operating results and
financial condition. The Company plans to increase its operating expenses to
fund greater levels of research and development and increase its marketing and
business development efforts. To the extent that such expenses are not
immediately followed by an infusion of capital from either financing activities
or from operating revenues, the Company's business, operating results and
financial condition will be materially adversely affected.

The Company expects to experience significant fluctuations in future
quarterly operating results that may be caused by many factors, including demand
for the Company's services, introduction of new technological developments, the
introduction, enhancement and market acceptance of new and existing services,
the introduction of competing services, and general economic conditions. As a
result, the Company believes that period to period comparisons of its results of
operations will not necessarily be meaningful and should not be relied upon as
any indication of future performance. Because of all of the foregoing factors,
it is likely that in some future quarter the Company's operating results will be
below the expectations of public market analysts and investors. In such event,
the Company's Common Stock would likely be materially adversely affected.

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In connection with the issuance of 100,000 options to Dr. Vladislav Rysin,
the Company will record a charge to earnings of $300,000 over the term of Dr.
Rysin's employment agreement. See "Management--Employment Agreements."

LIQUIDITY AND CAPITAL RESOURCES

To date, the Company has primarily financed it operations through private
sales of equity and debt securities and through the contribution of capital by
its founders. The Company has not generated any revenues or other cash through
operations since its inception and it is unlikely that it will generate any cash
from operations in the foreseeable future. The Company completed a bridge
financing on March 20, 1996 which consisted of the sale of $250,000 in two year
promissory notes, 200,000 shares of Common Stock and 1,000,000 warrants to
purchase Common Stock. This initial bridge financing provided net proceeds to
the Company of approximately $199,500 after investment banking and legal fees.
The Company completed a second bridge financing on May 9, 1996 which consisted
of the sale of 200,000 shares of Common Stock at a price of $2.50 per share for
total gross proceeds to the Company of $500,000. This second financing provided
net proceeds to the Company of approximately $385,000. The Company used
approximately $262,000 to repay the principal and interest due on the $250,000
of promissory notes issued in the first bridge financing. In connection with the
repayment of the notes upon completion of the second bridge financing the
Company will record a charge to operations of approximately $165,000 for May
1996. The effective interest rate on the initial bridge financing was
approximately 1,235%.

Capital expenditures were approximately $33,000 for the period from August
23, 1995 (date of inception) to March 31, 1996. The Company has no material
commitments other than employment and consulting agreements, obligations to
UUNET Technologies Corporation, equipment leases and operating leases. See Notes
to Consolidated Financial Statements. The Company estimates that capital
expenditures through the fiscal year ending March 31, 1997 will be approximately
$275,000 of which approximately $130,000 is related to video station equipment
and related expenditures for the implementation of its first offering of
commercial service content.

The Company believes that the net proceeds from this Offering, together with
available funds will be sufficient to meet its anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.
Thereafter, if the Company is unable to generate sufficient cash from operations
to satisfy the Company's liquidity requirements, the Company may sell additional
equity or debt securities or obtain new credit facilities. The sale of
additional equity or convertible debt securities will result in additional
dilution to the Company's stockholders.

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<PAGE>
BUSINESS

NetLive Communications, Inc. (the "Company") is a development stage company
recently organized to provide live, one-on-one, videoconferenced entertainment,
educational and counseling services over the Internet. The Company is developing
and intends to utilize technologies that will allow customers to view and
communicate with the Company's professionals and entertainment performers over
the Internet in an interactive and user-friendly environment. It is intended
that, at such times as the Company either develops technology or licenses such
technology from others, customers will be able to simultaneously view and speak
with the Company's live professionals. The Company plans to bill its customers
according to the length of time that they remain on-line. No assurance can be
given as to when, if ever, such technology will be ready to be used commercially
or that it will be commercially accepted. To date, other than the continued
development and integration of its technology and business plan, and raising
financing, the Company has not conducted any business nor generated any revenues
or profits and no assurance can be given, that it will be able to do so in the
future. See "Risk Factors".

It is intended that the Company's proposed entertainment, educational and
counseling services will initially include PsychicNet, TutorNet and TherapyNet.
However, the Company is continuously monitoring and evaluating the proposed
services it has under development in order to establish priorities and determine
the probabilities of each service's success. In addition, the Company is
reviewing additional services which it may consider offering. No assurance can
be given that the Company will fully develop or offer its currently proposed
services, or that, if developed and offered, such proposed services will be
accepted by consumers.

It is intended that computer users will be able to access the Company's
services over the Internet using a Netscape browser-based user interface. The
Company is developing its integrated WWW commerce server to provide for secure
transaction processing, efficient scheduling, and automated billing. The Company
also is designing its system to automatically collect and process market data.

The Company is developing and plans to maintain databases containing
profiles of all customers utilizing the Company's services. The Company believes
that this information will enable the Company to better understand its customer
base, to develop new and innovative services and to create targeted marketing
programs geared toward efficiently selling the Company's services. The Company
also intends to employ focused consumer marketing techniques and to track
marketing effectiveness utilizing advanced database and analytical methods. It
is intended that the Company will initially market its services worldwide over
the Internet and it plans, in the future, to market through traditional media in
targeted markets throughout North America. In addition, the Company plans, in
the future, to market through traditional media in targeted markets throughout
Europe and Asia.

JEANE DIXON'S PSYCHICNET

It is intended that PsychicNet will employ professional psychics to provide
live videoconferenced psychic advice including tarot card readings, astrological
chart analysis and general psychic guidance over the Internet. In May 1996, the
Company entered into a licensing agreement with Jeane Dixon, a world renowned
psychic, pursuant to which the Company has the exclusive worldwide right to use
Ms. Dixon's name, voice, likeness and image in connection with psychic guidance
and astrology services provided over the Internet, other on-line services and in
connection with live, psychic guidance and

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<PAGE>
astrology services provided over the telephone. In addition, the Company has the
non-exclusive worldwide right to use Ms. Dixon's name, voice, likeness and image
in connection with any products sold in connection therewith and all
endorsements and promotions thereof. The agreement with Ms. Dixon is for a term
ending on August 31, 1999, which term is renewable, on 30 days written notice
from the Company following completion of the term (or the renewal terms, as the
case may be), at the option of the Company for additional one (1) year periods
provided certain financial performance levels are achieved. In connection with
the agreement, the Company has agreed to make certain royalty payments to Ms.
Dixon, which payments are based upon a percentage of the Company's sales in
connection with this service. The agreement is terminable (i) by the Company at
any time, without cause, upon ninety (90) days prior written notice, (ii) by Ms.
Dixon in the event that the average monthly payments to Ms. Dixon do not exceed
certain minimum amounts, or (iii) by Ms. Dixon upon material breach by the
Company of the agreement.

The Company plans to incorporate computer generated special visual and audio
effects to enhance the nature of the service. It is intended that PsychicNet
customers will be able to actually see the results of their personalized
astrological and tarot card readings on their computer screen. No assurance can
be given when, if ever, such technology will be developed and available for
large scale commercial applications. Moreover, no assurance can be given that
such technology will ever be accepted by consumers. See "Risk Factors--New and
Uncertain Market" and "--Technological Change and New Services".

HOLISTICVISIONS

It is intended that HolisticVisions, in addition to PsychicNet, will employ
professional psychics to provide live video conferenced psychic advice including
tarot card readings, astrological chart analysis and general psychic guidance
over the Internet. In addition, the Company's proposed HolisticVisions WWW site
will offer consumers information on holistic health, spirituality, personal
fulfillment and other "New Age" related issues. "New Age" refers to paranormal,
mystical and spiritual phenomena which can be explained through the use of
horoscopes, tarot card and psychic readings and prognostications. In connection
with the Company's proposed HolisticVisions service and WWW site, the Company
has entered into a non-binding letter of intent with the New York Open Center, a
holistic learning center, regarding the Company's intention to work with the New
York Open Center to broadcast its seminars and lectures on the Internet via the
Company's proposed HolisticVisions WWW site. In addition, the Company has
retained the services of a consultant on a part-time basis, who is helping the
Company develop its proposed HolisticVisions service and WWW site. No assurance
can be given when, if ever, such technology will be developed and available for
large scale commercial applications. Moreover, no assurance can be given that
such technology will be accepted by consumers. See "Risk Factors--New and
Uncertain Market" and "--Technological Change and New Services."

TUTORNET

It is intended that TutorNet will provide live videoconferenced tutoring
services for students ranging from elementary school through graduate school. It
is intended that TutorNet will provide students with first-rate professional
instruction in a variety of academic subjects on demand. The Company plans to
employ professional tutors to provide live tutoring services to today's computer
literate students. It is intended that TutorNet's staff will assist students
with homework questions, writing assignments and exam preparation in a variety
of subjects. TutorNet also intends to offer instruction on popular standardized
tests, such as the PSAT, SAT, LSAT, GRE, GMAT and MCAT. The Company plans to
integrate whiteboard and document sharing technology that is intended to allow
the Company tutor and the customer to view and work together on the same written
documents. With the exception of having retained the services of two
consultants, on a part-time basis, to assist the Company in developing its
proposed TutorNet service and WWW site, the Company has not, as of the date
hereof, entered into any agreements with any professional tutors. No assurance
can be given when,

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<PAGE>
if ever, such technology will be developed and available for large scale
commercial applications. Moreover, no assurance can be given that such
technology will ever be accepted by consumers. See "Risk Factors--New and
Uncertain Market" and "--Technological Change and New Services".

THERAPYNET

It is intended that TherapyNet will provide customers with counseling from
persons experienced in the mental health profession who will videoconference
directly to consumers in the privacy of their home or office. It is intended
that customers will be able to schedule regular weekly therapy sessions and may
also avail themselves of the Company's therapy services on demand. It is
intended that TherapyNet's staff will provide customers with a range of
immediate counseling from crisis intervention to advice for the lovelorn. With
the technology that the Company is in the process of developing, it is intended
that the consumer will initially be able to simultaneously view, listen and
communicate with the therapist. With the exception of having retained the
services of one consultant, on a part-time basis, to assist the Company in
developing its proposed TherapyNet service and WWW site, the Company has not, as
of the date hereof, entered into any agreement with any mental health
professionals, and no assurance can be given that it will be able to do so, or
that TherapyNet will be accepted by consumers. See "Risk Factors--New and
Uncertain Market" and "--Technological Change and New Services".

Additional proposed entertainment, educational and counseling services which
the Company is considering include FantasyNet, ModelNet, WebClinic and CookNet.
The following is a brief description of each of these proposed services.

FANTASYNET

It is intended that FantasyNet will offer an interactive, video theater
broadcast directly to consumers' homes throughout the world. It is intended that
customers will initially select from among a wide range of frequently changing
fantasy narratives, whereupon they will first engage in a free, recorded
interactive fantasy over the Internet's WWW. At a critical juncture in the
interactive fantasy, the consumer will then be encouraged to continue the
fantasy via a live video and voice connection with an on-line performer. It is
intended that the Company's videoconferencing technology will allow the customer
to segue from the multi-media interactive fantasy to live role-playing with a
professional actor. As of the date hereof, the Company has not entered into any
agreements or hired any persons experienced in the dramatic arts, and no
assurance can be given that it will in the future be able to do so, or that
FantasyNet will be accepted by consumers. See "Risk Factors--New and Uncertain
Market" and "--Technological Change and New Services".

MODELNET

It is intended that ModelNet will allow customers to engage in live
videoconferenced conversations with professional models on subjects including
the modeling industry, beauty tips or the life of a high fashion model. It is
intended that ModelNet will offer customers the rare and highly-coveted
opportunity to interact live with top agency models as they view them on their
computer screen. With this service, the Company intends to capitalize upon the
current fascination and glorification of fashion models in American society,
demonstrated by the top celebrity status of today's super-models. As of the date
hereof, the Company has not entered into any agreements or hired any persons
experienced in the modeling industry, and no assurance can be given that it will
in the future be able to do so, or that ModelNet will be accepted by consumers.
See "Risk Factors--New and Uncertain Market" and "--Technological Change and
New Services".

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WEBCLINIC

It is intended that WebClinic will make medical information accessible on
the desktop computers of the millions of Internet users. It is intended that
WebClinic will offer consumers a complete, teleconferenced managed care center.
The Company plans to provide teleconferenced health professionals to screen
medical problems and help customers determine the appropriate level of
consultation or evaluation. It is intended that patients will ask questions
regarding diagnosis, treatment and prevention of disease, as well as regarding
screening tests and immunizations. The Company also plans to offer an on-line
health and wellness store that will allow patients to purchase medication, home
diagnostic equipment and supplies over the Internet. As of the date hereof, the
Company has not entered into any agreements or hired any persons experienced in
clinical medicine, and no assurance can be given that it will in the future to
able to do so, or that WebClinic will be accepted by consumers. See "Risk
Factors-- New and Uncertain Market" and "--Technological Change and New
Services".

COOKNET

It is intended that CookNet will provide a resource on the Internet for
cooking aficionados. It is intended that CookNet will employ its
videoconferencing system to create a video cooking school on the Internet. It is
also intended that CookNet will provide a large database of recipes which will
be searchable by ingredients and will provide shopping lists and nutritional
analyses. The Company also intends for CookNet to provide customers with a
variety of nutritional information and the ability to videoconference, one to
one, with a qualified nutritionist. With the exception of having retained the
services of a consultant, on a part-time basis, to assist the Company in
developing its proposed CookNet service and WWW site, the Company has not, as of
the date hereof, entered into any written or other agreements with any
nutritionists, and no assurance can be given that it will be able to do so, or
that CookNet will be accepted by consumers. See "Risk Factors--New and Uncertain
Market" and "--Technological Change and New Services".

TELEPHONE ENTERTAINMENT SERVICES

The Company plans to develop and market telephone entertainment services,
consisting primarily of live tarot card and astrological readings and live
psychic consultations. The Company has obtained the exclusive right to use Jeane
Dixon's name, likeness and image to market such services over the telephone. It
is intended that the Company's proposed telephone entertainment services will
permit customers to engage in live one-on-one conversations with psychics and to
receive personalized information responsive to their requests. The customer will
be able to access the Company's proposed telephone entertainment services by
dialing "900" numbers, which will be billed at premium rates, or by dialing
"800" numbers and providing credit card information. The Company intends to
market its proposed telephone entertainment services through television
commercials, as well as through the use of print media, direct mail and
telemarketing services. The Company also proposes to provide its telephone
entertainment services by offering club memberships for a monthly fee, although
no assurance can be given that it will be able to do so.

INDUSTRY BACKGROUND

The Internet

Developed over 25 years ago, the Internet is a global web of computer
networks that allows personal computer users to access a variety of information
and services. The Internet was developed for use by academic institutions, the
Department of Defense and government agencies primarily for obtaining remote
access to host computers, for transferring files, and for sending and receiving
e-mail. This early Internet usage has changed substantially. The Company
believes that the number of commercial domains on the Internet has surpassed the
number of government and academic domains.

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The Internet has been experiencing rapid growth as industry and individuals
discover its substantial information access abilities.

Individuals are connecting to the Internet directly through Internet access
services such as those provided by MCI, NETCOM, Performance Systems
International, Inc. ("PSI"), and UUNET Technologies, Inc. ("UUNET"). The Company
believes these services are expanding because easy-to-use software packages make
accessing the Internet as easy as getting onto the popular consumer on-line
services. Also, the consumer on-line services, including America On-line, Inc.
("AOL"), CompuServe, Inc. ("CompuServe") and Prodigy Services Co. ("Prodigy"),
previously independent computer networks, as well as Microsoft Corporation (the
Microsoft Network) have now introduced Internet access gateways for their
subscribers. With these gateways, the on-line services effectively become large
Internet "on-ramps," bringing great numbers of their subscribers onto the
Internet.

Videoconferencing Technology

The Company's intended business has been brought about by the recent
development of videoconferencing technology. One group of providers offers
videoconferencing systems that operate over the Internet. These systems require
that users possess only low cost Internet connections, a personal computer, a
modem and the provider's software. Because of the low cost, this technology
makes videoconferencing available to the consumer market. A second group of
system providers transmit video over "plain old telephone service" (POTS) lines.
These systems are also low cost, but are subject to the additional charge of
long distance telephone service. The final group of providers, composed chiefly
of large long distance telephone carriers such as AT&T, Sprint and MCI, as well
as other large scale enterprises, provide videoconferencing over Integrated
Service Digital Network (ISDN) lines and Local Area Networks (LANs). These lines
must be connected individually to each videoconference participant. Such
systems, the Company believes, can cost in excess of $25,000 for each user, and
thus are used principally by businesses. Because of the substantial growth of
the Internet, its low cost, its relative ease of use, and the proliferation of
high bandwidth connections, the Company believes that the Internet will become
the primary medium for videoconferenced services.

The Company has entered into an agreement with UUNET pursuant to which UUNET
will provide the Company with high speed access to the Internet, enabling the
Company to deliver its videoconferencing services through the Internet. The
agreement requires the Company to make monthly payments of $1,500 to UUNET. The
agreement expires in January 1997.

COMPANY STRATEGIES

Offer a Complete Line of High Quality, Live One-on-One Internet Services

The Company's goal is to be the leading provider of live, one-on-one
videoconferenced entertainment, educational and counseling services over the
Internet. The Company intends to recruit professionals in each service area and
to train them to work with, and communicate effectively over, the Internet.

Develop and Maintain Industry Leading Proprietary Technology

The Company is developing an integrated, commercial videoconferencing system
for use over the Internet. This proprietary system has several components,
including a Netscape browser based user interface, an advanced real time video
and audio delivery platform, and an automated marketing database and analytic
system. This advanced architecture is being designed to allow the customer to
access the Company's services directly from an Internet browser with a simple
point and click of a mouse. It is intended that PC users without Internet access
will be able to use the Company's services by connecting directly to the
Company's network using a modem.

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The Company integrates an advanced video compression-decompression ("CODEC")
technology into its videoconferencing and WWW commerce system. The Company's
system incorporates variable bandwidth capabilities. The Company believes this
will allow the Company to capture today's market of low bandwidth modem
connections, while positioning itself to capitalize on the rapid movement
towards high bandwidth Internet connections.

The Company intends for its WWW commerce server to allow for secure
transaction processing through an encrypted credit card validation and automated
billing system. The server also will include on-line scheduling software that
will efficiently route incoming customer calls to the appropriate professional.
The Company intends to develop a video station management system that will allow
scheduling control, status monitoring and transaction processing for
videoconference stations in remote studios from a central management base.

As it becomes commercially viable, the Company further plans to incorporate
Java, a new programming language recently introduced by Sun Microsystems, for
its WWW presence, as well as virtual reality modeling language ("VRML"), which
allows for the realistic presentation of three-dimensional spaces and images
over the Internet.

Maintaining state-of-the art technology is essential to the Company's
success. The Company intends to continue to increase the performance,
functionality and flexibility of all of its technologies to meet the evolving
needs of its customers. The Company is developing and integrating an enhanced
version of its videoconferencing and WWW commerce system which will offer higher
performance, greater stability, easier installation, and easier integration with
other applications. For example, the Company is developing software that will
allow customers to pan and zoom the camera remotely in order to achieve the
desired view of the Company's professionals. The Company will attempt to
maintain a leadership position by continually improving the performance and
versatility of its technology, including the enhancement of its video, graphics
and audio capabilities.

Provide Strong Customer Support

A key element in the Company's proposed business strategy is a commitment to
provide extensive support and service to its customers. This element of the
Company's proposed strategy is particularly important to the Company's success
since many of the Company's clients are, and much of the Internet community over
the next few years will be, new to the Internet. With the focus of the Company's
products on individualized service, the Company believes that maintaining a
strong customer support group will be vital to its success. The Company believes
that its high level of support will enable the Company to distinguish itself
from its competitors.

Provide Consistent Interfaces and Multi-Platform Support

All of the Company's proposed services are intended to utilize the same
broad technology. The Company intends to position itself to cross-sell existing
services and to introduce new services to its existing customer base. The
Company is designing its software to operate on most popular computer operating
systems.

Create and Leverage Brand Awareness

Although certain other companies may provide one or more of such services,
the Company believes that since it will be an early provider of a combined
package of live, one-on-one videoconferenced entertainment, educational and
counseling services over the Internet it will be well positioned to build
customer awareness of its brand name and logo. The Company's ability to
capitalize on its early entrance into the market is subject to several factors,
including its ability to raise sufficient funds to develop and market its
technology and services, and the viability and commercial acceptance of its
services. No assurance can be given that the Company's strategies will be
successful.

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<PAGE>
Provide Enhanced Security

The Company's products will employ leading standards for data and
communications security and are designed to enable secure commerce and
communications over the Internet.

Marketing, Sales & Distribution

The Company intends to utilize various media and marketing programs to
stimulate demand for its services. These programs will be intended to focus on
the target market of individual PC users that have either gateway or direct
Internet connections. The Company's marketing operations will include market
research, marketing services and strategic partnerships.

Information on existing and proposed Company products and services will be
collected through a variety of sources. An automated customer registration
process contained in the Company's WWW site will provide a formatted and
quantifiable source of such information. Such information will also be collected
through automated follow-up e-mail to existing customers. Internet newsgroups as
well as responses to the Company's active postings in such newsgroups provide
further product feedback.

The Company is in the process of developing and plans to maintain databases
containing profiles of all customers utilizing its services. Customer
biographical, credit and preference information will be input directly from the
WWW home-page at the time of sale. Additional customer information will be
collected in conjunction with the offering of free trial memberships and other
promotions. The goal of these promotions is intended to identify and analyze
current and potential users of the Company's services, create an awareness of
new service offerings and generate leads for additional sales to other
customers.

This marketing information is intended to enable the Company to better
understand its customer base, to develop new and innovative services for its
customers and to create targeted marketing programs geared toward efficiently
selling the Company's services. The Company believes that these databases will
provide the Company with a distinct competitive advantage over new companies
entering this market and will permit the Company to evaluate the effectiveness
of its operations utilizing advanced database and analytical methods.

The Company intends to initially market its services over the Internet
itself utilizing several WWW sites. Customers will initially visit the WWW home
page of the particular Company service that they intend to use. Customers will
then be able to avail themselves of the Company's live entertainment,
educational or counseling services.

The Company intends to maintain a high profile on the Internet by actively
participating in various Internet user newsgroups. The Company also intends to
publish several "zines," or electronic magazines, to increase its marketing
exposure. These zines will highlight issues related to the particular service,
promote new company services, offer items of special value and feature news of
interest to the Company's customers. The Company has also developed specially
designed "mailbots," or mail robots, which are intended to automatically respond
to inquiries twenty-four hours a day. The Company intends to offer membership
options, pre-paid services and other marketing programs designed to increase
customer awareness and usage.

The Company also intends to utilize print media, cable television and radio
advertisements to promote its services. The Company plans to market its services
though various computer, technology and Internet-related publications, such as
Wired and Internet World, as well as other appropriate publications geared to
the Company's target markets for each of its individual services. The Company
also plans to market its services at computer and entertainment conventions and
trade shows.

28
<PAGE>
Competition

The Company's business is subject to significant competition. The Company
believes that it will face initial direct competition for its live, one-on-one
videoconferenced services over the Internet, as well as additional competition
in the future from companies that possess substantially greater technical,
financial, sales and marketing resources than that which the Company has.
Because the Internet is an open system designed to be freely available to
computer users worldwide and because of the increasing popularity of the
Internet, the Company anticipates that it will encounter substantial competition
from new entrants as the market for Internet services expands. Such increased
competition may have a material adverse effect on the Company's ability to
successfully market its services.

Competitive factors in the Internet-based entertainment, educational and
counseling market include core technology, product content, product quality,
marketing, distribution resources and customer support and services.

Customer Support and Services

A key element of the Company's business is its commitment to provide
extensive customer support and service. The Company intends to hire, train and
maintain a customer support staff and to track all support requests through a
series of customer databases that will maintain current status reports as well
as historical logs of customer interaction. These reports will be evaluated by
management to determine how to best serve customer needs.

Proprietary Rights

The Company's success and ability to compete will depend in part upon its
ability to maintain the most up-to-date portfolio of videoconferencing and
related technologies. The Company is developing, and intends to license and
maintain such technologies and to enter into co-development arrangements for the
advancement of such systems with other corporations and research groups.

While the Company will rely partly upon its proprietary 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 will be more essential to
establishing and maintaining an industry leadership position. The Company also
intends to rely on trademark, trade secret and copyright laws to protect the
creative elements of its services. The Company intends to enter into
confidentiality or license agreements with its employees, consultants and
vendors and to control access to and distribution of this proprietary
information. The Company has and will continue to file as servicemarks the names
and logos of the Company and each of the existing services.

GOVERNMENT REGULATION

The Company's proposed telephone entertainment services will be subject to
extensive regulation at the federal, state and local levels, and the effect and
extent of such regulations has not been fully reviewed or addressed by the
Company. There can be no assurance that the Company will be able to comply with
applicable laws and regulations, that such laws and regulations will not change,
or that regulatory authorities will not take action to limit or prevent the
Company from advertising, marketing, promoting or offering its proposed
telephone entertainment services. Failure to comply with applicable

29
<PAGE>
laws and regulations could prevent the Company from offering its proposed
telephone entertainment services and could subject the Company to civil
remedies, including substantial fines, penalties and injunctions, as well as
possible criminal sanctions, which could have a material adverse effect on the
Company. See "Business-Government Regulations."

PROPERTIES

The Company's executive offices comprise approximately 3,500 gross square
feet and are located at 584 Broadway, New York, New York. The Company occupies
two offices at such location pursuant to separate leases that expire February 1,
1997 and November 30, 1998. The lease expiring February 1, 1997 covers
approximately 1,500 gross square feet and requires the Company to pay $1,270 per
month.

The lease expiring November 30, 1998 covers approximately 2,000 gross square
feet and requires the Company to pay $1,975 per month for the year ending
November 30, 1996. This amount is scheduled to increase incrementally throughout
the course of the lease to approximately $2,136 per month for the lease's final
year.

The Company believes that its facilities are adequate for its current needs
and that additional space will be available on acceptable terms when it is
required.

EMPLOYEES

As of July 1, 1996, the Company employed 17 persons, including 6 in
marketing and on-line content development, 6 in research and development and 5
administrative personnel. Of such 17 persons, 9 persons are full-time and 8
persons are part-time. None of these employees is covered by a collective
bargaining agreement. The Company believes that its labor relations are good.

LEGAL PROCEEDINGS

The Company is not party to any material legal proceedings.

30
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company are as follows:

NAME AGE POSITION
---- --- --------
<S> <C> <C>
Laurence Rosen.................... 32 President, Chief Executive
Officer, Treasurer and Director
Michael Kharitonov................ 33 Chairman of the Board, Director of
Technology and Secretary
Ross S. Glatzer................... 49 Director
John E. Meier..................... 50 Director
Jeffrey Wolf...................... 33 Director
Richard Rosen..................... 29 Vice-President of Marketing
Vladislav Rysin................... 36 Senior Software Developer and
Project Manager
</TABLE>

Set forth below is a brief background of the executive officers and
directors of the Company, based on information supplied by them.

LAURENCE ROSEN is a co-founder of the Company. He has been the President and
a Director of the Company since December 1995, Chief Executive Officer since
February 1996, and Treasurer since April 1996. From September 1995 through
December 1995, Mr. Rosen served as the Chief Financial Officer and General
Counsel of the Company. From October 1994 through August 1995, Mr. Rosen worked
in the corporate finance group at CIBC Wood Gundy, an investment banking firm.
From April 1992 through June 1993, Mr. Rosen was employed as an attorney at
McCarter & English, a New Jersey based law firm. From August 1991 through April
1992, Mr. Rosen was employed as an Assistant Federal Defender in the Office of
the Federal Defender. From October 1990 through August 1991, Mr. Rosen was
employed as a law clerk to the acting chief Judge of the United States District
Court of the Virgin Islands. From August 1988 through January 1990, Mr. Rosen
was employed as an attorney at Skadden, Arps, Slate, Meagher & Flom, a New York
City based law firm. Mr. Rosen received an M.B.A. from The University of Chicago
Graduate School of Business in 1994, a J.D. from New York University School of
Law in 1988 and a B.A. in economics from Emory University in 1985.

MICHAEL KHARITONOV, PH.D., is a co-founder of the Company. He has been the
Chairman of the Board, Director of Technology and Secretary of the Company since
April 1996. From November 1992 to April 1996, Dr. Kharitonov was employed by
D.E. Shaw & Co., an investment management firm, most recently having held the
position of vice president. From January 1986 through September 1987, Dr.
Kharitonov was appointed as a scientific associate at CERN, the European
Laboratory for Particle Physics. Dr. Kharitonov received a Ph.D. in computer
science from Stanford University in 1993 and a B.A. in computer science and
mathematics from the University of California at Berkeley in 1985.

ROSS S. GLATZER has been a Director of the Company since July 1996. From
1986 to April 1995, Mr. Glatzer was employed by Prodigy Services, Inc., a
leading consumer on-line service, most recently having held the positions of
President and Chief Executive Officer. Prior thereto, Mr. Glatzer served as
general merchandise manager for Sears Roebuck and Company from 1982 to 1986. Mr.
Glatzer received a B.A. in political science from the University of Georgia in
1968.

JOHN E. MEIER has been a Director of the Company since June 1996. From 1990
to 1996, Mr. Meier was employed by CompuServe, Incorporated, a leading consumer
on-line service, having held the positions of senior vice president of market
planning and development, and senior vice president of membership support and
retention. In addition, while working at CompuServe, Mr. Meier founded The
Electronic Mall, an on-line shopping service, and Compuserve Magazine. Mr. Meier
received a Certificate in Commercial Design from the Columbus College of Art and
Design in 1968.

31
<PAGE>
JEFFREY WOLF is a co-founder of the Company. He has been a Director of the
Company since September 1995. From September 1995 through December 1995, Mr.
Wolf served as the President of the Company, and from September 1995 through
April 1996, Mr. Wolf served as the Treasurer of the Company. Mr. Wolf has been a
managing director of Athena Ventures, LLC, a New York City based venture capital
firm, since January 1996. From November 1994 through December 1995, Mr. Wolf was
the head of Berenson Minella Ventures, the venture capital division of Berenson
Minella and Company, a New York City based merchant bank. From July 1991 through
November 1994, Mr. Wolf was a vice president and managing director of The Castle
Group, Ltd., a New York-based venture capital firm. Prior thereto, Mr. Wolf was
a vice president of D.H. Blair & Co., Inc., a New York city based broker-dealer
registered with the NASD. Mr. Wolf co-founded Xenometrix, a public company
specializing in the development of novel biological-based information systems,
in February 1994, and served as a director of such company from February 1994
through November 1994. Mr. Wolf also co-founded Avigen, a San Francisco based
gene-therapy company in February 1994, and he served as a director of such
company from February 1994 through November 1994. Mr. Wolf also co-founded
Conversion Technologies, an environmental technology company focusing on the
treatment and conversion of hazardous waste, in February 1994, and he served as
chairman of such company from February 1994 through November 1994. Mr. Wolf
received an M.B.A. from Stanford Business School in 1990, a J.D. from New York
University School of Law in 1988 and a B.A. in economics from The University of
Chicago in 1985. Mr. Wolf devotes only a portion of his time to the Company.

RICHARD ROSEN has been the Vice-President of Marketing of the Company since
July 1996. From 1994 to 1996, Mr. Rosen was employed by Time Warner Inc. as
product manager of its WarnerVision Entertainment division. He served as an
assistant brand manager for Playboy Enterprises, Inc. in 1994. Mr. Rosen was
co-founder of First Job, Inc., where he served from 1992 through 1994, and he
was founder of Collegiate Marketing Concepts, Inc., where he was employed from
1986 through 1992. Mr. Rosen received a B.A. in Economics and an M.B.A. in
International Business from George Washington University in 1988 and 1991,
respectively.

VLADISLAV RYSIN, PH.D., has been the Senior Software Developer and Project
Manager of the Company since May 1996. From May 1993 to May 1996, Dr. Rysin
served as a vice president of Accomet Corporation, a company engaged in the
manufacturing and trading of metals. From May 1992 to May 1993, Dr. Rysin served
as a systems manager for Consist International, Inc., a software development
company. From February 1990 to May 1992, Dr. Rysin served as a project manager
for Atedeca Corporation, C.A., a software development company. Dr. Rysin
received an M.A. in Math and Computer Science from Kiev University in 1982 and a
Ph.D. in Computer Science from the Melnikov Laboratory of Moscow in 1986.

Directors serve until the next annual meeting of stockholders or until their
successors are elected and qualified. Officers serve at the discretion of the
Board of Directors. Except for Ross Glatzer and John Meier (who will each
receive $1,500 per meeting which they attend), directors do not currently
receive fees for their services as directors, but are reimbursed for travel
expenses.

EXECUTIVE COMPENSATION

The following table sets forth certain summary information with respect to
the compensation paid to the Company's President and Chief Executive Officer for
services rendered in all capacities to the Company for the period ended March
31, 1996. The Company had no executive officer whose total annual salary and
bonus exceeded $100,000 for such fiscal year:

32
<PAGE>
SUMMARY COMPENSATION TABLE:

<TABLE>
<CAPTION>
FISCAL ALL OTHER
NAME AND PERIOD ENDED SALARY BONUS COMPENSATION
PRINCIPAL POSITION MARCH 31, ($) ($) OPTIONS ($)
- ------------------------------------- ------------ ------- ------- --------- ------------
<S> <C> <C> <C> <C> <C>
Laurence Rosen....................... 1996 $35,000 $29,167 330,648(2) (1)
Chief Executive Officer and
President
</TABLE>

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

(1) Represents accrued salary and bonus, $25,000 of which was paid in March
1996. Mr. Rosen has agreed to defer the payment of the bonus until the
completion of the Company's proposed public offering. See "Employment
Agreements" below.

(2) Represents Non-Plan Options to purchase an aggregate of 93,158 shares of
Common Stock and options granted under the Company's Option Plan to purchase
an aggregate of 237,490 shares of Common Stock, all of which are not
currently exercisable or exercisable within 60 days. See "Management--1996
Stock Option Plan" and "--Non-Plan Stock Options".

EMPLOYMENT AGREEMENTS

Effective as of September 1, 1995, the Company entered into employment
agreements with Laurence Rosen and Jeffrey Wolf. In addition, effective as of
April 5, 1996, the Company entered into an employment agreement with Michael
Kharitonov, and, effective as of May 19, 1996, the Company entered into an
employment agreement with Vladislav Rysin. The employment agreement with Jeffrey
Wolf was amended effective May 1, 1996. In addition, the Company's employment
agreement with Michael Kharitonov was amended effective July 1, 1996.

Pursuant to the agreement with Mr. Rosen, the Company's President, Chief
Executive Officer, and Director, Mr. Rosen will receive a base salary of
$105,000 per year through August 31, 1996, and a salary of $115,000 per year for
the year commencing September 1, 1996 and $125,000 per year for the year
commencing September 1, 1997. In addition, Mr. Rosen will receive 93,158
options, 50% of which are exercisable upon the earlier of (i) the Company
achieving certain earnings standards or (ii) five years from the date of grant.
See "Management--Non-Plan Stock Options." The employment agreement will be
renewed for successive one year terms unless the Company gives 30 days prior
written notice of its intention not to renew the agreement. The employment
agreement may be terminated by the Company upon the death of Mr. Rosen or for
just cause, which includes a material breach by Rosen of the confidentiality
provisions, a material breach of the agreement which remains uncured or any
action by Rosen to intentionally harm the Company. Further, Mr. Rosen may also
terminate the employment agreement for just cause, which includes a material
breach of the agreement which remains uncured or any action by the Company to
intentionally harm Rosen. The employment agreement also provides for payments to
Mr. Rosen for a nine month period following termination equal to his base salary
and a pro-rata portion of any bonus to which he would have been entitled in the
event that the employment agreement is terminated other than as a result of the
death of Mr. Rosen, for just cause (as defined above) or for lack of renewal
thereof. The agreement with Mr. Rosen also includes certain confidentiality and
non-competitive provisions.

Pursuant to the agreement with Dr. Kharitonov, which was amended effective
July 1, 1996, as long as Dr. Kharitonov performs his duties as a full-time
employee of the Company, he will receive a base annual salary of $100,000 per
year through August 31, 1996, and a salary of $110,000 per year for the year
commencing September 1, 1996 and $120,000 per year for the year commencing
September 1, 1997. However, Dr. Kharitonov has the option to perform work for
the Corporation on a reduced hour basis. In the event that Dr. Kharitonov elects
to perform his duties on a reduced hour basis, his salary shall be adjusted so
that the Company shall pay him a base salary after such election at the rate of
$50,000 per annum through August 31, 1996, $55,000 from September 1, 1996
through August 31, 1997, $60,000 per annum from September 1, 1997 through August
31, 1998 and such equal or greater amount in each subsequent year of the term of
the employment agreement as may be determined by the

33
<PAGE>
Board of Directors, payable in equal installments on a semi-monthly basis in
arrears. Further, Dr. Kharitonov shall be paid a bonus of $30,000 on January 1,
1997. In addition, Dr. Kharitonov will receive 55,789 options, 50% of which are
exercisable upon the earlier of (i) the Company achieving certain earnings
standards or (ii) five years from the date of grant. See "Management--Non-Plan
Stock Options." The employment agreement will be renewed for successive one year
terms unless the Company gives 30 days prior written notice of its intention not
to renew the agreement. The employment agreement may be terminated by the
Company upon the death of Dr. Kharitonov or for just cause (as defined above).
Further, Dr. Kharitonov may also terminate the employment agreement for just
cause (as defined above). The employment agreement also provides for payments to
Dr. Kharitonov following termination as follows: (i) so long as Dr. Kharitonov
performs his duties as a full-time employee of the Company, upon termination Dr.
Kharitonov shall receive payments equal to his base salary and a pro-rata
portion of any bonus to which he would have been entitled for a nine month
period after termination in the event that the employment agreement is
terminated other than as a result of the death of Dr. Kharitonov, for cause (as
defined above) or for lack of renewal thereof, or (ii) in the event that Dr.
Kharitonov elects to perform his duties on a reduced hour basis, upon
termination Dr. Kharitonov shall receive payments equal to the amount described
above but for the entire remaining term of the employment agreement. The
agreement with Dr. Kharitonov includes certain confidentiality and
non-competitive provisions.

Pursuant to the agreement with Jeffrey Wolf, which was amended effective as
of May 1, 1996, Mr. Wolf will receive a consulting fee of $50,000 per year
through August 31, 1996 and provides for a consulting fee of $55,000 per year
for the year commencing September 1, 1996 and $60,000 per year for the year
commencing September 1, 1997. In addition, Mr. Wolf will receive 73,860 options,
50% of which are exercisable upon the earlier of (i) the Company achieving
certain earnings standards or (ii) five years from the date of grant. See
"Management--Non-Plan Stock Options." The employment agreement will be renewed
for successive one year terms unless the Company gives 30 days prior written
notice of its intention not to renew the agreement. The employment agreement may
be terminated by the Company upon the death of Mr. Wolf or for just cause (as
defined above). Further, Mr. Wolf may also terminate the employment agreement
for just cause (as defined above). The employment agreement also provides for
payments to Mr. Wolf for a nine month period following termination equal to his
base salary and a pro-rata portion of any bonus to which he would have been
entitled in the event that the employment agreement is terminated other than as
a result of the death of Mr. Wolf, for cause (as defined above) or for lack of
renewal thereof. The agreement does not currently require Mr. Wolf to devote his
time exclusively to the Company and also subjects Mr. Wolf to certain
confidentiality and non-competitive provisions.

Pursuant to the agreement with Dr. Rysin, the Company's Senior Software
Developer and Project Manager, Dr. Rysin will receive a base salary of $98,000
per year through May 18, 1997, and a salary of $108,000 per year for the year
commencing May 19, 1997 and $118,000 per year for the year commencing May 19,
1998. In addition, Dr. Rysin will receive 100,000 options which will vest
immediately, and one-third of which shall become exercisable one (1) year from
the date of his employment agreement, and an additonal one-sixth of which shall
become exercisable every six months thereafter. See "Management--1996 Stock
Option Plan." The employment agreement will be renewed for successive one year
terms unless the Company gives 30 days prior written notice of its intention not
to renew the agreement. The employment agreement may be terminated by the
Company upon the death of Dr. Rysin or for just cause (as defined above).
Further, Dr. Rysin may also terminate the employment agreement for just cause
(as defined above). The employment agreement also provides for payments to Dr.
Rysin for a nine month period following termination equal to his base salary and
a pro-rata portion of any bonus to which he would have been entitled in the
event that the employment agreement is terminated other than as a result of the
death of Dr. Rysin, for cause (as defined above) or for lack of renewal thereof.
Further, Dr. Rysin shall be paid a bonus of $79,000 on the last day of the month
on each of the twelfth, twenty-fourth and thirty-sixth months of the employment
agreement. The agreement with Dr. Rysin includes certain confidentiality and
non-competitive provisions.

34
<PAGE>
Currently, all of the officers of the Company perform their duties as
full-time employees of the Company.

1996 STOCK OPTION PLAN

Effective as of February 1996, the Board of Directors and stockholders of
the Company adopted the Company's 1996 Stock Option Plan (the "Option Plan").
The Option Plan is intended to recognize the contributions made to the Company
by key employees, officers and directors of the Company, to provide such persons
with additional incentive to devote themselves to the future success of the
Company, and to improve the ability of the Company to attract, retain, and
motivate individuals upon whom the Company's sustained growth and financial
success depend, by providing such persons with an opportunity to acquire or
increase their proprietary interest in the Company through receipt of rights to
acquire the Company's Common Stock.

The Company has reserved 800,000 shares of Common Stock for issuance upon
the exercise of options available for future grant under the Option Plan
designated as either (i) incentive stock options ("ISO's") under the Internal
Revenue Code of 1986, as amended (the "Code") or (ii) non-qualified stock
options ("NQSO's"). ISO's may be granted under the Option Plan to employees
(including directors) and officers of the Company. NQSO's may be granted to
non-employee directors, employees and officers of the Company. In certain
circumstances, the exercise of options granted under the Option Plan may have an
adverse effect on the market price of the Common Stock.

It is intended that the Option Plan will be administered by the Compensation
Committee (the "Committee"), composed of two or more persons appointed by the
Company's Board of Directors who are "disinterested persons" as defined under
Rule 16b-3 under the Exchange Act or "outside directors" as defined under
Section 162(m) of the Code. The Committee shall grant options in its discretion
and may consider the nature of the optionee's services and responsibilities, the
optionee's present and potential contribution to the Company's success and such
other factors as it may deem relevant. ISO's granted under the Option Plan may
not be granted at a price less than the fair market value of the Common Stock on
the date of grant (or 110% of fair market value in the case of persons holding
10% or more of the voting stock of the Company). The aggregate fair market value
of shares for which ISO's granted to any employee are exercisable for the first
time by such employee during any calendar year (under all stock option plans of
the Company and any related corporation) may not exceed $100,000. Options
granted under the Option Plan will expire not more than ten years from the date
of grant (five years in the case of ISO's granted to persons holding 10% or more
of the voting stock for the Company). Options granted under the Option Plan are
not transferable during an optionee's lifetime but are transferable at death by
will or by the laws of descent and distribution.

As of June 1996, the Company had granted ISO's under the Option Plan
exercisable for the purchase of an aggregate of 622,852 shares of Common Stock,
including (i) options to purchase 40,000 and 50,000 shares granted to Messrs.
Laurence Rosen and Michael Kharitonov, respectively, exercisable at a price of
$2.50 per share, and (ii) options to purchase 90,000 and 20,000 to Messrs.
Laurence Rosen and Michael Kharitonov, respectively, exercisable at a price of
$5.00 per share, which options vest immediately, but are not exercisable until
the date one year following the effective date of the Company's initial public
offering, and which become exercisable incrementally every six (6) months over a
three (3) year period commencing from their respective date of grant. In
addition, the Company also has granted options under the Option Plan to purchase
(i) 53,745, 32,186 and 42,611 shares to Messrs. Laurence Rosen, Michael
Kharitonov and Jeffrey Wolf, respectively, exercisable at a price of $2.50 per
share, and (ii) 53,745, 32,186 and 42,611 to Messrs. Laurence Rosen, Michael
Kharitonov and Jeffrey Wolf respectively, exercisable at a price of $5.50 per
share, which options vest immediately, but are not exercisable for a period of
one (1) year from the effective date of the initial public offering. The Company
has also agreed to issue 15,000 options to each of Messrs. John Meier and Ross
Glatzer, and 20,000 options to Richard Rosen, exercisable at $5.50 per share,
with such options to vest over a period of three years from their date of grant.
See "Principal Shareholders."

35
<PAGE>
In addition to the foregoing, Vladislav Rysin was granted 100,000 NQSO's on
May 19, 1996. Mr. Rysin's NQSO's are exercisable at an exercise price of $2.50
per share as follows: one-third (33,333) on May 19, 1997 and one-sixth (11,111)
every six (6) months thereafter.

The Option Plan also contains certain change in control provisions which
could cause options and other awards to become immediately exercisable, and
restrictions and deferral limitations applicable to other awards to lapse, in
the event any "person," as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including a "group" as defined in Section 13(d), but excluding
certain shareholders of the Company, acquires beneficial ownership of more than
50.1% of the Company's outstanding shares of Common Stock.

NON-PLAN STOCK OPTIONS

As of the date of this Prospectus , the Company has issued options to
purchase up to an aggregate of 260,000 shares of Common Stock (the "Non-Plan
Options") outside of the Option Plan to certain executive officers, non-employee
directors and consultants. Although all of such Non-Plan Options have vested,
50% of such options are not exercisable until one year following their date of
grant and the right to exercise the remaining 50% of such Non-Plan Options
become exercisable on the earlier of (i) the Company achieving an after-tax net
income of at least $1,250,000 for a full fiscal year or (ii) five years
following their date of grant. See "Principal Stockholders." The following table
sets forth the information with respect to the Non-Plan Options issued to the
Company's executive officers and directors:

OPTION GRANTS DURING YEAR ENDED MARCH 31, 1996
[INDIVIDUAL GRANTS]

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL EXERCISE
SECURITIES UNDERLYING OPTIONS/SARS OR BASE
OPTIONS/SARS GRANTED TO PRICE EXPIRATION
NAME GRANTED (#) EMPLOYEES IN FISCAL YEAR ($/SH) DATE
- ----------------------------------- --------------------- ------------------------ -------- ----------
<S> <C> <C> <C> <C>
Laurence Rosen..................... 93,158 35.8% $ 2.50 2/27/06
Jeffrey Wolf....................... 73,860 28.4% $ 2.50 2/27/06
Michael Khartinov.................. 55,789 21.5% $ 2.50 2/27/06
</TABLE>

The Company may, in the future, file a registration statement on Form S-8
under the Securities Act registering the options and shares of Common Stock
underlying the options that may be issued under the plans.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Delaware General Corporation Law contains various provisions entitling
directors, officers, employees or agents of the Company to indemnification from
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys's fees, as the result of an action or proceeding (whether civil,
criminal, administrative or investigative) in which they may be involved by
reason of being or having been a director, officer, employee or agent of the
Company provided said persons acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interest of the Company (and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
that the conduct complained of was unlawful). The By-Laws of the Company provide
that the indemnification provisions of any applicable law are to be utilized to
the fullest extent permitted.

LIMITATION ON LIABILITY OF DIRECTORS

The Delaware General Corporation Law permits a corporation, through its
Certificate of Incorporation, to exonerate its directors from personal liability
to the corporation, or to its stockholders, for monetary damages for breach of
fiduciary duty of care as a director, with certain exceptions. The exceptions
include a breach of the director's duty of loyalty, acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
improper declarations of dividends, and transactions from which the directors
derived an improper personal benefit. The Company's Certificate

36
<PAGE>
of Incorporation exonerates its directors from monetary liability to the extent
permitted by this statutory provision. The Company has been advised that it is
the position of the Securities and Exchange Commission that insofar as the
foregoing provision may be invoked to disclaim liability for damages arising
under the Act, that provision is against public policy as expressed in the Act
and is therefore unenforceable.

PRINCIPAL STOCKHOLDERS

The following table sets forth, assuming the successful sale of the maximum
number of shares offered hereby, certain information concerning beneficial
ownership of shares of Common Stock with respect to (i) each person known to the
Company to own 5% or more of the outstanding shares of Common Stock, (ii) each
director of the Company, (iii) the executive officer(s) named in the Summary
Compensation table, and (iv) all directors and officers of the Company as a
group:

<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE APPROXIMATE
SHARES PERCENTAGE OF PERCENTAGE OF
BENEFICIALLY COMMON STOCK COMMON STOCK
NAME OWNED BEFORE OFFERING AFTER OFFERING(8)
- ---------------------------------------------------- ------------ --------------- -----------------
<S> <C> <C> <C>
Laurence Rosen(1)(2)................................ 438,662 25.8% 16.6%
Jeffrey Wolf(1)(3).................................. 341,553 20.1% 12.9%
Michael Kharitonov(1)(4)............................ 266,210 15.7% 10.0%
Scott Wolf(5)....................................... 177,474 10.4% 6.7%
Dennis Sal(6)....................................... 90,000 5.3% 3.4%
All Officers and Directors as a Group (3
persons)(7)......................................... 1,046,425 61.6% 39.5%
</TABLE>

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

Except as noted above, the address for the above identified officers and
directors of the Company is c/o NetLive Communications, Inc., 584 Broadway,
Suite 806, New York, New York 10012.

(1) May be deemed to be a "parent" and "promoter" of the Company as defined in
the Rules and Regulations of the Commission promulgated under the Act.

(2) Does not include Non-Plan Options to purchase an aggregate of 93,158 shares
of Common Stock or options granted under the Company's Option Plan to
purchase an aggregate of 237,490 shares of Common Stock, all of which are
not currently exercisable or exercisable within 60 days. See
"Management--1996 Stock Option Plan" and "--Non-Plan Stock Options".

(3) Does not include Non-Plan Options to purchase an aggregate of 73,860 shares
of Common Stock, or options granted under the Company's Stock Option Plan to
purchase an aggregate of 85,223 shares of Common Stock, all of which are not
currently exercisable or exercisable within 60 days. See "Management--1996
Stock Option Plan" and "--Non-Plan Stock Options".

(4) Does not include Non-Plan Options to purchase an aggregate of 55,789 shares
of Common Stock or options granted under the Company's Option Plan to
purchase an aggregate of 134,372 shares of Common Stock, all of which are
not currently exercisable or exercisable within 60 days. See
"Management--1996 Stock Option Plan" and "--Non-Plan Stock Options".

(5) Does not include performance options to purchase an aggregate of 37,193
shares of Common Stock, all of which are not currently exercisable or
exercisable within 60 days. See "Management--Non-Plan Stock Options". Scott
Wolf is the brother of Jeffrey Wolf, a director of the Company.

(6) Does not include options to purchase an aggregate of 250,000 shares of
Common Stock, all of which are not currently exercisable or exercisable
within 60 days.

(7) Does not include Non-Plan Options to purchase an aggregate of 222,807 shares
of Common Stock or options granted under the Company's Option Plan to
purchase an aggregate of 457,085 shares of Common Stock, all of which are
not currently exercisable or exercisable within 60 days. See
"Management--1996 Stock Option Plan" and "--Non-Plan Stock Options".

(8) Does not give effect to the sale of shares of Common Stock in connection
with an offering by certain Selling Securityholders of the Company (the
"Selling Securityholders Offering") which is being made concurrently with
this offering. In connection with the Selling Securityholders Offering, Mr.
Dennis Sal will be offering 90,000 shares of Common Stock of the Company for
sale. In the event that all 90,000 shares are sold by Mr. Sal, his
percentage ownership of Common Stock of the Company will be zero percent
(0%).

37
<PAGE>
CERTAIN TRANSACTIONS

The Company was originally incorporated under the laws of the State of
Delaware under the name of Netvisions Incorporated and subsequently changed its
name to NetLive Communications, Inc. In September 1995, December 1995 and
January 1996, certain executive officers, directors and/or principal
shareholders of the Company purchased shares of Common Stock for an aggregate
consideration of $6,750, $22,890 and $1.00, respectively. The following table
indicates the number of shares of Common Stock purchased by such persons and the
date of such purchases:

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF NUMBER OF
SHARES PURCHASED SHARES PURCHASED SHARES PURCHASED
NAME IN SEPTEMBER 1995 IN DECEMBER 1995 IN JANUARY 1996
- --------------------------------------------- ----------------- ---------------- ----------------
<S> <C> <C> <C>
Scott Wolf................................... 132,268 45,206
Laurence Rosen............................... 263,699 88,737 1,674
Jeffrey Wolf................................. 263,699 88,737
Andrew Schwartz.............................. 45,206 45,206
Michael Kharitonov........................... 132,268 132,268 1,674
</TABLE>

In February 1996, Mr. Robert Friedman purchased 41,857 shares of the Company's
Common Stock for an aggregate consideration of $50,000. In addition, in February
1996, Mr. Robert Friedman purchased 5,860 and 10,883 shares of the Company's
Common Stock from Messrs. Laurence Rosen and Jeffrey Wolf, respectively. In
February 1996, Mr. Laurence Rosen purchased 90,412 shares of the Company's
Common Stock from Mr. Andrew Schwartz.

The Company believes that all transactions with officers, directors and
principal shareholders and their affiliates were made on terms no less favorable
to the Company than those available from unaffiliated parties. In addition, the
Company has adopted a policy that all future transactions, including loans
between the Company and its officers, directors, principal stockholders and
their affiliates must be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors on
the Board of Directors, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is authorized to issue up to 19,000,000 shares of Common Stock,
$.0001 par value per share. The holders of Common Stock are entitled to receive
dividends equally when, as and if declared by the Board of Directors, out of
funds legally available therefor.

The holders of the Common Stock have sole voting rights, one vote for each
share held of record, and are entitled upon liquidation of the Company to share
ratably in the net assets of the Company available for distribution. Shares of
the Company's Common Stock do not have cumulative voting rights and vote as a
class on all matters requiring stockholder approval. Therefore, the holders of a
majority of the shares of Common Stock may elect all of the directors of the
Company, control its affairs and day to day operations. The shares of Common
Stock are not redeemable and have no preemptive or similar rights. All
outstanding shares of the Company's Common Stock are fully paid for and
non-assessable.

WARRANTS

Each Warrant entitles its holder to purchase one share of Common Stock at an
exercise price of $5.50 per share, subject to adjustment, commencing two years
after the Effective Date until , 2001.

The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement") among the Company, the Underwriter and American Stock Transfer &
Trust Co., the warrant agent, and will be evidenced by warrant certificates in
registered form.

38
<PAGE>
The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property issuable upon exercise of the
Warrants are subject to adjustment in certain circumstances, including stock
splits, stock dividends, subdivisions, combinations, reclassification, or
issuances of stock at a price lower than the current market price. Additionally,
an adjustment will be made upon the sale of all or substantially all of the
assets of the Company in order to enable the holders of the Warrants to purchase
the kind and number of shares of stock or other securities or property
(including cash) receivable in such event by a holder of the number of shares of
Common Stock that might otherwise have been purchased upon exercise of the
Warrants.

The Warrants do not confer upon the holder any voting or any other rights of
a stockholder of the Company. Upon notice to the holders of the Warrants, the
Company has the right to reduce the exercise price or extend the expiration date
of the Warrants.

Warrants may be exercised upon surrender of the Warrant certificate
evidencing those Warrants on or prior to the expiration date (or earlier
redemption date) of the Warrants to the Warrant Agent, with the form of
"Election to Purchase" on the reverse side of the Warrant certificate completed
and executed as indicated, accompanied by payment of the full exercise price (in
United States funds, by cash or certified bank check payable to the order of the
Warrant Agent) for the number of Warrants being exercised.

No fractional shares will be issued upon exercise of the Warrants. However,
if a holder of a Warrant exercises all Warrants then owned of record by him, the
Company will pay to that holder, in lieu of the issuance of any fractional share
which would otherwise be issuable, an amount in cash based on the market value
of the Common Stock on the last trading day prior to the exercise date.

No Warrant will be exercisable unless at the time of exercise the Company
has filed with the Commission a current prospectus covering the issuance of
shares of Common Stock issuable upon exercise of the Warrants and the issuance
of shares has been registered or qualified or is deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of the Warrant. The Company has undertaken to use its
best efforts to maintain a current prospectus relating to the issuance of shares
of Common Stock upon the exercise of the Warrants until the expiration of the
Warrants, subject to the terms of the Warrant Agreement. While it is the
Company's intention to maintain a current prospectus, there is no assurance that
it will be able to do so. See "Risk Factors--Current Prospectus and State Blue
Sky Registration Required to Exercise Warrants."

The Warrants are redeemable, in whole or in part, by the Company at a price
of $.05 per Warrant, commencing one year after the Effective Date and prior to
their expiration, provided that (i) prior written notice of not less than 30
days is given to the Warrantholders, (ii) the closing bid price (as defined) of
the Company's Common Stock for the twenty consecutive trading days immediately
prior to the date on which the notice of redemption is given, shall have
exceeded $7.50 per share, and (iii) Warrantholders shall have exercise rights
until the close of business the day preceding the date fixed for redemption. The
Warrants shall be exercisable until the close of the business day preceding the
date fixed for redemption. In addition, subject to the rules of the NASD, the
Company has agreed to engage the Underwriter as warrant solicitation agent, in
connection with which it would be entitled to a 5% fee upon exercise of the
Warrants. See "Underwriting."

PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of "blank check"
Preferred Stock par value $.0001 per share ("Preferred Stock"). The Preferred
Stock may be issued from time to time, in one or more series, upon authorization
by the Company's Board of Directors. The Board of Directors, without further
approval of the stockholders, will be authorized to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of Preferred Stock. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of the Common

39
<PAGE>
Stock and, under certain circumstances, make it more difficult for a third party
to gain control of the Company, discourage bids for the Company's Common Stock
at a premium or otherwise adversely effect the market price of the Common Stock,
if the Common Stock is ever publicly traded, of which there are no assurances.
As of the date hereof, the Company has no plans to issue, or any present
intention to issue any such shares.

TRANSFER AGENT AND WARRANT AGENT

The Transfer Agent for the Company's Common Stock and the Warrant Agent for
the Company's A Warrants is American Stock Transfer & Trust Co., New York, New
York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of this Offering, the Company will have 2,650,000 shares
of Common Stock outstanding (2,792,500 shares if the Underwriter's
over-allotment option is exercised in full). All of the shares of Common Stock
sold in this Offering will be freely tradeable without restriction or further
registration under the Securities act of 1933, as amended (the "Securities
Act"), except for any shares purchased by an "affiliate" of the Company which
will be subject to certain limitations of Rule 144 adopted under the Securities
Act.

The 1,700,000 presently outstanding shares of Common Stock are restricted
securities and will be subject to the resale limitations provided for in Rule
144. Under Rule 144, as currently in effect, subject to the satisfaction of
certain other conditions, a person, including an affiliate of the company, who
has owned restricted shares of Common Stock beneficially for at least two years,
is entitled to sell, within any three month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the Common stock is quoted on an exchange, the average weekly
trading volume during the four calendar weeks preceding the sale. A
non-affiliate who has not been an affiliate of the Company for at least the
three months immediately preceding the sale and who has beneficially owned
shares of Common Stock for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above. In
meeting the two and three year holding periods described above, a holder who has
purchased shares can include the holding periods of a prior owner who was not an
affiliate of the Company.

All Company's securityholders, on the date hereof, have agreed not to
publicly sell, for a period of 2 years from the date of this Prospectus, any
shares of the Company's Common Stock. Commencing one year from the date of this
Prospectus, such securityholders may be released from their lock-up agreements
with the prior written consent of the Underwriter.

Prior to this Offering, there has been no market for any securities of the
Company. The effect, if any, of public sales of the restricted shares of Common
Stock or the availability of such shares for future sale at prevailing market
prices cannot be predicted. Nevertheless, the possibility that substantial
amounts of restricted shares may be resold in the public market may adversely
affect prevailing market prices for the Common Stock and the Class A Warrants,
if any such market should develop.

40
<PAGE>
UNDERWRITING

Subject to the terms and conditions contained in the underwriting agreement
between the Company and the Underwriter (a copy of which agreement is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part),
the Company has agreed to sell to the Underwriter 950,000 shares of Common Stock
and 730,000 Warrants. All 950,000 shares and 730,000 Warrants offered must be
purchased by the Underwriter if any are purchased. The shares and Warrants are
being offered by the Underwriter subject to prior sale, when, as and if
delivered to and accepted by the Underwriters and subject to approval of certain
legal matters by counsel and to certain other conditions.

The Underwriter has advised the Company that it proposes to offer the shares
of Common Stock and the Warrants to the public at the offering prices set forth
on the cover page of this Prospectus and that the Underwriter may allow to
certain dealers who are members in good standing with the National Association
of Securities Dealers, Inc. ("NASD") concessions, not in excess of $ per
share of Common Stock and $ per Warrant. After the initial public offering,
the public offering price and concessions may be changed by the Underwriter.

While certain of the officers of the Underwriter have significant experience
in corporate finance and the underwriting of securities, the Underwriter has not
previously underwritten any public offerings. No assurance can be given that the
Underwriter's limited public offering experience will not affect the Company's
Offering of the Common Stock and Warrants and subsequent development of a
trading market, if any.

The Company has granted the Underwriter an option, exercisable for 45 days
from the date of this Prospectus, to purchase up to 142,500 Shares and 109,500
Warrants from it, at the public offering price less the underwriting discounts
set forth on the cover page of this Prospectus. The Underwriters may exercise
this option solely to cover over-allotments in the sale of the shares of Common
Stock and Warrants offered hereby.

The Company has agreed to pay the Underwriter a non-accountable expense
allowance of 3% of the gross proceeds of the shares of Common Stock and Warrants
sold in this Offering, of which $25,000 has been paid prior to the date hereof.

The underwriting agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain civil liabilities, including
liabilities under the Securities Act of 1933.

The Company has agreed to sell to the Underwriter or its designees, at a
price of $10, the Underwriter's Warrants, which entitle the Underwriter to
purchase up to 95,000 shares of Common Stock of the Company and/or 73,000
Warrants, respectively. The Underwriter's Warrants will be exercisable at a
price of $6.60 per share and $.12 per Warrant, respectively, for a period of
four years commencing one year from the date of this Prospectus, and they will
not be transferable except to underwriters and selected dealers and officers and
partners thereof. Any profit realized upon any resale of the Underwriter's
Warrants or upon any sale of the shares of Common Stock or Warrants underlying
same may be deemed to be additional underwriter's compensation. The Company has
agreed to register (or file a post-effective amendment with respect to any
registration statement registering), for a period of five years from the
effective date of this offering, the Underwriter's Warrants and the underlying
securities under the Securities Act at its expense on one occasion, and at the
expense of the holders thereof on another occasion, upon the request of a
majority of the holders thereof. The Company has also agreed to certain
"piggy-back" registration rights for the holders of the Underwriter's Warrants
and the underlying securities. Such piggy-back registration rights will expire
seven years from the effective date of this offering.

The Company has agreed that for a period of three years, the Underwriter
will have the right to designate a person to be a non-voting advisor to the
Company's Board of Directors who will receive the

41
<PAGE>
same compensation as a member of the Board of Directors and who will be
indemnified by the Company against any claims arising out of his participation
at meetings of the Board of Directors. The identity of such person has not been
determined as of the date hereof, and it is not expected that such right will be
exercised in the immediate future.

The Underwriters have informed the Company that they do not expect sales of
shares and the Class A Warrants to be made to discretionary accounts to exceed
1% of the shares of Common Stock and Warrants offered hereby.

The Company will pay the Underwriter a commission equal to five percent (5%)
of the exercise price of the Warrants exercised, of which a portion may be
reallowed to any dealer who solicited the exercise, provided that (i) at the
time of exercise the market price of the Common Stock is greater than the
exercise price of the Warrants, (ii) the exercise of the Warrants was solicited
by the Underwriter, (iii) the Warrants exercised are not held in discretionary
accounts, (iv) disclosure of the compensation arrangements have been made both
at the time of this Offering and at the time of exercise, and (v) the
solicitation of the exercise of the Warrants is not in violation of Rule 10b-6
under the Securities Exchange Act of 1934. The Company has agreed not to solicit
the exercise of the Warrants other than through the Underwriter.

The Offering is subject to the agreement by all present stockholders of the
Company that they will not sell any shares of Common Stock to the public for a
period of twenty-four months. Commencing twelve months from the date of this
Prospectus, such stockholders may be released from their lock-up agreements with
the prior written consent of the Underwriter.

The Company has agreed to enter into an agreement with the Underwriter
retaining them as a financial consultant for a period of three years from the
date hereof, pursuant to which they will receive fees aggregating $90,000 which
fees will be payable in full at closing.

CONCURRENT REGISTRATION OF SECURITIES

Concurrently with this Offering, 417,500 shares of Common Stock and
1,000,000 Warrants have been registered under the Securities Act for immediate
resale. None of the holders of such securities or their affiliates has ever held
any position or office with the Company or had any other material relationship
with the Company. The holders of such securities have agreed not to sell any of
the registerable securities for a period of 2 years from the Effective Date.
Commencing one year from the date of this Prospectus, such holders of securities
may be released from their lock-up agreements with the prior written consent of
the Underwriter.

LEGAL MATTERS

The legality of the shares offered hereby will be passed upon for the
Company By Gusrae, Kaplan & Bruno, Esqs., New York, New York. The firm of
Gusrae, Kaplan & Bruno owns 17,500 shares of the Common Stock of the Company.
Certain legal matters in connection with this Offering will be passed upon for
the Underwriter by Gersten Savage Kaplowitz & Curtin, LLP, New York, New York.

EXPERTS

The financial statements of the company at March 31, 1996 and for the period
from August 23, 1995 (date of inception) to March 31, 1996 included in this
Prospectus have been included in reliance upon the report of Goldstein Golub
Kessler & Company, P.C., independent certified public accountants, given upon
the authority of said firm as experts in auditing and accounting.

42
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Washington, D.C. office of the Securities and
Exchange Commission a Registration Statement (the "Registration Statement")
under the Securities Act with respect to the securities offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and this Offering, reference is made to the Registration
Statement, including the exhibits filed therewith. Statements contained in the
Prospectus as to the contents of any contract or other document are not
necessarily complete and reference is made to each such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended. Reports and other information filed by the
Company can be inspected without charge or copies made at prescribed rates from
the Commission at its principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its Midwest Regional Office located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, or at its Northeast
Regional Office located at 7 World Trade Center, New York, New York 10048. The
Commission maintains a WWW site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The Commission's WWW site is located at http://www.sec.gov.

43
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
INDEPENDENT AUDITOR'S REPORT..................................................... F-2

FINANCIAL STATEMENTS:

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

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

Statement of Stockholders' Equity.............................................. F-5

Statement of Cash Flows........................................................ F-6

Notes to Financial Statements.................................................. F-7-F-12
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT

The Board of Directors
NetLive Communications, Inc.

We have audited the accompanying balance sheet of NetLive Communications,
Inc. (a development stage company) as of March 31, 1996 and the related
statements of operations, stockholders' equity, and cash flows for the period
from August 23, 1995 (date of inception) 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 audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of NetLive Communications, Inc.
as of March 31, 1996 and the results of its operations and its cash flows for
the period from August 23, 1995 (date of inception) to March 31, 1996 in
conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 9 to the
financial statements, the Company has had limited operations, has a working
capital deficiency and a deficit accumulated during the development stage that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 9. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.

New York, New York

April 25, 1996, except for Note 8, as to
which the date is May 9, 1996,
and the next to last paragraph
of Note 6, as to which the date is
May 19, 1996

F-2
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 1996

<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1)............................................ $ 160,395
Prepaid expenses and other current assets..................................... 1,771
---------
TOTAL CURRENT ASSETS...................................................... 162,166
Property and Equipment, net (Notes 1 and 2)..................................... 46,001
Deferred Income Tax Asset, net of valuation allowance of $36,000 (Notes 1 and
5)............................................................................ --
Debt Issue Costs (Notes 1 and 4)................................................ 24,479
Deferred Offering Costs (Note 1)................................................ 43,500
Other Assets (Note 1)........................................................... 6,292
---------
TOTAL ASSETS.............................................................. $ 282,438
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses (Note 6)................................ $ 144,813
Notes payable (Note 4)........................................................ 88,348
Current portion of obligations under capital leases (Note 3).................. 5,190
---------
TOTAL CURRENT LIABILITIES................................................. 238,351
Obligations under Capital Leases, net of current portion (Note 3)............... 12,280
---------
TOTAL LIABILITIES......................................................... 250,631
---------
Commitments (Notes 3, 4 and 6)
Stockholders' Equity (Notes 7, 8 and 9):
Preferred stock--$.0001 par value; authorized 1,000,000 shares, none issued... --
Common stock--$.0001 par value; authorized 19,000,000 shares, issued and
outstanding 1,500,000 shares................................................ 150
Additional paid-in capital.................................................... 289,661
Deficit accumulated during the development stage.............................. (243,129)
Deferred offering costs relating to common stock issued for services related
to intended IPO (Note 1).................................................... (14,875)
---------
STOCKHOLDERS' EQUITY...................................................... 31,807
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................ $ 282,438
---------
---------
</TABLE>

The accompanying notes and independent auditor's report should be read
in conjunction with the financial statements.

F-3
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 23, 1995 (DATE OF INCEPTION) TO MARCH 31, 1996

<TABLE>
<CAPTION>
Selling, general and administrative expenses:
<S> <C>
Salaries (Note 6)............................................................... $ 160,714
Professional fees............................................................... 27,812
Rent (Note 6)................................................................... 9,724
Depreciation and amortization................................................... 4,727
Interest expense and financing costs............................................ 5,189
Other........................................................................... 34,963
---------
Net loss........................................................................ $(243,129)
---------
---------
Net loss per common share....................................................... $ (.16)
---------
---------
Weighted average number of common shares outstanding (Note 1)................... 1,543,385
---------
---------
</TABLE>

The accompanying notes and independent auditor's report should be read
in conjunction with the financial statements.

F-4
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 23, 1995 (DATE OF INCEPTION) TO MARCH 31, 1996

<TABLE>
<CAPTION>
DEFERRED OFFERING
DEFICIT COSTS RELATING TO
COMMON STOCK ACCUMULATED COMMON STOCK
------------------ ADDITIONAL DURING THE ISSUED FOR PRICE
NUMBER PAID-IN DEVELOPMENT SERVICES RELATED STOCKHOLDERS' PER
DATE OF SHARES AMOUNT CAPITAL STAGE TO INTENDED IPO EQUITY SHARE
-------- --------- ------ ---------- ----------- ----------------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuances of
common stock for
cash............ 9/2/95 837,140 $ 84 $ 6,666 -- -- $ 6,750 $ .01
12/18/95 400,154 40 22,850 -- -- 22,890 .06
1/11/96 3,349 -- -- -- -- -- --
2/1/96 41,857 4 49,996 -- -- 50,000 1.19
Contributed
property and
equipment and
expenses paid by
stockholders,
contributed to
the Company (Note
7).............. -- -- 30,296 -- -- 30,296 --
Issuance of common
stock for
services related
to intended
IPO............. 2/19/96 17,500 2 14,873 -- $ (14,875) -- $ .85
Issuance of common
stock in
connection with
private placement
(Note 4)........ 3/20/96 200,000 20 149,980 -- -- 150,000 $ .75
Issuance of
warrants in
connection with
private placement
(Note 4)........ 3/20/96 -- -- 15,000 -- -- 15,000 --
Net loss.......... -- -- -- $(243,129) -- (243,129) --
--------- ------ ---------- ----------- ------- ------------- -----
Balance at March
31, 1996......... 1,500,000 $150 $289,661 $(243,129) $ (14,875) $ 31,807 --
--------- ------ ---------- ----------- ------- ------------- -----
</TABLE>

The accompanying notes and independent auditor's report should be read
in conjunction with the financial statements.

F-5
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 23, 1995 (DATE OF INCEPTION) TO MARCH 31, 1996

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss...................................................................... $(243,129)
Adjustments to reconcile net loss to net cash used in operating activities:
Expenses paid by stockholders, contributed to the Company (Note 7)........ 12,006
Depreciation and amortization............................................. 4,727
Amortization of debt issue costs and discount on notes payable............ 3,869
Changes in operating assets and liabilities:
Increase in prepaid expenses and other current assets................... (1,771)
Increase in other assets................................................ (2,175)
Increase in accounts payable and accrued expenses....................... 144,813
---------
NET CASH USED IN OPERATING ACTIVITIES................................. (81,660)
---------
Cash flows from investing activities:
Purchase of property and equipment............................................ (14,703)
Acquisition of intangibles.................................................... (4,220)
---------
CASH USED IN INVESTING ACTIVITIES..................................... (18,923)
---------
Cash flows from financing activities:
Capital contributions......................................................... 79,640
Principal payments on obligations under capital leases........................ (162)
Proceeds from issuance of notes payable....................................... 250,000
Debt issue costs.............................................................. (25,000)
Deferred offering costs....................................................... (43,500)
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES............................. 260,978
---------
Cash and cash equivalents at end of period...................................... $ 160,395
---------
---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest...................................... $ 70
---------
---------
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
Contributed property and equipment (Note 7)................................... $ 18,290
---------
---------
Capital lease obligations incurred............................................ $ 17,632
---------
---------
Common stock issued for services related to intended IPO...................... $ 14,875
---------
---------
</TABLE>

The accompanying notes and independent auditor's report should be read
in conjunction with the financial statements.

F-6
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS

1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES:

NetLive Communications, Inc. (a development stage company) (the "Company")
was incorporated on August 23, 1995 under the laws of the State of Delaware. The
Company is developing and intends to utilize technologies that will provide
live, one-on-one, videoconferenced entertainment, educational and counseling
services over the Internet.

Property and equipment are recorded at cost. Depreciation is provided for by
the straight-line method over the estimated useful lives of the property and
equipment.

Trademarks are being amortized over 10 years using the straight-line method
and are included in other assets in the accompanying balance sheet.

The Company recognizes revenue when services are provided.

Research and development expenses, consisting primarily of salaries and
consulting fees to support technology and services content development, are
expensed as incurred.

The Company employs the liability method of accounting for income taxes
pursuant to Statement of Financial Accounting Standards ("SFAS") No. 109, under
which method recorded deferred income taxes reflect the tax consequences on
future years of temporary differences (differences between the tax basis of
assets and liabilities and their financial amounts at year-end). The Company
provides a valuation allowance that reduces deferred tax assets to their net
realizable value.

Debt issue costs associated with the March 1996 private placement financing
described in Note 4 will be amortized by the straight-line method over the terms
of the related debt. Accumulated amortization was $521 at March 31, 1996.

Deferred offering costs represent costs incurred through March 31, 1996
attributable to the May 1996 private placement offering and an intended initial
public offering ("IPO") (see Notes 8 and 9). The Company intends to offset these
costs against the proceeds from these transactions. In the event that these
transactions are not completed, these costs will be charged to operations.

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

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

The preparation of financial statements in accordance with generally
accepted accounting principles requires the use of estimates by management.

Net loss per share of common stock has been computed using the weighted
average number of shares of common stock outstanding. For purposes of this
computation shares of common stock issued prior to the initial filing of the
Registration Statement relating to the IPO and shares issuable upon the exercise
of all common stock purchase options outstanding, with exercise prices below the
IPO price, have been included in weighted average number of shares outstanding,
since inception, utilizing the treasury stock method.

F-7
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

1. PRINCIPAL BUSINESS ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES:--
(CONTINUED)

The Company intends to measure compensation cost using Accounting Principles
Board Opinion No. 25 ("APB 25") as is permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation," effective for financial statements with fiscal years
beginning after December 31, 1995.

The Company intends to adopt SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," for its 1997
fiscal year. Management of the Company believes that the adoption of this
pronouncement will not have a material effect on the Company's financial
statements.

2. PROPERTY AND EQUIPMENT:

Property and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE
-----------
<S> <C> <C>
Furniture and equipment................................ $ 1,364 5 years
Computer and video equipment........................... 31,629 3 years
Equipment acquired under capital leases (Note 3)....... 17,632 3 years
-------
50,625
-------
Less accumulated depreciation and amortization:
Equipment acquired under capital leases.............. 97
Other................................................ 4,527
-------
4,624
-------
$46,001
-------
-------
</TABLE>

3. OBLIGATIONS UNDER CAPITAL LEASES:

The Company is the lessee of equipment acquired under capital leases
expiring in 1999. The Company is required to make monthly payments aggregating
$585 with interest at 12% per annum.

Minimum future payments under these leases are as follows:

<TABLE>
<CAPTION>
Year ending March 31,
<S> <C>
1997....................................................... $ 7,029
1998....................................................... 7,029
1999....................................................... 6,794
-------
20,852
Less amount representing interest................................ 3,382
-------
$17,470
-------
-------
</TABLE>

F-8
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. NOTES PAYABLE:

In March 1996, the Company completed a private placement for which it
received in the aggregate $250,000 and in exchange issued 200,000 shares of
common stock, 1,000,000 redeemable common stock purchase warrants and $250,000
aggregate principal amount of its 12% redeemable promissory notes with interest
payable upon repayment. The notes are due and payable at the earlier of the
completion of the Company's proposed IPO, March 1998, or the date of closing of
a sale of securities by the Company in an amount of $500,000 or greater, as
defined. Accordingly, the notes were repaid in May 1996 (see Note 8). The
Company will record a charge to operations of approximately $165,000 in May
1996. In connection with this private placement, the Company incurred costs
amounting to $25,000.

In accordance with paragraph 16 of APB Opinion No. 14 "Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants" ("APB 14") values
were assigned to each part of the transaction based on an allocation of the
relative fair values of the securities at the time of issuance. The fair value
of the promissory notes were based on a 24% discount rate after effecting for
the costs of the offering. The fair value of the common stock was determined to
be $2.50 per share which was the price at which 200,000 shares of common stock
were sold in May 1996 (see Note 8). The fair value of the warrants was estimated
at $.05 per warrant. Accordingly, a value of $85,000 was assigned to the
promissory notes, a value of $150,000 was assigned to the common stock and a
value of $15,000 was assigned to the warrants.

The redeemable common stock purchase warrants are not exercisable until one
year from the effective date of the proposed IPO and expire three years from the
effective date of the proposed IPO. Each warrant entitles the holder to purchase
one share of common stock for $5.50 per share. The Company may call these
warrants for redemption on the earlier of one year from the effective date of
the IPO or any time after September 1, 1996, provided the Company has not
consummated an IPO of its securities by that time, as defined.

In the event the Company does not consummate an IPO by September 1, 1996,
the Company may redeem the common stock and common stock purchase warrants at an
aggregate redemption price equal to 85% of the principal amount remaining
outstanding on the promissory note.

5. INCOME TAXES:

The tax effects of loss carryforwards and the valuation allowance that give
rise to deferred tax assets at March 31, 1966 are as follows:

<TABLE>
<S> <C>
Net operating losses............................................. $ 36,000
Less valuation allowance......................................... (36,000)
--------
DEFERRED TAX ASSETS........................................ $ 0
--------
--------
</TABLE>

As of March 31, 1996, the Company had net operating loss carryforwards
available to offset future taxable income of approximately $240,000 which expire
in the year 2011. The Company uses the lowest marginal U.S. corporate tax of 15%
to determine deferred tax amounts and the related valuation allowance because
the Company has had no taxable earnings through March 31, 1996.

F-9
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. COMMITMENTS:

The Company leases office space under noncancelable operating leases which
expire at various dates through November 1998. A lease is subject to escalations
for the Company's share of increases in real estate taxes.

Minimum future obligations under the leases are as follows:

<TABLE>
<CAPTION>
Year ending March 31,
<S> <C>
1997....................................................... $36,616
1998....................................................... 24,976
1999....................................................... 17,090
-------
$78,682
-------
-------
</TABLE>

Rent expense charged to operations for the period from August 23, 1995 (date
of inception) to March 31, 1996 amounted to $9,724.

The Company has entered into employment agreements with a consultant and
executive officers of the Company which provide for compensation through May 18,
1999 as follows:

<TABLE>
<CAPTION>
Year ending March 31,
<S> <C>
1997..................................................... $ 355,333
1998..................................................... 480,333
1999..................................................... 322,834
2000..................................................... 93,750
----------
$1,252,250
----------
----------
</TABLE>

At March 31, 1996, approximately $90,000 of such compensation has been
accrued and included in accounts payable and accrued expenses.

7. STOCKHOLDERS' EQUITY:

Effective March 5, 1996, the Company's Board of Directors approved an
approximate 837.14 for 1 stock split, whereby the number of shares of
outstanding common stock was increased from 1,532 to 1,282,500. The stated par
value of each share was not changed from $.0001. A total of $130 was
reclassified from the Company's additional paid-in capital account to the
Company's common stock account. All share and per share amounts have been
restated to retroactively reflect the stock split.

The cash cost of the contributed property and equipment and expenses paid by
stockholders aggregated $30,296. Contributed property and equipment aggregating
$18,290 which mainly consisted of computer and video equipment have been
recorded at the stockholders' cost. Expenses paid by stockholders aggregating
$12,006 consisted of consulting expense, travel expense and other miscellaneous
costs.

During February 1996, the Board of Directors of the Company adopted the 1996
Stock Option Plan (the "Plan") which authorizes the granting of options to
purchase up to an aggregate of 800,000

F-10
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

7. STOCKHOLDERS' EQUITY:--(CONTINUED)

shares of common stock to employees, officers and directors of the Company. Both
nonqualified options and options intended to qualify as incentive stock options
("ISOs") under the Internal Revenue Code of 1986, as amended, may be granted
under the Plan. ISOs granted under the Plan may not be granted at a price less
than the fair market value of the common stock on the date of the option grant,
provided that the exercise price of such option granted to a stockholder owning
more than 10% of the outstanding common stock of the Company may not be less
than 110% of the fair market value of the common stock on the date of the option
grant. The term of each option and the manner of exercise are determined by a
committee appointed by the Board of Directors, but in no case can the options be
exercised in excess of 10 years beyond the grant date, as defined.

In March 1996, options to purchase 622,854 shares of common stock at
exercise prices ranging from $2.50 to $5.00 per share were granted under the
Plan. A portion of the options become exercisable one year following the
effective date of the Company's intended IPO and the balance of the options
become exercisable incrementally every six months for a three-year period.

In February 1996, the Company issued options to purchase an aggregate of
260,000 shares of common stock outside the Plan to certain executive officers,
nonemployee directors and consultants. The options will be exercisable at $2.50
per share of common stock commencing one year from the date of grant. Options to
purchase 130,000 shares of common stock are exercisable at the earlier of five
years from the date of grant or when the Company achieves net income, as
defined, of at least $1,250,000 for a full fiscal year. Options to purchase the
remaining 130,000 shares are exercisable one year from the date of grant.

In accordance with APB 25, no compensation expense has been recorded on the
option grants since the exercise price of each option granted was the fair
market value of the common stock on the date of the option grant.

8. SUBSEQUENT EVENT:

During May 1996, the Company completed a private placement offering of
securities, whereby the Company issued 200,000 shares of common stock at an
offering price of $2.50 per share. Costs incurred in connection with the private
placement were approximately $123,000. A portion of the proceeds from this
private placement was used to repay notes payable (see Note 4).

9. INITIAL PUBLIC OFFERING AND GOING CONCERN:

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company has had limited
operations, has a working capital deficiency and a deficit accumulated during
the development stage that raise substantial doubt about the Company's ability
to continue as a going concern.

The Company intends to file a Registration Statement on Form SB-2 under the
Securities Act of 1933. The Registration Statement contemplates an offering of
950,000 shares of common stock at an estimated offering price of $5.50 per share
and 730,000 Class A warrants at an offering price of $.10 per warrant, each
warrant to purchase one share of common stock at a price of $5.50 per share.

F-11
<PAGE>
NETLIVE COMMUNICATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

9. INITIAL PUBLIC OFFERING AND GOING CONCERN:--(CONTINUED)

Management believes that the successful completion of the proposed IPO will
allow the Company to continue as a going concern. If the proposed IPO is not
successfully completed, the Company would not have the capital resources
necessary to continue the development of its business which would significantly
impact the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

F-12
<PAGE>
[INSIDE BACK COVER OF PROSPECTUS]

[PICTURE]

Netscape Communications, Inc., the Netscape Communications logo, Netscape, and
Netscape Navigator are trademarks of Netscape Communications Corporation.
Netscape has not endorsed or otherwise sponsored the advertised product or
service.
<PAGE>
======================================== =====================================
- ---------------------------------------- -------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS
BEEN AUTHORIZED IN CONNECTION WITH THIS
OFFERING TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR A SOLICITATION IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS 950,000 SHARES
NOR ANY SALE MADE HEREUNDER SHALL, OF COMMON STOCK AND
UNDER ANY CIRCUMSTANCES, CREATE 730,000 COMMON STOCK
AN IMPLICATION THAT THERE HAS BEEN PURCHASE WARRANTS.

NO CHANGE IN THE CIRCUMSTANCES OF THE
COMPANY OR THE FACTS HEREIN SET
FORTH SINCE THE DATE HEREOF.

-------------------
[NETLIVE LOGO]
TABLE OF CONTENTS

PAGE
----
Prospectus Summary.............. 3
Risk Factors.................... 7
Dilution........................ 14
Use of Proceeds................. 16
Dividend Policy................. 17
Capitalization.................. 18
Managements's Discussion
and Analysis of Financial
Condition and Results
of Operations................. 19 ----------------
Business........................ 22 PROSPECTUS
Management...................... 31 ----------------
Principal Stockholders.......... 37

Certain Transactions............ 38
Description of Securities....... 38
Shares Eligible for
Future Sale................... 40
Underwriting.................... 41
Concurrent Registration
of Securities................. 42
Legal Matters................... 42
Experts......................... 42
Additional Information.......... 43 MAY DAVIS GROUP, INC.
Financial Statements............ F-1

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

UNTIL , 1996 (25 DAYS AFTER
THE DATE OF THE PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS , 1996
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 WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT
TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- ---------------------------------------- -------------------------------------
======================================== =====================================

<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

SUBJECT TO COMPLETION, DATED AUGUST 7, 1996

[NETLIVE LOGO]

417,500 SHARES OF COMMON STOCK AND
1,000,000 COMMON STOCK PURCHASE WARRANTS

This Prospectus relates to the sale by certain selling securityholders (the
"Selling Securityholders") of 417,500 Shares of common stock, par value $.0001
per share (the "Common Stock") and 1,000,000 common stock purchase warrants (the
"Warrants") of NetLive Communications, Inc., a Delaware corporation (the
"Company"). None of the proceeds from the sale of the Common Stock and Warrants
by the Selling Securityholders will be received by the Company. The Company will
bear all expenses (other than selling commissions and fees and expenses of
counsel or other advisors to the Selling Securityholders) in connection with the
registration and sale of the Common Stock and Warrants being offered by the
Selling Securityholders.

The Common Stock and Warrants will be offered by the Selling Securityholders
in transactions in the over-the-counter market, in negotiated transactions or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. The Selling Securityholders
may effect such transactions by selling the Common Stock and Warrants to or
through broker/dealers, and such broker/dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Securityholders
and/or the purchasers of the Common Stock and Warrants for whom such
broker/dealers may act as agent or to whom they sell as principal, or both. The
Selling Securityholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, as amended (the "Securities Act"). If any broker/dealers
are used by the Selling Securityholders, any commission paid to broker/dealers
and, if broker/dealers purchase any Common Stock or Warrants as principals, any
profits received by such broker/dealers on the resales of the Securities may be
deemed to be underwriting discounts or commissions under the Securities Act. In
addition, any profits realized by the Selling Securityholders may be deemed to
be underwriter commissions. All costs, expenses and fees in connection with the
registration of the Common Stock and Warrants offered by Selling Securityholders
will be borne by the Company. Brokerage commissions, if any, attributable to the
sale of the Common Stock and Warrants will be borne by the Selling
Securityholders. See "Selling Securityholders" and "Plan of Distribution".

The Company has applied for listing of the Common Stock and Warrants on the
NASDAQ SmallCap Market ("NASDAQ") under the symbols "NETL" and "NETLW,"
respectively.

Concurrently with the commencement of this offering, the Company offered by
separate Prospectus 950,000 shares of Common Stock and 730,000 Warrants (the
"Public Securities"). The Company's offering (the "Public Offering") is being
made through May Davis Group, Inc. (the "Underwriter").

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

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS," COMMENCING ON PAGE 8 AND
"DILUTION".
-------------------

THE DATE OF THIS PROSPECTUS IS , 1996
<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>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

With the exception of having retained the services of Jeane Dixon and
certain consultants, on a part-time basis, who are helping the Company develop
its proposed PsychicNet, HolisticVisions, TutorNet and TherapyNet services and
WWW sites, the Company has not, as of the date hereof, entered into any
agreements with any professional tutors or mental health professionals.

Additional proposed entertainment, educational and counseling services which
the Company is considering include FantasyNet, ModelNet, WebClinic and CookNet.
See "Business."

THE OFFERING

<TABLE>
<S> <C>
Securities Offered(1)........................ 417,500 shares of Common Stock and 1,000,000
Warrants. See "Description of Securities."
Common Stock Outstanding Before Public
Offering................................... 1,700,000 shares.

Common Stock Outstanding After Public
Offering(1)(2)............................. 2,650,000 shares.

Warrants to be Issued in this offering....... 1,000,000 Warrants.

Exercise Terms............................... Each Warrant entitles the holder thereof to
purchase one share of Common Stock for $5.50,
during the three year period commencing two
years after the Effective Date, subject to
adjustment in certain circumstances. See
"Description of Securities--Warrants".

Expiration Date.............................. , 2001 (five years after the Effective Date).
</TABLE>

4
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

<TABLE>
<S> <C>
Redemption................................... Redeemable by the Company, in whole or in
part, at a price of $.05 per Warrant, upon
not less than 30 days prior written notice to
the holders of such Warrants, provided that
the closing bid price (as defined) of the
Company's Common Stock for the twenty
consecutive trading days immediately prior to
the date on which the notice of redemption is
given, shall have exceeded $7.50 per share.

Use of Proceeds.............................. The Company will receive none of the proceeds
from this offering. See "Use of Proceeds".

Risk Factors................................. Investment in the securities offered hereby
involves a high degree of risk and immediate
substantial dilution. See "Risk Factors" and
"Dilution".
Proposed NASDAQ Symbols:(2)

Common Stock............................... NETL

Warrants................................... NETLW
</TABLE>

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

(1) Does not include (i) 142,500 shares of Common Stock and 109,500 Warrants,
subject to the Underwriters' Over-allotment Option; (ii) 1,000,000 shares of
Common Stock issuable upon the exercise of the outstanding Warrants, (iii)
168,000 shares of Common Stock issuable upon the exercise of the
Underwriters' Stock Warrants and Underwriters' Warrants; (iv) 800,000 shares
of Common Stock reserved for issuance pursuant to the Company's incentive
stock option plan; or (v) 260,000 shares of Common Stock reserved for
issuance pursuant to certain other options. See "Management", "Underwriting"
and "Description of Securities".

(2) The proposed trading symbols do not imply that a liquid and active market
will be developed or sustained for the securities upon completion of the
Public Offering.

5
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

SUMMARY FINANCIAL INFORMATION

The following summary of financial information should be read in conjunction
with the Unaudited Financial Statements and notes thereto appearing elsewhere in
this Memorandum.

STATEMENT OF OPERATIONS DATA:

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

(1) Reflects incorporation of the Company on August 23, 1995. See "Certain
Transactions."

BALANCE SHEET DATA:

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

6
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

RISK FACTORS

EXPLANATORY PARAGRAPH IN INDEPENDENT AUDITORS REPORT; DEPENDENCE UPON PUBLIC
OFFERING PROCEEDS. The Company incurred a net loss of $243,129 for the period
from August 23, 1995 (date of inception) to March 31, 1996. In addition, the
Company had a working capital deficiency of $76,185 and a deficit accumulated
during the development state of $243,129 at such date. As a result of the
Company's working capital deficiency and deficit accumulated during the
development stage, the Company's independent auditors' report on the Company's
financial statements for the period from August 23, 1995 (date of inception) to
March 31, 1996 contains an explanatory paragraph discussing the fact that there
is substantial doubt about the Company's ability to continue as a going concern.
The Company has an immediate need for the net proceeds of the Public Offering,
or other financing in order to continue the development of its proposed
services, and to commence its operations and the marketing of its services. The
Company believes that the proceeds of the Public Offering will be sufficient to
fund the Company's operations for a period of approximately one year from the
date of this Prospectus, including the commencement of its operations and
marketing of its services. This estimate is based upon the Company's limited
operations to date and its estimates as to cash flow. However, in the event that
such estimates are inaccurate or future events prevent the Company from
implementing its plans as anticipated, the Company may be materially and
adversely effected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Financial Statements."

NEED FOR ADDITIONAL FINANCING. Although the Company believes that the net
proceeds from the sale of the Public Securities offered hereby will be
sufficient to fund the Company's operations for a period of approximately one
year, such belief cannot give rise to an assumption that the Company's cost
estimates are accurate or that the proceeds to be received from the Public
Offering will provide sufficient working capital for at least one year of
operations. In addition, in the event of delays or unanticipated costs or
problems in the development and marketing of the Company's proposed services,
the Company may require substantial additional financing. Further, the Company's
ability to continue operations after one year

7
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

POTENTIAL LIABILITY AND INSURANCE. The Company may be subject to substantial
liability as a result of claims made by consumers arising out of services
provided by the Company's independent contractors and employees. The Company is
aware that claims have been made against other companies engaged in providing
telephone entertainment services on the basis of advice or prognostications
disseminated through such services. While the Company does not currently
maintain insurance, the Company intends to attempt to purchase such insurance at
such time as it has sufficient funds available for such purpose. There can be no
assurance that the Company will be able to obtain such insurance, or if
obtained, that such insurance will be sufficient to cover potential claims or
that an adequate level of coverage will be available in the future at a
reasonable cost. The Company will seek to limit any such potential liability by
providing disclaimers in connection with its services. There can be no
assurance, however, that the Company will not face claims resulting in
substantial liability for which the Company is partially or completely
uninsured. A partially or completely uninsured claim against the Company, if
successful and of sufficient magnitude, would have a material adverse effect on
the Company.

IMMEDIATE AND SUBSTANTIAL DILUTION. The Public Offering involves immediate
and substantial dilution to investors. As of March 31, 1996, the negative net
tangible book value of the Company was $40,392, or approximately, ($.03) per
share of Common Stock. Purchasers of shares of Common Stock in the Public
Offering will incur immediate dilution in net tangible book value of $3.82 per
share of Common Stock (attributing no value to the Warrants), which is
approximately 69.5% based on the initial public offering price of $5.50 per
share. All of the Company's present stockholders purchased their shares at a
price substantially less than the initial public offering price of the Common
Stock. Accordingly, to the extent that the Company incurs losses, the public
investors will bear most of the risk of such losses. See "Dilution".

BROAD DISCRETION IN USE OF PROCEEDS. Approximately 22.5% of the net proceeds
of the Public Offering will be applied to working capital and other general
corporate purposes. Accordingly, management of the Company will have broad
discretion as to the application of such proceeds. See "Use of Proceeds."

10
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

CONTROL BY MANAGEMENT. The Company's officers and directors currently own
and have the power to vote in excess of 61% of the total outstanding shares of
Common Stock. In addition, upon completion of the Public Offering, management of
the Company will continue to beneficially own shares of Common Stock
representing in excess of 39% of all votes entitled to be cast. Accordingly,
management of the Company will, as a practical matter, be in a position to elect
a majority of the directors of the Company and to control the Company's affairs.

NO ASSURANCE OF PUBLIC MARKET; DETERMINATION OF PUBLIC OFFERING PRICE;
VOLATILITY OF STOCK PRICE. Prior to the Public Offering, there has been no
market for any of the Company's securities. There can be no assurance that a
trading market will develop after the Public Offering for any of the Company's
securities or that, if developed, it will be sustained. The initial public
offering price of the Public Securities and the exercise price and other terms
of the Warrants were established by negotiations between the Company and the
Underwriter and do not bear any direct relationship to the Company's assets,
book value, results of operations or any other criteria of value. See
"Underwriting".

11
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

NASDAQ ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING OF
SECURITIES FROM NASDAQ MARKET; RISKS OF LOW-PRICED STOCKS. Prior to the Public
Offering, there has been no established public trading market for the Company's
securities and there is no assurance that a public trading market for the
Company's securities will develop after the completion of the Public Offering.
If a trading market does in fact develop for the securities offered hereby,
there can be no assurance that it will be sustained.

If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of purchasers in the Public Offering to sell their securities in
the secondary market. There is no assurance that trading in the Company's
securities will not be subject to these or other regulations that would
adversely affect the market for such securities.

12
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

Warrantholders; (ii) the closing bid price of the Company's Common Stock for the
twenty (20) consecutive trading days immediately prior to the date on which the
notice of redemption is given, shall have exceeded $7.50 per share; and (iii)
Warrantholders shall have exercise rights until the close of the business day
preceding the date fixed for redemption. Notice of redemption of the Warrants
could force the holders to exercise the Warrants and pay the Exercise Price at a
time when it may be disadvantageous for them to do so, or to sell the Warrants
at the current market price when they might otherwise wish to hold them, or to
accept the redemption price, which may be substantially less than the market
value of the Warrants at the time of redemption. The Warrants may not be
exercised unless the registration statement pursuant to the Securities Act
covering the underlying shares of Common Stock is current and such shares have
been qualified for sale, or there is an exemption from applicable qualification
requirements, under the securities laws of the state of residence of the holder
of the Warrants. Although the Company does not presently intend to do so, the
Company reserves the right to call the Warrants for redemption whether or not a
current prospectus is in effect or such underlying shares are not, or cannot be,
registered in the applicable states. Such restrictions could have the effect of
preventing certain Warrantholders from liquidating their Warrants. See
"Description of Securities-- Warrants."

LACK OF EXPERIENCE OF THE UNDERWRITER. The Underwriter was organized in
August 1993, was registered as a broker dealer in June 1995, and became a member
firm of the NASD in June 1995. The Underwriter is principally engaged in retail
brokerage and market making activities and various corporate finance projects.
Although the Underwriter has acted as a placement agent in private offerings and
has participated as a member of the underwriting syndicate or as a selected
dealer in one public offering, it has not acted as the lead managing underwriter
in any public offerings of securities. While certain of the officers of the
Underwriter have significant experience in corporate finance and the
underwriting of securities, the Underwriter has not previously underwritten any
public offerings. No assurance can be given that the Underwriter's lack of
experience as a lead managing underwriter of public offerings will not adversely
affect the Public Offering and the subsequent development of a liquid public
trading market in the Company's securities.

13
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

will be prohibited from engaging in any market-making activities or solicited
brokerage activities with regard to the Company's securities during a period
beginning nine business days prior to the commencement of any such solicitation
and ending on the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Underwriter may have to
receive a fee for the exercise of the Warrants following such solicitation. As a
result, the Underwriter and soliciting broker/dealers may be unable to continue
to make a market in the Company's securities during certain periods while the
exercise of Warrants is being solicited. Such a limitation, while in effect,
could impair the liquidity and market price of the Company's securities.

ISSUANCE OF PREFERRED STOCK: ANTI-TAKEOVER PROVISIONS. The Company's
Certificate of Incorporation permits its Directors to designate the terms of and
issue shares of Preferred Stock. The issuance of shares of Preferred Stock by
the Board of Directors could adversely effect the rights of holders of Common
Stock by, among other matters, establishing preferential dividends, liquidation
rights and voting power. Although the Company has no present intention to issue
shares of Preferred Stock (and is prohibited from issuing shares of Preferred
Stock for two years from the closing date of the Public Offering without the
consent of the Underwriter), the issuance thereof might render it more
difficult, and therefore discourage, an unsolicited takeover proposal such as a
tender offer, proxy contest or the removal of incumbent management, even if such
actions would be in the best interest of the Company's stockholders. See
"Description of Securities."

UNDERWRITER'S WARRANTS AND REGISTRATION RIGHTS. In connection with the
Public Offering, the Company has agreed to sell to the Underwriter, for $10, the
Underwriter's Warrants which entitle the Underwriter to purchase up to 95,000
shares of Common Stock and/or 73,000 Warrants, respectively. The securities
issuable upon exercise of the Underwriter's Warrants are identical to those
offered pursuant to this prospectus. The Underwriter's Warrants are exercisable
at $6.60 and $.12, respectively, for a period of four years commencing one year
from the Effective Date. The exercise of the Underwriter's Warrants and the
Warrants contained in the Underwriter's Warrants may dilute the value of the
shares of Common Stock to be acquired by holders of the Warrants, may adversely
affect the Company's ability to obtain equity capital, and, if the Common Stock
issuable upon the exercise of the Underwriter's Warrants and the Warrants
contained in the Underwriter's Warrants are sold in the public market, may
adversely affect the market price of the Common Stock. The Underwriter has been
granted certain "piggyback" and demand registration rights for a period of five
years from the Effective Date with respect to the registration under the
Securities Act of the securities directly or indirectly issuable upon exercise
of the Underwriter's Stock Warrants and Underwriter's warrants. The exercise of
such rights could result in substantial expense to the Company. See
"Underwriting."

DILUTION

The difference between the initial public offering price per share of Common
Stock and the pro forma net tangible book value per share of Common Stock after
the Public Offering constitutes the dilution to investors in the Public
Offering. Net tangible book value per share is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common stock. The following
discussions allocate no value to the Class A Warrants.

14
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

an immediate increase in net tangible book value of $1.71 per share to the
existing stockholders, and immediate dilution of $3.82 per share (69.5%) to new
investors. The table on the following page illustrates dilution to new investors
on a per share basis:

<TABLE>
<CAPTION>
<S> <C> <C>
Public offering price per share............................. $5.50
Net tangible book value (deficit) per share before
offering.................................................... ($.03)
Increase attributable to public investors................... $1.71
Pro forma net tangible book value per share after
offering.................................................... $1.68
-----
Dilution per share to public investors...................... $3.82
-----
-----
</TABLE>

The following table sets forth with respect to the existing stockholders and
public investors, a comparison of the number of shares of Common stock owned by
the existing stockholders, the number of shares of Common Stock to be purchased
from the Company by the purchasers of the Public Securities and the respective
aggregate consideration paid to the Company and the average price per share.

15
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

CAPITALIZATION

The following table sets forth the capitalization of the Company at March
31, 1996 and such capitalization as adjusted to give effect to (i) the sale of
the Public Securities offered hereby, and (ii) the anticipated use of the net
proceeds of the Public Offering in the manner contemplated under "Use of
Proceeds". This table should be read in conjunction with the historical
financial statements and notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------
ACTUAL AS ADJUSTED(1) (2)
-------- ------------------
<S> <C> <C>
Liabilities
Total liabilities.............................. $250,631 $ 143,033
-------- ------------------
-------- ------------------
Stockholders' Equity
Preferred Stock, $.0001 par value: Authorized
1,000,000 shares; none issued.................... -- --
Common Stock, $.0001 par value: Authorized
19,000,000 shares; Issued and Outstanding--
1,500,000 and 2,650,000, respectively............ 150 265
Additional paid in capital....................... 289,661 4,875,731
Deficit accumulated during the development
stage............................................ (243,129) (431,760)
Deferred offering costs relating to Common Stock
issued for services related to intended IPO...... (14,875) 0
-------- ------------------
Stockholders' equity............................. $ 31,807 $4,444,436
-------- ------------------
-------- ------------------
</TABLE>

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

(1) Gives effect to the sale of the Common Stock and Warrants offered hereby and
the receipt of $4,159,760 of net proceeds therefrom, after giving effect to
$25,500 of previously paid Public Offering costs.

18
<PAGE>
[Alternate Page for Selling Securityholders' Prospectus]

In connection with the issuance of 100,000 options to Dr. Vladislav Rysin,
the Company will record a charge to earnings of $300,000 over the term of Dr.
Rysin's employment agreement. See "Management--Employment Agreements."

LIQUIDITY AND CAPITAL RESOURCES

To date, the Company has primarily financed it operations through private
sales of equity and debt securities and through the contribution of capital by
its founders. The Company has not generated any revenues or other cash through
operations since its inception and it is unlikely that it will generate any cash
from operations in the foreseeable future. The Company completed a bridge
financing on March 20, 1996 which consisted of the sale of $250,000 in two year
promissory notes, 200,000 shares of Common Stock and 1,000,000 warrants to
purchase Common Stock. This initial bridge financing provided net proceeds to
the Company of approximately $199,500 after investment banking and legal fees.
The Company completed a second bridge financing on May 9, 1996 which consisted
of the sale of 200,000 shares of Common Stock at a price of $2.50 per share for
total gross proceeds to the Company of $500,000. This second financing provided
net proceeds to the Company of approximately $385,000. The Company used
approximately $262,000 to repay the principal and interest due on the $250,000
of promissory notes issued in the first bridge financing. In connection with
the repayment of the notes upon completion of the second bridge financing, the
Company will record a charge to operations of approximately $165,000 for May
1996. The effective interest rate on the initial bridge financing was
approximately 1235%.

The Company believes that the net proceeds from the Public Offering,
together with available funds will be sufficient to meet its anticipated cash
needs for working capital and capital expenditures for at least the next 12
months. Thereafter, if the Company is unable to generate sufficient cash from
operations to satisfy the Company's liquidity requirements, the Company may sell
additional equity or debt securities or obtain new credit facilities. The sale
of additional equity or convertible debt securities will result in additional
dilution to the Company's stockholders.

21
<PAGE>
[ALTERNATE PAGE FOR PRINCIPAL STOCKHOLDERS]

of Incorporation exonerates its directors from monetary liability to the extent
permitted by this statutory provision. The Company has been advised that it is
the position of the Securities and Exchange Commission that insofar as the
foregoing provision may be invoked to disclaim liability for damages arising
under the Act, that provision is against public policy as expressed in the Act
and is therefore unenforceable.

PRINCIPAL STOCKHOLDERS

<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
NUMBER OF PERCENTAGE OF PERCENTAGE OF
SHARES COMMON STOCK COMMON STOCK
BENEFICIALLY BEFORE PUBLIC AFTER PUBLIC
NAME OWNED OFFERING OFFERING(8)
- ---------------------------------------------------- ------------ --------------- -----------------
<S> <C> <C> <C>
Laurence Rosen(1)(2)................................ 438,662 25.8% 16.6%
Jeffrey Wolf(1)(3).................................. 341,553 20.1% 12.9%
Michael Kharitonov(1)(4)............................ 266,210 15.7% 10.0%
Scott Wolf(5)....................................... 177,474 10.4% 6.7%
Dennis Sal(6)....................................... 90,000 5.3% 3.4%
All Officers and Directors as a Group (3
persons)(7)......................................... 1,046,425 61.6% 39.5%
</TABLE>

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

Except as noted above, the address for the above identified officers and
directors of the Company is c/o NetLive Communications, Inc., 584 Broadway,
Suite 806, New York, New York 10012.

(1) May be deemed to be a "parent" and "promoter" of the Company as defined in
the Rules and Regulations of the Commission promulgated under the Act.

(6) Does not include options to purchase an aggregate of 250,000 shares of
Common Stock, all of which are not currently exercisable or exercisable
within 60 days.

(8) Does not give effect to the sale of shares of Common Stock in connection
with this offering. In connection with this offering, Mr. Dennis Sal will be
offering 90,000 shares of Common Stock of the Company for sale. In the event
that all 90,000 shares are sold by Mr. Sal, his percentage ownership of
Common Stock of the Company will be zero percent (0%).

37
<PAGE>
ALTERNATE PAGE FOR SHARES ELIGIBLE FOR FUTURE SALE

Stock and, under certain circumstances, make it more difficult for a third party
to gain control of the Company, discourage bids for the Company's Common Stock
at a premium or otherwise adversely effect the market price of the Common Stock,
if the Common Stock is ever publicly traded, of which there are no assurances.
As of the date hereof, the Company has no plans to issue, or any present
intention to issue any such shares.

TRANSFER AGENT AND WARRANT AGENT

The Transfer Agent for the Company's Common Stock and the Warrant Agent for
the Company's A Warrants is American Stock Transfer & Trust Co., New York, New
York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Public Offering, the Company will have 2,650,000
shares of Common Stock outstanding (2,792,500 shares if the Underwriter's
over-allotment option is exercised in full). All of the shares of Common Stock
sold in the Public Offering will be freely tradeable without restriction or
further registration under the Securities act of 1933, as amended (the
"Securities Act"), except for any shares purchased by an "affiliate" of the
Company which will be subject to certain limitations of Rule 144 adopted under
the Securities Act.

Prior to the Public Offering, there has been no market for any securities of
the Company. The effect, if any, of public sales of the restricted shares of
Common Stock or the availability of such shares for future sale at prevailing
market prices cannot be predicted. Nevertheless, the possibility that
substantial amounts of restricted shares may be resold in the public market may
adversely affect prevailing market prices for the Common Stock and the Class A
Warrants, if any such market should develop.

40
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

CONCURRENT PUBLIC OFFERING OF SECURITIES

Concurrently with this offering, the Company is offering 900,000 shares of
Common Stock and 600,000 Warrants in a public offering through the Underwriter.

USE OF PROCEEDS

The Company will not receive any proceeds from this offering. The net
proceeds to the Company from the sale of the Public Securities offered are
estimated to be approximately $4,159,760 ($4,851,149 if the Underwriter's
over-allotment option is exercised in full) after deducting underwriting
commissions and discounts and other expenses of the Public Offering. The Company
expects to use the net proceeds from the Public Offering as follows:

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

(1) Represents anticipated costs associated with advertising and promotion,
including purchase of broadcast media, commercials, infomercials,
telemarketing and direct mail advertising in connection with the Company's
proposed Internet videoconferencing and telephone entertainment services.

(3) Includes costs associated with development of proprietary Internet software,
including payment of salaries for technical staff.

(4) Represents anticipated costs associated with purchasing equipment, including
computer hardware and videoconferencing equipment.

(5) Includes fees to be paid to celebrities and trademark owners for use of
their names and/or trademarks.

The foregoing represents the Company's current estimate of the allocation of
the net proceeds of the Public Offering based upon certain assumptions relating
to the costs associated with the implementation of the Company's proposed
business operations. Future events, including the problems, delays, expenses and
complications frequently encountered by companies which seek to develop new
technologies or establish new services or introduce services to a new market, as
well as changes in economic conditions, regulatory or competitive conditions,
and the success of the Company's marketing activities, may make shifts in the
allocation of funds necessary or desirable. There can be no assurance that the
Company's estimates will prove to be accurate or that unforeseen expenses will
not be incurred.

The Company believes that the net proceeds of the Public Offering will
satisfy the Company's capital requirements for approximately twelve months.
During those twelve months, the Company's efforts will be directed at developing
and implementing its proposed business operations.

41
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

SELLING SECURITYHOLDERS

The following table sets forth the number of shares of the Common Stock of
the Company beneficially owned by each Selling Securityholders and the number of
shares of Common Stock included for sale in this Prospectus.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
AND WARRANTS
BENEFICIALLY OWNED
NUMBER OF SHARES AFTER THE SELLING
OF COMMON STOCK NUMBER OF WARRANTS SECURITY HOLDERS
NAME BENEFICIALLY OWNED BENEFICIALLY OWNED OFFERING
- ------------------------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Eaglehurst Corporation, N.V.(1)............ 50,000 250,000 0
Celestial Dreams Corporation, N.V.(2)...... 50,000 250,000 0
Jasminville Corporation, N.V.(3)........... 12,500 62,500 0
Davstar II Managed Investments Corp.,
N.V.(4).................................... 37,500 187,500 0
Dennis Sal................................. 90,000 250,000 0
Arlene Horowitz............................ 10,000 0 0
Lon Rubackin............................... 10,000 0 0
Edwin S. Osias............................. 20,000 0 0
Cliff Feldstein............................ 10,000 0 0
Georgia M. Rodgers......................... 10,000 0 0
Ulysses Flemming........................... 10,000 0 0
Phil Settles............................... 20,000 0 0
Farid K. Farida............................ 20,000 0 0
Robert B. Sauter........................... 20,000 0 0
Balch and Bingham
Money Purchase Pension Plan FBO
Harold Bowron.............................. 10,000 0 0
Annetta D'Amico Bolson..................... 10,000 0 0
Ben Shabtai................................ 10,000 0 0
Gusrae, Kaplan & Bruno..................... 17,500 0 0
</TABLE>

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

(1) Eaglehurst Corporation, N.V. is beneficially owned by Mr. Vivcenzo Minucci.

(2) Celestial Dreams Corporation, N.V. is beneficially owned by Mr. Umberto
Frascati.

(3) Jasminville Corporation, N.V. is beneficially owned by over 30 European
Investors.

(4) Davstar II Managed Investments Corp., N.V., is beneficially owned by over 30
European investors.

PLAN OF DISTRIBUTION

Each Selling Securityholder is free to offer and sell his or her Common
Stock and Warrants at such time, in such manner and at such prices as he or she
shall determine. Such Common Stock and Warrants may be offered by Selling
Securityholders in one or more types of transactions, which may or may not
involve brokers, dealers or cash transactions. There is no underwriter or
coordinating broker

42
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

acting in connection with the proposed sale of Common Stock and Warrants by the
Selling Securityholders.

The Selling Securityholders have advised the Company that sales of Common
Stock and Warrants may be effected from time to time in transactions, through
the writing of options on the Securities, or a combination of such methods of
sale, at fixed price which may be changed, at market prices prevailing at the
time of sale, or at negotiated prices, the Selling Securityholders may effect
such transactions by selling Common Stock and Warrants directly to purchasers or
to or through broker/dealers which may act as agents or principals. Such
broker/dealer may receive compensation in the form of discounts, concessions, or
commissions from the Selling Securityholders and/or the purchasers of Common
Stock and Warrants for whom such broker/dealers may act as agents or to whom thy
sell as principal, or both (which compensation as to a particular broker/dealer
that act in connection with the sale of the Common Stock and Warrants might be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Common Stock and Warrants as principal might be deemed to be
underwriting discounts and commissions under the Securities Act. The Selling
Securityholders may agree to indemnify any agent, dealer or broker/dealer that
participates in transactions involving sales of the Common Stock and Warrants
against certain liabilities, including liabilities arising under the Securities
Act.

Because Selling Securityholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Common Stock and Warrants, they will be
subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of his or her Securities, any
Selling Securityholder, any selling broker/dealer and any "affiliated
purchasers" may be subject to Rule 10b-7 under the Exchange Act which prohibits
any "stabilizing bid" or "stabilizing purchase" for the purpose of pegging,
fixing or stabilizing the price of the Common Stock and Warrants in connection
with the Offering.

LEGAL MATTERS

EXPERTS

43
<PAGE>
[ALTERNATE PAGE FOR SELLING SECURITYHOLDERS' PROSPECTUS]

ADDITIONAL INFORMATION

The Company has filed with the Washington, D.C. office of the Securities and
Exchange Commission a Registration Statement (the "Registration Statement")
under the Securities Act with respect to the securities offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration State-ment, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and this Offering, reference is made to the Registration
Statement, including the exhibits filed therewith. Statements contained in the
Prospectus as to the contents of any contract or other document are not
necessarily complete and reference is made to each such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.

The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended. Reports and other information filed by the
Company can be inspected without charge or copies made at prescribed rates from
the Commission at its principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at its Midwest Regional Office located at Citicorp. Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, or at its Northeast
Regional Office located at 7 World Trade Center, New York, New York 10048. The
Commission maintains a WWW site that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission. The Commission's WWW site is located at http://www.sec.gov.

44
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

In general, Section 145 of the Delaware General Corporation Law provides
that persons who are officers or directors of a corporation may be indemnified
by the corporation for acts performed in their capacities as such. The
Registrant's by-Laws authorize indemnification in accordance with and to the
extent permitted by said statute.

The Company's Certificate of Incorporation and By-Laws provide for
indemnification to the fullest extent permitted by law.

Reference is also made to Section 8 of the Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement, pursuant to which the Underwriter
agrees to indemnify the directors and certain officers of the Company and
certain other persons against civil liability.

Except as hereinafter set forth, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of the
Company is indemnified in any manner against any liability which he may incur in
his capacity as such.

Article VI of the Company's Articles of Incorporation provides as follows:

A director of the corporation shall not be liable to the corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended. Any amendment,
modification or repeal of the foregoing sentence by the stockholders of the
corporation shall not adversely affect, any right or protection of a
director of the corporation in respect of any act or commission occuring
prior to the time of such amendement, modification or repeal.

Article X of the Company's By-Laws provides as follows:

The Corporation shall indemnify to the full extent authorized by law any
person made or threatened to be made a party to an action or proceeding,
whether civil, criminal, administrative or investigative, by reason of the
fact that he, his testator or intestate is or was a director, officer or
employee or agent of the Corporation or any predecessor of the Corporation
or serves or served any other enterprise as a director, officer or employee
or agent at the request of the Corporation or any predecessor of the
Corporation.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses of this Offering all of which are to be paid by the
Registrant in connection with the issuance and distribution of the securities
being registered are as follows:

<TABLE>
<S> <C>
SEC registration fee.......................................... $ 6,801.31
NASD filing fee............................................... 1,555.37
NASDAQ listing and Filing fee................................. 10,000.00
Printing and engraving expenses............................... 100,000.00*
Accounting fees and expenses.................................. 75,000.00*
Legal fees and expenses....................................... 100,000.00*
Blue sky fees and expenses.................................... 50,000.00*
Transfer agent fees........................................... 10,000.00*
Miscellaneous expenses........................................ 31,643.32*
-----------
Total......................................................... $385,000.00*
-----------
-----------
</TABLE>

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

* Estimated.

II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Except as set forth below, there were no sales of unregistered securities by
the Registrant during the past three years:

Effective as of September 1995, the Registrant sold 132,268, 263,699,
263,699, 45,206 and 132,268 shares of the Company's Common Stock to Messrs.
Scott Wolf, Laurence Rosen, Jeffrey Wolf, Andrew Schwartz and Michael
Kharitonov, respectively, for aggregate consideration of $6,750. These
transactions were exempt from registration under the Securities Act of 1933, as
amended (the "Act"), under Section 4(2) of the Act as not involving a public
offering.

Effective as of December 1995, the Registrant sold 45,206, 88,737, 88,737,
45,206 and 132,268 shares of the Company's Common Stock, to Messrs. Scott Wolf,
Laurence Rosen, Jeffrey Wolf, Andrew Schwartz and Michael Kharitonov,
respectively, for an aggregate consideration of approximately $22,890. These
transactions were exempt from registration under the Act, under Section 4(2) of
the Act as not involving a public offering.

On or about February 1, 1996, the Registrant sold 41,857 shares of the
Company's Common Stock to Mr. Robert Friedman for an aggregate consideration of
$50,000. This transaction was exempt from registration under the Act, under
Section 4(2) of the Act as not involving a public offering.

Effective as of January 1996, the Company sold 1,674 shares of the Company's
Common Stock to each of Messrs. Laurence Rosen and Michael Kharitonov for an
aggregate consideration of $1.00. These transactions were exempt from
registration under the Act, under Section 4(2) of the Act as not involving a
public offering.

On or about February 28, 1996, the Company sold 17,500 shares of the
Company's Common Stock to Gusrae Kaplan & Bruno in consideration for services
rendered. This transaction was exempt from registration under the Act, under
Section 4(2) of the Act as not involving a public offering.

In March 1996, the Registrant issued an aggregate of $250,000 principal
amount twelve percent (12%) promissory notes, 200,000 shares of Common Stock and
1,000,000 Warrants to a total of four private investors, who paid total gross
consideration of $250,000. These transactions were exempt from registration
under the Act, under Section 4(2) and Rule 506 of Regulation D of the Act as not
involving a public offering. May Davis Group, Inc. acted as Placement Agent for
these issuances and received an aggregate of $25,000 in commissions (10%). The
recipients of all of the foregoing securities represented that such securities
were being acquired for investment and not with a view to the distribution
thereof. In addition, the certificates evidencing such securities bear
restrictive legends.

In May 1996, the Registrant issued an aggregate of 200,000 shares of Common
Stock to a total of 13 private investors, who paid total gross consideration of
$500,000. These transactions were exempt from registration under the Act, under
Section 4(2) and Rule 506 of Regulation D of the Act as not involving a public
offering. May Davis Group, Inc. acted as Placement Agent for these issuances and
received an aggregate of $65,000 in commissions (10%) and non-accountable
expense allowances (3%). The recipients of all of the foregoing securities
represented that such securities were being acquired for investment and not with
a view to the distribution thereof. In addition, the certificates evidencing
such securities bear restrictive legends.

II-2
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<C> <S>
(a) Exhibits
1.1 Form Underwriting Agreement**
1.2 Form of Selected Dealers Agreement**
3.1 Articles of Incorporation, as amended to date**
3.2 By-Laws**
4.1 Form of Underwriter's Warrant**
4.2 Form of Financial Advisory and Investment Banking Agreement with the Underwriter**
4.3 Form of Common Stock Certificate**
4.4 Form of Common Stock Purchase Warrant**
4.5 Form of Common Stock Purchase Warrant used for Bridge Loans**
4.6 Form of Warrant Agreement**
5.1 Opinion of Gusrae Kaplan & Bruno
10.1 Employment Agreement with Laurence Rosen**
10.2 Employment Agreement with Michael Kharitonov**
10.3 Employment Agreement with Jeffrey Wolf, as amended**
10.4 Amendment No. 1 to Employment Agreement with Michael Kharitonov**
10.5 Employment Agreement with Vladislav Rysin**
10.6 License Agreement with Jeane Dixon**
10.7 Registrant's 1996 Incentive Stock Option Plan**
23.1 Consent of Gusrae, Kaplan & Bruno (to be included in Exhibit 5.1)
23.2 Consent of Goldstein Golub Kessler & Company, P.C.
</TABLE>

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

** Previously filed

All other schedules are omitted, as the required information is either
inapplicable or presented in the financial statements or related notes.

ITEM 28. UNDERTAKINGS

The Registrant hereby undertakes:

(1) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer 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 small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
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 small business issuer 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 of 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.

(2) The Registrant will provide to the underwriters, immediately after the
closing of this Offering, stock and warrant certificates in such denominations
and registered in such names as to permit prompt delivery to each purchaser.

II-3
<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
the requirements for filing on Form SB-2 and authorized this amendment to the
registration statement to be signed on its behalf by the undersigned in the City
of New York, State of New York August 7, 1996.

NETLIVE COMMUNICATIONS, INC.

By: /s/ LAURENCE ROSEN
..................................
Laurence Rosen,
President

In accordance with the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following persons
in the capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------ ----------------
<S> <C> <C>

/s/ LAURENCE ROSEN Chief Executive Officer, President, August 7, 1996
.................................... Treasurer and Director (Principal
Laurence Rosen Accounting and Financial Officer)

/s/ MICHAEL KHARITONOV Chairman of the Board, Director of August 7, 1996
.................................... Technology and Secretary
Michael Kharitonov

.................................... Director August , 1996
Ross S. Glatzer

.................................... Director August , 1996
John E. Meier

/s/ JEFFREY WOLF Director August 7, 1996
....................................
Jeffrey Wolf
</TABLE>

II-4
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
- ------- ----
<C> <S> <C>
1.1 Form Underwriting Agreement**
1.2 Form of Selected Dealers Agreement**
3.1 Articles of Incorporation, as amended to date**
3.2 By-Laws**
4.1 Form of Underwriter's Warrant**
4.2 Form of Financial Advisory and Investment Banking Agreement with the
Underwriter**
4.3 Form of Common Stock Certificate**
4.4 Form of Common Stock Purchase Warrant**
4.5 Form of Common Stock Purchase Warrant used for Bridge Loans**
4.6 Form of Warrant Agreement**
5.1 Opinion of Gusrae Kaplan & Bruno
10.1 Employment Agreement with Laurence Rosen**
10.2 Employment Agreement with Michael Kharitonov**
10.3 Employment Agreement with Jeffrey Wolf, as amended**
10.4 Amendment No. 1 to Employment Agreement with Michael Kharitonov**
10.5 Employment Agreement with Vladislav Rysin**
10.6 License Agreement with Jeane Dixon**
10.7 Registrant's 1996 Incentive Stock Option Plan**
23.1 Consent of Gusrae, Kaplan & Bruno (to be included in Exhibit 5.1)
23.2 Consent of Goldstein Golub Kessler & Company, P.C.
</TABLE>

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

** Previously filed

Exhibit 5.1

GUSRAE, KAPLAN & BRUNO
120 Wall Street
New York, New York 10005
(212) 269-1400

August 7, 1996

TO THE BOARD OF DIRECTORS OF:

NetLive Communications, Inc.
584 Broadway
New York, New York 10012

Re: NetLive Communications, Inc.
Form SB-2
SEC File No. 333-04057

Gentlemen:

We have acted as counsel to NetLive Communications, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company of a registration statement (the "Registration Statement") on Form
SB-2, File No. 333-04057, under the Securities Act of 1933, relating to the
public offering of 950,000 shares of the Company's Common Stock, $.0001 par
value (the "Common Stock") and 730,000 Common Stock Purchase Warrants (the
"Warrants"), each exercisable to purchase one share of Common Stock. The
offering also involves the grant to the Underwriter of an option to purchase
and additional 95,000 shares of Common Stock and 73,000 Warrants to cover
over-allotments in connection with the offering, the sale to the Underwriter of
warrants for the purchase of 142,500 shares of Common Stock and 109,500
Warrants and an aggregate of 417,500 shares of Common Stock and 1,000,000
Warrants to be sold by certain selling security holders, as well as the
Warrants themselves.

We have examined the Certificate of Incorporation and By-laws of the
Company, the minutes of the various meetings and consents of the Board of
Directors of the company, drafts of the Underwriting Agreement relating to the
offering of the shares of Common Stock and Warrants, drafts of the Warrant
Agreement, the Underwriters' Warrants, forms of certificates representing the
Common Stock and the Warrants, originals or copies of all such records of
the Company, certificates of public officials, certificates of officers and
representatives of the Company and others, and such other documents,
certificates, records, authorizations, proceedings, statutes, judicial
decisions and opinions of counsel as we have deemed necessary to form the basis
of the opinion expressed below. In such examination, we have assumed the
genuineness of all

<PAGE>

signatures, the authenticity of all documents submitted to
us as originals and the conformity to originals of all documents submitted to
us as copies thereof. As to various questions of fact material to such
opinion, we have relied upon statements and certificates of
officers and representatives of the Company and others.

Based upon the foregoing, we are of the opinion that:

1. All of the foregoing shares of Common Stock have been duly authorized
and, when issued and sold in accordance with the terms described in the
Prospectus forming a part of the Registration Statement ("Prospectus") will be
validly issued, fully paid and non-assessable.

2. All of the Warrants have been duly authorized and are validly issued
and the Underwriters' Warrants have been duly authorized and, when issued and
sold in accordance with the terms described in the Prospectus, will be validly
issued.

3. The shares of Common Stock of the Company issuable upon exercise of
the Warrants and the Underwriters' Warrants have bee duly authorized and
reserved for issuance and, when issued in accordance with the terms of the
Warrants and the Underwriters' Warrants, as the case may be, will be validly
issued, fully paid and non-assessable.

We hereby consent to our firm being named in the Registration Statement
and the Prospectus in the section entitled "Legal Matters".

We further consent to your filing a copy of this opinion as an exhibit to
the Registration Statement.

Very truly yours,

/s/GUSRAE, KAPLAN & BRUNO
________________________________
GUSRAE, KAPLAN & BRUNO

EXHIBIT 23.2

INDEPENDENT AUDITOR'S CONSENT

TO THE BOARD OF DIRECTORS
NETLIVE COMMUNICATIONS, INC.

We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form SB-2 of our report dated April 25, 1996, except
for Note 8, as to which the date is May 9, 1996, and the next to last paragraph
of Note 6, as to which the date is May 19, 1996, on the financial statements of
NetLive Communications, Inc. as of March 31, 1996 and for the period from August
23, 1995 (date of inception) to March 31, 1996, which appear in such Prospectus.
We also consent to the reference to our firm under the caption "Experts" in such
Prospectus.

/s/ GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
.................................................
Goldstein Golub Kessler & Company, P.C.

GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.

August 7, 1996
New York, New York