VISCORP, 10-12G/A, 1997-03-10

VISCORP
10-12G/A, 1997-03-10
ELECTRONIC COMPONENTS & ACCESSORIES

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3 TO

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
Under Section 12(b) or (g) of the Securities Exchange Act of 1934

VISCORP
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Nevada 88-0101953
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

111 North Canal Street, Suite 933 60606
- ----------------------------------- --------------------------------------
Chicago, Illinois (Zip Code)
- ----------------------------------------
(Address of principal executive offices)

Issuer's telephone number, (312) 655-0903
------------------

Securities to be registered under Section 12(b) of the Act:

Title of each class Name of each exchange on which each
to be so registered class is to be registered

None None
- ----------------------------------- --------------------------------------

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

Securities to be registered under Section 12(g) of the Act:

Common Stock, $0.01 par value
- --------------------------------------------------------------------------------
(Title of class)

- --------------------------------------------------------------------------------
(Title of class)

<PAGE>

AN INVESTMENT IN THE COMPANY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER THE RISK FACTORS INVOLVED IN AN
INVESTMENT IN THE COMPANY, INCLUDING THE FOLLOWING: (A) THAT THE COMPANY IS A
DEVELOPMENT STAGE COMPANY THAT HAS GENERATED NO CASH REVENUES SINCE ITS
INCEPTION, (B) THE COMPANY'S HISTORY OF LOSSES, (C) THAT THE COMPANY CURRENTLY
IS INSOLVENT AND COULD BE THE SUBJECT OF BANKRUPTCY PROCEEDINGS, (D) DOUBT AS TO
WHETHER THE COMPANY CAN CONTINUE AS A GOING CONCERN, (E) INTENSE COMPETITION IN
THE INDUSTRY IN WHICH THE COMPANY OPERATES, (F) VOLATILITY OF THE COMPANY'S
STOCK PRICE AND (G) THE UNCERTAINTY OF FUTURE FUNDING. PROSPECTIVE INVESTORS
SHOULD CAREFULLY READ EACH SECTION OF THIS REGISTRATION STATEMENT WHICH CONTAIN
THESE AND OTHER RISK FACTORS.

ITEM 1. BUSINESS.

GENERAL

Visual Information Service Corp. ("VISC") was incorporated in Illinois in
May, 1990 and was founded to develop an electronic device capable of adding
modem, video data and telephone features to an ordinary television receiver over
a telephone line. The Company is seeking to take advantage of current and
future worldwide interest in networked interactivity by introducing a series of
affordable products and services that connect the standard television set and
the telephone so that interactivity (and especially the Internet) can become a
truly mass-market phenomenon. On November 28, 1995, VISC merged into Global
Telephone and Communications, Inc. ("GTCI"). GTCI was incorporated in Nevada on
May 30, 1984. The planned operation of GTCI was to provide consulting services
for the public and private sectors. At the time of the merger, GTCI was a shell
company and not operating as a going concern. To the Company's knowledge, GTCI
never operated as a consultant nor carried on any type of business at any time
prior to the merger. The merger was consummated because the common stock of
GTCI traded on the Nasdaq Bulletin Board, and thus, the merger provided VISC an
entity which already had a public presence. Pursuant to the merger each share
of common stock of VISC was exchanged for four shares of common stock of GTCI.
Following the merger, GTCI changed its name to Viscorp. As used herein, the
Company refers to Viscorp and its subsidiary VISC.

The Company continues to be in the development phase of operation. The
Company is developing two products -- the Universal Internet Television
Interface ("UITI") and the Electronic Device ("ED"). The Company's design team
has performed extensive research and development in connection with these two
products, including: the manufacture and implementation of industrial and
mechanical designs for the products' casing and remote control devices, the
creation of electrical designs and programmable logic, as well as the
development of new operating systems and enhancements to existing operating
systems (i.e. Amiga) to accommodate applications software. The long range
target of the Company's research and development efforts is to create a custom
chip and software component to target television

(2)

<PAGE>

manufacturers, telephone companies and cable television companies. The Company
is also engaged in initial marketing efforts with original equipment
manufacturers ("OEMs") to incorporate the Company's technology into the OEM's
products, and with multi-level marketing groups (such as Quorom, an Arizona
company that offers marketing and sales assistance for manufacturers of "high-
end" electronic products) to discuss the marketing potential of the UITI and the
ED. Although the Company is continuing its marketing efforts, the Company has
not yet entered into any contracts with OEMs or marketing groups in connection
with its products. Since 1990, the Company has generated losses as a result of
significant expenditures on research and development and substantial overhead
expenses.

The Company has generated losses since its inception in May, 1990 and
currently cannot generate sufficient revenues and cash flow from operations to
meet its business obligations. The Company currently is insolvent and could be
the subject of bankruptcy proceedings unless it obtains additional capital. In
prior years, the Company was able to raise capital by issuing its Common Stock
in private placements. The Company's future operations are predicated on
raising additional capital in debt or equity markets. Any implementation of the
commercialization of the UITI and the ED is dependent on obtaining additional
financing that is necessary to achieve a level of sales adequate to support the
Company's operations. In December, 1996, the Company entered into an agreement
with a placement agent, Wincap, Ltd., for a private offering (the "Offering") of
the Company's 8% Cumulative Convertible Preferred Stock, $0.01 par value per
share (the "8% Preferred Stock"). The Company offered a minimum of 2,000,000
and a maximum of 6,666,667 shares of the 8% Preferred Stock (the "Preferred
Shares") for consideration of between $3,000,000 and $10,000,000. On March 6,
1997, the Company sold 2,031,832 Preferred Shares for a total consideration of
approximately $3,045,000. Of this amount, the Company received approximately
$2,690,000 which it intends to use for debt repayment and working capital. The
Offering is ongoing in an attempt to secure additional financing. See "Item 10
- -- Recent Sales of Unregistered Securities".

PRODUCTS

The UITI is a set top device which is designed to give the home television
viewer access to the Internet, World Wide Web and other on-line services. The
ED is an enhanced set top device which, in addition to on-line services, will
feature capabilities such as telephone reception and dial-up, facsimile, pay-
per-view options and electronic mail. The UITI and the ED are designed to be
placed next to or on top of a standard television set and connect directly to a
telephone jack either through a conventional telephone wire or through wireless
radio frequency connectivity. Through the use of specifically configured fonts,
the television set presents text and graphics that can be viewed at normal
television viewing distances. The UITI and the ED are equipped with a modem,
video and audio circuitry, and a controller. Extensive functions may also be
controlled with an enhanced remote control, currently being developed by the
Company's engineers. The commodities which constitute the raw materials for the
UITI and the ED presently are either available on the open market, or are
available from select suppliers. Negotiations currently are taking place
between the Company and various other entities in order for the Company to
acquire the materials necessary to produce the housing of the UITI and the ED
boxes, and for the remote control casing.

(3)

<PAGE>

The UITI is a very similar product to the device currently being marketed
as "WEB-TV". The UITI is strictly an internet access device using the
customer's television set and phone line. Although the UITI technology is
similar to WEB-TV technology, the Company intends to market the UITI technology
differently. In addition to producing a set-top device, the Company is seeking
to license the UITI technology to OEMs to be built into a television set, making
the separate set-top device optional. The Company began negotiations with
various OEMs in May, 1996, but no contracts have yet been entered into with any
such OEMs. The ED incorporates the features of the UITI and adds many features
not available with WEB-TV. Some of these include: the ability (i) to make and
receive telephone calls through the television set, (ii) to display "caller-id"
information on the television screen, (iii) to send facsimile, and (iv) to
function as a television tuner. As with the UITI, the Company is seeking to
license the ED technology to OEMs to be built into a television set, making the
separate set-top device optional.

The Company believes that recently introduced products, such as WEB-TV, are
creating market awareness and may help consumers understand such products.
However, late entry into the interactive television market could result in lost
sales opportunities for the Company and difficulty with brand recognition once
the Company's products are introduced. In addition, the Company may not have
adequate financial resources to successfully bring its products to the
marketplace. See "Item 1 -- Business-General" and "Item 2 -- Management's
Discussion and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources."

In April, 1996, the Company entered into an agreement with Solectron France
S.A., a US-based manufacturing company listed on the New York Stock Exchange
("Solectron"), pursuant to which Solectron produced the first 30 prototypes of
the UITI at Solectron's facilities in France. The agreement expired when
Solectron's design participation was completed upon the delivery of the UITI
prototypes to the Company in September of 1996. The total service price for the
contract was 231,000 French francs (taxes excluded). The approximate U.S. value
of this contract was $56,000. Although the contract price was stated in French
francs, Solectron continually has billed and the Company continually has made
all payments in United States currency. Approximately $12,000 remains as an
outstanding balance due Solectron pursuant to this agreement. Discussions are
ongoing between the Company and Solectron with respect to its payment
obligations. Solectron's manufacturing expertise in collaboration with the
Company's design techniques produced the working prototypes of the UITI. The
Company expects the UITI product to be fully operational and deliverable to the
marketplace by mid-1997.

The Company conducted a field test of a preliminary prototype of the ED
with Booth Communications, a cable television system operator based in
Birmingham, Michigan. The ED was placed in the homes of approximately twenty
cable subscribers and connected to the existing cable set-top box to provide
access to the Internet, CompuServe and other services, including facsimile, TV-
based speaker phone, caller ID and pay-per-view ordering. Sigma Research
Management Group, an independent market-research firm, conducted a series of
quantitative and qualitative studies (including focus groups) of the
participating cable subscribers. The trial lasted approximately six months and
was concluded in March, 1996. The study revealed that some functions provided
by the ED may require redesign, changes to the feature array and expansion of
capability. Technical and market-research results from this trial have been

(4)

<PAGE>

incorporated into the Company's revised prototype designs of the UITI and the
ED. The Company has not yet fully completed the development of the UITI and the
ED devices. Final design and testing of both hardware and software to be used
with these products is ongoing. There are several companies who have the
ability to build the products. The Company has entered into preliminary
discussions with some, including Solectron in France. The products will
ultimately be built in several locations, depending on various factors
including: destination of the products and whether the products are a stand
alone set-top box or built into a television set. If the latter were the case,
the products would be constructed by OEMs.

The Company expects the ED product to be fully operational and deliverable
to the marketplace by late-1997. The ED accesses information available from
computer sites, which is transmitted over lines provided by telephone and cable
companies, and is displayed on the television screen. The Company must rely
upon third parties to provide the foregoing signal transmission mechanisms.
However, cable companies have begun the process of installing cable lines
capable of supporting the ED system, in response to market forces calling for
the improvement of antedated cable equipment. Therefore, the Company need not
enter into any material alliances or collaborations in this regard. Although
there are no statistics available as to the actual number of cable systems so
equipped, the installation of data delivery systems within cable television
systems appears to be proceeding at a slower pace than originally anticipated.
However, both the UITI and the ED can be configured to receive all necessary
data over ordinary telephone lines.

Although the field test demonstrated the functionality of the Company's
products, there is no assurance that the Company will be able to successfully
manufacture or market the UITI and/or the ED.

PATENTS

The Company owns several patents covering the features of the UITI and the
ED, which expire commencing on March 7, 2012, assuming all maintenance fees are
paid. The Company relies on patents to protect its proprietary rights. The
Company's success will depend in part on its ability to obtain patent protection
for its products and to operate without infringing on the patent or other
proprietary rights of others. There can be no assurance that patent
applications filed by the Company will result in the issuance of patents of the
scope and breadth of those previously granted to the Company or that any patents
now or hereafter owned by the Company will afford protection against competitors
which develop similar technology or provide products with competitive advantages
to those designed by the Company. In addition, there can be no assurance that
any patents issued to the Company will be held valid if subsequently challenged
or that others will not claim rights in the patents and other proprietary
technology without violating any of the Company's proprietary rights. The
Company has been involved in legal proceedings with regard to certain of its
intellectual property rights. See "Item 8 -- Legal Proceedings." There can be
no assurance that others will not independently develop similar products,
duplicate the Company's products or design products that circumvent any patents
used by the Company. Patent enforcement is expensive, and the Company may not
have the resources to pursue such protection. In the absence of patent
protection, the Company's business may be adversely affected by competitors who
independently develop substantially equivalent or superior technology.

(5)

<PAGE>

LICENSES

In December, 1995, the Company entered into an agreement with Amiga
Technologies GmbH, a German company ("Amiga"), for a nonexclusive,
nontransferable license to the Amiga computer operating system technology. The
initial term of the agreement expires December 26, 1998. Unless terminated, in
accordance with the terms of the agreement, the agreement is renewable for
subsequent three-year periods at the licensee's option. For a detailed
discussion of potential implications due to the bankruptcy of Amiga, see "Other
Material Agreements". In January, 1996, the Company paid an initial royalty
deposit of $450,000 to Amiga. The Company is required to pay usage royalties as
defined in the agreement. To date, no usage royalties have been paid by the
Company and therefore the $450,000 deposit remains unchanged. However, because
Amiga is in bankruptcy, the Company has determined that this amount is not
recoverable. See "Other Material Agreements." The agreement provides that the
Company may sublicense its rights under the license for others to perform any
licensed acts for the Company. The Company intends to use the Amiga operating
system and chip sets in producing the UITI and the ED and also intends to
sublicense the Amiga technology to others. The Company believes the Amiga
operating system will enhance the operational capacity of the UITI and the ED.
The Company has produced a prototype of the base board utilizing the Amiga
operating system and chip sets which boards will be used to produce the UITI and
the ED which currently is in the process of being tested.

In December, 1994, the Company entered into a license agreement with NTN
Communications, Inc. ("NTN"). The initial term of the agreement expires
December 31, 2001. Unless terminated, in accordance with the terms of the
agreement, the agreement will be extended for a period of seven years. The
agreement provides the Company with a nonexclusive worldwide license to promote,
market and develop an on-line computer service, which will be provided by NTN,
for use with the Company's products. The technology of this service provides
two-way interactive computerized games that are broadcast to multiple locations,
can be played by multiple participants at each location and enables the
retrieval and processing of data entered by the participants. The Company is
required to pay usage royalties as defined in the agreement. The Company agreed
to pay NTN $250,000 upon signing the agreement. To date, the Company has paid
$200,000 of this amount, with $50,000 having been due to NTN on December 31,
1996. NTN has granted the Company an extension for the payment of this amount
which expires on March 31, 1997. The use of this license has not yet generated
any revenues for the Company.

In January, 1995, the Company entered into a license agreement with Digital
Sciences, Inc. ("Digital") to license the ED technology and services. The
agreement with Digital (the "Digital Agreement") granted to Digital an exclusive
license to use the ED technology and services, solely in the health care
industry in the United States and Canada, for a period of ten years. On
February 27, 1995, the Company received an initial license fee payable in the
form of 250,000 shares of Digital stock valued at $2.50 per share, for a total
value of $629,688, which amount reflected a 35% discount from the trading price
of $3.875 per share or $968,750 because the shares were restricted (the "Digital
Stock"). Pursuant to a merger in April 1996, each share of Digital Stock was
converted to one share of stock of Intelligent Decision Systems, Inc. ("IDSI").

(6)

<PAGE>

In November, 1996, the Company transferred all of its shares of IDSI stock
to an individual in exchange for the cancellation of a loan of $500,000 made by
such individual to the Company in October, 1996. The $500,000 loan was a demand
loan which bore no interest. When the individual requested repayment, the
Company negotiated a transaction whereby 250,000 shares of IDSI stock would be
transferred to this individual in repayment of the loan. The Company and the
individual settled on a $2.00 per share valuation on the stock because the price
of the IDSI stock which is traded on the Nasdaq Bulletin Board was fluctuating
between $1.375 and $2.19 during the period when the stock was transferred. In
addition to the initial license fee, Digital is obligated to pay additional
license fees based on a percentage of gross revenues derived from the use of the
ED technology and services. The Company did not receive any additional license
fees from Digital in 1995, other than the initial license fee, and there is no
assurance that the Digital Agreement will generate additional license fees in
the future.

OTHER MATERIAL AGREEMENTS

On July 18, 1996, the Company entered into an agreement with Amiga (the
"Amiga Agreement") to acquire certain assets of Amiga (the "Amiga Assets"). The
Amiga Assets would be acquired by the Company from the bankruptcy estate of
Escom Beteiligungs GmbH (a former manufacturer and distributor of IBM compatible
computers throughout Europe) (the "bankruptcy estate of Escom"). The Amiga
Agreement was cancelled during the beginning of the fourth quarter of 1996
because the Company was unable to secure the necessary financing to consummate
the transaction. No new agreement has been entered into between the Company and
Amiga.

Although the Amiga Agreement was cancelled, the Company intends to continue
its use of the Amiga computer operating system in accordance with the provisions
of its December, 1995 licensing agreement with Amiga. If it is determined that
the Company's licensing agreement with Amiga is unenforceable because Amiga
currently is the subject of German bankruptcy proceedings, the Company intends
to (i) seek to enter into a new licensing agreement with any subsequent
purchaser of Amiga with respect to the intellectual property or (ii) to acquire
the Amiga portfolio of intellectual property in the open market. However, any
acquisition of the Amiga portfolio of intellectual property in the open market
will be dependent on obtaining additional financing in debt or equity markets.
The Company does not intend to finance any of the Amiga related objectives with
the proceeds of the sale of the 8% Preferred Stock.

COMPETITION

The Company faces intense competition within the interactive television
industry, an industry in the midst of a period of significant volatility due to
the convergence of computing, telephony and television. Currently, there are
many companies developing, in various stages, systems similar to the Company's
products. Products or procedures may become commercially available that are
competitive with the Company's products. Most of the Company's competitors have
substantially longer operating histories and substantially greater financial and
managerial experience and resources. However, the Company does not believe that
any of these companies currently are developing products with the same set of
performance capabilities the Company

(7)

<PAGE>

expects to develop with its products. The company intends to have discussions
with many OEMS with the intent of licensing the UITI and the ED technology to be
built into new television sets. The Company believes that this is one of the
features of their products that gives it a competitive advantage. Currently
most other planned and existing similar products (i.e. WEB-TV) are set-top
devices and are not being licensed to OEMs.

The UITI is a very similar product to the device currently being marketed
as "WEB-TV". The UITI is strictly an internet access device using the
customer's television set and phone line. Although the UITI technology is
similar to WEB-TV technology, the Company intends to market the UITI technology
differently. In addition to producing a set-top device, the Company is seeking
to license the UITI technology to OEMs to be built into a television set, making
the separate set-top device optional. As of this date, the Company has not
entered into any contracts or agreements with OEMs, and does not know if any of
its competitors have entered into such agreements with the exception of
Interactive Video Publishing, Inc. ("IVP"). IVP entered into a license
agreement with Curtis Mathis Holding Inc. ("Curtis") in April, 1996 which
purported to incorporate the Company's technology into television sets produced
by Curtis. The Company filed a lawsuit against IVP and three of its employees
in July, 1996 and received a preliminary injunction against IVP's used of the
Company's technology in December, 1996. See "Item 8 -- Legal Proceedings".

The ED incorporates the features of the UITI and adds many features not
available with WEB-TV. Some of these include: the ability to (i) make and
receive telephone calls through the television set, (ii) to display "caller-id"
information on the television screen, (iii) to send facsimile, and (iv) to
function as a television tuner. As with the UITI, the Company is seeking to
license the ED technology to OEMs to be built into a television set, making the
separate set-top device optional.

Competitors for the Company include the following: (i) television
manufacturers such as Sony Electronics Corp. and Philips Consumer Electronics
Co. -- often working in conjunction with computer companies -- that have
introduced Internet-access set-top devices such as WEB-TV and/or "smart"
interactive TV sets; (ii) computer companies such as Oracle Corp., IBM Corp.,
Sun Microsystems Inc., Netscape Communications Corp. and Apple Computer Inc. who
have announced plans to develop "network computers", which are stripped-down
devices to be used in place of an expensive home personal computer system to
provide access to the Internet and e-mail; (iii) video game companies such as
Sega Genesis, Sony Electronics Corp. and Philips Consumer Electronics Co. that
plan to enhance their game machines with Internet access and on-line
capabilities; (iv) cable television set-top device manufacturers such as General
Instrument and Scientific Atlanta that are enhancing the overall performance
capabilities of their current analog and newer all-digital converter boxes; and
(v) independent companies like the Company.

(8)

<PAGE>

Discussion and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources."

EMPLOYEES

In addition to its officers, the Company has five employees in its office
in Chicago. The Company also routinely utilizes the services of consultants.

(9)

<PAGE>

ITEM 2. FINANCIAL INFORMATION.

SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the financial statements, related notes and other information included in this
Memorandum (See "Exhibit A -Financial Statements of the Company"). The
statement of operations data set forth below for each of the years ended
December 31, 1991, 1992, 1993, 1994 and 1995 are derived from the financial
statements of the Company, all of which, except for the statement of operations
for 1991, have been audited by Blackman Kallick Bartelstein, LLP, independent
auditors. The selected financial data for the nine months ended September 30,
1995 and 1996 and the statement of operations data for the year ended December
31, 1991 are unaudited and include, in the opinion of the Company, all
adjustments, consisting of only normal recurring accruals, that the Company
considers necessary for a fair presentation of its results for such periods.

NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------------------- ------------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Income . . . . . . . . . . . . . . . 0 0 0 0 (629,688)(1) (629,688)(1) 0
Operating Expenses
Research and development. . . . . . 75,592 199,924 622,428 701,460 1,134,262 652,641 1,124,236
Expenses related to
unrecoverable royalty
deposit. . . . . . . . . . . . . . 0 0 0 0 0 0 450,000
Travel and entertainment. . . . . . 11,633 53,233 122,840 194,162 620,012 442,330 355,738
Legal fees. . . . . . . . . . . . . 34,553 66,078 150,133 28,508 552,109 264,217 665,750
Consulting. . . . . . . . . . . . . 6,678 39,711 17,789 73,786 353,915 333,175 312,934
Stock option compensation
and consulting expense . . . . . . 0 0 0 0 0 0 3,675,000
Other general and
administrative including
salaries . . . . . . . . . . . . . 117,357 239,085 335,170 341,448 562,191 331,594 741,619
--------- --------- --------- --------- --------- --------- ---------
Total Operating Expenses . . . . . 245,813 598,031 1,248,360 1,339,364 3,222,489 2,023,957 7,305,277

Operating Losses . . . . . . . . . . 245,813 598,031 1,248,360 1,339,364 2,592,801 1,394,269 7,305,277
Other expense (income)
Interest expense - other
(stockholder debt). . . . . . . . 32,380 67,552 109,429 2,910 0 17,126
Interest expense - other. . . . . . 0 0 0 0 1,103 0 0
Interest income . . . . . . . . . . 0 0 0 (4,095) (8,761) (1,693) (6,321)
Loss on disposal of
equipment. . . . . . . . . . . . . 0 0 2,817 757 0 0 0
--------- --------- --------- --------- --------- --------- ---------
Net loss . . . . . . . . . . . . . 278,193 665,583 1,360,606 1,336,026 2,588,053 1,392,576 7,316,082
Average shares outstanding . . . . . 982,000 982,000 7,104,092 11,775,976 17,190,915 16,042,308 21,595,781
Loss per share. . . . . . . . . . . .28 .68 .19 .12 .15 .08 .34

BALANCE SHEET DATA

Total assets . . . . . . . . . . . . 46,246 29,492 16,982 664,328 1,258,853 822,748 610,055
Total liabilities. . . . . . . . . . 424,807 1,073,636 1,622,532 170,576 552,217 910,058 2,264,488
Shareholders equity (deficit). . . . (378,561) (1,044,144) (1,605,550) 493,752 706,636 (87,310) (1,204,433)
</TABLE>

_____________________
(1) Represents the estimated market value of the 250,000 shares of Digital
received by the Company as the initial license fee under the Digital
License Agreement. See "Business - Licenses".

(10)

<PAGE>

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

The information in this section should be read together with the
consolidated financial statements and notes thereto that are included elsewhere
in this Registration Statement.

The Company has incurred net losses in its last three fiscal years.
Moreover, there can be no assurance that the ED or the UITI will ever generate
significant revenues, will generate any revenues or that they will do so in the
time periods estimated by the Company. There can be no assurance that any of
the Company's products will be introduced or marketed successfully, or that the
Company will ever achieve a profitable level of operations or, if profitability
is achieved, that it can be sustained.

The Company's auditors have included an explanatory paragraph in their
report with respect to the Company's financial statements included herein
which states that the Company cannot currently generate sufficient revenues
and cash flow from operations to meet its business obligations and,
therefore, future operations are predicated on raising additional capital in
debt or equity markets. In December, 1996, the Company entered into an
agreement with a placement agent, Wincap, Ltd. ("Wincap"), for a private
offering (the "Offering") of the Company's 8% Cumulative Convertible
Preferred Stock, $0.01 par value per share (the "8% Preferred Stock"). The
Company offered a minimum of 2,000,000 and a maximum of 6,666,667 shares of
the 8% Preferred Stock (the "Preferred Shares") for consideration of between
$3,000,000 and $10,000,000. On March 6, 1997, the Company sold 2,031,832
Preferred Shares for a total consideration of approximately $3,045,000. Of
this amount, the Company received approximately $2,690,000 which it intends
to use for debt repayment and working capital. The Offering is ongoing in an
attempt to secure additional financing. See "Item 10 -- Recent Sales of
Unregistered Securities."

The Company's President resigned on January 8, 1997, and a Severance
Agreement was approved by the Board of Directors and executed on that same date.
Lawrence D. Siegel has temporarily assumed the duties previously performed by
Mr. Buck for a period of two months commencing January 22, 1997. The trial
period was designed to allow the Company to assess its needs and determine
whether Mr. Siegel should serve as the Company's President. At the end of such
trial period, the Company will decide whether to seek to enter into an
employment agreement with Mr. Siegel. See "Item 5 -- Directors and Executive
Officers -- Board of Directors." The Company terminated David Rosen from his
position as Vice President-Marketing, effective January 27, 1997. The Company
has not yet appointed a successor to assume Mr. Rosen's duties. Mitchell
Melamed resigned from his position as Secretary of the Company on February 14,
1997. Mr. Melamed's duties have been temporarily assumed by Hugh Jencks until
the Company appoints a successor.

(11)

<PAGE>

recognize a loss on this transaction of approximately $130,000. See "Item 1 --
Business -- Licenses."

Prior to its attempted purchase of Amiga, in December, 1995, the Company
entered into an agreement with Amiga for a nonexclusive, nontransferable
license to the Amiga computer operating system technology. The initial term
of the agreement expires December 26, 1998. Unless terminated, in accordance
with the terms of the agreement, the agreement is renewable for subsequent
three-year periods at the licensee's option. In January, 1996, the Company
paid an initial royalty deposit of $450,000 to Amiga. The Company is
required to pay usage royalties as defined in the agreement. To date, no
usage royalties have been paid by the Company. However, because Amiga is in
bankruptcy, the Company believes the $450,000 deposit is now not recoverable
and therefore has been charged to expense in the nine months ended September
30, 1996.

The Company, two directors, Jerome Greenberg and Roger Remillard, and a
former director, William Buck, are defendants in a lawsuit filed by a former
employee, Nolan Bushnell. This lawsuit currently is being tried in the United
States District Court for the Northern District of California. The second
amended complaint dated April 30, 1996 alleges multiple claims including breach
of fiduciary duty, breach of oral agreement, wrongful termination of employment,
interference with contract, breach of employment agreement and fraudulent
misrepresentation, all arising out of the plaintiff's employment over a period
of 2 1/2 months as the Company's President, the termination of his employment
and the aborted negotiations for a proposed merger between the Company and the
plaintiff's company. Damages claimed are in excess of $10 million for failure
to transfer approximately four million shares of the Company's stock allegedly
promised to the plaintiff, salary and expenses arising out of his employment
relationship and punitive damages. The dollar amount of damages claimed is
dependent upon the current per share price of the Company's stock. The
Company's first summary adjudication motion, challenging the plaintiff's claim
for failure to transfer approximately four million shares of Company stock, was
granted by the District Court on August 29, 1996, thus precluding the plaintiff
from recovering any shares of stock from the Company. Although this claim has
been dismissed, the plaintiff filed a motion for reconsideration, which was
heard by the District Court on October 11, 1996. On December 6, 1996, the
District Court denied the plaintiff's motion for reconsideration. The Company
filed a summary adjudication motion against the plaintiff on all his remaining
claims, which also was heard by the District Court on October 11, 1996. On
December 6, 1996, the Court granted the Company's summary adjudication motion
and dismissed all of the plaintiff's remaining claims. It remains possible that
the summary adjudication orders could be overturned on appeal. Should the
orders be overturned, and should the plaintiff prevail on these claims, the
Company may be materially adversely affected by the outcome.

(12)

<PAGE>

in the United States District Court for the Northern District of California.
The Company's complaint alleges misappropriation of trade secrets, conversion
and breach of fiduciary duty arising out of the individual defendants' previous
confidential relationships with the Company, access to proprietary information
including the technology, hardware design, software, parts selection, feature
set and architecture of the ED technology and subsequent transmittal of this
proprietary information to the defendant corporation for its beneficial use.
The Company is seeking declaratory and injunctive relief, as well as monetary
damages. The defendants filed various counterclaims against the Company on
September 13, 1995 alleging intentional interference with economic advantage,
intentional interference with contractual relations and unfair competition
arising out of the same set of occurrences. The defendants are seeking damages
for lost profits, injury to business reputation, diminution of value of
proprietary data, loss of customers and loss of investments. In addition, the
defendants are seeking a declaratory judgment of no misappropriation of trade
secrets, injunctive relief and punitive damages.

The Company has filed a motion for a preliminary injunction, which motion
was heard by the District Court on October 25, 1996. On December 4, 1996, the
District Court granted the Company's motion and issued a preliminary injunction
against the defendants. The injunction enjoins the defendants, during the
pendency of the action, from using any of the Company's trade secrets or
technology. Because the lawsuit is still in the discovery stage, it is not
possible to determine the probable likelihood of an adverse ruling on the
defendants' counterclaims. However, if the defendants succeeded on their
counterclaims, and were awarded significant monetary damages, and/or injunctive
or declaratory relief against the Company, the Company could be materially
adversely affected. The Company believes the allegations in the defendants'
counterclaims are without merit and intends to vigorously defend itself against
the actions.

An additional lawsuit was filed against the Company by David Serlin and
another individual formerly associated with Company, Marvin Lerch, on December
20, 1996 in the United States District Court for the Northern District of
California. The complaint alleges multiple claims including breach of contract,
fraud, negligent misrepresentation, breach of fiduciary duty, wrongful
termination and conversion, all arising out of the plaintiffs' employment with
the Company during 1995. Damages claimed are for failure to transfer 400,000
shares of the Company's stock and 284,000 options to purchase the Company's
stock allegedly promised to each of the plaintiffs, lost profits and business
opportunities arising out of the employment relationships and punitive damages.
The dollar amount of damages claimed is dependent upon the current per share
price of the Company's stock.

Because the lawsuit has not yet reached the discovery stage, it is not
possible to determine the probable likelihood of an adverse ruling on the
plaintiffs' claims. However, if the plaintiffs succeeded on their claims, and
were awarded significant monetary damages against the Company, the Company could
be materially adversely affected. Although the Company has not had enough time
to respond to the complaint, the Company intends to vigorously defend itself
against the action.

(13)

<PAGE>

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1995

The Company had no license income in the first nine months of fiscal 1996
compared to $629,688 in the first nine months of fiscal 1995. The $629,688
represented the value of the 250,000 shares of Digital stock received by the
Company as an initial license fee pursuant to the Digital Agreement in 1995.

Research and Development Expenses increased to $1,124,236 for the first
nine months of fiscal 1996 from $652,641 for the first nine months of fiscal
1995, an increase of $471,595. This increase was due to the increased activity
relating to the production of a prototype of the ED, hiring additional engineers
and amortization of Amiga license agreement prepaid royalties.

Travel and entertainment expenses decreased to $335,738 for the first nine
months of fiscal 1996 from $442,330 for the first nine months of fiscal 1995, a
decrease of $106,592. The decrease was due to the reduction in travel by
executive officers in connection with work relating to the Company's patents.

Legal fees increased to $665,750 for the first nine months of fiscal 1996
from $264,217 for the first nine months of fiscal 1995, an increase of $401,533.
This increase was due to increased activity relating to the Bushnell litigation
and Serlin litigation.

Other general and administrative expenses increased to $741,619 for the
first nine months of fiscal 1996 from $331,594 for the first nine months of
fiscal 1995, an increase of $410,025. This increase was due to preparation and
production of marketing and advertising materials , the relocation of the
Company into larger office facilities, and hiring of additional employees.

An amount of $450,000 has been charged to Operating Expenses for the
period ending September 30, 1996 in connection with the Company's December,
1995 licensing agreement with Amiga. In January 1996, the Company paid an
initial royalty deposit of $450,000 to Amiga. Because Amiga subsequently
went into bankruptcy, the Company believes the $450,000 deposit is now not
recoverable.

The Company granted stock options to various employees and consultants
during the period ended September 30, 1996. In connection with the granting of
these options, the Company recorded compensation and consulting expense, and a
related increase to additional paid-in-capital, in the amount of $3,675,000
during the period ended September 30, 1996. The amount recorded represents the
difference between the exercise price and the fair market value of the Company's
Common Stock, as determined by reference to the publicly traded value of the
stock, as of the date the options were granted.

1995 COMPARED TO 1994.

License income for 1995 was $629,688 which represented the value of 250,000
shares of Digital stock issued to the Company in payment of an initial license
fee pursuant to the Digital Agreement. The value of the stock of Digital
received by the Company reflected a discount from the trading price because the
stock was restricted.

Research and Development Expenses increased to $1,134,262 for fiscal 1995
from $701,460 for fiscal 1994, an increase of $432,802. This increase was due
to: (i) costs related to the field test of the ED with Booth Communications;
(ii) additional costs related to the

(14)

<PAGE>

continuing development of the printed circuit layout for the base board,
including fees for engineers and consultants; and (iii) costs of producing
design and mechanical drawings for manufacturers of the prototypes of the UITI
and the ED.

Travel and Entertainment Expenses increased to $620,012 for fiscal 1995
from $194,162 for fiscal 1994, an increase of $425,850. Because the Company was
successful in developing a prototype of the UITI and the ED during 1995, the
Company significantly increased its marketing efforts to develop relationships
with companies to manufacture and distribute the Company's products and to raise
additional equity financing.

Legal fees increased to $552,109 for fiscal 1995 from $28,908 for fiscal
1994, an increase of $523,201. This increase was due to: (i) legal fees
related to a lawsuit filed against the Company in December 1994 by a former
director and officer of the Company; (ii) legal fees related to the merger of
VISC and GTCI; and (iii) legal fees related to the negotiation and documentation
of the license agreements with Amiga and Digital.

Consulting fees for consultants other than engineers increased to $353,915
for fiscal 1995 from $73,786 for fiscal 1994, an increase of $280,129. This
increase was primarily due to the consulting fees associated with the
formulation of the Company's business plan in 1995.

Other general and administrative expenses increased to $562,191 for fiscal
1995 from $341,448 for fiscal 1994, an increase of $220,744. This increase
was primarily due to the increased salaries resulting from the hiring of
additional personnel, directors fees paid to the Chairman and printing costs
associated with the preparation of the Company's business plan.

1994 COMPARED TO 1993.

Research and Development Expenses increased to $701,460 for fiscal 1994
from $622,428 for fiscal 1993, an increase of $79,032. This increase was due to
a general increase in activity of the Company in the continuing developing of
its products.

Travel and Entertainment Expenses increased to $194,162 for fiscal 1994
from $122,840 for fiscal 1993, an increase of $71,322. The increase reflects
increased marketing efforts to develop relationships with companies to
manufacture and distribute the Company's products.

Legal fees decreased to $28,908 for fiscal 1994 from $150,133 for fiscal
1993, a decrease of $121,225. This decrease was primarily due to capitalizing
legal expenses in connection with the Company's patents.

Consulting fees for consultants (other than engineers) increased to $73,786
for fiscal 1994 from $17,789 for fiscal 1993, an increase of $55,997. This
increase was due to the increase in the number of consultants retained in 1994.

The Company had no interest expense for fiscal 1994 compared to $109,429 in
fiscal 1993. Such amount represented interest accrued on a loan by Jerome
Greenberg to the Company, which loan was exchanged for common stock in November
1994.

(15)

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company has generated losses since its inception in May, 1990 and
cannot currently generate sufficient revenues and cash flow from operations to
meet its business obligations. In July, 1996, the Company entered into a
purchase agreement with Amiga to acquire the Amiga Assets for a purchase price
of $20 million less certain administrative costs. However, the Amiga Agreement
was cancelled during the beginning of the fourth quarter of 1996 because the
Company was unable to secure the necessary financing to consummate the
transaction. Although the Amiga Agreement was cancelled, the Company intends to
continue its use of the Amiga computer operating system in accordance with the
provisions of its December, 1995 licensing agreement with Amiga. If it is
determined that the Company's licensing agreement with Amiga is unenforceable
because Amiga currently is the subject of German bankruptcy proceedings, the
Company intends to (i) seek to enter into a new licensing agreement with any
subsequent purchaser of Amiga with respect to the intellectual property or (ii)
to acquire the Amiga portfolio of intellectual property in the open market.
However, any acquisition of the Amiga portfolio of intellectual property in the
open market will be dependent on obtaining additional financing in debt or
equity markets. The Company does not intend to finance any of the Amiga related
objectives with the proceeds of the sale of the 8% Preferred Stock.

In addition, the Company paid approximately $45,000 out of working capital
to Solectron through September, 1996, pursuant to the April 9, 1996 agreement
with Solectron. The payment was made upon delivery of the 30 UITI prototypes by
Solectron. Approximately $12,000 remains as an outstanding balance due
Solectron pursuant to this agreement. Discussions are ongoing between the
Company and Solectron with respect to its payment obligations. Should the
Company enter into further agreements with Solectron, working capital will be
used to pay for additional prototypes.

The Company anticipates no future need for any material capital
expenditures. Any future manufacturing or assembly projects will be sub-
contracted out, bypassing the need for any infrastructure investment. In prior
years, the Company was able to fund its operations through the issuance of its
Common Stock in transactions exempt under the Securities Act of 1933, and
through stockholder loans. Any implementation of the commercialization of the
UITI and the ED is dependent on obtaining additional financing that is necessary
to achieve a level of sales adequate to support the Company's operations. The
Company is insolvent and cannot currently generate sufficient revenues and cash
flow from operations to meet its business obligations. Therefore, future
operations are predicated on raising additional capital in debt or equity
markets. The Company has entered into an agreement with a placement agent for a
private offering of its shares of the 8% Preferred Stock and has received
approximately $2,690,000 to date from such offering. See "Item 10 -- Recent
Sales of Unregistered Securities."

ITEM 3. PROPERTIES.

The Company currently leases its 3,100 square foot office facility pursuant
to a lease that expires on February 28, 1997. Pursuant to negotiations with the
building's landlord, the lease has been extended for an additional three-month
period, through May 31, 1997. The annual

(16)

<PAGE>

base rent for this facility is approximately $44,000. The Company believes
that its facilities are in good condition and adequate for its current
operations. It is the Company's present intention to remain in these
facilities for the foreseeable future.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 6, 1997 by (a) each director and
executive officer of the Company, (b) each person known by the Company to own
beneficially five percent or more of the Common Stock and (c) all current
executive officers, directors and five percent or more beneficial owners as a
group.

Number of
Shares
Directors, Officers and Beneficially Percent of Common
Five Percent Stockholders Owned Stock Outstanding
------------------------------- -------------- -----------------
Jerome Greenberg (A) . . . . . 6,658,000(1) 29
William H. Buck (B) . . . . . . 2,384,000(2) 10.4
Roger Remillard (A) . . . . . . 1,744,000(3) 7.6
Donald Gilbreath (C) . . . . . 1,230,400(4) 5.4
Robert E. Reid . . . . . . . . 65,000(5) *
Hugh A. Jencks . . . . . . . . 35,000(6) *
Robert Wussler . . . . . . . . 25,000(6) *
Thomas Glenndahl . . . . . . . 25,000(6) *
All directors, officers
and 5% or more beneficial
owners as a group
(eight persons). . . . . . . . 12,166,400 56.0

- ---------------------
* Less than one percent.

(A) The address of Messrs. Greenberg and Remillard is c/o VisCorp, 111 N. Canal
Street, Suite 933, Chicago, Illinois 60606.
(B) The address of Mr. Buck is 11 Bis Rue Du Dobropol, 75017, Paris France.
(C) The address of Mr. Gilbreath is 543 Powell Lane, Westchester, Pennsylvania
19380.

(1) Includes 100,000 shares which may be acquired pursuant to the exercise of
vested stock options.
(2) Includes 384,000 shares which may be acquired pursuant to the exercise of
vested stock options.
(3) Includes 488,000 shares which may be acquired pursuant to the exercise of
vested stock options.
(4) Includes 230,400 shares which may be acquired pursuant to the exercise of
vested stock options.
(5) Includes 25,000 shares which may be acquired pursuant to the exercise of
vested stock options.
(6) Represents shares which may be acquired pursuant to the exercise of vested
stock options.

(17)

<PAGE>

ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to each of
the directors and executive officers of the Company as of March 6, 1997:

NAME AGE POSITION
---- --- --------
Jerome Greenberg . . . . 70 Chairman of the Board of Directors,
Vice President, Treasurer and Director

Lawrence D. Siegel . . . 48 Interim President

Roger Remillard . . . . . 47 Vice President - Technology and a
Director

Donald Gilbreath . . . . 38 Vice President - Engineering

Hugh A. Jencks . . . . . 52 Vice President, Interim Secretary

Robert J. Wussler . . . 59 Director

Robert E. Reid . . . . . 77 Director

Thomas Glenndahl . . . . 50 Director

JEROME GREENBERG. Mr. Greenberg is a co-founder and major shareholder of
the Company and has been the Chairman and Treasurer from its inception in May,
1990, and a Vice President since December, 1996. From 1982 and 1989 he was the
principal shareholder and President of Leader Communications Inc. ("Leader"), a
Chicago-based cellular phone and two-way radio company. In 1989, Mr. Greenberg
sold Leader to Fleet Call, Inc., which subsequently changed its name to NextTel.
Mr. Greenberg is also the President of Hampden Green Management Corporation, a
private real estate management and development company, which is not an active
entity at this time.

LAWRENCE D. SIEGEL. Mr. Siegel was appointed to assume temporarily the
duties previously performed by Mr. Buck who resigned all positions from the
Company on January 8, 1997. The Board appointed Mr. Siegel to serve in such
capacity for a trial period of two months beginning January 22, 1997. The trial
period was designed to allow the Company to assess its needs and determine
whether Mr. Siegel should serve as the Company's President. At the end of such
trial period, the Company will decide whether to seek to enter into an
employment agreement with Mr. Siegel. From 1994 to the present, Mr. Siegel has
been the President of Yellow Pearl, Inc., a software company founded by him in
1994. From 1992 to 1994, Mr. Siegel was the President of T-HQ, Inc., a software
company. From 1988 to 1992, he was the President of Atari Corporation.

ROGER REMILLARD. Mr. Remillard is a co-founder of the Company and has
served as a director and Vice President - Technology since the Company's
inception. Mr. Remillard is the inventor of the ED and has filed several
patents relating to interactive television technology.

(18)

<PAGE>

Prior to 1990, Mr. Remillard served as a consultant in the communications
industry, specializing in the field of two-way, rapid cellular telephony and
data-radio communications.

DONALD GILBREATH. Mr. Gilbreath has served as Vice President - Engineering
since he joined the Company in November, 1994. Prior to November, 1994, he
worked for the Company as a consultant and was instrumental in designing, and
producing the initial prototypes of, the ED. He formed Gilbreath Systems Inc.
("Gilbreath Systems") a general engineering consulting company in 1992. From
1980 to 1991, Mr. Gilbreath worked for Commodore International Ltd., a computer
manufacturer which filed for bankruptcy in April, 1994, where he served in
various capacities, including Director of Product and Market Development (1987
to 1991), Director of Research and Development (1985 to 1987) and Manager,
Consumer Products Research and Development (1985 to 1987). Under his direction,
Commodore developed the first consumer-priced multimedia compact disc player.

HUGH A. JENCKS. Mr. Jencks was elected to the position of Vice President
of the Company in December, 1996 and has served as its Interim Secretary since
February, 1997. Prior to such date, he was a consultant to the Company since
July, 1996. Mr. Jencks has been an active Director of the Michigan Cable
Telecommunications Association for many years and currently serves as its
Associate Director. In July, 1996, Mr. Jencks completed a special project for
Michigan Governor John Engler, by designing and building Michigan Government
Television. From 1982 to August, 1996, Mr. Jencks was the General Manager of
Booth Communications ("Booth") in Birmingham, Michigan. During his tenure at
Booth he led a cable television system into several trials of interactive
technology with Cableshare of London, Ontario, Ameritech, NTN and the Company.

ROBERT J. WUSSLER. Mr. Wussler was elected to the Board of Directors on
May, 1996. From 1992 to the present he has been the President and Chief
Executive Officer of the Wussler Group, located in Potomac, Maryland, advising
companies in TV, cable, interactive and other related activities. From 1989 to
1992, he was the President and CEO of COMSAT Video Enterprises which was in the
business of satellite delivery of entertainment to the U.S. lodging industry.

(19)

<PAGE>

ROBERT E. REID. Mr. Reid was appointed to the Board of Directors in May,
1996. Mr. Reid has been the President of Engis Corporation ("Engis") based in
Wheeling, Illinois, since 1972. Engis is in the business of utilizing
industrial diamonds in machinery.

THOMAS GLENNDAHL. Mr. Glenndahl was elected to the Board of Directors on
August 5, 1996. He is the founder and, since 1982 has been the Chief Executive
Officer of the Aspect Group, an international education group with offices in 26
countries.

BOARD OF DIRECTORS

The Board of Directors consists of six directors, divided into two classes.
The first class is made up of non-employee directors who serve one-year terms
and the second class is made up of employee directors who serve three-year
terms. At the August 5, 1996 meeting of shareholders, the shareholders elected
three directors in each class to serve for terms expiring at the 1997 and 1999
annual meetings, respectively. The three individuals elected as non-employee
directors were: Robert J. Wussler, Robert E. Reid and Thomas Glenndahl. The
three individuals elected as employee directors were: Jerome Greenberg, William
H. Buck and Roger Remillard. Executive officers of the Company are appointed by
the Board of Directors and serve at its discretion.

Mr. Buck resigned from his position as a Director and President of the
Company on January 8, 1997. The remaining board members accepted Mr. Buck's
resignation and approved the Severance Agreement dated as of January 8, 1997
between the Company and Mr. Buck. The Severance Agreement provides that the
Company shall reimburse Mr. Buck for all reasonable expenses associated with the
Company's business incurred by him as of the date thereof, up to an amount
approximately equal to $300,000. The amount of expenses currently claimed by
Mr. Buck is approximately $58,850. Additional expenses, totalling approximately
$196,500, are claimed by Raquel Velasco pursuant to the Severance Agreement.
Ms. Velasco's expenses, like Mr. Buck's, were incurred in connection with the
attempted acquisition of Amiga. The Severance Agreement with Mr. Buck also
pertains to Ms. Velasco because the Company desired to settle all claims arising
out of the attempted purchase of Amiga at the same time. The Severance
Agreement released the Company from any further obligations and liabilities
toward Mr. Buck and Ms. Velasco. On January 22, 1997, the Board appointed
Lawrence D. Siegel to temporarily assume the duties previously performed by Mr.
Buck, for a period of two months.

(20)

<PAGE>

ITEM 6. EXECUTIVE COMPENSATION.

The following table sets forth certain information with respect to
compensation for fiscal years 1993, 1994 and 1995 paid to the Company's Chief
Executive Officer. No other executive officers of the Company received
compensation in excess of $100,000 during such periods.

LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------- --------------
SECURITIES
UNDERLYING ALL OTHER
NAME YEAR SALARY ($) BONUS ($) OPTIONS COMPENSATION($)
- ------------------------ ------ ------------ ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
William H. Buck 1996 60,000 -- -- --
Chief Executive Officer 1995 60,000 -- -- --
and Director. . . . . . 1994 5,000 -- 384,000 --

</TABLE>

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>

POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE APPRECIATION FOR
SHARES OPTIONS OPTION TERM
UNDERLYING GRANTED TO ----------------------------
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE 5% ($) 10% ($)
- -------------------------- ----------- ---------- ------------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
William H. Buck
Chief Executive Officer 384,000 0 .625 11/11/99 66,307 382,080

NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL THE-MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END($)(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---------------------------- ------------------------- -------------------------
<S> <C> <C>
William H. Buck
Chief Executive Officer . . . . . . 384,000/0 384,000/0

</TABLE>

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

(1) The value of "in the money" options represents the difference between the
exercise price of such option and the $1.625 closing price of the
Company's Common Stock as quoted on the Nasdaq Bulletin Board on March 6,
1997.

(21)

<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of Roger
Remillard, Jerome Greenberg, Donald Gilbreath, Hugh Jencks and Christa A.
Prange. Each of the employment agreements for Messrs. Remillard, Greenberg and
Gilbreath provides for an initial term expiring in November, 1997, which is
automatically renewed for one-year periods unless notice of non-renewal is given
at least 120 days prior to the end of the expiration term. The employment
agreement for Mr. Jencks provides for an initial term expiring on August 31,
1998 and is not automatically renewable. The employment agreement for
Ms. Prange provides for an initial term expiring on April 30, 1998 and is not
automatically renewable. Mr. Remillard's employment agreement, dated
November 12, 1994, provides for an annual base salary of $60,000 (subject to
annual increase based upon the CPI) and granted options to purchase 288,000
shares of Common Stock, at an exercise price of $.625 per share. Mr.
Greenberg's employment agreement, dated November 12, 1994, provides for an
annual base salary of $37,500 (subject to annual increase based upon the CPI)
and granted options to purchase 100,000 shares of Common Stock at an exercise
price of $.625 per share. Mr. Gilbreath's employment agreement, dated
November 12, 1994, provides for an annual salary of $48,000 (subject to annual
increase based upon the CPI) and granted options to purchase 230,400 shares of
Common Stock at an exercise price of $.625 per share. Mr. Jencks' employment
agreement, effective as of September 1, 1996, provides for an annual base salary
of $120,000 subject to annual increases of at least 5%. Pursuant to the
agreement, Mr. Jencks was granted options to purchase, subject to a vesting
schedule, up to 250,000 shares of common stock at an exercise price of $.625 per
share. Ms. Prange's employment agreement, dated May 1, 1996, provides for an
annual base salary of $60,000 (subject to annual increases of at least 5%) and
granted options to purchase, subject to a vesting schedule, up to 250,000 shares
of common stock, at an exercise price of $.625 per share. The number of shares
and the per share amounts for the options have been adjusted for the merger
between GTCI and VISC, and the stock split.

The Company has not entered into a written employment agreement with its
Interim President, Lawrence Siegel. Mr. Siegel is being compensated $25,000 per
month for each of the two months of the trial period of his employment. In
addition, Mr. Siegel is being covered by the Company's health plan and the
Company is reimbursing him for legitimate business expenses. At the end of the
trial period, the Company will decide whether to seek to enter into an
employment agreement with Mr. Siegel.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The Company made advances to Roger Remillard during 1993 totaling $127,532.
As of December 31, 1993, the receivable was forgiven recorded as compensation
expense.

(22)

<PAGE>

The Company loaned $39,238 to William H. Buck and $18,670 to Roger
Remillard during 1995. As of December 31, 1995, these amounts were forgiven and
recorded as compensation expense.

ITEM 8. LEGAL PROCEEDINGS.

The Company, two directors, Jerome Greenberg, Roger Remillard and a former
director, William Buck, are defendants in a lawsuit filed by a former employee,
Nolan Bushnell. This lawsuit was filed on December 15, 1994 in the California
Superior Court and was subsequently removed to the United States District Court
for the Northern District of California. The second amended complaint dated
April 30, 1996 alleges multiple claims including breach of fiduciary duty,
breach of oral agreement, wrongful termination of employment, interference with
contract, breach of employment agreement and fraudulent misrepresentation, all
arising out of the plaintiff's employment over a period of 2 1/2 months as the
Company's President, the termination of his employment and the aborted
negotiations for a proposed merger between the Company and the plaintiff's
company. Damages claimed are in excess of $10 million for failure to transfer
approximately four million shares of the Company's stock allegedly promised to
the plaintiff, salary and expenses arising out of his employment relationship
and punitive damages. The dollar amount of damages claimed is dependent upon
the current per share price of the Company's stock.

The Company has filed a claim against the plaintiff for fraud, breach of
fiduciary duty, declaratory relief, rescission and negligent interference with
prospective business advantage arising out of the same set of occurrences as the
plaintiff's complaint. The Company's first summary adjudication motion,
challenging the plaintiff's claim for failure to transfer approximately four
million shares of Company stock, was granted by the District Court on August 29,
1996, thus precluding the plaintiff from recovering any shares of stock from the
Company. Although this claim has been dismissed, the plaintiff filed a motion
for reconsideration, which was heard by the District Court on October 11, 1996.
On December 6, 1996, the District Court denied the plaintiff's motion for
reconsideration. The Company filed a summary adjudication motion against the
plaintiff on all his remaining claims, which also was heard by the District
Court on October 11, 1996. On December 6, 1996, the Court granted the Company's
summary adjudication motion and dismissed all of the plaintiff's remaining
claims. It remains possible that the summary adjudication orders could be
overturned on appeal. Should the orders be overturned, and should the plaintiff
prevail on these claims, the Company may be materially adversely affected by the
outcome.

The Company filed a lawsuit against three individuals formerly associated
with the Company, David Serlin, Steve Owens and Kaori Kuwata, and the
corporation which currently employs each of the foregoing individuals,
Interactive Video Publishing, Inc., on July 25, 1996 in the United States
District Court for the Northern District of California. The Company's complaint
alleges misappropriation of trade secrets, conversion and breach of fiduciary
duty arising out of the individual defendants' previous confidential
relationships with the Company, access to proprietary information including the
technology, hardware design, software, parts selection, feature set and
architecture of the ED technology and subsequent transmittal of this proprietary
information to the defendant corporation for its beneficial use. The Company is

(23)

<PAGE>

seeking declaratory and injunctive relief, as well as monetary damages. The
defendants filed various counterclaims against the Company on September 13, 1995
alleging intentional interference with economic advantage, intentional
interference with contractual relations and unfair competition arising out of
the same set of occurrences. The defendants are seeking damages for lost
profits, injury to business reputation, diminution of value of proprietary data,
loss of customers and loss of investments. In addition, the defendants are
seeking a declaratory judgment of no misappropriation of trade secrets,
injunctive relief and punitive damages.

(24)

<PAGE>

ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.

The Company's shares have been traded on a limited basis on the Nasdaq
Bulletin Board under the symbol VICP since December 27, 1995. The following
table sets forth the range of high and low sales prices as reported on the
Nasdaq Bulletin Board. These prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.

PERIOD LOW HIGH

Fourth Quarter of 1995 (beginning December 8, 1995) 5-1/8 5-3/8

First Quarter of 1996 7-1/2 8-1/4

Second Quarter of 1996 8-1/8 11-3/8

Third Quarter of 1996 8-1/8 11-3/8

Fourth Quarter of 1996 1-1/4 9-5/16

First Quarter of 1997 (through March 6, 1997) 1-1/8 2-1/16

There were 122 shareholders of record of the Common Stock as of March 6,
1997.

DIVIDENDS

The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future, but
intends to retain future earnings, if any, for reinvestment in the future
operation and expansion of the Company's business and related development
activities. Any future determination to pay cash dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements and such other
factors as the Board of Directors deems relevant, as well as the terms of any
financing arrangement.

ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.

In December, 1996, the Company entered into an agreement with a placement
agent, Wincap, Ltd. ("Wincap"), for a private offering to be consummated by
offshore transactions exempt pursuant to Regulation S of the Securities Act.
The Company offered a minimum of 2,000,000 and a maximum of 6,666,667 shares of
the Company's 8% Preferred Stock at a price of $1.50 per share (the "Preferred
Shares") for a total consideration of between $3,000,000 and $10,000,000. For
every two Preferred Shares purchased, the investor received one warrant to
purchase one share of the Company's Common Stock at an exercise price of $3.00
per share.

(25)

<PAGE>

Each warrant expires three years from the date of execution of the investor's
Subscription Agreement entered into in connection with the offering. On March
6, 1997, the Company sold 2,031,832 Preferred Shares for a total consideration
of $3,047,748. Wincap received $333,763.55 and 2,172,800 warrants as
compensation for its services and costs . Each warrant entitles Wincap to
purchase one share of Common Stock at an exercise price of $1.50 at any time on
or prior to December 5, 1999. Escrow agent fees totalling $22,738.70 were
incurred pursuant to the offering, and are included as stock issuance costs.
The offering is ongoing in an attempt to secure additional financing.

The Company conducted the following sales of unregistered securities
between 1993 and 1996. The sales were made pursuant to negotiated transactions
between the parties, and the price per share for each transaction was a result
of the negotiations. Prices quoted on the NASDAQ Bulletin Board reflect
interdealer prices without retail mark-up, mark-down or commission and may not
represent actual transactions. The number of shares and per share amounts for
the following transactions have been adjusted for the merger between GTCI and
VISC, and the stock split. See "Item 1 -- Business-General."

On May 13, 1993, upon the exercise of an option to purchase Common Stock by
Jerome Greenberg, the Company issued 3,196,800 shares to Mr. Greenberg at a
price of $0.25 per share. On December 31, 1993, upon the exercise of an option
to purchase Common Stock by Roger Remillard, the Company issued 799,200 shares
to Mr. Remillard at a price of $0.25 per share.

In November, 1994, the Company entered into an agreement with a placement
agent, West America Securities ("West"), for a private offering to be
consummated by a transaction not involving a public offering exempt pursuant to
Regulation D of the Securities Act. This private offering resulted in the sale
of 2,000,000 units at a purchase price of $.625 per unit for a total
consideration of $1,250,000. The securities were sold to various investors, as
diagrammed by the following chart.

(26)

<PAGE>

NOVEMBER 1994 PRIVATE PLACEMENT
- --------------------------------------------------------------------------------
INVESTOR UNITS PURCHASED TOTAL VALUE
- --------------------------------------------------------------------------------
Altafin Anstalt 160,000 $100,000

Avatar Business Corp. 388,000 $242,500

Benton Enterprises, LTD. 400,000 $250,000

Paine Webber CDN/FBO 16,000 $10,000

Claire L. Blue & Raymond F. Blue
TRUA 3/17/87 16,000 $10,000

CCD Consulting Commerce
Distribution AG 400,000 $250,000

Comstar Biocapital NV 40,000 $25,000

Mr. Robert M. Gabriel 36,000 $22,500

Clifford and Alva Johnson
Intervivos Trust 3/3/76 40,000 $25,000

Pawnee Trading Company 80,000 $50,000

Mr. Robert E. Reid 40,000 $25,000

Mr. Barry Rice 40,000 $25,000

Mr. Alan J. Newman,
Trustee of the Rose Leigh Trust 320,000 $200,000

Mr. Anthony Veschio
Mrs. Patricia Veschio 24,000 $15,000
- --------------------------------------------------------------------------------
TOTAL 2,000,000 $1,250,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Each unit consisted of one share of Common Stock, one Class A warrant and one
Class B warrant. Each Class A warrant entitled the registered holder to
purchase one share of Common Stock at an exercise price of $1.25 at any time on
or before March 1, 1995. Each Class B warrant entitled the registered holder to
purchase one share of Common Stock at an exercise price of $1.88 at any time on
or before April 30, 1995. None of the Class A warrants or Class B warrants were
exercised prior to the expiration date. West received 200,000 shares of Common
Stock and 48,000 units valued at $155,000 as compensation for its services and
costs. Attorneys' and finders' fees totalling $83,833 were incurred and are
included as stock issuance costs. One of the consultants participating in the
private placement received $25,000 in cash, 40,000 shares of Common Stock with a
deemed value of $25,000 and an option, exercisable until November 27, 2000, to
purchase 120,000 shares of Common Stock at $.625 per share.

(27)

<PAGE>

In November, 1994, the Company issued 640,000 shares of Common Stock to
Jerome Greenberg upon conversion of a $400,000 loan Mr. Greenberg made to the
Company in a transaction not involving a public offering exempt pursuant to
Section 4(2) of the Securities Act of 1933, as amended ("Securities Act").

In April and May, 1995, the Company issued 212,000 shares of Common Stock
for an aggregate offering price of $265,000 in a transaction not involving a
public offering exempt pursuant to Regulation S of the Securities Act. Of the
212,000 shares, 52,000 shares were purchased by Swiss American Securities, Inc.
(BBC) for a purchase price of $65,000, and the remaining 160,000 shares were
purchased by Haus & Company for a purchase price of $200,000.

In April and May, 1995, the Company issued 706,000 shares of Common Stock
for an aggregate valuation of $425,000 in a transaction not involving a public
offering exempt pursuant to Section 4(2) of the Securities Act. Of the 706,000
shares: (i) 40,000 shares valued at $25,000 were issued to Associated
Interchange, Limited at the direction of a consultant, to whom the Company
intended to issue such shares as a bonus for securing a placement agent for the
Company, which consultant wished to extinguish a debt owing to Associated
Interchange (ii) 66,000 shares valued at $25,000 were issued to West America
Securities Corp as additional compensation for securities placement services
with respect to the offering which was commenced in November 1994, (iii) and the
remaining 600,000 shares valued at $375,000 were issued to Donald Gilbreath as a
bonus.

On August 30, 1995, the Company issued 32,000 shares of Common Stock to
Synalgest for an aggregate offering price of $20,000 in a transaction not
involving a public offering exempt pursuant to Regulation S of the Securities
Act.

On September 28, 1995, the Company issued options to purchase 100,000,
100,000 and 40,000 shares of Common Stock, respectively, to Beatrice de Lippe,
Richard de Braux and Fabrica de la Ferriere, three individuals formerly
associated with the Company. The options were issued in connection with a
settlement agreement that released the Company from any and all claims and
amounts owing which may have been brought by these individuals based upon prior
employment relationships with the Company. The options were issued in a
transaction not involving a public offering exempt pursuant to Regulation S of
the Securities Act. The options have an exercise price of $0.625 per share and
an expiration date of September 2000.

During 1995, the Company issued a total of 4,400,000 shares of Common Stock
for an aggregate offering price of $2,750,000 in a transaction not involving a
public offering exempt pursuant to Regulation S of the Securities Act. The
securities were sold to various investors, as diagrammed by the following chart.

(28)

<PAGE>

1995 REGULATION "S" OFFERINGS
- --------------------------------------------------------------------------------
INVESTOR SHARES PURCHASED TOTAL VALUE
- --------------------------------------------------------------------------------
Ankerbank 500,000 $312,500

Lyckle Kuipers 800,000 $500,000

Haus & Company 372,000 $232,500

Affida Bank 800,000 $500,000

Ankerbank 320,000 $200,000

Avatar Business Corp. 160,000 $100,000

Lucio Cerquiglini 48,000 $30,000

Haus & Company 400,000 $250,000

Investmentbank Austria 200,000 $125,000

Investmentbank Austria 800,000 $500,000
- --------------------------------------------------------------------------------
TOTAL 4,400,000 $2,750,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Dextro Establishment, a Liechtenstein company, the placement agent, received
finder's fees totalling $330,000 in connection with this offering, which were
included as stock issuance costs.

In February, 1996, the Company issued 20,000 shares of Common Stock for an
aggregate offering price of $50,000 in a transaction exempt pursuant to
Regulation S of the Securities Act. Grammont, Inc., a French brokerage firm,
received $5,000 in connection with this offering.

From March, 1996 to April, 1996, the Company issued 500,000 shares of
Common Stock for an aggregate offering price of $1,000,000 in a transaction not
involving a public offering exempt pursuant to Regulation D of the Securities
Act. Of the 500,000 shares, 200,000 shares were purchased by Darier, Hentsch
for a purchase price of $400,000, 200,000 shares were purchased by the Affida
Bank for a purchase price of $400,000, and the remaining 100,000 shares were
purchased by the Ankerbank for a purchase price of $200,000.

On April 26, 1996, the Company issued options to purchase 400,000 shares
of Common Stock to a shareholder, Dextro Establishment, with an exercise price
of $.625 per share.

ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED

The authorized capital of the Company consists of 50,000,000 shares of
Common Stock, par value $0.01 per share and 10,000,000 shares of Preferred
Stock, par value $0.01 per share. The class of Preferred Stock may be issued in
series, from time to time, with such designations, relative rights, priorities,
preferences, qualifications, limitations and restrictions thereof, as the

(29)

<PAGE>

Board of Directors may determine. The rights, priorities, preferences,
qualifications, limitations and restrictions of different series of preferred
stock may differ with respect to dividend rates, amounts payable on liquidation,
voting rights, conversion rights, redemption provisions, sinking fund provisions
and other matters. The Board of Directors may authorize the issuance of
preferred stock which ranks senior to the Common Stock with respect to the
payment of dividends and the distribution of assets on liquidation. In
addition, the Board of Directors is authorized to fix the limitations and
restrictions, if any, upon the payment of dividends on Common Stock to be
effected while any shares of preferred stock are outstanding. The Board of
Directors may issue, without stockholder approval, preferred stock with voting
and conversion rights which could adversely affect the voting power of the
holders of Common Stock. The issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change of control of the Company.

The Board of Directors has authorized the issuance of up to 6,666,667
shares of the 8% Preferred Stock. The shares of 8% Preferred Stock will accrue
dividends at the rate of 8% per annum on its purchase price of $1.50 per share,
which dividends will be payable quarterly, each March 31, June 30, September 30
and December 31, beginning on March 31, 1997, (the "Dividend Payment Date") to
the holders of the Shares. Dividends on each share of 8% Preferred Stock will
accrue cumulatively, based upon a three-hundred sixty (360) day year for the
actual number of days occurring between the interval beginning on the most
recent Dividend Payment Date and ending on and including the day immediately
preceding the next succeeding Dividend Payment Date (the "Dividend Period").
Dividends on the Preferred Stock shall be paid before any dividends or
distribution is made in respect of any Common Stock.

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Company, the holders of the 8% Preferred Stock will be entitled to be paid,
before any distribution or payment is made in respect of any Common Stock as to
distribution on liquidation, dissolution or winding up, an amount in cash equal
to the aggregate Stated Value of all Shares outstanding plus all accrued but
unpaid dividends.

Holders of the 8% Preferred Stock will have the right to convert each share
into one share of Common Stock. The Preferred Shareholders will have the right
to convert their Shares as follows: (a) 25% of the shares 90 days following the
date such shares were purchased (the "Initial Conversion Date"); and (b) 25% of
the shares at the end of each of the three consecutive 90-day periods following
the Initial Conversion Date. As of this date, the Company has issued
2,031,832 shares of the 8% Preferred Stock. See the first paragraph under
"Recent Sales of Unregistered Securities."

The foregoing summary of certain provisions of the capital stock of the
Company does not purport to be complete and is subject to, and qualified in its
entirety by, the provisions of the Company's Articles of Incorporation and
Bylaws that are included as exhibits to this Registration Statement and by
provisions of applicable law.

As of March 5, 1997 there were 21,728,000 shares of Common Stock of the
Company issued and outstanding. Each stockholder is entitled to one vote for
each share of Common Stock held of record on all matters submitted to a vote of
stockholders, including the elections of the members of the Board of Directors
of the Company. Holders of Common Stock

(30)

<PAGE>

have no preemptive rights and no rights to convert their Common Stock into any
other securities, and there are no redemption provisions with respect to such
shares. Upon liquidation, dissolution or winding up of the Company, the holders
of the Common Stock are entitled to share ratably in all assets remaining after
payment of the Company's liabilities. All outstanding shares of Common Stock
are fully paid and non-assessable.

The Company currently is in good standing in Illinois.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Corporate Stock
Transfer in Denver, Colorado.

SHARES ELIGIBLE FOR FUTURE SALE

As of March 6, 1997, there were approximately 4,700,000 shares of Common
Stock which were sold by the Company in reliance upon Regulation S. These
shares may be sold without restriction, assuming the holder could properly claim
an exemption under the 1933 Act.

Under Rule 144 under the Securities Act the shares held by Messrs.
Greenberg, Remillard, Buck and Gilbreath will be available for sale, subject to
the volume limitations of Rule 144, in November, 1997. The number of shares
currently held by these individuals equals 12,010,400 shares in the aggregate
(which include shares issuable upon the exercise of vested options).

In general, under Rule 144 as currently in effect, a stockholder, including
an "affiliate" of the Company, as that term is defined in Rule 144 (an
"Affiliate"), who has beneficially owned his or her restricted securities (as
that term is defined in Rule 144) for at least two years from the later of the
date such securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate is entitled to sell, within any three-month
period, a number of such shares that does not exceed the greater of one percent
of the then outstanding shares of Common Stock (approximately 217,280 shares as
of March 6, 1997) or the average weekly trading volume in the Common Stock
during the four calendar weeks preceding the date on which notice of such sale
was filed under Rule 144, provided certain requirements concerning availability
of public information, manner of sale and notice of sale are satisfied. In
addition, under Rule 144(k), if a period of at least three years has elapsed
between the later of the date restricted securities were acquired from the
Company and the date they were acquired from an Affiliate of the Company, a
stockholder who is not an Affiliate of the Company at the time of sale and has
not been an Affiliate for at least three months prior to the sale would be
entitled to sell the shares immediately without compliance with the foregoing
requirements under Rule 144.

Stock options have been granted to certain individuals pursuant to a plan
under Rule 701 under the Securities Act. Pursuant to Rule 701, 90 days after an
issuer becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the securities issued in compliance with
Rule 701 may be resold: (a) by persons other than

(31)

<PAGE>

Affiliates in reliance on Rule 144 without compliance with the volume limitation
or holding period requirement of Rule 144, and (b) by Affiliates in reliance on
Rule 144 without compliance with the holding period requirement of Rule 144.
Options to purchase 1,512,480 shares of Common Stock have been granted by the
Company pursuant to this plan.

ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section XIV of the Company's Articles of Incorporation provides that the
Company shall indemnify and hold the officers and directors of the Company
harmless and free from liability for any claims against said officer and/or
director arising out of the performance of their duties on behalf of the Company
and shall, further, reimburse said person for any legal expenses incurred in the
defense of such claim.

Reference is made to Sections 2 and 3 of Article 78 of the Nevada Revised
Statutes which provides for indemnification of directors and officers in certain
circumstances.

ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The required financial statements are included under the Section "Financial
Statements" in this Registration Statement.

ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not Applicable.

ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements

Consolidated Balance Sheets (Unaudited) as of September 30, 1996 and
September 30, 1995

Consolidated Statements of Operations (Unaudited) for the Nine Months
Ended September 30, 1996 and September 30, 1995 and Period from
inception (May 1, 1990) to September 30, 1996

Consolidated Statements of Cash Flows (Unaudited) for the Nine Months
Ended September 30, 1996 and September 30, 1995 and Period from
inception (May 1, 1990) to September 30, 1996

Consolidated Balance Sheets as of December 31, 1995, 1994 and 1993.

(32)

<PAGE>

Consolidated Statements of Operations for the years ended December 31,
1995, 1994 and 1993 and Period from inception (May 1, 1990) through
December 31, 1995

Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993 and Period from inception (May 1, 1990) through
December 31, 1995

Notes to Consolidated Financial Statements

(b) Exhibits

2.1 Agreement and Plan of Reorganization dated as of October 12,
1995 by and between Global Telephone and Communications, Inc.
and Visual Information Services Corp. and its shareholders.

3.1 Articles of Incorporation, as amended, of VisCorp

3.2 Articles of Incorporation, as amended of Visual Information
Services Corp.

3.3 By-laws of VisCorp

3.4 By-laws of Visual Information Services Corp.

4.1 Form of the Company's Stock Certificate

10.1 Service Agreement dated as of April 8, 1996 between Viscorp and
Solectron France, S.A.

10.2 Technology License Agreement dated as of January 1, 1995 by and
between Visual Information Services Corp. and Digital Sciences,
Inc.

10.3 Employment Agreement between Visual Information Services Corp.
and Jerome Greenberg dated as of November 12, 1994.

10.4 Employment Agreement between Visual Information Services Corp.
and Don Gilbreath dated as of November 12, 1994.

10.5 Employment Agreement between Visual Information Services Corp.
and William Buck dated as of November 12, 1994.

10.6 Employment Agreement between Visual Information Services Corp.
and Roger Remillard dated as of November 12, 1994.

(33)

<PAGE>

10.7 Employment Agreement between Visual Information Services Corp.
and David Rosen dated as of January 7, 1996.

10.8 Employment Agreement between Visual Information Services Corp.
and Christa A. Prange dated as of May 1, 1996.

10.9 License Agreement between Amiga Technologies GmbH and Visual
Information Service Corp. dated as of December 26, 1995.

10.10 Agreement for the Purchase of Inventories, Industrial Property
Rights and certain other Rights and Assets between Escom AG,
Amiga Technologies GmbH and VisCorp Acquisitions Inc. dated
July 18, 1996.

10.11 Gateway Information Provider Agreement between NTN
Communications, Inc. and Visual Information Services Corp.
dated as of December 13, 1994.

10.12 Viscorp Stock Option Plan

10.13 Severance Agreement between Visual Information Services Corp.
and William Buck and Raquel Velasco dated as of January 8,
1997.

10.14 Employment Agreement between Visual Information Services Corp.
and Hugh Jencks dated as of September 1, 1996.

10.15 Placement Agent Agreement between Visual Information Services
Corp. and Wincap, Ltd. dated December 6, 1996.

11.1 Earnings Per Share Computation

21 Subsidiaries

(34)

<PAGE>

FINANCIAL STATEMENTS

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Balance Sheet (Unaudited)

As of September 30, 1996 and 1995

ASSETS

AT SEPTEMBER 30,
-----------------------
(UNAUDITED) (UNAUDITED)
----------- -----------
1996 1995

CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . $ 79,686 $ 340,136
Receivables:
Officers . . . . . . . . . . . . . . . . . . . . . . 55,649 21,331
Prepaid expenses . . . . . . . . . . . . . . . . . . 41,689 100,000
----------- -----------

Total Current Assets . . . . . . . . . . . . . . . 177,024 461,467
----------- -----------
PROPERTY AND EQUIPMENT, AT COST
Equipment . . . . . . . . . . . . . . . . . . . . . . 96,719 54,050
Furniture . . . . . . . . . . . . . . . . . . . . . . 2,656 2,656
Test equipment. . . . . . . . . . . . . . . . . . . . 4,883 4,883
----------- -----------
104,258 61,589
Less accumulated depreciation . . . . . . . . . . . . (33,852) (28,796)
----------- -----------

Total Property and Equipment, Net. . . . . . . . . 70,406 32,793
----------- -----------

OTHER ASSETS
Investment securities -- Digital Sciences, Inc. . . . 264,388 253,542
Intangible assets (Net of accumulated amortization) . 92,567 74,946
Other . . . . . . . . . . . . . . . . . . . . . . . . 5,670 0
----------- -----------

Total Other Assets . . . . . . . . . . . . . . . . 362,625 328,488
----------- -----------
$ 610,055 $ 822,748
----------- -----------
----------- -----------

The unaudited interim financial statments include all adjustments
which are, in the opinion of management, necessary to a fair
statement of results for the interim periods presented.

(35)

<PAGE>

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)

AT SEPTEMBER 30,
-----------------------
(UNAUDITED) (UNAUDITED)
----------- -----------
1996 1995

CURRENT LIABILITIES
Accounts payable. . . . . . . . . . . . . . . . . . . $ 1,110,388 $ 358,518
Accrued expenses. . . . . . . . . . . . . . . . . . . 40,489 11,540
Stockholders loans including accrued interest
at a rate of 5.97% . . . . . . . . . . . . . . . . . 1,113,611 540,000
----------- -----------

Total Current Liabilities. . . . . . . . . . . . . 2,264,488 910,058
----------- -----------

STOCKHOLDERS' EQUITY (DEFICIT)
Common stock. . . . . . . . . . . . . . . . . . . . . 217,280 3,471,615
Additional paid-in capital. . . . . . . . . . . . . . 12,139,498 1,694,361
Deficit accumulated during the development stage. . . (13,645,911) (4,877,140)
Net unrealized investment losses. . . . . . . . . . . (365,300) (376,146)
----------- -----------
Total Stockholders' (Deficit). . . . . . . . . . . (1,654,433) (87,310)
----------- -----------
$ 610,055 $ 822,748
----------- -----------
----------- -----------

(36)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statements of Operations (Unaudited)
Nine Months Ended September 30, 1996 and 1995 and
Period from May 1, 1990 (Inception) through September 30, 1996

FROM
NINE MONTHS ENDED SEPTEMBER 30 INCEPTION
--------------------------------- (MAY 1, 1990)
TO SEPTEMBER 30,
1996 1995 1996*
------------- -------------- --------------
(UNAUDITED) (UNAUDITED)

<S> <C> <C> <C>
LICENSE INCOME . . . . . . . . . . . . . . . . . . . . . . $ 0 $ (629,688) $ (629,688)

OPERATING EXPENSES
Research and development . . . . . . . . . . . . . . . . 1,124,236 652,641 4,090,224
Expenses related to unrecoverable royalty deposit. . . . 450,000 0 450,000
Travel and entertainment . . . . . . . . . . . . . . . . 335,738 442,330 1,347,475
Legal fees:
Employee litigation. . . . . . . . . . . . . . . . . . 368,337 123,433 662,124
Other. . . . . . . . . . . . . . . . . . . . . . . . . 297,413 140,784 836,421
Consulting . . . . . . . . . . . . . . . . . . . . . . . 312,934 333,175 806,546
Stock option compensation and consulting expense . . . . 3,675,000 0 3,675,000
Other general and administrative . . . . . . . . . . . . 741,619 331,594 2,192,912
------------ ------------ ------------

Total Operating Expenses . . . . . . . . . . . . . . 7,305,277 2,023,957 14,060,702

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

OPERATING LOSS . . . . . . . . . . . . . . . . . . . . . . 7,305,277 1,394,269 13,431,014
------------ ------------ ------------

OTHER EXPENSE (INCOME)
Interest expense -- Stockholder debt . . . . . . . . . . 17,126 0 229,397
Interest expense -- Other. . . . . . . . . . . . . . . . 0 0 1,103
Interest income. . . . . . . . . . . . . . . . . . . . . (6,321) (1,693) (19,177)
Loss on disposal of equipment. . . . . . . . . . . . . . 0 0 3,574
------------ ------------ ------------
Total Other (Income) Expense, Net. . . . . . . . . . 10,805 (1,693) 214,897
------------ ------------ ------------
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,316,082 $ 1,392,576 $13,645,911
------------ ------------ ------------
------------ ------------ ------------
AVERAGE SHARES OUTSTANDING . . . . . . . . . . . . . . . . 21,595,781 16,042,308
------------ ------------
------------ ------------

LOSS PER SHARE . . . . . . . . . . . . . . . . . . . . . . $0.34 $0.08
---------- ----------
---------- ----------

</TABLE>

* The data for the period December 31, 1995 to September 30, 1996 is unaudited.

The unaudited interim financial statments include all adjustments
which are, in the opinion of management, necessary to a fair
statement of results for the interim periods presented.

(37)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1996 and 1995 and
Period from May 1, 1990 (Inception) through September 30, 1996

NINE MONTHS NINE MONTHS FROM
ENDED ENDED INCEPTION
SEPTEMBER 30, SEPTEMBER 30, (MAY 1, 1990) TO
(UNAUDITED) (UNAUDITED) SEPTEMBER 30,
1996 1995 1996*
------------- -------------- --------------

<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net loss to net cash used in
operating activities

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (7,316,082) $ (1,392,576) $(13,645,911)
Depreciation and amortization. . . . . . . . . . . . . . . . . . 9,852 13,200 69,782
License income received in stock . . . . . . . . . . . . . . . . 0 (629,688) (629,688)
Stock option compensation and consulting expense . . . . . . . . 3,675,000 0 3,675,000
Services paid in stock . . . . . . . . . . . . . . . . . . . . . 0 125,000 416,250
Interest on stockholder loans. . . . . . . . . . . . . . . . . . 17,126 0 229,397
Provision for losses on employee advances. . . . . . . . . . . . 0 0 36,509
Loss on disposal of equipment. . . . . . . . . . . . . . . . . . 0 0 3,574
(Increase) decrease in prepaid expenses . . . . . . . . . . . . 58,311 (93,427) (41,689)
Increase in:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 805,499 193,022 1,110,388
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . 27,555 6,480 40,489
------------ ------------ ------------
Total Adjustments. . . . . . . . . . . . . . . . . . . . . . 4,593,343 (385,433) 4,910,012
------------ ------------ ------------
Net Cash Used in Operating Activities. . . . . . . . . . . . (2,722,739) (1,778,009) (8,735,899)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment. . . . . . . . . . . . . . . . . . 0 0 500
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . (43,947) (16,062) (114,103)
Advances to employee and related company . . . . . . . . . . . . . (55,649) (21,331) (92,158)
Patents and other expenditures . . . . . . . . . . . . . . . . . . 0 (5,873) (128,396)
------------ ------------ ------------
Net Cash Used in Investing Activities. . . . . . . . . . . . . (99,596) (43,266) (334,157)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of checks issued in excess of funds on deposit. . . . . 0 0 0
Borrowings from stockholders and others. . . . . . . . . . . . . . 862,091 540,000 3,952,575
Proceeds from issuance of common stock . . . . . . . . . . . . . . 1,300,000 1,068,533 5,586,000
Payment of stock issuance costs. . . . . . . . . . . . . . . . . . 0 0 (388,833)
------------ ------------ ------------
Net Cash Provided by Financing Activities. . . . . . . . . . . 2,162,091 1,608,533 9,149,742
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . (660,244) (212,742) 79,686
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . 739,930 552,878 0
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . $ 79,686 $ 340,136 $ 79,686
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

* The data for the period December 31, 1995 to September 30, 1996 is unaudited.

The unaudited interim financial statments include all adjustments
which are, in the opinion of management, necessary to a fair
statement of results for the interim periods presented.

(38)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements

Nine Months Ended September 30, 1996 (Unaudited)

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

NOTE 1 -- AMIGA AGREEMENTS

On July 18, 1996, the Company entered into an agreement with Amiga (the "Amiga
Agreement") to acquire certain assets of Amiga (the "Amiga Assets"). The Amiga
Assets would be acquired by the Company from the bankruptcy estate of Escom
Beleiligungs GmbH (a former manufacturer and distributor of IBM compatible
computers throughout Europe). The Amiga Agreement was cancelled during the
beginning of the fourth quarter of 1996 because the Company was unable to secure
the necessary financing to consummate the transaction. No new agreement has
been entered into between the Company and Amiga.

Prior to its attempted purchase of Amiga, in December, 1995, the Company
entered into an agreement with Amiga for a nonexclusive, nontransferable
license to the Amiga computer operating system technology. The initial term
of the agreement expires December 26, 1998. Unless terminated, in accordance
with the terms of the agreement, the agreement is renewable for subsequent
three-year periods at the licensee's option. In January, 1996, the Company
paid an initial royalty deposit of $450,000 to Amiga. The Company is
required to pay usage royalties as defined in the agreement. To date, no
usage royalties have been paid by the Company. However, because Amiga is in
bankruptcy, the Company believes the $450,000 deposit is now not recoverable
and therefore will be charged to expense in the nine months ended September
30, 1996.

Although the Amiga Agreement was cancelled, the Company intends to continue its
use of the Amiga computer operating system in accordance with the provisions of
its December 1995 licensing agreement with Amiga. If it is determined that the
Company's licensing agreement with Amiga is unenforceable because Amiga
currently is the subject of German bankruptcy proceedings, the Company intends
to (i) seek to enter into a new licensing agreement with any subsequent
purchaser of Amiga with respect to the intellectual property or (ii) to acquire
the Amiga portfolio of intellectual property in the open market. However, any
acquisition of the Amiga portfolio of intellectual property in the open market
will be dependent on obtaining additional financing in debt or equity markets.
The Company does not intend to finance any of the Amiga related objectives with
the proceeds, if any, of the sale of the 8%) Preferred Stock.

NOTE 2 -- SUBSEQUENT EVENTS

PREFERRED STOCK PRIVATE PLACEMENT

In December 1996, the Company entered into an agreement with a placement agent,
Wincap, Ltd., for a private offering (the "Offering") of the Company's 8%
Cumulative Convertible Preferred Stock, $0.01 par value per share (the "8%
Preferred Stock"). The Company is offering a minimum of 2,000,000 and a maximum
of 6,666,667 shares of the 8% Preferred Stock for consideration of between
$3,000,000 and $10,000,000.

(39)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements

Nine Months Ended September 30, 1996 (Unaudited)

The minimum offering level was reached and funds in the amount of approximately
$2,690,000 were released from escrow into the Company's accounts on March 6,
1997. The Company will continue the Offering and its efforts to raise
additional capital up to the maximum as discussed above.

STOCK OPTION RELATED COMPENSATION AND CONSULTING EXPENSE

The Company granted stock options to various employees and consultants during
the period ended September 30, 1996. In connection with the granting of these
options, the Company recorded compensation and consulting expense, and a related
increase to additional paid-in-capital, in the amount of $3,675,000 during the
period ended September 30, 1996. The amount recorded represents the difference
between the exercise price and the fair market value of the Company's Common
Stock, as determined by reference to the publicly traded value of the stock, as
of the date the options were granted.

OTHER TRANSACTIONS

Pursuant to a merger in April 1996, each share of Digital Sciences, Inc. stock
held by the Company was converted to one share of stock of Intelligent Decision
Systems, Inc. ("IDSI"). In November 1996, the Company transferred all of its
shares of IDSI stock to an individual in exchange for the cancellation of a loan
of $500,000 made by such individual to the Company in October 1996. The
$500,000 loan was a demand loan which bore no interest. The Company will
recognize a loss on this transaction of approximately $130,000.

(40)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED FINANCIAL STATEMENTS AND
INDEPENDENT AUDITOR'S REPORT

YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

(41)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Years Ended December 31, 1995, 1994 and 1993

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

C O N T E N T S
---------------

Reference Page
--------- ----

Independent Auditor's Report 43-44

Consolidated Balance Sheets Exhibit A 45-46

Consolidated Statements of Operations Exhibit B 47

Consolidated Statements of Stockholders' Equity (Deficit) Exhibit C 48

Consolidated Statements of Cash Flows Exhibit D 49

Notes to Consolidated Financial Statements 50-63

Consolidated Other General and Administrative Expenses Schedule B-1 64

(42)

<PAGE>

INDEPENDENT AUDITOR'S REPORT

Stockholders
Viscorp
Chicago, Illinois

We have audited the accompanying consolidated balance sheets of VISCORP (A
DEVELOPMENT STAGE ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years then ended and for the period from May 1, 1990 (inception) through
December 31, 1995 (the cumulative period). These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of VISCORP (A DEVELOPMENT STAGE
ENTERPRISE) as of December 31, 1995, 1994 and 1993, and the results of its
operations and its cash flows for the years then ended and for the cumulative
period, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the company
will continue as a going concern. The company cannot currently generate
sufficient revenues and cash flow from operations to meet its business
obligations. Therefore, future operations are predicated on raising additional
capital in debt or equity markets. These factors raise substantial doubt about
the company's ability to continue as a going concern. Any implementation of the
commercialization of the electronic device is dependent upon obtaining
additional financing as may be necessary to ultimately achieve a level of sales
adequate to support the company's operations. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

(43)

<PAGE>

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
of operating expenses is presented for analysis purposes and is not a required
part of the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.

/S/ BLACKMAN KALLICK BARTELSTEIN, LLP
- -------------------------------------

Chicago, Illinois

March 21, 1996, except for the second
paragraph of Note 9, and Notes 12 and 14,
as to which the date is October 22, 1996

(44)

<PAGE>
EXHIBIT A

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Balance Sheets

December 31, 1995, 1994 and 1993

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

ASSETS

1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note 3) $ 739,930 $ 552,878 $ -
Receivables
Other (Net of allowance
for doubtful accounts of $25,000 in 1995) - - -
Prepaid expenses 100,000 6,573 -
------------ ------------ ------------

Total Current Assets 839,930 559,451 -
------------ ------------ ------------

PROPERTY AND EQUIPMENT, AT COST
Equipment 52,772 37,988 17,985
Furniture 2,656 2,656 6,801
Test equipment 4,883 4,883 4,883
------------ ------------ ------------

60,311 45,527 29,669
Less accumulated depreciation (26,028) (15,596) (13,687)
------------ ------------ ------------

Total Property and Equipment, Net 34,283 29,931 15,982
------------ ------------ ------------

OTHER ASSETS
Investment securities - Digital Sciences, Inc.
(Notes 4, 11 and 14) 284,375 - -
Intangible assets (Net of accumulated
amortization) (Note 5) 94,595 74,946 1,000
Other 5,670 - -
------------ ------------ ------------

384,640 74,946 1,000
------------ ------------ ------------

$1,258,853 $ 664,328 $ 16,982
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

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

(45)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Balance Sheets

December 31, 1995, 1994 and 1993

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CURRENT LIABILITIES
Checks issued in excess of funds on deposit $ - $ - $ 31,745
Accounts payable 304,889 165,516 75,285
Due to affiliated company - - 18,689
Accrued expenses 12,934 5,060 2,652
Stockholder loans including accrued
interest at a rate of 5.97% 234,394 - -
------------ ------------ ------------

Total Current Liabilities 552,217 170,576 128,371

STOCKHOLDER LOANS, INCLUDING ACCRUED
INTEREST AT A RATE OF 10% - - 1,494,161
------------ ------------ ------------

Total Liabilities 552,217 170,576 1,622,532
------------ ------------ ------------

STOCKHOLDERS' EQUITY (DEFICIT) (Exhibit C)
(Note 6)
Common stock 212,080 2,566,167 800,200
Additional paid-in capital 7,169,698 1,669,361 -
Deficit accumulated during the
development stage (6,329,829) (3,741,776) (2,405,750)
Net unrealized investment losses (Note 4) (345,313) - -
------------ ------------ ------------
Total Stockholders' Equity (Deficit) 706,636 493,752 (1,605,550)
------------ ------------ ------------
$ 1,258,853 $ 664,328 $ 16,982
------------ ------------ ------------
------------ ------------ ------------

</TABLE>

(46)
<PAGE>

EXHIBIT B
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statements of Operations

Year Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995

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

Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
----------- ----------- ---------- -----------
LICENSE INCOME (Note 11) $ (629,688) $ - $ - $ (629,688)
----------- ----------- ---------- -----------
<S> <C> <C> <C>
OPERATING EXPENSES
Research and development 1,134,262 701,460 622,428 2,965,988
Travel and entertainment 620,012 194,162 122,840 1,011,737
Legal fees
Employee litigation 287,990 5,797 - 293,787
Other 264,119 22,711 150,133 539,008
Consulting 353,915 73,786 17,789 493,612
Other general and administrative 562,191 341,448 335,170 1,451,293
----------- ----------- ---------- -----------
Total Operating Expenses 3,222,489 1,339,364 1,248,360 6,755,425
----------- ----------- ---------- -----------
OPERATING LOSS 2,592,801 1,339,364 1,248,360 6,125,737
----------- ----------- ---------- -----------
OTHER EXPENSE (INCOME)
Interest expense - Stockholder debt 2,910 - 109,429 212,271
Interest expense - Other 1,103 - - 1,103
Interest income (8,761) (4,095) - (12,856)
Loss on disposal of equipment - 757 2,817 3,574
----------- ----------- ---------- -----------
Total Other (Income)
Expense, Net (4,748) (3,338) 112,246 204,092
----------- ----------- ---------- -----------

NET LOSS $(2,588,053) $(1,336,026) $(1,360,606) $(6,329,829)
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------

AVERAGE SHARES OUTSTANDING 17,190,915 11,775,976 7,104,092
----------- ----------- ----------
----------- ----------- ----------
(Note 2)

LOSS PER SHARE (Note 2) $ (.15) $ (.12) $ (.19)
----------- ----------- ----------
----------- ----------- ----------

</TABLE>

The accompanying notes are an integral part of the financail statements.

(47)
<PAGE>

EXHIBIT C

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statements of Stockholders' Equity (Deficit)

Years Ended December 31, 1995, 1994, and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995

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

Common Stock
$.01 Par Value
(25,000,000 Shares
Authorized)
------------------------------
Date of
Transaction Shares Amount
------------ ------------ ------------
<S> <C> <C> <C>
Balance, May 1, 1990 (Inception)
Sale of Stock for Cash ($1 per share*) 5/90 $ - -
Net Loss through 1991 - -
---------- ----------
Balance, through 1991 - -
Net Loss for the Year - -
---------- ----------
Balance, December 31, 1992 - -
Exercise of Stock Options, Stock Issued for
Retirement of Stockholder Advances ($1 per
share*) (Note 10) 5/93 - -
Net Loss for the Year - -
---------- ----------
Balance, December 31, 1993 - -
Exercise of Stock Options, Stock Issued for
Retirement of Stockholder Advances ($1 per
share*) (Note 10) 8/94 - -
Three-for-one Stock Split (Note 1) 11/94 - -
Stock Sold for Cash ($2.50 per share**; class A
and B Warrants Valued at $0) (Note 6) 11/94 - -
Stock Issued in Exchange for Cancellation of
stockholder debt ($2.50 per share**) 11/94 - -
Stock Exchanged for Consulting Services
($2.50 per share**) (Note 6) 11/94 - -
Stock Issuance Costs (Note 6) - -
Net Loss for the Year - -
---------- ----------
Balance, December 31, 1994 -
Sale of Stock for Cash ($2.50 per share**) (Note 6) Various - -
Sale of Stock for Cash ($5.00 per share**) (Note 6) Various -
Stock Issued for Consulting Services ($2.50 per share**)
(Note 6) Various - -
Stock Issued for Consulting Services ($2.50 per share**)
(Note 6) Various - -
Stock Issuance Costs (Note 6) - -
Effect of Merger (Note 2) 21,208,000 212,080
Net Loss for the Year - -
---------- ----------
Balance, December 31, 1995 21,208,000 $ 212,080
---------- ----------
---------- ----------
</TABLE>

Common Stock Deficit
No Par Value Accumulated
--------------------------- Additional during the
Paid-in Development
Shares**** Amount Capital Stage
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance, May 1, 1990 (Inception)
Sale of Stock for Cash ($1 per share*) 1,000 $ 1,000 $ - $ -
Net Loss through 1991 - - - (379,561)
------------ ------------ ------------ ------------
Balance, through 1991 1,000 1,000 - (379,561)
Net Loss for the Year - - - (665,583)
------------ ------------ ------------ ------------
Balance, December 31, 1992 1,000 1,000 - (1,045,144)
Exercise of Stock Options, Stock Issued for
Retirement of Stockholder Advances ($1 per -
share*) (Note 10) 799,200 799,200 - -
Net Loss for the Year - - - (1,360,606
------------ ------------ ------------ ------------
Balance, December 31, 1993 800,200 800,200 - (2,405,750)
Exercise of Stock Options, Stock Issued for -
Retirement of Stockholder Advances ($1 per
share*) (Note 10) 199,800 199,800 - -
Three-for-one Stock Split (Note 1) 2,000,000 - - -
Stock Sold for Cash ($2.50 per share**; class A
and B Warrants Valued at $0) (Note 6) 500,000 1,250,000 - -
Stock Issued in Exchange for Cancellation of -
stockholder debt ($2.50 per share**) 160,000 400,000 1,669,361 -
Stock Exchanged for Consulting Services
($2.50 per share**) (Note 6) 62,000 155,000 - -
Stock Issuance Costs (Note 6) - (238,833) - -
Net Loss for the Year - - - (1,336,026)
------------ ------------ ------------ ------------
Balance, December 31, 1994 3,722,000 2,566,167 1,669,361 (3,741,776)
Sale of Stock for Cash ($2.50 per share**) (Note 6) 1,108,000 2,770,000 - -
Sale of Stock for Cash ($5.00 per share**) (Note 6) 53,000 265,000 - -
Stock Issued for Consulting Services ($2.50 per share**)
(Note 6) 150,000 375,000 - -
Stock Issued for Consulting Services ($2.50 per share**) 1,669,361
(Note 6) 26,500 66,250 - -
Stock Issuance Costs (Note 6) - (330,000) - -
Effect of Merger (Note 2) (5,059,500) (5,712,417) 5,500,337 -
Net Loss for the Year - - - (2,588,053)
------------ ------------ ------------ ------------
Balance, December 31, 1995 $ - $ - $7,169,698 $(6,329,829)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------

*$.0833 as adjusted for subsequent stock split and merger
**$.625 as adjusted for merger
***$1.25 as adjusted for merger
****Not restated

</TABLE>

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

(48)

<PAGE>
EXHIBIT D

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,588,053) $(1,336,026) $(1,360,606) $(6,329,829)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 13,136 4,798 19,993 59,930
License income received in stock (629,688) - - (629,688)
Services paid in stock 416,250 - - 416,250
Interest on stockholder loans 2,910 - 109,429 212,271
Provision for losses on advances 25,000 - - 36,509
Loss on disposal of equipment - 757 2,817 3,574
(Increase) decrease in prepaid expenses (93,427) (6,573) 1,425 (100,000)
Increase in
Accounts payable 189,373 40,231 16,794 304,889
Accrued expenses 7,874 2,408 1,717 12,934
---------- ---------- ---------- ----------
Total Adjustments (68,572) 41,621 152,175 316,669
---------- ---------- ---------- ----------
Net Cash Used in Operating
Activities (2,656,625) (1,294,405) (1,208,431) (6,013,160)
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment - 500 - 500
Capital expenditures (14,784) (20,004) (11,725) (70,156)
Advances to related company (25,000) - - (36,509)
Patents and other expenditures (28,023) (73,946) - (128,396)
---------- ---------- ---------- ----------
Net Cash Used in Investing Activities (67,807) (93,450) (11,725) (234,561)
---------- ---------- ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES
(Repayments of) checks issued in excess
of funds on deposit - (31,745) 30,156 -
Borrowings from stockholders 231,484 775,000 1,190,000 3,090,484
Repayments to affiliated company - (18,689) - -
Proceeds from issuance of common stock 3,035,000 1,250,000 - 4,286,000
Payment of stock issuance costs (355,000) (33,833) - (388,833)
Net Cash Provided by Financing
Activities 2,911,484 1,940,733 1,220,156 6,987,651
---------- ---------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 187,052 552,878 - 739,930
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 552,878 - - -
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 739,930 $ 552,878 $ - $ 739,930
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>

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

(49)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the company and
its wholly owned subsidiary after eliminating material intercompany balances
and transactions.

CASH EQUIVALENTS

For purposes of the statements of cash flows, the company considers all highly
liquid debt
investments purchased with original maturities of three months or less and money
market accounts to be cash equivalents. As of December 31, 1995, substantially
all funds are held in a money market account at one financial institution. The
company does not believe it is exposed to any significant credit risk on cash
equivalents.

INVESTMENT SECURITIES

As of December 31, 1995, marketable equity securities have been categorized as
available for sale and as a result are stated at fair value. These securities
are held for noncurrent uses, such as capital expenditures, business expansion
or acquisitions and therefore are classified as long-term assets. Unrealized
holding losses are included as a component of stockholders' equity until
realized.

PROPERTY AND EQUIPMENT

The company's policy is to depreciate property and equipment over the estimated
useful lives of the assets as indicated in the following tabulation by use of
accelerated methods.

Years
-----

Equipment 5
Furniture 7
Test equipment 5

LOSS PER SHARE

Loss per share is based upon the weighted average number of shares
outstanding during the year (Note 2).

(50)
<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

COMMON STOCK SPLIT

In November 1994, the board of directors authorized a three-for-one stock
split of common shares effective immediately, which resulted in an increase
of authorized shares from 1,000,000 as of December 31, 1993 to 10,000,000 as
of December 31, 1994. All loss per share and share amounts, other than those
otherwise described, included in these financial statements have been
adjusted for the stock split and merger described in Note 2.

INTANGIBLES

Legal fees incurred for patents allowed and/or pending have been capitalized.
The company received approval for several patents in 1995 which are being
amortized over 5 years, which is management's current estimate of their
useful lives. No amortization is being taken on patents not yet issued as of
December 31, 1995. Legal fees incurred for trademarks pending have been
capitalized. No amortization was taken in 1995 as the trademarks had not
been issued as of December 31, 1995.

MANAGEMENT ESTIMATES

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

FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents and stockholder loans are a
reasonable estimate of their fair value. Investment securities are carried at
their fair value.

(51)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Consolidated Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

STOCK OPTIONS

The company has completed an initial review of Statement of Financial
Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based
Compensation," which will become effective for 1996. As is permitted under
SFAS 123, the company has decided to continue accounting for employee stock
compensation under the rules of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," but will disclose pro forma
results using the SFAS 123 alternative accounting method.

NOTE 2 - NATURE OF OPERATIONS

The company was formed in Chicago, Illinois in May 1990. The company is a
development stage enterprise and was founded to develop an electronic device
(ED) capable of adding modem, video data and telephone features to an ordinary
television receiver over a telephone line. The company is currently engaged in
the continuing development of that product and certain initial marketing
efforts. In 1995, the product has reached the demonstration stage, and the
company is seeking partners with software capabilities to utilize the ED
technology.

On November 28, 1995, the company merged with Global Telephone and
Communications, Inc. (GTCI) and reorganized under Section 368(a)(1)(B) of the
Internal Revenue Code. Pursuant to the merger, four shares of GTCI stock were
exchanged for every share of Viscorp stock, resulting in the stockholders of
the former Viscorp retaining voting control over the merged entity.
Accordingly, for accounting purposes, the acquisition has been treated as a
recapitalization of Viscorp with Viscorp as the acquiror (reverse
acquisition).

Upon completion of the reorganization, GTCI changed its name to Viscorp. Pro
forma results of operations have not been presented because the effects of this
acquisition were not significant.

NOTE 3 - CASH AND CASH EQUIVALENTS

1995 1994
--------- ---------

Cash $ 8,547 $ 5,564
Money market funds* 731,383 -
U.S. Treasury Bill* - 547,314
--------- ---------

$ 739,930 $ 552,878
--------- ---------
--------- ---------
*At cost (which approximates fair value)

(52)

<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994, and 1993

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

NOTE 4 - INVESTMENT SECURITIES

Investment securities classified as noncurrent assets as of December 31, 1995
include marketable equity securities with a cost of $629,688, gross unrealized
losses of $345,313 and an estimated fair value of $284,375.

NOTE 5 - INTANGIBLES

Intangible assets consist of the following:

1995 1994
---------- ----------

Patents and patents pending $ 80,194 $ 73,946
Trademark and trademarks pending 17,105 1,000
-------- --------

97,299 74,946
Less accumulated amortization (2,704) -
-------- --------

$ 94,595 $ 74,946
-------- --------
-------- --------

NOTE 6 - COMMON STOCK

In November 1994, the company issued 640,000 shares of common stock at $.625 per
share in exchange for the cancellation of a loan from a stockholder. The
difference between the stated value of the common stock ($400,000) and the
balance of the stockholder loan ($2,069,361) was recorded as additional paid-in
capital. The conversion was not part of the original terms of the loan. The
transaction was an extinguishment of debt between the company and a principal
stockholder and as such was accounted for as a capital transaction.

(53)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 6 - COMMON STOCK (Continued)

In November 1994, the company entered into an agreement with a placement agent
for a private offering. This private offering resulted in the sale of 2,000,000
units at a purchase price of $.625 per unit for a total consideration of
$1,250,000. Each unit consisted of one share of common stock, one class A
warrant and one class B warrant. The placement agent received 200,000 shares of
common stock and 48,000 expense units valued at $155,000 as compensation for its
services and costs. Each expense unit was composed of one share of common
stock, one class A warrant and one class B warrant. In addition, attorney and
finder's fees totaling $83,833, paid or to be paid in cash, $25,000 of
which relates to an officer of the company, were incurred and are included as
stock issuance costs. Of the $83,833, $50,000 was payable at December
31, 1994 to one consultant. In addition the consultant was granted an option,
exercisable until March 8, 1998, for the purchase of 80,000 shares of common
stock at the exercise price of $.625 per share. During 1995, the Company and
the consultant revised the fee structure. In exchange for the cancellation of
the $50,000 obligation and the option to purchase 80,000 shares, the consultant
received $25,000 in cash, 40,000 shares of common stock with a deemed value of
$25,000 and an option, which is exercisable until November 27, 2000, for the
purchase of 120,000 shares at the price of $.625 per share. In both cases, the
options granted to purchase common stock were assigned a fair value of $0 and
were accounted for accordingly.

Each class A warrant entitled the registered holder to purchase one share of
common stock at an exercise price of $1.25 at any time on or before March 1,
1995. Each class B warrant entitled the registered holder to purchase one share
of common stock at an exercise price of $1.88 at any time on or before April 30,
1995. None of the class A warrants were exercised by the March 1, 1995
expiration date, nor were any class B warrants exercised by the April 30, 1995
expiration date.

During 1995, the company entered into an agreement with Dextro Establishment,
located in Liechtenstein in Europe to raise equity financing solely from
offshore purchasers and purchasers who may be deemed "accredited investors" as
those terms are generally defined under Regulation S and Regulation D,
respectively, promulgated by the U.S. Securities and Exchange Commission. A
total of 4,400,000 shares of the company's stock were issued at a purchase price
of $.625 per share for a total of $2,750,000. The placement agent received
finder's fees totaling $330,000 which are included as stock issuance costs.

(54)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 6 - COMMON STOCK (Continued)

Prior to signing the agreement with Dextro, the company was able to raise
$265,000 through the issuance of 212,000 shares at a purchase price of
$1.25 per share and 32,000 shares at a purchase price of $.625 per share.

In addition, an officer of the company and an outside consultant
received 600,000 and 66,000 shares, respectively, during 1995 as payment
for services rendered, valued at the price of $.625 per share. Shares of common
stock issued for other than cash have been assigned amounts equivalent to the
fair value of the service or assets received in exchange.

NOTE 7 - INCOME TAXES

The company had elected to be taxed as an S corporation under provisions of the
Internal Revenue Code. Under these provisions, the company did not pay federal
and state corporate income taxes on its taxable income but was responsible for
state replacement taxes. The election was terminated effective November 12,
1994.

Of the years presented, the company was an S corporation during the year ended
December 31, 1993. There would be no change in the tax expense, net loss and
net loss per share, taking into consideration the pro forma effect of applying C
corporation statutory rates then in effect. No material book versus tax
temporary differences exist upon which deferred income taxes would be
calculated. The company incurred a loss in all periods prior to and including
1993.

The company has net operating loss carryforwards of approximately $3,325,000 for
federal and Illinois tax return purposes that may be offset against future
taxable income. If not used, the carryforwards will expire as follows:

Operating
Losses
-----------

2009 $ 1,076,200
2010 2,249,000
-----------

$ 3,325,200
-----------
-----------

Because of the uncertainty of ever utilizing the loss carryforwards, a deferred
tax asset of approximately $1,330,100 has been offset in total by a valuation
allowance.

(55)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 7 - INCOME TAXES (Continued)

Principal reasons for variations between the statutory federal rate and the
effective rates were as follows:

1995 1994
-------- --------

U.S. federal statutory income tax rate 34.00% 34.00%
State income taxes, net of federal tax benefit - 4.71
Permanent differences regarding compensation - 17.85
S Corporation income - (25.29)
Valuation allowance (34.00) (32.01)
Other - .74

-% -%
-------- --------
-------- --------

NOTE 8 - OPERATING LEASES

The company entered into one-year leases for its office facilities. The lease
for one of its offices is with a significant stockholder. Total rental expense
for all operating leases, except those with terms of one month or less that were
not renewed, was $8,400, $15,650 and $17,100 for the years ended December 31,
1995, 1994 and 1993, respectively. The amount of related party rent expense
included above was $8,400, $9,100 and $8,400 for the years ended December 31,
1995, 1994 and 1993, respectively. Effective March 1, 1996, the company entered
into a one-year lease with a nonrelated party at an annual rental of $43,960.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENTS

The company has entered into separate employment agreements with four of its
officers and two other employees. The agreements for the four officers expire
November 11, 1997, and automatically renew for an additional one-year period
unless the company or the employee notifies the other party not less than 120
days prior to the expiration of the agreement of the company's or the employee's
intent to let the agreement expire. The agreements for the two other employees
expire in 1998, and do not automatically renew.

(56)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

- --------------------------------------------------------------------------------
NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

LITIGATION

In December 1994, a former director and officer of the company filed a lawsuit
in a California court against the company and several of its officers and
directors alleging that the company violated an alleged agreement with him to
become an executive officer of the company and claiming damages in excess of
$10,000,000. The lawsuit alleges multiple claims including breach of fiduciary
duty, breach of oral agreement, wrongful termination of employment, interference
with contract, breach of employment agreement and fraudulent misrepresentation.
The company has filed a counterclaim for fraud, breach of fiduciary duty,
declaratory relief, rescission and negligent interference with prospective
business advantage. The lawsuit was subsequently removed to the United States
District Court for the Northern District of California, which granted the
company's first summary adjudication motion on August 29, 1996. The District
Court has postponed ruling on the company's remaining summary judgment motion,
but may rule on it at any time. The company believes the allegations are
without merit and intends to continue to vigorously defend itself and its
directors and officers against the action.

The Company filed a lawsuit against three individuals formerly associated with
the Company and the corporation which currently employs each of the foregoing
individuals on July 25, 1996 in the United States District Court for the
Northern District of California. The Company's complaint alleges
misappropriation of trade secrets, conversion and breach of fiduciary duty
arising out of the individual defendants' previous confidential relationships
with the Company, access to proprietary information including the technology,
hardware design, software parts selection, feature set and architecture of the
ED technology and subsequent transmittal of this proprietary information to the
defendant corporation for its beneficial use. The Company is seeking
declaratory and injunctive relief, as well as monetary damages. The defendants
filed various counterclaims against the Company on September 13, 1995 alleging
intentional interference with economic advantage, intentional interference with
contractual relations and unfair competition arising out of the same set of
occurrences. The defendants are seeking damages for lost profits, injury to
business reputation, diminution of value of proprietary data, loss of customers
and loss of investments. In addition, the defendants are seeking a declaratory
judgment of no misappropriation of trade secrets, injunctive relief and punitive
damages.

The Company has filed a motion for a preliminary injunction, which motion was
heard by the District Court on October 25, 1996. The District Court has yet to
rule on this motion. Because the lawsuit is in the very early stages of
discovery, it is not possible to determine the probable likelihood of an adverse
ruling. However, if the defendant succeeded on their counterclaims, and were
awarded significant monetary damages, and/or injunctive or declaratory relief
against the Company, the Company could be materially adversely affected. The
Company believes the allegations in the defendants' counterclaims are without
merit and intends to vigorously defend itself against the actions.

(57)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

- --------------------------------------------------------------------------------
NOTE 10 - STOCK OPTIONS

On May 13, 1993, the company granted two stockholders (holders) an option to
purchase 9,590,400 and 2,397,600 shares of common stock. The option price was
$.0833 per share. The option could only be exercised by the holder for no less
than all of the shares. As of December 31, 1993, options to purchase 2,397,600
shares of common stock were outstanding.

On May 13, 1993 and August 31, 1994, options were exercised for 9,590,400 and
2,397,600 shares, respectively. Payment was executed by retiring stockholder
advances in the amount of $799,200 and $199,800, respectively.

In November 1994, the Company, pursuant to employment agreements, granted
options to purchase 1,002,400 shares of common stock at an exercise price of
$.625 per share. These options were issued to officers of the Company. Options
to purchase 212,800 shares of the common stock were immediately vested with the
balance of the options vesting over a two-year period commencing February, 1,
1995. These options will expire in November 2004. None of these options were
exercised during 1994, so 1,002,400 options to purchase shares of common stock
were outstanding as of December 31, 1994.

In September 1995, the Company adopted a stock option plan that reserved a total
of 2,400,000 shares of authorized, but unissued shares of common stock. Options
under the plan may be granted to employees and/or parties who render services to
the Company. The final date on which options can be granted is June 30, 1996.
All options expire on June 30, 2001 if not previously exercised.

During 1995, 525,200 options were granted to employees under the stock option
plan at an exercise price of $.625 per share. No options under the plan were
exercised during 1995.

In addition, during September 1995, 440,000 stock options were granted to
parties under various settlement agreements at an exercise price of $.625 per
share. These options under the settlement agreements expire in September 2000.
None of these options were exercised during the year ended December 31, 1995.

(58)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 11 - LICENSE FEE INCOME

In January 1995, the company entered into a license agreement with Digital
Sciences, Inc. to license the ED technology and services and received an initial
license fee paid in the form of 250,000 shares of Digital Sciences, Inc. common
stock. The shares received on February 27, 1995 had a trading price of $968,750
and a fair value of $629,688, reflecting a 35% discount from trading price, as
the shares were not yet registered (the "Digital Stock"). The company
recognized this stock receipt as income during 1995 as all the requirements of
the company under the agreement were completed during the year. In addition,
Digital Sciences, Inc. will pay a license fee based on a percentage of gross
revenue derived from the use of the ED technology and services. The company did
not receive any such license fees in 1995.

(59)

<PAGE>
VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 12 - LICENSE FEE EXPENSE

In 1994, as part of an agreement with NTN Communications, Inc. (NTN), the
company incurred and expensed a license fee of $250,000. Of this fee, $200,000
was paid in 1994, with the remainder due on December 31, 1996. The initial term
of the agreement expires December 13, 2001. Unless terminated, in accordance
with the terms of the agreement, the agreement will be extended for a period of
seven years. The company has a nonexclusive worldwide license to promote,
market and develop an online computer service (service), which will be provided
by NTN, for use with the company's product. The technology of the service
provides two-way interactive computerized games that are broadcast to multiple
locations, can be played by multiple participants at each location and allow the
retrieval and processing of data entered by the participants. The company is
required to pay usage royalties as defined in the agreement.

NOTE 13 - UNCERTAINTY - GOING CONCERN

Management is continuing its efforts to obtain additional funding from private
and venture capital sources and, with its merger with GTCI (Note 2), from public
sources so the company can meet its obligations and sustain future operations.
See Note 14 for additional information.

(60)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 14 - SUBSEQUENT EVENTS

AMIGA

In January 1996, the company finalized an agreement with Amiga Technologies GmbH
(Amiga), a German company, for a nonexclusive, nontransferable license to the
Amiga computer operating system technology. The initial term of the agreement
expires December 26, 1998. Unless terminated, in accordance with the terms of
the agreement, the agreement is to be renewable for subsequent three-year
periods at the licensee's option. In January 1996, the company paid an initial
royalty deposit of $450,000 to Amiga. The company is required to pay usage
royalties as defined in the agreement.

In April 1996, the company signed a letter of understanding with Amiga and its
parent, Escom AG, to acquire inventory and intellectual property, including
patents and the Amiga computer operating system referred to above. The
tentative acquisition price of the aforementioned assets was $40 million and was
subject to normal due diligence and the completion of the transaction. Escom
subsequently filed for bankruptcy in Germany.

On July 18, 1996, the company entered into a new agreement ("Amiga Agreement")
to acquire certain assets of Amiga (the "Amiga Assets"). The Amiga Assets would
be acquired by the company from the bankruptcy estate of Escom Beteiligungs GmbH
(a former manufacturer and distributor of IBM compatible computers throughout
Europe) (the "bankruptcy estate of Escom"). The purchase price for the Amiga
Assets would be $20.0 million less certain administrative costs associated with
releasing the inventory to the company, estimated to be approximately $1.3
million. The company intends to liquidate the inventory through distribution
agreements. The primary purpose for which the company is seeking to enter into
the agreement is to incorporate Amiga's patented technology as an integral
component of the ED device. The purchase price would be payable in three
installments, with the first installment being due 30 days after the company
posts a bank guarantee for such payment, which guarantee was to be secured
within 30 days of the Amiga Agreement. The first payment of $10.0 million was
due approximately 60 days from the date of the Amiga Agreement, or on or about
September 18, 1996, with additional payments of $5.0 million and $3.7 million to
occur 60 and 90 days, respectively, after posting such bank guarantee.

The Amiga Assets are to be acquired by a newly formed Delaware corporation
("Acquisition Corp.") which was formed expressly for the contemplated
transaction. The company intends to establish an operating entity in
Switzerland, which will enter into a series of sales representation agreements
with sales organizations located throughout the European community.

Prior to the company posting the bank guarantee for the purchase price, Amiga is
obligated to continue its ongoing operations, including the sale of existing
inventories. Any funds received

(61)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

by Amiga from sales between July 18, 1996 and the date the company posts the
bank guarantee will be deposited in a bank account which will be transferred to
the company as part of the purchase of the Amiga assets. As of October 1, 1996,
such sales totaled $645,814. Although the company currently is in negotiations
with certain potential investors in an attempt to finance this transaction, the
company has not obtained any commitments for financing. Pursuant to previous
negotiations with the bankruptcy estate of Escom, the company received an
extension from the earlier due date until October 14, 1996 to obtain the
necessary financing. Although the time period to obtain financing has passed,
the company currently is in active negotiations with the bankruptcy estate of
Escom to gain an additional extension of time to secure the necessary financing.
However, as of October 22, 1996, no extension had been obtained. There is no
assurance the company will be able to obtain a further extension or the
necessary financing to consummate the Amiga Agreement.

OTHER

In February 1996, the company raised $50,000 through the issuance of 20,000
shares of common stock. In addition, from March 1 through April 11, 1996, the
company raised $1,000,000 through the issuance of 500,000 shares of common stock
and $250,000 through the exercise of 400,000 options at a price of $.625 per
share which were convertible into 400,000 shares.

On February 5, 1996, the stockholders and board of directors approved an
increase in the number of authorized common shares from 25,000,000 to
50,000,000.

(62)

<PAGE>

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Notes to Financial Statements

Years Ended December 31, 1995, 1994 and 1993

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

NOTE 14 - SUBSEQUENT EVENTS (continued)

On March 22, 1996, the stockholders of Digital Sciences, Inc. (Notes 4 and 11)
approved the acquisition of Digital Sciences, Inc. by Resource Finance Group
Ltd. Digital Sciences, Inc. merged into DSI Acquisition Corp., a newly-formed,
wholly owned subsidiary of Resource Finance Group Ltd. On April 1, 1996,
Resource Finance Group Ltd. merged into Intelligent Decision Systems Inc., a
wholly owned subsidiary of Resource Finance Group Ltd. Each Digital Sciences,
Inc. common share was converted into one common share of Intelligent Decision
Systems Inc. As of April 11, 1996, Intelligent Decision Systems Inc.'s common
stock was traded on the OTC Bulletin Board at approximately $2.25 per share.
The company's per share carrying value for these shares is $1.14 as of December
31, 1995, reflecting a 35% discount from its trading value, as the shares were
not yet registered.

NOTE 15 - RELATED PARTY TRANSACTIONS

The Company made advances to stockholders of $127,532 and $57,908 during 1993
and 1995, respectively. These amounts, which were originally intended to be
recovered, were forgiven during the years in which they were advanced and
accounted for as compensation expense in 1993 and 1995.

NOTE 16 - RECLASSIFICATION

For comparability, the 1994 and 1993 financial statements reflect
reclassifications where appropriate to conform to the financial statement
presentation used in 1995.

(63)

<PAGE>

SCHEDULE B-1

VISCORP
(A DEVELOPMENT STAGE ENTERPRISE)

Consolidated Other General and Administrative Expenses

Years Ended December 31, 1995, 1994, and 1993 and
Period from May 1, 1990 (Inception) through December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Period from
May 1, 1990
(Inception)
through
December 31,
1995 1994 1993 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Salaries $ 224,391 $ 72,427 $ 127,532 $ 501,456
Payroll taxes 10,887 - - 14,225
Equipment rental - 3,338 - 722
Advertising - 722 38,214 46,545
69

Business plan 39,141 2,500 - 41,641
Accounting 59,811 46,920 14,050 136,256
Automobile - 14,159 12,829 37,773
Depreciation and amortization 8,161 3,235 19,993 53,392

Dues and subscriptions - 1,621 1,959 4,620
Delivery - 4,994 - 4,994
Office 25,812 2,489 2,182 34,912
Miscellaneous 26,820 12,152 10,471 49,845

Promotion 16,372 15,318 46,569 94,734
Repair and maintenance 1,344 131 1,312 4,875
Rent and utilities 8,610 15,969 17,653 67,231
Bank charges 486 479 1,385 2,350

Insurance 19,016 2,125 - 21,141
Telephone 58,840 34,372 26,487 137,321
Printing - 5,406 14,534 20,229
Bad debt - - - 11,509

Bad debts - Other 25,000 - - 25,000
Directors' fee 37,500 4,500 - 42,000
Outside services - 98,522 - 98,522
---------- ---------- ---------- ------------

Total (Exhibit B) $ 562,191 $ 341,448 $ 335,170 $ 1,451,293
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
</TABLE>

See independent auditor's report regarding supplemental information.

(64)

<PAGE>

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.

VISCORP

By: /s/ Jerome Greenberg
------------------------------
March 10, 1997 VisCorp, Chairman of the Board

(65)