THINK NEW IDEAS INC, SB-2/A, 1996-11-14

THINK NEW IDEAS INC
SB-2/A, 1996-11-14
BUSINESS SERVICES, NEC

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<PAGE>

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

REGISTRATION NO. 333-12795
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

PRE EFFECTIVE AMENDMENT #3 TO

FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

--------------
THINK NEW IDEAS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 7389 95-4578104
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
OF INCORPORATION OR
ORGANIZATION)

45 WEST 36TH STREET
NEW YORK, NEW YORK 10018
(212) 629-6800
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

--------------
SCOTT A. MEDNICK
CHIEF EXECUTIVE OFFICER
THINK NEW IDEAS, INC.
8522 NATIONAL BOULEVARD, SUITE 101
CULVER CITY, CALIFORNIA 90232-2481
(310) 842-8444
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:
RALPH V. DE MARTINO, ESQ. SHELDON E. MISHER, ESQ.
DE MARTINO FINKELSTEIN ROSEN & VIRGA BACHNER, TALLY, POLEVOY & MISHER, LLP
1818 N STREET, NW, SUITE 400 380 MADISON AVENUE
WASHINGTON, DC 20036-2492 NEW YORK, NY 10017
(202) 659-0494 (212) 687-7000
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [_]

If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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, as amended, or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.

CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(2) SHARE(1) PRICE(1) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.0001(2)............... 2,300,000 $ 7.50 $17,250,000 $5,948
- ----------------------------------------------------------------------------------------------------
Underwriter
Warrants(3)............. 200,000 .001 $ 200 --
- ----------------------------------------------------------------------------------------------------
Common Stock, par value
$.0001(4)............... 200,000 $10.50 $ 2,100,000 $ 725
- ----------------------------------------------------------------------------------------------------
Total.................... $19,350,000 $6,673
- ----------------------------------------------------------------------------------------------------
Less amounts previously
paid.................... $6,673
- ----------------------------------------------------------------------------------------------------
Total....................
</TABLE>
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- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(a).
(2) Includes 300,000 shares of Common Stock subject to the over-allotment
option granted to the Underwriter.
(3) To be issued to the Underwriter in the Offering.
(4) Issuable upon exercise of the warrants to be issued to the Underwriter.

*Note: Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement covers such additional indeterminate number of
shares of Common Stock as may be issued by reason of adjustments in the
number of shares of Common Stock issuable pursuant to anti-dilution
provisions applicable to the securities subject hereto. Because such
additional shares of Common Stock will, if issued, be issued for no
additional consideration, no registration fee is required.

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

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THE SECURITIES DESCRIBED HEREIN HAS BEEN +
+FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THE 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 DESCRIBED HEREIN IN ANY STATE IN WHICH SUCH OFFER, +
+SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION +
+UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to completion, dated November 13, 1996

PROSPECTUS

[LOGO OF THINK NEW IDEAS, INC. APPEARS HERE]

THINK NEW IDEAS, INC.

2,000,000 Shares of Common Stock

-----------

All of the shares of common stock, par value $.0001 (the "Common Stock"),
offered hereby are being sold by THINK New Ideas, Inc. (the "Company"), except
for certain shares that may be sold in connection with the exercise of the
over-allotment option granted to the Underwriter. Prior to this Offering (the
"Offering"), there has been no public market for the Common Stock of the
Company. It is currently estimated that the initial public offering price will
be between $7.00 and $8.00 per share. See "Underwriting" for a discussion of
the factors to be considered in determining the initial public offering price.
The Company has applied for listing of the Common Stock for quotation on The
Nasdaq National Market ("Nasdaq") under the symbol "THNK."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 8 AND "DILUTION."

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share $ $ $
- -------------------------------------------------------------------------------
Total(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------

(1) Does not include additional underwriting compensation in the form of: (a) a
warrant to purchase up to 200,000 shares of Common Stock exercisable for a
period of four years commencing one year from the date of this Prospectus
at a price equal to 140% of the initial public offering price (the
"Underwriter's Warrant"); (b) a non-accountable expense allowance equal to
1.0% of the initial public offering price; and (c) an advisory fee (the
"Advisory Fee") equal to 3.0% of the initial public offering price. The
Company and Benchmark Equity Group, Inc. ("Benchmark" or the "Selling
Stockholder") have agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting estimated expenses of the Offering payable by the Company,
including the non-accountable expense allowance and the Advisory Fee,
estimated at $ ($ if the Underwriter's over-allotment option is
exercised in full). See "Underwriting."

(3) The Company and the Selling Stockholder have granted to Commonwealth
Associates (the "Underwriter") a 30-day option to purchase up to 300,000
additional shares of Common Stock on the same terms and conditions as set
forth above, solely to cover over-allotments, if any. Pursuant to the terms
of such option, upon exercise thereof by the Underwriter, the first 100,000
shares of Common Stock will be offered and sold by the Company and the
remaining 200,000 shares of Common Stock will be offered and sold by the
Selling Stockholder. The Company will not receive any of the proceeds from
the sale of shares of Common Stock by the Selling Stockholder. If such
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions and Proceeds to the Company will be $ , $
and $ , respectively. See "Principal and Selling Stockholders" and
"Underwriting."

The shares of Common Stock are being offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter, and
subject to certain other conditions. The Underwriter reserves the right to
withdraw, cancel or modify the Offering and to reject any order in whole or in
part. It is expected that delivery of certificates representing the Common
Stock will be made against payment therefor at the offices of Commonwealth
Associates, 733 Third Avenue, New York, New York 10017, on or about , 1996.
See "Underwriting."

COMMONWEALTH ASSOCIATES
The date of this Prospectus is , 1996
<PAGE>

[ART]

Think New Ideas, On Ramp, Metaverse, Internet One, CubePublisher, Market
Advantage, CubeBuilder, CubeEditor, CubeEngine, CubeFactory, CubeTech,
UpperClass, Office of the Future, Inc., OFI, NetCube, and VINNI are trademarks
of the Company or its subsidiaries. The Company or its subsidiaries has filed
servicemark applications with the U.S. Patent and Trademark Office for "Think
New Ideas" and the "Thinking Head" logo. The Company or its subsidiaries has
filed various product trademarks with the U.S. Patent and Trademark Office.
This Prospectus also includes product names, trade names and trademarks of
other companies.

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

2
<PAGE>

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety and should be
read in conjunction with the more detailed information and consolidated
financial statements (including the notes thereto) appearing elsewhere in this
prospectus (the "Prospectus"). The information provided throughout this
Prospectus assumes that the over-allotment option granted to the Underwriter is
not exercised and gives retroactive effect to a one to .496225157 reverse stock
split effected by the Company in September 1996 and a two-for-three reverse
split to be effected by the Company in November 1996. References hereinafter to
the Company shall include its subsidiaries as the context may require.
Prospective investors are urged to consider the factors discussed in "Risk
Factors" in evaluating an investment in the Common Stock offered hereby.

THE COMPANY

The Company provides integrated marketing and communications solutions to
Fortune 500 clients. Through the creative use of traditional marketing skills
combined with advanced technological expertise, the Company is positioned as
one of the leading integrated marketing and communications firms in the
emerging new media and digital communications arena. The Company's integrated
solutions include the development of several proprietary Internet, intranet
tools and applications. These tools and applications include WebMechanic,
Ecorp, Netcube, ASAP and Comparabase, each providing specific solutions to
problems commonly faced by corporate clientele, for example, improving internal
corporate communications, reducing costs of operations, integrating multiple
databases and data base analysis, timely evaluation of consumer marketing. The
Company has designed its solutions to be customized to the specification of
each client, remaining flexible enough to allow for marketing and licensing to
a broad base of corporate clients and industries.

The Company will continue to offer its services and products to corporate
clients by drawing upon its core strengths which include: desk top accessible
database management and software designs, sophisticated Internet and Intranet
systems development and corporate brand name marketing and positioning. These
strengths and capabilities allow the Company to assist its corporate clients as
follows:

Communicate and Operate More Efficiently Internally. The Company's user-
friendly interfaces and Internet/intranet tools, combined with training
software and methodology, enable it to develop and deploy sophisticated
intranet solutions for its clients. For example, the Company developed a
proprietary intranet solution called "Distributor Net" to allow Anheuser
Busch to exchange proprietary data with its distributors over the Internet.

Access Data More Efficiently. The Company's proprietary technologies
allow users of both the World Wide Web and corporate intranets to: (i)
craft on-line marketing solutions that are responsive to user needs,
allowing markets and analysts to more easily access, analyze and utilize
data; and (ii) provide necessary tools to allow the Website sponsor to
assess the effectiveness of its marketing solutions in a timely manner.

Position and Brand Products and Services. The Company utilizes its
experience in traditional marketing services, as well as its understanding
of interactive and Internet/intranet technologies and other emerging media
to position clients and market their products. The Company provides a range
of services, including brand positioning, developing corporate identity and
print, television and packaging design, as well as the ability to target
individual consumers with tailored marketing messages and programs.

Market Products and Services Using Internet Technology. The Company
develops corporate Websites that incorporate the latest in multi-layered
Internet technology to employ creative marketing strategies. For example,
the Company's "Comparabase" comparative software engine, licensed to NEC,
allows visitors to perform comparative product searches and quickly
generate customized product presentations from the NEC product database
based on the visitors' product preferences, interests and desired
specifications.

The Company's current clients include: Anheuser Busch Companies, Inc., Avon,
Bankers Trust, Berlitz International, Inc., Bloomingdale's, Busch Entertainment
Corporation, Chrysler Corporation, The Coca-Cola

3
<PAGE>

Company, Continental Airlines, Inc., Janus Funds, Microsoft, MITA, Moet, NEC
USA, Inc., Pioneer Electronics (USA) Inc., Reebok International, Ltd., Samsung
Electronics of America, Inc., Sea World, Sega of America, Inc., Sony, Sprint,
Tambrands, Time Warner, The Toro Company, Turner Entertainment Group and United
Distillers.

The Company's growth strategy includes the following elements: (i) the
continued marketing and branding of its proprietary internet, intranet and
database management solutions to its existing and future clients; (ii)
expansion of its licensing service and hosting contract services to enhance its
recurring revenue base; (iii) development of solutions which incorporate the
latest on-line technologies; and (v) the continued development of traditional
marketing solutions to serve existing clients and attract new clients.

In August 1996, the Company entered into a strategic relationship with
Omnicom Group Inc. ("Omnicom"), a publicly held company. Omnicom is the third
largest marketing and advertising company in the world. Pursuant to the
Company's agreement with Omnicom (the "Omnicom Agreement"), Omnicom purchased
938,667 shares of Common Stock from the Company in exchange for the payment to
the Company of $4,998,000; and in November 1996 four principal stockholders of
the Company transferred an aggregate of 124,667 shares of Common Stock to
Omnicom for no cash consideration (the "Omnicom Transaction"). Since June 1996,
the Company and Omnicom have engaged in joint marketing of their services to
several Omnicom clients and the Company believes that the relationship could
provide access to a substantial additional client base. See "Recent
Developments--Omnicom Transaction."

The Company's executive offices are located at 45 West 36th Street, New York,
New York 10018. Its telephone number at that location is (212) 629-6800. The
addresses of the Company and the Subsidiaries on the Internet include the
following: http://www.thinkinc.com. None of the information contained in any of
the Websites mentioned in this Prospectus is deemed to be incorporated herein.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company... 2,000,000 Shares
Common Stock outstanding after the 6,266,667 Shares(1)(2)
Offering.............................
Use of Proceeds....................... The Company intends to use the net
proceeds from the Offering for general
corporate purposes, including working
capital. See "Use of Proceeds."
Proposed Nasdaq National Market THNK
Symbol...............................
Risk Factors.......................... The Offering involves a high degree of
risk and immediate substantial
dilution. See "Risk Factors" and
"Dilution."
</TABLE>
- --------

(1) Excludes: (a) 200,000 shares of Common Stock issuable upon exercise of the
Underwriter's Warrants; and (b) 966,667 shares of Common Stock reserved for
issuance pursuant to the Company's 1996 Stock Option Plan, pursuant to
which options to purchase 966,667 shares of Common Stock are issued and
outstanding. See "Management--Stock Option Plan," "Description of
Securities" and "Underwriting."
(2) Includes 825,000 shares of Common Stock (the "Escrow Shares") which have
been deposited into escrow by the holders thereof. The Escrow Shares are
subject to cancellation and will be contributed to the capital of the
Company if the Company does not attain certain earnings levels or the
market price of the Common Stock does not achieve certain levels. If such
earnings or market price levels are met, the Company will record a
substantial non-cash charge to earnings, for financial reporting purposes,
as compensation expense relating to the value of the Escrow Shares released
to Company officers and employees. See "Risk Factors--Potential Charges to
Earnings," "Capitalization" and "Principal and Selling Stockholders."

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The table below contains certain summary historical and pro forma financial
information of the Company. The information has been derived from the
consolidated financial statements included elsewhere and in this Prospectus
(the "Financial Statements"). The quarterly data at September 30, 1996 and for
the three months ended September 30, 1995 and 1996 are derived from the
Company's unaudited financial statements and include all adjustments,
consisting only of normal recurring adjustments, that management considers
necessary to fairly present such data. The results for the three months ended
September 30, 1996 are not necessarily indicative of the results to be expected
for the full year ending June 30, 1997. This information should be read in
conjunction with the Financial Statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------ ----------------------
1994 1995 1996 1995 1996
-------- -------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA
Revenues................ $ 8,486 $ 10,332 $ 12,146 $ 2,462 $ 4,239
Operating expenses:
Direct salaries and
related expenses...... 3,321 3,557 4,587 1,136 1,943
Other direct expenses.. 3,776 3,935 4,815 1,073 1,000
Selling, general and
administrative
expenses.............. 1,963 2,622 3,286 606 1,002
Merger expenses......... -- -- 981 -- --
------- -------- ----------- ---------- ----------
Operating income
(loss)................. (574) 218 (1,523) (353) 294
Interest expense........ (82) (132) (418) (51) (125)
Other, net.............. 8 77 146 10 (48)
------- -------- ----------- ---------- ----------
Income (loss) before
taxes on income........ (648) 163 (1,795) (394) 121
Taxes on income......... 103 (234) (149) (57) (27)
------- -------- ----------- ---------- ----------
Net income (loss)....... $ (545) $ (71) $ (1,944) $ (451) $ 94
======= ======== =========== ========== ==========
Income per share(1)..... $ .04
Supplemental income per
share(1)............... .06
Pro forma data:
Net loss(2)............ $ (1,195) $ (490)
Loss per share(1)...... (.38) (.15)
Supplemental loss per
share(1).............. (.30) (.15)
Shares used in computing
income (loss) per
share.................. 3,070,831 3,167,149 2,729,273
Shares used in computing
supplemental income
(loss) per share....... 3,174,615 3,205,549 3,018,407
</TABLE>

<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
------------------------
ACTUAL(3) AS ADJUSTED(4)
--------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA
Cash and cash equivalents.............................. $1,118 $14,162
Working capital........................................ 2,959 16,003
Total assets........................................... 7,483 20,020
Note payable to related party.......................... 788 500
Shareholders' equity................................... 4,151 16,976
</TABLE>

(Footnotes appear on next page)

5
<PAGE>

(1) Income (loss) per share data are based on pro forma net loss through June
30, 1996 and historical net income for the three months ended September 30,
1996. Historical loss per share data for periods through June 30, 1996 are
not considered meaningful and, therefore, are not presented. The data are
computed based on the weighted average numbers of shares of common stock
outstanding (which exclude 825,000 shares held in escrow), as adjusted for
the effects of applying Securities and Exchange Commission Staff Accounting
Bulletin (SAB) No. 83 using the treasury stock method, as more fully
described in the Financial Statements. Pro forma net loss and historical
net income used in the calculations were adjusted by approximately $19,000
and $10,000 for the year ended June 30, 1996 and the three months ended
September 30, 1996 to exclude interest expense on convertible debt because
the shares issuable upon conversion were treated as outstanding pursuant to
SAB No. 83.

Supplemental income (loss) per share data reflect the pro forma and
historical income (loss) per share that would have resulted if the portion
of the proceeds from the shares sold in August 1996 that was used to fund
debt repayments had been used to repay debt on the dates it was issued,
rather than for the assumed purchase of treasury stock. In computing the
supplemental amounts, pro forma and historical net income (loss) amounts
described in the preceding paragraph were adjusted to exclude interest on
such debt of approximately $224,000 for the year ended June 30, 1996 and
$7,000 and $63,000 for the three months ended September 30, 1995 and 1996.
The weighted average numbers of shares outstanding were correspondingly
increased.

(2) Excludes the costs incurred by the Company in connection with its
acquisitions of the Subsidiaries, includes the impact of employment
agreements between the Company and certain key employees as if such
agreements had been in effect throughout fiscal 1996 and adjusts income
taxes to zero since none would have been recognized had the acquisitions
occurred previously.

(3) Reflects the accrual at September 30, 1996 of $507,000 of expenses related
to the Offering.

(4) Reflects the anticipated repayment prior to the Offering of $288,000 in
principal amount under a promissory note issued to a related party and
gives effect to the sale of the 2,000,000 shares of Common Stock offered
hereby at an assumed initial public offering price of $7.50 per share and
receipt of the net proceeds therefrom.

6
<PAGE>

RECENT DEVELOPMENTS

THE REORGANIZATION

The Company was incorporated pursuant to the laws of the State of Delaware
in January 1996. In June 1996, in exchange for the issuance of an aggregate of
723,167 shares of Common Stock, the Company acquired all of the issued and
outstanding capital stock of seven companies: Scott Mednick & Associates, Inc.
("Mednick Group"); On Ramp, Inc. ("On Ramp"); Internet One, Inc. ("Internet
One"); Creative Resources Agency, Inc. ("Creative Resources"); The S.D.
Goodman Group, Inc. ("Goodman Group"), and NetCube Corporation of Delaware and
NetCube Corporation of New Jersey (collectively, "NetCube"). The foregoing
companies have been defined and are collectively referred to hereinafter as
the "Subsidiaries" and the combination of the Subsidiaries with the Company is
referred to hereafter as the "Reorganization." See "Certain Transactions."

OMNICOM TRANSACTION

Pursuant to the terms of the Omnicom Agreement, (a) Omnicom purchased
938,667 shares of Common Stock from the Company in exchange for $4,998,000;
(b) the Company appointed Barry Wagner to represent Omnicom on the Company's
board of directors (the "Board of Directors"); (c) Omnicom agreed not to
increase its ownership interest in the Company absent the approval of the
Board of Directors; and (d) Omnicom granted the Company a right of first
refusal to purchase the shares of Common Stock owned by Omnicom.

In November 1996, four principal stockholders of the Company transferred an
aggregate of 124,667 shares of Common Stock to Omnicom for no cash
consideration. Omnicom consented to the November 1996 stock split and related
amendments to the Omnicom Agreement and the Company agreed to decrease the
number of shares available under the 1996 Stock Option Plan.

The Company entered into the Omnicom Transaction to establish a strategic
relationship which management of the Company believes could provide access to
a substantial additional client base, although there can be no assurance that
such result will occur. Since June 1996, Omnicom and the Company have engaged
in the joint marketing of their services to several Omnicom clients. There can
be no assurance that such joint marketing will continue, nor can there be any
assurance with respect to the effect of such marketing on the Company's
operations.

7
<PAGE>

RISK FACTORS

The securities offered hereby are speculative in nature and an investment in
the Common Stock offered hereby involves a high degree of risk. In addition to
the other information contained in this Prospectus, prospective investors
should carefully consider the following risk factors in evaluating whether to
purchase the Common Stock offered hereby. Moreover, prospective investors are
cautioned that the statements in this Prospectus that are not descriptions of
historical facts may be forward looking statements that are subject to risks
and uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors, including those set forth below.

OPERATING LOSS

During the fiscal year ended June 30, 1996, the Company realized an
operating loss of $1,523,000 and a net loss of $1,944,000. Those losses
resulted primarily from non-recurring merger expenses in the amount of
$981,000 incurred in combining the Subsidiaries and losses from operations
realized by one of the Subsidiaries, NetCube, in the amount of $1,033,000.
During the fiscal year ended June 30, 1996, NetCube modified its business so
as to emphasize the development of its proprietary NetCube data applications
and de-emphasize hourly consulting services, resulting in a significant
decrease in revenues. Although the Company believes that the losses at NetCube
may be reduced as NetCube changes its focus from product development to the
marketing of its proprietary data applications, there can be no assurance that
the Company will be able to achieve or sustain profitable operations at
NetCube. Moreover, there can be no assurance that any other Subsidiary or that
the Company as a whole will be profitable. The Company also intends to
increase marketing and other operating expenses and increase the level of
capital expenditures, including costs related to Internet infrastructure. Such
increases in operating expense levels and capital expenditures may adversely
affect operating results. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business."

FLUCTUATIONS IN OPERATING RESULTS

The Company's quarterly operating results have varied significantly in the
past and the Company expects operating results to continue to fluctuate in
future quarters. Factors which may affect the Company's operating results in
the future include timing of the completion or cancellation of projects, the
loss of a client, receipt of new business and variations in business mix, and
other factors outside the control of the Company. The Company may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall, and a shortfall in actual revenues as compared to estimated
revenues would have an immediate, material adverse effect on the Company's
business, financial condition and operating results. The Company's operating
results could also be materially adversely affected by increased competition
in the Company's markets. The Company believes that period to period
comparisons of its revenues and operating results are not necessarily
meaningful and that such comparisons should not be relied upon as indicators
of future performance. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."

LACK OF COMBINED OPERATING HISTORY; RISK OF INTEGRATION

While certain of the Subsidiaries have been in existence for several years,
the Reorganization occurred in June 1996. See "Recent Developments." The
Company's success will depend in part on its ability to manage the combined
operations of those companies, and to integrate the operations of those
companies in a single organizational structure. The Company currently operates
at five principal locations and has only recently commenced centralizing
administrative functions at its New York office. There can be no assurance
that the Company will be able to effectively integrate the operations of its
Subsidiaries in a single organizational structure. Integration of these
operations could also place additional strain on the management and key
technical resources of the Company. The failure to successfully manage this
integration could have a material adverse effect on the Company. Finally,
while a key motivation for the Reorganization is the belief that the
Subsidiaries can market their services to existing clients of other
Subsidiaries, there can be no assurance that this cross-marketing will be
achieved or sustained. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business--Business Strategy."

8
<PAGE>

MANAGEMENT OF GROWTH; FUTURE CAPITAL REQUIREMENTS

The Company and the Subsidiaries have experienced significant growth since
their inception, which places demands on the management, employees, operations
and physical resources of the organization. Although the Company's strategy
contemplates continued future growth, there can be no assurance that such
growth will be achieved. In order to manage any future growth, the Company
will be required to continue to improve its operating systems, attract and
retain superior management, marketing and new media talent and expand the
Company's facilities. If the Company is unable to effectively manage its
growth, the Company's business, operating results and financial condition
could be adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Future growth, if achieved, may also strain the Company's capital resources.
Although the Company anticipates that cash flow from operations and the
proceeds of the Offering contemplated hereby will be sufficient to fund its
operations during the next 12 months, the Company may require additional
financing in order to expand its business. There can be no assurance that the
Company will be able to successfully negotiate or obtain additional financing,
or that such financing will be on terms favorable or acceptable to the
Company. The failure to secure necessary financing could have a material
adverse impact on the Company. See "Use of Proceeds," "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources" and "Business."

DEPENDENCE ON THE INTERNET; DEVELOPING MARKET

The Company's ability to derive revenues by providing marketing solutions
will depend in part upon a robust industry and the infrastructure for
providing Internet access and carrying Internet traffic. There can be no
assurance that the necessary infrastructure, such as a reliable network
backbone, or complementary products, such as high speed modems, will be
developed or that the Internet will become a viable commercial marketplace.
Critical issues concerning the commercial use of the Internet, including
security, reliability, cost, ease of use and access, and quality of service,
remain unresolved and may impact the growth of Internet use. In the event that
the necessary infrastructure or complementary products are not developed, or
the Internet does not become a viable commercial marketplace, the business,
operating results and financial condition of the Company could be adversely
affected.

DEPENDENCE ON PROPRIETARY TECHNOLOGIES

The Company regards certain of its products and technologies, including its
software applications, as proprietary and relies upon a combination of
trademark, copyright and trade secret law, together with non-disclosure
licensing and invention assignment agreements, to establish and protect its
proprietary rights. Much of the Company's proprietary information may not be
patentable, and the Company does not currently possess any patents. There can
be no assurance that the Company's current intellectual property rights will
afford meaningful protection or that the Company's competitors will not
independently develop technologies that are substantially equivalent or
superior to the Company's technologies. There can be no assurance that others
will not infringe the Company's proprietary rights or assert claims that the
Company's technologies infringe their proprietary rights. Litigation
concerning the alleged violation of intellectual property rights is inherently
uncertain and could result in significant costs to the Company, whether or not
any such claims are valid.

RAPID TECHNOLOGICAL CHANGE

The market for interactive marketing services is characterized by rapid
changes in technology. The rapid pace of technological change presents
substantial challenges to a provider of marketing services to maintain its
technical competence and competitive position. In addition to competing with
other integrated marketing service providers and traditional advertising
agencies, the Company competes with specialized service providers that are
highly skilled in their particular discipline. The Company believes that, in
order for it to compete successfully, each of the disciplines that is utilized
in developing a solution for a client must demonstrate competence equal

9
<PAGE>

or superior to that demonstrated by competitive specialty firms that limit the
scope of their services to that particular discipline. There can be no
assurance that the Company will be successful in attracting and maintaining a
high level of technical and artistic competence or that it will be successful
in providing competitive solutions to clients. Failure to do so could result
in the loss of existing customers or the inability to attract and retain new
customers, which developments could have a material adverse effect on the
business, financial condition and operating results of the Company. See
"Business."

RELIANCE ON KEY MANAGEMENT PERSONNEL

The Company's operations are dependent upon the continued efforts of its
senior management, including Scott A. Mednick, the Chief Executive Officer of
the Company; Ronald Bloom, the President and Chief Operating Officer of the
Company; and Adam Curry, the Chief Technology Officer of the Company, each of
whom performs significant marketing, sales and product development functions.
The loss of the services of any of the foregoing officers could be detrimental
to the Company. Messrs. Mednick, Bloom and Curry, along with certain other
members of senior management, have entered into employment agreements with the
Company. These agreements contain noncompete provisions that may not be
enforceable in certain states. The Company has obtained key man life insurance
in the principal amount of $2,000,000 on each of the lives of Messrs. Mednick
and Bloom. The Company intends to obtain key man life insurance on the life of
Mr. Curry. See "Management."

Qualified employees are in great demand and are likely to remain a limited
resource for the foreseeable future. Competition for skilled creative and
technical talent is intense. There can be no assurance that the Company will
be successful in attracting and retaining such personnel. In addition, the
Company's ability to generate revenues relates directly to the number and
expertise of the personnel that are available to work on its projects. Any
failure by the Company to retain existing employees or to hire new employees
when necessary could have a material adverse effect upon the Company's
business, financial condition and results of operations. See "Business--
Employees."

BROAD DISCRETIONARY USE OF PROCEEDS

The Company has broad discretion with respect to the specific application of
the net proceeds of this Offering. Such amounts are intended to be used for
working capital, including salaries, equipment and development of technology.
Thus, purchasers of the shares offered hereby will be entrusting their funds
to the Company's management, upon whose judgment the investors must depend,
with only limited information concerning management's specific intentions.

DEPENDENCE ON SIGNIFICANT PROJECTS; LIMITED CONTRACTUAL RELATIONSHIPS

The Company's five largest clients accounted for approximately 38% of the
Company's revenues for the fiscal year ended June 30, 1996, with significant
quarterly fluctuations in the amount of revenue contribution from each such
client. Pioneer Electronics (USA), Inc., SEGA of America, Inc., Toshiba of
America, Inc., Reebok International, Ltd., and Source Informatics, the
Company's five largest clients during the period, accounted for approximately
14.6%, 7.1%, 5.4%, 5.3% and 5.2% of the Company's revenues, respectively,
during the period. The Company's clients generally retain the Company on a
project by project basis. Consequently, a client from whom the Company
generates substantial revenue in one period may not be a substantial source of
revenue in a subsequent period. There can be no assurance that a client will
engage the Company for further services once a project is completed. Moreover,
the Company typically does not enter into long-term contractual relationships
with its clients, and therefore such clients may unilaterally reduce their use
of the Company's services or terminate existing projects at their discretion.
The termination of a business relationship with any of the Company's
significant clients or a material reduction in a significant client's use of
the services provided by the Company could have a material adverse effect on
the business, financial condition and operating results of the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

10
<PAGE>

PROJECT PROFIT EXPOSURES; NEED TO DEVELOP RECURRING REVENUE

The Company generates the substantial majority of its revenues through
project fees on a fixed fee for service basis. The Company assumes greater
financial risk on fixed-price type contracts than on either time-and-material
or cost-reimbursable contracts. Failure to anticipate technical problems,
estimate costs accurately or control costs during performance of a fixed-price
contract may reduce the Company's profit or cause a loss. Although the
majority of the Company's projects typically last four to eight weeks and
therefore each individual short-term project creates less exposure than a
long-term fixed-price contract, in the event the Company does not accurately
anticipate the progress of a number of significant revenue-generating projects
it could have a material adverse effect on the Company's business, operating
results and financial condition. The Company's future success will depend in
part on its ability to convert its project by project relationships to
continuing relationships characterized by recurring revenue. There can be no
assurance that the Company's efforts will be successful. See "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

COMPETITION

The market for the Company's services is highly competitive and is
characterized by pressures to incorporate new capabilities and accelerate job
completion schedules. The Company faces competition from a number of sources,
including national and regional new media marketing companies and national and
local advertising agencies, many of which have started to develop or acquire
interactive media capabilities. New boutiques that either provide integrated
or specialized services (e.g., corporate identity and packaging, advertising
services or Website design) and are technologically proficient, have emerged
and are competing with the Company. Many of the Company's competitors or
potential competitors have longer operating histories, longer client
relationships and significantly greater financial, management, technology,
development, sales, marketing and other resources than the Company. The
Company's ability to maintain its existing clients and generate new clients
depends to a significant degree on the quality of its services and its
reputation among its clients and potential clients, as compared with the
quality of services provided by and the reputations of the Company's
competitors. In the event that the Company loses clients to competitors
because of dissatisfaction with the services performed or provided by the
Company, or the reputation of the Company is otherwise adversely impacted, the
business, financial condition and operating results of the Company could be
materially adversely affected.

There are relatively low barriers to entry into the Company's business. The
Company expects that it will face additional competition in the future from
new entrants into the market. There can be no assurance that existing or
future competitors will not develop or offer marketing communication services
and products that provide significant performance, price, creative or other
advantages over those offered by the Company, which could have a material
adverse effect on the business, financial condition and operating results of
the Company.

SYSTEM SECURITY

The Company currently operates servers and maintains Internet connectivity
from its offices in New York and Colorado. Despite the implementation of
network security measures by the Company, such as limiting physical and
network access to its routers, the Company's Internet infrastructure is
vulnerable to computer viruses, break-ins and similar disruptive problems
caused by its customers or other Internet users. Computer viruses, break-ins
or other security problems could lead to interruption, delays or cessation in
service to the Company's Internet customers. Further, such inappropriate use
of the Internet could also potentially jeopardize the security of confidential
information stored in the computer systems of the Company's customers and
other parties connected to the Internet, which may deter potential customers
and give rise to uncertain liability to users whose security or privacy has
been infringed. The security and privacy concerns of existing and potential
customers may inhibit the growth of the Internet service industry in general
and the Company's customer base and revenues in particular. A significant
security breach could result in loss of customers, damage to the Company's
reputation, direct damages, costs of repair and detection, and other expenses.
The occurrence of any of the foregoing events could have a material adverse
effect on the Company's business, results of operations and financial
condition.

11
<PAGE>

RISK OF SYSTEM FAILURE

The success of the Company is dependent upon its ability to deliver high
quality, uninterrupted Internet hosting, which requires that the Company
protect its computer equipment and the information stored in its servers
against damage by fire, natural disaster, power loss, telecommunications
failures, unauthorized intrusion and other catastrophic events. Any damage or
failure that causes interruptions in the Company's operations could have a
material adverse effect on its business, results of operations and financial
condition. In particular, a failure at its New York offices, if prolonged,
could result in reduced revenues, loss of customers and damage to the
Company's reputation, any of which could in turn have a material adverse
effect on the Company's business, results of operations and financial
condition. While the Company carries property and business interruption
insurance to cover its operations, the coverage may not be adequate to
compensate the losses that may occur.

REGULATORY UNCERTAINTY; LEGAL UNCERTAINTIES

The Company is not currently subject to government regulation, except to the
extent that it is subject to regulations of general applicability to business.
However, due to the increasing media attention on the Internet, it is possible
that laws and regulations applicable to the Internet may be adopted that will
address user privacy, or the pricing, taxation, characteristics or quality of
products or services offered over the Internet. The adoption of any such laws
or regulations could restrict the growth of the Internet, which in turn could
adversely affect the demand for the Company's services, affect the Company's
cost structure or cause the Company to modify its operations. Moreover, the
applicability of existing laws governing property ownership, libel and privacy
to the Internet is unsettled. It is possible, therefore, that businesses that
develop Websites could be subject to liability for certain actions of their
clients, including liability for infringement of intellectual property rights,
defamation and libel. The Company is unable to predict the impact that any
future change in applicable law may have on its business. Any imposition of
liability on the Company could have a material adverse effect on the Company's
financial condition and operations.

POTENTIAL CHARGES TO EARNINGS

The Securities and Exchange Commission (the "Commission") has taken the
position with respect to escrow arrangements such as that entered into by the
Company and certain of its stockholders that in the event any shares are
released from escrow to the holders who are officers, directors, employees or
consultants of the Company, a compensation expense will be recorded for
financial reporting purposes. Accordingly, in the event of the release of the
Escrow Shares, the Company will recognize during the period in which the
earnings thresholds are probable of being met or such stock levels achieved, a
substantial noncash charge to earnings equal to the fair market value of such
shares on the date of their release, which would have the effect of
significantly increasing the Company's loss or reducing or eliminating
earnings, if any, at such time. The recognition of such compensation expense
may have a depressive effect on the market price of the Company's securities.
Notwithstanding the foregoing discussion, there can be no assurance that the
Company will attain the targets which would enable the Escrow Shares to be
released from escrow. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Principal and Selling Stockholders--
Escrow Shares."

ABSENCE OF PRIOR TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public trading market for the
Common Stock, and there can be no assurance that an active trading market will
develop or be sustained upon completion of the Offering. The initial public
offering price of the shares of Common Stock will be determined by negotiation
among the Company and the Underwriter and does not necessarily bear any
relationship to the Company's assets, book value, net worth or any other
established criteria of value. See "Underwriting" for a discussion of the
factors that will be considered in determining the initial public offering
price. The market price of the shares of Common Stock, like that of the common
stock of many other companies engaged in technology-related fields, is likely
to be highly volatile. Factors such as fluctuations in the Company's operating
results, the operating results of the Company's competitors and other
technology companies, and general market conditions may have a significant
impact on the market price of the Common Stock.

12
<PAGE>

FUTURE SALES OF COMMON STOCK; REGISTRATION RIGHTS

Future sales of shares of Common Stock by existing stockholders pursuant to
Rule 144 under the Securities Act of 1933 (the "Securities Act"), through the
exercise of outstanding registration rights or through the issuance of shares
of Common Stock upon exercise of options, warrants or otherwise, could have an
adverse effect on the price of the Company's Common Stock. In addition to the
2,000,000 shares of Common Stock offered hereby, subject to compliance with
Rule 144 under the Securities Act, 4,266,667 shares of Common Stock will be
eligible for sale in the public market beginning February 1998. An additional
241,666 shares of Common Stock issuable upon the exercise of outstanding stock
options will also become eligible for sale in the public market pursuant to
Rule 701 and Rule 144 under the Securities Act beginning in July 1997. The
Commission has recently proposed an amendment to the holding period
requirements of Rule 144 to permit resales of restricted securities after a
one year holding period rather than a two year holding period, and to permit
unrestricted resales by non-affiliates after a two year holding period rather
than a three year holding period. Additionally, the holders of 1,187,590
shares of Common Stock have certain demand and/or piggyback registration
rights with respect to shares owned by them. Holders of 3,833,340 shares of
outstanding Common Stock and 433,327 shares of Common Stock have agreed not to
sell or transfer any of their shares for periods of 12 months and 6 months,
respectively, following the Offering without the prior written consent of the
Underwriter. The Underwriter may, at its sole discretion and at any time
without notice, release all or any portion of the shares subject to such lock-
up agreements. See "Description of Capital Stock--Registration Rights" and
"Shares Eligible for Future Sale."

POTENTIAL ANTI-TAKEOVER PROVISIONS

The Certificate of Incorporation of the Company, as amended (the
"Certificate of Incorporation") authorizes the issuance of up to 5,000,000
shares of Preferred Stock with such rights and preferences as may be
determined from time to time by the Board of Directors. Accordingly, the Board
of Directors may, without stockholder approval, issue shares of Preferred
Stock with dividend, liquidation, conversion, voting or other rights which
could adversely affect the voting power or other rights of the holders of
Common Stock. However, the Company's ability to issue such securities is, with
certain exceptions, subject to the prior approval of the Underwriter for a
period of twelve months from the date of this Prospectus. See "Underwriting."
Although the Company does not currently intend to issue any shares of
Preferred Stock, there can be no assurance that the Company will not do so in
the future. In addition to the foregoing, the Certificate of Incorporation and
the Bylaws of the Company (the "Bylaws") contain provisions which may
discourage certain transactions involving an actual or threatened change in
control of the Company. The Bylaws prescribe the manner in which shareholder
proposals may be presented for consideration at meetings of stockholders. The
Company is also subject to a Delaware statute regarding business combinations.
Any of the foregoing may have the effect of rendering more difficult, or
discouraging, an acquisition of the Company or changes in control of the
Company. See "Management" and "Description of Securities."

CONTROL BY EXISTING STOCKHOLDERS

As of the date hereof, the officers and directors of the Company (and their
affiliates) own an aggregate of 3,807,880 shares of Common Stock (including
825,000 Escrow Shares with respect to which the owners thereof have voting
rights). Immediately upon completion of the Offering, the officers and
directors of the Company will own or control the voting of 45.8% of the
Company's issued and outstanding voting stock. Moreover, pursuant to the
Bylaws, holders of 33% of all outstanding shares of Common Stock entitled to
vote shall constitute a quorum and the holders of a majority of such quorum
may control the vote. The officers and directors of the Company, as holders of
the Company's securities, will therefore have the ability to significantly
influence the election of the Board of Directors, to potentially control the
outcome of any corporate action requiring less than a majority of the
outstanding voting securities entitled to vote, and consequently, to
significantly influence the business and affairs of the Company. See "Recent
Transactions," "Management," "Certain Transactions" and "Principal and Selling
Stockholders."

13
<PAGE>

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of the Common Stock in the Offering will suffer immediate
substantial dilution in the net tangible book value of shares of Common Stock
purchased in the amount of $4.39 per share or 58.5%. In January 1996, the
founders of the Company paid $.0001 (par value) per share for their shares of
Common Stock. In March 1996 and April 1996, respectively, the holders of the
10% Notes agreed to pay (and subsequently paid) $.125 per share for their
shares of Common Stock and the holders of the 12% Notes agreed to pay (and
subsequently paid) $.75 per share for their shares of Common Stock. Upon
completion of the Offering, the Company's current stockholders will have paid
$7,154,788 for 4,266,667 shares of Common Stock (including the Escrow Shares)
or 68% of the Company's then outstanding shares of Common Stock, and
purchasers of shares of Common Stock in the Offering will have paid
$15,000,000 for 2,000,000 shares of Common Stock, or 32% of the Company's then
outstanding shares of Common Stock. Therefore, investors' shares of Common
Stock will bear a substantially greater financial risk than the Company's
current stockholders. See "Dilution," "Management--Stock Option Plan,"
"Certain Transactions" and "Description of Securities."

POSSIBLE DELISTING; RISKS OF LOW-PRICED STOCK

Under the rules of the National Association of Securities Dealers, Inc.
("NASD"), in order to maintain listing on Nasdaq, a company must have, among
other things, between $1,000,000 and $4,000,000 in net tangible assets
(depending upon whether or not such company has sustained operating losses)
and, alternatively, either: (i) $3,000,000 in market value of public float and
$4,000,000 in net tangible assets; or (ii) a minimum bid price of $1.00 per
share. In the event that the Company is unable to satisfy the requirements for
continued quotation on the Nasdaq National Market or on the Nasdaq SmallCap
Market, quotation, if any, of the Common Stock would be in the over-the-
counter market in what are commonly referred to as the "pink sheets" of the
National Quotation Bureau, Inc. or on the NASD OTC Electronic Bulletin Board.
As a result, an investor may find it more difficult to dispose of or to obtain
accurate quotations as to the price of such securities. If the Company's
securities were delisted from Nasdaq they could become subject to Rule 15g-9
under the Exchange Act, which imposes additional sales practice requirements
on broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worths
in excess of $1,000,000 or annual incomes exceeding $200,000 or $300,000
together with their spouses).

In addition, Commission regulations define a "penny stock" to be any non-
Nasdaq equity security that has a market price (as therein defined) of less
than $5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. The Commission's rules impose additional
requirements on broker-dealers for any transactions involving penny stocks.

In the event that the Company's securities are delisted or become subject to
Rule 15g-9 or the penny stock rules, the liquidity of the Company's securities
will be adversely affected and investors may find it more difficult to dispose
of or obtain accurate quotations to the prices thereof.

ABSENCE OF DIVIDENDS

The Company has not paid any dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, working
capital and earnings, if any, will be retained for use in the Company's
business operations and in the expansion of its business. See "Dividend
Policy" and "Description of Securities."

14
<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Common
Stock offered hereby at an assumed initial public offering price of $7.50 per
share and after deducting underwriting discounts and commissions and estimated
expenses payable by the Company, will be approximately $12,825,000 (or
approximately $13,492,500 if the over-allotment option granted to the
Underwriter is exercised in full). The Company will receive the proceeds of
the sale of the shares of Common Stock offered by the Company, but will not
receive any of the proceeds from the sale of any shares of Common Stock
offered by the Selling Stockholder pursuant to exercise of the Underwriter's
over-allotment option. The Company intends to use the net proceeds of the
Offering approximately as follows: $2,500,000 for sales and marketing;
$1,500,000 for the purchase of computer equipment; $1,500,000 for research and
development and the remaining balance for working capital.

The Company may also use a portion of such net proceeds and investment
securities balances to acquire or invest in businesses, products and
technologies that are complementary to those of the Company, although no such
acquisitions are planned or being negotiated as of the date of this Prospectus
and no portion of the net proceeds has been allocated for any specific
acquisitions.

The Company's intended allocation of net proceeds of the Offering is based
upon the Company's current plans and prevailing economic and industry
conditions. Although the Company does not currently contemplate material
changes with respect to allocation of the net proceeds, to the extent that
management of the Company finds that adjustment thereto is required, the
amounts shown may be adjusted among the uses indicated above. Pending their
ultimate use, the net proceeds will be invested in short-term, investment
grade, interest-bearing securities, certificates of deposit or direct or
guaranteed obligations of the United States.

DIVIDEND POLICY

The Company has not paid, and does not anticipate paying, any dividends on
its Common Stock in the foreseeable future. The Company currently intends to
retain its future earnings for use in operations and expansion of its
business. Declaration and payment of future dividends, if any, will be at the
sole discretion of the Board of Directors. Certain of the Subsidiaries have
declared dividends in connection with such Subsidiaries' former elections to
be treated as Subchapter S corporations under the Internal Revenue Code of
1986, as amended (to enable the former owners of such Subsidiaries to pay
applicable Federal income taxes).

15
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company: (i) as of
September 30, 1996; and (ii) as adjusted to give effect to the sale of the
Common Stock offered hereby at an assumed initial public offering price of
$7.50 per share and the receipt of the estimated net proceeds therefrom.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------
ACTUAL(1) AS ADJUSTED(1)(2)
--------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Note payable to related party...................... $ 788 $ 500
------ -------
Shareholders' Equity:
Preferred Stock, $.0001 par value; 5,000,000
shares authorized; no shares outstanding........ -- --
Common Stock, $.0001 par value; 50,000,000 shares
authorized; 4,266,667 shares issued (actual);
and 6,266,667 shares issued (as adjusted)(1).... -- 1
Additional paid-in capital....................... 5,137 17,961
Accumulated deficit.............................. (986) (986)
------ -------
Total shareholders' equity..................... 4,151 16,976
------ -------
Total capitalization......................... $4,939 $17,476
====== =======
</TABLE>
- --------
(1) Includes 825,000 shares of Common Stock held in escrow. See "Principal and
Selling Securityholders."

(2) Reflects the anticipated repayment prior to the Offering of $288,000 in
principal amount under a promissory note issued to a related party and
gives effect to the sale of all of the Common Stock offered hereby at an
assumed initial public offering price of $7.50 per share and receipt of
the net proceeds therefrom.

16
<PAGE>

DILUTION

The net tangible book value of the Company as of September 30, 1996 was
$3,604,000 or approximately $1.05 per share of Common Stock. Net tangible book
value per share represents the amount of the Company's pro forma stockholders'
equity, less intangible assets, divided by the number of shares of Common
Stock outstanding (excluding the Escrow Shares). Dilution to new investors
represents the difference between the amount per share paid by purchasers of
shares of Common Stock in the Offering made hereby and the net tangible book
value per share of Common Stock immediately after completion of the Offering.
After giving effect to the sale of 2,000,000 shares of Common Stock by the
Company at an assumed initial public offering price of $7.50 per share and
receipt of the estimated net proceeds therefrom, the net tangible book value
of the Company as of September 30, 1996 would have been $16,936,000 or $3.11
per share. This represents an immediate increase in net tangible book value of
$2.06 per share to existing stockholders and an immediate dilution in net
tangible book value of $4.39 per share to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $7.50
Net tangible book value per share as of September 30, 1996...... 1.05
Increase per share attributable to new investors................ 2.06
----
Net tangible book value per share after the Offering.............. 3.11
-----
Dilution per share to new investors............................... $4.39
=====
</TABLE>

In the event that the Underwriter's over-allotment option is exercised in
full, the net tangible book value of the Company at September 30, 1996 would
be approximately $3.18 per share (excluding the Escrow Shares), which would
result in dilution per share to the new investors in the Offering of
approximately $4.32 per share.

The following table summarizes at September 30, 1996 the difference between
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by existing
stockholders since inception and by new investors in this Offering (at an
assumed initial public offering price of $7.50 per share):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders... 4,266,667(1) 68% $ 7,154,788(2) 32% $1.68
New Investors........... 2,000,000 32% 15,000,000 68% $7.50
--------- --- ----------- ---
Totals................ 6,266,667 100% $22,154,788 100%
========= === =========== ===
</TABLE>
- --------
(1) Includes 825,000 shares of Common Stock held in escrow.
(2) Includes $4,998,000 paid by Omnicom in the Omnicom Transaction.

The foregoing tables do not give effect to the exercise of any outstanding
options or the release of the Escrow Shares. See "Management--Stock Option
Plan" and "Principal and Selling Stockholders."

17
<PAGE>

SELECTED FINANCIAL DATA

The table below contains certain summary historical and pro forma financial
information of the Company. The information has been derived from the
Financial Statements included elsewhere in this Prospectus. The quarterly data
at September 30, 1996 and for the three months ended September 30, 1995 and
1996 are derived from the Company's unaudited financial statements and include
all adjustments, consisting only of normal recurring adjustments, that
management considers necessary to fairly present such data. The results for
the three months ended September 30, 1996 are not necessarily indicative of
the results to be expected for the full year ending June 30, 1997. This
information should be read in conjunction with the Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------ ----------------------
1994 1995 1996 1995 1996
-------- -------- ----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF OPERATIONS DATA
Revenues................ $ 8,486 $ 10,332 $ 12,146 $ 2,462 $ 4,239
Operating expenses:
Direct salaries and
related expenses...... 3,321 3,557 4,587 1,136 1,943
Other direct expenses.. 3,776 3,935 4,815 1,073 1,000
Selling, general and
administrative
expenses.............. 1,963 2,622 3,286 606 1,002
Merger expenses......... -- -- 981 -- --
------- -------- ----------- ---------- ----------
Operating income
(loss)................. (574) 218 (1,523) (353) 294
Interest expense........ (82) (132) (418) (51) (125)
Other, net.............. 8 77 146 10 (48)
------- -------- ----------- ---------- ----------
Income (loss) before
taxes on income........ (648) 163 (1,795) (394) 121
Taxes on income......... 103 (234) (149) (57) (27)
------- -------- ----------- ---------- ----------
Net income (loss)....... $ (545) $ (71) $ (1,944) $ (451) $ 94
======= ======== =========== ========== ==========
Income per share(1)..... $ .04
Supplemental income per
share(1)............... $ .06
Pro forma data:
Net loss(2)............ $ (1,195) $ (490)
Loss per share(1)...... (.38) (.15)
Supplemental loss per
share(1).............. (.30) (.15)
Shares used in computing
income (loss) per
share.................. 3,070,831 3,167,149 2,729,273
Shares used in computing
supplemental income
(loss) per share....... 3,174,615 3,205,549 3,018,407
</TABLE>

(Footnotes appear on next page)

18
<PAGE>

- --------

(1) Income (loss) per share data are based on pro forma net loss through June
30, 1996 and historical net income for the three months ended September
30, 1996. Historical loss per share data for periods through June 30, 1996
are not considered meaningful and, therefore, are not presented. The data
are computed based on the weighted average numbers of shares of common
stock outstanding (which exclude 825,000 shares held in escrow), as
adjusted for the effects of applying Securities and Exchange Commission
Staff Accounting Bulletin (SAB) No. 83 using the treasury stock method, as
more fully described in the Financial Statements. Pro forma net loss and
historical net income used in the calculations were adjusted by
approximately $19,000 and $10,000 for the year ended June 30, 1996 and the
three months ended September 30, 1996 to exclude interest expense on
convertible debt because the shares issuable upon conversion were treated
as outstanding pursuant to SAB No. 83.

(3) Reflects the accrual at September 30, 1996 of $507,000 of expenses related
to the Offering.

19
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

The Company was incorporated in the State of Delaware in January 1996 for
the purpose of creating a corporate structure to facilitate the combination
and integration of specialized businesses operating in the areas of
advertising, marketing, Internet and intranet services and data management.
See "Recent Developments--The Reorganization." On June 30, 1996, the Company
completed the acquisition of all of the outstanding shares of common stock of
the Subsidiaries in exchange an aggregate of 723,167 shares of Common Stock.
Each of the acquisitions was accounted for using the pooling of interests
method. Accordingly, the results of operations for each of the Subsidiaries
has been included in the Company's Financial Statements since the earlier of
July 1, 1993 or each Subsidiary's inception.

The Subsidiaries generate revenue from Internet and interactive media
services including Website development and hosting, corporate internal
communications solutions, database marketing, corporate identity and product
branding and packaging, on-line and off-line training systems, advertising and
media placement services, and interface solutions that provide high-speed
access via the Internet to off-line databases. Historically, revenues from
these services by the Subsidiaries have been derived on a project-by-project
basis, which tends to cause fluctuations in revenues between reporting
periods. A substantial portion of those revenues have been fixed fees for
services to be delivered. While the Company has recently entered into a number
of contracts for ongoing maintenance, content updates, server hosting and
software licensing, which will create recurring revenue streams for the life
of their respective contracts (typically 12 months), it is anticipated that
project revenue will continue to be a significant component of total revenues
and therefore revenue may continue to fluctuate significantly from quarter to
quarter.

The Company generally provides Website design and development and
traditional marketing services under contracts that vary in duration from two
to four weeks in the case of smaller projects and up to five months in the
case of larger projects. In connection with Website design and development,
the Company typically enters into twelve-month arrangements providing for
maintenance, content updates of Websites and software licensing and hosting of
a client Website on the Company's servers. Revenues from contracted services
are generally recognized using the percentage of completion method based upon
the ratio of costs incurred to total estimated costs of the project. Revenues
from hosting, maintenance and updates are recognized as the services are
provided.

Part of the Company's strategy to increase revenues is to attempt to
increase the percentage of revenue which is recurring and to increase the
number of services provided to a particular client. The Company intends to
implement this strategy by increasing its over-all marketing and cross-
marketing efforts. See "Business--Business Strategy."

RESULTS OF OPERATIONS

The following discussion of the results of operations and financial
condition of the Company should be read in conjunction with the Financial
Statements and notes thereto included elsewhere in this Prospectus.

THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

Consolidated revenues for the Company increased to $4,239,000 for the three
month period ended September 30, 1996 from $2,462,000 for the three month
period ended September 30, 1995 (72%). Revenues for On Ramp and Internet One
increased to $2,315,000 during the first quarter of fiscal 1997 from $374,000
during the first quarter of fiscal 1996 (519%) primarily on the strength of
corporate demand for internet related services. Revenues for the Company's
strategic marketing subsidiaries (Mednick, Creative Resources, and Goodman
Group) increased to $1,823,000 during the first quarter of 1997 from
$1,736,000 during the first quarter of fiscal 1996 (5%) primarily as a result
of expanded sales at Creative Resources.

Direct salaries and related expenses for the Company increased to $1,943,000
during the first quarter of fiscal 1997 from $1,135,000 during the first
quarter of fiscal 1996 (71%) primarily as a result of a significant

20
<PAGE>

increase in the number of employees retained by the Company to meet its higher
level of operations. Selling, general and administrative expenses increased to
$1,002,000 during the first quarter of fiscal 1997 from $606,000 during the
first quarter of fiscal 1996 (65%) which primarily reflects the formation and
expansion of the Company's corporate infrastructure during late fiscal 1996.
Interest and other expenses also increased during the first quarter of fiscal
1997 as compared to fiscal 1996. Interest expense increased as a result of
various corporate financing arrangements which were effected during fiscal
1996.

Primarily as a result of the foregoing factors, the Company generated net
income of $94,000 during the first quarter of fiscal 1997 compared to a
$451,000 loss during the first quarter of fiscal 1996.

YEARS ENDED JUNE 30, 1994, 1995 AND 1996

Revenues. The following table presents the Company's consolidated revenues,
by reference to the Subsidiaries, for the fiscal years ended June 30, 1994,
1995 and 1996. The individual and combined historical revenues of the
Subsidiaries are not necessarily indicative of the future revenues that may be
expected.

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------
1994 1995 1996
---------- ----------- -----------
$ % $ % $ %
------ --- ------- --- ------- ---
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Mednick Group, Creative Resources,
Goodman Group.......................... $5,317 63% $ 5,881 57% $ 7,084 58%
On Ramp................................. 7 -- 776 8 2,323 19
Internet One............................ 76 1 674 6 1,338 11
NetCube................................. 3,086 36 3,001 29 1,401 12
------ --- ------- --- ------- ---
$8,486 100% $10,332 100% $12,146 100%
====== === ======= === ======= ===
</TABLE>

Revenues for Mednick Group, Creative Resources and Goodman Group, consisting
primarily of strategic marketing and corporate and brand positioning,
increased to $7,084,000 in fiscal 1996 from $5,881,000 in fiscal 1995 (20%)
and from $5,317,000 in fiscal 1994 (11%). The increase in revenues in fiscal
1996 resulted from sales to new clients of Mednick Group and Creative
Resources completing its first full year of operations. The increase in
revenues in fiscal 1995 resulted primarily from the completion of the first
full year of operations at Goodman Group and the start-up of operations at
Creative Resources.

Revenues for On Ramp and Internet One, consisting primarily of Internet and
intranet systems and services, on-line systems and implementation of tools and
training, increased to $3,661,000 in fiscal 1996 from $1,450,000 in fiscal
1995 (152%) and from $83,000 in fiscal 1994 (1,647%). The increase in revenues
in fiscal 1996 is primarily the result of increased corporate awareness and
demand for Internet access, infrastructure, security, and training, while the
increase in revenues in 1995 is primarily attributed to On Ramp and Internet
One completing their first full year of operations.

Revenues for NetCube, consisting primarily of data access consulting and
services, decreased to $1,401,000 in fiscal 1996 from $3,001,000 in fiscal
1995 (53%) and from $3,086,000 in fiscal 1994 (3%). The decrease in revenues
in fiscal 1996 was primarily the result of the strategic decision by the
management of NetCube to more fully develop its data base interface
application and to de-emphasize NetCube's historical focus of providing hourly
consulting services. This shift in business focus resulted in a significant
reduction in revenues and higher development costs without offsetting
revenues.

Direct salaries and related expenses. Direct salaries and related expenses
consist of wages, payroll taxes and employee benefits. Direct salaries and
related expenses increased to $4,587,000 in fiscal 1996 from $3,557,000 in
fiscal 1995 (29%) and from $3,321,000 in fiscal 1994 (7%). The increase in
fiscal 1996 is primarily due to the hiring of additional personnel
necessitated by growth at Mednick Group, On Ramp and Internet One. The
increase in fiscal 1995 is primarily attributed to an increase of $640,000 in
salary expenses at Internet One, On Ramp and Goodman Group which were all
completing their first full year of operation, offset in part by a decrease of
$450,000 at NetCube due to a reduction in performance bonuses.

Other direct expenses. Other direct expenses consist of contract labor,
materials and facility expenses associated with providing services to the
Subsidiaries' clients. Other direct expenses increased to $4,815,000 in fiscal
1996 from $3,935,000 in fiscal 1995 (22%) and from $3,776,000 in fiscal 1994
(4%). The increase in fiscal

21
<PAGE>

1996 is primarily due to incremental costs incurred by the Subsidiaries as a
result of higher levels of operations. The increase in 1995 is comprised of
increased direct expenses of approximately $660,000 at Internet One, On Ramp,
Creative Resources and Goodman Group associated with those companies
completing their first full year of operations, offset in part by an
approximate $500,000 reduction in production material and contract labor
expenses at Mednick Group and NetCube.

General and administrative expenses. General and administrative expenses
consist primarily of salaries and related payroll costs for financial and
administrative personnel, occupancy costs, consulting and professional fees,
general office expenses and bad debt expense. General and administrative
expenses increased to $3,286,000 in fiscal 1996 from $2,622,000 in fiscal 1995
(25%) and from $1,962,000 in fiscal 1994 (34%). The increase in fiscal 1996 is
due to increased occupancy expenses and administrative salaries as most of the
Subsidiaries expanded upon their corporate infrastructure to accommodate
operational growth and the increase in 1995 is primarily the reflection of
several of the Subsidiaries completing their first full year of operations.

Economies of scale, elimination of duplicate overhead and administrative
costs, and reduction in professional fees paid by the Subsidiaries for
services which will be performed in-house are expected to reduce future
operating costs. Offsetting these anticipated benefits are anticipated
increases in personnel costs due to increased administrative personnel and
expenses to be incurred in developing the Company's corporate infrastructure.

Merger Expenses. Merger expenses consist of the nonrecurring costs incurred
by the Company in completing the acquisitions of the Subsidiaries on June 30,
1996, including a $500,000 finder's fee paid to an affiliate of the Company.
See "Certain Transactions--Consulting and Finders' Agreements."

Interest Expense. Interest expense increased to $418,000 in fiscal 1996 from
$132,000 in fiscal 1995 (216%) and from $83,000 in fiscal 1994 (59%). The
increase in fiscal 1996 was primarily due to expense associated with the
Company's convertible promissory note borrowings. The increase in 1995 was
primarily the result of increased related party borrowings made by NetCube to
finance its operations.

Income taxes. The Company had income tax expenses of $149,000 in fiscal 1996
and $234,000 in fiscal 1995 and the Company had an income tax benefit of
$103,000 in fiscal 1994. Given that certain of the Subsidiaries were not
subject to taxation (as such Subsidiaries had elected S corporation status
under applicable provisions of the Internal Revenue Code of 1986, as amended,
and certain state statutes) and the remaining Subsidiaries were subject to
income taxes based on their respective discreet operations, the effective
income tax rate on a consolidated historical basis is not meaningful. The
Company will file consolidated tax returns in the future.

LIQUIDITY AND CAPITAL RESOURCES

Since their respective formations, the Subsidiaries have financed their
operations primarily through cash generated from operations, bank borrowings
and shareholder contributions and financings.

During 1996, the Company entered into a series of transactions in order to
fund the operations of the Subsidiaries and to prepare itself for the
Offering. The Company raised $270,000 through the issuance of three 10% Notes.
Proceeds obtained from the issuance have been used to cover costs related to
the Company's acquisitions of the Subsidiaries and the Offering. The Company
raised an additional $1,800,000 through a private placement of 12% Notes.
Proceeds received by the Company, after deducting placement agent fees and
other expenses, totaled $1,582,500. Of the funds received from the private
placement, $1,000,000 was loaned to On Ramp in order to complete a transaction
in which On Ramp redeemed outstanding shares of its common stock. The
remaining funds received from the private placement have been used to provide
working capital for On Ramp and Internet One. See "Certain Transactions--
Recent Financings."

In August 1996, the Company received proceeds of $4,998,000 through the
issuance of shares of Common Stock to Omnicom. See "Recent Developments--
Omnicom Transaction." Proceeds raised from the Omnicom Transaction were used
by the Company to retire the nonconvertible portion of the outstanding
principal and accrued interest under the 10% Notes and 12% Notes (aggregating
$1,880,505), to retire certain other debt and outstanding obligations, to fund
the operations of the Subsidiaries and to cover expenses and costs incurred in
connection with the acquisitions of the Subsidiaries and the Offering.

22
<PAGE>

At September 30, 1996, the Company had cash and cash equivalents of
approximately $1,118,000 and working capital of approximately $2,671,000,
primarily as a result of effecting the following transactions during the
quarter ended September 30, 1996: (i) the sale of 938,667 shares of Common
Stock to Omnicom and the receipt of proceeds therefrom of $4,998,000 and the
transfer by four principal stockholders of the Company of an aggregate of
124,667 shares of Common Stock to Omnicom for no cash consideration; (ii) the
conversion of $27,000 in principal amount under the 10% Notes and $162,000 in
principal amount under the 12% Notes, respectively, into 216,667 and 216,660
shares of Common Stock; (iii) the repayment of the non-convertible portion of
the 10% Notes and the 12% Notes, aggregating $1,881,000 from the proceeds of
the Omnicom Transaction; (iv) the payment of a finder's fee in consideration
for the termination of a certain finder's agreement using proceeds from the
Omnicom transaction; and (v) the renegotiation of the terms of a note payable
to a related party, providing for liquidation of $288,000 of such debt using
proceeds from the Omnicom Transaction and extending the maturity of the
remaining balance of $500,000 until March 1998.

The Company has entered into employment agreements ranging in term from one
year to three years (exclusive of extensions) with several of its executive
officers pursuant to which the Company is obligated to pay such individuals up
to an aggregate of $1,225,000 per year. See "Management--Executive
Compensation."

The Company anticipates significant changes in its operating cost structure
once the Subsidiaries have been completely integrated, and administration and
control of the Company's future operations have been centralized. The Company
expects that the cash generated from future operations and from the Offering
will be sufficient to fund the anticipated expenditures required for product
development, organizational infrastructure (including additional personnel and
upgraded telecommunications and computer systems) and general corporate needs
for the next 12 months. See "Use of Proceeds."

There can be no assurance that the Company will not be required to seek
additional sources of financing within the foreseeable future. The failure to
raise the funds necessary to finance the Company's future cash requirements
would adversely affect the Company's ability to pursue its operational
strategies.

In the event of the release of the Escrow Shares, the Company will recognize
during the period in which the earnings thresholds are probable of being met
or such stock levels achieved, a substantial noncash charge to earnings equal
to the fair market value of such shares on the date of their release, which
would have the effect of significantly increasing the Company's loss or
reducing or eliminating earnings, if any, at such time. The recognition of
such compensation expense may have a depressive effect on the market price of
the Company's securities. Notwithstanding the foregoing discussion, there can
be no assurance that the Company will attain the targets which would enable
the Escrow Shares to be released from escrow.

Impact of New Accounting Pronouncements. Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-based Compensation" ("SFAS No. 123")
issued by the Financial Accounting Standards Board ("FASB") is effective for
specific transactions entered into after December 15, 1995, while the
disclosure requirements are effective for financial statements for fiscal
years beginning after December 15, 1995. The new standards establish a fair
value method of accounting for stock-based compensation plans and for
transactions in which an entity acquires goods or services from nonemployees
in exchange for equity instruments. However, it also allows an entity to
continue to measure compensation cost for those plans using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees." Entities electing to remain with the
accounting in APB Opinion No. 25 must make pro forma disclosures of net income
and earnings per share, as of the fair value based method of accounting
defined in the Statement had been applied. The Company elected to make pro
forma disclosures as allowed by SFAS No. 123, and the Company's adoption of
SFAS No. 123 during the first quarter of fiscal 1997 did not have a material
effect on the Company's financial position or results of operations.

SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121), issued by the FASB is
effective for financial statements for fiscal years beginning after December
15, 1995. The new standard establishes new guidelines regarding when
impairment losses on long-lived assets, which include plant and equipment and
certain identifiable intangible assets and goodwill, should be recognized and
how impairment losses should be measured. The Company adopted SFAS No. 121
during the first quarter of fiscal 1997 with no material effect on its
financial position or results of operations.

23
<PAGE>

BUSINESS

OVERVIEW

The Company develops and provides a broad range of marketing and
communications solutions to corporate clients by combining traditional
marketing expertise with advanced Internet intranet capabilities. In addition,
the Company has developed proprietary software applications that allow users
to easily access, analyze and utilize server and mainframe databases over the
Internet.

The Company's mission is to become the leader of integrated marketing and
communications solutions by drawing upon its core strengths, which include:
desktop accessible database management and software designs, sophisticated
Internet and Intranet content systems development and corporate brand name
marketing and positioning.

The Company is a collection of seven diverse and experienced companies. The
following table summarizes the types of services provided by each Subsidiary:

<TABLE>
<CAPTION>
COMMENCEMENT
SUBSIDIARY OF OPERATIONS PREDOMINANT TYPE OF SERVICE PROVIDED
---------- ------------- ------------------------------------
<S> <C> <C>
Mednick Group........... October 1982 Strategic Marketing and Corporate and Brand
Positioning
On Ramp................. February 1994 Internet and Intranet Systems and Services
NetCube................. February 1978 Database and Information Management and
Utilization
Goodman Group........... July 1993 Strategic Marketing and Corporate and Brand
Positioning
Creative Resources...... November 1994 Strategic Marketing and Corporate and Brand
Positioning
Internet One............ November 1993 Secure On-Line Systems Implementation and
Internet Tools Training
</TABLE>

The Company's current clients include Anheuser Busch Companies, Inc., Avon,
Bankers Trust, Berlitz International, Inc., Bloomingdale's, Busch
Entertainment Corporation, Chrysler Corporation, The Coca-Cola Company,
Continental Airlines, Inc., General Motors Corporation, Janus Funds, Liz
Claiborne, Inc., Microsoft, MITA, Moet, NEC USA, Inc., Pioneer Electronics
(USA) Inc., Random House, Reebok International, Ltd., Samsung Electronics of
America, Inc., Sea World, Sega of America, Inc., Sony, Sprint, Tambrands, Time
Warner, The Toro Company, Turner Entertainment Group and United Distillers.

In August 1996, the Company entered into a strategic relationship with
Omnicom. Omnicom is the third largest advertising company in the world.
Pursuant to the Omnicom Agreement, Omnicom purchased 938,667 shares of Common
Stock for the Company in exchange for payment to the Company of $4,998,000.
Since June 1996, the Company and Omnicom have engaged in joint marketing of
their services to several Omnicom clients and the Company believes that the
relationship could provide access to a substantial additional client base and
to additional advertising agent support systems.

In November 1996 four principal stockholders of the Company transferred an
aggregate of 124,667 shares of Common Stock to Omnicom for no cash
consideration. Omnicom consented to the November 1996 stock split and related
amendments to the Omnicom Agreement and the Company agreed to decrease the
number of shares available under the 1996 Stock Option Plan.

THE INDUSTRY

The recent proliferation of new technologies, particularly the Internet, has
changed the way companies market and distribute their products and services
and communicate with their vendors, suppliers, customers and employees. These
developments are creating the following trends:

Substantial Opportunities for Internet Marketing and Advertising. As the
Internet emerges as a global information network, corporations are struggling
to discover and develop the marketing, advertising and

24
<PAGE>

communication strategies that will enable them to utilize this interactive
network to their advantage. The World Wide Web offers corporations the ability
to market their products and services, enhance their corporate identity and
brand image to a worldwide audience, distribute products or information
targeted to groups or individuals, and operate more efficiently and cost-
effectively. These capabilities offer the opportunity to enhance the
relationship between marketer and consumer and challenge the marketers to take
full advantage of the capabilities offered by the Internet.

Demand for More Marketing Information. In order to design effective and
targeted marketing campaigns, corporations desire information regarding
customers' characteristics, interests and behavior. The Internet provides a
new technical means to efficiently obtain this information from individual
users and react to it in real time. Further, Internet usage itself creates
additional marketing information about users. However, most companies lack the
skill, experience or technology to exploit the information gathering potential
of the Internet.

Businesses Are Searching For Ways To Maximize Their Interactive
Investment. Businesses are experiencing competitive pressure to draw more
value from their Internet presence. Internet presences are becoming more
elaborate and expensive, increasing the need for companies to be able to
quantify the return on investment and make rapid changes based on measured
reaction. As the novelty of simply having a Website diminishes, the
competitive, solutions-driven capabilities of the Internet become more
critical.

Evolution of the Communications Infrastructure. Internet technology and the
World Wide Web have revolutionized on-line communications and data sharing.
Many companies have begun to adopt Internet technology for their corporate
intranets. An intranet is a private data communications network that utilizes
Internet technology to provide improved communications, reduced deployment and
maintenance costs, and increased ability to access corporate data, within a
secure environment. Key elements in successful corporate intranet
implementations include the creation of a user friendly interface and the
integration of this interface into the existing information infrastructure.
Effective user interfaces encompass Internet-style point-and click graphics,
audio and video, page scrolling and bookmarking.

THE COMPANY'S SERVICES AND PRODUCTS

The Company combines technological expertise in Internet and interactive
communications with extensive traditional marketing experience to provide
integrated solutions to leading corporate accounts. The Company's solutions
incorporate brand and corporate strategy and positioning, Website development,
maintenance, updating and hosting, corporate intranet solutions, sophisticated
content development capabilities, data access and profile-driven response
technologies, on-line and off-line training systems, and advertising and media
placement services. The Company has developed several proprietary software
applications (including NetCube, ASAP, Comparabase, VINNI and PenPals) that it
utilizes in delivering marketing solutions to its clients. The Company focuses
on assisting its clients in the following areas:

Position and Brand Products and Services. The Company utilizes its
experience in traditional advertising and marketing, as well as its
understanding of the capabilities of different and emerging media, to position
clients and market their products. The Company provides a range of services,
including brand positioning, developing corporate identity and print,
television and packaging design.

Market Client Products and Services Using Internet Technology. The Company
combines traditional and interactive media approaches advertising and
marketing to position its clients and market their products and services on
the Internet. This includes the development of Websites that incorporate the
latest in Internet technology. For example, at the NEC Website a visitor can
request a database-driven catalogue to compare a number of NEC products and
generate customized Webpages displaying a comparative presentation of those
NEC products in which that visitor has an interest (http://www.nec.com). The
Company's "smart Websites" track and analyze a visitor's travels through a
Website and make suggestions regarding additional links or Websites that may
be of interest to the user in real time (http://www.hitsathome.com/idsst). The
Company's intelligent interfaces allow users to customize a personalized
interface with links to the user's favorite Websites. The Company's user-
directed interactive technology results in Internet experiences which are
unique for each

25
<PAGE>

user, based on the user's indicated preferences, characteristics or past
behavior (http: www.4adventure.com). The skillful application of these
technologies enable a business to market directly with the consumer, improving
the effectiveness of the marketing message.

Identify and Develop New Lines Of Distribution. The Company is working with
its clients to develop new channels of distribution utilizing the Internet.
For example, Avon sought to utilize a marketing channel not currently
addressed by its traditional distribution system. The Company is assisting
Avon in establishing a Website from which it will market directly to customers
over the Internet and allow Avon representatives to receive product
information and communicate internally. The Website (http://www.avon.com) is
expected to be introduced in September 1996. The Company is also creating a
Website that will enable Bloomingdale's to sell a variety of merchandise on-
line, allowing it to extend its distribution beyond its current retail store
and catalog presence (http://www.bloomingdales.com).

Communicate and Operate More Effectively Internally. The Company's user-
friendly interfaces and Internet tools, combined with training software and
methodology, enable it to develop and deploy sophisticated intranet solutions
for its clients. For example, the Company developed a password-protected
intranet to allow Anheuser Busch to deliver proprietary marketing information
to its distributors. This intranet allows Anheuser Busch, among other things,
to distribute information and engage in communication with its distributors
quickly and provides a means for distributors to order marketing materials
easily through a secure medium.

Access Data More Efficiently. The Company's proprietary technologies allow
users of both the World Wide Web and corporate intranets to easily access,
analyze and utilize data on-line. The Company's software components include
NetCube, ASAP and Comparabase. NetCube is a database interface application
that enables highly flexible viewing, analysis and reporting of information
generated from multiple databases. ASAP, the Advanced Statistical Analysis
Program, is a software application that provides proprietary statistical
analysis to the sponsor of a Website regarding the number and nature of the
visits to that Website. Comparabase is a searchable comparative on-line
database that enables consumers to select products from a sizeable on-line
catalogue and compare them to similar products by feature. These proprietary
tools allow the Company to: (i) craft on-line marketing solutions that are
responsive to user needs, allowing the user to more easily access, compile and
analyze data; and (ii) provide necessary tools to allow the Website sponsor to
assess the effectiveness of its marketing solutions.

BUSINESS STRATEGY

The Company continues to leverage its core strengths in order to further
enhance its ability to provide high-quality, innovative marketing and
communications solutions, both in traditional media and interactive media,
with a special focus on the Internet and intranet applications. The Company's
strategies include the following key elements:

Market and Cross-Market Services. In fiscal 1996, the Company provided
services to over 100 companies. See "Business--Customers" below. Many of these
companies are leaders in their respective industries. The entry level of the
Company into a business is typically at a senior management level, enabling
the Company to position itself for future assignments as its client's needs
expand. The Company leverages these client relationships in a number of ways.
First, the Company often sells expanded or updated solutions or new services
to its existing clients. Second, clients of one of the Subsidiaries are often
offered solutions or services by another Subsidiary. For example, the Rockport
Company, historically a client of Mednick Group for traditional marketing
services, was introduced to the Internet capabilities of On Ramp, resulting in
the creation of both Internet (http://www.rockport.com) and intranet solutions
for Rockport. Third, the Company uses experience gained working for existing
clients, or leads or endorsements furnished by an existing client, to secure
new client engagements.

Apply the Company's Experience in Internet and Data Management Technologies
to Provide Clients Interactive Functionality. The Company differentiates its
solutions by providing technological expertise in Website creation and
Internet tools and database access and analytical technologies. In addition,
the Company draws upon its proprietary software components to enhance the
effectiveness of its integrated solutions. The

26
<PAGE>

Company applies this technology in order to create an Internet presence for
clients who previously did not have a Website, to create enhanced Websites for
clients with first-generation Websites, and to add, extend and enhance
functionality to client Websites by incorporating technologies such as data
management, intuitive interface, intelligent agents or transaction security.
Recently, the Company has been applying its on-line communications skills and
Internet technology expertise to build communications solutions for corporate
intranets.

Create Recurring Revenue Sources. The Company is attempting to increase the
percentage of revenue that is recurring, thereby reducing its dependence on
project by project fees. The Company derives recurring revenue in a number of
ways: (i) updating client Websites to add new content or functionality,
maintaining client Websites to optimize performance, hosting client Websites
on the Company's servers and providing clients with periodic analytical
reports on use of their Websites; (ii) licensing its proprietary software
applications to its clients; and (iii) selling advertising space, sponsorships
and "hot links" on its proprietary content Websites (http://www.metaverse.com,
http: www.alterworld.com) and infotainment events (such as the 37th Annual
Grammy Awards).

Develop Solutions which Incorporate the Latest Technologies. The Company
maintains its technological leadership by continuously evaluating and adopting
the latest Internet tools, data management and profile-based customization
technologies, in order to create more effective solutions. For example, the
Company works with leading technology providers to evaluate pre-release
versions of new Internet tools (such as Microsoft's Active X, Real Audio's
Streaming Audio and MacroMedia's Shockwave, Sun Microsystem's Java). Such
opportunities allow the Company to comment on "beta" or pre-release versions
of software allowing it the opportunity to potentially influence the ultimate
product, and to develop an early expertise in the use of such software.
Moreover, the acquisition of NetCube provides the Company with database access
and analysis expertise and proprietary tools not available to traditional
marketing and communications firms.

Continue to Develop Compelling Content. The Company creates content for use
in: (i) client Websites; (ii) Company sponsored Websites; and (iii) Company
sponsored promotions and events. The Company's Websites provide
"Infotainment," a combination of information and entertainment on the Internet
(http://www.metaverse.com, http://www.alterworld.com,
http://www.melroseplace.com). For example, Metaverse.com features, among other
things, film, music, politics, World Wide Web-related information, photography
exhibits and receives millions of "hits" each month. The Company has hosted a
number of cybercasts (live broadcasts of media events over the Internet) of an
entertainment or marketing events (http://www.metaverse.com cyber).
Entertainment cybercasts have included the 37th Annual Grammy Awards, the Mike
Tyson Comeback Fight and the NFL Draft. Corporate Cybercasts have included the
Reebok Supershow and Anheuser Busch Distributor Convention. Think's Websites
and Cybercasts attract measurable traffic, serve as a testing grounds for new
content and presentation techniques, attract and build visitor bases and help
direct those visitors to clients' Websites and enhance the Company's
visibility. Client Websites, such as Continental Airlines, Reebok, NEC and
Anheuser Busch, feature content created and maintained each month by Company.
See "Case Studies."

27
<PAGE>

CUSTOMERS

The following is a list of customers of the Company that represented $50,000
or more in revenues to the Company during the fiscal year ended June 30, 1996.

CONSUMER GOODS ENTERTAINMENT TECHNOLOGY
Anheuser Busch Berkeley Systems Hewlett Packard
Avon Broadcast Music, Inc. I-Link
Berlitz (BMI) AT&T
Bloomingdale's Crystal Dynamics Sprint
Book of the Month Club Disney Art Classics Microsoft
Busch Entertainment Interplay Mita
Coca-Cola Company Knowledge Adventure Motorola
Liz Claiborne MSNBC NEC
Reebok NBA Properties Pioneer
Rockport Request Television Samsung
Tambrands Sega Toshiba
Sony Western Digital
TRAVEL & TRANSPORTATION TBS Superstation
Continental Airlines Turner New Media BUSINESS TO BUSINESS
Chrysler Motors Hearst
Fodors FINANCIAL RL Polk
Ford Motors ING Barings Turner Network Sales
Janus Funds W. R. Grace
Bankers Trust Walsh America
Wentworth

In the fiscal year ended June 30, 1996, Pioneer Electronics of America, Inc.
accounted for 15% of the Company's revenue. No other customer accounted for
more than 10% of the Company's revenue.

CASE STUDIES

Reebok. The Company provides a broad range of marketing, branding and
corporate positioning services to Reebok International, Ltd. This relationship
began in March 1991 when the Company was retained to launch the Step Reebok
program, the first branded bench aerobic system. The client sought a complete,
integrated marketing program targeting retailers, health clubs and consumers,
for which the Company developed a multi-staged marketing solution, which
included: brand identity, advertising and a fitness home video. For his
efforts on behalf of Reebok Classics Shoes in 1992, the Company's Chief
Executive Officer, Scott A. Mednick, was named "Print Art Director of the Year
for the Western Region" by Adweek Magazine.

Upon the advent of the World Wide Web, the Company was retained to help
Reebok brand and position its new corporate campaign, "Planet Reebok", on-
line. The Company responded by designing and implementing PlanetReebok.com,
one of the first commercial Websites on the Internet.

In order to help maintain a high level of traffic and recognition for
PlanetReebok.com, the Company has provided live cybercasts for Reebok, has
hosted live "chats" with various Reebok-sponsored athletes and has developed
other content and marketing solutions. When the Company's ASAP Statistical
Analysis Program indicated that traffic to the Website was decreasing, the
Company redesigned and relaunched the site, resulting in increased traffic and
new interest. The Company has gone on to expand the marketing of Reebok's
message and products on the Internet, including daily live updates from the
1996 Summer Olympics. The client relationship has resulted in Reebok's
presence on the Company's Metaverse.com Website and the hosting of the
PlanetReebok Website on the Company's Internet servers.

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<PAGE>

Anheuser Busch. When Anheuser Busch Companies, Inc. ("Anheuser Busch") chose
the Company to develop a complete Internet entertainment presence, the result
was the Budweiser.com Website, (http: www.budweiser.com) a full featured
interactive entertainment Website introduced in November 1995. Budweiser.com
has been voted the number one corporate Website on the Internet by Interactive
Week Magazine. The Company's mission was to make the site more than just a
"billboard" on the Internet. The Website marked the introduction of the
Company's proprietary 3-D Browser interface, VINNI, which has been licensed
exclusively to Anheuser Busch on a month-to-month basis as part of its debut
on-line marketing campaign. The Company has supported the Budweiser.com
Website with custom-developed promotional efforts, including: a "Bud Bowl
'96," sweepstakes conceived and managed by the Company; a live Cybercast from
Budweiser's national convention in New Orleans, Louisiana in 1996; and the
"Net the Gold" promotion, supporting Budweiser's sponsorship of the 1996
Olympics. The client relationship has resulted in Budweiser's presence on the
Company's Metaverse.com Website, the hosting of the Anheuser Busch Website on
the Company's Internet servers and a contract to update the Anheuser Busch
Website, each of which represents a continuing source of recurring revenue.
The Company has recently developed a password-protected intranet solution
enabling distributors, resellers and corporate employees to access information
regarding a new corporate positioning campaign.

Based upon its work for Budweiser, the Company was also selected to develop,
maintain and host the http: www.4adventure.com Website for Sea World, Busch
Gardens and other theme parks owned by the Busch Entertainment Corporation.
This Website prompts a user to input words describing the users' dream
vacation, and responds by generating a Webpage that is constructed on the
basis of such input. In addition, the Website allows the user to create a
customized vacation based on the user's references and allows the user to book
vacation reservations on-line.

Continental Airlines. In order to provide a foundation to attract traffic
and eventually offer on-line ticket sales, the Company recently created a
Website and on-line campaign for Continental Airlines, Inc. ("Continental").
The Continental Airlines Website (http: www.flycontinental.com) includes a
custom navigation interface created by the Company in conjunction with
Continental, Electronic Data Systems, Inc. and Official Airline Guides, which
enables visitors to review schedules on-line. The Company is currently engaged
in the design of a custom interface to permit booking and receipt of airline
ticketing.

NEC. NEC USA, Inc. ("NEC") requested that the Company design and implement
an interactive Internet intranet solution that incorporated three separate
divisions (each with a distinct look, feel and product category) into a single
on-line environment. The Company responded by creating http: www.nec.com,
featuring two on-line interactive databases, NEC Search and Comparabase. Each
of NEC Search and Comparabase were created by the Company and are licensed to
NEC USA, Inc, along with a complete toolset that enables NEC administrative
staff to update the databases without any specific Internet expertise. The
Website includes an on-line customer support section developed by the Company.
The client relationship has resulted in NEC's presence on the Company's
Metaverse.com Website, software licensing and a contract to update and provide
content for the NEC Website, as well as designing and cybercasting the
interactive portion of NEC's recent appearance at the Networld Interop
conference in Las Vegas.

Sega. The Company began working with Sega of America, Inc. ("Sega") in April
1991 to provide traditional marketing solutions for its hardware and software
products. The Company's initial assignments were to develop packaging for the
Game Gear portable game machine and the Menacer bazooka accessory to Sega's
primary game console, the Genesis. In the course of its relationship with
Sega, the Company has designed packaging for more than fifty individual game
titles, as well as themes, graphics and trade advertising promotion for Sega's
participation in the Consumer Electronics Show. In addition, the Company
developed the logo, hardware and peripheral packaging, point-of-sale, print
advertising and miscellaneous collateral materials utilized in the launch of
Sega Saturn, a new 32-bit gaming platform, in May 1995.

Janus. Janus Funds is one of the largest mutual fund companies in the United
States, managing over $32 billion in assets for its clients. Janus selected
the Company to develop and deploy a dynamically driven Web

29
<PAGE>

presence which enables Janus customers to enter password protected areas,
check out their funds and portfolio information and monitor the net asset
value of their portfolios. The Website features database interface and full
session based tracking. In addition, the Company created two custom
applications: a Java navigational aid and JAB (the Janus Asset Builder), a
Java-based calculation applet.

RELATIONSHIP WITH OMNICOM

In August 1996, the Company entered into a strategic relationship with
Omnicom, the third largest advertising company in the world. Pursuant to the
terms of the Omnicom Agreement: (i) Omnicom purchased 938,667 shares of Common
Stock from the Company in exchange for $4,998,000; (ii) the Company appointed
Barry Wagner to represent Omnicom on the Company's Board of Directors; (iii)
Omnicom agreed not to increase its ownership interest in the Company absent
the approval of the Board of Directors; and (iv) Omnicom granted the Company a
right of first refusal to purchase the shares of Common Stock owned by
Omnicom.

The Company entered into the Omnicom Transaction to establish a strategic
relationship that could provide access to a substantial additional client base
and to additional advertising agent support systems, although there can be no
assurance that these results will occur. Since June 1996, Omnicom and the
Company have engaged in the joint marketing of their services to several
Omnicom clients. There can be no assurance that such joint marketing will
continue, nor can there be any assurance with respect to the effect of such
marketing on the Company's operations.

COMPETITION

The market for the Company's services is highly competitive and is
characterized by pressures to incorporate new capabilities and accelerate job
completion schedules. The Company faces competition from a number of sources.
These sources include national and regional new media marketing companies and
national and local advertising agencies, many of which have started to develop
or acquire interactive media capabilities. New boutiques that either provide
integrated or specialized services (e.g., corporate identity and packaging,
advertising services or Website design) and are technologically proficient,
have emerged and are competing with the Company. Many of the Company's
competitors or potential competitors have longer operating histories, longer
client relationships and significantly greater financial, management,
technology, development, sales, marketing and other resources than the
Company. The Company's ability to maintain its existing clients and generate
new clients depends to a significant degree on the quality of its services and
its reputation among its clients and potential clients, as compared with the
quality of services provided by and the reputations of the Company's
competitors. In the event that the Company loses clients to competitors
because of dissatisfaction with the services performed or provided by the
Company, or the reputation of the Company is otherwise adversely impacted, the
business, financial condition and operating results of the Company could be
materially adversely affected.

There are relatively low barriers to entry into the Company's business. The
Company expects that it will face additional competition from new entrants
into the market in the future. There can be no assurance that existing or
future competitors will not develop or offer marketing communication services
and products that provide significant performance, price, creative,
technological or other advantages over those offered by the Company, which
could have a material adverse effect on the business, financial condition and
operating results of the Company.

The Company believes that the principal competitive factors in the market
for new media marketing services are creative content, quality of service,
breadth of services offered, technological and new media sophistication,
perceived value, responsiveness to clients' needs and timeliness in delivering
solutions. The Company believes that it generally competes favorably with
respect to each of these factors.

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<PAGE>

SERVER HOSTING AND INTERNET CONNECTIVITY

The Company currently operates servers and maintains Internet connectivity
from its offices in New York and Colorado. In New York, the Company's
connectivity is via redundant DS-3 100 MB/sec lines with connectivity to the
MAE East, MAE West and SWIPE, with all associated peering. Backup is available
via multiple redundant T-1 lines. The Company's serving in New York is
accomplished via symmetrical multiprocessing, multi-threaded Windows NT
servers and Sun Ultra 170E servers with uninterrupted power supply backup
distributed primarily through Cisco routers. In Colorado, the Company's
connectivity is via T-1 lines. Servers in the Colorado facility consist of
multiple Sun Ultra 170E with uninterrupted power supply backup distributed
primarily through Cisco routers. Both facilities feature level 0 backup with
off-site storage.

The Company intends to expand its server and connectivity infrastructure in
the future by adding servers and dedicated high bandwidth connectivity at each
of its other major offices. The Company believes that updating and expanding
its technically advanced network is important to maintaining its leadership
position. The Company intends to continue to invest in maintaining and
expanding its server and connectivity infrastructure.

PROPERTIES

The Company's executive and administrative offices are located in New York,
New York. The Company also maintains offices in Culver City, California;
Boulder, Colorado; Atlanta, Georgia; and Edgewater, New Jersey.

The New York facilities consist of approximately 10,000 square feet on two
floors in midtown Manhattan (the "Manhattan Space"). The Manhattan Space is
currently leased on a month-to-month basis for $145,000 per annum from October
1, 1996 to September 30, 2001 and then for $155,000 per annum from October 1,
2001 to September 30, 2006.

The California facility consists of approximately 11,000 square feet of
space located in a converted warehouse. Such space is currently leased by the
Company on a month-to-month basis for approximately $15,000 per month.

The Company's offices in Colorado, Georgia and New Jersey range in space
from 2500 square feet to 9,000 square feet. Each of these facilities is leased
with monthly rents ranging from $750 to $10,000.

The Company believes that its existing facilities are adequate to meet its
current operating needs and that suitable additional space will be available
to the Company on favorable terms should the Company require additional space
to accommodate future operations or expansion. Further, in the event that any
one of the foregoing leases was not renewed, the Company believes that it
would be able to obtain suitable alternative space on terms comparable to
those currently afforded to the Company.

EMPLOYEES

At November 1, 1996, the Company employed 98 full-time employees, including
12 persons in management, 17 creative directors, 35 production personnel, 15
administrative persons, 10 marketing representatives and 9 technical
professionals. The Company is not a party to any collective bargaining
agreement and the Company's employees are not represented by any labor union.
The Company considers its relationship with its employees to be good. The
Company's success depends in large part upon its ability to attract, develop,
motivate and retain highly skilled creative and technical employees, of which
there can be no assurance.

LEGAL PROCEEDINGS

The Company is not a party to any litigation that is expected to have a
material adverse effect on the Company's financial condition or results of
operations.

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<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Scott Mednick.................. 40 Chief Executive Officer and Chairman of the
Board
Ronald Bloom................... 44 President, Chief Operating Officer and
Director
Melvin Epstein................. 50 Chief Financial Officer and Secretary
Adam Curry..................... 31 Chief Technology Officer and Director
David Hieb..................... 31 Vice President
James Grannan.................. 33 Vice President
Susan Goodman.................. 41 Vice President
James Carlisle................. 49 Vice President
Frank DeLape................... 42 Director
Angel Martinez................. 40 Director
Michael Ribero................. 40 Director
Barry Wagner................... 56 Director
</TABLE>

Scott Mednick has been Chairman of the Board of Directors and Chief
Executive Officer of the Company since its inception in January 1996. Mr.
Mednick founded Scott A. Mednick & Associates, Inc. (known as "The Mednick
Group"), one of the Subsidiaries, primarily engaged in the provision of
strategic marketing and corporate and brand positioning, in 1985. Mr. Mednick
is the President and Creative Director of The Mednick Group. Prior to starting
The Mednick Group, Mr. Mednick was employed by Boyd Communications in Los
Angeles, California, most recently as Creative Director from 1982 to 1985. Mr.
Mednick holds a B.A. Degree from the Rhode Island School of Design.

Ronald Bloom has been a Director and the President and Chief Operating
Officer of the Company since June 1996. Previously, Mr. Bloom was Chief
Operating Officer and General Manager of On Ramp, one of the Subsidiaries,
primarily engaged in the provision of Internet and intranet systems and
services, from 1995 to 1996, and presently serves as its Vice President and
Secretary. Prior to joining On Ramp, Mr. Bloom founded and served as President
of MediaTime Advertising and Communications, Chicago, Illinois from 1979 to
1981; President of Prototype Computer Aided Design from 1980 to 1983; Vice
President and Creative Director of Jeffrey Nemetz and Associates Advertising,
Chicago, Illinois from 1983 to 1985; President of TMF Communications, Los
Angeles, California from 1986 to 1989; President of Ron Bloom Productions, a
production company and consulting firm founded by Mr. Bloom from 1989 to 1994.

Melvin Epstein has been the Chief Financial Officer of the Company since
August 1996. From 1994 to August 1996, Mr. Epstein was Managing Director of TN
Services, a unit of True North Communications, an advertising agency. Prior to
joining TN Services, Mr. Epstein was the Chief Financial Officer of Backer
Spielvogel Bates, a subsidiary of Saatchi & Saatchi, P.L.C., from 1987 to
1994. Mr. Epstein holds a B.S. in Accounting from Queen's College.

Adam Curry has been a Director and the Chief Technical Officer of the
Company since June 1996. Mr. Curry founded and has been Chairman of the Board
of Directors of On Ramp since 1994 and its President since March 1996. Mr.
Curry hosted and produced the nationally broadcast radio program "CountDown"
from 1983 to 1987. From 1987 to 1992, Mr. Curry served as an On-Air
Personality for MTV Networks in New York.

David Hieb has been Vice President of the Company since June 1996. Mr. Hieb
founded Internet One, one of the Subsidiaries, primarily engaged in the
provision of secure on-line systems and Internet tools training, in October of
1993. From July 1991 through September 1993, Mr. Hieb was Senior Engineer for
the Root Group,

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<PAGE>

Inc. a UNIX and TCP IP networking firm. From January 1990 through July 1991,
Mr. Hieb was a Systems Engineer for the Computer Science Department at the
University of Colorado at Boulder. Mr. Hieb holds a B.S. in Electrical and
Computer Engineering from the University of Colorado at Boulder.

James Grannan has been Vice President of the Company since June 1996. Mr.
Grannan founded Creative Resources, one of the Subsidiaries, primarily engaged
in the provision of strategic marketing and corporate and brand positioning
services, in 1994. Mr. Grannan was Creative Manager for the Coca-Cola Company
from 1992 to 1994 and Promotional Packaging and Design Manager for the Coca-
Cola Company from 1988 to 1992. Prior to joining Coca-Cola, Mr. Grannan worked
with Adair-Greene, an advertising agency in Atlanta, Georgia from 1987 to
1988. Mr. Grannan holds a B.A. Degree in Advertising Design from the Atlanta
College of Art.

Susan Goodman has been Vice President of the Company since June 1996. Ms.
Goodman founded the Goodman Group, one of the Subsidiaries, primarily engaged
in the provision of strategic marketing and corporate and brand positioning
services, in 1993 as a strategic marketing consultancy, specializing in direct
marketing and new media. Previously she was Director of Client Services at
Chiat Day Direct Marketing from February 1992 through July 1992. She spent 10
years in merchandising in the apparel industry with companies such as IZOD and
Merona Sport (division of Oxford Industries). Ms. Goodman serves on the
Operating Committee of the Direct Marketing Association's Business to Business
Council. Ms. Goodman has a B.A. in history from Tufts University and received
her M.B.A. in Marketing, Finance and Strategic Planning from Northwestern
University's Kellogg School of Management.

James Carlisle has been Vice President of the Company since June 1996. Dr.
Carlisle founded NetCube Corporation, one of the Subsidiaries, primarily
engaged in the provision of database and information management and
utilization services, in 1978. Prior to that, Dr. Carlisle was co-founder,
Vice President and Chief Technical Officer of Office Systems Planning
Corporation from 1975 to 1977. He was a Research Scientist at the Information
Sciences Institute, the first software development center funded by the
Defense Advanced Research Project Agency (DARPA), supporting the Advanced
Research Project Agency (ARPA)-Net from 1974 to 1977. Dr. Carlisle served
simultaneously as an Associate Professor on the faculty of the University of
Southern California, Annenberg School of Communications, where he co-founded
the first doctoral program to focus on Human Interaction with Computers,
Teleconferencing, and Internet-related technologies. Dr. Carlisle has been a
research scientist at the Wharton School from 1976 to 1977, a consultant at
the RAND Corporation in 1970, and a consultant for Lexis Corp. from 1969 to
1970. He received his Ph.D. and M.Phil. from Yale University's School of
Organization and Management and a B.S. in Engineering with Honors from
Princeton University.

Frank DeLape became a Director of the Company when it was formed in January
1996. Mr. DeLape has served as President, Secretary, Treasurer and a director
of Oak Tree Capital, Inc., financial consulting firm, since its formation in
January 1996 and of Benchmark Equity Group, Inc., a financial consulting firm,
since its formation in April 1994. Oak Tree Capital, Inc. is the manager and a
member of Trident II, L.L.C., a stockholder of the Company. Mr. DeLape served
as President, Chief Executive Officer and Director of AquaNatural Company, a
provider of water purification, dispensing and marketing program, from its
inception in February 1992 until March 1994. Mr. DeLape served as President,
Chief Executive Officer and a director of Critical Industries, Inc. from 1990
to 1992.

Angel Martinez has been a Director of the Company since September 1996.
Since July 1994, Mr. Martinez has served as President and Chief Executive
Officer of the Rockport Company, Inc. a shoe manufacturer. Prior to joining
Rockport Company, Inc., Mr. Martinez served as Executive Vice President for
Global Marketing at Reebok International, Ltd. from February 1994 until July
1994. Mr. Martinez was President of the Fitness Division of Reebok
International, Ltd. from September 1992 to January 1994, prior to which, he
served as Vice President for Business Development. Mr. Martinez is also a
member of the Board of Advisors for the Reebok Human Rights Awards. Mr.
Martinez holds a B.A. from the University of California at Davis.

Michael Ribero has been a Director of the Company since September 1996.
Since September 1995, Mr. Ribero has served as Executive Vice President and
General Manager of Sega of America. Prior to joining Sega

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<PAGE>

of America, Mr. Ribero was Executive Vice President, Marketing and Strategic
Planning of Hilton Hotels Corporation from October 1994 to February 1995, the
Senior Vice President, Marketing and Strategic Planning from January to
September 1994, and the Senior Vice President, Marketing from June 1988 to
December 1993. Mr. Ribero holds a B.S. in Operations Research and Industrial
Engineering from the University of Florida.

Barry Wagner has been a Director of the Company since September 1996. Mr.
Wagner has been an employee of Omnicom since 1974, and currently serves as
Secretary and General Counsel of Omnicom. Mr. Wagner also serves as Secretary
and Chief Legal Officer of BBDO Worldwide Inc. and is Senior Vice President
and Chief Legal Officer of BBDO New York, both of which are part of Omnicom.
Prior to joining Omnicom, Mr. Wagner was an attorney with the National
Broadcasting Company and the Federal Reserve Board of New York. Mr. Wagner is
a graduate of Hamilton College and Harvard Law School.

All officers of the Company are elected to serve in such capacities until
the next annual meeting of the Board of Directors of the Company and until
their successors are duly elected and qualified.

BOARD COMMITTEES

Audit Committee. The Company's audit committee (the "Audit Committee") is
responsible for making recommendations to the Board of Directors concerning
the selection and engagement of the Company's independent certified public
accountants and for reviewing the scope of the annual audit, audit fees, and
results of the audit. The Audit Committee also reviews and discusses with
management and the Board of Directors such matters as accounting policies and
internal accounting controls, and procedures for preparation of financial
statements. Michael Ribero and Barry Wagner are members of the Audit
Committee.

Compensation Committee. The Company's compensation committee (the
"Compensation Committee") approves the compensation for executive employees of
the Company. The Compensation Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company,
reviews general policy matters relating to compensation and benefits of
employees of the Company and administers the Company's 1996 Stock Option Plan.
Michael Ribero and Angel Martinez are members of the Compensation Committee.

EXECUTIVE COMPENSATION

The following table sets forth the compensation received by the Company's
Chief Executive Officer and four most highly compensated executive officers
whose total annual salary and bonus exceeded $100,000 during the year ended
June 30, 1996 ("Named Officers").

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION SALARY BONUS COMPENSATION($) COMPENSATION($)
------------------ -------- ------- --------------- ---------------
<S> <C> <C> <C> <C>
Scott Mednick................. $225,000 $11,376 $20,000 --
Chief Executive Officer
Ronald Bloom.................. $106,250 $58,234 -- --
President
Adam Curry.................... $125,000 $ 2,684 -- --
Chief Technology Officer
Susan Goodman................. $138,000 -- -- $130,000(1)
Vice President
James Carlisle................ $159,500 -- -- $ 7,200
Vice President
</TABLE>
- --------
(1) Represents distributions to the noted executive as the former sole
stockholder of Goodman Group, previously a Subchapter S corporation.

34
<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with each of Scott
Mednick, Ronald Bloom, Adam Curry and James Carlisle, each of which provides
for an initial term of three years, subject to automatic extension for a
period of two years in the absence of notice to the contrary at the option of
the Company. Pursuant to the terms of such agreement, Mr. Mednick is entitled
to receive an annual salary of $195,000. Pursuant to the respective terms of
such agreements, as amended by individual letter agreements each dated October
28, 1996, each of Messrs. Bloom, Curry and Carlisle is entitled to receive an
annual salary of $125,000. Each of Messrs. Mednick, Bloom, Curry and Carlisle
is entitled to receive a bonus as determined by the Board of Directors.

The Company has also entered into employment agreements with each of James
Grannan and David Hieb which provide for initial terms of one and three years,
respectively, subject to renewal for a periods of one year each at the
discretion of the Company. Pursuant to the terms of such agreements, each of
Mr. Grannan and David Hieb is entitled to receive an annual salary of $125,000
and bonuses as determined by the Board of Directors.

The Company has also entered into an employment agreement with Susan Goodman
which provides for an initial term of three years. Pursuant to the terms of
the employment agreement, Ms. Goodman is entitled to receive an annual salary
of $195,000, a bonus of $30,000 within six months of execution of such
agreement and bonuses thereafter as determined by the Board of Directors.

The Company has also entered into an employment letter with Mel Epstein,
pursuant to which Mr. Epstein is entitled to receive an annual salary of
$180,000.

All of the foregoing employment agreements provide for termination by the
Company upon death or disability of the individual and may be terminated with
or without cause (as defined therein). Such agreements also provide for
severance payments upon termination without cause based upon a multiple of the
monthly salaries provided for therein (for up to 12 months following the
number of months otherwise remaining under such agreements). In addition, all
of the foregoing employment agreements contain non-competition and
confidentiality provisions that extend beyond the respective terms of such
agreements for periods of up to one year.

DIRECTOR COMPENSATION

Employee directors receive no compensation for acting as directors or
attending meetings of directors. Non-employee directors receive $1,000 per
year for each year such director serves on the Board of Directors, $2,500 per
meeting attended. In addition, all directors are eligible to receive options
under the Company's Stock Option Plan. See "Management--Stock Option Plan."
All directors are entitled to reimbursement of reasonable expenses related to
attending meetings of the directors. Frank DeLape, a director of the Company,
is a principal and director of Benchmark, which received a $500,000 finder's
fee and receives consulting fees of $7,000 per month from the Company. See
"Certain Transactions--Consulting and Finder's Agreements."

STOCK OPTION PLAN

In July 1996, the Board of Directors adopted and the Company's stockholders
approved the 1996 Stock Option Plan (the "Stock Option Plan"), which was
subsequently amended and restated in November 1996. The Stock Option Plan
provides for the grant of options which qualify as incentive stock options
("Incentive Options") under Section 422 of the Internal Revenue Code of 1986,
as amended, to officers and employees of the Company and options which do not
so qualify ("Non-Qualified Options") to officers, directors, employees and
consultants of the Company (including the Subsidiaries). A total of 966,667
shares of Common Stock is reserved for issuance under the Stock Option Plan
(which number is subject to adjustment in the event of the Company's
declaration of stock dividends, stock splits, reclassifications and the
occurrence of other similar events). Options to purchase 966,667 shares of
Common Stock at an exercise price per share of $7.50 were granted by the
Company in November 1996. No options were granted prior to June 30, 1996. The
Options granted will vest in increments of one-fourth at the end of each year
over a four year period from the date of grant. No options have been exercised
to date.

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<PAGE>

Pursuant to its terms, the Stock Option Plan is to be administered by the
Board of Directors or a committee established by the Board of Directors (the
"Stock Option Committee"). The Board of Directors or such committee determines
the persons to whom options are granted, the number of shares of stock subject
to an option, the period during which options may be exercised and the
exercise price thereof.

The price at which each share of Common Stock covered by an option may be
purchased shall be determined by the Board of Directors or the Stock Option
Committee, provided that the option price for any Incentive Option shall not
be less than the "fair market value" of the shares of Common Stock at the time
of grant, and provided, however, if an Incentive Option to purchase shares of
Common Stock is granted to an optionee who owns more than ten percent (10%) of
the voting power of the capital stock of the Company, the minimum exercise
price of such option shall be not less than one hundred ten percent (110%) of
the "fair market value" of the shares of Common Stock on the date of grant
determined in accordance with the Stock Option Plan.

LIMITATION ON LIABILITY; INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Certificate of Incorporation limits the personal liability of directors
to the fullest extent permitted by Section 102(b)(7) of the Delaware General
Corporation Law. Section 145 of the Delaware General Corporation Law provides
that a corporation's certificate of incorporation may limit the personal
liability of its directors for monetary damages for breach of their fiduciary
duties as directors except for liability: (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) arising under Section 174 of the Delaware
General Corporation Law; or (iv) for any transaction from which the director
derived an improper personal benefit.

The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against such
persons in their official capacities if such person acted in good faith and in
a manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

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<PAGE>

CERTAIN TRANSACTIONS

ISSUANCE OF FOUNDERS' STOCK

In January 1996, Scott A. Mednick, Ronald Bloom, Benchmark and Christopher
Efird, as the founding stockholders of the Company, acquired an aggregate of
2,171,508 shares of Common Stock in exchange for payment of an aggregate of
$657 therefor.

THE REORGANIZATION

In connection with the Company's acquisition of Mednick Group pursuant to
the Reorganization in June 1996, the Company issued to Scott Mednick, as the
sole stockholder of Mednick Group, an aggregate of 208,084 shares of Common
Stock. Mr. Mednick is a founding stockholder, an officer and a director of the
Company. For information relating to the Reorganization, see "Recent
Developments--The Reorganization."

RECENT FINANCINGS

In March 1996, the Company obtained a loan in the aggregate principal amount
of $270,000 from three separate lenders, including Trident II, L.L.C., Frank
M. DeLape and J.B. Manning. In exchange for extension of the loan, the Company
issued three 10% Notes, including one in the principal amount of $225,000 to
Trident II, L.L.C. and one in the principal amount of $20,000 to Mr. DeLape.
Mr. DeLape, a director and founder of the Company, is an officer, director and
principal of Benchmark and of Oak Tree Capital, Inc., which is the manager and
a member of Trident II, L.L.C. In August 1996, an aggregate of $27,000 in
principal amount of the foregoing 10% Notes was converted by the holders
thereof into an aggregate of 216,667 shares of Common Stock. In July 1996,
Trident II, L.L.C. loaned the Company an additional $75,000 evidenced by a
separate non-convertible promissory note. Principal and interest outstanding
under the 10% Note and the $75,000 non-convertible promissory note were repaid
out of the proceeds of the Omnicom Transaction in August 1996, as more fully
described elsewhere herein. See "Principal Stockholders."

In April 1996, upon release of an escrow account established to facilitate
the following loan transaction, the Company loaned an aggregate of $1,000,000
to On Ramp in connection with the redemption by On Ramp of 100 shares of its
common stock (which shares of common stock represented 66% of the issued and
outstanding capital stock of On Ramp). Such redemption was the result of an
agreement previously reached among the former stockholders of On Ramp arising
out of fundamental differences among such individuals relating to the
operation and business strategy of On Ramp. In addition, pursuant to the terms
of a certain loan agreement between the Company and On Ramp, the Company
agreed to make available to On Ramp an additional $600,000, of which $583,000
has been borrowed by On Ramp as of the date hereof. Such loans are evidenced
by promissory notes executed on behalf of On Ramp in favor of the Company in
the principal amounts of $1,000,000 and $600,000, respectively (the "On Ramp
Notes"). Amounts outstanding under the On Ramp Notes accrue interest at the
rate of 12% per annum. Payment of principal and interest on the On Ramp Notes
was due on August 16, 1996, subject to a six-month cure period. Repayment of
amounts outstanding under the On Ramp Notes were secured by the pledge in
favor of the Company of 26 shares of common stock of On Ramp by Adam Curry
(who, as a result of the foregoing redemption, became the sole stockholder of
On Ramp). Subsequently, in connection with the Company's acquisition of On
Ramp, the Company acquired all of the issued and outstanding capital stock of
On Ramp, including the shares of common stock subject to the On Ramp Pledge
Agreement. In addition, amounts owed by On Ramp to its former shareholders in
the amount of $234,000 were forgiven by On Ramp in fiscal 1996.

In May 1996, pursuant to the terms of a certain loan agreement between the
Company and Internet One, the Company agreed to make available to Internet One
up to $70,000, of which $50,000 has been borrowed by Internet One as of the
date hereof. Such loan is evidenced by a promissory note executed by Internet
One in favor of the Company in the principal amount of $70,000 (the "Internet
One Note"). Amounts outstanding under the Internet One Note accrue interest at
the rate of 12% per annum. Payment of principal and interest on the Internet
One Note is due on September 30, 1996. Repayment of amounts outstanding under
the Internet One Note was secured by the pledge in favor of the Company (the
"Internet One Pledge Agreement") of 132,000

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<PAGE>

shares of common stock of Internet One (which shares of common stock represent
33% of the issued and outstanding capital stock of Internet One) by David R.
Hieb. Subsequently, in connection with the Company's acquisition of Internet
One, the Company acquired all of the outstanding shares of capital stock of
Internet One, including the shares of common stock subject to the Internet One
Pledge Agreement.

Historically, Dr. Carlisle and his father, Dan Carlisle, have extended
credit to NetCube. In connection with the Company's acquisition of NetCube in
June 1996, Dr. Carlisle agreed to forgive an aggregate of approximately
$1,220,000 in debt owed to him by NetCube. In addition, the Company agreed to
issue three promissory notes providing for repayment of amounts owed to each
of Dr. Carlisle and Dan Carlisle. Each of such promissory notes accrues
interest at the rate of 8% per annum and is convertible into shares of Common
Stock prior to expiration thereof at the rate of $7.50 per share. The
principal amount of the promissory note issued to Dr. Carlisle is $132,000 and
the principal amounts of the two promissory notes issued to Dan Carlisle are
$288,000 and $515,760, respectively. The $132,000 promissory note issued to
Dr. Carlisle and the $288,000 promissory note issued to Dan Carlisle are
payable prior to the Offering; the $515,760 promissory note issued to Dan
Carlisle is payable on March 31, 1998 (or earlier, upon the Company's receipt
of $3,000,000 from a private offering of securities, the sale of 50% of the
assets of the Company or another public offering.)

CONSULTING AND FINDER'S AGREEMENTS

In March 1996, the Company entered into a consulting agreement with
Benchmark (the "Consulting Agreement"), pursuant to which Benchmark agreed to
render to the Company for a period of two years certain management consulting
services, including among other things, rendering advice in the areas of
strategic planning, business strategy, acquisition planning and business
administration. In exchange therefor, the Company agreed to pay Benchmark a
lump sum payment of $35,000 plus a monthly fee of $7,000. In March 1996, the
Company also entered into a finder's agreement with Benchmark (the "Finder's
Agreement"), pursuant to which Benchmark agreed to introduce acquisition
candidates to the Company, on a non-exclusive basis, for a period of two
years. In August 1996, in consideration of the payment by the Company to
Benchmark of $500,000, representing payment of amounts earned in connection
with the introduction of certain of the Subsidiaries, the Finder's Agreement
was terminated. The Company used a portion of the proceeds of the Omnicom
Transaction to pay amounts owed by the Company to Benchmark under the Finder's
Agreement. Benchmark is a founding stockholder of the Company and Frank M.
DeLape, a director of Benchmark, is a director of the Company and an officer
and director of Oak Tree Capital, Inc., which is the manager and a member of
Trident II, L.L.C., a stockholder of the Company. See "Management" and
"Principal Stockholders."

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<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information as of November 1, 1996
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each of the Company's directors; (ii) each of the Named Officers; (iii) each
person or entity who is known to the Company to beneficially own 5% or more of
the outstanding Common Stock; and (iv) all directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
PERCENT BENEFICIALLY OWNED
NUMBER OF SHARES -----------------------------
NAME AND ADDRESS BENEFICIALLY BEFORE AFTER
OF BENEFICIAL OWNER(1) OWNED OFFERING OFFERING
---------------------- ---------------- ------------- -------------
<S> <C> <C> <C>
Frank M. DeLape.............. 878,898(2) 20.6 14.0
16406 Brook Forest Drive
Houston, Texas 77059
Benchmark Equity Group....... 682,231(3) 16.0 10.9
700 Gemini
Houston, Texas 77058
Ronald Bloom................. 875,932 20.5 14.0
45 West 36th Street
New York, New York 10036
Scott A. Mednick............. 630,467 14.8 10.1
8522 National Boulevard,
Suite 101
Culver City, California
90232-2481
Adam Curry................... 200,405(4) 4.7 3.2
30 Glen Road
Verona, New Jersey 07044
James Carlisle............... 195,182(5) 4.6 3.1
45 Allison Road
Alpine, New Jersey 07620
Susan Goodman................ 49,623(6) 1.2 0.8
45 West 36th Street
New York, New York 10036
Omnicom Group Inc(7)......... 1,063,333 24.9 17.0
437 Madison Avenue
New York, New York 10022
Angel Martinez............... -- -- --
Michael Ribero............... -- -- --
Barry Wagner................. -- -- --
All Directors and Executive
Officers as a Group (11
persons).................... 2,869,213(8) 67.2 45.8
</TABLE>
- --------
* Less than one percent.
(1) Unless otherwise noted, all of such shares of Common Stock listed above
are owned of record by each individual named as beneficial owner and such
individual has sole voting and dispositive power with respect to the
shares of Common Stock owned by each of them. Each person's percentage of
ownership is determined by assuming that any options or convertible
securities held by such person which are exercisable within 60 days from
the date hereof have been exercised or converted, as the case may be.

(2) Includes 682,231 shares and 180,000 shares of Common Stock beneficially
owned by Benchmark and Trident II, L.L.C., respectively. Mr. DeLape, a
director of the Company, is an officer, director and principal of
Benchmark and of Oak Tree Capital, Inc., which is the manager and a member
of Trident II, L.L.C, and may be deemed to be beneficial owner of such
shares. An aggregate of 200,000 shares of Common Stock owned by Benchmark
are subject to sale by Benchmark, as the Selling Stockholder, upon the
exercise of the over-allotment option granted to the Underwriter. If the
over-allotment option is exercised in full,

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<PAGE>

Mr. DeLape would beneficially own approximately 10.9% of the outstanding
Common Stock after the Offering. Excludes 97,461 shares held by Christopher
Efird, a principal of Benchmark, and a former director of the Company.
Benchmark is owned and controlled by Frank DeLape.
(3) Excludes 180,000 shares of Common Stock owned by Trident II, L.L.C. and
16,667 shares of Common Stock owned by Frank DeLape.
(4) Represents shares of Common Stock issued in connection with the Company's
acquisition of On Ramp, which shares were issued in the name of Sachnoff &
Weaver, Ltd., as escrow agent, to be distributed to Mr. Curry and certain
former stockholders of On Ramp upon release of escrow.
(5) Excludes 66,667 shares of Common Stock issuable upon exercise of options
granted to the named stockholder under the 1996 Stock Option Plan.
(6) Excludes 36,667 shares of Common Stock issuable upon exercise of options
granted to the named stockholder under the 1996 Stock Option Plan.
(7) Omnicom is a multinational, publicly held corporation.
(8) Excludes shares of Common Stock subject to options granted under the 1996
Stock Option Plan.

ESCROW SHARES

In connection with the Offering, certain holders of Common Stock have agreed
to place, on a pro rata basis, 825,000 shares into escrow pursuant to an
escrow agreement (the "Escrow Agreement") between such holders and Continental
Stock Transfer & Trust Company, as escrow agent. The Escrow Shares are not
transferable or assignable; however, the Escrow Shares may be voted by the
beneficial holders thereof.

The Escrow Shares will be released from escrow if, and only if, the
following conditions are met:

(a) the Company's net income before provision for income taxes and
exclusive of any extraordinary earnings (all as audited by the Company's
independent public accountants) (the "Minimum Pretax Income") amounts to at
least $1.15 per share for any of the fiscal years ending June 30, 1997,
1998 or 1999; provided, however, that in the event that Minimum Pretax
Income amounts to at least $.86 per share for the fiscal year ending June
30, 1999, the Escrow Shares will be released if Minimum Pretax Income
amounts to at least $1.15 per share for the fiscal year ending June 30,
2000;

(b) the Closing Price (as defined in the Escrow Agreement) of the Common
Stock averages in excess of $20.00 per share for 40 consecutive business
days during the 36-month period commencing on the date of this Prospectus;
and

(c) during the periods specified in (b) above, the Company is acquired by
or merged into another entity in a transaction in which the value of the
per share consideration received by the stockholders of the Company on the
date of such transaction or at any time during the period set forth in (b)
equals or exceeds the level set forth in (b) above.

Holders of the Escrow Shares and their respective escrowed amounts are as
follows: Benchmark, 204,645; Mr. Efird, 27,906 shares; Mr. Mednick, 188,043
shares; Mr. Bloom, 261,256 shares; Mr. Curry, 59,774 shares; Ms. Goodman,
14,801 shares; Mr. Hieb, 10,360 shares; and Dr. Carlisle, 58,215 shares.

The Minimum Pretax Income amounts set forth above shall: (i) be calculated
exclusively of any extraordinary earnings, including any charge to income
relating to the release of the Escrow Shares; and (ii) be increased
proportionately, with certain limitations, in the event additional shares of
Common Stock or securities convertible into, exchangeable for or exercisable
into Common Stock are issued after completion of the Offering. The Closing
Price amounts set forth above are subject to adjustment in the event of any
stock splits, reverse stock splits or other similar events.

Any money, securities, rights or property distributed in respect of the
Escrow Share and including any property distributed as dividends or pursuant
to any stock split, merger, recapitalization, dissolution, or total or partial
liquidation of the Company, shall be held in escrow until release of the
Escrow Shares. If the applicable Minimum Pretax Income or Closing Price levels
set forth above have not been met by September 30, 1999 (which date shall be
extended to September 30, 2000 in the event that Minimum Pretax Income amounts
to at

40
<PAGE>

least $.86 per share for the fiscal year ending June 30, 1999), the Escrow
Shares, as well as any dividends or other distributions made with respect
thereto, will be cancelled and contributed to the capital of the Company. The
Company expects that the release of the Escrow Shares to officers, directors,
employees and consultants of the Company will be deemed compensatory and,
accordingly, will result in a substantial charge to reportable earnings, which
would equal the fair market value of such shares on the date of release. Such
charge could substantially increase the loss or reduce or eliminate the
Company's net income, if any, for financial reporting purposes for the period
during which such shares and options are, or become probable of being, released
from escrow. Although the amount of compensation expense recognized by the
Company will not affect the Company's total stockholders' equity, it may have a
negative effect on the market price of the Company's securities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 9 of Notes to Financial Statements.

The Minimum Pretax Income and Closing Price levels set forth above were
determined by negotiation between the Company and the Underwriter and should
not be construed to imply or predict any future earnings by the Company or any
increase in the market price of its securities.

DESCRIPTION OF SECURITIES

The following description of the Company's securities does not purport to be
complete and is subject in all respects to applicable Delaware law and the
provisions of the Company's Certificate of Incorporation and Bylaws and the
Underwriting Agreement between the Company and the Underwriter, copies of all
of which have been filed with the Commission as exhibits to the Registration
Statement of which this Prospectus forms a part.

COMMON STOCK

The Certificate of Incorporation of the Company authorizes the issuance of up
to 50,000,000 shares of Common Stock, $.0001 par value per share. As of
November 1, 1996, there were 4,266,667 shares of Common Stock outstanding held
by 20 holders of record. Each share of Common Stock entitles the holder thereof
to one vote on each matter submitted to the stockholders of the Company. The
holders of Common Stock are entitled to receive ratable dividends, if any, as
may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of Company,
the holders of Common Stock are entitled to share ratable in all of the assets
of the Company available for distribution. The Common Stock has no preemptive,
subscription or conversion rights, or redemption or sinking fund provisions
applicable thereto. All outstanding shares of Common Stock are fully paid and
non-assessable. The Company has not paid any dividends on its Common Stock to
date.

PREFERRED STOCK

The Certificate of Incorporation of the Company authorizes the issuance of up
to 5,000,000 shares of Preferred Stock, $.0001 par value per share. None of
such Preferred Stock has been designated or issued. The Board of Directors is
authorized to issue shares of Preferred Stock from time to time in one or more
series and, subject to the limitations contained in the Certificate of
Incorporation and any limitations prescribed by law, to establish and designate
any such series and to fix the number of shares and the relative conversion
rights, voting rights and terms of redemption (including sinking fund
provisions) and liquidation preferences. If shares of Preferred Stock with
voting rights are issued, such issuance could affect the voting rights of the
holders of the Common Stock by increasing the number of outstanding shares
having voting rights, and by the creation of class or series voting rights.
Issuance of shares of Preferred Stock could, under certain circumstances, have
the effect of delaying or preventing a change in control of the Company and may
adversely affect the rights of holders of Common Stock. Also, the Preferred
Stock could have preferences over the Common Stock (and other series of
Preferred Stock) with respect to dividends and liquidation rights.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION

The Certificate of Incorporation and Bylaws contain provisions that could
discourage potential takeover attempts and prevent stockholders from changing
the Company's management. The Bylaws provide that no

41
<PAGE>

proposal by a stockholder shall be presented for vote at an annual meeting of
stockholders unless such stockholder shall, not later than the close of
business of the last business day of January and, with respect to a special
meeting, not later than the close of business on the fifth calendar day
following the date on which notice of the meeting is first given to
stockholders, provide the Board of Directors or the Secretary of the Company
with written notice of intention to present a proposal for action at the
forthcoming meeting of stockholders, which notice shall include the name and
address of such stockholder, the number of voting securities he or she holds
of record and which he or she holds beneficially, the text of the proposal to
be presented at the meeting and a statement in support of the proposal. Any
stockholder may make any other proposal at an annual meeting or special
meeting of stockholders and the same may be discussed and considered, but
unless stated in writing and filed with the Board of Directors or the
Secretary prior to the date set forth above, such proposal shall be laid over
for action at an adjourned, special, or annual meeting of the stockholders
taking place 60 days or more thereafter.

REGISTRATION RIGHTS

The Company has granted to the holders of the 10% Notes demand and piggyback
registration rights with respect to 216,667 shares of Common Stock issued upon
conversion of such notes and has granted to the holders of the 12% Notes
piggyback registration rights with respect to 216,660 shares of Common Stock
issued upon conversion of such notes. The former owners of Internet One, Inc.
have also been granted piggyback registration rights with respect to 25% of to
the shares of Common Stock issued to such owners in connection with the
Company's acquisition of Internet One. Pursuant to the terms of a certain
Employment Agreement between the Company and Scott A. Mednick, the Company has
agreed to file a registration statement relating to all of the Common Stock
owned by Mr. Mednick in the event that Mr. Mednick's employment is terminated
without cause. Additionally, pursuant to the terms of the Reorganization
Agreements relating to the Company's acquisition of Mednick Group and On Ramp,
the Company has agreed to file a registration statement under the Securities
Act relating to 25% percent of the shares of the Common Stock owned by each of
Mr. Mednick and Adam Curry. Each of the foregoing stockholders has entered
into a lock up agreement with the Underwriter, pursuant to which each such
stockholder has agreed not to exercise such registration rights and not to
sell or transfer any of their shares of Common Stock for periods of six and
twelve months. The holders of the Underwriter's Warrants will also have
certain demand and piggyback registration rights with respect to such warrants
and the 200,000 shares of Common Stock underlying such warrants. Any exercise
of the above registration rights may hinder efforts by the Company to arrange
future financings of the Company and or have an adverse effect on the market
price of the Company's shares. See "Underwriting."

TRANSFER AGENT & REGISTRAR

Continental Stock Transfer & Trust Company, New York, New York, is the
Transfer Agent and Registrar for the Company's securities. Its telephone
number is (212) 509-4000.

BUSINESS COMBINATION PROVISIONS

The Company has expressly elected to be subject to Section 203 of the
Delaware General Corporation Law regulating "business combinations" (defined
to include a broad range of transactions) between Delaware corporations and
"interested stockholders" (defined as persons who have acquired at least 15%
of a corporation's stock). Under the law, a corporation subject to Section 203
may not engage in any business combination with any interested stockholder for
a period of three years from the date such person became an interested
stockholder unless certain conditions are satisfied. Section 203 contains
provisions enabling a corporation to avoid the statute's restrictions.

42
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have outstanding 6,266,667
shares of Common Stock. Of these shares, the 2,000,000 shares of Common Stock
offered hereby will be freely transferable. without restriction or further
registration under the Securities Act, unless purchased by affiliates of the
Company as that term is defined in Rule 144 under the Securities Act ("Rule
144") described below. The 4,266,667 shares of Common Stock currently
outstanding are "restricted securities" or owned by affiliates within the
meaning of Rule 144 and may not be sold publicly unless they are registered
under the Securities Act or are sold pursuant to Rule 144 or another exemption
from registration. Such shares will become eligible for sale in the public
market pursuant to Rule 144 commencing February 1998.

In general, under Rule 144, a person (or persons whose shares are
aggregated), including persons who may be deemed to be "affiliates" of the
Company as that term is defined under the Securities Act, is entitled to sell
within any three-month period a number of restricted shares beneficially owned
for at least two years that does not exceed the greater of (i) 1% of the then
outstanding shares of Common Stock or (ii) an amount equal to the average
weekly trading volume in the Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
requirements as to the manner of sale, notice and the availability of current
public information about the Company. However, a person who is not deemed an
affiliate and has beneficially owned such shares for at least three years is
entitled to sell such shares under Rule 144(k) without regard to the volume or
other resale requirements. The Commission has recently proposed an amendment
to the holding period requirements of Rule 144 to permit resales of restricted
securities after a one-year holding period rather than a two-year holding
period, and to permit unrestricted resales by non-affiliates pursuant to Rule
144(k) after a two-year holding period rather than a three-year holding
period. In the event such proposal is adopted, the dates upon which the
outstanding restricted securities will become eligible for sale under Rule 144
will be accelerated.

Under Rule 701 of the Securities Act, a person having exercisable options
which were granted prior to the date of this Prospectus would be entitled to
sell such shares after the 90th day following the date of this Prospectus in
reliance on Rule 144, without having to comply with the holding period
requirements of Rule 144 and, in the case of non-affiliates, without having to
comply with the public information, volume limitation or notice provisions of
Rule 144. Affiliates are subject to all Rule 144 restrictions after the 90-day
period, but without a holding period. Currently, no outstanding options are
exercisable; however, if all the requirements of Rule 701 are met, an
aggregate of 241,667 shares subject to outstanding stock options may be sold
in July 1997.

The Company has granted certain demand and piggyback registration rights
with respect to an aggregate of 1,187,590 shares of Common Stock. The
Underwriter also has demand and piggyback registration rights with respect to
the Common Stock underlying the Underwriter's Warrants. See "Description of
Securities--Registration Rights" and "Underwriting."

Notwithstanding the above, the holders of all of the outstanding shares of
Common Stock (including shares issuable upon exercise of options) have agreed
not to sell or otherwise dispose of any shares of Common Stock without the
Underwriter's prior written consent for a period of 12 months after the date
of this Prospectus. In addition, 825,000 of such shares are Escrow Shares and
are subject to the restrictions on transfer set forth in the Escrow Agreement.
See "Principal and Selling Stockholders--Escrow Shares" and "Underwriting."

Prior to the Offering, there has been no market for any securities of the
Company, and no predictions can be made of the effect, if any, that sales of
Common Stock or the availability of Common Stock for sale will have on the
market price of such securities prevailing from time to time. Nevertheless,
sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices and the ability of the Company to
raise equity capital in the future.

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<PAGE>

UNDERWRITING

Commonwealth Associates, the Underwriter, has agreed, subject to the terms
and conditions of the Underwriting Agreement, to purchase from the Company the
2,000,000 shares of Common Stock offered hereby on a "firm commitment" basis,
if any are purchased. The shares are being offered by the Underwriter subject
to prior sale, when, as and if delivered to and accepted by the Underwriter
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 to the initial public at the public offering price set forth
on the cover page of this Prospectus and to certain dealers who are members of
the NASD, at such prices less concessions of not in excess of $ per share,
of which a sum not in excess of $ per share may in turn be reallowed to
other dealers who are members of the NASD. After the commencement of the
Offering, the initial public offering price, the concession and the
reallowance may be changed by the Underwriter.

The Company and the Selling Stockholder have granted to the Underwriter an
option, exercisable during the 30-day period commencing on the date of this
Prospectus, to purchase from the Company at the initial public offering price,
less underwriting discounts, up to 300,000 additional shares for the purpose
of covering over-allotments, if any. If the over-allotment option is
exercised, the Company will sell the first 100,000 shares to be sold upon
exercise of the over-allotment option and the Selling Stockholder will sell up
to the remaining 200,000 shares.

The Company has agreed to sell to the Underwriter and its designees, for
nominal consideration, the Underwriter's Warrants to purchase up to 200,000
shares of Common Stock. The Underwriter's Warrants will be exercisable during
the four-year period commencing one year after the date of this Prospectus at
an exercise price of $ per share, subject to adjustment in certain events
to protect against dilution, and are not transferable for a period of one year
after the date of this Prospectus except to officers of the Underwriter or to
members of the selling group. The Company has agreed to register during the
four-year period commencing one year after the date of this Prospectus, on two
separate occasions, the securities issuable upon exercise thereof under the
Securities Act, the initial such registration to be at the Company's expense
and the second at the expense of the holders. The Underwriter's Warrants
include a provision permitting the holders to elect a "cashless exercise"
whereby the holders may exchange, in lieu of cash, such number of shares
issuable upon exercise of the Underwriter's Warrants equal in value to the
aggregate exercise price. The Company has also granted certain piggyback
registration rights to holders of the Underwriter's Warrants.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance equal to 1% of the gross proceeds derived from the sale of shares
offered hereby, including any shares purchased pursuant to the Underwriter's
over-allotment option, $35,000 of which has been paid to date. The Company has
also agreed to enter into a financial consulting agreement with the
Underwriter providing for an advisory fee of 3% of the gross proceeds derived
from the sale of shares offered hereby, including any shares purchased
pursuant to the Underwriter's over-allotment option.

The Company and the Selling Stockholder have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act.

All of the Company's current stockholders, optionholders, officers and
directors have agreed not to sell, assign, transfer or otherwise dispose
publicly of any of their shares of Common Stock or exercise any registration
rights for periods of 6 or 12 months after the date of this Prospectus without
the prior written consent of the Underwriter.

Prior to the Offering, there has been no public market for any of the
securities offered hereby. Accordingly, the initial public offering price of
the shares offered hereby has been determined by negotiation between the
Company and the Underwriter and are not necessarily related to the Company's
asset value, net worth or other established criteria of value. Among the
factors considered in determining such prices and terms, in addition to

44
<PAGE>

prevailing market conditions, include the history of and the prospects for the
industry in which the Company competes, the present state of the Company's
development and its future prospects, an assessment of the Company's
management, the Company's capital structure and demand for similar securities
of comparable companies.

The Underwriter has informed the Company that it does not expect sales to
discretionary accounts to exceed 5% of the total number of the shares offered
hereby.

The Underwriter acted as Placement Agent for a private placement in April
1996 for which it received a placement agent fee of $180,000 and a non-
accountable expense allowance of $37,500.

LEGAL MATTERS

Certain legal matters in connection with the issuance of the securities
being offered hereby will be passed upon for the Company by De Martino
Finkelstein Rosen & Virga, Washington, D.C. Certain matters in connection with
this Offering will be passed upon for the Underwriter by Bachner, Tally,
Polevoy & Misher, LLP, New York, New York.

EXPERTS

The Financial Statements of the Company and the Subsidiaries at June 30,
1996 and for each of the three years in the three-year period ended June 30,
1996 appearing in this Prospectus have been audited by BDO Seidman, LLP,
independent certified public accountants, as indicated in their report
appearing elsewhere herein, and have been included herein in reliance upon
such report, given upon the authority of said firm as experts in accounting
and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission the Registration Statement
relating to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to
the Company and such Common Stock, reference is made to the Registration
Statement and the exhibits and schedules filed as a part thereof. Statements
contained in this Prospectus as to the contents of any agreement or any other
document referred to are not necessarily complete, and in each instance, if
such agreement or document is filed as an exhibit, reference is made to the
copy of such document filed as an exhibit to the Registration Statement. The
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Room 1228,
Seven World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials may be obtained from the Public
Reference Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and its public reference facilities in
New York, New York and Chicago, Illinois, at prescribed rates. In addition,
the Commission maintains a Website on the Internet that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the Commission's
Website is http: www.sec.gov.

Following the Offering, the Company will be subject to the reporting and
other requirements of the Exchange Act and intends to furnish to its
Stockholders annual reports containing audited financial statements and may
furnish interim reports as it deems appropriate.

45
<PAGE>

THINK NEW IDEAS, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS
Independent Certified Public Accountants' Report............. F-2
Consolidated Balance Sheets.................................. F-3
Consolidated Statements of Operations........................ F-4
Consolidated Statements of Shareholders' Equity (Deficit).... F-5
Consolidated Statements of Cash Flows........................ F-6
Notes to the Consolidated Financial Statements............... F-7 through F-15
</TABLE>

F-1

<PAGE>

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT

[The following is the form of the opinion that BDO Seidman, LLP will be in a
position to issue upon completion of the grant of options, a two for three
reverse stock split, and contribution of shares into an escrow account
described in Note 8 and the private placement transaction described in Note
12.]

To the Shareholders of Think New Ideas, Inc.
New York, New York

We have audited the accompanying consolidated balance sheets of Think New
Ideas, Inc. and subsidiaries as of June 30, 1995 and 1996 and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for each of the three years in the period ended June 30, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Think New
Ideas, Inc. and subsidiaries as of June 30, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended June 30, 1996, in conformity with generally accepted accounting
principles.

BDO Seidman, LLP

New York, New York
July 23, 1996, except for Notes 5, 8, 10
and 12, which are as of November , 1996

F-2
<PAGE>

THINK NEW IDEAS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
---------------------- SEPTEMBER 30,
1995 1996 1996
---------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS (Notes 2 and 4)
Current Assets:
Cash and cash equivalents.............. $ 381,511 $ 429,596 $1,117,570
Accounts receivable, net of allowance
for doubtful accounts of $45,000,
$186,000 and $183,000................. 1,528,393 2,394,732 2,800,152
Unbilled receivables................... 795,575 296,903 1,192,550
Due from shareholders.................. 89,400 -- --
Prepaid expenses and other assets...... 15,622 60,914 191,581
Refundable income taxes (Note 6)....... 152,613 -- --
Deferred income taxes (Note 6)......... -- 160,000 201,000
---------- ----------- ----------
Total current assets..................... 2,963,114 3,342,145 5,502,853
Property and equipment, net (Note 3)..... 608,401 699,031 792,221
Software development costs............... -- 167,436 261,493
Deferred income taxes (Note 6)........... 115,000 79,000 50,000
Other assets............................. 55,605 490,394 876,588
---------- ----------- ----------
$3,742,120 $ 4,778,006 $7,483,155
========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
(Note 2)
Current Liabilities:
Note payable to bank (Note 4).......... $ -- $ 70,000 $ --
Note payable to related party (Note
10)................................... 430,000 -- --
Accounts payable....................... 1,010,347 1,244,057 919,256
Accrued salaries and wages............. 36,053 349,158 507,215
Accrued expenses....................... 190,873 306,949 384,319
Deferred revenue....................... 425,984 452,959 284,959
Income taxes payable (Note 6).......... -- 76,779 28,000
Deferred income taxes (Note 6)......... 240,000 -- --
Due to shareholders (Notes 2 and 10)... 1,202,816 500,000 420,000
---------- ----------- ----------
Total current liabilities................ 3,536,073 2,999,902 2,543,749
Convertible promissory notes (Notes 5 and
12)..................................... -- 2,070,000 --
Note payable to related party (Note 10).. -- 788,000 788,000
---------- ----------- ----------
Total liabilities........................ 3,536,073 5,857,902 3,331,749
---------- ----------- ----------
Commitments and Contingencies (Note 7)
Redeemable Common Stock (Note 8)......... -- -- --
Shareholders' Equity (Deficit) (Notes 8
and 12):
Preferred stock, $.0001 par value;
5,000,000 shares authorized; none
issued and outstanding................ -- -- --
Common stock, $.0001 par value;
50,000,000 shares authorized;
1,186,311, 2,894,673 and 4,266,667
shares issued......................... 118 289 426
Additional paid-in capital............. 161,767 -- 5,137,420
Retained earnings (accumulated
deficit).............................. 44,162 (1,080,185) (986,440)
---------- ----------- ----------
Total shareholders' equity (deficit)..... 206,047 (1,079,896) 4,151,406
---------- ----------- ----------
$3,742,120 $ 4,778,006 $7,483,155
========== =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

THINK NEW IDEAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
------------------------------------ ----------------------
1994 1995 1996 1995 1996
---------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues (Note 11)...... $8,485,505 $10,331,991 $12,146,348 $2,462,119 $4,238,968
Operating Expenses:
Direct salaries and
related expenses..... 3,321,477 3,556,758 4,587,027 1,135,952 1,943,007
Other direct
expenses............. 3,775,562 3,935,172 4,814,771 1,073,532 1,000,609
Selling, general and
administrative
expenses............. 1,962,471 2,622,490 3,286,090 605,903 1,001,826
Merger expenses (Note
2)................... -- -- 981,341 -- --
---------- ----------- ----------- ---------- ----------
Operating income
(loss)................. (574,005) 217,571 (1,522,881) (353,268) 293,526
Interest expense........ (82,778) (131,877) (417,589) (50,483) (124,831)
Other, net.............. 8,119 77,340 145,817 10,000 (48,176)
---------- ----------- ----------- ---------- ----------
Income (loss) before
taxes on income........ (648,664) 163,034 (1,794,653) (393,751) 120,519
Taxes on income (Note
6)..................... 103,240 (233,821) (149,187) (57,237) (26,774)
---------- ----------- ----------- ---------- ----------
Net income (loss)....... $ (545,424) $ (70,787) $(1,943,840) $ (450,988) $ 93,745
========== =========== =========== ========== ==========
Income per share........ $ .04
==========
Supplemental income per
share.................. $ .06
==========
Pro forma amounts
(unaudited):
Historical loss before
taxes on income...... $(1,794,653) $ (393,751)
Compensation
adjustment........... (382,000) (96,000)
Merger expense
adjustment........... 981,341 --
----------- ----------
Net loss.............. $(1,195,312) $ (489,751)
=========== ==========
Loss per share........ $ (.38) $ (.15)
=========== ==========
Supplemental loss per
share................ $ (.30) $ (.15)
=========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

THINK NEW IDEAS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
RETAINED
COMMON STOCK ADDITIONAL EARNINGS
----------------- PAID-IN (ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT)
--------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Balance, July 1, 1993.............. 403,266 $ 40 $ 1,960 $ 929,059
Issuance of common stock......... 779,075 78 12,801 --
Capital contributions............ -- -- 15,000 --
Distributions to shareholders.... -- -- -- (72,753)
Net loss for the year............ -- -- -- (545,424)
--------- ---- ----------- ----------
Balance, June 30, 1994............. 1,182,341 118 29,761 310,882
Issuance of common stock......... 3,970 -- 9,336 --
Capital contributions............ -- -- 122,670 --
Distributions to shareholders.... -- -- -- (195,933)
Net loss for the year............ -- -- -- (70,787)
--------- ---- ----------- ----------
Balance, June 30, 1995............. 1,186,311 118 161,767 44,162
Issuance of common stock......... 2,171,507 217 440 --
Capital contributions............ -- -- 150,000 --
Conversion of shareholder loans
and interest (Note 10).......... -- -- 1,685,075 --
Acquisition of common stock (Note
8).............................. (463,145) (46) (5,954) (994,000)
Distributions to shareholders.... -- -- (24,325) (153,510)
Capitalization of accumulated
deficit of subsidiaries upon
termination of S-corporation
elections....................... -- -- (1,967,003) 1,967,003
Net loss for the year............ -- -- -- (1,943,840)
--------- ---- ----------- ----------
Balance, June 30, 1996............. 2,894,673 289 -- (1,080,185)
Issuance of common stock
(unaudited)..................... 938,667 94 4,947,968 --
Conversion of convertible debt
(unaudited)..................... 433,327 43 189,452 --
Net income for the period
(unaudited)..................... -- -- -- 93,745
--------- ---- ----------- ----------
Balance, September 30, 1996
(unaudited)....................... 4,266,667 $426 $ 5,137,420 $ (986,440)
========= ==== =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE>

THINK NEW IDEAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED JUNE 30, SEPTEMBER 30,
--------------------------------- ---------------------
1994 1995 1996 1995 1996
--------- --------- ----------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From
Operating Activities:
Net income (loss)..... $(545,424) $ (70,787) $(1,943,840) $(450,988) $ 93,745
Adjustments to
reconcile net income
(loss) to net cash
provided by (used in)
operating activities:
Depreciation........ 419,230 275,555 262,181 65,500 62,918
Amortization........ -- -- 163,000 -- 56,723
Deferred income
taxes.............. (309,000) (55,000) (364,000) (24,502) (12,000)
Bad debt expense.... 78,547 246,683 166,655 104,295 41,664
Changes in assets
and liabilities:
Accounts
receivable....... 45,118 (814,401) (1,032,994) (805,667) (447,084)
Unbilled
receivables...... (37,444) (293,330) 498,672 598,250 (895,647)
Due from
shareholders..... 7,681 (82,081) 89,400 -- --
Accounts payable.. 98,933 393,322 233,710 21,326 (324,801)
Accrued expenses.. 60,240 (4,355) 429,181 12,762 235,427
Deferred revenue.. -- 425,984 26,975 (288,044) (168,000)
Due to
shareholders..... -- -- 500,000 (47) (80,000)
Other assets and
liabilities...... 28,410 25,980 21,339 302,423 (333,087)
--------- --------- ----------- --------- ----------
Net cash provided by
(used in) operating
activities............. (153,709) 47,570 (949,721) (464,692) (1,770,142)
--------- --------- ----------- --------- ----------
Cash Flows from
Investing Activities:
Additions to software
development costs.... -- -- (167,436) -- (94,057)
Purchases of property
and equipment........ (105,716) (382,192) (352,811) (101,933) (156,108)
--------- --------- ----------- --------- ----------
Net cash used in
investing activities... (105,716) (382,192) (520,247) (101,933) (250,165)
--------- --------- ----------- --------- ----------
Cash Flows from
Financing Activities:
Proceeds from issuance
(repayment) of
promissory notes..... -- -- 2,070,000 -- (1,880,505)
Deferred financing
costs................ -- -- (217,500) -- --
Increase (decrease) in
notes payable to
related parties...... 464,310 516,864 840,259 105,376 --
Acquisition of common
stock................ -- -- (1,000,000) -- --
Deferred offering
costs................ -- -- (217,528) -- (289,276)
Borrowings (repayment)
on operating lines of
credit............... -- -- 70,000 107,045 (70,000)
Principal repayments
on long-term debt.... (49,365) (69,567) -- -- --
Issuance of common
stock................ 12,879 9,336 657 -- 4,948,062
Capital
contributions........ 15,000 122,670 150,000 150,000 --
Distributions to
shareholders......... (72,753) (195,933) (177,835) -- --
--------- --------- ----------- --------- ----------
Net cash provided by
financing activities... 370,071 383,370 1,518,053 362,421 2,708,281
--------- --------- ----------- --------- ----------
Net increase in cash and
cash equivalents....... 110,646 48,748 48,085 (204,204) 687,974
Cash and cash
equivalents, beginning
of period.............. 222,117 332,763 381,511 381,511 429,596
--------- --------- ----------- --------- ----------
Cash and cash
equivalents, end of
period................. $ 332,763 $ 381,511 $ 429,596 $ 177,307 $1,117,570
--------- --------- ----------- --------- ----------
--------- --------- ----------- --------- ----------
Supplemental Cash Flow
Information:
Cash paid during the
period for:
Income taxes........ $ 74,000 $ 235,133 $ 139,967 $ 59,000 $ 90,000
Interest............ 7,647 7,823 8,091 50,483 $ 116,891
Noncash financing
activities:
Loans and accrued
interest payable to
shareholders
converted to
additional paid in
capital............ $ -- $ -- $ 1,685,075 $ -- $ --
Conversion of
convertible
promissory notes
into common stock.. $ -- $ -- $ -- $ -- $ 189,495
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business and Principles of Consolidation

The consolidated financial statements include the accounts of Think New
Ideas, Inc. ("Think" or the "Company") and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company was incorporated in January 1996. In June 1996, the Company
acquired the companies discussed in Note 2 in business combinations accounted
for using the pooling of interests method. Accordingly, the consolidated
financial statements give retroactive effect to the acquisitions.

The Company provides marketing and communications services to clients
seeking to market their products and services and convey messages and images
to the public. The Company provides traditional services, such as advertising
copy, graphic design and art work, and "new media" services. New media
services include developing Internet web sites and related analytical tools
and Internet training.

Cash and Cash Equivalents

For purposes of the consolidated balance sheets and statements of cash
flows, the Company considers all highly liquid investments having original
maturities of three months or less to be cash equivalents.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the following estimated useful lives:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Equipment.......................................................... 3 to 5
Furniture and fixtures............................................. 5 to 7
Leasehold improvements............................................. 5
</TABLE>

Software Development Costs

In accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed," software development costs incurred by
the Company subsequent to establishing technological feasibility of the
resulting product or enhancement and until the product is available for
general release to customers are capitalized and carried at the lower of
unamortized cost or net realizable value. Net realizable value is determined
based on estimates of future revenues to be derived from the sale of the
software product reduced by costs of completing and disposing of that product.
Amortization of the costs capitalized began in 1997 and is based on current
and anticipated future revenues for each product or enhancement with an annual
minimum equal to straight-line amortization over the remaining estimated
economic life of the product or enhancement.

Revenue Recognition

Revenues from the design and development of Internet web sites and
traditional marketing services are recognized using the percentage of
completion method based on the ratio of costs incurred to total estimated
costs. Unbilled receivables represent costs incurred and anticipated profits
earned on projects in progress in excess of amounts billed, and are recorded
as assets. Deferred revenue includes amounts billed in excess of costs

F-7

<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)
incurred and estimated profits earned, and are recorded as liabilities. To the
extent costs incurred and anticipated costs to complete projects in progress
exceed anticipated billings, a loss is recognized for the excess.

Payments received for subsequent maintenance of internet web sites are
deferred and recognized over the period during which the maintenance is
supplied.

Taxes on Income

Three of the Company's subsidiaries had elected S corporation status under
applicable provisions of the Internal Revenue Code and certain state statues
and, accordingly, were not subject to income taxes. The S corporation status
of these subsidiaries terminated on June 30, 1996 as a result of their
acquisition by the Company.

The Company and its other subsidiaries account for income taxes in
accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes."
SFAS No. 109 requires the recognition of deferred tax assets and liabilities
for the expected future income tax consequences of events that have been
recognized in a company's financial statements or tax return. Deferred income
taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts for income tax purposes using enacted tax rates in effect in
the years in which the temporary differences are expected to reverse.

Unaudited Interim Consolidated Financial Statements

In the opinion of the Company's management, the consolidated balance sheet
as of September 30, 1996, the consolidated statements of operations and cash
flows for the three months ended September 30, 1995 and 1996, and the
consolidated statement of stockholders' equity (deficit) for the three months
ended September 30, 1996 contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the information set forth
therein. The results of operations for the three months ended September 30,
1996 are not necessarily indicative of the results for any other period.

Pro Forma Data (Unaudited)

Concurrent with the business combinations consummated on June 30, 1996, the
Company entered into employment agreements with certain of its officers (as
discussed further in Note 7). Pro forma adjustments for the year ended June
30, 1996 and the three months ended September 30, 1995 have been presented to
exclude the costs of effecting the business combination transactions and
reflect these employment agreements as if they had been in effect throughout
1996.

The pro forma data do not reflect a benefit for income taxes because none
would have been recognized if the business combinations had occurred and the
Company and all of its subsidiaries had been taxed as C corporations since
July 1, 1993.

Income (Loss) Per Share

Income (loss) per share is computed based on pro forma net loss through June
30, 1996 and historical net income for the three months ended September 30,
1996 and the weighted average number of shares of common stock and common
stock equivalents outstanding (which excludes 825,000 shares held in escrow
(see Note 8)), as adjusted for the effects of applying Securities and Exchange
Commission Staff Accounting

F-8
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

Bulletin (SAB) No. 83, using the treasury stock method. Pursuant to SAB No.
83, common stock issued by the Company at prices less than the initial public
offering price during the twelve months preceding the initial filing of the
registration statement of which these financial statements form a part,
together with the number of shares of common stock subject to options and
convertible debt issued during such period having exercise or conversion
prices below the initial public offering price have been treated as
outstanding for all periods presented. As a result, 3,070,831, 3,167,149 and
2,729,273 shares were used in the calculations for the year ended June 30,
1996 and the three months ended September 30, 1995 and 1996. Similarly, pro
forma net loss and historical net income used in the calculations were
adjusted by approximately $19,000 and $10,000 for the year ended June 30, 1996
and the three months ended September 30, 1996, to exclude the related amount
of interest expense on convertible debt issued (see Note 5).

Supplemental pro forma and income (loss) per share are computed by dividing
supplemental pro forma and historical net income (loss) (each as adjusted as
described in the preceding paragraph, further adjusted by approximately
$224,000 for the year ended June 30, 1996 and $7,000 and $63,000 for the three
months ended September 30, 1995 and 1996, the amount of interest expense on
debt repaid with the proceeds of the August 1996 private placement (see Note
12)), by the weighted average number of shares that would have been treated as
outstanding (3,174,615, 3,205,549 and 3,018,407 for the year ended June 30,
1996 and for the three months ended September 30, 1995 and 1996) had the
portion of the proceeds from the shares sold in August 1996 to fund debt
repayments been used to repay debt on the dates it was issued, rather than for
the assumed purchase of treasury stock.

Historical loss per share data for periods through June 30, 1996 are not
considered meaningful and, therefore, are not presented.

Fair Values of Financial Instruments

The carrying amounts reported in the balance sheet as of June 30, 1996 for
cash equivalents, accounts receivable, and accounts and notes payable
approximate fair value because of the immediate or short-term maturity of
these financial instruments. The carrying amounts reported for the
nonconvertible portions of the convertible promissory notes approximate fair
value. The fair values of the convertible portions of the convertible
promissory notes have been estimated based on the estimated fair value of the
common stock into which the notes are convertible. Based on the price per
share for which the Company's common stock was recently sold in a private
placement (Note 12), the estimated aggregate fair value of the convertible
portions of the convertible promissory notes approximated $2,037,000 at June
30, 1996.

Use of Estimates

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

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to a
concentration of credit risk consist of cash and cash equivalents and accounts
and unbilled receivables. Cash and cash equivalents consist of deposits and

F-9
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)
money market funds placed with various high credit quality financial
institutions. Concentrations of credit risk with respect to receivables are
limited due to the geographically diverse customer base. The Company controls
credit risk through credit approvals, credit limits and monitoring procedures.

New Accounting Pronouncements

SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS No. 121), issued by the Financial
Accounting Standards Board (FASB) is effective for financial statements for
fiscal years beginning after December 15, 1995. The new standard establishes
new guidelines regarding when impairment losses on long-lived assets, which
include plant and equipment and certain identifiable intangible assets and
goodwill, should be recognized and how impairment losses should be measured.
The adoption of SFAS No. 121 during the first quarter of fiscal 1997 did not
have a material effect on the Company's financial position or results of
operations.

SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123),
issued by the FASB is effective for specific transactions entered into after
December 15, 1995, while the disclosure requirements are effective for
financial statements for fiscal years beginning after December 15, 1995. The
new standard establishes a fair value method of accounting for stock-based
compensation plans and for transactions in which an entity acquires goods or
services from nonemployees in exchange for equity instruments. The Company
adopted SFAS No. 123 during the first quarter of fiscal 1997, electing to
continue to measure compensation costs for equity instruments granted to
employees using the intrinsic value method of accounting proscribed by APB
Opinion No. 25. Adoption of SFAS No. 123 during the first quarter of fiscal
1997 did not have a material effect on the Company's financial position or
results of operations.

NOTE 2--BUSINESS ACQUISITIONS

In June 1996, the Company acquired all of the issued and outstanding shares
of common stock of the following entities in exchange for 723,167 shares of
the Company's common stock:

<TABLE>
<CAPTION>
NUMBER OF SHARES
ENTITY/DATE OPERATIONS COMMENCED ISSUED TO EFFECT ACQUISITION
-------------------------------- ----------------------------
<S> <C>
The Mednick Group ("Mednick")/October 1982.... 208,084
On Ramp, Inc. ("On Ramp")/February 1994....... 231,572
Creative Resources Agency, Inc. ("Creative
Resources")/November 1994.................... 3,970
The S.D. Goodman Group ("Goodman")/July 1993.. 49,623
Internet One, Inc. ("Internet One")/November
1993......................................... 34,736
NetCube, Inc. ("NetCube")/February 1978....... 195,182
</TABLE>

Mednick, Creative Resources and Goodman provide a wide variety of marketing-
related services. On Ramp, NetCube and Internet One are principally providers
of new media services. The acquisition of each of these companies has been
accounted for using the pooling of interests method of accounting, and
accordingly, the accompanying consolidated financial statements give
retroactive effect to the acquisitions, as if the companies had always
operated as a single entity. In connection with the acquisitions,
approximately $981,000 of acquisition costs and expenses were incurred,
including $500,000 in finder's fees owed to Benchmark Equity Group
("Benchmark"), a shareholder of the Company, and have been charged to expense
during 1996.

F-10
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

Separate results of operations for the combining entities for the three
years in the period ended June 30, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
------------------------------------
1994 1995 1996
---------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Mednick................................. $5,203,185 $ 5,046,035 $ 6,150,950
On Ramp................................. 6,543 775,803 2,323,365
Creative Resources...................... -- 160,058 371,298
Goodman................................. 113,160 674,967 561,203
Internet One............................ 76,519 674,214 1,338,246
NetCube................................. 3,086,098 3,000,914 1,401,286
Think................................... -- -- --
---------- ----------- -----------
Combined................................ $8,485,505 $10,331,991 $12,146,348
========== =========== ===========
Net Income (Loss):
Mednick................................. $ 72,781 $ (62,860) $ 263,428
On Ramp................................. (26,465) (128,474) (279,104)
Creative Resources...................... -- 63,511 74,000
Goodman................................. 61,312 179,159 133,010
Internet One............................ 22,283 92,652 2,974
NetCube................................. (675,335) (214,775) (1,032,583)
Think................................... -- -- (1,105,565)
---------- ----------- -----------
Combined................................ $ (545,424) $ (70,787) $(1,943,840)
========== =========== ===========
</TABLE>

NOTE 3--PROPERTY AND EQUIPMENT

Property and equipment at June 30, consisted of the following:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Equipment......................................... $ 1,955,931 $ 2,047,966
Furniture and fixtures............................ 568,925 604,610
Leasehold improvements............................ 360,025 365,551
----------- -----------
2,884,881 3,018,127
Less accumulated depreciation and amortization.... (2,276,480) (2,319,096)
----------- -----------
Property and equipment, net....................... $ 608,401 $ 699,031
=========== ===========
</TABLE>

NOTE 4--LINES OF CREDIT

Certain of the Company's subsidiaries have lines of credit with banks having
an aggregate borrowing availability of $290,000. Interest rates at June 30,
1996 range from 1% over prime to 10.75%. At June 30, 1995, there were no
outstanding borrowings. At June 30, 1996, borrowings of $70,000 were
outstanding at an interest rate of 9.5%. These borrowings were repaid during
the three months ended September 30, 1996. Borrowings under the lines of
credit are secured by substantially all of the assets and guaranteed by the
former stockholders of the respective subsidiaries. One of the lines requires
all outstanding borrowings to be repaid for a thirty day period during each
six months and contains certain other restrictive covenants.

F-11
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

NOTE 5--CONVERTIBLE PROMISSORY NOTES

In March 1996, the Company borrowed $270,000 pursuant to the terms of three
separate convertible promissory notes. Two of the notes, having original
principal balances of $225,000 and $20,000, are payable to an entity
controlled by a shareholder of the Company and to a shareholder, respectively.
Each of the notes bear interest at 10% and mature upon the earlier of
September 30, 1996 or the Company raising $2,000,000 through a debt or equity
financing. At the option of the note holders, up to an aggregate of $27,000 in
principal may be converted into 216,667 shares of the Company's common stock.

In April 1996, the Company raised $1,582,500, net of placement fees of
$217,500, through a private placement of 12% convertible promissory notes. The
principal balance, together with accrued interest, is due upon the earlier of
April 30, 1997 or the Company raising $3,000,000 through a debt or equity
financing. The notes are secured by the pledge of all of the outstanding
shares of common stock of On Ramp. At the option of the note holders, up to an
aggregate of $162,495 in principal may be converted into 216,660 shares of the
Company's common stock.

As discussed more fully in Note 12, during the three months ended September
30, 1996 the convertible promissory notes were converted into common stock or
repaid with proceeds obtained from the sale of the Company's common stock.
Accordingly, the convertible promissory notes have been classified as
noncurrent liabilities at June 30, 1996.

NOTE 6--INCOME TAXES

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
1994 1995 1996
--------- -------- ---------
<S> <C> <C> <C>
Current:
Federal.................................... $ 174,250 $222,021 $ 382,735
State...................................... 31,510 66,800 130,452
--------- -------- ---------
205,760 288,821 513,187
--------- -------- ---------
Deferred:
Federal.................................... (263,000) (47,000) (311,000)
State...................................... (46,000) (8,000) (53,000)
--------- -------- ---------
(309,000) (55,000) (364,000)
--------- -------- ---------
Taxes on income.............................. $(103,240) $233,821 $ 149,187
========= ======== =========
</TABLE>

The difference between the federal statutory tax rate and the effective tax
rate resulted from the following:

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Federal statutory tax rate............................ (34.0)% 34.0% (34.0)%
Subsidiaries not subject to income taxes.............. 17.5 50.8 9.3
Merger expenses and other permanent differences....... 3.7 17.5 20.1
State income taxes, net of federal tax benefit........ 3.2 27.0 7.3
Change in valuation allowance......................... -- -- 5.0
Other items, net...................................... (6.3) 14.1 0.6
----- ----- -----
Effective tax rate.................................... (15.9)% 143.4% 8.3%
===== ===== =====
</TABLE>

F-12
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

Temporary differences which gave rise to the deferred tax assets
(liabilities) consisted of the following at June 30, 1995 and 1996:

<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Current:
Accounts receivable................................. $(132,000) $(127,000)
Allowance for doubtful accounts..................... 18,000 52,000
Accounts payable.................................... 38,000 235,000
Tax method conversion deferral...................... (164,000) --
--------- ---------
Total current......................................... (240,000) 160,000
--------- ---------
Noncurrent:
Property and equipment.............................. 115,000 79,000
Net operating loss carryforwards.................... 80,000 170,000
--------- ---------
Total noncurrent...................................... 195,000 249,000
--------- ---------
Deferred tax asset valuation allowance................ (80,000) (170,000)
--------- ---------
Net deferred tax asset (liability).................... $(125,000) $ 239,000
========= =========
</TABLE>

For tax purposes, the Company had available, at June 30, 1996, net operating
loss carryforwards of approximately $425,000 which expire through the year
2011.

NOTE 7--COMMITMENTS AND CONTINGENCIES

The Company leases office space and certain equipment under operating leases
which expire on various dates over the next fifteen years. Future minimum
rental commitments under existing leases as of June 30, 1996 are as follows:

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
Year ended June 30,
1997............................................................ $ 217,000
1998............................................................ 323,000
1999............................................................ 315,000
2000............................................................ 321,000
2001............................................................ 326,000
Thereafter...................................................... 1,964,000
----------
$3,466,000
==========
</TABLE>

Total rent expense under operating leases amounted to $407,914, $411,266 and
$662,340 for the years ended June 30, 1994, 1995 and 1996.

In March 1996, the Company entered into a two year consulting agreement with
Benchmark. Under the agreement, the Company is required to pay Benchmark
$35,000 at signing and a monthly fee of $7,000. During 1996, the Company paid
$56,000 to Benchmark in connection with the agreement.

F-13
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

The Company has entered into employment agreements with certain of its
officers. The agreements have terms of up to three years and include, among
other things, noncomplete agreements and salary and benefits continuation.

NOTE 8--SHAREHOLDERS' EQUITY

The Company has a stock option and appreciation rights plan (the "Plan")
which provides for the grant of options to purchase up to 966,667 shares of
the Company's common stock at exercise prices to be determined by the Board of
Directors. Subsequent to June 30, 1996, the Company granted options to certain
employees to acquire 966,667 shares at a per share option price of $7.50 (the
estimated fair value of the shares on the date of grant). The options become
exercisable in annual one-third increments beginning on the first anniversary
of the date of grant and expire after ten years.

In February 1995, On Ramp entered into an agreement with its three
shareholders which set forth certain rights and obligations of the
shareholders with respect to each other and with On Ramp regarding the
purchase and disposition of the outstanding shares of On Ramp. The agreement
included, among other things, provisions that required On Ramp to purchase
shares of a decedent or terminated shareholder. The estimated value of the
redeemable On Ramp shares as of that date was not significant; accordingly, no
amount was assigned to them. In April 1996, two of the three shareholders
terminated their employment and On Ramp purchased their shares for $1,000,000.

In June 1996, the Company effected a 6.855-for-one stock split. In September
1996, the Company effected a .496-for-one reverse stock split. In November
1996, the Company effected a two-for-three reverse stock split. All applicable
share and per share data have been retroactively restated to reflect the stock
splits.

In July 1996, the Board of Directors increased the authorized shares of the
Company's preferred and common stock to 5,000,000 and 50,000,000,
respectively.

Subsequent to June 30, 1996, the Company signed a letter of intent with an
underwriter to conduct a public offering of the Company's common stock. In
connection with the proposed offering, the Company's founding shareholders,
together with the shareholders who acquired shares in connection with the
business acquisitions discussed in Note 2, contributed, on a pro rata basis,
825,000 shares of the Company's common stock held by them into an escrow
account. The shares are to be released to the shareholders from the escrow
account upon the Company achieving certain net income or per share market
price targets. The value of the shares released, as determined by the market
price of the shares on the date of the release, will be recognized as
compensation expense in future periods.

NOTE 9--EMPLOYEE RETIREMENT PLANS

Certain of Think's subsidiaries sponsor defined contribution retirement
plans (the "Plans") which cover all employees meeting minimum service
requirements. The Plans qualify as deferred salary arrangements under Section
401(k) of the Internal Revenue Code. The subsidiaries' contributions to the
plans are based on percentages of the employees' contributions. Employer
contributions to the Plans during the years ended June 30, 1994, 1995 and 1996
were approximately $0, $7,000, and $37,000.

NOTE 10--RELATED PARTY TRANSACTIONS

At June 30, 1995 and 1996 and September 30, 1996, NetCube owed $430,000,
$788,000 and $788,000 to the father of its former sole shareholder. Pursuant
to terms of the promissory note under which the borrowings were made, advances
(including accrued interest) are due on demand, are unsecured, and bear
interest at 10%. Interest expense incurred by NetCube related to these
advances totalled $31,000, $40,000 and $58,000 during

F-14
<PAGE>

THINK NEW IDEAS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

FOR THE YEARS ENDED JUNE 30, 1994, 1995 AND 1996 AND

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996

(INFORMATION RELATED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996 IS
UNAUDITED.)

the years ended June 30, 1994, 1995 and 1996 and $10,000 and $20,000 during
the three months ended September 30, 1995 and 1996. The Company intends to
repay $288,000 of the note prior to the Offering (see Note 12) and amended the
terms of the promissory note whereby the maturity of the remaining unpaid note
balance was extended until March 1998. Accordingly, the amount due under the
note has been classified as a noncurrent liability at June 30 and September
30, 1996.

At June 30, 1995, Internet One owed approximately $5,000 to its former
shareholder, which amount was repaid during the year ended June 30, 1996.

At June 30, 1995, NetCube owed approximately $976,000 to its former
shareholder. During 1996, the shareholder converted this balance and
additional loans made during 1996, including interest thereon, aggregating
approximately $1,450,000 to capital. Interest expense of $9,000, $9,000, and
$16,000 was recorded in connection with this loan in 1994, 1995 and 1996.

At June 30, 1995, On Ramp owed approximately $234,000 to its former
shareholders pursuant to terms of promissory notes. The amount outstanding,
including interest thereon, was converted to capital in 1996.

During fiscal 1994 and 1995, Mednick had sales to companies affiliated
through common ownership of $46,000 and $92,000. In fiscal 1995, a receivable
of $104,000 arising from these sales was charged off to expense.

On Ramp leases office space from an affiliate of its former shareholders.
The lease provides for monthly payments of approximately $16,000 through
September 1996. Total expenses paid to this affiliate during the years ended
June 30, 1995 and 1996 and the three months ended September 30, 1995 and 1996
were $71,000, $374,000, $50,000 and $50,000, respectively.

NOTE 11--MAJOR CUSTOMER

During 1995 and 1996, the Company had sales to one customer which accounted
for approximately 16% and 15% of consolidated revenues.

NOTE 12--SUBSEQUENT EVENTS

Private Placement

In August 1996, the Company sold equity securities in a private placement.
In November 1996, the agreement pursuant to which the securities were sold was
amended. As a result, the Company issued an aggregate of 938,667 shares of its
common stock in exchange for net proceeds (after transaction costs of
approximately $50,000) of $4,948,000. Additionally, certain of the Company's
shareholders gave the purchaser an additional 124,667 shares of the Company's
Common Stock held by them for no consideration. The number of shares of common
stock sold is required to be increased if the Company has not successfully
completed a public offering of its common stock by January 31, 1997. Further
increases will be required if a public offering has not been completed by July
31, 1997.

Debt Conversions and Extinguishments

During the three months ended September 30, 1996, the holders of the
convertible promissory notes discussed in Note 5 converted such notes,
aggregating $189,495, into 433,327 shares of common stock. In addition, a
portion of the proceeds of the private placement discussed above was used to
extinguish the remaining $1,880,505 of such notes. It is anticipated that
$288,000 of a note payable to a related party will be repaid prior to the
Offering, as discussed in Note 10.

F-15
<PAGE>

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

NO DEALER, SALES REPRESENTATIVE, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF
ANY OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SO-
LICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Recent Developments...................................................... 7
Risk Factors............................................................. 8
Use of Proceeds.......................................................... 15
Dividend Policy.......................................................... 15
Capitalization........................................................... 16
Dilution................................................................. 17
Selected Financial Data.................................................. 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 20
Business................................................................. 24
Management............................................................... 32
Certain Transactions..................................................... 37
Principal and Selling Stockholders....................................... 39
Description of Securities................................................ 41
Shares Eligible for Future Sale.......................................... 42
Underwriting............................................................. 44
Legal Matters............................................................ 45
Experts.................................................................. 45
Additional Information................................................... 45
Index to Financial Statements............................................ F-1
</TABLE>

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL DEALERS AF-
FECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

THINK NEW IDEAS, INC.

[LOGO OF THINK NEW IDEAS, INC. APPEARS HERE]

2,000,000 SHARES OF
COMMON STOCK

PROSPECTUS
, 1996

COMMONWEALTH ASSOCIATES

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses to be incurred by the Company in connection with the
issuance and distribution of the securities being registered pursuant to this
Registration Statement, other than underwriting discounts and commissions, are
estimated as follows:

<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 6,673
NASD Filing Fee.................................................. 2,435
Blue Sky Fees and Expenses....................................... 30,000
Printing Expenses................................................ 100,000
Legal Fees and Expenses.......................................... 200,000
Accountant's Fees and Expenses................................... 100,000
Transfer Agent and Registrar's Fee and Expenses.................. 20,000
Miscellaneous Expenses........................................... 65,892
--------
Total.......................................................... $525,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Underwriter has agreed to indemnify the Company, its directors and each
person who controls it within the meaning of Section 15 of the Securities Act
of 1933 with respect to any statement in or omission from the Registration
Statement or the Prospectus or any amendment or supplement thereto if such
statement or omission was made in reliance upon information furnished in
writing to the Company by the Underwriter specifically for or in connection
with the preparation of the Registration Statement, the Prospectus, or any
such amendment or supplement thereto.

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers
provided that this provision shall not eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders; (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law; (iii)
arising under Section 174 of the Delaware General Corporation Law; or (iv) for
any transaction from which the director derived an improper personal benefit.

The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any
other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, vote of shareholders or otherwise.

Article Seven of the Company's Certificate of Incorporation eliminates the
personal liability of directors to the fullest extent permitted by Section
102(b)(7) of the Delaware General Corporation Law.

The effect of the foregoing is to require the Company to indemnify the
officers and directors of the Company for any claim arising against any such
person in their official capacities if such person acted in good faith and in
a manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company was incorporated pursuant to the laws of the State of Delaware
on January 30, 1996 at which time 2,171,507 shares of Common Stock were issued
to the Company's founders in exchange for par value as

II-1
<PAGE>

follows: Benchmark: 709,501 shares of Common Stock; Ronald Bloom: 875,932
shares of Common Stock; Scott A. Mednick: 630,467 shares of Common Stock; and
Christopher Efird: 101,357 shares of Common Stock. The issuances were effected
pursuant to a claim exemption under Section 4(2) of the Act.

In March 1996, in exchange for the extension of a loan in the aggregate
principal amount of $270,000, the Company issued the 10% Notes to three
lenders. In August 1996, an aggregate of $27,000 in principal amount of the
10% Notes was converted into 216,667 shares of Common Stock by the holders
thereof and the remaining principal (plus accrued interest) was repaid.

In April 1996, the Company commenced the private Offering of the 12% Notes.
Pursuant to such Offering, the Company issued an aggregate of $1,800,000 in
principal amount of 12% Notes to nine investors. The Company relied upon the
services of the Placement Agent with respect to the offer of 12% Notes in the
aggregate principal amount of $1,250,000, for which the Placement Agent
received a fee equal to 10% of the aggregate proceeds of the private Offering
and a non-accountable expense allowance equal to 3% of the aggregate proceeds
received by the Company from investors introduced by the Placement Agent. In
August 1996, an aggregate of $162,495 in principal amount of the 12% Notes was
converted by the holders of thereof into 216,660 shares of Common Stock and
the remaining principal (plus accrued interest) was repaid.

Pursuant to the terms of the Omnicom Agreement, in August 1996, the Company
offered and sold to Omnicom 938,667 shares of Common Stock in exchange for
proceeds of $4,998,000.

The Company believes that the transactions set forth above were exempt from
registration with the Commission pursuant to Section 4(2) of the Securities
Act as transactions by an issuer not involving any public Offering. Except as
disclosed above, no broker-dealer or underwriter was involved in the foregoing
transactions. All certificates representing such securities have been
appropriately legended. The March and April 1996 placements were made in
reliance upon a claim of exemption pursuant to Rule 506 of Regulation D.
Additionally, the participants in the March and April 1996 private placements
were accredited investors. All requisite regulatory filings were made in
accordance with Rule 506 of Regulation D.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
1.1* Form of Underwriting Agreement by and among the Company and the
Underwriter.
1.2* Form of Underwriter's Warrant.
1.3* Form of Advisory Agreement with Commonwealth Associates.
1.4* Form of Letter of Transmittal and Custody Agreement.
1.5* Form of Selling Stockholders Irrevocable Power of Attorney.
3.1(a)* Certificate of Incorporation of the Company.
3.1(b)* Certificate of Amendment to Certificate of Incorporation of the
Company.
3.1(c)* Certificate of Amendment to Certificate of Incorporation of the
Company.
3.2* Amended and Restated Bylaws of the Company.
4.1* Specimen Common Stock Certificate of the Company.
4.2* Form of Non-Negotiable 10% Convertible Promissory Note.
4.3* Form of Series I Non-Negotiable 12% Convertible Promissory Note.
5.1** Opinion of De Martino Finkelstein Rosen & Virga, counsel for the
Company.
10.1* Form of Agreement and Plan of Reorganization by and among the Company
and each of the Subsidiaries.
10.2* Employment Agreement by and between the Company and Scott A. Mednick.
10.3* Employment Agreement by and between the Company and Adam Curry.
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
10.3(a)* Amendment to Adam Curry Employment Agreement dated October 28, 1996.
10.4* Employment Agreement by and between the Company and Ronald Bloom.
10.4(a)* Amendment to Ronald Bloom Employment Agreement dated October 28,
1996.
10.5* Employment Agreement by and between the Company and David R. Hieb.
10.6* Employment Agreement by and between the Company and James Grannan.
10.7* Employment Agreement by and between the Company and Susan Goodman.
10.8* Employment Agreement by and between the Company and Dr. James
Carlisle.
10.8(a)* Amendment to Dr. James Carlisle Employment Agreement dated October
28, 1996.
10.9* Promissory Note, dated March 31, 1996, executed by On Ramp, Inc. in
favor of the Company in the principal amount of $1,000,000.
10.10* Loan Agreement, dated March 31, 1996, by and between On Ramp, Inc.
and the Company.
10.11* Promissory Note, dated March 31, 1996, executed by On Ramp, Inc. in
favor of the Company in the principal amount of $600,000.
10.12* Pledge Agreement, dated March 31, 1996, by and among On Ramp, Inc.
Adam Curry and the Company.
10.13* Loan Agreement, dated May 13, 1996, by and between the Company and
Internet One, Inc.
10.14* Promissory Note, dated May 13, 1996, executed by Internet One, Inc.
in favor of the Company in the principal amount of $70,000.
10.15* Pledge Agreement, dated May 13, 1996, by and among Internet One,
Inc., David R. Hieb and the Company.
10.16* Form of Amended and Restated 1996 Stock Option Plan.
10.16(a)* Amended and Restated 1996 Stock Option Plan.
10.17(a)* Consulting Agreement by and between the Company and Benchmark Equity
Group, Inc.
10.17(b)* Amendment to Consulting Agreement dated August 9, 1996.
10.18(a)* Stock Purchase Agreement between Omnicom Group Inc. and the Company.
10.18(b)* Form of Letter of Amendment to Omnicom Agreement.
10.19* Form of Escrow Agreement between the Company, Continental Stock
Transfer and Trust Company and certain stockholders of the Company.
10.20(a)* Letter Agreement by and among the Company, Dan Carlisle and James H.
Carlisle dated September 20, 1996.
10.20(b)* Promissory Note, dated October 1, 1996, executed by the Company in
favor of James J. Carlisle in the principal amount of $132,000.
10.20(c)* Promissory Note, dated October 1, 1996, executed by the Company in
favor of Dan Carlisle in the principal amount of $288,000.
10.20(d)* Promissory Note, dated October 1, 1996, executed by the Company in
favor of Dan Carlisle in the principal amount of $515,760.
10.21* Employment letter by and between the Company and Mel Epstein.
11* Loss per share calculations.
21.1* Subsidiaries of the Company.
23.1** Consent of De Martino Finkelstein Rosen & Virga (included in Exhibit
5.1).
23.2 Consent of BDO Seidman, LLP, independent certified public
accountants.
24.1* Power of Attorney (included on signature page in Registration
Statement).
27.1* Financial Data Schedule.
</TABLE>
- --------
*Previously filed.
**To be filed by amendment.

II-3
<PAGE>

ITEM 17. UNDERTAKINGS

(a) Undertakings Relating to Indemnification and Acceleration of Effective
Date. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions of
this Registration Statement, or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company 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 Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.

(b) Undertakings Relating to Rule 430A Under the Securities Act of 1933. The
Company hereby understands that it will:

(1) For the purpose of determining any liability under the Securities Act
of 1933, treat the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Company under Rule 424(b)(1)
or (4) or 497(h) under the Securities Act of 1933 as part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in
the Registration Statement, and that Offering of such securities at that
time shall be deemed to be as the initial bona fide Offering thereof.

II-4
<PAGE>

SIGNATURES

IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THE COMPANY HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW
YORK, STATE OF NEW YORK, ON NOVEMBER 13, 1996.

THINK New Ideas, Inc.

/s/ Melvin Epstein
By: _________________________________
MELVIN EPSTEIN
CHIEF FINANCIAL OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.

SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Scott A. Mednick Chief Executive
- ------------------------------------- Officer and November 13, 1996
SCOTT A. MEDNICK Chairman of the
Board of Directors

* President, Chief
- ------------------------------------- Operating Officer November 13, 1996
RONALD E. BLOOM and Director

* Chief Technology
- ------------------------------------- Officer and November 13, 1996
ADAM S. CURRY Director

* Chief Financial
- ------------------------------------- Officer November 13, 1996
MELVIN EPSTEIN

* Director
- ------------------------------------- November 13, 1996
FRANK DELAPE

Director , 1996
- -------------------------------------
ANGEL MARTINEZ

Director , 1996
- -------------------------------------
MICHAEL RIBERO

Director , 1996
- -------------------------------------
BARRY J. WAGNER

/s/ Scott A. Mednick
By*__________________________________ November 13, 1996
SCOTT A. MEDNICK
ATTORNEY-IN-FACT
</TABLE>

II-5
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
------- ----------------------- --------
<C> <S> <C>
1.1* Form of Underwriting Agreement by and among the Company
and the Underwriter.
1.2* Form of Underwriter's Warrant.
1.3* Form of Advisory Agreement with Commonwealth Associates.
1.4* Form of Letter of Transmittal and Custody Agreement.
1.5* Form of Selling Stockholders Irrevocable Power of
Attorney.
3.1(a)* Certificate of Incorporation of the Company.
3.1(b)* Certificate of Amendment to Certificate of Incorporation
of the Company.
3.1(c)* Certificate of Amendment to Certificate of Incorporation
of the Company.
3.2* Amended and Restated Bylaws of the Company.
4.1* Specimen Common Stock Certificate of the Company.
4.2* Form of Non-Negotiable 10% Convertible Promissory Note.
4.3* Form of Series I Non-Negotiable 12% Convertible Promissory
Note.
5.1** Opinion of De Martino Finkelstein Rosen & Virga, counsel
for the Company.
10.1* Form of Agreement and Plan of Reorganization by and among
the Company and each of the Subsidiaries.
10.2* Employment Agreement by and between the Company and Scott
A. Mednick.
10.3* Employment Agreement by and between the Company and Adam
Curry.
10.3(a)* Amendment to Adam Curry Employment Agreement dated October
28, 1996.
10.4* Employment Agreement by and between the Company and Ronald
Bloom.
10.4(a)* Amendment to Ronald Bloom Employment Agreement dated
October 28, 1996.
10.5* Employment Agreement by and between the Company and David
R. Hieb.
10.6* Employment Agreement by and between the Company and James
Grannan.
10.7* Employment Agreement by and between the Company and Susan
Goodman.
10.8* Employment Agreement by and between the Company and Dr.
James Carlisle.
10.8(a)* Amendment to Dr. James Carlisle Employment Agreement dated
October 28, 1996.
10.9* Promissory Note, dated March 31, 1996, executed by On
Ramp, Inc. in favor of the Company in the principal amount
of $1,000,000.
10.10* Loan Agreement, dated March 31, 1996, by and between On
Ramp, Inc. and the Company.
10.11* Promissory Note, dated March 31, 1996, executed by On
Ramp, Inc. in favor of the Company in the principal amount
of $600,000.
10.12* Pledge Agreement, dated March 31, 1996, by and among On
Ramp, Inc. Adam Curry and the Company.
10.13* Loan Agreement, dated May 13, 1996, by and between the
Company and Internet One, Inc.
10.14* Promissory Note, dated May 13, 1996, executed by Internet
One, Inc. in favor of the Company in the principal amount
of $70,000.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE NO.
------- ----------------------- --------
<C> <S> <C>
10.15* Pledge Agreement, dated May 13, 1996, by and among
Internet One, Inc., David R. Hieb and the Company.
10.16* Form of Amended and Restated 1996 Stock Option Plan.
10.16(a)* Amended and Restated 1996 Stock Option Plan.
10.17(a)* Consulting Agreement by and between the Company and
Benchmark Equity Group, Inc.
10.17(b)* Amendment to Consulting Agreement dated August 9, 1996.
10.18(a)* Stock Purchase Agreement between Omnicom Group Inc. and
the Company.
10.18(b)* Form of Letter of Amendment to Omnicom Agreement.
10.19* Form of Escrow Agreement between the Company, Continental
Stock Transfer and Trust Company and certain stockholders
of the Company.
10.20(a)* Letter Agreement by and among the Company, Dan Carlisle
and James H. Carlisle dated September 20, 1996.
10.20(b)* Promissory Note, dated October 1, 1996, executed by the
Company in favor of James J. Carlisle in the principal
amount of $132,000.
10.20(c)* Promissory Note, dated October 1, 1996, executed by the
Company in favor of Dan Carlisle in the principal amount
of $288,000.
10.20(d)* Promissory Note, dated October 1, 1996, executed by the
Company in favor of Dan Carlisle in the principal amount
of $515,760.
10.21* Employment letter by and between the Company and Mel
Epstein.
11* Loss per share calculations.
21.1* Subsidiaries of the Company.
23.1** Consent of De Martino Finkelstein Rosen & Virga (included
in Exhibit 5.1).
23.2 Consent of BDO Seidman, LLP, independent certified public
accountants.
24.1* Power of Attorney (included on signature page in
Registration Statement).
27.1* Financial Data Schedule.
</TABLE>
- --------
*Previously filed.
**To be filed by amendment.

<PAGE>

CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Think New Ideas, Inc.
New York, New York

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated July 23, 1996, except for Notes 5,
8, 10 and 12, which are as of November 1996, relating to the consolidated
financial statements of Think New Ideas, Inc., which is contained in that
Prospectus.

We also consent to the reference to us under the caption "Experts" in the
Prospectus.

BDO Seidman, LLP

New York, New York

November 13, 1996