ELECTRONIC TRANSMISSION CORP /DE/, SB-2, 1998-03-16

ELECTRONIC TRANSMISSION CORP /DE/
SB-2, 1998-03-16
MISC HEALTH & ALLIED SERVICES, NEC

Previous: ELECTRONIC TRANSMISSION CORP /DE/, 10QSB/A, 1998-03-16

Next: ALLEGIANCE CORP, 10-K405, 1998-03-16

<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

FORM SB-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
------------------------

ELECTRONIC TRANSMISSION CORPORATION
(Name of Small Business Issuer in its Charter)

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

<TABLE>
<S> <C> <C>
DELAWARE 8099 75-2578619
(Primary Standard
Industrial
(State or Other Jurisdiction of Classification Code (I.R.S. Employer
Incorporation or Organization) Number) Identification Number)

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

W. MACK GOFORTH
5025 ARAPAHO ROAD, SUITE 501 5025 ARAPAHO ROAD, SUITE 501
DALLAS, TEXAS 75248 DALLAS, TEXAS 75248
(972) 989-0900 (972) 980-0900
(Address and Telephone Number of (Name, Address and Telephone
Principal Executive Offices and Number of Agent for Service)
Principal Place of Business)
</TABLE>

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

COPY TO:

RICHARD B. GOODNER, ESQ.
JACKSON WALKER L.L.P.
901 MAIN STREET, SUITE 6000
DALLAS, TEXAS 75202
PHONE NO. (214) 953-6167
FAX NO. (214) 953-5822
------------------------

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

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value....... 2,571,872 $0.53125 $1,366,307 $471.10
Total................................ $471.10
</TABLE>

(1) Represents the average of the bid and ask prices of the Common Stock on
March 9, 1998 as reported on The OTC Bulletin Board in accordance with Rule
457(c) under the Securities Act of 1933.
------------------------

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

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 16, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS

ELECTRONIC TRANSMISSION CORPORATION

2,571,872 SHARES OF COMMON STOCK

The 2,571,872 shares (the "Shares") of common stock, $0.001 par value (the
"Common Stock"), of Electronic Transmission Corporation (the "Company"), offered
hereby, are being sold by certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any proceeds from the sale of the
Shares by the Selling Stockholders. See "Selling Stockholders," "Plan of
Distribution" and "Agreements with Selling Stockholders."

The Shares may be offered by the Selling Stockholders from time to time in
open market transactions (which may include block transactions) or otherwise
through The OTC Bulletin Board of the Nasdaq Stock Market, Inc. ("The OTC
Bulletin Board"), or in private transactions at prices relating to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions at prices relating to prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling the
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or purchasers of the Shares, as the case may be, for
whom such broker-dealers may act as agent or to whom they sell as principal or
both. The Selling Stockholders and any broker-dealer acting in connection with
the sale of the Shares offered hereby may be deemed to be "underwriters" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
which event any discounts, concessions or commissions received by them, which
are not expected to exceed those customary in the types of transactions
involved, or any profit on resales of the Shares by them, may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Selling
Stockholders" and "Plan of Distribution."

The costs, expenses and fees incurred in connection with the registration of
the Shares, which are estimated to be approximately $50,000 (excluding selling
commissions and brokerage fees incurred by the Selling Stockholders), will be
paid by the Company.

The Company's Common Stock is traded on The OTC Bulletin Board under the
symbol "ETSM". On March 9, 1998, the average of the closing bid and ask prices
of the Common Stock was $0.53125 per share.

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

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.

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

The Date of this Prospectus is , 1998
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the U.S. Securities and Exchange Commission (the
"SEC") a Registration Statement on Form SB-2 (together with all exhibits
thereto, the "Registration Statement") under the Securities Act with respect to
shares of the Common Stock of the Company which may be sold by certain
stockholders of the Company. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits thereto. Copies of the Registration Statement and exhibits thereto are
available from the SEC upon payment of certain fees prescribed by the SEC.
Copies of the Registration Statement and exhibits thereto may be inspected at
the SEC's principal office, 450 Fifth Street, N.W., Washington, D.C. 20549.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information can be inspected, without
charge, and copies may be obtained, at prescribed rates, at the public reference
facilities of the SEC maintained at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. Copies of such reports may also be inspected,
without charge, at the SEC's regional offices at 7 World Trade Center, Suite
1300, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, copies of such reports may be obtained by mail, at
prescribed rates, from the Public Reference Branch of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. The SEC also maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers of securities which file electronically with
the SEC.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus, including but not limited to the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business"
sections, contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking terminology, such as "may," "intend," "will," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. In particular, any statement,
express or implied, concerning future operating results or the ability to
generate revenues, income or cash flow are forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, there can be no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations ("cautionary statements") are
disclosed in this Prospectus, including, but not limited to, the information
disclosed under "Risk Factors." All forward-looking statements are expressly
qualified by such cautionary statements.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY AND TO PARTICULARLY CONSIDER THE INFORMATION SET
FORTH UNDER THE HEADING "RISK FACTORS." UNLESS OTHERWISE INDICATED, ALL SHARE
AND PER SHARE DATA AND INFORMATION RELATING TO THE NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING IN THIS PROSPECTUS ASSUME NO EXERCISE OF OUTSTANDING OPTIONS
AND WARRANTS TO PURCHASE AN AGGREGATE OF 1,476,942 SHARES AT PRICES RANGING FROM
$.001 TO $1.50 PER SHARE AND NO CONVERSION OF THE COMPANY'S OUTSTANDING
CONVERTIBLE DEBENTURES INTO APPROXIMATELY 83,707 SHARES OF COMMON STOCK.

THE COMPANY

GENERAL

Electronic Transmission Corporation, a Delaware corporation (the "Company"),
is the survivor of a merger (the "Merger") of Electronic Transmission
Corporation, a Texas corporation ("ETC-Texas"), into ETC Transaction
Corporation, a Delaware corporation (originally incorporated in the Province of
Alberta, Canada) ("ETC-Canada"), in the first quarter of 1997. Unless otherwise
indicated herein, all references to the Company include its predecessors's,
ETC-Canada and ETC-Texas. See "Business--Organization."

The Company's core competencies, which are embodied in each of its service
areas, include:

- claims automation services

- medical provider network services

- third party administration

Given the above competencies, the Company is able to provide process and
systems solutions to the non-provider sector of the health care industry.
Process solutions are automated through a broad range of application and data
base information systems. Information systems include software solutions
developed by the Company and are proprietary in nature. In order to provide the
process solutions, the Company contracts with health care payors, self-insured
companies and other payors, such as third party administrators ("TPAs"), for
automation and electronic data interchange (EDI) services. The Company also
contracts with various health care provider networks, through its Electra-Net
division, to provide cost containment services to its customers. In January
1998, the Company, through ETC Administrative Services, Inc., a wholly-owned
subsidiary ("ETC Services"), initiated the Company's TPA component to service
its existing clients. Through ETC Services, the Company can provide a continuum
of services to a self-insured corporate customer beginning with the scanning of
the health care provider's claim and concluding with the payment to the health
care provider. See "Business."

RECENT FINANCINGS

On December 17, 1997, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") pursuant to which Special Situations
Private Equity Fund, L.P. and Special Situations Cayman Fund, L.P.
(collectively, the "Investors") obtained the right to purchase up to an
aggregate of 3,000,000 shares of Common Stock for total consideration of
$1,500,000 or $0.50 per share. The Purchase Agreement calls for the sale and
purchase of the available shares to occur in two tranches. On December 17, 1997,
the Investors purchased an aggregate of 2,447,719 shares of Common Stock, which
represent certain of the Shares being registered in this Prospectus, for total
cash consideration of $1,223,859.50 (the "First Closing"). The Investors may
purchase the remaining 552,281 shares of Common Stock (the "Second Closing")
upon the satisfaction by the Company of the conditions identified below as well
as certain other conditions which may be required by the Investors. See "Selling
Stockholders."

3
<PAGE>
The Second Closing is contingent in part upon the Company's ability to
effect amendments to its Certificate of Incorporation for the purpose of (i)
increasing its authorized Common Stock from 15,000,000 to 20,000,000 shares and
(ii) undertaking a reverse stock split (the "Reverse Stock Split") whereby every
four shares of outstanding Common Stock will be exchanged for one share of
Common Stock (the foregoing amendments to the Certificate of Incorporation being
collectively referred to herein as the "Amendments"). The Company must effect
the Reverse Stock Split by August 15, 1998 unless the last reported bid price on
The OTC Bulletin Board of a share of Common Stock has exceeded $5.00 on each of
the 10 trading days immediately preceding August 1, 1998. A special meeting of
stockholders was held on February 25, 1998 at which time the Amendments were
approved by the requisite vote of the Company's stockholders. The Certificate of
Amendment increasing the authorized Common Stock to 20,000,000 shares was filed
with the State of Delaware on February 27, 1998. See "Description of Securities"
and "Agreements with Selling Stockholders."

CURRENT OPERATIONS AND RELATED MATTERS

For the fiscal year ended December 31, 1997, the Company recorded revenues
of $3,249,492 and had a net loss of $1,999,404. As of December 31, 1997, the
Company had an accumulated deficit of $6,976,881 and a working capital deficit
of $562,394. The Company does not have a bank line of credit. The Company has
funded its operating losses and expansion costs primarily through a combination
of private offerings of debt and equity securities and the factoring of accounts
receivable. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

On February 16, 1998, the Board of Directors of the Company terminated the
Amended and Restated Employment Agreement, dated December 17, 1997, of L. Cade
Havard, the former Chairman of the Board, Chief Executive Officer and President
of the Company. The decision to terminate the agreement was based in part upon
the inability of the Board of Directors and Mr. Havard to resolve differences
regarding the Company's ongoing management and operational philosophy. On
February 16, 1998, Mr. Havard resigned from the Board of Directors. Also on
February 16, 1998, the Board of Directors elected W. Mack Goforth, the Company's
Chief Financial Officer, as a member of the Board of the Directors and to serve
as Chairman thereof, as well as electing Mr. Goforth as Chief Executive Officer
of the Company. See "Business" and "Management."

BUSINESS STRATEGY

The Company's current business strategy is to (i) continue to increase cash
flows by extensively marketing its services to the non-provider sector of the
health care industry, (ii) enhance existing client relationships by offering a
broader range of services, and (iii) concentrate research and development
activities within a limited number of core areas. See "Business--Business
Strategy."

The following are key elements of the Company's strategy:

- Continued use of two-tiered customer contracts.

- Rapid installation and enhanced processing capability.

- Enhanced marketing efforts.

The success of the Company's business strategy is dependent upon (i)
improving claims processing operations through cost reductions and increased
market penetration; (ii) entering into long-term claims processing contracts
with self-insured companies, TPAs and management services organizations; (iii)
successful development and marketing of its claims repricing and successful
expansion of its existing service components; and (iv) its ability to link the
various medical claims processing activities of payees and payors. However, even
if the Company achieves all or a portion of its business strategy, there can be
no assurance that it will be able to generate sufficient revenues to achieve
significant profitable operations or

4
<PAGE>
fund its expansion plans. See "Risk Factors--Working Capital Deficit; Lack of
Liquidity and Capital Resources."

The Company maintains its executive offices at 5025 Arapaho Road, Suite 501,
Dallas, Texas 75248, telephone (972) 980-0900.

THE OFFERING

<TABLE>
<S> <C> <C>
SECURITIES OFFERED BY THE SELLING
STOCKHOLDERS.................... 2,571,872 shares of Common Stock. See "Description of
Securities--Common Stock," "Selling Stockholders,"
"Plan of Distribution" and "Agreements with Selling
Stockholders."

OUTSTANDING SECURITIES SECURITIES
PRESENTLY
OUTSTANDING
---------

Common Stock(1)............................. 14,109,358

RISK FACTORS...................... An investment in the Shares offered hereby involves a
high degree of risk. See "Risk Factors."

TRADING SYMBOL.................... Common Stock--ETSM
</TABLE>

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

(1) Unless otherwise indicated herein, the information contained in this
Prospectus regarding the Company's outstanding securities does not include
543,000 shares reserved for issuance upon exercise of outstanding warrants,
933,942 shares reserved for issuance upon exercise of outstanding options or
approximately 83,707 shares reserved for issuance upon conversion of
outstanding convertible debentures. See "Description of Securities" and
"Shares Eligible for Future Sale."

5
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION

The following summary historical financial information has been presented
for the periods ended December 31, 1996 and December 31, 1997, respectively.
This information has been derived from the audited financial statements of the
Company. In the opinion of management, this financial information includes all
material adjustments necessary to present historical results of the Company.
This financial information does not purport to be indicative of the financial
position or results of operations that may be obtained in the future. This
financial information should be read in conjunction with the historical
financial statements and notes thereto of the Company and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenues........................................................... $ 831,323 $ 3,249,492
Costs of revenues.......................................................... 568,474 1,682,083
Net income/(loss).......................................................... $ (2,470,684) $ (1,999,404)
Net income/(loss) per weighted-average share of common stock outstanding:
Basic.................................................................... $ (0.36) $ (0.23)
Diluted.................................................................. $ (0.36) $ (0.24)
Number of weighted-average shares of common stock outstanding:
Basic.................................................................... 6,906,593 8,960,723
Diluted.................................................................. 6,906,593 8,751,524

DECEMBER 31, 1996 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>

BALANCE SHEET DATA:
Cash....................................................................... $ 50,125 $ 548,565
Working capital (deficit).................................................. (307,329) (562,394)
Total assets............................................................... 918,974 1,825,774
Total liabilities.......................................................... 1,895,283 1,538,867
Stockholders' equity/(deficit)............................................. (976,309) 286,907
</TABLE>

6
<PAGE>
RISK FACTORS

BEFORE DECIDING WHETHER TO PURCHASE THE SHARES OFFERED HEREIN, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER ALL OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS AND, IN PARTICULAR, THE FACTORS DISCUSSED BELOW. INFORMATION
CONTAINED IN THIS PROSPECTUS CONTAINS "FORWARD-LOOKING STATEMENTS" INCLUDING,
WITHOUT LIMITATION, STATEMENTS CONTAINING THE WORDS "BELIEVES," "EXPECTS,"
"INTENDS," "SEEKS TO," "MAY," "WILL," "SHOULD," "ANTICIPATES" AND SIMILAR WORDS
OR THE NEGATIVE THEREOF, OTHER VARIATIONS THEREON, COMPARABLE TERMINOLOGY OR BY
DISCUSSIONS OF STRATEGY. THERE IS NO ASSURANCE THAT FUTURE RESULTS OR EVENTS
WHICH ARE COVERED BY FORWARD-LOOKING STATEMENTS WILL BE ACHIEVED. THE FOLLOWING
PARAGRAPHS OF THIS SECTION OF THE PROSPECTUS IDENTIFY FACTORS WITH RESPECT TO
CERTAIN FORWARD-LOOKING STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO VARY
MATERIALLY FROM FUTURE RESULTS TO WHICH SUCH FORWARD-LOOKING STATEMENTS REFER.
OTHER FACTORS WHICH ARE NOT DISCUSSED IN THIS SECTION ALSO COULD CAUSE ACTUAL
RESULTS TO VARY MATERIALLY FROM FUTURE RESULTS REFERRED TO IN FORWARD-LOOKING
STATEMENTS. AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS.

ACCUMULATED DEFICIT AND INDEPENDENT ACCOUNTANTS' REPORT REFERRING TO GOING
CONCERN UNCERTAINTIES. Since inception, the Company has incurred losses from
operations, and as of December 31, 1997 the Company had an accumulated deficit
of $6,976,881. This history of recurring losses indicates that the Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flows to meet its obligations on a timely basis, to obtain
additional financing or capital and ultimately to attain profitable operations.
The Company's independent accountants, in their report regarding the Company's
financial statements for the fiscal year ended December 31, 1997, stated that
since the Company had a history of losses since inception and had a significant
working capital deficit, doubt existed as to the Company's ability to continue
as a going concern. See "Management's Discussion and Analysis of the Financial
Condition and Results of Operations."

WORKING CAPITAL DEFICIT; LACK OF LIQUIDITY AND CAPITAL RESOURCES. As of
December 31, 1997, the Company had total current assets of $950,886 and total
current liabilities of $1,513,280 resulting in a working capital deficit of
$562,394. The ability of the Company to sustain its working capital, and to
obtain the necessary capital resources to fund future costs associated with its
operations and expansion plans is dependent upon: (i) improving claims
processing operations through cost reductions and increased market penetration;
(ii) entering into long-term claims processing contracts with self-insured
companies, TPAs and management services organizations; (iii) successful
development and marketing of its claims repricing and successful expansion of
its existing service components; and (iv) its ability to link the various
medical claims processing activities of payees and payors. Even if the Company
achieves some success with its operational strategy, there can be no assurance
that it will be able to generate sufficient revenues to sustain its working
capital and have funds available for growth. To achieve all of its objectives,
the Company may be required to raise additional working capital in the short
term by issuing debt and/or equity securities. If the Company is unable to raise
additional capital as needed, it could be forced to limit its expansion plans.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

POSSIBILITY OF CONTINUED LOSSES. The Company incurred losses of $2,470,684
for the fiscal year ended December 31, 1996 and $1,999,404 for the fiscal year
ended December 31, 1997. In addition to the historical losses, the Company
expects to have continued losses in the short term. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business."

DEPENDENCE ON QUALITY OF CLAIMS PROCESSING AND THIRD PARTY ADMINISTRATION
SERVICES. Substantially all of the Company's revenues are currently derived
from providing process and systems solutions to the non-provider sector of the
health care industry. There can be no assurances that processing methodology
will meet the demands of the marketplace in the future. The Company's future
success and financial performance will depend in part upon its ability to
provide an expanding product line that will meet the functionality required by
its customers through the linkage of payees, health care cost containment

7
<PAGE>
companies and payors of medical claims. There can be no assurance that the
Company will successfully implement electronic processing applications that will
meet the requirements of health care providers and payors and thereby achieve
market acceptance. The Company's future success and financial performance is
also dependent upon its ability to develop its TPA business component. Despite
significant capital expenditures by the Company, there can be no assurances
given that the Company will be able to successfully penetrate the highly
competitive TPA market. Failure to either meet the needs of health care
providers and payors with regard to claims processing services or to
successfully develop and market its TPA component will have a materially adverse
effect upon the business operations of the Company. See "Business."

DEPENDENCE ON MAJOR CLIENT; MATERIAL CONTRACTS. For the 12 months ended
December 31, 1997, services provided to Wal-Mart Stores, Inc. ("Wal-Mart"), the
Company's largest client, accounted for approximately 54% of revenues. For the
identical period, network and repricing services provided to Champion
International accounted for approximately 12% of its revenues. The loss of
either client could have a materially adverse effect on the Company and its
business. No other client accounted for as much as 10% of net revenue for the
referenced period. See "Management's Discussion and Analysis of the Financial
Condition and Results of Operations" and "Business."

The Company is a party to a Processing Agreement (the "Processing
Agreement") with Imaged Data, Inc. ("IDI") pursuant to which IDI provides
electronic claims conversion functions for the Company. Under the terms of the
Processing Agreement, IDI can only perform medical claim conversions for the
Company or pay the Company 30% of gross revenues generated by IDI as a result of
medical claims conversions done for the benefit of third parties. The Processing
Agreement is subject to automatic one year renewals with the next renewal to
occur in November 1998. Although the Company currently has a good relationship
with IDI and the Company has no reason to believe otherwise, no assurances can
be given that IDI will agree to an extension of the term of the Processing
Agreement. The loss of IDI's conversion services could have a material adverse
effect on the financial condition and results of operations of the Company. The
Company is, however, aware of other providers of services similar to those
performed by IDI, but no assurance can be given that such services could be
contracted for on mutually acceptable terms.

COMPETITION. The non-provider sector of the health care industry is
intensely competitive and is characterized by companies that provide both
electronic automation and paper processing solutions. There are participants in
the industry that provide automation services, discount and repricing services
and TPA services in the market currently served by the Company. The Company's
competition in the market for electronic claims processing, discount and
repricing services and adjudication and payment services is primarily
concentrated in certain insurance companies, TPAs or management services
organizations which have greater financial and technical resources and longer
operating histories than the Company. The Company also believes that its
processing methodology is easily duplicated. In addition, the Company may face
substantial competition from new entrants into the electronic claims processing
industry. The Company's ability to compete successfully with current and
potential competitors will depend to a significant extent on its ability to
continue developing processing methodologies which are superior to its
competitors, to adapt to changes in the marketplace and produce sufficient
profits to be able to finance its ongoing operations.

CONSOLIDATION AND UNCERTAINTY IN THE HEALTH CARE INDUSTRY. Consolidation of
the payor and provider segments of the health care industry could erode the
Company's customer base and reduce the size of its target market. In addition,
the resulting enterprises could have greater bargaining power, which could lead
to price erosion of the Company's services. The reduction in the size of the
Company's target market or the failure of the Company to maintain adequate price
levels could have a materially adverse effect on the Company's business,
financial condition and results of operations. The health care industry also is
subject to change by political, economic and regulatory influences that may
affect the procurement of contracts

8
<PAGE>
and the operation of health care industry participants. During the past several
years, the United States health care industry has been subject to an increase in
governmental regulation and reform proposals. These reforms may increase
governmental involvement in health care, lower reimbursement rates, and
otherwise change the operating environment for the Company's customers. The
failure of the Company to retain adequate processing efficiency or price levels
as a result of legislative or market driven reforms could have a materially
adverse effect on the Company's business, financial conditions and results of
operations. See "Business."

EFFECT OF GOVERNMENT REGULATION. The Company is not currently subject to
any direct federal or state government regulation because of the nature of its
business. There can be no assurance that federal or state authorities will not
in the future impose restrictions on its activities that might adversely effect
the Company. The failure by the Company to obtain or retain any applicable
licenses, certifications or operational approvals could adversely effect its
existing operations and professional performance. There can be no assurance that
in the future the Company will be able to acquire all the necessary licenses,
permits or approvals, if any, necessary to conduct its business or that the
costs associated with complying with laws and regulations affecting its business
will not have a materially adverse effect on the Company. See "Business."

PROPRIETARY RIGHTS, RISK OF INFRINGEMENT. The Company will rely on
nondisclosure and other contractual provisions to protect its proprietary rights
and trade secrets. The Company has registered its service mark in the States of
Texas, Maryland and Arkansas. There can be no assurance that measures taken by
the Company to protect its intellectual property will be adequate or that the
Company's competitors will not independently develop services that are
substantially equivalent or superior to those of the Company. There can be no
assurance that third parties will not assert infringement claims against the
Company in the future or that a license or similar agreement will be available
on reasonable terms in the event of an unfavorable ruling on any such claim. In
addition, any such claim may require the Company to incur substantial litigation
expenses or subject the Company to significant liabilities and could have a
materially adverse effect on the Company's business, financial condition or
results of operations.

DEPENDENCE ON KEY PERSONNEL. The Company is dependent upon the efforts and
ability of W. Mack Goforth, Chairman of the Board, Chief Executive Officer and
Chief Financial Officer, and Timothy P. Powell, Executive Vice President--Data
Services. The loss of the services of either of these individuals could have a
materially adverse effect on the Company. Each of the foregoing has entered into
employment and non-competition agreements with the Company. In addition, the
Company's future growth will be dependent to a significant degree upon its
ability to attract and retain additional skilled management personnel. See
"Management."

CONFLICTS OF INTEREST. Certain officers, directors and related parties have
engaged in business transactions with the Company. The Company has entered into
consulting, marketing and leasing agreements, respectively, with certain of its
directors and stockholders. Management of the Company believes that the terms of
transactions with officers, directors and related parties were or are as
favorable as those that could have been obtained from unaffiliated parties under
similar circumstances. It is the Company's policy that transactions between it
and its affiliates will be on terms no less favorable than could be obtained
from unaffiliated third parties and be approved by a majority of the
disinterested members of the Board of Directors. See "Certain Relationships and
Related Transactions."

POSSIBLE DILUTION FOR FUTURE SALES OF COMMON STOCK. The issuance of
additional shares of Common Stock or the issuance of stock upon exercise of
outstanding options or warrants or conversion of the outstanding convertible
debentures may result in dilution of the equity represented by the then
outstanding shares of Common Stock held by other stockholders. The issuance of
additional shares of Common Stock, while potentially providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of the Company. The Board of
Directors could issue large blocks of

9
<PAGE>
Common Stock to fend off unwanted tender offers or hostile takeovers without
further stockholder approval. See "Description of Securities" and "Shares
Eligible for Future Sale."

SHARES ELIGIBLE FOR FUTURE SALE. Sales of the Shares in the public market
could have an adverse effect on the market price of the Common Stock. There are
approximately 14,109,358 shares of Common Stock currently outstanding. All of
the Shares of Common Stock offered hereby and approximately 11,274,152 shares of
Common Stock held by current stockholders of the Company will be eligible for
public sale without restrictions, except for restrictions placed upon
disposition of securities by affiliates (those controlling or controlled by or
under common control with the Company and generally deemed to include officers
and directors) of the Company. The remaining approximately 263,334 shares of the
Company's Common Stock are "restricted securities" as that term is defined under
Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). Subject to the volume and holding period limitations of Rule
144, 100,000 currently outstanding shares of Common Stock will be eligible for
sale under Rule 144 within ninety days of the date of this Prospectus. None of
the Company's currently outstanding restricted securities are eligible for sale
under Rule 144(k). No prediction can be made as to the effect, if any, that
future sales of additional shares of Common Stock or the availability of such
shares for sale under Rule 144, other applicable exemptions or otherwise will
have on the market price of the Common Stock prevailing from time to time. Sales
of substantial amounts of Common Stock in the public market, or the perception
that such sales could occur, could adversely affect prevailing market prices of
the Common Stock. See "Principal Stockholders," "Shares Eligible for Future
Sale" and "Selling Stockholders."

PAYMENT OF DIVIDENDS. The Company has never declared or paid any cash
dividends on its capital stock. It is anticipated that future earnings of the
Company will be retained to finance the continuing development of its business.
The payment of any future dividends will be at the discretion of the Board of
Directors of the Company and will depend upon, among other things, future
earnings, the success of business activities, regulatory and capital
requirements, the general financial condition of the Company and general
business conditions.

NO ASSURANCE OF ACTIVE PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK
PRICE. Although the Common Stock is quoted on The OTC Bulletin Board, there can
be no assurance that an active public market for the Common Stock will develop
or be sustained. The trading price of the Common Stock is subject to wide
fluctuations in response to quarter to quarter variations in operating results,
announcements of innovations by the Company or its competitors, and other events
or factors. In addition, the stock market has from time to time experienced
extreme price and volume fluctuations which affects the market price of
securities of publicly traded companies and which have often been unrelated to
the operating performance of these companies. Broad market fluctuations may
adversely affect the market price of the Common Stock. See "Common Stock Price
Ranges and Dividends," "Description of Securities," and "Shares Eligible for
Future Sale."

OVER-THE-COUNTER TRADING MARKET. As the Company's Common Stock is traded on
The OTC Bulletin Board, liquidity of the Company's securities could be impaired,
not only in the number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in security analysts and
news media coverage of the Company and lower prices for the Company's securities
than might otherwise be attained if such securities were listed or traded on a
national or regional exchange.

RISKS OF LOW-PRICED STOCK. The Company's securities are traded on The OTC
Bulletin Board and are subject to Rule 15(g)-9 under the Exchange Act, which
imposes additional sales practice requirements on broker/dealers who sell
securities to persons other than established customers and accredited investors
(generally, individuals with net worths in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their spouses). For transactions
covered by this rule, a broker/dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the

10
<PAGE>
transaction prior to sale. Consequently, such rule may adversely effect the
ability of broker/dealers to sell the Company's securities and may adversely
effect the holder's ability to sell in the secondary market.

The SEC's regulations define a penny stock to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 or with
an exercise price of less than $5.00 per share subject to certain exceptions.
For any transaction involving a penny stock, unless exempt, the SEC's rules
require delivery, prior to any transaction in a penny stock, of a disclosure
schedule prepared by the SEC relating to the penny stock market. Disclosure is
also required to be made about commissions to both the broker/ dealer and the
registered representative in current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stocks.

POTENTIAL ANTI-TAKEOVER EFFECTS OF DELAWARE LAW, CERTIFICATE OF
INCORPORATION AND BYLAWS. Certain provisions of Delaware law applicable to the
Company could delay or make more difficult mergers, tender offers or proxy
contests involving the Company. In addition, the Board of Directors of the
Company may issue shares of preferred stock without stockholder approval on such
terms as the Board of Directors may determine. The rights of all the holders of
Common Stock will be subject to, and may be adversely effected by, the rights of
the holders of any preferred stock that may be issued in the future. In
addition, the Company's Bylaws eliminate the right of stockholders to act by
written consent without a meeting and eliminate cumulative voting in the
election of directors. All of the foregoing could have the effect of delaying,
deferring or preventing a change in control of the Company and could limit the
price that certain investors might be willing to pay in the future for shares of
the Common Stock. See "Description of Securities."

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND
DIRECTORS. Pursuant to the Company's Bylaws, directors and officers are not
liable for monetary damages for breach of fiduciary duty, except in connection
with a breach of the duty of loyalty, for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law.
Furthermore, the Bylaws provide that the Company may indemnify its directors,
officers, employees or agents to the full extent permitted by the Delaware
General Corporation Law (the "DGCL"), and the Company has the right to purchase
and maintain insurance on behalf of any such person whether or not the Company
would have the power to indemnify such person against the liability.

YEAR 2000 MODIFICATIONS. The Company is currently reviewing its computer
systems in order to evaluate necessary modifications for the year 2000. The
Company does not currently anticipate that it will incur material expenditures
to complete any such modifications.

CURRENT PROSPECTUS REQUIRED IN CONNECTION WITH SALE OF SHARES OFFERED
HEREBY. The Selling Stockholders will be able to sell the Shares offered hereby
only if (i) there is a current prospectus relating to the Shares under an
effective registration statement filed with the SEC, and (ii) such Shares are
then qualified for sale or exempt therefrom under applicable state securities
laws of the jurisdictions in which the various Selling Stockholders reside.
There can be no assurance, however, that the Company will be successful in
maintaining a current registration statement. After a registration statement
becomes effective, it may require updating by the filing of a post-effective
amendment. A post-effective amendment is required (i) any time after nine months
subsequent to the effective date when any information contained in the
prospectus is over 16 months old, (ii) when facts or events have occurred which
represent a fundamental change in the information contained in the registration
statement, or (iii) when any material change occurs in the information relating
to the plan or distribution of the securities registered by such registration
statement. The Company anticipates that this registration statement will remain
effective for at least nine months following the date of this Prospectus,
assuming a post-effective amendment is not filed by the Company.

11
<PAGE>
COMMON STOCK PRICE RANGES AND DIVIDENDS

The Company's Common Stock began trading on The OTC Bulletin Board on April
4, 1997 under the symbol "ETSM". The following table sets forth the high and low
bid information for the Common Stock as reported on The OTC Bulletin Board. The
table reflects inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
April 4 - June 30, 1997...................................................... $ 3.50 $ 1.25
July 1 - September 30, 1997.................................................. $ 1.44 $ 0.75
October 1, 1997 - December 31, 1997.......................................... $ 1.13 $ 0.53
January 1, 1998 - March 9, 1998.............................................. $ 0.69 $ 0.38
</TABLE>

HOLDERS. As of March 9, 1998, there were approximately 351 record holders
of the Common Stock.

DIVIDEND POLICY

The Company has not previously paid any cash dividends on its Common Stock
and does not anticipate or contemplate paying dividends on the Common Stock in
the foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's business. In addition, the
Company may not pay any dividends on common equity unless and until all dividend
rights on outstanding preferred stock, if any, have been satisfied. The only
other restrictions that limit the ability to pay dividends on common equity or
that are likely to do so in the future, are those restrictions imposed by law or
by certain credit agreements.

12
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1997. This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's financial statements, including the notes thereto, appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
<S> <C>
Short-term debt................................................................................ $ 249,970
Current maturities of long-term debt........................................................... 102,240
Long-term debt................................................................................. 25,587
-----------------
Total debt and debt equivalents.............................................................. $ 377,797
-----------------
-----------------
Common Stock, $0.001 par value; 14,026,024 shares issued and outstanding....................... $ 14,026
Additional paid-in capital..................................................................... 7,249,762
Accumulated deficit............................................................................ (6,976,881)
-----------------
Total stockholders' equity................................................................... $ 286,907
-----------------
-----------------
Total capitalization......................................................................... $ 664,704
-----------------
-----------------
</TABLE>

13
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION

The following selected financial information has been presented for the
periods ended December 31, 1996 and December 31, 1997, respectively. This
information has been derived from the audited financial statements of the
Company. In the opinion of management, this financial information includes all
material adjustments necessary to present historical results of the Company.
This financial information does not purport to be indicative of the financial
position or results of operations that may be obtained in the future. This
financial information should be read in conjunction with the historical
financial statements and notes thereto of the Company and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
------------- -------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Service revenues................................................................... $ 831,323 $ 3,249,492
Costs of revenues.................................................................. 568,474 1,682,083
Net income/(loss).................................................................. $ (2,470,684) $ (1,999,404)
Net income/(loss) per weighted-average share of common stock outstanding:
Basic............................................................................ $ (0.36) $ (0.23)
Diluted.......................................................................... $ (0.36) $ (0.24)
Number of weighted-average shares of common stock outstanding:
Basic............................................................................ 6,906,593 8,960,723
Diluted.......................................................................... 6,906,593 8,751,524

DECEMBER 31, DECEMBER 31,
1996 1997
------------- -------------
<S> <C> <C>

BALANCE SHEET DATA:
Cash............................................................................... $ 50,125 $ 548,565
Working capital (deficit).......................................................... (307,329) (562,394)
Total assets....................................................................... 918,974 1,825,774
Total liabilities.................................................................. 1,895,283 1,538,867
Stockholders' equity/(deficit)..................................................... (976,309) 286,907
</TABLE>

14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and "Selected Historical Financial
Information" and respective notes thereto, included elsewhere herein. The
information below should not be construed to imply that the results discussed
herein will necessarily continue into the future or that any conclusion reached
herein will necessarily be indicative of actual operating results in the future.
Such discussion represents only the best present assessment of management of the
Company. Because of the Company's recent acquisitions and the limited scale of
the Company's operations prior to 1996, the results of operations from period to
period are not necessarily comparative.

OVERVIEW

The Company is the survivor of the Merger of ETC-Texas into ETC-Canada in
the first quarter of 1997. The Company and all of its predecessors received
going concern audit opinions for the fiscal years ended December 31, 1995, 1996
and 1997.

ETC-Canada was inactive from 1992 until it reorganized its affairs in 1995
in preparation of the Merger. In March 1996, ETC-Canada changed its name from
Solo Petroleums Ltd. ("Solo") to ETC-Canada and effected a one-for-five
consolidation of capital of the outstanding shares of common stock to facilitate
the effectiveness of the Merger. In June 1996, ETC-Canada consummated a private
offering of common stock for aggregate proceeds of $779,575 which it loaned to
ETC-Texas to facilitate the Merger. Since ETC-Canada had no significant assets
and was relatively inactive during the period prior to the Merger, management of
the Company does not believe that a discussion of ETC-Canada's financial
condition and results of operations would be relevant. Therefore, any references
to activity prior to the Merger are activities of ETC-Texas, unless otherwise
specifically referenced.

In January 1998, the Company, through ETC Services, initiated its TPA
component to service its existing clients. Through ETC Services, the Company can
provide a continuum of services to a self-insured corporate customer beginning
with the scanning of the health care provider's claim and concluding with the
payment to the health care provider.

The Company's revenues are generated by different methods for each segment
of its business. The Company is paid a set price for scanning and automating
each health care provider claim. Additionally, the Company is paid a specific
percentage of the "savings" generated by its re-pricing activities. The TPA
services are charged on a set price for each customer employee that is serviced
by the Company.

The Company has not generated sufficient revenues during its limited
operating history to repay its outstanding indebtedness, pay its existing trade
accounts or fund its ongoing operating expenses or service development
activities. The Company plans to alleviate its current financial problems
through private offerings of debt or equity securities, borrowings and increased
profits from operations. The Company has historically been able to raise capital
through the private sales of its Common Stock. At December 31, 1997, the Company
had cash and cash equivalents of approximately $548,565 and a working capital
deficit of approximately $562,394. Management believes that cash, working
capital and available credit facilities

15
<PAGE>
are sufficient to fund operations of the Company through the close of its fiscal
year ending December 31, 1998. Significant additional research and development
expenditures are not anticipated at this time.

At December 31, 1997, the Company had 19 clients including self-insured
companies and medical provider networks. The Company expended considerable
effort and resources, including hiring personnel with extensive experience in
paying medical claims, to develop its current work flow process. Additional
resources were devoted to (i) defining the exact services that were needed by
the market segment and (ii) developing, testing and ultimately implementing
these services. While expensive and time consuming, these activities serve as
the basis on which the business of the Company will operate. As the Company
expands its customer base, additional computer equipment and personnel will be
required and added. Such expansion will be funded by the revenues derived from
operations and other funding sources that the Company may find from time to
time.

RESULTS OF OPERATIONS OF THE COMPANY

YEAR ENDED DECEMBER 31, 1996 COMPARED TO 1995

REVENUES. During the fiscal year ended December 31, 1996, revenues were
$831,323 as compared to $66,612 for fiscal 1995. The Company did not have any
ongoing operations during fiscal 1995.

During fiscal 1996, the Company entered into an agreement to provide
electronic medical claims processing and repricing services for Wal-Mart. For
the fiscal year ended December 31, 1996, revenues produced by the agreement were
approximately $596,754 or approximately 64% of revenues. Loss of Wal-Mart as a
client would have a materially adverse effect on the Company's results of
operations, and might require the Company to temporarily reduce staff, curtail
operations and delay expansion plans. See "Risk Factors--Dependence on Major
Clients; Material Contracts."

COST OF REVENUES. Direct costs in fiscal 1996 were $568,474, consisting
primarily of $324,466 in data entry personnel costs, $151,383 in optical
character recognition costs and $28,469 in electronic data line costs. Direct
costs in fiscal 1995 were $40,764.

GROSS PROFIT. Gross profit for fiscal 1996 was $262,849 as compared to
$25,848 in fiscal 1995. The gross profit margin for fiscal 1996 was 31.6% versus
38.8% for fiscal 1995.

OTHER EXPENSES. As the Company continued to develop, its start-up costs
declined. The start-up costs incurred in fiscal 1996 were $395,866 or 42.1% of
the $939,347 incurred in fiscal 1995. Likewise, research and development
expenses continued to increase. Research and development expenses in fiscal 1996
increased to $1,469,858 from $179,830. Sales, general and administrative
expenses in fiscal 1996 were $826,285 compared to zero in fiscal 1995. Total
other expenses in fiscal 1996 were $2,803,429 verses $1,159,941 in fiscal 1995.
Total expenses in fiscal 1996 included $1,254,094 in personnel costs verses
$521,472 in fiscal 1995. Total expenses in fiscal 1996 also included $693,541 in
legal and professional fees primarily related to expenses incurred in seeking
and identifying suitable merger candidates, general corporate matters,
preparation of the merger agreement and related documents pertaining to the
Merger, and the audit, accounting and legal fees for the preparation of the
joint proxy statement/prospectus used in connection with the Merger.

NET LOSS. The Company incurred a net loss of $2,470,684 verses $1,093,329
for the fiscal years ended December 31, 1996 and 1995, respectively. The Company
has approximately $2,886,000 in tax loss carry forwards generated by these
losses.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO 1996

REVENUES. Revenues from automation services totaled $1,286,251 and $797,154
for the fiscal years ended December 31, 1997 and 1996, respectively. With the
initiation of the Electra-Net division in April 1997, revenues for network
services totaled $1,788,997 for the fiscal year ended December 31, 1997.

16
<PAGE>
The addition of Electra-Net caused total revenues to increase 300% when
comparing revenues of $312,774 for the first quarter ended March 31, 1997 and
$912,026 for the second quarter ended June 30, 1997. The Company's workers'
compensation division had revenues totaling $174,243 in fiscal 1997, with fiscal
1996 revenues of $34,169 based on four months of operations.

For the fiscal year ended December 31, 1996, fees paid by Wal-Mart for
automation services were approximately 64% of total revenues. In fiscal 1997,
Wal-Mart accounted for 54% of total revenues, which demonstrates the
diversification and growth of the Company's client base during the period.

COST OF REVENUES. Cost of automation services totaled $763,700 and $568,474
for the fiscal years ended December 31, 1997 and 1996, respectively. These costs
for fiscal 1997 were comprised of $457,471 in data entry personnel, $247,767 in
imaging fees and $36,386 for communication expenses. In fiscal 1996, these costs
consisted of $324,466 in data entry personnel, $151,383 in imaging fees and
$28,469 in communication expenses. Cost of network services were largely made up
of $579,739 in third party network fees. Cost of workers' compensation services
were comprised primarily of personnel costs of $65,772 and $25,000 for the
fiscal years ended December 31, 1997 and 1996, respectively.

GROSS PROFIT. Gross profit for fiscal 1997 was $1,567,409 as compared to
$262,849 for fiscal 1996. The gross profit margin for fiscal 1997 was 48.3%
verses 31.6% for fiscal 1996.

OTHER EXPENSES. The Company, in the fourth quarter of 1996, emerged from
the development stage with the signing of the long-term contract with Wal-Mart.
Therefore, no start-up costs or research and development costs were recorded for
the fiscal year ended December 31, 1997. Sales, general and administrative costs
increased to $3,406,709 for the fiscal year ended December 31, 1997, compared to
$826,285 for the fiscal year ended December 31, 1996. The Company has issued
stock options to employees which are considered compensatory. Compensation costs
were expensed over the periods of employment attributable to the options at an
amount equal to the excess of the fair market value of the Common Stock
underlying such options on the date of grant over the exercise price thereof. In
June 1997, the Company elected to vest all employee stock options and recognize
compensation expense for all outstanding options. Compensation costs totaling
$321,220 and $322,067 was recognized as expense during the fiscal years ended
December 31, 1997 and 1996, respectively. During the fiscal years ended December
31, 1997 and 1996, the Company issued 320,000 shares of Common Stock for
services for a total expense of $400,000, and 262,625 shares of Common Stock for
a total of $262,625, respectively.

Sales, general and administrative expenses consisted primarily of personnel
costs, rent, telephone and professional fees. Total personnel costs for fiscal
1997 were $1,744,771, rent of $178,212, telephone of $95,814 and professional
fees of $326,561. Professional fees were incurred due to the preparation and
filing of a registration statement, year-end audit, legal matters and computer
consulting.

Interest expense increased to $87,328 for the fiscal year ended December 31,
1997 compared to $34,230 for the fiscal year ended December 31, 1996. The
increase is primarily related to the Company's issuance of convertible
debentures and the factoring of its accounts receivable during fiscal 1997. See
"Description of Securities."

NET LOSS. The Company reported a net loss of $1,999,404 for the fiscal year
ended December 31, 1997 as compared to a net loss of $2,470,684 for the fiscal
year ended December 31, 1996 or ($.23) and ($.36) basic earnings per share for
fiscal 1997 and fiscal 1996, respectively. For the fiscal years ended December
31, 1997 and 1996, the Company incurred non-cash employee stock compensation
expense and stock for consulting services expense totaling $721,220 and
$584,692, respectively, as discussed above. Such compensation expenses
materially increased the Company's net loss for the referenced periods. It is
not anticipated that the Company will incur similar expense items in future
periods.

17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has financed its operations, working capital
needs and capital expenditures principally through private placements of equity
securities. Cash and cash equivalents at December 31, 1997 were $548,565. The
Company has a note payable of $121,654 bearing interest at 12% per annum.
Principal of $7,553 including interest is due monthly, with the remaining
balance plus interest due upon maturity on May 19, 1998. The note is
collateralized by an option to purchase 113,333 shares of Common Stock at $1.50
per share. The Company also has a $28,316 bank loan bearing interest at 10.5%.
Principal of $1,484 including interest is due monthly, with the note maturing
September 15, 1998. The bank loan is collateralized by certain equipment. A
subordinated convertible debenture of $100,000 payable to a corporation was
issued in 1997. The debentures bears an interest rate of 12% per annum, payable
semi-annually with principal due upon maturity at May 12, 1998. The debenture is
convertible at $1.25 per common share including principal and accrued interest.
See "Description of Securities."

The Company signed the Purchase Agreement on December 17, 1997 in which it
agreed to sell to the Investors up to an aggregate of 3,000,000 shares of Common
Stock for total proceeds of $1,500,000. The First Closing occurred on December
17, 1997 with an issuance of 2,447,719 shares of Common Stock for $1,223,859.50
in proceeds. The Second Closing, if consummated, will result in the issuance of
an additional 552,281 shares of Common Stock. Proceeds from the First Closing
have been used for working capital. See "Prospectus Summary--The Company" and
"Agreements with Selling Stockholders."

The Company's independent auditors have included a paragraph in their report
to the Company's Board of Directors and stockholders which states that the
Company's loss from operations and working capital deficiency raise substantial
doubt about its ability to continue as a going concern. The Company is currently
reviewing its cost structure and accessing a possible reduction in the fixed
cost portion of its infrastructure. If in the first quarter of fiscal 1998
revenues do not significantly increase as compared to the identical period for
fiscal 1997, the Company will take steps to reduce fixed costs to be
proportionate with revenues. The Company also intends to increase its current
sales force by entering into marketing agreements with certain consultants to
provide additional clients and increase revenues. As of the date of this
Prospectus, the Company has not entered into any such consulting agreements.
Additionally, the Company continues to enhance its productivity through software
improvements. The Company has no material working capital expenditures over the
next 12-month period. The Company believes that the net proceeds from the second
tranche of the Purchase Agreement, the existing liquidity sources and the
anticipated working capital provided from improved operations, will satisfy its
cash requirements for the next 12 months.

YEAR 2000 MODIFICATIONS

The Company is currently reviewing its computer systems in order to evaluate
necessary modifications for the year 2000. The Company does not currently
anticipate that it will incur material expenditures to complete any such
modifications.

OTHER MATTERS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("SFAS 128"). SFAS
128 requires companies with complex capital structures that have publicly held
common stock or common stock equivalents to present both basic and diluted
earnings per share ("EPS") on the face of the income statement. The presentation
of basic EPS replaces the presentation of primary EPS currently required by
Accounting Principles Board Opinion No. 15 ("APB No. 15"). Basic EPS is
calculated as income available to common stockholders divided by the weighted
average number of common shares outstanding during the period. Diluted EPS is
calculated using the "if converted" method for convertible securities and the
treasury stock method for options and warrants as prescribed by APB No. 15. This
statement is effective for financial statements issued for

18
<PAGE>
interim and annual periods ending after December 15, 1997. The Company adopted
SFAS 128 as of December 31, 1997 for the period ended December 31, 1997 and all
prior periods. The adoption of SFAS 128 has not had a significant impact on the
Company's reported EPS to date.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 129, DISCLOSURES OF INFORMATION ABOUT
CAPITAL STRUCTURE ("SFAS 129") which establishes standards for disclosing
information about an entity's capital structure. The disclosures are not
expected to have a significant impact on the consolidated financial statements
of the Company. SFAS 129 is effective for financial statements ending after
December 15, 1997.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME ("SFAS
130") which established standards for reporting and displaying comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general purpose financial statements. SFAS 130 requires that all items that
are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS 130 is effective for
years beginning after December 15, 1997. The Company does not anticipate a
material impact to its consolidated financial statements upon adoption of this
standard.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION ("SFAS 131") which establishes standards for
the way public business enterprises are to report information about operating
segments in annual financial statements and requires those enterprises to report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes the related disclosures about
products and services, geographic areas and major customers. SFAS 131 replaces
the "industry segment" concept of Financial Accounting Standard No. 14 with a
"management approach" concept as the basis for identifying reportable segments.
SFAS 131 is effective for financial statements for periods beginning after
December 15, 1997. The Company expects additional disclosures will be required,
but otherwise does not anticipate a material impact to its consolidated
financial statements upon adoption of this standard.

19
<PAGE>
BUSINESS

ORGANIZATION

The Company is the surviving entity of the Merger of ETC-Texas into
ETC-Canada during the first quarter of 1997. ETC-Texas was organized in December
1994. ETC-Canada was originally incorporated as Solo in September 1986.
ETC-Canada was inactive from 1992 until late 1995 when it reorganized its
affairs in preparation of the Merger. In March 1996, Solo changed its name to
ETC-Canada and effected a one-for-five consolidation of capital of the
outstanding shares of common stock to facilitate the effectiveness of the
Merger. In June 1996, ETC-Canada consummated a private offering of common stock
for aggregate proceeds of $779,575 which it loaned to ETC-Texas to facilitate
the Merger.

ETC-Texas and ETC-Canada jointly filed a registration statement with the SEC
to register the shares of stock issuable to the stockholders of ETC-Texas under
the terms of the Merger, subject to approval of the Merger by the stockholders
of the respective companies. The Merger was approved by stockholders of
ETC-Texas and ETC-Canada on January 31, 1997 and February 11, 1997,
respectively. ETC-Canada, the surviving corporation, then continued into
Delaware and changed its name to Electronic Transmission Corporation, with the
stockholders of ETC-Texas receiving 1.25 shares of ETC-Canada common stock for
every one share of ETC-Texas common stock outstanding as of the time of the
Merger. The business operations of ETC-Texas were assumed by the survivor
following the Merger.

GENERAL

The Company is in the business of providing process and systems solutions to
the non-provider sector of the health care industry. Process solutions are
automated through a broad range of application and data base information
systems. Information systems include software solutions developed by the Company
and are proprietary in nature. The Company believes that the solutions provide
state-of-the-art methodology and technology to its customers. In order to
provide the process solutions, the Company contracts with health care payors,
self-insured companies and other payors, such as TPAs, for automation and
electronic data interchange (EDI) services. The Company also contracts with
various health care provider networks, through its Electra-Net division, to
provide cost containment services to its clients. With the inauguration of TPA
capabilities through ETC Services, the Company can provide a continuum of
services to a self-insured corporate customer beginning with the scanning of the
health care provider's claim and concluding with the payment to the health care
provider.

SERVICE AREAS

The Company's principal service areas include (i) claims automation, (ii)
cost containment, and (iii) TPA, each of which is discussed below:

CLAIMS AUTOMATION SERVICES. The Company provides automation services of
healthcare claims for (i) self-insured companies that administer their own
healthcare plans and pay their own medical claims, (ii) TPAs that administer
healthcare plans and pay medical claims for self-insured companies, (iii) PPOs,
and (iv) other managed care organizations that offer discounts on medical claims
and who reprice those claims to reflect discounts offered by providers to
payors. The claims automation process electronically captures and stores
electronic images of scanned paper documents. The Company scans more than one
million claims per year for clients, the majority of which are received from
self-insured employers. Utilizing its existing work flow process and available
imaging technology, the Company processes standardized claim forms by scanning
these forms at the client's facility, with the scanned data being transmitted to

20
<PAGE>
the Company's imaging center. The two primary sources for the standardized claim
forms are from the physicians (HCFA's) and from health care facilities such as
clinics and hospitals (UB's). Once received at the Company's imaging center, the
data is processed using an optical character recognition process. The Company
then stores all available data from the scanned claim forms in proprietary data
bases maintained by the Company, manually reviews certain portions of each
claim, and transmits the claim information to a medical provider network
(including Electra-Net) or to a payor (including ETC Services) for repricing
adjudication and/or payment.

MEDICAL PROVIDER NETWORK SERVICES. The Company, through its Electra-Net
division, provides medical provider network services to its clients. Electra-Net
is made up of over 40 regional and national networks, PPO's (Physician Provider
Organization), PHOs (Physician Hospital Organizations), IPAs (Independent
Physician Associations), and other provider groups that have joined with the
Company in providing true EDI claims processing in the managed care area.
Nationally, the number of provider networks with true EDI capabilities is very
small resulting in difficulties for payors looking to reduce costs and
streamline their operations. The Company's integrated solution has dramatically
reduced the time and effort required by payors to process repriced medical
claims. Currently Electra-Net has access to over 384,000 provider contracts that
can be repriced electronically, making it, what management believes to be, one
of the broadest coverage networks in the country.

THIRD PARTY ADMINISTRATION. The need for TPA services has dramatically
increased given that approximately 65% of nationwide group medical insurance is
provided through self-insured benefits, where the employer elects to self-insure
a percentage of the risk rather than pay a fully insured premium. The portion,
if any, which the employer elects not to self-insure is placed as stop loss
coverage with a reinsurance carrier. Self-insured benefit plans can be
administered either by the insurance company who underwrites the stop loss
coverage, self-administered by the employer, or administered by a TPA.
Approximately 50% of self-insured employers elect to use a TPA to administer
their benefit plan.

As a full service TPA, the Company, through its wholly-owned subsidiary, ETC
Services, offers standard administration services, including, but not limited
to, marketing the reinsurance, writing plan documents, processing medical,
dental, vision and disability claims and ensuring compliance with federal and
state mandates. With the electronic data, the Company can reprice electronically
all of the claims prior to being loaded into the Company's licensed claims
system for auto-adjudication. The electronic claims environment increases
accuracy, reduces processing time, and decreases staffing needs. The Company
believes that both the brokerage community, which represents employers, and
reinsurance carriers acknowledge the benefits of the totally automated claims
process system of ETC Services.

BUSINESS STRATEGY

The following are key elements of the Company's strategy:

TWO TIERED CUSTOMER CONTRACTS. The Company typically enters into 90-day
service provider agreements which are cancelable by either the client or the
Company at any time. During this 90-day period, the Company evaluates the needs
of the client, develops a tailored claims processing system, initiates claims
processing procedures for the client's analysis and determines its costs
associated with the services provided to the client. Upon expiration of the
90-day period, the Company will typically enter into a long-term agreement,
generally for a term of two years. The terms of the extended contract will
provide services that are developed and custom designed to fit the needs of the
client during the 90-day review period. The pricing of these services is based
on the Company's current pricing schedules and its cost estimates

21
<PAGE>
developed from on-site review of the customer's requirements. The Company
utilizes the 90-day review process, which is risk free to the client, as a
proving ground for its services thereby allowing it to enter into more lucrative
long-term provider contracts. The Company believes that long-term contracts
provide benefits to both itself and its clients. Clients are able to realize the
cost savings associated with the processing of medical claims through an
electronic medium, while long-term contracts add stability to the Company's
revenue base and may deter potential competition. After the expiration of the
initial term of a long-term contract, the term of the contract continues in
effect until the Company or the client notifies the other of its desire to
terminate.

RAPID INSTALLATION AND ENHANCED PROCESSING CAPABILITY. The Company installs
claims processing equipment, including computer, telecommunications and scanning
equipment, for use at the client's facility. Once the contractual relationship
is entered into, it is the Company's intention to initiate claims processing
services within 20 days of the date that an agreement is reached. The Company
believes its ability to rapidly install a processing system at a client's
location with minimal disruption gives it a significant advantage in the
marketplace.

ENHANCED MARKETING EFFORT. Although the Company has utilized direct
marketing efforts to solicit customers in the past, new customers have been
generated through referrals from a small number of existing clients. Since the
Company's areas of service have grown and been enhanced, the Company will
supplement its direct sales force in the future. The sales force will be
compromised of employees of the Company and outside sales personnel with whom
the Company will have entered into specific marketing agreements. The Company
believes that to be successful in the future, it will have to expand the range
of existing services, its distribution channels and its sales force.

PROFESSIONAL SERVICES. The Company currently provides system and process
review and design, installation and integration services to its customers. The
Company does not currently charge the customer for these services. As the
Company's services in this area become more customized and are expanded, the
Company believes that it will be able to generate a revenue stream from this
activity.

VENDORS. The Company currently furnishes the customer with an imaging
system that is comprised of hardware, software and certain other peripheral
devices free of charge. The Company is considering becoming a value added
reseller ("VAR") for the components of the imaging system. As a VAR, the Company
would be able to enhance its profit margins on the provision of these systems
without increasing its cost of sales.

RESEARCH AND DEVELOPMENT

All of the Company's computer systems are Year 2000 compliant. The Company
believes that to be successful in the future, its products must remain on the
leading edge of technology. The Company continually evaluates new imaging
components including imaging software (optical character recognition (OCR))
capabilities. Additionally, the Company is continually enhancing its proprietary
software used in the provision of the services to its customers. The Company's
research and development activities are based in part upon its efforts to make
enhancements to existing service components in response to recommendations made
by its clients.

SALES AND MARKETING

The Company currently markets its services directly through its own sales
organization. The Company's services are focused towards medium to large (more
than 100 employees) businesses and institutions. Sales are generated primarily
by the Company's sales force, currently comprised of three sales personnel. The
Company intends to increase sales personnel staffing.

22
<PAGE>
The Company's sales professionals are supported by a team of computer
network technicians. These technicians support the clients during the system
installation process and after the sale, provide the clients with repair,
maintenance and support services to maintain the onsite scanning systems, if
applicable.

Referrals from existing clients and vendors, particularly Wal-Mart and Capp
Care, are a significant source of prospective clients and establish credibility
with potential clients. In fiscal 1997, revenues related to vendor referrals
were responsible for $573,921 (17%) of the Company's revenue. There are no
contractual requirements for such referrals and they could cease at any time.

CUSTOMERS

The Company markets its processing services primarily to self-insured
companies, TPAs and other provider networks or other cost containment companies.
The Company's current customer base includes 13 self-insured and
self-administered customers, one health care provider network and five TPA
customers.

Under the terms of its existing agreement with Wal-Mart, the Company is
obligated to provide electronic medical claims processing and repricing services
for a term ending in September 1998. The Company will receive $1.00 per claim
processed for the first 50,000 claims processed in a given month, which amount
will be reduced by $.10 for every additional 50,000 claims processed in that
month. Once 150,000 claims have been processed in a given month, the Company
will receive $.75 per additional claim processed during said month. As of
December 31, 1997 and 1996, the Company processed approximately 789,300 and
611,250 medical claims for the benefit of Wal-Mart, resulting in revenues to the
Company of approximately $1,818,000 and $596,754, respectively. Revenues
generated from Wal-Mart represented approximately 54% and 64% of the Company's
revenues as of December 31, 1997 and 1996 respectively. See "Risk
Factors--Dependence on Major Clients; Material Contracts."

COMPETITION

The non-provider sector of the health care industry is intensely competitive
and is characterized by companies that provide both electronic automation and
paper processing solutions. There are participants in the industry that provide
discount and repricing services and TPA services in the market currently served
by the Company. The Company's competition in the market for electronic claims
processing, discount and repricing services and adjudication and payment
services is primarily concentrated in certain insurance companies, TPAs or
management services organizations which have greater financial and technical
resources and longer operating histories than the Company. The Company also
believes that its processing methodology is easily duplicated. However,
management of the Company believes that the Company's competitors, while each
providing segments of the services offered by the Company, do not offer the
interconnected array of services provided by the Company. The Company believes
that it possesses a competitive advantage by offering its claims automation,
discounting and repricing services in a format that connects payors, payees and
service providers. The service methodology of the Company will allow it to
compete against more established companies with much greater financial and
technical resources. However, there are no barriers which would prohibit the
Company's competitors from modifying their current services to emulate those
offered by the Company. In addition, the Company may face substantial
competition from new entrants into the electronic claims processing industry.
The Company's ability to compete successfully with current and potential
competitors will depend to a significant extent on its ability to continue
developing processing methodologies which are superior to its competitors, to
adapt to changes in the marketplace and produce sufficient profits to be able to
finance its ongoing operations. See "Risk Factors--Competition."

REGULATORY MATTERS

The Company is not subject to any direct federal or state government
regulation because of the nature of its business. There can be no assurance that
federal or state authorities will not in the future impose

23
<PAGE>
restrictions on its activities that might adversely effect the Corporation's
business. The failure by the Corporation to obtain or retain any applicable
licenses, certifications or operational approvals could adversely effect its
existing operations and professional performance. There can be no assurance that
in the future the Corporation will be able to acquire all the necessary
licenses, permits or approvals, if any, necessary to conduct its business or
that the costs associated with complying with laws and regulations affecting its
business will not have a materially adverse effect on the Corporation. See "Risk
Factors-- Effect of Government Regulation."

EMPLOYEES

Effective January 1, 1998, the Company canceled a Staff Leasing Services
Agreement with E(3) Group, Inc., an employee leasing company. The Staff Leasing
Services Agreement had been in effect since January 1996. As of March 9, 1998,
the Company had 59 full-time employees and seven part-time employees. None of
the Company's employees is represented by a labor union or subject to a
collective bargaining agreement. The Company has never experienced a work
stoppage and believes that its employee relations are good.

PROPERTIES

The Company owns no real property. The Company's offices are located in a
12,176 square foot office facility in Dallas, Texas. The lease for the Company's
offices expires September 30, 2001 and provides for monthly rental payments of
$15,662.

24
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following is a list of the names and ages of each of the Company's
directors and executive officers:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
W. Mack Goforth 53 Chairman of the Board of Directors, Chief Executive Officer and Chief
Financial Officer
Timothy P. Powell 40 Executive Vice President--Data Services and Director
Dennis Barnes 41 Director
Michael Eckstein 50 Director
David O. Hannah 73 Director
Scott A. Stewart 43 Director
Ann C. McDearmon 47 Executive Vice President--Director of Marketing
</TABLE>

W. MACK GOFORTH has served as Chief Financial Officer of the Company since
November 1997 and Chairman of the Board of Directors and Chief Executive Officer
since February 16, 1998. From February 1996 to October 1997, Mr. Goforth worked
for Electronic Data Systems Corp. as a Manager in the Global Purchasing Group.
From September 1994 to January 1996, Mr. Goforth was a self-employed financial
consultant performing due diligence procedures for individuals seeking companies
to purchase and working with fiduciaries associated with bankrupt entities. From
April 1989 to August 1994, Mr. Goforth was employed by MCorp as its Managing
Director -- Accounting and Control. Mr. Goforth is a graduate of Southern
Methodist University and is licensed in the State of Texas as a Certified Public
Accountant.

TIMOTHY P. POWELL has served as Executive Vice President -- Data Services
and as a director of the Company since February 1995. From 1981 to February
1995, Mr. Powell served as a self-employed computer consultant for individuals
and corporations. Mr. Powell contracted consulting projects with independent,
governmental organizations and Fortune 1000 companies, and provided services in
system design, implementation, applications development and procurement
specifications.

DENNIS BARNES has served as a director of the Company since June 1997. Mr.
Barnes is the Founder, President and Chief Executive Officer of Barnes Health
Group, Inc., a Dallas-based health care development company. Mr. Barnes has more
than 12 years senior management experience in health care, and served as Chief
Executive Officer of Texas Back Institute, one of the largest free standing
spine clinics in the United States, from 1994 to 1996. From 1992 to 1994, Mr.
Barnes served as Vice President of Rehabilitation Services for Texas Back
Institute. Prior to joining Texas Back Institute, Mr. Barnes was co-owner and
managing partner of Independent Rehabilitation Ventures from 1990 to 1992. Mr.
Barnes has served as President of PRIDE USA, a Dallas-based rehabilitation
company and Chief Executive Officer of MDC America Corporation, a
multidisciplinary health care company. He currently serves as the President of
the Board of Directors of Athletes Working for a Better Texas, a Dallas-based
not-for profit company. Mr. Barnes obtained Bachelors and Masters degrees from
Midwestern State University and completed the course work for a Ph.D. in
Clinical Psychology from the University of Texas Southwestern Medical School in
Dallas, Texas.

MICHAEL ECKSTEIN has served as a director of the Company since January 1996.
Mr. Eckstein is the President of EDI For Healthcare, a Pennsylvania-based
technology company specializing in systems, networking and EDI applications for
health care and insurance industries. Mr. Eckstein's personal experience
includes over 20 years of designing and implementing data processing and
information management solutions for health care providers and payors. He is an
active member of the ANSI Standards Committee for EDI Insurance and Healthcare
Applications, and participates in numerous EDI initiatives including the
National Information Infrastructure task force for health care and medical
applications.

25
<PAGE>
DAVID O. HANNAH has served as a director of the Company since February 1995.
For the proceeding five years, Mr. Hannah has managed his personal investments.
Mr. Hannah has spent most of his professional career in real estate development,
with expertise in the purchase and development of real estate for leasing to
commercial entities.

SCOTT A. STEWART has served as a director of the Company since December
1997. For the past 20 years, Mr. Stewart has been a partner in the law firm of
Horsley & Stewart, Dallas, Texas. Mr. Stewart obtained his Juris Doctorate Law
degree from Southern Methodist University in 1978 and is a Board Certified civil
and personal injury trial lawyer.

ANN C. MCDEARMON has served as Executive Vice President--Director of
Marketing of the Company since June 1995. From November 1989 to May 1995, Ms.
McDearmon served as claims manager for Tucker and Clark, a TPA, where her
responsibilities included claims processing, employee management and
subrogation. While serving as claims manager, Ms. McDearmon wrote the claims
logic for automated claims, created a budget and new filing system, and wrote
plan benefit designs to comply with ERISA and the ADA. Ms. McDearmon has
successfully completed the Health Insurance Association of America courses as
well as the International Claims Administration course on Medical and Dental
claims and LOMA I. Ms. McDearmon obtained a Bachelor of Arts degree from
Arkansas State in 1973.

DIRECTOR COMPENSATION AND COMMITTEES

The Company does not presently compensate its directors for serving in such
a capacity or attending either Board or Committee meetings.

The Board of Directors has created an Audit Committee and a Compensation
Committee; however, at the present time, all Board related matters are acted
upon by the members as a whole. The Audit Committee is to be composed of three
members, one of which shall be independent director, and is charged with
reviewing the annual audit and meeting with independent accountants to review
internal controls and financial management practices. The Compensation Committee
is to be composed of three members, the majority of which are to be independent
directors. The Compensation Committee is charged with recommending to the Board
of Directors the compensation for key employees.

FAMILY RELATIONSHIPS

There are no family relationships among the Company's directors or executive
officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

None of the Company's directors or executive officers has been involved
during the past five years in any legal proceedings material to an evaluation of
such persons ability or integrity.

26
<PAGE>
EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth, for the years
indicated, all cash compensation paid, distributed or accrued for services,
including salary and bonus amounts, rendered in all capacities to the listed
current and former executive officers of the Company. No other executive officer
of the Company, or any predecessor entity, received salary and bonus
compensation in excess of $100,000 in the referenced fiscal years, nor did any
executive officer receive perquisites or other personal benefits exceeding
either $50,000 of 10% of their total annual salary for the referenced periods.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
AWARDS
ANNUAL COMPENSATION --------------------------------
------------------------------- SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING
NAME/TITLE YEAR SALARY/BONUS COMPENSATION STOCK AWARDS OPTIONS/SARS
- ----------------------------------------------------- --------- ------------ ----------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
W. Mack Goforth, Chairman of the Board, 1997 $ 25,000 $ 0 0 200,000
Chief Executive Officer and Chief
Financial Officer(1)................................

Timothy P. Powell, Executive Vice 1997 $ 101,500 $ 0 0 0
President--Data Services............................ 1996 $ 73,000 $ 0 0 0
1995 $ 41,450 $ 0 0 0

Ann C. McDearmon, Executive Vice 1997 $ 134,399 $ 0 0 250,000
President--Director of Marketing.................... 1996 $ 73,281 $ 0 0 0
1995 $ 24,500 $ 0 0 0

L. Cade Havard, former Chairman of the 1997 $ 158,000 $ 0 0 280,000
Board, Chief Executive Officer and 1996 $ 184,000 $ 0 0 0
President(2)........................................ 1995 $ 96,736 $ 0 0 400,000
</TABLE>

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

(1) Mr. Goforth became employed on October 14, 1997 and is entitled to base
compensation of $150,000 per year. See "--Employment Agreements."

(2) Mr. Havard's employment with the Company ceased on February 16, 1998.

EMPLOYMENT AGREEMENTS

On October 14, 1997, the Company and W. Mack Goforth, the Chairman of the
Board, Chief Executive Officer and Chief Financial Officer of the Company,
entered into an Employment and Settlement Agreement (the "Agreement"). Under the
terms of the Agreement, Mr. Goforth agreed to serve the Company for a term of
five years from November 1, 1997. As compensation for services to be rendered by
Mr. Goforth under the terms of the Agreement, he is entitled to receive a base
salary (the "Base Salary") at a rate of One Hundred Fifty Thousand and No/100
Dollars ($150,000) per year payable in accordance with the Company's established
payroll procedures. Mr. Goforth is entitled to participate in all benefit plans,
including stock option plans, provided by the Company on the same basis as other
executive officers of the Company. Furthermore, Mr. Goforth is entitled to four
weeks of paid vacation. Mr. Goforth also received options to purchase 200,000
shares of Common Stock at a price of $1.0625 per share. These options vest at a
rate of 50,000 per year beginning October 31, 1998. The Agreement may be
terminated by the Company without cause, in which event Mr. Goforth is entitled
to receive one year's Base Salary and any options that would have vested in that
year will be accelerated as full and final satisfaction of the Company's
obligations to Mr. Goforth. If Mr. Goforth is terminated after a change in
control, Mr. Goforth will be entitled to the amounts due through the end of the
contract and all non-vested options will become vested. The Agreement may also
be terminated by the Company for cause at any time

27
<PAGE>
the Board of Directors determines Mr. Goforth has been convicted of a felony or
has engaged in gross malfeasance or willful misconduct in performing his duties
under the Agreement. In the event Mr. Goforth is terminated for cause, he shall
be entitled to receive any accrued but unpaid salary and bonus compensation. If
Mr. Goforth's employment is terminated without cause, Mr. Goforth has the right
to include any shares purchased pursuant to the exercise of the options granted
in the Agreement in the next registration statement filed by the Company with
the SEC. Upon termination of the Agreement, Mr. Goforth has agreed, for a period
of two (2) years thereafter, not to solicit for his own benefit, any business of
the same or similar nature to any business conducted by the Company or any
subsidiary during the term of the Agreement from any entities with which the
Company conducted business during the term of the Agreement.

On March 1, 1995, the Company and Timothy P. Powell, Executive Vice
President--Data Services, entered into an Employment Agreement (the
"Agreement"). Under the terms of the Agreement, Mr. Powell agreed to serve in
the capacity of Executive Vice President--Data Services of the Company for a
term of three years ending December 31, 1998. As compensation for services to be
rendered by Mr. Powell under the terms of the Agreement, he is entitled to
receive a base salary (the "Base Salary") at a rate of Seventy-two Thousand and
No/100 Dollars ($72,000) per year payable in accordance with the Company's
established payroll procedures and commission based compensation related to
client originations. Effective September 1997, Mr. Powell's Base Salary was
increased to $120,000. Mr. Powell is entitled to participate in all benefit
plans, including stock option plans, provided by the Company on the same basis
as other executive officers of the Company. Furthermore, Mr. Powell is entitled
to three weeks of paid vacation. The Agreement may be terminated by the Company
without cause, in which event Mr. Powell is entitled to receive 25% of all
salary due for the remainder of the Agreement. The Agreement may also be
terminated by the Company for cause at any time the Board of Directors
determines Mr. Powell has been convicted of a felony or has engaged in gross
malfeasance or willful misconduct in performing his duties under the Agreement.
In the event Mr. Powell is terminated for cause, he shall be entitled to receive
any accrued but unpaid salary and bonus compensation.

On March 1, 1997, the Company and Ann C. McDearmon, Executive Vice
President--Director of Marketing, entered into a revised Employment Agreement
(the "Agreement"). Under the terms of the Agreement, Ms. McDearmon agreed to
serve in the capacity of Executive Vice President--Director of Marketing of the
Company for a term of three years from December 31, 1997. As compensation for
services to be rendered by Ms. McDearmon under the terms of the Agreement, she
is entitled to receive a base salary (the "Base Salary") at a rate of Sixty
Thousand and No/100 Dollars ($60,000) per year payable in accordance with the
Company's established payroll procedures and commission based compensation
related to client originations. Ms. McDearmon is entitled to participate in all
benefit plans, including stock option plans, provided by the Company on the same
basis as other executive officers of the Company. Furthermore, Ms. McDearmon is
entitled to four weeks of paid vacation. McDearmon also received options to
purchase 250,000 shares of Common Stock at a price of $1.25 per share. These
options will be effective for the life of the Agreement and one year after. The
Agreement may be terminated by the Company without cause, in which event Ms.
McDearmon is entitled to receive 25% of all salary due for the remainder of the
Agreement. The Agreement may also be terminated by the Company for cause at any
time the Board of Directors determines Ms. McDearmon has been convicted of a
felony or has engaged in gross malfeasance or willful misconduct in performing
her duties under the Agreement. In the event Ms. McDearmon is terminated for
cause, she shall be entitled to receive any accrued but unpaid salary and bonus
compensation.

STOCK OPTIONS

During fiscal 1997, W. Mack Goforth and Ann C. McDearmon received options to
purchase 200,000 shares of Common Stock at $1.06 per share and 250,000 shares of
Common Stock at $1.25 per share, respectively. Mr. Goforth's options vest at a
rate of 50,000 options per year beginning October 1998.

28
<PAGE>
Ms. McDearmon's options are fully vested, with none having been exercised during
fiscal 1997. The options issued to Ms. McDearmon expire upon the termination of
her employment with the Company. See "--Employment Agreements" for a discussion
of the terms and conditions of the options granted to Mr. Goforth. L. Cade
Havard, the former Chairman of the Board, Chief Executive Officer and President
of the Company, exercised options to purchase an aggregate of 720,000 shares of
Common Stock during fiscal 1997. Mr. Havard's remaining options to purchase
280,000 shares of Common Stock, at a purchase price of $1.25 per share, were
canceled upon the termination of Mr. Havard's employment agreement in February
1998. See "Prospectus Summary--The Company."

During fiscal 1997, the Company granted options to purchase 50,000 shares of
Common Stock, at an exercise price of $1.50 per share, to an employee of the
Company. The option vests over the period commencing June 1998 and ending June
2000 and expires upon the termination of the holder's employment with the
Company.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS GRANTED EXERCISE OR
UNDERLYING OPTIONS/ TO EMPLOYEES IN BASE PRICE
NAME SARS GRANTED (#) FISCAL 1997 ($/SH)
- --------------------------------------------------------- ------------------- --------------------- -------------
<S> <C> <C> <C>
W. Mack Goforth, Chairman of the Board, Chief Executive
Officer and Chief Financial Officer.................... 200,000 15.4% $ 1.06
Timothy P. Powell, Executive Vice President--Data
Services............................................... 0 0 0
Ann C. McDearmon, Executive Vice President-- Director of
Marketing.............................................. 250,000 19.2% $ 1.25
L. Cade Havard, former Chairman of the Board, Chief
Executive Officer and President........................ 800,000 61.5% $ 1.25
</TABLE>

AGGREGATED FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR-END YEAR-END
-------------------------- ------------------------------
NAME/TITLE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
W. Mack Goforth, Chairman of the Board, Chief Executive
Officer and Chief Financial Officer..................... 0 200,000 N/A N/A
Timothy P. Powell, Executive Vice President--Data
Services................................................ 0 0 0 0
Ann C. McDearmon, Executive Vice President-- Director of
Marketing............................................... 250,000 0 $ 0 $ 0
L. Cade Havard, Chairman of the Board, Chief Executive
Officer and President................................... 280,000 0 $ 0 $ 0
</TABLE>

29
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In early 1995, ETC-Texas purchased certain of the assets of Sterling
National Corporation ("Sterling"), a company wholly owned and operated by L.
Cade Havard, the former Chairman of the Board, Chief Executive Officer and
President of the Company, in exchange for a cash payment of $210,000 and the
issuance of 3,965,100 shares of ETC-Texas common stock. Sterling is currently in
the business of factoring accounts receivable, and is the record owner of 6,224
shares of Common Stock. There are no current arrangements between the parties
and none are presently contemplated.

On December 12, 1995, ETC-Texas entered into a marketing agreement (the
"Marketing Agreement") with MS3. Rick Snyder, the principal owner of MS3, is a
former director of the Company. Under the terms of the Marketing Agreement, MS3
is to assist the Company in identifying and bringing under contract clients
requiring claims processing services. As of December 31, 1997, MS3 was owed
$32,857 under the Marketing Agreement.

On January 18, 1996, ETC-Texas entered into a consulting agreement with
Michael Eckstein, a director of the Company, pursuant to which Mr. Eckstein
agreed to assist ETC-Texas in identifying and placing under contract TPAs,
preferred provider organizations and other managed care companies which may be
able to utilize the Company's claims processing services. Under the terms of
this agreement, Mr. Eckstein is entitled to receive compensation on a monthly
basis equal to $3,500 and commissions equal to 8% of the "gross income from
revenue," as defined in the agreement, realized by the Company from clients
generated by Mr. Eckstein.

On April 1, 1996, Solo issued 201,112 shares of its common stock to L. Cade
Havard, the then Chairman of the Board and Chief Executive Officer of Solo, in
satisfaction of $201,112 of debt owed by Solo to Mr. Havard.

The Company is a party to an equipment lease and stock option agreement (the
"Lease Agreement"), dated April 23, 1996, with Ironwood Leasing Ltd., a Texas
corporation ("Ironwood"). Principals of Ironwood, including Dennis Barnes, a
director of the Company, are also stockholders of the Company. Under the terms
of the Lease Agreement, the Company leases certain scanning equipment necessary
to scan paper claims and convert them into electronically transmittable claims
data information. Under the Lease Agreement, the Company has granted to Ironwood
the option to either (i) sell to the Company all the equipment referenced in the
Lease Agreement in exchange for the number of shares of Common Stock equal to
the purchase price for said equipment divided by 1.25 per share or (ii)
purchase, at a per share price of $1.25, the number of shares of Common Stock
equal to the purchase price of the equipment divided by 1.25 whereby the Company
may in turn purchase the equipment referenced in the Lease Agreement at the
expiration of the lease term for $1.00. On June 20, 1996, Ironwood waived the
escrow requirements imposed pursuant to the Lease Agreement for the period
ending June 30, 1996. Ironwood further agreed that the Company would not have to
comply with the escrow provisions of the Lease Agreement until the Company had
received 30-days written notice from Ironwood. The Lease Agreement is for a term
of five years and automatically renews for consecutive one-year periods unless a
party thereto notifies the other of its intent to terminate the Lease Agreement
90 days prior to the end of the renewal term.

Effective May 1, 1996, Roy W. Mers ("Mers") resigned from his position as
President and director of ETC-Texas. As a consequence to his resignation,
ETC-Texas and Mers entered into a Settlement Agreement the obligations of which
were assumed by the Company. Pursuant to the agreement, ETC-Texas agreed to
compensate Mers for his efforts in assisting ETC-Texas in obtaining financing
for its business ventures. The agreement terminated on August 1, 1997 with no
compensation being paid to Mr. Mers.

Effective April 1, 1997, the Company completed a business combination with
Electra-Net, L.C. ("Electra-Net") by assuming its net liabilities. Electra-Net
is a limited liability company wholly owned and controlled by L. Cade Havard.
Mr. Havard received shares of Common Stock as additional consideration

30
<PAGE>
in the transaction. In December 1997, Mr. Havard returned all shares of Common
Stock received in the transaction, pending a review by the Board of Directors of
the appropriateness of the consideration paid. After a review of the nature of
the business combination, it was determined by the Board that Mr. Havard was not
entitled to any additional consideration.

On May 2, 1997, the Company and Elaine Boze, the Company's General Counsel
and a member of the Board of Directors, entered into a Severance Agreement and
General Release (the "Severance Agreement") whereby Ms. Boze resigned as General
Counsel and a director of the Company. Under the terms of the Severance
Agreement, Ms. Boze received a $25,000 separation payment and is entitled to a
continuation of her health care benefits until such time as Ms. Boze becomes
employed by an entity providing similar benefits. In consideration for the
foregoing, Ms. Boze agreed to non-competition, confidentiality and
non-solicitation covenants which expire on May 2, 1999.

31
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table provides certain information based on the outstanding
securities of the Company as of March 9, 1998, with respect to each director,
executive officer and beneficial owner of more than 10% of the Common Stock and
all corporate officers and directors as a group.

<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF
BENEFICIAL OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER(1)(2) OWNERSHIP COMMON STOCK
- ------------------------------------------------------------------------------------- ---------- -----------------
<S> <C> <C>
W. Mack Goforth(3)................................................................... 0 0
Timothy P. Powell(3)(4).............................................................. 446,666 3.0
Dennis Barnes(3)..................................................................... 45,782 *
Michael Eckstein(3).................................................................. 100,000 *
David O. Hannah(3)................................................................... 738,813 5.2
Scott A. Stewart(3).................................................................. 62,337 *
Ann C. McDearmon(5).................................................................. 300,000 2.1
All executive officers and directors as a group (7 persons as to the Company)........ 1,693,598 11.4
Special Situations Private Equity Fund, L.P.(6)(7)................................... 2,000,000 13.8
Special Situations Cayman Fund, L.P.(6)(8)........................................... 1,000,000 7.0
L. Cade Havard(9).................................................................... 2,867,028 20.3
</TABLE>

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

* Indicates less than 1%.

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days following the date of this Prospectus
upon the exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date of this Prospectus have been
exercised. Unless otherwise noted, the Company believes that all persons
named in the table have sole voting and investment power with respect to all
common shares beneficially owned by them.

(2) Unless otherwise indicated, the address of each beneficial owner identified
is: c/o the Company, 5025 Arapaho Road, Suite 501, Dallas, Texas 75248.

(3) Director of the Company.

(4) Represents options to purchase 446,666 shares of Common Stock from the
Sterling National Corporation Trust. The options are fully vested and have
an exercise price of $.001 per share.

(5) Includes options to purchase 250,000 shares of Common Stock at an exercise
price of $1.25 per share.

(6) Special Situations Private Equity Fund, L.P. and Special Situations Cayman
Fund, L.P. are affiliated entities managed through investment advisors
principally owned by Austin W. Marxe and David M. Greenhouse. See "Selling
Stockholders" and "Agreements with Selling Stockholders."

(7) Includes the right to purchase 368,188 shares of Common Stock under the
terms of the Purchase Agreement. See "Prospectus Summary--The Company."

(8) Includes the right to purchase 184,093 shares of Common Stock under the
terms of the Purchase Agreement. See "Prospectus Summary--The Company."

(9) Includes (i) 500,214 shares of Common Stock issued in the name of Mr.
Havard's minor children over which Mr. Havard exercises sole voting and
investment power; (ii) 6,224 shares of Common Stock issued in the name of
Sterling, of which Mr. Havard is the sole stockholder and (iii) 500,000
shares of Common Stock issued in the name of Anneal O. Havard, the wife of
L. Cade Havard.

32
<PAGE>
DESCRIPTION OF SECURITIES

GENERAL

The Company's authorized capital consists of 20,000,000 shares of Common
Stock, $0.001 par value, and 2,000,000 shares of preferred stock, $1.00 par
value (the "Preferred Stock").

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share in all
matters submitted to a vote of stockholders. The holders of Common Stock do not
have cumulative voting rights for the election directors. The holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
by the Board of Directors out of legally available funds. In the event of
liquidation, dissolution or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets of the Company remaining after
provision for payment of liabilities in satisfaction of the liquidation
preference of any shares of Preferred Stock that may be issued and outstanding.
The holders of Common Stock have no preemptive, subscription, redemptive or
conversion rights. The rights, preferences and privileges of the holders of
Common Stock may be subject to those of holders of Preferred Stock, if such
securities should ever be issued. See "--Preferred Stock."

PREFERRED STOCK

The Board of Directors of the Company is authorized, without further
stockholder action, to issue any of the undesignated shares of Preferred Stock
in one or more series and to fix the voting rights, liquidation preferences,
dividend rights, repurchase rights, conversion rights, redemption rights and
terms, including sinking fund provisions, and certain other rights and
preferences of such shares of the Preferred Stock.

WARRANTS

ANDREW WARRANTS. On June 10, 1995, the Company entered into a consulting
agreement with Ken Andrew. In connection with the consulting agreement, the
Company issued to Mr. Andrew 420,000 Common Stock Purchase Warrants (the "Andrew
Warrants") to purchase 420,000 shares of Common Stock at $1.25 per share until
February 28, 2004. At March 9, 1998, none of the Andrew Warrants had been
exercised.

TYLER WARRANTS. In February 1997, the Company issued to each of Craig Tyler
and Mark Tyler 50,000 Common Stock Purchase Warrants (the "Tyler Warrants") to
purchase 50,000 shares of the Company's Common Stock at $1.25 per share until
February 28, 2004. At March 9, 1998, none of the Tyler Warrants had been
exercised.

CONVERTIBLE DEBENTURES

In June 1997, the Company completed the private placement of $150,000 of its
12% Subordinated Convertible Debentures (the "Convertible Debentures") to two
accredited investors. The proceeds from this offering were used for working
capital. The Convertible Debentures are due on May 12, 1998 and are unsecured.
The outstanding Convertible Debentures are convertible into approximately 83,707
shares of the Company's Common Stock, subject to adjustment upon certain events.
The conversion price is $1.25 per share which amount includes accrued and unpaid
principal plus accrued and unpaid interest. In September 1997, $50,000 of the
aggregate principal amount of the Convertible Debentures plus accrued but unpaid
interest thereon was converted into 41,653 shares of Common Stock. See "Selling
Stockholders."

33
<PAGE>
REGISTRATION RIGHTS

Certain holders of the Company's securities have been granted registration
rights for their Common Stock. These include certain piggyback and demand
registration rights (i) held by the holders of the Convertible Debentures for
shares of the Common Stock received upon conversion of the Convertible
Debentures, (ii) for shares upon exercise of options granted to certain
employees of the Company, and (iii) for shares acquired by the Investors
pursuant to the terms of the Purchase Agreement. See "Selling Stockholders" and
"Agreements with Selling Stockholders."

TRANSFER AGENT

The Transfer Agent for the Company's Common Stock is Securities Transfer
Corporation, 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248, (972)
447-9890.

LIMITATION OF LIABILITY OF DIRECTORS

CERTAIN PROVISIONS OF THE COMPANY'S CHARTER

Section 102 of the DGCL authorizes a Delaware corporation to include a
provision in its certificate of incorporation limiting or eliminating the
personal liability of its directors to the corporation and its stockholders for
monetary damages for breach of a director's fiduciary duty of care. The duty of
care requires that, when acting on behalf of the corporation, directors exercise
an informed business judgment based on material information reasonably available
to them. Absent the limitations authorized by such provisions, directors are
accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Although Section 102 of the DGCL does not change a director's duty of care, it
enables corporations to limit available relief to equitable remedies such as
injunction or rescission. Pursuant to such provisions, the Company's Charter
limits the personal liability of the Company's directors, in their capacity as
directors (but not in their capacity as officers) to the Company or its
stockholders to the fullest extent permitted by the DGCL. Specifically, a
Company director will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for (i) any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct and knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases, redemptions or other distributions, and
(iv) any transaction from which the director derived an improper personal
benefit.

The inclusion of this provision may have the effect of reducing the
likelihood of derivative litigation against directors and discourage or deter
stockholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefitted the Company and its stockholders. However, the
inclusion of this provision together with the provision which requires the
Company to indemnify its officers and directors against certain liabilities, is
intended to enable the Company to attract qualified persons to serve as
directors who might otherwise be reluctant to do so.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock in the public market could have
an adverse effect on the market price of the Common Stock. As of the date of
this Prospectus, there are approximately 14,109,358 shares of Common Stock
outstanding. The Shares offered hereby will be eligible for public sale without
restriction, except as may be sold or purchased by affiliates of the Company
(those controlling or controlled by or under common control with the Company and
generally deemed to include officers and directors). Of the 14,109,358 shares of
Common Stock outstanding, 2,835,206 shares are presently deemed "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act. Additionally, there are outstanding options and warrants to
purchase an aggregate 1,476,942 shares of

34
<PAGE>
Common Stock which will be restricted shares under the Securities Act. See
"Management" and "Description of Securities."

Effective April 29, 1997, the SEC adopted amendments to Rule 144 to shorten
the holding period for restricted securities, generally being those securities
purchased in unregistered private placements. As a result of these amendments,
and subject to satisfaction of certain other conditions, a person, including an
affiliate of the Company (or persons whose shares are aggregated into such
affiliate), who has owned restricted shares of Common Stock beneficially for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of one percent of the total number of
outstanding shares of the same class or the average weekly trading volume of the
Common Stock during the four calendar weeks preceding the sale. Subject to the
volume and holding period limitations of Rule 144, 100,000 outstanding shares of
Common Stock are eligible for sale under Rule 144. A person who has not been an
affiliate of the Company for at least the three months immediately preceding the
sale and who has beneficially owned shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144(k) without regard to any of
the limitations described above. No restricted shares of Common Stock would be
eligible for sale under the provisions of Rule 144(k).

The possibility that substantial amounts of Common Stock may be sold in the
public market may adversely affect the prevailing market price for the Common
Stock and could impair the Company's ability to raise capital through the sale
of its equity securities.

35
<PAGE>
SELLING STOCKHOLDERS

The 2,571,872 Shares of Common Stock offered hereby are being sold pursuant
to this Prospectus by the Selling Stockholders. The Company will not receive any
proceeds from the sale of the Shares by the Selling Stockholders. See "Plan of
Distribution."

Except as described below and in "Agreements with Selling Stockholders"
herein, none of the Selling Stockholders has ever held any position or office
with the Company or had any other relationship with the Company or its
affiliates.

The table below sets forth the beneficial ownership of the Company's Common
Stock by the Selling Stockholders at March 9, 1998, and after giving effect to
the sale of the Shares offered hereby.

<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
OWNERSHIP SHARES OWNERSHIP
PRIOR TO PERCENT TO BE AFTER PERCENT
SELLING STOCKHOLDER OFFERING OF CLASS SOLD OFFERING OF CLASS
- ------------------------------------------------- --------------- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Special Situations Private Equity Fund, L.P...... 2,000,000 13.8% 1,631,812 368,188(1) 2.5%
Special Situations Cayman Fund, L.P.............. 1,000,000 7.0% 815,907 184,093(2) 1.3
Teresa Herring................................... 10,413 * 10,413 0 0
Marilyn Hamrick.................................. 10,413 * 10,413 0 0
Nancy Powell..................................... 20,827 * 20,827 0 0
Queensland America Corp.......................... 12,500 * 12,500 0 0
Ethel C. Radzewicz............................... 20,000 * 20,000 0 0
Tammy L. Newman.................................. 20,000 * 20,000 0 0
Robert L. Bonomi................................. 30,000 * 30,000 0 0
</TABLE>

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

* Indicates less than 1%.

(1) Includes the right to purchase 368,188 shares of Common Stock under the
terms of the Purchase Agreement. See "Prospectus Summary--The Company."

(2) Includes the right to purchase 184,093 shares of Common Stock under the
terms of the Purchase Agreement. See "Prospectus Summary--The Company."

PLAN OF DISTRIBUTION

The Shares may be offered by the Selling Stockholders from time to time in
open market transactions (which may include block transactions) or otherwise
through The OTC Bulletin Board, or in private transactions at prices relating to
prevailing market prices or at negotiated prices. The Selling Stockholders may
effect such transactions at prices relating to prevailing market prices or at
negotiated prices. The Selling Stockholders may effect such transactions by
selling the Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders and/or purchasers of the Shares, as the case may be,
from whom such broker-dealers may act as agent or to whom they sell as principal
or both. The Selling Stockholders and any broker-dealer acting in connection
with the sale of the Shares offered hereby may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any discounts,
concessions or commissions received by them, which are not expected to exceed
those customary in the types of transactions involved, or any profit on resales
of the Shares by them, may be deemed to be underwriting commissions or discounts
under the Securities Act.

AGREEMENTS WITH SELLING STOCKHOLDERS

SPECIAL SITUATIONS PRIVATE EQUITY FUND, L.P. AND SPECIAL SITUATIONS CAYMAN FUND,
L.P.

On December 17, 1997, the Company entered into the Purchase Agreement
pursuant to which the Investors obtained the right to purchase up to an
aggregate of 3,000,000 shares of Common Stock for total consideration of
$1,500,000 or $0.50 per share. The Purchase Agreement calls for the sale and
purchase of the shares to occur in two tranches. On December 17, 1997, the
Investors purchased an aggregate of

36
<PAGE>
2,447,719 shares of Common Stock, which represent certain of the Shares being
registered in this Prospectus, for total cash consideration of $1,223,859.50
(the "First Closing"). The Investors may in turn purchase the remaining 552,281
shares of Common Stock upon the satisfaction by the Company of certain
conditions (the "Second Closing"). See "Prospectus Summary--The Company."

Under the terms of the Purchase Agreement, the Company, on or before the
date 45 days after the First Closing, is obligated to file a registration
statement under the Securities Act for the purpose of effecting the registration
of the 2,447,719 shares acquired at the First Closing. The Investors have
extended the filing date for the registration statement required as a result of
the First Closing. In the event the Second Closing is effected, the Company will
be obligated to register the shares of Common Stock acquired by the Investors
within 45 days of the closing date of the Second Closing. Furthermore, the
Selling Stockholders have been granted piggyback registration rights with regard
to the shares acquired or to be acquired under the terms of the Purchase
Agreement. See "Selling Stockholders."

12% SUBORDINATED CONVERTIBLE DEBENTURE HOLDERS

Under the terms of the Convertible Debentures, the holders thereof are
entitled to convert every $1.25 of the principal amount of accrued and unpaid
interest due on the Convertible Debentures into one share of Common Stock and
have such shares registered with the SEC pursuant to certain piggy-back
registration rights. In September 1997, Mary Margaret Cook converted $50,000 of
principal plus accrued and unpaid interest into 41,653 shares of Common Stock
(the "Cook Shares"). Ms. Cook then directed that the Cook Shares be distributed
as follows: 10,413 Cook Shares to Teresa Herring, 10,413 Cook Shares to Marilyn
Hamrick and 20,827 Cook Shares to Nancy Powell. The Company has agreed to
include the Cook Shares in the registration statement of which this Prospectus
is a part. See "Selling Stockholders."

SOLO DEBENTURE HOLDERS

In connection with the Settlement of certain obligations owed to holders of
debentures originally sold by Solo, the Company issued 12,500 shares of Common
Stock to Queensland America Corp. and 20,000 shares of Common Stock to Ethel C.
Radzewicz. In connection with the issuance of the foregoing securities, the
Company granted piggy-back registration rights to the holders thereof. The
Company has agreed to register the shares held by Queensland America Corp. and
Ethel C. Radzewicz in the registration statement of which this Prospectus is a
part. See "Selling Stockholders."

EMPLOYEES

The aggregate of 50,000 shares of Common Stock being registered for Tammy L.
Newman and Robert L. Bonomi were originally issued to said individuals as a
result of their exercise of employee stock options to purchase an identical
number of shares. The Company had agreed to register the shares underlying such
options in a registration statement on Form S-8; however, the referenced
employees exercised their options prior to the filing of such registration
statement. In light of the foregoing, the Company has agreed to register the
shares of Common Stock issued to Ms. Newman and Mr. Bonomi as a result of the
exercise of their options in the registration statement of which this Prospectus
is a part. See "Selling Stockholders."

LEGAL MATTERS

The validity of the issuance of the Shares offered hereby will be passed
upon for the Company by Jackson Walker L.L.P., 901 Main Street, Suite 6000,
Dallas, Texas 75202.

EXPERTS

The financial statements of the Company appearing in this Prospectus have
been audited by Simonton, Kutac & Barnidge, L.L.P., independent certified public
accountants, as set forth in their report appearing elsewhere in this
Prospectus, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

37
<PAGE>
INDEPENDENT AUDITORS' REPORT

January 30, 1998

To the Board of Directors
of Electronic Transmission Corporation:

We have audited the accompanying balance sheets of Electronic Transmission
Corporation, a Delaware corporation, as of December 31, 1996 and 1997, and the
related statements of operations, stockholders' equity 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 Electronic Transmission
Corporation as of December 31, 1996 and 1997, and the results of operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.

As described in Note 3, the accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company
has experienced net losses of $2,470,684 and $1,999,404 for the years ended
December 31, 1996 and 1997, respectively. Additionally, the Company's current
liabilities exceeded its current assets by $562,394 and had an accumulated
deficit of $6,976,881 at December 31, 1997. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 3. Unless the Company
obtains an increased customer base, it will not be able to meet its obligations
as they come due and it will be unable to execute its long-term business plan.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

Simonton, Kutac & Barnidge, L.L.P.

Houston, Texas
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION
BALANCE SHEETS
ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents......................................................... $ 50,125 $ 548,565
Accounts receivable............................................................... 264,559 353,818
Current portion, capital lease receivable......................................... 25,095 27,723
Prepaid assets.................................................................... 15,286 20,780
------------- -------------
Total Current Assets............................................................ 355,065 950,886
------------- -------------
Property and Equipment, net......................................................... 521,576 866,398
------------- -------------
Capital lease receivable............................................................ 27,723 --
Deposits and other.................................................................. 14,610 8,490
------------- -------------
42,333 8,490
------------- -------------
Total Assets........................................................................ $ 918,974 $ 1,825,774
------------- -------------
------------- -------------

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued liabilities.......................................... $ 567,188 $ 1,161,070
Notes payable and convertible debentures.......................................... -- 249,970
Current portion, capital lease obligations........................................ 95,206 102,240
------------- -------------
Total Current Liabilities....................................................... 662,394 1,513,280
Note payable--ETC Transaction Corporation........................................... 779,575 --
Due to shareholder.................................................................. 339,208 --
Long-term capital lease obligations................................................. 114,106 25,587
------------- -------------
Total Liabilities............................................................... 1,895,283 1,538,867
------------- -------------
Stockholders' Equity:
Preferred stock, $1 par value, 2,000,000 shares authorized; no shares issued and
outstanding..................................................................... -- --
Common stock, $0.001 par value, 15,000,000 shares authorized; 7,153,601 and
14,026,024 shares issued and outstanding, respectively.......................... 2,475,637 14,026
Additional paid-in-capital........................................................ 322,067 7,249,762
Accumulated deficit............................................................... (3,774,013) (6,976,881)
------------- -------------
Total Stockholders' Equity...................................................... (976,309) 286,907
------------- -------------
Total Liabilities & Stockholders' Equity............................................ $ 918,974 $ 1,825,774
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-1
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Service revenues.................................................................... $ 831,323 $ 3,249,492
------------- -------------
Costs and Expenses:
Costs of revenues................................................................. 568,474 1,682,083
Selling, general and administrative............................................... 826,285 3,406,709
Depreciation and amortization..................................................... 111,420 270,186
Start-up costs.................................................................... 395,866 --
Research and development.......................................................... 1,469,858 --
------------- -------------
Total Costs and Expenses........................................................ 3,371,903 5,358,978
------------- -------------
Loss from operations................................................................ (2,540,580) (2,109,486)
Other Income (Expense):
Interest expense, net............................................................. (34,230) (87,328)
Other income...................................................................... 104,126 88,148
------------- -------------
Total Other Income.............................................................. 69,896 820
------------- -------------
Loss before income tax expense and extraordinary item............................... (2,470,684) (2,108,666)
Income tax benefit.................................................................. -- 36,000
------------- -------------
Loss before extraordinary item...................................................... (2,470,684) (2,072,666)
Extraordinary item--extinguishment of debt, net of applicable income taxes of
$36,000........................................................................... -- 73,262
------------- -------------
Net loss............................................................................ $ (2,470,684) $ (1,999,404)
------------- -------------
------------- -------------
Loss per common share:
Basic............................................................................. $ (0.36) $ (0.23)
------------- -------------
------------- -------------
Diluted........................................................................... $ (0.36) $ (0.24)
------------- -------------
------------- -------------
Weighted average common shares outstanding:
Basic............................................................................. 6,906,593 8,960,723
------------- -------------
------------- -------------
Diluted........................................................................... 6,906,593 8,751,524
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-2
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION
STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995........... 6,158,210 $ 1,494,023 $ -- $ (1,303,329) $ 190,694
Issuance of shares for cash............ 732,766 718,989 -- -- 718,989
Issuance of shares for services........ 262,625 262,625 -- -- 262,625
Compensation expense................... -- -- 322,067 -- 322,067
Net loss............................... -- -- -- (2,470,684) (2,470,684)
------------ ------------- ------------ ------------- -------------
Balance at December 31, 1996........... 7,153,601 2,475,637 322,067 (3,774,013) (976,309)
Merger with ETC
Transaction Corporation.............. 2,007,144 1,704,569 -- (1,050,938) 653,631
Conversion of Electronic Transmission
Corporation Stock on 1 for 1.25
Basis................................. 1,788,401 -- -- -- --
Reclass for par value $0.001........... -- (4,169,257) 4,169,257 -- --
Conversion of debentures............... 74,153 74 84,494 -- 84,568
Issuance of shares for cash............ 2,682,725 2,683 1,231,311 -- 1,233,994
Issuance of shares for services........ 320,000 320 399,680 -- 400,000
Capital contribution................... -- -- 721,733 -- 721,733
Compensation expense................... -- -- 321,220 -- 321,220
Deemed dividend........................ -- -- -- (152,526) (152,526)
Net loss............................... -- -- -- (1,999,404) (1,999,404)
------------ ------------- ------------ ------------- -------------
Balance at December 31, 1997........... 14,026,024 $ 14,026 $ 7,249,762 $ (6,976,881) $ 286,907
------------ ------------- ------------ ------------- -------------
------------ ------------- ------------ ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------
1996 1997
------------- -------------
<S> <C> <C>
Cash Flows from Operations:
Net loss........................................................................... $ (2,470,684) $ (1,999,404)
Adjustments to Reconcile Net Loss to
Net Cash Provided (Used) by Operations:
Non-cash issuance of common stock for services rendered........................ 262,625 400,000
Non-cash compensation from stock options....................................... 322,067 321,220
Depreciation and amortization.................................................. 111,420 270,186
Increase in accounts receivable-trade.......................................... (229,298) (91,551)
Decrease (increase) in employee advances....................................... (22,469) 25,162
Increase in prepaid expenses................................................... (11,531) (5,493)
Decrease (increase) in deposits and other assets............................... (10,174) 2,067
Increase (decrease) in accounts payable........................................ 172,020 (14,485)
Increase in accrued expenses................................................... 120,395 240,260
Increase in accrued payroll and taxes.......................................... 80,695 125,615
Increase (decrease) in accrued interest payable................................ 27,800 (46,870)
------------- -------------
Net Cash Provided (Used) by Operating Activities................................. (1,647,134) (773,293)
------------- -------------
Cash Flows from Investing Activities:
Payments on capital lease receivable........................................... 11,642 25,095
Purchases of furniture and equipment........................................... (312,580) (368,962)
------------- -------------
Net Cash Used in Investing Activities............................................ (300,938) (343,867)
------------- -------------
Cash Flows from Financing Activities:
Issuance of convertible debentures............................................. -- 150,000
Payments on convertible debentures............................................. -- (20,000)
Proceeds from notes payable.................................................... 779,575 202,000
Payments on notes payable...................................................... -- (52,030)
Payments on capital leases payable............................................. (37,202) (98,231)
Net proceeds (payment) of shareholder loans.................................... 421,949 (521,866)
Capital contribution........................................................... -- 721,733
Issuance of common stock for cash.............................................. 718,990 1,233,994
------------- -------------
Net Cash Provided by Financing Activities........................................ 1,883,312 1,615,600
------------- -------------
Net increase (decrease) in cash.................................................... (64,760) 498,440
Cash and equivalents, beginning of period.......................................... 114,885 50,125
------------- -------------
Cash and equivalents, end of period................................................ $ 50,125 $ 548,565
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1997

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Electronic Transmission Corporation ("ETC" or "Company"), a Delaware
corporation, provides services to self-insured companies, third party
administrators that pay claims for self-insured companies and other medical
provider networks or cost containment companies providing services to
self-insured companies. The Company's automation capabilities encompass the
entire workflow process involved in processing and paying healthcare claims.
Additionally, the Company provides third party administrative services which it
will operate through its wholly owned subsidiary in 1998. Revenues are derived
primarily from commerce within the United States.

Effective February 11, 1997, ETC completed a merger with and into ETC
Transaction Corporation, formerly known as Solo Petroleums Ltd. The merger is in
effect a reverse acquisition and is accounted for as a recapitalization of ETC,
with ETC as the acquirer (see Note 2). Effective February 11, 1997, the name of
ETC Transaction Corporation was changed to Electronic Transmission Corporation,
with the Certificate of Incorporation being duly amended to reflect the change
of name.

CONSOLIDATION--The financial statements do not include the accounts of ETC
Administrative Services, Inc., a Texas corporation and wholly owned subsidiary,
which did not become active until January 1998. Upon activation of the
subsidiary, all intercompany accounts and transactions will be eliminated.

DEVELOPMENT STAGE--ETC was in the development stage until the last quarter
of 1996, as it had no significant revenues. In the last quarter, a long-term
contract was executed with a large national self-insured corporation and
operations commenced. Start-up costs incurred during the period of developing
ETC's business plan are expensed as incurred in accordance with generally
accepted accounting principles. Research and development costs incurred are
expensed as incurred in accordance with generally accepted accounting
principles.

REVENUE RECOGNITION--The Company recognizes revenue when services are
performed.

CASH AND CASH EQUIVALENTS--For purposes of the statements of cash flows, the
Company considers any short-term cash investments with a maturity of three
months or less to be a cash equivalent.

ACCOUNTS RECEIVABLE--The Company's trade receivables arise from sales in the
normal course of business. ETC uses the allowance method to account for
uncollectible accounts; in management's opinion, all accounts are collectible
and no allowance is necessary at December 31, 1996 and December 31, 1997.

OFFICE FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS--Office furniture,
equipment and leasehold improvements are stated at cost. Maintenance and repairs
are charged to operating expense. Costs of significant improvements and renewals
are capitalized. Depreciation is provided on the straight-line basis over the
following useful lives:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES
-----------
<S> <C>
Office furniture....................................................... 5 years
Computer and office equipment.......................................... 3 years
Computer software...................................................... 3 years
Leasehold improvements................................................. 5 years
</TABLE>

F-5
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Periodically, the Company evaluates whether changes have occurred that would
require revision of the remaining estimated useful lives of the equipment or
rendered the value of the equipment not recoverable. The recoverability is
evaluated by estimating the future cash flows expected to result from use of the
asset and its eventual disposition. Equipment as of December 31, 1997 is not
considered to be impaired.

INCOME TAXES--ETC utilizes the asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statement and tax basis of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the period
in deferred tax assets and liabilities.

LOSS PER SHARE--Loss per common share was calculated by dividing the
Company's net loss by the weighted average common shares outstanding. Certain
common stock equivalents were excluded from the calculation, as such inclusion
would have had an antidilutive effect.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The carrying value of cash, receivables
and accounts payable approximates fair value due to the short maturity of these
instruments. The carrying value of short and long-term debt approximates fair
value based on discounting the projected cash flows using market rates available
for similar maturities. None of the financial instruments are held for trading
purposes.

USE OF ESTIMATES AND ASSUMPTIONS--Management uses estimates and assumptions
in preparing its financial statements. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities, and the reported amounts of revenues and expenses.
Actual results could vary from the estimates that were used.

STOCK-BASED COMPENSATION--The Company has an incentive stock option plan.
Compensation costs arising from the plan will be recorded as an expense. The
measurement date for determining compensation costs is the date of the grant.
Compensation cost is the excess, if any, of the quoted market price of the stock
at date of grant over the amount the employee must pay to acquire the stock.
Compensation cost is recognized as an expense over the period of employment
attributable to the option. The Company measures compensation costs using the
"intrinsic value based method" of accounting for stock issued to employees.

RECLASSIFICATIONS--Certain amounts for the year ended December 31, 1996,
have been reclassified to conform with the December 31, 1997 presentation. The
reclassifications have no effect on net income for the year ended December 31,
1996.

NOTE 2--MERGER

Effective February 11, 1997, ETC completed a merger with ETC Transaction
Corporation, formerly known as Solo Petroleums Ltd. The merger was effected by
ETC Transaction Corporation issuing 1.25 shares for each issued and outstanding
common share in ETC. At the date of merger, ETC had 7,153,601 shares issued and
outstanding and accordingly, the merger resulted in the issuance of 10,949,146
shares in ETC Transaction Corporation for all of the issued and outstanding
common shares of Electronic Transmission Corporation. A special meeting of the
shareholders of ETC was held on January 31, 1997, at which

F-6
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 2--MERGER (CONTINUED)
time the shareholders ratified and approved the terms and conditions of the
Merger Agreement and authorized the Board of Directors of ETC to effect the
merger. ETC Transaction Corporation held its annual meeting on February 11,
1997, at which time the shareholders ratified and approved both the Continuance
of ETC Transaction Corporation into the State of Delaware and the Merger
Agreement and authorized the Board of Directors to effect the merger. ETC and
ETC Transaction Corporation executed the merger transaction as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). ETC and ETC Transaction Corporation did not recognize any
gain or loss as a result of the merger. The merger is in effect a reverse
acquisition and is accounted for as a recapitalization of ETC, with ETC as the
acquirer. Effective February 11, 1997, the name of ETC Transaction Corporation
was changed to Electronic Transmission Corporation, with the Certificate of
Incorporation being duly amended to reflect the change of name.

NOTE 3--GOING CONCERN AND CONTINUED OPERATIONS

The financial statements have been prepared on the assumption that the
Company will continue as a going concern. The financial statements do not
include any adjustments to reflect the possible effects on the recoverability
and classification of assets or classification of liabilities which may result
from the inability of the Company to continue as a going concern. ETC sustained
a net operating loss of $2,470,684 and $1,999,404 during the years ended
December 31, 1996 and 1997, respectively. Cash used by operating activities for
the same periods aggregated $1,647,134 and $773,293, respectively. Additionally,
at December 31, 1997, ETC's current liabilities exceeded its current assets by
$562,394. ETC's continued existence depends upon the success of management's
efforts to raise sufficient capital and increase its customer base.

Management plans to mitigate the going concern issues by marketing its
services to large self-insured companies to expand its customer base and
increase profitability. Management believes that it will be successful in
generating sufficient cash to support its operations. There can be no degree of
assurance that the Company will be successful in raising additional working
capital or executing its business plan to the extent that it will be profitable.

NOTE 4--ACCOUNTS RECEIVABLE

The following is a summary of accounts receivable:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
<S> <C> <C>
Accounts receivable--trade...................................................... $ 236,356 $ 350,113
Employee receivables............................................................ 28,203 3,041
Accounts receivable--other...................................................... -- 664
---------- ----------
$ 264,559 $ 353,818
---------- ----------
---------- ----------
</TABLE>

In September 1997, the Company entered into an agreement whereby the Company
has the right to sell certain receivables, with recourse, to a financial
institution from time to time until September 1998. The maximum amount of
outstanding receivables owned by the financial institution at any time is
$500,000. The receivables are discounted at 2.75% of the face value of the
receivables. The financial

F-7
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 4--ACCOUNTS RECEIVABLE (CONTINUED)
institution retains 20% of the face amount of outstanding receivables in a cash
reserve account in the name of the Company. The Company is required to
repurchase any receivables sold, which are in arrears more than ninety days, at
the receivables amount net of unearned interest. During the year ended December
31, 1997, the Company received $1,080,806 from the sale of receivables.
Receivables which were outstanding under the agreement at year-end amounted to
$228,757. Required cash reserves included in cash and cash equivalents amounted
to $45,751 at December 31, 1997. Discounts on the sale of receivables recorded
as an expense in 1997 amounted to $38,500.

NOTE 5--CAPITAL LEASE RECEIVABLE

The Company, as lessor, has entered into a non-cancellable lease for service
equipment. Future minimum lease payments receivable under the non-cancellable
lease at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
CAPITAL
LEASES
---------
<S> <C>
Total minimum lease payments during the years ended December 31, 1998........................ $ 29,248
Less: amount representing interest........................................................... (1,525)
---------
Present value of minimum lease payments...................................................... $ 27,723
---------
---------
</TABLE>

NOTE 6--OFFICE FURNITURE AND EQUIPMENT

The following is a summary of office furniture and equipment:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
----------- ------------
<S> <C> <C>
Furniture.................................................................... $ 104,349 $ 105,473
Computer & Office Equipment.................................................. 458,178 615,521
Computer Software............................................................ 92,836 544,368
Leasehold Improvements....................................................... 8,791 9,747
----------- ------------
664,154 1,275,109
Less: accumulated depreciation............................................... (142,578) (408,711)
----------- ------------
$ 521,576 $ 866,398
----------- ------------
----------- ------------
</TABLE>

Depreciation expense was $110,405 and $266,133 for 1996 and 1997,
respectively.

F-8
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 7--ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following is a summary of accounts payable and accrued liabilities:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ------------
<S> <C> <C>
Accounts payable.............................................................. $ 221,315 $ 247,325
Accrued expenses.............................................................. 128,248 596,272
Accrued payroll and taxes..................................................... 189,825 315,440
Accrued interest payable...................................................... 27,800 2,033
---------- ------------
$ 567,188 $ 1,161,070
---------- ------------
---------- ------------
</TABLE>

NOTE 8--NOTES PAYABLE AND CONVERTIBLE DEBENTURES

The following is a summary of notes payable:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
<S> <C> <C>
Note payable to corporation, interest at 12.0%, $7,553 principal including
interest due monthly, remaining balance plus interest due upon maturity on May
19, 1998; collateralized by option to purchase 113,000 shares of common stock
at $1.50 per share............................................................ $ -- $ 121,654
Note payable to bank, interest at 10.5%, $1,484 principal including interest due
monthly, maturing September 15, 1998; collateralized by certain equipment and
assignment of officer's life insurance policy................................. -- 28,316
Subordinated convertible debenture payable to corporation, interest at 12.0%
payable semi-annually, principal due upon maturity at May 12, 1998,
convertible at $1.25 per common share including principal and accrued
interest...................................................................... -- 100,000
---------- ----------
$ -- $ 249,970
---------- ----------
---------- ----------
</TABLE>

Under an agreement with a leasing company discussed in Note 9, the Company
has a $500,000 line of credit of which funding is based on the leasing companies
ability to provide funds. As of December 31, 1997, the Company has made no draws
under this agreement.

During 1991 and 1992, ETC Transaction Corporation (formerly Solo Petroleums,
Ltd.) issued $52,500 in short-term convertible debentures which were due 180
days from issuance bearing an interest rate of 20%. The debentures provided for
the holder to receive ten common shares of ETC Transaction Corporation stock for
each one U.S. dollar of debenture. In December 1997, the Company issued 32,500
shares of common stock on a $1-for-1 share basis in full settlement of the
agreements. The remaining $20,000 debentures were paid in cash to the holders in
full settlement.

On May 14, 1997, the Company issued $50,000 in short-term subordinated
convertible debentures which were due in one year. The debentures were
convertible at $1.25 per common share including

F-9
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 8--NOTES PAYABLE AND CONVERTIBLE DEBENTURES (CONTINUED)
principal and accrued interest. On September 22, 1997, the holder converted
$52,067 of principal and interest into 41,653 of common stock.

NOTE 9--LEASE OBLIGATIONS PAYABLE

The Company, as lessee, has entered into various non-cancellable leases for
service equipment, vehicles, and office facilities. Future minimum lease
payments under non-cancellable leases at December 31, 1997 are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS CAPITAL OPERATING
ENDING DECEMBER 31, LEASES LEASES
- --------------------------------------------------------------------- ----------- ----------
<S> <C> <C>
1998................................................................. $ 110,095 $ 183,680
1999................................................................. 26,487 189,375
2000................................................................. -- 195,071
Thereafter........................................................... -- 149,507
----------- ----------
Total minimum lease payments......................................... 136,582 $ 717,633
----------
----------
Less: amount representing interest................................. (8,755)
-----------
Present value of minimum lease payments.............................. 127,827
Less: current portion.............................................. (102,240)
-----------
Long-term capital lease obligation................................... $ 25,587
-----------
-----------
</TABLE>

Rent expense during the years ended December 31, 1996 and 1997 for operating
leases was $122,544 and $173,494, respectively, and is included in operating
expenses.

The cost of assets subject to capital leases included in office furniture
and equipment is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---------- ----------
<S> <C> <C>
Computer & Office Equipment........................................... $ 182,053 $ 198,801
Less: accumulated depreciation........................................ (21,044) (84,520)
---------- ----------
$ 161,009 $ 114,281
---------- ----------
---------- ----------
</TABLE>

In April 1996, the Company entered into an equipment lease agreement and
stock option agreement with a leasing company which is recorded as a capital
lease by the Company. The agreement is for a term of five years and allows the
Company to lease certain equipment for amounts specified in the agreement with
rental payments due on the first of each month. As of December 31, 1997, monthly
payments required under the lease agreement amounted to $9,954 expiring in
December 1999.

At any time during the term of the agreement, the leasing company has the
right to i) sell to ETC any or all of the equipment in exchange for the number
of shares of ETC common stock, or stock of any company with which ETC merges,
that is equal to the purchase price of the equipment divided by $1.25 per share
or, ii) purchase, at $1.25 per share, the number of shares of ETC stock, or
stock of the merged

F-10
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 9--LEASE OBLIGATIONS PAYABLE (CONTINUED)
company, equal to the purchase price of the equipment divided by 1.25, and give
ETC the option to purchase the equipment at the end of the lease for $1.00;
provided, that if ETC issues, agrees to issue or grants an option to purchase
ETC stock to any other person for a price less than $1.25 per share, the price
payable to the leasing company will be reduced to such lower price. During
December 1997, the Company sold common stock at a price of $0.50 per share;
therefore, the leasing company has the option to purchase common stock at this
price as discussed in Note 12.

The leasing company agreement contains certain restrictive covenants which
(i) required ETC to escrow all accounts received which were derived from the use
of this equipment, less third party costs, through March 31, 1996 or until any
class of stock became registered with the Securities and Exchange Commission or
otherwise became publicly traded, or the funds in escrow equalled the total
purchase price of the equipment, and (ii) restricted ETC from issuing additional
securities before ETC merged with a public company. ETC was in violation of each
of these covenants and has obtained a waiver from the leasing company releasing
ETC from any claims under the escrow requirement and violations relating to the
issuance of securities.

NOTE 10--INCOME TAXES

ETC has net operating loss carryforwards of approximately $4,519,000 that
are available to offset any future income tax liability. The net operating loss
carryforwards expire as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDING DECEMBER 31, EXPIRING
- -------------------------------------------------------------------------------- ------------
<S> <C>
2010............................................................................ $ 880,000
2011............................................................................ 2,006,000
2012............................................................................ 1,633,000
------------
Total........................................................................... $ 4,519,000
------------
------------
</TABLE>

Deferred income taxes result from the book versus tax accounting difference
for net operating loss carryforwards, accrued payroll and stock option-based
compensation. The Company has deferred tax assets amounting to approximately
$1,115,000 and $1,627,000 at December 31, 1996 and 1997, respectively. The
realization of the benefits from these deferred tax assets appears uncertain due
to going concern questions. Accordingly, a valuation allowance has been recorded
which offsets the deferred tax assets at December 31, 1996 and 1997.

The components of the provision for federal income taxes are as follows as
of December 31:

<TABLE>
<CAPTION>
1996 1997
---------- ----------
<S> <C> <C>
Currently payable..................................................... $ -- $ --
Deferred.............................................................. -- (36,000)
---------- ----------
Federal income tax expense (benefit).................................. $ -- $ (36,000)
---------- ----------
---------- ----------
</TABLE>

Deferred tax benefit results from the difference in extraordinary gain on
extinguishment of debt which reduced the benefit of the net operating loss
carryforwards and decreased the valuation allowance recorded against the
deferred tax assets.

F-11
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 11--BUSINESS COMBINATION

Effective April 1, 1997, the Company completed a business combination with
Electra-Net, L.C. ("Electra-Net") by assuming their net liabilities.
Electra-Net, L.C. is a company wholly owned and controlled by ETC's former
Chairman of the Board, Chief Executive Officer, President and current
shareholder.

The transaction was accounted for using the purchase method as follows:

<TABLE>
<S> <C>
Assets Acquired:
Cash............................................................ $ 2,065
Accounts receivable............................................. 76,061
Computer hardware............................................... 20,908
---------
Total assets.................................................. $ 99,034
---------
Liabilities Assumed:
Accounts payable................................................ $ 15,711
Loans payable................................................... 235,849
---------
Total liabilities............................................. $ 251,560
---------
Net Liabilities Assumed........................................... $ 152,526
Consideration Paid:
Cash............................................................ $ --
---------
Total consideration............................................. --
---------
Dividend paid to shareholder...................................... $ 152,526
---------
---------
</TABLE>

Treatment of the excess consideration (net liabilities assumed) for the
business is accounted for as a deemed dividend in accordance with generally
accepted accounting principles. Goodwill was not recorded since this transaction
was consummated with a related party and this treatment would have constituted a
step-up in basis. The transaction is reflected in the financial statements on
the date the transaction occurred (April 1, 1997), in accordance with generally
accepted accounting principles.

NOTE 12--STOCK OPTIONS

The Company has issued various stock options to employees of the Company
which are considered compensatory. Vesting varies by employee agreement ranging
from 2 to 5 years. The contractual life of outstanding stock options at December
31, 1997 is the term of employment of the holder.

F-12
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 12--STOCK OPTIONS (CONTINUED)
A summary of the status of employee stock options is set forth below:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997
----------------------- -----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
STOCK OPTIONS SHARES PRICE SHARES PRICE
- ---------------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Outstanding, beginning of period.......................... 675,000 $ 0.001 691,667 $ 0.001
Granted................................................... 260,000 $ 0.001 1,400,000 $ 0.990
Exercised................................................. (118,333) $ 0.001 (234,999) $ 0.040
Forfeited/expired......................................... (125,000) $ 0.001 (865,000) $ 0.780
---------- ----------
Outstanding, end of period................................ 691,667 $ 0.001 991,668 $ 0.740
---------- ----------
---------- ----------
Options exercisable, end of period........................ 18,333 $ 0.001 741,668
---------- ----------
---------- ----------
Weighted average fair value of options granted during the
year.................................................... $ 1.12 $ 0.85
---------- ----------
---------- ----------
</TABLE>

The following table summarizes information about fixed stock options
outstanding at December 31, 1997:

<TABLE>
<S> <C>
Range of exercise prices $0.001 to $1.50 per common share
Weighted average exercise price $0.74 per common share
</TABLE>

Compensation costs will be recognized as an expense over the periods of
employment attributable to the options at an amount equal to the excess of the
fair market value of the stock at the date of measurement over the amount the
employee must pay. The measurement date is generally the grant date. Future
compensation expense to be recorded in subsequent periods as of December 31,
1996 and 1997, was $555,897 and $0, respectively. During 1997, the Company
elected to rescind specific compensatory stock options of an officer of the
Company. Accordingly, compensation costs associated with these options were not
expensed due to the officer retroactively forfeiting any rights under the
original option agreement. Effective June 30, 1997, the Company elected to vest
all employee stock options and recognize compensation expense for all
outstanding options. Compensation cost totaling $322,067 and $321,220 was
recognized as expense during the years ended December 31, 1996 and 1997,
respectively. Had compensation cost for the Company's stock-based compensation
been determined on the fair value at the grant dates for awards with the method
of FASB Statement 123, the Company's net loss and loss per share would not have
been significantly changed.

As discussed in Note 8, the Company issued 113,333 options to purchase
common stock at $1.50 per share to a corporation as collateral to secure a note
payable. The options expire on May 19, 1998.

Under an agreement with a leasing company discussed in Note 9, the leasing
company has 210,608 options to purchase common stock at $0.50 per share. These
options have no fixed maturity.

F-13
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 13--STOCK WARRANTS

Effective June 1, 1996, the Company issued 220,000 stock warrants which
expired on June 15, 1997, and allowed the holder of each warrant to purchase one
share of common stock at a price of $1.50 per share. As of December 31, 1996, no
warrants had been exercised. This agreement was superceded by the following
agreement dated February 28, 1997.

Effective February 28, 1997, the Company issued 520,000 stock warrants which
expire on February 28, 2004, and allow the holder of each warrant to purchase
one share of common stock at a price of $1.25 per share. As of December 31,
1997, no warrants have been exercised.

Effective June 1, 1997, the Company issued 23,000 stock warrants which
expire on June 1, 1998, and allow the holder of each warrant to purchase one
share of common stock at a price of $1.50 per share. As of December 31, 1997, no
warrants have been exercised.

NOTE 14--CUSTOMER CONCENTRATION

For the year ended December 31, 1996, revenues from one customer amounted to
approximately 64% of total revenues. For the year ended December 31, 1997,
revenues from two customers amounted to approximately 56% and 13% of total
revenues, respectively.

Trade accounts receivable included $76,395 and $86,717 relating to these
customers at December 31, 1996 and 1997, respectively.

NOTE 15--RELATED PARTY TRANSACTIONS

In December 1995, the Company entered into an agreement with a marketing
firm to assist in obtaining and servicing customers. A member of the marketing
firm is a former member of the Board of Directors. Compensation for services
rendered to the Company will be paid through November 1997. At December 31,
1997, the Company was indebted to the former director in the amount of $32,857.

On May 15, 1996, the Company executed a note payable of $779,575 with ETC
Transaction Corporation of which the proceeds were used as working capital to
fund its post-merger business plan. The note payable to ETC Transaction
Corporation and related accrued interest of $27,800 eliminated upon completion
of the merger.

As of December 31, 1996 and 1997, the Company had a payable of $339,207 and
$0, respectively, to Sterling National Corporation ("SNC") for working capital
loans. SNC is wholly-owned and operated by the former Chairman of the Board,
Chief Executive Officer and shareholder of ETC.

At December 31, 1996, the Company has a trade receivable due from
Electra-Net, L.C., a company wholly-owned and operated by the former Chairman of
the Board, C.E.O. and majority shareholder of ETC. The receivable of $103,026
relates to administrative fees for providing computer processing for medical
claims.

The Company had an agreement to purchase equipment from SNC. The
relationship exists through SNC's purchase contract with an equipment wholesaler
which allowed SNC to purchase equipment at a significant discount. The Company
recorded the equipment purchases at SNC's cost. As of December 31, 1997, the
agreement had been canceled. During the years ended December 31, 1996 and 1997,
the Company purchased equipment totaling $127,709 and $20,291, respectively.

F-14
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 16--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

During the years ended December 31, 1996 and 1997, the Company paid $9,021
and $79,202 for interest, respectively. During the years ended December 31, 1996
and 1997, the Company made no payments for income taxes.

Non-cash investing and financing activities include the following:

The Company acquired assets valued at $246,513 and $16,747 through capital
lease obligations during the year ended December 31, 1996 and 1997,
respectively. The Company disposed of assets with a carrying value of $64,460
through a capital lease receivable during the year ended December 31, 1996.

During the years ended December 31, 1996 and 1997, the Company issued
262,625 common stock shares for services rendered at $1 per share in the total
amount of $262,625. During the year ended December 31, 1997, the Company issued
320,000 common stock shares for services rendered at $1.25 per share in the
total amount of $400,000.

F-15
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 17--EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-----------------------------------------
LOSS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- -----------
<S> <C> <C> <C>
Loss before extraordinary item............................... $ (2,470,684)
BASIC EARNINGS PER SHARE
Loss available to common stockholders........................ $ (2,470,684) 6,906,593 $ (0.36)
-----------
-----------
EFFECT OF DILUTIVE SECURITIES
Employee stock options....................................... -- --
------------- -------------
DILUTED EARNINGS PER SHARE
Loss available to common stockholders plus assumed
conversions................................................. (2,470,684) 6,906,593 $ (0.36)
------------- ------------- -----------
------------- ------------- -----------
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
-----------------------------------------
LOSS SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- ------------- -----------
<S> <C> <C> <C>
Loss before extraordinary item............................... $ (2,072,666)
BASIC EARNINGS PER SHARE
Loss available to common stockholders........................ $ (2,072,666) 8,960,723 $ (0.23)
-----------
-----------
EFFECT OF DILUTIVE SECURITIES
12% convertible debentures................................... 5,077 (20,517)
Warrants..................................................... -- (111,406)
Employee stock options....................................... -- (26,707)
Non-employee options......................................... -- (50,569)
------------- -------------
DILUTED EARNINGS PER SHARE
Loss available to common stockholders plus assumed
conversions................................................. (2,067,589) 8,751,524 $ (0.24)
------------- ------------- -----------
------------- ------------- -----------
</TABLE>

Options to purchase 691,667 shares of common stock at $0.001 per share were
outstanding at December 31, 1996, but were not included in the computation of
diluted earnings per share because the options had an antidilutive effect on
earnings per share. As of December 31, 1997, options to purchase 741,668 shares
of common stock at $0.001 per share were outstanding but were not included in
the computation of diluted earnings per share because the options had an
antidilutive effect on earnings per share.

NOTE 18--SUBSEQUENT EVENTS

The Company is in the process of amending its June 30, 1997, and September
30, 1997, quarterly financial statement filings with the Securities and Exchange
Commission to reflect the rescission of certain

F-16
<PAGE>
ELECTRONIC TRANSMISSION CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

DECEMBER 31, 1996 AND 1997

NOTE 18--SUBSEQUENT EVENTS (CONTINUED)
common stock and stock option agreements in the fourth quarter of 1997. The
financial statements reflect the rescission of these agreements at December 31,
1997.

On February 16, 1998, L. Cade Havard, the Company's Chairman of the Board,
Chief Executive Officer and President, was terminated by the Company's Board of
Directors. The Board of Directors appointed W. Mack Goforth, the Company's Chief
Financial Officer, as its Chief Executive Officer and Chairman of the Board.

F-17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
Common Stock Price Ranges and Dividends................................... 12
Dividend Policy........................................................... 12
Capitalization............................................................ 13
Selected Historical Financial Information................................. 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 15
Business.................................................................. 20
Management................................................................ 25
Certain Relationships and Related Transactions............................ 30
Principal Stockholders.................................................... 32
Description of Securities................................................. 33
Limitation of Liability of Directors...................................... 34
Shares Eligible for Future Sale........................................... 34
Selling Stockholders...................................................... 35
Plan of Distribution...................................................... 35
Agreements with Selling Stockholders...................................... 35
Legal Matters............................................................. 37
Experts................................................................... 37
Financial Statements...................................................... F-1
</TABLE>

ELECTRONIC TRANSMISSION
CORPORATION

2,571,872 SHARES
OF COMMON STOCK

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

PROSPECTUS

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

March , 1998

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company has no contract or arrangement that insures or indemnifies a
controlling person, director or officer of the Company which affects his or her
liability in that capacity. The Company's bylaws provide for such
indemnification, subject to applicable law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses in connection with the registration of the Shares pursuant to this
registration statement are as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.............................. $ 471
Accounting Fees and Expenses............................................... 5,000
Legal Fees and Expenses.................................................... 30,000
Printing and Engraving..................................................... 10,000
Fees of Transfer Agent and Registrar....................................... 0
Blue Sky Fees and Expenses................................................. 0
Miscellaneous.............................................................. 2,000
---------
Total...................................................................... $ 47,471*
---------
---------
</TABLE>

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

* Estimated

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

A. PRIVATE OFFERINGS

1. PRIVATE OFFERING COMPLETED JUNE 1997.

Effective June 1997, the Company closed the private placement of its 12%
Subordinated Convertible Debentures (the "Convertible Debentures") for total
proceeds of $150,000. Information concerning the sale of such debentures is as
follows:

<TABLE>
<CAPTION>
PURCHASER PRINCIPAL AMOUNT PURCHASED
- ---------------------------------------------------------------------------- --------------------------
<S> <C>
Mission Society International............................................... $ 100,000
Mary Margaret Cook.......................................................... $ 50,000
</TABLE>

The principal balance of the Convertible Debentures is due upon maturity at
May 12, 1998, with accrued interest being payable semi-annually. All principal
plus accrued and unpaid interest due and owing under the Convertible Debentures
may be converted at the option of the holder into shares of Common Stock at the
rate of one share of Common Stock for each $1.25 of principal and interest
converted. In September 1997, Mary Margaret Cook converted the $50,000 principal
amount of her Convertible Debenture plus all accrued and unpaid interest thereon
into 41,653 shares of Common Stock.

The sale of the above securities was made in reliance upon Section 4(2) of
the Securities Act, which provides an exemption for transactions not involving a
public offering. The purchasers of the securities described above acquired them
for their own account and not with a view to any distribution thereof to the
public. The Convertible Debentures bear legends stating that they may not be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act or an exemption from such registration
requirements.

II-1
<PAGE>
2. PRIVATE OFFERING COMPLETED DECEMBER 17, 1997

The Second Closing is contingent in part upon the Company's ability to
effect amendments to its Certificate of Incorporation for the purpose of (i)
increasing its authorized Common Stock from 15,000,000 to 20,000,000 shares and
(ii) undertaking a reverse stock split (the "Reverse Stock Split") whereby every
four (4) shares of outstanding Common Stock will be exchanged for one (1) share
of Common Stock (the foregoing amendments to the Certificate of Incorporation
being collectively referred to herein as the "Amendments"). The Company must
effect the Reverse Stock Split by August 15, 1998 unless the last reported bid
price on The OTC Bulletin Board of a share of Common Stock has exceeded $5.00 on
each of the ten trading days immediately preceding August 1, 1998. A special
meeting of stockholders was held on February 25, 1998 at which time the
Amendments were approved by the requisite vote of the Company's stockholders.
The Certificate of Amendment increasing the authorized Common Stock to
20,000,000 shares was filed with the State of Delaware on February 27, 1998.

The sale of the above securities was made in reliance upon Rule 506
promulgated under Regulation D of the Securities Act, which provides an
exemption for transactions not involving a public offering. The Investors
acquired the referenced securities for their own account and not with a view to
any distribution thereof to the public. The certificates evidencing the
securities bear legends stating that the shares are not to be offered, sold or
transferred other than pursuant to an effective registration statement under the
Securities Act or an exemption from such registration requirements.

B. WARRANTS

ANDREW WARRANTS. On June 10, 1995, the Company entered into a consulting
agreement with Ken Andrew. In connection with the consulting agreement, the
Company issued to Mr. Andrew 420,000 Common Stock Purchase Warrants to purchase
420,000 shares of Common Stock at $1.25 per share until February 28, 2004. At
March 9, 1998, none of the warrants had been exercised.

TYLER WARRANTS. In February 1997, the Company issued to each of Craig Tyler
and Mark Tyler 50,000 Common Stock Purchase Warrants to purchase 50,000 shares
of the Company's Common Stock at $1.25 per share until February 28, 2004. At
March 9, 1998, none of the warrants had been exercised.

The issuance of the above securities was made in reliance upon Section 4(2)
of the Securities Act, which provides an exemption for transactions not
involving a public offering. The holders of the securities described above
acquired them for their own account and not with a view to any distribution
thereof to the public. The warrants bear legends stating that they may not be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act or an exemption from such registration
requirements.

II-2
<PAGE>
C. OPTIONS

Prior to January 1997, the Company issued options to purchase a total of
908,000 shares of Common Stock to certain employees and affiliates. Information
concerning such options is as follows:

<TABLE>
<CAPTION>
EXERCISE
DATE OF NO. OF PRICE PER
GRANT OPTIONS ISSUED TO SHARE
- --------- --------- ---------------------- -------------
<S> <C> <C> <C>
01/02/95 400,000 L. Cade Havard $ 0.001
09/22/95 50,000 Scott Vu 0.001
12/07/95 10,000 Derek Dzung Pham 0.001
02/15/96 60,000 Kip Altman 0.001
02/20/96 30,000 Marsha Wilcox 0.001
04/04/96 8,000 Dennis Bissonnette 0.001
05/28/96 10,000 Lyndel McGee 0.001
06/96 100,000 Michael Eckstein 0.100
06/12/96 25,000 Marsha Wilcox 1.250
06/15/96 45,000 Dan Doughty 0.001
06/17/96 45,000 Mark Roden 0.001
07/01/96 45,000 Robert Bonomi 0.001
07/01/96 30,000 Tammy Newman 0.001
08/01/96 50,000 Julie Krueger 0.001
</TABLE>

Each of the foregoing options was granted pursuant to the authority of the
Board of Directors of the Company, or its predecessors, and are or were subject
to a written option agreement between the Company, or its predecessors, and the
respective option holder. With regard to the issuances of the options discussed
above, the Company, or its predecessor, relied upon Rule 701 under the
Securities Act for an exemption from applicable registrant requirements, as at
the time the options were granted neither the Company nor its predecessors were
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.

Since January 1997, the Company has issued options to purchase a total of
1,323,000 shares of Common stock to certain employees and affiliates.
Information concerning such options is as follows:

<TABLE>
<CAPTION>
EXERCISE
DATE OF NO. OF PRICE PER
GRANT OPTIONS ISSUED TO SHARE
- --------- --------- ---------------------- -------------
<S> <C> <C> <C>
02/24/97 800,000 L. Cade Havard 1.250
03/01/97 250,000 Ann McDearmon 1.250
06/01/97 10,000 Kelly McDonald 1.500
06/01/97 13,000 Edward Bollinger 1.500
06/02/97 50,000 Lloyd Roberts 1.500
10/14/97 200,000 W. Mack Goforth 1.063
</TABLE>

The issuance of the above securities was made in reliance upon Section 4(2)
of the Securities Act, which provides an exemption for transactions not
involving a public offering. The holders of the securities described above
acquired them for their own account and not with a view to any distribution
thereof to the public. The securities bear legends stating that they may not be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act or an exemption from such registration
requirements.

II-3
<PAGE>
D. EXERCISE OF OPTIONS

Since June 14, 1996, option holders have exercised their right to purchase a
total of 434,666 shares of Common Stock. Information concerning the exercise of
such options and the issuance of shares thereunder is as follows:

<TABLE>
<CAPTION>
DATE OF NO. OF
GRANT OPTIONS ISSUED TO
- --------- --------- ----------------------
<S> <C> <C>
01/02/96 100,000 L. Cade Havard
04/30/96 8,333 Scott Vu
04/30/96 8,000 Dennis Bissonnette
01/31/97 5,000 Lyndel McGee
02/20/97 10,000 Marsha Wilcox
02/20/97 5,000 Derek Dzung Pham
02/20/97 8,333 Scott Vu
06/30/97 15,000 Mark Roden
06/30/97 15,000 Don Doughty
07/15/97 10,000 Tammy Newman
07/15/97 15,000 Robert Bonomi
08/15/97 5,000 Lyndel McGee
08/18/97 16,666 Julie Krueger
10/01/97 100,000 Michael Eckstein
10/01/97 30,000 Mark Roden
01/05/98 20,000 Tammy Newman
01/09/98 33,334 Julie Krueger
02/23/98 30,000 Robert Bonomi
</TABLE>

The issuance of the above securities was made in reliance upon Section 4(2)
of the Securities Act, which provides an exemption for transactions not
involving a public offering. The holders of the securities described above were
acquired by them for their own account and not with a view to any distribution
thereof to the public. The securities bear legends stating that they may not be
offered, sold or transferred other than pursuant to an effective registration
statement under the Securities Act or an exemption from such registration
requirements.

E. OTHER ISSUANCES

To securitize an indebtedness, the Company issued to TDC Partners, Inc.
options to acquire 113,333 shares of Common Stock at an exercise price of $1.50
per share. The options expire on May 19, 1998. As of March 9, 1998, none of the
options has been exercised.

II-4
<PAGE>
ITEM 27. EXHIBITS

The following documents are filed as exhibits to this registration
statement:

<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
- -------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 ** Agreement and Plan of Merger dated as of May 1, 1996, by and among the Company and Electronic
Transmission Corporation.

3.1 ** Articles of Incorporation of the Company, dated September 5, 1986.

3.2 ** Articles of Amendment to the Articles of Incorporation of the Company, dated March 26, 1996.

3.3 ** Bylaws of the Company, dated September 5, 1986.

3.4 ** Form of Certificate of Incorporation of the Company, as continued and domesticated into the State of
Delaware.

3.5 ** Form of Bylaws of the Company, as continued and domesticated into the State of Delaware.

3.6 * Certificate of Amendment of Certificate of Incorporation of the Company, dated February 25, 1998.

4.1 ** Specimen of Common Stock Certificate.

5.1 + Opinion of Jackson Walker L.L.P. regarding the legality of the securities being registered.

9.1 ** Voting Trust Agreement, dated January 26, 1995, between Sterling National Corporation and holders of
Sterling Options.

9.2 *** Voting Agreement, dated December 17, 1997, between L. Cade Havard, Anneal O. Havard, Doug Havard,
Amanda Havard, Sterling National Corporation, Sterling National Trust, Hannah Family Trust, Michael
Eckstein, Special Situations Private Equity Fund, L.P. and Special Situations Cayman Fund, L.P.

10.1 ** Bill of Sale, dated effective January 1, 1995, by and between Electronic Transmission Corporation, a
Texas corporation, and Sterling National Corporation.

10.2 ** Agreement for Processing Medical Claims on a Temporary Basis, dated effective March 5, 1996, by and
between Electronic Transmission Corporation, a Texas corporation, and Wal-Mart Stores, Inc.

10.3 ** Equipment Lease and Stock Option Agreement, effective April 23, 1996, by and between Electronic
Transmission Corporation, a Texas corporation, and Ironwood Leasing Limited.

10.4 ** Letter Agreement, dated June 20, 1996, between Electronic Transmission Corporation, a Texas
corporation, and Ironwood Leasing Limited.

10.5 ** Promissory Note, dated June 1, 1996, in the principal amount of $779,574.50, executed in favor of the
Company by Electronic Transmission Corporation, a Texas corporation.

10.6 ** Staff Leasing Services Agreement, dated effective December 15, 1995, by and between Network Employers
Group, Inc. and Electronic Transmission Corporation, a Texas corporation.

10.7 ** Employment and Settlement Agreement, dated January 2, 1995, between Electronic Transmission
Corporation, a Texas corporation, and L. Cade Havard.

10.8 ** Employment and Settlement Agreement, dated December 4, 1995, between Electronic Transmission
Corporation, a Texas corporation, and Elaine Boze.

10.9 ** Employment and Settlement Agreement, dated March 1, 1995, between Electronic Transmission
Corporation, a Texas corporation, and Timothy P. Powell.
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
- -------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.10** Employment Agreement, dated May 1, 1996, between Electronic Transmission Corporation, a Texas
corporation, and Ann C. McDearmon.

10.11** Employment Agreement, dated April 1, 1996, between Electronic Transmission Corporation, a Texas
corporation, and Louann Smith.

10.12** Settlement and Employment Agreement, dated May 1, 1996, between Electronic Transmission Corporation,
a Texas corporation, and Roy W. Mers.

10.13** Office Lease, dated January 5, 1995, by and between Natron Limited Partnership and Electronic
Transmission Corporation, a Texas corporation,, including amendments thereto.

10.14** Agreement for Processing and Repricing Medical Claims, effective September 1, 1996, by and between
Electronic Transmission Corporation, a Texas corporation, and Wal-Mart Stores, Inc.

10.15**** Contract of Sale, dated April 1, 1997, between L. Cade Havard and the Company as to the sale of the
business of Electra-Net, L.C. to the Company.

10.16*** Securities Purchase Agreement, dated December 17, 1997, by and among Special Situations Private
Equity Fund, L.P., Special Situations Cayman Fund, L.P. and the Company (schedules and exhibits
have been omitted).

10.17*** Amended and Restated Employment and Settlement Agreement, dated December 17, 1997, by and between L.
Cade Havard and the Company.

10.18* Employment and Settlement Agreement, dated October 14, 1997, by and between W. Mack Goforth and the
Company.

10.19* Amended and Restated Employment and Settlement Agreement, dated March 1, 1997, by and between Ann C.
McDearmon and the Company.

10.20* Severance Agreement and General Release, dated May 2, 1997, by and between Elaine Boze and the
Company.

10.21* Processing Agreement, dated November 15, 1995, between Imaged Data, Inc. and the Company.

10.22* License and Maintenance Agreement, dated July 7, 1997, by and between FACTS Services, Inc. and the
Company.

21.1 * List of Subsidiaries.

23.1 + Consent of Jackson Walker L.L.P. (set forth in Exhibit 5.1)

23.2 * Consent of Simonton, Kutac & Barnidge, L.L.P. as to the financial statements of the Company.

24.1 * Power of Attorney. (See page II-8 of the Registration Statement).

27.1 * Financial Data Schedule
</TABLE>

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

+ To be filed by amendment.

* Filed herewith.

** Previously filed as an Exhibit to the Company's Registration Statement on
Form S-4, as declared effective on January 7, 1997 (SEC File Number
333-07069), and incorporated herein by this reference.

*** Previously filed as an Exhibit to the Company's Current Report on Form
8-KSB, dated December 29, 1997, and incorporated herein by this reference.

****Previously filed as an Exhibit to the Company's Quarterly Report on Form
10-QSB for the period ended June 30, 1997, and incorporated herein by this
reference.

II-6
<PAGE>
ITEM 28. UNDERTAKINGS.

The undersigned hereby undertakes:

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

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

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

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

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Company
under the Securities Exchange Act of 1934.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

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

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions described under
Item 17 above, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Company hereby undertakes that for purposes of determining
any liability under the Securities Act, (i) the information omitted from the
Prospectus filed as part of this Registration Statement, as permitted by Rule
430A of the Securities Act and to be contained in the form of prospectus to be
filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act, shall be deemed to be incorporated by reference into this
Registration Statement at the time it is declared effective, and (ii) each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on March 16, 1998.

<TABLE>
<S> <C> <C>
ELECTRONIC TRANSMISSION CORPORATION

By: /s/ W. MACK GOFORTH
-----------------------------------------
W. Mack Goforth
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
OFFICER AND CHIEF FINANCIAL OFFICER
</TABLE>

POWER OF ATTORNEY

We, the below signed directors and officers of Electronic Transmission
Corporation, do hereby constitute and appoint W. Mack Goforth, with full power
of substitution our true and lawful attorney and agent, to do any and all acts
and things in our names in the capacities indicated which W. Mack Goforth may
deem necessary or advisable to enable the Company to comply with the Securities
Act of 1933, as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with this Registration
Statement, including specifically, but not limited to, the power and authority
to sign for us, or any of us in our names in the capacities indicated and any
and all amendments (including post-effective amendments) to this Registration
Statement; and we do hereby ratify and confirm all that W. Mack Goforth shall do
or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form SB-2 has been signed by the following persons on
behalf of the Company and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board,
/s/ W. MACK GOFORTH Chief Executive Officer
- ------------------------------ and Chief Financial March 16, 1998
W. Mack Goforth Officer

/s/ TIMOTHY P. POWELL Executive Vice
- ------------------------------ President--Data Services March 16, 1998
Timothy P. Powell and Director

/s/ DENNIS BARNES
- ------------------------------ Director March 16, 1998
Dennis Barnes

/s/ MICHAEL ECKSTEIN
- ------------------------------ Director March 16, 1998
Michael Eckstein

/s/ DAVID O. HANNAH
- ------------------------------ Director March 16, 1998
David O. Hannah

/s/ SCOTT STEWART
- ------------------------------ Director March 16, 1998
Scott Stewart

*By: /s/ W. MACK GOFORTH
-------------------------
W. Mack Goforth,
ATTORNEY-IN-FACT

II-8

<PAGE>

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION

ELECTRONIC TRANSMISSION CORPORATION (the "Corporation"), a corporation
organized and existing under and by virtue of the Delaware General
Corporation Law, DOES HEREBY CERTIFY:

FIRST: The name of the Corporation is Electronic Transmission Corporation.

SECOND: The first paragraph of Article FOURTH of the Certificate of
Incorporation of the Corporation is hereby amended in its entirety to read as
follows:

"FOURTH. The Corporation shall have authority to issue two classes of
shares to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Corporation is authorized to
issue is Twenty-Two Million (22,000,000) shares of which Twenty Million
(20,000,000) shall be Common Stock and Two Million (2,000,000) shall be
Preferred Stock. Each share of Common Stock shall have a par value of
$0.001, and each share of Preferred Stock shall have a par value of
$1.00."

THIRD: This Certificate of Amendment of Certificate of Incorporation
shall be effective as of February 25, 1998.

FOURTH: This Certificate of Amendment of Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors of the
Corporation.

FIFTH: That at a special meeting of stockholders held on February 25,
1998, in accordance with Section 222 of the General Corporation Law of the
State of Delaware, the necessary number of shares as required by statute were
voted in favor of the amendment.

SIXTH: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this 25th day of February, 1998.

ELECTRONIC TRANSMISSION CORPORATION

By: /s/ W. Mack Goforth
--------------------------------------------
W. Mack Goforth, Chairman of the Board and Chief
Executive Officer

-1-

<PAGE>

ATTEST:

By: /s/ Louann C. Smith
---------------------------
Louann C. Smith, Secretary

-2-

<PAGE>

EMPLOYMENT AND SETTLEMENT AGREEMENT

This Employment Agreement (this "Agreement") is made and entered into
this 14th day of October, 1997, the Effective Date, by and between Electronic
Transmission Corporation, a Delaware corporation ("ETC"), and W. Mack Goforth
("Mr. Goforth").

ETC desires to employ Mr. Goforth, as Chief Financial Officer and Mr.
Goforth desires to accept such employment with ETC, all on the following
terms and subject to the following conditions.

NOW, THEREFORE, ETC and Mr. Goforth hereby agree as follows.

1. EMPLOYMENT. ETC hereby employs Mr. Goforth, and Mr. Goforth hereby accepts
employment by ETC, for the term and compensation and subject to the terms
and conditions hereinafter set forth.

2. DUTIES. Mr. Goforth shall serve in the capacity of Executive Vice President
and Chief Financial Officer. In that capacity, Mr. Goforth's
responsibilities will include; all accounting functions; audit of
financial statements on an annual basis; timely financial reporting in
compliance with all regulatory bodies, including but not limited to those
required by the United States Securities and Exchange Commission for
public reporting companies; acquisition and management of capital whether
debt or equity; interfacing with the investment community with regards to
financial needs of the company; assisting in any way possible the company
in attracting sponsorship for the company's shares; financial
forecasting; and budgeting. Further, Mr. Goforth will review the
practices of the company and establish any further policies and
procedures as needed or amend existing policies and procedures to
stabilize the company financially, including but not limited to spending
controls, and organization of departmental budgeting practices. Mr.
Goforth will evaluate the current Staff being utilized and make any
changes necessary in the best interest of the company. Mr. Goforth will
review the existing debt arrangements the company has with its creditors
and make changes where be deems necessary. This will include but not be
limited to moving lines of credit, changing banking relationships,
securing additional lines of credit or additional equity that he deems to
be in the best interest of the company. Mr. Goforth will report directly
to the CEO and the Chairman of the Board of Directors.

3. COMPENSATION. As compensation for his services rendered to ETC in the
capacities set forth above, ETC shall pay Mr. Goforth a salary of
$150,000 per year with a review in 180 days and prior to the end of the
first year for increases in compensation which may be tied to the
performance of the employee and or the company. Additionally, Mr. Goforth
may receive salary increases and bonuses in such amounts as determined at
the discretion of the CEO and the Board of Directors at any time.

<PAGE>
Employment and Settlement Agreement Between ETC and W. Mack Goforth - Page 2

4. BENEFITS. During the term hereof, Mr. Goforth shall be entitled to
participate in all benefits plans, including stock option plans, provided
by ETC on the same basis as other ETC senior executive officers and will
additionally receive free medical insurance for himself. ETC reserves the
right unilaterally to modify, amend, or terminate any such plans and
programs at any time and from time to time during the term of this
Agreement. Mr. Goforth shall be entitled to four weeks of paid vacation
time each year. Mr. Goforth shall also be entitled to all paid holidays
given by ETC to its senior executive officers. Mr. Goforth may perform
all of his duties while living in Dallas, Texas and may not be relocated
against his will.

5. REIMBURSEMENT OF EXPENSES. ETC shall reimburse Mr. Goforth for expenses
actually incurred by him in connection with ETC business, provided that
such expenses are reasonable and are in accordance with ETC policies.
Such reimbursement shall be made to Mr. Goforth upon appropriate
documentation of such expenditures in accordance with ETC policies.

6. TERM. The term of this Agreement shall be for the period commencing on
November 1, 1997 and ending on October 31, 2002, subject to earlier
termination as provided in Section 7. The term of this Agreement will
automatically extend for a period of 1 (one) additional year to October
31, 2003 unless either party gives notice at least 30 days prior to
October 31, 2002.

7. TERMINATION. This Agreement and Mr. Goforth's employment hereunder shall
terminate in the event of Mr. Goforth's death or if Mr. Goforth becomes
permanently disabled as determined by the ETC Board of Directors. This
Agreement and Mr. Goforth's employment hereunder may be terminated
immediately by ETC "for cause" at any time the ETC Board of Directors
determines, in the exercise of its good faith judgment, that Mr. Goforth
has engaged in gross malfeasance or willful misconduct in performing his
duties hereunder and that his continued employment by ETC no longer is in
the best interests of ETC.

8. NON-COMPETITION FOR EXISTING CLIENTS AFTER TERM. Mr. Goforth agrees, for a
period of two years after the expiration of the term hereof, not to
solicit, on his own behalf or on behalf of any future employer or other
entity, any business of the same or similar nature to any business
conducted by ETC or any subsidiary or affiliate during the term hereof,
from any entity with which ETC did business, during the term hereof. The
patties recognize that this covenant not to compete for specified
customers for a limited time period is an integral part of this Agreement
and that ETC would not enter into this Agreement, or would do so only on
the basis of decreased compensation to Mr. Goforth, without this covenant.

9. NON-DISCLOSURE OF INFORMATION AND TRADE SECRETS. During his employment
hereunder and thereafter, Mr. Goforth will not disclose to any person or
entity not directly connected

<PAGE>
Employment and Settlement Agreement Between ETC and W. Mack Goforth - Page 3

with ETC, or use for his own benefit, any of the trade secrets, financial
information, systems, records, or business methods of ETC or its
subsidiaries or affiliates, or any of the business relationships between
ETC or its subsidiaries or affiliates and any of their business partners
or customers, unless such disclosure shall be in direct connection with or
a part of Mr. Goforth's performance of his duties hereunder or as may be
required by law or regulations. See addendum "A". Mr. Goforth will also
execute an Employee NonDisclosure Agreement.

10. ETC Stock options for Services. As additional compensation for his services,
Mr. Goforth shall be offered the option to purchase a total of 200,000
shares of ETC stock The purchase price will be set at the closing price
(last trade) on the effective date (or if no trades are made on the
effective date then the closing price on the closest day prior to the
effective date. This price is considered a price that constitutes 100% of
the fair market value of such shares on the effective date (the date of
the agreement. (See addendum"B") The shares shall be available to Mr.
Goforth according to the following schedule so long as he remains in the
employ of ETC: 50,000 shares on October 31, 1998; 50,000 shares on
October 31, 1999; 50,000 shares on October 31, 2000; and the balance of
50,000 shares on October 31, 2001. Upon exercising of this option Mr.
Goforth shall be entitled to include any shares purchased pursuant to
this agreement in the next registration of shares filed by the company.

Mr. Goforth represents and warrants that:
(a) he has received and carefully read this Agreement and the
materials prepared by ETC regarding its respective businesses
and statuses, is familiar with and understands them, has based
his investment decision on the information contained therein,
and has not asked any questions or requested any materials of
ETC which have not been answered or supplied; and
(b) he is acquiring the Stock for his own account for investment
and not with a view to distribution or resale thereof, (ii)
meets the suitability standards for an investment in the Stock
as set forth in the Securities Act of 1933, and applicable
U.S. and state securities laws, and all applicable regulations
under any of the foregoing (collectively the "Securities Laws
and Regulations"), (iii) understands that the Stock and the
issuance thereof, have not been registered under the
Securities Laws and Regulations, (iv) will not sell or
otherwise transfer the Stock except in compliance with the
Securities Laws and Regulations, or by will or the laws of
descent and distribution, and (v) resides at his address as
set forth in section 12 below.

11. UNAUTHORIZED TERMINATION: If ETC shall terminate Mr. Goforth's employment
hereunder prior to the expiration of the term hereof, other than "for
cause" as set forth above, and recognizing that there is no right to
terminate such employment, then ETC shall promptly pay to Mr. Goforth as
liquidated damages an amount equal to twelve (12) months base salary.
Such amounts shall be payable to Mr. Goforth at his current monthly
salary rate

<PAGE>
Employment and Settlement Agreement Between ETC and W. Mack Goforth - Page 4

until the balance is paid. Further, should such termination occur,
then all stock options that would have vested at the end of that year
will be accelerated and be available to Mr. Goforth at the time of
termination. Should there be a sale of ETC which results in a change
of control and should Mr. Goforth be terminated, the following
provisions will apply. Mr. Goforth shall receive an amount each year
until the end of this contract term equal to what his yearly salary,
raises and bonuses would have been had he remained employed by ETC and
all remaining stock options will automatically accelerate and be
available to Mr. Goforth at that time. In either case, upon exercising
of any stock options, Mr. Goforth shall be entitled to include any
shares purchased pursuant to this agreement in the next registration of
shares filed by the company. If ETC shall remove Mr. Goforth from the
office set forth in section 2 above, or significantly change his duties
as set forth therein, without his consent, then Mr. Goforth at his
option may treat such actions as an unauthorized termination under this
section II.

12. NOTICES. All notices hereunder shall be in writing and delivered personally
or sent by U.S. Mail or recognized courier service, addressed as follows or
to such other address for itself as any party may specify hereunder:

If to ETC: Electronic Transmission Corporation
5025 Arapaho, Suite 501
Dallas, Texas 75248

If to Mr. Goforth: W. Mack Goforth
6107 Waggoner
Dallas, TX 75230-4011

13. ENTIRE AGREEMENT COUNTERPARTS GOVERNING LAW. This Agreement expresses the
complete understanding of the parties with respect to the subject matter
hereof, superseding all prior or contemporaneous understandings,
arrangements, or agreements of the parties, and may be amended,
supplemented, or waived in whole or in part only by an instrument in
writing executed by the parties hereto, save and except for any
Non-Disclosure, Non-Compete agreement which may be in effect between the
parties. No party may assign this Agreement or its rights or obligations
hereunder without the written consent of all other parties hereto.
Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
administrators, successors, and assigns. The invalidity or
un-enforceability of any provision or provisions in this agreement shall
not affect the validity or enforceability of any other provision in this
agreement which shall remain in full force and effect. The headings
herein are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement. This Agreement may be
executed in multiple counterparts, and by the parties in separate
counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument. This Agreement
shall be governed by and construed in accordance with the laws of the
State of Texas.

<PAGE>
Employment and Settlement Agreement Between ETC and W. Mack Goforth - Page 5

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representatives, on and
effective as of the Effective Date.

ELECTRONIC TRANSMISSION CORPORATION

By: /s/ L. Cade Havard
---------------------------------
L. Cade Havard
Chairman and CEO

/s/ W. Mack Goforth
---------------------------------
W. Mack Goforth

<PAGE>
Employment and Settlement Agreement Between ETC and W. Mack Goforth - Page 6

ADDENDUM

"A"

Confidential information shall not include any information known generally to
the public (other than as a result of an unauthorized disclosure by Mr.
Goforth) or any information of a type not otherwise considered confidential
by persons engaged in the same business or businesses similar to that
conducted by ETC or any subsidiary or affiliate.

"B"

The shares of ETC stock covered by this agreement and the exercise price
thereof, shall be subject to adjustment to reflect any stock dividend, stock
split, share combination, exchange of shares, re-capitalization, mergers,
consolidation, separation, reorganization, liquidation or the like of or in
any manner involving ETC.

<PAGE>
EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement") is made and entered into
this 1st day of March, 1997, by and among Electronic Transmission
Corporation, a Delaware corporation ("ETC"), and Ann Compton McDearmon ("Ms.
McDearmon").

ETC now desires to employ Ms. McDearmon as Executive Vice President,
Marketing and Ms. McDearmon desires to accept such employment with ETC, all
on the following terms and subject to the following conditions.

NOW, THEREFORE, ETC and Ms. McDearmon hereby agree as follows.

1. EMPLOYMENT. ETC hereby employs Ms. McDearmon, and Ms. McDearmon hereby
accepts employment by ETC, for the term and compensation and subject to the
terms and conditions hereinafter set forth.

2. DUTIES OF MS. MCDEARMON. Ms. McDearmon shall serve in the capacity of
Executive Vice President and Director of Marketing, subject at all times to the
terms and conditions hereof and to the ultimate control and direction of the
President, the Chief Executive Officer, and the Board of Directors of ETC. In
that capacity, Ms. McDearmon shall have a substantial role in the marketing
by ETC of the services it offers to its clients. Ms. McDearmon shall not
make any agreements, representations, or performance guarantees, or execute
or agree to any instruments or contracts, on behalf of ETC or any of its
subsidiaries or affiliates without prior consent of ETC's chief executive
officer or Board of Directors. During the term of this Agreement, Ms. McDearmon
shall devote her entire business day and efforts to the performance of the
duties and responsibilities contained in this Agreement.

3. COMPENSATION. As compensation for her services rendered to ETC in the
capacities set forth above, ETC shall pay to Ms. McDearmon a base salary of
sixty thousand dollars ($60,000) per year and shall receive a commission of
five percent (5%) of all gross income generated from sales to companies
brought to ETC by her; however, she shall not receive a commission from
Electra-Net, L.C. revenue attributable to the accounts of Wal-Mart and MAPCO.
Gross income shall be calculated for each calendar month during the term
hereof by (i) determining the gross income received by ETC in immediately
available funds during such calendar month from commissions, administrative
and other fees, fees for editing and transmitting claims and other direct
sources, from accounts credited to Ms. McDearmon, and (ii) subtracting any
third party subcontractor or consultant or other third party expenses
incurred by ETC with respect to such accounts during such calendar month. The
percentages specified above of the gross income so calculated for each
calendar month during the term hereof, less any authorized deductions, shall
be paid to Ms. McDearmon in the next calendar month. There shall be no
carry-over from one month to the next of any negative net income.

<PAGE>

Employment and Settlement Agreement Between ETC and Ann
McDearmon
Page 2

Commissions shall continue for the life of the above described accounts
so long as this Agreement or any extension thereof is in effect. If this
Agreement is terminated or not renewed, commissions shall be paid on said
accounts for one year after termination or non-renewal. Should this Agreement
be terminated without cause by ETC, the liquidated damages shall be payment
of commissions to Ms. McDearmon for the remainder of the term of this
Agreement and for one year thereafter.

Ms. McDearmon is also herein granted an option to purchase two hundred
fifty thousand (250,000) shares of ETC stock at a price of one dollar and
twenty-five cents ($1.25) per share. This option will be effective for the
life of this agreement and one year thereafter. Should Ms. McDearmon die,
this option will be extended, if necessary, to give her heirs one year from
her death to exercise this option.

4. BENEFITS. During the term hereof, Ms. McDearmon shall be entitled to
participate in any benefit plans, stock option plans, and medical insurance
programs, provided by ETC on the same basis as other ETC employees.

5. REIMBURSEMENT OF EXPENSES. ETC shall reimburse Ms. McDearmon for all
expenses actually incurred by her in connection with ETC business, provided
that such expenses are reasonable and are in accordance with ETC policies.
Such reimbursement shall be made to Ms. McDearmon upon appropriate
documentation of such expenditures in accordance with ETC policies.

6. TERM. The term of this Agreement shall be for the period commencing
on March 1, 1997, and ending on December 31, 2000, subject to earlier
termination as provided in Section 7. The term of this Agreement will be
automatically extended for five years unless either party gives 60 days
notice that it will not be extended.

7. TERMINATION. This Agreement and Ms. McDearmon's employment hereunder
shall terminate in the event of Ms. McDearmon's death or if Ms. McDearmon
becomes permanently disabled as determined by the ETC Board of Directors
using current medical standards for disability. This Agreement and Ms.
McDearmon's employment hereunder may be terminated by ETC "for cause" at any
time the ETC Board of Directors determines, in the exercise of its good faith
judgment, that Ms. McDearmon has engaged in gross malfeasance or willful
misconduct in performing her duties hereunder and that her continued
employment by ETC no longer is in the best interests of ETC. Ms. McDearmon
may terminate this agreement at any time.

8. NONCOMPETITION FOR EXISTING CLIENTS AFTER TERMINATION. Ms. McDearmon
agrees, for a period of six months after the termination of this Agreement,
not to solicit, on her own behalf or on behalf of any future employer or
other entity, any business from any entity with which ETC or any of its
subsidiaries did business during the term hereof; unless Ms. McDearmon
purchases Claims, Etc. In that event, she may continue that business but may
not solicit any ETC business outside of Claims, Etc. The parties recognize
that this covenant not to compete for specified

<PAGE>

Employment and Settlement Agreement Between ETC and Ann
McDearmon
Page 3

customers for a limited time period is an integral part of this Agreement and
that ETC would not enter into this Agreement, or would do so only on the
basis of decreased compensation to Ms. McDearmon, without this covenant.

9. NONDISCLOSURE OF INFORMATION AND TRADE SECRETS. During her employment
hereunder and thereafter, Ms. McDearmon will not disclose to any person or
entity not directly connected with ETC, or use for her own benefit, any of
the trade secrets, financial information, systems, records, or business
methods of ETC or its subsidiaries or affiliates, or any of the business
relationships between ETC or its subsidiaries or affiliates and any of their
business partners or customers, unless such disclosure shall be in direct
connection with or a part of Ms. McDearmon's performance of her duties
hereunder. All software development code written while Ms. McDearmon is
employed by ETC will be the intellectual property of ETC and will be
protected by ETC copyrights. The provisions of this section shall survive
any termination of this Agreement.

10. UNAUTHORIZED TERMINATION. If ETC shall terminate Ms. McDearmon's
employment hereunder prior to the expiration of the term hereof, other than
"for cause" as set forth above, and recognizing that there is no right so to
terminate such employment, then ETC shall promptly pay to Ms. McDearmon as
liquidated damages an amount equal to twenty-five percent (25%) of all salary
due for the remainder of the term hereof under Section 3 above, such amount
payable at Ms. McDearmon's current salary rate until the balance is paid.
Additionally, she shall receive all commissions she would have received for
one year after termination. Should there be a sale of ETC or change of
control from ETC's current management, the following provisions will apply.
Ms. McDearmon shall receive an amount each year until the end of this
contract term equal to what her yearly salary, raises and bonuses would have
been had she remained employed by ETC. If ETC shall remove Ms. McDearmon from
the office set forth in Section 2 above, or significantly change her duties
as set forth therein, without her consent, then Ms. McDearmon at her option
may treat such actions as an unauthorized termination under this Section 10.
As further liquidated damages, Ms. McDearmon shall be treated as an early
retiree and ETC must provide free medical insurance coverage to Ms. McDearmon
for the rest of her life, and Ms. McDearmon shall have the option to
participate in all pension and profit sharing programs as other ETC officers
and employees.

11. NOTICES. All notices hereunder shall be in writing and delivered
personally or sent by U.S. Mail or recognized courier service, addressed as
follows or to such other address for itself as any party may specify
hereunder:

If to ETC: Electronic Transmission Corporation
5025 Arapaho, Suite 501
Dallas, Texas 75248

Attention: Mr. L. Cade Havard, Chief Executive Officer

<PAGE>

Employment and Settlement Agreement Between ETC and Ann
McDearmon
Page 4

If to Ms. McDearmon: Ms. Ann McDearmon
6503 N. Ridge
Dallas, Texas 75214

12. ENTIRE AGREEMENT COUNTERPARTS GOVERNING LAW. This Agreement
expresses the complete understanding of the parties with respect to the
subject matter hereof, superseding all prior or contemporaneous
understandings, arrangements, or agreements of the parties, and may be
amended, supplemented, or waived in whole or in part only by an instrument in
writing executed by the parties hereto. This Agreement replaces all other
agreements between the parties, including but not limited to the Employment
Agreement dated December 27, 1995 and the Employment Agreement dated May 1,
1996, save and except the conveyance of Ms. McDearmon's interest in Claims,
Etc., L.C. to ETC, such conveyance being in full force and effect. No party
may assign this Agreement or its rights or obligations hereunder without the
written consent of all other parties hereto. This Agreement must be approved
by the Board of Directors to be effective. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, administrators, successors, and assigns.
The headings herein are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement. This Agreement may be
executed in multiple counterparts, and by the parties in separate
counterparts, each of which shall be an original but all of which together
shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representatives, on and
effective as of the Effective Date.

ELECTRONIC TRANSMISSION CORPORATION

By: /s/ L. Cade Havard
------------------------------------
L. Cade Havard
Chairman and Chief Executive Officer

MS. McDEARMON

/s/ Ann Compton McDearmon
----------------------------------------
Ann Compton McDearmon

<PAGE>
SEVERANCE AGREEMENT AND GENERAL RELEASE

THIS SEVERANCE AGREEMENT AND GENERAL RELEASE (the "Agreement") is made and
entered into on this the 2nd day of May, 1997, by and between ELAINE BOZE, an
individual residing in Denton County, Texas (the "Employee"), and ELECTRONIC
TRANSMISSION CORPORATION, a Delaware corporation (the "Company").

RECITALS:

WHEREAS, the Company has employed the Employee pursuant to the terms of
that certain Employment and Settlement Agreement dated as of December 4,
1995, between the Employee and the Company (the "Employment Agreement") that
gives the Employee certain rights upon termination of the Employee's
employment with the Company for certain reasons; and

WHEREAS, the Employee and the Company have reached the following agreement
relating to the Employee's employment with the Company, and her resignation as
General Counsel and a Director of the Company, and to provide a complete and
mutual release by the parties hereto of any claims or causes of action they
might have against each other in connection with Employee's employment by the
Company and resignation from such employment and from such directorship.

NOW, THEREFORE, in consideration of the payments set forth below, and
the mutual promises and actions contained herein, the parties hereto
hereby agree as follows:

AGREEMENT

1. DEPARTURE FROM EMPLOYMENT: TERMINATION OF EMPLOYMENT AGREEMENT.
Effective on the above noted date (the "Termination Date") the Employee has
resigned from employment with the Company, and the Employee has relinquished
her director position, all other titles, and all authorities with respect to
the Company and all members of the Company Group (as defined below), and the
Employee has returned (or will return) to the Company all Company property,
including all Confidential Information described in Section 3 below. As used
herein, "Company Group" means the Company, and any entity that directly or
indirectly controls, is controlled by or is under common control with, the
Company, and for purposes of this definition "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership of
voting securities, by contract or otherwise.

Upon execution of this Agreement, the parties hereto agree that the
Employment Agreement shall terminate and the terms and provisions of this
Agreement shall supersede the Employment Agreement; provided, however, that
the covenants and agreements of the Employee set forth in paragraphs 8 and 9
of the Employment Agreement shall survive the termination of the Employment
Agreement.

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 1

<PAGE>

2. PAYMENTS AND BENEFITS.

(a) SEPARATION PAYMENTS. Subject to the provisions of, and in
consideration of the Employee's agreement to comply with the terms of, this
Agreement, the Employee will receive separation payments totaling $25,000
to be paid in five monthly payments of $5,000, less appropriate deductions,
offsets and withholdings as provided in this Agreement.

(b) CONTINUATION OF CERTAIN BENEFITS. The Employee shall be entitled
to continuation of all existing health care benefits until such time as the
Employee becomes employed either directly or indirectly by any single
business entity on a full-time basis which provides such benefits ("Benefit
Termination Date"). If Employee does not become so employed this benefit
shall continue for the life of the Employee.

While the Employee continues to participate in the Company's employee
benefits programs, the Employee hereby agrees to pay the Company the amount
of any such taxes at the time such taxes are due and payable by the
Company.

3. NON-COMPETE: CONSULTING SERVICES: CONFIDENTIALITY AND
NON-SOLICITATION.

(a) NON-COMPETE AGREEMENT. For a period of two years following the
date of this Agreement, the Employee shall not directly or indirectly
engage in the business of electronic claims processing; or any other
business in which any member of the Company Group directly or indirectly
engages as of this date; provided, however, that the restriction in this
Section 3 shall apply only to the reasonable and limited geographic area
consisting of any state in which any member of the Company Group directly
or indirectly has offices, operations or customers, or otherwise conducts
business. For purposes of this Section 3, the Employee shall be deemed to
engage in a business if she directly or indirectly engages or invests in,
owns, manages, operates, controls or participates in the ownership,
management, operation or control of, is employed by, associated or in any
manner connected with, or renders services or advice to, any business
engaged in electronic claims processing; provided, however, that the
Employee may invest in the securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if (x) such
securities are listed on any national or regional securities exchange or
have been registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Securities Act"), and (y) the Employee does not
beneficially own (as defined in Rule 13d-3 promulgated under the Securities
Act) in excess of 5% of the outstanding capital stock of such enterprise.

The Employee agrees that if a court of competent jurisdiction
determines that the length of time or any other restriction, or portion
thereof, set forth in this Section 3(a) is overly restrictive and
unenforceable, the court may reduce or modify such restrictions to those
which it deems reasonable and enforceable under the circumstances, and as
so reduced or modified, the parties hereto agree that the restrictions of
this Section 3(a) shall remain in full force and effect. The Employee

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 2

<PAGE>

further agrees that if a court of competent jurisdiction determines that
any provision of this Section 3(a) is invalid or against public policy,
the remaining provisions of this Section 3 and the remainder of this
Agreement shall not be affected thereby, and shall remain in full force
and effect.

(b) CONFIDENTIALITY AND NON-SOLICITATION.

(i) The Employee acknowledges that the Company's continued
operations and success is dependent upon (x) certain processes,
specifications, designs, systems, sales procedures and confidential
information of the Company which are valuable, special and unique
assets; and (y) the Company's continuing relationship with, and
knowledge about, customers and prospective customers and the goodwill
those relationships create. The Employee acknowledges that all of the
following information is confidential and a valuable, special and a
unique asset of the Company's business: (1) the names, addresses and
telephone numbers of customers, and their employees and
representatives; (2) the nature of the business and operations of any
customer; (3) the amount, nature, volume and other information
regarding any products or services sold to any customer or required
by any customer; (4) the nature of the internal business operation of
the Company; (5) the methods, processes, specifications, designs,
systems and know-how used, developed or acquired by the Company in
its business; (6) the Company's prices or charges to customers for
its products and services; and (7) information regarding the salaries,
bonuses or other compensation paid by the Company to its employees.

(ii) The Employee acknowledges that all of the information
described in paragraph (i) of this Section is "Confidential
Information," which is the sole and exclusive property of the Company.
The Employee acknowledges that all Confidential Information is
revealed to the Employee in trust, based solely upon the confidential
relationship existing between the Company and the Employee. The
Employee agrees: (1) that all writing or other records concerning
Confidential Information are the sole and exclusive property of the
Company; (2) that all manuals, forms and supplies furnished to or used
by the Employee and all data or information placed thereon by the
Employee or any other person are the Company's sole and exclusive
property; (3) that, upon execution of this Agreement, or upon request
of the Company at any time, the Employee shall deliver to the Company
all such writings, records, forms, manuals and supplies and all copies
of such; (4) that the Employee will not make or retain any copies of
such for her own or personal use, or take the originals or copies of
such from the offices of the Company; and (5) that the Employee will
not, at any time, publish, distribute or deliver any such writing or
records to any other person or entity, or disclose to any person or
entity the contents of such records or writings or any of the
Confidential Information.

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 3

<PAGE>

(iii) The Employee further agrees that at no time will she
either directly or indirectly, solicit any employee of the Company to
(x) accept employment, whether permanent or temporary, with the
Employee or any business entity which competes with and/or provides
services similar to the Company and with which the Employee is
associated in any manner, or (y) to terminate such employee's
employment with the Company.

(iv) The Employee acknowledges that the restrictions contained in
this Section (the "Restrictions"), in view of the nature of the
business in which the Company is engaged, are reasonable and
necessary in order to protect the legitimate interests of the Company,
and that any violation thereof would result in irreparable injury to
the Company, and the Employee therefore further acknowledges that,
in the event the Employee violates, or threatens to violate, any of
such Restrictions, the Company shall be entitled to obtain from any
court of competent jurisdiction, without the posting of any bond or
other security, preliminary and permanent injunctive relief as well
as damages and an equitable accounting of all earnings, profits and
other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies in law or
equity to which the Company or any affiliate or subsidiary of the
Company may be entitled. If the Employee violates any of the
Restrictions, the restricted period shall not run in favor of the
Employee from the time of commencement of such violation until such
time as such violation shall be cured by the Employee to the
satisfaction of the Company. If any Restriction, or any part thereof,
is determined in any judicial or administrative proceeding to be
invalid or unenforceable, the remainder of the Restrictions shall not
thereby be affected and shall be given full effect, without regard to
the invalid provisions. If the period of time or scope of activity in
the Restriction should be adjudged unreasonable in any judicial or
administrative proceeding, then the court or administrative body shall
have the power to reduce the period of time or the scope covered and,
in its reduced from, such provision shall then be enforceable and
shall be enforced.

4. MUTUAL RELEASE. In consideration of the benefits and payments
provided and to be provided by the Company herein, and as a material
inducement to the parties to enter into this Agreement, the parties hereto
hereby mutually release, acquit and forever discharges each other, including
the Company's owners, stockholders, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, attorneys,
divisions, subsidiaries, affiliates and all persons acting by, through, under
or in concert with any of them, from any and all charges, complaints, claims,
controversies, demands, rights, disputes and causes of action of any nature
whatsoever, known or unknown, asserted or unasserted, accrued or not accrued,
arising prior to or existing at the time of the execution of this Agreement
which either may have or claim to have against any of the persons or entities
released regarding any matter.

This Mutual Release includes, but is not limited to, any claim or cause
of action for discrimination under Title VII of the Civil Rights Act of 1964,
the Texas Commission on

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 4

<PAGE>

Human Rights Act, the Age Discrimination in Employment Act and the Americans
With Disabilities Act. It also includes any other statutory or common law
cause of action providing rights for employees against their employers. The
Employee further covenants not to sue the Company or file any claim or charge
with any agency complaining of the Company's action with respect to her
employment with the Company.

5. TAX PAYMENTS, WITHHOLDINGS AND REPORTING. The Employee recognizes
that the payments and benefits provided under this Agreement including
without limitation those provided pursuant to Section 2 may result in taxable
income to her which the Company and its affiliates will report to the
appropriate taxing authorities. The Company and its affiliates shall have the
right to deduct from any payment made under this Agreement to the Employee,
any business entity controlled by her or any other person or entity, any
federal, state, local or foreign income, employment or other taxes it
determines are required by law to be withheld with respect to such payments
or benefits provided thereunder or to require payment from the Employee which
she agrees to pay upon demand, for the purpose of satisfying any such
withholding requirement. The Company understands that the Employee may, at
her election, apply to the Internal Revenue Service ("IRS") for a private
letter ruling addressing the issue of such taxable income. The Company agrees
to comply with the ruling adopted by the IRS in any such private letter
ruling.

6. NON-COMPLIANCE. All foregoing payments and benefits, provided
hereunder pursuant to Section 2, are conditioned upon the Employee's
compliance with the provisions of Section 3 and 8 hereof. Each of the
aforementioned provisions are material terms of this Agreement, and in the
event of any violation of any such provision of this Agreement by the
Employee or anyone acting to Employee's direction, or in the event the
Employee or anyone acting at her direction at any time shall substantially
denigrate any of the persons or entities released under Section 4 above,
including without limitation by way of news media or the expression to news
media of personal views, opinions or judgments, the Company shall be entitled
to withhold and terminate all aforementioned payments and benefits provided
or to be provided in Section 2, without waiving the right to pursue any other
available legal or equitable remedies. The Company agrees that no statement
shall be made to third parties about the Employee by executive officers of
the Company or directors that denigrates her, including without limitation by
way of news media or the expression to news media of personal views, opinions
or judgments. The provisions of this Section 6 shall not be applicable to
any truthful statement required to be made by the Employee or any
representative of the Company or its affiliates in any legal proceeding or
government or regulatory investigation.

The Employee further agrees to reasonably cooperate with the Company,
its financial and legal advisors and/or government officials, in any claims,
investigations, administrative proceedings, lawsuits and other legal,
internal or business matters, as reasonably requested by the Company. To the
extent the Employee incurs travel or other expenses with respect to such
activities, the Company agrees to reimburse her for such reasonable expenses
documented and approved in accordance with Company policy.

7. NO ADMISSION. This Agreement shall not in any way be construed as
an admission by the Company of any act of discrimination or other unlawful
act whatsoever

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 5

<PAGE>

against the Employee or any other person, and the Company specifically
disclaims any liability to or discrimination against the Employee or any
other person on the part of itself, its employees or its agents.

8. CONFIDENTIALITY. The Employee and the Company agree that the terms
of the Agreement shall be confidential. The Employee specifically agrees that
she will neither now nor at any time in the future disclose or cause to be
disclosed the terms of this Agreement except (a) to employees of the Company
to the limited extent necessary to perform the terms of this Agreement, (b)
as may be necessary (i) in filing tax returns or Securities and Exchange
Commission filings, (ii) in connection with enforcing the terms and
conditions of this Agreement in a court of law as provided herein, (iii) in
response to a valid subpoena or other lawful process, or (iv) except as
otherwise required by applicable law, and (c) Employee's own legal counsel.
In the event that either party breaches this non-disclosure provision, the
other party will be entitled to injunctive relief to obtain specific
performance of this provision and will be entitled to recover costs and
attorneys' fees.

9. MISCELLANEOUS PROVISIONS.

(a) NO ASSIGNMENT. The Employee represents that she has not
transferred or assigned, or purported to assign or transfer, to any person
or entity any claim involving the Company or any portion thereof or
interest therein. Any assignment in violation of the foregoing shall be
null and void. Subject to the foregoing, this Agreement shall extend to,
be binding upon, and inure to the benefit of the parties hereto and their
heirs, representatives, successors and assigns. In the event that there
shall occur any transaction involving a change of control of the Company,
then the Company shall cause the party acquiring control of the Company or
the Company to assume the obligations of the Company under this Agreement.

(b) SEVERANCE. If any provision of this Agreement is or may be held
by a court of competent jurisdiction to be invalid, void or unenforceable
to any extent, the validity of the remaining parts, terms or provisions of
this Agreement shall not be affected thereby, and such illegal or invalid
part, term or provision shall be deemed not to be part of this Agreement.
The remaining provisions shall nevertheless survive and continue in full
force and effect without being invalidated in any way.

(c) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties and there are no other agreements or understandings
other than those set out in this Agreement.

(d) TEXAS LAW. This Agreement is made within the State of Texas and
shall in all respects be interpreted, enforced and governed under the laws
of the State of Texas, and shall in all cases be construed as a whole
(according to its fair meaning, and not strictly for or against any of the
parties).

(e) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be construed as an original for all purposes, but all
of which taken together shall constitute one and the same Agreement.

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 6

<PAGE>

SIGNED this 2nd day of May, 1997.

EMPLOYEE:

/s/ ELAINE BOZE
--------------------------------------
ELAINE BOZE

ELECTRONIC TRANSMISSION CORPORATION

By: /s/ L. Cade Havard
------------------------------------
L. Cade Havard, President

SEVERANCE AGREEMENT AND GENERAL RELEASE - Page 7

<PAGE>

PROCESSING AGREEMENT

This Processing Agreement is effective as of November 15, 1995 (the
"Effective Date") by and among Mr. Steve Arning ("Mr. Arning"), and Imaged
Data, Inc. ("IDI"), both of whose address is 3150 Premier Drive, Irving,
Texas 75063, and Electronic Transmission Corporation ("ETC"), having an
address of 5025 Arapaho, Suite 515, Dallas, Texas 75428.

ETC is in the business of receiving, processing, editing, and
transmitting medical claims of all types electronically to organizations that
reprice, adjudicate, and otherwise pay these claims, (collectively "Medical
Payors"). In order for ETC to pursue more clients and build its claims
network between payors and managed care organizations, it must have a
resource that can convert paper claims and images into electronic data by
extracting the data from various claim forms. IDI is in the business of
imaging medical claims, and extracting the data from these claims by means of
a technology known in the computer industry as OCR (Optical Character
Recognition). Both ETC and IDI acknowledge that all claims received by ETC
and/or IDI cannot be processed using OCR and will require manual data entry.

Both ETC and IDI know that the accuracy of the data extracted is the
single most important part of the claim conversion process and are thus
dedicated to accuracy above all else. ETC wishes to engage IDI to convert
paper medical claims and images of medical claims and to extract the data
from the claims accurately from machine printed HCFA 1500 and UB-92 forms.
IDI agrees to accept paper claims or scanned images from ETC or its clients
and to extract as much of the data as is required by any given client. The
information extracted will be checked for accuracy and then transmitted to
ETC in a format agreed to by both parties on a timely basis. The time allowed
to process any given group of claims will be determined by the need of the
clients and will be approved in advance by IDI. ETC will pay IDI a minimum of
$.29 per claim sheet and a maximum of $.32 per claim sheet to image machine
printed claim forms or to accept an image of a claim form and extract the
data and transmit the data to ETC for further processing. In the case of
extraordinary numbers of claims from any one client of ETC's, a price less
than $.29 per claim sheet may be negotiated between ETC and IDI. In the event
any client wants to fax claims or submit miscellaneous claim forms to be
processed including American Dental Association, hand printed and other
miscellaneous claim forms, ETC and IDI will negotiate a rate for that service
on a client by client basis. Subsequent pricing arrangements will be
submitted to IDI in writing and approved in advance and will be subject to
the terms and conditions of this agreement.

ETC is the exclusive agent for medical claims for IDI. For all medical
forms processed, imaged, archived, or otherwise processed by IDI for
customers other than ETC, IDI will pay ETC thirty percent (30%) of the gross
revenue paid to IDI.

<PAGE>

This agreement shall be effective for a term (the "Term") of one year
following the Effective Date. Such Term shall be extended automatically for
subsequent one year periods unless IDI or ETC gives at least 60 days prior
notice to the other that the Term will not be so extended.

All notices hereunder shall be in writing and delivered personally or
sent by U.S. Mail or recognized courier service, addressed as set forth above
or to such other address for itself as any party may specify hereunder.

This agreement expresses the complete understanding of the parties with
respect to the subject matter hereof; superseding all prior or
contemporaneous understandings, arrangements, or agreements of the parties,
and may be amended, supplemented, or waived in whole or in part only by an
instrument in writing executed by the parties hereto. No party may assign
this Agreement or its rights or obligations hereunder without the written
consent of all other parties hereto. Subject to the foregoing, the Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, administrators, successors, assigns and any entity in
which they have or may acquire a monetary interest. This Agreement may be
executed by facsimile in multiple counterparts, and by the parties in
separate counterparts, each of which shall be an original but all of which
together shall constitute one and the same instrument. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Texas.

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
duly executed and delivered by its duly authorized representatives, on and
effective as of the Effective Date.

Electronic Transmission Corporation

By: /s/ L. Cade Havard
-------------------------------------
L. Cade Havard
Chairman, CEO

Imaged Data. Inc.

By: /s/ Steve Arning
-------------------------------------
Steve Arning
President

<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

This License and Maintenance Agreement (hereinafter referred to as
"Agreement") is made as of the date indicated below by and between FACTS
Services, Inc., a Florida corporation (hereinafter referred to as
"Licensor"), and the party executing this Agreement as Licensee (hereinafter
referred to as "Licensee").

WHEREAS, Licensor hereunder is the sole licensee under that certain
License Agreement dated April 5, 1989, with JOVAST, Inc. a Florida
corporation, (hereinafter referred to as "OWNER"), the sole owner of all
rights, both tangible and intangible, to a certain computer software system
known as FACTS* (hereinafter referred to as "SYSTEM"); and,

WHEREAS, SYSTEM is comprised of certain modules (hereinafter referred to
as "Modules"); and,

WHEREAS, Licensee desires to license and receive maintenance services
for certain Modules from Licensor as set forth on Schedule 1, attached hereto
and made a part hereof, under "SYSTEM"; and,

WHEREAS, Licensor desires to provide Licensee with a license for said
Modules and provide such maintenance services to Licensee.

NOW, THEREFORE, for and in consideration of the covenants and promises
herein recited, it is understood, acknowledged and agreed by the parties as
follows:

1. GRANT AND TERM. Subject to the terms and conditions specified
herein, Licensor grants to Licensee a non-transferable, nonexclusive Five (5)
year license to use a copy of the object code of SYSTEM (hereinafter referred
to as "Object Code") as provided by Licensor and all related documentation and
manuals, as more fully described on Schedule 1. After expiration of the
initial five (5) year term of this Agreement, this Agreement shall
automatically renew in full force and effect for all subsequent five (5) year
periods in which Licensee shall have prepaid to Licensor the License Renewal
Fee (hereinafter referred to as "LICENSE RENEWAL FEE") specified in Schedule 1
for each five (5) year period after the initial five (5) year period. The
LICENSE RENEWAL FEE must be paid by Licensee to Licensor prior to the renewal
of any five (5) year period, including the initial five (5) year period. Such
license shall be for Licensee's internal use only and used only on the
computer system (hereinafter referred to as "COMPUTER") specified in Schedule
2 attached hereto and made a part hereof and only at the location (hereinafter
referred to as "LOCATION") set forth below. Licensee may not transfer SYSTEM
to any other computer system without the prior written approval of Licensor.
Further, Licensee may not transfer SYSTEM to any other computer system without
the payment of the Software Transfer Fee pursuant to Section 4 herein.
Licensee recognizes that more than one copy of SYSTEM will be licensed to
others, and that this does not evidence an intent by Licensor or OWNER to
publish SYSTEM, and shall not be construed as such a publication, nor does
such multiple licensing evidence any intent by Licensor or OWNER not to treat
the SYSTEM as its trade secret. Also, see Section 22, THIS AGREEMENT
SUPERSEDES ALL PRIOR AGREEMENTS.

2. SCOPE OF USE. One copy of SYSTEM must be licensed for each computer
system upon which SYSTEM is installed. Licensee may purchase additional
licenses from Licensor if Licensee desires to install SYSTEM on another
computer system other than Licensee's COMPUTER or at another location. SYSTEM
may only be used by employees of Licensee at the LOCATION of the COMPUTER. The
employees shall be actual employees of Licensee and shall not provide any
SYSTEM-related services or disclose any information relating to the SYSTEM to
any person or entity other than Licensee during or after the term of their
employment. Further, employees shall specifically exclude any former employees
of Licensor, CGData, FACTS Services, Inc., or JOVAST, Inc., unless prior
written approval is given by Licensor. Licensee is authorized to use SYSTEM in
the course of the rendering professional advice to Licensee's clients, who are
not competitors or clients of Licensor. Licensee is expressly prohibited
without the prior

- -------------------------------------------------------------------------------
*FACTS-R- is a registered trademark of JOVAST Inc. Page 1

Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

written consent of the Licensor from (i) giving any person, including without
limitation, its clients and customers, direct access to SYSTEM; except that
Licensee may provide access to SYSTEM to its client American Care Source for
use of the FACTS CASE MANAGEMENT-TM- and FACTS PPO-TM-Modules; (ii) renting or
lending, with or without charge, COMPUTER or any computer system, which
includes SYSTEM to any person, including without limitation, Licensee's
clients; (iii) operating at any time an on-line or off-line customer service
bureau involving SYSTEM; or (iv) using, or allowing others to use, including
without limitation, Licensee's clients, SYSTEM in a time sharing, multiple
user or multiple computer system environment in which the COMPUTER would be
part of, or in a network which extends beyond the LOCATION of the COMPUTER.
Regardless of the number of computer systems installed at a particular site,
one additional copy of SYSTEM must be licensed for each additional computer
system upon which SYSTEM is installed or used. At no time shall SYSTEM be used
to service (including repricing claims and processing claims) any insured not
in SYSTEM.

3. PAYMENT. Payments for use of SYSTEM shall be due in accordance with
the payment schedule set forth in Schedule 3 attached hereto and made a part
hereof. Prices reflected in Schedule 3 and all invoices from Licensor are
stated and payable in U.S. dollars. Licensee shall pay, or upon receipt of
invoice from Licensor, shall reimburse Licensor for, all sales, use, property,
customs, excise or other taxes (however designated and whether foreign or
domestic) imposed on Licensee or required to be collected by Licensor, or
imposed on SYSTEM or Modules, irrespective of whether included in any prior
invoice sent to Licensee at any time by Licensor. All invoices sent to
Licensee are sent at the end of the calendar month for most charges incurred
in that month that were not prepaid. Any delay in payment exceeding the due
date shall be assessed at the higher of a 1.5% finance charge per month or
portion thereof or the maximum finance charge available by law. The finance
charge shall be charged on a monthly basis. Freight, insurance, shipping and
handling charges are not included in price quotes given to Licensee by
Licensor. Such charges will be invoiced to Licensee at the time of shipment.
In the event that Licensee uses Licensee's purchase order form in connection
with this Agreement or for any products or services requested from Licensor,
such order will be governed by the terms and conditions (referred to as
"provisions" in this section) of this Agreement and any provisions of such
order form which in any manner differs from or is in addition to the
provisions of this Agreement shall be of no force or effect. Licensor's
acceptance of such order is expressly made conditional on Licensee's assent to
the provisions of this Agreement. Any acknowledgment by Licensee of this
Agreement shall be limited to the provisions of this Agreement, and any
provision in such acknowledgment which in any manner differs from or is in
addition to the provisions of this Agreement shall be of no force or effect.
Commencing thirty (30) days after the earlier of Licensee's or Licensor's
signature below and continuing quarterly thereafter, Licensee agrees to pay
Licensor the quarterly licensing fee (hereinafter referred to as "Quarterly
Fee") specified in Schedule 4 attached hereto and made a part hereof. Licensor
may not increase this licensing fee more than once in any 12 month period and
only upon thirty (30) days' notice to Licensee; notwithstanding the foregoing,
the Quarterly Fee shall be subject to change if Licensee purchases additional
software licenses or extends the scope of SYSTEM or licenses additional
Modules, third party software, sites or computers or increases or expands its
operations to require additional support in which case said fees may be
increased by Licensor's published rates. It is acknowledged and agreed that
Quarterly Fees are past due if they are not received in Licensor's office by
the first day of the calendar quarter for such calendar quarter.

4. INSTALLATION/SOFTWARE TRANSFER/SOFTWARE RELICENSING FEES. Licensor
shall be responsible for installation of SYSTEM on the COMPUTER specified in
Schedule 2 and Licensor shall provide Licensee with all documentation
applicable to Modules in SYSTEM on or before the installation of COMPUTER at
LOCATION. All fees and charges relating to such installation are specified in
Schedule 2 and shall be payable in accordance with the terms thereof. In the
event that Licensee desires to transfer SYSTEM to another computer system,
Licensee will be required to pay Licensor the Software Transfer Fee that
Licensor has in effect at the time the system is transferred. The Software
Transfer Fee is a combination of the amount of work required to transfer
SYSTEM to the new computer and the configuration of the new computer. In the
event that Licensee desires to upgrade the COMPUTER, Licensee shall pay
Licensor the Software Relicensing Fee that Licensor has in effect at the time
the COMPUTER is upgraded. In the event that Licensee desires to increase the
total number of ports or users on the COMPUTER, Licensee shall pay the
Additional Licensing Fees specified in Schedule 3 to Licensor.

- -------------------------------------------------------------------------------
Page 2
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

5. TRAINING. Licensor hereby agrees to furnish, and Licensee hereby
agrees to pay for, those training services set forth in Schedule 1.

6. TITLE, RISK OF LOSS AND NON-ASSIGNABILITY. Title to SYSTEM, all
property rights therein and all documentation and all other materials supplied
to Licensee under this Agreement are and shall remain the sole property of
OWNER. After delivery and installation of SYSTEM, Licensee shall bear all risk
of loss relating to the copy of SYSTEM licensed hereunder, except as otherwise
provided herein. The license to use SYSTEM hereunder is personal to Licensee
and Licensee shall not sell, transfer, sublease, assign, or deliver SYSTEM
(or any copy of SYSTEM) or such license to any other person or entity
including any entity that controls, is controlled by, or is under common
control with Licensee. All applicable rights to patents, copyrights,
trademarks, and trade secrets in SYSTEM shall remain in OWNER.

7. MODIFICATION. Licensee is expressly prohibited from modifying, any
portion of SYSTEM for any purpose or from merging SYSTEM, in whole or in part,
into any other program materials. Licensee shall not modify, clone, tolerate
or permit to occur any design theft, disassembling, decompiling, or otherwise
reverse engineering: in whole or in part, SYSTEM; Licensor's Security
Features; any Source Code of SYSTEM or Source Code that interacts with SYSTEM
or any part thereof; any Object Code; or any other programs, or program
materials, whether developed by Licensee or Licensor, at any time, for any
reason. Further, Licensee shall not compile Source Code or compile any
enhancements or modifications to Source Code of SYSTEM or produce any Object
Code that would or does replace Object Code, in whole or in part, of SYSTEM in
any manner whatsoever.

8. CONFIDENTIALITY, NON-DISCLOSURE AND NON-REPRODUCTION OF PROPRIETARY
INFORMATION. Each party acknowledges that certain material and information
including this Agreement, its terms and conditions, which has or will come
into its possession or knowledge in connection with this Agreement includes
identified confidential or proprietary information, disclosure of which to
third parties may be damaging. Therefore, each party agrees to hold such
material and information in strictest confidence, to be used only for the
performance of this Agreement, and to be released only to those persons
requiring access to the information for such performance. Licensee understands
and agrees that SYSTEM and related documentation, manuals, and materials
constitute confidential and proprietary information or trade secrets of
Licensor. Licensee agrees to maintain SYSTEM and all related documentation,
manuals and materials in strict confidence and, except for the right of
Licensee to make one copy of SYSTEM for backup purposes to support its use of
SYSTEM in the manner specified herein, Licensee agrees not to disclose,
duplicate or otherwise reproduce, directly or indirectly, SYSTEM, in whole or
in part, or any documentation, manuals or materials relating thereto. Licensee
agrees to take all reasonable steps to ensure that only full-time employees of
Licensee shall have access to SYSTEM and that all authorized persons having
access to SYSTEM shall refrain from any such disclosure, duplication or
reproduction. Licensee agrees not to remove Licensor's or OWNER's copyright
notice and other proprietary markings from SYSTEM, and any copy of SYSTEM made
by Licensee for backup purposes pursuant to the terms of this Section 8 shall
contain the same copyright notice and proprietary markings contained on the
copy of SYSTEM furnished by Licensor to Licensee hereunder. Licensee is
prohibited from renaming, selling, publishing, disclosing, transferring,
timesharing, lending, leasing or otherwise making available to others the
SYSTEM or any portion or copy thereof Licensee acknowledges that SYSTEM is
unique and that Licensee's failure to comply with any provision of this
Section 8 shall result in irreparable harm to Licensor and that in the event
of the breach or threatened breach by Licensee of its obligations under this
Section 8, Licensor may bring suit in equity to enjoin any such actual or
threatened breach. Also, see Section 12, TERMINATION.

9. INDEMNIfICATION.

A. LICENSEE INDEMNITY. Licensor shall defend or settle any proceeding
brought against Licensee to the extent that it is based on a claim that the
SYSTEM made to Licensor's specifications and being within the scope of the

- -------------------------------------------------------------------------------
Page 3
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

Agreement hereunder constitutes and infringement of a U.S. copyright or an
existing U.S. patent provided that Licensor is notified of the claim promptly
in writing and is given complete authority and information required for the
complete defense of same, and Licensor shall pay all damages and costs awarded
therein against Licensee, but Licensor shall, in no event, be responsible for
any costs, expenses or compromise incurred or made by Licensee without
Licensor's prior written consent.

In the event that SYSTEM or any Module of SYSTEM furnished hereunder is,
in Licensor's opinion, likely to or does become the subject of a claim for
infringement of a copyright or patent, Licensor may, at its option and
expense, procure for Licensee the right to continue using such materials,
modify them to make them non-infringing, or substitute other materials of
similar capability. If none of the foregoing alternatives is reasonably
available to Licensor in its opinion, Licensor may terminate the License of
such Module upon thirty (30) days written notice to Licensee, in which case
Licensor shall refund to Licensee all fees (exclusive of: Training Fees;
Training Expenses; Quarterly Fees; Software Relicensing Fees; Additional
Licensing Fees; taxes; and the price of the COMPUTER) paid to Licensor by
Licensee for the infringing Module under this Agreement. If, however, the
Module or SYSTEM is likely to become the subject of a filed claim for
copyright infringement but has not, Licensee may, at its peril, elect to
continue using the same until an injunction issues or the claim has been
withdrawn. In such event Licensee agrees to defend any action involving such
claim and to indemnify Licensor with respect to all costs, damages and
attorneys fees attributable to use of the SYSTEM or Module by Licensee after
notice from Licensor of the possibility of a claim. Licensor may participate,
at its expense, in the defense of any action that may arise out of any claim
made against Licensee from its use after notice from Licensor against Licensor.

Licensor shall have no liability for any claim of infringement based upon
the use of other than a current unaltered release of the SYSTEM available from
Licensor if such infringement would have been avoided by the use of such
current unaltered release, or upon use of a combination of the SYSTEM with
non-Licensor programs or combination of the unaltered SYSTEM with any other
programs or data.

The foregoing states the entire liability of Licensor with respect to
infringement of any copyright or patent by the SYSTEM or Modules or any part
of the SYSTEM or Modules, and is in lieu of all warranties or representations,
expressed or implied, in regard thereto.

B. Licensor INDEMNITY. Licensee shall, to the full extent permitted by
law, indemnify Licensor and OWNER hold Licensor and OWNER harmless against all
damages, costs, charges, expenses (including attorney's fees), actions, claims
and demands which may be sustained or suffered by or recovered or made against
Licensor by any third party arising from or in any way connected with a breach
of any term of this Agreement by Licensee.

10. LIABILITY. Except as specified in this Section 10 in this Agreement,
neither Licensor nor OWNER shall be liable for any loss or damage that may
arise in connection with the furnishing, performance or use by Licensee of
SYSTEM, including, without limitation, any indirect, special, incidental or
consequential damages. Except as otherwise provided in Section 9 hereof, the
remedies of Licensee set forth under Section 11 hereof shall be the sole and
exclusive remedies of Licensee for any breach of any obligations of Licensor
hereunder or otherwise, and in no event shall Licensee be entitled to any
monetary damages against Licensor in excess of the software license fees
(exclusive of: Training Fees; Training Expenses; Quarterly Fees; Software
Relicensing Fees; Additional Licensing Fees; taxes; and the price of the
COMPUTER) paid to Licensor by Licensee hereunder.

11. WARRANTY. Licensor warrants that it has full power and authority to
grant the rights granted herein. Licensor additionally warrants that at the
time of installation of the initial copy of SYSTEM and for a period of one
year thereafter, such copy of SYSTEM shall be in substantial conformance with
the applicable published documentation (which may be updated from time to
time) of SYSTEM and will operate on the COMPUTER specified on Schedule 2
attached hereto. Licensor agrees to use its best reasonable efforts to
correct, as soon as practicable, any failure of

- -------------------------------------------------------------------------------
Page 4
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SYSTEM to so conform or replace any defective item(s) in such copy of SYSTEM
(or any subsequent release of SYSTEM) which Licensor determines to be
necessary at Licensor's own cost and expense, provided that Licensee is able
to reproduce any such error in SYSTEM and provided further that written notice
reasonably identifying such error is given immediately to Licensor during the
warranty period. This warranty shall not apply if: (i) an item of SYSTEM shall
not have been used in accordance with Licensor's instructions; (ii) an item of
SYSTEM shall have been altered, modified, merged or converted by Licensee
without the prior written approval of Licensor; (iii) Licensee's operating
system shall have been altered, modified or converted without the prior
written approval of Licensor; (iv) any of Licensee's equipment shall
malfunction; or (v) any other cause within the control of Licensee or Licensor
shall result in an item of SYSTEM becoming inoperative. THE FOREGOING WARRANTY
IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND, OTHER THAN AS
EXPRESSLY SET OUT HEREIN, LICENSOR DISCLAIMS ALL WARRANTIES OF ANY KIND OR
NATURE INCLUDING, BY WAY OF EXAMPLE AND NOT LIMITATION, THE IMPLIED WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES OF RESULTS,
COMMERCIAL PRACTICALITY OR PERFORMANCE.

12. TERMINATION. In the event that Licensee shall breach any of its
covenants or agreements herein or has any two Quarterly Fees that are past due
(as defined in Section 3, PAYMENT), then Licensor may, at its option, suspend
the supply of products and services Licensor provides to Licensee upon verbal
notification to Licensee or terminate this Agreement and terminate the license
to use SYSTEM hereunder, upon written notification to Licensee. Either party
may terminate this Agreement by providing the other with written notice 120
(one hundred twenty) days prior to the expiration of the term hereof. Upon
termination of this Agreement, Licensee shall promptly return to Licensor any
and all copies of SYSTEM and all documentation,manuals and materials relating
to SYSTEM in Licensee's possession and certify in writing to Licensor that all
such copies have been so returned. Licensor shall have the right to enter upon
any premises of Licensee where the SYSTEM, COMPUTER and related documentation,
manuals and materials may be found to verify that SYSTEM and any such related
documentation, manuals and materials have been returned to Licensor. In the
event that, upon inspection by Licensor, SYSTEM or any such documentation,
manuals and materials still exist upon such premises, Licensor shall have the
right to remove them and Licensee shall permit and assist Licensor in
effecting the retaking and removal of the SYSTEM related documentation,
manuals and materials. In the event that any invoice due hereunder or any
invoice from Licensor to Licensee is past due (unpaid for seven days beyond
the stated due date described in Section 3, PAYMENT, and not disputed in
writing, prior to its stated due date, pursuant to Section 21 hereof) or any
Quarterly Fee is not paid by the first day of the calendar quarter for which
it is due then Licensor may, at its option, suspend the supply of products and
services Licensor provides to Licensee until Licensee pays all unpaid items in
full. In the case where Licensee causes Licensor more work or effort as a
result of Licensee's non-payment of an invoice and where Licensor suspends
Licensee's supply of products and services as a result thereof, then Licensee
agrees to pay for the amount of extra time and charges Licensor expends as a
result of such cause. Suspension of products or services shall not relieve
Licensee of its obligations to make any payments due for any then past or then
current Quarterly Fees to Licensor. Further, there shall be no reimbursement
or proration of the Quarterly Fee in the event of such suspension, or in the
event of any termination of this Agreement. Licensee's obligation to maintain
the confidentiality of Licensor's proprietary information shall survive any
termination of the license granted hereunder. Licensor shall have the right to
terminate the license to use the FACTS CES Module if Licensor ceases to have
its VAR AGREEMENT in effect with Medicode. For further information and the
definition of the terms "VAR AGREEMENT" and "Medicode", please refer to
Section 21, Item O hereof

13. NON-INTERFERENCE WITH EMPLOYEES. During the term of this Agreement,
and for a period of three (3) years after its termination, Licensee agrees not
to hire or to solicit knowingly the employment of any employee, or former
employee, of Licensor, CGData Corporation, Jovast, Inc., or FACTS Services,
Inc., without the prior written consent of Licensor. The terms "employee" and
"employment," for the purposes of this Section, apply also to any individual
working on a contracted or subcontracted basis for Licensee.

- -------------------------------------------------------------------------------
Page 5
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

14. OWNER'S RIGHTS AND RESPONSIBILITIES. Irrespective of any language
contained herein the Licensee agrees, acknowledges and understands that OWNER,
as the owner of the software, makes no representations or warranties with
respect to SYSTEM, and the Licensee shall have the right to look solely to
FACTS Services, Inc. with respect to any alleged breach of this Agreement or
any other cause of action which may arise with respect to the use of SYSTEM.
Licensee agrees that upon notice from OWNER of a breach of the obligations of
Licensor to OWNER and without need for further inquiry or investigation by
Licensee, Licensee shall acknowledge OWNER as the Licensor hereunder and be
obligated to OWNER as though OWNER were the initial Licensor, under this
Agreement.

15. LICENSOR'S RIGHT TO REVIEW SYSTEM. Licensee agrees and consents that
Licensor shall at all times have access to and the right of entry into
Licensee's COMPUTER to review SYSTEM, the Object Code, the Source Code and any
enhancements or modifications thereof and any production accounts that access
the SYSTEM pursuant to Licensor's technical specifications. Access shall occur
either through modem or by means of an on site inspection at the option of
Licensor. Licensee shall be required to provide Licensor, at no cost to
Licensor, a full file save complete with a file statistics, which excludes
Licensee's clients data, report every six months, starting from the date of
the execution of this Agreement.

16. DEFAULT. Licensee shall be in default under this Agreement and all
rights granted herein shall automatically terminate without notice to
Licensee, upon any of the following: (i) if Licensee shall become materially
delinquent, insolvent, makes an assignment for the benefit of creditors,
suffers or permits the appointment of a receiver, trustee in bankruptcy, or
similar official for all or any substantial part of its business or assets;
(ii) in the event Licensee shall avail itself or become subject to any
Bankruptcy Code or any statute or any procedure relating to insolvency or the
protection of the rights of creditors; or (iii) in the event Licensee
terminates or suspends its business, or a Federal or State governmental or
quasi-governmental authority terminates or suspends Licensee's business.

17. UPDATE TO MODULES. Licensor from time to time updates the Modules
which result in new releases of the Modules. During the term hereof, Licensor
shall provide Licensee with one (1) copy of every new release of Modules which
are the subject of this Agreement. Licensee agrees and understands that
Licensor may from time to time include within a Module provisions which extend
the then current capabilities of the Modules and require Licensee to sign a
separate license agreement with Licensor for the use of the additional
capabilities and that Licensor may also from time to time develop a new Module
or extend the capabilities of an existing Module and make such available to
Licensee only through the payment of additional licensing fees to Licensor. In
such case, Licensee shall determine if Licensee desires to purchase the
additional functionality. Notwithstanding anything to the contrary contained
herein, Licensor, in its sole and unfettered discretion, shall decide whether
a provision in an update is a new product and whether a provision in an update
adding additional capabilities to the Modules shall only be made available for
Licensee's use only for an additional fee, and/or for executing a separate
license agreement.

18. MAINTENANCE SERVICES. Licensor warrants, commencing on July 1, 1997
and during the term hereof, to maintain the Modules in such a manner that the
Modules shall perform in substantial conformance with the then-existing
published documentation (which may be updated from time to time) for the
Modules listed in Schedule 1. Personnel of Licensor shall be available during
Licensor's standard working hours to respond to inquiries by Licensee for
consultation concerning maintenance of the Modules. Licensee agrees to use
Licensor's Electronic Support System-TM- as its principal means of
communication with Licensor. In the event that Licensee notifies Licensor of
an error or malfunction of the Modules or SYSTEM and in the further event that
Licensor shall reasonably determine that such problem relates to Licensee's
failure to operate the Modules or SYSTEM in accordance with Licensor's
instructions or Licensor's documentation, Licensee shall, upon receipt of an
invoice from Licensor, promptly pay Licensor its hourly rate, which is
currently One Hundred Thirty Dollars ($130.00), for all services performed in
connection with the diagnosis and correction of such problem and reimburse
Licensor for all out-of-pocket expenses incurred in connection therewith.

- -------------------------------------------------------------------------------
Page 6
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL

<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

19. SPECIALLY REQUESTED ENHANCEMENTS TO SYSTEM.

A. Licensee may request that Licensor develop, at Licensee's expense,
certain enhancements to SYSTEM. Licensor, in its sole discretion, may develop
enhancements requested by Licensee which will reasonably relate to the
functions or processes performed by SYSTEM. Licensee agrees to pay Licensor's
standard hourly rates for all services performed in developing any such
enhancements and to reimburse Licensor for all out-of-pocket expenses incurred
in connection therewith. Licensor reserves the right to reject any requests by
Licensee for enhancements.

B. In the event that Licensee desires that Licensor develop any
enhancement to SYSTEM, Licensee shall submit a written request acceptable to
Licensor setting forth in substantial detail the nature and specifications of
the requested enhancement. If Licensor agrees to develop such enhancement
Licensor will set forth an estimated date by which such enhancement may be
developed and the estimated cost thereof Licensee shall pay Licensor its
standard published fee for evaluating such request. Upon receipt of an
authorization to proceed, Licensor will proceed with the enhancement request
as detailed in Licensor's quote. Licensee's request for the enhancement and
authorization for Licensor to proceed with the enhancement, and any other
documents which reference the enhancement that in any manner differs from or
is in addition to Licensor's quote shall be of no force or effect. Licensor's
acceptance of agreeing to perform an enhancement is expressly made conditional
on Licensor's assent to the fact that only the quote from Licensor shall be
the governing document for the development of the enhancement. In as much
Licensor cannot accurately detail the exact time it will take to perform any
specific enhancement, Licensee agrees to pay Licensor for all time spent in
completing any such enhancement, even if such enhancement should cost more
than the estimate in Licensor's quote for such enhancement.

C. All enhancements made to SYSTEM (and all rights in such
enhancements, tangible and intangible), whether such enhancements be made by
Licensor or by Licensee, shall be the sole property of OWNER. In the event
that any enhancements to SYSTEM shall be developed by Licensee, Licensee shall
immediately deliver a copy of such enhancements (and all related documentation
and backup materials) to Licensor. Licensor shall, in its sole discretion, be
free to make available any such enhancements developed by Licensor or Licensee
to other licensees of SYSTEM. In addition, Licensee agrees to execute any and
all documents and instruments requested by Licensor to protect OWNER's
property rights, tangible and intangible, in SYSTEM and any such enhancements.

D. The terms "enhancements" and "modifications" used throughout this
Agreement are further defined as any Source Code, Object Code, or any
derivative works of the SYSTEM or any other programs that access the SYSTEM or
any data that the SYSTEM uses or interacts with the SYSTEM, directly or
indirectly, or the data that the SYSTEM uses. Such enhancements and
modifications are not limited to programs or programming techniques. It is
expressly acknowledged that these definitions extend to the interaction of
hardware and peripheral devices that in any manner use or access the SYSTEM or
any data that the SYSTEM uses.

20. ADDITIONAL TERMS GOVERNING USE OF SYSTEM.

A. The updates to Modules provided by Licensor to Licensee described in
Section 17 herein must be loaded by Licensee in the time frame given to
Licensee by Licensor. Such updates will replace the Modules, thus bringing
Licensee up to a current revision. At no time is Licensee permitted to load an
old version of the SYSTEM or Modules without the prior written approval of
Licensor as required herein.

B. Licensor requires that Licensee's COMPUTER operate within an
operating system revision as specified by Licensor. Such operating system
revision may or may not be Equipment Manufacturer's current revision.

- -------------------------------------------------------------------------------
Page 7
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

21. GENERAL.

A. This Agreement constitutes the entire and exclusive Agreement
between the parties with respect to the SYSTEM, Modules, COMPUTER, and duties
and obligations to be performed by each of the parties and supersedes all
prior and concurrent proposals, agreements and all other communications (oral
and written) between the parties relating to the subject matter of this
Agreement, notwithstanding any prior course of dealing, custom or usage of
trade or course of performance. No representations or statements of any kind
made by any representative of Licensor, which are not stated herein, shall be
binding on Licensor. Licensee represents that Licensee is not relying on any
oral or written representation or warranties not contained in this written
Agreement.

B. No term or provision of this Agreement shall be deemed waived and no
breach excused unless such waiver or consent shall be in writing and be signed
by the party claimed to have waived or consented. Any consent by any party to,
or waiver of, a breach by the other, whether express or implied, shall not
constitute a continuing waiver of, or continuing consent to, or a consent to
or waiver of, or excuse for different or subsequent breaches.

C. If any provision of this Agreement is held to be ineffective,
unenforceable or illegal for any reason, such decision shall not affect the
validity or enforceability of any or all of the remaining provisions hereof.

D. In the event that either party is required to enforce any provision
of this Agreement in a court of competent jurisdiction, both parties agree
that the party that prevails shall be awarded reasonable attorneys' fees and
expenses of counsel in addition to other monetary and/or equitable damages,
both at the trial and appellate levels.

E. Licensee shall pay, or upon receipt from Licensor, shall reimburse
Licensor for, all sales, use, property, customs, excise or other taxes imposed
on Licensee, or required to be collected by Licensor, or imposed on SYSTEM or
the use thereof, irrespective of whether included in any invoice sent to
Licensee at any time by Licensor. Licensor agrees to notify Licensee of any
taxes that Licensor has been notified of, that Licensee will be subject to,
pursuant to SYSTEM or the use thereof Licensee's obligation pursuant to this
Section 21 E shall survive any termination of the license granted hereunder.

F. Notwithstanding choice of law principles, place of performance or
execution, the parties agree that this Agreement shall be interpreted,
governed, constructed, and enforced in accordance with the laws of the State
of Florida, and that any action, be it litigation, mediation, arbitration or
otherwise, between the parties shall be conducted in either the federal or the
state courts located in Dade County, Florida, and the parties hereby submit to
such jurisdiction and venue.

G. Any notice or other communication hereunder shall be in writing, and
shall be delivered in person or sent by certified or registered mail, return
receipt requested, or by Federal Express, Express Mail of the U.S. Postal
Service, or other similar, bonded, overnight delivery service and shall be
addressed, if to Licensor, to the person whose signature appears below, and
only in that person's absence, to the President or Chairman of the Board, and
if to Licensee, to the party for whom it is intended. All deliveries are to be
made to the respective addresses as set forth below. Such addresses may be
changed by written notice pursuant to and in accordance with Sections 21G and
21H.

H. This Agreement shall not be deemed accepted by or binding upon
Licensor until executed by the President or Vice President of Licensor. Any
additions, amendments, deletions, modifications, or other changes made to the
preprinted form of this Agreement must be effected by a written instrument
signed by the President or Vice President of Licensor in order for such an
amendment to be binding. In the absence of such an amendment, commencement of
performance by Licensor shall be for Licensee's convenience only and shall not
be deemed acceptance of any proposed amendment by Licensee.

- -------------------------------------------------------------------------------
Page 8
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

I. The operating system for the COMPUTER and certain third party
software is not sold or licensed under this Agreement. In order to obtain such
operating system, Licensee must enter into a license agreement(s) with the
manufacturer of the equipment (hereinafter collectively referred to as
"Equipment Manufacturer") upon the execution of this Agreement. In order to
obtain certain third party software, Licensee must enter into a license
agreement with the manufacturer of such third party software upon the
execution of this Agreement. Licensor gives no assurances regarding the
availability of such operating system or third party software and shall have
no obligation or liability with respect thereto.

J. All risk of loss or destruction or damage to the COMPUTER by reason
of theft, fire, water or any other cause, shall pass to Licensee upon delivery
of the COMPUTER to Licensee. The occurrence of any such casualty shall not
relieve Licensee from the obligation to make payment of any amount due
hereunder. Prior to delivery of the COMPUTER, Licensee shall, at its own
expense, procure and continuously maintain fire, theft, extended coverage,
vandalism and malicious mischief insurance in an amount equal to the purchase
price of the COMPUTER, plus all freight and handling charges and taxes due
hereunder. Until payment in full of all amounts due hereunder, such insurance
policies shall name Licensee as insured and Licensor as an additional insured.
Immediately upon delivery of COMPUTER, Licensee shall inspect the COMPUTER
for damage. Licensee must describe any and all visible damage of the COMPUTER
on the Bill of Lading prior to Licensee accepting delivery of the COMPUTER.

K. Licensor shall have no responsibility or liability whatsoever for
the operation or maintenance of the COMPUTER or the operating system of the
COMPUTER or third party software. Licensor requires that the COMPUTER and the
operating system be maintained by Equipment Manufacturer or other agent that
Licensor designates and that third party software be maintained by the
manufacturer of the software, or other agent that Licensor designates, who may
offer to enter into its standard maintenance agreement with Licensee for
maintenance thereof. In no event shall Licensor be responsible for any
improper operation of the COMPUTER or certain third party software, defects or
other consequences arising from or related to the operation or maintenance of
the COMPUTER or certain third party software, by Licensee or others, including
Equipment Manufacturer, an agent that Licensor designates, and the
manufacturer of such third party software. Licensee shall contact the party
whom Licensor designates in its judgment as appropriate for all such operation
or maintenance issues regarding the COMPUTER or the operating system of the
COMPUTER or third party software.

L. Licensee agrees that its sole remedy in case of any defect in the
COMPUTER shall be such remedy as is afforded it against Equipment Manufacturer
by Equipment Manufacturer's warranty of the COMPUTER, if any, or such other
remedy against the Equipment Manufacturer as Licensee may have under any
provision of contract or law. During Equipment Manufacturer,s warranty period,
Licensor agrees to use its best efforts to assist Licensee in resolving with
Equipment Manufacturer any problems with respect to the failure of the
COMPUTER to perform in accordance with such warranty, though Licensor provides
no assurances that any such problem can be resolved in a manner that is
satisfactory to Licensee. Licensor shall not be liable to Licensee for any
damage, defect, failure to meet specifications, late delivery or shortage with
respect to the COMPUTER. Licensor shall not be liable, in any event, for lost
profits, loss of anticipated profits, loss by reason of shut-down,
non-operation, or increased expense of operation of other equipment,
processes, or systems, or other incidental or consequential loss or damage of
any nature arising from any cause whatsoever, including breach of contract,
breach of warranty, tort, negligence or otherwise. THE FOREGOING WARRANTIES
ARE IN LIEU OF ALL OTHER WARRANTIES OF Licensor WITH RESPECT TO THE COMPUTER,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE.

M. Licensor may assign payment of any monies due hereunder to any other
party that Licensor designates for any consideration Licensor may determine in
its sole discretion.

- -------------------------------------------------------------------------------
Page 9
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

N. If Licensee is licensed under Schedule 1 hereunder to use the FACTS
MICR Module as part of SYSTEM, then Licensee agrees that all Printer Supplies
specified in Schedule 4 attached hereto and made a part hereof must be
purchased from Licensor. Licensor's published prices for the additional
PRINTERS and PRINTER SUPPLIES are outlined in Schedule 4. In the event that
Licensee purchases an additional PRINTER, to be used in connection with the
MICR Module, from any entity other than Licensor, then Licensee agrees that it
shall pay Licensor a licensing fee of Ten Thousand Dollars ($10,000.00)
exactly for each PRINTER that Licensee does not purchase from Licensor. For
the purposes of the Agreement, an "additional PRINTER" shall be defined as any
printing device that the MICR Module uses, whether used for actual MICR
printing or not, that increases the total number of PRINTERS used by the MICR
Module to more than the number of PRINTERS described in Schedule 1. Licensee
acknowledges and agrees that this Agreement only gives Licensee the right to
use the number of PRINTERS described in Schedule 1. Licensee is only permitted
to replace the PRINTERS with actual replacement printers by purchasing such
replacement printers from Licensor. The cost of replacement printers is
outlined in Schedule 4. Regardless of the number of times a PRINTER is
replaced, Licensee shall only be permitted to use and be Licensed for the
number of PRINTERS described in Schedule 1. For the purposes of this
Agreement, a "replacement printer" is defined as a printer that replaces a
PRINTER licensed hereunder. Licensee may use additional PRINTERS by purchasing
from Licensor a license to use additional PRINTERS. Any replacement printer
that Licensee replaces that was purchased from Licensor shall be deemed a
PRINTER as if the replacement printer was actually a PRINTER.

O. Licensor hereunder is a Value-Added Reseller under that certain
MEDICODE" VALUE-ADDED RESELLER SOFTWARE DEVELOPMENT MARKETING AND MAINTENANCE
AGREEMENT (herein referred to as "VAR AGREEMENT") effective December 1, 1993,
with Medicode, Inc., a Utah Corporation (herein referred to as "Medicode"),
the provider of the data that the FACTS CES Module will use under this
Agreement. The VAR AGREEMENT is for a 24 month term. If Licensee is licensed
under Schedule 1 hereunder to use the FACTS CES Module as part of SYSTEM, then
Licensee agrees to the following: (i) Licensor requires Licensee to contract
with Medicode for use of Medicode's data prior to installing the FACTS CES
Module; (ii) Licensor shall install the FACTS CES Module and Medicode's data
upon both the execution of this Agreement and receipt of the authorization
from Medicode to release their data. The initial installation charge is Two
Hundred Fifty Dollars exactly ($250.00). All subsequent loads that Medicode
authorizes shall be at Licensor's then prevailing rates; (iii) Licensee shall
look solely to Licensor for loading Medicode's data; and (iv) Licensor shall
have the right to terminate the license to use the FACTS CES Module if
Licensor ceases to have its VAR AGREEMENT in effect with Medicode or if
Licensee terminates it contract to use MEDICODE'S data.

P. If Licensee is licensed under Schedule 1 hereunder to use any of the
Modules outlined below, then Licensee agrees to pay Licensor the additional
annual licensing fee that is associated with the Module(s) licensed beginning
on January 1 of the second year immediately after the date of execution of
this Agreement. On January 1 of the first year immediately after the date of
execution of this Agreement, Licensee shall pay the appropriate annual
licensing fee reduced by either (i) nothing, if the date of execution of this
Agreement is in the months of January through March inclusive; (ii)
twenty-five (25) percent if the date of execution of this Agreement is in the
months of April through June inclusive; (iii) fifty (50) percent if the date
of execution of this Agreement is in the months of July through September
inclusive; (iv) seventy-five (75) percent if the date of execution of this
Agreement is in the months of October through December inclusive.

Modules Annual Licensing Fee
------- --------------------
FACTS CES $2,500 or 25% of Medicode's published annual
fee, whichever is greater
FACTS EDI $2,000 (per format) plus see Schedule 5
OPTIFACTS $5,000 (per workstation)
FACTS MICR (with HP Printer) $1,000 (per printer)
FACTS WDS See Schedule 5

- -------------------------------------------------------------------------------
Page 10
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

AUTOFACTS See Schedule 5

FACTS WDS, AUTOFACTS, and FACTS EDI have annual fees based on the number
of insured lives administered listed in Schedule 5, attached hereto and made a
part hereof; that are due January 1 of each year after execution of the
Agreement. No proration of these fees is calculated.

Q. Licensee shall not use SYSTEM or any related proprietary
confidential materials disclosed by Licensor to compete with, or otherwise
unduly take advantage of, Licensor.

R. Licensee shall appoint one if its employees as project manager who
shall work with Licensor and who shall furnish Licensor, in a timely manner,
with all of the information reasonably deemed necessary by Licensor to
complete the production and delivery of SYSTEM. In the absence of receiving
notice of the identity of the project manager within 10 days after Licensee
executes this Agreement, Licensee shall be deemed to have appointed the person
whose signature appears below on behalf of Licensee as the project manager.

S. Nothing in this Agreement obligates Licensor to assume
responsibility for making ready and/or converting any data files of Licensee
or MEDICODE from their present condition to that required by the SYSTEM.

T. The headings at the beginning of the Sections of this Agreement are
for identification purposes and shall not, by themselves, determine the
interpretation or construction of this Agreement. This Agreement shall be
interpreted fairly to both parties without regard for which party drafted any
particular Section of this Agreement.

U. This Agreement does not constitute Licensee as the agent, legal
representative, partner, or joint venture of Licensor for any purpose
whatsoever. Licensee is not granted any rights to create any obligation or
responsibility, express or implied, on behalf of or in the name of Licensor,
or to bind Licensor in any manner or thing whatsoever.

V. To the extent that Licensor's performance hereunder is prevented,
hindered, or delayed by reason of any cause beyond the reasonable control of
Licensor, including by way of example and not limitation, any computer system
manufacturing or shipping delays or labor disputes, act of God, or regulation
of any governmental or quasi-governmental authority, the dates or times by
which Licensor is required to make performance hereunder shall be waived and
Licensor shall not be liable for any damages arising out of any such delay,
hindrance or prevention.

W. This Agreement may be executed in any number of duplicate
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. The persons
signing below represent that they are duly authorized to execute this
Agreement for and on behalf of the party for whom they are signing. The
parties agree that transmission of the other party of this Agreement with the
transmitting party's facsimile signature shall suffice to bind the party
signing and transmitting same to this Agreement in the same manner as if the
Agreement with an original signature had been delivered. Without limitation of
the foregoing, each party who transmits this Agreement with its facsimile
signature covenants to deliver the original thereof to the other party with
reasonable promptness thereafter.

X. This Agreement does not constitute Licensee as the agent, legal
representative, partner, or joint venture of Licensor for any purpose
whatsoever. However, Licensor does recognize that Licensee has access to
potential clients of the FACTS system and agrees to pay Licensee an amount of
no less than five percent (5) of the price of the FACTS Software Modules
purchased for all contacts that Licensee registers with Licensor, that have
not been identified as a prospect by Licensor, or been contacted by Licensor,
or entered by Licensor in Licensor's prospect or marketing database, or been
registered by any other person or entity, that result in an actual purchase of
any module of the FACTS system within one (1) year of Licensee providing for
the registration information. Licensee is not granted any rights to create
any obligation or responsibility, express or implied, on behalf of or in the

- -------------------------------------------------------------------------------
Page 11
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

name of Licensor, or to bind Licensor in any manner or thing whatsoever. For
the purposes of this Section 21, item U, registration of prospects is defined
as Licensee providing notice to Licensor, in writing and pursuant to Section
20, item G herein, as to the prospect, a contact name, phone number, address,
type of business, types of blocks of business being administered by prospect,
and the potential Modules to be purchased by prospect. Upon such receipt,
Licensor will issue a registration number if such prospect will be pursued or
used by Licensor. If no registration number is received by Licensee then there
shall be no commission paid. Licensor is obligated to provide such a
registration number if such prospect is pursued or used by Licensor.

22. THIS AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS AGREEMENT
SUPERSEDES ANY AND ALL PRIOR AGREEMENTS BETWEEN LICENSEE AND LICENSOR
INCLUDING BUT NOT LIMITED TO ANY LICENSE AGREEMENTS AND ANY SOFTWARE
MAINTENANCE AND ENHANCEMENT AGREEMENTS. ALSO SEE, SECTION 21, GENERAL, ITEM A.

23. TRAINING. Licensee shall at all times maintain employee(s), herein
referred to as "System Administrator(s)", through whom Licensee shall make all
requests for support to Licensor under this Agreement.

A. The System Administrator(s) shall be required to have taken
Licensor's standard Phase I training course and may be required by Licensor to
take up to 5 days of Licensor's training every calendar year. The annual 5
days of training may be waived at the discretion of Licensor.

B. Prior to requesting support or assistance for any Module of the
SYSTEM, Licensee must employ at least one current employee who has received
Licensor's training on that module. Licensor may elect to waive this
requirement where Licensee has lost such an employee as a result of employee
turnover and Licensor has signed up, with prepayment, a replacement employee
to take the required Licensor training course.

C. Licensee agrees that it shall maintain System Administrator
personnel who are competent and capable of maintaining the integrity of the
SYSTEM and of understanding the total operation of the SYSTEM, including
hardware, the operating system software, utilities and operating system.

-
-
-
-
-
-
-
This space intentionally left blank
-
-
-
-
-

- -------------------------------------------------------------------------------
Page 12
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL

<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

IN WITNESS THEREOF, each of Licensor and Licensee has executed this
Agreement effective JULY 7, 1997.

Licensor: Licensee and LOCATION of COMPUTER:

FACTS Services, Inc. Electronic Transmission Corporation
Suite 406 Suite 515
5025 Arapaho Road
1575 San Ignacio Avenue Dallas, TX 75248
Coral Gables, FL 33146

Name: DAVID L. GRAHAM Name: CADE HAVARD
------------------------ -------------------------
Title: VICE PRESIDENT Title: PRESIDENT

Signature: Signature: /s/ L. Cade Havard
------------------- --------------------
Attest: Attest: /s/ Ann C. McDearman
---------------------- -----------------------
Dated: Dated: July 7, 1997
----------------------- ------------------------

- -------------------------------------------------------------------------------
Page 13
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SCHEDULE 1

"SYSTEM"

FACTS-R- CLAIMS & ENCOUNTERS-TM- Version 30.7 for 16 users
FACTS-R- BILLING & ACCOUNTING-TM- Version 30.7 for 16 users
FACTS-R- PPO-TM- Version 30.7 for 16 users
FACTS-R- CASE MANAGEMENT-TM-** Version 30.7 for 16 users
FACTS-R- CODER-TM- Version 30.7 for 16 users
FACTS-R- PRE-AUTH & REFERRAL-TM- Version 30.7 for 16 users
FACTS-R- COMP-R- Version 30.7 for 16 users
FACTS-R- CES-TM- Version 30.7 for 16 users
AUTOFACTS-TM- Version 30.7 for 16 users
FACTS-R- WDS-TM- Version 30.7 for 16 users
FACTS-R- EDI-TM- Version 30.7 for 16 users
FACTS-R- MICR-TM- Module for two (2) HP5si Printer
Serial#________ Serial#________
FACTS-R- REPORTER-TM-* Version 2.3

The grant to Licensee to use a copy of the Object Code of the FACTS
computer Software System for a non-exclusive five (5) year renewable term is for
the following Modules with related documentation:

"LICENSE RENEWAL FEE"

The License Renewal Fee is Thirty Eight Thousand Dollars exactly ($38,000)
for each five (5) year period after the initial five (5) year period. Further,
the License Renewal Fee must be paid by Licensee to Licensor prior to the
automatic renewal of any five (5) year period, including the initial five (5)
year period.

"TRAINING"

Training will be provided by Licensor at Licensee's office for a total of
fifteen (15) days to be used in non-consecutive 5 day blocks. All training
hereunder must be scheduled with Licensor by Licensee such that it is completed
within 120 days of execution of this Agreement. Additional training may be
obtained from Licensor at Licensor's prevailing rates. Training quotes given by
Licensor for on-site training do not include travel or lodging expenses nor a
$50 per diem trainer expense. All such expenses shall be paid by Licensee.
Licensee will control training, travel and lodging expenses by booking airline
reservations and accommodations. Licensor shall approve such reservations and
accommodations.

*FACTS REPORTER-TM- is an end-user product and is not supported by Licensor or
included under Section 18, MAINTENANCE SERVICES.

**Upon delivery of Module.

- -------------------------------------------------------------------------------
Page 14
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SCHEDULE 2

"COMPUTER"

*NCR S-26XLP Server System Serial #_________________.
200MHz Pentium Pro Processor
256MB RAM
6GB Disk Capacity
Tape, QIC SCSI, 1GB
4/8GB 4MM DAT
CD-ROM SCSI
Systech EISA Host Adapter
Systec Unplug 16 Port CCU
Fast Ethernet adapter PCI
UPS 1400VA In-Line
14" Autoscan Color Monitor
FACTS 4000 Terminal
NFS UNIX 3.01 SVR4 (unlimited users)
Mentor Base & Manuals
Mentor Operating Environment (16 users)
Via Duct Version 3.5 (Terminal Emulation) (16 users)

"INSTALLATION FEES"

There is no initial installation fee due to Licensor for the installation of the
COMPUTER. There is no initial installation fee due Licensor for the installation
of SYSTEM on COMPUTER.

- -------------------------------------------------------------------------------
Page 15
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SCHEDULE 3

"PAYMENT"

The purchase price of the COMPUTER (pursuant to Schedule 2), and the grant
to use a copy of the Object Code of the SYSTEM and the Training (pursuant to
Schedule 1) is Four Hundred Forty One Thousand Eight Hundred Thirty Eight
Dollars exactly ($441,838) and is payable as follows:

1. A payment of Eighty Seven Thousand Five Hundred Dollars exactly
($87,500) is due on or before the execution of this Agreement by
Licensee.

2. A payment of One Hundred Fifty Thousand Dollars exactly ($150,000) is
due upon the installation of COMPUTER at Licensee's office.

3. A payment of One Hundred Sixteen Thousand Eight Hundred Thirty Eight
Dollars exactly ($116,838) is due on the earlier of: (i) the set-up of
a group on SYSTEM by Licensee; or (ii) October 31, 1997.

4. A payment of Eighty Seven Thousand Five Hundred Dollars exactly
($87,500) is due on or before January 1, 1998.

"ADDITIONAL LICENSING FEES"

Additional Licensing Fees for use of SYSTEM are required to be paid to
Licensor by Licensee as the total number of ports, or total number of users who
have access to SYSTEM, whichever is greater, (referred to in this section as
"Licensed Users"), increases.

Licensee must pay to Licensor the amount below when the total number of
Licensed Users on the COMPUTER equals or exceeds the number of Licensed Users
below.

Number of Licensed Users Additional Licensing Fee
------------------------ ------------------------
each additional 8
Licensed Users past 16 $15,000
and less than 57

each additional 8 $30,000
Licensed users past 56

- -------------------------------------------------------------------------------
Page 16
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SCHEDULE 4

"QUARTERLY FEE"

The QUARTERLY FEE is Fourteen Thousand Three Hundred Fifty Seven Dollars
exactly ($14,357) and shall be paid quarterly in advance.

"PRINTER SUPPLIES"

HP5si Printer $14,500
Additional Printer 14,500
Replacement Printer 7,500
Digitizing, per Logo/Signature 250
Cartridges 350
Cartridge burn in fee 150
MICR Toner Cartridge 295
MICR Bond Paper:
25,000 sheets @ $24 per 1,000 sheets 600
50,000 sheets @ $18 per 1,000 sheets 900
100,000 sheets @ $17 per 1,000 sheets 1,700
250,000 sheets @ $16 per 1,000 sheets 4,000

ALL PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE AND DO NOT INCLUDE SHIPPING,
HANDLING OR INSURANCE.

- -------------------------------------------------------------------------------
Page 17
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL
<PAGE>

LICENSE AND MAINTENANCE AGREEMENT
FACTS

SCHEDULE 5

FACTS WDS, AUTOFACTS, AND FACTS EDI ANNUAL LICENSING FEE

If Licensee is licensed under Schedule 1 hereunder or otherwise to use the FACTS
WDS Module, FACTS EDI Module, or AUTOFACTS Module, then Licensee agrees to pay
Licensor the Annual Licensing Fee corresponding to the number of insured lives
being administered by Licensee, as indicated below. In addition, Licensee shall
provide to Licensor, in writing and signed by an officer of Licensee, the actual
number of insured lives being administered, in each of the 12 previous months on
October 1 of each year beginning the first year of the date of execution of this
Agreement, and continuing annually thereafter.

NUMBER OF INSURED LIVES FACTS WDS AUTOFACTS FACTS EDI
- ----------------------- --------- --------- ---------
ADMINISTERED BY LICENSEE
- ------------------------
0 - 4,999 $7,500 $3,000 $1,000
5,000 - 9,999 10,000 6,000 2,000
10,000 - 19,999 12,500 9,000 3,000
20,000 - 29,999 15,000 12,000 4,000
30,000 - 39,999 17,500 15,500 5,000
40,000 - 49,999 20,000 18,000 6,000
50,000 - 74,999 30,000 22,000 9,000
75,000 - 99,999 40,000 26,000 12,000
100,000-124,999 50,000 30,000 15,000
125,999-149,999 60,000 34,000 18,000
150,000+ Prices to be determined

For the purposes of determining the number of insured lives, the greater of the
following shall be used: (i) the number of active employees as of September 30
for the year in which this calculation is made; (ii) the average of any three
months of active employees for the 12 months preceding September 30 for which
this calculation is being made; or (iii) the annual average for active employees
as of September 30 for the previous 12 months for which this calculation is
being made. For definition purposes, an active employee is any insured employee
in SYSTEM. In the case where a PPO group or any of the like kind of any network
of providers of service is used, the definition of an active employee shall
extend to all members or participants of the administered group, not just the
members or participants for which claims are submitted.

- -------------------------------------------------------------------------------
Page 18
Licensor's Initials: Licensee's Initials:
LCH
- -------------------- -------------------- CONFIDENTIAL

<PAGE>

Exhibit 21.1

List of Subsidiaries

ETC Administrative Services, Inc., a Texas corporation

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the use in this Registration Statement on Form SB-2 of our
report dated January 30, 1998 relating to the financial statements and
"Selected Historical Financial Information" of Electronic Transmission
Corporation for the years ended December 31, 1997 and 1996.

Simonton, Kutac & Barnidge, LLP

Houston, Texas
March 16, 1998

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 548,565
<SECURITIES> 0
<RECEIVABLES> 353,818
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 950,886
<PP&E> 1,275,109
<DEPRECIATION> 408,711
<TOTAL-ASSETS> 1,825,774
<CURRENT-LIABILITIES> 1,513,280
<BONDS> 0
0
0
<COMMON> 14,026
<OTHER-SE> 7,249,762
<TOTAL-LIABILITY-AND-EQUITY> 1,825,774
<SALES> 0
<TOTAL-REVENUES> 3,249,492
<CGS> 0
<TOTAL-COSTS> 1,682,083
<OTHER-EXPENSES> 3,676,895
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 87,328
<INCOME-PRETAX> (2,108,666)
<INCOME-TAX> 36,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 73,262
<CHANGES> 0
<NET-INCOME> (1,999,404)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.24)

</TABLE>