PRECIS SMART CARD SYSTEMS INC
PRER14A, 2000-09-05
COMPUTERS & PERIPHERAL EQUIPMENT & SOFTWARE
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<PAGE>
                            SCHEDULE 14A INFORMATION

                  PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                                (Amendment No. 2)

    Filed by the Registrant /X/
    Filed by a party other than the Registrant / /
    Check the appropriate box:

    /X/  Preliminary Proxy Statement
    / /  Confidential, for Use of the Commission Only (as permitted by Rule
         14a-6(e)(2))
    / /  Definitive Proxy Statement
    / /  Definitive Additional Materials
    / /  Soliciting Material Pursuant to (S)240.14a-11(C) or (S)240.14a-12

                         PRECIS SMART CARD SYSTEMS, INC.
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ /  No fee required.

/X/  Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
     and 0-11.

    (1) Title of each class of securities to which transaction applies:
        Common Stock and Series A Convertible Preferred Stock
        ------------------------------------------------------------------------
    (2) Aggregate number of securities to which transaction applies:
        500,000 share Common Stock and 166,667 shares of Series A Convertible
         Preferred Stock
        ------------------------------------------------------------------------
    (3) Per unit price or other underlying value of transaction computed
        pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
        filing fee is calculated and state how it was determined):
        Closing Sale Price of Common on June 23, 2000 was $4.25 per share for
        an aggregate value of $2,000,000 and the each shares of Series A
        Convertible Preferred Stock has a stated value and liquidation
        Preference of $12 per share for an aggregate value of $2,000,004.
        ------------------------------------------------------------------------
    (4) Proposed maximum aggregate value of transaction:
        $4,125,004
        ------------------------------------------------------------------------
    (5) Total fee paid:
        $825
        ------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
    0-11(a)(2) and identify the filing for which the offsetting fee was paid
    previously. Identify the previous filing by registration statement number,
    or the Form or Schedule and the date of its filing.

    (1) Amount Previously Paid:

        ------------------------------------------------------------------------
    (2) Form, Schedule or Registration Statement No.:

        ------------------------------------------------------------------------
    (3) Filing Party:

        ------------------------------------------------------------------------
    (4) Date Filed:

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

<PAGE>

PRECIS SMART CARD SYSTEMS, INC.
                                               2500 SOUTH MCGEE DRIVE, SUITE 147
                                                          NORMAN, OKLAHOMA 73072
                                                       TELEPHONE: (405) 292-4900
--------------------------------------------------------------------------------

                            NOTICE OF ANNUAL MEETING

                         TO BE HELD ON _________, 2000

TO THE SHAREHOLDERS:

         Precis Smart Card Systems, Inc., will hold its annual shareholders
meeting at its offices in Suite 147 at 2500 South McGee Drive in Norman,
Oklahoma, commencing at _______ p.m., local time on _________, 2000 to vote on:

1.       The Agreement and Plan of Merger, dated March 21, 2000, by and among
         Precis Smart Card Systems, Inc., Precis-Foresight Acquisition, Inc. (a
         wholly-owned subsidiary of Precis) and Foresight, Inc. and its
         shareholders Paul A. Kruger and Mark R. Kidd, providing for the merger
         of Foresight into Precis-Foresight Acquisition with result that
         Foresight will become a wholly-owned subsidiary of Precis;

2.       The Precis Smart Card Systems, Inc. 1999 Stock Option Plan;

3.       Amendment of Precis' Certificate of Incorporation to provide that the
         provisions of Sections 1090.3 and Sections 1145 through 1155 of the
         Oklahoma General Corporation Act no longer apply;

4.       Amendment of Precis' Certificate of Incorporation to increase the
         number of authorized shares of common stock, $.01 par value per share,
         to 100,000,000 shares;

5.       The election of four directors, each to hold office until the 2001
         annual meeting of shareholders and until his successor is duly elected
         and qualified;

6.       Ratification of Murrell Hall McIntosh & Co., PLLP as the independent
         accountants for 2000; and

7.       Any other business that properly comes before the meeting or any
         adjournment or postponement of the Annual Meeting.

         Precis shareholders at the close of business on __________, 2000, are
receiving notice and may vote at the Annual Meeting. Approval of the
merger-acquisition of Foresight and amendment of our Certificate of
Incorporation requires the affirmative vote of at least a majority of the
outstanding shares of Precis common stock entitled to vote at the Annual
Meeting, while all other matters presented at the Annual Meeting require the
affirmative vote of a majority of the shares present in person or by proxy at
the Annual Meeting.

         YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE MATTERS BEING VOTED UPON.

         YOUR ATTENDANCE OR PROXY IS IMPORTANT TO ASSURE A QUORUM AT THE ANNUAL
MEETING. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON
ARE REQUESTED TO COMPLETE AND RETURN THE ENCLOSED PROXY, USING THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED FROM WITHIN THE UNITED STATES. ANY
PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS
EXERCISE AND, IF PRESENT AT THE ANNUAL MEETING, MAY WITHDRAW IT AND VOTE IN
PERSON. ATTENDANCE AT THE ANNUAL MEETING IS LIMITED TO PRECIS SHAREHOLDERS,
THEIR PROXIES AND INVITED GUESTS. ALL SHAREHOLDERS ARE CORDIALLY INVITED TO
ATTEND THE ANNUAL MEETING.

                                       BY ORDER OF THE BOARD OF DIRECTORS:


                                       Mark R. Kidd, Corporate Secretary

Norman, Oklahoma
____________, 2000

<PAGE>

                                 PROXY STATEMENT

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

                         Precis Smart Card Systems, Inc.
                        2500 South McGee Drive, Suite 147
                             Norman, Oklahoma 73072
                            Telephone: (405) 292-4900



                         ANNUAL MEETING OF SHAREHOLDERS
                        TO BE HELD ON ___________, 2000


                     SOLICITATION AND REVOCATION OF PROXIES

         This Proxy Statement is furnished to the shareholders of Precis Smart
Card Systems, Inc. in connection with an Annual Meeting of the holders of the
Precis common stock to be held in Suite 147 at 2500 South McGee Drive in Norman,
Oklahoma, at ____ p.m., local time, on ________, 2000 and any adjournment or
postponement of the Annual Meeting. This Proxy Statement and the accompanying
Notice of Annual Meeting of Shareholders and Proxy were first mailed on or
about _________, 2000, to Precis' shareholders of record on _________, 2000.

         If the accompanying Proxy is properly executed and returned, the shares
of common stock represented by the Proxy Card will be voted at the Annual
Meeting. If you indicate on the Proxy a choice with respect to any matter to be
voted on, your shares will be voted in accordance with your choice. If no choice
is indicated, your shares of common stock will be voted FOR

-        approval of the Agreement and Plan of Merger, dated March 21, 2000, by
         and among Precis Smart Card Systems, Inc., Precis-Foresight
         Acquisition, Inc. (a wholly-owned subsidiary of Precis) and Foresight,
         Inc. and its shareholders Paul A. Kruger and Mark R. Kidd, providing
         for the merger of Foresight into Precis-Foresight with result that
         Foresight will become a wholly-owned subsidiary of Precis;

-        approval of the Precis Smart Card Systems, Inc. 1999 Stock Option Plan;

-        approval of amendment of Precis' Certificate of Incorporation to
         provide that the provisions of Sections 1090.3 and Sections 1145
         through 1155 of the Oklahoma General Corporation Act no longer apply;

-        approval of amendment Precis' Certificate of Incorporation to increase
         the number of authorized shares of common stock, $.01 par value per
         share, to 100,000,000 shares;

-        the election of four directors, each to hold office until the 2001
         annual meeting of shareholders and until his successor is duly elected
         and qualified; and

-        ratification of Murrell Hall McIntosh & Co., PLLP as the independent
         accountants for 2000.

In addition, your shares will also be considered and voted upon other business
that properly comes before the Annual Meeting or any adjournment or
postponement. Our Board of Directors knows of no business that will be presented
for consideration at the Annual Meeting, other than matters described in this
Proxy Statement. Once given, you may revoke the Proxy by


<PAGE>

-        giving written notice of revocation to our Secretary at any time before
         your Proxy is voted,

-        executing another valid proxy bearing a later date and delivering this
         proxy to the Secretary of the Company prior to or at the Annual
         Meeting, or

-        attending the Annual Meeting and voting in person.

         Neither the corporate laws of Oklahoma, the state in which we are
incorporated, nor our Certificate of Incorporation or Bylaws have any provisions
regarding the treatment of abstentions and broker non-votes. Our policy is (i)
to count abstentions or broker non-votes for purposes of determining the
presence of a quorum at the Annual Meeting, (ii) to treat abstentions as votes
not cast but to treat them as shares represented at the Annual Meeting for
determining results on actions requiring a majority vote, and (iii) to consider
neither abstentions nor broker non-votes in determining results of plurality
votes.

         We will bear the expenses of this proxy solicitation, including the
cost of preparing and mailing this Proxy Statement and accompanying Proxy. These
expenses include the charges and expenses of banks, brokerage firms, and other
custodians, nominees or fiduciaries for forwarding solicitation material
regarding the Annual Meeting to beneficial owners of our common stock.
Solicitation of Proxies may be made by mail, telephone, personal interviews or
by other means by our directors or employees without additional compensation
other than reimbursement for their related out-of-pocket expenses.

         All information contained in this Proxy Statement with respect to
Precis and Precis-Foresight Acquisition and Foresight was furnished by Precis
and Precis-Foresight Acquisition and Foresight, respectively, for inclusion in
this Proxy Statement.

                          SHAREHOLDERS ENTITLED TO VOTE

         The shareholders entitled to vote at the Annual Meeting are the holders
of record, at the close of business on _________, 2000 (the "Record Date"), of
the 2,350,000 shares of common stock then outstanding. Each holder of a share of
common stock outstanding on the Record Date will be entitled to one vote for
each share held on each matter presented at the Annual Meeting. Our officers and
directors own a total of 172,715 shares, or 7.3% of the issued and outstanding
common stock, and intend to vote all of their shares in favor of the matters to
be voted upon at the Annual Meeting. There is no cumulative voting with respect
to the election of directors. The presence in person or by proxy of the holders
of a majority of the shares of common stock outstanding and represented at the
Annual Meeting will constitute a quorum for the transaction of business. The
affirmative vote of the holders of a majority of the outstanding shares of our
common stock is required for approval of the proposals to be presented at the
Annual Meeting, other than approval of our 1999 Stock Option Plan, the election
of directors and ratification of the independent accountants which only require
the affirmative vote of a majority of the shares of common stock present at the
Annual Meeting in person and by proxy and entitled to vote. Votes will be
tabulated by an inspector of election appointed by our Board of Directors.

         THIS PROXY STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF THESE TRANSACTIONS NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.


                                    -ii-
<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
SUMMARY........................................................................................................ -1-
         The Annual Meeting.................................................................................... -1-
         Proposal One -- Foresight, Inc. Merger-Acquisition.................................................... -1-
         Proposal Two -- 1999 Stock Option Plan................................................................ -2-
         Proposal Three -- Anti-Takeover Provisions Amendment.................................................. -3-
         Proposal Four -- Share Amendment...................................................................... -3-
         Proposal Five -- Election of Directors................................................................ -4-
         Proposal Six -- Ratification of Independent Accountants............................................... -4-

THE FORESIGHT, INC. MERGER-ACQUISITION......................................................................... -4-
         Foresight, Inc........................................................................................ -5-
         Precis Smart Card Systems, Inc........................................................................ -5-
         Reasons for the Merger-Acquisition.................................................................... -5-
         Conditions That Must Be Satisfied to Complete the Merger-Acquisition.................................. -6-
         Termination of the Merger-Acquisition  ............................................................... -6-
         Federal Income Tax Consequences....................................................................... -6-
         Accounting Treatment.................................................................................. -6-
         Lack of Opinion of Financial Advisor.................................................................. -7-
         Shareholders Do Not Have Appraisal Rights............................................................. -7-
         Management Changes After the Merger-Acquisition....................................................... -7-
         Interests of Our Executive Officers and Directors in the Merger-Acquisition........................... -7-

SUMMARY HISTORICAL AND UNAUDITED PRO FORMACOMBINED CONDENSED FINANCIAL INFORMATION............................. -8-
         Foresight, Inc. Selected Historical Financial Information............................................. -8-
         Precis Smart Card Systems, Inc. Selected Historical Financial Information............................. -9-
         Summary Unaudited Pro Forma Combined Condensed Financial Information..................................-10-
         Unaudited Comparative Per Share Information...........................................................-11-

RISK FACTORS...................................................................................................-13-

PROPOSAL ONE -- THE MERGER-ACQUISITION.........................................................................-18-
         Background of the Merger-Acquisition..................................................................-18-
         Reasons for and Advantage of the Merger-Acquisition...................................................-19-
         Disadvantages of the Merger-Acquisition...............................................................-20-
         Recommendation of Our Board of Directors..............................................................-22-
         Has Precis or Foresight obtained an opinion regarding the fairness of the merger-acquisition?.........-22-
         Will our shareholders have any approval or appraisal rights?..........................................-23-
         Will there be any management changes of Precis after the merger-acquisition?..........................-23-
         Do any members of management have any material interests in the Merger-Acquisition?...................-23-
         How will the merger-acquisition be treated for accounting purposes?...................................-24-
         How will we and our shareholders be affected by the merger-acquisition
                  for federal income tax purposes?.............................................................-24-
         What are the federal securities law consequences of the merger-acquisition?...........................-25-
         Will any kind of regulatory approval be required?.....................................................-25-
         Summary of the Agreement and Plan of Merger...........................................................-25-
         Required Affirmative Vote.............................................................................-28-


                                       -iii-
<PAGE>


PROPOSAL TWO -- APPROVAL OF OUR 1999 STOCK OPTION PLAN.........................................................-29-
         The Stock Option Plan.................................................................................-29-
         Federal Income Tax Consequences.......................................................................-30-
         Consequences of Merger-Acquisition....................................................................-31-
         Required Affirmative Vote.............................................................................-31-
         Recommendation of Our Board of Directors..............................................................-31-

PROPOSAL THREE -- ANTI-TAKEOVER PROVISIONS AMENDMENT...........................................................-31-
         Consequences of Merger-Acquisition....................................................................-33-
         Required Affirmative Vote.............................................................................-33-
         Recommendation of Our Board of Directors..............................................................-33-

PROPOSAL FOUR -- SHARE AMENDMENT...............................................................................-33-
         Consequences of Merger-Acquisition....................................................................-34-
         Required Affirmative Vote.............................................................................-34-
         Recommendation of Our Board of Directors..............................................................-34-

PROPOSAL FOUR -- ELECTION OF DIRECTORS.........................................................................-34-
         Nominees..............................................................................................-34-
         Consequences of Merger-Acquisition....................................................................-34-
         Required Affirmative Vote.............................................................................-35-
         Recommendation of Our Board of Directors..............................................................-35-
         Information About Each Director and Nominee Directors.................................................-35-
         Compliance with Section 16(a) of the Securities Exchange Act of 1934..................................-36-
         Meetings and Committees of the Board of Directors.....................................................-37-

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS...............................................................-37-
         Executive Officers Compensation.......................................................................-37-
         Stock Option Plan.....................................................................................-38-
         Compensation of Directors.............................................................................-38-
         Indemnification of Officers and Directors.............................................................-38-
         Lack of Employment Arrangements and Keyman Insurance..................................................-39-

PROPOSAL FIVE -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS........................................-39-
         Required Vote.........................................................................................-39-
         Recommendation of Our Board of Directors..............................................................-39-

CERTAIN TRANSACTIONS...........................................................................................-39-

PRICE RANGE OF COMMON STOCK; DIVIDENDS.........................................................................-40-

FORESIGHT, INC.................................................................................................-42-
         General...............................................................................................-42-

         MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS..................-42-
                  Results of Operations........................................................................-42-
                  Comparison of Six Month Periods Ended June 30, 2000 and 1999.................................-43-
                  Comparison of the Years Ended December 31, 1999 and 1998.....................................-43-
                  Liquidity and Capital Resources..............................................................-44-


                                        -iv-
<PAGE>


         BUSINESS..............................................................................................-44-
                  Membership Service Program Industry Overview.................................................-44-
                  Foresight Solution...........................................................................-45-
                  Business Objective and Plan..................................................................-46-
                  Membership Service Programs..................................................................-47-
                  Sales and Marketing Channels.................................................................-50-
                  Client Contractual Arrangements..............................................................-51-
                  Government Regulation........................................................................-52-
                  Competition..................................................................................-52-
                  Employees....................................................................................-53-
                  Facilities...................................................................................-53-
                  Legal Proceedings............................................................................-54-
                  Federal Trade Commission Legal Proceedings...................................................-54-

         MANAGEMENT............................................................................................-54-
                  Executive Officers and Directors.............................................................-54-

         EXECUTIVE OFFICER COMPENSATION AND OTHER INFORMATION..................................................-55-
                  Lack of Employment Arrangements and Keyman Insurance.........................................-55-
                  401(k) Profit Sharing Plan...................................................................-55-

         CERTAIN TRANSACTIONS..................................................................................-55-

PRECIS SMART CARD SYSTEMS, INC.................................................................................-56-

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................-56-
                  Results of Operations........................................................................-56-
                  Comparison of the Six-Month Periods Ended June 30, 2000 and 1999.............................-56-
                  Comparison of the Years Ended December 31, 1999 and 1998.....................................-57-
                  Pro Forma Effect of Stock-Based Compensation.................................................-57-
                  Income Tax Provision (Benefit) ..............................................................-58-
                  Liquidity and Capital Resources..............................................................-58-

         BUSINESS..............................................................................................-59-
                  General......................................................................................-59-
                  What is a smart card and its uses?...........................................................-59-
                  What is the history of the smart card industry?..............................................-60-
                  What products are offered by Precis?.........................................................-61-
                  Who are Precis principal customers?..........................................................-63-
                  How are Precis products developed and what do the Precis products offer?.....................-63-
                  Does Precis have any strategic business relationships?.......................................-63-
                  What is Precis'business strategy and plans for further product development?..................-64-
                  What are the current and future markets for Precis'products?.................................-65-
                  What is the nature and extent of Precis'competition?.........................................-66-
                  Does Precis have any license agreements and intellectual property rights?....................-67-
                  How much does Precis spend on research and product development?..............................-67-
                  Are the operations of Precis subject to government regulation?...............................-67-
                  Employees....................................................................................-68-

PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT..............................................................-68-
         Change in Control.....................................................................................-69-


                                         -v-
<PAGE>

DESCRIPTION OF SECURITIES......................................................................................-69-
         Common Stock..........................................................................................-69-
         Preferred Stock.......................................................................................-70-
         Transfer Agent and Registrar..........................................................................-71-
         Underwriters'Warrants.................................................................................-71-
         Outstanding Stock Options.............................................................................-71-
         Shareholder Action....................................................................................-72-
         Anti-Takeover Provisions..............................................................................-72-

LEGAL MATTERS..................................................................................................-72-

EXPERTS........................................................................................................-72-

OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING................................................................-73-

SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING..................................................................-73-

WHERE YOU CAN FIND MORE INFORMATION............................................................................-73-

INDEX TO FINANCIAL STATEMENTS.................................................................................. F-1
</TABLE>

APPENDIX A -- Agreement and Plan of Merger

APPENDIX B -- Precis Smart Card Systems, Inc. 1999 Stock Option Plan

APPENDIX C -- First Amendment to the Certificate of Incorporation of Precis
              Smart Card Systems, Inc.
APPENDIX D -- Audit Committee Charter of Precis Smart Card Systems, Inc.



                                        -vi-
<PAGE>

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                                     SUMMARY

         The following summary of certain information in this proxy statement
is intended only to provide certain facts and highlights from the material
contained elsewhere herein. We have summarized all material matters that are
presented that are presented in this proxy statement. Our summarization is
qualified in its entirety by the more detailed information elsewhere in this
proxy statement and the appendices hereto, all of which are important and
should be carefully reviewed.

THE ANNUAL MEETING

         The annual meeting of our shareholders will be held in Suite 147 at
2500 South McGee Drive in Norman, Oklahoma, on _____________, 2000, commencing
at ____ p.m., local time. Holders of record of shares of our outstanding
common stock at the close of business on __________, 2000 (the "record date"),
are entitled to notice of and to vote at the annual meeting. On the record
date, there were 2,350,000 shares of common stock outstanding, each of which
will be entitled to one vote on each matter to be acted upon or which may
properly be brought before the annual meeting. The affirmative vote of the
holders of a majority of the outstanding shares of our common stock is
required for approval of the proposals to be presented at the annual meeting,
other than approval of our 1999 Stock Option Plan, election of directors and
ratification of the independent accountants which only require the affirmative
vote of a majority of the shares of common stock present at the annual meeting
in person and by proxy and entitled to vote.

PROPOSAL ONE -- FORESIGHT, INC. MERGER-ACQUISITION (PAGE 17)

         On March 21, 2000, we and our wholly-owned subsidiary,
Precis-Foresight Acquisition, Inc., entered into an Agreement and Plan of
Merger with Foresight, Inc., an Oklahoma corporation. Under this agreement,
subject to approval by the holders of a majority of our outstanding common
stock, we and Foresight agreed as follows (see "Summary of the Agreement and
Plan of Merger, page 22):

-        Foresight will merge with and into our subsidiary and become our
         wholly-owned subsidiary,

-        At closing we will issue and deliver 500,000 shares of our common
         stock;

-        At closing we will issue and deliver 166,667 shares of our series A
         convertible preferred stock

         -        having a stated value of $12.00 per share,

         -        providing annual cumulative dividends of $1.44 per share,
                  payable quarterly, and

         -        permitting each share to be converted, at the holder's option,
                  into one share of our common stock (see "Description of
                  Securities--Preferred Stock--Series A Preferred Stock,
                  page 67;

-        We will issue to the shareholders of Foresight one share of our common
         stock for each dollar of the greater of our and Foresight's combined or
         consolidated income before income tax expense (plus the goodwill
         amortization attributable to the acquisition of Foresight) during 2000,
         2001, 2002 or 2003, less the 500,000 shares of our common stock
         previously delivered to them;


-        Until all of the shares of common stock have been delivered under the
         terms of the merger-acquisition (approximately until April 30, 2004),

         -        Paul A. Kruger, John Simonelli and Mark R. Kidd will serve as
                  members of our board of directors, which will increase our
                  board to seven members and

         -        in the event of the resignation or death of Messrs. Kruger,
                  Simonelli or Kidd, a person designated by Mr. Kruger (or his
                  successors in interest in the event he is deceased) will be
                  named as a director to fill the vacancy created by the
                  resignation or death.

Our requirement to issue additional shares of our common stock to the former
shareholders of Foresight is illustrated as follows:

                                     -1-

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

<PAGE>

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


-        If our and Foresight's combined operations during 2000 resulted in
         consolidated income before income tax expense, plus the goodwill
         amortization attributable to the acquisition of Foresight, of $500,000,
         we would not be required to issue any additional shares of common stock
         to the former shareholders of Foresight.


-        Further assume that our and Foresight's combined operations during 2001
         resulted in consolidated income before income tax expense, plus the
         goodwill amortization attributable to the acquisition of Foresight, of
         $1,000,000, we would be required to issue 500,000 additional shares of
         our common stock. This would be determined by multiplying $1,000,000 by
         one (representing one share per dollar of consolidated income before
         income tax expense) and then subtracting the 500,000 shares of common
         stock previously issued to the former Foresight shareholders at closing
         of the merger-acquisition. Following this issuance of common stock, the
         former Foresight shareholders would have been issued 1,000,000 shares
         of our common stock, 500,000 at closing of the merger-acquisition and
         500,000 as a result of our and Foresight's consolidated operations
         during 2001.


-        Assume further that our and Foresight's combined operations during 2002
         resulted in consolidated income before income tax expense, plus the
         goodwill amortization attributable to the acquisition of Foresight, of
         $1,250,000, we would be required to issue 250,000 additional shares of
         our common stock. This was determined by multiplying $1,250,000 by one
         (representing one share per dollar of consolidated income before income
         tax expense) and then subtracting the 1,000,000 shares of common stock
         previously issued to the former Foresight shareholders. Following this
         issuance of common stock, the former Foresight shareholders would have
         been issued 1,250,000 shares of our common stock, 500,000 at closing of
         the merger-acquisition, 500,000 as a result of our and Foresight's
         consolidated operations during 2001 and 250,000 as a result of our and
         Foresight's consolidated operations during 2002.


-        Assume further that our and Foresight's combined operations during 2003
         resulted in consolidated income before income tax expense, plus the
         goodwill amortization attributable to the acquisition of Foresight, of
         $1,000,000, we would not be required to issue any additional shares of
         our common stock. Accordingly, following completion of the
         merger-acquisition, the former Foresight shareholders would have been
         issued 1,250,000 shares of our common stock, 500,000 at closing of the
         merger-acquisition, 500,000 as a result of our and Foresight's
         consolidated operations during 2001 and 250,000 as a result of our and
         Foresight's consolidated operations during 2002.


Therefore, in the example during the years 2000, 2001, 2002 and 2003 the
greatest amount of consolidated income before income taxes from our and
Foresight's combined operations was $1,250,000 and the former Foresight
shareholders would have been issued 1,250,000 shares of common stock.


         Foresight is a privately held company and there is no market for its
shares of common stock, while our common stock is traded on The Nasdaq Stock
Market under the symbol "PCIS." On March 21, 2000, the last trading day before
we announced the merger-acquisition, our common stock closed at $9.18 per
share. On September 1, 2000, our common stock closed at $2.38 per share.


         In connection with this merger-acquisition, we have agreed to grant
Barron Chase Securities, Inc. stock options exercisable on or before June 30,
2003 for the purchase of 200,000 shares of our common stock for $9.37 per
share. These options were granted for the investment banking financial
services and consulting advice provided by Barron Chase Securities in valuing
and structuring the merger consideration. Barron Chase Securities did not
participate directly in the actual merger negotiations.

PROPOSAL TWO -- 1999 STOCK OPTION PLAN (PAGE 25)

         On November 29, 1999, our board of directors restated and adopted our
1999 Stock Option Plan with an effective date of November 30, 1999. We have
reserved 145,000 shares of our common stock for issuance upon the exercise of
options granted under this plan. The purpose of the plan is to strengthen our
ability to attract and retain well-qualified personnel, to furnish additional
incentive to those persons responsible for our success, and thereby to enhance
shareholder value.

                                     -2-

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<PAGE>

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PROPOSAL THREE -- ANTI-TAKEOVER PROVISIONS AMENDMENT (PAGE 28)

         We are proposing amendment of our Certificate of Incorporation, upon
approval by the holders of a majority of our outstanding common stock, to
provide that

-        the Oklahoma Control Share Acquisition Act (as set forth in Sections
         1145 through 1155 of Title 18 of the Oklahoma Statutes) will not apply
         to us and our shareholders and

-        the prohibitions under Oklahoma law (as set forth in Section 1090.3 of
         Title 18 of the Oklahoma Statutes) related to the mergers, asset sales,
         and other transactions resulting in a financial benefit to shareholders
         will not apply to us and our shareholders.

         In general, under the Oklahoma Control Share Acquisition Act
(Sections 1145 through 1155 of the Oklahoma General Corporation Act), the
acquisition of ownership or voting power of shares of voting stock
representing 20% of all voting power to elect directors causes the shares to
become nonvoting stock for the three years following the acquisition. This
type of acquisition is referred to as a control share acquisition and the
shares are referred to as control shares. This loss of voting rights generally
does not apply to control shares acquired pursuant to an agreement with us or
acquired with approval by the holders of a majority of our common stock.

         Section 1090.3 of the Oklahoma General Corporation Act prohibits a
publicly-held Oklahoma corporation from engaging in a mergers, asset sales,
and other transactions resulting in a financial benefit to a shareholder that
has owned (with his affiliates and associates) 15% or more of the outstanding
common stock for three years or less. This prohibition does not apply to a
transaction if this shareholder attained his 15% or greater shareholder status
with approval of the board of directors or the merger, asset sale, and other
transaction resulting in a financial benefit to a shareholder is approved by
shareholders. Immediately following completion of the merger-acquisition, we
anticipate that Paul A. Kruger will be the only shareholder having a 15% or
greater shareholder status.

         This amendment was unanimously approved by our board of directors on
February 8, 2000, as a condition of registration of our common stock and
compliance with the California Department of Corporations' Rule 260.140.1.
This rule requires all shareholders including those benefitting from a merger,
asset sale or other transaction within the meaning of Section 1090.3 of the
Oklahoma General Corporation Act and any person making a control share
acquisition within the meaning of Section 1145 through 1155 of the Oklahoma
General Corporation Act must be entitled to vote on all matters subject to
approval by the holders of that class. Registration of our common stock with
the California Department of Corporations was conditioned upon our board of
directors unanimously supporting this amendment when submitted to you and our
other shareholders for approval. Accordingly, our board unanimously approved
and supports approval of this amendment. The failure to obtain shareholder
approval of the amendment will not have any effect upon the registration of
our common stock with the California Department of Corporations.

PROPOSAL FOUR -- SHARE AMENDMENT (PAGE 30)

         We are proposing amendment of our Certificate of Incorporation that,
upon approval by the holders of a majority of our outstanding common stock,
will increase our authorized common stock from 8,000,000 to 100,000,000
shares. This amendment is for the principal purpose of increasing the number
of authorized shares of our common stock to permit future issuance

-        under our 1999 Stock Option Plan of up to 145,000 shares of common
         stock,

-        for conversion of our outstanding series A convertible preferred stock
         into 166,667 shares of common stock following completion of the
         merger-acquisition,

-        for potential acquisitions, and

-        as a source for further capital funding.

                                     -3-

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<PAGE>

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PROPOSAL FIVE -- ELECTION OF DIRECTORS (PAGE 31)

         The election of four directors, each to hold office until the 2001
annual meeting of shareholders and until his successor is duly elected and
qualified.

PROPOSAL SIX -- RATIFICATION OF INDEPENDENT ACCOUNTANTS (PAGE 36)

         Ratification of Murrell Hall McIntosh & Co., PLLP as the independent
accountants for 2000. Murrell Hall McIntosh & Co., PLLP has been our
independent accountants since 1999.

         OUR BOARD OF DIRECTORS UNANIMOUSLY APPROVED AND RECOMMENDS TO YOU AND
OUR OTHER SHAREHOLDERS APPROVAL OF EACH OF THE FOREGOING PROPOSALS.


                     THE FORESIGHT, INC. MERGER-ACQUISITION


FORESIGHT, INC. (PAGE 38)
2500 SOUTH MCGEE DRIVE, SUITE 200
NORMAN, OKLAHOMA 73072
(405) 579-9000

         Foresight primarily designs and markets membership and loyalty
programs for rental-purchase companies, financial institutions, employer
groups, retailers and association-based organizations. These programs are
offered and sold as a value-added feature of a point-of-sale transaction
(either rental or purchase) or by direct marketing through direct mail and
other direct marketing distribution. Program members are offered and provided
products and services of Foresight and third-party vendors. The products and
services are bundled, enhanced, priced and marketed utilizing relationship
marketing strategies to target the profiled needs of the client's particular
customer base. The marketing programs offer members an economic, efficient and
expedient method of purchasing the products and services offered. As of June
30, 2000, Foresight had approximately 115 client organizations offering
various membership programs with approximately 560,000 members.

         The program products and services currently offered by Foresight
include various forms of

-        insurance products, including accidental death and dismemberment,
         property and unemployment insurance,

-        consumer discounts and benefits, including discounted fees for health
         services including savings on prescription drugs, dental services and
         vision products and services, credit card and valuables registration
         services, credit reporting and monitoring services, legal services and
         legal defense reimbursement, travel services, and Internet web portal,

-        discount programs and services utilizing redeemable discount coupons,
         including offers for food, household services and entertainment options
         (amusement or theme park discounts), and

-        automotive services including roadside assistance, discounted
         automotive services, theft reward, emergency travel and ambulance
         expense reimbursements.

In addition, Foresight has the ability to build loyalty based point programs
into its membership programs. The points can be redeemed by members for a
variety of products and discounts which may include airline miles or in-store
discounts. The type of point program is customized to the needs of Foresight's
client.

                                     -4-

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<PAGE>

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PRECIS SMART CARD SYSTEMS, INC. (PAGE 52)
2500 SOUTH MCGEE DRIVE, SUITE 147
NORMAN, OKLAHOMA 73072
(405) 292-4900

         We at Precis Smart Card Systems, Inc. are a development stage
company. We have developed and marketed on a limited basis commercial software
products using a technology commonly referred to as "smart cards." The smart
card contains an embedded microchip that serves as an information storage
device that performs limited computer functions. This smart card technology
enables electronic commerce for point-of-sale transactions and can serve as an
information storage device for personal healthcare and emergency medical
treatment. Our products include the following:

-        Precis Health Card System-TM- -- personal medical history and
         information are stored on the care smart card for use by healthcare
         providers and emergency response personnel;

-        PrecisCache-TM- -- an amount of money value is stored on a disposable
         smart card that may be used to purchase products or services typically
         in closed areas including stadiums, arenas, campuses, and events and
         specific retail sites;

-        PrecisReserve-TM- -- a reusable smart card system on which an amount of
         money value is initially stored and additional amounts may be added to
         replenish the money value and may be used to purchase products or
         services; and

-        PrecisPersona-TM- -- a smart card system designed for use by marketers,
         retailers, distributors and manufacturers to track customer purchasing
         preferences and patterns and reward customer loyalty through discounts,
         refunds and other complementary gifts.

Thesep roducts may require enhancement or further development depending on the
customer's proposed use of our products.

REASONS FOR THE MERGER-ACQUISITION (PAGE 18 )

Our Board of Directors believes the merger-acquisition will benefit you, our
ohter shareholders and us for a number of reasons:

1.       The successful implementation of our business plan largely depends on
         the effectiveness of our efforts to market our smart card technology.
         Currently, Foresight is assisting in marketing our smart card products
         and technology. We believe that companies with smart card marketing
         experience are very limited. Therefore, we may not be able to obtain
         marketing assistance from other third-party marketers. Without this
         assistance, our product marketing will be limited to our internal
         marketing staff, which we believe will increase the possibility that
         our marketing activities will be unsuccessful.

2.       We believe the merger-acquisition will permit cost savings which
         increase the efficiency of our operations. This also should reduce our
         losses and we anticipate will ultimately lead to our profitability.

3.       You and our other shareholders will own an interest in a larger and
         more diversified company. Although this puts you and our other
         shareholders at risk with regard to the aspects of Foresight's
         business, the acquisition of Foresight will provide other sources of
         revenues. Consequently, our success and profitability will not be
         solely dependent upon our smart card technology and its market
         acceptance.

4.       We anticipate that Foresight's future revenues, cash flows and profits,
         when combined with ours, will reduce the "burn rate" or rate of
         exhaustion of our capital resources, including the remaining net
         proceeds of our initial public offering.

5.       Our smart card products and computer software applications are subject
         to rapid technological change and obsolescence and any developed market
         position in the smart card industry or other markets that we may enter
         could be eroded rapidly by product advancements. We believe that
         Foresight's business and

                                     -5-

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<PAGE>

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

         products will add product diversification, as well as revenue source
         diversification as mentioned above, consequently reducing the risk of
         technology obsolescence.

Our expected or anticipated effects of the merger-acquisition, of course, are
forward-looking and there is no assurance that they will be realized. You
should review the "Risk Factors" section of this Proxy Statement and
familiarize yourself with Foresight by reading the information provided
elsewhere in this Proxy Statement before making your decision to approve the
Agreement and Plan of Merger.

CONDITIONS THAT MUST BE SATISFIED TO COMPLETE THE MERGER-ACQUISITION (PAGE 24)

         Completion of the merger-acquisition depends on a number of
conditions being met. These conditions are contained in the Agreement and Plan
of Merger. Some of the conditions are:

1.       our shareholders must approve the Agreement and Plan of Merger; and

2.       there must be no governmental order blocking completion of the
         merger-acquisition and no governmental proceeding threatening to block
         the merger-acquisition.

Unless prohibited by law, we or Foresight may waive any condition to the
merger-acquisition (other than our shareholders' approval) that has not been
satisfied and complete the merger-acquisition anyway. We cannot be certain
whether or when any of these conditions will be satisfied or waived if
possible. We cannot be certain that we will complete the merger-acquisition.

TERMINATION OF THE MERGER-ACQUISITION (PAGE 24)

We and Foresight may agree to terminate the Agreement and Plan of Merger, even
if previously approved by our shareholders. Furthermore, we or Foresight may
terminate at any time prior to the effective time for a number of reasons,
including:

1.       if the merger-acquisition is not completed by September 30, 2000; or

2.       if there is a non-appealable final order, decree or ruling or other
         action having the effect of permanently restraining, enjoining or
         otherwise prohibiting the merger-acquisition; or

3.       if we on the one hand or Foresight on the other hand materially
         violates any of our or Foresight's (as the case may be)
         representations, warranties or obligations under the Agreement and Plan
         of Merger.

We or Foresight cannot seek to terminate the Agreement and Plan of Merger if
we or Foresight, as the case may be, caused the reason for termination or
material breach.

FEDERAL INCOME TAX CONSEQUENCES (PAGE 21)

         We expect that you, our other shareholders and us will not recognize
any gain or loss for U.S. federal income tax purposes in connection with the
merger-acquisition. We will receive an opinion of our legal counsel that this
is the case. However, this opinion will not be binding on the Internal Revenue
Service, which could take a different view.

ACCOUNTING TREATMENT (PAGE 20)

         For accounting purposes, we will be considered to have purchased
Foresight. On a pro forma basis, the purchase price of Foresight will be
$3,750,000, which will be recorded as goodwill (an intangible asset). This
goodwill will be amortized over 15 years and will be attributable to
Foresight's customer contracts, customer list, product development and vendor
network. Any additional shares of our common stock issued and delivered in
connection with and subsequent to the merger-acquisition of Foresight will be
recorded as additional goodwill. These additional shares, if any, will
increase the purchase price of Foresight and will be recorded as additional
goodwill based upon the market value of the shares on the date of issuance.
This additional goodwill will be amortized over the remainder of the 15-year
period.

                                     -6-

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<PAGE>

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LACK OF OPINION OF FINANCIAL ADVISOR (PAGE 19)

         In merger-acquisition transactions, the respective companies in some
circumstances obtain opinions of investment banking or financial adviser
firms. These opinions relate to the fairness to the respective shareholders of
the consideration to be received in the merger-acquisition from a financial
point of view. We have not obtained and will not seek an opinion from an
investment banking or financial adviser firm regarding the fairness of our
merger-acquisition of Foresight. However, without reliance on an independent
third-party fairness opinion, our Board of Directors concluded that the
consideration to be paid by us to the Foresight shareholders in the
merger-acquisition is fair from a financial point of view to you and our other
shareholders.

SHAREHOLDERS DO NOT HAVE APPRAISAL RIGHTS (PAGE 19)

         Although we are seeking approval of the merger-acquisition of
Foresight, this approval is not required under the Oklahoma General
Corporation Act. Accordingly, you and our other shareholders will not have any
rights of appraisal under the Oklahoma General Corporation Act.

MANAGEMENT CHANGES AFTER THE MERGER-ACQUISITION (PAGE 20)

         Upon completion of the merger-acquisition, the number of directors
serving on our Board of Directors will be increased to seven and Paul A.
Kruger, John Simonelli and Mark R. Kidd will become members of our Board of
Directors.

INTERESTS OF OUR EXECUTIVE OFFICERS AND DIRECTORS IN THE MERGER-ACQUISITION
(PAGE 20)

         Our Chief Financial Officer, Controller and Secretary, Mark R. Kidd,
also serves as Executive Vice President, Chief Financial Officer, Secretary
and a Director of Foresight. Mr. Kidd has an interest in the
merger-acquisition that is different from your and our other shareholders'
interests. On the effective date of the merger, Mr. Kidd will be entitled to
receive 50,000 shares of our common stock in exchange for his common stock
shares of Foresight and, pursuant to an agreement with Paul A. Kruger, a
portion of the additional shares of common stock that may be issued in
connection with the merger-acquisition. In addition, we have agreed to enter
into an employment agreement with Mr. Kidd providing for employee compensation
and benefits similar to the compensation and benefits being received by Mr.
Kidd from Foresight immediately prior to the effective time of the
merger-acquisition.








                                     -7-

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<PAGE>

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                   SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
                    COMBINED CONDENSED FINANCIAL INFORMATION

FORESIGHT, INC. SELECTED HISTORICAL FINANCIAL INFORMATION

         The following table presents selected historical financial data of
Foresight. The financial data presented below as of December 31, 1999 and 1998
and for each of the years ended on these dates are audited and have been
derived from the financial statements of Foresight which are contained in this
proxy statement. The financial data as of June 30, 2000 and 1999 and for the
six months ended on these dates are unaudited and derived from the financial
statements of Foresight which are contained in this proxy statement. You
should read this information together with Foresight's financial statements
and their notes and with Foresight's "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are presented later in
this proxy statement.

<TABLE>
<CAPTION>
                                                               FOR THE YEAR              FOR THE SIX MONTHS
                                                                   ENDED                        ENDED
                                                               DECEMBER 31,                    JUNE 30,
                                                      ---------------------------    ----------------------------
                                                           1999          1998             2000           1999
                                                      -------------  ------------    -------------    -----------
<S>                                                   <C>            <C>             <C>              <C>
STATEMENT OF OPERATIONS DATA:
Product and service revenues (1)......................$  6,635,390   $ 17,818,861    $  3,617,492     $ 3,300,819
                                                      ------------   ------------    ------------     -----------
Operating expenses--
    Product deployment................................   4,249,225     11,595,396       2,287,622       2,215,173
    Sales and marketing...............................     677,702        720,973         385,829         325,207
    General and administrative........................   1,259,099      1,868,007         762,558         444,736
                                                      ------------   ------------    ------------     -----------
            Total operating expenses (1)..............   6,186,026     14,184,376       3,436,009       2,985,116
                                                      ------------   ------------    ------------     -----------
            Operating income..........................     449,364      3,634,485         181,483         315,703
Other income--
    Interest (income) expense.........................      (1,740)       (49,870)         (6,325)          3,744
                                                      ------------   ------------    ------------     -----------
Income before income taxes............................     451,104      3,684,355         187,808         311,959
Provision for income taxes - current..................    (150,000)           --          (42,000)       (115,000)
                                                      ------------   ------------    ------------     -----------
Net income............................................     301,104      3,684,355    $    145,808         196,959
                                                                                     ============
Pro forma provision for income taxes (unaudited)......     (13,000)    (1,400,000)                        (13,000)
                                                      ------------   ------------                     -----------
Pro forma net income (unaudited)......................$    288,104   $  2,284,355                     $   183,959
                                                      ============   ============                     ===========
Earnings per share--
    Net income per share..............................$     602.21   $   7,368.71    $     291.62     $    393.92
                                                      ============   ============    ============     ===========
    Pro forma net income per share (unaudited)........$     576.21   $   4,568.71                     $    367.92
                                                      ============   ============                     ===========

    Weighted average number of common
        shares outstanding............................         500            500             500             500
                                                      ============   ============    ============     ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                                DECEMBER  31,
                                                                          -------------------------       JUNE 30,
                                                                             1999           1998            2000
                                                                          ---------      ----------     -----------
<S>                                                                       <C>            <C>            <C>
BALANCE SHEET DATA:
Current assets........................................................    $ 975,486      $3,309,819     $ 1,084,635
Working capital (deficit).............................................     (164,438)      2,783,305          (6,332)
Total assets..........................................................    1,133,608       3,317,758       1,230,459
Current liabilities...................................................    1,139,924         526,514       1,090,967
Long-term debt, net of current portion................................          --              --              --
Stockholders' equity (deficit)........................................      (45,316)      2,791,244         100,492

</TABLE>


(1)      THE DECREASE IN REVENUE AND TOTAL OPERATING EXPENSES FROM 1998 TO 1999
         WAS PRIMARILY ATTRIBUTABLE TO THE LOSS OF ONE LARGE RENTAL-PURCHASE
         CLIENT IN 1998. THE REVENUE FROM THIS CLIENT IN 1998 WAS APPROXIMATELY
         $11,000,000. NO REVENUE WAS RECEIVED FROM THIS CLIENT IN 1999.

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                                      -8-

<PAGE>

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PRECIS SMART CARD SYSTEMS, INC. SELECTED HISTORICAL FINANCIAL INFORMATION

         The following table presents our selected historical financial data.
The financial data presented below as of December 31, 1999 and 1998 and for
the years ended on these dates are audited and have been derived from our
financial statements which are contained in this proxy statement. The
financial data as of June 30, 2000 and 1999 and for the six months ended on
these dates are unaudited and derived from our financial statements which are
contained in this proxy statement. You should read this information together
with our financial statements and their notes and with our "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
which are presented later in this proxy statement.

<TABLE>
<CAPTION>
                                                            FOR THE YEAR ENDED          FOR THE SIX MONTHS ENDED
                                                               DECEMBER  31,                   JUNE  30,
                                                      ---------------------------     ----------------------------
                                                           1999            1998            2000             1999
                                                      -----------     -----------     -----------      -----------
<S>                                                   <C>             <C>             <C>              <C>
STATEMENT OF OPERATIONS DATA:
Product and service revenues......................    $    63,060     $   322,483     $     --         $    25,000
                                                      -----------     -----------     -----------      -----------
Operating expenses--
    Product deployment and
        research and development..................        230,828         389,586         113,233          134,462
    Sales and marketing...........................        163,712         147,411          87,587           79,321
    General and administrative....................        382,764         399,756         234,800          217,124
                                                      -----------     -----------     -----------      -----------
            Total operating expenses..............        777,304         936,753         435,620          430,907
                                                      -----------     -----------     -----------      -----------
            Operating loss........................       (714,244)       (614,270)       (435,620)        (405,907)
                                                      -----------     -----------     -----------      -----------
Other expense (income)--
    Interest expense..............................         79,261          59,196          23,644           42,834
    Interest income...............................           --            (2,136)        (91,428)            --
                                                      -----------     -----------     -----------      -----------
                                                           79,261          57,060         (67,784)          42,834
                                                      -----------     -----------     -----------      -----------
Net loss -- Deficit accumulated
    during development state......................    $  (793,505)    $  (671,330)    $  (367,836)     $  (448,741)
                                                      ===========     ===========     ===========      ===========

    Weighted average number of common
        shares outstanding........................      1,200,000       1,200,000       2,158,000        1,200,000
                                                      ===========     ===========     ===========      ===========
    Net (loss) per share..........................    $     (0.66)    $     (0.56)    $     (0.17)     $     (0.37)
                                                      ===========     ===========     ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                               DECEMBER  31,
                                                                       ----------------------------      JUNE  30,
                                                                            1999            1998            2000
                                                                       ------------      ----------     ----------
<S>                                                                    <C>               <C>            <C>
BALANCE SHEET DATA:
Current assets....................................................     $    21,538       $  10,035      $4,278,971
Working capital (deficit).........................................      (1,198,107)       (757,441)      4,227,989
Total assets......................................................         168,966          74,253       4,308,971
Current liabilities...............................................       1,219,645         767,476          50,982
Long-term debt, net of current portion............................             --           41,570             --
Stockholders' equity (deficit)....................................      (1,050,679)       (734,793)      4,257,989

</TABLE>








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                                      -9-

<PAGE>

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SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

         The following table presents our selected pro forma combined
financial information assuming that the merger-acquisition of Foresight
occurred on the date of the balance sheet and at the beginning of each period
for which results of operations are presented. The information presented below
is derived from, and should be read in conjunction with, our financial
statements and the financial statements of Foresight, our unaudited pro forma
combined financial information and other information related to us and
Foresight, all presented later in this proxy statement. The pro forma
information is presented for illustrative purposes only, is not necessarily
indicative of the results of operations or financial position that would have
been achieved if the transactions included in the pro forma adjustments had
been consummated in accordance with the assumptions set forth in the notes to
our unaudited pro forma combined financial statements, and is not necessarily
indicative of our future operating results or financial position.

<TABLE>
<CAPTION>

                                                                                          PRO FORMA COMBINED
                                                                                  ---------------------------------
                                                                                                       SIX MONTHS
                                                                                      YEAR ENDED          ENDED
                                                                                  DECEMBER 31, 1999   JUNE 30, 2000
                                                                                  -----------------   -------------
<S>                                                                               <C>                 <C>
STATEMENT OF OPERATIONS DATA:
Product and service revenues.................................................       $  6,698,450      $  3,617,492
                                                                                    ------------      ------------
Operating expenses:
     Product deployment and research and development.........................          4,480,053         2,400,855
     Sales and marketing.....................................................            841,414           472,876
     General and administrative..............................................          1,885,164         1,119,009
                                                                                    ------------      ------------
         Total operating expenses............................................          7,206,631         3,992,740
                                                                                    ------------      ------------

Operating income (loss)......................................................           (508,181)         (375,248)
                                                                                    ------------      ------------
Other expense (income):

     Interest expense........................................................             79,261            23,694
     Interest income.........................................................             (1,740)          (97,803)
                                                                                    ------------      ------------
                                                                                          77,521           (74,109)
                                                                                    ------------      ------------

Income (loss) before income taxes............................................           (585,702)         (301,139)
                                                                                    ------------      ------------

Net income (loss)............................................................           (585,702)         (301,139)

Preferred dividend requirements..............................................            240,000           120,000
                                                                                    ------------      ------------

Net loss available to common shareholders....................................       $   (825,702)     $   (421,139)
                                                                                    ============      ============

Net loss per common share....................................................       $      (0.49)     $      (0.16)
                                                                                    ============      ============

Weighted average number of common shares outstanding.........................          1,700,000         2,658,000
                                                                                    ============      ============
</TABLE>

<TABLE>
<CAPTION>

                                                                                                          JUNE 30,
                                                                                                            2000
                                                                                                         ----------
<S>                                                                                                      <C>
BALANCE SHEET DATA:
Current assets...................................................................................        $5,363,606
Working capital..................................................................................         4,221,657
Total assets.....................................................................................         9,188,938
Current liabilities..............................................................................         1,141,949
Long-term debt, net of current portion...........................................................               --
Stockholders' equity.............................................................................         8,007,989

</TABLE>

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                                     -10-

<PAGE>

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UNAUDITED COMPARATIVE PER SHARE INFORMATION

         The following table presents our and Foresight's comparative earnings
(loss) per share and shareholders' equity (deficit) per share on a historical
basis and on a pro forma basis giving effect to our merger-acquisition of
Foresight. The historical information is derived from our and Foresight's
historical financial statements presented later in this proxy statement. The
unaudited pro forma information assumes that Foresight has been merged with us
throughout the periods presented.


<TABLE>
<CAPTION>

                                                                                           FOR THE      FOR THE SIX
                                                                                         YEAR ENDED     MONTHS ENDED
                                                                                         DECEMBER 31,     JUNE 30,
                                                                                            1999            2000
                                                                                         ------------   ------------
<S>                                                                                      <C>            <C>
Earnings (loss) per common share from operations
     Precis Smart Card Systems, Inc.:
          Historical..............................................................        $  (0.66)       $  (0.17)
          Pro forma combined for the merger-acquisition(1)........................           (0.49)          (0.16)
     Foresight, Inc.:
          Historical..............................................................          602.21          291.62
          Pro forma equivalent for the merger-acquisition(2)......................         (653.34)        (213.34)
Dividends per common share
     Precis Smart Card Systems, Inc.:
          Historical..............................................................             --              --
          Pro forma combined for the merger-acquisition(1)........................            0.25             --
     Foresight, Inc.:
          Historical..............................................................          860.00             --
          Pro forma equivalent for the merger-acquisition(2)......................          333.34             --
Stockholders' equity (deficit) per common share (end of period)
     Precis Smart Card Systems, Inc.:
          Historical..............................................................           (0.88)           1.81
          Pro forma combined for the merger-acquisition(1)........................             N/A            2.81
     Foresight, Inc.:
          Historical..............................................................          (90.63)         200.98
          Pro forma equivalent for the merger-acquisition(2)......................             N/A        3,746.66
Net tangible book value (deficit) per common share (end of period)(3)
     Precis Smart Card Systems, Inc.:
          Historical..............................................................           (0.88)           1.81
          Pro forma combined for the merger-acquisition(1)........................             N/A            1.53
     Foresight, Inc.:
          Historical..............................................................          (90.63)         200.98
          Pro forma equivalent for the merger-acquisition(2)......................             N/A        2,040.00
Pro forma combined for the merger-acquisition dilution or accretion
     Stockholders' equity (end of period) accretion per common share..............             N/A            1.00
     Net tangible book value (end of period) dilution per common share(3).........             N/A            0.28

</TABLE>

--------------------------------------
(1)     The unaudited comparative per share information is presented for
        informational purposes only and does not give effect to any synergies
        that may occur due to the combining of our and Foresight's operations.
        We expect to incur legal, accounting, proxy printing and distribution
        expenses of approximately $45,000 in connection with the
        merger-acquisition. These charges are not reflected in the unaudited
        pro forma combined balance sheet or statements of operations.

(2)     The Foresight per share pro forma equivalent for the merger-acquisition
        is calculated by multiplying our pro forma combined for the
        merger-acquisition share amount by the share exchange ratio (each
        common stock share of Foresight being equivalent to 1,333.33 shares of
        our common stock, assuming conversion of the series A convertible
        preferred stock into 166,667 shares of our common stock).


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                                     -11-

<PAGE>

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(3)     The net tangible book value per share for the pro forma combined
        presentation is based upon the number of shares of common stock
        outstanding at the end of the period, adjusted to include the shares of
        common stock issued pursuant to the merger-acquisition. Net tangible
        book value per share represents the amount of our tangible net worth
        (total tangible assets, less total liabilities) divided by the total
        number of shares of common stock outstanding.




























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

                                     -12-

<PAGE>


                                  RISK FACTORS

         In addition to the other information in this Proxy Statement, you
should carefully consider the risk factors discussed below in evaluating the
merger-acquisition of Foresight, Inc. Many of the factors discussed below are
not within Foresight's or our control. We provide no assurance that, following
completion of the merger-acquisition, one or more of these factors will not
adversely affect the market price of our common stock, our future operations,
and our business, financial condition, or results of operations. The occurrence
of these factors following completion of the merger-acquisition of Foresight may
ultimately require significant reduction or discontinuance of our operations,
require us to seek a merger partner or require us to sell additional stock on
terms that are highly dilutive to our shareholders.

CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING INFORMATION

         We have included some forward-looking statements in this section and
other places in this Proxy Statement regarding our expectations after completion
of the merger-acquisition. These forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, levels of activity, performance or achievements, or industry results,
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements. Some of these forward-looking statements can be identified by the
use of forward-looking terminology including "believes," "expects," "may,"
"will," "should" or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategies that involve
risks and uncertainties. You should read statements that contain these words
carefully because they:

-        discuss our future expectations;

-        contain projections of our future operating results or of our future
         financial condition; or

-        state other "forward-looking" information.

         We believe it is important to communicate our expectations to you, but
events may occur in the future over which we have no control and which we are
not accurately able to predict.

RISKS ASSOCIATED WITH THE MERGER-ACQUISITION

         Although we believe that Foresight's business will complement and fit
well with our needs for marketing of our smart card technology and products, the
marketing business is new to us. Our unfamiliarity with this business may make
it more difficult to integrate Foresight's operations with ours. We will not
achieve the anticipated benefits of the merger-acquisition unless we
successfully integrate the operations of Foresight. There can be no assurance
that this will occur.

ASSUMPTION OF CONTINGENT TAX LIABILITY

         In January 1999, the former parent of Foresight, Universal Marketing
Services, Inc., purchased the outstanding common stock Foresight for $4,540,000.
Universal Marketing Services agreed to indemnify the former owners of the common
stock of Foresight for the increase in federal income taxes and any applicable
penalties to the extent that $4,532,000 of the purchase price does not qualify
for long-term capital gain treatment. These former shareholders reported
$4,532,000 of the purchase price as long-term capital gain. In connection with
the merger-acquisition, we will assume this indemnification obligation of
Universal Marketing Services. Upon examination the Internal Revenue Service may
take the position that a portion of the $4,532,000 should be classified as
ordinary income taxable at the maximum federal income tax rate of 39.6% rather
than the applicable 20% rate. In the event the Internal Revenue Service
successfully asserts that long-term capital gain classification was improper,
we will be required to indemnify the former shareholders.


                                     -13-
<PAGE>



DEPENDENCE ON CLIENTS

         In carrying out its program marketing activities, Foresight is
dependent upon its clients utilizing its services to design membership programs
for customers. Each marketing program is approved by the client prior to
presentation to the client's customers.

         Approximately 74% and 75% of Foresight's revenues for the year ended
December 31, 1999 and the six months ended June 30, 2000, were attributable to
membership programs of Rent Way, Inc. Those client relationships that are
pursuant to written contracts typically may be terminated by us or the client
upon 90 days' notice prior to the initial two-year anniversary or the one-year
anniversary date thereafter without cause and without penalty. Generally, upon
such termination, the client may not offer similar products or services for a
one-year period; however, Foresight is not prohibited from continuing to offer
or provide membership services and products directly or indirectly to the
client's individual customers. If the agreement is terminated for Foresight's
default, Foresight is are prohibited from renewing memberships and the client
has the right to cause Foresight to terminate its relationship with existing
program members. Events that constitute default include events outside
Foresight's control, including acts and omissions by Foresight's third-party
product and service vendors or providers. Foresight can not provide any
assurance that Foresight's principal client and other clients will not terminate
their relationship with Foresight or that clients will provide additional
customer lists for Foresight's use in further marketing of new or existing
membership programs.

CLIENT RELATIONSHIPS ARE GENERALLY DEVELOPED OVER A PERIOD OF SIX MONTHS OR MORE

         Foresight's client relationships are based in part on professional
relationships and the reputation of its management and marketing personnel.
Consequently, client relationships may be adversely affected by events beyond
Foresight's control, such as departures of key personnel and alterations in
professional relationships, and lost clients may not be replaced on a timely
basis, if at all.

         The loss of any client for any reason, particularly Foresight's client
that accounted for more than 70% of its revenues during 1999 and the first six
months of 2000, could have a material adverse effect on Foresight's (as well as
ours following completion of the merger-acquisition) business, financial
condition and results of operations.

DEPENDENCE ON MEMBERSHIP RENEWALS

         Generally, during the initial year of an individual membership program,
as compared to renewal years, the program generates minimal cash flows due to
higher marketing costs associated with initial member procurement. Furthermore,
a higher percentage of cancellations occurs during the initial membership period
as compared to renewal periods. Accordingly, Foresight's revenues and
profitability from membership programs depend on recurring and sustained
membership renewals. Renewal rates are inherently uncertain. There are a number
of factors affecting renewals, many of which are outside of Foresight's control,
including changing member preferences, competitive price pressures, general
economic conditions and customer satisfaction. Foresight does not provide any
assurance that a particular membership program will generate sufficient renewals
to become profitable or that memberships, if renewed, will not be subsequently
canceled. Failure of one or more of a client's membership programs to generate
recurring and sustained membership sales or renewals may have a material adverse
effect on Foresight's (as well as ours following completion of the
merger-acquisition) business, financial condition and results of operations.

COMPETITION

         Competition is intense in the membership services market for clients.
Foresight offers membership programs that provide products and services similar
to or directly compete with products and services offered by Foresight's
competitors as well as the providers of such products and services through other
channels of distribution. Through contractual arrangements with a competitor,
potential clients may be prohibited from contracting with Foresight to design a
membership program if the services or products provided by Foresight's program
are similar to, or merely overlap with, the services or products provided by an
existing competitor's program. Although not permitted under the current
agreements with Foresight's clients, in the future some of Foresight's clients
may provide, either directly or through third parties, programs offered by
Foresight's competitors that directly compete with Foresight's programs.

                                    -14-
<PAGE>

Competition for new members is also intense, particularly as the market becomes
saturated with customers who are already members of competing programs.
Foresight's principal competitors are Cendant Corporation, Memberworks, Inc.,
Nationwide Club Administrators, Inc., Encore International, Inc. and Consumer
Benefit Services, Inc. Foresight's other competitors include large retailers,
travel agencies, financial institutions, and other organizations which offer
benefit programs to their customers. There can be no assurance that:

-        Foresight's competitors will not increase their emphasis on programs
         similar to those offered by Foresight and more directly compete with
         it;

-        new competitors will not enter the market; or

-        other businesses will not themselves introduce competing programs.

         Many of Foresight's competitors have substantially larger customer
bases and greater financial and other resources. We and Foresight can not
provide any assurance that Foresight's competitors will not provide programs
comparable or superior to the client programs designed by Foresight at lower
membership prices or adapt more quickly to evolving industry trends or changing
market requirements. Also, strategic alliances among competitors may emerge
resulting in concentration of market share. Increased competition may result in
price reductions, reduced gross margins, and loss of market share, any of which
could materially adversely affect the combined business, financial condition and
results of operations of Foresight and us. There can be no assurance that
Foresight (and following completion of the merger-acquisition that we) will be
able to compete effectively against current and future competitors.

NEW PROGRAM INTRODUCTIONS

         A critical element of Foresight's marketing business is the ability to
develop and successfully introduce new membership programs that meet the needs
of clients and generate consumer interest. Foresight's failure to design and
provide new programs to clients in a timely manner could result in loss of
clients and market share to Foresight's competitors. In addition, a client's
introduction or announcement of new programs, whether designed by Foresight or
its competitors, may render Foresight's existing programs noncompetitive or
obsolete, or result in a delay or decrease in orders as customers evaluate new
programs or select the new programs as an alternative to existing programs.
Thus, the announcement or introduction of new competitive programs, whether
offered by Foresight or its competitors, or Foresight's (as well as ours
following completion of the merger-acquisition) failure to design or the
clients' failure to introduce new programs which have broad consumer appeal,
could have a material adverse effect on Foresight's (as well as ours following
completion of the merger-acquisition) business, financial condition and results
of operations.

DEPENDENCE ON VENDORS

         Foresight and most of its clients depend on independent third-party
vendors to provide products and services to program members. In addition,
Foresight depends on its clients to market Foresight's membership programs.
Foresight's arrangements with vendors generally may be terminated by the vendor
with limited prior notice. There is no assurance that, in the event a vendor
ceases operations, or terminates, breaches or chooses not to renew its agreement
with a client or Foresight, a replacement vendor could be retained on a timely
basis, if at all. In addition, vendors are independent contractors and the level
and quality of services provided is not within Foresight's control. Any service
delays, interruptions, or quality problems could result in customer
dissatisfaction and membership cancellations, that could have a material adverse
effect on Foresight's (as well as ours following completion of the
merger-acquisition) business, financial condition and results of operations.

DEPENDENCY ON RETAILERS

         The success of Foresight's marketing activities is dependent in large
part on continued demand for Foresight's marketing program design capabilities
as well as the economic conditions of the industries served by Foresight's
clients or prospective clients. In particular, programs designed by Foresight
and marketed by its clients in the rental-purchase industry accounted for
substantially all of Foresight's revenues in 1999. A significant downturn in the
rental-purchase industry as well as any other industry served by Foresight's
clients or an industry trend to reduce or eliminate the use

                                    -15-
<PAGE>

of membership programs would have a material adverse effect on Foresight's (as
well as ours following completion of the merger-acquisition) business, financial
condition and results of operations.

MEMBERSHIP PROGRAM INDUSTRY; IMPACT OF THE INTERNET AND OTHER COMPETING
INDUSTRIES

         Foresight, like all other providers of consumer membership programs,
competes for client marketing budget dollars with other marketing activities
and, in particular, other forms of direct marketing activities, such as direct
mail or delivery distribution. More recently, there have been significant
advances in new forms of direct marketing, such as the development of
interactive shopping and data collection through television, the Internet and
other media. As widely reported and predicted, electronic interactive shopping
and information exchange on the World Wide Web has and continues to proliferate
significantly. To the extent such proliferation continues, electronic shopping
on the Internet and the World Wide Web may have a material adverse effect on the
demand for membership service programs. Furthermore, as the telemarketing
industry continues to grow, the effectiveness of telemarketing as a direct
marketing tool may decrease as a result of increased consumer resistance to
telemarketing in general.

RELIANCE ON COMPUTER AND COMMUNICATIONS SYSTEMS; TECHNOLOGY OBSOLESCENCE

         Foresight's business is highly dependent on its computer and
telecommunications systems and any temporary or permanent loss of either system,
for whatever reason, could have a material adverse effect on Foresight's (as
well as ours following completion of the merger-acquisition) business, financial
condition and results of operations. In addition, the technologies on which
Foresight is dependent to compete effectively and meet its clients' needs are
rapidly evolving and in many instances are characterized by short product life
cycles or innovation. As a result, Foresight is dependent on ongoing,
significant investment in advanced computer and telecommunications technology
and its ability to anticipate and adapt to technological shifts. There is no
assurance that Foresight will be successful in anticipating or adapting to
technological changes or in selecting and developing new and enhanced technology
on a timely basis.

DEPENDENCE ON TELEPHONE SERVICE

         The marketing of products and services to and support of program
members is highly dependent on telephone services provided by various local and
long distance telephone companies. Foresight's (as well as ours following
completion of the merger-acquisition) business, financial condition and results
of operations could be adversely affected by any one of the following:

-        any significant interruption in telephone services;

-        limitations on the ability of telephone companies to provide us with
         increased capacity that may be required in the future, if any; and

-        rate increases imposed by these telephone companies and the
         corresponding increases in operating expenses.

GOVERNMENT REGULATION; ADVERSE PUBLICITY

         Although historically utilized to a limited extent, Foresight's
membership programs are sometimes marketed via telemarketing. The telemarketing
industry is subject to an increasing amount of federal and state regulation as
well as general public scrutiny. The Federal Telephone Consumer Protection Act
of 1991 limits the hours during which telemarketers may call consumers and
prohibits the use of automated telephone dialing equipment to call certain
telephone numbers. The Federal Telemarketing and Consumer Fraud and Abuse
Prevention Act of 1994, and Federal Trade Commission regulations promulgated
thereunder, prohibit deceptive, unfair or abusive practices in telemarketing
sales. Both the Federal Trade Commission and state attorneys general have
authority to prevent telemarketing activities that constitute "unfair or
deceptive acts or practices." Additionally, some states have enacted laws and
others are considering enacting laws targeted directly at telemarketing
practices. We provide no assurance that any such laws, if enacted, will not
adversely affect or limit Foresight's future operations.

         Foresight is responsible for compliance with federal and state
regulations. The membership programs industry is especially susceptible to
charges by the media of regulatory noncompliance and unfair dealing. As is often
the case, the media may publicize perceived non-compliance with consumer
protection regulations and violations of notions of

                                    -16-
<PAGE>

fair dealing with consumers. Foresight's failure to comply with current as well
as newly enacted or adopted federal and state regulations could have a material
adverse effect upon Foresight's (as well as ours following completion of the
merger-acquisition) business, financial condition and results of operations in
addition to the following:

-        non-compliance may cause us to become the subject of a variety of
         enforcement or private actions for non-compliance;

-        compliance with changes in applicable regulations could materially
         increase the associated operating costs;

-        non-compliance with any rules and regulations enforced by a federal or
         state consumer protection authority may subject us or our management
         personnel to fines or various forms of civil or criminal prosecution;
         and

-        non-compliance or alleged non-compliance may result in negative
         publicity potentially damaging our reputation, client relationships and
         the relationship with program members and consumers in general.

FEDERAL TRADE COMMISSION LEGAL PROCEEDINGS

         In July 1999, the Federal Trade Commission commenced an investigation
of the telemarketing of credit card registration services by Universal Marketing
Services, Inc. On June 28, 2000, the Federal Trade Commission filed a complaint
in the United States District Court for the Western District of Oklahoma against
Universal Marketing Services, Inc. and its President, Steven Brett Wimberley.
Universal Marketing Services was formerly the parent of Foresight and managed
the operations of Foresight. The investigated telemarketing activities were
conducted by an unrelated third party pursuant to a written agreement. Under
this agreement, the third party agreed to conduct all telemarketing activities
in compliance with the rules and regulations of the Federal Trade Commission.
The Federal Trade Commission would not limit its investigation to or agree only
to pursue the third party. To avoid prolonged litigation and the associated
expenses, Universal Marketing Services and Mr. Wimberley agreed to a stipulated
judgment and a $100,000 consent judgment was entered against them.

         Under the terms of the stipulated judgment, Universal Marketing
Services and Mr. Wimberley are banned from engaging in, or assisting others in,
the promotion, advertising, marketing, offering for sale or sale of any credit
card registration or protection services through telemarketing. Additionally,
the rights of Universal Marketing Services and Mr. Wimberley to telemarket other
products are subject to restrictions and monitoring by the Federal Trade
Commission. Foresight is neither the subject of the investigation nor a party to
the stipulated judgment. However, Foresight's telemarketing activities (as well
as our telemarketing activities following completion of the merger-acquisition)
may become subject to restrictions and monitoring similar to those imposed by
the stipulated judgment, whether conducted with Universal Marketing Services,
Mr. Wimberley or an unrelated third party.



                                    -17-
<PAGE>


                                  PROPOSAL ONE

                             THE MERGER-ACQUISITION

BACKGROUND OF THE MERGER-ACQUISITION


         In connection with marketing of our products, our chief executive
officer contacted representatives of Universal Marketing Services, Inc. to
develop and assist in marketing our smart card products and services. Commencing
in January 1999, our executive officers and those of Universal Marketing met to
discuss and negotiate terms of the acquisition of Universal Marketing. The
parties were unable to agree on the financial terms and merger consideration of
the acquisition, which involved us issuing approximately 2,000,000 shares of our
common stock to the shareholders of Universal Marketing with an anticipated
market value of $12,000,000 based upon the anticipated initial public offering
price of our common stock. As a result, our discussions and negotiations with
Universal Marketing terminated in mid-1999 without any agreement being reached.
During December 1999, the common stock of Foresight, Inc., formerly a
wholly-owned subsidiary of Universal Marketing, was transferred to Paul A.
Kruger and Mark R. Kidd, both former shareholders of Universal Marketing.
Foresight and its executive officers have significant experience in marketing
membership and loyalty programs to large groups of consumers. In connection with
the development and marketing of our products such as the roll-out of the Precis
Instacare Emergency Card, we determined that Foresight's marketing abilities and
experience could greatly enhance our ability to package and market our products,
and as a result, merger discussions and negotiations resumed in February 2000
with Foresight. During the period between mid-1999 and February 2000, there was
no significant relationship between us and Universal Marketing or Foresight.
However, our Chief Financial Officer, Mark R. Kidd, is also an executive officer
and shareholder of Foresight and prior to December 1999, an executive officer
and shareholder of Universal Marketing. Mr. Kidd was party to the negotiations
of the merger on the behalf of Foresight as the minority shareholder, but did
not participate on our behalf. In addition, Mr. Kidd is not a member of our
Board of Directors and, as such, did not participate in our Board's
consideration and the discussion of the terms of the merger-acquisition and was
not involved in the Board's approval of the merger. In addition, Mr. Kruger has
voting control of Foresight as the holder of 90% of outstanding common stock and
was the primary determiner of the terms of the merger on behalf of Foresight. On
March 16, 2000, our Board of Directors approved the Agreement and Plan of
Merger. The Agreement and Plan of Merger was executed on March 21, 2000. Due to
the delay in completing the merger-acquisition, the required completion date of
the merger-acquisition was extended to September 30, 2000 by amendment of the
agreement on June 22, 2000. Furthermore, due to the delay in completing the
merger-acquisition and the decrease in the market value of our common stock
since March 21, 2000, the agreement was amended on August 23, 2000 extending the
required completion date to December 31, 2000 and to include the year ending
December 31, 2003 for purposes of issuing additional common stock to the
Foresight shareholders date for completionTo date, we have not identified any
other potential merger partners.


         The purchase price for the merger was negotiated between our Chief
Executive Officer and the shareholders of Foresight. The purchase price was
determined based on the current earnings of Foresight and the potential
efficiencies to be gained from the merger and the marketing experience and
infrastructure of Foresight which Precis does not currently have. The formula
for the contingent consideration was developed to provide compensation for the
shareholders of Foresight for the impact that they can bring to the products of
Precis and for the anticipated growth of Foresight business. The consideration
was made contingent upon future earnings to ensure that the impact of the
consideration increases shareholder value. We did not negotiate any alternative
structures for the merger.


         The valuation attributed to Foresight by our Board of Directors was
comprised of two components: one component which is related to the revenue and
operating income of Foresight and one component which is related to the
operational infrastructure and personnel force in place at Foresight. With
respect to the revenue and operating income of Foresight, the Board of Directors
derived a consideration formula of one share of common stock for each dollar
($1) of pre-tax net income of Foresight. This formula was also used for the
contingent consideration to be possibly issued in the future. This in effect
results in us paying a multiple on pre-tax earnings equivalent to the price of
our stock on the closing date of the merger. The value attributable to the
operational infrastructure and personnel force of Foresight was given a value of
$2 million which is equal to the amount of preferred stock that will be issued


                                    -18-
<PAGE>


in conjunction with the merger. Absent the merger, Precis would have to incur
significant operational losses to develop the operational infrastructure and
personnel force that Foresight has in place. The value of Foresight was
determined based on the positive cash flow and operating income that Foresight
will provide; this operating income contribution will be reduced by the
amortization of the goodwill attributable to the merger which will diminish the
actual earnings per share of shareholders. Our Board of Directors unanimously
concluded that the consideration for this proposed merger-acquisition was fair
from a financial point of view to our shareholders based on the following
points:


-        Foresight will immediately provide us with revenue and operating
         income.

-        Because we have not generated significant revenue from our smart card
         technology and products and obtained profitability, we are a
         development stage enterprise. The merger-acquisition will result in our
         shareholders owning common stock in a company that has product
         offerings in the emerging smart card industry as well as a company that
         has ongoing revenue and profitability from Foresight's developed
         customer loyalty programs.

-        Foresight will provide us with operational infrastructure and personnel
         skills that we do not currently have.

         In arriving at this conclusion members of our the Board of Directors
reviewed audited financial and other information furnished by Foresight,
including financial projections, and presented and provided the financial and
other information to the full Board. It was represented that the financial
projections received had been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of Foresight's management as to the
future operation and financial performance of Foresight. In addition, our Chief
Executive Officer compared Foresight's financial and other data with
publicly-held companies engaged in businesses similar to Foresight's business
and reported his findings to the Board. However, there were no companies or
transactions analyzed that were directly comparable to us, Foresight or the
merger-acquisition. Accordingly, the analysis was not mathematical, but instead
it involved considerations and business judgments concerning differences in the
financial and operating characteristics of the companies and other factors that
could affect the public trading values of the companies or company to which
Foresight was compared.


REASONS FOR AND ADVANTAGE OF THE MERGER-ACQUISITION

         As indicated above, the successful implementation of our business plan
largely depends on the effectiveness of our efforts to market our smart card
technology. Currently, Foresight is assisting in marketing our smart card
products and technology. We believe that companies with smart card marketing
experience are very limited. Therefore, we have not sought marketing assistance
from other qualified and experienced third-party marketers; however we may seek
marketing assistance from other third-party marketers in the future. Foresight's
president and controlling shareholder, Paul A. Kruger, has more than 25 years
experience in the distribution and marketing of promotional product sales.
Without this assistance or the assistance of another third-party marketer, our
product marketing may be limited only to our internal marketing staff, which we
believe will increase the possibility that our marketing activities will be
unsuccessful. Our Board of Directors believes that the combination of our and
Foresight's operations and utilizing Foresight's marketing expertise provides
the most effective available means for establishing a market for our smart card
technology and products. It is anticipated that this type of marketing
assistance could be obtained on a contract basis rather than pursuant to the
merger-acquisition; however, it is believed that contractual marketing
assistance would only be available at higher costs. In further comparison, our
Board of Directors concluded that the merger-acquisition of Foresight will not
only achieve reduced costs of development of a market for our smart card
technology and products but also will provide a source of immediate revenue from
the sale of Foresight programs.


         As indicated above, our Chief Financial Officer, Mark R. Kidd, is also
an executive officer and shareholder of Foresight and prior to December 1999, an
executive officer and shareholder of Universal Marketing. Mr. Kidd was party to
the negotiations of the merger on the behalf of Foresight as the minority
shareholder, but did not participate on our behalf. In addition, Mr. Kidd is not
a member of our Board of Directors and as such, did not participate in our
Board's consideration and the discussion of the terms of the merger-acquisition
and was not involved in the Board's


                                    -19-
<PAGE>


approval of the merger. In addition, Mr. Kruger has voting control of Foresight
as the holder of 90% of outstanding common stock and was the primary determiner
of the terms of the merger on behalf of Foresight.


         Our Board also anticipates that the merger-acquisition will result in
increased operational and administrative efficiencies. Foresight has in place
marketing, sales and client services personnel that have significant experience
in marketing and servicing membership and loyalty programs. In addition,
Foresight has an experienced finance and administrative function including
accounting personnel with public reporting experience. The experience of the
Foresight personnel will allow us to eliminate certain current personnel
positions and remove the need for additional personnel positions. These
efficiencies, if achieved, will reduce our losses and we anticipate will
ultimately lead to our profitability. However, these efficiencies are
indeterminable as of the date of this Proxy Statement and there is no assurance
they will be obtained.

         Completion of the merger-acquisition of Foresight will result in you
and our other shareholders owning an interest in a larger and more diversified
company. Although this puts you and our other shareholders at risk with regard
to the aspects of Foresight's business, the acquisition of Foresight will
provide other sources of revenues. Consequently, following completion of the
merger-acquisition our success and profitability will not be solely dependent
upon our smart card technology and its market acceptance. In addition, the
purchase consideration for the merger does not include any cash which allows us
to retain the proceeds of our public offering for use in product development and
marketing. The contingent consideration is based on us and Foresight producing
increased earnings which ensures that any future consideration will increase
shareholder value.

         Our Board anticipates that Foresight's future revenues, cash flows and
profits, when combined with ours, will reduce the "burn rate" or rate of
exhaustion of our capital resources, including the remaining net proceeds of our
initial public offering. Near term reduction in the rate of exhaustion of our
capital resources will provide an extended period for development of a market
for our smart card technology and products. This will postpone and possibly
eliminate the need for obtaining additional capital resources through the sale
of our equity securities, the sale of which may be dilutive to our shareholders.

         Our smart card products and computer software applications are subject
to rapid technological change and obsolescence and any developed market position
in the smart card industry or other markets that we may enter could be eroded
rapidly by product advancements. We believe that Foresight's business and
products will add product diversification, as well as revenue source
diversification as mentioned above, consequently reducing the risk of technology
obsolescence.

         Our expected or anticipated effects of the merger-acquisition, of
course, are forward-looking and there is no assurance that they will be
realized. You should review the "Risk Factors" section of this Proxy Statement
and familiarize yourself with Foresight by reading the information provided
elsewhere in this Proxy Statement before making your decision to approve the
Agreement and Plan of Merger.

DISADVANTAGES OF THE MERGER-ACQUISITION

         Immediately following completion of the merger-acquisition,

-        you and our other current shareholders will own approximately 73% of
         our issued and outstanding common stock and our executive officers and
         directors will own approximately 27% of our issued and outstanding
         common stock, which will result in further concentration of voting
         control in our executive officers and directors;

-        there will be 166,667 shares of our series A preferred stock issued and
         outstanding (convertible into 166,667 shares of our common stock,
         having a stated value and liquidation preference of $12.00 per share,
         providing for annual dividends of $1.44 per share, payable quarterly
         from earnings and profits), which if converted will result in further
         concentration of voting control in our executive officers and
         directors;

-        you and our other current shareholders on a per common stock share will
         incur net tangible book value dilution of $0.28; and


                                    -20-
<PAGE>


-        the former shareholders of Foresight will be entitled to receive one
         share of our common stock for each dollar of the greater of our and
         Foresight's combined or consolidated income before income tax expense,
         plus the goodwill amortization attributable to the acquisition of
         Foresight, during 2000, 2001, 2002 or 2003, less the 500,000 shares of
         our common stock previously delivered to them, which may result in
         further concentration of voting control in our executive officers and
         directors.


         Furthermore, in evaluating the merger-acquisition, you should consider,
in addition to the advantages described above, the factors, consequences and
possible disadvantages to you and our other shareholders of completion of the
merger-acquisition as discussed below and elsewhere in this Proxy Statement. Of
course, after the merger-acquisition, we will own Foresight. Therefore, the
various risks involved in Foresight's business will be assumed by us and our
shareholders. Many of these risks are not within Foresight's or our control.
There is no assurance that, following completion of the merger-acquisition, one
or more of these risks will not materialize and adversely affect the market
price of our common stock, our future operations, and our business, financial
condition, or results of operations. Also, the occurrence of these risks may
ultimately require significant reduction or discontinuance of our operations,
require us to seek a merger partner or require us to sell additional stock on
terms that are highly dilutive to our shareholders. These risks include the
following:


-        Although we believe that Foresight's business will complement and fit
         well with our needs for marketing of our smart card technology and
         products, the marketing business will be new to us. Our unfamiliarity
         with this business may make it more difficult to integrate Foresight's
         operations with ours. We will not achieve the anticipated benefits of
         the merger-acquisition unless we successfully integrate the operations
         of Foresight.


-        In January 1999, the former parent of Foresight, Universal Marketing
         Services, Inc., purchased the outstanding Foresight common stock for
         $4,540,000. Universal Marketing Services agreed to indemnify the former
         owners of the Foresight common stock for the increase in federal income
         taxes and any applicable penalties to the extent that $4,532,000 of the
         purchase price does not qualify for long-term capital gain treatment.
         These former shareholders reported $4,532,000 of the purchase price as
         long-term capital gain. In connection with the merger-acquisition, we
         will assume this indemnification obligation of Universal Marketing
         Services. Upon examination the Internal Revenue Service may take the
         position that a portion of the $4,532,000 should be classified as
         ordinary income taxable at the maximum federal income tax rate of 39.6%
         rather than the applicable 20% rate. In the event the Internal Revenue
         Service successfully asserts that long-term capital gain classification
         was improper, we will be required to indemnify the former shareholders.


-        In carrying out its program marketing activities, Foresight is
         dependent on its clients utilizing its services to design membership
         programs for customers. Approximately 74% and 75% of Foresight's
         revenues for the year ended December 31, 1999 and the six months ended
         June 30, 2000, were attributable to membership programs of Rent Way,
         Inc. Moreover, the client relationships that are pursuant to written
         contracts typically may be terminated by us or the client upon 90 days'
         notice prior to the initial two-year anniversary or the one-year
         anniversary date thereafter without cause and without penalty. There is
         no assurance that Rent Way, Inc. or Foresight's other clients will not
         terminate their business relationships with Foresight.


-        Generally, during the initial year of an individual membership program,
         as compared to renewal years, the program generates minimal cash flows
         due to higher marketing costs associated with initial member
         procurement. Furthermore, a higher percentage of cancellations occurs
         during the initial membership period as compared to renewal periods.
         Accordingly, Foresight's revenues and profitability from membership
         programs depend on recurring and sustained membership renewals. Renewal
         rates are inherently uncertain. There are a number of factors affecting
         renewals, many of which are outside of Foresight's control, including
         changing member preferences, competitive price pressures, general
         economic conditions and customer satisfaction. There is no assurance
         that a particular membership program developed by Foresight will
         generate sufficient renewals to become profitable or that memberships,
         if renewed, will not be subsequently canceled.


-        Competition is intense in the membership services market for clients.
         Foresight offers membership programs that provide products and services
         similar to or directly compete with products and services offered by


                                    -21-
<PAGE>

         Foresight's competitors as well as the providers of such products and
         services through other channels of distribution. Through contractual
         arrangements with a competitor, potential clients may be prohibited
         from contracting with Foresight to design a membership program if the
         services or products provided by Foresight's program are similar to, or
         merely overlap with, the services or products provided by an existing
         competitor's program. In the future some of Foresight's clients may
         provide, either directly or through third parties, programs offered by
         Foresight's competitors that directly compete with Foresight's
         programs. Competition for new members is also intense, particularly as
         the market becomes saturated with customers who are already members of
         competing programs. There is no assurance that Foresight's competitors
         will not provide programs comparable or superior to the client programs
         designed by Foresight at lower membership prices or adapt more quickly
         to evolving industry trends or changing market requirements. Also,
         strategic alliances among competitors may emerge resulting in
         concentration of market share. Increased competition may result in
         price reductions, reduced gross margins, and loss of market share.
         There can be no assurance that Foresight (and following completion of
         the merger-acquisition that we) will be able to compete effectively
         against current and future competitors.


-        A critical element of Foresight's marketing business is the ability to
         develop and successfully introduce new membership programs that meet
         the needs of clients and generate consumer interest. Foresight's
         failure to design and provide new programs to clients in a timely
         manner could result in loss of clients and market share to Foresight's
         competitors. In addition, a client's introduction or announcement of
         new programs, whether designed by Foresight or its competitors, may
         render Foresight's existing programs noncompetitive or obsolete, or
         result in a delay or decrease in orders as customers evaluate new
         programs or select the new programs as an alternative to existing
         programs.


-        Foresight and most of its clients depend on independent third-party
         vendors to provide products and services to program members. The level
         and quality of services provided by vendors is not within Foresight's
         control. In addition, Foresight depends on its clients to market
         Foresight's membership programs. Foresight's arrangements with vendors
         generally may be terminated by the vendor with limited prior notice.
         There is no assurance that, in the event a vendor ceases operations, or
         terminates, breaches or chooses not to renew its agreement with a
         client or Foresight, a replacement vendor could be retained on a timely
         basis, if at all.


-        The success of Foresight's marketing activities is dependent in large
         part on continued demand for Foresight's marketing program design
         capabilities as well as the economic conditions of the industries
         served by Foresight's clients or prospective clients. In particular,
         programs designed by Foresight and marketed by its clients in the
         rental-purchase industry accounted for substantially all of Foresight's
         revenues. There is the risk of a significant downturn in the
         rental-purchase industry as well as any other industry served by
         Foresight's clients or an industry which will tend to reduce or
         eliminate the use of membership programs.


-        Foresight competes for client marketing budget dollars with other
         marketing activities and channels and, in particular, other forms of
         direct marketing activities, such as direct mail or delivery
         distribution. More recently, there have been significant advances in
         the development of interactive shopping and data collection through
         television, the Internet and other media. As widely reported and
         predicted, electronic interactive shopping and information exchange on
         the World Wide Web has and continues to proliferate significantly. To
         the extent such proliferation continues, electronic shopping on the
         Internet and the World Wide Web may have a material adverse effect on
         the demand for membership service programs.


RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors unanimously recommends that you vote "FOR"
approval of the Agreement and Plan of Merger. We will vote your proxy
accordingly unless you specify a contrary choice.

HAS PRECIS OR FORESIGHT OBTAINED AN OPINION REGARDING THE FAIRNESS OF THE
MERGER-ACQUISITION?

         In transactions such as the merger-acquisition of Foresight, the
respective companies in some circumstances obtain opinions of investment banking
or financial adviser firms. These opinions relate to the fairness to the
respective shareholders of the consideration to be received in the
merger-acquisition from a financial point of view. We have not


                                    -22-
<PAGE>


obtained and will not seek an opinion from an investment banking or financial
adviser firm regarding the fairness of our merger-acquisition of Foresight. Our
board of directors concluded that the cost of a fairness opinion was unwarranted
because:

-        Foresight will immediately provide us with revenue and operating
         income,

-        The merger will increase shareholder value in the future and

-        Foresight will provide us with operational infrastructure and personnel
         skills that we do not currently have.

         Without an independent third-party fairness opinion, our Board of
Directors concluded that the consideration to be received by the Foresight
shareholders in the merger-acquisition is fair from a financial point of view to
you and our other shareholders.


WILL OUR SHAREHOLDERS HAVE ANY APPROVAL OR APPRAISAL RIGHTS?

         Although we are seeking approval of the merger-acquisition of
Foresight, this approval is not required under the Oklahoma General Corporation
Act. Accordingly, you and our other shareholders will not have any rights of
appraisal under the Oklahoma General Corporation Act.

WILL THERE BE ANY MANAGEMENT CHANGES OF PRECIS AFTER THE MERGER-ACQUISITION?

         Upon completion of the merger-acquisition, the number of directors
serving on our Board of Directors will be increased to seven and Paul A. Kruger,
John Simonelli and Mark R. Kidd will become members of our Board of Directors.
Messrs. Kruger and Kidd are currently executive officers and directors of
Foresight. Furthermore, until all of the shares of common stock have been
delivered under the terms of the merger-acquisition (which is anticipated to be
on or before April 30, 2004), Messrs. Kruger, Simonelli and Kidd will serve as
members of our Board of Directors as the designees of Mr. Kruger. In the event
of the resignation or death of Messrs. Kruger, Simonelli or Kidd, a person
designated by Mr. Kruger (or his successors in interest in the event he is
deceased) will be named as a director to fill the vacancy created by the
resignation or death.


DO ANY MEMBERS OF MANAGEMENT HAVE ANY MATERIAL INTERESTS IN THE
MERGER-ACQUISITION?

         Paul A. Kruger and Mark R. Kidd are executive officers and directors of
Foresight. Mr. Kidd is our Chief Financial Officer, Controller and Secretary. On
the effective date of the merger, each of Messrs. Kruger and Kidd will be
entitled to receive the following:

-        Mr. Kruger will be entitled to receive 450,000 shares of our common
         stock and 166,667 shares of our series A preferred stock in exchange
         for his common stock shares of Foresight. This preferred stock will
         have a stated value of $12.00 per share and will provide for annual
         dividends of $1.44 per share, payable quarterly. Also, each share of
         this preferred stock will be convertible, at the holder's option, into
         one share of our common stock.

-        Mr. Kidd will be entitled to receive 50,000 shares of our common stock
         in exchange for his common stock shares of Foresight.

After the effective date of the merger-acquisition, Messrs. Kruger and Kidd will
also be entitled to receive one share of our common stock for each dollar of the
greater of our and Foresight's combined or consolidated income before income tax
expense, plus the goodwill amortization attributable to the acquisition of
Foresight, during 2000, 2001, 2002 or 2003, less the 500,000 shares of our
common stock previously delivered to them. These additional shares, if
applicable, will be issued and delivered to Messrs. Kruger and Kidd in
accordance with a separate agreement with Messrs. Kruger and Kidd. In addition,
we have agreed to enter into an employment agreement with each of Messrs. Kruger
and Kidd providing for employee compensation and benefits similar to the
compensation and benefits being received by each of Messrs. Kruger and Kidd from
Foresight immediately prior to the effective time of the merger-acquisition.
Currently, Messrs. Kruger and Kidd are receiving from Foresight annual
compensation of $60,000 and $106,000, respectively. Messrs. Kruger and Kidd
participate in Foresight's 401(k) retirement plan and Mr. Kidd participates in
Foresight's health insurance plan.



                                    -23-
<PAGE>


         Also, in connection with this merger-acquisition, we have agreed to
grant Barron Chase Securities, Inc. stock options exercisable on or before June
30, 2003 for the purchase of 200,000 shares of our common stock for $9.37 per
share. These options were granted for the investment banking financial services
and consulting advice provided by Barron Chase Securities in valuing and
structuring the merger consideration. Barron Chase Securities did not
participate directly in the actual merger negotiations.


HOW WILL THE MERGER-ACQUISITION BE TREATED FOR ACCOUNTING PURPOSES?

         For accounting purposes, Foresight will be considered to have been
purchased by us. On a pro forma basis, the purchase price of Foresight will be
$3,750,000 for accounting purposes, which will be recorded as goodwill, an
intangible asset. This pro forma purchase price is the aggregate sum of

-        166,667 shares of our series A preferred stock delivered on the
         effective date of the merger-acquisition was valued at $2,000,000, the
         $12.00 per share stated value, and

-        the 500,000 shares of common stock delivered on the effective date of
         the merger-acquisition was valued based upon the per share $3.50
         closing sale price of our common stock on July 31, 2000. The actual
         amounts to be recorded by Precis will be based upon the closing sale
         price of its common stock on the effective date of the
         merger-acquisition.

The resulting $3,649,508 of goodwill will be amortized over 15 years. Any
additional shares of our common stock issued and delivered in connection with
this merger-acquisition will be recorded as additional goodwill. These
additional shares, if any, will increase the purchase price of Foresight and
will be recorded as additional goodwill based upon the market value of the
shares on the date of issuance. This additional goodwill will be amortized over
the remainder of the 15-year period.

HOW WILL WE AND OUR SHAREHOLDERS BE AFFECTED BY THE MERGER-ACQUISITION FOR
FEDERAL INCOME TAX PURPOSES?

         The following discussion is a summary of the material U.S. federal
income tax consequences to us and our shareholders of the merger-acquisition of
Foresight. This discussion is neither intended to summarize nor address the tax
matters that may affect Foresight and its shareholders. The following discussion
is based on the Internal Revenue Code of 1986, as amended (the "Code"), treasury
regulations promulgated under the Code, administrative rulings and
pronouncements and judicial decisions as of the date of this proxy statement,
all of which are subject to change, possibly with retroactive effect.

         The discussion below is for general information only and does not
address the effects of any state, local or foreign tax laws as they may relate
to the merger-acquisition. In addition, the discussion below assumes you hold
shares of our common stock as a capital asset. However, the tax treatment may
vary depending upon your particular situation. Certain taxpayers, including
insurance companies, tax-exempt organizations, financial institutions and
broker-dealers may be subject to special rules not discussed below.


         In the opinion of our counsel, Dunn Swan & Cunningham, consummation of
the merger-acquisition will constitute a reorganization within the meaning of
Section 368 of the Code. This opinion will be based on facts existing at the
time the merger-acquisition becomes effective and on the representations,
warranties and covenants as to factual matters contained in the Agreement and
Plan of Merger. The conclusions reached in the opinion could be jeopardized if
the representations, warranties or covenants are incorrect in certain material
respects. We are unaware of any facts or circumstances which would cause any of
the representations, warranties and covenants made in the Agreement and Plan of
Merger to be untrue or incorrect in any material respect. The opinion of counsel
is not binding on the Internal Revenue Service or the courts.


         Based on the opinions discussed above, the material U.S. federal income
tax consequences that will result from the merger-acquisition are as follows:

-        holders of our common stock will not recognize any income, gain or loss
         upon completion of this merger-acquisition and


                                    -24-
<PAGE>


-        no income, gain or loss will be recognized by us or our subsidiary
         corporation, Precis-Foresight Acquisition, Inc., as a result of the
         merger-acquisition.

         The foregoing discussion is only a summary and is not a complete
analysis or listing of all potential tax effects that may be relevant to your
particular tax circumstances. You are urged to consult your own tax advisor
concerning the U.S. federal, state and local and any foreign tax consequences of
the merger-acquisition to you.

WHAT ARE THE FEDERAL SECURITIES LAW CONSEQUENCES OF THE MERGER-ACQUISITION?

         The merger-acquisition will not have any securities law consequences to
you because you will not be receiving any shares of common stock pursuant to the
merger-acquisition. All shares of our common stock received by the shareholders
of Foresight pursuant to the merger-acquisition will be "restricted securities"
as defined under Rule 144 of the Securities Act of 1933. Restricted securities
are not freely transferable; however, restricted securities may be resold in
compliance with the applicable holding period, volume, manner-of-sale and notice
requirements of Rule 144. For purposes of Rules 144 and 145 of the Securities
Act of 1933, the Foresight shareholders will be considered to have acquired our
common stock on the effective date of the merger-acquisition. This effective
date will commence the one- and two-year holding periods of our common stock for
purposes of Rule 144.

WILL ANY KIND OF REGULATORY APPROVAL BE REQUIRED?

         There are no regulatory approvals required to be obtained by us or
Foresight prior to or subsequent to consummation of the merger-acquisition.

SUMMARY OF THE AGREEMENT AND PLAN OF MERGER

         The following description of the Agreement and Plan of Merger
summarizes all of the material terms of the Agreement and Plan of Merger. For
full information, you should read the Agreement and Plan of Merger, a copy of
which is included as Appendix A to this Proxy Statement.

         WHAT ARE THE TERMS OF THE AGREEMENT AND PLAN OF MERGER?

         THE MERGER. Foresight will merge with and into our wholly-owned
subsidiary, Precis-Foresight Acquisition, Inc. As a result of the
merger-acquisition, the separate corporate existence of Foresight will cease,
and Precis-Foresight Acquisition will continue as the surviving corporation and
our wholly-owned subsidiary. The corporate name of Precis-Foresight Acquisition
will be changed to Foresight, Inc.

         EFFECTIVE TIME. As promptly as practicable (and in any event within two
business days) after the satisfaction or waiver of the conditions set forth in
the Agreement and Plan of Merger, we will complete the merger-acquisition by
filing a certificate of merger with the Secretary of State of the State of
Oklahoma. The time of filing the certificate of merger will be the "effective
time" of the merger-acquisition.

         Conversion of Foresight Common Shares to Precis Common Stock. The
outstanding 500 shares of Foresight's common stock will be converted into our
common stock and series A preferred stock as follows:

-        at the effective time of the merger-acquisition, 166,667 fully paid and
         nonassessable shares of our series A preferred stock will be issued to
         Paul A. Kruger and 500,000 fully paid and nonassessable shares of our
         common stock will be issued, of which 450,000 shares will be issued and
         delivered to Mr. Kruger and 50,000 shares will be issued and delivered
         to Mark R. Kidd, ; and

-        after the effective date of the merger-acquisition, Messrs. Kruger and
         Kidd will also be entitled to receive one share of our common stock for
         each dollar of the greater of our and Foresight's combined or
         consolidated income before income tax expense, plus the goodwill
         amortization attributable to the acquisition of Foresight, during 2000,
         2001, 2002 or 2003, less the 500,000 shares of our common stock
         previously delivered to them.


Any additional shares, if applicable, will be issued and delivered to Messrs.
Kruger and Kidd in accordance with a separate agreement with Messrs. Kruger and
Kidd.


                                    -25-
<PAGE>

         REPRESENTATIONS AND WARRANTIES. The Agreement and Plan of Merger
contains various representations and warranties. Those relate, among other
things, to the following matters (which, in certain cases, are subject to
specified exceptions):

-        CORPORATE STATUS - The organization, good standing, qualification and
         capitalization are as described in the Agreement and Plan of Merger,
         and except as stated, there are no commitments by Foresight to issue
         capital stock;

-        APPROVALS AND FILINGS - There are no governmental or regulatory
         approvals or filings required to complete the merger-acquisition, or
         needed to prevent the termination of governmental or regulatory
         licenses or permits where the effect of such termination could
         reasonably be expected to have a material adverse effect on our or
         Foresight's business, assets or financial condition (referred to below
         as a "material adverse effect");

-        ABSENCE OF CONFLICT - The merger-acquisition will not conflict with
         certificates of incorporation documents, laws or agreements to which
         any party is subject, and the only consents required for the completion
         of the merger-acquisition are as set forth except for those which might
         not reasonably be expected to have a material adverse effect;

-        ACCURACY OF FINANCIAL STATEMENTS - Certain financial statements
         delivered to the other party have been prepared fairly and in
         accordance with generally accepted accounting principles and there are
         no undisclosed liabilities that could reasonably be expected to have a
         material adverse effect;

-        CONDUCT OF BUSINESS - Since the beginning of this year and until
         completion of the merger-acquisition, we and Foresight have conducted
         business in the ordinary course and there has been an absence of
         certain changes or events, including the occurrence of a material
         adverse effect; and

-        OTHER MATTERS - The Agreement and Plan of Merger also includes
         representations and warranties dealing with employee relations, benefit
         plans, title to properties owned by us or Foresight, compliance with
         laws, the absence of litigation that could reasonably be expected to
         have a material adverse effect, intellectual property rights,
         contracts, the validity and standing of any required permits and
         authorizations, compliance with environmental laws, maintenance of
         books and records, customers, and relationships and transactions with
         affiliates.

         CONDUCT OF BUSINESS PENDING COMPLETION OF THE MERGER-ACQUISITION. The
Agreement and Plan of Merger contains various covenants and agreements made by
us and Foresight. Those relate, among other things, to the following matters
(which, in certain cases, are subject to specified exceptions):

-        CONDUCT OF BUSINESS BY FORESIGHT. Prior to the effective time,
         Foresight will conduct its business only in the ordinary course of
         business and in a manner consistent with past practice. Foresight also
         will use reasonable commercial efforts to preserve substantially intact
         its business organization, to keep available the services of its
         present officers, employees and consultants and to preserve its present
         relationships with customers, suppliers and other persons with which it
         has significant business relations. Except as contemplated by the
         Agreement and Plan of Merger:

         -        AMENDMENTS - Foresight will not amend its Certificate of
                  Incorporation (other than as provided in this Proxy Statement)
                  or Bylaws;

         -        CHANGES IN CAPITAL STRUCTURE OR ASSETS - Foresight will not
                  change its capital structure, including issuing or
                  repurchasing stock, or sell, pledge or otherwise dispose of
                  its assets, declare or pay any dividend or distribution or
                  amend the terms of any of its securities;

         -        ISSUANCE OF INDEBTEDNESS; CAPITAL EXPENDITURES OR ACQUISITIONS
                  - Without our consent, Foresight will not acquire any other
                  business or incur any additional indebtedness or, except in
                  the ordinary course of business and consistent with past
                  practice, incur or guarantee or otherwise become responsible
                  for any material indebtedness or make any capital expenditures
                  or purchase any fixed assets in excess of set amounts;

                                    -26-

<PAGE>
         -        EMPLOYMENT MATTERS - Foresight will not change any
                  compensation arrangements or make any promises to pay any
                  bonus or extra compensation to any director, officer,
                  employee, salesman or agent, increase any employee benefits,
                  or make any commitment to adopt an additional employee benefit
                  plan;

         -        MATERIAL CHANGE OR ELECTION - Foresight will not make any
                  material change to accounting policies or procedures, or make
                  any material tax election inconsistent with past practice, or
                  settle or compromise any material tax liability or agree to an
                  extension of a statute of limitations;

         -        SATISFACTION OF CLAIMS OR LIABILITIES - Foresight will not
                  pay, discharge or satisfy any claims, liabilities or
                  obligations other than in the ordinary course of business and
                  consistent with past practices; and

         -        OTHER ACTIONS - Foresight will not take or agree to take any
                  of the above actions, or any other actions which would make
                  any of its representations or warranties in the Agreement and
                  Plan of Merger untrue or incorrect, or prevent it from
                  performing its covenants under the Agreement and Plan of
                  Merger.

-        ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable notice and
         subject to any other agreement by which it is bound, we and Foresight
         will afford the other reasonable access to its properties, books,
         contracts, commitments and records and will furnish promptly to the
         other all information concerning its business, properties and personnel
         as the other may reasonably request.

-        CONSENTS; APPROVALS. We and Foresight have agreed to use reasonable
         best efforts to obtain all consents, waivers, approvals, authorizations
         or orders, and to make all required filings, necessary to complete the
         merger-acquisition.

-        INDEMNIFICATION. The Certificate of Incorporation and Bylaws of
         Foresight contain the same indemnification provisions set forth in our
         Certificate of Incorporation and Bylaws of Precis. Unless required by
         law, these provisions will not be amended, repealed or modified for a
         period of three years from the effective time in any manner that would
         adversely affect the rights of the individuals who, at the effective
         time, were directors or officers of Foresight.

-        NOTIFICATION OF CERTAIN MATTERS. We and Foresight agreed to give the
         other prompt notice of any event that is likely to cause any of our or
         its representations or warranties in the Agreement and Plan of Merger
         to be materially untrue or inaccurate, or of any failure by us or it
         materially to comply with any covenant, condition or agreement in the
         Agreement and Plan of Merger.

-        FURTHER ACTION. We and Foresight will use all commercially reasonable
         efforts to consummate as promptly as practicable the transactions
         contemplated by the Agreement and Plan of Merger, to obtain in a timely
         manner all necessary waivers, consents and approvals and to effect all
         necessary registrations and filings, and otherwise to satisfy or cause
         to be satisfied all conditions precedent to our or its obligations
         under the Agreement and Plan of Merger.

         WHAT ARE THE CONDITIONS THAT MUST BE SATISFIED TO COMPLETE THE
MERGER-ACQUISITION?

         CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. Our
obligations and those of Foresight to complete the merger-acquisition are
subject to the satisfaction, at or prior to the effective time, of various
conditions. We believe that all conditions of completing the
merger-acquisition will be timely satisfied and accordingly there is no
material uncertainty that all conditions of the merger-acquisition will be
satisfied. These conditions include the following:

-        REPRESENTATIONS AND WARRANTIES - The representations and warranties
         contained in the Agreement and Plan of Merger must be true and correct
         in all respects on and as of the effective time, except where the
         failure to be true and correct could not reasonably be expected to have
         a material adverse effect;
                                    -27-
<PAGE>

-        AGREEMENTS AND COVENANTS -- All agreements and covenants contained in
         the Agreement and Plan of Merger must have performed or complied with
         in all material respects on and as of the effective time;

-        CONSENTS AND APPROVALS -- All material required consents, waivers,
         approvals, authorizations or orders must be obtained, and all required
         filings must have been made, except where the failure to do so would
         not reasonably be expected to have a material adverse effect on us or
         Foresight;

-        GOVERNMENTAL ACTIONS -- There must not be any pending or threatened
         action, proceeding or inquiry by any governmental authority or
         administrative agency, or any other legal restraint, preventing or
         seeking to prevent us from exercising all material rights and
         privileges pertaining to our ownership of Foresight or our ownership or
         operation of Foresight's business or assets, or compelling or seeking
         to compel us to dispose of or hold separate all or any material portion
         of its business or assets, as a result of the merger-acquisition; and

-        ILLEGALITY -- There must not be any statute, rule, regulation or order
         which makes the consummation of the merger-acquisition illegal.

         CONDITIONS TO TERMINATION. Subject to notice requirements and rights
to cure defaults or breaches, the Agreement and Plan of Merger may be
terminated at any time prior to the effective time:

-        by mutual written consent authorized by the boards of directors of us
         and Foresight; or

-        by either us or Foresight if the merger-acquisition is not completed by
         December 31, 2000 (except that any party whose failure to fulfill any
         obligation under the Agreement and Plan of Merger has prevented
         consummation of the merger-acquisition by such date cannot terminate
         the Agreement and Plan of Merger for this reason); or

-        by either us or Foresight if there is a non-appealable final order,
         decree or ruling or other action having the effect of permanently
         restraining, enjoining or otherwise prohibiting the merger-acquisition;
         or

-        by us or Foresight, (i) if any of our or Foresight's representations or
         warranties in the Agreement and Plan of Merger was untrue when made, or
         (ii) upon a breach by us or Foresight of any covenant or agreement in
         the Agreement and Plan of Merger, and are of the nature that the
         conditions to the other party's obligations would not be satisfied; or

-        by us, if any representation or warranty of Foresight becomes untrue so
         that the conditions of our obligations will not be satisfied, or by
         Foresight, if any of our representations or warranties have become
         untrue so that the conditions to Foresight's obligations will not be
         satisfied.

         COSTS AND EXPENSES. All fees and expenses incurred in connection with
the Agreement and Plan of Merger and the merger-acquisition will be paid by
the party incurring the expenses, whether or not the merger-acquisition is
consummated.

         AMENDMENT AND WAIVER. The Agreement and Plan of Merger may be amended
in writing by the parties at any time prior to the effective time. At any time
prior to the effective time, any party to the Agreement and Plan of Merger may
extend the time for the performance of any of the obligations or other acts of
another party, waive any inaccuracies in the representations and warranties of
another party contained in the Agreement and Plan of Merger or in any document
delivered pursuant to the Agreement and Plan of Merger, or waive compliance
with any of the agreements or conditions of another party contained in the
Agreement and Plan of Merger. Any such extension or waiver will be valid if
set forth in an instrument in writing signed by the party or parties to be
bound.

REQUIRED AFFIRMATIVE VOTE

         The affirmative vote of the holders of a majority of the outstanding
shares of our common stock is required for approval of the merger-acquisition.
Abstentions and broker non-votes will not be tabulated as negative votes on

                                    -28-

<PAGE>
this proposal, but will be included in computing the number of shares present
for purposes of determining the presence of a quorum for the Annual Meeting.


                                  PROPOSAL TWO

                     APPROVAL OF OUR 1999 STOCK OPTION PLAN

         Our Board of Directors is seeking ratification and shareholder
approval of The Precis Smart Card Systems, Inc. 1999 Stock Option Plan (the
"Plan"), which, effective November 30, 1999, was adopted by the Board of
Directors. A copy of the Plan is attached hereto as Appendix B. Subject to
approval of the Plan by a majority of our shareholders, we will reserve
145,000 shares of our common stock for issuance upon the exercise of options
granted under the plan. As of the date of this Proxy Statement, no Options
have been granted under the Plan.

THE STOCK OPTION PLAN

         The purpose of the Plan is to strengthen our ability to attract and
retain well-qualified personnel, to furnish additional incentive to those
persons responsible for our success, and thereby to enhance shareholder value.
The Plan provides for the grant of stock options ("Options"), including
incentive stock options ("ISO Options") and nonincentive stock options ("NSO
Options"), with or without stock appreciation rights ("SARs"), to our
employees, independent contractors and consultants, including employees who
also serve as our directors. Under the provisions of the Plan, we intend that
ISO Options (with or without SARs) qualify as options granted pursuant to
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
are entitled to the favorable tax consequences thereunder upon the grant and
exercise of the ISO Options. The total number of shares of common stock
authorized and reserved for issuance under the Plan is 145,000.

         GRANT AND EXERCISE OF OPTIONS. Our Board of Directors or the stock
option committee appointed by our Board administers and interprets the Plan
and has authority to grant Options to all eligible employees, independent
contractors and consultants, and determine the types of Options (with or
without SARs) granted, the terms, restrictions and conditions of the Options
at the time of grant, and whether SARs, if granted, are exercisable at the
time of exercise of the Option to which the SAR is attached.

         Options granted under the Plan are exercisable in such amounts, at
such intervals and upon such terms as the Option grant provides. The purchase
price of the common stock under the Option is determined by our Board or the
stock option committee; however, the purchase price may not be less than 85%
(100% for ISO Options) of the fair market value of our common stock on the
date of grant of the Option. However, if a participant owns more than 10% of
the total combined voting power of all classes of our capital stock, the
exercise price of ISO Options may not be less than 110% of the fair market
value of the common stock on the date of the grant, and ISO Options cannot be
exercised five years after the date of grant. The aggregate fair market value
of the common stock with respect to which ISO Options are initially
exercisable by any participant in any calendar year may not exceed $100,000.
The fair market value of a share of the common stock is determined by
averaging the closing high bid and low asked quotations for such share on the
date of grant of the option. Upon the exercise of an Option, the Option price
must be paid in full, in cash or in common stock or a combination of cash and
common stock in the event that the purchase is pursuant to exercise of rights
under an SAR which is attached to an Option and which is exercisable on the
date of exercise of the Option. Subject to our Board's or the stock option
committee's approval, upon exercise of an Option with an SAR attached, an
option holder may receive cash, shares of common stock or a combination of
both in an amount or having a fair market value equal to the excess of the
fair market value, on the date of exercise, of the shares for which the Option
and SAR are exercised over the Option exercise price.

         Options granted under the Plan may not be exercised until six months
after the date of the grant, except in the event of death or disability of the
holder, and may not under any circumstances be exercised after 10 years from
the date of grant. Subject to the foregoing, Options are exercisable only by
holders who are actively employed by us (or, if applicable, one of our
subsidiaries) as employees, independent contractors or consultants (only by
employees for ISO Options), except that Options may, with the consent of our
Board or the stock option committee, be exercised at any time within three
years after the holder's retirement, death, disability or the occurrence of
other special
                                    -29-
<PAGE>

circumstances as determined by our Board or the stock option committee, but in
no event beyond the expiration date of the Option. If a holder's employment as
an employee, independent contractor or a consultant terminates for any reason
other than death, disability or retirement, all Options immediately terminate,
unless permitted to be exercised by our Board or the stock option committee in
its sole discretion. No Option under the Plan may be granted after December
31, 2008. Options are not transferable except by will or by the laws of
descent and distribution.

         STOCK APPRECIATION RIGHTS. SARs may be granted and attached to an
Option at the time the Option is granted or at any time subsequent thereto,
subject to certain conditions. An SAR may not be exercised until six months
after the date of grant except, with the consent of our Board or the stock
option committee, upon the death or disability of the holder. SARs are
exercisable only upon surrender of part or all of the related Option (and only
to the extent that the related Option is exercisable) and terminate upon
termination of the related Option. SARs may be exercised only under
substantially the same terms and conditions as the Options to which they are
attached, with the additional condition that our Board or the stock option
committee, at the time of exercise, be comprised wholly of, or have not less
than, two disinterested directors.

         Upon the exercise of an Option to which an SAR is attached, the
holder is entitled, subject to the approval of our Board or the stock option
committee, to receive cash, shares of common stock or a combination of both,
in an amount or having a fair market value equal to the excess of the fair
market value, on the date of exercise, of the shares for which the right is
exercised, over the Option purchase price. Neither our Board nor the stock
option committee has the authority to deny the exercise of the underlying
Option pursuant to the terms of the Option grant.

         TERMINATION AND AMENDMENT. The Plan will terminate on December 31,
2008. The Plan may be altered, changed, modified, amended or terminated by
written amendment approved by our Board; provided, that no action of our Board
may, without the approval of our shareholders,

-        increase the total amount of common stock which may be purchased
         pursuant to exercise of Options granted under the Plan;

-        withdraw the administration of the Plan from the stock option
         committee;

-        amend or alter the Option price of common stock under the Plan;

-        change the manner of computing the spread payable by us to a holder
         upon the exercise of an SAR; or

-        amend the Plan in any manner which would impair the applicability of
         the exemption afforded to the Plan by the Securities Exchange Act of
         1934 and the Securities and Exchange Commission's Rule 16b-3.

No amendment, modification or termination of the Plan may in any manner
adversely affect any Option previously granted under the Plan without the
consent of the holder.

         PARTICIPANTS. At this time it is not possible to determine who in the
future will be among the eligible employees, independent contractors and
consultants selected to receive Options, with or without SARs attached, under
the Plan or the number of shares of common stock which may be optioned to any
eligible employee, independent contractor or consultant. It is expected,
however, that these determinations will be made on the basis of the eligible
person's responsibilities and present and potential contributions to our
success as indicated by our Board's or the stock option committee's evaluation
of the position the eligible person occupies.

FEDERAL INCOME TAX CONSEQUENCES

         The grant of Options under the Plan will not have any tax consequence
to us or the recipient of the Option. Upon exercise of a NSO Option, an
optionee will recognize ordinary income in an amount equal to the excess, if
any, of the fair market value, on the date of exercise, of the shares of
common stock acquired over the exercise price of the Option. Consequently, we
will be entitled to a tax deduction in an amount equal to the ordinary income
recognized by the recipient if, only in the case of employees, we deduct and
withhold appropriate income taxes. Any additional gain or loss realized by an
optionee on disposition of the Option shares generally will be capital gain or
loss to the optionee and will not result in any additional tax deduction to us.

                                    -30-

<PAGE>

         Upon the exercise of an ISO Option, an optionee will not recognize
taxable income. The recognition of income and gain is deferred until the
optionee sells the Option shares. If the optionee does not dispose of the
Option shares within two years from the date the Option was granted and within
one year after the exercise of the Option, and the Option is exercised no
later than three months after the termination of the optionee's employment,
the gain on sale will be treated as long-term capital gain. We will not be
entitled to any tax deduction in respect of the exercise of an ISO Option;
however, if the Option shares are not held for the full term of the holding
period described above, the Options will retroactively lose their
qualification as ISO Options (i.e., become NSO Options), the gain on the sale
of such shares, being the lesser of (a) the fair market value of the shares on
the date of exercise minus the Option price, or (b) the amount realized on
disposition minus the Option price, will be taxed to the optionee as ordinary
income and we may be entitled to a deduction in the same amount. Any
additional gain or loss realized by an optionee upon disposition of Option
shares prior to the expiration of the full term of the holding period
described above, generally will be capital gain or loss to the optionee and
will not result in a tax deduction to us. The "spread" upon exercise of an ISO
Option constitutes a tax preference item for purposes of the "alternative
minimum tax" under the Code. The tax benefits which might otherwise accrue to
an optionee may be affected by the imposition of such tax if applicable to the
optionee's individual circumstances.

CONSEQUENCES OF MERGER-ACQUISITION

         Approval by our shareholders and completion of the merger-acquisition
or failure to complete the merger-acquisition will not have any effect on the
Plan.

REQUIRED AFFIRMATIVE VOTE

         The affirmative vote of a majority of the outstanding shares present
in person or by proxy at the Annual Meeting and voting on this proposal is
required for the approval of the Plan. Abstentions and broker non-votes will
not be tabulated as negative votes on this proposal, but will be included in
computing the number of shares present for purposes of determining the
presence of a quorum for the Annual Meeting.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors recommends that you vote "FOR" the approval of
the Plan. We will vote your proxy accordingly unless you specify a contrary
choice.


                                 PROPOSAL THREE

                       ANTI-TAKEOVER PROVISIONS AMENDMENT

         We are proposing amendment of our Certificate of Incorporation to
provide that

-        the Oklahoma Control Share Acquisition Act (as set forth in Sections
         1145 through 1155 of the Oklahoma General Corporation Act) will not
         apply to us and our shareholders, and

-        the "business combination" with an "interested shareholder"
         proscriptions under Oklahoma law (as set forth in Section 1090.3 of the
         Oklahoma General Corporation Act) will not apply to us and our
         shareholders.

This amendment was unanimously approved by our Board of Directors on February
8, 2000. This amendment is set forth as Article Eight in the First Amendment
of the Certificate of Incorporation attached hereto as Appendix C.

         Our Board's approval of this amendment was required by the California
Department of Corporations to comply with the Department's Rule 260.140.1 as a
condition of registration of our common stock that was offered and sold to
California residents as part of our initial public offering. This rule
requires all shareholders including "interested shareholders" within the
meaning of Section 1090.3 of the Oklahoma General Corporation Act and any
person making a "control share acquisition" within the meaning of the Oklahoma
Control Share Acquisition Act be entitled to vote on all matters subject to
approval by the holders of that class. Approval of this amendment will
eliminate voting disabilities imposed the Oklahoma Control Share Acquisition
Act and Section 1090.3 of the

                                    -31-

<PAGE>

Oklahoma General Corporation Act. Failure of our shareholders to approve this
amendment will not have any effect on our registration with the California
Department of Corporations.

         Section 1090.3 of the Oklahoma General Corporation Act prohibits a
publicly-held Oklahoma corporation from engaging in a "business combination"
with an "interested shareholder." This prohibition is for a three-year period
following the date of the transaction in which the person became an interested
shareholder. This prohibition does not apply to a transaction if the
interested shareholder attained this status with approval of our Board of
Directors or the business combination is approved by our shareholders. A
"business combination" includes mergers, asset sales, and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who, together with affiliates and associates, owns,
or within three years did own, 15% or more of our common stock.

         In general, the Oklahoma Control Share Acquisition Act (Sections 1145
through 1155 of the Oklahoma General Corporation Act) provides that shares
("interested shares") of voting stock acquired (within the meaning of a
"control share acquisition") become nonvoting stock for the three-year period
following the control share acquisition. This loss of voting rights does not
apply if a majority of the holders of non-interested shares approve a
resolution reinstating the interested shares with the same voting rights that
the shares had before the interested shares became control shares.

         Any person ("acquiring person") who proposes to make a control share
acquisition may, at the person's election, and any acquiring person who has
made a control share acquisition is required to deliver an acquiring person
statement to us disclosing prescribed information regarding the acquisition.
We are required to present to the next annual meeting of the shareholders the
reinstatement of voting rights with respect to the control shares that
resulted in the control share acquisition. Alternatively, an acquiring person
may request a special meeting of shareholders for this purpose; however, the
acquiring person must undertake to pay the costs and expenses of the special
meeting. In the event voting rights of control shares acquired in a control
share acquisition are reinstated in full and the acquiring person has acquired
control shares with a majority or more of all voting power, you and the other
shareholders will have dissenters' rights entitling you and the other
shareholders to receive the fair value of the shares of the Common Stock held.
In this case, the fair value will not be less than the highest price paid per
share by the acquiring person in the control share acquisition.

         A "control share acquisition" includes the acquisition by any person
(including persons acting as a group) of ownership of, or the power to direct
the exercise of voting power with respect to, control shares (generally shares
having more than 20% of all voting power in the election of directors of a
publicly held corporation), subject to the following exceptions:

-        an acquisition under an agreement of merger, consolidation, or share
         acquisition to which we are a party and which is effected in compliance
         with the Oklahoma General Corporation Act;

-        an acquisition by a person of additional shares within the range of
         voting power for which the person has received approval by the majority
         of the holders of non-interested shares;

-        an increase in voting power resulting from any action taken by us,
         provided the person whose voting power is thereby affected is not our
         affiliate;

-        an acquisition by proxy solicitation under and in accordance with the
         Securities Exchange Act of 1934, as amended, or the laws of Oklahoma;
         and

-        an acquisition from any person whose previous acquisition of shares did
         not constitute a control share acquisition, provided the acquisition
         does not result in the acquiring person holding a higher range of
         voting power than that of the person from whom the control shares were
         acquired.

         The Oklahoma legislature enacted the Control Share Acquisition Act to
discourage hostile takeover attempts or the acquisition of a potentially
controlling ownership position without the approval of a corporation's
shareholders. Because we have less than 1,000 shareholders (as of the Record
Date we had approximately _____ shareholders), the Control Share Acquisition
Act is not currently applicable to us and our shareholders; however, there is
no assurance

                                    -32-

<PAGE>

that we and our shareholders will not become subject to this Act as a result
of an increase in the number of our shareholders.

         The Oklahoma Control Share Acquisition Act and Section 1090.3 of the
Oklahoma General Corporation Act are intended to have the effect of
encouraging persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts. We believe that elimination of the voting
disabilities imposed by the Oklahoma Control Share Acquisition Act and Section
1090.3 of the Oklahoma General Corporation Act will encourage non-negotiated
takeover attempts to effect a change in control and replacement of our
incumbent management without shareholder approval. However, there is no
assurance that the terms of a non-negotiated takeover will be on more
favorable terms to our shareholders compared to a takeover negotiated with and
approved or supported by our Board of Directors.

CONSEQUENCES OF MERGER-ACQUISITION

         Approval by our shareholders and completion of the merger-acquisition
or failure to complete the merger-acquisition will not have any effect on the
Anti-Takeover Provisions Amendment.

REQUIRED AFFIRMATIVE VOTE

         The affirmative vote of a majority of the outstanding shares of our
common stock is required for the approval of the Anti-Takeover Provisions
Amendment. Abstentions and broker non-votes will not be tabulated as negative
votes on this proposal, but will be included in computing the number of shares
present for purposes of determining the presence of a quorum for the Annual
Meeting.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors recommends a vote "FOR" the approval of the
Anti-Takeover Provisions Amendment. We will vote your proxy accordingly unless
you specify a contrary choice.


                                  PROPOSAL FOUR

                                 SHARE AMENDMENT

         The Share Amendment, upon its approval by a majority vote of our
shareholders, will increase the authorized Common Stock from 8,000,000 to
100,000,000 shares. The Share Amendment is for the principal purpose of
increasing the number of authorized shares of our common stock to permit
future issuance

-        under our 1999 Stock Option Plan of up to 145,000 shares of common
         stock,

-        for conversion of our outstanding series A convertible preferred stock
         into 166,667 shares of common stock following completion of the
         merger-acquisition,

-        for potential acquisitions, and

-        as a source for further capital funding.

This amendment is set forth in Article Four of the First Amendment of the
Certificate of Incorporation attached hereto as Appendix C.

         As of the date of this Proxy Statement, after giving full effect to
our obligations to issue shares and reserve shares for issuance upon
conversion of preferred stock that may be issued pursuant to the
merger-acquisition, the grant and exercise of outstanding stock options, of
the 8,000,000 common shares authorized, 3,106,497 shares would be issued.

         Unless deemed advisable by our Board of Directors, no further share
authorization will be sought for the issuance of our common stock shares. The
additional authorized and unissued shares could be used for general corporate
purposes, including stock dividends or stock splits, employee incentives,
raising equity capital and acquisitions. Except as noted above, our Board of
Directors has no immediate plans, intentions, or commitments to

                                    -33-

<PAGE>


issue additional shares of common stock for any purpose, including rendering
more difficult or discouraging a merger, tender offer, proxy contest or other
change in control of us.

         As of the Record Date, there were 2,350,000 shares of our common stock
issued and outstanding. Our common stock does not provide preemptive rights to
our shareholders to purchase newly issued shares.

CONSEQUENCES OF MERGER-ACQUISITION

         Approval by our shareholders and completion of the merger-acquisition
or failure to complete the merger-acquisition will not have any effect on the
Share Amendment.

REQUIRED AFFIRMATIVE VOTE

         The affirmative vote of a majority of the outstanding shares of our
common stock is required for the approval of the Share Amendment. Abstentions
and broker non-votes will not be tabulated as negative votes on this proposal,
but will be included in computing the number of shares present for purposes of
determining the presence of a quorum for the Annual Meeting.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors believes that this proposal is in the best
interests of you and our other shareholders and recommends a vote "FOR" the
approval of the Share Amendment. We will vote your proxy accordingly unless you
specify a contrary choice.

                                  PROPOSAL FIVE

                              ELECTION OF DIRECTORS

         Our Bylaws provide that our Board of Directors shall consist of not
less than one and a greater number as determined from time to time by resolution
of our Board. The number of directors is currently fixed at five. In general, a
director holds office for a term expiring at the next annual meeting of our
shareholders or until his successor is duly elected and qualified. Nominations
of candidates for election as our directors may be made at any meeting of our
shareholders by or at the direction of our Board of Directors or by any
shareholder entitled to vote at the meeting. Our Bylaws provide that the annual
meeting of our shareholders will be fixed by our Board.

NOMINEES

         The Board of Directors has nominated each of Kent H. Webb, M.D., Larry
E. Howell, Lyle W. Miller, and Michael E. Dunn (collectively the "nominees") for
re-election as a director for a term expiring in 2001 or until his successor is
elected and qualified. Donald A. Cunningham is not standing for re-election to
our Board and his term as a director will end on the day of the Annual Meeting.
Following the Annual Meeting, the number of directors will be reduced to four,
unless the merger-acquisition of Foresight is completed in which event the
number of directors will be increased to seven. The persons named as proxies in
the accompanying Proxy, who have been designated by our Board, intend to vote,
unless otherwise instructed in the Proxy, for the election of Messrs. Webb,
Howell, Miller and Dunn. Should any nominee named herein become unable for any
reason to stand for re-election as a director, it is intended that the persons
named in the Proxy will vote for the election of such other person as our Board
may recommend. We know of no reason why the nominees will be unavailable or
unable to serve.

         The affirmative vote of the holders of a majority of the shares of
common stock present in person or by proxy at the Annual Meeting and entitled to
vote, is required for the election of a director. An abstention from voting and
broker non-votes will be tabulated as a vote withheld on the election, but will
be included in computing the number of shares present for purposes of
determining the presence of a quorum for the Annual Meeting and whether a
nominee has received the vote of a majority of the shares present at the Annual
Meeting.

CONSEQUENCES OF MERGER-ACQUISITION

         Upon completion of the merger-acquisition following approval by our
shareholders, the number of directors serving on our Board of Directors will be
increased to seven and Paul A. Kruger, John Simonelli and Mark R. Kidd

                                    -34-
<PAGE>


will become members of our Board of Directors. Messrs. Kruger and Kidd are
currently executive officers and directors of Foresight. Furthermore, until all
of the shares of common stock have been delivered under the terms of the
merger-acquisition (which is anticipated to be on or before April 30, 2004),
Messrs. Kruger, Simonelli and Kidd will serve as members of our Board of
Directors as the designees of Mr. Kruger. In the event of the resignation or
death of Messrs. Kruger, Simonelli or Kidd, a person designated by Mr. Kruger
(or his successors in interest in the event he is deceased) will be named as a
director to fill the vacancy created by the resignation or death.

REQUIRED AFFIRMATIVE VOTE

         The affirmative vote of a majority of the shares present in person or
by proxy at the Annual Meeting and voting on this proposal is required for
election of each nominee Director. Abstentions and broker non-votes will not be
tabulated as negative votes on this proposal, but will be included in computing
the number of shares present for purposes of determining the presence of a
quorum for the Annual Meeting.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors recommends a vote "FOR" the re-election of Kent
H. Webb, M.D., Larry E. Howell, Lyle W. Miller, and Michael E. Dunn to our
Board. We will vote your proxy accordingly unless you specify a contrary choice.

INFORMATION ABOUT EACH DIRECTOR AND NOMINEE DIRECTORS

         The following is a brief description of the business background of our
executive officers, directors and nominee directors, including Messrs. Kruger,
Simonelli and Kidd who will be entitled to become members of our Board of
Directors upon completion of the merger-acquisition of Foresight:

         KENT H. WEBB, M.D., age 43 and one of our founders, has served as
Chairman of the Board since June 1996 and was a member or general partner of our
predecessors Advantage Data Systems, Ltd. and Medicard Plus - ADS Limited
Partnership. Dr. Webb is a general and vascular surgeon and is the cofounder and
a director of Surgical Hospital of Oklahoma. He is a Fellow of the American
College of Surgeons and serves as a Clinical Professor for the University of
Oklahoma. Dr. Webb is a past Director of the Smart Card Industry Association, a
nonprofit association. He is a surgical consultant for the Ethicon Division of
Johnson & Johnson Company, a publicly-held pharmaceutical and consumer products
company.

         LARRY E. HOWELL, age 54, became one of our directors in January 1999
and became Chief Executive Officer in August 1999. From March 1994 until July
1999, Mr. Howell was employed by Laboratory Specialists of America, Inc. and
served as President and Chief Operating Officer, and a Director until December
7, 1998. Laboratory Specialists of America, Inc. is engaged in forensic drug
testing and was formerly publicly-held until acquired by The Kroll-O'Gara
Company by merger. Mr. Howell served as a Director, President and Treasurer of
Vantage Capital Resources, Inc. from March 1996 until its merger with The
ViaLink Company (formerly Applied Intelligence Group, Inc.) and thereafter
served as a Director and Vice President of The ViaLink Company until October 14,
1996. Since January 1982, Mr. Howell as the sole proprietor of Howell and
Associates has provided consulting services principally related to corporate
acquisitions and mergers.

         DONALD (DAN) A. Cunningham, age 57, became one of our Directors in 1996
and served as President and Chief Operating Officer from August 1999 until April
2000. During 1998 and 1997 Mr. Cunningham served as President and Chief
Executive Officer of the Smart Card Industry Association. Before that position,
he served as Senior Vice President of Business Development of Phoenix Planning &
Evaluation, Ltd. Phoenix is one of the premier consulting firms in the United
States providing strategic planning and technical assistance to the banking
industry, government agencies, and healthcare and transportation industries. Mr.
Cunningham served as President and Chief Executive Officer of Gemplus Card
International Corp., the United States subsidiary of French-owned Gemplus SA,
from 1993 to 1996. Before joining Gemplus, Mr. Cunningham held positions at
Micro Card Technologies, Inc., Recognition Equipment, Inc. and the NCR
Corporation.

         LYLE W. MILLER, age 57, began serving as one of directors on November
29, 1999. For more than the past five years, Mr. Miller has been the President
and a Director of McMiller Holding Company, Northern Leasing & Sales,

                                    -35-
<PAGE>


Inc., and Northern Connections, Inc., each a privately-held company engaged in
the real estate business; a partner of MahMill Acres, a privately-held real
estate development partnership; President and Director of Servco Incorporated, a
privately-held sales company; Lansing Ice & Gymnastic Center, Inc., a
privately-held company operating the Lansing Ice & Gymnastic Center; and
Landings Restaurant, Inc., a privately-held company operating the Landings
Restaurant. In addition, Mr. Miller is a Director of Capitol Bancorp Limited, a
publicly-held bank holding company. Mr. Miller received a Bachelor of Business
Administration from Michigan State University.

         MICHAEL E. DUNN, age 54, became a one of our Directors in January 1999.
Mr. Dunn has been a member, shareholder and the President of Dunn Swan &
Cunningham, A Professional Corporation, since February 28, 1995. From August
1994 until December 7, 1998, when acquired by The Kroll-O'Gara Company, Mr. Dunn
served as a Director of Laboratory Specialists of America, Inc., a forensic drug
testing company. From April 1980, he has been a shareholder and director of
Zrenda Dunn & Swan and has served as President since April 1992. He has been the
owner of the Woodlake Racquet Club, a recreational athletic club, since 1981.
Mr. Dunn was graduated from the University of Oklahoma College of Law in 1972,
and holds a B.B.S. in accounting and pursued graduate studies at the University
of Oklahoma.

         PAUL A. KRUGER, age 46, has more than 25 years experience with the
financial services industry. Beginning in 1980 until February 1996 Mr. Kruger
was employed by United Bank Club Association, Inc. and served as President and
Chief Executive Officer. During this period, United Bank Club Association grew
to more than 350 employees with operational and sales branches in Michigan,
Florida, Arizona, Texas and Mexico providing financial enhancement services to
more than 2,000 institutions serving more than six million customers in the
United States, Puerto Rico, U.S. Virgin Islands and Mexico. Mr. Kruger founded
Priority OnLineJ which developed NetBranchJ, a proprietary Internet banking
application currently in use by the second largest bank headquartered and
controlled in Oklahoma. In 1999 Mr. Kruger became Chairman of Foresight, Inc.
Mr. Kruger holds a Bachelor of Business Administration/Accounting received from
Cameron University and a Juris Doctorate from the Oklahoma City University
School of Law.

         JOHN SIMONELLI, age 54, will become one of our directors upon
completion of the merger-acquisition of Foresight. In August 1999, Mr. Simonelli
became our consultant and has provided corporate acquisition and merger
consulting services. From March 1994 until July 1999, Mr. Simonelli was employed
by Laboratory Specialists of America, Inc. and served as Chairman of the Board,
Chief Executive Officer and Secretary, and a Director until December 7, 1998.
Laboratory Specialists of America, Inc. is engaged in forensic drug testing and
was formerly publicly-held until acquired by The Kroll-O'Gara Company by merger.
Mr. Simonelli served as a Director, Chief Executive Officer and Secretary of
Vantage Capital Resources, Inc. from March 1996 until its merger with The
Vialink Company (formerly Applied Intelligence Group, Inc.) and thereafter
served as a Director and Vice President of The Vialink Company until October 14,
1996.

         MARK R. KIDD, age 33, became our Chief Financial Officer and Controller
and Secretary in August 1999 and serves as Executive Vice President, Chief
Financial Officer, Secretary and a Director of Foresight. Mr. Kidd began serving
as President of PaceCo Financial Services, Inc. and President of UniFin, Inc. in
March 1998. Both are privately held companies that provide various financial
services. From January 1997 until March 1998, he served as Senior Vice President
and Chief Financial Officer of Republic Bank of Norman. From May 1988 through
1996, Mr. Kidd was employed by the public accounting firm of Arthur Andersen
LLP. Mr. Kidd is a Certified Public Accountant and holds a B.B.A. in accounting
from Southern Methodist University.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and officers, and persons who own more than 10% of a
registered class of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10% shareholders are required to furnish us with
copies of all Section 16(a) forms they file. During 1999, we were not subject to
the Securities Exchange Act of 1934. Accordingly, our officers and directors
were not require to file these reports.

                                    -36-
<PAGE>


MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

         During 1999, the Board of Directors held one meetings and took action
six times through unanimous approval of a written record and memorandum of
action in lieu of meeting. All of the directors were present at the meetings. In
1999 we established the Compensation Committee and Audit Committee. Other than
the Compensation Committee and Audit Committee, the Board of Directors does not
have any other standing committees.

         COMPENSATION COMMITTEE. Messrs. Webb and Howell serve on the
Compensation Committee at the pleasure of the Board of Directors. The
Compensation Committee reviews and acts on matters relating to compensation
levels and benefit plans for our executive officers and employees. The
Compensation Committee also reviews the succession planning for key executive
personnel, monitors employee relations issues and oversees senior management
structure. The Compensation Committee did not have any meetings during the year
ended December 31, 1999. All actions taken regarding the functions of this
Committee were taken by the Board.

         AUDIT COMMITTEE. Messrs. Webb, Miller and Dunn serve on the Audit
Committee at the pleasure of the Board of Directors. The Audit Committee assists
in the selection of our independent accountants and is responsible for
designating those services to be performed by and maintaining effective
communication with our independent accountants. The Audit Committee did not have
any meetings during the year ended December 31, 1999. Our Board has adopted the
Audit Committee Charter attached hereto as Appendix D. Currently, Messrs. Webb,
Miller and Dunn qualify as independent directors; however, it is anticipated
that the legal fees paid and to be paid to Dunn Swan & Cunningham during 2000
will disqualify Mr. Dunn as an independent director.


                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS


EXECUTIVE OFFICERS COMPENSATION

         SUMMARY COMPENSATION TABLE. The following table sets forth the
compensation during 1999, 1998 and1997, paid or accrued, of Larry E. Howell, our
President and Chief Executive Officer. Mr. Howell became our President and Chief
Executive Officer in August 1999 and accordingly during 1998 and 1997 did not
receive any compensation. None of our executive officers received compensation
in excess of $100,000 during these years.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                                         LONG-TERM
                                                                                                       COMPENSATION
                                                                                                           AWARDS
                                                                                                       ------------
                                                                             ANNUAL COMPENSATION(1)    COMMON STOCK
                                                                             ---------------------      UNDERLYING
NAME AND PRINCIPAL POSITION                                         YEAR    SALARY(2)      BONUS(3)       OPTIONS
---------------------------                                        -----    ---------      --------    ------------
<S>                                                                <C>      <C>            <C>         <C>
James Lout(4)....................................................  1999        $46,108     $   -              -
  President and Chief Executive Officer                            1998        $64,000     $   -           17,241
                                                                   1997        $74,000     $   -              -

Larry E. Howell..................................................  1999        $15,000     $   -              -
  President and Chief Executive Officer                            1998        $   -       $   -              -
                                                                   1997        $   -       $   -              -
</TABLE>

------------------------
(1)      The named executive officer received additional non-cash compensation,
         perquisites and other personal benefits; however, the aggregate amount
         and value thereof did not exceed 10% of the total annual salary and
         bonus paid to and accrued for the named executive officer during the
         year.
(2)      Dollar value of base salary (both cash and non-cash) earned during the
         year.
(3)      Dollar value of bonus (both cash and non-cash) earned during the year.
(4)      Mr. Lout served as our President and Chief Executive Officer beginning
         in June 1996 until mid-August 1999. As a result of Mr. Lout's
         employment termination, 26,819 unexercisable stock options granted to
         Mr. Lout expired or terminated without exercise.

                                                           -37-
<PAGE>


         AGGREGATE STOCK OPTION EXERCISE AND YEAR-END AND OPTION VALUES. The
following table sets forth information related to the number of options
exercised in the year ended December 31, 1999, and the value realized by each
executive officer named in the Summary Compensation Table, as well as
information related to the number and value of options held by them at December
31, 1999. During the year ended December 31, 1999, no outstanding options were
exercised.

                       OPTION VALUES AT DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                                                 NUMBER OF                VALUE OF UNEXERCISED
                                                         UNEXERCISED OPTIONS(1)          IN-THE-MONEY OPTIONS(2)
                                                       -----------------------------   ----------------------------
NAME                                                   EXERCISABLE     UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
----                                                   -----------     -------------   -----------    -------------
<S>                                                    <C>             <C>             <C>            <C>
Larry E. Howell.....................                           -                 -        $    -            $ -

James Lout..........................                        36,399               -          28,391            -
</TABLE>

----------------------------
(1)      As a result of his employment termination in August 1999, Mr. Lout's
         right to receive the unexercisable options immediately terminated.
(2)      At December 31, 1999, a market for our common stock did not exist. The
         value of unexercised in-the-money options is based upon the fair market
         value of the shares of common stock underlying the options, which was
         determined to be $6.00 per share as of December 31, 1999 (after giving
         effect to and providing for adjustment of the options for the reverse
         stock split), minus the $5.22 exercise price multiplied by the number
         of shares of common stock underlying the options.

STOCK OPTION PLAN

         For the benefit of our employees, directors and consultants, we have
adopted the Precis Smart Card Systems, Inc. 1999 Stock Option Plan which is
described in more detail under Proposal Two -- Approval of Our 1999 Stock Option
Plan. No options have been granted under the Plan.

COMPENSATION OF DIRECTORS

         Directors who are not our employees are not compensated for Board or
committee meetings attended. Directors who are also our employees receive no
additional compensation for serving as Directors or on committees. We reimburse
our directors for travel and out-of-pocket expenses in connection with their
attendance at meetings of our Board.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

         As permitted by the provisions of the Oklahoma General Corporation Act,
our Certificate of Incorporation eliminates the monetary liability of our
directors for a breach of their fiduciary duties as directors. However, these
provisions do not eliminate a director's liability

-        for a breach of the director's duty of loyalty to us or our
         shareholders,

-        for acts or omissions by a director not in good faith or which involve
         intentional misconduct or a knowing violation of law,

-        arising under Section 1053 of the Oklahoma General Corporation Act
         relating to the declaration of dividends and purchase or redemption of
         shares in violation of the Oklahoma General Corporation Act, or

-        for any transaction from which the director derived an improper
         personal benefit.

         In addition, these provisions do not eliminate liability of a director
for violations of federal securities laws, nor do they limit our rights or your
and our other shareholders rights, in appropriate circumstances, to seek
equitable remedies including injunctive or other forms of non-monetary relief.
These remedies may not be effective in all cases.

         Our Bylaws require us to indemnify our directors and officers. Under
these provisions, when an individual in his or her capacity as an officer or a
director is made or threatened to be made, a party to any suit or proceeding,
the

                                    -38-
<PAGE>


individual may be indemnified if he or she acted in good faith and in a manner
reasonably believed to be in or not opposed to our best interest. Our Bylaws
further provide that this indemnification is not exclusive of any other rights
to which the individual may be entitled. Insofar as indemnification for
liabilities arising under our Bylaws or otherwise may be permitted to our
directors and officers, we have been advised that in the opinion of the
Securities and Exchange Commission the indemnification is against public policy
and is, therefore, unenforceable.

LACK OF EMPLOYMENT ARRANGEMENTS AND KEYMAN INSURANCE

         We do not have employment agreements with our employees. Also, we do
not maintain any keyman insurance on the life or in the event of disability of
our executive officer.


                                  PROPOSAL FIVE

             RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS

         Our Board of Directors has appointed Murrell Hall McIntosh & Co., PLLP
as our independent accountants for the year ending December 31, 2000. Murrell
Hall McIntosh & Co., PLLP has been our independent accountants and auditor since
1999. A proposal will be presented at the Annual Meeting asking you and our
other shareholders to ratify the appointment of Murrell Hall McIntosh & Co.,
PLLP as our independent accountants and auditor. If our shareholders do not
ratify the appointment of Murrell Hall McIntosh & Co., PLLP, our Board will
reconsider the appointment.

         A representative of Murrell Hall McIntosh & Co., PLLP will be present
at the Annual Meeting. Such representative will be given the opportunity to make
a statement if he desires to do so and will be available to respond to
appropriate questions.

REQUIRED VOTE

         The affirmative vote of a majority of the shares present in person or
by proxy at the Annual Meeting and voting on this proposal is required for the
adoption of this proposal. Abstentions and broker non-votes will not be
tabulated as negative votes on this proposal, but will be included in computing
the number of shares present for purposes of determining the presence of a
quorum for the Annual Meeting and whether this proposal has received the vote of
a majority of the shares present at the Annual Meeting.

RECOMMENDATION OF OUR BOARD OF DIRECTORS

         Our Board of Directors recommends a vote "FOR" ratification of the
appointment of Murrell Hall McIntosh & Co., PLLP as our independent accountants
and auditor. Proxies solicited by the Board of Directors of the Company will be
so voted unless shareholders specify a contrary choice.


                              CERTAIN TRANSACTIONS

         Set forth below is a description of transactions entered into between
us and certain of our officers, directors and shareholders during this year,
1999 and 1998. Certain of these transactions may result in conflicts of interest
between us and such individuals. Although these persons have fiduciary duties to
us, you and our other shareholders, there can be no assurance that conflicts of
interest will always be resolved in our favor or in favor of our shareholders.

         Under 10 separate promissory notes, Kent H. Webb, M..D. loaned $254,743
to us from 1997 through June 30, 1999. These shareholder loans were evidenced by
promissory notes. The principal amount of those notes issued before September
30, 1998, accrued interest at 25% per annum until September 30, 1998, and
thereafter at the 15% per annum rate. In January 1998, we repaid one of the
promissory notes in the principal amount of $25,000 and accrued interest of
$531. The remaining outstanding promissory notes became due on March 9, 2000 and
the principal amounts were paid, together with interest of $32,548.

         The terms of Dr. Webb's loans made prior to 1999 were approved and
ratified unanimously by our four independent directors, each of whom did not
have an interest in these loans and had access to our independent legal

                                    -39-
<PAGE>


counsel at our expense. At the time these loans were made in 1999, we did not
have sufficient disinterested independent directors to ratify the terms of the
loans. Because the 1999 loan terms were the same as the earlier loans, our board
of directors believes that the terms of the loans by Dr. Webb were at least as
favorable as could be obtained from unaffiliated third parties.

         In February 2000, the law firm of Dunn Swan & Cunningham, our legal
counsel, was paid $180,477 and we agreed to issue 2,000 shares of our common
stock in payment of $20,000 for performed legal services. In addition, we
reimbursed Dunn Swan & Cunningham $5,079 for expenses advanced on our behalf.
These legal services were performed and expenses advanced during 1998 and 1999
in connection with our private placement offering, initial public offering and
general corporate matters. During 1998 and 1999, Dunn Swan & Cunningham was not
paid for its legal services.

         We have adopted policies that any loans to officers, directors and 5%
or greater shareholders ("affiliates") are subject to approval by a majority of
not less than two of our disinterested independent directors and that such loans
and other transactions with affiliates will be on terms no less favorable than
could be obtained from unaffiliated parties and approved by a majority of not
less than two of our disinterested independent directors. As of the date of this
prospectus, our Board of Directors is comprised of five members, of which Lyle
W. Miller and Michael E. Dunn are the only independent directors. As a condition
of registration in Oklahoma and a governance requirements of Nasdaq Stock
Market, Inc. and the Boston Stock Exchange, we are required and undertake to
have not less than two independent directors serving on our board of directors
at all times.


                     PRICE RANGE OF COMMON STOCK; DIVIDENDS

         MARKET PRICES. Our common stock is traded in the over-the-counter
market and is quoted on Nasdaq SmallCap Market System under the symbol PCIS and
is listed on the Boston Stock Exchange under the symbol PCI. Prior to February
9, 2000, there was no public trading market for our common stock. The closing
sale prices reflect inter-dealer prices without adjustment for retail markups,
markdowns or commissions and may not reflect actual transactions. The following
table sets forth the high and low sale prices of our common stock during the
calendar quarter presented as reported by the Nasdaq SmallCap Market System.

<TABLE>
<CAPTION>
                                                                                                CLOSING SALE PRICE
                                                                                                ------------------
                                                                                                   COMMON STOCK
                                                                                                ------------------
QUARTER ENDED                                                                                    HIGH         LOW
-------------                                                                                   -----        -----
<S>                                                                                             <C>          <C>
March 31, 2000............................................................................       $10.63       $7.38
June 30, 2000.............................................................................         7.88        3.50
</TABLE>


         On September 1, 2000, the closing sale price of our common stock as
quoted on Nasdaq SmallCap Market was $2.38. On September __, 2000, there were
approximately ______holders of our common stock.


         The market price of our common stock is subject to significant
fluctuations in response to, and may be adversely affected by

-        variations in quarterly operating results,

-        changes in earnings estimates by analysts,

-        developments in the computer software industry generally and more
         particularly the smart card industry and the industries served thereby,

-        adverse earnings or other financial announcements of our customers or
         clients,

-        announcements and introductions of product or service innovations or
         new contracts by us or our competitors, and

-        general stock market conditions.


                                       -40-
<PAGE>



         If we fail to meet the minimum requirements, our common stock will be
delisted by Nasdaq and the Boston Stock Exchange and will become tradable on the
over-the-counter market, which will adversely affect the sale price of our
common stock. In order to continue inclusion of our common stock on Nasdaq and
the Boston Stock Exchange minimum listing requirements must be met. In the event
these minimum requirements for inclusion are not met, our common stock

-        will be delisted and no longer included on the Nasdaq SmallCap Market
         and the Boston Stock Exchange,

-        will then be traded in the over-the-counter market, and

-        may become subject to the "penny stock" trading rules.

The over-the-counter market is volatile and characterized as follows:

-        over-the-counter securities are subject to substantial and sudden price
         increases and decreases,

-        at times the price (bid and ask) information for the securities may not
         be available,

-        if there is only one or two market makers, there is a risk that the
         dealers or group of dealers may control the market in our common stock
         and set prices that are not based on competitive forces, and

-        the available offered price may be substantially below the
         quoted bid price.

Consequently, the market price of our common stock will be adversely affected if
it ceases to be included on the Nasdaq SmallCap Market and the Boston Stock
Exchange.

         If our common stock is delisted from the Nasdaq SmallCap Market and the
Boston Stock Exchange and does not trade on another national securities
exchange, our common stock may become subject to the "penny stock" rules. A
"penny stock" is generally a stock that

-        is only listed in Apink sheets@ or on the NASD OTC Bulletin Board,

-        has a price per share of less than $5.00 and

-        is issued by a company with net tangible assets less than $2 million.

The penny stock trading rules impose additional duties and responsibilities upon
broker-dealers and salespersons recommending the purchase a penny stock or the
sale of a penny stock. Required compliance with these rules will

-        materially limit or restrict the ability to resell our common stock,
         and

-        the liquidity typically associated with other publicly traded stocks
         may not exist.

         DIVIDEND POLICY. Our dividend policy is to retain our earnings, if any,
to support the expansion of our operations. Our Board of Directors does not
intend to pay cash dividends on the common stock in the foreseeable future. Any
future cash dividends will depend on future earnings, capital requirements, our
financial condition and other factors deemed relevant by our Board of Directors.
Following issuance of our series A preferred stock in connection with the
merger-acquisition of Foresight, no dividends may be paid on our common stock
until all dividends then due on the series A preferred stock have been paid.

                                       -41-
<PAGE>

                                 FORESIGHT, INC.

GENERAL

         Foresight primarily designs and markets membership and loyalty
programs for rental-purchase companies, financial institutions, employer
groups, retailers and association-based organizations. These programs are
offered and sold as a value-added feature of a point-of-sale transaction
(either rental or purchase) or by direct marketing through direct mail and
other direct marketing distribution. Program members are offered and provided
products and services of Foresight and third-party vendors. The products and
services are bundled, enhanced, priced and marketed utilizing relationship
marketing strategies to target the profiled needs of Foresight's client's
particular customer base. The marketing programs offer members an economic,
efficient and expedient method of purchasing the products and services
offered. As of June 30, 2000, Foresight had approximately 115 client
organizations offering various membership programs with approximately 560,000
members.

         The program products and services currently offered by Foresight
include various forms of

-        insurance products, including accidental death and dismemberment,
         property and unemployment insurance,

-        consumer discounts and benefits, including discounted fees for

         -        health services providing savings on prescription drugs,
                  dental services and vision products and services,

         -        credit card and valuables registration services,

         -        credit reporting and monitoring services,

         -        legal services and legal defense reimbursement, travel
                  services, and Internet web portal,

-        discount programs and services utilizing redeemable discount coupons,
         including offers for food and household services and entertainment
         options (amusement or theme park discounts) and

-        automotive services including roadside assistance, discounted
         automotive services, theft reward, emergency travel and ambulance
         expense reimbursements.

In addition, Foresight has the ability to build loyalty based point programs
in its membership programs. The points can be redeemed by members for a
variety of products and discounts which may include airline miles or in-store
discounts. The type of point program is customized to the needs of Foresight's
client.

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

         THE FOLLOWING DISCUSSION OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION IS BASED UPON AND SHOULD BE READ IN CONJUNCTION WITH FORESIGHT'S
FINANCIAL STATEMENTS AND NOTES CONTAINED LATER IN THIS PROXY STATEMENT.

RESULTS OF OPERATIONS

         The following table sets forth selected results of Foresight's
operations for the years ended December 31, 1999 and 1998 and the six months
ended June 30, 2000 and 1999. This information was taken from Foresight's
financial statements appearing elsewhere in this Proxy Statement.

                                    -42-

<PAGE>


<TABLE>
<CAPTION>

                                       FOR THE YEARS ENDED DECEMBER 31,            FOR THE SIX MONTHS ENDED JUNE 30,
                                 ------------------------------------------- -----------------------------------------
                                          1999                  1998                 2000                  1999
                                 --------------------  --------------------- -------------------  --------------------
                                   AMOUNT     PERCENT    AMOUNT      PERCENT   AMOUNT    PERCENT    AMOUNT     PERCENT
                                 ----------   -------  -----------   ------- ----------  -------  ----------   -------
<S>                              <C>          <C>      <C>           <C>     <C>         <C>      <C>          <C>
Product and Service
    Revenues.................... $6,635,390     100 %  $17,818,861     100%  $3,617,492    100 %  $3,300,819     100 %
                                 ----------            -----------           ----------           ----------

Operating Expenses:
   Product Deployment...........  4,249,225      64     11,595,396      65    2,287,622     63     2,215,173      67
   Sales and Marketing..........    677,702      10        720,973       4      385,829     11       325,207      10
   General and Administrative...  1,259,099      19      1,868,007      11      762,558     21       444,736      13
                                 ----------     ---    -----------     ---   ----------    ---    ----------     ---
     Total Operating Expenses...  6,186,026      93     14,184,376      80    3,436,009     95     2,985,116      90
                                 ----------     ---    -----------     ---   ----------    ---    ----------     ---

Operating Income................    449,364       7      3,634,485      20      181,483      5       315,703      10

Other Income:
   Interest (Income) Expense....     (1,740)     --        (49,870)     --       (6,325)    --         3,744      --
                                 ----------     ---    -----------     ---   ----------    ---    ----------     ---

Income Before Income Taxes......    451,104       7      3,684,355      20      187,808      5       311,959       9

Provision for Income Taxes......   (150,000)     (2)           -        --      (42,000)    (1)     (115,000)     (3)
                                 ----------     ---    -----------     ---   ----------    ---    ----------     ---

Net Income...................... $  301,104       5 %  $ 3,684,355      20%  $  145,808      4 %  $  196,959       6 %
                                 ==========     ===    ===========     ===   ==========    ===    ==========     ===


</TABLE>


COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999

         Revenue during the six months ended June 30, 2000, increased
$316,673, a 10% increase, to $3,617,492 from $3,300,819 during the six months
ended June 30, 1999. This increase was attributable to an increase in revenue
from one rental-purchase client and the revenue from two new rental-purchase
clients.

         Total operating expenses during the 2000 six month period increased
$450,893 to $3,436,009 from $2,985,116 during the 1999 six month period. The
$72,449 increase in product deployment expenses to $2,287,622 during the 2000
six month period from $2,215,173 during the 1999 six month period was
attributable to the increase in revenue. The $60,622 increase in sales and
marketing expenses to $385,829 during the 2000 six month period from $325,207
during the 1999 six month period was attributable to an increase in
commissions expense and convention expense. Also, general and administrative
expenses increased $317,822 to $762,558 during the 2000 six month period from
$444,736 during the 1999 six month period. The increase in general and
administrative expenses was due to increased salaries, consulting fees and
occupancy expense attributable to expanded efforts to market products outside
of the rental-purchase industry. Historically, Foresight has focused on the
rental-purchase industry; during 1999 Foresight broadened its marketing focus
to cover new products and industries which resulted in higher expenses in the
areas identified.

COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999 AND 1998

         Revenue during 1999 decreased $11,183,471, a 63% decrease, to
$6,635,390 from $17,818,861 during 1998. This decrease was primarily
attributable to the loss of one large rental-purchase client in 1998; the
revenue from this client in 1998 was approximately $11 million. No revenue was
received from this client in 1999.

         Total operating expenses during 1999 decreased $7,998,350 to
$6,186,026 from $14,184,376 during 1998. The $7,346,171 decrease in product
deployment expenses to $4,249,225 in 1999 from $11,595,396 in 1998 was
attributable to the loss of the large rental-purchase client discussed above.
Sales and marketing expenses decreased $43,271 to $677,702 during 1999 from
$720,973. The decrease in sales and marketing expenses was attributable to a
decrease in advertising, travel and meals and entertainment related to the
loss of the large rental-purchase client; these decreases were offset by an
increase in commissions attributable to the business maintenance agreement for
Foresight's largest customer. General and administrative expenses decreased
$608,908 to $1,259,099 during 1999 from $1,868,007 during 1998. The decrease
in general and administrative expenses was attributable to a decrease in
printing costs related to the loss of the large rental-purchase client and a
decrease in salaries.

                                    -43-

<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

         Operating activities for the six months ended June 30, 2000, provided
net cash of $228,593 as the result of net income $145,808 increased by
depreciation of $13,653, a decrease in accounts receivable of $113,557 and an
increase accounts payable and other items of $74,899 and 20,812, respectively,
which was offset by an increase in prepaid expenses of $16,280 and a decrease
in income taxes payable and accrued liabilities of $111,000 and $12,856,
respectively. For the year ended December 31, 1999, Foresight's operating
activities provided net cash of $3,150,619 as the result of net income of
$301,104 increased by depreciation of $43,727, a decrease in accounts
receivable of $2,153,378, and increases in accounts payable, accrued
liabilities and income taxes payable of $457,177, $45,233 and $150,000,
respectively. During the six months ended June 30, 2000 and the year ended
December 31, 1999, Foresight used cash of $22,167 and $160,910, respectively,
for investing activities by purchase of property and equipment. During the six
months ended June 30, 2000, Foresight did not use any cash for financing
activities compared to 1999 when Foresight used $3,170,664 for financing
activities. During the year ended December 31, 1999, Foresight paid
distributions and dividends to shareholders of $2,707,664 and $430,000,
respectively. During 1999, Foresight also made a loan to a shareholder of
$33,000.


         During January 1999, all of Foresight's outstanding common stock was
acquired by Universal Marketing Services, the former parent of Foresight, for
$4,540,000. Of this amount, $4,532,000 was reported as a long-term capital
gain for income tax purposes. Universal Marketing Services agreed to indemnify
the prior shareholders of Foresight if it were determined that any portion of
the $4,532,000 did not qualify for long-term capital gain treatment under
federal income tax purposes. We will assume this obligation and pay the prior
Foresight shareholders the increased federal income tax if capital gain
treatment is determined to be unavailable.

         On March 31, 2000, Foresight established a line of credit with a bank
in the principal amount of $250,000 which matures on December 9, 2000 and
bears interest at prime. The line of credit was established to provide
additional working capital. Foresight currently has no commitments for capital
expenditures in material amounts. Foresight believes that its existing cash
and cash from operations, together with its line of credit, will be sufficient
to fund its operations for the next 12 months. Because Foresight's capital
requirements cannot be predicted with certainty, there is no assurance that we
will not require additional financing before expiration of the 12-month
period. There is no assurance that additional financing will be available on
terms satisfactory to Foresight or advantageous to its shareholders.

BUSINESS

         BACKGROUND. Foresight, Inc. is an Oklahoma corporation organized in
July, 1992. During January 1999, all of Foresight's outstanding common stock
was acquired by Universal Marketing Services, Inc. for $4,540,000. Foresight
was operated by Universal Marketing Services during the period from February
1, 1999 through December 1, 1999 under a management agreement. Universal
Marketing Services conducted all activities related to the day to day
operations of Foresight. During December 1999, the common stock of Foresight
was transferred to Paul A. Kruger and Mark R. Kidd, both former shareholders
of Universal Marketing Services.

MEMBERSHIP SERVICE PROGRAM INDUSTRY OVERVIEW

         Membership service programs are increasingly utilized by vendors for
the marketing of their products and services. Membership service programs
offer selected products and services from a variety of vendors with the
objective of enhancing the existing relationship between businesses and their
customers. These programs are offered and sold in connection with
point-of-sale transactions or by various methods of direct marketing.
Foresight believes that membership service programs are one of the fastest
growing areas of direct marketing. When designed, marketed and managed
effectively, membership service programs can be of significant value to:

-        consumers who become members of the membership program;

-        vendors through sales and marketing of their products and services; and

-        clients through which the program memberships are offered and sold in
         connection with other point-of-sale
                                    -44-
<PAGE>

         transactions through sharing in the membership fee, or through receipt
         of royalties and fees when offered utilizing clients' customer lists.

         Consumers are increasingly confronted with a growing number of
product and service choices that are advertised and offered consumers. The
products and services are advertised and offered through media ranging from
network and cable television to traditional print media to the Internet.
Furthermore, increasingly consumers, especially dual income couples, have
limited time to devote to making informed and efficient purchasing decisions.
Foresight believes that a well-designed membership service program provides
the benefits of allowing consumers to make purchase decisions on a more
informed, efficient and convenient basis through access to the information
services, discounted products and services, and other types of assistance
offered by such programs.

         Product vendors and service providers are seeking more cost-effective
and efficient methods to expand their customer base and market share than
through the traditional mass-marketing channels of distribution. In addition,
they are seeking to reach new customers, strengthen relationships with
existing customers and generate new, predictable recurring sources of
revenues. Foresight believes membership service programs provide vendors a
viable, cost-effective alternative to the traditional mass-marketing
distribution channels.

         Historically, issuers of credit cards have been the most prevalent
users of membership service programs. However, in recent years there has been
a significant increase in the use and offering of membership programs by other
businesses, including rental-purchase companies, retailers and employers. In
most cases, these businesses seek professional marketing assistance to
successfully design, market and manage the membership service programs they
offer. These marketing firms, like Foresight, are able to:

-        apply advanced database systems to capture, process and store consumer
         and market information;

-        develop consumer profiles and purchasing trends, both in terms of
         products and services;

-        use their experience to provide effective membership service programs;
         and

-        realize economies of scale.

         In addition, a general requirement of the designer and provider of
membership service programs is that the provider of such programs have the
expertise to continue to introduce unique new programs. In addition, in some
cases, the businesses expect the provider of membership service programs to
have such resources as extensive vendor networks and experienced management
teams, in order to not only design the program but also to market the programs
quickly and successfully at the retail level.

FORESIGHT SOLUTION

         Foresight designs membership programs for rental-purchase companies,
financial organizations, employer groups, retailers and association-based
organizations. Memberships in these programs are offered and sold as part of a
point-of-sale transaction or by direct marketing through telemarketing, direct
mail or as an insert. Program members are offered and provided products and
services of Foresight and third-party vendors. Foresight believes that its
clients, their customers and the vendors of the products and services offered
through the programs all benefit from its membership service programs. The
products and services are bundled, priced and marketed utilizing relationship
marketing strategies to target the profiled needs of the clients' particular
customer base. Memberships in Foresight's programs are offered in two ways. If
the memberships are sold by an organization, generally in connection with a
point of sale transaction, Foresight refers to these programs and membership
sales as wholesale programs. On the other hand, if the memberships are sold by
Foresight through direct contact with the consumer (via direct mail or other
direct marketing distribution), Foresight refers to these programs and
membership sales as retail programs and sales. Substantially all of
Foresight's membership service programs are offered and sold at wholesale by
clients engaged in the rental-purchase industry. During 1999 and 1998 all of
Foresight's revenue was attributable to wholesale program sales, while during
the six months ended June 30, 2000 wholesale and retail program sales
accounted for 98% and 2%, respectively, of Foresight's revenue. Foresight
intends to focus its future efforts on the design and marketing of wholesale
programs for clients in numerous industries.

                                    -45-

<PAGE>

         Through the design of its programs, Foresight seeks to address the
desires of its clients to obtain another source of income from the clients'
customers through membership sales. In return for the wholesale sale of
memberships, Foresight's clients collect the weekly or monthly membership fees
and retain 40% to 80% of such fees. The balance of the membership fees, 20% to
60%, is remitted to us. With respect to retail membership sales, clients
providing the customer lists are entitled to royalties on the sales to the
clients' listed customers. The royalty payments range from 10% to 50% of the
membership fees. The programs are designed and managed to strengthen the
relationship between Foresight's clients and their customers. Foresight
believes that its programs offer members an economic, efficient and convenient
method for the selection of products and services. Members are entitled to
discounts for products and services which may not otherwise be available to
them. Vendors of products and services offered and sold through the programs
to members are benefitted. Vendors are provided the opportunity to reach a
large number of demographically targeted customers or consumers with minimal
incremental marketing cost.

         Foresight maximizes its marketing effort by utilizing a database
management system to analyze the demographics of clients' customers to
establish customer profiles. Based upon these demographics and customer
profiles, Foresight designs membership service programs that are targeted for
specific consumer groups. Typically, Foresight works with a wholesale client
to incorporate elements from one or more of the client's standard service
programs in the design of a custom program for the client. Memberships in the
custom program are offered and sold by the wholesale client to its customers
as a value-added feature generally in connection with a point-of-sale
transaction. The wholesale client remits 20% to 60% of the membership fees to
Foresight and retains the balance as compensation for having made the sale and
serving as collection agent of the fees. Wholesale programs substantially
reduce Foresight's costs of acquiring new members, which results in higher
profit margins in the first year of the program, compared to those obtained
through retail offering and sale of memberships.

         With respect to membership service programs offered as retail
programs, Foresight utilizes its database and experience to introduce new
programs, as well as improve existing programs. Retail programs are generally
offered through direct mail; however telemarketing and other direct marketing
methods are also employed. The offer and sale of retail programs provide
clients with a rapid, inexpensive means to test and introduce new concepts,
products and services to their customers.

         Foresight uses collectively the consumer market or groups represented
by its 115 clients and approximately 560,000 members to decrease its costs and
to pass economic benefits on to its clients and members, as well as obtain
substantial discounts on the vendors' products and services that are available
to member-customers. Foresight maintains a staff of approximately five member
service representatives on a 24-hour a day, seven-day-a-week basis. These
representatives ensure that members receive high-quality service and help
build consumer loyalty with Foresight's clients.

BUSINESS OBJECTIVE AND PLAN

         Foresight's objective is to become one of the leading providers of
unique membership service programs. Key elements of its business plan are as
follows:

         CONTINUE TO DEVELOP UNIQUE SERVICE PROGRAMS FOR BROAD MARKETS.
Foresight intends to continue its focus on the development and rapid
introduction of unique programs which address the lifestyle needs of large
numbers of its clients' customers. Foresight anticipates that this plan will
allow it to obtain a larger market share of the membership program market,
both through existing clients and through new clients who will find
Foresight's new and unique programs to be valuable to the clients' customers.

         Foresight will continue to expand its existing distribution channels
and seek new ones, including large and small banks, savings and loans and
other financial institutions, association-based organizations and others. To
date, most of Foresight's clients are involved in the rental-purchase
business. Foresight believes that the rental-purchase industry will continue
to provide substantial growth and expansion opportunities. Therefore,
Foresight intends to continue to devote significant resources to selling its
membership service programs to those companies involved in the rental-purchase
industry. In addition, Foresight has recently developed new wholesale
membership

                                    -46-

<PAGE>

programs for the retail furniture, check cashing, payday loan and consumer
finance industries. Foresight also intends to continue development and
expansion of its retail membership program offerings. As part of this business
plan, Foresight intends to continue to develop service programs which can be
easily modified to address the needs of a particular channel of distribution.

         DEVELOP A RECURRING REVENUE BASE. Membership renewals are not a
characteristic of or expected with respect to wholesale memberships because
the membership is continuous until the member voluntarily terminates the plan
or their relationship with a client. Recurring revenue from wholesale clients
is dependent upon the client continuously marketing Foresight's products to
their customer base. Renewals of the retail memberships are generally
considered a significant source of recurring revenues with minimal incremental
costs of marketing which offers increased profit margins on such membership
sales. Foresight intends to continue to focus Foresight's efforts on retaining
Foresight's existing and obtaining new wholesale clients. In addition,
Foresight intends to develop relationships with new clients to enhance its
retail membership revenue.

         OFFER HIGH QUALITY SERVICES. In order to manage Foresight's
anticipated growth and provide the type of membership services to ensure
client and member loyalty, Foresight must and intends to continue investing
significantly in its membership services system. Foresight has developed a
proprietary computer database system that provides member service
representatives on-line information regarding the components of each
membership plan and the details a member requires to utilize the benefits.
Members can access the system 24 hours a day, 7 days a week. Foresight
maintains its membership service center at its offices in Norman, Oklahoma.
Foresight also maintains and monitors relationships with over ten vendors to
assure that these vendors are providing high quality products and services in
order to enhance the relationship between the member-consumer and the client
offering the service program.

         EMPLOYMENT OF TECHNICAL SOLUTIONS. Foresight will continue the
development and improvement of its proprietary software utilized to coordinate
with clients or, if applicable, telemarketing vendors to accelerate the
delivery of new member information kits and, if applicable, membership
billings. Currently, Foresight utilizes its membership database management
system to model and analyze client lists to identify likely members. In
addition, Foresight will continue to invest in state-of-the-art technology in
other key areas of its business. These areas include call routing equipment
for Foresight's membership service support and advanced modeling techniques
for use with the customer databases provided to Foresight by its clients.

         LEVERAGE AND DEVELOP MULTIPLE VENDOR PARTNERS. Foresight will
continue its practice of developing dependable relationships with a wide
variety of vendors who provide services at substantial discounts. Foresight
believes that the key elements of its success is its ability to

         -        design new service programs;

         -        obtain marketing distribution of those service programs to
                  consumers; and

         -        provide a high quality, member-friendly interface between the
                  members and the service providers.

         Foresight outsources these products and services from vendors instead
of developing the infrastructure to integrate vertically for each new program,
thereby preserving program flexibility. As a result, Foresight is able to
respond to and quickly develop new programs that address the changing needs of
its clients.

         PURSUE INTERNATIONAL OPPORTUNITIES. Foresight intends to seek
international clients, particularly in Mexico, Puerto Rico and Canada, in the
near future in order to further expand its client base. Foresight believes
that, for the same reasons that membership service programs are growing
rapidly in the United States, there is significant demand for such programs in
these international markets.

MEMBERSHIP SERVICE PROGRAMS

         As of June 30, 2000, Foresight had six service programs which had
approximately 560,000 members. Foresight's membership service programs offer
members a combination of various insurance products and information and
savings opportunities with respect to the available program products and
services. The service programs are

                                    -47-

<PAGE>
marketed under the name of the program by the client if a wholesale program or
on behalf of the client if a retail program. The programs are designed and
developed to capitalize on the client's existing relationship with its
customers as a value-added feature. In general, membership fees paid by the
member, which may be payable weekly or monthly, range from approximately $2.00
per week to approximately $15.00 per month. Generally, customized service
programs are designed for Foresight's clients as a variation of Foresight's
standard service programs. As of June 30, 2000, Foresight had the following
six programs:

         FORESIGHT PREFERRED CUSTOMER CLUB-SM-. Foresight developed this
program specifically for clients in the rental-purchase and retail furniture
industry. The program consists of a basic package of consumer benefits,
combined with insurance coverage selected by the client. Clients may choose
the standard design with accompanying marketing materials, or customize their
program using their own name, logo and corporate "look." This program
effectively accounted for all of Foresight's revenue in 1999 and the six
months ended June 30, 2000.

         CASH-IN CLUB-SM- Foresight developed this program specifically for
clients in the consumer finance industry. The program consists of a basic
package of insurance, health and other consumer-oriented benefits. As with all
of Foresight's programs, the client has the option of providing additional
benefits. Clients may choose the standard design with accompanying marketing
materials, or customize their program using their own name, logo and corporate
"look."

         CHOICE-SM- CHECKING AND PRIORITY-SM- CHECKING. Faced with increasing
competition from larger financial institutions as well as non-bank
competitors, the importance of establishing proven, loyalty-building programs
is a high priority among the banking industry. Foresight developed several
different programs designed to appeal to specific segments within the bank
customer base including students and middle income and age market,
high-balance affluent and mature market customers. Each program is typically
offered in conjunction with several financial services offered by the bank
itself.

         IN GOOD HEALTH-SM-. Foresight developed In Good Health to appeal to
the concern about rising healthcare costs. The program includes access to
national discount networks for prescription drugs, dental services and vision
products. The program also can be packaged with other products such as
telephone access to a 24-hour nurse advisory service. Foresight markets In
Good Health on a retail basis to associations and employee groups. The program
can also be offered direct to consumers through direct marketing distribution.

         NAMESAFE. Foresight developed NameSafe to appeal to consumer concerns
about identity crime. The program includes access to the customer's credit
report, medical information bureau and social security benefits statement.
Customers can also subscribe to a credit monitoring service. Foresight markets
NameSafe on a retail basis to credit card customers. The program can also be
offered direct to consumers through direct marketing distribution.

         VIP CLUB. Foresight designed VIP Club as a supplemental benefits
program for employee groups. The program includes access to national discount
networks for prescription drugs, dental services and vision products and other
consumer-oriented benefits and services. Foresight markets VIP Club on a
retail basis to associations and employee groups.

         Foresight has been marketing the Preferred Customer Club for over 10
years. The other products listed above have been developed over the last two
years and although Foresight does receive revenue on each product listed, the
revenue is insignificant in relation to the revenue attributable to Preferred
Customer Club sales.

         Those customers that become members of wholesale programs pay the
membership fee as part of the weekly or monthly payments made to Foresight's
client in connection with the primary product or service purchased or rented.
With respect to retail service programs, the membership is for one year and
may be renewed.

         When customers agree to become a retail program member, they
generally receive a trial membership. During the period of the trial
membership, the member may use the program's services without any obligation
to pay for the services and benefits. Each customer-member is provided or
mailed a membership brochure along with a membership card and membership
identification number. The brochure summarizes the program products and
                                    -48-
<PAGE>

services offered and lists toll-free telephone numbers that may be used to
access service benefits and information. During the trial period, a consumer
may elect not to participate in a service offered by calling Foresight's
toll-free telephone number to cancel the particular service or benefit. Trial
memberships are generally for a period of 30 days. During the trial membership
period, the membership and related benefits may be unconditionally terminated
by the member without further obligation.

         If the membership is not canceled during the trial period, the
customer-member becomes obligated to pay the membership fee. In the event that
the member does not cancel the membership after the initial membership term,
such member generally receives a renewal kit in the mail in advance of each
membership termination date and is charged for the succeeding year's
membership fee. During the course of an initial annual membership term or
renewal term, a member is free to cancel a membership during the first 30 to
60 days of membership.

         Foresight's wholesale membership programs are offered by Foresight's
clients in connection with point-of-sale transactions and are presented to the
customer as a value-added benefit of doing business with the client. The
Customer relationships with clients of Foresight are generally short term and
typically on an infrequent basis. Therefore, there is not an extended
client-customer relationship. For offering and selling the memberships in a
wholesale program, the clients retain 40% to 80% of the membership fee and
remit the balance to Foresight.

         In comparison, Foresight offers the retail membership programs to
potential members obtained from customer lists provided by its clients.
Generally, clients and customers have an existing and often long-term
relationship. Foresight's clients provide lists of consumers which are added
to Foresight's computerized database system to model, analyze and identify
potential members. For such customer lists, Foresight's clients are paid a
royalty from the initial and renewal membership fees collected by Foresight
from the members listed in the clients' customer lists. These royalties are
from 10% to 50% of the membership fees.

         In combination with Foresight's product development and marketing
group and the clients' sales and marketing group, Foresight develops
strategies for new product and service offerings. Foresight's management team,
working with its clients, develops and refines new program concepts and
introduces the new program. Foresight believes that this method of product
development allows Foresight to respond quickly and effectively to market
demand for new programs. Foresight also believes that its programs are unique
with respect to the variety and quality of particular products, services,
discounts and other features that these programs offer. By bundling and
reconfiguring various features of Foresight's standard programs, Foresight can
customize a program to the particular needs and demands of its clients.
Foresight's standard programs contain the following features:

         MEMBER SERVICE. Foresight believes that providing high quality
service to program members is extremely important. This member service
encourages membership sales and strengthens the relationship of the members
and the client which offered the service program. Foresight maintains its
service center in Norman, Oklahoma, with a total of five membership service
representatives. Foresight's service center is available to members, toll
free, 24 hours a day, seven days a week. All new membership service
representatives must complete a comprehensive training course and receive
on-the-job training. Through Foresight's training programs, systems and
software, Foresight seeks to provide members with friendly, rapid and
effective answers to questions. Foresight also works closely with its clients'
customer service staffs to ensure that their representatives are knowledgeable
in matters relating to Foresight's membership service programs.

         TECHNOLOGY. Foresight has made substantial investments in its
information management systems. Accordingly, Foresight's proprietary software
is designed to accept its clients' customer databases for review, analysis and
modeling in order to develop customer profiles and identify potential members.
Foresight receives new member information from its clients on a monthly basis.
If the new member information is obtained in connection with a retail
membership program offering, such information is also routed to Foresight's
member fulfillment personnel and member information kits are mailed to the new
members. The information management system also receives confirmation of
billing data from Foresight's merchant processors on a regular basis,
permitting Foresight to update the status of each member, including member
profile information.

                                    -49-

<PAGE>

         FULFILLMENT. In some cases the program products and services offered to
members are provided directly to the members by independent vendors. Foresight
only selects and utilizes those vendors that Foresight believes can
cost-effectively deliver high quality products and services. Foresight's
programs generally provide vendors significant volume demand with
correspondingly minimal associated marketing expense. Accordingly, vendors gain
access and marketing exposure to Foresight's membership base. In exchange for
such access and marketing exposure, pursuant to Foresight's contractual
arrangements, vendors offer discount prices to Foresight's membership base.
Foresight receives no material payments from these vendors for rendering
services to its program members. In certain cases, Foresight pays its vendors a
fee based on the volume of members in Foresight's program or based on other
agreed upon factors. For example, Foresight pays an automotive service provider
a fee based on the number of active members in the program, pay an insurance
carrier premiums based on the number of active members in various wholesale
plans and pay fees to the service which provides the health related discounts
based on the number of active members in that program. The aggregate of all such
fees paid during the six months ended June 30, 2000 was approximately
$2,215,000.

         Foresight's vendor contracts are generally for a one-year term, with
subsequent one-year renewal terms at Foresight's option. Vendors may cancel
their contracts with Foresight but, in most cases, only for cause and subject to
notice provisions to provide time to locate a substitute vendor. Most of
Foresight's vendor contracts are non-exclusive, but have requirements that the
vendors maintain the confidentiality of the terms of the contract. Foresight
believes that the establishment of a vendor network can be used in programs
developed for clients in a number of different distribution channels.

         Although not used extensively in the past, Foresight may be dependent
in the future on telemarketers to offer membership interests in its retail
offered membership service programs to prospective members. Telemarketing
services are provided pursuant to contractual arrangements that may be
terminated by the telemarketers with limited prior notice. Foresight provides no
assurance that, in the event a vendor or telemarketer ceases operations, or
terminates, breaches or chooses not to renew its agreement with Foresight, a
replacement vendor or telemarketer can be retained on a timely basis, if at all.
In addition, vendors and telemarketers are independent contractors and the level
and quality of services provided are not within Foresight's control. Any service
interruptions, delays or quality problems could result in customer
dissatisfaction and membership cancellations, which could have a material
adverse effect on Foresight's business, financial condition and results of
operations.

SALES AND MARKETING CHANNELS

         Foresight generally outsources the offering of memberships and do not
make direct solicitations. With respect to wholesale programs, the client in a
point-of-sale transaction offers the membership to its customer as a value-added
feature. Under these programs, the client offering the memberships is
responsible for marketing, usually with Foresight's assistance. Foresight does
not pay the marketing costs of membership solicitation and sales. In some cases,
the client may provide wholesale memberships to its customers free of charge and
pay the periodic membership fee for each customer. In other cases, the client
may charge a reduced fee to its customer.

         With respect to membership interests other than in wholesale programs,
Foresight solicits members utilizing direct marketing methods, including direct
mail, as a solo piece mailed either at Foresight's expense or at the client's
expense. Foresight's direct marketing solicitations are made to potential
members based upon customer lists and information provided by Foresight's
clients. During 1999 and the six months ended June 30, 2000, Foresight sold
approximately 2,900 and 1,800 retail memberships, respectively.

         Foresight's sales strategy is to establish and maintain long-term
relationships with its clients. Through employment of its sales process,
Foresight determines how client needs can be addressed by Foresight's membership
service programs. Foresight attempts to build upon its existing customer
relationships by integrating and cross-selling Foresight's various membership
service programs. The term of the sales cycle for a new service program varies
and can be six months or more. Foresight's client sales force currently consists
of two executives and four sales representatives and support staff.


                                    -50-
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         Foresight's business is highly dependent on telephone service provided
by various local and long distance telephone companies. Any significant
interruption in telephone services could adversely affect Foresight.
Additionally, limitations on the ability of telephone companies to provide
increased capacity that Foresight may require in the future, if any, could
adversely affect Foresight's business, financial condition and results of
operations. Rate increases imposed by these telephone companies will increase
Foresight's operating expenses and could materially adversely affect Foresight's
business, financial condition and results of operations.

CLIENT CONTRACTUAL ARRANGEMENTS

         Foresight's ability to market memberships is dependent upon continuing
and establishing new client relations. The arrangements with clients are
pursuant to written agreements which set forth Foresight's and the client's
responsibilities, obligations, and entitlements, including collection of
membership fees and, as applicable, payment of royalties. Retailers that sell
wholesale memberships generally are required to collect the membership fee and
remit 20% to 60% of the memberships fee to Foresight and are entitled to retain
the balance. Foresight's client contracts with such retailers are generally for
an initial term of two years, which is automatically extended for a term of one
year following the initial term. These contracts are subject to termination upon
90-days' written notification prior to expiration of the initial term or the
extended term. Pursuant to these contracts, Foresight's clients are excluded
from offering and selling similar membership service programs. Upon such
termination, Foresight generally does not have any continuing relationship with
the client's customers, although Foresight is entitled to continue to receive
its portion of the membership fee as collected by the retail client.
Furthermore, for one year following termination of the contract, a retailer is
not permitted to offer programs that are similar to Foresight's membership
programs.

         With respect to those memberships sold by Foresight pursuant to direct
marketing methods, Foresight obtains substantially all customer marketing
information from customer lists supplied by Foresight's clients. Clients provide
these lists for use in marketing a single, specific program which has been
pre-approved by the client. Pursuant to contractual arrangements with these
clients, Foresight is obligated to collect the membership fees and remit 10% to
50% of such membership fees to the clients that provided the customer list used
to solicit the membership sales. Under Foresight's contractual arrangements with
these clients Foresight typically has the right to continue providing membership
services directly to the client's customers even if the client terminates the
contract. Foresight's ability to market new retail programs to an existing
customer base or an existing retail program to a new customer base is dependent
on first obtaining approval from a client.

         Approximately 75% and 74% of Foresight's revenues for the six months
ended June 30, 2000 and the year ended December 31, 1999, respectively, was
attributable to members obtained through wholesale solicitation and sales by one
customer.

         Client relationships generally are developed over an extended period of
six months or more. These relationships generally are based in part on
professional relationships and the reputation of Foresight's management and
marketing personnel. As a result, client relationships may be adversely affected
by events beyond Foresight's control, including departures of key personnel and
alterations in personal relationships. Consequently, because Foresight's
relationships with its clients are pursuant to contractual arrangements that are
subject to termination, Foresight provides no assurance that

         -        one or more of Foresight's key or other clients will not
                  terminate its relationship with Foresight;

         -        if applicable, that clients will provide additional customer
                  lists for use in Foresight's further marketing of new or
                  existing membership programs; or

         -        such clients will replaced on a timely basis, if at all.

Any one of the foregoing could have an adverse effect upon Foresight's business,
financial condition and results of operations.


                                    -51-
<PAGE>


GOVERNMENT REGULATION

         Foresight may use telemarketing as a method of direct marketing of
retail membership service programs. The telemarketing industry is increasingly
subject to federal and state regulation as well as general public scrutiny and
criticism. The Federal Telephone Consumer Protection Act of 1991 limits the
hours during which telemarketers may call consumers and prohibits the use of
automated telephone dialing equipment to call certain telephone numbers. The
Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 and
Federal Trade Commission regulations promulgated thereunder, prohibit deceptive,
unfair or abusive practices in telemarketing sales. Both the Federal Trade
Commission and state attorneys general have authority to prevent telemarketing
activities that constitute "unfair or deceptive acts or practices." Furthermore,
a number of states have enacted laws and others are considering enacting laws
targeted directly at telemarketing practices. Foresight provides no assurance
that any such laws, if enacted, will not adversely affect or limit Foresight's
current or future operations.

         Compliance with federal and state regulations is generally Foresight's
responsibility. The membership programs industry is especially susceptible to
charges by the media of regulatory noncompliance and unfair dealing. As is often
the case, the media may publicize perceived non-compliance with consumer
protection regulations and violations of notions of fair dealing with consumers.
Foresight's failure to comply with current as well as newly enacted or adopted
federal and state regulations could have a material adverse effect upon
Foresight's business, financial condition and results of operations in addition
to the following:

         -        non-compliance may cause Foresight to become the subject of a
                  variety of enforcement or private actions for non-compliance;

         -        compliance with changes in applicable regulations could
                  materially increase the associated operating costs;

         -        non-compliance with any rules and regulations enforced by a
                  federal or state consumer protection authority may subject
                  Foresight or its management personnel to fines or various
                  forms of civil or criminal prosecution; and

         -        non-compliance or alleged non-compliance may result in
                  negative publicity potentially damaging Foresight's
                  reputation, client relationships and the relationship with
                  program members and consumers in general.

COMPETITION

         Competition in the membership services market for clients is intense.
Foresight offers membership programs that provide products and services similar
to or directly in competition with products and services offered by its
competitors as well as the providers of such products and services through other
channels of distribution. Through contractual arrangements with a competitor,
potential clients may be prohibited from contracting with Foresight to design a
membership program if the services or products provided by Foresight's program
are similar to, or merely overlap with, the services or products provided by an
existing competitor program. Although not permitted under the current agreements
with Foresight's clients, in the future some of Foresight's clients may provide,
either directly or through third parties, programs offered by Foresight's
competitors that directly compete with Foresight's programs. Competition for new
members is also intense, particularly as the market becomes saturated with
customers who are already members of competing programs.

         Foresight's principal competitors are Cendant Corporation, Memberworks,
Inc., Nationwide Club Administrators, Inc., Encore International, Inc. and
Consumer Benefit Services, Inc. Foresight's other competitors include large
retailers, travel agencies, financial institutions, and other organizations
which offer benefit programs to their customers. Many of Foresight's competitors
have substantially larger customer bases and greater financial and other
resources. Foresight believes that the principal competitive factors, many of
which are not within Foresight's control, in the membership services industry
include:

         -        the ability to identify, develop and offer unique membership
                  service programs,


                                    -52-
<PAGE>


         -        the quality and breadth of the programs offered,

         -        membership fees,

         -        prices of products and services offered,

         -        marketing expertise,

         -        the ability to hire and retain employees,

         -        the development by others of membership service programs that
                  are competitive with Foresight's programs,

         -        the price at which competitors offer comparable membership
                  programs and the products and services of these programs, and

         -        responsiveness to customer needs.

         To date, Foresight has effectively competed with its competitors.
However, there is no assurance that:

         -        Foresight's competitors will not increase their emphasis on
                  programs similar to Foresight's programs to more directly
                  compete with Foresight,

         -        Foresight's competitors will not provide programs comparable
                  or superior to Foresight's programs at lower membership
                  prices,

         -        Foresight's competitors will not adapt more quickly to
                  evolving industry trends or changing market requirements,

         -        new competitors will not enter the market, or

         -        other businesses will not themselves introduce competing
                  programs.

This increased competition may result in price reductions, reduced gross margins
and loss of market share, any of which could materially adversely affect
Foresight's business, financial condition and results of operations.

         In addition, Foresight and other providers of membership programs
compete for client marketing budget dollars and, in particular, other forms of
direct marketing activities, such as direct mail. In recent years, there have
been significant advances in new forms of direct marketing, such as the
development of interactive shopping and data collection through television, the
Internet and other media. As widely reported, electronic interactive commerce
via the Internet and through the World Wide Web has and probably will continue
to grow significantly. To the extent such growth occurs, it could have a
material adverse effect on the demand for membership programs. Furthermore, as
the telemarketing industry continues to grow, the effectiveness of
telemarketing, which is used as a means of marketing Foresight's retail
programs, as a direct marketing tool may decrease as a result of increased
consumer resistance to telemarketing in general.

EMPLOYEES

         As of June 30, 2000, Foresight employed 19 persons on a full-time basis
and 5 on a part-time basis. Foresight's employees are not represented by a labor
union. Foresight believes that the relations with its employees are good.

FACILITIES


         Foresight's offices and operations are located in 7,450 square feet at
2500 South McGee Drive, Norman, Oklahoma 73072. The offices are occupied under a
lease agreement with Onward, L.L.C., which expires December 31, 2004 and
requires payment of monthly rent of $9,350. Onward, L.L.C. is wholly-owned by
Paul A. Kruger, Foresight's majority shareholder.



                                    -53-
<PAGE>


LEGAL PROCEEDINGS

         In the normal course of its business, Foresight may become involved in
litigation or in settlement proceedings relating to claims arising out of its
operations. Foresight is not a party to any legal proceedings, the adverse
outcome of which, individually or in the aggregate, could have a material
adverse effect on Foresight's business, financial condition and results of
operations.

FEDERAL TRADE COMMISSION LEGAL PROCEEDINGS

         In July 1999, the Federal Trade Commission commenced an investigation
of the telemarketing of credit card registration services by Universal Marketing
Services, Inc. At that time, Universal Marketing Services was the parent of
Foresight and managed the operations of Foresight. The investigated
telemarketing activities were conducted by United Marketing Group, Ltd. and its
officer Louie Paulozza, both unrelated to Universal Marketing Services,
Foresight and Mr. Wimberley. United Marketing Group and Mr. Paulozza conducted
the telemarketing activities pursuant to written agreement with Universal
Marketing Services. Under this agreement, United Marketing Group agreed to
conduct all telemarketing activities in compliance with the rules and
regulations of the Federal Trade Commission. The Federal Trade Commission would
not limit its investigation to or agree only to pursue United Marketing Group
and Mr. Paulozza. To avoid prolonged litigation and the associated expenses,
Universal Marketing Services and its President, Steven Brett Wimberley agreed to
a stipulated judgment. Following its approval of the stipulated judgement, the
Federal Trade Commission filed on June 28, 2000 a complaint in the United States
District Court for the Western District of Oklahoma styled FEDERAL TRADE
COMMISSION AND STATE OF OKLAHOMA V. UNIVERSAL MARKETING SERVICES, INC., STEVEN
BRETT WIMBERLEY, UNITED MARKETING GROUP, LTD. AND LOUIE PAULOZZA. Pursuant to
the stipulated judgment a $100,000 consent judgment was entered against
Universal Marketing Services and Mr. Wimberley.

         Under the terms of the stipulated judgment, Universal Marketing
Services and Mr. Wimberley are banned from engaging in, or assisting other in,
the promotion, advertising, marketing, offering for sale or sale of any credit
card registration or protection services through telemarketing. Additionally,
the rights of Universal Marketing Services and Mr. Wimberley to telemarket other
products are subject to restrictions and monitoring by the Federal Trade
Commission. Foresight is neither the subject of the investigation nor a party to
the stipulated judgment. However, Foresight's telemarketing activities (as well
as our telemarketing activities following completion of the merger-acquisition)
may become subject to restrictions and monitoring similar to those imposed by
the stipulated judgment, whether conducted with Universal Marketing Services,
Mr. Wimberley or an unrelated third party.

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

         The following table sets forth information with respect to each of
Foresight's executive officers and directors.

<TABLE>
<CAPTION>
     NAME                                       AGE    POSITION
------------------                              ---    --------
<S>                                             <C>    <C>
Paul A. Kruger...............................    46    President and Chief Executive Officer
                                                       and Director

Mark R. Kidd.................................    33    Executive Vice President, Chief
                                                       Financial Officer, Secretary and Director
</TABLE>

         A brief description of the business background of Messrs. Kruger and
Kidd appear under the caption "Proposal Four--Election of Directors--Information
About Each Director and Nominee Directors" of this Proxy Statement.


                                    -54-
<PAGE>


EXECUTIVE OFFICER COMPENSATION AND OTHER INFORMATION

         The following table sets forth the compensation during 1999, 1998 and
1997, paid or accrued, of Paul A. Kruger, Foresight's President and Chief
Executive Officer and the other named executive officers, each of whom received
compensation in excess of $100,000 during these years.

<TABLE>
<CAPTION>
                                                                          ANNUAL COMPENSATION(1)
                                                                         -----------------------
NAME AND PRINCIPAL POSITION                                     YEAR      SALARY           BONUS
---------------------------                                     ----     --------          -----
<S>                                                             <C>      <C>               <C>
Paul A. Kruger................................................. 1999     $ 55,650          $ --
  President and Chief Executive Officer                         1998           --            --
                                                                1997           --            --

Steve Owens.................................................... 1999     $     --          $ --
  Chairman of the Board                                         1998      240,000            --
                                                                1997      240,000            --

Danny Wright................................................... 1999     $     --          $ --
  Chief Executive Officer and President                         1998      364,315            --
                                                                1997      394,315            --
</TABLE>

----------------------------
(1)      The named executive officer received additional non-cash compensation,
         perquisites and other personal benefits; however, the aggregate amount
         and value thereof did not exceed 10% of the total annual salary paid to
         and accrued for the named executive officer during the year.

LACK OF EMPLOYMENT ARRANGEMENTS AND KEYMAN INSURANCE

         Foresight does not have written employment agreements with its
employees and does not maintain any keyman insurance on the life or in the event
of disability of its executive officers.

401(k) PROFIT SHARING PLAN

         On July 5, 1999, Foresight adopted the Foresight, Inc. Retirement Plan
which includes a 401(k) deferred compensation feature. All Foresight employees
who have completed at least six months of service and are 21 years of age or
older may enroll in the Retirement Plan. Under the Retirement Plan a
participating employee may contribute up to 15% of his or her compensation up to
a maximum of $10,500 during 2000. Foresight makes matching contributions of 50%
of a participant's contributions limited to 3% of the participant's annual
compensation. The Foresight's matching contributions vest 20% per year and
become fully vested after the participant has six or more years of service.
During 1999, Foresight made $7,000 in matching contributions to the Retirement
Plan. All contributions by participants are fully vested.

CERTAIN TRANSACTIONS

         Set forth below is a description of transactions entered into between
Foresight and certain of its officers, directors and shareholders during this
year, 1999 and 1998. Certain of these transactions may result in conflicts of
interest between Foresight and each of these individuals.


         Foresight's offices and operations are located in 7,450 square feet at
2500 South McGee Drive, Norman, Oklahoma 73072. The offices are occupied under a
lease agreement with Onward, L.L.C., which expires December 31, 2004 and
requires payment of monthly rent of $9,350. Onward, L.L.C. is wholly-owned by
Paul A. Kruger who is Foresight's majority shareholder. Furthermore, the offices
and operations of Precis Smart Card Systems are also located at 2500 South McGee
Drive, Norman, Oklahoma, in approximately 500 square feet. These offices and
operations are occupied under a month-to-month lease arrangement with Onward,
L.L.C. requiring monthly rent of $600. During this year and 1999, Onward, L.L.C.
was paid $56,000 and $41,000, respectively, for space occupied by Foresight.
During 1998, Onward, L.L.C. was not paid any rent by Foresight.


         Foresight holds an account receivable owed by Mark R. Kidd of $33,000
which was transferred to Foresight by Universal Marketing Services in connection
with the acquisition by Mr. Kidd of stock ownership of


                                     -55-
<PAGE>


Foresight. The debt was originally incurred by Mr. Kidd for the purpose
acquiring common stock of Universal Marketing Services.


                         PRECIS SMART CARD SYSTEMS, INC.

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

         YOU SHOULD READ THE FOLLOWING DISCUSSION IN CONJUNCTION WITH OUR
FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS REPORT. THE
RESULTS OF OUR OPERATIONS AS DISCUSSED BELOW ARE NOT NECESSARILY INDICATIVE OF
OUR OPERATIONS FOLLOWING COMPLETION OF THE OFFERING.

RESULTS OF OPERATIONS

         The following table sets forth selected results of our operations for
the years ended December 31, 1999 and 1998 and the six months ended June 30,
2000 and 1999. We took the information from our financial statements appearing
elsewhere in this Proxy Statement.

<TABLE>
<CAPTION>
                                        FOR THE YEAR ENDED DECEMBER 31,               FOR THE SIX MONTHS ENDED JUNE 30,
                                   ------------------------------------------    ------------------------------------------
                                           1999                   1998                   2000                  1999
                                   -------------------    -------------------    -------------------    -------------------
                                     AMOUNT    PERCENT      AMOUNT    PERCENT     AMOUNT     PERCENT     AMOUNT     PERCENT
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
<S>                                <C>         <C>        <C>         <C>        <C>         <C>        <C>         <C>
Product and service revenues....   $  63,060      100 %   $ 322,483     100 %    $      --      -- %    $  25,000      100 %
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
Operating expenses:
  Product deployment and
   research and development.....     230,828      366       389,586     121        113,233      --        134,462      538
  Sales and marketing...........     163,712      260       147,411      46         87,587      --         79,321      317
  General and administrative....     382,764      607       399,756     124        234,800      --        217,124      868
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
    Total expenses..............     777,304    1,233       936,753     290        435,620      --        430,907    1,723
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
    Operating loss..............    (714,244)  (1,133)     (614,270)   (190)      (435,620)     --       (405,907)  (1,624)
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
Other expenses (income):
  Interest expense..............      79,261      126        59,196      18         23,644      --         42,834      171
  Interest income...............          --       --        (2,136)     (1)       (91,428)     --             --       --
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
                                      79,261      126        57,060      18        (67,784)     --         42,834      171
                                   ---------   -------    ---------   -------    ---------   -------    ---------   -------
Net loss - deficit accumulated
  during development stage......   $(793,505)  (1,258)%   $(671,330)   (208)%    $(367,836)     -- %    $(448,741)  (1,795)%
                                   =========   =======    =========   =======    =========   =======    =========   =======
</TABLE>

         COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 1999

         We did not generate any revenue during the six months ended June 30,
2000. Prior to the completion of our public offering in February 2000, we lacked
the financial resources to support marketing of our products. Since the date of
our public offering, we have focused on the development of the Precis Instacare
card and began test marketing of the card in May 2000. We will be expanding our
test marketing in August 2000. We anticipate that some revenue will be generated
from the test marketing, but additional product development could be required
based upon the results of our test marketing before significant distribution of
the product and resulting generation of significant revenue can be realized.

         Operating expenses during the six months ended June 30, 2000 increased
$4,713 to $435,620 from $430,907 during the first six months of 1999. Increases
in sales and marketing expenses and general and administrative expenses were
offset by a decrease in product deployment and research and development
expenses. The $8,266 increase in sales and marketing expenses to $87,587 during
the six months ended June 30, 2000 from $79,321 during the first six months of
1999 was primarily attributable to an increase in salaries and benefits for
sales and marketing personnel. General and administrative expenses increased
$17,676 to $234,800 during the six months ended June 30, 2000 from $217,124
during the first six months of 1999. The increase in general and administrative
expenses was attributable to increased salaries and benefits. Offsetting the
increases in sales and marketing expenses and general and administrative
expenses, product deployment and research and development


                                     -56-
<PAGE>


expenses decreased $21,229 to $113,233 during the six months ended June 30, 2000
from $134,462 during 1999. This decrease was attributable to a reduction in our
staff of development engineers. We incurred operating losses of $435,620 and
$405,907 during the six months ended June 30, 2000 and 1999, respectively.

         We generated net other income $67,784 during the six months ended June
30, 2000 compared to a net other expenses of $42,834 during the first six months
of 1999. This change was due to the generation of interest income on the
proceeds received from our initial public offering in February 2000. During the
six months ended June 30, 1999, we did not have interest bearing deposits or
investments and as a result did not generate any interest income.


         COMPARISON OF THE YEARS ENDED DECEMBER 31, 1999 AND 1998


         Revenue during 1999 decreased $259,423, an 80% decrease, to $63,060
from $322,483 during 1998. This decrease was attributable to our lack of
financial resources to support marketing of our products during 1999.
Consequently, we did not replace the revenue from implementation of the
PrecisCache-TM- system for the 1998 PGA Championship and the Kiel Center Arena,
home of the National Hockey League's St. Louis Blues, during 1998. In addition,
during 1999 we completed the initial installation and implementation of our
smart card system in Ericsson Stadium. Our 1998 revenue from this installation
was $251,483, which included our cost of smart cards and computer hardware of
$86,424. In comparison, during 1999 we had revenue of $38,060 from this
installation. Typical of a installation like the Ericsson Stadium installation,
we furnish third-party manufactured hardware. Accordingly, our revenue from
these installations include the sales of the installed hardware. Following
initial installation, we may continue to sell additional smart cards as part of
the installation, but we do not typically have continuing significant hardware
sales associated with the installation. During 1999, we did not complete an
installation comparable to that of the Ericsson Stadium, which we believe was
principally due to our inadequate financial resources to support marketing
efforts.


         Operating expenses during 1999 decreased $159,449 to $777,304 from
$936,753 during 1998. Decreases in general and administrative expenses and
product deployment and research and development costs were offset by an increase
in sales and marketing expenses. The $158,758 decrease in product deployment and
research and development costs to $230,828 during 1999 from $389,586 during 1998
was primarily attributable to a decrease in product deployments costs associated
with the decrease of product and service revenue during 1999 compared to 1998.
Product deployment costs in 1998 included the costs of implementation of the
PrecisCache-TM- system for the 1998 PGA Championship and the Kiel Center Arena
and the maintenance in 1998 of the Chicago White Sox project test that was
implemented for the 1997 and 1998 seasons. Also, general and administrative
expenses decreased to $16,992 to $382,764 during 1999 from $399,756 during 1998.
The decrease in general and administrative expenses was attributable to the
decrease in depreciation expense. Offsetting the decrease in product deployment
and research and development costs and general and administrative expenses,
sales and marketing expenses increased $16,301 to $163,712 during 1999 from
$147,411 during 1998. This increase was attributable to the continued focus on
marketing activities. We incurred operating losses of $714,244 and $614,270
during 1999 and 1998, respectively. The $99,974 increase in 1999 operating loss
was attributable to the decrease in product and service revenues.


         Other expenses (income) increased by $22,201 or 39% to a net expense of
$79,261 during 1999 from $57,060 in 1998. This increase was principally due to
the increase in interest expense, which increased from $59,196 during 1998 to
$79,261 during 1999. The increase in interest expense was attributable to
increase in our outstanding debt during 1999 compared to 1998. During 1999 we
had a $793,505 net loss, while during 1998 we had a net loss of $671,330, an
increase of $122,175.

PRO FORMA EFFECT OF STOCK-BASED COMPENSATION

           We have historically used stock options to retain and compensate our
officers, directors, employees and others. During 1998, we granted stock options
for the purchase of our common stock to our officers, directors, employees and
others. In accordance with Accounting Principles Board Opinion No. 25, the
compensation cost of these stock options is not recognized in our financial
statements. The outstanding stock options granted in 1998


                                     -57-
<PAGE>


had an estimated fair value at the date of grant of the options of $116,278,
utilizing the methodology prescribed under SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. After giving effect to the estimated fair value of
these options, during 1998, we had a pro forma net loss of $787,608 ($0.66 per
common share).

INCOME TAX PROVISION (BENEFIT)

         Statement of Financial Accounting Standards 109, Accounting for Income
Taxes, requires the separate recognition, measured at currently enacted tax
rates, of deferred tax assets and deferred tax liabilities for the tax effect of
temporary differences between the financial reporting and tax reporting bases of
assets and liabilities, and net operating loss carryforwards for tax purposes. A
valuation allowance must be established for deferred tax assets if it is "more
likely than not" that all or a portion will not be realized. At December 31,
1999 and 1998, we had the benefit of net operating loss carryforwards of
$980,000 and $743,300, respectively. The tax benefit was attributable to the net
operating loss carryforwards of approximately $2,450,000 which if not realized,
will expire at various dates through 2015. The cumulative net deferred tax asset
at December 31, 1999, after the valuation allowance, had no value.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, we have financed operations and capital expenditures
through private placements and sales of debt and equity securities together with
cash from operations and loans from shareholders. In February 2000, we completed
our initial public offering and from the sale of 1,150,000 shares of our common
stock we received net proceeds of approximately $5,675,000. As of June 30, 2000,
we had working capital of $4,227,989. During the six months ended June 30, 2000,
we used a portion of the proceeds of the initial public offering to extinguish
substantially all of our outstanding debt.

         Operating activities for the six months ended June 30, 2000, used net
cash of $943,309 as the result of a net loss of $367,836 increased by changes in
accounts payable, accrued liabilities, other assets and inventory totaling
$575,473. During the six months ended June 30, 1999, our operating activities
used net cash of $281,024 as the result of the net loss of $448,741, offset by
depreciation of $56,992 and an increase in accounts payable and accrued
liabilities of $58,850 and $51,875, respectively. During the six months ended
June 30, 2000 and 1999, net cash provided by financing activities was $5,183,141
and $653,497, respectively. During the first six months of 2000, we sold
1,150,000 shares of our common stock in an initial public offering for gross
proceeds of $6,900,000 (net proceeds of approximately $5,675,000) which were
subsequently used to repay short-term debt of $329,643 and long-term debt of
$311,148. During the first six months of 1999, we sold 300,000 shares of our
commons stock in a private placement offering for gross proceeds of $600,000
(net proceeds of approximately $477,000). In addition, we borrowed $226,643 on a
short-term basis; we repaid a book overdraft of $27,513 and made payments of
$22,827 on long-term debt.

         We currently have no commitments for capital expenditures in material
amounts. We believe that our existing cash and cash from operations will be
sufficient to fund our operations for the next 12 months. Because our capital
requirements cannot be predicted with certainty, there is no assurance that we
will not require additional financing before expiration of the 12-month period.
There is no assurance that any additional financing will be available on terms
satisfactory to us or advantageous to our shareholders.

         In February 2000, we completed our initial public offering with the
sale of 1,150,000 shares of our common stock and received net proceeds of
$5,675,000, approximately. Our business plan is to use more than $2.7 million of
the net proceeds from this offering to market our products and technology. We
believe that through our marketing efforts we will obtain significant revenue
growth and obtain profitability. Historically, we have devoted our financial
resources principally to development of our smart card technology. We believe
that with the net proceeds of the offering, we have the financial resources to
develop market acceptance of our smart card technology. However, there is
limited information available concerning the performance of our technologies or
market acceptance of our products. Also, our marketing experience is very
limited. Thus, we provide no assurance that

-        we will be successful in implementing our business plan,


                                     -58-
<PAGE>

-        unanticipated expenses or problems or technical difficulties will not
         occur which would result in material implementation delays, or

-        we will have sufficient capacity to satisfy any increased demand for
         our smart card products and technologies resulting from implementation
         of our plan.

Any one of these will adversely affect our ability to become profitable.

BUSINESS

GENERAL

         We were organized in 1996 as an Oklahoma corporation and successor to
MediCard Plus-ADS, LLP, an Oklahoma limited partnership which was formed in
March 1994. At Precis, we design, market, implement and service custom memory
and microprocessor card products, known as smart cards, on which information and
software can be stored. This information can be easily, securely and accurately
accessed and manipulated by electronic data processing equipment. Our software
offers solutions for creating and processing data and ensuring secure electronic
transactions. Through our research efforts, we have developed a library of
reusable computer software components for a variety of personal computer and
embedded applications all centered on smart card technology. Our technology
enables electronic commerce in closed-system environments for point-of-sale
transactions and other uses. Our products includes the Precis Health Card
System-TM-, a healthcare smart card system; PrecisCache-TM-, a fixed-value smart
card system; PrecisReserve-TM-, a reloadable stored-value smart card system; and
PrecisPersona-TM-, a smart-card based customer loyalty and rewards system.

         Our products and services include full service hardware integration and
software development and implementation from the point-of-sale to back-end
processing for electronic commerce. We are positioned to provide customers with
sophisticated smart card business solutions across a wide range of applications.

WHAT IS A SMART CARD AND ITS USES?

         A smart card is a credit card-sized plastic card in which an integrated
circuit, usually containing a reusable memory chip, is embedded. In their
simplest form, smart cards provide memory storage capabilities, including
fixed-value cash cards, in which the card is discarded after the value stored on
the card is depleted. This microchip acts as a storage device and can be
programmed to perform many of the functions of a computer. The data on the cards
can be read and updated when the card is inserted into a terminal or, in some
cases, simply placed in the proximity of a radio-frequency based smart card
device.

         There are two basic types of cards that are often called smart cards
and some are smarter than others. The first is a simple memory card that, like a
magnetic stripe card, stores data. Unlike a 'mag-stripe' card, the smart card
can be overwritten with new data many times and can store, depending on the
card, up to 32 Kbytes of information. Because of its versatile nature, our smart
card technology is adaptable for use over a variety of applications. These
applications are generally categorized as payment vehicles, access and security
keys, and information management.

         PAYMENT VEHICLE CARDS -- The most familiar of these cards are the
stored-value payment vehicles, commonly known as electronic purse or wallet
cards, credit, debit and automated teller machine cards, which are disposable or
value reloadable. Some library applications use the same structure using tokens
or units instead of a monetary value.

         ACCESS AND SECURITY KEY CARDS -- These cards are used to store and
access identification and authentication information, including biometrics and
encryption technology, including digital certificates, for control of physical
access, online access and for facilitating secured commerce on intranets and the
Internet.

         INFORMATION MANAGEMENT CARDS -- These cards enable the storage and
manipulation of data of all kinds, including emergency information, medical
history, account management information, expense tracking and


                                     -59-
<PAGE>


various loyalty programs. These cards may be used to track and cross-reference
consumer purchasing habits to provide marketing information to retailers,
distributors and manufacturers of various products and services.

         To provide smart card applications for some clients, we develop
customized software and integrate appropriate hardware technology to adapt the
card to the customer's needs. We believe that our engineers have sufficient
expertise in hardware technology and computer programming languages necessary
for these development efforts.

         The manufacturing cost of a card varies from less than $1 to
approximately $10 depending on the amount of information the card holds and the
complexity of the microchip or its operating system. Similarly, the cost of a
reader device can vary from $50 to $2,000, depending on the complexity and
functionality of the device.

WHAT IS THE HISTORY OF THE SMART CARD INDUSTRY?

         Smart cards were first developed in the late 1960's in France. At
present smart card technology is established and extensively used in Europe and
Asia. According to Ovum Ltd., the market for smart card units will reach 2.7
billion by 2003. The largest markets will be in the prepayment applications,
followed by access control, and electronic cash applications. According to a
recent study from Dataquest, the overall market for memory and
microprocessor-based cards will grow from 544 million units in 1995 to 3.4
billion units by 2001. Of that figure, microprocessor-based smart cards, which
accounted for only 84 million units in 1995 will grow to 1.2 billion units in
2001. (Source: Microsoft Corporation: http://www.microsoft.com/windowsce/
smartcard/background.asp.) According to research firm, SJB Research, the smart
card market is growing at a rate close to 50% a year, with three to four
billion cards expected to be issued in 2000. (Source: Smart Card Central:
http://www. smartcardresearch.com/reports/sjb.html.) Furthermore, Killen &
Associates, Inc., also a research firm, projects that the smart card market
will grow from a world wide total of 250 million transactions in 1996 to 25
billion in 2005. (Source: Killen Associates, Inc., quoted in the Smart Card
Forum, http:// www.smartcrd.com/ info/more/factoid.htm.) The smart card market
in North America totaled 13 million cards in 1996 and is expected to grow to
273 million by 2001 and the projection for 2005 is an estimated 543 million
cards in North America. (Source: Schlumberger Public Relations Department,
"Schlumberger Electronic transactions," quoted in Smart Card Forum,
http://www.smartcrd.cwom/info/more/factoid.htm.)

         At first mainly used in pay telephones, smart cards are now being used
for transportation, car parking, arcade games and vending machines. Any coin
operated machine can be converted to a smart card format. Other applications
include automated teller machines, point-of-sale terminals, personal computers,
electronic ticketing and automatic fare collection.

         We believe that smart card technology represents the next step in the
evolution of credit/debit instruments and related products and services. Smart
card systems differ from other payment mechanisms in their ability to store
large quantities of data on a credit-card sized medium by means of an integrated
circuit chip. The sophisticated encryption algorithms and other security
mechanisms that the chip employs provide information protection. In January
1999, Microsoft Corporation released a beta version of its developers' kit to
provide a standard model for interfacing smart card readers and cards with
personal computers. (Source: Microsoft Corporation,
http://www.microsoft.com/windowsce/smartcard.scardwp.htm.) We believe that with
the integration of this technology with future versions of Windows and Windows
NT operating systems, smart card development and utilization for security and
electronic commerce on the Internet will become prevalent.

         We believe that widespread acceptance and use of smart card technology
will occur, but only following the transition from magnetic stripe only
infrastructure to one that includes both magnetic stripe and smart cards. Major
credit card companies and large banking institutions have shown an interest in
smart card technology because the technology makes small-value monetary
transactions feasible, faster and more economically processed. Use of smart
cards reduces the need for signature, verification of credit availability,
receipts and paperwork. The 1996 Olympic smart card pilot in Atlanta, Georgia by
several banks in association with Visa demonstrated the need for considerable
consumer education before widespread acceptance and utilization will occur.


                                     -60-
<PAGE>


         We believe that closed-area smart card systems will serve as a
transitional or interim phase to widespread smart card utilization and
acceptance. A closed-area system is a limited venue, including a sports arena, a
university or college campus, or a limited access entertainment event. There are
several reasons for this.

-        First, open systems require huge investments in both infrastructure and
         marketing. As with most technology implementation, especially
         point-of-sale and other transaction technology, there is reluctance to
         invest in the requisite infrastructure. Also, there is reluctance on
         the part of consumers to purchase and use the cards if widespread
         utilization does not exist. In a closed-area, the consumer may be
         required to use a smart card for purchases or access.

-        Second, the security and monitored-controlled access to a defined area
         provided. A closed-area by its nature is a controlled environment where
         security issues can be monitored easily and reacted to quickly should
         the need arise. Smart card technology is well suited for monitoring and
         controlling access for security purposes.

-        Third, the scale of infrastructure required for implementation. Within
         a defined area the required scale of infrastructure is limited and
         consequently results in more immediate implementation, either mandatory
         or voluntary, requiring consumer acceptance and use.

         We anticipate that significant short-term opportunities exist in the
development of closed-area systems including stored- value cards for events or
entertainment venues, individual store or franchise-wide loyalty applications in
retail, and access control and security applications for corporations. Multiple-
application systems for groups including hospitals, corporate campuses, schools,
colleges and universities can provide further market opportunity.

         In addition, a major factor in the rapid growth of smart card usage is
the ability to process small transactions. Smart card technology can eliminate
the need to carry cash and coins for many day-to-day transactions. By enabling
an individual to exchange information and payment through the smart card
microchip technology, we expect that this technology will open up new
opportunities with regard to the way people interact with financial
institutions, healthcare providers, retailers and others. Most information-based
industries are candidates for smart card conversion and utilization.

         We anticipate that significant additional revenue growth opportunities
also exist in a variety of markets including the academic campus, transportation
and telecommunications.

         Our revenue during 1999 decreased $259,423, an 80% decrease, to $63,060
from $322,483 during 1998. This decrease was attributable to our lack of
financial resources to support marketing of our products during 1999.
Consequently, during 1999 we did not replace the revenue from implementation
during 1998 of the PrecisCache(TM) system for the 1998 PGA Championship and the
Kiel Center Arena, home of the National Hockey League's St. Louis Blues, and
Ericsson Stadium, home of the Charlotte Panthers of the National Football
League.

         Our smart card technology has focused on healthcare and closed-area
sports environments and events. This technology is capable of being customized
for other markets. We are encouraged by the results of these initial programs,
and believe that these programs will lead to the national introduction and
installation of these products.

WHAT PRODUCTS ARE OFFERED BY PRECIS?

         PRECISCACHE-TM-. Our fixed stored-value product is known as
PrecisCache-TM-. This product is designed to be used in stadiums, arenas,
corporate or educational campuses, festivals, events, specific retail sites or
communities and other closed-area environments. This protected memory card
stores monetary value or tokens to be used within a designated card reader
system. This reader system can include portable (stand-alone) computer terminals
as well as terminals connected to existing point-of-sale computer network
systems. The stored-value smart card system also includes a "back-office"
processing system to account for transactions, create reports and provide other
data base information.


                                     -61-
<PAGE>


         Use of the PrecisCache-TM- system greatly reduces the cost of handling
cash, while expediting transaction processing. Cards and reader sites can serve
as marketing or advertising media for clients and outside sponsors. Many of the
cards issued will have an intrinsic collectible value based on their limited
distribution, the fan/collector oriented artwork on the card and the novelty of
the new technology.

         The smart card systems implemented for Major League Baseball's Chicago
White Sox, the 1998 PGA Championship, the Oklahoma State University Athletic
Department, the Main Street Fort Worth Arts Festival, Demo '97, the National
Football League's Carolina Panthers, the National Hockey League's St. Louis
Blues, and First Chicago NBO are stored-value systems based on the
PrecisCache-TM- product technology. With respect to each of these installations,
the engineering and managerial approach to implementation resulted in timely and
expeditious installation. The Chicago White Sox system was developed and
installed in five months as compared to 12 to 18 months for similar
installations by our competitors. The Oklahoma State University project was
implemented in 60 days using prototype VeriFone-TM- Omni 1250 readers for which
documentation had not yet been printed. The Fort Worth project was implemented
in 75 days. The 10,000 allocated cards were sold during the four-day festival.
More than 34,000 transactions were logged during the event. Finally, in a period
of five days, at the request of VeriFone, we customized the PrecisCache-TM-
system for use throughout the hotel/resort hosting the Demo '97 conference. Demo
'97 is the leading computer industry conference focused exclusively on emerging
technologies.

         Our most significant ongoing installation of the PrecisCache-TM- system
was implemented in July of 1998. This project, at Ericsson Stadium in Charlotte,
North Carolina, for the Carolina Panthers of the National Football League, was
completed in cooperation with NationsBank (now Bank of America). The Precis
system replaced an earlier smart card system that had been developed by two much
larger competitors.

         PRECIS HEALTH CARD SYSTEM-TM-. The Precis Health Card System-TM-
(formerly MediCard) was developed in 1993 by our predecessor Advantage Data
Systems. Currently, there are no hospitals, healthcare organizations or
insurance companies using the Precis Health Card System-TM-.

         The Precis Health Card System-TM- was the first healthcare smart card
system that linked patients with emergency response personnel, physicians,
hospitals and pharmacies. The card stored a patient's personal information and
medical history. It included patient demographics, family and physician
contacts, blood type, last hospital admission, allergies, medications,
procedures, diagnoses, primary and secondary insurance status, along with other
pertinent information. Card readers were located at healthcare facilities,
including hospitals, physician offices, mobile emergency units and pharmacies.

         The Precis Health Card System-TM- expedites the delivery of medical
care while reducing administrative time and cost because it provides accurate
information, reduces redundant testing and procedures, decreases the likelihood
of harmful drug interactions, improves the provider/patient relationship and
provides a private and secure information storage system. With the addition of
biometrics technology and electronic data interchange processes, the Precis
Health Card System-TM- provides a powerful mechanism to reduce insurance fraud.
We plan to integrate these additional capabilities into our health card system
through customized software development or interfacing with existing systems.

         PRECISRESERVE-TM-. Our reloadable stored-value system is
PrecisReserve-TM-. This product represents a significant modification to the
PrecisCache-TM- technology which, in addition to storing monetary value or
tokens, can be reloaded, facilitating extended use.

         The PrecisReserve-TM- product is seen as a second stage product for
many venues that have already implemented the disposable stored-value product.
Its reusability also enables the expansion of our marketing efforts into
corporate campus and community- based applications. The reusability also allows
for other applications to be added and used on the same card, including loyalty
and security access.

         PRECISPERSONA-TM-. Market trends toward loyalty and affinity products
led to the development of PrecisPersona-TM-, our smart card based loyalty
application. Rewarding frequent purchasers encourages repeat business and the
tracking capabilities of smart card technology provide opportunities to acquire
valuable customer


                                     -62-
<PAGE>


preference and purchasing pattern information which marketers, retailers,
distributors and manufacturers can use to improve service, improve existing
products and develop new products.

WHO ARE PRECIS PRINCIPAL CUSTOMERS?

         During the year ended December 31, 1999, 40% of our revenues were
received from Entertainment Smart Systems and 60% of our revenues were received
from the Bank of America in connection with the Ericsson Stadium installation.
During 1998, Bank of America (then NationsBank) in conjunction with the Ericsson
Stadium installation and Tangent Associates in conjunction with the St. Louis
Blues installation, accounted for 76% and 15% of our total revenues,
respectively. As of the date of this Proxy Statement, we do not have a
significant ongoing business relationship with Bank of America, Tangent
Associates, or Entertainment Smart Systems.

HOW ARE PRECIS PRODUCTS DEVELOPED AND WHAT DO THE PRECIS PRODUCTS OFFER?

         PrecisCache-TM-, PrecisReserve-TM-, Precis Health Card System-TM-,
PrecisPersona-TM- and all Precis products in the foreseeable future are
object-oriented programming applications. We have a number of products currently
in development. Physical access, network/intranet/Internet access, security,
identification and recognition applications using smart card technology are
expected to be leading areas of industry growth.

         Our products are object-oriented programming computer applications.
This methodology allows our engineers and programmers to create sets of reusable
components, or building blocks, that may be combined to form a complex system.
Our developmental efforts have produced a library of reusable individual
software components for a variety of personal computer and smart card devices.
Using this extensive collection of software components or building blocks
provides:

-        a simpler system design, thus reducing system maintenance costs, as
         well as allowing for the reusability of these building blocks across a
         wide range of smart card systems;

-        the ability to respond rapidly to customers that have
         specialized smart card needs; and

-        the ability to seamlessly integrate our software with all major
         operating systems, office-management and point-of-sale systems.

         We adhere to a stringent set of development standards in the
development of our products. These standards include the following:

-        COMPATIBILITY WITH OPERATING SYSTEMS -- We design our software products
         to be compatible with all major operating systems for the various
         system architectures. The compatibility of our products is key to
         market acceptance and provides a distinct advantage.

-        MARKET-DRIVEN ENHANCEMENTS AND PRODUCT OFFERINGS -- Our product design
         and architecture provide flexibility and adaptability to emerging
         technologies.

-        SUPPORT FOR INDUSTRY STANDARDS -- Our development standards include
         adherence to industry standards as promulgated by the International
         Standards Organization. We also follow different operating systems
         standards and recommended configurations when developing each product
         for those operating systems.

DOES PRECIS HAVE ANY STRATEGIC BUSINESS RELATIONSHIPS?

         We currently do not have any strategic relationships. However, during
1997, 1998 and 1999 we had established formal and informal strategic
relationships with a number of companies that are established leaders in their
respective industries to establish and maintain technological leadership,
realize advantageous product pricing structures and expand our marketing and
distribution channels.

         One of these former strategic relationships was with Bank of America,
formerly NationsBank. Working with NationsBank's Strategic Technologies Group,
we our PrecisCache system was selected to replace the stored-value system
previously implemented at Ericsson Stadium in Charlotte, North Carolina. That
implementation,


                                     -63-
<PAGE>


known as FANCash-Registered Trademark-, was a flagship project of NationsBank
that illustrates the strength of its ongoing commitment to smart card
technology.

         We were selected by VeriFone (a Hewlett-Packard company), one of the
leading providers of transaction automation systems for the payment processing
for financial institutions, merchants and consumers, as the testing site for
VeriFone's newest smart card point-of-sale device, the Omni 1250 as a part of
our Oklahoma State University implementation in February 1997. Additionally, we
assisted in the debut of VeriFone's newest smart card product, the Personal ATM,
at Demo '97.

WHAT IS PRECIS' BUSINESS STRATEGY AND PLANS FOR FURTHER PRODUCT DEVELOPMENT?

         Our objective is to become a leading provider of smart card solutions
across a wide range of applications. Our marketing strategy is to focus on
product development and innovation in the area of smart card technology. Our
market focus is on smart card applications for consumer situations that
necessitate card usage on a weekly or more frequent basis or on an event basis.
We have identified the following industries as those best suited to benefit from
smart card technology and have begun research and development efforts aimed at
meeting perceived needs of these industries:

-        HEALTHCARE -- We believe that the healthcare industry, with
         its millions of participants and voluminous and
         individualized information and payment requirements, can
         benefit significantly from smart card technology.  Smart
         cards can be designed to provide patient identification and
         medical record storage and retrieval, as well as electronic
         benefit transfers, determination of eligibility and drug
         interaction information.  In an emergency situation, a quick
         assessment of vital information including allergies,
         prescriptions and immunizations is critical for effective
         healthcare delivery.  Additionally, patient cards can be
         used to improve and streamline administrative and billing
         procedures as well as insurance reimbursement.

-        TRAVEL AND ENTERTAINMENT --  The travel and entertainment
         industry holds great promise with regard to smart card
         applications.  All categories that comprise this market,
         including air travel, car rentals, movie theaters, sporting
         events, restaurants, casinos, video stores, sports arenas,
         hotels and other venues would benefit from a multi-
         functional card.  This is an enormous global market with
         strong growth predicted for the near future.  Business
         travelers in particular are bogged down by paper-based
         expense reimbursement. Paper-based reimbursement systems are
         hampered with the potential for fraud in addition to being
         costly to administer.  Smart cards would enable businesses
         to more effectively monitor travel and entertainment
         expenses.

         Smart cards offer solutions in terms of their ability to collect and
         disseminate data and conduct electronic commerce. Several major
         airlines have initiated smart card pilot programs that allow ticketless
         travel, store frequent flier miles and process payments. In a resort
         setting, a multifunction card allows an individual access to
         restaurants, shopping, sports and entertainment activities and lodging
         while keeping track of loyalty points.

-        RETAILING -- All types of retailing can be embraced and enhanced with
         smart card technology. The retail sector encompasses everything from
         locally owned stores to national department stores. Retailers have been
         made acutely aware of the value of their contact with the consumer. The
         key to repeat business is to accurately identify, and then satisfy,
         customer needs. Smart cards would enable retailers to track customer
         behavior and base marketing decisions gleaned from this valuable
         information. This technology can also reduce the risk of fraud, improve
         inventory management and offer the customer convenience and better
         service.

-        AFFINITY PROGRAMS -- The trend in retail, fund raising and other repeat
         customer businesses is the move toward customer rewards. This
         application represents a tremendous opportunity and an explosive growth
         area, which is virtually untapped. By incorporating a smart card into a
         traditional point-of-sale application, the retailer will realize
         complete tracking of all aspects of the sales process including the
         ability to reward repeat customers with premiums or discounts through
         the use of a smart card without the


                                     -64-
<PAGE>


         traditional computerized infrastructure. Retailers could use the data
         accumulated to target market areas not being penetrated and focus
         marketing and advertising costs on those areas.

WHAT ARE THE CURRENT AND FUTURE MARKETS FOR PRECIS' PRODUCTS?

         We believe our early success in several important market niches has
positioned us for growth. Our near-term marketing focus is to solidify our
market position and use that foundation as a basis for expanding into additional
markets. To date our marketing efforts and successful installations have been
limited to the arena/stadium, event, and the healthcare markets.

         ARENA/STADIUM MARKET. Within the arena/stadium market there are more
than 750 major arenas, stadiums, auditoriums and coliseums in the United States.
Aside from professional sports teams associated with those arenas and stadiums,
concerts and events constitute a large potential market for our products. Our
PrecisCache-TM- card systems and technology have been used in the stadiums and
arenas of the Carolina Panthers, Chicago White Sox, St. Louis Blues and Oklahoma
State University. For the years ended December 31, 1999 and 1998, approximately
$38,000 (60%) and $305,000 (94%), respectively, of our revenues were
attributable to this market.

         The PrecisCache-TM- disposable store-value product is an appropriate
solution to the need for a convenient and secure cash handling process that we
believe will be favorably received by customers. For longer-term needs, enhanced
tracking capability and extended identity development potential, companies may
utilize the PrecisReserve-TM- reloadable card system. We believe our experience
with the Carolina Panthers, Chicago White Sox, St. Louis Blues and Oklahoma
State University has established our credibility within this market and will be
beneficial in any future discussions with prospects in this market.

         One of our long-term goals is to capitalize on the name recognition and
positive association we achieve through our affiliation with professional
sports. It is reported that the likelihood of attending a baseball game
increases steadily with household income. By 2010 the largest growth area for
attendance in Major League Baseball will be in the 45 to 64 year-old population.
[Source: Shannon Dortch, "The Future of Baseball," American Demographics, April
1996.] Because baseball is the least expensive game to attend, the same
demographic expectations should hold for other major sports, including football,
basketball and hockey. We believe that through this marketing channel, we will
reach corporate America, our ultimate target audience.

         EVENTS MARKET. There are approximately 10,000 festivals in the United
States each year. [Source: Festivals.com LLC, available from
http://www.festivals.com.] The scope of these of these festivals ranges from air
shows, art, food and music festivals, to state fairs and sporting events. Our
experience in the events market is limited to the Main Street Fort Worth Arts
Festival and the 1998 PGA Championship (at Swahili Country Club, Redmond,
Washington). For the year ended December 31, 1998, approximately $17,500 (5%) of
our revenues were attributable to this market. During 1999, we did not receive
any revenue attributable to this market. Although limited, we believe that our
experience with these events demonstrates the successful application of the
PrecisCache-TM- system.

         One of our significant advantages in the festival-fair market is that
the product can be sold profitably and implemented with minimum cost and
development effort. Given the large number of festivals that occur each year,
the opportunity for steady and reliable cash flows form the sale of this product
could be considerable.

         ADVERTISING MEDIUM AND CORPORATE SPONSORSHIP. As an adjunct to our
efforts to capture both the arenas-stadiums market and the festivals-fairs
market, we are developing a strategy for securing or assisting in the securing
of card sponsors-advertisers. In addition to its technological aspects, the
uniqueness of the product, the size and personal nature of the card, and the
fact that it is carried in an individual's wallet or purse and seen often, make
smart cards a very suitable advertising medium. Furthermore, beyond simply the
card, sponsor mentions in promotional materials, signage, advertising for the
cards and press reports surrounding an event can greatly enhance the value of
the card as a sponsorship medium. In many cases, revenues from the sponsorship
of the card may simply be used to offset the expenses incurred in implementing
the system. This was the case in the "All sports" series of cards for Oklahoma
State University that the Bank of Oklahoma sponsored.


                                     -65-
<PAGE>


         In the sports market, sponsorships are providing new and significant
revenues for franchises and stadiums as well. The smart card may provide
another, possibly significant, vehicle for companies to deliver their messages
to the public. In the festivals-fairs market, where the audience is a more
mass-market group, the opportunity for sponsorship-advertising revenues is
also very good. Where a sponsor may spend a significant amount on a single,
one-location promotional presentation, a smart card offers a better
opportunity for repeated impressions when carried and used for purchases at
the event. Many festivals and fairs are financed in part by corporate
sponsorships. The smart card simply provides another sponsorship vehicle. As
an example, Primacy, a sponsor of and in connection with the Main Street Fort
Worth Arts Festival, appeared on the smart card. The funds from the
sponsorship in part defrayed the cost of implementation of the smart card
system for this festival. We are currently developing a sponsorship pricing
strategy and contact list for the purpose of enlisting major sponsors in the
Company's efforts to approach the sports and arena markets as well as schools,
festivals, fairs, and others.

         HEALTHCARE MARKET. Our first market segment focus was in healthcare.
We believe that every insurance company, HMO, P.O., hospital association, and
independent provider association which serves the United States healthcare
market can benefit from the use of a smart card system. Our advantage in this
market is based upon our position as the first to provide a healthcare smart
card implementation and the experience we gained from it. Currently, there are
no hospital associations, HMAS, POPS, independent healthcare provider
organizations and insurance companies using the Precis Health Card System. The
opportunity to reduce healthcare costs, improve the quality of healthcare
services, and facilitate the payments process makes the use of smart card
systems very attractive and viable.

         Although we expect to continue to market smart card systems directly
through our management and employees, we intend to obtain the assistance of
unrelated third parties to assist our product marketing and to establish
strategic marketing alliances and licensing or other arrangements with systems
integrators, value-added resellers and other smart card vendors. Fulfillment
of product orders and installations will continue to be managed directly by
our staff.

WHAT IS THE NATURE AND EXTENT OF PRECIS' COMPETITION?

         The environment within which we operate is intensely competitive and
subject to rapid change in general. To maintain or increase our market share
position in the smart card industry, we will continually need to enhance our
current product offerings, introduce new product features and enhancements,
and expand our professional service capabilities. We currently compete
principally on the basis of the specialized nature of our products and ability
to expeditiously install and implement a smart card system. Our product
features and functions facilitate integration with a wide range of operating
systems and platforms to insure product quality, ease of use and reliability.
We believe we compete favorably in all of these areas.

         Our competitors vary in size and in the scope and breadth of the
products and services offered. We may encounter competition from a number of
sources, including International Business Machines, Inc., IC, 3GI, CyberMark,
Touch Technology International, Inc., Sun MicroSystems, Inc., Technology @
Work, Bull, Card Europe, Gemplus, Innovatron, Philips Electronics, Aladdin
Systems, Pathways Group, Inc., MONDEX, MasterCard, Microsoft, Motorola,
Schlumberger, Siemens, DigiCash, Leapfrog, Inc. We compete against numerous,
smaller, privately-held companies with fewer resources based on breadth of
product features and functionality, as well as larger, publicly-held companies
with greater resources and having greater product and market diversification.

         Many of our current and potential competitors, both privately-held
and publicly-held, have greater financial, technical, marketing and
distribution resources than ours. As a result, they may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development and
distribution of their products. In addition, because there are relatively low
barriers to entry in the software marketplace, we expect additional
competition from other established or emerging companies as the smart card
market continues to expand. Increased competition is likely to result in
pricing pressures, reduced gross margins and loss of market share, any of
which could materially adversely affect our business, financial condition and
results of operations. We also expect that competition will increase as a
result of software industry


                                     -66-

<PAGE>

consolidations. There can be no assurance that we will be able to compete
successfully against current and future competitors or that competitive
pressures we encounter will not materially adversely affect our business,
financial condition and results of operations.

DOES PRECIS HAVE ANY LICENSE AGREEMENTS AND INTELLECTUAL PROPERTY RIGHTS?

         We regard our software as proprietary and license our products
generally under written license agreements executed by licensees. We also
employ an encryption system which restricts a user's access to source codes to
further protect our intellectual property. Because our products allow
customers to customize their applications without altering source codes, the
source codes for our products are typically neither licensed nor provided to
customers.

         We have applied for registration of our Precis Health Card System-TM-
trademark. Because of inadequate working capital and financial resources, we
have not applied for registration of our PrecisCache-TM-, PrecisReserve-TM-,
and PrecisPersona-TM- trademarks. We have no patents or patent applications
pending. Currently, we rely on a combination of copyright, trademark and trade
secret laws to protect our products. We also require employee and third-party
non-disclosure and confidentiality agreements. Despite these precautions, it
may be possible for unauthorized parties to copy portions of our products or
reverse engineer or obtain and use information that we regard as proprietary.
We intend to take appropriate measures to register our trademarks.

HOW MUCH DOES PRECIS SPEND ON RESEARCH AND PRODUCT DEVELOPMENT?

         We must continue to make significant investments in research and
development to continue development of our smart card technology. Currently,
the dynamic nature of the smart card technology industry places large research
and development demands on businesses that desire to remain competitive.
Competing with larger firms with substantially greater capital resources, we
have devoted significant portions of available resources to remain abreast of
industry developments and to offer competitive products and services.

         As of December 31, 1999, our product development staff consisted of
three employees. Our total expenses for product development and deployment
during 1999 and 1998 were $230,828 and $389,586, respectively. Our customers
have not borne any portion of our product development and deployment expenses.
We anticipate that we will continue to commit substantial resources to product
development in the future.

ARE THE OPERATIONS OF PRECIS SUBJECT TO GOVERNMENT REGULATION?

         Our operations are subject to various federal, state and local
requirements which affect businesses generally, including taxes, postal
regulations, labor laws, and environment and zoning regulations and ordinances.

         Furthermore, although there may be aspects of our services subject to
Regulation E promulgated by the Federal Reserve Board, we believe that most of
our services are not subject to Regulation E. Regulation E governs electronic
funds transfers made by regulated financial institutions and providers of
access devices and electronic fund transfer systems. Regulation E requires
written receipt for transactions, monthly statements, pre-transaction
disclosures and error resolution procedures. There can be no assurance that
the Federal Reserve Board will not require all of our services to comply with
Regulation E, or revise Regulation E, or adopt new rules and regulations for
electronic funds transfers that could result in an increase in our operating
costs, reduce the convenience and functionality of our services and products,
possibly resulting in reduced market acceptance and revenues which would have
a material adverse effect on our business, financial condition or operating
results.

         We believe that current state and federal regulations concerning
electronic commerce do not apply to our current product line. However, there
is a move towards taxation of Internet use by several states. There are some
strategic plans under consideration to conduct commerce on the Internet using
our core technology. We have an ongoing regulatory compliance program
pertaining to transactions utilizing smart card technology and subscribe to
industry watch publications that address regulatory issues.


                                     -67-

<PAGE>

EMPLOYEES

         As of June 30, 2000, we had a total of four employees, of which one
was employed in sales and marketing, one was employed in product development,
and two were employed in professional services and customer support. Our
future performance depends in significant part upon the continued service of
our key technical and management personnel, and our continuing ability to
attract and retain highly qualified and motivated personnel in all areas of
our operations. Competition for qualified personnel is intense. We provide no
assurance that we can retain key managerial and technical employees or that we
can attract, assimilate or retain other highly qualified personnel in the
future. Our employees are not represented by a labor union. We have not
experienced any work stoppages and consider our employee relations to be good.

                PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT

         The following table presents, as of the Record Date, information
related to the beneficial ownership of our common stock of (i) each person who
is known to us to be the beneficial owner of more than 5% thereof, (ii) each
of our directors and executive officers, and (iii) all of our executive
officers and directors as a group, together with their percentage holdings of
the outstanding shares, and, as adjusted to give effect to the offering. All
persons listed have sole voting and investment power with respect to their
shares unless otherwise indicated, and there are no family relationships
amongst our executive officers and directors. For purposes of the following
table, the number of shares and percent of ownership of our outstanding common
stock that the named person beneficially owns includes shares of our common
stock that the person has the right to acquire within 60 days of the date of
the Record Date from exercise of stock options and are deemed to be
outstanding, but are not deemed to be outstanding for the purposes of
computing the number of shares beneficially owned and percent of outstanding
common stock of any other named person.


<TABLE>
<CAPTION>
                                                                         BEFORE THE                     AFTER THE
                                                                     MERGER-ACQUISITION             MERGER-ACQUISITION
                                                               ---------------------------    ----------------------------
                                                                  SHARES      PERCENT OF         SHARES        PERCENT OF
                                                               BENEFICIALLY  OUTSTANDING       BENEFICIALLY   OUTSTANDING
NAME (AND ADDRESS) OF BENEFICIAL OWNER                           OWNED(1)    SHARES(1)(2)        OWNED(1)     SHARES(1)(2)
--------------------------------------                         ------------  ------------     -------------   ------------
<S>                                                            <C>           <C>              <C>             <C>
Paul A. Kruger(3).......................................              --            --            616,667          20.4
    2500 South McGee Drive, Suite 200
    Norman, Oklahoma 73072

Michael R. Morrisett....................................         270,401          11.5            270,401           9.5
    8626 South Florence Avenue
    Tulsa, Oklahoma 74137

Kent H. Webb, M.D.......................................          72,018           3.1             72,018           2.5

Larry E.  Howell........................................         100,000           4.3            100,000           3.5

John Simonelli........................                           100,000           4.3            100,000           3.5

Donald (Dan) A. Cunningham(4)...........................          10,697           (5)             10,697           (5)

Mark R.  Kidd...........................................              --            --             50,000           1.8

Lyle W. Miller..........................................              --            --                 --            --

Michael E.  Dunn(6).....................................           2,000           (5)              2,000           (5)

Executive Officer and Directors as a group
    (six persons before and eight persons after
    the Merger-Acquisition)(3)(4)(5)(6).................         184,715           7.8            951,382          31.4

</TABLE>

------------------------------
(1)     Shares not outstanding but deemed beneficially owned by virtue of the
        right of a person to acquire the shares within 60 days are treated as
        outstanding for determining the amount and percentage of our common
        stock owned by the person. To our knowledge, each named person has
        sole voting and sole


                                     -68-

<PAGE>


        investment power with respect to the shares shown except as noted,
        subject to community property laws, where applicable.
(2)     The percentage shown was rounded to the nearest one-tenth of one
        percent, based upon 2,350,000 shares of our common stock outstanding
        before the merger-acquisition of Foresight and 2,850,000 shares of our
        common stock outstanding after the offering.
(3)     The beneficially owned shares and the percentage includes 166,667
        shares of common stock into which the series A preferred stock issued
        and delivered to Mr. Kruger in connection with the merger-acquisition
        may be converted.
(4)     The beneficially owned shares and the percentages includes 10,000 shares
        of our common stock purchasable upon exercise of
        stock options held by Mr. Cunningham.
(5)     The percentage is less than 1.0%.
(6)     The beneficially owned shares and the percentages includes 2,000 shares
        of common stock that Dunn Swan & Cunningham (of which Mr. Dunn is
        President) is entitled to receive but has not been issued.

CHANGE IN CONTROL


         Completion of the merger-acquisition of Foresight will result in a
change in our management and control. Paul A. Kruger will own 450,000 shares
(16%) of our outstanding common stock and 166,667 shares of our series A
preferred stock having a liquidation preference of $2,000,000 with the right
to convert into 166,667 shares of our common stock. In addition, Mr. Kruger
and his designees John Simonelli and Mark R. Kidd will become directors. Until
all of the shares of common stock have been delivered under the terms of the
merger-acquisition (which is anticipated to be on or before April 30, d004d,
Messrs. Kruger, Simonelli and Kidd will serve as members of our Board of
Directors as the designees of Mr. Kruger. In the event of the resignation or
death of Messrs. Kruger, Simonelli or Kidd, a person designated by Mr. Kruger
(or his successors in interest in the event he is deceased) will be named as a
director to fill the vacancy created by the resignation or death.


                            DESCRIPTION OF SECURITIES

         Under our Certificate of Incorporation, we are authorized to issue up
to 10,000,000 shares of capital stock, consisting of 8,000,000 shares of
common stock, $.01 par value per share, and 2,000,000 shares of preferred
stock, $.01 par value per share. As of the date of this Proxy Statement, our
issued and outstanding capital stock consists of 2,350,000 shares of common
stock.

         The following description of our common stock and preferred stock is
a summary and is qualified in its entirety by the provisions of our
Certificate of Incorporation and Bylaws.

COMMON STOCK

         As holders of our outstanding shares of the common stock, your
rights, privileges, disabilities and restrictions in general are as follows:

-        the right to receive ratably dividends, if any, as may be declared
         from time to time by the Board of Directors out of assets legally
         available therefor, subject to the payment of preferential dividends
         with respect to our then outstanding preferred stock;

-        the right to share ratably in all assets available for distribution to
         the common stock shareholders after payment of our liabilities in the
         event of our liquidation, dissolution and winding-up, subject to the
         prior distribution rights of the holders of our then outstanding
         preferred stock;

-        the right to one vote per share on matters submitted to a vote by our
         common stock shareholders;

-        no preferential or preemptive right and no subscription, redemption or
         conversion privilege with respect to the issuance of additional shares
         of our common stock; and

-        no cumulative voting rights, which means that the holders of a
         majority of shares voting for the election of directors can elect all
         members of our board of directors then subject to election.

                                     -69-
<PAGE>


In general, a majority vote of shares represented at a meeting of common stock
shareholders at which a quorum (a majority of the outstanding shares of common
stock) is present, is sufficient for all actions that require the vote or
concurrence of shareholders, subject to and possibly in connection with the
voting rights of the holders of our then outstanding preferred stock and
entitled to vote with the holders of our common stock.

PREFERRED STOCK

         Our authorized preferred stock may be issued from time to time in one
or more series. Our Board of Directors, without further approval of the common
stock shareholders, is authorized to fix the relative rights, preferences,
privileges and restrictions applicable to each series of our preferred stock.
We have agreed not to issue any preferred stock prior to February 8, 2003
without the consent of Barron Chase Securities. Furthermore, in connection
with the registration of our common stock in Oklahoma, we represented that we
will not offer preferred stock

-        to our 5% or greater shareholders, officers, and directors except on
         terms that the preferred stock is offered to all other shareholders or
         to new shareholders, or

-        unless the preferred stock is approved by a majority of our
         independent directors who do not have an interest in the transaction
         and who have access, at our expense, to our independent legal counsel.

We believe that having this class of preferred stock provides greater
flexibility in financing, acquisitions and other corporate activities. While
there are no current plans, commitments or understandings, written or oral, to
issue any of our preferred stock (other than in connection with the
Merger-Acquisition), in the event of any issuance, our common stock
shareholders will not have any preemptive or similar rights to acquire any of
the preferred stock. Issuance of preferred stock could adversely affect

-        the voting power of the  holders of our then outstanding common stock
         and

-        the likelihood that the holders will receive dividend payments and
         payments upon liquidation

could have the effect of delaying or preventing a change in shareholder and
management control.

         SERIES A PREFERRED STOCK. In connection with the merger- acquisition
of Foresight, our Board of Directors has designated 166,667 shares of
preferred stock as series A convertible preferred stock ("series A preferred
stock") with a stated value of $12.00 per share. All shares of series A
preferred stock will be issued and delivered to Paul A. Kruger. We may in the
future issue additional series of preferred stock with liquidation preferences
and dividend rights which rank junior to the series A preferred stock.

         The series A preferred stock possess all such rights and privileges
that are afforded to preferred stock by the Oklahoma General Corporation Act
in the absence of any express grant or limitation of rights or privileges
provided in the series A preferred stock certificate. The designations and the
preferences, conversions and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of the
shares of the series A preferred stock are summarized below.

         DIVIDENDS. Dividends may be declared and paid or set apart for
payment upon the series A preferred stock out of our assets or funds legally
available for the payment of dividends. Holders of series A preferred stock,
as a class, will be entitled to receive, when and as declared by our Board of
Directors, out of any funds legally available therefor, preferred annual
dividends of $1.44, payable quarterly. Dividends are cumulative. Dividends may
not be declared and paid or set apart for payment upon our common stock unless
all dividends, including cumulative dividends, then payable on the series A
preferred stock shall have been paid.

         VOTING RIGHTS. Holders of the series A preferred stock will have not
have any voting rights. However, the consent of the holders of at least a
majority of the outstanding shares, voting at a special or annual meeting of
shareholders called for the purpose, will be necessary to amend our
certificate of incorporation and the designations, preferences and rights of
the series A preferred stock, in any manner which would adversely affect the
holders of the shares.

         LIQUIDATION RIGHTS. In the event of our liquidation, dissolution or
winding-up of the affairs, and before any distribution or payments are made to
the holders of the common stock, holders of the series A preferred stock


                                     -70-

<PAGE>

will be entitled to receive a liquidating distribution of $12.00 per share
plus accumulated and unpaid dividends before any distribution of assets will
be made to holders of our common stock or any junior preferred stock. Holders
of series A preferred stock are not entitled to participate in any further
liquidating distributions of us.

         CONVERSION PRIVILEGES. Each share of series A preferred stock is
convertible, at such holder's option, into one share of our common stock at
any time, subject to customary adjustments to prevent dilution upon the
occurrence of certain future events. We will be obligated at all times to
reserve and keep available, free from preemptive rights, unissued or treasury
shares of our common stock sufficient to effect the conversion of all the
issued and outstanding shares of series A preferred stock.

         REDEMPTION. We may, at our option, redeem the series A preferred
stock on at least 30 days' notice, in whole and not in part, at any time at
$12.00 per share plus accumulated and unpaid dividends to the date fixed for
redemption, subject to the holder's right to convert to our common stock.

TRANSFER AGENT AND REGISTRAR

         UMB Bank, N.A. is the registrar and transfer agent of our Common
Stock.  The mailing address of UMB Bank, N.A. is Security Trust Division, 28
Grand Boulevard, 13th Floor, Kansas City, Missouri 64106.

UNDERWRITERS' WARRANTS

         In connection with our initial public offering, we sold to Barron
Chase Securities, the managing underwriter, and its related persons, for
nominal consideration, common stock underwriter warrants (the "underwriters'
warrants"). These warrants are exercisable for the purchase of 100,000 shares
of our common stock for $9.00 each after February 8, 2001 and on or before
February 8, 2004.

         The underwriters' warrants may be exercised using shares of common
stock to be received upon exercise for payment of the exercise price of the
warrants. This type of exercise is referred to as a cashless exercise or net
issuance exercise. This type of exercise has the effect of requiring us to
issue shares of our common stock without a corresponding increase in capital.
A net exercise of the underwriters' warrants will have the same dilutive
effect on our shareholders' interests as will a cash exercise. The
underwriters' warrants and the securities issuable upon their exercise may not
be offered for sale except in compliance with the applicable provisions of
federal securities laws.

         For a seven-year period, we have agreed to include the underwriter
warrants or common stock underlying these warrants in any amendment to the
registration statement of which this prospectus is a part or any new
registration statement filed with the United States Securities and Exchange
Commission at our expense. We have registered the common stock underlying the
underwriters' warrants and intend to maintain this registration at our expense
for the seven-year period.

OUTSTANDING STOCK OPTIONS

         As of the date of this Proxy Statement, we have outstanding stock
options exercisable for the purchase of 86,830 shares of our common stock
during various periods which expire February 8, 2003 through December 31,
2007, at an exercise price of $5.22 to $6.00 per share (with a weighted
average purchase price of $5.31 per share). The exercise prices of the stock
options were equal to the estimated fair market value of the common stock on
the date of the grant of each stock option as determined by our Board of
Directors. In addition, we have reserved 97,128 shares of our common stock for
issuance upon the vesting and exercise of outstanding stock options. Our Board
of Directors is also authorized to issue additional stock options exercisable
for the purchase of 145,000 shares of our common stock under our stock option
plan. As a condition of registration of our common stock in Oklahoma, we
agreed not to grant any options or warrants with an exercise price of less
that 85% of the fair market value of our shares of common stock on the date of
grant.

SHAREHOLDER ACTION

         Under our Bylaws, the affirmative vote of the holders of a majority
of our outstanding shares of the common stock entitled to vote thereon is
sufficient to authorize, affirm, ratify or consent to any act or action
required of or by the holders of the common stock, except as otherwise
provided by the Oklahoma General Corporation Act.


                                     -71-

<PAGE>

         Under the Oklahoma General Corporation Act, our shareholders may take
actions without the holding of a meeting by written consent. The written
consent must be signed by the holders of a sufficient number of shares to
approve the act or action had all of our outstanding shares of capital stock
entitled to vote thereon been present at a meeting. In this event, we are
required to provide prompt notice of any corporate action taken without a
meeting to our shareholders who did not consent in writing to the act or
action. However, any time that we have 1,000 or more shareholders of record,
any act or action required of or by the holders of our capital stock entitled
to vote thereon may only be taken by unanimous affirmative written consent of
the shareholders or a shareholder meeting.

ANTI-TAKEOVER PROVISIONS

         Our Certificate of Incorporation and the Oklahoma General Corporation
Act include a number of provisions which may have the effect of encouraging
persons considering unsolicited tender offers or other unilateral takeover
proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts. We believe that the benefits of these
provisions outweigh the potential disadvantages of discouraging the proposals
because, among other things, negotiation of the proposals might result in an
improvement of their terms. The description below related to provisions of our
Certificate of Incorporation is intended as a summary only and is qualified in
its entirety by reference to our Certificate of Incorporation filed as an
exhibit to the registration statement of which this prospectus is a part. See
"Where You Can Find Additional Information."

         PREFERRED STOCK. Our Certificate of Incorporation authorizes the
issuance of the preferred stock in classes. Our board of directors is
authorized to set and determine the voting rights, redemption rights,
conversion rights and other rights relating to the class of preferred stock.
In some circumstances, the preferred stock could be issued and have the effect
of preventing a merger, tender offer or other takeover attempt which our board
of directors opposes.

         OKLAHOMA ANTI-TAKEOVER STATUTES. We are subject to Section 1090.3 and
Sections 1145 through 1155 of the Oklahoma General Corporation Act. Section
1090.3 of the Oklahoma General Corporation Act prohibits a publicly-held
Oklahoma corporation from engaging in a "business combination" with an
"interested shareholder." Sections 1145 through 1155 of the Oklahoma General
Corporation Act provide that shares ("interested shares") of voting stock
acquired (within the meaning of a "control share acquisition") become
nonvoting stock for the three-year period following the control share
acquisition. See "Proposal Three--Anti-Takeover Provisions Amendment."

         The anti-takeover provisions of the Oklahoma General Corporation Act
may have the effect of discouraging a third party from acquiring large blocks
of the common stock within a short period or attempting to obtain control of
us, even though the attempt might be beneficial to us and our shareholders.
Accordingly, you and our other shareholders could be deprived of the
opportunities to sell the shares of the common stock held at a higher market
price than might otherwise be the case.

                                  LEGAL MATTERS

         The validity of issuance of the shares of our common stock to be
issued in connection with the Merger-Acquisition will be passed upon for us by
our counsel, Dunn Swan & Cunningham, A Professional Corporation, of Oklahoma
City, Oklahoma. Dunn Swan & Cunningham has delivered an opinion to the effect
that the description of the federal income tax consequences of the merger-
acquisition under the section of this Proxy Statement captioned "The
Merger-Acquisition--Certain Federal Income Tax Consequences" correctly sets
forth the material federal income tax consequences of the merger-acquisition
to us and our shareholders.

                                     EXPERTS

         The balance sheets as of December 31, 1999 and 1998, and the
statements of operations and accumulated deficit, stockholders' equity and
cash flows for each of the two years in the period ended December 31, 1999,
included in this Proxy Statement, have been included herein in reliance on the
report of Murrell, Hall, McIntosh & Co., PLLP, independent public accountants,
given on authority of that firm as experts in accounting and auditing.


                                     -72-

<PAGE>

                 OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING

         Our Board of Directors knows of no business which will be presented
for action at the Annual Meeting other than that described in the Notice of
Annual Meeting of Shareholders and this Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is the intention of
the persons named in the accompanying Proxy to vote such Proxies as they deem
advisable in accordance with their best judgment.

                  SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

         Under the existing rules of the Securities and Exchange Commission,
one or more of our shareholders may present proposals on any matter that is a
proper subject for consideration by our shareholders at the 2001 annual
meeting of our shareholders, which we currently anticipates will be held on or
before July 31, 2001. In order to be included in the proxy statement (or
disclosure statement in the event proxies are not solicited by our Board of
Directors) for the 2001 annual meeting of our shareholders, a proposal must be
received by April 1, 2001. It is suggested that if you as one of our
shareholders desire to submit a proposal you should do so by sending the
proposal certified mail, return receipt requested, addressed to our Corporate
Secretary at our principal office, 2500 South McGee Drive, Suite 147, Norman,
Oklahoma 73072. Detailed information for submitting proposals will be provided
upon written request, addressed to our Corporate Secretary.

                       WHERE YOU CAN FIND MORE INFORMATION

         We file annual and quarterly reports and other reports and
information with the Securities and Exchange Commission. These reports and
other information can be inspected and copied at, and copies of these
materials can be obtained at prescribed rates from, the Public Reference
Section of the Securities and Exchange Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549-1004, and at its regional offices at 7
World Trade Center, 13th Floor, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. We distribute to our
shareholders annual reports containing financial statements audited by our
independent public accountants and, upon request, quarterly reports for the
first three quarters of each fiscal year containing unaudited financial
information. In addition, the reports and other information are filed through
Electronic Data Gathering, Analysis and Retrieval (known as "EDGAR") system
and are publicly available on the Securities and Exchange Commissions's site
on the Internet, located at http://www.sec.gov. We will provide without charge
to you, upon written or oral request, a copy of the reports and other
information filed with the Securities and Exchange Commission.

         Any requests for copies of information, reports or other filings with
the Securities and Exchange Commission should be directed to Precis Smart Card
Systems, Inc. at 2500 South McGee Drive, Suite 147, Norman, Oklahoma 73072,
telephone: (405) 292-4900.

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

         Your cooperation in giving this matter your immediate attention and
in returning your Proxy promptly will be appreciated.

                                          BY ORDER OF THE BOARD OF DIRECTORS


                                          Mark R. Kidd
                                          Corporate Secretary


September ___, 2000



         A copy of our Annual Report, which includes our Form 10-KSB for the
fiscal year ended December 31, 1999, is enclosed herewith. Our Quarterly
Reports on Form 10-QSB for the quarters ended March 31 and June 30, 2000,
excluding the exhibits, may be obtained without charge by writing Precis Smart
Card Systems, Inc., 2500 South McGee Drive, Suite 147, Norman, Oklahoma 73072,
Attention: Corporate Secretary.



                                     -73-
<PAGE>

<TABLE>

                          INDEX TO FINANCIAL STATEMENTS


FORESIGHT, INC.
<S>                                                                                                            <C>
Report of Independent Public Accountants...................................................................     F-3

Balance Sheets as of December 31, 1999 and 1998, and as of
     June 30, 2000 and 1999 (Unaudited)....................................................................     F-4

Statements of Operations for the Years Ended December 31, 1999
     and 1998, and for the Six Months ended June 30, 2000 and 1999 (Unaudited).............................     F-5

Statements of Stockholders' Equity (Deficit) for the Years Ended
     December 31, 1999 and 1998, and for the Six Months ended June 30, 2000 (Unaudited)....................     F-6

Statements of Cash Flows for the Years Ended December 31, 1999
     and 1998, and for the Six Months ended June 30, 2000 and 1999 (Unaudited).............................     F-7

Notes to Financial Statements..............................................................................     F-8

PRECIS SMART CARD SYSTEMS, INC.

Report of Independent Public Accountants....................................................................   F-11

Balance Sheets as of December 31, 1999 and 1998.............................................................   F-12

Statements of Operations and Accumulated Deficit for the Years Ended December
     31, 1999 and 1998 and from Inception (April 1994) to
     December 31, 1999 (Unaudited)..........................................................................   F-13

Statements of Stockholders' Deficit for the Years Ended December 31, 1999
     and 1998 and from Inception (April 1994) to December 31, 1999 (Unaudited)..............................   F-14

Statements of Cash Flows for the Years Ended December 31, 1999
     and 1998 and from Inception (April 1994) to December 31, 1999 (Unaudited)..............................   F-15

Notes to Financial Statements...............................................................................   F-16

Condensed Balance Sheets (Unaudited) as of June 30, 2000 and December 31, 1999.............................    F-21

Condensed Statements of Operations and Accumulated Deficit (Unaudited) for the
     Six Months ended June 30, 2000 and 1999 and from
     Inception (April 1994) to June 30, 2000................................................................   F-22

Condensed Statements of Stockholders' Equity (Unaudited) from Inception
     (April 1994) to June 30, 2000..........................................................................   F-23

                                                           F-1
<PAGE>


                                                                                                               PAGE
                                                                                                               ----
PRECIS SMART CARD SYSTEMS, INC. (CONTINUED)

Condensed Statements of Cash Flows (Unaudited) for the Six Months ended
         June 30, 2000 and 1999 and from Inception (April 1994) to June 30, 2000............................   F-24

Notes to Condensed Financial Statements.....................................................................   F-25

PRECIS SMART CARD SYSTEMS, INC.
         UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Unaudited Pro Forma Combined Balance Sheet as of June 30, 2000..............................................   F-26

Unaudited Pro Forma Combined Statement of Operations for the
         Six Months ended June 30, 2000.....................................................................   F-27

Unaudited Pro Forma Combined Statement of Operations for the
         Year Ended December 31, 1999.......................................................................   F-28

Notes to Unaudited Pro Forma Combined Financial Statements..................................................   F-29

</TABLE>


                                                           F-2
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders
of Foresight, Inc.

We have audited the accompanying balance sheets of Foresight, Inc. (an Oklahoma
Corporation) as of December 31, 1999 and 1998, and the related statements of
operations, stockholders' equity (deficit) and cash flows for the years then
ended. 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Foresight, Inc. as of December
31, 1999 and 1998, and the results of its operations and cash flows for the
years then ended in conformity with generally accepted accounting principles.

MURRELL HALL McINTOSH & CO., PLLP

Oklahoma City, Oklahoma
May 17, 2000



                                    F-3
<PAGE>

<TABLE>
<CAPTION>

                                 FORESIGHT, INC.
                                 BALANCE SHEETS


                                                                DECEMBER 31,                      JUNE 30,
                                                          ---------------------           ----------------------
                                                             1999        1998                2000        1999
                                                          ----------  ---------           ----------  ----------
                                                                                         (UNAUDITED) (UNAUDITED)
                       ASSETS
<S>                                                       <C>        <C>                  <C>         <C>
Current Assets:
    Cash and Cash Equivalents........................     $   64,240 $  245,195           $  270,666  $       -
    Accounts Receivable..............................        911,246  3,064,624              759,231   1,097,072
    Prepaid Expense..................................             -          -                16,280          -
    Income Taxes Receivable..........................             -          -                38,458          -
                                                          ---------- ----------           ----------  ----------
       Total Current Assets..........................        975,486  3,309,819            1,084,635   1,097,072
                                                          ---------- ----------           ----------  ----------
Property and Equipment:
    Machinery and Equipment..........................        171,472      7,939              151,608       7,939
    Leasehold Improvements...........................         14,442         -                14,442          -
    Other............................................         25,000         -                25,000          -
                                                          ---------- ----------           ----------  ----------
                                                             210,914      7,939              191,050       7,939
    Less Accumulated Depreciation....................        (85,792)        -               (94,413)         -
                                                          ---------- ----------           ----------  ----------
        Total Property and Equipment.................        125,122      7,939               96,637       7,939
                                                          ---------- ----------           ----------  ----------
Other Assets:
    Receivable from Stockholder......................         33,000         -                33,000          -
    Software, Net of Amortization....................             -          -                16,187          -
                                                          ---------- ----------           ----------  ----------
        Total Other Assets...........................         33,000         -                49,187          -
                                                          ---------- ----------           ----------  ----------
Total Assets.........................................     $1,133,608 $3,317,758           $1,230,459  $1,105,011
                                                          ========== ==========           ==========  ==========

            LIABILITIES AND STOCKHOLDERS'
                  EQUITY (DEFICIT)

Current Liabilities:
         Accounts Payable............................     $  983,691 $  526,514           $1,058,590  $  816,468
         Accrued Liabilities.........................         45,233         -                32,377       8,004
         Income Taxes Payable........................        111,000         -                    -           -
                                                          ---------- ----------           ----------  ----------
       Total Current Liabilities.....................      1,139,924    526,514            1,090,967     824,472
                                                          ---------- ----------           ----------  ----------
Income Taxes Payable.................................         39,000         -                39,000          -
                                                          ---------- ----------           ----------  ----------
Total Liabilities....................................      1,178,924    526,514            1,129,967     824,472
                                                          ---------- ----------           ----------  ----------
Stockholders' Equity (Deficit):
    Common Stock, $1.00 Par Value, 50,000
       Shares Authorized; 500 Shares Issued
       and Outstanding...............................            500        500                  500         500
    Retained Earnings (Deficit)......................        (45,816) 2,790,744               99,992     280,039
                                                          ---------- ----------           ----------  ----------
          Total Stockholders' Equity (Deficit).......        (45,316) 2,791,244              100,492     280,539
                                                          ---------- ----------           ----------  ----------
Total Liabilities and Stockholders' Equity (Deficit).     $1,133,608 $3,317,758           $1,230,459  $1,105,011
                                                          ========== ==========           ==========  ==========

</TABLE>

                 See Accompanying Notes to Financial Statements

                                                        F-4
<PAGE>

<TABLE>
<CAPTION>
                                 FORESIGHT, INC.
                            STATEMENTS OF OPERATIONS

                                                                  FOR THE YEARS ENDED      FOR THE SIX MONTHS ENDED
                                                                     DECEMBER 31,                 JUNE 30,
                                                               -----------------------    -------------------------
                                                                   1999        1998          2000           1999
                                                               -----------  ----------    ------------  -----------
                                                                                           (UNAUDITED)  (UNAUDITED)
<S>                                                            <C>         <C>            <C>           <C>
Product and Service Revenues...........................        $ 6,635,390 $17,818,861    $ 3,617,492   $ 3,300,819
                                                               -----------  ----------    ------------  -----------
Operating Expenses:
   Product Deployment..................................          4,249,225  11,595,396      2,287,622     2,215,173
   Sales and Marketing.................................            677,702     720,973        385,829       325,207
   General and Administrative..........................          1,259,099   1,868,007        762,558       444,736
                                                               -----------  ----------    ------------  -----------
     Total Operating Expenses..........................          6,186,026  14,184,376      3,436,009     2,985,116
                                                               -----------  ----------    ------------  -----------
Operating Income.......................................            449,364   3,634,485        181,483       315,703

Other Income:
   Interest (Income) Expense...........................             (1,740     (49,870)        (6,325)        3,744
                                                               -----------  ----------    ------------  -----------
Income Before Income Taxes.............................            451,104   3,684,355        187,808       311,959

Provision for Income Taxes.............................           (150,000           -        (42,000)     (115,000)
                                                               -----------  ----------    ------------  -----------

Net Income.............................................            301,104   3,684,355    $   145,808       196,959
                                                               -----------  ----------    ============  ===========
Pro Forma Provision for Income Taxes (Unaudited).......            (13,000  (1,400,000)                     (13,000)
                                                               -----------  ----------                  ===========

Pro Forma Net Income (Unaudited).......................        $   288,104 $ 2,284,355                  $   183,959
                                                               =========== ===========                  ===========
Earnings Per Share:

   Net Income Per Share................................        $    602.21 $  7,368.71    $    291.62   $    393.92
                                                               =========== ===========    ===========   ===========
   Pro Forma Net Income Per Share (Unaudited)..........        $    576.21 $  4,568.71                  $    367.92
                                                               =========== ===========                  ===========

Weighted Average Number of
   Common Shares Outstanding...........................                500         500            500           500
                                                               =========== ===========    ===========   ===========
</TABLE>
                 See Accompanying Notes to Financial Statements

                                                                   F-5
<PAGE>

<TABLE>
<CAPTION>
                                 FORESIGHT, INC.
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                                                                                         RETAINED
                                                                             COMMON STOCK                EARNINGS
                                                                       ----------------------------
                                                                          SHARES           AMOUNT        (DEFICIT)
                                                                       ------------   -------------   ------------
<S>                                                                       <C>         <C>             <C>
Balance, December 31, 1997...........................................          500    $        500    $  1,178,848
   Distributions.....................................................         --              --        (2,072,460)
   Net Income........................................................         --              --         3,684,356
                                                                       ------------   -------------   ------------
Balance, December 31, 1998...........................................          500             500       2,790,744
   Dividends.........................................................         --              --          (430,000)
   Distributions.....................................................         --              --        (2,707,664)
   Net Income........................................................         --              --           301,104
                                                                       ------------   -------------   ------------
Balance, December 31, 1999...........................................          500             500         (45,816)
   Net Income (Unaudited)............................................         --              --           145,808
                                                                       ------------   -------------   ------------
Balance, June 30, 2000 (Unaudited)...................................          500    $        500    $     99,992
                                                                       ============   =============   ============

</TABLE>
                 See Accompanying Notes to Financial Statements

                                                       F-6
<PAGE>


                                              FORESIGHT, INC.
                                         STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

                                                              FOR THE YEARS ENDED         FOR THE SIX MONTHS ENDED
                                                                 DECEMBER 31,                     JUNE 30,
                                                        ----------------------------    ---------------------------
                                                            1999            1998            2000            1999
                                                        ------------    ------------    ------------   ------------
                                                                                        (UNAUDITED)    (UNAUDITED)
<S>                                                     <C>             <C>             <C>            <C>
Cash Flows from Operating Activities
   Net Income.......................................... $    301,104    $  3,684,355    $    145,808   $    147,739
   Adjustments to Reconcile Net Income.................
     to Net Cash Provided by Operating Activities:
       Depreciation....................................       43,727          23,277          13,653            --
       (Increase) Decrease:
         Receivables...................................    2,153,378      (2,221,842)        113,557      1,966,756
         Prepaid Expenses..............................          --           45,556         (16,280)           --
       Increase (Decrease):
         Accounts Payable..............................      457,177        (610,846)         74,899        338,830
         Accrued Liabilities...........................       45,233             --          (12,856)         9,144
         Income Taxes Payable..........................      150,000             --         (111,000)           --
       Other...........................................          --              --           20,812            --
                                                        ------------    ------------    ------------   ------------

           Net Cash Provided by Operating Activities...    3,150,619         920,500         228,593      2,462,469
                                                        ------------    ------------    ------------   ------------

Cash Flows from Investing Activities
   Purchase of Property and Equipment..................     (160,910)        (19,990)        (22,167)           --
                                                        ------------    ------------    ------------   ------------

     Net Cash Used in Investing Activities.............     (160,910)        (19,990)        (22,167)           --
                                                        ------------    ------------    ------------   ------------

Cash Flows from Financing Activities
   Loan to Shareholder.................................      (33,000)            --              --             --
   Dividends Paid......................................     (430,000)            --              --             --
   Distributions.......................................   (2,707,664)     (2,072,460)            --      (2,707,664)
                                                        ------------    ------------    ------------   ------------

     Net Cash Used in Financing Activities.............   (3,170,664)     (2,072,460)            --      (2,707,664)
                                                        ------------    ------------    ------------   ------------

Net Change in Cash.....................................     (180,955)     (1,171,950)        206,426       (245,195)

Cash at Beginning of Period............................      245,195       1,417,145          64,240        245,195
                                                        ------------    ------------    ------------   ------------

Cash at End of Period.................................. $     64,240    $    245,195    $    270,666   $        --
                                                        ============    ============    ============   ============

</TABLE>

                                  See Accompanying Notes to Financial Statements




                                                      F-7

<PAGE>

                                 FORESIGHT, INC.
                          NOTES TO FINANCIAL STATEMENTS

Note 1 - Nature of Business

         Foresight, Inc. (the "Company") is a provider of innovative
membership service programs. The Company addresses the needs of organizations
seeking to leverage the expertise of an outside provider in offering
membership service programs. Membership service programs offer selected
products and services from a variety of vendors intended to enhance the
existing relationships between businesses and consumers.

Note 2 - Summary of Significant Accounting Policies

         INTERIM FINANCIAL STATEMENTS - The financial statements as of June
30, 2000 and 1999 are unaudited and, in the opinion of management, reflect all
adjustments that are necessary for a fair presentation of the financial
position as of the date and the results of operations and cash flows for the
periods then ended. All of these adjustments are of a normal and recurring
nature. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. The results of operations for the six months
ended June 30, 2000, and 1999 are not necessarily indicative of the results
that may be expected for the entire years ending December 31, 2000, and 1999.

         USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
of the Company to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

         PROPERTY AND EQUIPMENT - Property and equipment are carried at cost,
less accumulated depreciation. Depreciation is calculated using the
double-declining-balance method based on useful lives of five to seven years.

         EARNINGS PER SHARE - Earnings per share is computed based on the
weighted average number of common shares outstanding.

         CONCENTRATION OF CREDIT RISK - The Company maintains its cash in bank
deposit accounts which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant risk.

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The recorded amounts of cash,
accounts receivable, accounts payable, and accrued liabilities approximate
fair value because of the short-term maturity of these items.

         IMPAIRMENT OF LONG-LIVED ASSETS - The Company accounts for the
impairment and disposition of long-lived assets in accordance with SFAS No.
121, "Accounting for the Impairment of Long-lived Assets to be Disposed of"
(FAS 121). In accordance with FAS 121, long-lived assets held are reviewed for
events or changes in circumstances which indicate that their carrying value
may not be recoverable. As of December 31, 1999, no impairment has been
indicated.

         CASH AND CASH EQUIVALENTS - Cash and cash equivalents consist
primarily of cash on deposit or cash investments purchased with original
maturities of three months or less.

         REVENUE RECOGNITION - Wholesale revenues are recorded in the month
earned. Retail revenues, net of anticipated refunds, are recorded in the month
the member joins the program.

                                     F-8

<PAGE>

                                 FORESIGHT, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


Note 3 - Income Taxes

         The stockholders of the Company elected to adopt the provisions of
Subchapter S of the Internal Revenue Code for the periods ended prior to
February 1, 1999. As a result, the Company was not subject to corporate income
taxes prior to February 1, 1999. Accordingly, no provision has been made in
the accompanying historical financial statements for Federal and state income
taxes prior to February 1, 1999, since such taxes are liabilities of the
individual stockholders, and the amounts thereof depended upon their
respective tax situations. For periods subsequent to January 31, 1999, the
Company is subject to corporate income taxes.

         The Company's tax returns are subject to examination by Federal and
state taxing authorities. In the event of an examination of such tax returns,
the liability of the stockholders could be changed if adjustments in or
classification of the distributable income for periods prior to February 1,
1999 are ultimately sustained by the taxing authorities (See Note 5).

         The provision for income taxes for 1999 differs from the statutory
rates because of the amortization of intangible assets for tax purposes and
other adjustments arising out of the acquisition by Universal Marketing
Services, Inc. ("UMS") (See Note 5).

Note 4 - Preferred STOCK

         The Board of Directors is authorized to provide for the issuance of
preferred stock in series as prescribed by the Company's Certificate of
Incorporation. As of December 31, 1999 and 1998, no shares of preferred stock
had been authorized or issued.

Note 5 - Merger with Universal Marketing Services, Inc.

         During January 1999, all of the Company's outstanding common stock
was acquired by UMS for $4,540,000 and accounted for as a purchase
transaction. Of this amount, $4,532,000 was reported as a long-term capital
gain for income tax purposes. UMS has agreed to compensate the prior
stockholders if it is determined that any portion of the $4,532,000 does not
qualify for long-term capital gain treatment under Federal law. The Company
may be required to assume this liability if it arises. During December 1999,
the common stock of the Company was transferred to two stockholders of UMS,
which was accounted for as a sale by UMS.

Note 6 - Related Parties

         The Company operates in facilities leased from an affiliate on a
monthly basis. Management expects that leases currently in effect will be
renewed or replaced with other leases of a similar nature and term. Rent
expense under operating leases was $44,824 and $47,192 for the years ended
December 31, 1999 and 1998, respectively.

         The Company was operated by UMS during the period from February 1,
1999 through December 1, 1999 under a management agreement. UMS conducted all
activities related to the day to day operations of the Company. Expenses
totaling $708,843 were incurred by UMS and allocated to the Company during
1999 based on management's review of all expenses incurred by UMS. Management
is of the opinion that the method utilized is reasonable. Also management
believes that the Company's expenses would not have been materially different
if the Company had operated on a stand-alone basis in 1999. In addition to the
$430,000 dividends paid to UMS during 1999, the Company also incurred a loss
of $228,155 on receivables from UMS which were uncollectable.

         The receivable from stockholder of $33,000 was transferred to the
Company from UMS. The debt was originally incurred by the stockholder to
purchase common stock of UMS.

                                     F-9

<PAGE>

                                 FORESIGHT, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

         UMS and Brett Wimberley, individually and acting as president of UMS,
have entered into a Stipulated Judgement and Order for Permanent Injunction
(the "Order") with the Federal Trade Commission to resolve certain matters.
The parties to the Order are permanently restrained and enjoined from engaging
in, or assisting others in, the promotion, advertising, marketing, offering
for sale, or sale of any credit card registration or credit card protection
services through telemarketing. The parties are also permanently restrained
and enjoined from engaging in, or assisting others in, telemarketing sales
activities for any goods and/or services unless they comply with certain
requirements of the Order.

         During 1999, the Company acquired $81,025 of property and equipment
from an affiliate and paid $543,082 to an affiliate for services related to
membership programs.

Note 7 - Major Customers

         Membership service programs by one client of the Company accounted
for 74% and 62% of revenues for the fiscal years ended December 31, 1999 and
1998, respectively.

Note 8 - 401(k) Profit Sharing Plan

         On July 5, 1999, the Company adopted a retirement plan which includes
a 401(k) deferred compensation feature. All employees who have completed at
least six months of service and are 21 years of age or older may participate
in the plan. A participating employee may contribute up to 15% of his or her
compensation up to a maximum of $10,500 during 2000. The Company makes
matching contributions of up to 50% of a participant's contributions limited
to 3% of the participant's annual compensation. The Company matching
contributions vest 20% per year and become fully vested after the participant
has 6 or more years of service. During 1999, the Company made $7,000 in
matching contributions to the plan. All contributions by participants are
fully vested.

Note 9 - Subsequent Events

         On March 21, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") to be acquired by Precis Smart Card Systems,
Inc. ("Precis") through a merger transaction. The merger is subject to, among
other conditions, approval of the shareholders of the Company and Precis. It
is anticipated that the merger will be completed before December 31, 2000 and
that it will be accounted for as a purchase by Precis. The Merger Agreement
provides that on the effective date of the merger, Precis will issue 500,000
shares of its common stock and 166,667 shares of preferred stock for the
Company. Additional shares of common stock are issuable based on earnings
levels of Precis for the years 2000 through 2002. Following the merger,
Precis' Board of Directors will be limited to seven with three designated by
the Company's shareholders. Precis is related to the Company because one of
the Company's shareholders is the chief financial officer of Precis.











                                    F-10

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Stockholders
of Precis Smart Card Systems, Inc.

         We have audited the accompanying balance sheets of Precis Smart Card
Systems, Inc. (an Oklahoma Corporation in the development stage) as of
December 31, 1999 and 1998, and the related statements of operations,
stockholders' deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Precis Smart Card
Systems, Inc. as of December 31, 1999 and 1998, and the results of its
operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.

         The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 7 to
the financial statements, the Company has suffered losses and has accumulated
a significant deficit. These conditions raise substantial doubt about its
ability to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



MURRELL, HALL, MCINTOSH & CO., PLLP



Oklahoma City, Oklahoma
April 3, 2000








                                    F-11

<PAGE>
                                              PRECIS SMART CARD SYSTEMS, INC.
                                             (A DEVELOPMENT STAGE ENTERPRISE)
                                                      BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                             DECEMBER 31,
                                                                                    -----------------------------
                                                                                        1999              1998
                                                                                    -----------       -----------
<S>                                                                                 <C>               <C>
                                        ASSETS
Current Assets:
   Cash and Cash Equivalents....................................................    $    21,538       $       --
   Inventory....................................................................            --             10,035
                                                                                    -----------       -----------
       Total Current Assets.....................................................         21,538            10,035
                                                                                    -----------       -----------

Property and Equipment:
   Office Equipment.............................................................         48,219            48,219
   Computer Equipment...........................................................        273,959           263,499
   Furniture and Fixtures.......................................................          7,735             6,890
                                                                                    -----------       -----------
                                                                                        329,913           318,608
   Less Accumulated Depreciation................................................       (329,913)         (254,390)
                                                                                    -----------       -----------
      Total Property and Equipment..............................................            --             64,218
                                                                                    -----------       -----------
Deferred Offering Costs.........................................................        147,428               --
                                                                                    -----------       -----------
Total Assets                                                                        $   168,966       $    74,253
                                                                                    ===========       ===========


                        LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
   Book Overdraft...............................................................    $       --        $    27,513
   Accounts Payable.............................................................        443,074           265,012
   Accrued Liabilities..........................................................        127,836            46,110
   Mezzanine Debt - Related Party...............................................        329,643           103,000
   Current Portion of Capital Leases............................................         41,570            48,319
   Current Portion of Long-Term Debt............................................        277,522           277,522
                                                                                    -----------       -----------
      Total Current Liabilities.................................................      1,219,645           767,476
                                                                                    -----------       -----------

Long-Term Liabilities:
   Capital Leases, Net of Current Portion.......................................            --             41,570
                                                                                    -----------       -----------
      Total Long-Term Liabilities...............................................            --             41,570
                                                                                    -----------       -----------
      Total Liabilities.........................................................      1,219,645           809,046
                                                                                    -----------       -----------

Stockholders' Deficit:
   Preferred Stock, $1 Par Value, 2,000,000 Shares Authorized;
      No shares Issued and Outstanding at December 31, 1999 and 1998............            --                --
   Common Stock, $.01 Par Value, 8,000,000 Shares Authorized;
      1,200,000 and 900,000 Issued and Outstanding at
      December 31, 1999 and 1998, Respectively..................................         12,000             9,000
   Additional Paid-In Capital...................................................      2,701,070         2,226,451
   Deficit Accumulated During Development Stage.................................     (3,763,749)       (2,970,244)
                                                                                    -----------       -----------
      Total Stockholders' Deficit...............................................     (1,050,679)         (734,793)
                                                                                    -----------       -----------
Total Liabilities and Stockholders' Deficit.....................................    $   168,966       $    74,253
                                                                                    ===========       ===========

</TABLE>


                                  See Accompanying Notes to Financial Statements

                                                     F-12
<PAGE>


                                        PRECIS SMART CARD SYSTEMS, INC.
                                       (A DEVELOPMENT STAGE ENTERPRISE)
                                STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT



<TABLE>
<CAPTION>


                                                                                                          INCEPTION
                                                                            FOR THE YEARS ENDED         (APRIL 1994)
                                                                               DECEMBER 31,                  TO
                                                                        -------------------------       DECEMBER 31,
                                                                           1999           1998              1999
                                                                        ----------     ----------       -----------
                                                                                                         (UNAUDITED)
<S>                                                                     <C>            <C>              <C>
Product and Service Revenues......................................      $   63,060     $  322,483       $   443,026
                                                                        ----------     ----------       -----------
Operating Expenses:
    Product Deployment and Research
        and Development...........................................         230,828        389,586         1,615,004
    Sales and Marketing...........................................         163,712        147,411           619,374
    General and Administrative....................................         382,764        399,756         1,716,964
                                                                        ----------     ----------       -----------
        Total Operating Expenses..................................         777,304        936,753         3,951,342
                                                                        ----------     ----------       -----------
Operating Loss....................................................        (714,244)      (614,270)       (3,508,316)
                                                                        ----------     ----------       -----------
Other Expense (Income):

    Interest Expense..............................................          79,261         59,196           259,852
                                                                        ----------     ----------       -----------
    Interest Income...............................................             --          (2,136)           (4,419)
                                                                        ----------     ----------       -----------
                                                                            79,261         57,060           255,433
                                                                        ----------     ----------       -----------
Net Loss - Deficit Accumulated During
    Development Stage.............................................      $ (793,505)    $ (671,330)      $(3,763,749)
                                                                        ==========     ==========       ===========
Net Loss per Share................................................      $    (0.66)    $    (0.56)      $     (3.14)
                                                                        ==========     ==========       ===========
Weighted Average Number of
    Common Shares Outstanding.....................................       1,200,000      1,200,000         1,200,000
                                                                        ==========     ==========       ===========


</TABLE>













                                  See Accompanying Notes to Financial Statements

                                                     F-13
<PAGE>


                                          PRECIS SMART CARD SYSTEMS, INC.
                                         (A DEVELOPMENT STAGE ENTERPRISE)
                                        STATEMENTS OF STOCKHOLDERS' DEFICIT



<TABLE>
<CAPTION>


                                                COMMON STOCK           PREFERRED STOCK            ADDITIONAL
                                           ---------------------     --------------------          PAID-IN       ACCUMULATED
                                             SHARES       AMOUNT      SHARES      AMOUNT           CAPITAL         DEFICIT
                                           ---------     -------     --------     -------        -----------     -----------
<S>                                        <C>           <C>         <C>          <C>            <C>             <C>
Balance, Inception (April 1994).......           --      $   --           --      $   --         $       --      $       --


   Sale of Stock (unaudited)..........     1,230,000      12,300          --          --             693,831             --
   Net Loss (unaudited)...............           --          --           --          --                 --         (417,348)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31, 1994
    (unaudited).......................     1,230,000      12,300          --          --             693,831        (417,348)


   Sale of Stock (unaudited)..........       525,000       5,250          --          --             352,250             --
   Net Loss (unaudited)...............           --          --           --          --                 --         (333,017)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31, 1995
    (unaudited).......................     1,755,000      17,550          --          --           1,046,081        (750,365)


   Sale of Stock (unaudited)..........       122,600       1,226          --          --             243,974             --
   Net Loss (unaudited)...............           --          --           --          --                 --         (398,389)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31, 1996
   (unaudited)........................     1,877,600      18,776          --          --           1,290,055      (1,148,754)


   Sale of Stock (unaudited)..........       162,750       1,628          --          --             323,873             --
   Net Loss (unaudited)...............           --          --           --          --                 --       (1,150,160)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31,1997.............     2,040,350      20,404          --          --           1,613,928      (2,298,914)


   Sale of Stock......................         2,500          25        4,968       4,968            596,127             --
   Conversion of Preferred Stock......       298,060       2,980       (4,968)     (4,968)             1,987             --
   Reverse Stock Split................    (1,440,910)    (14,409)         --          --              14,409             --
   Net Loss...........................           --          --           --          --                 --         (671,330)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31, 1998............       900,000       9,000          --          --           2,226,451      (2,970,244)


   Sale of Stock......................       300,000       3,000          --          --             474,619             --
   Net Loss...........................           --          --           --          --                 --         (793,505)
                                           ---------     -------     --------     -------        -----------     -----------


Balance, December 31, 1999............     1,200,000     $12,000          --      $   --         $ 2,701,070     $(3,763,749)
                                           =========     =======     ========     =======        ===========     ===========

</TABLE>





                                  See Accompanying Notes to Financial Statements

                                                     F-14
<PAGE>

                                        PRECIS SMART CARD SYSTEMS, INC.
                                       (A DEVELOPMENT STAGE ENTERPRISE)
                                           STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>





                                                                                                         INCEPTION
                                                                              FOR THE YEARS ENDED       (APRIL 1994)
                                                                                 DECEMBER 31,                TO
                                                                           ------------------------     DECEMBER 31,
                                                                              1999          1998           1999
                                                                           ----------    ----------    ------------
                                                                                                        (UNAUDITED)
<S>                                                                        <C>           <C>           <C>
Cash Flows from Operating Activities:
  Net Loss..............................................................   $ (793,505)   $ (671,330)   $ (3,763,749)
  Adjustments to Reconcile Net Loss to
    Net Cash Provided by Operations:
      Depreciation......................................................       75,523       103,594         330,072
      (Increase) Decrease --
        Inventory.......................................................       10,035        34,123             --
        Gain on Disposition of Assets...................................        3,488           --            3,488
        Increase (Decrease) --
          Accounts Payable..............................................      178,062        78,080         443,074
          Accrued Liabilities...........................................       81,726        34,859         127,836
                                                                           ----------    ----------    ------------
            Net Cash Used by Operating
              Activities................................................     (444,671)     (420,674)     (2,859,279)
                                                                           ----------    ----------    ------------
Cash Flows from Investing Activities:
  Purchase of Property and Equipment....................................      (14,793)       (7,537)       (333,560)
                                                                           ----------    ----------    ------------
            Net Cash Used by Investing
             Activities.................................................      (14,793)       (7,537)       (333,560)
                                                                           ----------    ----------    ------------
Cash Flows from Financing Activities:
  Sale of Stock.........................................................      330,191       601,119       2,565,642
  Book Overdraft (Decrease) Increase....................................      (27,513)       27,513               -
  Payments on Long-Term Debt............................................      (48,319)     (280,127)       (762,765)
  Proceeds from Long-Term Debt..........................................          --            --        1,081,857
  Proceeds from Short-Term Debt.........................................      226,643        78,000         329,643
                                                                           ----------    ----------    ------------
            Net Cash Provided by Financing
             Activities.................................................      481,002       426,505       3,214,377
                                                                           ----------    ----------    ------------
Net Increase (Decrease) in Cash.........................................       21,538        (1,706)         21,538

Cash at Beginning of Period.............................................          --          1,706             --
                                                                           ----------    ----------    ------------

Cash at End of Period...................................................   $   21,538    $      --     $     21,538
                                                                           ==========    ==========    ============

Supplemental Disclosure:

   Interest Paid........................................................   $    7,755    $   25,884
                                                                           ==========    ==========


</TABLE>



                                  See Accompanying Notes to Financial Statements

                                                     F-15
<PAGE>

                         PRECIS SMART CARD SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

Note 1 - Nature of Business

         Precis Smart Card Systems, Inc. (the "Company") is a development
stage company. The Company develops and markets commercial software products
used with a technology referred to as "smart cards". The smart card contains
an embedded integrated circuit or microchip that serves as a programmable
storage device that performs limited computer functions. The Company's
products include the Precis Health Card System-TM-, a health care smart card
system; PrecisCache-TM-, a fixed-value smart card system; PrecisReserve-TM-, a
reloadable stored-value smart card system; and PrecisPersona-TM-, a smart card
based customer loyalty and rewards system.

Note 2 - Summary of Significant Accounting Policies

         Development Stage Operations - Precis is a development stage
enterprise engaging in developing and marketing "smart card" technology. The
Company has yet to generate any significant revenue from smart card sales and
has no assurance of future revenues from such sales. The Company plans to
spend significant amounts on the development and marketing of its products.

         Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
of the Company to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.

         Property and Equipment - Property and Equipment are carried at cost,
less accumulated depreciation. Depreciation is calculated using the
straight-line method based on useful lives of three to seven years.

         Inventory - The Company has recorded its inventory held for resale at
its estimated value which is less than its actual cost.

         Net Loss Per Share - Net loss per share is calculated based on the
weighted average number of common, and dilutive common equivalent shares
outstanding. There were no material differences between primary and fully
diluted earnings per share for the periods presented. The computation of net
loss per share gives retroactive effect for all periods presented to reflect
the 1998 reverse stock split and nominal issuances of stock sold in
contemplation of a public offering (discussed in Notes 5 and 7).

         Concentration of Credit Risk - The Company maintains its cash in bank
deposit accounts which, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant risk.

         Fair Value of Financial Instruments - The recorded amounts of cash,
inventory, accounts payable, and accrued liabilities approximate fair value
because of the short-term maturity of these items.

         Impairment of Long-lived Assets - The Company accounts for the
impairment and disposition of long-lived assets in accordance with SFAS No.
121, "Accounting for the Impairment of Long-lived Assets to be Disposed of"
(FAS 121). In accordance with FAS 121, long-lived assets to be held are
reviewed for events or changes in circumstances which indicate that their
carrying value may not be recoverable. As of December 31, 1999, no impairment
has been indicated.

         Cash and Cash Equivalents - Cash and cash equivalents consist
primarily of cash on deposit or cash investments purchased with original
maturities of three months or less.

         Revenue Recognition - The Company recognized revenues as the services
or products are provided. Amounts billed and received prior to services or
products being performed or provided are included in deferred revenues.

                                    F-16

<PAGE>

                         PRECIS SMART CARD SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)



Note 3 - Debt

         Long-term debt consists of unsecured project notes bearing interest
at 10%, due to various investors. Interest only was due and payable beginning
September 1, 1997 through December 1, 1997. Amortization of the notes began
January 1, 1998. The final payment was due in 1999. The Company is in default
on these notes due to failure to make the required payments. The holders have
the right to declare the notes immediately due and payable. The notes were
paid subsequent to year end.

         The mezzanine debt is unsecured, is due to two shareholders and bears
interest at 15% to 25% per annum. All mezzanine debt matures 30 days
subsequent to the Company's planned initial public offering (discussed in Note
9). The notes were paid subsequent to year end.

         The Company has a $50,000 line of credit with a bank which matures on
June 28, 2000 which is collateralized by all business assets of the Company.
There was no balance outstanding on this agreement at December 31, 1999.

Note 4 - Adoption of New Accounting Standard

         The Company has adopted Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities", issued by the American Institute of Certified
Public Accountants. This statement requires that the costs of start-up
activities and organization costs, as defined, be expensed as incurred.

         In October 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of
Position 97-2, Software Revenue Recognition ("SOP 97-2"). SOP 97-2 focuses on
when and the amount of revenue that should be recognized for licensing,
selling, leasing or otherwise marketing computer software and is effective for
transactions entered into in fiscal years beginning after December 15, 1997.
In March 1998, the Accounting Standards Executive Committee issued Statement
of Position 98-4, Deferral of the Effective Date of Provision of SOP 97-2,
Modification of SOP 97-2, Software Revenue Recognition ("SOP 98-4"). SOP 98-4
defers for one year specific provision of SOP 97-2 In December 1998, the
Accounting Standards Executive Committee issued Position 98-9, Modification of
SOP 97-2, Software Revenue Recognition, with respect to Certain Transactions
("SOP 98-9"). SOP 98-9 also amended specific provisions of SOP 98-4 through
fiscal years beginning on or before March 15, 1999. Management believes that
the adoption of SOP 97-2, as amended, will not have a material effect the
financial position or results of operations.

Note 5 - Capital Structure and Stock Options

         Pursuant to its Certificate of Incorporation, the Company is
authorized to issue up to 10,000,000 shares of capital stock, consisting of
8,000,000 shares of Common Stock, $.01 par value per share (the "Common
Stock"), and 2,000,000 shares of preferred stock, $1.00 par value per share
(the "Preferred Stock").

         Common Stock - The Company was operated historically (from
approximately April 1994 through June 1996) as a limited partnership (the
"LP"). Effective July 1, 1996, the entire business of the LP was merged into
the Company (the "Merger"). The Company issued shares of common stock to the
partners of the LP in consideration of the Merger, thus, the partners of the
LP became the shareholders of the Company. The merger was accounted for as a
"pooling-of-interest." The Company conducted a private placement of common
stock during 1997 and 1999, during which it issued and subscribed shares of
common stock.

                                    F-17

<PAGE>

                         PRECIS SMART CARD SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

         Preferred Stock - During 1998, the Company conducted a private
placement of convertible redeemable, "putable" preferred stock. During this
period, the Company sold 4,967.67 shares of $120.00 face value, no coupon
preferred stock. During 1998, and in accordance with their conversion rights,
the preferred shareholders elected to convert their preferred shares into
298,060 shares of common stock ( a conversion ratio of 1 preferred share for
60 shares of common).

         Restructuring Plan - As a result of the conversion of the outstanding
preferred shares to common shares, the Company had 2,340,910 shares of common
stock outstanding on October 29, 1998. On October 30, 1998, the Company
affected a reverse split of the common stock such that immediately after the
reverse split there were 900,000 shares of common stock outstanding.

         Common Stock Options - Also, as part of the restructuring plan, the
Company obtained releases from its directors and Project Note holders that
cancelled all common stock options held by directors and Project Note holders.
After the reverse split discussed above and as of December 31, 1999, the
Company had the following common stock options outstanding to certain
employees and ongoing service providers:


<TABLE>
<CAPTION>

                       Exercise          Expiration                   Vesting
      Quantity          Price               Date                      Status
      --------          -----               ----                      ------
      <S>              <C>               <C>                          <C>
       86,398           $5.22               2008                      Vested

</TABLE>

         The Company also has agreed to issue 87,547 of future stock options
if the Company reaches certain annual earnings levels. These future options
will have an exercise price based on current fair market value at the date the
earnings levels are met. These options expire 10 years from the date granted.

         The Company also has agreed to grant future stock options upon
completion of an initial public offering to an officer of the Company for
10,000 shares of the Company's common stock at $6.00 per share, exercisable
during a three-year period commencing six months following completion of the
initial public offering (discussed in Note 9).

         It is expected that the Company will make future stock option grants
to its employees pursuant to the Company's stock option plan established in
1999. The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25). Under APB 25, no
compensation expense is recognized when the exercise price of stock options
equals the market price of the underlying stock on the date of the grant.

         If the Company had elected to recognize compensation based on the
fair value of the options granted at the grant date as prescribed by
"Statement of Financial Accounting Standards No. 123, (SFAS 123) Accounting
for Stock-Based Compensation", net loss and net loss per share would have
increased to the pro forma amounts shown below for the year ending December
31, 1998:

<TABLE>

   <S>                                                           <C>
   Pro Forma Net Loss                                            $(787,608)
   Pro Forma Net Loss Per Share                                  $   (0.66)

</TABLE>

         The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions
used for grants: weighted average risk free interest rate of 5.50%; no
dividend yield; volatility of 40%; and expected life less than six years. The
fair values of the options were based on the difference between the present
value of the exercise price of the option and the estimated fair value price
of the common share. No stock options were granted during 1999.

                                    F-18

<PAGE>

                        PRECIS SMART CARD SYSTEMS, INC.
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)


         The intent of the Black-Scholes option valuation model is to provide
estimates of fair values of traded options that have no vesting restrictions
and are fully transferable. Option valuation models require the use of highly
subjective assumptions including expected stock price volatility. The Company
has utilized the Black-Scholes method to produce the pro forma disclosures
required under SFAS 123. In management's opinion, existing valuation models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options because the Company's employee stock options have
significantly different characteristics from those of traded options and
because changes in the subjective input assumptions can materially affect the
fair value estimate. The effects of applying SFAS 123 in this pro forma are
not indicative of future amounts.

Note 6 - Income Taxes

         There was no current or deferred provision for income taxes for the
years ended December 31, 1999 or 1998. No current provision was required
because tax losses were incurred in those years. Deferred tax assets result
from differences in the basis of assets and liabilities for tax and financial
statement purposes. The tax effects of the net operating loss carryforwards
and the valuation allowance established are summarized below:


<TABLE>
<CAPTION>

                                                                       1999              1998
                                                                    ---------         ---------
    <S>                                                             <C>               <C>
    Benefit of net operating loss carryforward..........            $ 980,000         $ 743,300
    Less: Valuation allowance...........................             (980,000)         (743,300)
                                                                    ---------         ---------
      Net deferred tax asset............................            $       -         $       -
                                                                    =========         =========

</TABLE>

         The valuation allowance for deferred tax assets at January 1, 1998
was $488,100. The net change in the valuation allowance for the years ended
December 31, 1999 and 1998 were increases of $236,700 and $255,200
respectively. At December 31, 1999 and 1998 the Company had federal and state
net operating loss carryforwards of approximately $2,450,000 and $1,860,000
expiring at various dates through 2015. The Company's ability to use these
losses to offset future taxable income is subject to limitations under the
Internal Revenue Code.

Note 7 - Operations

         As of December 31, 1999, the Company had negative working capital of
$1,198,107 and accumulated deficit of $3,763,749. During 1999, the Company
incurred an operating loss of $714,244. The completion of the initial public
offering discussed in Note 9 does not alleviate the substantial doubt about
the Company's ability to continue as a going concern because there is no
assurance of future revenues.

Note 8 - Contingencies

         The Company operates in leased facilities. Management expects that
leases currently in effect will be renewed or replaced with other leases of a
similar nature and term. Rent expense under operating leases was $25,080 and
$23,408 for the years ended December 31, 1999 and 1998 respectively.

         Capital lease obligations consist of non-cancelable equipment leases
expiring through September, 2000. These leases are payable in monthly
installments, aggregating $4,632 including imputed interest at 10.67%. These
leases are secured by certain equipment.

         Prior to the Company's initial public offering (discussed in Note 9),
there has been no public market for the Company's common stock. The initial
public offering price does not necessarily bear any relationship to the
Company's assets, book value, earnings or other established criterion of
value. Management provides no assurance that a public market for their common
stock will develop, that such public market will be sustained, or that the
shares of common stock purchased pursuant to the offering can be resold at any
time at the offering or any other price.

                                    F-19

<PAGE>

                         PRECIS SMART CARD SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONCLUDED)

         In connection with the Company's initial public offering, the Company
agreed to sell to the underwriter warrants exercisable for the purchase of
100,000 shares of common stock for $9.00 per share during a five-year period.
The holders of these warrants will have the right, for seven years following
the effective date of the initial public offering, to include such warrants
and the shares of common stock issuable upon their exercise in any
registration statement or amendment to a registration statement of the Company
at no expense to such holders.

Note 9 - Subsequent Events

         The Company completed an initial public offering of 1,150,000 shares
of common stock during February, 2000 and received net proceeds of
approximately $5,675,000.

         On March 21, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") to acquire Foresight, Inc. ("Foresight")
through a merger transaction. The merger is subject to, among other
conditions, approval of the Company's shareholders. It is anticipated that the
merger will be completed before December 31, 2000 and that it will be
accounted for as a purchase. The Merger Agreement provides that on the
effective date of the merger, the Company will issue 500,000 shares of its
common stock and 166,667 shares of preferred stock for Foresight. Additional
shares of common stock are issuable based on earnings levels of the Company
for the years 2000 through 2002. Following the merger, the Company's Board of
Directors will be limited to seven with three designated by Foresight
shareholders. The Company is related to Foresight because one Foresight
shareholder is the chief financial officer of the Company.

         Also, in connection with this merger, the Company granted Barron
Chase Securities, Inc. stock options exercisable for the purchase of 200,000
shares of common stock for $9.37 per share. The options are exercisable
through June 30, 2003.

Note 10 - Major Customers

         Two customers of the Company accounted for 100% and 91% of the
revenues for the fiscal years ended December 31, 1999 and 1998, respectively.
















                                    F-20
<PAGE>

<TABLE>
<CAPTION>
                         PRECIS SMART CARD SYSTEMS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)

                                                                                         JUNE 30,      DECEMBER 31,
                                                                                          2000             1999
                                                                                       ----------      ------------
                                      ASSETS
<S>                                                                                    <C>             <C>
Current Assets:
   Cash...........................................................................     $4,261,370      $     21,538
   Inventory......................................................................         17,601                 -
                                                                                       ----------      ------------
     Total Current Assets.........................................................      4,278,971            21,538
                                                                                       ----------      ------------

Property and Equipment:
   Office Equipment...............................................................         48,219            48,219
   Computer Equipment.............................................................        273,959           273,959
   Furniture and Fixtures.........................................................          7,735             7,735
                                                                                       ----------      ------------
                                                                                          329,913           329,913
   Less Accumulated Depreciation..................................................       (329,913)         (329,913)
                                                                                       ----------      ------------
     Total Property and Equipment.................................................              -                 -
                                                                                       ----------      ------------

Other Assets......................................................................         30,000           147,428
                                                                                       ----------      ------------

TOTAL ASSETS......................................................................     $4,308,971      $    168,966
                                                                                       ==========      ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
   Accounts Payable...............................................................     $   32,722      $    443,074
   Accrued Liabilities............................................................         10,316           127,836
   Mezzanine Debt.................................................................              -           329,643
   Current Portion of Capital Leases..............................................          7,944            41,570
   Current Portion of Long-Term Debt..............................................              -           277,522
                                                                                       ----------      ------------
     Total Current Liabilities....................................................         50,982         1,219,645
                                                                                       ----------      ------------

     Total Liabilities............................................................         50,982         1,219,645
                                                                                       ----------      ------------

Stockholders' Equity (Deficit):
   Preferred Stock, $1 Par Value, 2,000,000 Shares Authorized;
      No shares Issued and Outstanding............................................              -                 -
   Common Stock, $.01 Par Value, 8,000,000 Shares Authorized;
     2,350,000 and 1,200,000 Issued and Outstanding...............................         23,500            12,000
   Additional Paid-In Capital.....................................................      8,366,074         2,701,070
   Deficit Accumulated During Development Stage...................................     (4,131,585)       (3,763,749)
                                                                                       ----------      ------------
     Total Stockholders' Equity (Deficit).........................................      4,257,989        (1,050,679)
                                                                                       ----------      ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)..............................     $4,308,971      $    168,966
                                                                                       ==========      ============
</TABLE>


            See Accompanying Notes to Condensed Financial Statements


                                      F-21
<PAGE>

<TABLE>
<CAPTION>

                         PRECIS SMART CARD SYSTEMS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           CONDENSED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
                                   (UNAUDITED)





                                                                                                       INCEPTION
                                                                        FOR THE SIX MONTHS ENDED     (APRIL 1994)
                                                                                 JUNE 30,                 TO
                                                                      ---------------------------       JUNE 30,
                                                                         2000            1999            2000
                                                                      -----------     -----------     -----------
<S>                                                                   <C>             <C>             <C>
Product and Service Revenues.......................................   $         -     $    25,000     $   443,026
                                                                      -----------     -----------     -----------

Operating Expenses:
   Product Deployment and Research and Development.................       113,233         134,462       1,728,237
   Sales and Marketing.............................................        87,587          79,321         706,961
   General and Administrative......................................       234,800         217,124       1,951,764
                                                                      -----------     -----------     -----------
     Total Operating Expenses......................................       435,620         430,907       4,386,962
                                                                      -----------     -----------     -----------

Operating Loss.....................................................      (435,620)       (405,907)     (3,943,936)
                                                                      -----------     -----------     -----------

Other Expense (Income):
   Interest Expense................................................        23,644          42,834         283,496
   Interest Income.................................................       (91,428)              -         (95,847)
                                                                      -----------     -----------     -----------
                                                                          (67,784)         42,834         187,649
                                                                      -----------     -----------     -----------

Net loss B Deficit Accumulated During Development Stage............   $  (367,836)    $  (448,741)    $(4,131,585)
                                                                      ===========     ===========     ===========

Net Loss per Share.................................................   $     (0.17)    $     (0.37)    $     (3.23)
                                                                      ===========     ===========     ===========

Weighted Average Number of Common Shares Outstanding...............     2,158,000       1,200,000       1,278,000
                                                                      ===========     ===========     ===========
</TABLE>





            See Accompanying Notes to Condensed Financial Statements


                                      F-22
<PAGE>

<TABLE>
<CAPTION>

                                  PRECIS SMART CARD SYSTEMS, INC.
                                 (A DEVELOPMENT STAGE ENTERPRISE)
                           CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
                                           (UNAUDITED)



                                                COMMON STOCK           PREFERRED STOCK         ADDITIONAL
                                         ------------------------    ---------------------       PAID-IN     ACCUMULATED
                                           SHARES        AMOUNT       SHARES      AMOUNT         CAPITAL       DEFICIT
                                         -----------  -----------    ---------  ----------     ----------    -----------
<S>                                        <C>        <C>             <C>       <C>            <C>           <C>
Balance, Inception (April 1994).......             -  $         -            -  $        -     $        -    $         -

  Sale of Stock.......................     1,230,000       12,300            -           -        693,831              -
  Net Loss............................             -            -            -           -              -       (417,348)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31, 1994............     1,230,000      12,300             -           -        693,831       (417,348)

  Sale of Stock.......................       525,000       5,250             -           -        352,250              -
  Net Loss............................             -           -             -           -              -       (333,017)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31, 1995............     1,755,000      17,550             -           -      1,046,081       (750,365)

  Sale of Stock.......................       122,600       1,226             -           -        243,974              -
  Net Loss............................             -           -             -           -              -       (398,389)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31, 1996............     1,877,600      18,776             -           -      1,290,055     (1,148,754)

  Sale of Stock.......................       162,750       1,628             -           -        323,873              -
  Net Loss............................             -           -             -           -              -     (1,150,160)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31,1997.............     2,040,350      20,404             -           -      1,613,928     (2,298,914)

  Sale of Stock.......................         2,500          25         4,968       4,968        596,127              -
  Conversion of Preferred Stock.......       298,060       2,980        (4,968)     (4,968)         1,987              -
  Reverse Stock Split.................    (1,440,910)    (14,409)            -           -         14,409              -
  Net Loss ...........................             -           -             -           -              -       (671,330)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31, 1998............       900,000       9,000             -           -      2,226,451     (2,970,244)

  Sale of Stock.......................       300,000       3,000             -           -        474,619              -
  Net Loss............................             -           -             -           -              -       (793,505)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, December 31, 1999............     1,200,000      12,000             -           -      2,701,070     (3,763,749)

  Sale of Stock.......................     1,150,000      11,500             -           -      5,665,004              -
  Net Loss............................             -           -             -           -              -       (367,836)
                                         -----------  -----------    ---------  ----------     ----------    -----------

Balance, June 30, 2000................     2,350,000  $   23,500             -  $        -     $8,366,074    $(4,131,585)
                                         ===========  ===========    =========  ==========     ==========    ===========
</TABLE>

            See Accompanying Notes to Condensed Financial Statements


                                      F-23
<PAGE>

<TABLE>
<CAPTION>

                         PRECIS SMART CARD SYSTEMS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                                                                       INCEPTION
                                                                         FOR THE SIX MONTHS ENDED    (APRIL 1994)
                                                                                JUNE 30,                  TO
                                                                      ---------------------------       JUNE 30,
                                                                         2000            1999            2000
                                                                      -----------     -----------    ------------
<S>                                                                   <C>              <C>           <C>
Cash Flows from Operating Activities
   Net Loss........................................................   $ (367,836)      $(448,741)    $(4,131,585)
   Adjustments to Reconcile Net Loss to Net Cash Used
     by Operating Activities:
       Depreciation................................................            -          56,992         330,072
       (Increase) Decrease:
         Inventory.................................................      (17,601)              -         (17,601)
         Gain on Disposition of Assets.............................            -               -           3,488
         Other Assets..............................................      (30,000)              -         (30,000)
       Increase (Decrease):
         Accounts Payable..........................................     (410,352)         58,850          32,722
         Accrued Liabilities.......................................     (117,520)         51,875          10,316
                                                                      -----------     -----------    ------------

           Net Cash Used by Operating Activities...................     (943,309)       (281,024)     (3,802,588)
                                                                      -----------     -----------    ------------
Cash Flows from Investing Activities
   Purchase of Property and Equipment..............................            -          (7,836)       (333,560)
                                                                      -----------     -----------    ------------

     Net Cash Used by Investing Activities.........................            -          (7,836)       (333,560)
                                                                      -----------     -----------    ------------

Cash Flows from Financing Activities
   Sale of Stock...................................................    5,823,932         477,194       8,389,574
   Decrease in Book Overdraft......................................            -         (27,513)              -
   Payments on Short-Term Debt.....................................     (329,643)              -        (329,643)
   Payments on Long-Term Debt......................................     (311,148)        (22,827)     (1,073,913)
   Proceeds from Short-Term Debt                                               -         226,643         329,643
   Proceeds from Long-Term Debt....................................            -               -       1,081,857
                                                                      -----------     -----------    ------------

     Net Cash Provided by Financing Activities.....................    5,183,141         653,497       8,397,518
                                                                      -----------     -----------    ------------

Net Change in Cash.................................................    4,239,832         364,637       4,261,370
Cash at Beginning of Period........................................       21,538               -               -
                                                                      -----------     -----------    ------------

Cash at End of Period..............................................   $4,261,370      $  364,637     $ 4,261,370
                                                                      ===========     ===========    ============
</TABLE>




            See Accompanying Notes to Condensed Financial Statements


                                      F-24
<PAGE>



                         PRECIS SMART CARD SYSTEMS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


Note 1 - Interim Financial Information

         The accompanying condensed financial statements are unaudited, but
include all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position at such dates and of the operations and cash flows for the
periods then ended. The financial information is presented in a condensed
format, and it does not include all of the footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles. Operating results for the period ended June 30, 2000 are
not necessarily indicative of results that may be expected for the entire year.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and reported amounts of revenue
and expenses during the reporting period. Actual results could differ materially
from such assumptions and estimates. The accompanying financial statements and
related footnotes should be read in conjunction with the Company's audited
financial statements, included in its December 31, 1999 Form 10-KSB filed with
the Securities and Exchange Commission.

Note 2 - Capital Structure

         During February 2000, the Company completed an initial public offering
of 1,150,000 shares of common stock and received net proceeds of approximately
$5,675,000.

Note 3 - Contingencies

         In connection with the Company's initial public offering, the Company
agreed to sell to the underwriter warrants exercisable for the purchase of
100,000 shares of common stock for $9.00 per share during a five-year period.
The holders of these warrants have the right, until February 8, 2007 to include
such warrants and the underlying shares of common stock in any registration
statement or amendment to a registration statement of the Company at no expense
to such holders.

Note 4 - Proposed Merger

         On March 21, 2000, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") to acquire Foresight, Inc. ("Foresight") through
a merger transaction. The merger is subject to, among other conditions, approval
of the Company's shareholders. It is anticipated that the merger will be
completed before December 31, 2000 and that it will be accounted for as a
purchase. The Merger Agreement provides that on the effective date of the
merger, the Company will issue 500,000 shares of its common stock and 166,667
shares of preferred stock for Foresight. Additional shares of common stock are
issuable based on earnings levels of the Company for the years 2000 through
2002. Following the merger, the Company's Board of Directors will be limited to
seven with three designated by Foresight shareholders. The Company is related to
Foresight because one Foresight shareholder is the chief financial officer of
the Company.

         Also, in connection with this merger, the Company granted Barron Chase
Securities, Inc. stock options exercisable for the purchase of 200,000 shares of
common stock for $9.37 per share. The options are exercisable through June 30,
2003.


                                      F-25
<PAGE>

<TABLE>
<CAPTION>

                                     PRECIS SMART CARD SYSTEMS, INC.
                               UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                                              JUNE 30, 2000



                                                       PRECIS SMART
                                                       CARD SYSTEMS,                      PRO FORMA       PRO FORMA
                                                           INC.        FORESIGHT, INC.   ADJUSTMENTS       COMBINED
                                                       ------------    ---------------   -----------     ----------

                      ASSETS
<S>                                                    <C>             <C>               <C>             <C>
Current Assets:
   Cash............................................    $  4,261,370    $       270,666   $         -     $4,532,036
   Accounts Receivable.............................               -            759,231             -        759,231
   Inventory.......................................          17,601                  -             -         17,601
   Income Taxes Receivable.........................               -             38,458             -         38,458
   Other...........................................               -             16,280             -         16,280
                                                       ------------    ---------------   -----------     ----------
     Total Current Assets..........................       4,278,971          1,084,635             -      5,363,606
                                                       ------------    ---------------   -----------     ----------

Property and Equipment.............................         329,913            191,050             -        520,963
   Less Accumulated Depreciation...................        (329,913)           (94,413)            -       (424,326)
                                                       ------------    ---------------   -----------     ----------

     Total Property and Equipment..................               -             96,637             -         96,637

Other Assets.......................................          30,000             49,187             -         79,187
Goodwill, net of Accumulated Amortization..........               -                  -     3,649,508 (a)  3,649,508
                                                       ------------    ---------------   -----------     ----------
Total Assets.......................................    $  4,308,971    $     1,230,459   $ 3,649,508     $9,188,938
                                                       ============    ===============   ===========     ==========


           LIABILITIES AND STOCKHOLDERS'
                 EQUITY (DEFICIT)

Current Liabilities:
   Accounts Payable................................    $     32,722    $     1,058,590   $         -     $1,091,312
   Accrued Liabilities.............................          10,316             32,377             -         42,693
   Current Portion of Capital Leases...............           7,944                  -             -          7,944
                                                       ------------    ---------------   -----------     ----------

     Total Current Liabilities.....................          50,982          1,090,967             -      1,141,949

Income Taxes Payable...............................               -             39,000             -         39,000
                                                       ------------    ---------------   -----------     ----------

     Total Liabilities.............................          50,982          1,129,967             -      1,180,949
                                                       ------------    ---------------   -----------     ----------

Stockholders' Equity (Deficit):
   Preferred Stock.................................               -                  -     2,000,000 (a)  2,000,000
                                                                                                (500)(a)
   Common Stock....................................          23,500                500         5,000 (a)     28,500
   Additional Paid-In Capital......................       8,366,074                  -     1,745,000 (a) 10,111,074
   Retained Earnings (Deficit).....................      (4,131,585)            99,992       (99,992)(a) (4,131,585)
                                                       ------------    ---------------   -----------     ----------
     Total Stockholders' Equity (Deficit)..........       4,257,989            100,492     3,649,508      8,007,989
                                                       ------------    ---------------   -----------     ----------

Total Liabilities and Stockholders'
   Equity (Deficit)................................    $  4,308,971    $     1,230,459   $ 3,649,508     $9,188,938
                                                       ============    ===============   ===========     ==========
</TABLE>



 The accompanying notes are an integral part of these pro forma financial
                                  statements.


                                      F-26
<PAGE>

<TABLE>
<CAPTION>
                         PRECIS SMART CARD SYSTEMS, INC.
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000



                                                      PRECIS SMART
                                                           CARD                         PRO FORMA         PRO FORMA
                                                      SYSTEMS, INC.  FORESIGHT, INC.   ADJUSTMENTS         COMBINED
                                                      -------------  ---------------   -----------       ----------
<S>                                                   <C>            <C>               <C>               <C>
Product and Service Revenues.......................   $           -  $     3,617,492   $         -       $3,617,492
                                                      -------------  ---------------   -----------       ----------

Operating Expenses:
   Product Deployment and Research and
     Development...................................         113,233        2,287,622             -        2,400,855
   Sales and Marketing.............................          87,587          385,829             -          472,876
   General and Administrative......................         234,800          762,558       121,651 (a)    1,119,009
                                                      -------------  ---------------   -----------       ----------

     Total Operating Expenses......................         435,620        3,436,009       121,651        3,992,740
                                                      -------------  ---------------   -----------       ----------

Operating Income (Loss)............................        (435,620)         181,483      (121,651)        (375,248)
                                                      -------------  ---------------   -----------       ----------


Other Expense (Income):
   Interest Expense................................          23,644               50             -           23,694
   Interest Income.................................         (91,428)          (6,375)            -          (97,803)
                                                      -------------  ---------------   -----------       ----------

                                                            (67,784)          (6,325)            -          (74,109)
                                                      -------------  ---------------   -----------       ----------

Income (Loss) Before Income Taxes..................        (367,836)         187,808      (121,651)        (301,139)
(Provision) Benefit for Income Taxes...............               -          (42,000)       42,000 (b)            -
                                                      -------------  ---------------   -----------       ----------

Net Income (Loss)..................................        (367,836)         145,808       (79,651)        (301,139)

Preferred Dividend Requirements....................               -                -       120,000 (c)      120,000
                                                      -------------  ---------------   -----------       ----------

Net Income (Loss) Available
    to Common Shareholders.........................   $    (367,836) $       145,808   $  (199,651)      $ (421,139)
                                                      =============  ===============   ===========       ==========

Net Loss Per Share.................................   $       (0.17)                                     $    (0.16)
                                                      =============                                      ==========

Weighted Average Number
     of Common Shares Outstanding..................       2,158,000                                       2,658,000
                                                      =============                                      ==========
</TABLE>



 The accompanying notes are an integral part of these pro forma financial
                                  statements.


                                      F-27
<PAGE>

<TABLE>
<CAPTION>

                                        PRECIS SMART CARD SYSTEMS, INC.
                             UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                                     FOR THE YEAR ENDED DECEMBER 31, 1999



                                                      PRECIS SMART
                                                          CARD                          PRO FORMA         PRO FORMA
                                                      SYSTEMS, INC.  FORESIGHT, INC.   ADJUSTMENTS        COMBINED
                                                      -------------  ---------------   -----------       ----------
<S>                                                   <C>            <C>               <C>               <C>
Product and Service Revenues.......................   $      63,060  $     6,635,390   $         -       $6,698,450
                                                      -------------  ---------------   -----------       ----------


Operating Expenses:
     Product Deployment and Research
           and Development.........................         230,828        4,249,225             -        4,480,053
     Sales and Marketing...........................         163,712          677,702                        841,414
     General and Administrative....................         382,764        1,259,099       243,301 (a)    1,885,164
                                                      -------------  ---------------   -----------       ----------

          Total Operating Expenses.................         777,304        6,186,026       243,301        7,206,631
                                                      -------------  ---------------   -----------       ----------

Operating Income (Loss)............................        (714,244)         449,364      (243,301)        (508,181)
                                                      -------------  ---------------   -----------       ----------

Other Expense (Income):
     Interest Expense..............................          79,261                -             -           79,261
     Interest Income...............................               -           (1,740)            -           (1,740)
                                                      -------------  ---------------   -----------       ----------

                                                             79,261           (1,740)            -           77,521
                                                      -------------  ---------------   -----------       ----------

Income (Loss) Before Income Taxes..................        (793,505)         451,104      (243,301)        (585,702)
(Provision) Benefit for Income Taxes...............               -         (150,000)      150,000 (b)            -
                                                      -------------  ---------------   -----------       ----------

Net Income (Loss)..................................        (793,505)         301,104       (93,301)        (585,702)

Preferred Dividend Requirements....................               -                -       240,000 (c)      240,000
                                                      -------------  ---------------   -----------       ----------

Net Income (Loss) Available
    to Common Shareholders.........................   $    (793,505) $       301,104   $  (333,301)      $ (825,702)
                                                      =============  ===============   ===========       ==========

Net Loss per Common Share..........................   $       (0.66)                                     $    (0.49)
                                                      =============                                      ==========

Weighted Average Number
     of Common Shares Outstanding..................       1,200,000                                       1,700,000
                                                      =============                                      ==========
</TABLE>




 The accompanying notes are an integral part of these pro forma financial
                                  statements.


                                      F-28

<PAGE>



                         PRECIS SMART CARD SYSTEMS, INC.
           NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Note 1 - Basis for Presentation

The pro forma combined balance sheet and statements of operations present the
pro forma effects of the proposed merger of Precis-Foresight Acquisition, Inc.
("Merger Sub"), a wholly-owned subsidiary of Precis Smart Card Systems, Inc.
("Precis"), with Foresight, Inc., an Oklahoma corporation ("Foresight") pursuant
to an Agreement and Plan of Merger (the "Merger Agreement") by and among Precis,
Merger Sub and Foresight dated March 21, 2000 (the "Foresight Merger"). The
Foresight Merger will be accounted for under the purchase method of accounting,
and, as a result of this merger, Foresight will become a wholly-owned subsidiary
of Precis. Foresight is a provider of membership service programs. Membership
service programs offer selected products and services from a variety of vendors
intended to enhance the existing relationships between businesses and consumers.


The merger is subject to, among other conditions, approval of Precis'
shareholders. The Merger Agreement provides that on the effective date of the
merger, Precis will issue and deliver 500,000 shares of its common stock and
166,667 shares of its Series A Convertible Preferred Stock having a stated value
of $12.00 per share, providing annual cumulative dividends of $1.44 per share,
payable quarterly, and permitting each share to be converted, at the holder's
option, into one share of Precis common stock. In addition, Precis will issue to
the former shareholders of Foresight one share of its common stock for each
dollar of the greater of Precis' and Foresight's combined or consolidated income
before income tax expense during 2000, 2001, 2002 or 2003, less the 500,000
shares of our common stock previously delivered at closing. Any additional
common shares issued following completion of the Foresight Merger will be
recorded as additional goodwill at their current fair value on the date of
issuance as additional cost of the Foresight Merger. The additional recorded
goodwill will be amortized over the remaining life of the goodwill. Furthermore,
Precis granted Barron Chase Securities, Inc. stock options exercisable for the
purchase of 200,000 shares of common stock for $9.37 per share. The options are
exercisable through June 30, 2003. These options were granted for the investment
banking financial services and consulting advice provided by Barron Chase
Securities in structuring the merger.


The accompanying unaudited pro forma financial statements are presented assuming
the Foresight Merger occurred or was consummated as of June 30, 2000, the date
of the balance sheet, or on January 1, 1999, the first day of the year ended
December 31, 1999, the period presented. The information presented for Precis
and Foresight as of and for the six months ended June 30, 2000, is derived from
the unaudited financial statements of Precis and Foresight as of such date and
for such period. The information presented for Precis and Foresight for the year
ended December 31, 1999, is derived from the audited financial statements of
Precis and Foresight as of such date and for such period.

The pro forma financial information presented in the unaudited pro forma
combined financial statements is not necessarily indicative of the financial
position or results of operations that would have been achieved had the
operations been those of a single consolidated corporate entity. The results of
operations presented in the unaudited pro forma statements of operations are not
necessarily indicative of the combined results of future operations of Precis
following consummation of the Foresight Merger.

Note 2 - Pro Forma Adjustments

The accompanying unaudited pro forma combined financial statements have been
adjusted to record and give effect to the Foresight Merger as follows:

         (a)      The purchase of Foresight and resulting goodwill. The
                  consideration given to the shareholders of Foresight was
                  valued as follows: the $2,000,000 of preferred stock was
                  valued at par; the 500,000 shares of common stock has been
                  valued at the July 31, 2000 closing price of $3.50 per share.
                  The resulting $3,649,508 of goodwill will be amortized over 15
                  years and is attributable to Foresight's


                                      F-29
<PAGE>



                           PRECIS SMART CARD SYSTEMS, INC.
        NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONCLUDED)

                  customer contracts, customer list, product development and
                  vendor network. The market price of our common stock has been
                  volatile since commencement of trading in February 2000. Our
                  historical financial statements will reflect the value of the
                  consideration for the merger and the resulting goodwill as of
                  the closing date of the merger. For each one dollar ($1)
                  change in our market price from the amount assumed in this pro
                  forma presentation and the actual market price as of the
                  closing date of the merger, our goodwill and stockholders'
                  equity will increase or decrease by $500,000 and the annual
                  amortization expense will increase or decrease by $33,333.

         (b)      The provision for income taxes has been applicable to
                  Foresight has been eliminated to reflect the benefit that will
                  be realized from the consolidation of Precis and Foresight.

         (c)      The 166,667 shares of preferred stock issued in conjunction
                  with the merger have an annual cumulative dividend rate of
                  $1.44 per share.

Note 3 - Goodwill


Goodwill recorded in connection with the Foresight Merger will be amortized on a
straight-line basis over 15 years. The selection of a 15-year amortization
period considers the nature of Foresight's business, the products and services
provided by Foresight and the contractual relationships and arrangements with
Foresight's clients. Foresight has been in continuous operation for
approximately 14 years. Although clients have the right to terminate their
contractual relationship with Foresight, because of the marketing organization
that Foresight has developed over its 14 years of operations, historically
terminating clients have been replaced with new clients. In acquiring Foresight,
the intent is not to acquire individual clients, but to acquire the employee
organization and management responsible for obtaining and maintaining clients.
Precis will continually review whether events and circumstances have occurred
that indicate the remaining estimated useful life of goodwill warrants revision
or that the remaining unamortized balance of goodwill is not recoverable. When
factors, such as operating losses, loss of customers, or changes in the
membership services industry, if present, indicate that goodwill should be
evaluated for possible impairment, Precis will use an estimate of the related
undiscounted net income over the remaining life of the goodwill in measuring
whether the goodwill is recoverable. Although management believes that goodwill
will be recoverable over the respective remaining amortization periods, it is
possible, due to a change in circumstances, that the carrying value of goodwill
could become impaired in the future. Such impairment could have a material
effect on the results of operations in a particular reporting period.


Note 4 - Earnings Per Share

Pro forma loss per common share has been computed based upon the weighted
average number of common shares outstanding during the six months ended June 30,
2000 and year ended December 31, 1999, respectively. Outstanding warrants are
not included in the weighted average shares outstanding for the periods because
their effect on earnings per share calculations is anti-dilutive.

Note 5 - Segment Reporting

The operations of Precis are significantly different from those of Foresight.
Therefore, if the proposed merger is completed, Precis will provide segment
disclosure as required by Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information."



                                      F-30

<PAGE>


                                                                     APPENDIX A



                          AGREEMENT AND PLAN OF MERGER


                  AGREEMENT AND PLAN OF MERGER, dated as of March 21, 2000
(this "AGREEMENT"), among PRECIS SMART CARD SYSTEMS, INC., an Oklahoma
corporation ("PARENT"), PRECIS-FORESIGHT ACQUISITION, INC., an Oklahoma
corporation and a wholly-owned subsidiary of Parent ("MERGER SUB"), FORESIGHT,
INC., an Oklahoma corporation (the "COMPANY"), and the sole shareholders of
the Company, namely Paul A. Kruger and Mark R. Kidd (the "COMPANY
SHAREHOLDERS").

                              W I T N E S S E T H:

                  WHEREAS, the Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the best
interests of their respective shareholders for Parent to cause the Company to
merge with and into Merger Sub upon the terms and subject to the conditions
set forth herein;

                  WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company and the Company Shareholders
and the Parent as the sole shareholder of Merger Sub have each approved (as
evidenced by their execution of this Agreement) the merger (the "MERGER") of
the Company with and into Merger Sub in accordance with the applicable
provisions of the Oklahoma General Corporation Act (the "OGCA"), and upon the
terms and subject to the conditions set forth in this Agreement;

                  WHEREAS, Parent, Merger Sub and the Company intend, by
approving resolutions authorizing this Agreement, to adopt this Agreement as a
plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "CODE"), and the regulations promulgated
thereunder;

                  WHEREAS, Parent, Merger Sub and the Company intend that the
Merger be accounted for as a purchase acquisition of the Company by Parent
under the purchase method of accounting for financial reporting purposes; and

                  WHEREAS, pursuant to the Merger, each outstanding share
(each, a "COMMON SHARE") of the Company's Common Stock, par value $1.00 per
share (the "COMPANY COMMON STOCK"), shall be converted into the right to
receive the Merger Consideration (as defined in Section 1.7(b)), upon the
terms and subject to the conditions set forth herein;

                  NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:



                                      -1-

<PAGE>


                                    ARTICLE I

                                   THE MERGER


                  SECTION 1.1 THE MERGER. (a) EFFECTIVE TIME. At the Effective
Time (as defined in Section 1.2), and subject to and upon the terms and
conditions of this Agreement and the OGCA, the Company shall be merged with
and into Merger Sub, the separate corporate existence of the Company shall
cease, and Merger Sub shall continue as the surviving corporation. Merger Sub
as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "SURVIVING CORPORATION."

                  (b)     CLOSING. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VI, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article VI at the
offices of Dunn Swan & Cunningham, 2800 Oklahoma Tower, 210 Park Avenue,
Oklahoma City, Oklahoma (the "CLOSING"), unless another date, time or place is
agreed to in writing by the parties hereto.

                  SECTION 1.2 EFFECTIVE TIME. As promptly as practicable after
the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing a
certificate of merger as contemplated by the OGCA (the "CERTIFICATE OF
MERGER"), together with any required related certificates, with the Secretary
of State of the State of Oklahoma, in such form as required by, and executed
in accordance with the relevant provisions of, the OGCA (the time of such
filing being the "EFFECTIVE TIME").

                  SECTION 1.3 EFFECT OF THE MERGER. At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Certificate
of Merger and the applicable provisions of the OGCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all
the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts, liabilities
and duties of the Surviving Corporation.

                  SECTION 1.4 CERTIFICATE OF INCORPORATION; BY-LAWS. (a)
CERTIFICATE OF INCORPORATION. The Certificate of Merger shall provide for
amendment of the Certificate of Incorporation of the Surviving Corporation to
change the name of the Surviving Corporation to "Foresight, Inc." In all other
respects, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as
provided by the OGCA and such Certificate of Incorporation.

                  (b)     BYLAWS. The Bylaws of the Company, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended as provided by the OGCA, the Certificate
of Incorporation of the Surviving Corporation and such Bylaws.

                  SECTION 1.5 DIRECTORS AND OFFICERS. The directors of the
Company immediately prior to the Effective Time shall become the directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
Furthermore, from and after the Effective Time and until completion of the
issuance and delivery of the Contingent Shares to which the Company
Shareholders are entitled to receive pursuant to Section 1.6(a), Paul A.
Kruger, John Simonelli and Mark R. Kidd (the "COMPANY DESIGNEES") shall serve
as directors of Parent and the Board of Directors of Parent shall be comprised
of no more than seven members, unless at least two of the Company Designees
otherwise agree. In the event of the resignation or death of any of the
Company Designees, a person designated by Paul A. Kruger (or his successors in
interest if he shall be deceased) shall be named as a director of Parent to
fill the vacancy created by such resignation or death. In addition, subsequent
to the


                                      -2-

<PAGE>

Effective Time, Parent or the Surviving Corporation and each of Paul A. Kruger
and Mark R. Kidd shall enter into an employment agreement providing for
employee compensation and benefits similar to the employee compensation and
benefits being received by each of Messrs. Kruger and Kidd from the Company
immediately prior to the Effective Time.


                  SECTION 1.6 EFFECT ON CAPITAL STOCK. At the Effective Time,
by virtue of the Merger and without any action on the part of the Parent,
Merger Sub, the Company or the holders of any of the following securities:

                  (a)     CONVERSION OF SECURITIES. (i) The outstanding Common
Shares shall be exchanged, in the aggregate, for the following number of
shares of Parent Common Stock to be delivered as follows:

                          (A) At Closing , Parent shall issue and deliver (i)
                  to Paul A. Kruger 166,667 shares of Parent's Series A
                  Convertible Preferred Stock ( the "PARENT PREFERRED STOCK")
                  and (ii) to the Company Shareholders 500,000 shares of Parent
                  Common Stock, of which 90 percent of the shares of Parent
                  Common Stock shall be issued and delivered to Paul A. Kruger
                  and 10 percent of the shares of Parent Common Stock shall be
                  issued and delivered to Mark R. Kidd; provided, however, that
                  in the event the net income before income tax expense of the
                  Company for the year ended December 31, 1999 as reflected in
                  the audited statement of income of the Company ("COMPANY 1999
                  NET INCOME BEFORE INCOME TAXES"), is less than $450,000, the
                  500,000 shares of Parent Common Stock delivered at Closing to
                  the Company Shareholders shall be reduced by one share for
                  each $1.00 increment that Company 1999 Net Income Before
                  Income Taxes is less than $500,000. For purposes of the
                  following subparagraphs (B), (C), and (D), the term "Company
                  1999 Base Income" shall mean the lesser of (i) the number of
                  shares of Parent Common Stock issued at the Closing
                  multiplied by $1.00 or (ii) $500,000.

                          (B) Parent shall issue and deliver to the Company
                  Shareholders one share of Parent Common Stock for each $1.00
                  that Consolidated Adjusted Income Before Taxes of Parent for
                  the year ended December 31, 2000, assuming the Merger
                  occurred on January 1, 2000, plus the loss of Parent during
                  the period commencing January 1, 2000, and ending on the
                  Effective Date, exceeds Company 1999 Base Income.

                          (C) Parent shall issue and deliver to the Company
                  Shareholders one share of Parent Common Stock for each $1.00
                  that Consolidated Adjusted Income Before Taxes of Parent for
                  the year ended December 31, 2001, exceeds the greater of (i)
                  Company 1999 Base Income or (ii) Consolidated Adjusted Income
                  Before Taxes of Parent for the year ended December 31, 2000,
                  assuming the Merger occurred on January 1, 2000, plus the
                  loss of Parent during the period commencing January 1, 2000,
                  and ending on the Effective Date.

                          (D) Parent shall issue and deliver to the Company
                  Shareholders one share of Parent Common Stock for each $1.00
                  that Consolidated Adjusted Income Before Taxes of Parent for
                  the year ended December 31, 2002, exceeds greater of (i)
                  Company 1999 Base Income or (ii) Consolidated Adjusted Income
                  Before Taxes of Parent for the year ended December 31, 2000,
                  assuming the Merger occurred on January 1, 2000, plus the
                  loss of Parent during the period commencing January 1, 2000,
                  and ending on the Effective Date, or (iii) Consolidated
                  Adjusted Income Before Taxes of Parent for the years ended
                  December 31, 2001.

For purposes of this Agreement, "CONSOLIDATED ADJUSTED INCOME BEFORE TAXES"
shall mean the net income before income tax expense for the applicable fiscal
year (determined in accordance with generally accepted accounting principles
for financial reporting purposes under the rules and regulations of the U.S.
Securities and Exchange Commission), plus the amount of amortization during
the fiscal year attributable to the acquisition of the Company by Parent
pursuant to this Agreement. Furthermore, any shares of Parent Common Stock to
be issued and delivered to the


                                      -3-

<PAGE>

Company Shareholders pursuant to Section 1.6(a), other than those shares of
Parent Common Stock issued and delivered at Closing, are referred to herein as
the "CONTINGENT SHARES."

         As soon as reasonably practical following the determination of
Consolidated Adjusted Income Before Income Taxes of Parent for each of the
years ended December 31, 2000, 2001 and 2002, any issuances and deliveries of
the Parent Common Stock pursuant to this Section 1.6(a) and not made at
Closing, shall be made as soon as reasonably practicable following the
applicable determination. Provided, however, the Contingent Shares shall be
issued and delivered to the Company Shareholders in accordance with the
separate agreement to be executed and delivered simultaneously with this
Agreement between Parent and the Company Shareholders. All shares of Parent
Common Stock and Parent Preferred Stock shall be issued and distributed to the
Company Shareholders pursuant to Section 1.6(a) shall be fully paid and
non-assessable shares, subject to adjustment pursuant to Section 1.6(e).

         The number of shares of Parent Common Stock and Parent Preferred
Stock into which each outstanding Common Share is converted pursuant to this
Section 1.6(a) is referred to herein as the "EXCHANGE RATIO."

                  (b)     CANCELLATION. Each Common Share held in the treasury
of the Company and each Common Share owned by Parent, Merger Sub or any direct
or indirect wholly-owned subsidiary of the Company or Parent immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.

                  (c)     ASSUMPTION OF OUTSTANDING STOCK OPTIONS AND
WARRANTS.  Omitted.

                  (d)     CAPITAL STOCK OF MERGER SUB.  Omitted.

                  (e)     ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio
shall be appropriately adjusted to reflect fully the effect of any stock
split, reverse split or stock dividend (including any dividend or distribution
of securities convertible into Parent Common Stock), with respect to Parent
Common Stock having a record date after the date hereof and prior to the
Effective Time.

                  SECTION 1.7 EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT.
Parent shall instruct UMB Bank, N.A., its transfer agent and registrar of
Parent Common Stock (the "EXCHANGE AGENT"), to reserve and set aside for the
benefit of the Company Shareholders for exchange in accordance with this
Section 1.7, through the Exchange Agent, certificates evidencing the shares of
Parent Common Stock and Parent Preferred Stock, as applicable into which the
outstanding Common Shares and Preferred Shares, as applicable, have been
converted pursuant to Section 1.6(a) in exchange for outstanding Common Shares
and Preferred Shares.

                  (b)     EXCHANGE PROCEDURES. As soon as reasonably
practicable after the Effective Time, Parent will instruct the Exchange Agent
to mail to each holder of record of the certificates evidencing and
representing the Common Stock and Preferred Stock (the "CERTIFICATES") (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Parent may reasonably specify), and (ii)
instructions to effect the surrender of the Certificates in exchange for the
certificates evidencing shares of Parent Common Stock or the Parent Preferred
Stock, as applicable. Upon surrender of a Certificate for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, and
such other customary documents as may be required pursuant to such
instructions, the Company Shareholders shall be entitled to receive in
exchange therefor (A) certificates evidencing that number of whole shares of
Parent Common Stock or the Parent Preferred Stock, as applicable which the
Company Shareholders has the right to receive in accordance with the Exchange
Ratio in respect of the Common Shares or Preferred Shares, as applicable,
formerly evidenced by such Certificate, (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 1.7(c), and
(C), if applicable, Contingent Shares, in each case without any interest
thereon (the shares of Parent Common Stock, Parent Preferred Stock and


                                      -4-

<PAGE>

Contingent Shares being, collectively, the "MERGER CONSIDERATION"), and the
Certificate so surrendered shall forthwith be canceled.

                  (c)     DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time
with respect to shares of Parent Common Stock or Parent Preferred Stock, as
applicable, payable to shareholders of record as of a date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the shares of Parent Common Stock or Parent Preferred Stock they are
entitled to receive pursuant to the provisions hereof until the holder of such
Certificate shall surrender such Certificate pursuant to Section 1.7(b).
Subject to applicable law, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole
shares of Parent Common Stock or Parent Preferred Stock, as applicable, issued
in exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions payable to shareholders of record
as of a date after the Effective Time and theretofore paid with respect to
such whole shares of Parent Common Stock or Parent Preferred Stock, as
applicable.

                  (d)     TRANSFERS OF OWNERSHIP. If any certificate for
shares of Parent Common Stock or Parent Preferred Stock, as applicable, is to
be issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance
thereof that the Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the Person requesting such
exchange will have paid to Parent or any agent designated by it any transfer
or other taxes required by reason of the issuance of a certificate for shares
of Parent Common Stock or Parent Preferred Stock, as applicable, in any name
other than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.

                  (e)     NO LIABILITY. Neither Parent, Merger Sub nor the
Company shall be liable to any holder of Company Common Stock for any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.

                  (f)     WITHHOLDING RIGHTS. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock, such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of the Shares in respect of which such deduction and withholding was made by
Parent or the Exchange Agent.

                  SECTION 1.8.  DISSENTING SHARES.  Omitted.

                  SECTION 1.9 STOCK TRANSFER BOOKS. At the Effective Time, the
stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Company Common Stock thereafter on
the records of the Company.

                  SECTION 1.10 NO FURTHER OWNERSHIP RIGHTS IN COMPANY CAPITAL
STOCK. The Merger Consideration delivered upon the surrender for exchange of
Common Shares or Preferred Shares, as applicable, in accordance with the terms
hereof shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Common Shares or Preferred Shares, as applicable, and there
shall be no further registration of transfers on the records of the Surviving
Corporation of such Common Shares or Preferred Shares, as applicable, which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.

                  SECTION 1.11 LOST, STOLEN OR DESTROYED CERTIFICATES. In the
event any Certificate shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificate,
upon


                                      -5-

<PAGE>

the making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock or Parent Preferred Stock as may be required pursuant to
Section 1.7; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent or the Exchange Agent with respect to the Certificate alleged to have
been lost, stolen or destroyed.

                  SECTION 1.12 TAXES. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Code. The parties hereto hereby adopt this Agreement as a
"plan of reorganization" within the meaning of sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.

                  SECTION 1.13 TAKING OF NECESSARY ACTION; FURTHER ACTION.
Each of Parent, Merger Sub and the Company will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Merger in accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Company and Merger
Sub, the officers and directors of the Company and Merger Sub immediately
prior to the Effective Time are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful
and necessary action.

                  SECTION 1.14 MATERIAL ADVERSE EFFECT. When used in
connection with the Company or any of its subsidiaries or Parent or any of its
subsidiaries, as the case may be, the term "MATERIAL ADVERSE EFFECT" means any
change, effect or circumstance that, individually or when taken together with
all other such changes, effects or circumstances that have occurred prior to
the date of determination of the occurrence of the Material Adverse Effect, is
or is reasonably likely to be materially adverse to the business, operations,
assets (including intangible assets), condition (financial or otherwise),
liabilities or results of operations of the Company and its subsidiaries or
Parent and its subsidiaries, as the case may be, in each case taken as a whole.

                  SECTION 1.15 INVESTMENT INTENT. The Company Shareholders
represents to Parent and its officers and directors that the Parent Common
Stock and Parent Preferred Stock, as applicable, that may be issued to such
Company Shareholders pursuant to Section 1.6, at the time of issuance, will be
acquired by such Company Shareholders for investment purposes only without the
intent to resell such Parent Common Stock and Parent Preferred Stock, as
applicable, and will not be transferred except pursuant to registration under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and the
applicable state securities laws unless pursuant to exemption from
registration under such acts. Each of the Company Shareholders hereby
acknowledges that the Parent Common Stock or Parent Preferred Stock, as
applicable, that may be issued to such Company Shareholder pursuant to Section
1.6 will be issued pursuant to exemption from registration under the
Securities Act and the applicable state securities laws and the certificates
evidencing the such Parent Common Stock or Parent Preferred Stock, as
applicable, will bear appropriate restrictive transfer legends as required
pursuant to the Securities Act and the applicable state securities laws.

                  SECTION 1.16 COMPANY SHAREHOLDERS APPROVAL. Each of the
Company Shareholders hereby covenants and agrees that he has read and has been
fully advised by legal counsel as to the meaning and effect of this Agreement
and the transactions to be effected by this Agreement, and that he hereby
approves this Agreement and the transactions contemplated in this Agreement.
By execution of this Agreement, (i) each of the Company Shareholders hereby
votes all of the issued and outstanding shares of the Company Common Stock in
favor of approval of this Agreement and the transactions contemplated in this
Agreement and (ii) each of the Company Shareholders hereby consents to all
corporate action required to consummate the transactions contemplated in this
Agreement without the necessity for a meeting of the shareholders of the
Company, to the extent and in the event shareholder approval shall be required
for approval of this Agreement and the transactions contemplated in and to be
effect by this Agreement.

                  SECTION 1.17 STOCK OPTION AMENDMENTS. Parent shall obtain
and deliver to the Company


                                      -6-

<PAGE>

amendments or statements of clarification to each agreement governing the
Stock Options which state that for purposes of determining the gross revenues
of Parent and accordingly the vesting and exercisability of the Stock Options
shall be limited to the revenues of either (i) Parent without consolidation
with the revenues of the Company or anyone of its subsidiaries or divisions or
(ii) any subsidiaries or divisions of Parent through which the smart card
operations of Parent as currently constituted and conducted are subsequently
constituted and conducted as a result of any corporate restructuring of Parent
and its subsidiaries.

                                 ARTICLE II

                REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company and the Company Shareholders hereby represent
and warrant to Parent and Merger Sub that, except as set forth in the written
disclosure schedule delivered by the Company to Parent (the "COMPANY
DISCLOSURE SCHEDULE"):

                  SECTION 2.1 CORPORATE ORGANIZATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Oklahoma and has all requisite corporate power and
authority to own, operate and lease its properties and assets as and where the
same are owned, operated or leased and to conduct its business as it is now
being conducted. The Company is in good standing and duly qualified or
licensed as a foreign corporation to do business in those jurisdictions listed
in Section 2.1 of the Company Disclosure Schedule, such jurisdictions being
the only jurisdictions in which the location of the property and assets owned,
operated or leased by the Company or the nature of the business conducted by
the Company makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed could not reasonably be expected to
have a Material Adverse Effect. The Company has heretofore delivered to the
Parent complete and correct copies of the Company's Certificate of
Incorporation and Bylaws, as amended to and as in effect on the date hereof.

                  SECTION 2.2 CAPITALIZATION. (a) The authorized capital stock
of the Company consists of 50,000 shares of Company Common Stock, par value
$1.00 per share. As of the date hereof, 500 shares of Company Common Stock are
issued and outstanding.

                  (b)     All outstanding shares of Company Common Stock are
validly issued and outstanding, fully paid and non-assessable, and there are
no preemptive or similar rights in respect of the Company Common Stock. All
outstanding shares of Company Common Stock were issued in compliance with all
requirements of all applicable federal and state securities laws.

                  SECTION 2.3 SUBSIDIARIES. There are no entities of which the
Company owns 10% or more of the outstanding voting securities or other equity
interests, directly or indirectly through one or more intermediaries, by the
Company.

                  SECTION 2.4 NO COMMITMENTS TO ISSUE CAPITAL STOCK. There are
no outstanding options, warrants, calls, convertible securities or other
rights, agreements, commitments or other instruments pursuant to which the
Company is or may become obligated to authorize, issue or transfer any shares
of its capital stock or any other equity interest. There are no agreements or
understandings in effect among any of the stockholders of the Company or with
any other Person and by which the Company is bound with respect to the voting,
transfer, disposition or registration under the Securities Act of any shares
of capital stock of the Company.

                  SECTION 2.5 AUTHORIZATION; EXECUTION AND DELIVERY. The
Company has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by
all requisite corporate action on the part of the Company, including unanimous
approval of this Agreement by the Company Shareholders as evidenced by their
execution of this Agreement. This


                                      -7-

<PAGE>

Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.

                  SECTION 2.6 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing or registration with, any governmental or
regulatory authority is required in order (a) to permit the Company to
consummate the Merger or perform its obligations under this Agreement or (b)
to prevent the termination of, or materially and adversely affect, any
governmental right, privilege, authority, franchise, license, permit or
certificate of the Company or any of its Subsidiaries (collectively
"GOVERNMENTAL LICENSES") to enable the Company and its Subsidiaries to own,
operate and lease their properties and assets as and where such properties and
assets are owned, leased or operated and to provide service and carry on their
business as presently provided and conducted, or to prevent any material loss
or disadvantage to the Company's business, by reason of the Merger, except for
(i) filing and recording of the Certificate of Merger as required by the OGCA
and an Agreement of Merger as required by the OGCA, and (ii) as set forth in
Section 2.6 of the Company Disclosure Schedule.

                  SECTION 2.7 NO CONFLICT. Subject to compliance with the
Governmental Licenses described in Section 2.6 of the Company Disclosure
Schedule and obtaining the other consents and waivers that are set forth and
described in Section 2.7 of the Company Disclosure Schedule (the "PRIVATE
CONSENTS"), neither the execution, delivery and performance of this Agreement
by the Company, nor the consummation by the Company of the transactions
contemplated hereby, will (i) conflict with, or result in a breach or
violation of, any provision of the Certificate of Incorporation (or similar
organizational document) or bylaws of the Company; (ii) conflict with, result
in a breach or violation of, give rise to a default, or result in the
acceleration of performance, or permit the acceleration of performance, under
(whether or not after the giving of notice or lapse of time or both) any
Encumbrance, note, bond, indenture, guaranty, lease, license, agreement or
other instrument, writ, injunction, order, judgment or decree to which the
Company or any of its Subsidiaries or any of their respective properties or
assets is a party or is subject; (iii) give rise to a declaration or
imposition of any Encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries; or (iv) impair the Company's business or
adversely affect any Governmental License necessary to enable the Company to
carry on its business as presently conducted, except, in the case of clauses
(ii), (iii) or (iv), for any conflict, breach, violation, default,
declaration, imposition or impairment that could not reasonably be expected to
have a Material Adverse Effect.

                  SECTION 2.8 SEC FILINGS. The Company does not have a class
or securities registered under the Securities Act of 1934, as amended, and
does not have any obligation to file forms, reports or other documents with
the United States Securities and Exchange Commission under such Act.

                  SECTION 2.9 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES; RECEIVABLES. (a) The Company has heretofore delivered to Parent
complete and correct copies of the following financial statements (the
"COMPANY FINANCIAL STATEMENTS"), all of which have been prepared from the
books and records of the Company in accordance with generally accepted
accounting principles ("GAAP") consistently applied and maintained throughout
the periods indicated (except as may be indicated in the notes thereto) and
fairly present in all material respects the financial condition of the Company
as at their respective dates and the results of the Company's operations and
cash flows for the periods covered thereby:

                              (i)     unaudited balance sheet (the "COMPANY
                  BALANCE SHEET") of the Company as of December 31, 1999 (the
                  "COMPANY BALANCE SHEET DATE") and statement of income for
                  the year then ended.

Such statement of income does not contain any items of special or nonrecurring
revenue or income or any revenue or income not earned in the ordinary course
of business, except as expressly specified therein.

                  (b)     Except as and to the extent reflected or reserved
against on the Company Balance Sheet, the Company did not have, as of the
Company Balance Sheet Date, any liabilities, debts or obligations (whether
absolute,


                                      -8-

<PAGE>

accrued, contingent or otherwise) of any nature that would be required as of
such date to have been included on a balance sheet prepared in accordance with
GAAP. Since the Company Balance Sheet Date, the Company had not incurred or
suffered to exist any liability, debt or obligation (whether absolute,
accrued, contingent or otherwise), except liabilities, debt and obligations
incurred in the ordinary course of business, consistent with past practice,
none of which will have a Material Adverse Effect. Since the Company Balance
Sheet Date, there has been no material adverse change in the business,
operations, assets (including intangible assets), condition (financial or
otherwise), liabilities or results of operations of the Company, taken as a
whole, and no event has occurred which is reasonably likely to cause any such
material adverse change.

                  (c)     All receivables of the Company (including accounts
receivable, loans receivable and advances) which are reflected in the Company
Balance Sheet, and all such receivables which have arisen thereafter and prior
to the Effective Time, have arisen or will have arisen only from BONA FIDE
transactions in the ordinary course of business and shall be fully collectible
at the aggregate recorded amounts thereof (except to the extent of appropriate
reserves therefor established in accordance with prior practice and GAAP) and
are not and will not be subject to defense, counter-claim or offset.

                  SECTION 2.10 CERTAIN OTHER FINANCIAL REPRESENTATIONS. Since
the Company Balance Sheet Date, the Company's accounts payable have been
accrued and paid in a manner consistent with the Company's prior practice.

                  SECTION 2.11 ABSENCE OF CHANGES. Except as disclosed in the
Company Financial Statements or as set forth in Section 2.11 of the Company
Disclosure Schedule, since December 31, 1999, the Company has conducted its
business only in the ordinary course and the Company has not:

                  (a)     amended or otherwise modified its Certificate of
Incorporation or Bylaws (or similar organizational document);

                  (b)     issued or sold or authorized for issuance or sale,
or granted any options or warrants or amended or modified in any respect of
any previously granted option or warrant or made other agreements (other than
this Agreement) of the type referred to in Section 2.4 with respect to, any
shares of its capital stock or any other of its securities, or altered any
term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, stock dividend
or otherwise or redeemed, purchased or otherwise acquired any of its or its
parent's capital stock or agreed to do any of the foregoing (whether or not
legally enforceable);

                  (c)     recorded or accrued any item of revenue, except as a
result of the provision of services in the ordinary course of business and
consistent with prior practice;

                  (d)     incurred any indebtedness for borrowed money,
entered into any lease that should be capitalized in accordance with GAAP or
subjected to any Encumbrance or other restriction any of its properties,
business or assets except Encumbrances or other restrictions that could not
reasonably be expected to have a Material Adverse Effect;

                  (e)     discharged or satisfied any Encumbrance, or paid any
obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due, other than current liabilities shown on the Company's
consolidated balance sheet as of December 31, 1999 and current liabilities
incurred since that date in the ordinary course of business and consistent
with prior practice;

                  (f)     sold, transferred, leased to others or otherwise
disposed of any material properties or assets or purchased, leased from others
or otherwise acquired any material properties or assets except in the ordinary
course of business;


                                      -9-

<PAGE>

                  (g)     canceled or compromised any debt or claim or waived
or released any right of substantial value;

                  (h)     terminated or received any notice of termination of
any contract, lease, license or other agreement or any Governmental License,
or suffered any damage, destruction or loss (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect;

                  (i)     made any change in the rate of compensation,
commission, bonus or other remuneration payable, or paid, agreed, or promised
(in writing or otherwise) to pay, provide or modify, conditionally or
otherwise, any bonus, extra compensation, pension, severance or vacation pay
or any other benefit or perquisite of any other kind, to any director,
officer, employee, salesman or agent of the Company or any of its Subsidiaries
except in the ordinary course of business consistent with prior practice and
pursuant to or in accordance with plans disclosed in Section 2.14(a) of the
Company Disclosure Schedule that were in effect as of December 31, 1999;

                  (j)     made any increase in or commitment (whether or not
legally enforceable) to increase or communicated any intention to increase any
employee benefits, adopted or made any commitment to adopt any additional
employee benefit plan or made any contribution, other than regularly scheduled
contributions, to any Employee Benefit Plan (as defined in Section 2.14(a));

                  (k)     lost the employment services of a senior manager or
other employee of equal or higher ranking;

                  (l)     made any loan or advance to any Person other than
travel and other similar routine advances in the ordinary course of business
consistent with past practice, or acquired any capital stock or other
securities of any other corporation or any ownership interest in any other
business enterprise;

                  (m)     instituted, settled or agreed to settle any material
litigation, action or proceeding before any court or governmental body
relating to the Company or its properties or assets;

                  (n)     entered into any transaction, contract or commitment
other than in the ordinary course of business;

                  (o)     changed any accounting practices, policies or
procedures utilized in the preparation of the Company Financial Statements
(including procedures with respect to revenue recognition, payment of accounts
payable or collection of accounts receivable); or

                  (p)     entered into any agreement or made any commitment to
take any of the types of action described in subparagraphs (a) through (o) of
this Section 2.11.

                  SECTION 2.12 TAX MATTERS. (a) For purposes of this
Agreement, "TAX" or "TAXES" shall mean taxes, fees, levies, duties, tariffs,
imposts and governmental impositions or charges of any kind in the nature of
(or similar to) taxes, payable to any federal, state, local or foreign taxing
authority, including (without limitation) (i) income, franchise, profits,
gross receipts, AD VALOREM, net worth, value added, sales, use, service, real
or personal property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and (ii) interest,
penalties, additional taxes and additions to tax imposed with respect thereto;
and "TAX RETURNS" shall mean returns, reports, and information statements with
respect to Taxes required to be filed with the Internal Revenue Service (the
"IRS") or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns, including returns
required in connection with any Employee Benefit Plan (as defined in Section
2.14(a)).


                                      -10-

<PAGE>



                  (b)     The Company represents that, other than as disclosed
in Section 2.12(b) of the Company Disclosure Schedule, the Company has timely
filed all United States federal income Tax Returns and all other material Tax
Returns required to be filed by it. All such Tax Returns are complete and
correct in all material respects (except to the extent a reserve has been
established as reflected in the Company Balance Sheet). The Company has timely
paid and discharged all Taxes due in connection with or with respect to the
periods or transactions covered by such Tax Returns and have paid all other
Taxes as are due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are
required), and there are no other Taxes that would be due if asserted by a
taxing authority, except with respect to which the Company is maintaining
reserves unless the failure to do so could not have a Material Adverse Effect.
Except as does not involve or would not result in liability to the Company
that could have a Material Adverse Effect, (i) there are no tax liens on any
assets of the Company; (ii) the Company has not granted any waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax; (iii) no unpaid (or unreserved) deficiencies for Taxes
have been claimed, proposed or assessed by any taxing or other governmental
authority with respect to the Company; (iv) there are no pending or threatened
audits, investigations or claims for or relating to any liability in respect
of Taxes of the Company; and (v) the Company has not requested any extension
of time within which to file any currently unfiled Tax Returns. The accruals
and reserves for Taxes (including deferred taxes) reflected in the Company
Balance Sheet are in all material respects adequate to cover all Taxes
accruable through the date thereof (including Taxes being contested) in
accordance with GAAP.

                  (c)     The Company represents that, other than as disclosed
in Section 2.12(c) of the Company Disclosure Schedule and other than with
respect to items the inaccuracy of which could not have a Material Adverse
Effect: (i) the Company has not filed or been included in a combined,
consolidated or unitary return (or substantial equivalent thereof) of any
Person other than the Company; (ii) the Company is not liable for Taxes of any
Person other than the Company, or currently under any contractual obligation
to indemnify any Person with respect to Taxes, or a party to any tax sharing
agreement or any other agreement providing for payments by the Company with
respect to Taxes; (iii) the Company is not a party to any joint venture,
partnership or other arrangement or contract which could be treated as a
partnership for United States federal income tax purposes; (iv) the Company is
not a party to any agreement, contract, arrangement or plan that would result
(taking into account the transactions contemplated by this Agreement),
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (v) the Company is
not a "consenting corporation" under Section 341(f) of the Code or any
corresponding provision of state, local or foreign law; and (vi) the Company
has not made an election or is required to treat any of its assets as owned by
another Person for federal income tax purposes or as tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of the
Code (or any corresponding provision of state, local or foreign law).

                  SECTION 2.13 RELATIONS WITH EMPLOYEES. (a)  Except as set
forth in Section 2.13(a) of the Company

Disclosure Schedule:

                          (i)     The Company has satisfactory relationships
with their employees.

                          (ii)    The Company is and has been in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment, and wages and hours, including any law, rule or
regulation relating to discrimination, fair labor standards and occupational
health and safety, wrongful discharge or violation of the personal rights of
employees, former employees or prospective employees, and the Company is not
or has not engaged in any unfair labor practices, except to the extent a
failure to so comply could not, alone or together with any other failure, have
a Material Adverse Effect.

                          (iii)   No collective bargaining agreement with
respect to the business of the Company is currently in effect or being
negotiated. The Company does not have any obligation to negotiate any such
collective bargaining agreement. There are no labor unions representing,
purporting to represent or attempting to represent any employee of the Company.


                                      -11-

<PAGE>

                          (iv)    There are no strikes, slowdowns or work
stoppages pending or, to the best of the knowledge of the Company and each of
the Company Shareholders, threatened with respect to the employees of the
Company, nor has any such strike, slowdown or work stoppage occurred or, to
the best of the knowledge of the Company and each of the Company Shareholders,
been threatened. There is no representation claim or petition or complaint
pending before the National Labor Relations Board or any state or local labor
agency and, to the best of the knowledge of the Company and each of the
Company Shareholders, no question concerning representation has been raised or
threatened respecting the employees of the Company.

                          (v)     To the best of the knowledge of the Company
and each of the Company Shareholders, no charges with respect to or relating
to the business of the Company are pending before the Equal Employment
Opportunity Commission, or any state or local agency responsible for the
prevention of unlawful employment practices, which could reasonably be
expected to have a Material Adverse Effect.

                  (b)     Except as set forth in Section 2.13(b) of the
Company Disclosure Schedule, the Company is not a contractor or subcontractor
with obligations under any federal, state or local government contract.

                  (c)     Except as set forth in Section 2.13(c) of the
Company Disclosure Schedule, the Company has nor or could not have any
material liability, whether absolute or contingent, including any obligations
under any of the Employee Benefit Plans described in Section 2.14, with
respect to any misclassification of a person as an independent contractor
rather than as an employee.

                  (d)     Section 2.13(d) of the Company Disclosure Schedule
contains a complete and correct list of all employment, management or other
consulting agreements with any Persons employed or retained by the Company
(including independent consultants), complete and correct copies of which have
been delivered to Parent.

                  SECTION 2.14 BENEFIT PLANS. (a) Section 2.14(a) of the
Company Disclosure Schedule sets forth each employee benefit plan, policy,
program, practice, agreement, understanding, arrangement or commitment
(whether written or underwritten) providing compensation, benefits or
perquisites of any kind, including executive compensation, deferred
compensation, stock ownership, stock purchase, stock option, restricted stock,
performance share, bonus and other incentive plans, pension, profit sharing,
savings, thrift or retirement plans, employee stock ownership plans, life,
health, dental and disability plans, vacation, severance pay, sick leave or
dependent care plans, any cafeteria or tuition reimbursement plans and any
"employee benefit plans" within the meaning of Section g(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (whether or not
subject to ERISA), all employment, severance, golden parachute or similar
agreements (individually, an "EMPLOYEE BENEFIT PLAN" and collectively, the
"EMPLOYEE BENEFIT PLANS"), currently or within the past six years maintained
by, contributed by or with respect to which an obligation to contribute exists
on the part of the Company or any of its trades or businesses, whether or not
incorporated, which, together with the Company, is treated as a single
employer under Section 414 of the Code (collectively, "ERISA AFFILIATES"), or
with respect to which the Company or any ERISA Affiliate may have any
liability or obligation (direct, indirect, contingent or otherwise) to any
employee, former employee, director or former director (or any of their
dependents or beneficiaries) of the Company or any of its Subsidiaries or to
any governmental entity. There have been delivered to Parent complete and
correct copies of all written Employee Benefit Plans and any related trust
agreements, insurance and other contracts and other funding arrangements,
written descriptions of all unwritten Employee Benefit Plans, the current
summary plan descriptions and current summaries of material modifications
relating to each Employee Benefit Plan, the two most recent Forms 5500
required to have been filed with any appropriate government agency with
respect to each Employee Benefit Plan, the most recent favorable determination
letter issued for each Employee Benefit Plan and related trust that is
intended to satisfy the qualification requirements of sections 401(a) and
501(a) of the Code (and the latest IRS form 5300 or 5307, whichever is
applicable, filed with the IRS for each such Employee Benefit Plan), and all
collective bargaining agreements pursuant to which an Employee Benefit Plan is
maintained or contributions to an Employee Benefit Plan are or have been made.


                                      -12-

<PAGE>

                  (b)     No Employee Benefit Plan is, a "DEFINED BENEFIT
PLAN" within the meaning of section 3(35) of ERISA to which ERISA applies
applicable to or a plan to which the funding requirements of Section 412 of
the Code or 302 of ERISA and neither the Company nor any ERISA Affiliate has
or could have any liability with respect to any such plan. Neither the Company
nor any ERISA Affiliate has ever contributed to, or withdrawn in a complete or
partial withdrawal from, any multi-employer plan (within the meaning of
Subtitle E of Title IV of ERISA) or incurred contingent liability under
Section 4204 of ERISA. No Employee Benefit Plan provides for medical or health
benefits (through insurance or otherwise) to individuals other than current
employees of the Company (or spouses and dependents of such employees), except
to the extent necessary to comply with "APPLICABLE BENEFITS LAW" (including,
without limitation, section 4980B of the Code), and there has been no
communication to any person that could reasonably be expected to promise or
guarantee any employee, former employee (or any spouse, dependent or domestic
partner of any employee or former employee) any retiree medical, life or other
retiree benefits. "Applicable Benefits Law" refers to the legal requirements
(whether imposed by common law, statue or regulation or otherwise) applicable
to employee benefit plans sponsors thereof or their affiliates, services
providers thereto or fiduciaries thereof or their affiliates or parties
related thereto or their affiliates by the United States or any political
subdivision thereof (including any requirements enforced by the IRS with
respect to employee benefit plans intended to confer tax benefits on the
Company or any of its employees).

                  (c)     Each Employee Benefit Plan (and each related trust,
insurance contract and fund) is in compliance in all material respects in form
and in operation with all applicable requirements of Applicable Benefits Law
(including ERISA and the Code), and is being administered in all material
respects in accordance with all relevant plan documents to the extent
consistent with Applicable Benefits Law. There has been no prohibited
transaction with respect to any Employee Benefit Plan which would result in
the imposition of any material unpaid excise tax. No Employee Benefit Plan is
under investigation or audit by the Department of Labor or Internal Revenue
Service other than as part of a routine tax audit of the Company. There are no
legal actions or suits pending or, to the best of the knowledge of the Company
and each of the Company Shareholders, threatened against or with respect to
any Employee Benefit Plan or the assets of any such Employee Benefit Plan or
against any fiduciary of any such Employee Benefit Plan and the Company has no
knowledge of any facts that could give rise to any such actions. There has
been full compliance in all material respects with the notice and continuation
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I
of ERISA, and the requirement of Part 7 of Subtitle B of Title I of ERISA and
Section 9801, ET. seq. of the Code applicable to any Employee Benefit Plan. No
event has occurred or reasonably is expected to occur as a result of which the
Company or any ERISA Affiliate, directly or indirectly, could be subject to
any material Liability (including under any indemnity or hold harmless
agreement) under ERISA or the Code or any other Applicable Benefits Law,
including, without limitation, Section 4971, 4975 or 4976 of the Code or
Sections 406, 409, 502(i) and 502(l) of the Code.

                  (d)     Except as provided in Section 2.14(d) of the
Company Disclosure Statement, no provision of any Employee Benefit Plan
becomes effective in the event of a change in control of the employer
maintaining such Employee Benefit Plan. The Company has not agreed to or has
not announced any plan or commitment (whether or not legally binding) to
create any new employee benefit plan or, with respect to any existing Employee
Benefit Plan, to increase the benefits or change in employee coverage in an
amount that could increase the expense of maintaining such Employee Benefit
Plan or to terminate any Employee Benefit Plan. No provision of any Employee
Benefit Plan prohibits the employer maintaining it from amending or
terminating such Employee Benefit Plan at any time and to the fullest extent
that law permits. Except as provided in Section 2.14(d) of the Company
Disclosure Schedule, the consummation of the Merger or any other transaction
contemplated by this Agreement, either alone or in combination of any other
event, will not (i) result in an increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any benefits or
compensation payable under any Employee Benefit Plan in respect of any
employee or former employee of the Company, (ii) entitle any such current or
former employee to any benefits or payment, or (iii) result in any "Parachute
Payment" under Section 280 G of the Code, whether or not such payment is
considered reasonable compensation for services rendered. No employee or
former employee of the Company will be entitled to any severance benefits
under the terms of any Employee Benefit Plan solely by reason of the
consummation of the Merger or any other transaction contemplated by this
Agreement.


                                      -13-

<PAGE>

                  (e)     No leased employee (within the meaning of section
414(n) or (o) of the Code) performs any services for the Company.

                  (f)     An Employee Benefit Plan does not own or is not
entitled to receive any of the capital stock of the Company.

                  (g)     Except as set forth in Section 2.14(g) of the
Company Disclosure Schedule, there are no material liabilities, whether
absolute or contingent, of the Company relating to workers compensation
benefits that are not fully insured against by a BONA FIDE third-party
insurance carrier. Except as set forth in Section 2.14(g) of the Company
Disclosure Schedule, with respect to each workers' compensation arrangement
that is funded wholly or partially through an insurance policy or public or
private fund, all premiums required to have been paid to date under the
insurance policy or fund have been paid, all premiums required to be paid
under the insurance policy or fund through the Closing Date will have been
paid on or before the Closing Date and, as of the Closing Date, there will be
no material liability of the Company under any such insurance policy, fund or
ancillary agreement with respect to such insurance policy or fund in the
nature of a retroactive rate adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date.

                  SECTION 2.15 TITLE TO PROPERTIES. Except as set forth in
Section 2.15 of the Company Disclosure Schedule, the Company has good and
indefeasible title to all of its properties and assets, free and clear of all
Encumbrances, except liens for taxes not yet due and payable and such
Encumbrances or other imperfections of title, if any, as do not materially
detract from the value of or interfere with the present use of the property
affected thereby or which could not reasonably be expected to have a Material
Adverse Effect, and except for Encumbrances which secure indebtedness
reflected in the Company Balance Sheet.

                  SECTION 2.16 COMPLIANCE WITH LAWS; LEGAL PROCEEDINGS. (a)
The Company is not in violation of, or in default with respect to, any
applicable law, statute, regulation, ordinance, writ, injunction, order,
judgment, decree or any Governmental License, including any federal state or
local law regarding or relating to trespass or violations of privacy rights,
which violation or default could reasonably be expected to have a Material
Adverse Effect.

                  (b)     Except as set forth in Section 2.16(b) of the
Company Disclosure Schedule, there is no order, writ, injunction, judgment or
decree outstanding and no legal, administrative, arbitration or other
governmental proceeding or investigation pending or, to the best of the
knowledge of the Company and each of the Company Shareholders, threatened, and
there are no claims (including unasserted claims of which the Company is
aware) against or relating to the Company or any of its properties, assets or
businesses. There is no legal, administrative or other governmental proceeding
or investigation pending or, to the best of the knowledge of the Company and
each of the Company Shareholders, threatened against the Company, or any of
its directors or officers, as such, that relates to this Agreement, the Merger
or any of the transactions contemplated hereby. None of the items listed in
Section 2.16(b) of the Company Disclosure Schedule could reasonably be
expected to have a Material Adverse Effect. The Company has not been a
defendant (either originally, by counter-claim or impleading) in any legal
proceedings which have either been filed in the past two (2) fiscal years or
are currently pending (all as set forth in Section 2.16(b) of the Company
Disclosure Schedule). Except as set forth in Section 2.16(b) of the Company
Disclosure Schedule, none of the legal proceedings set forth in Section
2.16(b) of the Company Disclosure Schedule has had or, to the best of the
knowledge of the Company and each of the Company Shareholders, will have a
Material Adverse Effect.

                  SECTION 2.17 BROKERS. No broker, finder or investment
advisor acted, directly or indirectly, as such for the Company or any
shareholder of the Company in connection with this Agreement or the Merger,
and no broker, finder, investment advisor or other Person is entitled to any
fee or other commission, or other remuneration, in respect thereof based in
any way on any action, agreement, arrangement or understanding taken or made
by or on behalf of the Company or any shareholder of the Company.

                  SECTION 2.18 INTELLECTUAL PROPERTY. (a) The Company owns, or
is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications


                                      -14-

<PAGE>
therefor, technology, know-how, computer software programs or applications,
and tangible or intangible proprietary information or material that are used
in the business of the Company as currently conducted, except as would not
reasonably be expected to have a Material Adverse Effect.

                  (b)     Except as disclosed in Section 2.18(b) of the
Company Disclosure Schedule or as could not reasonably be expected to have a
Material Adverse Effect: (i) The Company is not, nor will it be as a result of
the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any patents, trademarks, service marks or
copyrights owned by others ("COMPANY THIRD-PARTY INTELLECTUAL PROPERTY
RIGHTS"); (ii) No claims with respect to the patents, registered and material
unregistered trademarks and service marks, registered copyrights, trade names
and any applications therefor owned by the Company (the "COMPANY INTELLECTUAL
PROPERTY RIGHTS"), any trade secret material to the Company, or Company Third
Party Intellectual Property Rights to the extent arising out of any use,
reproduction or distribution of Company Third Party Intellectual Property
Rights by or through the Company, are currently pending or, to the best of the
knowledge of the Company and each of the Company Shareholders, have been
threatened by any Person; or (iii) The Company does not know of any valid
grounds for any BONA FIDE claims (1) to the effect that the sale, licensing or
use of any product or service as now sold, licensed or used, or proposed for
sale, license or use by the Company infringes on any copyright, patent,
trademark, service mark or trade secret; (2) against the use by the Company of
any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business
of the Company as currently conducted or as proposed to be conducted; (3)
challenging the ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to the Company; or
(4) challenging the license or legally enforceable right to use of Company
Third Party Intellectual Rights by the Company.

                  (c)     To the best of the knowledge of the Company and each
of the Company Shareholders, there is no material unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former employee of the
Company.

                  SECTION 2.19 INSURANCE. Except as set forth in Section 2.19
of the Company Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and other insurance
policies maintained by the Company are with reputable insurers, provide
adequate coverage for all normal risks incident to the Company's assets,
properties and business operations and are in character and amount at least
equivalent to that carried by Persons engaged in a business subject to the
same or similar perils or hazards.

                  SECTION 2.20 CONTRACTS; ETC. (a) Set forth on Section 2.20
of the Company Disclosure Schedule is a complete and correct list of each of
the following agreements, leases and other instruments, both oral and written,
to which the Company is a party or by which Company or its properties or
assets are bound:

                  (i)     each service or other similar type of agreement under
         which services are provided by any other Person to the Company which
         is material to the business of the Company taken as a whole;

                  (ii)    each agreement that restricts the operation of the
         business of the Company or the ability of the Company to solicit
         customers or employees;

                  (iii)   each operating lease (as lessor, lessee, sublessor or
         sublessee) that is material to the Company taken as a whole of any
         real or tangible personal property or assets;

                  (iv)    each agreement under which services are provided by
         the Company to any material customer;

                  (v)     each agreement (including capital leases) under which
         any money has been or may be borrowed or loaned or any note, bond,
         indenture or other evidence of indebtedness has been issued or assumed
         (other than those under which there remain no ongoing obligations of
         the Company), and each guaranty of any

                                      -15-

<PAGE>

         evidence of indebtedness or other obligation, or of the net worth, of
         any Person (other than endorsements for the purpose of collection in
         the ordinary course of business);

                  (vi)    each partnership, joint venture or similar agreement;

                  (vii)   each agreement containing restrictions with respect
         to the payment of dividends or other distributions in respect of the
         Company's capital stock;

                  (viii)  each agreement to make unpaid capital expenditures in
         excess of $25,000;

                  (ix)    each agreement providing for accelerated or special
         payments as a result of the Merger, including any shareholder rights
         plan or other instrument commonly referred as a "poison pill."

A complete and correct copy of each written agreement, lease or other type of
document, and a true, complete and correct summary of each oral agreement,
lease or other type of document, required to be disclosed pursuant to this
Section 2.20(a) has been previously delivered to Parent.

                  (b)     Each agreement, lease or other type of document
required to be disclosed pursuant to Sections 2.13, 2.14 or 2.20(a) to which
the Company is a party or by which the Company or its properties or assets are
bound (collectively, the "COMPANY CONTRACTS"), except those Company Contracts
the loss of which could reasonably be expected to not have a Material Adverse
Effect, is valid, binding and in full force and effect and is enforceable by
the Company in accordance with its terms. The Company is not (with or without
the lapse of time or the giving of notice, or both) in breach of or in default
under any of the Company Contracts, and, to the best of the knowledge of the
Company and each of the Company Shareholders, no other party to any of the
Company Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach of or in default under any of the Company
Contracts, where such breach or default could reasonably be expected to have a
Material Adverse Effect. No existing or completed agreement to which the
Company is a party is subject to renegotiation with any governmental body.

                  SECTION 2.21 PERMITS, AUTHORIZATIONS, ETC. Section 2.21 of
the Company Disclosure Schedule sets forth all Governmental Licenses and each
other material approval, authorization, consent, license, certificate, order
or other permit of any governmental agencies, whether federal, state, local or
foreign, necessary to enable the Company to own, operate and lease its
properties and assets as and where such properties and assets are owned,
leased or operated and to provide service and carry on its business as
presently provided and conducted (collectively, the "COMPANY PERMITS") or
required to permit the continued conduct of such business following the Merger
in the manner conducted on the date of this Agreement (indicating in each case
whether or not the consent of any Person is required for the consummation of
the transactions contemplated hereby). The Company has all necessary Company
Permits of all governmental agencies, whether federal, state, local or
foreign, all of which are valid and in good standing with the issuing agencies
and not subject to any proceedings for suspension, modification or revocation,
except for such Company Permits which could not reasonably be expected to have
a Material Adverse Effect.

                  SECTION 2.22 ENVIRONMENTAL MATTERS. (a) For purposes of this
Agreement, the capitalized terms defined below shall have the meanings
ascribed to them below.

                  (i)     "ENVIRONMENTAL CLAIM" means any accusation,
         allegation, notice of violation, action, claim, lien, demand,
         abatement or other order or direction (conditional or otherwise) by
         any governmental agency or entity or any other Person for personal
         injury (including sickness, disease or death), tangible or intangible
         property damage, damage to the environment, nuisance, pollution,
         contamination or other adverse effects an the environment, or for
         fines, penalties or restrictions resulting from or based upon (a) the
         existence, or the continuation of the existence, of a Release
         (including, without limitation, sudden or non-sudden accidental or
         non-accidental Releases) of, or exposure to, any Hazardous Substance,
         odor or audible noise in, into or onto the environment (including,
         without limitation, the air, soil, surface water or groundwater) at,
         in, by, from or


                                      -16-

<PAGE>

         related to any property owned, operated or leased by the Company or
         any activities or operations thereof; (b) the transportation,
         storage, treatment or disposal of Hazardous Substances in connection
         with any property owned, operated or leased by the Company or its
         operations or facilities; or (c) the violation, or alleged violation,
         of any Environmental Law or Environmental Permit of or from any
         governmental agency or entity relating to environmental matters
         connected with any property owned, leased or operated by the Company.

                  (ii)    "ENVIRONMENTAL LAW(S)" means all federal, state or
         local law (including common law), statute, ordinance, rule,
         regulation, code, or other requirement relating to the environment,
         natural resources, or public or employee health and safety and
         includes, but is not limited to the Comprehensive Environmental
         Response Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss.
         9601 eT Seq., the Hazardous Materials Transportation Act, 49 U.S.C.
         ss. 1801 eT Seq., The Resource Conservation and Recovery Act
         ("RCRA"), 42 U.S.C. ss. 6901 eT Seq., the Clean Water Act, 33 U.S.C.
         Section ss. 1251 ET seq., the Clean Air Act, 33 U.S.C. ss. 2601 ET
         SEQ., the Toxic Substances Control Act, 15 U.S.C. ss. 2601 eT Seq.,
         the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 eT Seq., and the
         Occupational Safety and Health Act, 29 U.S.C. ss. 651 ET seq., as
         such laws have been amended or supplemented, and the regulations
         promulgated pursuant thereto, and all analogous state or local
         statutes and any applicable transfer statutes.

                  (iii)   "ENVIRONMENTAL PERMITS" means all approvals,
         authorizations, consents, permits, licenses, registrations and
         certificates required by any applicable Environmental Law.

                  (iv)    "HAZARDOUS SUBSTANCE(S)" means, without limitation,
         any flammable explosives, radioactive materials, urea formaldehyde
         foam insulation, polychlorinated biphenyls, petroleum and petroleum
         products (including but not limited to waste petroleum and petroleum
         products), methane, hazardous materials, hazardous wastes,
         pollutants, contaminants and hazardous or toxic substances, as
         defined in or regulated under any applicable Environmental Laws.

                  (v)     "RELEASE" means any past or present spilling,
         leaking, pumping, pouring, emitting, emptying, discharging,
         injecting, escaping, leaching, dumping or disposing of a Hazardous
         Substance into the Environment.

                  (b)     The Company has obtained all Environmental Permits
required for its businesses and facilities except for such Environmental
Permits the failure of which to obtain could not reasonably be expected to
have a Material Adverse Effect. The Company (i) is in compliance with all
terms and conditions of their Environmental Permits and of any applicable
Environmental Law, except for such failure to be in compliance that could not
reasonably be expected to have Material Adverse Effect; (ii) has not received
notice of any violation by or claim against the Company under any
Environmental Law; and (iii) is not aware of any facts or circumstances
related to their businesses and facilities likely to give rise to an
Environmental Claim that could reasonably be expected to have a Material
Adverse Effect.

                  (c)     There have been no Releases, or threatened Releases
of any Hazardous Substances into, on or under any of the properties owned or
operated (or formerly owned or operated) by the Company in any case in such a
way as to create any liability (including the costs of investigation and
remediation) under any applicable Environmental Law that could reasonably be
expected to have a Material Adverse Effect.

                  (d)     The Company has not been identified as a potentially
responsible party at any federal or state National Priority List ("SUPERFUND")
site, and the Company has not transported, disposed of, or arranged for the
disposal of any Hazardous Substances.

                  SECTION 2.23 COMPANY ACQUISITIONS. Section 2.23 of the
Company Disclosure Schedule hereto contains a complete and correct list of all
agreements ("COMPANY ACQUISITION AGREEMENTS") executed by the Company pursuant
to which the Company has acquired or agreed to acquire all or any part of the
stock or assets (including any

                                      -17-

<PAGE>

customer list) of any Person. A complete and correct copy of each of the
Company Acquisition Agreements has been delivered to Parent. The Company does
not have any further obligation or liability under any of the Company
Acquisition Agreements or as a result of the transactions provided for
therein, except as described in reasonable detail in Section 2.23 of the
Company Disclosure Schedule.

                  SECTION 2.24 BOOKS AND RECORDS. All accounts, books, ledgers
and official and other records prepared and kept by the Company have been kept
and completed in all material respects, and there are no material inaccuracies
or discrepancies contained or reflected therein. Such records of the Company
are located at the Company's offices in Norman, Oklahoma.

                  SECTION 2.25 INTERESTED PARTY TRANSACTIONS. Except as set
forth in Section 2.25 of the Company Disclosure Schedule, since January 1,
1998, no event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-B
promulgated by the United States Securities and Exchange Commission.

                  SECTION 2.26 OPINION OF FINANCIAL ADVISOR. The Company has
not been advised by a financial advisor regarding, as of the date hereof, the
fairness of the Exchange Ratio from a financial point of view of the Company
Shareholders.

                  SECTION 2.27 PROXY OR INFORMATION STATEMENT. The information
supplied by the Company with respect to the Company and its officers,
directors, stockholders and other Affiliates (collectively, the "COMPANY
INFORMATION") for inclusion in the Proxy or Information Statement (as defined
in Section 5.1) to be sent to the stockholders of Parent in connection with
the meeting of the stockholders of Parent to consider the Merger (the "PARENT
SHAREHOLDERS MEETING") will not, on the date the Proxy Information Statement
(or any amendment thereof or supplement thereto) is first mailed to Parent's
shareholders or at the time of the Parent Shareholders Meeting, contain any
statement which, at such time and in light of the circumstances under which it
shall be made, is false or misleading. If at any time prior to the Effective
Time any event relating to the Company or any of its officers, directors,
shareholders or other Affiliates should be discovered by the Company which
should be set forth in an amendment to the Proxy or Information Statement, the
Company shall promptly inform Parent. The Proxy or Information Statement shall
comply in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"). Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Merger Sub which is contained or
incorporated by reference in, or furnished in connection with the preparation
of, the Proxy or Information Statement.

                  SECTION 2.28 BANK ACCOUNTS AND POWERS OF ATTORNEY. Section
2.28 of the Company Disclosure Schedule sets forth the name of each bank in
which the Company have an account, lock box or safe deposit box, the number of
each such account, lock box or safe deposit box and the names of the Persons
authorized to draw thereon or have access thereto. Except as set forth on
Section 2.28 of the Company Disclosure Schedule, no Person holds any power of
attorney from the Company.

                  SECTION 2.29 CERTAIN PAYMENTS. Neither the Company nor any
director, officer, agent, or employee thereof, or to the knowledge of the
Company and each of the Company Shareholders, any other Person associated with
or acting for or on behalf of the Company, has directly or indirectly (a) made
any contribution, gift, bribe, rebate, payoff, influence payment, kickback or
other payment to any Person, private or public, regardless of form, whether in
money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any affiliate of the Company, or (iv) in
violation of any legal requirement, or (b) established or maintained any fund
or asset that has not been recorded in the books and records of the Company.

                  SECTION 2.30 CUSTOMERS; CUSTOMER RELATIONSHIPS. Section 2.30
of the Company Disclosure Schedule sets forth a complete list of the 10
largest clients and customers of the Company in each of the years ended


                                      -18-

<PAGE>

December 31, 1999 and 1998, including the amounts they paid to the Company in
such years. To the knowledge of the Company and each of the Company
Shareholders, there are no facts or circumstances that are likely to result in
the loss of any such client or customer of the Company or a material change in
the relationship of the Company with any such client or customer.

                                   ARTICLE III

                        REPRESENTATIONS AND WARRANTIES OF
                              PARENT AND MERGER SUB


                  Parent and Merger Sub, jointly and severally, hereby
represent and warrant to the Company that, except as set forth in the written
disclosure schedule delivered by Parent to the Company (the "PARENT DISCLOSURE
SCHEDULE"):

                  SECTION 3.1 CORPORATE ORGANIZATION. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma and has all requisite
corporate power and authority to own, operate and lease its properties and
assets as and where the same are owned, operated or leased and to conduct its
business as it is now being conducted. Each of Parent and Merger Sub is in
good standing and duly qualified or licensed as a foreign corporation to do
business in those jurisdictions in which the location of the property and
assets owned, operated or leased by Parent or Merger Sub or the nature of the
business conducted by Parent or Merger Sub makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
could not reasonably be expected to have a Material Adverse Effect. Parent has
heretofore delivered to the Company complete and correct copies of the
Certificate of Incorporation and Bylaws of Parent and Merger Sub, as amended
to and as in effect on the date hereof.

                  SECTION 3.2 CAPITALIZATION. (a) The authorized capital stock
of Parent consists of 8,000,000 shares of Parent Common Stock, par value $0.01
per share and 2,000,000 shares of Parent Preferred Stock, par value $1.00 per
share. As of the date hereof, 2,350,000 shares of Parent Common Stock and no
shares of Parent Preferred Stock are issued and outstanding.

                  (b)     All outstanding shares of Parent Common Stock are
validly issued and outstanding, fully paid and non-assessable and there are no
preemptive or similar rights in respect of Parent Common Stock. All
outstanding shares of Parent Common Stock were issued in compliance with all
requirements of all applicable federal and state securities laws.

                  (c)     Section 3.2 of the Parent Disclosure Schedule sets
forth a complete and correct list of (i) all stock options, including stock
options granted under any Parent stock option plan, (ii) all warrants to
purchase Parent Common Stock indicating as to each holder thereof, and (iii)
and other rights to receive Parent Common Stock indicating as to each holder
thereof, the number of shares of Parent Common Stock subject thereto and the
exercisability, exercise price and termination date therefor, if applicable.

                  SECTION 3.3 SUBSIDIARIES. (a)  Merger Sub is the only
subsidiary of Parent.

                  (b)     Except as set forth in Section 3.3(b) of the Parent
Disclosure Schedule, Parent or Merger Sub has good and valid title to all such
shares free and clear of all Encumbrances. All of the outstanding shares of
capital stock of Merger Sub are validly issued, fully paid and non-assessable,
and there are no preemptive or similar rights in respect of any shares of
capital stock of Merger Sub.

                  SECTION 3.4 NO COMMITMENTS TO ISSUE CAPITAL STOCK. Except
for the Stock Options and the Warrants and as set forth in Section 3.4 of the
Parent Disclosure Schedule, there are no outstanding options, warrants,


                                      -19-

<PAGE>

calls, convertible securities or other rights, agreements, commitments or
other instruments pursuant to which the Company or any of its Subsidiaries is
or may become obligated to authorize, issue or transfer any shares of its
capital stock or any other equity interest. Except as set forth in Section 3.4
of the Parent Disclosure Schedule, there are no agreements or understandings
in effect among any of the stockholders of the Company or any such Subsidiary
or with any other Person and by which the Company or any such Subsidiary is
bound with respect to the voting, transfer, disposition or registration under
the Securities Act of any shares of capital stock of the Company or any of its
Subsidiaries.

                  SECTION 3.5 AUTHORIZATION; EXECUTION AND DELIVERY. Parent
and Merger Sub each has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. The
execution, delivery and performance of this Agreement by Parent and Merger Sub
and the consummation by Parent or Merger Sub of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of Parent and Merger Sub. This Agreement has been duly executed and delivered
by Parent and Merger Sub and constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub
in accordance with its terms. The shares of Parent Common Stock and Parent
Preferred Stock to be issued as part of the Merger Consideration have been
duly reserved and authorized for issuance upon consummation of the Merger and
when issued pursuant to and in accordance with this Agreement will be duly
authorized, validly issued, fully paid and non-assessable shares of Parent
Common Stock and Parent Preferred Stock.

                  SECTION 3.6 GOVERNMENTAL APPROVALS AND FILINGS. No approval,
authorization, consent, license, clearance or order of, declaration or
notification to, or filing or registration with, any governmental or
regulatory authority is required in order (a) to permit Parent or Merger Sub
to consummate the Merger or perform its obligations under this Agreement or
(b) to prevent the termination of, or materially and adversely affect, any
Governmental License of Parent or any of its Subsidiaries to enable Parent and
its Subsidiaries to own, operate and lease their properties and assets as and
where such properties and assets are owned, leased or operated and to provide
its services or carry on its business, or to prevent any material loss or
disadvantage to Parent's business, by reason of the Merger, except for (i)
filing and recording of the Certificate of Merger as required by the OGCA and
(ii) as set forth in Section 3.6 of the Parent Disclosure Schedule.

                  SECTION 3.7 NO CONFLICT. Subject to compliance with any
Governmental Licenses described in Section 3.7 of the Parent Disclosure
Schedule and obtaining the Private Consents, neither the execution, delivery
and performance of this Agreement by Parent or Merger Sub, nor the
consummation by Parent or Merger Sub of the transactions contemplated hereby,
will (i) conflict with, or result in a breach or violation of, any provision
of the Certificate of Incorporation (or similar organizational document) or
Bylaws of Parent or Merger Sub; (ii) conflict with, result in a breach or
violation of, give rise to a default, or result in the acceleration of
performance, or permit the acceleration or performance, under (whether or not
after the giving of notice or lapse of time or both) any Encumbrance, note,
bond, indenture, guaranty, lease, license, agreement or other instrument,
writ, injunction, order, judgment or decree to which Parent or Merger Sub or
any of their respective properties or assets is subject; (iii) give rise to a
declaration or imposition of any Encumbrance upon any of the properties or
assets of Parent or Merger Sub; or (iv) impair Parent's business or adversely
affect any Governmental License necessary to enable Parent and Merger Sub to
carry on their business as presently conducted, except, in the cases of
clauses (ii), (iii) or (iv), for any conflict, breach, violation, default,
declaration, imposition or impairment that could not reasonably be expected to
have a Material Adverse Effect.

                  SECTION 3.8 SEC FILINGS. The Parent Common Stock is the only
class or securities of Parent registered under the Exchange Act. Parent has
filed all forms, reports or other documents required to be filed with the SEC
(the "PARENT SEC REPORTS") since its initial public offering of the Parent
Common Stock on February 8, 2000. The Parent SEC Reports (i) were prepared in
accordance, and complied as of their respective dates in all material
respects, with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Parent has filed with the SEC as exhibits to
the Parent SEC Reports all agreements, contracts and other


                                      -20-

<PAGE>

documents or instruments required to be so filed, and such exhibits are
correct and complete copies of such agreements, contracts and other documents
or instruments. Merger Sub is not required to file any forms, reports or other
documents with the SEC under the Exchange Act.

                  SECTION 3.9 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED
LIABILITIES. (a) Parent has heretofore delivered to the Company complete and
correct copies of the following financial statements (collectively, the
"PARENT FINANCIAL STATEMENTS"), all of which have been prepared from the books
and records of Parent in accordance with GAAP consistently applied and
maintained throughout the periods indicated (except as may be indicated in the
notes thereto) and fairly present in all material respects the financial
condition of Parent as at their respective dates and the results of the
Parent's operations and cash flows for the periods covered thereby:

                                    (i)    unaudited balance sheet (the "PARENT
                  BALANCE SHEET") of Parent as of December 31, 1999 (the
                  "PARENT BALANCE SHEET DATE") and statement of income for the
                  year then ended.

Such statements of income do not contain any items of special or nonrecurring
revenue or income or any revenue or income not earned in the ordinary course
of business, except as expressly specified therein.

                  (b)     Except as and to the extent reflected or reserved
against on the Parent Balance Sheet, and except for liabilities which will not
have a Material Adverse Effect, Parent did not have, as of the Parent Balance
Sheet Date, any liabilities, debts or obligations (whether absolute, accrued,
contingent or otherwise) of any nature that would be required as of such date
to have been included on a balance sheet prepared in accordance with GAAP.
Since the Parent Balance Sheet Date, Parent has not incurred or suffered to
exist any liability, debt or obligation (whether absolute, accrued, contingent
or otherwise), except liabilities, debt and obligations incurred in the
ordinary course of business, consistent with past practice, none of which will
have a Material Adverse Effect or incurred in connection with this Agreement
and the transactions contemplated herein. Other than the transactions
contemplated by this Agreement, since the Parent Balance Sheet Date, there has
been no material adverse change in the business, operations, assets (including
intangible assets), condition (financial or otherwise), liabilities or results
of operations of Parent, taken as a whole, and no event has occurred which is
reasonably likely to cause any such material adverse change.

                  SECTION 3.10 CERTAIN OTHER FINANCIAL REPRESENTATIONS. Since
the Parent Balance Sheet Date, the Parent's accounts payable have been accrued
and paid in a manner consistent with the Parent's prior practice.

                  SECTION 3.11 ABSENCE OF CHANGES. Except as disclosed in the
Parent Financial Statements or as set forth in Section 3.11 of the Parent
Disclosure Schedule, since December 31, 1999, Parent has conducted its
business only in the ordinary course and Parent has not:

                  (a)     amended or otherwise modified its Certificate of
Incorporation or Bylaws (or similar organizational document);

                  (b)     issued or sold or authorized for issuance or sale,
or granted any options or warrants or amended or modified in any respect of
any previously granted option or warrant or made other agreements (other than
this Agreement) of the type referred to in Section 3.4 with respect to, any
shares of its capital stock or any other of its securities, or altered any
term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or other ownership interests or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares, stock dividend
or otherwise or redeemed, purchased or otherwise acquired any of its or its
parent's capital stock or agreed to do any of the foregoing (whether or not
legally enforceable);

                  (c)     recorded or accrued any item of revenue, except as a
result of the provision of services in the ordinary course of business and
consistent with prior practice;


                                      -21-

<PAGE>


                  (d)     incurred any indebtedness for borrowed money,
entered into any lease that should be capitalized in accordance with GAAP or
subjected to any Encumbrance or other restriction any of its properties,
business or assets except Encumbrances or other restrictions that could not
reasonably be expected to have a Material Adverse Effect;

                  (e)     discharged or satisfied any Encumbrance, or paid any
obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due, other than current liabilities shown on Parent's
consolidated balance sheet as of December 31, 1999 and current liabilities
incurred since that date in the ordinary course of business and consistent
with prior practice;

                  (f)     sold, transferred, leased to others or otherwise
disposed of any material properties or assets or purchased, leased from others
or otherwise acquired any material properties or assets except in the ordinary
course of business;

                  (g)     canceled or compromised any debt or claim or waived
or released any right of substantial value;

                  (h)     terminated or received any notice of termination of
any contract, lease, license or other agreement or any Governmental License,
or suffered any damage, destruction or loss (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect;

                  (i)     made any change in the rate of compensation,
commission, bonus or other remuneration payable, or paid, agreed, or promised
(in writing or otherwise) to pay, provide or modify, conditionally or
otherwise, any bonus, extra compensation, pension, severance or vacation pay
or any other benefit or perquisite of any other kind, to any director,
officer, employee, salesman or agent of the Company or any of its Subsidiaries
except in the ordinary course of business consistent with prior practice and
pursuant to or in accordance with plans disclosed in Section 3.11(a) of the
Parent Disclosure Schedule that were in effect as of December 31, 1999;

                  (j)     made any increase in or commitment (whether or not
legally enforceable) to increase or communicated any intention to increase any
employee benefits, adopted or made any commitment to adopt any additional
employee benefit plan or made any contribution, other than regularly scheduled
contributions, to any Employee Benefit Plan (as defined in Section 2.14(a));

                  (k)     lost the employment services of a senior manager or
other employee of equal or higher ranking;

                  (l)     made any loan or advance to any Person other than
travel and other similar routine advances in the ordinary course of business
consistent with past practice, or acquired any capital stock or other
securities of any other corporation or any ownership interest in any other
business enterprise;

                  (m)     instituted, settled or agreed to settle any material
litigation, action or proceeding before any court or governmental body
relating to Parent or its properties or assets;

                  (n)     entered into any transaction, contract or commitment
other than in the ordinary course of business;

                  (o)     changed any accounting practices, policies or
procedures utilized in the preparation of Parent Financial Statements
(including procedures with respect to revenue recognition, payment of accounts
payable or collection of accounts receivable); or

                  (p)     entered into any agreement or made any commitment to
take any of the types of action described in subparagraphs (a) through (o) of
this Section 3.11.


                                      -22-

<PAGE>

                  SECTION 3.12 TAX MATTERS. (a) Parent represents that, other
than as disclosed in Section 3.12(a) of the Parent Disclosure Schedule, Parent
has timely filed all United States federal income Tax Returns and all other
material Tax Returns required to be filed by it. All such Tax Returns are
complete and correct in all material respects (except to the extent a reserve
has been established as reflected in the Parent Balance Sheet). Parent has
timely paid and discharged all Taxes due in connection with or with respect to
the periods or transactions covered by such Tax Returns and have paid all
other Taxes as are due, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are
required), and there are no other Taxes that would be due if asserted by a
taxing authority, except with respect to which Parent is maintaining reserves
unless the failure to do so could not have a Material Adverse Effect. Except
as does not involve or would not result in liability to Parent that could have
a Material Adverse Effect, (i) there are no tax liens on any assets of Parent;
(ii) Parent has not granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax; (iii)
no unpaid (or unreserved) deficiencies for Taxes have been claimed, proposed
or assessed by any taxing or other governmental authority with respect to
Parent; (iv) there are no pending or threatened audits, investigations or
claims for or relating to any liability in respect of Taxes of Parent; and (v)
Parent has not requested any extension of time within which to file any
currently unfiled Tax Returns. The accruals and reserves for Taxes (including
deferred taxes) reflected in the Parent Balance Sheet are in all material
respects adequate to cover all Taxes accruable through the date thereof
(including Taxes being contested) in accordance with GAAP.

                  (b)     Parent represents that, other than as disclosed in
Section 3.12(b) of Parent Disclosure Schedule and other than with respect to
items the inaccuracy of which could not have a Material Adverse Effect: (i)
Parent has not filed or been included in a combined, consolidated or unitary
return (or substantial equivalent thereof) of any Person other than Parent;
(ii) Parent is not liable for Taxes of any Person other than Parent, or
currently under any contractual obligation to indemnify any Person with
respect to Taxes, or a party to any tax sharing agreement or any other
agreement providing for payments by Parent with respect to Taxes; (iii) Parent
is not a party to any joint venture, partnership or other arrangement or
contract which could be treated as a partnership for United States federal
income tax purposes; (iv) Parent is not a party to any agreement, contract,
arrangement or plan that would result (taking into account the transactions
contemplated by this Agreement), separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G
of the Code; (v) Parent is not a "consenting corporation" under Section 341(f)
of the Code or any corresponding provision of state, local or foreign law; and
(vi) Parent has not made an election or is required to treat any of its assets
as owned by another Person for federal income tax purposes or as tax-exempt
bond financed property or tax-exempt use property within the meaning of
Section 168 of the Code (or any corresponding provision of state, local or
foreign law).

                  SECTION 3.13 RELATIONS WITH EMPLOYEES. (a) Except as set
forth in Section 3.13 of the Parent Disclosure Schedule:

                          (i)      Parent has satisfactory relationships with
their employees in all material respects.

                          (ii)     Parent is and has been in compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours, including any law, rule or
regulation relating to discrimination, fair labor standards and occupational
health and safety, wrongful discharge or violation of the personal rights of
employees, former employees or prospective employees, and Parent is not or has
not engaged in any unfair labor practices, except to the extent a failure to
so comply could not, alone or together with any other failure, have a Material
Adverse Effect.

                          (iii)    No collective bargaining agreement with
respect to the business of Parent is currently in effect or being negotiated.
Parent does not have any obligation to negotiate any such collective
bargaining agreement. There are no labor unions representing, purporting to
represent or attempting to represent any employee of Parent.

                          (iv)     There are no strikes, slowdowns or work
stoppages pending or, to the best of Parent's knowledge, threatened with
respect to the employees of Parent, nor has any such strike, slowdown or work
stoppage occurred or, to the best of Parent's knowledge, been threatened.
There is no representation claim or petition or


                                      -23-

<PAGE>

complaint pending before the National Labor Relations Board or any state or
local labor agency and, to the best of Parent's knowledge, no question
concerning representation has been raised or threatened respecting the
employees of Parent.

                          (v)      To the best of Parent's knowledge, no
charges with respect to or relating to the business of Parent are pending
before the Equal Employment Opportunity Commission, or any state or local
agency responsible for the prevention of unlawful employment practices, which
could reasonably be expected to have a Material Adverse Effect.

                  (b)     Except as set forth in Section 3.13(b) of Parent
Disclosure Schedule, Parent is not a contractor or subcontractor with
obligations under any federal, state or local government contract.

                  (c)     Except as set forth in Section 3.13(c) of Parent
Disclosure Schedule, Parent has nor or could not have any material liability,
whether absolute or contingent, including any obligations under any of the
Employee Benefit Plans described in Section 3.13 of the Parent Disclosure
Schedule, with respect to any misclassification of a person as an independent
contractor rather than as an employee.

                  (d)     Section 3.13(d) of Parent Disclosure Schedule
contains a complete and correct list of all employment, management or other
consulting agreements with any Persons employed or retained by Parent
(including independent consultants), complete and correct copies of which have
been delivered to the Company.

                  SECTION 3.14 BENEFIT PLANS. (a) Section 3.14(a) of Parent
Disclosure Schedule sets forth each Employee Benefit Plan, currently or within
the past three years maintained by, contributed by or with respect to which an
obligation to contribute exists on the part of Parent or any of its ERISA
Affiliates, or with respect to which Parent or any ERISA Affiliate may have
any liability or obligation (direct, indirect, contingent or otherwise) to any
employee, former employee, director or former director (or any of their
dependents or beneficiaries) of Parent or to any governmental entity. There
have been delivered to the Company complete and correct copies of all written
Employee Benefit Plans and any related trust agreements, insurance and other
contracts and other funding arrangements, written descriptions of all
unwritten Employee Benefit Plans, the current summary plan descriptions and
current summaries of material modifications relating to each Employee Benefit
Plan, the two most recent Forms 5500 required to have been filed with any
appropriate government agency with respect to each Employee Benefit Plan, the
most recent favorable determination letter issued for each Employee Benefit
Plan and related trust that is intended to satisfy the qualification
requirements of sections 401(a) and 501(a) of the Code (and the latest IRS
form 5300 or 5307, whichever is applicable, filed with the IRS for each such
Employee Benefit Plan), and all collective bargaining agreements pursuant to
which an Employee Benefit Plan is maintained or contributions to an Employee
Benefit Plan are or have been made.

                  (b)     No Employee Benefit Plan is, a "defined benefit
plan" within the meaning of section 3(35) of ERISA to which ERISA applies
applicable to or a plan to which the funding requirements of Section 412 of
the Code or 302 of ERISA and neither Parent nor any ERISA Affiliate has or
could have any liability with respect to any such plan. Neither Parent nor any
ERISA Affiliate has ever contributed to, or withdrawn in a complete or partial
withdrawal from, any multi-employer plan (within the meaning of Subtitle E of
Title IV of ERISA) or incurred contingent liability under Section 4204 of
ERISA. No Employee Benefit Plan provides for medical or health benefits
(through insurance or otherwise) to individuals other than current employees
of Parent (or spouses and dependents of such employees), except to the extent
necessary to comply with Applicable Benefits Law (including, without
limitation, section 4980B of the Code), and there has been no communication to
any person that could reasonably be expected to promise or guarantee any
employee, former employee (or any spouse, dependent or domestic partner of any
employee or former employee) any retiree medical, life or other retiree
benefits.

                  (c)     Each Employee Benefit Plan (and each related trust,
insurance contract and fund) is in compliance in all material respects in form
and in operation with all applicable requirements of Applicable Benefits Law
(including ERISA and the Code), and is being administered in all material
respects in accordance with all relevant plan documents to the extent
consistent with Applicable Benefits Law. There has been no prohibited
transaction with respect


                                      -24-

<PAGE>

to any Employee Benefit Plan which would result in the imposition of any
material unpaid excise tax. No Employee Benefit Plan is under investigation or
audit by the Department of Labor or Internal Revenue Service other than as
part of a routine tax audit of Parent. There are no legal actions or suits
pending or, to the best of Parent's knowledge, threatened against or with
respect to any Employee Benefit Plan or the assets of any such Employee
Benefit Plan or against any fiduciary of any such Employee Benefit Plan and
Parent has no knowledge of any facts that could give rise to any such actions.
There has been full compliance in all material respects with the notice and
continuation requirements of Section 4980B of the Code and Part 6 of Subtitle
B of Title I of ERISA, and the requirement of Part 7 of Subtitle B of Title I
of ERISA and Section 9801, ET. SEQ. of the Code applicable to any Employee
Benefit Plan. No event has occurred or reasonably is expected to occur as a
result of which Parent or any ERISA Affiliate, directly or indirectly, could
be subject to any material Liability (including under any indemnity or hold
harmless agreement) under ERISA or the Code or any other Applicable Benefits
Law, including, without limitation, Section 4971, 4975 or 4976 of the Code or
Sections 406, 409, 502(i) and 502(l) of the Code.

                  (d)     Except as provided in Section 3.14(d) of Parent
Disclosure Statement, no provision of any Employee Benefit Plan becomes
effective in the event of a change in control of the employer maintaining such
Employee Benefit Plan. Parent has not agreed to or has not announced any plan
or commitment (whether or not legally binding) to create any new employee
benefit plan or, with respect to any existing Employee Benefit Plan, to
increase the benefits or change in employee coverage in an amount that could
increase the expense of maintaining such Employee Benefit Plan or to terminate
any Employee Benefit Plan. No provision of any Employee Benefit Plan prohibits
the employer maintaining it from amending or terminating such Employee Benefit
Plan at any time and to the fullest extent that law permits. Except as
provided in Section 3.14(d) of Parent Disclosure Schedule, the consummation
of the Merger or any other transaction contemplated by this Agreement, either
alone or in combination of any other event, will not (i) result in an increase
in the amount of compensation or benefits or accelerate the vesting or timing
of payment of any benefits or compensation payable under any Employee Benefit
Plan in respect of any employee or former employee of the Company, (ii)
entitle any such current or former employee to any benefits or payment, or
(iii) result in any "PARACHUTE PAYMENT" under Section 280G of the Code,
whether or not such payment is considered reasonable compensation for services
rendered. No employee or former employee of the Company will be entitled to
any severance benefits under the terms of any Employee Benefit Plan solely by
reason of the consummation of the Merger or any other transaction contemplated
by this Agreement.

                  (e)     No leased employee (within the meaning of section
414(n) or (o) of the Code) performs any services for Parent.

                  (f)     An Employee Benefit Plan does not own or is not
entitled to receive any of the capital stock of Parent.

                  (g)     Except as set forth in Section 3.14(g) of Parent
Disclosure Schedule, there are no material liabilities, whether absolute or
contingent, of Parent relating to workers compensation benefits that are not
fully insured against by a BONA FIDE third-party insurance carrier. Except as
set forth in Section 3.14(g) of Parent Disclosure Schedule, with respect to
each workers' compensation arrangement that is funded wholly or partially
through an insurance policy or public or private fund, all premiums required
to have been paid to date under the insurance policy or fund have been paid,
all premiums required to be paid under the insurance policy or fund through
the Closing Date will have been paid on or before the Closing Date and, as of
the Closing Date, there will be no material liability of Parent or any of its
Subsidiaries under any such insurance policy, fund or ancillary agreement with
respect to such insurance policy or fund in the nature of a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring prior to the Closing Date.
Furthermore, at no time since the organization of Parent has any entity (other
than Parent) been an "ERISA affiliate" of Parent.

                  SECTION 3.15 TITLE TO PROPERTIES. Except as set forth in
Section 3.15 of Parent Disclosure Schedule, Parent has good and indefeasible
title to all of its properties and assets, free and clear of all Encumbrances,
except liens for taxes not yet due and payable and such Encumbrances or other
imperfections of title, if any, as do not materially


                                      -25-

<PAGE>

detract from the value of or interfere with the present use of the property
affected thereby or which could not reasonably be expected to have a Material
Adverse Effect, and except for Encumbrances which secure indebtedness
reflected in Parent Balance Sheet.

                  SECTION 3.16 COMPLIANCE WITH LAWS; LEGAL PROCEEDINGS. (a)
Parent is not in violation of, or in default with respect to, any applicable
statute, regulation, ordinance, writ, injunction, order, judgment, decree or
any Governmental License, including any federal state or local law regarding
or relating to trespass or violations of privacy rights, which violation or
default could reasonably be expected to have a Material Adverse Effect.

                  (b)     Except as set forth in Section 3.13(b) of the Parent
Disclosure Schedule, there is no order, writ, injunction, judgment or decree
outstanding and no legal, administrative, arbitration or other governmental
proceeding or investigation pending or, to the best of Parent's knowledge,
threatened, and there are no claims (including unasserted claims of which
Parent is aware) against Parent or Merger Sub or any of their respective
properties, assets or businesses that could reasonably be expected to have a
Material Adverse Effect or against Parent or any of its directors or officers,
as such, that relate to this Agreement, the Merger or the other transactions
contemplated hereby. None of the items listed in Section 3.16(b) of Parent
Disclosure Schedule could reasonably be expected to have a Material Adverse
Effect. Parent has not been a defendant (either originally, by counter-claim
or impleading) in any legal proceedings which have either been filed in the
past two (2) fiscal years or are currently pending (all as set forth in
Section 3.16(b) of Parent Disclosure Schedule). Except as set forth in Section
3.16(b) of Parent Disclosure Schedule, none of the legal proceedings set forth
in Section 3.16(b) of Parent Disclosure Schedule has had or, to the best of
Parent's knowledge, will have a Material Adverse Effect.

                  SECTION 3.17 BROKERS. No broker, finder or investment
advisor acted directly or indirectly as such for Parent, Merger Sub or any
shareholder of Parent in connection with this Agreement or the Merger, and no
broker, finder, investment advisor or other Person is entitled to any fee or
other commission, or other remuneration, in respect thereof based in any way
on any action, agreement, arrangement or understanding taken or made by or on
behalf of Parent, Merger Sub or any shareholder of Parent.

                  SECTION 3.18 INTELLECTUAL PROPERTY. (a) Parent owns, or is
licensed or otherwise possesses legally enforceable rights to use, all
patents, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs or applications,
and tangible or intangible proprietary information or material that are used
in the business of Parent as currently conducted, except as could not
reasonably be expected to have a Material Adverse Effect.

                  (b)     Except as disclosed in Section 3.18(b) of Parent
Disclosure Schedule or as could not reasonably be expected to have a Material
Adverse Effect: (i) Parent is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other agreements as
to which Parents is a party and pursuant to which Parent is authorized to use
any patents, trademarks, service marks or copyrights owned by others ("PARENT
THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS"); (ii) No claims with respect to the
patents, registered and material unregistered trademarks and service marks,
registered copyrights, trade names and any applications therefor owned by
Parent or Merger Sub (the "PARENT INTELLECTUAL PROPERTY RIGHTS"), any trade
secret material to Parent, or Parent Third Party Intellectual Property Rights
to the extent arising out of any use, reproduction or distribution of Parent
Third Party Intellectual Property Rights by or through Parent, are currently
pending or, to the best of Parent's knowledge, have been threatened by any
Person; or (iii) Parent does not know of any valid grounds for any BONA FIDE
claims (1) to the effect that the sale, licensing or use of any product or
service as now sold, licensed or used, or proposed for sale, license or use by
Parent infringes on any copyright, patent, trademark, service mark or trade
secret; (2) against the use by Parent of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of Parent as currently
conducted or as proposed to be conducted; (3) challenging the ownership,
validity or effectiveness of any of Parent Intellectual Property Rights or
other trade secret material to Parent; or (4) challenging the license or
legally enforceable right to use of Parent Third Party Intellectual Rights by
Parent.


                                      -26-

<PAGE>

                  (c)     To the best of Parent's knowledge, there is no
material unauthorized use, infringement or misappropriation of any of Parent
Intellectual Property Rights by any third party, including any employee or
former employee of Parent.

                  SECTION 3.19 INSURANCE. Except as set forth in Section 3.19
of the Parent Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and other insurance
policies maintained by Parent are with reputable insurers, provide adequate
coverage for all normal risks incident to Parent's assets, properties and
business operations and are in character and amount at least equivalent to
that carried by Persons engaged in a business subject to the same or similar
perils or hazards.

                  SECTION 3.20 CONTRACTS; ETC. (a) Set forth on Section 3.20
of Parent Disclosure Schedule is a complete and correct list of each of the
following agreements, leases and other instruments, both oral and written, to
which Parent is a party or by which Parent or its properties or assets are
bound:

                  (i)     each service or other similar type of agreement under
         which services are provided by any other Person to Parent which is
         material to the business of Parent taken as a whole;

                  (ii)    each agreement that restricts the operation of the
         business of Parent or the ability of Parent to solicit customers or
         employees;

                  (iii)   each operating lease (as lessor, lessee, sublessor or
         sublessee) that is material to Parent taken as a whole of any real or
         tangible personal property or assets;

                  (iv)    each agreement under which services are provided by
         Parent to any material customer;

                  (v)     each agreement (including capital leases) under which
         any money has been or may be borrowed or loaned or any note, bond,
         indenture or other evidence of indebtedness has been issued or assumed
         (other than those under which there remain no ongoing obligations of
         Parent), and each guaranty of any evidence of indebtedness or other
         obligation, or of the net worth, of any Person (other than
         endorsements for the purpose of collection in the ordinary course of
         business);

                  (vi)    each partnership, joint venture or similar agreement;

                  (vii)   each agreement containing restrictions with respect
         to the payment of dividends or other distributions in respect of
         Parent's capital stock;

                  (viii)  each agreement to make unpaid capital expenditures in
         excess of $25,000;

                  (ix)    each agreement providing for accelerated or special
         payments as a result of the Merger, including any shareholder rights
         plan or other instrument commonly referred as a "poison pill."

A complete and correct copy of each written agreement, lease or other type of
document, and a true, complete and correct summary of each oral agreement,
lease or other type of document, required to be disclosed pursuant to this
Section 3.20(a) has been previously delivered to the Company.

                  (b)     Each agreement, lease or other type of document
required to be disclosed pursuant to Sections 3.13, 3.14 or 3.20(a) to which
Parent is a party or by which Parent or its properties or assets are bound
(collectively, the "Parent Contracts"), except those Parent Contracts the loss
of which could reasonably be expected to not have a Material Adverse Effect,
is valid, binding and in full force and effect and is enforceable by Parent in
accordance with its terms. Parent is not (with or without the lapse of time or
the giving of notice, or both) in breach of or in default under any of the
Parent Contracts, and, to the best of Parent's knowledge, no other party to
any of the Parent Contracts is (with or without the lapse of time or the
giving of notice, or both) in breach of or in default under any of the Parent
Contracts,


                                      -27-

<PAGE>

where such breach or default could reasonably be expected to have a Material
Adverse Effect. No existing or completed agreement to which Parent is a party
is subject to renegotiation with any governmental body.

                  SECTION 3.21 PERMITS, AUTHORIZATIONS, ETC. Section 3.21 of
Parent Disclosure Schedule sets forth all Governmental Licenses and each other
material approval, authorization, consent, license, certificate, order or
other permit of any governmental agencies, whether federal, state, local or
foreign, necessary to enable Parent to own, operate and lease its properties
and assets as and where such properties and assets are owned, leased or
operated and to provide service and carry on its business as presently
provided and conducted (collectively, the "PARENT PERMITS") or required to
permit the continued conduct of such business following the Merger in the
manner conducted on the date of this Agreement (indicating in each case
whether or not the consent of any Person is required for the consummation of
the transactions contemplated hereby). Parent has all necessary Parent Permits
of all governmental agencies, whether federal, state, local or foreign, all of
which are valid and in good standing with the issuing agencies and not subject
to any proceedings for suspension, modification or revocation, except for such
Parent Permits which could not reasonably be expected to have a Material
Adverse Effect.

                  SECTION 3.22 ENVIRONMENTAL MATTERS. (a) Parent has obtained
all Environmental Permits that are required for the lawful operation of its
business except for such Environmental Permits the failure of which to obtain
could not reasonably be expected to have a Material Adverse Effect. Parent (i)
is in compliance with all terms and conditions of their Environmental Permits
and are in compliance with and not in default under any applicable
Environmental Law, except for such failure to be in compliance that could not
reasonably be expected to have Material Adverse Effect, and (ii) has not
received written notice of any material violation by or material claim against
Parent under any Environmental Law.

                  (b)     There have been no Releases or threatened Releases
of any Hazardous Substances (i) into, on or under any of the properties owned
or operated (or formerly owned or operated) by Parent or any such Subsidiary
in such a way as to create any liability (including the costs of investigation
or remediation) under any applicable Environmental Law that could reasonably
be expected to have a Material Adverse Effect.

                  (c)     Parent has not been identified as a potentially
responsible party at any federal or stated National Priority List
("superfund") site.

                  SECTION 3.23 PARENT ACQUISITIONS. Section 3.23 of Parent
Disclosure Schedule hereto contains a complete and correct list of all
agreements ("PARENT ACQUISITION AGREEMENTS") executed by Parent pursuant to
which Parent has acquired or agreed to acquire all or any part of the stock or
assets (including any customer list) of any Person. A complete and correct
copy of each of the Parent Acquisition Agreements has been delivered to the
Company. Parent does not have any further obligation or liability under any of
the Parent Acquisition Agreements or as a result of the transactions provided
for therein, except as described in reasonable detail in Section 3.23 of
Parent Disclosure Schedule.

                  SECTION 3.24 BOOKS AND RECORDS. All accounts, books, ledgers
and official and other records prepared and kept by Parent and Merger Sub have
been kept and completed in all material respects, and there are no material
inaccuracies or discrepancies contained or reflected therein. Such records of
Parent and Merger Sub are located at Parent's offices in Oklahoma City and
Norman, Oklahoma.

                  SECTION 3.25 INTERESTED PARTY TRANSACTIONS. Except as set
forth in Section 3.25 of Parent Disclosure Schedule, since January 1, 1998, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-B
promulgated by the SEC.

                  SECTION 3.26 OPINION OF FINANCIAL ADVISOR. Parent has not
been advised by a financial advisor regarding, as of the date hereof, the
fairness of the Exchange Ratio from a financial point of view to Parent
shareholders.


                                      -28-

<PAGE>

                  SECTION 3.27 PROXY OR INFORMATION STATEMENT. The information
supplied by Parent with respect to Parent and its officers, directors,
shareholders and other Affiliates (collectively, the "PARENT INFORMATION") for
inclusion in the Proxy Statement (as defined in Section 5.1) to be sent to the
stockholders of Parent in connection with the Parent Shareholders Meeting will
not, on the date the Proxy Information Statement (or any amendment thereof or
supplement thereto) is first mailed to Parent's shareholders or at the time of
the Parent Shareholders Meeting, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading. If at any time prior to the Effective Time any event relating to
Parent or any of its officers, directors, shareholders or other Affiliates
should be discovered by Parent which should be set forth in an amendment to
the Proxy or Information Statement, Parent shall promptly inform the Company.
The Proxy or Information Statement shall comply in all material respects with
the requirements of the Exchange Act. Notwithstanding the foregoing, Parent
makes no representation or warranty with respect to any information supplied
by the Company which is contained or incorporated by reference in, or
furnished in connection with the preparation of, the Proxy or Information
Statement.

                  SECTION 3.28 BANK ACCOUNTS AND POWERS OF ATTORNEY. Section
3.28 of Parent Disclosure Schedule sets forth the name of each bank in which
Parent have an account, lock box or safe deposit box, the number of each such
account, lock box or safe deposit box and the names of the Persons authorized
to draw thereon or have access thereto. Except as set forth on Section 3.28 of
Parent Disclosure Schedule, no Person holds any power of attorney from Parent.

                  SECTION 3.29 CERTAIN PAYMENTS. Parent, Merger Sub nor any
director, officer, agent, or employee thereof, or to the knowledge of Parent,
any other Person associated with or acting for or on behalf of Parent, has
directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of Parent or any affiliate of
Parent, or (iv) in violation of any legal requirement, or (b) established or
maintained any fund or asset that has not been recorded in the books and
records of Parent.

                  SECTION 3.30 CUSTOMERS; CUSTOMER RELATIONSHIPS. Section 3.30
of Parent Disclosure Schedule sets forth a complete list of the 10 largest
clients and customers of Parent in each of the years ended December 31, 1999
and 1998, including the amounts they paid to Parent in such year. To the
knowledge of Parent, there are no facts or circumstances that are likely to
result in the loss of any such client or customer of Parent or a material
change in the relationship of Parent with any such client or customer.

                  SECTION 3.31 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES.
(a) Merger Sub is a direct, wholly-owned subsidiary of Parent and was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement.

                  (b)     As of the date hereof and the Effective Time, expect
for obligations or liabilities incurred in connection with its incorporation
or organization and the transactions contemplated by this Agreement and expect
for this Agreement and any other agreements or arrangements contemplated by
this Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any Person.


                                   ARTICLE IV

                    CONDUCT OF BUSINESS PENDING THE MERGER

                  SECTION 4.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing, the Company shall conduct its


                                      -29-

<PAGE>

business only in, and shall not take any action except in, the ordinary course
of business and in a manner consistent with past practice; and the Company
shall use reasonable commercial efforts to preserve substantially intact the
business organization of the Company, to keep available the services of the
present officers, employees, agents and consultants of the Company and to
preserve the present relationships of the Company with customers, suppliers
and other Persons with which the Company has significant business relations.
By way of amplification and not limitation, except as contemplated by this
Agreement, each of the Company shall not, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:

                  (a)     amend or otherwise change the Company's Certificate
         of Incorporation or Bylaws;

                  (b)     issue, sell, pledge, dispose of or encumber, or
         authorize the issuance, sale, pledge, disposition or encumbrance of,
         any shares of capital stock of any class, or any options, warrants,
         convertible securities or other rights of any kind to acquire any
         shares of capital stock, or any other ownership interest (including,
         without limitation, any phantom interest) in the Company or any of
         its Affiliates, except for the issuance of shares of Company Common
         Stock issuable upon the exercise of the Stock Options and Warrants
         and other commitments listed in Section 2.4 of the Company Disclosure
         Schedule;

                  (c)     sell, transfer, lease to others or otherwise dispose
         of or subject to any Encumbrance any material assets or properties of
         the Company or purchase, lease from others or otherwise acquire any
         material assets or properties (except for (i) purchases or sales of
         assets in the ordinary course of business and in a manner consistent
         with past practice, (ii) dispositions of obsolete or worthless
         assets, and (iii) purchases or sales of immaterial assets not in
         excess of $20,000);

                  (d)     (i) declare, set aside, make or pay any dividend or
         other distribution (whether in cash, stock or property or any
         combination thereof) in respect of any of its capital stock, (ii)
         split, combine or reclassify any of its capital stock or issue or
         authorize or propose the issuance of any other securities in respect
         of, in lieu of or in substitution for shares of its capital stock, or
         (iii) amend the terms or change the period of exercisability of,
         purchase, repurchase, redeem or otherwise acquire, or permit any
         Person to purchase, repurchase, redeem or otherwise acquire, any of
         its securities, including shares of Company Common Stock or any
         option, warrant or right, directly or indirectly, to acquire shares
         of Company Common Stock;

                  (e)     (i) acquire (by merger, consolidation, or acquisition
         of stock or assets) any corporation, partnership or other business
         organization or division thereof; (ii) incur any indebtedness for
         borrowed money, except for borrowings and reborrowing under the
         Company's existing credit facilities or issue any debt securities or
         assume, guarantee or endorse or otherwise as an accommodation become
         responsible for, the obligations of any Person, or make any loans or
         advances, except in the ordinary course of business consistent with
         past practice; (iii) authorize any capital expenditures or purchases
         of fixed assets which are, in the aggregate, in excess of the amount
         set forth in Section 4.1 of the Company Disclosure Schedule for the
         Company taken as a whole; or (iv) enter into or amend any contract,
         agreement, commitment or arrangement to effect any of the matters
         prohibited by this Section 4.1(e);

                  (f)     make any change in the rate of compensation,
         commission, bonus or other remuneration payable, or pay or agree or
         promise to pay, conditionally or otherwise, any bonus, extra
         compensation, pension or severance or vacation pay, to any director,
         officer, employee, salesman or agent of the Company except in the
         ordinary course of business consistent with prior practice and
         pursuant to or in accordance with plans disclosed in Section 2.14(a)
         of the Company Disclosure Schedule that were in effect as of December
         31, 1999 or make any increase in or commitment to increase any
         employee benefits, adopt or make any commitment to adopt any
         additional employee benefit plan or make any contribution, other than
         regularly scheduled contributions, to any Employee Benefit Plan;


                                               -30-

<PAGE>

                  (g)     take any action to change accounting practices,
         policies or procedures (including procedures with respect to revenue
         recognition, payments of accounts payable or collection of accounts
         receivable);

                  (h)     make any material tax election inconsistent with past
         practice or settle or compromise any material federal, state, local or
         foreign Tax liability or agree to an extension of a statute of
         limitations, except to the extent the amount of any such settlement
         has been reserved for in the Company Financial Statements;

                  (i)     pay, discharge or satisfy any claims, liabilities or
         obligations (absolute, accrued, contingent or otherwise), other than
         the payment, discharge or satisfaction when due, in the ordinary
         course of business and consistent with past practice of liabilities
         reflected or reserved against in the Company Financial Statements or
         incurred after December 31, 1999 in the ordinary course of business
         and consistent with past practice;

                  (j)     enter into any transaction, contract or commitment
         other than in the ordinary course of business; or

                  (k)     take, or agree in writing or otherwise to take, any
         of the actions described in Sections 4.1(a) through (j) above, or any
         action which would make any of the representations or warranties of
         the Company contained in this Agreement untrue or incorrect or
         prevent the Company from performing or cause the Company not to
         perform its covenants herein.

                  SECTION 4.2 CONDUCT OF BUSINESS BY PARENT PENDING THE
MERGER. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, except as set forth in Section 4.2 of the Parent
Disclosure Schedule or unless the Company shall otherwise agree in writing,
Parent shall conduct its business, and cause the businesses of Merger Sub to
be conducted, in the ordinary course of business and consistent with past
practice, other than actions taken by Parent or Merger Sub in contemplation of
the Merger, and shall not directly or indirectly do, or propose to do, any of
the following without the prior written consent of the Company:

                  (a)     amend or otherwise change Parent's Certificate of
         Incorporation or Bylaws;

                  (b)     issue, sell, pledge, dispose of or encumber, or
         authorize the issuance, sale, pledge, disposition or encumbrance of,
         any shares of capital stock of any class, or any options, warrants,
         convertible securities or other rights of any kind to acquire any
         shares of capital stock, or any other ownership interest (including,
         without limitation, any phantom interest) in Parent, Merger Sub or
         any of their Affiliates, except for the issuance of shares of Parent
         Common Stock issuable upon the exercise of the Stock Options and
         Warrants and other commitments listed in Section 3.2 of the Parent
         Disclosure Schedule;

                  (c)     sell, transfer, lease to others or otherwise dispose
         of or subject to any Encumbrance any material assets or properties of
         Parent or purchase, lease from others or otherwise acquire any
         material assets or properties (except for (i) purchases or sales of
         assets in the ordinary course of business and in a manner consistent
         with past practice, (ii) dispositions of obsolete or worthless
         assets, and (iii) purchases or sales of immaterial assets not in
         excess of $20,000);

                  (d)     (i) declare, set aside, make or pay any dividend or
         other distribution (whether in cash, stock or property or any
         combination thereof) in respect of any of its capital stock, (ii)
         split, combine or reclassify any of its capital stock or issue or
         authorize or propose the issuance of any other securities in respect
         of, in lieu of or in substitution for shares of its capital stock, or
         (iii) amend the terms or change the period of exercisability of,
         purchase, repurchase, redeem or otherwise acquire, or permit any
         Person to purchase, repurchase, redeem or otherwise acquire, any of
         its securities or any securities of Merger Sub, including shares of
         Parent Common Stock or any option, warrant or right, directly or
         indirectly, to acquire shares of Parent Common Stock;


                                      -31-

<PAGE>

                  (e)     (i) acquire (by merger, consolidation, or acquisition
         of stock or assets) any corporation, partnership or other business
         organization or division thereof; (ii) incur any indebtedness for
         borrowed money, except for borrowings and reborrowing under Parent's
         existing credit facilities or issue any debt securities or assume,
         guarantee or endorse or otherwise as an accommodation become
         responsible for, the obligations of any Person, or make any loans or
         advances, except in the ordinary course of business consistent with
         past practice; (iii) authorize any capital expenditures or purchases
         of fixed assets which are, in the aggregate, in excess of the amount
         set forth in Section 4.2 of the Parent Disclosure Schedule for Parent
         taken as a whole; or (iv) enter into or amend any contract,
         agreement, commitment or arrangement to effect any of the matters
         prohibited by this Section 4.2(e);

                  (f)     make any change in the rate of compensation,
         commission, bonus or other remuneration payable, or pay or agree or
         promise to pay, conditionally or otherwise, any bonus, extra
         compensation, pension or severance or vacation pay, to any director,
         officer, employee, salesman or agent of Parent except in the ordinary
         course of business consistent with prior practice and pursuant to or
         in accordance with plans disclosed in Section 3.12(a) of Parent
         Disclosure Schedule that were in effect as of December 31, 1999 or
         make any increase in or commitment to increase any employee benefits,
         adopt or make any commitment to adopt any additional employee benefit
         plan or make any contribution, other than regularly scheduled
         contributions, to any Employee Benefit Plan;

                  (g)     take any action to change accounting practices,
         policies or procedures (including procedures with respect to revenue
         recognition, payments of accounts payable or collection of accounts
         receivable);

                  (h)     make any material tax election inconsistent with past
         practice or settle or compromise any material federal, state, local or
         foreign Tax liability or agree to an extension of a statute of
         limitations, except to the extent the amount of any such settlement
         has been reserved for in Parent Financial Statements;

                  (i)     pay, discharge or satisfy any claims, liabilities or
         obligations (absolute, accrued, contingent or otherwise), other than
         the payment, discharge or satisfaction when due, in the ordinary
         course of business and consistent with past practice of liabilities
         reflected or reserved against in Parent Financial Statements or
         incurred after December 31, 1999, in the ordinary course of business
         and consistent with past practice;

                  (j)     enter into any transaction, contract or commitment
         other than in the ordinary course of business; or

                  (k)     take, or agree in writing or otherwise to take, any
         of the actions described in Sections 4.1(a) through (j) above, or any
         action which would make any of the representations or warranties of
         Parent contained in this Agreement untrue or incorrect or prevent
         Parent and Merger Sub from performing or cause Parent and Merger Sub
         not to perform its covenants herein.

                                   ARTICLE V

                             ADDITIONAL AGREEMENTS

                  SECTION 5.1 PROXY OR INFORMATION STATEMENT. As promptly as
reasonably practicable after the execution of this Agreement, and after the
furnishing by the Company and Parent of all information required to be
contained therein (which each agrees to do as promptly as practicable after
the date hereof), Parent, after obtaining the approval of Company, shall
prepare and file with the SEC a proxy statement pursuant to Section 14(a) of
the Exchange Act or information statement pursuant to Section 14(c) of the
Exchange Act (the "PROXY OR INFORMATION STATEMENT") for the purpose of
obtaining approval of the Merger by the shareholders of Parent. Parent, with
all reasonable cooperation of the Company, shall use all reasonable efforts to
cause file the definitive Proxy or Information Statement with the SEC as soon
as reasonably practicable.


                                      -32-

<PAGE>
                  SECTION 5.2 COMPANY SHAREHOLDERS APPROVAL. The Company
Shareholders by execution of this Agreement hereby approves the Merger in all
respects as contemplated in this Agreement.

                  SECTION 5.3 ACCESS TO INFORMATION; CONFIDENTIALITY. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company and Parent shall each (and
shall cause each of their Subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company and
Parent each shall (and shall cause each of their Subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as such other party may reasonably request, and each shall make
available to the other the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the other's business,
properties and personnel as either Parent or the Company may reasonably
request. Each party shall keep such information confidential.

                  SECTION 5.4 CONSENTS; APPROVALS. The Company and Parent
shall each use their reasonable best efforts to obtain all consents, waivers,
approvals, authorizations or orders (including, without limitation, all United
States and foreign governmental and regulatory rulings and approvals), and the
Company and Parent shall make all filings (including, without limitation, all
filings with United States and foreign governmental or regulatory agencies)
required in connection with the authorization, execution and delivery of this
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby. The Company and Parent shall furnish all
information required to be included in the Prospectus and the Registration
Statement or for any application or other filing to be made pursuant to the
rules and regulations of any United States or foreign governmental body in
connection with the transactions contemplated by this Agreement.

                  SECTION 5.5 AGREEMENTS WITH RESPECT TO AFFILIATES. [Omitted.]

                  SECTION 5.6 INDEMNIFICATION AND INSURANCE. (a) The Bylaws
and Certificate of Incorporation of the Surviving Corporation shall contain
the provisions with respect to indemnification set forth in the Bylaws and
Certificate of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of three years from the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time were
directors or officers of the Company, unless such modification is required
after the Effective Time by law.

                  (b)     The Surviving Corporation shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Certificate of Incorporation or Bylaws, indemnify and hold harmless each
present and former director or officer of the Company (collectively, the
"INDEMNIFIED PARTIES") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "ACTIONS"), (x) arising out of or pertaining to
the transactions contemplated by this Agreement, or (y) otherwise with respect
to any acts or omissions occurring at or prior to the Effective Time, to the
same extent as provided in the Company's Certificate of Incorporation or
Bylaws or any applicable contract or agreement as in effect on the date
hereof, in each case for a period of three years after the Effective Time;
PROVIDED, HOWEVER, that, in the event that any claim or claims for
indemnification are asserted or made within such three-year period, all rights
to indemnification in respect of any such claim or claims shall continue until
the disposition of any and all such claims. In the event of any such Action
(whether arising before or after the Effective Time), the Indemnified Parties
shall promptly notify the Surviving Corporation in writing, and the Surviving
Corporation shall have the right to assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Parties. The
Indemnified Parties shall have the right to employ separate counsel in any
such Action and to participate in (but not control) the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Parties unless (a) the Surviving Corporation has agreed to pay
such fees and expenses, (b) the Surviving Corporation shall have failed to
assume the defense of such Action or (c) the named parties to any such Action
(including any

                                      -33-
<PAGE>

impleaded parties) include both the Surviving Corporation and the Indemnified
Parties and such Indemnified Parties shall have been reasonably advised in
writing by counsel that there may be one or more legal defenses available to
the Indemnified Parties which are in conflict with those available to the
Surviving Corporation. In the event such Indemnified Parties employ separate
counsel at the expense of the Surviving Corporation pursuant to clauses (b) or
(c) of the previous sentence, (i) any counsel retained by the Indemnified
Parties for any period after the Effective Time shall be reasonably
satisfactory to the Surviving Corporation; (ii) the Indemnified Parties as a
group may retain only one law firm to represent them in each applicable
jurisdiction with respect to any single Action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties, in which
case each Indemnified Person with respect to whom such a conflict exists (or
group of such Indemnified Persons who among them have no such conflict) may
retain one separate law firm in each applicable jurisdiction; (iii) after the
Effective Time, the Surviving Corporation shall pay the reasonable fees and
expenses of such counsel, promptly after statements therefor are received; and
(iv) the Surviving Corporation will cooperate in the defense of any such
Action. The Surviving Corporation shall not be liable for any settlement of
any such Action effected without its written consent.

                  (c)     The provisions of this Section 5.6 shall survive the
consummation of the Merger at the Effective Time, is intended to benefit the
Company, the Surviving Corporation and the Indemnified Parties, shall be
binding on all successors and assigns of the Surviving Corporation and shall
be enforceable by the Indemnified Parties.

                  SECTION 5.7 NOTIFICATION OF CERTAIN MATTERS. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate, or (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any
notice pursuant to this Section 5.7 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice; and PROVIDED
FURTHER that failure to give such notice shall not be treated as a breach of
covenant for the purposes of Sections 6.2(b) or 6.3(b) unless the failure to
give such notice results in material prejudice to the other party.

                  SECTION 5.8 FURTHER ACTION/TAX TREATMENT. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things reasonably necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, to obtain in a timely manner all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, and otherwise to satisfy or cause to be satisfied
all conditions precedent to its obligations under this Agreement. The
foregoing covenant shall not include any obligation by Parent to agree to
divest, abandon, license or take similar action with respect to any assets
(tangible or intangible) of Parent or the Company. Each of Parent, Merger Sub
and the Company shall use its commercially reasonable efforts to cause the
Merger to qualify, and will not (both before and after consummation of the
Merger) take any actions which to its knowledge could reasonably be expected
to prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368 of the Code.

                  SECTION 5.9 PUBLIC ANNOUNCEMENTS. Parent and the Company
shall consult with each other before issuing any press release with respect to
the Merger or this Agreement and shall not issue any such press release or
make any such public statement without the prior consent of the other party,
which shall not be unreasonably withheld; PROVIDED, HOWEVER, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law if
it has used all reasonable efforts to consult with the other party.

                  SECTION 5.10 CONVEYANCE TAXES. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are


                                      -34-

<PAGE>

required or permitted to be filed on or before the Effective Time and the
Surviving Corporation shall be responsible for the payment of all such taxes
and fees.

                  SECTION 5.11 NO SOLICITATION. Upon execution of this
Agreement, Parent, the Company and the Company Shareholders do not have, or
shall immediately terminate, any discussions with any third party concerning
an Alternative Acquisition (as defined below). From and after the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Parent, the Company and the Company
Shareholders shall not, and shall not permit any officer, director, employee,
affiliate, investment banker or other agent or other representative of Parent
or the Company to, directly or indirectly, other than in connection with the
performance and consummation of the transactions contemplated in this
Agreement, (1) solicit, engage in discussions or negotiate with any Person
(whether such discussions or negotiations are initiated by Parent or the
Company, such other Person or otherwise) or take any other action intended or
designed to facilitate the efforts of any Person relating to the possible
acquisition of the Company or Parent (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or any material portion of its
or their capital stock or assets (with any such efforts by any such Person,
including a firm proposal to make such an acquisition, being referred to as an
"ALTERNATIVE ACQUISITION"), (2) provide information with respect to Parent or
the Company to any Person relating to a possible Alternative Acquisition by
any Person, (3) enter into an agreement with any Person providing for a
possible Alternative Acquisition, or (4) make or authorize any statement,
recommendation or solicitation in support of any possible Alternative
Acquisition by any Person.

                                    ARTICLE VI

                            CONDITIONS TO THE MERGER

                  SECTION 6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT
THE MERGER. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:

                  (a)     DELIVERY OF AUDITED FINANCIAL STATEMENTS. Parent
         shall have received from Company and Company shall have received from
         Parent its audited balance sheets as of December 31, 1999 and 1998
         and statements of income, stockholders' equity and cash flows and any
         applicable supplemental information prepared in accordance with
         generally accepted accounting principles in accordance with the rules
         and regulations of the SEC (the "AUDITED FINANCIAL STATEMENTS").
         Furthermore, there shall be no material adverse change in the
         financial condition and results of operations as presented in the
         Audited Financial Statements compared to the financial condition and
         results of operations as presented in the Parent Financial Statements
         or the Company Financial Statements, as the case may be.

                  (b)     APPROVAL OF SHAREHOLDERS OF PARENT. The shareholders
         of Parent shall have approved the Merger.

                  (c)     GOVERNMENTAL ACTIONS. There shall not have been
         instituted, pending or threatened any action or proceeding (or any
         investigation or other inquiry that might result in such an action or
         proceeding) by any governmental authority or administrative agency
         before any governmental authority, administrative agency or court of
         competent jurisdiction, domestic or foreign, nor shall there be in
         effect any judgment, decree or order of any governmental authority,
         administrative agency or court of competent jurisdiction, or any other
         legal restraint (i) preventing or seeking to prevent consummation of
         the Merger, (ii) prohibiting or seeking to prohibit or limiting or
         seeking to limit Parent from exercising all material rights and
         privileges pertaining to its ownership of the Surviving Corporation or
         the ownership or operation by Parent or any of its Subsidiaries of all
         or a material portion of the business or assets of Parent or Merger
         Sub, or (iii) compelling or seeking to compel Parent or Merger Sub to
         dispose of or hold separate all or any material portion of the
         business or assets


                                      -35-

<PAGE>
         of Parent or the Surviving Corporation, as a result of the Merger or
         the transactions contemplated by this Agreement.

                  (d)     ILLEGALITY. No statute, rule, regulation or order
         shall be enacted, entered, enforced or deemed applicable to the
         Merger which makes the consummation of the Merger illegal.

                  SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT
AND MERGER SUB. The obligations of Parent and Merger Sub to effect the Merger
are also subject to the following conditions:

                  (a)     REPRESENTATIONS AND WARRANTIES. The representations
         and warranties of the Company and the Company Shareholders contained
         in this Agreement and in the Company Disclosure Schedule shall be
         true and correct in all respects on and as of the Effective Time with
         the same force and effect as if made on and as of the Effective Time,
         except for (i) changes contemplated by this Agreement, (ii) those
         representations and warranties which address matters only as of a
         particular date (which shall have been true and correct as of such
         date, subject to clause (iii)), or (iii) where the failure to be true
         and correct would not reasonably be expected to have a Material
         Adverse Effect, and Parent and Merger Sub shall have received a
         certificate dated as of the Closing to such effect signed by the
         Chief Executive Officer of the Company;

                  (b)     AGREEMENTS AND COVENANTS. The Company shall have
         performed or complied in all material respects with all agreements
         and covenants required by this Agreement to be performed or complied
         with by it on or prior to the Closing, and Parent and Merger Sub
         shall have received a certificate dated as of the Closing to such
         effect signed by the Chief Executive Officer of the Company;

                  (c)     CONSENTS OBTAINED. All material consents, waivers,
         approvals, authorizations or orders required to be obtained, and all
         filings required to be made, by the Company for the authorization,
         execution and delivery of this Agreement, the consummation by it of
         the transactions contemplated hereby and the continuation in full
         force and effect of any and all material rights, documents, agreements
         or instruments of the Company shall have been obtained and made by
         the Company, except where the failure to receive such consents,
         waivers, approvals, authorizations or orders would not reasonably be
         expected to have a Material Adverse Effect on the Parent.

                  SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF THE
COMPANY. The obligation of the Company to effect the Merger is also subject to
the following conditions:

                  (a)     REPRESENTATIONS AND WARRANTIES. The representations
         and warranties of Parent and Merger Sub contained in this Agreement
         and the Parent Disclosure Schedule shall be true and correct in all
         respects on and as of the Effective Time with the same force and
         effect as if made on and as of the Effective Time, except for (i)
         changes contemplated by this Agreement, (ii) those representations
         and warranties which address matters only as of a particular date
         (which shall have been true and correct as of such date, subject to
         clause (iii)), or (iii) where the failure to be true and correct
         could not reasonably be expected to have a Material Adverse Effect,
         and the Company shall have received a certificate dated as of the
         Closing to such effect signed by the Chief Executive Officer of
         Parent;

                  (b)     AGREEMENTS AND COVENANTS. Parent and Merger Sub shall
         have performed or complied in all material respects with all
         agreements and covenants required by this Agreement to be performed
         or complied with by them on or prior to the Effective Time, and the
         Company shall have received a certificate dated as of the Closing to
         such effect signed by the Chief Executive Officer of Parent; and

                  (c)     CONSENTS OBTAINED. All material consents, waivers,
         approvals, authorizations or orders required to be obtained, and all
         filings required to be made, by Parent or Merger Sub for the
         authorization, execution and delivery of this Agreement, the
         consummation by them of the transactions contemplated hereby and the
         continuation in full force and effect of any and all material rights,
         documents, agreements or

                                      -36-
<PAGE>



         instruments of Parent shall have been obtained and made by Parent and
         Merger Sub, except where the failure to receive such consents,
         waivers, approvals, authorizations or orders could not be reasonably
         be expected to have a Material Adverse Effect on Parent.

                  (d)     STOCK OPTION AMENDMENTS. Parent shall obtain and
         deliver to the Company amendments or statements of clarification to
         each agreement governing the Stock Options in accordance with Section
         1.17 of this Agreement.

                                     ARTICLE VII

                                     TERMINATION

                  SECTION 7.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, notwithstanding approval thereof by the
shareholders of the Company or Parent:

                  (a)     by mutual written consent duly authorized by the
         Boards of Directors of Parent and the Company; or

                  (b)     by either Parent or the Company if the Merger shall
         not have been consummated by July 31, 2000 (provided that the right
         to terminate this Agreement under this Section 7.1(b) shall not be
         available to any party whose failure to fulfill any obligation under
         this Agreement has been the cause of or resulted in the failure of
         the Merger to occur on or before such date); or

                  (c)     by either Parent or the Company if a court of
         competent jurisdiction or governmental, regulatory or administrative
         agency or commission shall have issued a non-appealable final order,
         decree or ruling or taken any other action having the effect of
         permanently restraining, enjoining or otherwise prohibiting the
         Merger (provided that the right to terminate this Agreement under
         this Section 7.1(c) shall not be available to any party who has not
         complied with its obligations under Section 5.7 and such
         noncompliance materially contributed to the issuance of any such
         order, decree or ruling or the taking of such action); or

                  (d)     by Parent or the Company if any representation or
         warranty of the Company, or Parent and Merger Sub, respectively, set
         forth in this Agreement shall be untrue when made, such that the
         conditions set forth in Sections 6.2(a) or 6.3(a), as the case may
         be, would not be satisfied (a "TERMINATING MISREPRESENTATION");
         PROVIDED, HOWEVER, that, if such Terminating Misrepresentation is
         curable by the Company or Parent, as the case may be, through the
         exercise of its commercially reasonable efforts and for so long as
         the Company or Parent, as the case may be, continues to exercise such
         reasonable efforts, neither Parent nor the Company, respectively, may
         terminate this Agreement under this Section 7.1(d); or

                  (e)     by Parent if any representation or warranty of the
         Company shall have become untrue such that the condition set forth in
         Section 6.2(a) would not be satisfied (a "COMPANY TERMINATING
         CHANGE"), or by the Company if any representation or warranty of
         Parent and Merger Sub shall have become untrue such that the
         condition set forth in Section 6.3(a) would not be satisfied (a
         "PARENT TERMINATING CHANGE" and together with a Company Terminating
         Change, a "TERMINATING CHANGE"), in either case other than by reason
         of a Terminating Breach (as hereinafter defined); PROVIDED, HOWEVER,
         that if any such Terminating Change is curable by the Company or
         Parent, as the case may be, through the exercise of its commercially
         reasonable efforts, and for so long as the Company or Parent, as the
         case may be, continues to exercise such commercially reasonable
         efforts, neither Parent nor the Company, respectively, may terminate
         this Agreement under this Section 7.1(e); or

                  (f)     by Parent or the Company upon a breach of any
         covenant or agreement on the part of the Company or Parent,
         respectively, set forth in this Agreement, such that the conditions
         set forth in Sections


                                      -37-

<PAGE>



         6.2(b) or 6.3(b), as the case may be, would not be satisfied (a
         "TERMINATING BREACH"); PROVIDED, HOWEVER, that, if such Terminating
         Breach is curable by the Company or Parent, as the case may be,
         through the exercise of its commercially reasonable efforts and for
         so long as the Company or Parent, as the case may be, continues to
         exercise such commercially reasonable efforts, neither Parent nor the
         Company, respectively, may terminate this Agreement under this
         Section 7.1(f).

                  SECTION 7.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or of any of its Affiliates, directors, officers or stockholders except
(i) as set forth in Section 7.3 and Section 8.1, and (ii) except as provided
in Section 7.3, nothing herein shall relieve any party from liability for any
breach hereof.

                  SECTION 7.3 FEES AND EXPENSES. (a) Except as otherwise
provided in this Section 7.3, all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, whether or not the Merger is consummated,
including without limitation the costs and expenses attributable to the
preparation of audited and unaudited financial statements of Parent on the one
hand and the Company and those entities acquired by the Company pursuant to
the Company Acquisition Agreements on the other hand. Parent shall bear all
fees, costs and expenses of preparation and filing of the Proxy or Information
Statement and any amendments thereto.

                  (b)     Upon termination of this Agreement by either Parent
or the Company, the respective parties hereto may seek any and all remedies
available to it under applicable law.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

                  SECTION 8.1 EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. (a) Except as otherwise provided in this Section 8.1, the
representations, warranties, covenants and agreements of each party hereto
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors or
representatives, whether prior to or after the execution of this Agreement.
The representations, warranties and agreements in this Agreement and in the
Disclosure Schedules shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that the covenants and agreements set forth in Article I and Section
5.6 shall survive the Effective Time and those set forth in Section 7.3 shall
survive such termination.

                  (b)     Any disclosure made with reference to one or more
sections of the Company Disclosure Schedule or the Parent Disclosure Schedule
shall be deemed disclosed with respect to each other section therein as to
which such disclosure is relevant provided that such relevance is reasonably
apparent. Disclosure of any matter in the Company Disclosure Schedule or the
Parent Disclosure Schedule shall not be deemed an admission that such matter
is material.

                  SECTION 8.2 NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the facsimile numbers specified
below (or at such other address, facsimile or telephone number or other
Person's attention for a party as shall be specified by like notice):


                                      -38-

<PAGE>

                  (a)     If to Parent or Merger Sub:
                          Precis Smart Card Systems, Inc.
                          2500 McGee Street, Suite 147
                          Norman, Oklahoma 73072
                          Facsimile No.:  (405) 292-4900
                          Telephone No.:  (405) 360-5354
                          Attention: Larry E. Howell, Chief Executive Officer

                  With a copy to:
                          Michael E. Dunn
                          Dunn, Swan & Cunningham
                          2800 Oklahoma Tower
                          210 Park Avenue
                          Oklahoma City, Oklahoma 73102-5604
                          Facsimile No.:  (405) 235-9605
                          Telephone No.:  (405) 235-8318

                  (b)     If to the Company:
                          Foresight, Inc.
                          2500 McGee Drive
                          Norman, Oklahoma 73072
                          Facsimile No.:  (405) 579-9100
                          Telephone No.:  (405) 579-9000
                          Attention: Paul A. Kruger, President

                  With a copy to:
                          Gary C. Rawlinson
                          Crowe & Dunlevy
                          The HiPoint Office Building
                          2500 South McGee, Suite 140
                          Norman, Oklahoma 73070-8012
                          Facsimile No.:  (405) 360-4002
                          Telephone No.:  (405) 321-7317

                  SECTION 8.3 CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:

                  (a)     "Affiliates" means a Person that directly or
         indirectly, through one or more intermediaries, controls, is
         controlled by, or is under common control with, the first mentioned
         Person;

                  (b)     "Business Day" means any day other than a day on
         which banks in New York or Oklahoma City are required or authorized to
         be closed;

                  (c)     "Control" (including the terms "controlled by" and
         "under common control with") means the possession, directly or
         indirectly or as trustee or executor, of the power to direct or cause
         the direction of the management or policies of a Person, whether
         through the ownership of stock, as trustee or executor, by contract
         or credit arrangement or otherwise;

                  (d)     "Person" means an individual, corporation,
         partnership, limited liability company, association, trust,
         unincorporated organization other entity or group (as defined in
         Section 13(d)(3) of the Exchange Act); and


                                      -39-

<PAGE>

                  (e)     "Subsidiary" or "Subsidiaries" of the Company, the
         Surviving Corporation, Parent or any other Person means any
         corporation, partnership, limited liability company, or other legal
         entity of which the Company, the Surviving Corporation, Parent or
         such other Person, as the case may be (either alone or through or
         together with any other subsidiary), owns, directly or indirectly,
         more than 10% of the stock or other equity interests the holders of
         which are generally entitled to vote for the election of the board of
         directors or other governing body of such corporation or other legal
         entity.

                  SECTION 8.4 AMENDMENT. This Agreement may be amended by the
Company Shareholders and the Company's Board of Directors and the Board of
Directors of Parent and Merger Sub at any time prior to the Effective Time.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.

                  SECTION 8.5 WAIVER. At any time prior to the Effective Time,
any party hereto may with respect to any other party hereto (a) extend the
time for the performance of any of the obligations or other acts, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, or (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby. For purposes of this Agreement, time shall be of
the essence.

                  SECTION 8.6 HEADINGS; CONSTRUCTION. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. In this Agreement (a)
words denoting the singular include the plural and vice versa, (b) "it" or
"its" or words denoting any gender include all genders, (c) the word
"including" shall mean "including without limitation," whether or not
expressed, (d) any reference to a statute shall mean the statute and any
regulations thereunder in force as of the date of this Agreement or the
Closing, as applicable, unless otherwise expressly provided, (e) any reference
herein to a Section, Article or Schedule refers to a Section or Article of or
a Schedule to this Agreement, unless otherwise stated, (f) when calculating
the period of time within or following which any act is to be done or steps
taken, the date which is the reference day in calculating such period shall be
excluded and if the last day of such period is not a Business Day, then the
period shall end on the next day which is a Business Day and (g) any reference
to a party's "best efforts" or "reasonable efforts" shall not include any
obligation of such party to pay, or guarantee the payment of, money or other
consideration to any third party or to agree to the imposition on such party
or its Affiliates of any condition reasonably considered by such party to be
materially burdensome to such party or its Affiliates.

                  SECTION 8.7 SEVERABILITY. (a) If any term or other provision
of this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent reasonably possible.

                  (b)     The Company and Parent agree that the fee provided
in Section 7.3(a) is fair and reasonable in the circumstances. If a court of
competent jurisdiction shall nonetheless, by a final, non-appealable judgment,
determine that the amount of such fee exceeds the maximum amount permitted by
law, then the amount of such fee shall be reduced to the maximum amount
permitted by law in the circumstances, as determined by such court of
competent jurisdiction.

                  SECTION 8.8 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof, except as otherwise expressly provided herein.

                  SECTION 8.9  ASSIGNMENT; MERGER SUB.  This Agreement shall
not be assigned by operation of law or otherwise, except that all or any of
the rights of Merger Sub hereunder may be assigned to any direct, wholly-owned


                                      -40-

<PAGE>

Subsidiary of Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder. Parent guarantees the full and
punctual performance by Merger Sub of all the obligations hereunder of Merger
Sub or any such assignees.

                  SECTION 8.10 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and the
Company Designees, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, including,
without limitation, by way of subrogation, other than Section 5.6 (which is
intended to be for the benefit of the Indemnified Parties and may be enforced
by such Indemnified Parties).

                  SECTION 8.11 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be
a waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.

                  SECTION 8.12 GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the State of
Oklahoma applicable to contracts executed and fully performed within the State
of Oklahoma.

                  SECTION 8.13 COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.

                  SECTION 8.14 WAIVER OF JURY TRIAL. EACH OF THE COMPANY
SHAREHOLDERS, PARENT, MERGER SUB, AND THE COMPANY HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

                  SECTION 8.15 JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of Oklahoma, County of Cleveland or the United States District
Court for the Western District of Oklahoma, and each of the parties consents
to the jurisdiction of such courts (and of the appropriate appellate courts)
in any such action or proceeding and waives any objection to venue laid
therein.

                  IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the
Company Shareholders have caused this Agreement to be executed as of the date
first written above by their respective officers thereunto duly authorized.


"Parent"                        PRECIS SMART CARD SYSTEMS, INC.


                                By /s/LARRY E. HOWELL
                                  ---------------------------------------------
                                       Larry E. Howell, Chief Executive Officer

"Merger-Sub"                    PRECIS-FORESIGHT ACQUISITION, INC.


                                By /s/LARRY E. HOWELL
                                  ---------------------------------------------
                                       Larry E. Howell, Chief Executive Officer


                                      -41-

<PAGE>


"Company"                       FORESIGHT, INC.


                                By /s/PAUL A. KRUGER
                                  ---------------------------------------------
                                       Paul A. Kruger, Chief Executive Officer

"Company Shareholders"             /s/PAUL A. KRUGER
                                  ---------------------------------------------
                                       Paul A. Kruger

                                   /s/MARK R. KIDD
                                  ---------------------------------------------
                                       Mark R. Kidd


(Schedules Will Be Furnished Upon Request)
Company Disclosure Schedule
Parent Disclosure Schedule














                                      -42-

<PAGE>


                 FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER

         This FIRST AMENDMENT, dated as of June 22, 2000, to the Agreement and
Plan of Merger Agreement dated March 21, 2000, among PRECIS SMART CARD
SYSTEMS, INC., an Oklahoma corporation ("PARENT"), PRECIS-FORESIGHT
ACQUISITION, INC., an Oklahoma corporation and a wholly-owned subsidiary of
Parent ("MERGER SUB"), FORESIGHT, INC., an Oklahoma corporation (the
"COMPANY"), and the sole shareholders of the Company, namely Paul A. Kruger
and Mark R. Kidd (the "COMPANY SHAREHOLDERS").

                             W I T N E S S E T H:

         1.       Parent, Merger Sub, the Company and the Company Shareholders
are parties to the Agreement and Plan of Merger pursuant to which the Company
will merge with and into Merger Sub on the terms and subject to the conditions
set forth therein.

         2.       Section 7.1(b) of the Agreement and Plan of Merger provides
that the Agreement and Plan of Merger may be terminated by either party if the
merger contemplated thereby has not been consummated on or before July 31,
2000; and

         3.       The parties wish to extend the foregoing date to September
30, 2000.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties to this Agreement have
agreed, and hereby agree, as follows:

         1.       TERMINATION.  Section 7.1(b) of the Agreement and Plan of
Merger is hereby amended to read as follows:

                  "(b) by either Parent or the Company if the Merger shall not
         have been consummated by September 30, 2000 (provided that the right
         to terminate this Agreement under this Section 7.1(b) shall not be
         available to any party whose failure to fulfill any obligation under
         this Agreement has been the cause of or resulted in the failure of the
         Merger to occur on or before such date); or"

         2.       FULL FORCE AND EFFECT.  Except as amended hereby, the
Agreement and Plan of Merger shall remain in full force and effect.

         3.       COUNTERPARTS. This First Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be a single agreement.

                  IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the
Company Shareholders have caused this First Amendment to be executed as of the
date first written above by their respective officers thereunto duly
authorized.


"Parent"                        PRECIS SMART CARD SYSTEMS, INC.


                                By /s/LARRY E. HOWELL
                                  ---------------------------------------------
                                       Larry E. Howell, Chief Executive Officer

"Merger-Sub"                    PRECIS-FORESIGHT ACQUISITION, INC.


                                By /s/LARRY E. HOWELL
                                  ---------------------------------------------
                                       Larry E. Howell, Chief Executive Officer


                                      -1-

<PAGE>


"Company"                       FORESIGHT, INC.


                                By /s/PAUL A. KRUGER
                                  ---------------------------------------------
                                       Paul A. Kruger, Chief Executive Officer

"Company Shareholders"             /s/PAUL A. KRUGER
                                  ---------------------------------------------
                                       Paul A. Kruger

                                   /s/MARK R. KIDD
                                  ---------------------------------------------
                                       Mark R. Kidd












                                      -2-

<PAGE>

                SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER

         This SECOND AMENDMENT, dated as of August 23rd, 2000, to the Agreement
and Plan of Merger Agreement dated March 21, 2000, as previously amended as of
June 22, 2000, among PRECIS SMART CARD SYSTEMS, INC., an Oklahoma corporation
("PARENT"), PRECIS-FORESIGHT ACQUISITION, INC., an Oklahoma corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), FORESIGHT, INC., an Oklahoma
corporation (the "COMPANY"), and the sole shareholders of the Company, namely
Paul A. Kruger and Mark R. Kidd (the "COMPANY SHAREHOLDERS").

                              W I T N E S S E T H:

         1.   Parent, Merger Sub, the Company and the Company Shareholders
are parties to the Agreement and Plan of Merger pursuant to which the Company
will merge with and into Merger Sub on the terms and subject to the
conditions set forth therein.

         2.   Section 1.6(a) of the Agreement and Plan of Merger provides
for the issuance and delivery of Contingent Shares based upon the
Consolidated Adjusted Income Before Taxes for the years ended December
31, 2000, 2001 and 2002.

         3.   Because of the delay in closing of the Merger and the decrease
in the market value of the Parent Common Stock since execution of the
Agreement and Plan of Merger on March 21, 2000, the parties desire to include
the year ending December 31, 2003 within the formula for determining the
number of shares of Parent Common Stock to be issued and delivered as the
Contingent Shares.

         4.   Section 7.1(b) of the Agreement and Plan of Merger provides
that the Agreement and Plan of Merger may be terminated by either party if
the merger contemplated thereby has not been consummated on or before
September 30, 2000.

         5.   The parties wish to extend the foregoing date to December 31,
2000.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein set forth, the parties to this Agreement have
agreed, and hereby agree, as follows:

         1.   EFFECT ON CAPITAL STOCK. Section 1.6(a) of the Agreement and
Plan of Merger is hereby amended to read as follows:

                       (a) Conversion of Securities. (i) The outstanding
              Common Shares shall be exchanged, in the aggregate, for the
              following number of shares of Parent Common Stock to be
              delivered as follows:

                                (A) At Closing, Parent shall issue and
                       deliver (i) to Paul A. Kruger 166,667 shares of
                       Parent's Series A Convertible Preferred Stock ( the
                       "PARENT PREFERRED STOCK") and (ii) to the Company
                       Shareholders 500,000 shares of Parent Common Stock,
                       of which 90 percent of the shares of Parent Common
                       Stock shall be issued and delivered to Paul A. Kruger
                       and 10 percent of the shares of Parent Common Stock
                       shall be issued and delivered to Mark R. Kidd;
                       provided, however, that in the event the net income
                       before income tax expense of the Company for the year
                       ended December 31, 1999 as reflected in the audited
                       statement of income of the Company ("COMPANY 1999 NET
                       INCOME BEFORE INCOME TAXES"), is less than $450,000,
                       the 500,000 shares of Parent Common Stock delivered
                       at Closing to the Company Shareholders shall be
                       reduced by one share for each $1.00 increment


                                        1

<PAGE>



                       that Company 1999 Net Income Before Income Taxes is
                       less than $500,000. For purposes of the following
                       subparagraphs (B), (C), and (D), the term "Company
                       1999 Base Income" shall mean the lesser of (i) the
                       number of shares of Parent Common Stock issued at the
                       Closing multiplied by $1.00 or (ii) $500,000.

                                (B) Parent shall issue and deliver to the
                       Company Shareholders one share of Parent Common Stock
                       for each $1.00 that Consolidated Adjusted Income
                       Before Taxes of Parent for the year ended December
                       31, 2000, assuming the Merger occurred on January 1,
                       2000, plus the loss of Parent during the period
                       commencing January 1, 2000, and ending on the
                       Effective Date, exceeds Company 1999 Base Income.

                                (C) Parent shall issue and deliver to the
                       Company Shareholders one share of Parent Common Stock
                       for each $1.00 that Consolidated Adjusted Income
                       Before Taxes of Parent for the year ended December
                       31, 2001, exceeds the greater of (i) Company 1999
                       Base Income or (ii) Consolidated Adjusted Income
                       Before Taxes of Parent for the year ended December
                       31, 2000, assuming the Merger occurred on January 1,
                       2000, plus the loss of Parent during the period
                       commencing January 1, 2000, and ending on the
                       Effective Date.

                                (D) Parent shall issue and deliver to the
                       Company Shareholders one share of Parent Common Stock
                       for each $1.00 that Consolidated Adjusted Income
                       Before Taxes of Parent for the year ended December
                       31, 2002, exceeds greater of (i) Company 1999 Base
                       Income or (ii) Consolidated Adjusted Income Before
                       Taxes of Parent for the year ended December 31, 2000,
                       assuming the Merger occurred on January 1, 2000, plus
                       the loss of Parent during the period commencing
                       January 1, 2000, and ending on the Effective Date, or
                       (iii) Consolidated Adjusted Income Before Taxes of
                       Parent for the year ended December 31, 2001.

                                (E) Parent shall issue and deliver to the
                       Company Shareholders one share of Parent Common Stock
                       for each $1.00 that Consolidated Adjusted Income
                       Before Taxes of Parent for the year ended December
                       31, 2003, exceeds greater of (i) Company 1999 Base
                       Income or (ii) Consolidated Adjusted Income Before
                       Taxes of Parent for the year ended December 31, 2000,
                       assuming the Merger occurred on January 1, 2000, plus
                       the loss of Parent during the period commencing
                       January 1, 2000, and ending on the Effective Date, or
                       (iii) Consolidated Adjusted Income Before Taxes of
                       Parent for the year ended December 31, 2001 or (iv)
                       Consolidated Adjusted Income Before Taxes of Parent
                       for the year ended December 31, 2002.

         For purposes of this Agreement, "CONSOLIDATED ADJUSTED INCOME BEFORE
         TAXES" shall mean the net income before income tax expense for the
         applicable fiscal year (determined in accordance with generally
         accepted accounting principles for financial reporting purposes under
         the rules and regulations of the U.S. Securities and Exchange
         Commission), plus the amount of amortization during the fiscal year
         attributable to the acquisition of the Company by Parent pursuant to
         this Agreement. Furthermore, any shares of Parent Common Stock to be
         issued and delivered to the Company Shareholders pursuant to Section
         1.6(a), other than those shares of Parent Common Stock issued and
         delivered at Closing, are referred to herein as the "CONTINGENT
         SHARES."


                                        2

<PAGE>



                  Following the determination of Consolidated Adjusted Income
         Before Income Taxes of Parent for each of the years ended December 31,
         2000, 2001, 2002 and 2003, any issuances and deliveries of the Parent
         Common Stock pursuant to this Section 1.6(a) and not made at Closing,
         shall be made as soon as reasonably practicable following the
         applicable determination. Provided, however, the Contingent Shares
         shall be issued and delivered to the Company Shareholders in accordance
         with the separate agreement to be executed and delivered simultaneously
         with this Agreement between Parent and the Company Shareholders. All
         shares of Parent Common Stock and Parent Preferred Stock issued and
         distributed to the Company Shareholders pursuant to Section 1.6(a)
         shall be fully paid and non-assessable shares, subject to adjustment
         pursuant to Section 1.6(e).

                  The number of shares of Parent Common Stock and Parent
         Preferred Stock into which each outstanding Common Share is converted
         pursuant to this Section 1.6(a) is referred to herein as the "EXCHANGE
         RATIO."

         2.   TERMINATION. Section 7.1(b) of the Agreement and Plan of Merger is
hereby amended to read as follows:

                  (b) by either Parent or the Company if the Merger shall not
         have been consummated by December 31, 2000 (provided that the right to
         terminate this Agreement under this Section 7.1(b) shall not be
         available to any party whose failure to fulfill any obligation under
         this Agreement has been the cause of or resulted in the failure of the
         Merger to occur on or before such date); or

         3.   FULL FORCE AND EFFECT. Except as amended hereby, the Agreement and
Plan of Merger shall remain in full force and effect.

         4.   COUNTERPARTS. This Second Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be a single agreement.

              IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the
Company Shareholders have caused this Second Amendment to be executed as of
the date first written above by their respective officers hereunto duly
authorized.

"Parent"                        PRECIS SMART CARD SYSTEMS, INC.


                                By   /s/LARRY E. HOWELL
                                  ----------------------------------------------
                                        Larry E. Howell, Chief Executive Officer

"Merger-Sub"                    PRECIS-FORESIGHT ACQUISITION, INC.


                                By   /s/LARRY E. HOWELL
                                  ----------------------------------------------
                                        Larry E. Howell, Chief Executive Officer

"Company"                       FORESIGHT, INC.


                                By   /s/PAUL A. KRUGER
                                  ----------------------------------------------
                                        Paul A. Kruger, Chief Executive Officer


                                       -3-

<PAGE>


"Company Shareholders"               /s/PAUL A. KRUGER
                                  ----------------------------------------------
                                        Paul A. Kruger

                                     /s/MARK R. KIDD
                                  ----------------------------------------------
                                        Mark R. Kidd


                                       -4-

<PAGE>



                                                                     APPENDIX B

                        PRECIS SMART CARD SYSTEMS, INC.
                            1999 STOCK OPTION PLAN

                                  ARTICLE 1

                             GENERAL PROVISIONS

         1.1 PURPOSE. The purpose of the PRECIS SMART CARD SYSTEMS, INC. 1999
STOCK OPTION PLAN (this "Plan") shall be to attract, retain and motivate key
employees and independent contractors and consultants (the "Participants") of
Precis Smart Card Systems, Inc. (the "Company") and its subsidiaries, if any,
by way of granting (i) non-qualified stock options ("Stock Options"), (ii)
non-qualified stock options with stock appreciation rights attached ("Stock
Option SARs"), (iii) incentive stock options ("ISO Options"), and (iv) ISO
Options with stock appreciation rights attached ("ISO Option SARs"). For the
purpose of this Plan, Stock Option SARs and ISO Option SARs are sometimes
collectively herein called "SARs;" and Stock Options and ISO Options are
sometimes collectively herein called "Options." The ISO Options to be granted
under this Plan are intended to be qualified pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Stock Options
to be granted are intended to be "non-qualified stock options" as described in
Sections 83 and 421 of the Code. The failure of an ISO Option to qualify under
Section 422 of the Code shall not affect the rights of the holder of the ISO
Option, although the ISO Option shall be automatically converted to a Stock
Option, and under no circumstances shall the Company have any liability as a
result of such failure. Furthermore, under this Plan, the terms "parent" and
"subsidiary" shall have the same meaning as set forth in Subsections (e) and
(f) of Section 425 of the Code unless the context herein clearly indicates to
the contrary.

         1.2 GENERAL. The terms and provisions of this Article I shall be
applicable to Stock Options, SARs and ISO Options unless the context herein
clearly indicates to the contrary.

         1.3 ADMINISTRATION OF THIS PLAN. This Plan shall be administered by
the Board of Directors (the "Board") of the Company. The Board shall have the
power where consistent with the general purpose and intent of this Plan to (i)
modify the requirements of this Plan to conform with the law or to meet
special circumstances not anticipated or covered in this Plan, (ii) suspend or
discontinue this Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions
of this Plan including the form of any "stock option agreements" ("Stock
Option Agreements"). Unless otherwise provided in this Plan, the Board shall
have the authority to interpret and construe this Plan, and determine all
questions arising under this Plan and any agreement made pursuant to this
Plan. Any interpretation, decision or determination made by the Board shall be
final, binding and conclusive. A majority of the Board shall constitute a
quorum, and an act of the majority of the members present at any meeting at
which a quorum is present shall be the act of the Board.

         1.4 SHARES SUBJECT TO THIS PLAN. Shares of stock ("Stock") covered by
Stock Options, SARs and ISO Options shall consist of 145,000 shares of the
Common Stock, $.01 par value, of the Company. Either authorized and unissued
shares or treasury shares may be delivered pursuant to this Plan. If any
Option for shares of Stock, granted to a Participant lapses, or is otherwise
terminated, the Board may grant Stock Options, SARs or ISO Options for such
shares of Stock to other Participants. However, neither Stock Options, SARs
nor ISO Options shall be granted again for shares of Stock which have been
subject to SARs which are surrendered in exchange for cash or shares of Stock
issued pursuant to the exercise of SARs as provided in Article II hereof.

         1.5 PARTICIPATION IN THIS PLAN. The Board shall determine from time
to time those Participants who are to be granted Stock Options, SARs and ISO
Options and the number of shares of Stock covered thereby. Directors who are
not employees of the Company or of a subsidiary shall not be eligible to be
granted ISO Options under this Plan.


                                      -1-

<PAGE>

         1.6 DETERMINATION OF FAIR MARKET VALUE. As used in this Plan, "fair
market value" shall mean on any particular day (i) if the Stock is listed or
admitted for trading on any national securities exchange or the National
Market System of The Nasdaq Stock Market, Inc., the last sale price, or if no
sale occurred, the mean between the closing high bid and low asked quotations,
for such day of the Stock on the principal securities exchange on which shares
of Stock are listed, (ii) if Stock is not traded on any national securities
exchange but is quoted on The Nasdaq Stock Market, Inc. Automated Quotation
System or any similar system of automated dissemination of quotations or
securities prices in common use, the mean between the closing high bid and low
asked quotations for such day of the Stock on such system, (iii) if neither
clause (i) nor (ii) is applicable, the mean between the high bid and low asked
quotations for the Stock as reported by the National Daily Quotation Bureau,
Incorporated if at least two securities dealers have inserted both bid and
asked quotations for shares of the Stock on at least five (5) of the ten (10)
preceding days, (iv) in lieu of the above, if actual transactions in the
shares of Stock are reported on a consolidated transaction reporting system,
the last sale price of the shares of Stock on such system or, (v) if none of
the conditions set forth above is met, the fair market value of shares of
Stock as determined by the Board. Provided, for purposes of determining "fair
market value" of the Common Stock of the Company, such value shall be
determined without regard to any restriction other than a restriction which
will never lapse.

         1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number
of shares of Stock under Stock Options and ISO Options granted under this
Plan, the Option Price and the ISO Price and the total number of shares of
Stock which may be purchased by a Participant on exercise of a Stock Option
and an ISO Option shall be appropriately adjusted (including appropriate
adjustment) by the Board from time to time upon the occurrence, after the date
hereof, of the following events:

                  1.7.1 STOCK DIVIDENDS, FORWARD SPLITS AND REVERSE SPLITS. In
         case the Company shall (i) pay a dividend in, or make a distribution
         of, shares of its common stock or of capital stock convertible into
         common stock on its outstanding common stock ("Stock Dividend"), (ii)
         subdivide its outstanding shares of common stock into a greater
         number of such shares ("Forward Split") or (iii) combine its
         outstanding shares of common stock into a smaller number of such
         shares ("Reverse Split"), the total number of shares of Stock (and,
         if applicable, the capital stock convertible into common stock), the
         number of shares Stock purchasable upon the exercise of each Option
         outstanding immediately prior thereto shall be adjusted so that the
         holder of the Option upon exercise shall be entitled to receive at
         the same aggregate Option Price or the ISO Price the number of shares
         of Stock (and, if applicable, the capital stock convertible into
         common stock) which such holder would have owned or have been
         entitled to receive immediately following the happening of any of the
         event described above had such Option been exercised in full
         immediately prior to the happening of such event. Any adjustment made
         pursuant to this Subsection shall, in the case of a Stock Dividend,
         automatically become effective as of the record date therefor and, in
         the case of a Forward Split or Reverse Split, be made as of the
         effective date thereof. If, as a result of an adjustment made
         pursuant to this Subsection, the holder of any Option thereafter
         exercised shall become entitled to receive shares of two or more
         classes of capital stock of the Company, the Board (whose
         determination shall be conclusive and shall be evidenced by a Board
         resolution) shall determine the allocation of the Option Price or the
         ISO Price between or among shares of such classes of capital stock.

                  1.7.2 NON-ADJUSTMENT OF EXERCISE PRICE. In the event of any
         adjustment of the total number of shares of Stock purchasable upon the
         exercise of outstanding Options pursuant to Subsection 1.7.1, the
         Option Price or the ISO Price of each such Option shall remain
         unchanged, but the number of Shares (and, if applicable, the capital
         stock convertible into common stock) purchasable upon exercise of each
         such Option shall be adjusted as provided in Subsection 1.7.1.

                  1.7.3 REORGANIZATION OR RECLASSIFICATION. In the event of a
         capital reorganization or a reclassification of the common stock
         (except as provided in Subsection 1.7.1 or Subsection 1.7.5), the
         holder of Options, upon exercise thereof, shall be entitled to
         receive, in lieu of the Stock to which the holder would have become
         entitled upon exercise immediately prior to such reorganization or
         reclassification, the Stock (of any class or classes)


                                      -2-

<PAGE>

         or other securities or property of the Company (or cash) that the
         holder would have been entitled to receive at the same aggregate
         Option Price or the ISO Price upon such reorganization or
         reclassification if the Options held had been exercised immediately
         prior thereto; and in any such case, appropriate provision (as
         determined by the Board, whose determination shall be conclusive and
         shall be evidenced by a Board resolution) shall be made for the
         application of this Section 1.7 with respect to the rights and
         interests thereafter of the holders of outstanding Options
         (including, but not limited to, the allocation of the Option Price or
         the ISO Price between or among shares of classes of capital stock),
         to the end that this Section 1.7 (including the adjustments of the
         number of shares of Stock or other securities purchasable) shall
         thereafter be reflected, as nearly as reasonably practicable, in all
         subsequent exercises of the Options for any Stock or securities or
         other property (or cash) thereafter deliverable upon the exercise of
         the Options.

                  1.7.4 NOTIFICATION OF OPTION HOLDERS. Whenever the number of
         shares of Stock or other securities purchasable upon exercise of an
         Option is adjusted as provided in this Section 1.7, the Company will
         promptly provide the holders of outstanding Options a letter or
         certificate signed by the Chairman of the Board, Chief Executive
         Officer or the President, or a Vice President of the Company and by
         the Treasurer or an Assistant Treasurer or the Secretary or an
         Assistant Secretary of the Company setting forth (i) the number and
         kind of shares purchasable, as so adjusted, (ii) stating that such
         adjustments in the number shares of Stock or kind of shares or other
         securities conform to the requirements of this Section 1.7, and (iii)
         setting forth a brief statement of the facts accounting for such
         adjustments. Such letters or certificates shall be conclusive
         evidence of the correctness of such adjustments. Such letters or
         certificates will be promptly delivered, by first-class, postage
         prepaid mail, to the registered holders of the outstanding
         Certificates; provided, however, that failure to deliver such letters
         or certificates required under this Subsection, or any defect
         therein, shall not affect the legality or validity of any such
         adjustments under this Section 1.7.

                  1.7.5 CONSOLIDATION OR MERGER. In case of any consolidation of
         the Company with, or merger of the Company with, or merger of the
         Company into, another corporation (other than a consolidation or
         merger which does not result in any reclassification or change of the
         outstanding Common Stock), or in case of any sale or conveyance to
         another corporation of the property of the Company as an entirety or
         substantially as an entirety, the corporation formed by such
         consolidation or merger or the corporation which shall have acquired
         such assets, as the case may be, shall execute and deliver to each
         holder of outstanding Options a supplemental agreement providing that
         the holder of each Option then outstanding shall have the right
         thereafter (until the expiration of such Options) to receive, upon
         exercise of such Options, solely the kind and amount of shares of
         stock and other securities and property (or cash) receivable upon
         such consolidation, merger, sale or transfer by a holder of the
         number of shares of Stock of the Company for which such Options might
         have been exercised immediately prior to such consolidation, merger,
         sale or transfer. Such supplemental agreement shall provide for
         adjustments which shall be as nearly equivalent as may be practicable
         to the adjustments provided in this Section 1.7. The above provision
         of this Subsection 1.7.5 shall similarly apply to successive
         consolidations, mergers, sales or transfers.

                  1.7.6 EFFECTIVE UPON STOCK OPTION AGREEMENTS. Irrespective of
         any adjustments in the number or kind of shares issuable upon exercise
         of the Options, the Stock Option Agreement theretofore or thereafter
         issued may continue to express the same price and number and kind of
         shares as are stated in the similar Stock Option Agreements initially
         issuable pursuant to this Plan.

                  1.7.7 RETAIN INDEPENDENT PUBLIC ACCOUNTANTS. The Company may
         retain a firm of independent public accountants of recognized
         standing, which may be the firm regularly retained by the Company,
         selected by the Board to make any computation required under this
         Section 1.7, and a certificate signed by such firm shall be
         conclusive evidence of the correctness of any computation made under
         this Section 1.7.

                  1.7.8 DEFINITION OF STOCK. For the purpose of this Section
         1.7, the term "Stock" shall mean (i) the class of stock designated as
         common stock in the Certificate of Incorporation of the Company, as
         amended, at


                                      -3-

<PAGE>

         the date of this Agreement, or (ii) any other class of stock
         resulting from successive changes or reclassifications of such common
         stock consisting solely of changes in par value, or from par value to
         no par value, or from no par value to par value. In the event that at
         any time as a result of an adjustment made pursuant to this Section
         1.7, the holder of any Options thereafter exercised shall become
         entitled to receive any shares of capital stock of the Company other
         than shares of Stock, thereafter the number of such other shares so
         receivable upon exercise of any Options shall be subject to
         adjustment from time to time in a manner and on terms as nearly
         equivalent as practicable to the provisions with respect to the Stock
         contained in this Section 1.7, and all other provisions of this Plan,
         with respect to the Stock, shall apply on like terms to any such
         other shares.

         1.8 AMENDMENT AND TERMINATION OF THIS PLAN. This Plan shall terminate
at midnight, December 31, 2009, but prior thereto may be altered, changed,
modified, amended or terminated by written amendment approved by the Board.
Provided, that no action of the Board may, without the approval of the
shareholders of the Company, increase the aggregate number of shares of Stock
which may be purchased under Stock Options, SARs or ISO Options granted under
this Plan; withdraw the administration of this Plan from the Board; amend or
alter the Option Price or ISO Price, as applicable; change the manner of
computing the spread upon the exercise of a SAR or amend this Plan in any
manner which would impair the applicability of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, to this Plan. Except as provided in this
Article I, no amendment, modification or termination of this Plan shall in any
manner adversely affect any Stock Option, SAR or ISO Option theretofore
granted under this Plan without the consent of the affected Participant.

         1.9 EFFECTIVE DATE. This Plan shall be effective January 1, 1999,
subject to approval by the holders of a majority of the outstanding Common
Stock of the Company present, or represented, and entitled to vote at a
meeting called for such purpose or pursuant to a consent in lieu of meeting
executed by a majority of the holders of the outstanding Common Stock of the
Company.

         1.10 SECURITIES LAW REQUIREMENTS. The Company shall have the right,
but not the obligation, to cause the shares of Stock issuable upon exercise of
the Options to be registered under the Securities Act of 1933, as amended (the
"Securities Act") or the securities laws of any state or jurisdiction. As a
condition precedent to the grant of any Option or the issuance or transfer of
shares pursuant to the exercise of any Option, the Company may require the
Participant or holder to take any reasonable action to meet such requirements
or to obtain such approvals. The Company shall have the right to restrict the
transferability of shares of Stock issued or transferred upon exercise of the
Options in such manner as it deems necessary or appropriate to insure the
availability of any exemption from registration under the Securities Act and
any other applicable securities laws or regulations that may be available.

         1.11 SEPARATE CERTIFICATES. Upon exercise of the Options, separate
certificates representing the Stock or, if applicable, other securities of the
Company to be delivered to a holder upon the exercise will be issued to the
holders of the Options.

         1.12  PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.

                  (a) PAYMENT FOR STOCK. Payment for shares of Stock purchased
         under this Plan shall be made (i) in full and in cash or check made
         payable to the Company or (ii) may also be made in Common Stock of the
         Company but only in the event the Common Stock of the Company has been
         held or beneficially owned for six months or more or (iii) a
         combination of cash and such Common Stock of the Company. In the event
         that Common Stock of the Company is utilized in consideration for the
         purchase of Stock upon the exercise of an Option, then, such Common
         Stock shall be valued at the "fair market value" as defined in Section
         1.6 of this Plan.

                  (b) RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT. Furthermore,
         a Participant may exercise an Option without payment of the Option
         Price or ISO Price in the event that the exercise is pursuant to
         rights under an SAR attached to the Option and such SAR is
         exercisable on the date of exercise of the Option to


                                      -4-

<PAGE>

         which it is attached. In the event an Option with an SAR attached is
         exercised without payment of the Option Price or ISO Price in cash or
         by check, the Participant shall be entitled to receive either (i) a
         cash payment from the Company equal to the excess of the total fair
         market value of the shares of Stock on such date as determined with
         respect to which the Option is being exercised over the total cash
         Option Price or ISO Price of such shares of Stock as set forth in the
         Option or (ii) that number of whole shares of Stock as is determined
         by dividing (A) an amount equal to the fair market value per share of
         Stock on the date of exercise into (B) an amount equal to the excess
         of the total fair market value of the shares of Stock on such date
         with respect to which the Option is being exercised over the total
         cash Option Price or ISO Price of such shares of Stock as set forth
         in the Option, and fractional shares will be rounded to the next
         lowest number and the Participant will receive cash in lieu thereof.

         1.13 INCURRENCE OF DISABILITY AND RETIREMENT. A Participant shall be
deemed to have terminated his employment as an employee, his independent
contractor arrangement or consulting arrangement with the Company and incurred
a disability ("Disability") if such Participant suffers a physical or mental
condition which, in the judgment of the Board, totally and permanently
prevents a Participant from engaging in any substantial gainful employment
with or the providing of services or consulting for the Company or a
subsidiary. A Participant shall be deemed to have terminated employment as an
employee, independent contractor or a consultant due to retirement
("Retirement") if such Participant ceases to be an employee, independent
contractor or a consultant of the Company or its subsidiary, without cause,
after attaining the age of 55.

         1.14 STOCK OPTIONS AND ISO OPTIONS GRANTED SEPARATELY. Because the
Board is authorized to grant Stock Options, SARs and ISO Options to
Participants, the grant thereof and Stock Option Agreements relating thereto
will be made separately and totally independent of each other. Except as it
relates to the total number of shares of Stock which may be issued under this
Plan, the grant or exercise of a Stock Option or SARs shall in no manner
affect the grant and exercise of any ISO Options. Similarly, the grant and
exercise of any ISO Option shall in no manner affect the grant and exercise of
any Stock Option or SARs.

         1.15 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option,
ISO Option and/or SAR granted under this Plan shall be evidenced by the
minutes of a meeting of the Board or by the written consent of the Board and
by a written Stock Option Agreement effective on the date of grant and
executed by the Company and the Participant. Each Option granted hereunder
shall contain such terms, restrictions and conditions as the Board may
determine, which terms, restrictions and conditions may or may not be the same
in each case.

         1.16 USE OF PROCEEDS. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options granted under this Plan
shall be added to the Company's general funds and used for general corporate
purposes.

         1.17 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein
provided, any Option or SAR granted shall not be transferable otherwise than
by will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of the Participant, only by the Participant.
More particularly (but without limiting the generality of the foregoing), the
Option and/or SAR may not be assigned, transferred (except as provided above),
pledged or hypothecated in any way, shall not be assignable by operation of
law and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option and/or SAR contrary to the provisions hereof shall be null and void
and without effect.

         1.18 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an
Option and/or SAR by the Participant by will or the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice and an unauthenticated copy of the
will and/or such other evidence as the Board may deem necessary to establish
the validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.


                                      -5-

<PAGE>

         1.19 CHANGES IN EMPLOYMENT. So long as the Participant shall continue
to be an employee, independent contractor or consultant of the Company or any
one of its subsidiaries, any Option granted to him shall not be affected by
any change of duties or position. Nothing in this Plan or in any Stock Option
Agreement which relates to this Plan shall confer upon any Participant any
right to continue in the employ as an employee, independent contractor or
consultant of the Company or of any of its subsidiaries, or interfere in any
way with the right of the Company or any of its subsidiaries to terminate his
employment or independent contractor arrangement or consulting arrangement at
any time.

         1.20 SHAREHOLDER RIGHTS. No Participant shall have a right as a
shareholder with respect to any shares of Stock subject to an Option prior to
the purchase of such shares of Stock by exercise of the Option.

         1.21 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. Where
dissolution or liquidation of the Company or any merger consolidation or
combination in which the Company is not the surviving corporation occurs, the
Participant shall have the right immediately prior to such dissolution,
liquidation, merger, consolidation or combination, as the case may be, to
exercise, in whole or in part, the Participant's then remaining Options
whether or not then exercisable, but limited to that number of shares of Stock
(and, if applicable, any other securities of the Company) that can be acquired
without causing the Participant to have an "excess parachute payment" as
determined under Section 280G of the Code determined by taking into account
all of Participant's "parachute payments" determined under Section 280G of the
Code. Provided, the foregoing notwithstanding, after the Participant has been
afforded the opportunity to exercise his or her then remaining Options as
provided in this Section 1.21, and to the extent such Options are not timely
exercised as provided in this Section 1.21, then, the terms and provisions of
this Plan and any Stock Option Agreement will thereafter continue in effect,
and the Participant will be entitled to exercise any such remaining and
unexercised Options in accordance with the terms and provisions of this Plan
and such Stock Option Agreement as such Options thereafter become exercisable.
Provided further, that for the purposes of this Section 1.21, if any merger,
consolidation or combination occurs in which the Company is not the surviving
corporation and results only in a mere change in the identity, form, or place
of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event shall not cause an acceleration of
the exercisability of any such Options granted under this Plan.

         1.22 ASSUMPTION OF OUTSTANDING OPTIONS AND SARS. To the extent
permitted by the then applicable provisions of the Code, any successor to the
Company succeeding to, or assigned the business of, the Company as the result
of or in connection with a corporate merger, consolidation, combination,
reorganization or liquidation transaction shall assume Options and SARs
outstanding under this Plan or issue new Options and/or SARs in place of
outstanding Options and/or SARs under this Plan.

                                     ARTICLE II

                         TERMS OF STOCK OPTIONS AND EXERCISE

         2.1  GENERAL TERMS.

                  (a) GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be
         granted by the Board on the following terms and conditions: No Stock
         Option shall be exercisable within six months from the date of grant
         (except as specifically provided in Subsection 2.1(c) hereof, with
         regard to the death or Disability of a Participant), nor more than
         five years after the date of grant. Subject to such limitation, the
         Board shall have the discretion to fix the period (the "Option
         Period") during which any Stock Option may be exercised. Stock
         Options granted shall not be transferable except by will or by the
         laws of descent and distribution.

                  (b) OPTION PRICE. The option price ("Option Price") for
         shares of Stock subject to Stock Option shall be determined by the
         Board, but in no event shall such Option Price be less than 85 percent
         of the "fair market value" of the Stock on the date of grant.


                                      -6-

<PAGE>

                  (c) ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION ON
         RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The
         Board, in its sole discretion, may permit (i) a Participant who
         terminates employment as an employee, an independent contractor or a
         consultant due to Retirement, (ii) a Participant who terminates
         employment as an employee, an independent contractor or a consultant
         due to a Disability, (iii) the personal representative of a deceased
         Participant, or (iv) any other Participant who terminates employment
         as an employee, independent contractor or a consultant upon the
         occurrence of special circumstances (as determined by the Board), to
         exercise and purchase all or any part of the shares subject to Stock
         Option on the date of the Participant's termination, Retirement,
         Disability, death, or as the Board otherwise so determines,
         notwithstanding that all installments, if any, with respect to such
         Stock Option, had not accrued or vested on such date. Provided, such
         discretionary authority of the Board shall not be exercised with
         respect to any Stock Option (or portion thereof) if the applicable
         six-month waiting period for exercise had not expired, except in the
         event of the death or disability of the Participant when the personal
         representative of the deceased Participant or the disabled
         Participant may, with the consent of the Board, exercise such Stock
         Option notwithstanding the fact that the applicable six-month waiting
         period had not yet expired.

                  (d) NUMBER OF STOCK OPTIONS GRANTED. Participants may be
         granted more than one Stock Option. In making any such determination,
         the Board shall obtain the advice and recommendation of the officers
         of the Company or a subsidiary which have supervisory authority over
         such Participants. The granting of a Stock Option under this Plan
         shall not affect any outstanding Stock Option previously granted to a
         Participant under this Plan.

                  (e) NOTICE OF EXERCISE STOCK OPTION. Upon exercise of a Stock
         Option, a Participant shall give written notice to the Secretary of
         the Company, or other officer designated by the Board, at the
         Company's main office in Oklahoma City, Oklahoma. No Stock shall be
         issued to any Participant until the Company receives full payment for
         the Stock purchased, if applicable, and any required state and
         federal withholding taxes.

                                      ARTICLE III

                                         SARS

3.1 GENERAL TERMS.

                  (a) GRANT AND TERMS OF SARS. The Board may grant SARs to
         Participants in connection with Options granted under this Plan. SARs
         shall not be exercisable (i) earlier than six months from the date of
         grant except as specifically provided in Subsection 3.1(b) hereof in
         the case of the death or Disability of a Participant, and (ii) shall
         terminate at such time as the Board determines and shall be exercised
         only upon surrender of the related Option and only to the extent that
         the related Option (or the portion thereof as to which the SAR is
         exercisable) is exercised. SARs may be exercised only by the
         Participant while actively employed as an employee, an independent
         contractor or a consultant by the Company or a subsidiary except that
         (i) any SARs previously granted to a Participant which are otherwise
         exercisable may be exercised, with the approval of the Board, by the
         personal representative of a deceased Participant, even if such death
         should occur within six months of the date of grant (but not beyond
         the expiration date of such SAR), and (ii) if a Participant
         terminates his employment as an employee, his independent contractor
         arrangement or his consulting arrangement with the Company or a
         subsidiary, as the case may be, on account of Retirement or incurring
         a Disability, such Participant may exercise any SARs which are
         otherwise exercisable, with the approval of the Board, anytime within
         three months of the date of the termination by Retirement or within
         12 months of termination by Disability. If a Participant should die
         during the applicable three-month period following the date of such
         Participant's Retirement or during the applicable 12 month period
         following the date of termination on account of Disability, the
         rights of the personal representative of such deceased Participant as
         such relate to any SARs granted to such deceased Participant shall be
         governed in accordance with (i) of the second sentence of this
         Subsection 3.1(a) of this Article III. The applicable SAR shall (i)
         terminate upon the


                                      -7-

<PAGE>

         termination of the underlying Option, (ii) only be transferable at the
         same time and under the same conditions as the underlying Option is
         transferable, (iii) only be exercised when the underlying Option is
         exercised, and (iv) may be exercised only if there is a positive
         spread between the Option Price or ISO Price, as applicable and the
         "fair market value" of the Stock for which the SAR is exercised.

                  (b) ACCELERATION OF OTHERWISE UNEXERCISABLE SARS ON
         RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The
         Board, in its sole discretion, may permit (i) a Participant who
         terminates employment as an employee, an independent contractor or a
         consultant with the Company or a subsidiary due to Retirement, (ii) a
         Participant who terminates his employment as an employee, his
         independent contractor arrangement or his consulting arrangement with
         the Company or a subsidiary due to a Disability, (iii) the personal
         representative of such deceased Participant, or (iv) any other
         Participant who terminates employment as an employee, his independent
         contractor arrangement or his consulting arrangement with the Company
         or a subsidiary upon the occurrence of special circumstances (as
         determined by the Board) to exercise (within three years of such date
         of termination of employment, independent contractor arrangement or
         consulting arrangement, or the Participant's Retirement, Disability
         or death, as the case may be) all or any part of any such SARs
         previously granted to such Participant as of the date of such
         Participant's termination, Retirement, Disability, death, or as the
         Board otherwise so determines, notwithstanding that all installments,
         if any with respect to such SARs, had not accrued on such date.
         Provided, such discretionary authority of the Board may not be
         exercised with respect to any SAR (or portion thereof if the
         applicable six-month waiting period for exercise had not expired as
         of such date, except (i) in the event of the Disability of the
         Participant or (ii) the death of the Participant, when such disabled
         Participant or the personal representative of such deceased
         Participant may, with the consent of the Board, exercise such SARs
         notwithstanding the fact that the applicable six-month waiting period
         had not yet expired.

                  (c) FORM OF PAYMENT OF SARS. The Participant may request the
         method and combination of payment upon the exercise of a SAR;
         however, the Board has the final authority to determine whether the
         value of the SAR shall be paid in cash or shares of Stock or both.
         Upon exercise of a SAR, the holder is entitled to receive the excess
         amount of the "fair market value" of the Stock (as of the date of
         exercise) for which the SAR is exercised over the Option Price or ISO
         Price, as applicable, under the related Stock Option or ISO Option,
         as the case may be. All applicable federal and state withholding
         taxes will be paid by the Participant to the Company upon the
         exercise of a SAR because the excess amount described above will be
         required to be included within taxable income in accordance with
         Sections 61 and 83 of the Code.

                                    ARTICLE IV

                              GRANTING OF ISO OPTIONS

         4.1 GENERAL. With respect to ISO Options granted on or after the
effective date of this Plan and intended to qualify as "incentive stock
options" as defined in Section 422 of the Code, the provisions of this Article
IV shall apply.

         4.2 GRANT AND TERMS OF ISO OPTIONS. ISO Options may be granted only
to employees of the Company and any of its subsidiaries. No ISO Options shall
be granted to any person who is not eligible to receive "incentive stock
options" as provided in Section 422 of the Code. No ISO Options shall be
granted to any management employee if, immediately before the grant of an ISO
Option, such employee owns more than 10% of the total combined voting power of
all classes of stock of the Company or its subsidiaries (as determined in
accordance with the stock attribution rules contained in Section 425(d) of the
Code). Provided, the preceding sentence shall not apply if, at the time the
ISO Option is granted, the ISO Price is at least 110 percent of the "fair
market value" of the Stock subject to the ISO Option, and such ISO Option by
its terms is not exercisable after the expiration of five years from the date
such ISO Option is granted.


                                      -8-

<PAGE>
                  (a) ISO OPTION PRICE. The option price for shares of Stock
         subject to an ISO Option ("ISO Price") shall be determined by the
         Board, but in no event shall such ISO Price be less than the fair
         market value of the Stock on the date of grant.

                  (b) ANNUAL ISO OPTION LIMITATION. The aggregate "fair market
         value" (determined as of the time the ISO Option is granted) of the
         Stock with respect to which ISO Options are exercisable for the first
         time by any Participant during in any calendar year (under all
         "incentive stock option" plans qualified under Section 422 of the Code
         sponsored by the Company and its subsidiary corporations) shall not
         exceed $100,000.

                  (c) TERMS OF ISO OPTIONS. ISO Options shall be granted on the
         following terms and conditions: (i) no ISO Option shall be
         exercisable within six months from the date of grant (except as
         specifically provided in Subsection 4.2(d) hereof with regard to the
         Disability or death of a Participant), nor more than ten years after
         the date of grant; (ii) the Board shall have the discretion to fix
         the period (the "ISO Period") during which any ISO Option may be
         exercised; (iii) ISO Options granted shall not be transferable except
         by will or by the laws of descent and distribution; (iv) ISO Options
         shall be exercisable only by the Participant while actively employed
         by the Company or a subsidiary, except that (A) any such ISO Option
         granted and which is otherwise exercisable, may be exercised by the
         personal representative of a deceased Participant within 12 months
         after the death of such Participant (but not beyond the expiration
         date of such ISO Option), (B) if a Participant terminates his
         employment as an employee with the Company or a subsidiary on account
         of Retirement, such Participant may exercise any ISO Option which is
         otherwise exercisable at any time within three months of such date of
         termination and (C) if a Participant terminates his employment with
         the Company or a subsidiary on account of incurring a Disability,
         such Participant may exercise any ISO Option which is otherwise
         exercisable at any time within 12 months of such date of termination.
         If a Participant should die during the applicable three-month or 12
         month period following the date of such Participant's Retirement or
         Disability, then in such event, the rights of the personal
         representative of such deceased Participant as such relate to any ISO
         Options granted to such deceased Participant shall be governed in
         accordance with Subsection 4.1(c) of this Article IV.

                  (d) ACCELERATION OF OTHERWISE UNEXERCISABLE ISO OPTION ON
         RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The
         Board, in its sole discretion, may permit (i) a Participant who
         terminates employment as an employee with the Company or a subsidiary
         due to Retirement, (ii) a Participant who terminates employment as an
         employee with the Company or a subsidiary due to a Disability, (iii)
         the personal representative of a deceased Participant, or (iv) any
         other Participant who terminates employment as an employee with the
         Company or a subsidiary upon the occurrence of special circumstances
         (as determined by the Board) to exercise and purchase (within three
         months of such date of termination of employment as an employee or 12
         months in the case of a disabled or deceased Participant) all or any
         part of the shares of Stock subject to ISO Option on the date of the
         Participant's Retirement, Disability, death, or as the Board otherwise
         so determines, notwithstanding that all installments, if any, had not
         accrued on such date. Provided, such discretionary authority of the
         Board may not be exercised with respect to any ISO Option (or portion
         thereof) if the applicable six-month waiting period for exercise had
         not expired as of such date except in the event of the Disability of
         the Participant or death of the Participant, when the disabled
         Participant or the personal representative of such deceased
         Participant, may, with the consent of the Board, exercise such ISO
         Option notwithstanding the fact that the applicable six-month waiting
         period had not yet expired.

                  (e) NUMBER OF ISO OPTIONS GRANTED. Subject to the applicable
         limitations contained in this Plan with respect to ISO Options,
         Participants may be granted more than one ISO Option. In making any
         such determination, the Board shall obtain the advice and
         recommendation of the officers of the Company or a subsidiary which
         have supervisory authority over such Participants. The granting of an
         ISO Option under this Plan shall not affect any outstanding ISO Option
         previously granted to a Participant under this Plan.

                                      -9-

<PAGE>

                  (f) NOTICE TO EXERCISE ISO OPTION. Upon exercise of an ISO
         Option, a Participant shall give written notice to the Secretary of
         the Company, or other officer designated by the Board, at the
         Company's main office in Oklahoma City, Oklahoma.

                                      ARTICLE V

                              OPTIONS NOT QUALIFYING AS
                               INCENTIVE STOCK OPTIONS

         5.1 NON-QUALIFYING OPTIONS. With respect to all or any portion of any
Option granted under this Plan not qualifying as an "incentive stock option"
under Section 422 of the Code, such option or portion thereof shall be
considered a Stock Option granted under this Plan for all purposes. Any Stock
Option granted under this Plan that does not qualify as an "incentive stock
option" under Section 422 of the Code shall be transferrable unless otherwise
limited by the terms to the Stock Option.
























                                      -10-

<PAGE>



                                                                     APPENDIX C

                              FIRST AMENDMENT TO THE
                           CERTIFICATE OF INCORPORATION
                                        OF
                          PRECIS SMART CARD SYSTEMS, INC.

         Precis Smart Card Systems, Inc., an Oklahoma corporation (this
"Corporation"), does hereby certify:

         1. Precis Smart Card Systems, Inc., an Oklahoma corporation, was
incorporated on April 16, 1996.

         2. This First Amendment to the Certificate of Incorporation was duly
adopted in accordance with the provisions of Sections 77 and 80 of the
Oklahoma General Corporation Act (the "Act").

         3. Article FOURTH of this Corporation's Certificate of Incorporation
is hereby amended to read in its entirety as follows:

                  FOURTH. The total number of shares of capital stock which the
         corporation shall have authority to issue is 102,000,000 shares,
         divided into 100,000,000 shares designated as Common Stock, par value
         $.01 per share, and 2,000,000 shares designated as Preferred Stock,
         par value $1.00 per share.

                  The preferences, qualifications, limitations, restrictions
         and the special or relative rights in respect of the shares of each
         classare as follows:

                  PREFERRED

                  The board of directors is authorized, subject to limitations
         prescribed by law and the provisions hereof, to provide for the
         issuance of the shares of Preferred Stock in series, and by filing a
         certificate pursuant to the applicable law of the State of Oklahoma,
         to establish form time to time the number of shares to be included in
         each such series, and to fix the designation, powers, preferences and
         rights of the shares of each such series and the qualifications,
         limitations or restrictions thereof.

                  The authority of the board with respect to each series shall
         include but not be limited to, determination of the following:

                  (a)     The number of shares constituting the series and the
                          distinctive designation of that series;

                  (b)     The dividend rate on the shares of that series,
                          whether dividends shall be cumulative, and if so,
                          from which date or dates, and the rights of priority,
                          if any, of payment of dividends on shares of that
                          series;

                  (c)     Whether that series shall have voting right, in
                          addition to the voting rights provided by law, and if
                          so, the terms of such voting rights;

                  (d)     Whether that series shall have conversion privileges,
                          and if so, the terms and conditions of such
                          conversion, including provisions for adjustment of
                          the conversion rate in such events as the board shall
                          determine;

                  (e)     Whether or not shares shall be redeemable, and if so,
                          the terms and conditions of such redemption,
                          including the date or dates upon or after which they
                          shall be redeemable, and the amount per share payable
                          in case of redemption, which amount may vary with
                          different conditions and at different redemption
                          dates;

                  (f)     Whether that series shall have a sinking fund for
                          redemption or purchase of shares of the series, and
                          if so, the terms and amount of such sinking fund;

                  (g)     The rights of the shares of that series in the event
                          of any voluntary or involuntary liquidation,
                          dissolution or winding up of the affairs of the
                          corporation, and the relative rights of priority, if
                          any, of payment of shares of that series; and

                  (h)     Any other relative rights, preferences or limitations
                          of that series.

<PAGE>

                  Dividends on outstanding shares of Preferred Stock shall be
         paid or set apart for payment before any dividends shall be paid or
         declared or set apart for payment on the common shares with respect to
         the same dividend period.

                  If upon voluntary or involuntary liquidation, dissolution or
         wind up of the corporation the assets available for distribution to
         holders of shares of Preferred Stock of all series shall be
         insufficient to pay such holders the full preferential amount to
         which they are entitled, then such assets shall be distributed
         ratable amount the shares of all series in accordance with the
         respective preferential amounts (including unpaid cumulative
         dividends, if any) payable with respect thereto.

         COMMON

                  Each of the shares of the Common Stock of the corporation
         shall be equal in all respects to each other share. The holders of
         shares of Common Stock shall be entitled to one vote for each share of
         Common Stock held with respect to all matters as to which the Common
         Stock is entitled to be voted.

                  Subject to the preferential and other dividend rights
         applicable to Preferred Stock, the holders of shares of Common Stock
         shall be entitled to receive such dividends (payable in cash, stock or
         otherwise) as may be declared on the Common Stock by the board of
         directors at any time or from time to time out of any funds legally
         available therefor.

                  In the event of any voluntary or involuntary liquidation,
         dissolution or winding up of the corporation, after distribution in
         full of the preferential and/or other amounts to be distributed to the
         holders of shares of Preferred Stock, the holders of shares of Common
         Stock shall be entitled to receive all of the remaining assets of the
         corporation available for distribution to its shareholders, ratably in
         proportion to the number of shares of Common Stock held by them.

         4. The following is added as Article EIGHTH to this Corporation's
Certificate of Incorporation:

                  EIGHTH. The corporation elects that the Control Share
         Acquisition Act as set forth in Sections 1145 through 1155 of Title 18
         of the Oklahoma Statutes shall not apply to the corporation.
         Furthermore, the corporation elects not to be governed by Section
         1090.3 of Title 18 of the Oklahoma Statutes.

         5. In all other respect this Corporation's Certificate of
Incorporation remains as set forth in the Second Amended and Restated
Certificate of Incorporation of this Corporation.

                  IN WITNESS WHEREOF, this Corporation has caused this Firstd
Amendment to the Certificate of Incorporation to be signed by its Chief
Executive Officer and President and attested by its Secretary this ____ day of
_______, 2000.

                                     PRECIS SMART CARD SYSTEMS, INC.


                                     By:
                                        ---------------------------------------
                                          Larry E. Howell
                                          Chief Executive Officer and President

ATTEST:


--------------------------------
Mark R. Kidd, Secretary





                                      -2-
<PAGE>

                                                                     APPENDIX D

                               AUDIT COMMITTEE CHARTER
                                         OF
                           PRECIS SMART CARD SYSTEMS, INC.

                              (Adopted June 7, 2000)

The Audit Committee (the "Committee") of the Board of Directors (the "Board")
of Precis Smart Card Systems, Inc. (the "Company") will have the oversight
responsibility, authority and specific duties as described below.

COMPOSITION

The Committee will be comprised of three or more directors as determined by
the Board. The members of the Committee will meet the independence and
experience requirements of the Nasdaq Stock Market, Inc. (the "Nasdaq") and
the Boston Stock Exchange (the "BSEX"). The members of the Committee will be
elected annually at the meeting of the full Board following the Company's
annual shareholders meeting and will be listed in the annual report to
shareholders. One of the members will be elected Committee Chair by the Board.

RESPONSIBILITY

The Committee is a part of the Board. The Committee's primary function is to
assist the Board in fulfilling its oversight responsibilities with respect to
(i) the annual financial information to be provided to shareholders and the
Securities and Exchange Commission (the "SEC"); (ii) the system of internal
controls that management has established; and (iii) the internal and external
audit process. In addition, the Committee provides a line of communication
between the Company's accounting staff, independent auditors, financial
management and the Board. The Committee should have a clear understanding with
the Board and the independent accountants that the ultimate accountability of
the independent accountants is to the Board and the Committee. The Committee
will make regular reports to the Board concerning it activities.

While the Committee has the responsibilities and powers set forth in this
Charter, the Committee's duties do not include the planning or conduct of
audits or determination that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of the Company's management and
independent auditors. Furthermore, unless otherwise authorized and approved
the Board, the Committee's duties do not require the Committee to conduct
investigations, to resolve disagreements, if any, between management and the
independent auditors or to assure compliance with laws and regulations and the
Company's business conduct guidelines.

AUTHORITY

Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.

MEETINGS

The Committee shall meet as frequently as the Committee deems necessary, but
not less than one time each year, to carry out it duties and responsibilities.
Content of the agenda for each meeting shall be cleared by the Committee
Chair. The Committee is to meet in separate executive sessions with the Chief
Financial Officer, independent auditors and internal accounting staff at least
once each year and more frequently as considered appropriate by the Committee.

ATTENDANCE

Committee members will strive to be present at all meetings, either in person
or by telephonic communications. As necessary or desirable, the Committee
Chair may request that members of management and representatives of the
independent auditors and internal accounting staff be present at Committee
meetings.

                                      -1-

<PAGE>
SPECIFIC DUTIES

In carrying out its oversight responsibilities, the Committee's duties and
responsibilities include the following:

1.      Review and reassess the adequacy of this Charter annually and recommend
        any proposed changes to the Board for approval. This should be done in
        compliance with applicable the Nasdaq, BSEX and SEC audit committee
        requirements.

2.      Review the Company's management, internal accounting staff and
        independent auditors the Company's accounting and financial reporting
        controls. Obtain annually in writing from the independent auditors
        their letter as to the adequacy of such controls.

3.      Review with the Company's management, internal audit and independent
        auditors significant accounting and reporting principles, practices and
        procedures applied by the Company in preparing it financial statements.
        Discuss with the independent auditors their judgments about the
        quality, not just the acceptability, of the Company's accounting
        principles used in financial reporting.

4.      Review the scope of internal audit's work plan for the year and receive
        a summary report of major findings by internal accounting staff and how
        management is addressing the conditions reported.

5.      Review the scope and general extent of the independent accountants'
        annual audit. The Committee's review should include an explanation from
        the independent auditors of the factors considered by the auditors in
        determining the audit scope, including the major risk factors. The
        independent auditors should confirm to the Committee that no
        limitations have been placed on the scope or nature of their audit
        procedures. The Committee will review annually with management the fee
        arrangement with the independent auditors.

6.      Inquire regarding the independence of the independent auditors and
        obtain from the independent auditors, at least annually, a formal
        written statement delineating all relationships between the independent
        auditors and the Company as contemplated by Independence Standards
        Board Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES.

7.      Establish a predetermined arrangement with the independent accountants
        that they will advise the Committee through its Chair and management of
        the Company of any matters identified through procedures followed by
        interim quarterly financial statements, and that such notification as
        required under standards for communication with audit committees is to
        be made prior to the related press release or, if not practicable,
        prior to filing quarterly reports with the SEC.  Also receive a written
        confirmation provided by the independent auditors at the end of each of
        the first and third quarters of the year that they have nothing to
        report to the Committee, if that is the case, or the written
        enumeration of required reporting issues.

8.      At completion of the annual audit, review with management, internal
        accounting staff and independent auditors the following:

         -       The annual financial statements and related footnotes and
                 financial information to be included in the Company's annual
                 report to shareholders and in the annual report filed with the
                 SEC.

         -       Results of the audit of the financial statements and the
                 related report thereon and, if applicable, a report on changes
                 during the year in accounting principles and their
                 application.

         -       Significant changes to the audit plan, if any, and any serious
                 disputes or difficulties with management encountered during
                 the audit. Inquire regarding the cooperation received by the
                 independent auditors during the audit, including access to all
                 requested records, data and information. Inquire of the
                 independent auditors whether have been any disagreements with
                 management that, is not satisfactorily resolved, would have
                 caused them to issue a nonstandard report on the Company's
                 financial statements.

                                      -2-
<PAGE>


         -       Other communications as required to be communicated by the
                 independent auditors by Statement of Auditing Standards
                 ("SAS") 61 as amended by SAS 90 relating to the conduct of the
                 audit. Further, receive a written communication provided by
                 the independent auditors concerning their judgment regarding
                 the quality of the Company's accounting principles, as
                 outlined in SAS 61 as amended by SAS 90, and that they concur
                 with management's representation concerning audit adjustments.

        If deemed appropriate after such review and discussion, recommend to
        the Board that the financial statements be included in the Company's
        annual report filed with the SEC.

9.      After preparation by management and review by the internal accounting
        staff and independent auditors, approve the report required under SEC
        rules and regulations to be included in the Company's annual proxy
        statement. This Charter is to be published as an appendix to the proxy
        statement every three years.

10.     Discuss with the independent auditors the quality of the Company's
        financial and accounting personnel. Also, elicit the comments of
        management regarding the responsiveness of the independent accountants
        to the Company's needs.

11.     Meet with management, internal accounting staff and the independent
        auditors to discuss any relevant significant recommendations that the
        independent auditors may have, particularly those characterized as
        "material" or "serious." Typically, such recommendations will be
        presented by the independent auditors in the form of a letter of
        comments and recommendations address to the Committee. The Committee
        should review responses of management to the letter of comments and
        recommendations of the independent auditors and receive follow-up
        reports on action taken concerning the aforementioned recommendations.

12.     Recommend to the Board the selection, retention or termination of the
        Company's independent auditors.

13.     Review the appointment and replacement of the senior internal
        accounting staff executives.

14.     Review with management, internal audit and independent accountants the
        methods used to establish and monitor the Company's policies with
        respect to unethical or illegal activities by Company employees that
        may have a material impact on the financial statements.

15.     Generally as part of the review of the annual financial statements,
        receive an oral report, at least annually, from the Company's general
        counsel concerning legal and regulatory matters that may have a
        material impact on the financial statements.

16.     As the Committee may deem appropriate, obtain, weigh and consider
        expert advice as to the audit committee related rules of Nasdaq, BSEX,
        and SEC, statements on auditing standards and other accounting, legal
        and regulatory provisions.








                                      -3-
<PAGE>

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

PROXY                                                                      PROXY

                         PRECIS SMART CARD SYSTEMS, INC.
                        2500 SOUTH MCGEE DRIVE, SUITE 147
                             NORMAN, OKLAHOMA 73072

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PRECIS SMART CARD
SYSTEMS, INC.

         The undersigned hereby appoints Larry E. Howell and Kent H. Webb, M.D.
as Proxies, each with the power to appoint his substitute, and hereby appoints
and authorizes either of them to represent and vote as designated below, all the
shares of Common Stock, $.01 par value, of Precis Smart Card Systems, Inc. (the
"Company") held of record by the undersigned on ________, 2000, at the annual
meeting of shareholders to be held on ______, ______, 2000, or any adjournment
thereof.

PROPOSAL ONE --     To approve the Agreement and Plan of Merger, dated March 21,
                    2000, by and among the Company, Precis-Foresight
                    Acquisition, Inc. (a wholly-owned subsidiary of the
                    Company) and Foresight, Inc. and its shareholders Paul A.
                    Kruger and Mark R. Kidd, providing for the merger of
                    Foresight, Inc. into Precis-Foresight Acquisition, Inc. with
                    the result that Foresight, Inc. will become a wholly-owned
                    subsidiary of the Company. A vote "For" will represent a
                    vote for approval of the Agreement and the merger.

                                             / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL TWO--      To approve the Precis Smart Card Systems, Inc. 1999 Stock
                    Option Plan. A vote "For" will represent a vote for approval
                    of the Plan.

                                             / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL THREE --   To approve amendment of the Company's Certificate of
                    Incorporation to provide that the provisions of Sections
                    1090.3 and Sections 1145 through 1155 of the Oklahoma
                    General Corporation Act no longer apply. A vote "For" will
                    represent a vote for approval of the amendment.

                                             / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL FOUR --    To approve amendment of the Company's Certificate of
                    Incorporation to increase the number of authorized shares of
                    common stock, $.01 par value per share, to 100,000,000
                    shares. A vote "For" will represent a vote for approval of
                    the amendment.

                                             / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL FIVE --    To re-elect Kent H. Webb, M.D., Larry E. Howell, Lyle W.
                    Miller and Michael E. Dunn each for a term ending in 2001
                    and until each of their respective successors shall have
                    been duly elected and qualified. A vote "For" will represent
                    a vote for the nominee director.

                    Kent H. Webb, M.D.       / / FOR   / / AGAINST   / / ABSTAIN

                    Larry E. Howell          / / FOR   / / AGAINST   / / ABSTAIN

                    Lyle W. Miller           / / FOR   / / AGAINST   / / ABSTAIN

                    Michael E. Dunn          / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL SIX --     To ratify the appointment of Murrell, Hall, McIntosh & Co.,
                    PLLP as the Company's independent accountants for the year
                    ending December 31, 2000. A vote "For" will represent a
                    vote for such ratification and appointment.

                                             / / FOR   / / AGAINST   / / ABSTAIN

PROPOSAL SEVEN --   To approve other business that properly comes before the
                    Annual Meeting or any adjournment or postponement. A vote
                    "For" will represent a vote for approval of the business
                    presented.

                                             / / FOR   / / AGAINST   / / ABSTAIN


THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS ONE THROUGH SEVEN.


                    Please sign exactly as the name appears to left. When shares
                    are held by joint tenants, both should sign. When signing as
                    attorney, as executor, administrator, trustee or guardian,
                    please give full title as such. If a corporation, please
                    sign in full corporate name by president or other authorized
                    officer. If a

<PAGE>


                    partnership, please sign in partnership name by authorized
                    person.

                    Date: _____________________, 2000

                    -----------------------------------------------------------
                                               Signature

                    -----------------------------------------------------------
                                    Signature if held jointly

                    PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
                    THE ENCLOSED ENVELOPE.




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