ALLIN COMMUNICATIONS CORP, S-1/A, 1996-10-11

ALLIN COMMUNICATIONS CORP
S-1/A, 1996-10-11
BUSINESS SERVICES, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1996
REGISTRATION NO. 333-10447
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
ALLIN COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)

DELAWARE 7389 25-1795265
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
300 GREENTREE COMMONS
381 MANSFIELD AVENUE
PITTSBURGH, PENNSYLVANIA 15220
(412) 928-8800

(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------
RICHARD W. TALARICO
CHIEF EXECUTIVE OFFICER
ALLIN COMMUNICATIONS CORPORATION
300 GREENTREE COMMONS
381 MANSFIELD AVENUE
PITTSBURGH, PENNSYLVANIA 15220
(412) 928-8800

(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------
COPIES TO:
BRYAN D. ROSENBERGER, ESQ. PETER J. ROMEO, ESQ.
ECKERT SEAMANS CHERIN & MELLOTT HOGAN & HARTSON L.L.P.
42ND FLOOR, 600 GRANT STREET 555 13TH STREET, N.W.
PITTSBURGH, PA 15219 WASHINGTON, D.C. 20004
(412) 566-6000 (202) 637-5600

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

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

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

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

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- -------------------------------------------------------------------------------
<PAGE>

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

SUBJECT TO COMPLETION, DATED OCTOBER 11, 1996

2,000,000 SHARES

[LOGO OF ALLIN COMMUNICATIONS CORPORATION]

ALLIN COMMUNICATIONS CORPORATION

COMMON STOCK

All of the shares of Common Stock, par value $.01 per share ("Common Stock"),
offered hereby are being offered by Allin Communications Corporation (the
"Company"). Prior to this offering (the "Offering"), there has been no public
market for the Common Stock. The Common Stock has been approved for quotation
on the NASDAQ Stock Market's National Market under the symbol "ALLN." It is
currently estimated that the initial public offering price will be between $14
and $16 per share. See "Underwriting" for information relating to the factors
to be considered in determining the initial public offering price.
-----------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 10.
-----------

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

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

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities. See "Underwriting."

(2) Before deducting estimated expenses of $700,000 payable by the Company.

(3) The Company has granted to the Underwriters a 30-day over-allotment option
to purchase up to 300,000 additional shares of Common Stock on the same
terms and conditions as set forth above. If all such shares are purchased
by the Underwriters, the total Price to Public, Underwriting Discount and
Proceeds to the Company will be $ , $ and $ , respectively. See
"Underwriting."

The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters, and
subject to their right to withdraw, modify, correct and reject orders in whole
or in part. It is expected that delivery of the certificates representing the
shares of Common Stock will be made against payment therefor at the offices of
Friedman, Billings, Ramsey & Co., Inc., Arlington, Virginia, or in book entry
form through the book entry facilities of the Depository Trust Company, on or
about , 1996.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.

THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE>

[LOGO OF ALLIN COMMUNICATIONS]

ALLIN COMMUNICATIONS CORPORATION PROVIDES CUSTOMIZED INTERACTIVE
TELEVISION, DIGITAL IMAGING AND OTHER COMMUNICATIONS AND MEDIA SERVICES TO USERS
IN THE TRAVEL AND LEISURE, SPORTS MARKETING AND PROMOTION, COMMERCIAL
PHOTOGRAPHY AND OTHER INDUSTRIES.

SEAVISION/R/
- --------------------------------------------------------------------------------
WORLDWIDE INTERACTIVE TELEVISION SERVICES

SEAVISION IS A FULL SERVICE MEDIA COMPANY OFFERING A VARIETY OF SERVICES TO
CUSTOMERS IN THE TRAVEL AND LEISURE INDUSTRY THROUGH ITS PROPRIETARY INTERACTIVE
TELEVISION ("ITV") SYSTEM. CRUISE LINES, HOTELS AND RESORTS CAN USE SEAVISION'S
ITV SYSTEM TO GENERATE INCREMENTAL REVENUE, IMPROVE CUSTOMER SERVICE AND
INCREASE EMPLOYEE PRODUCTIVITY.

PHOTOWAVE/SM/
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DIGITAL PHOTOGRAPHIC NETWORK

PHOTOWAVE'S SERVICES WILL COMBINE DIGITAL IMAGING TECHNOLOGY, INCLUDING IMAGE
ARCHIVAL AND TRANSMISSION, WITH CREATIVE GRAPHIC ENHANCEMENT IN A TURNKEY
PACKAGE WHICH CAN BE MARKETED FOR COMMERCIAL USE.

SPORTSWAVE/SM/
- --------------------------------------------------------------------------------
INTERACTIVE SPORTS MARKETING EVENTS

SPORTSWAVE WILL COMBINE INTERACTIVE TECHNOLOGY, DIGITAL IMAGING AND TRADITIONAL
SPORTS MARKETING TO CREATE UNIQUE PROMOTIONAL OPPORTUNITIES FOR ADVERTISERS AND
CORPORATE SPONSORS OF SPORTING EVENTS.

<PAGE>

[PHOTO APPEARS HERE]

[LOGO OF SEAVISION]
This image presents features of
SeaVision's interactive
television (ITV) installations,
including its shipboard ITV
control center and ITV
screen and menu.

[PHOTO APPEARS HERE]

[LOGO OF PHOTOWAVE]
This image presents features of
PhotoWave's mobile event imaging
service, including digital
imaging equipment.

[PHOTO APPEARS HERE]

[LOGO OF SPORTSWAVE]
This image presents various
sporting events, facilities and
figures, a prototype of
SportsWave's wireless
interactive terminal and a
representation of the types
of equipment SportsWave
intends to use for its mobile
media centers at such events.
<PAGE>

[GRAPHICS]

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

2
<PAGE>

PROSPECTUS SUMMARY

The following summary information is qualified in its entirety by reference
to, and should be read in conjunction with, the more detailed information and
financial statements and notes thereto appearing elsewhere in this Prospectus.
Prospective investors should carefully consider all of the information in this
Prospectus. The Company was formed to act as a holding company for four
subsidiaries: SeaVision, Inc., PhotoWave, Inc., SportsWave, Inc. and Kent
Consulting Group, Inc. See "Background." Simultaneously with the closing of the
Offering, the Company will acquire the sports marketing business of
International Sports Marketing, Inc., a Pennsylvania corporation ("ISM"), in
exchange for cash and certain future contingent payments (the "ISM
Acquisition"), and will change the name of ISM to SportsWave, Inc.
Simultaneously with the closing of the Offering, the Company will also acquire
the software design and network solutions business of Kent Consulting Group,
Inc., a California corporation ("KCG"), in exchange for cash, shares of Common
Stock and certain future contingent payments (the "KCG Acquisition"). See
"Background--The Acquisitions." Unless the context otherwise requires, all
references herein to the "Company" mean Allin Communications Corporation, a
Delaware corporation, and its subsidiaries. Unless otherwise indicated, all
information in this Prospectus assumes that (i) the over-allotment option
granted to the Underwriters will not be exercised, (ii) the price to the public
in the Offering will be $15.00 per share, the mid-point of the range set forth
on the cover of this Prospectus, and (iii) prior to closing of the Offering, a
2,400:1 split of the Common Stock will occur.

THE COMPANY

Allin Communications Corporation (the "Company") provides customized
interactive television ("ITV"), digital imaging and other communications and
media services to users in the travel and leisure, sports marketing and
promotion and other industries. These services are provided principally through
the use of the Company's proprietary interactive communications platform which
was created to run on the Microsoft Windows NT operating system. The platform
includes a multimedia digital file server and Windows-based software
applications, and features high resolution and animated graphics, compressed
full motion video, superior quality audio and flexible input capacity. Unlike
many other ITV platforms, the Company's platform features rapid response and
real time interfacing with a variety of third party systems permitting the
immediate execution and confirmation of transactions. The platform, which
received an applications development award from Microsoft in 1995, can provide
its media and imaging services over a variety of network architectures,
including the Internet, telephone and cable television systems, and other
public and private communications networks. The Company maintains a constant
focus on creating ITV design features that emphasize ease of use and eye-
catching graphics.

THE INTERACTIVE TELEVISION SYSTEM

The Company's ITV system offers customers a variety of interactive services
through 18 separate system modules. Among the pay services that can be offered
are video-on-demand, music-on-demand, shopping, games of chance, event
ticketing and customized photographs using digital imaging technology. Free-to-
user services include informational messages, account review and room service.
While free services do not currently provide revenue, they enhance the
usefulness of the system, afford the Company a competitive advantage in
marketing its system, attract users to other services offered on the Company's
system and provide potential sources of additional revenue from sponsorship of
various services by advertisers and from transaction fees. The ITV system can
also serve as a response-based marketing vehicle that can target specific
audiences for potential advertisers and can make available to service providers
a variety of other services, including activity reports and market research.

The Company's ITV system permits a user to access the transactional and other
services offered on the system by using a handheld television remote control to
make selections from easy-to-use menus on a television

3
<PAGE>

screen that may be located in a user's cruise ship cabin, hotel room or other
individual station, or in a centrally located kiosk. Users can limit access to
various pay services by utilizing lock out codes and password procedures. The
system currently operates in six languages: English, Spanish, French, Italian,
German and Portuguese.

MARKETS AND APPLICATIONS

Revenue from the domestic ITV service and advertising market increased from
approximately $252 million in 1992 to $866 million in 1995. This revenue
resulted primarily from the delivery of a limited number of interactive
services, predominantly on-demand movies. The market for ITV services and
advertising is projected by a market research and consulting firm to increase
to $1 billion by 1997 and to $8 billion by 2001, driven by growth in the
delivery of multiple interactive services, including on-demand movies, full-
motion video-on-demand, games, educational products and transactional services.
The Company believes that it is one of the first to market a fully operational
ITV system which is capable of providing multiple interactive services. While
the Company's ITV service and advertising market share is currently
insubstantial (less than one percent), the Company believes that the
capabilities of its ITV system, the existing contracts for the installation and
operation of its ITV system and the proceeds to be realized from the Offering
position the Company to participate in the projected growth in the market for
ITV services and advertising.

The Company initially marketed its ITV system to the travel and leisure
industry, principally the international cruise ship industry, which the Company
believes provides a substantial market opportunity for its ITV system and
related services. Through its wholly owned subsidiary, SeaVision, Inc.
("SeaVision"), the Company has installed and operates its ITV system on three
cruise ships operated by Celebrity Cruises Inc. ("Celebrity"), Carnival Cruise
Lines ("Carnival") and Norwegian Cruise Lines ("NCL"), respectively. As of
September 30, 1996, SeaVision had entered into contracts to install and operate
its system on five additional Celebrity cruise ships, one additional NCL ship
and two ships operated by Royal Caribbean Cruise Line ("RCCL"), and Carnival
had exercised an option to have the Company's system installed on one
additional ship. Based on its historical and projected installation schedules,
the Company anticipates completion of six of these installations by December
31, 1996, which will result in the ITV system being operational on nine ships
with approximately 8,200 cabins. The Company's contracts with Carnival, NCL and
RCCL provide Carnival, NCL and RCCL with the option of having SeaVision install
and operate its ITV system on up to eleven, four and two additional cruise
ships, respectively, and the Company is currently pursuing negotiations with
various other cruise lines to install its system on up to 26 additional
vessels. Based on its historical and projected installation schedules, the
Company believes that if it obtains firm contracts for 13 additional
installations, either through the exercise of cruise line options or through
the acquisition of additional contracts, the Company would have its systems
installed and operational on 25 ships by December 31, 1997. There can be no
assurance, however, that any option will be exercised or that any additional
contracts will be acquired or, if additional firm contracts are secured, that
unforeseen delays in installation will not occur.

SeaVision's in-cabin ITV system provides cruise passengers with a variety of
services, including casino video gaming, on-demand pay-per-view movies,
shopping, shore excursion ticket purchasing and room service ordering. The
system also can be used by passengers to preview and purchase photographs taken
by the ship's photographers during their voyage, and to customize photos with
special graphic overlays, borders and backgrounds. SeaVision and Eastman Kodak
Company ("Kodak") have entered into a market trial agreement for the operation
of this service on three ships fitted with SeaVision's ITV system. As of August
1, 1996, SeaVision's ITV system had been utilized on over 366,000 occasions, or
an average of 5,000 sessions per week per ship, by passengers on board the
three ships currently equipped with the system, resulting in what the Company
believes represents a multiple service application of interactive television
larger than any in the United States. SeaVision's system can also be utilized
for advertising on behalf of retailers, corporate sponsors and other third
parties and for gathering data and disseminating information by cruise
operators.

4
<PAGE>

The Company is actively seeking to market its services in other industries
and niche markets in which its technology may afford a competitive advantage.
Through SeaVision, the Company has begun to offer different types of services
to the cruise industry and is currently providing shipboard systems integration
services aboard the Queen Elizabeth 2 ("QE2") operated by Cunard Line Limited
("Cunard") and is also pursuing other shipboard systems integration contracts.
SeaVision is also marketing to the hotel and resort industry an ITV system
offering guest services that include not only on-demand pay-per-view movies but
also other services not typically provided, including high-speed Internet
access through the hotel's television system. Through its wholly owned
subsidiary, PhotoWave, Inc. ("PhotoWave"), the Company intends to market a
turnkey package of digital imaging services to industries dependent on
conventional "wet" photography, including the real estate, insurance and
commercial photography industries. The Company and District Photo, Inc.
("District Photo"), a major mail order photo finisher, have agreed in principle
to certain cooperative arrangements with respect to the Company's digital
imaging technology. The Company's wholly owned subsidiary, SportsWave, Inc.
("SportsWave"), intends to use the platform to expand the existing sports
marketing capabilities of ISM, which has exclusive worldwide marketing rights
with the Major League Baseball Players Alumni Association ("MLBPAA") and
significant relationships with former athletes in other professional sports.
The Company also intends to continue to operate KCG's software design and
network solutions business.

STRATEGY

To achieve its goal of becoming a leader in the processing and distribution
of ITV and digital imaging services, the Company's strategy is (i) to expand
its presence in the travel and leisure industry by (a) completing the
installation of ITV systems on ships for which the Company has firm contracts,
(b) seeking additional commitments from cruise line operators for the
installation and operation of ITV systems, (c) adding new applications to its
platform to maintain its competitive position within the cruise industry, (d)
expanding its shipboard systems integration business and (e) extending the use
of its platform to other segments of the travel and leisure industry, including
hotels and resorts; (ii) to develop its digital imaging business by marketing,
through PhotoWave, digital imaging services to niche markets currently
dependent on conventional photography; (iii) to expand the sports marketing
business of ISM by marketing, through SportsWave, new applications for the
Company's platform directed at promoters of sporting events and corporate
sponsors and spectators at such events; (iv) to utilize KCG's technical and
creative expertise to further develop the Company's digital platform and to
provide third party software design and network solutions; (v) to engage from
time to time in acquisitions of businesses and the development of joint venture
relationships that offer opportunities to complement or expand the Company's
ITV and other capabilities and the marketing of such capabilities; and (vi) to
supply specialized software and creative program enhancements to mass market
providers of interactive communications and digital imaging services, such as
cable television and telephone companies.

BACKGROUND

The Company was formed in July 1996 to act as a holding company for
SeaVision, PhotoWave, SportsWave and KCG. The Company's principal offices are
located at 300 Greentree Commons, 381 Mansfield Avenue, Pittsburgh,
Pennsylvania 15220, and its telephone number is (412) 928-8800.

SEAVISION

SeaVision was formed in June 1994 to focus on the development of an
interactive digital platform and the installation and operation of interactive
television systems in the travel and leisure industry.

5
<PAGE>

Henry Posner, Jr. and Thomas D. Wright, who currently own more than ten
percent of the outstanding Common Stock, Richard W. Talarico, a director and
executive officer of the Company, and James C. Roddey, a director of the
Company, were among the founding stockholders of SeaVision and are stockholders
of the Company. They are affiliated with The Hawthorne Group, a private
investment and management company whose principals have had investments in
diversified media and communications businesses, including television and radio
broadcasting, cable, outdoor advertising, paging and video production.

Certain stockholders of SeaVision and an entity affiliated with such
stockholders contributed to SeaVision certain intellectual property rights
relating to the technology utilized by SeaVision. In addition, the founders of
SeaVision were reimbursed for expenses incurred by them in forming and
organizing SeaVision. See "Certain Transactions--Transactions Relating to the
Formation and Organization of SeaVision." In August 1996, SeaVision became a
subsidiary of the Company by merging into SeaVision Acquisition Corporation, a
newly formed subsidiary of the Company which changed its name to SeaVision,
Inc. See "Certain Transactions--Transactions Relating to the Formation and
Organization of the Company."

PHOTOWAVE

In August 1996, PhotoWave was formed as a subsidiary of the Company to
continue the development and marketing of the Company's digital imaging
business.

THE ACQUISITIONS

Simultaneously with, and conditioned upon, the closing of the Offering, the
Company will acquire the sports marketing business of ISM, which has been in
operation since 1989 and which will change its name to SportsWave, Inc.
following the acquisition, and the software design and network solutions
business of KCG, which, including a predecessor business, has been in operation
since 1983. ISM and SeaVision have been exploring and continue to explore
applications of SeaVision's ITV system and interactive platform for the sports
marketing and promotions industry and have cooperated in various sports
marketing ventures. Since 1994, KCG has assisted SeaVision with many aspects of
the development of its ITV system. The acquisitions of ISM and KCG by the
Company present opportunities for these companies to combine their resources,
talents and capabilities.

ISM Acquisition

The ISM Acquisition is being made pursuant to a stock purchase agreement (the
"ISM Stock Purchase Agreement") providing for the acquisition by the Company of
all of the issued and outstanding shares of capital stock of ISM. The ISM Stock
Purchase Agreement provides for the payment of up to $4.8 million by the
Company to the ISM stockholders, consisting of $2.4 million in cash at the time
of closing of the ISM Acquisition and up to $2.4 million in contingent payments
based on the operating income of ISM for the years 1997, 1998 and 1999,
calculated as set forth in the ISM Stock Purchase Agreement, and paid pursuant
to a formula more fully described under "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

At the closing of the ISM Acquisition, Henry Posner, Jr., Thomas D. Wright,
Richard W. Talarico and James C. Roddey, each a stockholder of ISM as well as a
stockholder, officer and/or director of the Company, will receive cash payments
in amounts of approximately $1,273,000, $791,000, $48,000 and $120,000,
respectively, and will be entitled to receive contingent payments up to the
same approximate amounts (not including interest payable on any promissory note
delivered in respect of the contingent payments). See "Certain Transactions,"
"Management" and "Principal Stockholders."

6
<PAGE>

KCG Acquisition

The KCG Acquisition is being made pursuant to an agreement and plan of merger
(the "KCG Merger Agreement") providing for the merger of KCG with and into a
wholly owned subsidiary of the Company. The KCG Merger Agreement provides for
consideration to Les Kent, the sole stockholder of KCG, of up to $8.0 million,
consisting of $2.0 million in cash at the time of closing of the KCG
Acquisition, $3.2 million in Common Stock valued at the initial public offering
price in the Offering and up to $2.8 million in contingent payments, the amount
of which would be based on the operating income of KCG for the years 1997, 1998
and 1999, calculated as set forth in the KCG Merger Agreement, and paid in the
manner more fully described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources." Additionally, certain restricted stock grants totaling $400,000,
which will not vest until the third anniversary of the KCG Acquisition, will be
made to various employees of KCG. The sole stockholder will have certain
registration rights with respect to the shares of Common Stock issued in the
merger. See "Certain Transactions--Registration Rights."

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered Hereby(1)............. 2,000,000 shares.
Common Stock Currently Outstanding......... 2,400,000 shares.
Common Stock to be Outstanding After
this Offering(1)(2)....................... 4,884,065 shares.
Use of Net Proceeds........................ To repay accrued interest on indebtedness, to acquire
ISM and KCG and for capital expenditures. See "Use
of Proceeds."
NASDAQ Stock Market National Market symbol. "ALLN."
</TABLE>
- --------
(1) Excludes 300,000 shares of Common Stock that may be issued pursuant to the
Underwriters' over-allotment option. See "Underwriting."

(2) Includes 213,333 shares to be issued as a portion of the consideration in
the KCG Acquisition, 26,666 shares to be issued as restricted stock under
the Company's 1996 Stock Plan (the "1996 Stock Plan") in connection with
the KCG Acquisition (the "Restricted Grant Shares") and 244,066 shares to
be issued in exchange for the extinguishment of certain loans by
stockholders (the "Stockholder Loans"), but excludes 203,385 shares
issuable on conversion of the Company's Series A Convertible Redeemable
Preferred Stock, par value $100 per share (the "Convertible Preferred
Stock"), and the remaining 239,334 shares issuable under the 1996 Stock
Plan. See "Background--The Acquisitions--KCG Acquisition," "Certain
Transactions--Stockholder Loans," "Certain Transactions--Sale of
Convertible Preferred Stock" and "Management--1996 Stock Plan."

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Such risks include the Company's limited operating history,
history of net losses, accumulated deficit and dependence on its proprietary
technology and the risks inherent in development of new products and markets.
See "Risk Factors" for a discussion of these and other risks attendant to an
investment in the Common Stock. Purchasers of shares of Common Stock in the
Offering will also experience immediate and substantial dilution. See
"Dilution."

7
<PAGE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

The historical financial data for each of the periods ended December 31, 1994
and 1995 and June 30, 1996 presented below have been derived from the audited
consolidated financial statements of the Company. The pro forma consolidated
financial data for each of the periods ended December 31, 1995 and June 30,
1996 have been derived from the unaudited pro forma condensed consolidated
financial statements. The summary financial data should be read in conjunction
with the Consolidated Financial Statements of the Company, Pro Forma Condensed
Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
included elsewhere in this Prospectus. The historical financial data for the
interim period ended June 30, 1995 are unaudited but, in the opinion of
management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the results of such period.

The pro forma consolidated financial data are provided for comparative
purposes only and are not necessarily indicative of future results or the
results that would be achieved if the transactions reflected therein had
occurred at the beginning of the period. The pro forma consolidated statement
of operations data and pro forma per share data give effect to (i) the
acquisitions of ISM and KCG, (ii) the issuance of the Convertible Preferred
Stock and (iii) the Offering and the application of the net proceeds therefrom,
as if each had occurred as of January 1, 1995. The pro forma consolidated
balance sheet data give effect to the transactions described above as if each
had occurred as of June 30, 1996.

For all periods presented, SeaVision, Inc. elected to be treated as an S
Corporation and, as a result, the taxable loss has been reflected on the
federal and state tax returns of the shareholders rather than the corporate
returns. The pro forma loss before nonrecurring charges and pro forma loss
before nonrecurring charges per share do not reflect any tax benefit, due to
the uncertainty of realization.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------- ------------------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------- AS ADJUSTED --------------- AS ADJUSTED
1994 1995 1995 (2) 1995 1996 1996 (3)
----- ------ ----------- ------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenue................ $ -- $ 44 $ 6,212 $ -- $ 163 $ 3,287
Operating loss......... (588) (1,799) (3,172) (767) (2,044) (2,772)
Interest (income) ex- 24 369 (33) 105 468 4
pense, net............
Loss before nonrecur- (612) (2,168) (3,139) (872) (2,512) (2,776)
ring charges..........
Net loss............... (612) (2,168) (872) (2,512)
Pro forma loss before
nonrecurring charges
per common share (1).. $(0.63) $(0.55)
========= ==========
Weighted average number
of common shares out-
standing (1).......... 4,985,758 5,087,450
========= ==========
</TABLE>

<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
---------------------------------
PRO FORMA
CONSOLIDATED PRO FORMA
FOR AS
HISTORICAL ACQUISITIONS ADJUSTED
---------- ------------ ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................ $(4,843) $(6,746) $18,847
Total assets............................... 4,147 11,393 36,986
Total liabilities.......................... 9,437 11,033 7,226
Convertible, redeemable preferred stock.... -- 2,450 2,450(4)
Stockholders' equity....................... (5,290) (2,090) 27,310(5)
</TABLE>
- --------
[footnotes appear on next page]

8
<PAGE>

(1) The weighted average number of shares of Common Stock used to calculate pro
forma loss before nonrecurring charges per common share includes the
assumed conversion of the Convertible Preferred Stock. The pro forma loss
before nonrecurring charges for the year ended December 31, 1995 used to
compute pro forma loss before nonrecurring charges per common share does
not include the charges related to the conversion of the Convertible
Preferred Stock of $551,000, accretion of $50,000 to stated value of the
Convertible Preferred Stock and the charge of $661,000 related to the
induced conversion of the Stockholder Loans. These charges are nonrecurring
and directly attributable to the Offering and, therefore, are not reflected
in the pro forma loss before nonrecurring charges available to common
stockholders.

(2) Includes (a) elimination of intercompany profit of $253,000 capitalized as
software development costs, (b) compensation expense of $134,000 related to
the issuance of the Restricted Grant Shares to certain employees of KCG,
(c) amortization of intangible assets of $1,764,000, (d) reduction of
interest charges on the Stockholder Loans of $369,000 and (e) reduction of
tax provision of $57,000.

(3) Includes (a) elimination of intercompany profit of $40,000 capitalized as
software development costs and $30,000 capitalized as equipment, (b)
compensation expense of $66,000 related to the issuance of the Restricted
Grant Shares to certain employees of KCG, (c) amortization of intangible
assets of $882,000, (d) reduction of interest charges on the Stockholder
Loans of $468,000 and (e) reduction of tax provision of $167,000.

(4) Conversion of the Convertible Preferred Stock at $12.29 per share will
result in a charge to accumulated deficit of $551,000 based upon an assumed
public offering price of $15.00 per share.

(5) Includes a charge of $661,000 related to the induced conversion of the
Stockholder Loans into 244,066 shares of Common Stock (based upon an
assumed public offering price of $15.00 per share).

9
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors in evaluating an investment in the Company. Additionally, this
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from the
results discussed in the forward-looking statements.

LIMITED OPERATING HISTORY

The Company was not organized until July 1996 and will not, until the
Offering is consummated, conduct any operations as a combined entity
consisting of the businesses of SeaVision, ISM and KCG. Furthermore, SeaVision
has been in operation only since 1994 and has concentrated on developing its
digital platform and ITV system and on securing contracts to install and
operate the ITV system on cruise ships. To date, SeaVision is operating its
ITV system in only three installations, and as a result, revenue generated by
the ITV system has not been significant. See "Selected Consolidated Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Although SeaVision, ISM and KCG have had prior
relationships, and SeaVision and ISM have certain common owners, there can be
no assurance that the Company will be able to integrate the businesses
successfully. Because SeaVision has only a limited operating history and the
Company has no operating history as a combined entity, there can be no
assurance that the Company will succeed in implementing its strategy for
development and growth or that it will obtain financial returns sufficient to
justify its investment in the markets in which it participates. See
"Business--Operating and Growth Strategy."

RECENT NET LOSSES AND ACCUMULATED DEFICIT

On a pro forma basis, the Company has sustained substantial net losses
during the year ended December 31, 1995 and during the six months ended June
30, 1996 and, as of June 30, 1996, had an accumulated deficit of $5.0 million.
SeaVision has recognized net losses since inception in 1994 primarily because
of the limited revenue generated during its start-up phase, which have also
impacted the pro forma net losses noted above. During the start-up phase, the
Company has researched, developed and installed the only ITV system presently
in use in the cruise industry, and has incurred substantial costs in doing so.
The Company anticipates that it will continue to incur losses at least through
1996, and there can be no assurance that it will be able to achieve revenue
growth or profitability on an ongoing basis in the future. See "Selected
Financial Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

RISKS INHERENT IN DEVELOPMENT OF NEW PRODUCTS AND MARKETS

The Company's strategy includes developing new applications for its
interactive entertainment and information technologies and entering new
markets. This strategy presents risks inherent in assessing the value of
development opportunities, in committing capital in unproven markets and in
integrating and managing new technologies and applications. Within these new
markets, the Company will encounter competition from a variety of sources. It
is also possible that the Company will experience unexpected delays or
setbacks in developing new applications of its technology. There can be no
assurance that the Company's new products and applications will generate
additional revenue for the Company or that the Company will successfully
penetrate these additional markets. See "Business--Operating and Growth
Strategy."

DEPENDENCE ON PROPRIETARY TECHNOLOGY; ABSENCE OF PATENTS

The Company's success is highly dependent upon its proprietary technology.
The Company does not have patents on any of its technology and relies on a
combination of copyright and trade secret laws and contractual restrictions to
protect its technology. It is the Company's policy to require employees,
consultants and clients to execute nondisclosure agreements upon commencement
of a relationship with the Company, and to limit access

10
<PAGE>

to and distribution of its software, documentation and other proprietary
information. Nonetheless, it may be possible for third parties to
misappropriate the Company's technology and proprietary information or
independently to develop similar or superior technology. There can be no
assurance that the legal protections afforded to the Company and the measures
taken by the Company will be adequate to protect its technology. Any
misappropriation of the Company's technology or proprietary information could
have a material adverse effect on the Company's business, financial condition
and results of operations.

There can be no assurance that other parties will not assert technology
infringement claims against the Company, or that, if asserted, such claims
will not prevail. In such event, the Company may be required to engage in
protracted and costly litigation, regardless of the merits of such claims;
discontinue the use of certain software codes or processes; develop non-
infringing technology; or enter into license arrangements with respect to the
disputed intellectual property. There can be no assurance that the Company
would be able to develop alternative technology or that any necessary licenses
would be available or that, if available, such licenses could be obtained on
commercially reasonable terms. Responding to and defending against any of
these claims could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Technology and
Licensing."

RISK OF TECHNOLOGICAL OBSOLESCENCE

The ability of the Company to maintain a standard of technological
competitiveness is a significant factor in the Company's strategy to maintain
and expand its customer base, enter new markets and generate revenue. The
Company's continued success will depend in part upon its ability to identify
promising emerging technologies and to develop, refine and introduce high
quality services in a timely manner and on competitive terms. There can be no
assurance that future technological advances by direct competitors or other
providers will not result in improved equipment or software systems that could
adversely affect the Company's business, financial condition and results of
operations. See "Business--Competition."

NEED FOR MANAGEMENT OF GROWTH

The Company's growth strategy will require its management to conduct
operations and respond to changes in technology and the market, while
substantially expanding operations and personnel. If the Company's management
is unable to manage growth effectively, its business, financial condition and
results of operations will be materially adversely affected. See "Business--
Operating and Growth Strategy."

DEPENDENCE ON KEY PERSONNEL

The Company's success is dependent on a number of key management, research
and operational personnel for the management of operations, development of new
products and timely installation of its systems. The loss of one or more of
these individuals could have an adverse effect on the Company's business and
results of operations. The Company has in place key person life insurance
policies on certain of its key employees. The Company depends on its continued
ability to attract and retain highly skilled and qualified personnel and to
engage nonemployee consultants. There can be no assurance that the Company
will be successful in attracting and retaining such personnel or contracting
with such nonemployee consultants. See "Business--Technology and Licensing"
and "Management."

DEPENDENCE ON CRUISE INDUSTRY AND CONTINUED OPERATION OF CRUISE LINE CUSTOMERS

A substantial portion of the Company's revenue is expected to be generated
in the near term from its cruise industry operations, thereby making the
Company's business dependent upon the cruise industry in general and the
continued operations of the Company's current cruise line customers. A
significant reduction in the operations of any of these customers could,
depending on the extent of the reduction and the ships involved, have a
material adverse effect on the Company. See "Business--Travel and Leisure
Industry--International Cruise Industry."

11
<PAGE>

CRUISE LINES' RIGHTS TO TERMINATE OR BUY OUT CONTRACTS WITH THE COMPANY

Under certain circumstances, following termination of the Company's ITV
system contract with three of its cruise lines customers, the cruise line will
have the right to purchase the hardware installed by the Company and to obtain
a nontransferable license to use the software installed by the Company.
Additionally, one cruise line will have the right to purchase such hardware
and license such software from the Company, for a one-year period following
such termination, to enable it to install the Company's system on other ships
for an agreed upon aggregate purchase and license price. Any such purchase
would eliminate the Company's ability to share in revenue produced by the
purchased system. The loss or elimination of the Company's right to share in
revenue produced by its systems resulting from any of the foregoing events
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Travel and Leisure
Industry--International Cruise Industry--Customer Contracts."

DEPENDENCE ON MAJOR LEAGUE SPORTS

The Company's sports marketing and promotion business conducted through ISM
is dependent on the success and continued popularity of major league sports.
Factors which adversely affect major league sports could also adversely affect
the Company's business and results of operations. For example, ISM's business
was adversely impacted by the players' strike and owners' lockout during the
1994 and 1995 Major League Baseball seasons. There can be no assurance that
there will be no strike or other event with a similar adverse impact in the
future involving one or more of Major League Baseball, the National Football
League, the National Basketball Association or the National Hockey League. See
"Business--Sports Marketing Industry."

FLUCTUATIONS IN OPERATING RESULTS

The Company expects to experience significant fluctuations in its future
quarterly operating results that may be caused by many factors, including the
seasonal aspects of ISM's business. Accordingly, quarterly revenues and
operating results will be difficult to forecast, and the Company believes that
period-to-period comparisons of its operating results will not necessarily be
meaningful and should not be relied upon as an indication of future
performance. See "Management's Discussions and Analysis of Financial Condition
and Results of Operations."

POTENTIAL IMPACT OF PRIVACY CONCERNS

One of the features of the Company's ITV system is the ability to develop
and maintain information regarding usage of the system by cruise ship
passengers and other parties. The perception by the users of substantial
security and privacy concerns, whether or not valid, may cause users to resist
providing the personal information that might be useful for demographic
purposes and may inhibit market acceptance and usage of the Company's video
systems. In the event such concerns are not adequately addressed, the
Company's business, financial condition and results of operations could be
materially adversely affected. See "Business--Travel and Leisure Industry."

COMPETITIVE MARKET CONDITIONS

The market for interactive communications and digital imaging is new,
rapidly evolving and highly competitive. Many of the Company's current and
potential competitors have longer operating histories and significantly
greater financial, technical, marketing and other resources than the Company
and therefore may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. There

12
<PAGE>

can be no assurance that the Company will be able to compete effectively with
current or future competitors or that the competitive pressures faced by the
Company will not have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business--Operating and
Growth Strategy" and "-- Competition."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Certificate of Incorporation and Bylaws contain a number of
provisions that could inhibit a change in control of the Company by means of a
tender offer, merger, proxy contest or otherwise, including advance notice
provisions and provisions that enable the Board of Directors to issue "blank
check" preferred stock. These provisions and the future issuance of shares of
such preferred stock could adversely impact prevailing market prices for the
Common Stock and could result in the Common Stock holders having to forego a
transaction in which they may have received a substantial premium for their
shares over then-current market prices. See "Description of Capital Stock--
Certain Anti-Takeover Effects of Certificate and Bylaws Provisions."

LIMITATIONS ON DIRECTOR LIABILITY; INDEMNIFICATION

As permitted by Delaware law, the Certificate of Incorporation of the
Company contains provisions eliminating or limiting director liability to the
Company and its stockholders for monetary damages arising from acts or
omissions in the director's capacity as a director, subject to certain
exceptions provided by law. As a result of these provisions, the directors
generally will not be liable to the stockholders for negligence or even gross
negligence in the performance of their duties as directors. The Certificate of
Incorporation and By-Laws of the Company also provide that all directors and
officers and certain other persons shall be indemnified to the fullest extent
permitted by law in connection with each such person's service to the Company,
with certain limited exceptions. See "Description of Capital Stock--
Limitations on Liability and Indemnification of Directors and Officers."

ABSENCE OF TRADING MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained. The initial offering price for the Common Stock offered hereby will
be determined by negotiation between the Company and the representative of the
Underwriters and may not be indicative of the market price for the Common
Stock after the Offering. After the Offering, the market price of the Common
Stock could be subject to significant fluctuations in response to variations
in results of operations, changes in earnings estimates by securities
analysts, general economic and market conditions and other factors. See
"Underwriting."

ABSENCE OF DIVIDENDS

The Company has not paid any dividends to its stockholders since its
inception and does not anticipate paying any dividends on the Common Stock or
the Convertible Preferred Stock in the foreseeable future. The Company intends
to reinvest earnings, if any, in the development and expansion of its
business. See "Dividend Policy."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of the shares of Common Stock in the Offering will experience
immediate and substantial dilution in net tangible book value per share of
Common Stock from the initial public offering price. See "Dilution."

13
<PAGE>

POSSIBLE ADVERSE MARKET IMPACT OF FUTURE SALES OF COMMON STOCK

Sales of substantial amounts of Common Stock into the public market
following the Offering, or the perception that such sales might occur, could
adversely impact prevailing market prices for the Common Stock and the ability
of the Company to raise equity capital. A substantial number of shares of
Common Stock outstanding or issuable in the future pursuant to existing
Company commitments could become eligible for future sale in the public market
at varying times following the Offering. Included among these shares are
239,999 shares issuable upon the closing of the KCG Acquisition (including the
26,666 Restricted Grant Shares), 244,066 shares issuable upon the closing of
the Offering in exchange for the extinguishment of the Stockholder Loans, the
remaining 239,334 shares issuable under the 1996 Stock Plan, and 203,385
shares issuable upon conversion of the Convertible Preferred Stock. Holders of
these shares of Common Stock which will be outstanding upon closing of the
Offering (other than the Restricted Grant Shares) or issued upon conversion of
the Convertible Preferred Stock have agreed or will agree not to sell their
shares for twelve months following the closing of the Offering. See "Shares
Eligible for Future Sale."

GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES

The Company is subject, both directly or indirectly, to various laws and
governmental regulations relating to its business. As a result of rapid
technology growth and other related factors, laws and regulations may be
adopted which significantly impact the Company's business. See "Business--
Government Regulation."

14
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $27.2 million ($31.4 million if the Underwriters' over-allotment
option is exercised in full), after deducting underwriting discounts and
commissions and estimated offering expenses. The Company intends to use the
net proceeds of the Offering as follows: (i) $2.4 million to pay the cash
portion of the consideration due at the closing of the ISM Acquisition; (ii)
$2.0 million to pay the cash portion of the consideration due at the closing
of the KCG Acquisition, (iii) approximately $1.0 million to pay the accrued
interest on the Stockholder Loans; and (iv) the remainder (approximately $21.8
million if the Underwriters' overallotment option is not exercised) for
planned capital expenditures through 1997. Pending such uses, the Company
intends to invest the net proceeds in short-term, investment grade, interest-
bearing securities. Planned capital expenditures through 1997 include
approximately $13.8 million for equipment to be used for installations by
SeaVision of ITV systems on cruise ships, approximately $3.7 million for
equipment to be used for installations by SeaVision of ITV systems in hotels,
approximately $1.3 million for equipment to be used for continued development
of PhotoWave's data processing and image archival center and approximately
$3.0 million for equipment to be used by SportsWave for construction of mobile
media centers and development of interactive services for sports arenas and
stadiums.

The Stockholder Loans were made during the years 1994, 1995 and 1996 by
Henry Posner, Jr., Thomas D. Wright, Terence M. Graunke, James C. Roddey and
Richard W. Talarico (the "Funding Stockholders"), stockholders of SeaVision,
in the aggregate principal amount of $6.6 million to permit development and
operation of SeaVision's business. All of the Funding Stockholders are
stockholders, officers and/or directors of the Company. Currently, the
principal amount outstanding is $3.0 million. The entire principal amount
outstanding at the closing of the Offering will be extinguished at the closing
in exchange for 244,066 shares of Common Stock. The accrued interest of
approximately $1.0 million will be paid in cash at the closing of the
Offering. See "Certain Transactions."

DIVIDEND POLICY

The Company has no dividend history and presently intends to retain earnings
to finance the expansion of its business. Payment of future dividends, if any,
on the Common Stock will be at the discretion of the Company's Board of
Directors, after taking into account various factors, including the Company's
earnings, capital requirements, financial position and other relevant business
conditions, and there can be no assurance that dividends will be paid.
Dividends on the Convertible Preferred Stock will be paid when and as declared
by the Company's Board of Directors. See "Description of Capital Stock--Series
A Convertible Redeemable Preferred Stock." The Company currently intends to
defer payment of dividends on the Convertible Preferred Stock.

15
<PAGE>

DILUTION

The pro forma deficit in net tangible book value of the Company at June 30,
1996 was $(6,873,000) or $(2.38) per share of Common Stock, based upon
2,884,065 shares of Common Stock outstanding. Pro forma net tangible book
value per share represents the amount of total tangible assets less total
liabilities of the Company, divided by the number of shares of Common Stock
outstanding. After giving effect to the sale of the 2,000,000 shares of Common
Stock offered by the Company hereby (at an assumed public offering price of
$15.00 per share and after deduction of estimated underwriting discounts and
commissions and offering expenses), the pro forma net tangible book value of
the Company at June 30, 1996 would have been $19,527,000 or $4.00 per share.
This represents an immediate increase in such net tangible book value of $6.38
per share to existing stockholders and an immediate dilution of $11.00 per
share to new investors purchasing the shares in the Offering. Net tangible
book value dilution per share represents the difference between the amount per
share paid by new investors purchasing shares of Common Stock in the Offering
and the pro forma net tangible book value per share of Common Stock
immediately after completion of the Offering. The following table illustrates
this per share dilution:

<TABLE>

<S> <C> <C>
Assumed public offering price................................ $15.00
Net tangible book value before the Offering(1)(2).......... $(2.38)
Increase attributable to new investors..................... 6.38
Pro forma net tangible book value after the Offering......... 4.00
Dilution to new investors.................................... $11.00
------
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1996,
the differences between existing stockholders and new investors with respect
to the number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company, and the average consideration paid per
share (based upon an assumed initial public offering price of $15.00 per share
and before deduction of estimated underwriting discounts and commissions and
offering expenses payable by the Company):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------- ------------------- AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE
--------- ------- ----------- ------- -------
<S> <C> <C> <C> <C> <C>
Current Stockholders(1)(2)........ 2,884,065 59.1 $ 6,227,000 17.2 $ 2.16
New Investors..................... 2,000,000 40.9 30,000,000 82.8 15.00
--------- ----- ----------- -----
Total........................... 4,884,065 100.0 $36,227,000 100.0
========= ===== =========== =====
</TABLE>
- --------
(1) Includes (i) the effects of the 2,400 to 1 stock split, (ii) 244,066
shares issued in connection with the conversion of the Stockholder Loans,
(iii) 213,333 shares issued as a portion of the consideration in the KCG
Acquisition and (iv) 26,666 Restricted Grant Shares granted to certain
employees of KCG under the 1996 Stock Plan.

(2) Does not include (i) 25,000 shares of Convertible Preferred Stock, which
are convertible into 203,385 shares of Common Stock six months after the
closing of the Offering, and (ii) the remaining 239,334 shares of Common
Stock reserved for awards under the 1996 Stock Plan.

16
<PAGE>

CAPITALIZATION

The following table sets forth, as of June 30, 1996, (a) the Company's
actual capitalization, (b) the pro forma capitalization giving effect to the
issuance of the Convertible Preferred Stock and the borrowings under the
Company's senior revolving credit facility and (c) the pro forma
capitalization adjusted to give effect to (i) the Offering, assuming an
initial public offering price of $15.00 per share, and (ii) the application by
the Company of the estimated net proceeds from the Offering to the Company as
described under "Use of Proceeds." This table should be read in conjunction
with the Consolidated Financial Statements of the Company and the Notes
thereto and other information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
(IN THOUSANDS)
-------------------
PRO FORMA
ACTUAL AS ADJUSTED
------ -----------
<S> <C> <C>
Cash and cash equivalents................................ $ 572 $24,470
====== =======
Senior revolving credit facility......................... 4,850 5,000
Stockholder notes payable................................ 3,000 0
Preferred stock, par value $.01 per share, 100,000 shares
authorized, 25,000 shares of Series A Convertible
Redeemable Preferred Stock issued and outstanding....... 0 2,450
Stockholders' equity:
Common Stock, par value $.01 per share, 20,000,000 shares
authorized, 2,400,000 shares issued and outstanding
(4,884,065 shares as adjusted) (1)...................... 24 49
Additional paid in capital............................... 3 33,639
Deferred compensation (3)................................ -- (400)
Retained deficit......................................... (5,317) (5,978)(2)
------ -------
(5,290) 27,310
------ -------
Total Capitalization..................................... $2,560 $34,760
====== =======
</TABLE>
- --------
(1) Includes the 26,666 Restricted Grant Shares granted to certain employees
of KCG under the 1996 Stock Plan, but does not include the remaining
239,334 shares of Common Stock reserved for issuance under the 1996 Stock
Plan, under which options to purchase a total of 198,000 shares at the
initial public offering price will be granted upon the effective date of
the Offering. See "Management--1996 Stock Plan."

(2) Includes charges of $661,000 to be incurred upon the conversion of the
Stockholder Loans into 244,066 shares of Common Stock (based upon an
assumed public offering price of $15.00 per share).

(3) Represents future compensation expense related to the issuance of the
Restricted Grant Shares to certain employees of KCG to be incurred ratably
over a 36-month period.

17
<PAGE>

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)

The historical financial data for each of the periods ended December 31,
1994 and 1995 and June 30, 1996 presented below have been derived from the
audited consolidated financial statements of the Company. The pro forma
consolidated financial data for each of the periods ended December 31, 1995
and June 30, 1996 have been derived from the unaudited pro forma condensed
consolidated financial statements. The selected financial data should be read
in conjunction with the Consolidated Financial Statements of the Company, Pro
Forma Condensed Consolidated Financial Statements and Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere in this Prospectus. The historical financial
data for the interim period ended June 30, 1995 are unaudited but, in the
opinion of management, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the results of
such period.

The pro forma consolidated financial data are provided for comparative
purposes only and are not necessarily indicative of future results or the
results that would be achieved if the transactions reflected therein had
occurred at the beginning of the period. The pro forma consolidated statement
of operations data and pro forma per share data give effect to (i) the
acquisitions of ISM and KCG, (ii) the issuance of the Convertible Preferred
Stock and (iii) the Offering and the application of the net proceeds
therefrom, as if each had occurred as of January 1, 1995. The pro forma
consolidated balance sheet data give effect to the transactions described
above as if each had occurred as of June 30, 1996.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------- ---------------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
-------------- AS ADJUSTED -------------- AS ADJUSTED
1994 1995 1995 (2) 1995 1996 1996 (3)
----- ------- ----------- ----- ------- -----------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C>
Revenue................. $ -- $ 44 $ 6,212 $ -- $ 163 $ 3,287
Cost of sales........... -- 10 3,408 -- 40 1,828
----- ------- --------- ----- ------- ---------
Gross profit............ -- 34 2,804 -- 123 1,459
Depreciation & amortiza- 6 288 2,130 70 350 1,298
tion...................
Selling, general & ad- 582 1,545 3,846 697 1,817 2,933
ministrative...........
----- ------- --------- ----- ------- ---------
Operating loss.......... (588) (1,799) (3,172) (767) (2,044) (2,772)
Interest (income) ex- 24 369 (33) 105 468 4
pense, net.............
----- ------- --------- ----- ------- ---------
Loss before nonrecurring (612) (2,168) $ (3,139) (872) (2,512) $ (2,776)
charges................
========= =========
Nonrecurring charges.... -- -- -- --
----- ------- ----- -------
Net loss................ $(612) $(2,168) $(872) $(2,512)
===== ======= ===== =======
Pro forma loss before
nonrecurring charges
per common share (1)... $ (0.63) $ (0.55)
========= =========
Weighted average number
of common shares out-
standing (1)........... 4,985,758 5,087,450
========= =========
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30, 1996
-------------------- -----------------------------------
HISTORICAL PRO FORMA
-------------------- CONSOLIDATED
FOR PRO FORMA
1994 1995 HISTORICAL ACQUISITIONS AS ADJUSTED
--------- ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital....... $ 57 $(1,493) $(4,843) $(6,746) $18,847
Total assets.......... 146 2,353 4,147 11,393 36,986
Total liabilities..... 756 5,130 9,437 11,033 7,226
Convertible,
redeemable preferred
stock................ -- -- -- 2,450 2,450(4)
Stockholders' equity.. (610) (2,777) (5,290) (2,090) 27,310(5)
</TABLE>
- --------

(1) The weighted average number of shares of Common Stock used to calculate
pro forma loss before nonrecurring charges per common share includes the
assumed conversion of the Convertible Preferred Stock. The pro forma loss
before nonrecurring charges for the year ended December 31, 1995 used to
compute pro forma loss before nonrecurring charges per common share does
not include the charges related to the conversion of the Convertible
Preferred Stock of $551,000, accretion of $50,000 to stated value of the
Convertible Preferred Stock and the charge of $661,000 related to the
induced conversion of the Stockholder Loans. These charges are
nonrecurring and directly attributable to the Offering and, therefore, are
not reflected in the pro forma net loss available to common stockholders.

(2) Includes (a) elimination of intercompany profit of $253,000 capitalized as
software development costs, (b) compensation expense of $134,000 related
to the issuance of the Restricted Grant Shares to certain employees of
KCG, (c) amortization of intangible assets of $1,764,000, (d) reduction of
interest charges on the Stockholder Loans of $369,000 and (e) reduction of
tax provision of $57,000.

(4) Conversion of the Convertible Preferred Stock at $12.29 per share will
result in a charge to accumulated deficit of $551,000 based upon an
assumed public offering price of $15.00 per share.

(5) Includes a charge of $661,000 related to the induced conversion of the
Stockholder Loans into 244,066 shares of Common Stock (based upon an
assumed public offering price of $15.00 per share).

19
<PAGE>

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

The following discussion should be read in conjunction with the information
contained in Selected Financial Data and the Consolidated Financial Statements
of the Company and the Financial Statements of ISM and KCG and the other
financial information appearing elsewhere in this Prospectus.

OVERVIEW

The Company was formed in July 1996 to act as a holding company for four
subsidiaries: SeaVision, Inc., PhotoWave, Inc., SportsWave, Inc. and Kent
Consulting Group, Inc. Each of these subsidiaries will focus on a particular
aspect of the Company's business plan.

SeaVision was formed in June 1994 and focuses on the travel and leisure
industry. Its operations to date have involved the development of an
interactive digital platform and the installation and operation of ITV systems
in the international cruise industry. In addition, SeaVision is providing
shipboard systems integration services under an agreement to install and
operate a new television distribution and broadcast system aboard the QE2. It
seeks to expand its business in the international cruise industry and to
extend the use of its platform to other segments of the travel and leisure
industry, including hotels and resorts. See "Business--Travel and Leisure
Industry." SeaVision became a subsidiary of the Company in August 1996 through
a merger. See "Certain Transactions--Transactions Relating to Formation and
Organization of the Company."

PhotoWave was formed as a subsidiary of the Company in August 1996 to
continue the development and marketing of the Company's digital imaging
business. See "Business--Digital Imaging Industry."

Concurrently with the closing of this Offering, the Company will acquire all
of the capital stock of ISM, and the name of ISM will be changed to
SportsWave, Inc. The Company, through SportsWave, will continue to operate
ISM's traditional sports marketing business and intends to expand that
business by marketing ITV systems to sports arenas and stadiums and applying
interactive technology and digital imaging to corporate hospitality and
promotions. See "Business--Sports Marketing Industry."

Concurrently with the closing of this Offering, through a merger, KCG will
become a wholly owned subsidiary of the Company. KCG, which has assisted the
Company in the development of the Company's digital platform, will support the
further development of the platform and will also continue to provide third
party clients with software design and network solutions services. See
"Business--Software Design and Network Solutions."

The Company's historical results of operations (see "--Historical Results of
Operations") reflect the operations of SeaVision since inception. The pro
forma results of operations of the Company as a consolidated entity consisting
of SeaVision, ISM and KCG for the year ended December 31, 1995 and the six
months ended June 30, 1996 are discussed under "--Pro Forma Results of
Operations."

REVENUE

SeaVision

SeaVision was organized in June 1994, and until August 1995 its activities
were limited to start-up operations, including developing its ITV system,
recruiting key operating personnel and procuring contracts for the
installation of the system. As a result, revenue generated by SeaVision to
date has been limited.

The Company currently operates three ITV systems that SeaVision installed on
cruise ships in August 1995, December 1995 and July 1996, respectively.
SeaVision currently generates revenue primarily through the use by cruise ship
passengers of various "passenger pay" modules of the Company's ITV system.
SeaVision's revenue

20
<PAGE>

from the video wagering module is based upon the aggregate amount of net
"drop" or loss by passengers playing video games of chance on SeaVision's
system. SeaVision's revenue from video-on-demand consists of its share of the
prices paid by passengers to view movies, and it is anticipated that revenue
from music-on-demand and video games would be derived in a similar fashion.
With respect to SeaVision's shopping module, SeaVision acts as either the
retailer earning a markup on the wholesale cost of the goods sold through its
ITV system or a distributor earning a portion of the retail price of the goods
sold through its ITV system. SeaVision also anticipates generating revenue
from the sale of advertising to retailers, corporate sponsors and other third
parties. The Company is currently pursuing negotiations with various
advertisers, but there can be no assurance that any contract will result from
such negotiations.

SeaVision has installed the PhotoPlace(SM) digital imaging module of its
system on one cruise ship. Under that contract, SeaVision is to receive the
excess of the amount received by the cruise operator from the sales to
passengers through the PhotoPlace(SM) module over the operator's historical net
revenue from traditional shipboard photography sales. In the digital imaging
area, SeaVision is prepared to work with the cruise line photography
concessionaire, act as a supplier to a cruise line if it operates this
function in-house or provide turnkey photographic concessionaire services to
its cruise line clients.

In addition, the Company has recently commenced providing shipboard systems
integration services under an agreement calling for contract payments to
SeaVision of $1.24 million to install and operate a new television
distribution and broadcast system aboard Cunard's QE2. The Company anticipates
generating additional revenue from systems integration services, including the
installation of shipboard media centers. The Company is currently pursuing
negotiations with other cruise lines to act as a systems integrator, but there
can be no assurance that any contract will result from such negotiations.

SeaVision also anticipates generating revenue from the use of its system in
the hotel and resort industry. The Company is currently pursuing negotiations
with a resort operator to install its system, but there can be no assurance
that any contract will result from such negotiations. The Company presently
contemplates that contracts it might enter into with hotels and resorts would,
like the Company's current cruise line contracts, provide for an arrangement
whereby the Company shares with the operator a portion of the revenue from the
sale to users of various pay services, as well as a portion of the revenue
from the sale of advertising. The Company is also willing to offer other
arrangements to cruise operators and hotels and resorts, such as the sale of
the system coupled with an operation and maintenance contract. See "Business--
Travel and Leisure Industry."

PhotoWave

PhotoWave has had no significant operations to date, although the Company
has developed digital imaging applications for use in the international cruise
industry and is establishing digital imaging pilot sites which will serve to
test the market for the services to be offered by PhotoWave to various
industry segments. The Company anticipates that PhotoWave will generate
revenue from user fees and transaction fees charged to businesses utilizing
the Company's package of digital imaging services. See "Business--Digital
Imaging Industry."

SportsWave

ISM currently generates revenue from payments under its contracts for the
coordination of various events, including sports-themed premiums, promotions,
sales incentives, games, clinics and personal appearances by athletes. The
Company anticipates that SportsWave will continue to generate revenue from
ISM's traditional sports marketing business.

SportsWave also anticipates generating revenue from the installation and
operation in sports arenas and stadiums of ITV systems using the Company's
digital platform, and the Company has recently commenced marketing its system
to these potential customers. In addition, SportsWave anticipates generating
revenue from fees charged to corporate sponsors in connection with the mobile
media center which the Company and Wolf Coach, Inc., ("Wolf Coach") a
developer of truck or trailer mounted satellite communications and production
centers, are currently developing. There can be no assurance, however, that
such marketing and development efforts will result in the execution of
contracts with customers or the generation of revenue for the Company. See
"Business--Sports Marketing Industry."

21
<PAGE>

KCG

KCG currently generates revenue from fees under its contracts for software
design and network solutions services. The Company anticipates that KCG will
continue to generate revenue from providing such services to third party
clients in addition to providing technical and creative support in the further
development of the Company's digital platform. See "Business--Software Design
and Network Solutions."

EXPENSES

The expenses associated directly with the revenue described above include
(i) the cost of the goods or services provided through the Company's ITV
system; (ii) the cost of administering and storing digital images at the
Company's site on the Internet in connection with PhotoWave's package of
digital imaging services; (iii) the cost of sports marketing events
coordinated by SportsWave; (iv) staffing and other direct costs related to
mobile media centers; (v) direct labor, costs of materials and travel
associated with shipboard system integration contracts; and (vi) compensation
costs directly related to KCG's revenue generation.

Direct costs associated with the Company's ITV system include a percentage
of the revenue generated from the sale of pay-per-view movies which is payable
to the movie distributor, the cost of goods sold through the video shopping
module and any commissions paid on advertising revenue realized through the
system. The costs directly attributable to the sports marketing revenue
include event costs, such as leasing a location, costs of promotional items,
travel and meal expenses, licensing fees payable to the MLBPAA and appearance
fees paid to retired professional athletes.

Selling, general and administrative expenses include (i) compensation and
related benefits; (ii) selling and marketing costs; (iii) rent; (iv)
professional services and general overhead expenses; (v) contract payments
made to customers (such as cruise line operators) with whom the Company has
contracted to install and operate its ITV system; and (vi) costs incurred in
operating the Company's ITV system, such as the cost of transporting supplies
to the ship, travel expenses, credit card processing fees and the cost of
promotions to increase awareness and usage of the system.

Depreciation expense relates primarily to the cost of installation of the
Company's ITV system on cruise ships to the extent borne by the Company under
a particular contract, which are capitalized when incurred, and the cost of
computers and other equipment. Amortization expense relates primarily to other
intangible assets including trademarks, licensing fees paid for certain
software rights, research and development costs, formation expenses of the
Company and its subsidiaries, costs associated with this Offering and portions
of the purchase prices of the ISM Acquisition and the KCG Acquisition.

HISTORICAL RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
SIX MONTHS
PERIOD ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- -------------------
1994 1995 1995 1996
------------ ------------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue....................... $ -- $ 44 $ -- $ 163
Direct expenses............... -- 10 -- 40
----------- ------------- ----- -------
Gross profit.................. -- 34 -- 123
Selling, general &
administrative................ 582 1,545 697 1,817
Depreciation & amortization... 6 288 70 350
----------- ------------- ----- -------
Operating loss................ (588) (1,799) (767) (2,044)
Interest expense.............. 24 369 105 468
----------- ------------- ----- -------
Net loss...................... $(612) $(2,168) $(872) $(2,512)
=========== ============= ===== =======
</TABLE>

22
<PAGE>

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

As of June 30, 1996, SeaVision had installed its ITV system on two cruise
ships with an annual passenger capacity of 155,272, based on their itineraries
and passenger configurations at that time. SeaVision did not complete
installation of its first system on a ship until August 1995 and thus did not
record revenue or direct expenses for the six months ended June 30, 1995.
Accordingly, a comparison of revenue and direct expenses for the six-month
periods ended June 30, 1995 and June 30, 1996 is not meaningful.

Revenue for the six months ended June 30, 1996 was $163,000, including
$86,000 for pay-per-view movies and $75,000 for games of chance. Direct costs
for the six months ended June 30, 1996 were $40,000 and related primarily to
cost of sales for the video-on-demand module. Selling, general and
administrative expenses during the six months ended June 30, 1996 increased to
$1.8 million from $697,000 for the corresponding period in 1995. This increase
is attributable primarily to the costs of additional personnel that were hired
as the Company moved from the developmental stage to the implementation stage
of its ITV system. Depreciation and amortization expense increased to $350,000
during the six months ended June 30, 1996 as compared to $70,000 in the
corresponding period in 1995 because the Company had not completed
installation of ITV systems during the earlier period.

The Company's operating loss increased to $2.0 million for the six months
ended June 30, 1996, from $767,000 for the six months ended June 30, 1995.
This increase resulted from the continued growth of SeaVision's staff and
operations as SeaVision moved from the developmental stage to the
implementation stage of its ITV system. As SeaVision's installed base of ITV
systems increases, the Company anticipates revenue growth from the systems
will substantially outpace the growth of expenses. Interest expense increased
from $105,000 to $468,000 for the periods ended June 30, 1995 and June 30,
1996, respectively. Most of the interest expense was accrued but unpaid during
the period, and the increase reflected continued funding of the Company's
operating losses by certain of its stockholders in the form of loans, and with
respect to the six months ended June 30, 1996, one month of interest expense
and guarantee fees relating to the borrowings under its line of credit with
Integra Bank (now National City Bank). See "Certain Transactions--Stockholder
Loans." The Company sustained a net loss of $2.5 million during the six months
ended June 30, 1996, compared to a net loss of $872,000 for the six months
ended June 30, 1995, as a result of the increased operating losses and
interest expense discussed above.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO INCEPTION THROUGH DECEMBER 31, 1994

During the period from inception through December 31, 1994, SeaVision was in
the development phase of its first ITV implementation. Because SeaVision did
not complete installation of its first system on a ship until August 1995, it
did not record revenue or direct expenses for the year ended December 31,
1994. Accordingly, a comparison of revenue and direct expenses for the year
ended December 31, 1995 and the period ended December 31, 1994 is not
meaningful.

Revenue for the year ended December 31, 1995 was $44,000, primarily from
pay-per-view movies and games of chance. Direct expenses for the year ended
December 31, 1995 were $10,000, primarily representing costs of sales for pay-
per-view movies. Selling, general and administrative expenses for the year
ended December 31, 1995 increased to $1.5 million from $582,000 during the
period ended December 31, 1994 as a result of additions to the staff and
increased travel and other expenses as SeaVision entered the implementation
phase for its ITV system. Depreciation and amortization expense increased to
$288,000 during the year ended December 31, 1995 as compared to $6,000 for the
period ended December 31, 1994 because the Company had not completed
installation of ITV systems during the earlier period.

The Company incurred an operating loss in the amount of $1.8 million for the
year ended December 31, 1995, compared to an operating loss of $588,000 during
the period ended December 31, 1994. Interest expense increased from $24,000 to
$369,000 for the periods ended December 31, 1994 and 1995, respectively. All
of the interest expense was accrued but unpaid during the period and the
increase reflected continued funding of the

23
<PAGE>

Company's operating losses by certain of its stockholders in the form of
loans. See "Certain Transactions--Stockholder Loans." The Company sustained a
net loss of $2.2 million during the year ended December 31, 1995, compared to
a net loss of $612,000 for the period ended December 31, 1994, as a result of
the increased operating losses and interest expense discussed above.

PRO FORMA RESULTS OF OPERATIONS

The following table sets forth certain pro forma consolidated financial data
of the Company, expressed as a percentage of total consolidated revenue for
the Company, for the year ended December 31, 1995 and the six months ended
June 30, 1996, as if the Offering and the ISM Acquisition and the KCG
Acquisition had been consummated as of January 1, 1995. The pro forma
financial data may not be indicative of the results that would have been
achieved if the transactions reflected herein had occurred at the beginning of
the period for which the pro forma data is presented or of future results.

<TABLE>
<CAPTION>
PRO FORMA AS ADJUSTED
CONSOLIDATED FINANCIAL DATA
----------------------------------------
(UNAUDITED)
(IN THOUSANDS)
----------------------------------------
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
------------------- -------------------
<S> <C> <C> <C> <C>
REVENUE
SeaVision............................ $ 44 0.7% $ 163 5.0%
SportsWave (ISM)..................... 4,878 78.5 1,793 54.5
KCG.................................. 1,995 32.1 1,792 54.5
Less: Intercompany eliminations..... (705) (11.3) (461) (14.0)
--------- ------- --------- -------
TOTAL REVENUE......................... 6,212 100.0 3,287 100.0
Direct costs.......................... 3,408 54.9 1,828 55.6
--------- ------- --------- -------
Gross margin.......................... 2,804 45.1 1,459 44.4
Selling, general & administrative..... 3,846 61.9 2,933 89.2
Depreciation & amortization........... 2,130 34.3 1,298 39.5
--------- ------- --------- -------
Operating loss........................ (3,172) (51.1) (2,772) (84.3)
Interest income (expense)............. 33 0.5 (4) (.1)
--------- ------- --------- -------
Loss before nonrecurring charges...... $(3,139) (50.6)% $(2,776) (84.4)%
========= ======= ========= =======
</TABLE>

PRO FORMA RESULTS FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE SIX MONTHS ENDED
JUNE 30, 1996

On a pro forma consolidated basis, the Company recognizes revenue from three
sources: SeaVision's ITV system, sports marketing revenue generated by ISM and
software design and network solutions fees generated by KCG. The Company, ISM
and KCG have had various business relationships during the periods covered by
this discussion. For the purposes of the consolidated pro forma numbers
presented above and the following discussion, all such intercompany
transactions have been eliminated.

Revenue

Revenue, net of intercompany eliminations, for the year ended December 31,
1995 totaled $6.2 million, with 0.7% being generated by SeaVision, 78.5% by
ISM and 20.8% by KCG. Revenue for the six months ended June 30, 1996 totaled
$3.3 million, with 5.0% being generated by SeaVision, 54.5% by ISM and 40.5%
by KCG.

SeaVision completed the installation of its system on its first ship in
August 1995 and on its second ship in December 1995, and therefore reported
only $44,000 of revenue for the year ended December 31, 1995 and $163,000 of
revenue for the six months ended June 30, 1996. SeaVision completed the
installation of its ITV system on its third ship in July 1996 and holds firm
contracts for the installation of its system on nine additional

24
<PAGE>

ships, six of which it expects to complete by December 31, 1996. Accordingly,
SeaVision anticipates a significant increase in revenue from its ITV system as
these installations are completed. SeaVision also holds contracts under which
cruise lines have the option to request SeaVision to install its system on an
aggregate of 17 additional vessels. In addition, SeaVision is pursuing
negotiations with various other cruise lines to install its system on up to 26
additional vessels. The Company believes, based on its historical
installations and its projections of installations for which it has firm
contracts, that, if the Company receives firm contracts for 13 additional
installations (either through the exercise of cruise line options or through
the execution of additional contracts), the Company could complete such
installations and, accordingly, have its ITV system in operation on a total of
25 ships by December 31, 1997. The Company believes that the installations
which might result from exercise of the cruise line options and from these
negotiations represent a significant market opportunity for the installation
and operation of numerous additional systems. There can be no assurance,
however, that any option will be exercised or that any additional contracts
will result from the current negotiations or, if additional firm contracts are
secured, that unforeseen delays in installation will not occur.

Subsequent to June 30, 1996, SeaVision has added an Onboard Promotions
Manager to its staff, added a blackjack game to its video games of chance
module and continues to add content to the video shopping module to broaden
the selections available to users. The Company expects that these additions
will have a positive impact on the revenue derived from the ships on which the
Company's ITV system is installed. In addition, in September 1996, SeaVision
entered into its first shipboard systems integration contract pursuant to
which it is installing and will operate a new television distribution and
broadcast system aboard Cunard's QE2. This contract calls for payments of
$1.24 million to the Company. Installation is expected to be completed during
November 1996.

ISM reported revenue of $4.9 million for the year ended December 31, 1995
and $1.8 million for the six months ended June 30, 1996. Revenue is generated
by contract payments as sports-themed events occur. For the year ended
December 31, 1995, ISM's revenue was negatively affected because publicity
resulting from a 232-day baseball players' strike and owners' lockout between
Major League Baseball and its players union caused certain key customers to
cancel their promotions with ISM and the MLBPAA. ISM has established
relationships with retired pro football, basketball and hockey players to
minimize its reliance on any one sport in the future.

SportsWave is projecting a decline in revenue for the year ending December
31, 1996 compared to the same period of the prior year because management
believes that ISM's traditional customers utilized a substantial portion of
their sports marketing budgets on the summer Olympic games held in the United
States. Based on firm contracts and discussions with current and past
customers, management expects that revenue for ISM for the year ending
December 31, 1997 will increase compared to the year ending December 31, 1996.

KCG reported revenue of $2.0 million for the year ended December 31, 1995
and $1.8 million for the six months ended June 30, 1996. Revenue for the
period ended June 30, 1996 increased 134.3% compared to the same period of the
prior year. KCG's software design work on SeaVision's ITV platform was
recognized when the platform received an applications development award from
Microsoft in 1995. Successful marketing efforts associated with this award
plus the addition of a number of new clients were primarily responsible for
the substantial increase in revenue recognized during this period.

Expenses

Direct costs were $3.4 million and $1.8 million for the periods ended
December 31, 1995 and June 30, 1996, respectively.

SeaVision's direct costs for the year ended December 31, 1995 and the six
months ended June 30, 1996 are discussed above under "--Historical Results of
Operations."

ISM's direct costs were $2.7 million for the year ended December 31, 1995
and $1.1 million for the six months ended June 30, 1996. Gross margin realized
by ISM traditionally ranges from 42.5% to 43.8%. Gross margin for the year
ended December 31, 1995 was 43.7%. Gross margin for the six months ended June
30, 1996,

25
<PAGE>

at 39.2%, was below this range because of the replacement of several higher
margin contracts with contracts at lower margin.

KCG's direct costs were $989,000 for the year ended December 31, 1995 and
$937,000 for the six months ended June 30, 1996. Gross margin for KCG was
50.4% for the year ended December 31, 1995 and 47.7% for the six months ended
June 30, 1996.

Selling, general and administrative expenses of $3.8 million and $2.9
million for the periods ended December 31, 1995 and June 30, 1996,
respectively, were equal to 61.9% and 89.2% expressed as a percentage of total
revenue. The increase in selling, general and administrative expenses as a
percentage of sales resulted from additions to SeaVision's staff, the seasonal
nature of ISM's revenue base and the decline in revenue discussed above.

Depreciation and amortization expense for the year ended December 31, 1995
and the six months ended June 30, 1996 were $2.1 million and $1.3 million,
respectively. The increases in depreciation and amortization expense have
resulted almost entirely from the continued installation of SeaVision's ITV
system.

The Company realized operating losses of $3.2 million and $2.8 million for
the year ended December 31, 1995 and the six months ended June 30, 1996,
respectively. The operating losses were primarily attributable to losses
incurred by the Company relating to the growth of SeaVision's staff and
operations and the decrease in ISM's revenue, both of which are described
above.

Interest income for the year ended December 31, 1995 was $33,000, and
interest expense was $4,000 for the period ended June 30, 1996. Interest
expense of $369,000 and $468,000 for the periods ended December 31, 1995 and
June 30, 1996, respectively, was eliminated because, on a pro forma basis, the
obligations on which such interest accrued are treated as having been
extinguished in connection with the Offering.

The Company incurred losses before nonrecurring charges of $3.1 million and
$2.8 million for the periods ended December 31, 1995 and June 30, 1996,
respectively, for the reasons discussed above.

Based on scheduled installations for ITV systems by SeaVision, firm
contracts for ISM's services and trends in KCG's revenue, management expects
that the Company's combined revenue will increase after the acquisition of
these entities and as the Company develops.

LIQUIDITY AND CAPITAL RESOURCES

From its organization in June 1994 through May 31, 1996, the working capital
needs of SeaVision were funded through stockholder loans. See "Certain
Transactions--Stockholder Loans." On May 31, 1996, SeaVision entered into a
line of credit with Integra Bank (now National City Bank). The maximum amount
of borrowing allowed under the line of credit is $5 million, all of which was
outstanding as of August 1, 1996. The initial funding under the line of credit
occurred May 31, 1996 and was in the amount of $4.3 million, $3.6 million of
which was used to repay a portion of the principal amount of the Stockholder
Loans. The Company may choose between two rates of interest at each funding
date, the Prime Rate or the Euro-Rate (as defined in the Line of Credit Note
dated May 31, 1996) plus one and one-half percent. The remaining amounts
funded under the line of credit have been used as general working capital in
the operation of the Company. The line of credit expires on May 31, 1997 and
is guaranteed by certain stockholders of the Company. The guarantors are
entitled to a guarantee fee from the Company equal to the difference between
15% per annum and the rate which the Company is charged under the terms of the
line of credit.

On August 16, 1996 the Company issued an aggregate of 25,000 shares of
Convertible Preferred Stock to Henry Posner, Jr., Thomas D. Wright, Richard W.
Talarico, James C. Roddey, William C. Kavan and Mark Kottler, each of whom is
also an officer, director and/or holder of Common Stock of the Company. The
Company intends to use the $2,450,000 net proceeds from the sale of the
Convertible Preferred Stock for general working capital purposes. The holders
of Convertible Preferred Stock are entitled to receive, when and as declared
by the

26
<PAGE>

Company's Board of Directors, cumulative compounded quarterly dividends at the
rate of eight percent of the liquidation value thereof per annum. If the
Company has not consummated an initial public offering of Common Stock on or
before December 31, 1996, the dividend rate will increase to 12% of the
liquidation value thereof per annum from and after such date. For a limited
period beginning six months after the Offering, each holder of Convertible
Preferred Stock will have the right to convert all, but not less than all, of
the Convertible Preferred Stock then owned by such holder into shares of Common
Stock at the rate of approximately 8.1 shares of Common Stock for each share of
Convertible Preferred Stock. Shares of Convertible Preferred Stock not
converted into Common Stock will remain outstanding until the earlier of the
time such shares are redeemed by the Company or June 30, 2006. For additional
information concerning the Convertible Preferred Stock, see "Certain
Transactions--Sale of Convertible Preferred Stock" and "Description of Capital
Stock--Series A Convertible Redeemable Preferred Stock."

The Company recognized an operating loss for the year ended December 31,
1995, and the Company's business will require substantial capital investment on
an ongoing basis to finance its expansion in the travel and leisure industry
and for the implementation of its business plans for PhotoWave and SportsWave.
Capital expenditures were $1.6 million during the year ended December 31, 1995
and $1.6 million for the six months ended June 30, 1996. The Company expects to
incur capital expenditures of approximately $6 million during the full year
ended December 31, 1996 and approximately $17 million for the year ending
December 31, 1997. The actual amount and timing of the Company's capital
expenditures will vary (and such variations could be material) depending
primarily upon the number of new contracts for installation of its ITV systems
and shipboard systems integration entered into by the Company, the costs of the
installations and the rate of implementation of the PhotoWave and SportsWave
business plans.

The Company may also become obligated to make up to $2.4 million and $2.8
million, respectively, in contingent payments pursuant to the ISM Stock
Purchase Agreement and the KCG Merger Agreement. Under the ISM Stock Purchase
Agreement, an interim contingent payment must be made in an amount (the "ISM
Interim Earn-Out Amount") equal to the amount by which six times the sum of
operating income of ISM for 1997 and 1998 divided by three exceeds $2.4
million. A final payment must be made in an amount equal to the amount by which
six times the sum of operating income of ISM for 1997, 1998 and 1999 divided by
three exceeds the sum of $2.4 million plus the ISM Interim Earn-Out Amount.
One-half of such contingent payments, if any, will consist of promissory notes
bearing interest at seven percent per annum. In connection with the contingent
payments under the KCG Merger Agreement, at the closing of the KCG Acquisition,
the sole stockholder of KCG will receive a $2.8 million contingent promissory
note (the "KCG Note") of the surviving corporation in the merger. If KCG's
average annual operating income for the years 1997, 1998 and 1999 ("Average KCG
Operating Income") exceeds $1.862 million, the entire $2.8 million principal
amount of the KCG Note will be payable. If the Average KCG Operating Income is
less than $1.862 million, the principal amount of the KCG Note will be reduced
according to a scale whereby the amount of reduction increases as the Average
KCG Operating Income decreases. The entire KCG Note will be cancelled if
Average KCG Operating Income is less than or equal to $1.4 million. The
principal amount of the KCG Note (as adjusted) plus interest at a rate of 7%
per annum on such principal amount (as adjusted) will be payable in two
installments, the first of which will be paid 15 days after the date of
determination of the Average KCG Operating Income and the second of which will
be paid six months after such date of determination.

The Company believes that the net proceeds from this Offering, together with
available funds and cash flows expected to be generated by operations, will be
sufficient to meet its anticipated cash needs for working capital and capital
expenditures for at least the next 24 months. If cash generated by operations,
together with the net proceeds of the Offering, were insufficient to satisfy
the Company's cash requirements, the Company would be required to consider
other financing alternatives, such as selling additional equity or debt
securities or obtaining long or short-term credit facilities, although no
assurance can be given that the Company could obtain such financing. Any sale
of additional equity or convertible debt securities would result in additional
dilution to the Company's shareholders.

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EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121), was issued in March 1995 and is effective for fiscal years
beginning after December 15, 1995. This statement will be applied prospectively
and requires that impairment losses on long-lived assets be recognized when the
book value of the asset exceeds its expected undiscounted cash flows. The
Company adopted SFAS No. 121 on January 1, 1996, and adoption at that time did
not have a material impact on the Company's financial position or results of
operations.

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BUSINESS

The Company provides customized ITV, digital imaging and other
communications and media services to users in the travel and leisure, sports
marketing and promotion and other industries. The Company initially marketed
its ITV system to the travel and leisure industry, principally international
cruise lines, and expects to expand its presence in the cruise industry. The
Company anticipates installing ITV systems in hotels and resorts and intends
to adapt its system to other industries and niche markets in which its
technology may afford a competitive advantage, including the commercial
photography and sports marketing and promotion industries. The Company also
will operate KCG's software design and network solutions business to support
the Company's other businesses and to serve third party clients.

OPERATING AND GROWTH STRATEGY

The Company's goal is to become a leader in the processing and distribution
of interactive television and digital imaging services. To achieve this goal,
the Company's strategy is:

. To expand the Company's presence in the travel and leisure industry by (i)
completing the installation of ITV systems on ships for which the Company
has firm contracts, (ii) seeking additional commitments from cruise line
operators for the installation and operation of ITV systems, (iii) adding
new applications to its platform to maintain its competitive position
within the cruise industry, (iv) expanding its shipboard systems
integration business and (v) extending the use of its platform to other
segments of the travel and leisure industry, including hotels and resorts;

. To develop the Company's digital imaging business by marketing, through
PhotoWave, a turnkey package of digital imaging services to niche markets
currently dependent on conventional photography;

. To expand the sports marketing business of ISM by marketing, through
SportsWave, new applications for the Company's platform directed at
promoters of sporting events and spectators and corporate sponsors at such
events;

. To utilize KCG's software design and creative expertise to further develop
the Company's digital platform and continue KCG's third party software
design and network solutions business;

. To engage from time to time in acquisitions of businesses and the
development of joint venture relationships that offer opportunities to
complement or expand the Company's ITV and other capabilities and the
marketing of such capabilities; and

. To supply specialized software and creative program enhancements to mass
market providers of interactive communications and digital imaging
services, such as cable television and telephone companies.

Expand Presence in the Travel and Leisure Industry

The Company intends to expand its presence in the travel and leisure
industry through a number of initiatives. In addition to completing the
installation of ITV systems in ships for which it has firm contracts, it is
seeking additional commitments for the installation and operation of its ITV
system on cruise ships. Three of SeaVision's ITV system contracts give the
cruise operators the option to have SeaVision's system installed on an
aggregate of 17 additional ships. Additionally, during the term of its
contract with NCL, the Company has the right to be afforded the opportunity to
match any third-party offer that NCL may receive with respect to the provision
of on-board ITV and video entertainment services. The Company is currently
negotiating with various other cruise lines regarding contracts to install its
system on up to 26 additional ships. There can be no assurance, however, that
any option will be exercised or that any additional contracts will result from
the current negotiations.

The Company also intends to continue to develop new applications for
SeaVision's ITV system for the purpose of enhancing the system's appeal to
cruise operators. For example, the Company, working with Kodak,

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<PAGE>

recently developed a cost-effective digital imaging application that the
Company believes will significantly improve the delivery of photography
services on cruise ships by providing passengers with the ability to preview,
customize and purchase photos on the ITV system. The Company also is seeking
to utilize its platform as a media center for various shipboard systems,
including the ship's information systems, broadcast studio, print shop and
photography department. In addition, the Company has commenced providing
shipboard integration services pursuant to a contract under which it is
installing and will operate a new television distribution and broadcast system
aboard Cunard's QE2 and is pursuing additional contractual arrangements under
which the Company would act as a systems integrator for ships that are under
construction or being retrofitted.

In the hotel market, the Company is currently marketing an ITV system to
hotels and resorts that would make available to guests not only on-demand pay-
per-view movies, but also other services that most current hotel movie
operators do not provide, such as high speed Internet access, e-mail access
and direct airline ticketing and rental car reservations.

Develop the Digital Imaging Business

Through PhotoWave, the Company plans to market a turnkey package of digital
imaging services to businesses currently dependent on conventional "wet"
photography. The Company's services include a data processing and image
archival center that permits storage and transmission of digital images at the
Company's site on the Internet and other private networks and feature high-end
content and graphics, photo enhancement tools and customized business
management reporting tools to support users. The Company and District Photo
have agreed in principle to certain cooperative arrangements with respect to
the Company's digital imaging technology. The Company believes that its
digital imaging applications will make digital imaging technology available on
a cost effective basis to users with only minimal training, which may provide
the basis for broad acceptance of the Company's services by current users of
conventional photography.

Expand ISM's Sports Marketing Business

Through SportsWave, the Company is adapting its platform to offer
interactive services for use in sports arenas and stadiums to enhance the
impact of advertising messages. This program envisions equipping arenas and
stadiums with interactive capabilities which can be accessed through a
handheld device or through terminals located at a patron's seat, in luxury
boxes or at central locations, which would enable patrons to retrieve sports
data, purchase team logo and other concession items and view advertisements
and special offers. The Company also intends to support ISM's core business of
corporate hospitality and event promotion by providing innovative digital
imaging products to ISM's clients and expanding upon the services currently
being offered by ISM. The Company is developing a mobile media center that
could be made available to corporate sponsors for promotional purposes and
corporate incentives. Among other things, the center could be used to deliver
prints of pictures taken with major sports figures and to supply promoters of
sporting events with on-site office services, such as copying, information
processing and communications.

Utilize KCG's Technical and Creative Expertise

The Company intends to utilize KCG, which was responsible for much of the
software design and programming for the Company's proprietary digital
platform, to strengthen the creative and technical foundation for the further
development of the platform and its adaptation to new markets. The Company,
through KCG, also intends to continue to provide software design and network
solutions services to third parties.

Acquire Complementary Businesses and Develop Joint Venture Relationships

The Company intends to continue to identify businesses which are available
for acquisition and which offer opportunities to complement and expand the
Company's ITV and other capabilities and the marketing of such capabilities.
The Company will also seek to develop joint venture relationships with other
businesses in order to further the marketing of the Company's system for
existing or additional applications. In addition, if and as new

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<PAGE>

applications for the Company's system are identified, the Company may find it
desirable to seek acquisitions of technologies which could enhance the
capabilities of its system in respect of such applications. There can be no
assurance, however, that the Company will be able to identify suitable and
available acquisition or joint venture opportunities or that it will be able
to reach agreement with any identified candidate.

Supply Specialized Software and Creative Program Enhancements to Mass Market
Providers

The Company believes that the activities of SeaVision, PhotoWave and
SportsWave, as well as the expertise and industry relationships provided by
KCG, will provide a basis for establishing relationships with mass market
providers of interactive communications and digital imaging services that
could lead to the Company becoming a supplier of specialized software to such
providers. The Company plans to offer specialized software from the Company's
platform, such as software permitting immediate processing of transactions, to
these providers for use in other system architectures. The Company also
intends to provide creative program enhancements to telephone and cable
companies that are developing pilot programs to provide interactive services
to households. The Company is pursuing discussions with a telephone company
regarding the possible use of the Company's digital file server and software
for a mass market ITV trial.

TRAVEL AND LEISURE INDUSTRY

The Company's initial development and marketing efforts for its ITV system
have been directed at the international cruise industry. The Company is
seeking additional contracts for the installation and operation of its system
on cruise ships and intends to add new applications to its platform for cruise
operators. The Company also intends to extend the use of its platform to other
segments of the travel and leisure industry, including hotels and resorts.

International Cruise Industry

Industry Overview. From its inception in 1994, SeaVision identified the
cruise industry as an ideal initial market for its interactive communications
platform. The cruise industry is the fastest growing segment of the worldwide
travel business. An industry trade group, using information as of December 31,
1995, has indicated that approximately 120 cruise ships with a capacity of
more than 100,000 berths serve the North American market. The industry has
experienced rapid growth, with passenger volume increasing from 500,000 North
American passengers in 1970 to approximately 4.4 million passengers per year
in each of 1993, 1994 and 1995. An industry trade group has estimated that
annual passenger volume may reach as high as 7.0 million in 2000. An industry
trade group has estimated that the market for the cruise industry will grow to
more than $50 billion over the next five years. The increasing popularity of
cruise excursions in both the United States and abroad, combined with the high
level of customer satisfaction, is expected to foster continued growth in the
industry. To meet this anticipated demand, the cruise lines are investing in
new ships, with 20 new luxury liners set to enter service from 1997 through
1999. According to an industry trade group, the average cruise passenger in
the past five years was approximately 50 years old and had a household income
of approximately $63,000. Approximately eleven percent of such cruise
passengers had an annual household income of $100,000 or more. The Company
believes that it is the only company to date that has successfully operated
digital ITV systems on cruise ships.

Use of the Company's ITV System in the Cruise Industry. The Company's cruise
industry business began in March 1995 with a single contract to install its
ITV system on NCL's m/s Dreamward. The Company has now installed its ITV
system on two additional cruise ships, one owned and operated by each of
Celebrity and Carnival, and provides service to approximately 2,500 cabins.
Recently, the Company's contract with Celebrity was expanded to provide for
the installation and operation of the Company's system on board the five
additional ships in Celebrity's fleet, the Company's contract with NCL was
expanded to provide for the installation and operation of the Company's system
on board one additional ship in NCL's fleet and the Company entered into a
contract with RCCL to provide for the installation and operation of the
Company's system on board two ships in RCCL's fleet. In addition, Carnival has
exercised an option to have the Company's system installed on its new ship,
the m/s Destiny, which will be the largest cruise ship in the world upon its
launch scheduled in 1996.

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<PAGE>

Upon completion of these nine additional installations, SeaVision's ITV system
will be operational in 12 ships with a total of approximately 10,600 cabins
and a total estimated annual passenger carry of approximately 1.0 million.
These twelve installations will represent approximately 10% of all existing
cruise ships, 21% of total cabins in the industry and 20% of total passenger
carry in 1995.

Part of the Company's strategy in expanding its presence in the cruise
industry involves the development of new features which the Company believes
will enhance the value of the system to cruise operators. As a part of this
strategy, SeaVision has developed PhotoPlace(SM), an on-board digital
photography service which the Company is marketing as a cost-effective
alternative to shipboard photography which presently relies on conventional
photography. See "--Services for Passengers--Shipboard Photography." SeaVision
has also recently begun installation of a new television distribution and
broadcast system aboard Cunard's QE2 under SeaVision's first shipboard systems
integration contract and is pursuing negotiations for additional systems
integration contracts. The Company is also developing a media center which
will use the Company's platform to support various shipboard systems. See "--
Services for Cruise Operators."

Services for Passengers. The Company's ITV system offers various services to
passengers, some of which currently generate revenue to the Company and some
of which are currently offered free to passengers.

Passenger Pay Services. SeaVision's revenue from its cruise ship
operations is derived primarily from fees paid by passengers for in-cabin
ITV services.

Video Wagering. On cruise ships, the Company's ITV system allows
passengers, from their cabins, to play games of chance, presently
including video slots, video poker and blackjack, using credits charged
to their cabin accounts. The Company's video wagering module provides
photo quality, high resolution graphics, unlike video games of chance
offered in casinos, but still has the speed of play of casino games.
The Company intends to add more modules to the three modules currently
available for gaming purposes, including one providing a sports book
whereby passengers can place wagers on major sporting events.

Video-On-Demand. Through the Company's ITV system, a passenger can
choose from a large number of movie selections and individually start
the selected film at the passenger's convenience. In contrast to other
video-on-demand providers, the Company's system allows on-demand
selection and viewing of full motion previews of movies offered on the
system. SeaVision is the only company providing the cruise industry
with digitally formatted pay-per-view movies from Walt Disney Pictures
and Metro-Goldwyn-Mayer. The Company currently offers on-demand movies
on a pay-per-view basis at prices established by the Company ranging
from $5.95 to $9.95.

Shipboard Photography. The Company, working with Kodak, has developed
PhotoPlace(SM) which offers on-board digital photography services to
cruise passengers through a digital imaging system tied to the
Company's ITV system. Currently, the on-board photography market is
serviced by concessionaires utilizing conventional "wet" photography,
which requires the processing and developing of all photographs taken
(regardless of the number of photographs sold) and generally limits the
passenger's choice of size and number of prints. With PhotoPlace(SM),
shipboard photographers using digital cameras take passenger photos and
upload the images for viewing on the Company's ITV system. Guests are
able to preview, customize and purchase their photographs through their
cabin television. The Company believes that this convenience will
result in additional sales of photographs. In addition, since
photographs are processed in accordance with passenger purchases, there
is a substantial reduction in the number of photographs processed.
While the per unit cost of processing is higher for digital images than
for conventional photographs, the Company believes that the
PhotoPlace(SM) system will be cost-effective as a result of the reduction
in the number of photographs processed. Consequently, the Company
believes that PhotoPlace(SM) should gain wide acceptance in the travel
and leisure industry, and that it could become a significant source of
revenue. The Company has installed PhotoPlace(SM) on NCL's Dreamward, and
will begin installing it on two other ships in the fall of 1996.

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<PAGE>

Management believes that the Company should be able to develop
improved capabilities for storing, displaying and distributing digital
images. The Company is already actively working on applying its
existing digital imaging capabilities elsewhere in the operation of
cruise ships, including the printing of crew identification badges and
passenger identification cards, the publishing of the ship's daily
newspaper in four-color output, the printing of daily menus and
television programming guides and the reproduction of on-board
promotional materials. There can be no assurance that the Company will
be able to apply its existing digital imaging capabilities as
anticipated or develop improved digital imaging capabilities as quickly
as expected.

Shopping. The Company's shopping service provides passengers with the
ability to preview and purchase products through their cabin ITV
system. The Company acts as either the retailer earning a markup on the
wholesale cost of the goods sold or a distributor earning a portion of
the retail price of the goods sold. The Company presently offers for
sale items from such vendors as Bobby Jones Sportswear, Wenger Swiss
Army Brand and The Nature Company. The Company is currently negotiating
contracts with a number of other high quality, name-brand manufacturers
and retailers and anticipates that revenue from in-cabin shopping will
increase as more vendors are added.

Additional Passenger Services. The Company's ITV system also includes
various services for which the Company does not currently receive direct
revenue but which enhance the usefulness of the system to customers, afford
the Company a competitive advantage in marketing its system, attract users
to other services offered on the Company's system and provide a potential
source of additional revenue. The Company anticipates that these services
will represent a source of future revenue through the use, for example, of
corporate sponsorships of particular modules and transaction fees paid
either by the cruise operator or the passenger using the service.

Shore Excursion Preview and Ordering. The Company's ITV system
includes what the Company believes to be the world's first interactive
shore excursion preview and ordering system which features on-demand
full-motion videos illustrating the entertainment options available in
each port-of-call. The Company's shore excursion system can interface
with the ship's excursion inventory control system and also makes
available to cruise operators SEROS (Shore Excursion Reservation and
Ordering System)(TM), a proprietary inventory control system. This
module increases shipboard productivity by reducing the need for staff
to market and answer questions about shore tours and by automating the
inventory control system and ticket sales. The shore excursion service
has been well-received by passengers as evidenced by its extensive
usage. As of August 1, 1996, passengers on Celebrity's m/v Century had
used it on more than 33,500 occasions, or an average of approximately
1,340 occasions per cruise, and passengers on NCL's m/s Dreamward had
used it on more than 54,500 occasions, or an average of approximately
1,185 occasions per cruise.

Wine Ordering; Room Service. Through the Company's ITV system, a
passenger can review the ship's wine menu, order wine for dinner, pay
for it and have it waiting upon arrival in the restaurant. The Company
is currently pursuing discussions with advertisers to sponsor a full
motion informational interactive video using a sponsor's wines to
explain the appropriate wine selections for various meals. A passenger
can also order room service through a series of easy-to-use menus,
avoiding the need, for example, for ship personnel to collect and
process breakfast orders manually.

Personal Account Review; Free Television. The Company's ITV system
permits a passenger to view the status of his account and also provides
access to free television programs on closed-loop channels and through
satellite-received cable programming.

Other Services Under Development. The Company is developing modules
to make other services available to passengers, such as a module that
will interface with a ship's Global Positioning System, allowing
passengers to follow their itinerary and receive current weather
information.

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<PAGE>

Services for Cruise Operators. The Company makes several kinds of services
available to cruise operators.

Management Information. The Company's digital platform provides various
management information services. The system can generate detailed activity
reports and reports on usage of the system. Cruise operators can also use
the system for various types of surveys, from user satisfaction
questionnaires to sophisticated market research.

Systems Integration--Media Centers. In September 1996 the Company entered
into a contract with Cunard pursuant to which the Company is installing and
will operate a new television distribution and broadcast system aboard the
QE2, which is currently being retrofitted. Installation is expected to be
completed in November 1996. The Company is also pursuing negotiations with
other cruise lines to act as the systems integrator for ships that are
under construction or being retrofitted.

The Company's shipboard media center is being jointly developed with Wolf
Coach, a developer of truck or trailer mounted satellite communications and
production centers. The integrated shipboard media center would use the
Company's digital platform to support various shipboard systems, such as
shipboard information systems, the broadcast studio, the print shop and the
photography department. The Company believes that no other company has gone
beyond integration of components within a department to integrating these
shipboard systems. Although the Company anticipates that its media center
design and software will be available for installation on cruise ships
prior to the end of 1996, there can be no assurance that the Company will
be successful with efforts to obtain media center contracts or additional
systems integration contracts.

Crew Entertainment. To assist in maintaining crew morale, the Company's
system offers a product marketed as Backstage Pass(SM) which provides a
number of staff entertainment options, including foreign language
programming.

Advertising and Marketing. The demographic profile of cruise passengers,
including their age and high average income, make them desirable to
advertisers. Before the Company's ITV system, vehicles to access this audience
were limited. The Company's system offers advertisers and merchandisers a
broad range of options for reaching this audience including a flexible system
able to handle a variety of interactive applications to entertain, inform and
gather data; placement of corporate logos on individual interactive screens;
sponsorship of free programming; interactive commercials of interest to a
particular audience; and special event marketing. Furthermore, the Company's
system may be used as a test platform for advertisers interested in obtaining
invaluable knowledge and experience with interactive television now, before
such systems are generally available ashore. The Company's ITV system allows
advertisers and merchandisers to design a wide variety of applications,
experiment with them in a number of ways and analyze the results of their
efforts. Following installation of the Company's system on all ships for which
it currently has firm contracts, the Company's system will be operational on
12 ships having an estimated annual passenger carry of approximately 1.0
million. The Company believes the revenue potential from advertisers and
merchandisers to be substantial, and the Company is actively pursuing
discussions with advertisers, although the Company has only one advertising
contract at the present time. The Company believes that a recent demonstration
of its shopping module at a Microsoft-sponsored symposium for on-line
merchandising will assist it in attracting advertisers.

Customer Contracts. As of September 30, 1996, the Company had entered into
contractual arrangements with each of Celebrity, Carnival, NCL and RCCL
relating to the installation and operation of the Company's ITV system on
board certain of each cruise line's ships, as indicated in the following
table:

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<PAGE>

<TABLE>
<CAPTION>
SHIPS ON WHICH
SHIPS ON WHICH SHIPS UNDER FIRM CRUISE OPERATOR
SYSTEMS ARE IN CONTRACT FOR CAN ELECT TO HAVE
CRUISE LINE OPERATION SYSTEM INSTALLATION SYSTEMS INSTALLED
- ------------ -------------- -------------------- ------------------
<S> <C> <C> <C>
Celebrity................ 1 5 --
Carnival................. 1 1 11
NCL...................... 1 1 4
RCCL..................... -- 2 2
--- --- ---
Total.................. 3 9 17
</TABLE>

All of the Company's current ITV system contracts with cruise lines involve
an arrangement under which the Company installs its ITV system on board and
operates the system as a concessionaire, bearing most of the costs of
installation and operation. The Company, which retains ownership of the
system, shares with the host cruise line a portion of the revenue the system
generates from the sale to passengers of various pay services, as well as a
portion of the revenue from the sale of advertising to retailers, corporate
sponsors and other third parties.

Each of the Company's ITV system contracts with the cruise lines is subject
to renewal by mutual consent of the parties at the expiration of the initial
term. A decision by one or more of the cruise lines to discontinue its
agreement with the Company at the contractual expiration date could have a
material adverse effect on the Company. Three of the Company's existing ITV
system cruise line contracts grant to the cruise line the right, under certain
circumstances, following termination of its agreement with the Company, to
purchase the hardware installed by the Company on the subject ship and to
obtain a nontransferable license to use the software installed by the Company
on the subject ship. One contract grants the cruise line the right to purchase
such hardware and license such software from the Company, for a one-year
period thereafter, to enable the operator to install the Company's system on
other ships in its fleet.

In September 1996, the Company entered into a shipboard systems integration
contract with Cunard providing for the Company to install and operate a
television distribution and broadcast system aboard the QE2. This contract
calls for payments to the Company of $1.24 million relating to installation of
the system and monthly payments for operation of the system. Upon completion
of installation, Cunard will obtain title to the system.

Hotels and Resorts

Industry Overview. In 1995, the lodging market in the United States
consisted of over 3.4 million hotel rooms, of which approximately 1.9 million
were in hotels containing 100 or more rooms. Guest pay services were
introduced in the lodging market in the early 1970's and have since become a
standard amenity offered by many hotels to their guests. Virtually all hotels
offer free-to-guest services as well. In 1986 certain hotels began offering
their guests limited interactive services, and in 1991 on-demand movies became
available. Guest pay services are attractive to hotel operators because they
provide an additional amenity for their guests, as well as incremental revenue
to their establishments. The Company's strategy is to pursue contracts for the
installation and operation of its ITV system in hotels and resort properties
with more than 100 rooms.

Use of the Company's ITV System in the Hotel and Resort Industry. The
Company believes that the ITV system which the Company uses in cruise industry
applications can be used in essentially its present form to provide digital
interactive services to the hotel and resort industry. Given the nature and
configuration of the Company's platform, the Company will be able to offer
services not generally available to hotels and resorts at the present time,
such as in-room Internet access at speeds much faster than the typical home
computer and a ticket purchasing system which permits guests to reserve and
purchase theater and event tickets on the system. The Company intends to focus
its hotel services on the needs of the business traveler and plans to offer
airline ticketing and rental car reservations, as well as e-mail access. For
resorts, the Company intends to offer video games for children and
instructional videos for adults on subjects such as golf and tennis.

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<PAGE>

In addition to the services described above, the Company intends to offer
similar entertainment options to hotel and resort guests as it does to cruise
passengers, including video-on-demand and shopping, at prices comparable to
those charged in the cruise industry. Games of chance cannot be offered in any
United States hotel rooms at this time. The Company is also exploring other
forms of revenue-generating entertainment.

The Company is currently negotiating with a resort operator to install and
operate its system. There can be no assurance, however, that these
negotiations will result in a firm contract.

Advertising and Marketing. The Company's advertising strategy for hotels and
resorts will focus on both local advertisers who wish to make guests aware of
their presence and large national campaigns that recognize the value of
reaching these guests beyond in-room magazines and traditional television
commercials. To reach local advertisers in a cost-effective manner, the
Company anticipates developing revenue-sharing relationships with other local
media such as in-room hotel magazines. Several of such companies have
expressed an interest in working with the Company to expand their media
offerings. While management believes that such relationships would provide a
low-cost stream of revenue for the Company, no definitive arrangements have
been entered into, and there can be no assurance that such relationships will
materialize.

DIGITAL IMAGING INDUSTRY

Industry Overview

Digital imaging involves the capture of images in or conversion of images to
a digital format, the storage of images in a computer and the transmission of
the images over electronic networks. Digital imaging equipment such as cameras
and scanners has been developed which permits the capture of digital images
instantly without the need for film or the chemical development process. The
camera records the image on magnetic memory cards which can be removed and
inserted in any computer equipped with a standard slot for such cards.
Alternatively, digital imaging equipment can be connected directly to
computers through standard industry interfaces. Once an image is stored in a
computer, software can be used to manipulate and enhance the image in various
ways such as changing the size, rotating it or adding color.

Use of the Company's Platform in the Digital Imaging Industry

Through PhotoWave, the Company intends to market a turnkey package of
digital imaging services to commercial markets that currently depend on
conventional photography. The Company's digital imaging services, which can be
used with minimal training, include storage and transmission of digital images
at the Company's site on the Internet and other private networks, high-end
content and graphics, photo enhancement tools and customized business
management reporting tools.

The Company intends initially to market its digital imaging services to real
estate, school portrait and insurance companies. These companies are ideal
candidates for digital imaging technology because of their need to transmit
and store a large number of images. The Company is pursuing discussions with a
large photography company to jointly establish an independent dealer network
using digital imaging technology and the Company's package of digital imaging
storage, retrieval, transmission and processing services. The Company also
intends to use PhotoWave's digital imaging applications to support its other
businesses, such as sports marketing. See "Sports Marketing Industry--
Corporate Promotion and Hospitality."

The Company and District Photo, a major mail order photo finisher, have
agreed in principle to cooperative arrangements whereby District Photo would
fill third party orders for prints of digital photographs taken by PhotoWave
and would scan third party images to be stored on PhotoWave's archive service.

The Company also established digital imaging pilot sites in Lisbon, Ohio in
May 1996 and in Pittsburgh, Pennsylvania in September 1996 which make the
Company's package of digital imaging services available to independent
business owners in those areas. The Company believes that these pilot sites
will serve as the basis for a program to offer businesses such as local
commercial photographers the ability to offer digital imaging services to
other local businesses.

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Potential Commercial Applications

The Company intends to commence marketing of digital imaging services in the
markets described below.

Independent Businesses. The Company's strategic plan includes the aggressive
implementation of a digital imaging program to enable independent business
owners to offer digital imaging services to businesses within a given
geographic territory. These local independent business owners could provide
digital imaging services to youth and school athletic programs, promoters of
community and civic events and other local businesses for use, for example,
for corporate identification badges and restaurant menus. The Company's
digital imaging data center would support this network by providing high-end
creative and graphic content services through high-speed digital phone
circuits over the Internet. The Company has launched digital imaging test
sites which would serve as pilots in developing products and services of
interest to the local customer base.

Real Estate. Photographs play a significant role in the marketing of real
estate. It has been estimated by a consultant retained by the Company that
over 50 million photographs were taken in the real estate industry in the
United States in 1995. Real estate companies were among the first to use the
Internet to disseminate information and photographs to potential customers.
However, the existing limited capacity to store such information and images in
a standard format and centralized location has limited the expansion of such
application. Using its proprietary central file server platform, the Company
plans to make available to real estate companies a central hub for data and
image storing.

Insurance. It has been estimated by a consultant retained by the Company
that over 27 million photographs were taken in the insurance industry in the
United States in 1995. Accessible digital imaging would provide the insurance
industry with the ability to process claims more efficiently. Digital imaging
equipment would enable an insurance adjuster to capture the image at a claim
site to determine the extent of the insurance company's obligation to pay the
claim. The insurance adjuster could transmit the image on the Company's
network and store it on the Company's file server. The claims examiner could
then download the image and the accompanying report.

School Photographs. School photography represents a major portion of the
commercial photography industry. It has been estimated by a consultant
retained by the Company that school photographs of over 46 million students
were taken in the United States in 1995. School photography companies must
take, archive, store and have ready access to a large number of photographs.
Additionally, the product offering is rather narrow and the costs are
substantial as photographs must be processed into proofs for customers to view
and purchase. A combination of digital imaging and the Company's transmission
and storage capabilities would enable the photographer to offer a wider
variety of products, enhance or alter images and archive and instantly
retrieve images. Customers would also be able to view the images on a high
resolution screen, thereby eliminating the need to actually print the
photograph in all cases unless the customer decides to purchase it. The
Company anticipates offering this service to commercial photographers for an
annual membership fee plus additional fees for individual services such as
archiving software, storage and image enhancement tools.

SPORTS MARKETING INDUSTRY

Industry Overview

According to the 1996 Sports Almanac, Major League Baseball, the National
Football League, the National Basketball Association and the National Hockey
League play in approximately 93 arenas and stadiums in the United States and
Canada. The current seating capacity of such arenas and stadiums has been
estimated at approximately 3.7 million, and it has been estimated that as much
as $7 billion has been spent or committed over the past three years to
construct or renovate 30 major sports facilities in the United States and that
such expenditures are likely to increase in the future. The Company believes
that the demand for interactive

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technology in sports venues to enhance the impact of advertising at sporting
events will grow substantially in the next decade and will present substantial
opportunities for sports marketing services. The Company plans to begin
marketing prior to the end of 1996 an ITV system tailored to operate in sports
venues.

Event marketing, often centering on a sports event, is a growing sector of
the worldwide advertising industry. The Company intends to take advantage of
this market by continuing the corporate promotion and hospitality business of
ISM and by expanding that business through the use of the Company's digital
platform in sports marketing applications.

ISM's Activities

SportsWave was formed to develop and market applications of the Company's
digital platform in the sports industry and to operate the existing business
of ISM, which is to be acquired by the Company concurrently with the closing
of the Offering.

ISM, which was formed in 1989, offers a full range of sports marketing and
promotion services. The principal focus of ISM's operations has traditionally
been in the areas of promotions and premiums, corporate incentive programs,
event marketing and licensing. Since 1989, ISM has held a worldwide license
with Major League Alumni Marketing, Inc., with certain exclusive rights, to
use the name "Major League Baseball Players Alumni Association" ("MLBPAA") and
certain related logotypes and trademarks and the name "Major League Alumni
Marketing" in connection with certain marketing, merchandising and promotional
activities. The MLBPAA is a nonprofit organization, currently comprised of
over 3,000 former players, that was founded to, among other things, promote
and encourage the sport of baseball and to assist in charitable work.
Management believes its relationship with MLBPAA to be good.

The activities covered by the Company's license include (i) sponsorships and
events with former players, such as tours, exhibition games and autograph and
photograph sessions, (ii) creating and supplying products autographed by
former players and (iii) corporate and sales incentive programs including
fantasy camps and spring training trips. ISM pays royalties for the use of
such rights, and, subject to certain limitations, ISM is permitted to
sublicense such rights. The Company believes that this license from the MLBPAA
is important to its sports marketing and promotion business. The Company's
license currently expires on December 31, 1998 and automatically renews for
successive two-year terms unless either party gives notice of its election not
to renew at least one year prior to expiration of the then-current term.

ISM has contracted with numerous corporate clients in the past several years
to provide or sublicense former players and baseball memorabilia for varied
events. ISM has contracted to provide similar services in 1996 to corporate
clients such as American Airlines, MCI Telecommunications Corporation, Nabisco
Biscuit Company, Campbell Soup Company and Pennzoil Products Company.

The traditional sports marketing aspect of ISM's business has historically
been seasonal, with the largest number of events and promotions being staged
during the Major League Baseball season. However, ISM also contracts with
former professional football, basketball and hockey players to participate in
events, promotions and incentive programs for ISM clients, which reduces ISM's
reliance on events held during the Major League Baseball season.

Potential Commercial Applications

Advertising Enhancements at Sporting Events. Arena owners and operators have
begun experimenting with new media technology in an effort to enhance
advertising at sporting events. An example is the Rose Garden, the home arena
of the Portland Trailblazers franchise of the National Basketball Association,
which is equipped with acoustic clouds and wired with miles of fiber optic
cable capable of delivering advertising and other information instantly to
over 750 television monitors throughout the arena.

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The Company plans to begin marketing prior to the end of 1996 a system which
includes a central interactive digital file server which can be accessed
through a handheld device or through terminals located at a patron's seat, in
luxury boxes or at central locations. Such a system could be configured to
permit attendees at sports events to watch instant replays during the game and
order team merchandise and other stadium products. The system could also be
used for a number of advertising applications, including enhancing ad messages
through fan interaction with promotion campaigns seen on scoreboard video
screens during the event. The actual services offered would be determined by
the arena owner or operator in conjunction with the Company and its clients.
The Company does not currently have any contractual arrangement with respect
to placement of an interactive system in any sports venue.

Corporate Promotion and Hospitality. The existing business of ISM is
expected to be a key component in the Company's development of corporate
promotion and hospitality programs. In addition to the current services
provided by ISM, the Company intends to expand its sports promotion and
hospitality offerings by developing new applications of its digital platform,
such as the development of a mobile media center. The Company and Wolf Coach
are working to use the Company's digital platform as a base to develop such a
mobile media center for use at sporting events and by event managers and
corporate sponsors. The mobile media center would contain an office suite and
a multimedia customer area which could be deployed on behalf of clients to
their sports-related hospitality events. The center could be fitted with
necessary office services (such as copying, information processing and
communications) and a variety of interactive and digital imaging applications
tailored to the needs of the client, including quick and economical delivery
of prints of pictures taken with a major sports figure for a corporate
sponsor's customers and sales personnel. The Company intends to commence
marketing of the mobile media center prior to the end of 1996. Currently, no
contractual arrangements exist with respect to building a mobile media center.

Customer Contracts

ISM's business generally results from large contracts relating to a
particular event, series of events or promotion. Although a significant
portion of ISM's revenue in any particular year is often attributable to a
small number of customers, such customers differ from year to year.

SOFTWARE DESIGN AND NETWORK SOLUTIONS

Industry Overview

As information technology has become increasingly complex and important,
businesses have used third party specialists to provide various services in
the design and implementation of electronic solutions. The worldwide
outsourcing market in 1995 has been estimated at over $18 billion, of which
more than 40% relates to market segments in which KCG does business, that is,
providing services in the development of applications software and solutions
for the desktop and distributed environments and networking. An industry
analyst has projected that the outsourcing market will increase substantially
in the next five years and that the market segments in which KCG does business
will increase as a percentage of the total outsourcing market.

KCG's Activities

The Company intends to acquire the existing business of KCG concurrently
with the closing of the Offering. The KCG Acquisition is expected to
strengthen the technical and creative foundation for the continued evolution
of the Company's proprietary digital platform and to enable the Company to
provide third party clients with software design and network solutions
services.

KCG was formed in 1994, but has been operating through a predecessor entity
since 1983. KCG provides varied software design and network solutions services
to businesses ranging from startup companies to Fortune 500 companies, such as
Chevron, Clorox, Intuit, National Semiconductor, Pacific Bell, Pacific
Telesis, VISA and Wells Fargo Bank. KCG has also provided software design
services to the Company in the development of the

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<PAGE>

proprietary software for the Company's digital platform. KCG is authorized as
a Microsoft Solutions Provider Partner and is also authorized as a service
provider for Pacific Bell, Lotus, IBM and Novell. KCG's areas of expertise
include ITV platforms, Internet applications (including specialization in
improving connectivity and access), groupware and e-mail applications,
networking products and database applications. Its services include design of
system architecture, installation and configuration of software and hardware,
custom software development, training, systems management support and trouble-
shooting. KCG enables its customers to tie new applications and new
technologies into existing information systems quickly and with minimal
disruption. It has been on the leading edge in developing structures for
multi-site computing to enhance the productivity of travelers, workers in
remote and field offices and the growing number of telecommuters.

During the year ended December 31, 1995 and the six months ended June 30,
1996, SeaVision accounted for 35% and 26%, respectively, of KCG's revenue.
Other significant customers during the year ended December 31, 1995 were Read-
Rite Corporation and Watkins-Jonson International which accounted for 15% and
10%, respectively, of KCG's revenue. After the KCG Acquisition, KCG will
continue to provide technical and creative support in the further development
of the Company's digital platform and third party services. Historically, KCG
has served customers primarily in the San Francisco Bay area. The Company may
seek to expand its operations into other geographic areas in which the Company
does business and expects that KCG's software design and network solutions
business will benefit from referrals from the Company's other businesses. The
Company also expects to benefit from KCG's relationships with major computer
software and hardware companies.

SUPPLIERS

The Company does not manufacture the hardware components it uses, but has
one or more sources of supply for all such components. The Company purchases
components through purchase orders and does not have long term supply
contracts. The Company believes that reasonable alternative sources of supply
exist for all components.

The Company has entered into agreements with distributors of motion pictures
for nontheatrical viewing under which the distributor licenses to the Company
the right to make pay-per-view movies available on the Company's ITV system.
Payment to the distributor is based on revenue derived from the sale of such
movies on the Company's ITV system. The distributor pays the associated
royalties to the motion picture studios and other third parties. Although a
specific title may be available from a single source, the Company does not
anticipate that it will experience difficulty in obtaining these products.

The retail offerings of merchandise on the Company's ITV system are made
pursuant to various electronic retail sales agreements between the Company and
individual vendors. The Company has also entered into a consulting agreement
with a third party for the provision of consulting services related to retail
marketing and assistance in contracting with vendors for the sale of
merchandise on the Company's system. The Company pays such consultant a fixed
consulting fee and, after recapturing such fee, a portion of the revenue
generated from the sale of merchandise by a vendor introduced to the Company
by the consultant or with which the consultant assisted in contracting. The
Company presently offers for sale items from such vendors as Bobby Jones
Sportswear, Wenger Swiss Army Brand and The Nature Company. The Company is
seeking other vendors in order to expand its shopping service; it does not
anticipate any difficulty in contracting with vendors to offer and sell retail
products on the Company's system.

The Company currently plans to offer user-pay video games and music-on-
demand on its ITV system; however, it has not entered into any contract with a
distributor or other source of supply of the product for such services.
Although there can be no assurance, management does not anticipate any
difficulty in securing such sources of video games and music-on-demand
product.

MARKETING AND SALES

The Company's marketing and sales efforts are directed toward several
distinct groups: customers (such as cruise and hotel operators) that will
contract for the installation and operation, or the sale, of the Company's

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<PAGE>

digital platform and ITV system; advertisers and merchandisers who will
utilize the ITV system to deliver promotional messages of various kinds to
system users; retailers who will sell products on the Company's ITV shopping
service; and end users of the system (such as cruise passengers and hotel
guests) who utilize pay services that generate revenue for the Company.

The Company has a 15 person sales and marketing staff. Three members of this
staff currently focus on the travel and leisure industry, ten focus on the
Company's sports marketing business and two focus on software design and
network solutions. The Company, however, intends to emphasize the marketing of
an integrated package of its services in order to provide effective marketing
solutions to its clients. The Company also markets its products and services
and seeks advertisers and retailers through independent sales agencies.

The Company's shipboard representatives also market its services to end
users of its ITV system. Responsibilities of the shipboard representative
include implementing company-wide programs and policies to enhance revenue
from each service offered by the system. The Company may offer price
reductions for pay-per-view movies or merchandise, and free credits, prizes
and sweepstakes for video gaming.

The Company intends to pursue contractual arrangements with national
advertisers seeking to reach specific targeted audiences. The Company's ITV
system has significant capability to report response and use frequency.

COMPETITION

The interactive services industry is in the early stages of its development.
The Company competes with numerous other companies utilizing various
technologies and marketing approaches, and the Company anticipates that
additional competition will develop in all of the markets that the Company is
targeting. A number of these companies are larger than the Company and have
greater financial and other resources. The Company is unable to predict the
level of competition that will actually develop and the time frame in which it
will develop.

In the cruise line market, although cruise operators have received many
proposals to develop and install ITV systems, to the Company's knowledge, no
system with features comparable to the Company's has been installed on a
cruise ship. The Company believes that the architecture of the Company's
platform and its adaptation to the cruise environment will be difficult to
duplicate and that its successful implementation of its system gives it a
competitive advantage. However, there can be no assurance that competitors,
some of which may have greater financial resources than the Company, will not
enter the field.

Two companies are the dominant providers of interactive and cable television
services to the lodging industry. These competitors are larger and have
greater resources than the Company. There are also a number of small regional
providers and a number of potential competitors such as cable companies,
telecommunications companies and direct-to-home and direct broadcast satellite
companies that could provide in-room entertainment to the lodging industry.
Although the Company believes that its ITV system includes features that are
not currently available to the lodging industry, there can be no assurance
that the Company will be able to penetrate this market.

The sports marketing and software design and network solutions services
industries are fragmented and highly competitive. A number of the companies
and sales agencies that provide such services are larger than the Company and
have greater resources, both financial and otherwise. ISM generally competes
based on its specialized promotional and event marketing capabilities. The
business of ISM could be adversely affected if one or more large competitors
decide to directly focus their resources on providing the same services in the
same markets as ISM.

The digital imaging market is new and rapidly evolving. The Company expects
that a highly competitive market will develop and that many of the competitors
may have longer operating histories and greater resources than the Company.

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<PAGE>

TECHNOLOGY AND LICENSING

In the initial development of its system, the Company acquired a software
license from a developer of a hotel ITV system. The Company has made major
modifications to its system and its software since that time and now uses only
certain communications software from the licensed package. The Company intends
to develop communications software which does not make use of the licensed
rights. The Company also licenses from a software developer certain of the
software utilized in connection with the printing of digital images on cruise
ships.

The Company has used the services of third party software and graphics
designers in the development of its digital platform and ITV system. All
proprietary rights to the platform and system belong to the Company. KCG was
the principal software designer involved in software development for the
platform. While third party graphics designers have been important in
developing the visual amenities of the Company's system, if the Company should
no longer have access to their services, the Company believes that its in-
house personnel are capable of performing these functions or, if necessary,
that it will be able to engage third party graphics designers and personnel
capable of doing so. See "Risk Factors--Dependence on Key Personnel."

The ability of the Company to maintain a standard of technological
competitiveness is a significant factor in the Company's strategy to maintain
and expand its customer base, enter new markets and generate revenue. There
can be no assurance that future technological advances by direct competitors
or other providers will not result in improved equipment or software systems
that could adversely affect the Company's business. Also, the Company does not
have patents on any of its technology and relies on a combination of copyright
and trade secret laws and contractual restrictions to protect its technology.
There can be no assurance that the legal protections afforded to the Company
and the measures taken by it will be adequate to protect its technology.

GOVERNMENT REGULATION

The Company's ITV system currently offers games of chance to cruise ship
passengers while operating in international waters. However, such gaming
cannot be offered while the ship is in any United States port and it cannot be
offered in any United States hotel room at this time. Such service is
discontinued while a cruise ship is in port and will not be offered to hotels.

LEGAL PROCEEDINGS

The Company from time to time is involved in litigation incidental to the
conduct of its business. There are no pending legal proceedings to which the
Company or any of its subsidiaries is a party, or to which any of their
respective properties is subject.

EMPLOYEES

As of July 31, 1996, the Company had 57 employees. None of these employees
is covered by a collective bargaining agreement. The Company has never
experienced a strike or work stoppage and believes its relationship with its
employees to be good.

PROPERTIES

The Company's executive offices are located in leased premises in
Pittsburgh, Pennsylvania. The Company also leases premises for the operations
of SeaVision in Lisbon, Ohio, for the operations of ISM in Pittsburgh and for
the operations of KCG in Oakland, California and sales and marketing offices
for SeaVision and ISM in Miami, Florida and New York City, respectively. The
Company believes that its properties are adequate for its operations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning each of the
directors and executive officers of the Company. Ages are given as of August
1, 1996.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- --------------------------------------
<S> <C> <C>
Richard W. Talarico.................. 41 Chairman of the Board and Chief
Executive Officer
R. Daniel Foreman.................... 33 President and Director
Brian K. Blair....................... 34 Chief Operating Officer, Secretary and
Director
Jon E. VanAmringe.................... 47 Chief Financial Officer and Treasurer
William C. Kavan(1)(2)............... 45 Director
James C. Roddey(1)................... 63 Director
Richard S. Trutanic(1)............... 44 Director
</TABLE>
- --------
(1) Member of Compensation Committee. Richard S. Trutanic, who will become a
director of the Company after the closing of the Offering, will also serve
as a member of the Compensation Committee.

(2) Member of Audit Committee. It is contemplated that at least one additional
independent director will be appointed to serve on the Audit Committee
following the Offering.

Richard W. Talarico became Chairman of the Board and Chief Executive Officer
of the Company in July 1996. He has served as a director of SeaVision since
October 1994 and as Chairman of the Board and Chief Executive Officer of
SeaVision since June 1996. Mr. Talarico has served SeaVision in various other
capacities, including Vice President of Finance from October 1994 to October
1995, President from October 1995 to June 1996 and Chief Financial Officer,
Secretary and Treasurer from October 1994 to June 1996. Since 1991, Mr.
Talarico has been a partner in The Hawthorne Group ("THG"), where he has been
involved in numerous business ventures and has served in various financial and
operating capacities. THG is a private investment and management company which
invests through affiliates primarily in media and communications companies.

R. Daniel Foreman became a director and President of the Company in July
1996. He has served as a director of SeaVision since October 1994 and as
President since June 1996. Mr. Foreman also served as Vice President of
Technology of SeaVision from October 1994 to June 1996. Since May 1989, Mr.
Foreman has served as Executive Vice President of Blair Haven Entertainment,
Inc., which operates under the name Commercial Downlink ("Commercial
Downlink"), a company founded to serve the needs of the satellite
communications industry, where he has been responsible for technology
development and implementation. Since 1992, Mr. Foreman has been Executive
Vice President of ComTek Printing & Graphics Inc. ("ComTek"), a commercial
printing company. He also serves as President of Digital Media Corp., a
company which provides closed-circuit video to racetracks. Since the formation
of SeaVision in June 1994, Mr. Foreman has devoted substantially all of his
time to its operations.

Brian K. Blair became a director, Chief Operating Officer and Secretary of
the Company in July 1996. Mr. Blair has served as a director of SeaVision
since October 1994. Mr. Blair also served as Vice President of Administration
and Operations of SeaVision from October 1994 until June 1996. Since May 1989,
Mr. Blair has been President of Commercial Downlink where he is responsible
for the day-to-day activity of such company. Mr. Blair also serves as
Secretary and Treasurer of Digital Media Corp. Since the formation of
SeaVision in June 1994, Mr. Blair has devoted substantially all of his time to
its operations.

Jon E. VanAmringe joined the Company as Chief Financial Officer and
Treasurer in September 1996. From November 1995 until joining the Company, he
served as Vice President of MED3000 Group, Inc., a physician practice
management company involved in the development and management of integrated
health care delivery systems. From 1993 to 1995 he served as Vice President
and Chief Financial Officer of Strategic Advisory

43
<PAGE>

Group, Inc., a firm involved in providing consulting and management services
to physician groups and others in the healthcare industry which later merged
into MED3000 Group, Inc., and as President of Strategic Capital Group, a firm
which provided financial and management services. Mr. VanAmringe served as
Managing Director of Corporate Finance of Mid Atlantic Capital Group from 1989
to 1993 and was employed by Spectrum Control, Inc., a publicly traded
electronic component manufacturer, from 1982 to 1989, most recently as Senior
Vice President and Chief Financial Officer.

William C. Kavan became a director of the Company in July 1996 and has
served as a director of SeaVision since October 1994. Since 1980, Mr. Kavan
has been president of Berkely-Arm, Inc. ("Berkely"), the largest provider of
revenue generating passenger insurance programs for the cruise industry.
Berkely serves twenty-five cruise line clients, including Carnival, Costa,
Cunard, Epirotiki, NCL, P&O, Princess, Radisson and Royal Caribbean.

James C. Roddey became a director of the Company in July 1996 and has served
as a director of SeaVision since October 1994. Mr. Roddey served as President
of ISM from 1992 to 1996 and currently serves as Chairman and a director of
ISM. He has served as Chairman or as President of various other entities
affiliated with THG, including President of Star Cable Associates, a cable
television operator in various states, since 1991. He served as President of
Turner Communications Corporation from 1968 to 1971, and as President of
Rollins Communications Corporation from 1971 to 1979. Mr. Roddey currently
serves as a Trustee of the University of Pittsburgh.

Richard S. Trutanic will become a director of the Company after the closing
of the Offering as discussed in "Underwriting." He has been President and
Managing Director of The Somerset Group, a financial advisory firm, since 1990
and senior advisor to Friedman, Billings, Ramsey & Co., Inc., an investment
banking firm, since 1993. Mr. Trutanic was, from 1985 to 1990, a director and
member of the Executive Committee of Telecom U.S.A. (formerly SouthernNet,
Inc.), a telecommunications company. He is a Trustee of the New York Life
Mainstay Funds and a director of several private companies.

COMPENSATION OF DIRECTORS

Pursuant to the 1996 Stock Plan, the non-employee directors of the Company
will be entitled, following the Offering, to receive at the conclusion of each
year of service, an automatic grant of an immediately exercisable option to
acquire 5,000 shares of Common Stock at an exercise price per share equal to
the closing price of the Common Stock as reported by NASDAQ for the date on
which the option is granted. Non-employee directors of the Company will also
be entitled to receive $2,500 for each Board of Directors meeting attended and
$500 for each separate committee meeting attended on a date on which no full
board meeting is held. Directors of the Company who are also employees will
not receive additional compensation for attendance at Board and committee
meetings, except that all directors will be reimbursed for out-of-pocket
expenses in connection with attendance at Board and committee meetings. For
additional information concerning the 1996 Stock Plan, see "-- 1996 Stock
Plan."

COMPENSATION OF EXECUTIVE OFFICERS

During the year ended December 31, 1995, Richard W. Talarico, Chief
Executive Officer of the Company, was employed by The Hawthorne Group, Inc.
("Hawthorne") which received payments from SeaVision under a consulting
agreement. See "Certain Transactions." No separate allocation of the
compensation paid to Mr. Talarico by Hawthorne was made for services performed
by Mr. Talarico on behalf of SeaVision during 1995. Under employment
agreements with the Company, Mr. Talarico, R. Daniel Foreman, President of the
Company, and Brian K. Blair, Chief Operating Officer of the Company, will earn
salaries of $62,500 each during 1996 and Jon E. VanAmringe, Chief Financial
Officer of the Company, will earn a salary of $40,833 during 1996. See "--
Employment Agreements" for additional information regarding these employment
arrangements.

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<PAGE>

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Richard W. Talarico,
R. Daniel Foreman, Brian K. Blair and Jon E. VanAmringe. Each such employment
agreement contains restrictive covenants prohibiting such officer from
competing with the Company for a period of three years after the end of the
employment term in the case of Messrs. Talarico, Foreman and Blair, and for a
period of two years after the end of the employment term in the case of Mr.
VanAmringe. The terms of the employment agreements with Messrs. Talarico,
Foreman and Blair commenced as of August 1, 1996 and will continue through
December 31, 1999. The term of the employment agreement with Mr. VanAmringe
commenced as of September 16, 1996 and will continue through December 31,
1998. The annual salaries as set forth in the employment agreements are
$150,000 for each of Messrs. Talarico, Foreman and Blair and $140,000 for Mr.
VanAmringe.

Pursuant to the employment agreements, options to acquire shares of Common
Stock granted to Messrs. Talarico, Foreman, Blair and VanAmringe under the
1996 Stock Plan will, if not already vested, vest on the date of a change in
control of the Company, defined as a sale of all or substantially all of the
Company's assets, a merger in which the Company is not the surviving
corporation or when a person or group, other than the stockholders of
SeaVision as of August 1, 1996, owns 50% or more of the outstanding Common
Stock. The employment agreements also provide that each of Messrs. Talarico,
Foreman, Blair and VanAmringe will be entitled to receive for one year
following such person's termination of employment by the Company without cause
or contemporaneously with the occurrence of a change in control, semi-monthly
severance payments equal to the semi-monthly base salary payment which such
person was receiving immediately prior to such termination. Mr. VanAmringe
will be entitled to receive such payments for only six months if a termination
without cause, other than by change of control, occurs after December 31,
1997. If Mr. VanAmringe voluntarily resigns prior to December 31, 1997, he
will be entitled to receive semi-monthly payments equal to the semi-monthly
base salary payment he was receiving immediately prior to his resignation for
six months or, if earlier, until such time that he begins other full-time
employment.

1996 STOCK PLAN

Immediately prior to the effectiveness of the Registration Statement of
which this Prospectus is a part, the Board of Directors will adopt the 1996
Stock Plan. The 1996 Stock Plan provides for awards of stock options, stock
appreciation rights, restricted shares and restricted units to officers and
other executive employees of the Company and to consultants and advisors
(including non-employee directors) of the Company. An aggregate of 266,000
shares of Common Stock has been reserved for issuance under the 1996 Stock
Plan.

The 1996 Stock Plan will be administered by the Board of Directors which has
broad discretion to determine the individuals entitled to participate in the
1996 Stock Plan and to prescribe conditions (such as the completion of a
period of employment with the Company following an award) that must be
satisfied before awards vest. Awards under the 1996 Stock Plan may be made in
the form of incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and options that are
non-qualified for federal income tax purposes. Participants in the 1996 Stock
Plan may also receive stock appreciation rights ("SARs"), which may be awarded
separately from or in tandem with any option granted under the 1996 Stock
Plan. In addition, the Board of Directors may, in its discretion, award
restricted shares or restricted units under the 1996 Stock Plan.

Effective upon the closing of the Offering, the Board of Directors will
award options to purchase an aggregate of 198,000 shares of Common Stock at
the initial public offering price. Of this amount, Richard W. Talarico and all
executive officers as a group will receive options to purchase 21,000 and
77,000 shares, respectively, of Common Stock. There will be a five-year
vesting period for grantees who are employees of the Company. All of these
options will be non-qualified options for federal income tax purposes.
Effective upon the closing of the KCG Acquisition, the Board of Directors will
grant 26,666 shares of restricted stock under the 1996 Stock Plan to various
employees of KCG.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as to the ownership of
Common Stock as of the effective date of the Registration Statement, and after
giving effect to the sale of the shares of Common Stock offered hereby by (i)
each person who is known to the Company to own beneficially more than five
percent of the outstanding shares of Common Stock, (ii) each director and
(iii) all executive officers and directors as a group. Except as indicated
below, the persons named have sole voting and investment power with respect to
all shares shown as being beneficially owned by them.

<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY OWNED COMMON STOCK
-------------------- -----------------
BEFORE AFTER BEFORE AFTER
NAME OFFERING OFFERING OFFERING OFFERING
- ---- --------- ---------- -------- --------
<S> <C> <C> <C> <C>
Henry Posner, Jr. (1)................... 964,800 1,111,240 40.2% 22.7%
500 Greentree Commons
381 Mansfield Avenue
Pittsburgh, PA 15220
Thomas D. Wright (1).................... 241,200 277,810 10.1% 5.7%
500 Greentree Commons
381 Mansfield Avenue
Pittsburgh, PA 15220
Terence M. Graunke (1).................. 241,200 277,810 10.1% 5.7%
400 West Erie
Suite 504
Chicago, IL 60610
Richard W. Talarico (1)................. 80,400 92,603 3.4% 1.9%
R. Daniel Foreman....................... 198,000 198,000 8.3% 4.1%
Brian K. Blair.......................... 198,000 198,000 8.3% 4.1%
William C. Kavan (1).................... 100,800 100,800 4.2% 2.1%
James C. Roddey......................... 80,400 92,603 3.4% 1.9%
All executive officers and directors as
a group (6 persons) (1)................ 657,600 682,006 27.4% 14.0%
</TABLE>
- --------
(1) Ownership of shares following the Offering for Messrs. Posner, Wright,
Graunke, Talarico and Roddey and for all executive officers and directors
as a group include the shares of Common Stock to be issued upon conversion
of the Stockholder Loans into Common Stock. See "Certain Transactions--
Stockholder Loans." Ownership of shares for Messrs. Posner, Wright,
Talarico, Kavan and Roddey and for all executive officers and directors as
a group does not include the shares of Common Stock that may be issued
upon conversion of the shares of Convertible Preferred Stock owned by such
persons. See "Certain Transactions--Sale of Convertible Preferred Stock."

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<PAGE>

CERTAIN TRANSACTIONS

CONSULTING AGREEMENTS

SeaVision and Berkely were parties to a Consulting Agreement, entered into
in June 1994 and terminated as of June 30, 1996, which required Berkely to
provide certain marketing, sales and consulting services to SeaVision,
including the design and development of marketing strategies for the cruise
ship industry. William C. Kavan, a principal of Berkely, is a director of the
Company. The consulting agreement provided for the payment of a consulting fee
of $10,000 per month to Berkely, which was reduced to $2,000 per month in
January 1996. SeaVision was also obligated to pay $200 per hour for services
rendered by certain professional personnel of Berkely. During the fiscal years
ended December 31, 1994 and 1995, SeaVision paid $97,229 and $181,228,
respectively, and as of June 30, 1996 SeaVision was obligated to pay $12,000,
to Berkely under the consulting agreement, including out-of-pocket expenses.

SeaVision and Hawthorne were parties to a Consulting Agreement, entered into
in June 1994 and terminated as of June 30, 1996, which required Hawthorne to
provide SeaVision certain accounting and financial services, including the
preparation of financial models and plans, the design and implementation of
accounting systems and controls and assistance in acquiring third party
financing. Henry Posner, Jr. and Thomas D. Wright, each of whom owns more than
ten percent of the outstanding Common Stock, and two of Mr. Posner's sons are
shareholders of Hawthorne, and Messrs. Posner and Wright and Richard W.
Talarico, a director and executive officer of the Company, and James C.
Roddey, a director of the Company, were shareholders of Hawthorne Media Group,
Inc. ("HMG"), the original party to the agreement which assigned its rights
and obligations thereunder to Hawthorne. The consulting agreement provided for
the payment of a consulting fee of $18,000 per month. During the fiscal years
ended December 31, 1994 and 1995, SeaVision paid an aggregate of $149,437 and
$205,252, respectively, and as of June 30, 1996, SeaVision was obligated to
pay $143,138, to Hawthorne and HMG under the consulting agreement, including
out-of-pocket expenses.

AGREEMENTS WITH COMMERCIAL DOWNLINK AND AFFILIATE

SeaVision and Commercial Downlink were parties to an agreement entered into
in June 1994 and terminated as of July 31, 1996, which required Commercial
Downlink to act as a general contractor for the installation of ITV systems on
cruise ships, and to devote its full-time efforts to the business of
SeaVision. Brian K. Blair and R. Daniel Foreman, principals of Commercial
Downlink, are executive officers and directors of the Company and currently
own more than five percent of the outstanding Common Stock. SeaVision
reimbursed Commercial Downlink, at cost, for construction services and
materials provided in connection with the installation of SeaVision systems on
cruise ships. SeaVision also paid Commercial Downlink a monthly management
fee. During the fiscal years ended December 31, 1994 and 1995 and the six
months ended June 30, 1996, SeaVision paid $147,000, $322,000 and $91,600,
respectively, to Commercial Downlink under the consulting agreement in
addition to reimbursing Commercial Downlink for construction services and
materials provided in connection with the installation of ITV systems on
cruise ships.

As of August 1, 1996, SeaVision and Commercial Downlink entered into a
sublease agreement relating to facilities in Lisbon, Ohio owned by Comtek, a
majority owned subsidiary of Commercial Downlink, and including provisions
pursuant to which Commercial Downlink will provide certain administrative
services for an aggregate monthly payment of $3,700. Such agreement is
terminable on 30 days' prior notice by either party. The Company believes that
such payments are on terms as favorable to the Company as could be obtained
from an unaffiliated party.

During the fiscal years ended December 31, 1994 and 1995 and the six months
ended June 30, 1996, SeaVision made payments to ComTek in the amounts of
approximately $7,000, $25,000 and $40,000, respectively, for commercial
printing services. The Company believes that such payments were on terms as
favorable to the Company as could have been obtained from an unaffiliated
third party. The Company expects to continue to conduct business with ComTek
in the future.

47
<PAGE>

In 1996, SeaVision made advances in the aggregate amount of $53,730 to
Commercial Downlink. These advances have been repaid.

TRANSACTIONS RELATING TO FORMATION AND ORGANIZATION OF SEAVISION

Brian K. Blair and R. Daniel Foreman (the "Commercial Downlink
Shareholders"), Henry Posner, Jr., Thomas D. Wright, Terence M. Graunke, James
C. Roddey and Richard W. Talarico (the "Hawthorne Shareholders"), and William
C. Kavan, Mark Kottler and David F. Gould (the "Kavan Shareholders") were the
founders of SeaVision. Each group of founders received from SeaVision the
amount of expenses incurred by it in forming and organizing SeaVision in 1994.
The Hawthorne Shareholders received reimbursement of expenses in the amount of
$21,437, the Commercial Downlink Shareholders received reimbursement of
expenses in the amount of $109,083, and the Kavan Shareholders received
reimbursement of expenses in the amount of $17,871.

Pursuant to an Assignment of Intellectual Property Rights dated October 3,
1994, Commercial Downlink, Brian K. Blair and R. Daniel Foreman contributed to
SeaVision, intellectual property rights relating to the technology utilized by
SeaVision.

TRANSACTIONS RELATING TO FORMATION AND ORGANIZATION OF THE COMPANY

In August 1996, a merger (the "Formation Merger") occurred in which
SeaVision, Inc., a Delaware corporation ("Old SeaVision"), merged with and
into SeaVision Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of the Company, with SeaVision Acquisition Corporation
surviving the Formation Merger and changing its name to SeaVision, Inc. In the
Formation Merger, each share of common stock of Old SeaVision was converted
into one share of Common Stock. All shares of Common Stock currently
outstanding were issued in the Formation Merger. In connection with the
Formation Merger, the holders of shares of Common Stock of the Company were
granted certain registration rights. See "--Registration Rights".

STOCKHOLDER LOANS

In each of fiscal years 1994, 1995 and 1996, the Funding Stockholders made
various Stockholder Loans to SeaVision. Each Stockholder Loan, represented by
a promissory note which requires the principal amount outstanding under the
note to be paid in full on the third anniversary of the date of the note,
bears interest at a rate of 15% per annum, compounded quarterly. Stockholder
Loans were made in the following aggregate principal amounts: Mr. Posner--
$4,166,014; Mr. Wright--$1,041,506; Mr. Graunke --$718,800; Mr. Roddey--
$347,165; and Mr. Talarico--$347,165. Mr. Graunke owns more than ten percent
of the outstanding Common Stock. Stockholder Loans in an aggregate amount up
to $1.5 million are guaranteed by each of Brian K. Blair, R. Daniel Foreman
and William C. Kavan. Such guarantees are secured by a pledge of the shares of
Common Stock owned by Messrs. Blair, Foreman and Kavan.

On May 31, 1996, the Company used $3.6 million of the $5.0 million available
under its line of credit from Integra Bank (now National City Bank) (the
"Integra Loan") to repay a portion of the principal amount of the Stockholder
Loans, leaving Stockholder Loans in the following aggregate principal amounts
outstanding: Mr. Posner--$1,800,000; Mr. Wright--$450,000; Mr. Graunke--
$450,000; Mr. Roddey--$150,000; and Mr. Talarico $150,000. The Company intends
to use approximately $1.0 million of the net proceeds of the Offering to pay
the accrued interest on the Stockholder Loans. See "Use of Proceeds." The
Funding Stockholders have agreed, contingent upon the completion of the
Offering, to convert the remaining principal balance of the Stockholder Loans
into shares of Common Stock at a rate of approximately 8.1 shares of Common
Stock for each $100 principal amount outstanding, or approximately $12.29 per
share. The conversion rate was determined after consultation with the
Underwriters and is based upon an assumed value of the Company without giving
effect to the Offering. Cash payments will be made in lieu of the issuance of
fractional shares of Common Stock upon such conversion. The Funding
Stockholders will receive the following number of shares of Common Stock upon
conversion of the Stockholder Loans: Mr. Posner--146,440 shares; Mr. Wright--
36,610 shares; Mr. Graunke--36,610 shares; Mr. Roddey--12,203 shares and Mr.
Talarico--12,203 shares. The holders of these shares will have certain
registration rights with respect to these shares. See "--Registration Rights."

48
<PAGE>

On July 19, 1996, William C. Kavan made a loan in the amount of $1.0 million
to SeaVision at the interest rate of 8% per annum. Such loan was converted
into 10,000 shares of Convertible Preferred Stock following the Formation
Merger.

INTEGRA LOAN GUARANTEE

The Integra Loan was personally guaranteed by each of Messrs. Posner,
Wright, Roddey and Talarico and by Lyndhurst Associates, a Pennsylvania
limited partnership ("Lyndhurst"), for which such guarantors receive a
guarantee fee from time to time based on a percentage of the outstanding
principal balance of the Integra Loan. Such percentage is the difference
between 15%, the interest rate on the Stockholder Loans, and the interest rate
on the Integra Loan. Mr. Posner is the Managing General Partner of Lyndhurst.

LEGAL SERVICES

During each of the fiscal years ended December 31, 1995 and 1994, SeaVision
retained the law firm of Eckert Seamans Cherin & Mellott ("Eckert Seamans") to
represent SeaVision on various matters. During each of the fiscal years ended
December 31, 1995, 1994 and 1993, ISM retained Eckert Seamans to represent ISM
on various matters. Thomas D. Wright is a partner and chairman of the
Operations Committee of Eckert Seamans.

SALE OF CONVERTIBLE PREFERRED STOCK

On August 16, 1996, the Company issued 10,000 shares of Convertible
Preferred Stock to William C. Kavan in exchange for the extinguishment of a
$1.0 million loan to SeaVision. Additionally, on August 16, 1996, the Company
sold approximately 7,059, 1,765, 588 and 588 shares of Convertible Preferred
Stock to Henry Posner, Jr., Thomas D. Wright, Richard W. Talarico and James C.
Roddey, respectively, for an aggregate purchase price of $1.0 million. During
the seven-month period beginning six months after the closing of the Offering
(the "Conversion Period"), each holder of Convertible Preferred Stock will
have the right to convert all, but not less than all, of the Convertible
Preferred Stock then owned by such holder into shares of Common Stock at the
rate of approximately 8.1 shares of Common Stock for each share of Convertible
Preferred Stock, or approximately $12.29 per share (as adjusted for stock
dividends, stock splits, reverse stock splits and any other stock combination
or division). Cash payments will be made in lieu of the issuance of any
fractional shares of Common Stock upon any such conversion. If all of the
shares of Convertible Preferred Stock held by Messrs. Posner, Wright,
Talarico, Roddey and Kavan are converted into Common Stock during the
Conversion Period, Messrs. Posner, Wright, Talarico, Roddey and Kavan will
receive 57,427, 14,365, 4,785, 4,785 and 81,355 shares, respectively, of
Common Stock. See "Description of Capital Stock--Series A Convertible
Redeemable Preferred Stock." The holders of these shares will have certain
registration rights with respect to these shares. See "-- Registration
Rights."

REGISTRATION RIGHTS

If the Company issues shares of Common Stock upon conversion of the
Convertible Preferred Stock (the "Conversion Shares"), the holders of
Conversion Shares will have certain rights to require the Company to register
the Conversion Shares under the Securities Act. Under the terms of the
registration rights agreement relating to the Conversion Shares, the holders
of Conversion Shares and their transferees holding at least the number of
Conversion Shares into which 5,000 shares of Convertible Preferred Stock have
been converted will have the right, until the third anniversary of the last
date on which the Convertible Preferred Stock may be converted into Common
Stock (the "Commencement Date"), to require the Company, on one occasion, to
register the Conversion Shares for public offering and sale on Form S-3 in a
"shelf" registration pursuant to Rule 415 under the Securities Act. If any
holder requests a shelf registration, all Conversion Shares will be registered
thereunder unless a holder requests that all or a portion of his Conversion
Shares be excluded. Holders of a majority of the Conversion Shares will also
have the right on one occasion to elect to have their Conversion Shares which
are registered on the shelf registration statement sold in an underwritten
offering. In addition, the holders of Conversion Shares and their transferees
will have the right to participate in any registration of

49
<PAGE>

Common Stock for an underwritten offering initiated by the Company or any
other stockholder of the Company prior to the third anniversary of the
Commencement Date, subject to certain limitations. The Company will pay all
out-of-pocket expenses of any such registrations, including fees and expenses
of one counsel for the holders of Conversion Shares and their transferees, but
not including underwriting discounts and commissions, and will indemnify the
holders of Conversion Shares and their transferees against certain liabilities
under the federal securities laws, in connection therewith.

The current holders of Common Stock will also have certain rights under a
registration rights agreement to require the Company to register under the
Securities Act such shares and the shares of Common Stock to be issued upon
conversion of the Stockholder Loans. Such rights are substantially similar to
the rights granted to holders of Conversion Shares. However, holders of such
shares and their transferees holding at least ten percent of the shares
covered are required to cause the Company to register the shares for public
offering and sale on Form S-3 in a shelf registration pursuant to Rule 415
under the Securities Act. The sole stockholder of KCG will have the right,
subject to certain limitations, to have the shares of Common Stock that he
receives upon consummation of the KCG Acquisition included in any registration
statement that includes shares to be registered at the request of the current
stockholders under such registration rights agreement.

The holders of Convertible Preferred Stock, the existing stockholders and
the individual receiving Common Stock in connection with the KCG Acquisition
have agreed, or will agree, not to sell any Conversion Shares or other shares
of Common Stock owned by them and subject to the registration rights
agreements described above for a period of twelve months following the closing
of the Offering. See "Shares Eligible for Future Sale."

VIDEO PRODUCTION PAYMENTS

During the fiscal years ended December 31, 1994 and 1995 and the six months
ended June 30, 1996, SeaVision made payments to Production Masters, Inc.
("PMI") in the amounts of approximately $10,000, $137,000 and $118,000,
respectively, for the production of videos and other visual media for use with
the Company's ITV system. Messrs. Posner, Wright, Roddey and Talarico are
shareholders of PMI. The Company believes that such payments were on terms as
favorable to the Company as could have been obtained from an unaffiliated
party. The Company expects to continue to conduct business with PMI in the
future.

ARRANGEMENTS INVOLVING ISM

The Company, ISM and the ISM stockholders have entered into the ISM Stock
Purchase Agreement pursuant to which the Company will acquire all of the
issued and outstanding shares of capital stock of ISM from the ISM
stockholders promptly following, and conditioned upon, the closing of the
Offering. See "Background--The Acquisitions--ISM Acquisition." The aggregate
purchase price to be paid to the ISM stockholders by the Company in the ISM
Acquisition is a maximum of $4.8 million, consisting of $2.4 million in cash
at the time of closing of the Acquisition and up to $2.4 million in contingent
payments. One-half of the contingent payments, if any, is to be paid by
delivery to the ISM stockholders of promissory notes bearing interest at seven
percent per annum.

Henry Posner, Jr., Thomas D. Wright, Richard W. Talarico and James C. Roddey
are ISM stockholders. At the closing of the ISM Acquisition, Messrs. Posner,
Wright, Talarico and Roddey will receive cash payments in the amounts of
approximately $1,273,000, $791,000, $48,000 and $120,000, respectively, and
will be entitled to receive contingent payments up to the same approximate
amounts (not including interest payable on any promissory note delivered in
respect of the contingent payments).

ISM and Hawthorne are parties to an oral management arrangement pursuant to
which Hawthorne provides general, administrative, accounting and tax planning
and preparation services to ISM for an aggregate of $5,000 per month. During
the fiscal years ended December 31, 1993, 1994 and 1995 and the six months
ended June 30, 1996, ISM made payments in the aggregate amounts of $60,000,
$60,000, $60,000 and $30,000, respectively, to Hawthorne under this agreement.
The Company intends to terminate this arrangement within 90 days of the
closing of this Offering.

50
<PAGE>

JOINT PROMOTIONAL ACTIVITIES

SeaVision, ISM, PMI and other entities affiliated with THG have engaged in
various joint promotional marketing activities and have shared the revenue and
expenses of such activities. Examples of such activity in 1996 are ISM sports
marketing events at which SeaVision supplied digital imaging services. The
Company believes that such activities involving SeaVision or ISM have been
conducted on terms as favorable to SeaVision and ISM as could have been
obtained from an unaffiliated party.

LEASES

During the fiscal years ended December 31, 1993, 1994 and 1995 and the six
months ended June 30, 1996, ISM made payments pursuant to a lease agreement in
the amount of $39,524, $53,777, $76,774 and $39,832, respectively, to
Executive Office Associates ("EOA") for the lease of office space. Henry
Posner, Jr., Thomas D. Wright and two of Mr. Posner's sons and his spouse each
own an indirect equity interest in EOA. The Company believes that such
payments were on terms as favorable to the Company as could have been obtained
from an unaffiliated third party. The Company anticipates that it will
maintain this lease.

As of each of May 1, 1996 and September 1, 1996, the Company entered into a
four-month lease for office space with EOA. The aggregate rental payment under
these leases is $68,508. The Company believes that such payment is on terms as
favorable to the Company as could have been obtained from an unaffiliated
third party. The Company intends to continue to lease office space from EOA.

KCG TRANSACTIONS

During the year ended March 31, 1994, and the nine months ended December 31,
1994, KCG's predecessor ("Predecessor") leased a building from its principal
shareholders. Rental payments made in accordance with the lease agreement were
approximately $102,000 and $76,000, respectively. During the year ended
December 31, 1995 and the six months ended June 30, 1996, KCG leased office
and other space and an automobile from its shareholder. Rental payments made
under these arrangements were approximately $69,000 and $40,000, respectively.
The Company intends to continue leasing such space and automobile on a month-
to-month basis for an aggregate of $5,600 per month. The Company believes that
such payments are on terms as favorable to the Company as could be obtained
from an unaffiliated party.

KCG had a marketing commission agreement with Predecessor under which
commissions of $100,000 were paid during the year ended December 31, 1995.
This agreement provided for certain rights of Predecessor to be used by KCG,
including customer lists and employment agreements with employees. This
agreement was terminated and the related rights were acquired by KCG,
effective November 1, 1995, for $150,000, of which $65,000 was paid during the
year ended December 31, 1995. The remaining $85,000 was in the form of a bank
loan assumption. Additionally, approximately $88,000 under a separate bank
loan was assumed in exchange for certain tangible assets.

KCG had notes receivable from Predecessor and another affiliated entity of
approximately $25,000 and $18,000 as of December 31, 1995. KCG had a
shareholder note payable of $79,964 as of December 31, 1995. Predecessor had a
note receivable from one of its principal shareholders of approximately
$14,000 as of December 31, 1994.

During the year ended December 31, 1995 and the six months ended June 30,
1996, KCG purchased equipment for approximately $50,000 and $122,000,
respectively, from affiliated entities. The Company believes that such
payments were on terms as favorable to the Company as could be obtained from
an unaffiliated party.

51
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The following is a description of certain provisions of the Company's
Certificate of Incorporation (the "Certificate"), Certificate of Designation
relating to the Convertible Preferred Stock (the "Designation") and By-Laws
(the "By-Laws)." See "Additional Information" as to how to obtain a copy of
these documents.

GENERAL

Prior to the closing of the Offering, the Company intends to amend the
Certificate to permit the Company to issue up to 20,000,000 shares of Common
Stock, par value $0.01 per share, and 100,000 shares of preferred stock, par
value $.01 per share (the "Preferred Stock"). The Designation provides that
40,000 shares of the authorized Preferred Stock have been designated, and may
be issued as, Series A Convertible Redeemable Preferred Stock, par value $100
per share. Following the Offering, there will be 4,884,065 shares of Common
Stock issued and outstanding and 25,000 shares of Series A Convertible
Redeemable Preferred Stock having a liquidation value of $100 per share issued
and outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be submitted to a vote of the stockholders. The
Certificate does not provide for cumulative voting for the election of
directors. Subject to preferences that may be applicable to any outstanding
shares of Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors of the Company out of funds legally available therefor. See
"Dividend Policy." The holders of Common Stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or
sinking fund provisions with respect to the Common Stock. All outstanding
shares of Common Stock are, and the Common Stock to be sold in the Offering,
when issued and paid for, will be, fully paid and nonassessable. In the event
of any liquidation, dissolution or winding-up of the affairs of the Company,
holders of Common Stock will be entitled to share ratably in the assets of the
Company remaining after payment or provision for payment of all of the
Company's debts and obligations and liquidation payments to holders of
outstanding shares of Preferred Stock.

UNDESIGNATED PREFERRED STOCK

The Board of Directors of the Company is authorized, without further action
of the stockholders, to issue up to 100,000 shares of Preferred Stock in one
or more classes or series and to fix the designations, powers, preferences and
the relative participating, optional or other special rights of the shares of
each series and any qualifications, limitations and restrictions thereon. Of
such authorized shares, 40,000 shares have been designated as Convertible
Preferred Stock. Any Preferred Stock issued by the Company may rank prior to
the Common Stock as to dividend rights, liquidation preference or both, may
have full or limited voting rights and may be convertible into shares of
Common Stock.

The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
acquiring or seeking to acquire, a significant portion of the outstanding
Common Stock.

SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK

The holders of Convertible Preferred Stock are entitled to receive, when and
as declared by the Company's Board of Directors, cumulative compounded
quarterly dividends at the rate of eight percent of the liquidation value
thereof per annum. If the Company has not consummated an initial public
offering of Common Stock on or before December 31, 1996, the dividend rate
will increase to 12% of the liquidation value thereof per annum from and after
such date. The holders of Convertible Preferred Stock have no voting rights
except as provided by the Delaware General Corporation Law (the "DGCL") and
except with respect to actions which affect adversely the rights and
preferences of the Convertible Preferred Stock set forth in the Designation.
The Convertible Preferred Stock is senior in right of payment and on
liquidation to the Common Stock.

52
<PAGE>

During the seven-month period beginning six months after the closing of the
Offering (the "Conversion Period"), each holder of Convertible Preferred Stock
will have the right to convert all, but not less than all, of the Convertible
Preferred Stock then owned by such holder into shares of Common Stock at the
rate of approximately 8.1 shares of Common Stock for each share of Convertible
Preferred Stock, or approximately $12.29 per share (as adjusted for stock
dividends, stock splits, reverse stock splits and any other stock combination
or division). Cash payments will be made in lieu of the issuance of any
fractional shares of Common Stock upon any such conversion. In connection
with, and upon such conversion, the holders of Convertible Common Stock will
have no right to receive any accrued and unpaid dividends. Shares of
Convertible Preferred Stock which are not converted to Common Stock during the
Conversion Period will remain outstanding until the earlier of the time such
shares are redeemed by the Company or June 30, 2006.

If the Company, prior to the end of the Conversion Period, issues Common
Stock or warrants or options exercisable for Common Stock (other than pursuant
to any employee stock option plan or director stock plan approved by the Board
of Directors of the Company), and the price per share at which such shares,
warrants or options are issued (the "New Share Price") multiplied by the
aggregate number of issued and outstanding shares of Common Stock (determined
on a fully diluted basis, but excluding shares then being issued or which are
issuable pursuant to warrants or options then being issued) is less than $35.0
million, then the outstanding shares of Convertible Preferred Stock will
become convertible into such additional number of shares of Common Stock equal
to a fraction, the numerator of which is the number of outstanding shares of
Convertible Preferred Stock multiplied by 100 and the denominator of which is
the New Share Price.

The Company has the right at any time after the Conversion Period but prior
to maturity, to redeem the outstanding shares of Convertible Preferred Stock
at $100 per share, plus accrued and unpaid dividends, if any. Unless earlier
redeemed or converted into Common Stock, the outstanding shares of Convertible
Preferred Stock are to be redeemed by the Company at $100 per share, plus
accrued and unpaid dividends, if any, on June 30, 2006.

CERTAIN ANTI-TAKEOVER EFFECTS OF CERTIFICATE AND BY-LAWS PROVISIONS

Certain provisions of the Certificate and By-Laws summarized in the
following paragraphs may be deemed to have anti-takeover effects. These
provisions may have the effect of discouraging a future takeover attempt which
is not approved by the Board of Directors but which individual Company
stockholders may deem to be in their best interests or in which stockholders
may receive a substantial premium for their shares over then-current market
prices. As a result, stockholders who might desire to participate in such a
transaction may not have an opportunity to do so. Such provisions will also
render the removal of the current Board of Directors more difficult.

Number of Directors; Removal; Filling Vacancies

The Certificate and By-Laws provide that the number of directors will be
fixed from time to time with the consent of two-thirds of the Board of
Directors. Moreover, the Certificate provides that directors may only be
removed with cause by the affirmative vote of the holders of at least a
majority of the outstanding shares of capital stock of the Company then
entitled to vote at an election of directors. This provision prevents
stockholders from removing any incumbent director without cause and allows
two-thirds of the incumbent directors to add additional directors without
approval of stockholders until the next annual meeting of stockholders at
which directors are elected.

Advance Notice of Nominations and Stockholder Proposals

The By-Laws contain a provision requiring at least 60 but no more than 90
days' advance notice by a stockholder of a proposal or director nomination
that such stockholder desires to present at any annual or special meeting of
stockholders, which would prevent a stockholder from making a proposal or a
director nomination at a stockholder meeting without the Company having
advance notice of the proposal or director nomination. This provision could
make a change in control more difficult by providing the directors of the
Company with more time to prepare an opposition to a proposed change in
control.

53
<PAGE>

Vote Requirement for Calling Special Meeting

The By-Laws also contain a provision requiring the vote of the holders of
two-thirds of the outstanding Common Stock in order to call a special meeting
of stockholders. This provision would prevent a stockholder with less than a
two-thirds interest from calling a special meeting to consider a merger unless
such stockholder had first obtained adequate support from a sufficient number
of other stockholders.

Statutory Business Combination Provision.

Upon completion of the Offering, the Company will be subject to the
provisions of Section 203 ("Section 203") of the DGCL. Section 203 provides,
with certain exceptions, that a Delaware corporation may not engage in any of
a broad range of business combinations with a person, or an affiliate or
associate of such person, who is an "interested stockholder" for a period of
three years from the date that such person became an interested stockholder
unless: (i) the transaction resulting in a person becoming an interested
stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquired 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
it an interested stockholder (excluding shares owned by persons who are both
officers and directors of the corporation, and shares held by certain employee
stock ownership plans); or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. Under Section 203, an
"interested stockholder" is defined (with certain limited exceptions) as any
person that is (i) the owner of 15% or more of the outstanding voting stock of
the corporation or (ii) an affiliate or associate of the corporation and was
the owner of 15% or more of the outstanding voting stock of the corporation at
any time within the three-year period immediately prior to the date on which
it is sought to be determined whether such person is an interested
stockholder.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or by-laws by action
of its stockholders to exempt itself from coverage, provided that such by-law
or charter amendment does not become effective until 12 months after the date
it is adopted. Neither the Certificate nor the By-Laws contains any such
exclusion.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

Limitations on Liabilities

Consistent with the DGCL, the Certificate contains a provision eliminating
or limiting liability of directors to the Company and its stockholders for
monetary damages arising from acts or omissions in the director's capacity as
a director. The provision does not, however, eliminate or limit the personal
liability of a director (i) for any breach of such director's duty of loyalty
to the Company or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) for unlawful dividends or unlawful stock purchases or redemptions as
provided in Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit. This provision offers persons
who serve on the Board of Directors of the Company protection against awards
of monetary damages resulting from breaches of their duty of care, except as
indicated above. As a result of this provision, the ability of the Company or
a stockholder thereof to successfully prosecute an action against a director
for a breach of his duty of care is limited. However, the provision does not
affect the availability of equitable remedies such as an injunction or
rescission based upon a director's breach of his duty of care. The Securities
and Exchange Commission has taken the position that the provision will have no
effect on claims arising under the federal securities laws.

Indemnification

The Certificate and By-Laws provide for mandatory indemnification rights to
the maximum extent permitted by applicable law, subject to limited exceptions,
to any director or officer of the Company who, by reason of the

54
<PAGE>

fact that he is a director or officer of the Company, is involved in a legal
proceeding of any nature. Such indemnification rights include reimbursement
for expenses incurred by such director or officer in advance of the final
disposition of such proceeding in accordance with the applicable provisions of
the DGCL. The Company may also maintain directors' and officers' liability
insurance.

TRANSFER AGENT AND REGISTRAR

The Company has selected National City Bank as the transfer agent and
registrar for the Common Stock.

55
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no public market for the Common Stock.
Sales of substantial amounts of Common Stock into the public market after the
Offering, or the perception that such sales could occur, could adversely
affect the prevailing market price for the Common Stock and the ability of the
Company to raise equity capital. The Company can make no prediction as to the
effect, if any, that the sale or availability for future sale of shares of
additional Common Stock will have on the market price of the Common Stock
prevailing from time to time.

Upon completion of the Offering, the Company will have 4,884,065 shares of
Common Stock outstanding (assuming no exercise of options). These shares will
consist of 2,400,000 shares of Common Stock currently issued and outstanding
and held by the existing stockholders of the Company, 2,000,000 shares of
Common Stock sold in the Offering, 244,066 shares of Common Stock to be issued
upon conversion of the Stockholder Loans and 239,999 shares to be issued upon
consummation of the KCG Acquisition (including the 26,666 Restricted Grant
Shares). See "Certain Transactions--Stockholder Loans."

The 2,000,000 shares of Common Stock sold in the Offering will immediately
be freely tradable, except that any shares purchased by "affiliates" of the
Company, as that term is defined in Rule 144 under the Securities Act of 1933,
as amended ("Affiliates"), may generally only be sold in compliance with the
limitations of Rule 144 ("Rule 144") under the Securities Act, as described
below.

The 2,400,000 shares of Common Stock held by the existing stockholders, the
244,066 shares of Common Stock to be issued upon conversion of the Stockholder
Loans and the 239,999 shares of Common Stock to be issued upon consummation of
the KCG Acquisition (including the 26,666 Restricted Grant Shares) have not
been registered under the Securities Act, and, accordingly, such shares may
not be sold except in transactions registered under the Securities Act or
pursuant to an exemption from registration. In addition, the existing
stockholders and the persons receiving Common Stock in connection with the KCG
Acquisition have agreed, or will agree, not to sell any shares of Common Stock
owned by them for a period of twelve months following the closing of the
Offering. After the expiration of such twelve-month period, all of such
shares, other than the 26,666 Restricted Grant Shares, may be sold in
accordance with Rule 144, subject to the applicable volume, holding period and
other limitations of Rule 144 as described below. In addition, the holders of
these shares, other than the 26,666 Restricted Grant Shares, will have certain
rights to require the Company to register such shares under the Securities Act
for public offering and sale. See "Certain Transactions--Registration Rights."

Up to 203,385 additional shares could be issued upon conversion of the
Convertible Preferred Stock, which become convertible into shares of Common
Stock 180 days after the closing of the Offering. These Conversion Shares will
not be registered under the Securities Act, and, accordingly, such shares may
not be sold except in transactions registered under the Securities Act or
pursuant to an exemption from registration. In addition, the holders of
Convertible Preferred Stock have agreed not to sell any Conversion Shares
owned by them for a period of twelve months following the closing of the
Offering. After the expiration of such twelve-month period, all of such shares
may be sold in accordance with Rule 144, subject to the applicable volume,
holding period and other limitations of Rule 144 as described below. In
addition, the holders of Conversion Shares will have certain rights to require
the Company to register such Conversion Shares under the Securities Act for
public offering and sale. See "Certain Transactions--Registration Rights."

In addition to the shares described above, 239,334 additional shares of
Common Stock have been reserved for issuance as restricted stock or upon
exercise of options that may be granted under the Company's 1996 Stock Plan.
As of the closing of the Offering and the KCG Acquisition, an aggregate of
26,666 shares of restricted stock granted under 1996 Stock Plan and options
granted under the 1996 Stock Plan to acquire an aggregate of 198,000 shares of
Common Stock will be outstanding. The Company intends to file one or more
registration statements on Form S-8 under the Securities Act to register all
of these shares of Common Stock, which registration statements will become
effective immediately upon filing. Shares covered by these registration
statements will be eligible for sale in the public markets upon the
effectiveness of such registration statements (unless such shares are held by
an Affiliate).

56
<PAGE>

Any shares of Common Stock that have not been registered under the
Securities Act could be sold under Rule 144. In general, under Rule 144 as
currently in effect, beginning 90 days after the Offering, a person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least two years, including a person who may be deemed an
Affiliate, is entitled to sell within any three-month period a number of
shares of Common Stock that does not exceed the greater of one percent of the
then-outstanding shares of Common Stock or the average weekly reported trading
volume of the Common Stock during the four calendar weeks preceding such sale.
Sales under Rule 144 are subject to certain restrictions relating to manner of
sale, notice, and the availability of current public information about the
Company. A person who is not an Affiliate at any time during the three months
preceding a sale, and who has beneficially owned shares for at least three
years, would be entitled to sell such shares immediately following the
Offering without regard to the volume limitations, manner of sale provisions,
or notice or other requirements of Rule 144.

The Securities and Exchange Commission has published a notice of proposed
rulemaking that, if adopted as proposed, would shorten the applicable holding
periods under Rule 144(d) and Rule 144(k) to one and two years, respectively
(from the current two- and three-year periods). The Company cannot predict
whether such amendments will be adopted or the effect thereof on the trading
market for its Common Stock.

57
<PAGE>

UNDERWRITING

The Underwriters named below, represented by Friedman, Billings, Ramsey &
Co., Inc. (the "Representative"), have severally agreed to purchase, subject
to the terms and conditions of the underwriting agreement (the "Underwriting
Agreement"), and the Company has agreed to sell, the number of shares of
Common Stock set forth opposite the name of each Underwriter.

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
------------ ----------------
<S> <C>
Friedman, Billings, Ramsey & Co., Inc..........................
Total........................................................
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will be
obligated to purchase all of the shares of Common Stock if any shares are
purchased.

The Representative has advised the Company that the Underwriters propose
initially to offer the shares of Common Stock to the public on the terms set
forth on the cover page of this Prospectus and to certain dealers at such
price less a concession not in excess of $ per share. After the initial
offering, the public offering price and such concession may be changed. The
Common Stock is offered subject to receipt and acceptance by the Underwriters,
and to certain other conditions, including the right to reject orders in whole
or in part. The Representative has informed the Company that the Underwriters
do not intend to confirm sales to accounts over which they exercise
discretionary authority in excess of five percent of the number of shares of
Common Stock offered hereby.

The Company has granted the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an aggregate
of 300,000 additional shares of Common Stock at the public offering price less
the underwriting discount shown on the cover of this Prospectus. The
Underwriters may exercise such option only to cover over-allotments made in
connection with the sale of the 2,000,000 shares of Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on
the same terms as those on which the 2,000,000 shares of Common Stock are
being offered.

Prior to the Offering, there has been no public market for the Common Stock.
The offering price will be determined by negotiation among the Company and the
Representative. In determining such price, consideration will be given to the
financial and operating history and trends of the Company, the experience of
its management, the position of the Company in its industry, the Company's
prospects and the Company's financial results. Additionally, consideration
will be given to the status of the securities markets, market conditions for
new offerings of securities and the prices of similar securities of comparable
companies. The Common Stock has been approved for quotation on the NASDAQ
Stock Market's National Market under the symbol "ALLN."

The Company, its directors, executive officers and certain other
stockholders who, immediately following the Offering, will hold 2,857,399
shares have agreed not to offer, sell or otherwise dispose of any such shares
of Common Stock or any Conversion Shares for a period of one year after the
closing of the Offering without the prior written consent of the
Representative. See "Shares Eligible for Future Sale."

The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in respect thereof.
The Company also has agreed to reimburse the Representative for its actual
out-of-pocket legal expenses incurred in connection with the offering of the
Common Stock.

The Company has also given the Representative the right to act as the
exclusive financial advisor, placement agent and underwriter to the Company in
connection with certain financings, sales, transfers, mergers, consolidations
or other similar transactions involving the Company during the period ending
18 months after the closing of the Offering. The Representative has agreed to
provide such services to the Company on terms and conditions as are customary
and competitive. The Representative will also have a right to 7.0% of the
proceeds from any sale by the Company of securities within 12 months after
closing of the Offering to an individual identified to the Company by the
Representative prior to closing.

58
<PAGE>

The Company has agreed that Richard Trutanic will serve on the Board of
Directors after closing of the Offering.

LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Eckert Seamans
Cherin & Mellott, Pittsburgh, Pennsylvania. Thomas D. Wright, a partner and
chairman of the Operations Committee of such firm, currently owns more than
ten percent of the outstanding Common Stock of the Company. Certain legal
matters related to the Offering will be passed upon for the Underwriters by
Hogan & Hartson L.L.P., Washington, D.C.

EXPERTS

The consolidated financial statements and schedule of Allin Communications
Corporation as of December 31, 1994 and 1995 and June 30, 1996, for the period
from June 8, 1994 to December 31, 1994, the year ended December 31, 1995 and
the six-month period ended June 30, 1996; the financial statements of
International Sports Marketing, Inc. as of December 31, 1994 and 1995 and June
30, 1996, for the three years ended December 31, 1995 and the six-month period
ended June 30, 1996; and the financial statements of Kent Consulting Group,
Inc. as of December 31, 1994 and 1995 and June 30, 1996, for the year ended
March 31, 1994, the nine months ended December 31, 1994, the year ended
December 31, 1995 and the six-month period ended June 30, 1996 included in
this Prospectus and elsewhere in the Registration Statement have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm in accounting and auditing in giving said reports.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 under the Securities Act with respect to
the Common Stock offered hereby. As permitted by the rules and regulations of
the Commission, this Prospectus does not contain all the information set forth
in the Registration Statement and in the exhibits and schedules thereto. For
further information concerning the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and to the exhibits
and schedules filed therewith. The Registration Statement, including the
exhibits and schedules thereto, may be inspected, without charge, at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New
York 10048; and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661. Copies of each such document may be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file such materials
electronically with the Commission.

The Company intends to distribute to its stockholders annual reports
containing audited financial statements and quarterly reports containing
unaudited financial information for each of the first three quarters of its
fiscal year.

59
<PAGE>

INDEX TO FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Introduction.............................................................. F-2
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1996
(unaudited).............................................................. F-3
Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1995 (unaudited)...................................... F-4
Pro Forma Condensed Consolidated Statement of Operations for the six
months ended June 30, 1996 (unaudited)................................... F-5
Notes to Pro Forma Condensed Consolidated Financial Statements
(unaudited).............................................................. F-6
ALLIN COMMUNICATIONS CORPORATION CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants.................................. F-8
Consolidated Balance Sheets as of December 31, 1994 and 1995 and June 30,
1996..................................................................... F-9
Consolidated Statements of Operations for the period from June 8, 1994
(date of inception) to December 31, 1994, for the year ended December 31,
1995 and for the six months ended June 30, 1995 (unaudited) and 1996..... F-10
Consolidated Statements of Shareholders' Equity for the period from June
8, 1994 (date of inception) to December 31, 1994, for the year ended
December 31, 1995 and for the six months ended
June 30, 1996............................................................ F-11
Consolidated Statements of Cash Flows for the period from June 8, 1994
(date of inception) to December 31, 1994, for the year ended December 31,
1995 and for the six months ended June 30, 1995 (unaudited) and 1996..... F-12
Notes to Consolidated Financial Statements................................ F-13
INTERNATIONAL SPORTS MARKETING, INC. FINANCIAL STATEMENTS
Report of Independent Public Accountants.................................. F-18
Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996......... F-19
Statements of Operations for the years ended December 31, 1993, 1994 and
1995 and the six months ended June 30, 1995 (unaudited) and 1996......... F-20
Statements of Shareholders' Equity for the years ended December 31, 1993,
1994 and 1995 and the six months ended June 30, 1996..................... F-21
Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995 and the six months ended June 30, 1995 (unaudited) and 1996......... F-22
Notes to Financial Statements............................................. F-23
KENT CONSULTING GROUP, INC. FINANCIAL STATEMENTS
Report of Independent Public Accountants.................................. F-27
Balance Sheets as of December 31, 1994 and 1995 and June 30, 1996......... F-28
Statements of Operations for the year ended March 31, 1994, the nine
months ended December 31, 1994, the year ended December 31, 1995 and the
six months ended June 30, 1995 (unaudited) and 1996...................... F-29
Statements of Shareholders' Equity for the year ended March 31, 1994, the
nine months ended December 31, 1994, the year ended December 31, 1995 and
the six months ended June 30, 1996 ...................................... F-30
Statements of Cash Flows for the year ended March 31, 1994, the nine
months ended December 31, 1994, the year ended December 31, 1995 and the
six months ended June 30, 1995 (unaudited) and 1996...................... F-31
Notes to Financial Statements............................................. F-33
</TABLE>

F-1
<PAGE>

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following Pro Forma Condensed Consolidated Financial Statements of Allin
Communications Corporation (the Company) are based on the historical financial
statements of SeaVision, Inc. (SeaVision), International Sports Marketing,
Inc. (ISM) and Kent Consulting Group, Inc. (KCG), adjusted to give effect to
the acquisitions of ISM and KCG by the Company. The Pro Forma Condensed
Consolidated Statement of Operations for the year ended December 31, 1995 and
for the six months ended June 30, 1996 assumes that such acquisitions, the
issuance of Convertible Preferred Stock and the offering of Common Stock by
the Company pursuant to the Prospectus of which the following Pro Forma
Condensed Consolidated Financial Statements are part (the "Offering") had
occurred on January 1, 1995.

The pro forma condensed consolidated financial information reflects the
purchase method of accounting for the acquisitions of ISM and KCG, and
accordingly is based on estimated purchase accounting adjustments that are
subject to further revision depending upon completion of any appraisals or
other studies of the fair value of assets and liabilities. Final purchase
accounting adjustments will differ from the pro forma adjustments presented
herein and described in the accompanying notes due to the results of
operations of ISM and KCG from June 30, 1996 to the date of closing. The final
purchase accounting adjustments are not expected to differ significantly from
the estimates used herein.

The pro forma condensed consolidated financial information reflects certain
assumptions described above and in Notes to Pro Forma Condensed Consolidated
Statement of Operations below. The pro forma financial information does not
purport to present what the Company's results of operations would actually
have been if the acquisitions of ISM and KCG, the issuance of Convertible
Preferred Stock and the Offering had occurred on the assumed dates, as
specified above, or to project the Company's financial condition or results of
operations for any future period.

F-2
<PAGE>

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996

(UNAUDITED)

(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
INTERNATIONAL
SPORTS KENT OFFERING PRO
SEAVISION, MARKETING, CONSULTING PRO FORMA PRO FORMA FORMA PRO FORMA
INC. INC. GROUP, INC. ADJUSTMENTS CONSOLIDATED ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash................... $ 572 $ 63 $ 42 $(1,800)(1)(2) $(1,123) $25,593 (3) $24,470
Investments............ -- 420 -- 420 420
Accounts receivable.... 90 113 646 849 849
Prepaid expenses and
other current assets.. 125 203 6 334 334
------- ---- ---- ------- -------
Total current assets.. 787 799 694 480 26,073
Property and equipment,
net.................... 2,665 116 174 2,955 2,955
Other Assets............ 695 28 97 7,138 (1) 7,958 7,958
------- ---- ---- ------- -------
$ 4,147 $943 $965 $11,393 $36,986
======= ==== ==== ======= =======
LIABILITIES AND
SHAREHOLDERS' EQUITY:
Current liabilities.... $ 5,630 $812 $634 $ 150 (1) $ 7,226 $ 7,226
Long-term debt......... 3,807 -- -- 3,807 (3,807)(3)(4) --
Redeemable preferred
stock................. -- -- -- 2,450 (2) 2,450 2,450
Shareholders' equity .. (5,290) 131 331 2,738 (1) (2,090) 29,400 (3)(4) 27,310
------- ---- ---- ------- -------
$ 4,147 $943 $965 $11,393 $36,986
======= ==== ==== ======= =======
</TABLE>

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

F-3
<PAGE>

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1995

(UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INTERNATIONAL
SPORTS KENT OFFERING PRO
SEAVISION, MARKETING, CONSULTING PRO FORMA PRO FORMA FORMA PRO FORMA
INC. INC. GROUP, INC. ADJUSTMENTS CONSOLIDATED ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $ 44 $4,878 $1,995 $(705)(5) $ 6,212 $ 6,212
Cost and expenses:
Cost of revenue........ 10 2,747 989 (338)(5) 3,408 3,408
Selling, general and
administrative........ 1,833 1,647 712 1,784 (5)(6)(7) 5,976 5,976
Interest expense, net.. 369 (37) 4 336 (369)(8) (33)
--------- ------ ------ ------- ---------
Total cost and
expenses............. 2,212 4,357 1,705 9,720 9,351
--------- ------ ------ ------- ---------
Income (loss) before
taxes.................. (2,168) 521 290 (3,508) (3,139)
Provision for income
taxes.................. -- -- 57 (57)(9) -- --
--------- ------ ------ ------- ---------
Income (loss) before
nonrecurring charges
(10)................... $ (2,168) $ 521 $ 233 $(3,508) $ (3,139)
========= ====== ====== ======= =========
Loss before nonrecurring
charges per common
share (11)............. $ (0.90) $ (0.63)
========= =========
Weighted average number
of common shares
outstanding (11)....... 2,400,000 4,985,758
--------- ---------
</TABLE>

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

F-4
<PAGE>

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1996

(UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
INTERNATIONAL
SPORTS KENT OFFERING PRO
SEAVISION, MARKETING, CONSULTING PRO FORMA PRO FORMA FORMA PRO FORMA
INC. INC. GROUP, INC. ADJUSTMENTS CONSOLIDATED ADJUSTMENTS AS ADJUSTED
---------- ------------- ----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue................. $ 163 $1,793 $1,792 $(461)(5) $ 3,287 $ 3,287
Cost and expenses:
Cost of revenue........ 40 1,091 937 (240)(5) 1,828 1,828
Selling, general and
administrative........ 2,167 830 437 797 (5)(7) 4,231 4,231
Interest expense, net.. 468 1 3 472 (468)(8) 4
--------- ------ ------ ------- ---------
Total cost and
expenses............. 2,675 1,922 1,377 6,531 6,063
--------- ------ ------ ------- ---------
Income (loss) before
taxes.................. (2,512) (129) 415 (3,244) (2,776)
Provision for income
taxes ................. -- -- 167 (167)(9) -- --
--------- ------ ------ ------- ---------
Net income (loss)....... $ (2,512) $ (129) $ 248 $(3,244) $ (2,776)
========= ====== ====== ======= =========
Net loss per common
share.................. $ (1.05) $ (0.55)
========= =========
Weighted average number
of common shares
outstanding............ 2,400,000 5,087,450
--------- ---------
</TABLE>

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

F-5
<PAGE>

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

The following pro forma adjustments are based upon the assumption of the
closing of the Offering with the sale of 2,000,000 shares of common stock at
$15.00 per share.

The pro forma adjustments to the condensed consolidated balance sheet are as
follows:

(1) To record the acquisitions of ISM and KCG, for which the estimated
excess purchase price of approximately $7,138 has been assigned to
intangible assets. Along with these acquisitions, the remaining
available borrowings of $150 under the line of credit have been
reflected. The intangible assets identified, based upon an independent
appraisal, along with the assigned values and the estimated useful
lives, are as follows:

<TABLE>
<CAPTION>
ESTIMATED
ASSIGNED USEFUL LIVES
ASSETS VALUES IN YEARS
------ -------- ------------
<S> <C> <C>
Employment agreement............................... $2,680 2
Customer lists..................................... 195 5
Assembled work force............................... 113 7
Goodwill........................................... 3,768 7-20
Marketing agreement................................ 125 20
Trade names........................................ 257 40
------
$7,138
======
</TABLE>

The agreements which provide for these acquisitions include provisions
for contingent payments of up to $2,400 and $2,800, respectively, based
upon future operating income of ISM and KCG for the years 1997, 1998
and 1999. Future contingent payments, if any, made to the selling
shareholders of ISM and KCG will be reflected as additional cost of the
acquired entities. These additional costs of the affected assets will
be capitalized and amortized over the remaining life of the assets.

(2) To record the net proceeds of $2,450 from the issuance of 25,000 shares
of Series A Convertible Redeemable Preferred Stock with a par value of
$100 per share.

(3) To record the receipt of the net proceeds of the Offering of $26,400
and the application of these proceeds, primarily for the payment of
accrued interest on shareholder notes of $807 and the acquisitions of
ISM and KCG.

(4) To record the conversion of $3,000 of shareholder loans to 244,066
shares of common stock.

The pro forma adjustments to the condensed consolidated statements of
operations are as follows:

(5) To eliminate the effects of transactions between the companies
including intercompany profit capitalized as software development costs
of $253 for the year ended December 31, 1995, and $40 as software
development costs and $30 as onboard equipment for the six-month period
ended June 30, 1996.

(6) To record compensation expense related to the issuance of the
Restricted Grant Shares to certain employees of KCG of $134 for the
year ended December 31, 1995 and $66 for the six-month period ended
June 30, 1996.

F-6
<PAGE>

NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)--CONTINUED

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

(7) To record amortization of excess purchase price of $1,764 for the year
ended December 31, 1995 and $882 for the six-month period ended June
30, 1996.

(8) To reduce interest expense on borrowings of $369 for the year ended
December 31, 1995 and $468 for the six-month period ended June 30,
1996. The interest accrued during these respective periods was based
upon the outstanding borrowings under the shareholder loans (15%), the
line of credit (7%) and the guarantee fee due certain shareholders
based upon borrowing under the line of credit (8%). The weighted
average borrowing under the shareholder loans was approximately $2,464
and $5,577 for the year ended December 31, 1995 and the six-month
period ended June 30, 1996, respectively. The weighted average
borrowings under the line of credit was approximately $738 for the six-
month period ended June 30, 1996.

(9) To reduce the tax provision recorded by KCG of $57 for the year ended
December 31, 1995 and $167 for the six-month period ended June 30,
1996.

(10) A charge of $661 related to the induced conversion of the shareholder
loans is nonrecurring and directly attributable to the Offering and,
therefore, not reflected in the accompanying pro forma statement of
operations for the year ended December 31, 1995. This charge will be
recognized in the fiscal quarter in which the Offering is consummated.

The Convertible Preferred Stock is assumed to be converted during the
seven-month period beginning six months after the closing of the
Offering due to the inducement feature whereby the holders of such
preferred stock will receive common shares with a value of $3,051 in
return for such preferred stock with a stated value of $2,500. This
transaction will be treated in a manner similar to the treatment of
dividends paid to holders of the preferred stock. Accordingly, the
conversion premium of $551 and accretion of $50 from the net proceeds
from the issuance of Convertible Preferred Stock to stated value will
increase the loss attributable to common shareholders. The conversion
premium and accretion are nonrecurring and directly attributable to the
Offering and, therefore, not reflected in the accompanying pro forma
statement of operations for the year ended December 31, 1995.

(11) The weighted average number of shares of common stock used to
calculate pro forma loss before nonrecurring charges per share
includes the shares to be issued in connection with the Offering, the
acquisition of KCG, the conversion of the shareholder loans, and the
assumed conversion of the Convertible Preferred Stock and the
Restricted Grant Shares. The stock options issued at the time of
consummation of the Offering are not included with the weighted
average outstanding number of common shares, as the effect is
antidilutive.

F-7
<PAGE>

After the proposed stock split in connection with the initial public
offering of the Company, as discussed in Note 7 to the Notes to Consolidated
Financial Statements, is effected, we expect to be in a position to render the
following audit report.

Arthur Andersen LLP

Pittsburgh, Pennsylvania
October 2, 1996

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Allin Communications Corporation:

We have audited the accompanying consolidated balance sheets of Allin
Communications Corporation (a Delaware corporation) as of December 31, 1994
and 1995 and June 30, 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for the period from June 8,
1994 (date of inception), to December 31, 1994, the year ended December 31,
1995 and the six-month period ended June 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Allin
Communications Corporation as of December 31, 1994 and 1995 and June 30, 1996,
and the results of its operations and its cash flows for the period from June
8, 1994 (date of inception), to December 31, 1994, the year ended December 31,
1995 and the six-month period ended June 30, 1996, in conformity with
generally accepted accounting principles.

Pittsburgh, Pennsylvania,
October 2, 1996

F-8
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 32,852 $ 192,995 $ 571,961
Accounts receivable......................... -- 42,692 79,730
Related party receivable.................... -- -- 10,000
Prepaid expenses............................ 25,668 8,765 124,646
-------- ---------- ----------
Total current assets....................... 58,520 244,452 786,337
-------- ---------- ----------
Property and equipment, at cost:
Leasehold improvements...................... -- 42,450 47,836
Furniture and equipment..................... 16,404 188,897 337,587
On-board equipment.......................... -- 1,313,206 1,540,837
Construction-in-progress.................... -- -- 1,090,464
-------- ---------- ----------
16,404 1,544,553 3,016,724
Less--accumulated depreciation.............. (1,093) (153,648) (351,483)
-------- ---------- ----------
15,311 1,390,905 2,665,241
Other assets, net of accumulated
amortization of $5,295, $141,052 and
$293,379, respectively..................... 72,238 717,375 695,110
-------- ---------- ----------
$146,069 $2,352,732 $4,146,688
======== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit.............................. $ -- $ -- $4,850,000
Shareholder notes payable................... -- 1,493,000 --
Accounts payable............................ 1,600 151,436 553,269
Accrued liabilities:
Management fees............................ -- 45,000 84,000
Guarantee fees............................. -- -- 30,000
Other...................................... -- 47,849 111,989
-------- ---------- ----------
Total current liabilities................. 1,600 1,737,285 5,629,258
-------- ---------- ----------
Long-term liabilities:
Accrued interest............................ 24,080 393,138 807,284
Shareholder notes payable................... 730,000 3,000,000 3,000,000
-------- ---------- ----------
754,080 3,393,138 3,807,284
-------- ---------- ----------
Shareholders' equity (Notes 1 and 7):
Preferred stock, authorized 100,000 shares.. -- -- --
Common stock, par value $.01 per share-
authorized, 20,000,000 shares; issued and
outstanding, 2,400,000 shares.............. 10 10 24,000
Additional paid-in capital.................. 1,990 1,990 3,000
Retained deficit............................ (611,611) (2,779,691) (5,316,854)
-------- ---------- ----------
Total shareholders' equity................. (609,611) (2,777,691) (5,289,854)
-------- ---------- ----------
$146,069 $2,352,732 $4,146,688
======== ========== ==========
</TABLE>

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

F-9
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED SIX MONTHS ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, ----------------------------
1994 1995 1995 1996
------------ ------------ ----------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenue................. $ -- $ 44,413 $ -- $ 163,000
Cost of sales........... -- 10,000 -- 40,045
--------- ----------- ----------- -------------
Gross profit............ -- 34,413 -- 122,955
Selling, general &
administrative......... 587,531 1,833,435 766,603 2,167,456
--------- ----------- ----------- -------------
Loss from operations.... (587,531) (1,799,022) (766,603) (2,044,501)
Interest expense, net... 24,080 369,058 105,311 467,662
--------- ----------- ----------- -------------
Net loss................ $(611,611) $(2,168,080) $ (871,914) $ (2,512,163)
========= =========== =========== =============
PRO FORMA INFORMATION--
UNAUDITED (NOTE 8):
Net loss............... $(2,168,080) $ (871,914) $ (2,512,163)
Pro forma income taxes. -- -- --
----------- ----------- -------------
Pro forma net loss..... $(2,168,080) $ (871,914) $ (2,512,163)
=========== =========== =============
Pro forma net loss per
common share.......... $ (.90) $ (.36) $ (1.05)
=========== =========== =============
Weighted average common
shares outstanding
during
the period............. 2,400,000 2,400,000 2,400,000
</TABLE>

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

F-10
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
------------------- PAID-IN SHAREHOLDERS'
SHARES PAR VALUE CAPITAL RETAINED DEFICIT EQUITY
--------- --------- ---------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, June 8, 1994... $ -- $ -- $ -- $ -- $ --
Issuance of common
stock................. 2,400,000 10 1,990 -- 2,000
Net loss............... -- -- -- (611,611) (611,611)
--------- ------- ------ ----------- -----------
Balance, December 31,
1994................... 2,400,000 10 1,990 (611,611) (609,611)
Net loss............... -- -- -- (2,168,080) (2,168,080)
--------- ------- ------ ----------- -----------
Balance, December 31,
1995................... 2,400,000 10 1,990 (2,779,691) (2,777,691)
Initial capitalization
(Note 1).............. -- 23,990 1,010 (25,000) --
Net loss............... -- -- -- (2,512,163) (2,512,163)
--------- ------- ------ ----------- -----------
June 30, 1996........... 2,400,000 $24,000 $3,000 $(5,316,854) $(5,289,854)
========= ======= ====== =========== ===========
</TABLE>

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

F-11
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
PERIOD ENDED YEAR ENDED JUNE 30,
DECEMBER 31, DECEMBER 31, -----------------------
1994 1995 1995 1996
------------ ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss................... $(611,611) $(2,168,080) $(871,914) $(2,512,163)
Adjustments to reconcile
net loss to net cash flows
from operating activities:
Depreciation and
amortization............. 6,388 288,312 69,780 350,162
Accrued interest on
shareholder notes
payable.................. 24,080 369,058 104,162 414,146
Changes in certain assets
and liabilities:
Accounts receivable....... -- (42,692) -- (37,038)
Related party receivable.. -- -- -- (10,000)
Prepaid expenses.......... (25,668) 16,903 19,303 (115,881)
Software development
costs.................... - (753,252) (355,629) (130,062)
Other assets.............. (77,533) (27,642) (26,597) --
Accounts payable.......... 1,600 149,836 366,455 401,833
Accrued liabilities....... -- 92,849 -- 133,140
--------- ----------- --------- -----------
Net cash flows from
operating activities..... (682,744) (2,074,708) (694,440) (1,505,863)
--------- ----------- --------- -----------
Cash flows from investing
activities:
Capital expenditures....... (16,404) (1,528,149) (709,857) (1,472,171)
--------- ----------- --------- -----------
Cash flows from financing
activities:
Proceeds from shareholder
loans..................... 730,000 3,763,000 1,607,950 2,127,650
Proceeds from line of
credit.................... -- -- -- 4,850,000
Payments on shareholder
loans..................... -- -- -- (3,620,650)
Issuance of common stock... 2,000 -- -- --
--------- ----------- --------- -----------
Net cash flows from
financing activities..... 732,000 3,763,000 1,607,950 3,357,000
--------- ----------- --------- -----------
Net change in cash and cash
equivalents................. 32,852 160,143 203,653 378,966
Cash and cash equivalents,
beginning of period......... -- 32,852 32,852 192,995
--------- ----------- --------- -----------
Cash and cash equivalents,
end of period............... $ 32,852 $ 192,995 $ 236,505 $ 571,961
========= =========== ========= ===========
</TABLE>

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

F-12
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF OPERATIONS:

Allin Communications Corporation (the Company) was formed as a wholly owned
subsidiary of SeaVision, Inc. (SeaVision) on July 23, 1996. Effective August
16, 1996, the Company consummated a transaction pursuant to an agreement
whereby SeaVision became a wholly owned subsidiary of the Company. Prior to
this date, the Company had no operations. SeaVision was formed on June 8, 1994
for the purpose of designing, developing, selling and installing interactive
entertainment and communications systems for cruise ships. Revenues are
derived from passengers aboard the cruise ships through usage of pay-per-view,
gaming and video shopping services. During 1995, SeaVision completed
installation of two interactive systems on cruise ships.

The discussion under the heading "Risk Factors" contained in this
Registration Statement is incorporated herein by reference.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the significant accounting policies affecting
the consolidated financial statements of the Company.

Use of Estimates in the Preparation of Financial Statements

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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all certificates of deposit with an original maturity
of three months or less to be cash equivalents.

Accounts Receivable and Revenue Recognition

Revenue and related costs are recognized when the services are rendered. The
Company's revenue and receivables result from contracts with cruise lines. As
of June 30, 1996, two cruise lines account for all of the Company's revenue
and the resulting receivables.

Property and Equipment

The Company provides for depreciation on the straight-line method over the
estimated useful lives of the assets. In the year of acquisition, the Company
takes a full year of depreciation if the asset was purchased in the first six
months, and half a year of depreciation if the asset was purchased in the last
six months of the year. The estimated useful lives of property and equipment
range from three to five years. Expenditures for ordinary maintenance and
repairs which do not extend the lives of the applicable assets are charged to
expense as incurred, while renewals and betterments that materially extend the
lives of the applicable assets are capitalized and depreciated.

Other Assets

Certain expenditures related to the organization and start-up of SeaVision
have been capitalized in the accompanying consolidated financial statements.
Organizational and start-up costs included in this balance are being amortized
over a five-year period.

F-13
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Costs of software development are capitalized and amortized subsequent to
the project achieving technological feasibility and prior to market
introduction. Prior to the project achieving technological feasibility and
after market introduction, development costs are expensed as incurred.
Amortization of capitalized software costs, for both internally developed and
purchased software products, is computed on a product-by-product basis over a
three-year period. Software development expense, net of amortization of
capitalized costs, was approximately $173,000, $216,000 and $387,000 for the
periods ended December 31, 1994 and 1995, and June 30, 1996 respectively.

Advertising and Promotional

Expenditures for advertising and promotions are expensed as incurred due to
the short duration of the periods benefited.

Income Taxes

The shareholders of SeaVision had elected to file under Subchapter S for
both state and federal income tax purposes. Accordingly, no provision for
income taxes has been reflected in the financial statements as the taxable
income or loss is reflected on the individual income tax returns of the
shareholders. Certain events, including the transactions described in Notes 1
and 7, will automatically terminate the S corporation status of SeaVision,
thereby subjecting future income to federal and state income taxes at the
corporate level. See Note 8 for information concerning certain pro forma
adjustments for income taxes.

Financial Instruments

It was not practicable to estimate the fair value of the shareholder notes
payable. These notes are reflected at their outstanding face value, excluding
unpaid interest accrued at 15% annually. As no ready market exists for these
instruments, comparable instruments available from outside the Company are not
available. Based upon the closely held nature of these instruments and the
Company itself, it is not practicable to estimate the fair value of these
notes.

All other financial instruments are classified as current and will be
utilized within the next operating cycle.

Recently Issued Accounting Standards

Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121), was issued in March 1995 and is effective for fiscal years
beginning after December 15, 1995. This statement will be applied
prospectively and requires that impairment losses on long-lived assets be
recognized when the book value of the asset exceeds its expected undiscounted
cash flows. The Company adopted SFAS No. 121 on January 1, 1996, and adoption
at that time did not have a material impact on the Company's financial
position or results of operations.

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," (SFAS
No. 123) in October 1995. This statement establishes a "fair value based
method" of financial accounting and related reporting standards for stock-
based employee compensation plans, such as the plans that will be established,
subsequent to June 30, 1996 (see Note 7). SFAS No. 123 becomes effective in
1996 and provides for adoption in the income statement or through disclosure
only. The Company anticipates accounting for any adopted plan under APB
Opinion No. 25, "Accounting for Stock Issued to Employees," as permitted by
SFAS No. 123, but will provide the disclosure in the notes to the 1996
financial statements.

F-14
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Unaudited Interim Financial Statements

The consolidated statements of operations and cash flows for the six-month
period ended June 30, 1995, are unaudited and are not covered by the report of
independent public accountants. However, in the opinion of management, these
interim financial statements include all adjustments (which consist only of
normal recurring adjustments) necessary to present fairly the results of
operations and cash flows of the Company for the interim period and are
prepared on the same basis as the audited financial statements.

Supplemental Disclosure of Cash Flow Information

There were no cash payments for income taxes during the periods presented.
Cash payments for interest were approximately $23,000 during the six months
ended June 30, 1996.

3. RELATED PARTY TRANSACTIONS:

The following summarizes related party information. The discussion under the
heading "Certain Transactions" contained in this Registration Statement is
incorporated herein by reference.

Shareholder Notes Payable

These obligations represent numerous individual notes due to certain
shareholders, each with a three-year maturity. These notes bear interest at
15%, payable at maturity, and mature at various dates from July 1997 through
December 1998. That portion of the notes paid in connection with the Company's
line of credit entered into on May 31, 1996 (Note 4) has been included with
current liabilities in the accompanying consolidated balance sheets as of
December 31, 1995. The remaining outstanding balance of $3.0 million will be
converted into 244,066 shares of Common Stock, effective upon the closing of
the initial public offering (Note 7).

Management Services

Certain shareholders of the Company own interests in three separate entities
which perform installation, marketing, consulting and administrative services
and made purchases for the Company. Fees related to these services and
reimbursements for expenditures incurred on behalf of the Company were
approximately as follows:

<TABLE>
<CAPTION>
PERIOD ENDED FEES REIMBURSEMENTS
------------ -------- --------------
<S> <C> <C>
December 31, 1994 $343,000 $ 287,000
December 31, 1995 644,000 1,668,000
June 30, 1996 230,000 213,000
</TABLE>

During 1996, the Company hired a management team that reduced its need for
the services provided by these entities. Accordingly, the fees and
reimbursements paid under these arrangements have declined. Management
agreements with two of the entities were terminated in July 1996. The third
management agreement has been converted to a lease agreement effective August
1, 1996. The lease agreement includes the rental of office space and certain
administrative services to be provided to the Company. This agreement provides
for monthly fees of $3,700 and can be terminated by either party upon 30 days
notification.

In addition, the Company leases office space from an entity in which certain
shareholders have an ownership interest. Rental expense under this arrangement
was approximately $21,000 for the six months ended June 30, 1996. The future
commitment under this arrangement is approximately $21,000.

Professional Services

A shareholder of the Company is a partner in an entity which performs legal
services for the Company. Fees for these services were approximately $25,000,
$71,000 and $41,000 for the periods ended December 31, 1994 and 1995, and June
30, 1996, respectively.

F-15
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Other Services

Certain shareholders of the Company have an equity interest in an entity
which performs services for the Company related to visual media. Charges for
these services were approximately $10,000, $137,000 and $118,000 for the
periods ended December 31, 1994 and 1995, and June 30, 1996, respectively.

Another entity in which certain shareholders of the Company have an equity
interest performed commercial printing services for the Company. Charges for
these services were approximately $7,000, $25,000 and $40,000 for the periods
ended December 31, 1994 and 1995, and June 30, 1996, respectively.

Related Party Receivable

This balance represents noninterest-bearing advances made to an entity in
which certain shareholders of the Company own an interest.

4. LINE OF CREDIT:

The Company entered into a financing agreement which provides for a line of
credit that permits maximum allowable borrowings of $5 million. Borrowings
bear interest at either prime or Euro-rate plus 1-1/2% and are payable upon
demand. The maturity date is May 31, 1997, and borrowings are guaranteed by
certain shareholders of the Company, for which they will receive a guarantee
fee. This fee will be equal to the difference between the 15% accrued under
the shareholder notes payable and the rate accrued on borrowings under the
line of credit. As of July 17, 1996, $5 million has been borrowed under this
agreement.

5. OTHER ASSETS:

Other assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- JUNE 30,
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
Software development costs, net of accumulated
amortization of $-0-, $125,542 and $272,761....... $ -- $627,710 $610,553
Organizational and start-up costs, net of
accumulated amortization of $5,171, $14,976 and
$19,879........................................... 43,855 34,050 29,147
Other assets, net of accumulated amortization of
$124, $534 and $739............................... 28,383 55,615 55,410
------- -------- --------
$72,238 $717,375 $695,110
======= ======== ========
</TABLE>

6. COMMITMENTS:

License Agreement

The Company has an agreement with a vendor which provides for a software
license fee of $25,000 per installation and includes specified prices for
various hardware components. This agreement expires October 1999, and payments
for license fees under this arrangement were $25,000 and $75,000 for the
periods ended December 31, 1994 and 1995, respectively. These fees are
included with on-board equipment upon installation of the interactive systems.

Royalty Agreements

The contracts with the cruise lines provide for specified royalty payments
based upon adjusted gross revenue, as defined in the respective agreements.
These royalty payments are adjusted upon reaching specified milestones for
cumulative revenue generated by the interactive systems installations. Royalty
payments of approximately $2,000 and $6,000 are included with selling, general
and administrative expenses in the accompanying consolidated statements of
operations for the periods ended December 31, 1995, and June 30, 1996,
respectively.

F-16
<PAGE>

ALLIN COMMUNICATIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

7. SUBSEQUENT EVENTS:

In connection with the proposed initial public offering (the Offering) by
the Company, subsequent to June 30, 1996, the following transactions have
occurred or are anticipated to occur:

(i) Designation of 40,000 shares of authorized preferred stock as Series A
Convertible Redeemable Preferred Stock with a par value of $100 per
share.

(ii) Receipt of $1.5 million in the form of loans from two shareholders.
These loans bear interest at 8%, increasing to 12% if the Offering is
not consummated on or before December 31, 1996, and are convertible
into an aggregate 15,000 shares of Convertible Redeemable Preferred
Stock of the Company.

(iii) Conversion of the shareholder loans referred to above into 15,000
shares of Convertible Redeemable Preferred Stock and the issuance of
an additional 10,000 shares of Convertible Redeemable Preferred
Stock. These shares are entitled to cumulative compounded quarterly
dividends, when and as declared by the Board of Directors, of 8%,
increasing to 12% if the Offering is not consummated on or before
December 31, 1996. Additionally, the 25,000 shares issued are
convertible into 203,385 common shares, at the option of the holder,
not earlier than six months after the date of the Offering.

(iv) A stock split of 2,400 common shares for each common share outstanding
effective as the date of the Offering. This split has been reflected
retroactively in the accompanying financial statements.

(v) Entry into an agreement for the acquisition of all issued and
outstanding shares of International Sports Marketing, Inc. (ISM), an
entity in which certain shareholders of the Company have an ownership
interest. This acquisition is conditioned upon the closing of the
Offering and provides for cash payments of $2.4 million upon closing
and contingent payments up to $2.4 million based upon future operating
income.

(vi) Entry into an agreement for the merger of Kent Consulting Group, Inc.
(KCG) into a wholly owned subsidiary of the Company. This merger is
conditioned upon the closing of the Offering. The consideration
includes $2.0 million in cash and $3.2 million in common stock valued
at the Offering price at the closing and contingent payments up to
$2.8 million based upon future operating income.

(vii) Creation of the 1996 Stock Plan which provides up to 266,000 shares
for Common Stock to be awarded as stock options, stock appreciation
rights, restricted shares and restricted units to officers, other
executive employees, consultants and advisors (including non-employee
directors) of the Company. As of the closing of the Offering, 26,666
shares of common stock were granted in connection with the
acquisition of KCG. Additionally, options to purchase 198,000 shares
of common stock at the offering price were granted.

8. PRO FORMA INFORMATION (UNAUDITED):

The pro forma adjustments for income taxes included in the accompanying
statements of operations are based upon statutory rates in effect for C
corporations during the periods presented. Due to uncertainty as to the
realizability of the tax benefit attributable to the net operating losses, a
valuation allowance has been established that offsets this benefit.

The weighted average outstanding shares used to calculate the pro forma
earnings per share reflect the capital structure of the Company and give
effect to the stock split discussed in Note 7.

F-17
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To International Sports Marketing, Inc.:

We have audited the accompanying balance sheets of International Sports
Marketing, Inc. (a Pennsylvania corporation) as of December 31, 1994 and 1995
and June 30, 1996, and the related statements of operations, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995 and the six-month period ended June 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of International Sports
Marketing, Inc. as of December 31, 1994 and 1995 and June 30, 1996, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995 and the six-month period ended June 30,
1996, in conformity with generally accepted accounting principles.

Arthur Andersen LLP
Pittsburgh, Pennsylvania,
October 2, 1996

F-18
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1994 1995 1996
-------- -------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash............................................ $436,859 $ 70,636 $ 62,767
Investments..................................... -- 395,022 420,426
Accounts receivable............................. 74,448 116,850 112,780
Prepaid expenses................................ 57,424 212,496 202,805
-------- -------- --------
Total current assets........................... 568,731 795,004 798,778
-------- -------- --------
Equipment, at cost............................... 107,505 159,494 170,114
Less--Accumulated depreciation.................. (21,679) (41,844) (54,032)
-------- -------- --------
85,826 117,650 116,082
Long-term receivable............................. 6,145 12,038 27,673
Intangible assets, net of accumulated
amortization of
$184,412, $275,716 and $309,955, respectively... 125,543 34,239 --
-------- -------- --------
$786,245 $958,931 $942,533
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities........ $276,283 $ 88,233 $162,338
Deferred revenues............................... 189,224 408,250 649,625
-------- -------- --------
Total current liabilities...................... 465,507 496,483 811,963
-------- -------- --------
Shareholders' equity:
Common stock, par value $1 per share--
Authorized, 1,000 shares;
issued and outstanding, 100 and 105 shares,
respectively................................... 100 105 105
Additional paid-in capital...................... 99,900 99,900 99,900
Retained earnings............................... 220,738 357,587 28,873
Net unrealized gains on investments............. -- 4,856 1,692
-------- -------- --------
Total shareholders' equity..................... 320,738 462,448 130,570
-------- -------- --------
$786,245 $958,931 $942,533
======== ======== ========
</TABLE>

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

F-19
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------------- ----------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Events................. $2,770,993 $5,671,042 $4,807,763 $3,213,640 $1,603,537
Appearances............ 121,942 135,150 46,850 16,500 82,240
Licensing.............. 91,618 135,855 22,902 17,234 107,417
---------- ---------- ---------- ---------- ----------
2,984,553 5,942,047 4,877,515 3,247,374 1,793,194
Cost of sales:
Event costs............ 1,566,702 3,288,230 2,714,516 1,726,881 1,058,085
Appearance fees........ 96,536 63,800 25,450 8,900 32,267
Licensing costs and
expenses.............. 11,267 68,480 6,536 4,724 474
---------- ---------- ---------- ---------- ----------
Gross profit.......... 1,310,048 2,521,537 2,131,013 1,506,869 702,368
Operating expenses:
Payroll and benefit
costs................. 451,290 630,439 711,518 393,950 407,108
General and
administrative........ 214,237 287,766 338,935 130,791 146,040
Royalty fee............ 132,383 295,250 165,948 116,064 60,000
Rent................... 39,524 69,217 99,485 46,002 55,010
Airfare, lodging and
meals................. 73,412 73,096 91,404 36,510 48,629
Advertising and
promotional........... 82,563 67,409 68,493 20,371 37,392
Administrative service
fee................... 60,000 60,000 60,000 30,000 30,000
Depreciation and
amortization.......... 97,313 103,932 111,469 53,810 46,427
---------- ---------- ---------- ---------- ----------
Operating income
(loss)............... 159,326 934,428 483,761 679,371 (128,238)
Net investment income
(expense).............. 23,507 13,564 28,791 9,795 (496)
Other nonoperating
income................. -- 7,584 8,299 2,399 20
---------- ---------- ---------- ---------- ----------
Net income (loss)....... $ 182,833 $ 955,576 $ 520,851 $ 691,565 $ (128,714)
========== ========== ========== ========== ==========
</TABLE>

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

F-20
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL NET UNREALIZED
---------------- PAID-IN RETAINED GAINS ON
SHARES PAR VALUE CAPITAL EARNINGS INVESTMENTS
------ --------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C>
December 31, 1992........ 100 $100 $99,900 $(189,723) $ --
Net income.............. -- -- -- 182,833 --
--- ---- ------- --------- ------
December 31, 1993........ 100 100 99,900 (6,890) --
Distributions to
shareholders........... -- -- -- (727,948) --
Net income.............. -- -- -- 955,576 --
--- ---- ------- --------- ------
December 31, 1994........ 100 100 99,900 220,738 --
Exercise of options..... 5 5 -- -- --
Unrealized gains on
investments............ -- -- -- -- 4,856
Distributions to
shareholders........... -- -- -- (384,002) --
Net income.............. -- -- -- 520,851 --
--- ---- ------- --------- ------
December 31, 1995........ 105 105 99,900 357,587 4,856
Unrealized losses on
investments............ -- -- -- -- (3,164)
Distributions to
shareholders........... -- -- -- (200,000) --
Net loss................ -- -- -- (128,714) --
--- ---- ------- --------- ------
June 30, 1996............ 105 $105 $99,900 $ 28,873 $1,692
=== ==== ======= ========= ======
</TABLE>

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

F-21
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------------- ---------------------------
1993 1994 1995 1995 1996
--------- --------- --------- ---------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net income (loss)...... $ 182,833 $ 955,576 $ 520,851 $ 691,565 $ (128,714)
Adjustments to
reconcile net income
(loss) to net cash
flows from operating
activities:
Depreciation and
amortization......... 97,313 103,932 111,469 53,810 46,427
Assumption of Major
League Alumni
Marketing Program's
net liabilities...... (308,150) -- -- -- --
Changes in certain
assets and
liabilities:
Accounts receivable... 115,434 (2,398) (42,402) (594,665) 4,070
Prepaid expenses...... (29,415) (28,009) (155,072) (19,793) 9,691
Long-term receivable.. -- (6,145) (5,893) (5,893) (15,635)
Accounts payable and
accrued liabilities.. (97,360) 178,302 (188,050) 89,875 74,105
Deferred revenues..... 131,518 57,706 219,026 (210,407) 241,375
--------- --------- --------- ------------ ------------
Net cash flows from
operating activities. 92,173 1,258,964 459,929 4,492 231,319
--------- --------- --------- ------------ ------------
Cash flows from
investing activities:
Capital expenditures... (28,655) (54,817) (51,989) (22,754) (10,620)
Investments............ -- -- (390,166) -- (28,568)
--------- --------- --------- ------------ ------------
Net cash flows from
investing activities. (28,655) (54,817) (442,155) (22,754) (39,188)
--------- --------- --------- ------------ ------------
Cash flows from
financing activities:
Distribution paid to
shareholders.......... -- (727,948) (384,002) -- (200,000)
Exercise of options.... -- -- 5 -- --
Repayment of
shareholder loans
payable............... (113,648) (222,052) -- -- --
--------- --------- --------- ------------ ------------
Net cash flows from
financing activities. (113,648) (950,000) (383,997) -- (200,000)
--------- --------- --------- ------------ ------------
Net change in cash...... (50,130) 254,147 (366,223) (18,262) (7,869)
Cash, beginning of
period................. 232,842 182,712 436,859 436,859 70,636
--------- --------- --------- ------------ ------------
Cash, end of period..... $ 182,712 $ 436,859 $ 70,636 $ 418,597 $ 62,767
========= ========= ========= ============ ============
</TABLE>

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

F-22
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS:

International Sports Marketing, Inc. (ISM) was organized for the purpose of
marketing, licensing and operating sports-related promotions and rights. ISM
has arrangements with various organizations that represent former professional
athletes. ISM's revenue results primarily from the coordination of various
events, including the production of sports-themed premiums and promotions,
sales incentives, licensing, games, clinics and personal appearances.

The discussion under the heading "Risk Factors" contained in this
Registration Statement is incorporated herein by reference.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the significant accounting policies affecting
the financial statements of ISM:

Use of Estimates in the Preparation of Financial Statements

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.

Accounts Receivable

ISM grants credit to customers based upon management's assessment of their
creditworthiness. Sales to sponsors account for virtually all of ISM's
receivables as of December 31, 1994 and 1995 and June 30, 1996.

Two significant customers individually accounted for 51% and 15% of 1993
sales and 42% and 19% of 1994 sales. One other significant customer accounted
for 17% of 1995 sales. Four significant customers accounted for 15%, 12%, 12%
and 11% of sales for the six-month period ended June 30, 1996.

Depreciation

Depreciation is provided using the straight-line method which allocates the
cost of equipment over estimated useful lives ranging from five to ten years.

Long-Term Receivable

This represents premiums paid under a split-dollar life insurance policy
arrangement with a key employee of ISM. This balance is repayable upon
termination of the employee or from the proceeds of the insurance policy.

Deferred Revenue

Revenue received in advance, such as deposits on events and appearances, is
deferred and recognized as revenue during the period earned.

Stock Options

In accordance with an employment agreement, a key employee of ISM exercised
options to purchase approximately five shares of common stock. The exercise
price was $1.00 per share which was deemed to

F-23
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
approximate fair value as of the date of grant. Accordingly, no compensation
expense has been recognized in connection with this transaction.

Income Taxes

The shareholders of ISM have elected to file under Subchapter S for both
state and federal income tax purposes. No provision for income taxes has been
reflected in the financial statements as the taxable income or loss is
reflected on the individual income tax returns of the shareholders. Upon
completion of the transaction discussed in Note 6, ISM's S Corporation status
will automatically terminate.

Recently Issued Accounting Standards

Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121), was issued in March 1995 and is effective for fiscal years
beginning after December 15, 1995. This statement will be applied
prospectively and requires that impairment losses on long-lived assets be
recognized when the book value of the asset exceeds its expected undiscounted
cash flows. ISM adopted SFAS No. 121 on January 1, 1996, and adoption at that
time did not have a material impact on ISM's financial position or results of
operations.

Unaudited Interim Financial Statements

The statements of operations and cash flows for the six-month period ended
June 30, 1995 are unaudited and are not covered by the report of independent
public accountants. However, in the opinion of management, these interim
financial statements include all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the results of operations
and cash flows of ISM for the interim period and are prepared on the same
basis as the audited financial statements.

Supplemental Disclosure of Cash Flow Information

There were no cash payments for interest or taxes during the periods
presented.

Reclassifications

Certain prior year balances have been reclassified to conform to the current
year presentation.

3. LICENSE AGREEMENT:

ISM has a license agreement with Major League Alumni Marketing, Inc. (MLAM,
Inc.), a wholly owned subsidiary of the Major League Baseball Players Alumni
Association (the Agreement) dated December 1, 1993, effective January 1, 1993.
The Agreement supersedes the Management Agreement dated May 15, 1989, between
ISM and MLAM, Inc. Pursuant to the Agreement, the Major League Alumni
Marketing Program, a project formed between ISM and MLAM, Inc., was terminated
and ISM assumed all of the assets and liabilities of the project. The excess
of liabilities over assets assumed is reflected as an intangible asset in the
accompanying balance sheets and is being amortized over the initial term of
the Agreement on the straight-line basis.

This Agreement provides ISM with certain exclusive rights and provides for,
among other things, the following:

F-24
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Royalty Payment

ISM is required to make a royalty payment to MLAM, Inc. based upon a
specified percentage of its Annual Gross Revenues, as defined, related to the
use, exploitation and sublicensing of the rights acquired from MLAM, Inc. As
of June 30, 1996, the future minimum commitment under the Agreement is
$300,000. Royalties paid to MLAM, Inc. were $132,383, $295,250 and $165,948
for the years ended December 31, 1993, 1994 and 1995, and $60,000 for the six-
month period ended June 30, 1996, respectively.

Term of the Agreement

The Agreement provides for an initial term of 40.5 months and contains
automatic renewal options for successive two-year periods until termination.
ISM or MLAM, Inc. may terminate the Agreement with a written notification to
the other party at least one year prior to the expiration of the then current
term. As neither party elected to terminate this Agreement within the
notification period, the Agreement has automatically been extended effective
May 15, 1996, through December 31, 1998. The Agreement may also be terminated
by either party if a material breach of the Agreement occurs which remains
unresolved for 60 days following a written notification of the breach to the
other party.

4. INVESTMENTS:

ISM's investments represent securities classified as available for sale and
are stated at market value. These investments consist primarily of debt
securities which are actively traded on open markets. Unrealized gains or
losses are recorded in shareholders' equity. Realized gains and losses on
dispositions are computed by the specific identification method and are
included in the accompanying statements of operations.

The cost and estimated market value of investments in securities available
for sale are summarized below:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ --------
<S> <C> <C>
Debt securities available for sale, at cost........... $390,166 $418,734
Gross unrealized gains................................ 4,856 1,692
-------- --------
Estimated market value................................ $395,022 $420,426
======== ========
</TABLE>

5. RELATED PARTY TRANSACTIONS:

The following summarizes related party information. The discussion under the
heading "Certain Transactions" contained in this Registration Statement is
incorporated herein by reference.

Administrative Service Fee

Certain shareholders of ISM own an interest in the entity which performs
general, administrative and accounting services for ISM. Fees related to these
services were $60,000 for each of the years ended December 31, 1993, 1994 and
1995, and $30,000 for the six-month period ended June 30, 1996.

Lease Expense

ISM leases office space from an entity in which certain shareholders own an
indirect interest. Lease expense related to this office space was $39,524,
$53,777 and $76,774 for the years ended December 31, 1993, 1994 and 1995, and
$39,832 for the six-month period ended June 30, 1996, respectively.

Professional Services

A shareholder of ISM is a partner in the entity which performs legal
services for ISM. These fees amounted to $45,078, $97,831 and $20,499 for the
years ended December 31, 1993, 1994 and 1995, and $12,190 for the six-month
period ended June 30, 1996, respectively.

F-25
<PAGE>

INTERNATIONAL SPORTS MARKETING, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. SUBSEQUENT EVENT:

Effective August 14, 1996, the shareholders of ISM entered into an agreement
with Allin Communications Corporation to sell all of the outstanding shares of
the Company. The sales price is approximately $2.4 million. The agreement
includes a provision whereby the price will be increased in accordance with a
specified formula based upon average earnings over a three-year period, as
defined. The maximum additional payment would be approximately $2.4 million
payable over a three-year period. This sale is conditioned upon the closing of
an initial public offering being undertaken by Allin Communications
Corporation.

F-26
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Kent Consulting Group, Inc.:

We have audited the accompanying balance sheets of Kent Consulting Group,
Inc. (a California corporation) as of December 31, 1994 and 1995 and June 30,
1996, and the related statements of operations, shareholders' equity and cash
flows for the year ended March 31, 1994, the nine months ended December 31,
1994, the year ended December 31, 1995 and the six months ended June 30, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kent Consulting Group,
Inc. as of December 31, 1994 and 1995 and June 30, 1996, and the results of
its operations and its cash flows for the year ended March 31, 1994, the nine
months ended December 31, 1994, the year ended December 31, 1995 and the six
months ended June 30, 1996, in conformity with generally accepted accounting
principles.

Arthur Andersen LLP
Pittsburgh, Pennsylvania,
October 2, 1996

F-27
<PAGE>

KENT CONSULTING GROUP, INC. BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30
1994 1995 1996
-------- -------- -------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 3,613 $ 904 $ 42,303
Accounts receivable........................... 222,630 341,678 645,846
Notes receivable.............................. 14,332 42,720 --
Inventory..................................... 20,761 -- --
Deferred income taxes......................... 7,000 -- --
Other assets.................................. 1,149 3,757 6,065
-------- -------- --------
Total current assets......................... 269,485 389,059 694,214
Property and equipment, net.................... 131,708 73,786 174,133
Note receivable................................ -- -- 43,300
Shareholder receivable......................... 20,759 -- --
Deferred income taxes.......................... -- 56,000 54,000
-------- -------- --------
$421,952 $518,845 $965,647
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable........... $108,983 $ 50,417 $ 40,000
Line of credit................................ 165,000 -- --
Shareholder note payable...................... -- 79,964 --
Accounts payable.............................. 131,442 60,805 128,730
Accrued liabilities:
Payroll related.............................. 10,241 95,628 171,984
Income taxes................................. -- 42,000 158,000
Other........................................ 6,086 1,637 15,527
Deferred income taxes......................... -- 71,000 120,000
-------- -------- --------
Total current liabilities.................... 421,752 401,451 634,241
Notes payable.................................. -- 34,583 --
Shareholders' equity:
Common stock, no par value per share--
Authorized, 1,500 shares; issued and
outstanding, 1,000 shares................... 1,000 1,000 1,000
Retained earnings............................. (800) 81,811 330,406
-------- -------- --------
Total shareholders' equity................... 200 82,811 331,406
-------- -------- --------
$421,952 $518,845 $965,647
======== ======== ========
</TABLE>

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

F-28
<PAGE>

KENT CONSULTING GROUP, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, DECEMBER 31, DECEMBER 31, ----------------------
1994 1994 1995 1995 1996
---------- ------------ ------------ ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue................. $1,945,818 $1,467,975 $1,994,791 $764,922 $1,791,886
Cost of revenue......... 1,328,830 831,401 989,279 354,032 936,834
---------- ---------- ---------- -------- ----------
Gross profit.......... 616,988 636,574 1,005,512 410,890 855,052
Selling, general and
administrative......... 901,202 472,688 712,069 210,341 436,851
---------- ---------- ---------- -------- ----------
(Loss) income from
operations............. (284,214) 163,886 293,443 200,549 418,201
Interest expense, net... 26,897 24,531 3,832 3,219 2,606
---------- ---------- ---------- -------- ----------
(Loss) income before
income taxes........... (311,111) 139,355 289,611 197,330 415,595
Income taxes............ (74,495) 56,000 57,000 80,000 167,000
---------- ---------- ---------- -------- ----------
Net (loss) income....... $ (236,616) $ 83,355 $ 232,611 $117,330 $ 248,595
========== ========== ========== ======== ==========
</TABLE>

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

F-29
<PAGE>

KENT CONSULTING GROUP, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
RETAINED TOTAL
COMMON EARNINGS SHAREHOLDERS'
STOCK (DEFICIT) EQUITY
-------- --------- -------------
<S> <C> <C> <C>
March 31, 1993............................... $123,041 $ 21,427 $144,468
Net loss.................................... -- (236,616) (236,616)
-------- -------- --------
March 31, 1994............................... 123,041 (215,189) (92,148)
Acquisition and retirement of shares........ (12,766) -- (12,766)
Net income.................................. -- 83,355 83,355
Capital contribution........................ (109,275) 131,034 21,759
-------- -------- --------
December 31, 1994............................ 1,000 (800) 200
Net income.................................. -- 232,611 232,611
Distribution to shareholders................ -- (150,000) (150,000)
-------- -------- --------
December 31, 1995............................ 1,000 81,811 82,811
Net income.................................. -- 248,595 248,595
-------- -------- --------
June 30, 1996................................ $ 1,000 $330,406 $331,406
======== ======== ========
</TABLE>

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

F-30
<PAGE>

KENT CONSULTING GROUP, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, DECEMBER 31, DECEMBER 31, --------------------
1994 1994 1995 1995 1996
---------- ------------ ------------ ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net (loss) income..... $(236,616) $ 83,355 $232,611 $117,330 $248,595
Adjustments to
reconcile net (loss)
income to net cash
flows from operating
activities:
Depreciation and
amortization....... 22,168 12,000 18,417 9,000 27,530
Deferred income
taxes.............. (74,495) 56,000 15,000 61,000 51,000
Changes in certain
assets and
liabilities--
Accounts receivable.. 237,232 41,975 (285,966) (177,087) (304,168)
Notes receivable..... 203,757 (14,332) (42,720) (18,172) (580)
Shareholder
receivable.......... -- (20,759) -- -- --
Inventory............ 54,154 23,923 -- -- --
Other assets......... 1,882 325 (3,478) (2,748) (2,308)
Accounts payable..... (76,336) (105,216) 60,805 31,352 67,925
Accrued liabilities.. (82,432) 2,105 139,116 70,575 206,246
--------- -------- -------- -------- --------
Net cash flows from
operating
activities........ 49,314 79,376 133,785 91,250 294,240
--------- -------- -------- -------- --------
Cash flows from
investing activities:
Capital expenditures,
net.................. (2,692) (33,330) (60,069) (31,884) (127,877)
--------- -------- -------- -------- --------
Cash flows from
financing activities:
Proceeds from notes
payable.............. 187,000 -- 164,732 84,768 --
Principal payments on
notes payable........ (226,575) (58,550) (172,544) (104,943) (124,964)
Acquisition and
retirement of shares. -- (12,766) -- -- --
Distribution to
shareholders......... -- -- (65,000) -- --
Capital contribution.. -- 21,759 -- -- --
--------- -------- -------- -------- --------
Net cash flows from
financing
activities........ (39,575) (49,557) (72,812) (20,175) (124,964)
--------- -------- -------- -------- --------
Net change in cash and
cash equivalents 7,047 (3,511) 904 39,191 41,399
Cash and cash
equivalents, beginning
of period............. 77 7,124 -- -- 904
--------- -------- -------- -------- --------
Cash and cash
equivalents, end of
period................ $ 7,124 $ 3,613 $ 904 $ 39,191 $ 42,303
========= ======== ======== ======== ========
</TABLE>

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

F-31
<PAGE>

KENT CONSULTING GROUP, INC.

STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, DECEMBER 31, DECEMBER 31, ------------------
1994 1994 1995 1995 1996
---------- ------------ ------------ ----------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Supplemental disclosure
of cash flow
information:
Cash paid for--
Interest............. $32,000 $24,000 $6,000 $4,000 $6,000
======= ======= ====== ====== ======
Income taxes......... $18,000 $ -- $1,000 $ -- $1,000
======= ======= ====== ====== ======
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:

The net liabilities of Vision Network Systems, Inc., the Predecessor, as of
December 31, 1994 (reflected as a shareholder receivable on the balance sheet)
consist of the following (see Note 2):

<TABLE>
<S> <C>
Cash.......................................................... $ 3,613
Accounts receivable........................................... 222,630
Notes receivable.............................................. 14,332
Inventory..................................................... 20,761
Other assets.................................................. 800
Deferred tax asset............................................ 7,000
Property and equipment, net................................... 131,708
Accounts payable.............................................. (131,442)
Accrued liabilities........................................... (16,178)
Notes payable/line of credit.................................. (273,983)
---------
$ (20,759)
=========
</TABLE>

During the year ended December 31, 1995, the Company assumed $172,776 of
long-term debt from Vision Network Systems, Inc., the Predecessor, and
received in exchange the following (see Note 4):

<TABLE>
<S> <C>
Accounts receivable............................................ $ 55,712
Computer equipment............................................. 32,064
Buyout of marketing agreement.................................. 85,000
--------
$172,776
========
</TABLE>

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

F-32
<PAGE>

KENT CONSULTING GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS:

Kent Consulting Group, Inc. (KCG) is engaged in the performance of
professional services related to the design and operation of custom business
network systems for microcomputers. KCG was incorporated on November 23, 1994,
and commenced operations on January 1, 1995. Prior to December 31, 1994,
Vision Network Systems, Inc. (VNS or the Predecessor) was engaged in the same
business. KCG and VNS are deemed to be entities under common control as the
sole shareholder of KCG and his spouse own 96% of VNS. KCG was formed to
acquire substantially all of the assets of VNS. KCG provides the same services
to the same customers with the same employees as VNS had previously.
Therefore, due to factors described above, VNS is deemed to be a predecessor.

VNS is currently involved with litigation arising from the conduct of its
business. This liability was not assumed by KCG. In the opinion of management,
based upon its discussion with counsel, any liability associated with these
matters would be the obligation of VNS.

The matters affecting the Predecessor relate to an alleged usurpation of a
division of VNS's business by a former employee. VNS has filed a lawsuit
against the former employee who, in turn, has cross-complained against VNS for
damages to his reputation. The Predecessor is represented by its insurance
carrier in defense of the cross-complaint.

Also related to the matter described above, two claims against VNS remain
outstanding which were filed by former vendors for amounts due. VNS contends
these balances relate to purchases made by the former employee in a capacity
where he was not authorized to do so. Accordingly, these claims should be
directed to this individual.

As a result of the matters discussed above, KCG was formed to continue the
business. Subsequent to January 1, 1995, VNS's operations have been limited to
completion of projects previously commenced as well as efforts to resolve the
outstanding matters.

The discussion under the heading "Risk Factors" contained in this
Registration Statement is incorporated herein by reference.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the significant accounting policies affecting
the financial statements of KCG and the Predecessor.

Basis of Presentation

As KCG and VNS represent entities under common control, the accompanying
financial statements present the financial position and results of operations
and cash flows of KCG and VNS as if they were combined from inception in a
manner similar to a pooling of interests. The financial position, results of
operations and related disclosures as of and prior to December 31, 1994,
represent that of the Predecessor. This information is provided due to the
similarities in ownership and operations. The accompanying statements of
shareholders' equity reflect the net liabilities of VNS as of December 31,
1994, and the initial capitalization of KCG as a contribution of capital.

Comparable information for VNS subsequent to January 1, 1995, has not been
provided as that portion of the business was not acquired by the Company and
is not included as part of the transaction discussed in Note 9.

VNS used a fiscal year-end of March 31. The results of operations for the
nine-month period ended December 31, 1994, are provided for comparability.

F-33
<PAGE>

KENT CONSULTING GROUP, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Certain assets and liabilities of VNS were acquired and assumed by KCG. The
purchase method of accounting was not used as KCG and the Predecessor
represent entities under common control. VNS's cost basis in the assets
acquired and liabilities assumed has been reflected in the accompanying 1995
financial statements. Therefore, the purchase price in excess of the
Predecessor's cost basis has been reflected as a distribution to shareholders
in the accompanying statement of shareholders' equity (Note 4).

Use of Estimates in the Preparation of Financial Statements

Cash Equivalents

KCG considers all highly liquid investments with a maturity of three months
or less when acquired to be cash equivalents.

Accounts Receivable

KCG grants credit to customers based upon management's assessment of their
creditworthiness. Three significant customers accounted for approximately 35%,
15% and 10% of 1995 sales, respectively. One customer accounted for
approximately 26% of sales for the six months ended June 30, 1996. Trade
accounts receivable are due from approximately 30 customers located primarily
in the greater San Francisco Bay area.

Property and Equipment

KCG provides for depreciation on its property and equipment using
accelerated methods over estimated useful lives of 5 years. The Predecessor
provided for depreciation on its property and equipment using straight-line
and accelerated methods over useful lives ranging from 5 to 31.5 years.

Expenditures for ordinary maintenance and repairs which do not extend the
lives of the applicable assets are charged to expense as incurred, while
renewals and betterments that materially extend the lives of the applicable
assets are capitalized and depreciated.

Financial Instruments

Notes payable are reflected at their outstanding face value, excluding
unpaid interest. As no ready market exists for these instruments, comparable
instruments available from outside KCG are not available. Based upon the
nature of these instruments and KCG itself, it is not practicable to estimate
the fair value of these notes.

All other financial instruments are classified as current and will be
utilized within the next operating cycle.

Recently Issued Accounting Standards

Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of"
(SFAS No. 121), was issued in March 1995 and is effective for fiscal years
beginning after December 15, 1995. This statement will be applied
prospectively and requires that impairment losses on long-lived assets be
recognized when the book value of the asset exceeds its expected undiscounted
cash flows. KCG adopted SFAS No. 121 on January 1, 1996, and adoption at that
time did not have a material impact on KCG's financial position or results of
operations.

F-34
<PAGE>

KENT CONSULTING GROUP, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Unaudited Interim Financial Statements

The statements of operations and cash flows for the six-month period ended
June 30, 1995 are unaudited and are not covered by the report of independent
public accountants. However, in the opinion of management, these interim
financial statements include all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the results of operations
and cash flows of KCG for the interim period and are prepared on the same
basis as the audited financial statements.

3. PROPERTY AND EQUIPMENT:

Property and equipment is comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------- -------------
<S> <C> <C> <C>
Furniture, fixtures and
equipment................... $126,815 $ 92,133 $220,010
Automobile................... 37,556 -- --
Leasehold improvements....... 52,731 -- --
-------- -------- --------
217,102 92,133 220,010
Accumulated depreciation..... (85,394) (18,347) (45,877)
-------- -------- --------
$131,708 $ 73,786 $174,133
======== ======== ========
</TABLE>

4. RELATED PARTY TRANSACTIONS:

The following summarizes related party information. The discussion under the
heading "Certain Transactions" contained in this Registration Statement is
incorporated herein by reference.

During the year ended December 31, 1995 and the six months ended June 30,
1996, KCG leased certain space and an automobile from its shareholder under
three agreements. These rental agreements expire at various times through May
1997. Rental payments made under these arrangements were approximately $69,000
and $40,000. The future minimum commitment under these agreements is
approximately $58,000 as of June 30, 1996.

KCG had a marketing commission agreement with VNS under which commissions of
$100,000 were paid during the year ended December 31, 1995. This agreement
provided for certain rights of VNS to be used by KCG, including customer lists
and employment agreements with employees. This agreement was terminated and
the related rights were acquired by KCG, effective November 1, 1995, for
$150,000, of which $65,000 was paid during the year ended December 31, 1995.
The remaining $85,000 in consideration was in the form of a bank loan
assumption.

Additionally, approximately $88,000 under a separate bank loan was assumed
in exchange for certain tangible assets. The assumption of these obligations
has been reflected as noncash investing and financing activities in the
accompanying statement of cash flows.

KCG purchased equipment of approximately $50,000 and $122,000 from
affiliated entities during the year ended December 31, 1995 and the six months
ended June 30, 1996.

KCG had notes receivable from VNS and another affiliated entity of
approximately $25,000 and $18,000 as of December 31, 1995.

KCG had a shareholder note payable of $79,964 as of December 31, 1995. This
note bears interest at prime plus 4%, with monthly principal payments of
$6,664 plus interest. This note is secured by the Company's accounts
receivable and fixed assets.

F-35
<PAGE>

KENT CONSULTING GROUP, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

During the year ended March 31, 1994, and the nine months ended December 31,
1994, VNS leased a building from its principal shareholders. Rental payments
made in accordance with the lease agreement were approximately $102,000 and
$76,000, respectively.

VNS had a note receivable from one of its principal shareholders of
approximately $14,000 as of December 31, 1994. This note bears interest at 8%.

5. LINE OF CREDIT:

VNS had an agreement with a bank which provided for a $175,000 revolving
line of credit. Borrowings under this agreement accrued interest at 4% over
the bank's prime rate. These borrowings were secured by substantially all of
the assets of VNS, and were personally guaranteed by VNS's principal
shareholders. The amount outstanding under this line was $165,000 as of
December 31, 1994.

6. NOTES PAYABLE:

KCG and VNS had the following long-term debt obligations outstanding:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
------------ ------------ --------
<S> <C> <C> <C>
Note payable to a bank, interest at prime
plus 4%, monthly principal payments of
$4,583 plus interest, maturity August
1997, secured by accounts receivable and
general intangibles and guaranteed by
KCG's shareholders....................... $ -- $ 85,000 $ 40,000
Note payable to a bank, interest at 10.5%,
monthly principal and interest payments
of $4,026, maturity June 1997, secured by
personal residences of the principal
shareholders of VNS...................... 90,961 -- --
Note payable to a bank, interest at 9.25%,
monthly principal and interest payments
of $575, maturity December 1997, secured
by automobile............................ 18,022 -- --
-------- -------- --------
108,983 85,000 40,000
Less current maturities................... (108,983) (50,417) (40,000)
-------- -------- --------
$ -- $ 34,583 $ --
======== ======== ========
</TABLE>

7. EMPLOYEE BENEFIT PLANS:

KCG provides a 401(k) plan for its employees. The terms of the plan provide
for KCG to assume the cost of plan administration. No contributions by KCG are
required or have been made to date.

8. INCOME TAXES:

Deferred income taxes are provided on all significant temporary differences
between tax and financial reporting based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. The provision for income taxes represents the tax payable or
refundable for the period plus or minus the change during the period in
deferred tax assets and liabilities.

F-36
<PAGE>

KENT CONSULTING GROUP, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The provision for income taxes includes the following components:

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS
YEAR ENDED ENDED YEAR ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1994 1995 1996
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Current taxes--
Federal........................ $ -- $ -- $35,700 $100,300
State.......................... -- -- 6,300 17,700
-------- ------- ------- --------
-- -- 42,000 118,000
-------- ------- ------- --------
Deferred taxes--
Federal........................ (63,500) 47,600 12,750 41,650
State.......................... (10,995) 8,400 2,250 7,350
-------- ------- ------- --------
(74,495) 56,000 15,000 49,000
-------- ------- ------- --------
Total........................... $(74,495) $56,000 $57,000 $167,000
======== ======= ======= ========
</TABLE>

The effective tax rate for the year ended December 31, 1995, differs from
the statutory rates due to the deductibility of the amortization of the
intangible assets purchased from VNS. The accompanying financial statements
reflect this transaction as a distribution to shareholders.

KCG's deferred tax liability results primarily from differences arising from
the use of the cash method of accounting for federal and state income tax
purposes. Deferred income taxes are comprised of the following:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
------------ ------------ ---------
<S> <C> <C> <C>
Deferred tax assets:
Accruals................................. $ -- $ 63,000 $ 136,000
Net operating loss carryforward.......... 67,000 -- --
Intangible asset......................... -- 60,000 58,000
Deferred tax liabilities:
Accounts receivable...................... -- (137,000) (258,000)
Other.................................... -- (1,000) (2,000)
Valuation allowance....................... (60,000) -- --
-------- --------- ---------
Net asset (liability)..................... $ 7,000 $ (15,000) $ (66,000)
======== ========= =========
</TABLE>

VNS recorded a valuation allowance against a portion of the net deferred tax
asset. The benefit of the deferred tax asset will be recognized in the years
in which it is realized.

9. SUBSEQUENT EVENTS:

Effective August 16, 1996, KCG and its shareholder entered into an agreement
providing for a merger into a wholly owned subsidiary of Allin Communications
Corporation (Allin). Consideration related to this transaction is
approximately $5.2 million, consisting of $2.0 million in cash and $3.2
million in common stock of Allin. The agreement includes provisions whereby
the purchase price will be increased in accordance with a specified formula
based upon average earnings over a three-year period, as defined. The maximum
additional payment would be approximately $2.8 million. The agreement also
provides for grants of $400,000 in common stock of Allin to be made to certain
employees of KCG. This merger is conditioned upon the closing of an initial
public offering being undertaken by Allin.

F-37
<PAGE>

[LOGO OF ALLIN COMMUNICATIONS]

[PHOTO APPEARS HERE]
[LOGO OF SEAVISION]

Sample of Seavision's ITV screen graphics
presently in use in the
cruise industry.

[PHOTO APPEARS HERE]
[LOGO OF PHOTOWAVE]

Sample of PhotoWave's
digital imaging products.

[PHOTO APPEARS HERE]
[LOGO OF SPORTSWAVE]

Representation of sporting
events and sporting
memorabilia and of various
logos owned or licensed
by SportsWave.

<PAGE>

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANC-
ES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
Risk Factors............................................................... 10
Use of Proceeds............................................................ 15
Dividend Policy............................................................ 15
Dilution................................................................... 16
Capitalization............................................................. 17
Selected Financial Data.................................................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations............................................................. 20
Business................................................................... 29
Management................................................................. 43
Principal Stockholders..................................................... 46
Certain Transactions....................................................... 47
Description of Capital Stock............................................... 52
Shares Eligible for Future Sale............................................ 56
Underwriting............................................................... 58
Legal Matters.............................................................. 59
Experts.................................................................... 59
Additional Information..................................................... 59
Index to Financial Statements.............................................. F-1
</TABLE>

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

UNTIL , ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.

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

2,000,000 SHARES

ALLIN COMMUNICATIONS
CORPORATION

COMMON STOCK

------------
PROSPECTUS
, 1996
------------

FRIEDMAN, BILLINGS, RAMSEY
& CO., INC.

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

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................... $ 12,690
National Association of Securities Dealers, Inc. filing fee..... 29,420*
Printing expenses............................................... 82,000*
Accounting fees and expenses.................................... 190,000*
Legal fees and expenses......................................... 325,000*
Blue Sky fees and expenses...................................... 30,000*
Transfer agent fees............................................. 2,000*
Miscellaneous................................................... 28,890*
--------
TOTAL....................................................... 700,000*
========
</TABLE>
- --------
*Estimate.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
corporation to indemnify any person who was or is a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.

Section 145 of the DGCL also empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted
in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
to the corporation unless, and only to the extent that, the Court of Chancery
or the court in which such action was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.

Section 145 of the DGCL further provides that, to the extent that a director
or officer of a corporation has been successful in the defense of any action,
suit or proceeding referred to above or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 of the DGCL shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the corporation is empowered to purchase and maintain insurance on
behalf of a director or officer of the corporation against any liability
asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the corporation would have the power to
indemnify him against such liabilities under Section 145 of the DGCL.

II-1
<PAGE>

Consistent with the DGCL, the Registrant's Certificate of Incorporation
contains a provision eliminating or limiting liability of directors to the
Registrant and its stockholders for monetary damages arising from acts or
omissions in the director's capacity as a director. The provision does not,
however, eliminate or limit the personal liability of a director (i) for any
breach of such director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
dividends or unlawful stock purchases or redemptions as provided in Section
174 of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit. This provision offers persons who serve on the
Board of Directors of the Registrant protection against awards of monetary
damages resulting from breaches of their duty of care, except as indicated
above. The Securities and Exchange Commission has taken the position that the
provision will have no effect on claims arising under the federal securities
laws.

The Registrant's Certificate of Incorporation and By-Laws provide for
mandatory indemnification rights to the maximum extent permitted by applicable
law, subject to limited exceptions, to any director or officer of the
Registrant who, by reason of the fact that he is a director or officer of the
Registrant, is involved in a legal proceeding of any nature. Such
indemnification rights include reimbursement for expenses incurred by such
director or officer in advance of the final disposition of such proceeding in
accordance with the applicable provisions of the DGCL.

The Registrant intends to purchase and maintain insurance to protect persons
entitled to indemnification pursuant to the Registrant's Certificate of
Incorporation and By-laws and the DGCL against expenses, judgments, fines and
amounts paid in settlement, to the fullest extent permitted by the DGCL.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On August 16, 1996, in connection with the merger of SeaVision, Inc. with
and into a wholly owned subsidiary of the Registrant, the Registrant issued an
aggregate of 1,000 shares of its Common Stock. As no public offering was
involved, the issuance of such shares was exempt from registration under
Section 4(2) of the Securities Act.

On August 16, 1996, the Registrant issued 25,000 shares of its Series A
Convertible Redeemable Preferred Stock that is not convertible into Common
Stock until at least six months have elapsed from the closing of the Offering.
The aggregate consideration paid for such shares was $1,000,000 in cash and
the extinguishment of loans in the amount of $1,500,000. As no public offering
was involved, the issuance of such shares was exempt from registration under
Section 4(2) of the Securities Act.

Concurrently with or immediately following the closing of the Offering, in
connection with the closing of the KCG Acquisition, the Registrant will issue
to the sole shareholder of KCG $3.2 million in Common Stock valued at the
initial public offering price in the Offering. As no public offering is
involved, the issuance of such shares will be exempt from registration under
Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1 Form of Underwriting Agreement.*
2.1 Stock Purchase Agreement dated August 14, 1996 by and among
International Sports Marketing, Inc., Henry Posner, Jr., Thomas D.
Wright, Michael J. Fetchko, James C. Roddey, Richard W. Talarico,
John F. Hensler and the Registrant.*
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
2.2 Agreement and Plan of Merger dated August 16, 1996 by and among
Kent Consulting Group, Inc., Les Kent and the Registrant.*
3(i)(a) Certificate of Incorporation of the Registrant.*
3(i)(b) Certificate of Designation of the Registrant relating to Series A
Convertible Redeemable Preferred Stock.*
3(i)(c) Certificate of Amendment to Certificate of Designation of the
Registrant relating to the Series A Convertible Redeemable
Preferred Stock.*
3(ii) By-laws of the Registrant.*
4 Certificate of Designation of the Registrant relating to Series A
Convertible Redeemable Preferred Stock and Certificate of Amendment
relating thereto (filed as Exhibits (3)(i)(b) and 3(i)(c)).*
5 Opinion of Eckert Seamans Cherin & Mellott.*
10.1 Sublease Agreement dated August 1, 1996 between SeaVision, Inc. and
Blair Haven Entertainment, Inc.*
10.2 Assignment of Intellectual Property Rights dated October 3, 1994 by
Brian K. Blair and
R. Daniel Foreman in favor of SeaVision, Inc.*
10.3 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders.*
10.4 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders.*
10.5 Note Conversion Agreement dated July 23, 1996 by and among the
Registrant, Henry Posner, Jr., Thomas D. Wright, Terence M.
Graunke, James C. Roddey and Richard W. Talarico.*
10.6 License Agreement dated December 1, 1993 between Major League
Alumni Marketing, Inc. and Hawthorne Sports Marketing, Inc.*
10.7 Line of Credit Note, dated May 31, 1996, made by SeaVision, Inc. in
favor of Integra Bank.*
10.8 Form of 1996 Stock Plan of the Registrant.*
10.9 Employment Agreement dated August 1, 1996 by and between the
Registrant and Richard W. Talarico.*
10.10 Employment Agreement dated August 1, 1996 by and between the
Registrant and R. Daniel Foreman.*
10.11 Employment Agreement dated August 1, 1996 by and between the
Registrant and Brian K. Blair.*
10.12 First Amended and Restated Agreement dated June 1, 1996 between
SeaVision, Inc. and Celebrity Cruises Inc. (subject to request for
confidential treatment).*
10.13 Agreement dated February 6, 1996 between SeaVision, Inc. and
Carnival Corporation (subject to request for confidential
treatment).*
10.14 Agreement dated August 8, 1996 by and between SeaVision, Inc. and
Norwegian Cruise Line Limited (subject to request for confidential
treatment).*
10.15 Installation Agreement dated September 9, 1996 by and between
SeaVision, Inc. and Cunard Line Limited (subject to request for
confidential treatment).*
10.16 Concession Agreement dated September 17, 1996 by and between
SeaVision, Inc. and Royal Caribbean Cruise Line (subject to request
for confidential treatment).*
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.17 Employment Agreement dated as of September 16, 1996 by and between
the Registrant and Jon E. VanAmringe.*
11 Computation of Earnings per Share.*
21 Subsidiaries of the Registrant.*
23.1 Consent of Eckert Seamans Cherin & Mellott (included in its opinion
filed herewith as
Exhibit 5).*
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Richard S. Trutanic.*
24 Power of Attorney (included in the Signature Page).*
27 Financial Data Schedule.*
</TABLE>
- --------
* Previously filed.

(b) Financial Statement Schedules.

The following financial statement schedule is included in Part II of this
Registration Statement and should be read in conjunction with the Financial
Statements and notes thereto included elsewhere herein.

II. Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

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

(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

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

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment no. 2 to registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Pittsburgh, Commonwealth of Pennsylvania on October 11, 1996.

ALLIN COMMUNICATIONS CORPORATION

By: /s/ Richard W. Talarico
-----------------------------
Richard W. Talarico
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 2 to registration statement has been signed by the following persons in
the capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Richard W. Talarico Chairman of the Board and October 11, 1996
- ------------------------- Chief Executive Officer
Richard W. Talarico (principal executive officer)

/s/ Jon E. VanAmringe Chief Financial Officer and October 11, 1996
- ------------------------- Treasurer (principal
Jon E. VanAmringe financial and accounting officer)

* Director October 11, 1996
- -------------------------
R. Daniel Foreman

* Director October 11, 1996
- -------------------------
Brian K. Blair

* Director October 11, 1996
- -------------------------
William C. Kavan

* Director October 11, 1996
- -------------------------
James C. Roddey

*By: /s/ Richard W. Talarico
-----------------------
Richard W. Talarico
Attorney-in-Fact

II-5
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Allin Communications Corporation:

We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Allin Communications Corporation (a
Delaware corporation) and subsidiaries, included in this registration
statement and have issued our report thereon dated October 2, 1996. Our audits
were made for the purpose of forming an opinion on the basic consolidated
financial statements taken as a whole. Schedule II, which is the
responsibility of the Company's management, is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is not part
of the basic consolidated financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly states in all
material aspects the financial data required to be set forth in relation to
the basic consolidated financial statements taken as a whole.

Arthur Andersen LLP

Pittsburgh, Pennsylvania
October 2, 1996

S-1
<PAGE>

SCHEDULE II

ALLIN COMMUNICATIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE ADDITIONS BALANCE
AT CHARGED AT END
BEGINNING TO OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
--------- --------- ---------- -------
<S> <C> <C> <C> <C>
KENT CONSULTING GROUP, INC.
Deferred tax asset valuation
Year Ended March 31, 1994................ $ -- $60,000 $ -- $60,000
Period Ended December 31, 1994........... 60,000 -- -- 60,000
Year Ended December 31, 1995............. 60,000 -- 60,000 --
Six Months Ended June 30, 1996........... -- -- -- --
</TABLE>

S-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1 Form of Underwriting Agreement.*
2.1 Stock Purchase Agreement dated August 14, 1996 by and among
International Sports Marketing, Inc., Henry Posner, Jr., Thomas D.
Wright, Michael J. Fetchko, James C. Roddey, Richard W. Talarico,
John F. Hensler and the Registrant.*
2.2 Agreement and Plan of Merger dated August 16, 1996 by and among
Kent Consulting Group, Inc., Les Kent and Allin Communications
Corporation.*
3(i)(a) Certificate of Incorporation of the Registrant.*
3(i)(b) Certificate of Designation of the Registrant relating to Series A
Convertible Redeemable Preferred Stock.*
3(i)(c) Certificate of Amendment to Certificate of Designation relating to
the Series A Convertible Redeemable Preferred Stock.*
3(ii) By-laws of the Registrant.*
4 Certificate of Designation of the Registrant relating to Series A
Convertible Redeemable Preferred Stock and Certificate of Amendment
relating thereto (filed as Exhibits (3)(i)(b) and 3(i)(c)).*
5 Opinion of Eckert Seamans Cherin & Mellott.*
10.1 Sublease Agreement dated August 1, 1996 between SeaVision, Inc. and
Blair Haven Entertainment, Inc.*
10.2 Assignment of Intellectual Property Rights dated October 3, 1994 by
Brian K. Blair and R. Daniel Foreman in favor of SeaVision, Inc.*
10.3 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders.*
10.4 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders.*
10.5 Note Conversion Agreement dated July 23, 1996 by and among the
Registrant, Henry Posner, Jr., Thomas D. Wright, Terence M.
Graunke, James C. Roddey and Richard W. Talarico.*
10.6 License Agreement dated December 1, 1993 between Major League
Alumni Marketing, Inc. and Hawthorne Sports Marketing, Inc.*
10.7 Line of Credit Note, dated May 31, 1996, made by SeaVision, Inc. in
favor of Integra Bank.*
10.8 Form of 1996 Stock Plan of the Registrant.*
10.9 Employment Agreement dated August 1, 1996 by and between the
Registrant and Richard W. Talarico.*
10.10 Employment Agreement dated August 1, 1996 by and between the
Registrant and R. Daniel Foreman.*
10.11 Employment Agreement dated August 1, 1996 by and between the
Registrant and Brian K. Blair.*
10.12 First Amended and Restated Agreement dated June 1, 1996 between
SeaVision, Inc. and Celebrity Cruises Inc. (subject to request for
confidential treatment).*
10.13 Agreement dated February 6, 1996 between SeaVision, Inc. and
Carnival Corporation (subject to request for confidential
treatment).*
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.14 Agreement dated August 8, 1996 by and between SeaVision, Inc. and
Norwegian Cruise Line Limited (subject to request for confidential
treatment).*
10.15 Installation Agreement dated September 9, 1996 by and between
SeaVision, Inc. and Cunard Line Limited (subject to request for
confidential treatment).*
10.16 Concession Agreement dated September 17, 1996 by and between
SeaVision, Inc. and Royal Caribbean Cruise Line (subject to request
for confidential treatment).*
10.17 Employment Agreement dated as of September 16, 1996 by and between
the Registrant and Jon E. VanAmringe.*
11 Computation of Earnings per Share.*
21 Subsidiaries of the Registrant.*
23.1 Consent of Eckert Seamans Cherin & Mellott (included in its opinion
filed herewith as
Exhibit 5).*
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Richard S. Trutanic.*
24 Power of Attorney (included in the Signature Page).*
27 Financial Data Schedule.*
</TABLE>
- --------
* Previously filed.

<PAGE>

Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement.

/s/ Arthur Andersen LLP
-----------------------

Pittsburgh, Pennsylvania
October 11, 1996