FLEX ACQUISITION CORP, S-4, 1996-11-29

FLEX ACQUISITION CORP
S-4, 1996-11-29

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Commission File No. 33-_______________

Flex Acquisitions Corporation
(Exact name of registrant as specified in its charter)

Texas
(State of Incorporation)

___________
(Primary Standard Industrial Classification Code Number)

76-0498636
(I.R.S. Employer Identification Number)

770 S. Post Oak Lane, Suite 515
Houston, TX 77056
713/840-7500
Facsimile: 713/840-7554
(Address and telephone number of registrant's
principal executive offices)

Michael T. Fearnow, President, 770 S. Post Oak Lane, Suite 515, Houston, TX
77056
713/840-7500
Facsimile: 713/840-7554
(Name, address and telephone number of agent for service)

Copies to:

M. Stephen Roberts, Esq.
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
713/961-2696
Facsimile: 713/961-1148

Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after the Registration Statement becomes
effective.

If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box [ ]

<PAGE>

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

=========================================================================================================================
TITLE OF EACH CLASS OF PROPOSED PROPOSED
SECURITIES TO BE MAXIMUM MAXIMUM
REGISTERED OFFERING AGGREGATE AMOUNT OF
AMOUNT BEING PRICE OFFERING REGISTRATION
REGISTERED PER SECURITY(1) PRICE(1) FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (3) 80,000 $ .23 $ 18,400 $ 5.58
- -------------------------------------------------------------------------------------------------------------------------
Class A Options
Common Stock Underlying Class A Options
80,000 $ .50 $ 40,000 $ 12.12
- -------------------------------------------------------------------------------------------------------------------------
Unit Purchase Options - Bridge Loan (2)
Units issuable upon exercise of the Unit Purchase Options (2)
Common Stock issuable upon exercise of
the Unit Purchase Options 12,333 $ .46 $ 5,673 $ 1.72
- -------------------------------------------------------------------------------------------------------------------------
Class B Warrants issuable upon exercise
of the Unit Purchase Options 24,666 $ .02 $ 493 $ .15
- -------------------------------------------------------------------------------------------------------------------------
Common Stock issuable upon exercise of
Class B Bridge Loan warrants which
underlie the Unit Purchase Options 24,666 $ 6.25 $ 154,163 $ 46.71
- -------------------------------------------------------------------------------------------------------------------------
Class C Warrants issuable upon exercise
of the Unit Purchase Options 24,666 $ .02 $ 493 $ .15
- -------------------------------------------------------------------------------------------------------------------------
Common Stock issuable upon exercise of
Class C Bridge Loan warrants which
underlie the Unit Purchase Options 24,666 $ 10.00 $ 246,660 $ 74.74
- -------------------------------------------------------------------------------------------------------------------------
Units, each consisting of one share of
common stock, $.001 par value, two
Class B Warrants and two Class C Warrants (2)
Common Stock ($.001 par value)(3) 14,000 $ .23 $ 3,220 $ .98
- -------------------------------------------------------------------------------------------------------------------------
Class B Warrants 28,000 $ .10 $ 2,800 $ .85
- -------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying Class B Warrants 28,000 $ 6.25 $ 175,000 $ 53.03
- -------------------------------------------------------------------------------------------------------------------------
Class C Warrants 28,000 $ .05 $ 1,400 $ .42
- -------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying Class C Warrants 28,000 $ 10.00 $ 28,000 $ 8.48
- -------------------------------------------------------------------------------------------------------------------------
Common Stock (for the Shelf)(4) 2,000,000 $ .23 $ 460,000 $ 139.38
- -------------------------------------------------------------------------------------------------------------------------
TOTAL
=========================================================================================================================
<FN>

(1)Estimated solely for purposes of calculating the registration fee.

(2)Class A Options, Units and Unit Purchase Options are not being
registered as a security.

(3)These 94,000 (80,000 and 14,000) shares are to be offered in exchange
for all the issued and outstanding shares of
common stock of Flex Financial Group, Inc. in a proposed merger. The
registration fee is based upon the book value of
Flex Financial, $21,185, on July 31, 1996.

(4)These 2,000,000 shares are being registered pursuant to the provisions of
Regulation 230.415(a) (viii) and are to be
available to be issued in connection with business combinations. The
registration fee is based upon the maximum offering
price of the securities offered in exchange for all the issued and outstanding
shares of capital stock of Flex Financial.

(5)The registration statement also covers any additional securities which
may become issuable pursuant to anti-dilution
provisions of the warrants.
</TABLE>

The registration hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting pursuant to said
section 8(a) may determine.

<PAGE>
PROSPECTUS

FLEX ACQUISITIONS CORPORATION
(a Texas corporation)

94,000 Shares of Common Stock
(Par value, $0.001 per Share)

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

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
____________________________________

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

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Underwriting Proceeds to
Price to Discounts and Issuer or
Recipient Commissions Other Person(1)
- -------------------------- ---------- -------------- ----------------
<S> <C> <C> <C>
Per Share:
- -------------------------- ---------- -------------- ----------------
94,000 Merger Shares (2) $ 0.23 $ 0.00 $ 21,620
- -------------------------- ---------- -------------- ----------------
2,000,000 Shelf Shares (4) $ 0.23 $ 0.00 $ 460,000
- -------------------------- ---------- -------------- ----------------
<FN>

(1)The estimated expenses of the Merger transaction described herein are
$35,000, all of which is being borne by Flex Financial Group, Inc.

(2)Should the proposed Merger between Flex Acquisitions Corporation (the
"Company") and Flex Financial Group, Inc. ("Flex Financial") described herein
be approved and effectuated, these 94,000 Shares will be distributed to the
shareholders of Flex Financial, and all shares of Flex Financial will be
canceled. See "Terms of the Merger," page ___.

(3)Based upon the book value of Flex Financial on July 31, 1996.

(4)These Shares (the "Shelf Shares") shall not be distributed at this time but
shall be available to the Company for merger and acquisition purposes during
the 2 years' period after the effective date of this Prospectus upon the
Company's filing post-effective amendments to the Registration Statement of
which this Prospectus is a part. There are no current plans, arrangements or
understandings for mergers, acquisitions or business combinations for which
the Shelf Shares would be used.

(5)The offering price of the Shelf Shares would be determined in the future,
if use is made of such Shelf Shares, and would be reflected in post-effective
amendments to the Registration Statement of which this Prospectus is a part.
</TABLE>

<PAGE>

The Company is not a "reporting company," as such term is employed in the
Securities Exchange Act of 1934. It is not listed on any exchange, and its
Common Stock is not eligible for quotation on the NASDAQ Small-Cap Market
("NASDAQ"). There presently is no public market for the Common Stock of the
Company, and there can be no assurance that such a market will develop or can
be sustained should there be a completion of the proposed Merger. Should the
proposed Merger not be effected, there will be no public market for the
securities of the Company because of the above-described escrow arrangement.
See "Summary of Proposed Transaction - The Escrow Arrangement."

ADDITIONAL INFORMATION

Registration Statement. The Company has filed with the Securities and
-----------------------
Exchange Commission in Washington, D.C. a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Common Stock offered
by this Prospectus. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration
Statement and the exhibits listed in the Registration Statement. The
Registration Statement can be examined at the Public Reference Room of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained upon payment of the prescribed fees.
Reports to Shareholders. The Company intends to furnish shareholders
with annual reports containing financial statements audited by independent
public or certified accountants and such other periodic reports as it may deem
appropriate or as required by law.

Stock Certificates. It is expected that certificates for the
-------------------
securities offered hereby will be ready for delivery within thirty days after
the date of the approval of the proposed merger and the filing of the
necessary merger documents with the Secretary of State of Texas, should the
proposed merger be approved by the requisite shareholder vote of each of the
Company and Flex Financial Group, Inc., with respect to the Shares to be
distributed in the merger to the existing shareholders of Flex Financial
Group, Inc.

Post-Effective Amendment and Prospectus Stickers Concerning Proposed
-------------------------------------------------------------------------
Merger. Should the proposed Merger described herein be approved by the
- ------
requisite shareholder vote of Flex Financial and become effective, the Company
will file a post-effective amendment to the Registration Statement described
above and cause stickers to be placed on the front cover page of all copies of
the Prospectus, which amendment and stickers will describe the results of the
vote and the effective date of the merger.

Private Securities Litigation Reform Act Safe Harbor Statement. When
------------------------------------------------------------------
used in the Prospectus, the words "estimate", "project", "intend", "expect",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to risks and uncertainties that could cause actual
results to differ materially. For a discussion of such risks, see "Risk
Factors". Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

UNTIL _____________________, 1996 (90 DAYS AFTER THE REGISTERED SECURITIES ARE
RELEASED FROM ESCROW PURSUANT TO RULE 419 UNDER THE SECURITIES ACT OF 1933)
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES MAY BE
REQUIRED TO DELIVER A PROSPECTUS.

TABLE OF CONTENTS

<PAGE>

<TABLE>
<CAPTION>
Page
-------
<S> <C>
ADDITIONAL INFORMATION
SUMMARY OF PROPOSED TRANSACTION
The Three Companies
Flex Acquisitions Corporation
Flex Financial Group, Inc.
American NorTel Communications, Inc.
The Spinoff
The Proposed Merger and Spinoff
The Escrow Arrangement
Consequences Should the Merger Not Occur
Degree of Management Control of Vote on Merger
Dissenters' Rights of Appraisal
Compliance with Governmental Regulations
Tax Consequences of the transaction
Risk Factors
RISK FACTORS
TERMS OF THE TRANSACTION
Terms of the Merger
Reasons for the Merger and Spinoff
Accounting Treatment of Proposed Merger
Agreement and Plan of Merger
Differences Between Rights of
Shareholders of the Company
And of Flex Financial
Description of Securities
Common Stock
Voting Rights
Dividend Rights
Liquidation Rights
Preemptive Rights
Registrar and Transfer Agent
Dissenters' Rights
Preferred Stock
Other Securities of the Company
Class A Common Stock Purchase Options
Unit Purchase Options
Class B and Class C Warrants
Federal Income Tax Consequences
The Merger
The Spinoff
Shareholders of American NorTel
Pro Forma Financial Information and Dilution
Material Contacts Among the Companies
Reoffering by Party Deemed to be an Underwriter
Interest of Counsel
Indemnification
INFORMATION ABOUT THE COMPANY
Description of Business and Properties
Course of Business Should the Merger Not Occur
Legal Proceedings
Market for the Company's Common Sock and Related
Stockholder Matters
Rule 144 and Rule 145 restrictions on Trading
Financial Statements
Independent Auditor' Reports
Balance Sheet
Statement of Operations
Statement of changes in Stockholder's Equity
Statement of Cash Flows
Notes to Financial Statement

<PAGE>

INFORMATION ABOUT FLEX FINANCIAL
Management's Plan of Operation
Liquidity and Capital Resources
Plan of Operation
Business Objectives
Business Experience of Principals
Business Plan
1. General
2. Subordination and Bridge Loans
3. Long Term Investment Opportunities
Investment Transactions
4. Long Term Investment Opportunities
Business Combinations
5. Miscellaneous Matters
Description of Business Properties
Legal Proceedings
Market for Flex Financial's Common Stock
And related Stockholder Matters
Financial Statements
Independent Auditor's Report
Balance Sheet
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
VOTING AND MANAGEMENT INFORMATION
Date, Time and Place Information
The Company
Flex Financial
Voting Procedure
Dissenters' Rights of Appraisal
No Solicitation of Proxies
Voting Securities and Principal Holders Thereof
Security Ownership of Certain Beneficial Owners
and Management
Directors, Executive Officers and Significant
Employees
Remuneration of Directors and Officers
The Company
Flex Financial
Stock Options
Interest of Management and Others
In Certain transactions
PLAN OF MERGER
</TABLE>

<PAGE>

SUMMARY OF PROPOSED TRANSACTION

The transaction described herein, should it be approved by the
stockholders of Flex Financial Group, Inc., a Texas corporation ("Flex
Financial"), will register under the Securities Act of 1933, as amended (the
"Securities Act"), the distribution of shares (the "Shares") of Common Stock
of Flex Acquisitions Corporation (the "Company"), a Texas corporation, to the
holders of shares of capital stock of Flex Financial and of American NorTel
Communications, Inc., a Wyoming corporation ("American NorTel"). To
accomplish this end, the shareholders of each of the Company and of Flex
Financial will vote to approve or to reject a proposed merger (the "Merger")
between the two companies. The sole shareholder of the Company is American
NorTel, a corporation with approximately 780 shareholders residing in 31
states and Canada. Should the proposed Merger be approved, American NorTel
will distribute certificates representing the 20,000 shares of Common Stock of
the Company it now owns to its approximately 780 shareholders (the "Spinoff").
There is presently no public market for the Common Stock of the Company, and
no assurance can be given that such a market will be developed, or if
developed, will be sustained.

The Three Companies.
- ---------------------

Three companies and their shareholders are affected by the transaction
described in this Prospectus.

Flex Acquisitions Corporation (the "Company"). The Company was
-------------------------------------------------
incorporated under the laws of the State of Texas on March 21, 1996 for the
purpose of merging with Flex Financial Group, Inc. ("Flex Financial") should
the Merger transaction described herein be approved. The Company has no
business operations or significant capital and has no present intention of
engaging in any active business until and unless it merges with Flex
Financial.

The business office of the Company is located at 770 S. Post Oak Lane,
Suite 515, Houston, TX 77056. Its telephone number is 713/840-7500.

Flex Financial Group. Inc. ("Flex Financial"). Flex Financial was
-------------------------------------------------
incorporated under the business corporation laws of the State of Texas on
August 17, 1995.

General. Flex Financial was formed to participate in certain
-------
short-term financing opportunities (terms of less than one year) in the
underwriting segment of the securities industry and to participate in certain
long-term financing and investment opportunities (terms of greater than one
year) in transactions with operating businesses with significant growth
potential ("Target Businesses"). The Company has no business operations or
significant capital and has no present intention of engaging in any active
business until and unless it completes a public offering of its securities
("Concurrent Public Offering").

Business Plan. The Company intends to participate in short term
--------------
financing opportunities by (i) providing and/or participating in equity
subordination loans to selected underwriters requiring additional excess net
capital for underwriting specific issues on a firm commitment basis
("Subordination Loans") and (ii) providing and/or participating in bridge
loans to selected issuers meeting the Company's due diligence standards in
connection with initial public offerings and secondary financing ("Bridge
Loans"). By reason of its participation in Subordination and Bridge Loans,
the Company may be in a position to take advantage of long-term financing and
investment opportunities to effect exchanges of its assets for cash and/or
securities not involving acquiring control share positions ("Investment
Transactions") and to effect mergers, exchanges of capital stock, asset
acquisitions, joint ventures or other similar business combinations involving
acquiring control share positions ("Business Acquisitions") with Target
Businesses. The Company also intends to engage in "spinoff" activities such
as are described herein, such spinoffs to involve the distribution, by way of
stock dividends or otherwise, of registered shares of stock of other public
companies. The Company initially undertook a private placement of its
securities ("Private Placement") primarily to provide the capital to
undertake the transactions described herein.

<PAGE>

Management of the Company believes that financing opportunities will
become available to the Company due primarily to the liquidity of its assets,
its future status as a publicly-held company, and its flexibility in
structuring and participating in financing opportunities.

The Company maintains its offices at 770 S. Post Oak Lane, Suite 515,
Houston, Texas 77056 where its telephone number is 713/840-7500.

The business office of Flex Financial is 770 S. Post Oak Lane, Suite
515, Houston, TX 77056. Its telephone number is 713/840-7500.

American NorTel Communications Inc. American NorTel Communications
-----------------------------------
Inc. ("American NorTel") filed its Certificate of Registration and Articles of
Continuance with the Secretary of State of the State of Wyoming and became a
Wyoming corporation effective February 9, 1993. The company was originally
incorporated in British Columbia, Canada on May 17, 1979. American NorTel's
common stock has been listed for trading on the Vancouver Stock Exchange since
September 18, 1980. In conjunction with a one for five consolidation, the
company's name was changed to Coldsprings Resources Ltd. on June 4, 1987. In
conjunction with a one for ten consolidation, its name was changed to
Islehaven Capital Corporation on July 14, 1987. The company changed its name
to NorTel Communications Inc. on June 17, 1991. In conjunction with a one
for ten consolidation, the company's name was changed to American NorTel
Communications Inc. on May 11, 1992.

American NorTel currently operates only in the telecommunications
business, providing long distance telephone service in combination with
additional related services in the United States and a number of foreign
countries, including Argentina, Brazil, Mexico, Canada, and Costa Rica. Until
the end of 1993, the Company was also in the mining development and
exploration business in Costa Rica and Canada, and has divested of its
remaining mining assets.

In 1987, American NorTel was inactive and was classified as dormant
under the rules of the Vancouver Stock Exchange. The then current management
organized a reverse take-over by a number of limited partnerships and private
companies which were engaged in the mining development and exploration
business and who, on July 14, 1987, transferred all of their assets into the
company for Treasury shares. The company is no longer active in the mining
development and exploration business. In 1990, American NorTel became active
in the long distance telecommunications business, which is now its only
business.

American NorTel has approximately 780 shareholders. The company seeks
to diversify its business opportunities and investment potential to its
shareholders by engaging in "spinoff" activities such as are described herein,
such spinoffs to involve the distribution, by way of stock dividends or
otherwise, of registered shares of stock of other companies. American NorTel
organized the Company and, prior to the date of this Prospectus, has been the
controlling shareholder of the Company.

American NorTel's address is 7201 E. Camelback Road, Suite 320,
Scottsdale, Arizona 85251. Its telephone number is 602-945-1266.

<PAGE>

The Spinoff. American NorTel purchased 20,000 shares of Common
------------
Stock of the Company for a cash consideration of $1,000 and proposes to
distribute to the shareholders of American NorTel these 20,000 shares on the
basis of one share of the Company for every 588 shares of American NorTel held
of record on September 30, 1996; provided that only American NorTel
shareholders entitled to at least five shares will be eligible for a dividend
distribution ("the Spinoff"). The Spinoff transaction is being registered by
the Company with the Securities and Exchange Commission on a separate
registration statement ("the Spinoff registration statement"). See "Terms of
the Transaction."

American NorTel's address is 7201 East Camelback Road, Suite 320,
Scottsdale, AZ 85251. Its telephone number is (602) 945-1266.

THE PROPOSED MERGER AND SPINOFF.
- -----------------------------------

Upon the effectiveness both of the registration statements of which this
Prospectus is a part and the Spinoff registration statement, the shareholders
of the Company and of Flex Financial will each vote to approve or reject a
proposed merger of Flex Financial into the Company on the following terms:

1. Flex Financial shall merge into the Company, a Texas corporation.

2. Upon the effectiveness of the Merger, all the issued and
outstanding shares of capital stock of Flex Financial shall be converted into
94,000 shares of Common Stock of the Company, with each share of Flex
Financial's Common Stock being exchanged and converted into one share of the
Company's common. As of the date of this Prospectus, the following table sets
forth the number of outstanding shares of each class of Flex Financial capital
stock, the number of votes attributable to each class, the number of shares of
Common Stock of the Company that would be allocated to each class, and the
number of shares of each class to be exchanged for one share of the Company's
Common Stock in the Merger:

<TABLE>
<CAPTION>
No. of
Company
No. of No. of Shares for 1
Flex Total Shares Flex
Financial Voting of Financial
Class of Stock Shares Rights Company Share
- --------------------- --------- ------ ------- ------------
<S> <C> <C> <C> <C>
Flex Financial Common 94,000 94,000 94,000 1
</TABLE>

3. Because the exchange and conversion will be one share for one
share, fractional shares shall not be issued. The exercise or purchase price
of Flex Financial options and warrants shall be adjusted to be, for the
replacement Company options and warrants, that price determined by multiplying
(a) the present exercise price or purchase price by (b) the total voting
rights of all classes of Flex Financial's capital stock (which total voting
rights equal 94,000 as of the date of this Prospectus) divided by 94,000. The
effect of this formula will be that the exercise price of Flex Financial
options and warrants shall be identical to the replacement Company options and
warrants.

4. The business of Flex Financial shall be conducted, after the
Merger, by the Company, into which Flex Financial shall have merged, but Flex
Financial's management and directors shall become the management and directors
of the Company.

5. American NorTel shall distribute to its shareholders ("the
Spinoff"), on a basis proportionate to their shareholdings in American NorTel,
20,000 Shares ("the Spinoff Shares") of Common Stock of the Company now held
by American NorTel. Each American NorTel shareholder shall receive one share
of the Company for each 588 shares of American NorTel held of record on
September 30, 1996; provided that only American NorTel shareholders entitled
to at least five shares will be eligible for a dividend distribution.

<PAGE>

The Escrow Arrangement.
- ------------------------

A vote to approve the Merger by the sole shareholder of the Company is
assured, after which vote American NorTel shall declare a dividend to its
shareholders of the 20,000 shares of Common Stock of the Company held by it
("the Spinoff Shares"). Certificates representing the Spinoff Shares shall be
distributed by American NorTel to Southwest Bank of Texas NA ("the Escrow
Agent") to be held in escrow for distribution by it to American NorTel's
approximately 780 shareholders at such time as (i) the Merger is effected,
(ii) this Prospectus is supplemented to indicate that the Merger has been
effected and the date of such effectiveness, and (iii) information concerning
the Company in its post-merger form shall have been made available to market
makers of the Company's stock and also published in Moody's OTC Industrial
Manual. After certificates representing the Spinoff Shares have been
delivered to the Escrow Agent, the shareholders of Flex Financial shall vote
to approve or disapprove the Merger. Should they approve the Merger, Articles
of Merger must be filed with the Secretary of State of Texas, which filing and
recording would cause the Company and Flex Financial to be merged, with the
Company as the surviving corporation.

Upon the legal effectiveness of the Merger, the Company shall then (i)
file a post-effective amendment to the Registration Statement and supplement
this Prospectus to indicate the fact and date of the Merger and (ii) cause
information concerning the Company in its post-merger form to be made
available to market makers of the Company's stock and also published in
Moody's OTC Industrial Manual. At that time, the Company shall provide to the
Escrow Agent the Company's representation that the requirements of Securities
and Exchange Commission Regulation 230.419(e) have been met, and the Escrow
Agent shall distribute the escrowed certificates representing the Spinoff
Shares to the owners of such Shares.

The present management of Flex Financial shall become the management of
the Company after the Merger should the Merger become effective, but no
assurance can be given that it shall become effective.

Consequences Should the Merger Not occur.
- ---------------------------------------------

There can be no assurance that the proposed Merger between the Company
and Flex Financial will occur, since a favorable shareholder vote of Flex
Financial's shareholders must be obtained, and Flex Financial's management
does not hold voting power over a majority of any of its Common Stock, which
two thirds vote is required for Flex Financial to approve the Merger.

Should the Merger not become effective, (i) Flex Financial will continue
as a closely-held company with its existing assets and business, and (ii) the
Company will have no significant assets or business, and there will be no
trading market for its Common Stock, because the stock certificates
representing all its issued and outstanding shares of capital stock will still
be held in escrow by the Escrow Agent. As long as this escrow continues, no
transfer or other disposition of the Shares held in escrow shall be permitted
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title 1 of the Employee Retirement Income Security Act or
the rules thereunder. The Company's management has no specific plans for an
alternative to a rejection of the proposed Merger but would seek to acquire a
business or assets that would constitute a business, using funds contributed
by management to pay the costs of such search. Upon execution of any
agreement for the acquisition of a business or assets that would constitute a
business, the Company shall file a post effective amendment to the
Registration Statement and shall supplement this Prospectus to disclose
information about the alternative business or assets acquisition, including
financial statements and other information required by the Securities and
Exchange Commissions's Rule 419. Upon the legal effectiveness of the
acquisition described in the amended registration statement and supplemented
Prospectus, an additional post-effective amendment to the registration
statement would be filed, and upon the effectiveness of such post-effective
amendment filed with the Commission, the Escrow Agent would distribute the
stock certificates held in escrow. Should no alternative to the Merger be
effected within 18 months after the effective date of the Registration
Statement of which this Prospectus is a part, Flex Financial has agreed to
convert its $4,000 Note according to its terms into common stock representing
80% of the outstanding voting shares of the Company's Common Stock and will
have the voting rights to cause a dissolution of the Company. Flex Financial
has indicated its intentions to so exercise these voting rights to that
effect at that time. See "Summary of Proposed Transaction The Escrow
Arrangement."

<PAGE>

Degree of Management Control of Vote on Merger.
- -----------------------------------------------------

The Merger must be approved by a vote of two-thirds (2/3's) of the
outstanding shares of Common Stock of each of the Company and Flex
Financial. With respect to such companies, the percentage of outstanding
shares entitled to vote and held by officers, directors and their affiliates
are as follows: the Company - 0%; and Flex Financial - Common Stock -
43%.

Dissenters' Rights of Appraisal.
- ----------------------------------

Those shareholders of Flex Financial who vote against the Merger have the
right to dissent and to exercise certain rights of appraisal, which, if
exercised, and if the Merger is effected, would cause Flex Financial to pay
these dissenters the appraised value of their shareholdings. See "Voting and
Management Information - Dissenters' Rights of Appraisal."

Compliance with Governmental Regulations.
- -------------------------------------------

No federal or state regulatory requirements, other than securities laws
and regulations, must be complied with or federal or state approval obtained
in connection with the Spinoff and Merger, other than the filing of articles
of merger with the Secretary of State of Texas after a favorable vote might be
obtained on the proposed merger.

Tax Consequences of the Transaction.
- ---------------------------------------

The Merger should be a "tax-free" reorganization under Section 368(a)(1)
of the Internal Revenue Code. See "Terms of the Transaction - Federal Income
Tax Consequences."

Risk Factors.
- -------------

Ownership of the Common Stock of the Company is speculative and involves
a high degree of risk, whether the Merger with Flex Financial be effected or
not. See "Risk Factors" below.

RISK FACTORS

The shareholders of Flex Financial, all of whom shall be asked to vote on
the proposed Merger, are making an investment decision that involves a high
degree of risk and should carefully consider the following factors in
evaluating the Merger, the surviving corporation, and its business in
determining whether to approve the Merger.

<PAGE>

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933. Such forward-looking statements
may be found in this section and under "Prospectus Summary," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Business and Properties." Actual events or results
could differ materially from those discussed in the forward-looking statements
as a result of various factors including, without limitation, the risk factors
set forth below and elsewhere in this Prospectus. In addition to the other
information contained in this Prospectus, the following risk factors should be
considered when evaluating an investment in the shares of Common Stock offered
hereby.

1. No Assurance of a Public Market and Likelihood of a Volatile
-------------------------------------------------------------
Market. While the shares of Common Stock of the Company to be issued or
- ------
distributed pursuant to this Prospectus will be free of restrictions on
transferability for all persons except "affiliates" of the Company and Flex
Financial (and with respect to such "affiliates" such shares may be
transferred subject to certain restrictions), there is presently no public
market for the Common Stock of the Company and there is no assurance that a
public market for such securities will develop after the occurrence of the
Merger described in this Prospectus, or, if one develops, that it will be
sustained. It is likely that any market that develops for the Common Stock,
should it develop, will be highly volatile and that the trading volume in such
market will be limited.

2. Market Restrictions on Broker-Dealers. The Company's common
-------------------------------------
stock is covered by a Securities and Exchange Commission rule that imposes
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5 million or
individuals with net worth in excess of $1 million or annual income exceeding
$200,000 or $300,000 jointly with their spouse). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of
broker-dealers to sell the Company's securities and also may affect the
ability of persons receiving shares in this offering to sell their shares in
the secondary market. Further, the Company's Common Stock, after the Merger,
will initially be quoted on an NASD inter-dealer system called "the Bulletin
Board," will not have $4 million in assets or $2 million in stockholders'
equity which are both required for it to qualify for quotation on NASDAQ, and
may not command a market price of $5 per share, the price required for a
non-NASDAQ-quoted security to escape the trading severities imposed by the
Securities and Exchange Commission on so-called "penny stocks." These trading
severities tend to reduce broker-dealer and investor interest in penny stocks
and could operate (i) to inhibit the ability of the Company's stock to reach a
$3 per share trading price that would make it eligible for quotation on NASDAQ
even should it otherwise qualify for quotation on NASDAQ and (ii) to inhibit
the ability of the Company to use its stock for business acquisition purposes.
See "Information About the Company - Market for the Company's Common Stock
and Related Stockholders Matters."

3. Management Control. Should the proposed Merger be approved and
-------------------
effected, after the Merger the Company's officers and directors and their
affiliates will own approximately 35 percent of the common stock of the
Company and thereby may be able to determine the outcome of any vote affecting
the control of the Company. The Board of Directors has complete discretion in
making all business decisions. Accordingly, no person should purchase
Securities in the Company unless he is willing to entrust all business
decisions to the Board of Directors.

<PAGE>

4. Dependence on Key Personnel. The affairs of the surviving
---------------------------
company, should the Merger be approved, shall be conducted by the present
management of Flex Financial. The loss of the services of any of these
persons and other key employees, for any reason, may have a materially adverse
effect on the prospects of the emergent company. There are no employment
contracts with management or key personnel of the Company. See "Voting and
Management Information - Directors, Executive Officers and Significant
Employees." The Company will be heavily dependent on the skills, talents, and
abilities of its management and consultants to successfully implement its
business plan. Although management has experience in seeking, investigating
and participating in financing and investment opportunities, management will
generally depend on their general business expertise in making decisions
regarding the Company's operations. Because investors will not be able to
evaluate the merits of possible business opportunities by the Company, they
should critically assess the information concerning the Company's management.
The success of the emergent Company is dependent upon, among other things,
the services of Michael T. Fearnow, President of Flex Financial, and of M.
Stephen Roberts, who will provide certain financial and legal consulting
services to the Company. The Company has not entered into employment
agreements with any of its officers. Flex Financial does not have, nor does
it or the Company presently intend to obtain, key man life insurance (with
proceeds payable to the Company) on the life of Mr. Fearnow. The loss of the
services of Messrs. Fearnow and Roberts for any reason, may have a material
adverse effect on the prospects of the Company.

5. Dependence on Outside Consultants and Advisers. The Company
-----------------------------------------------
intends to retain the services of Financial Public Relations, Ltd. on a
non-exclusive long-term basis to provide financial consulting services to the
company. The services to be provided by Financial Public Relations, Ltd. will
be provided primarily by M. Stephen Roberts and Michael T. Fearnow who have
extensive experience in the securities industry and particularly with respect
to small firm underwritings. The Company expects to appoint through the board
of directors an advisory committee composed of persons employed in the
securities industry to provide ongoing advice and consultation to the board
with respect to business opportunities and the business activities of the
Company. During the investigation of a possible business opportunity and in
order to supplement the business experience of management, the Company may
employ accountants, technical experts, appraisers, attorneys, or other
consultants and advisers. The selection of any advisers will be made by
management and without any control from stockholders. Furthermore, it is
anticipated that advisers may be engaged by the Company on an independent
basis without a continuing fiduciary or other obligation to the Company.

6. Dilution. Should the Merger be approved and effected, the
--------
shareholders of Flex Financial shall suffer a 17.4% dilution in their
percentage ownership of the surviving company in exchange solely for obtaining
shares of Common Stock registered under the Securities Act to be exchanged for
their shares of capital stock of Flex Financial. Measured on the basis of net
tangible book value a share as of July 31, 1996, the Flex Financial Common
Stockholders shall suffer a 17.4% dilution (from $0.23 a share down to $0.19 a
share).

7. Tax Consequences. The anticipated favorable tax consequences
-----------------
of the proposed Merger and Spinoff to the Company and its shareholders (see
"Terms of the Transaction - Federal Income Tax Consequences") are not
supported by an advance ruling by the Treasury Department but are based upon
an opinion of M. Stephen Roberts, Esq., in his capacity as tax counselor to
the Company (which tax opinion is one of the exhibits to the registration
statement of which this Prospectus is a part). Should the actual income tax
consequences be different than as represented herein by the Company,
significant gain or loss might be recognized and reportable by any of the
Company, American NorTel, or American NorTel's approximately 780 shareholders
to whom will be distributed the 20,000 Spinoff Shares should the Merger be
effected.

8. Dividends Not Likely. Should the Merger be effected, for the
----------------------
foreseeable future it is anticipated that any earnings which may be generated
from operations of the emergent company will be used to finance the growth of
such company, and cash dividends will not be paid to holders of the Common
Stock.

<PAGE>

9. Possible Future Dilution. In addition t o the Shares registered
------------------------
for the proposed Merger and for the Spinoff, the Company has registered
2,000,000 shares to be available for issuance in possible business
combinations or asset acquisitions, the issuance of which would dilute the
percentage ownership and could dilute the net tangible book value per share of
shareholders of the surviving company.

TERMS OF THE TRANSACTION

The Company and Flex Financial, pursuant to approval by their respective
boards of directors, have entered into an agreed plan of merger, a copy of
which is included herein (see "Plan of Merger"). In order for the merger
contemplated by the Plan of Merger to become effective, it is necessary that
each of the following occur:

(i) a registration statement covering the 20,000 Spinoff Shares
offered herein and a registration statement covering the 94,000 Merger shares
(for distribution to Flex Financial's shareholders) (a) must be filed with the
Securities and Exchange Commission and with appropriate state securities
regulatory agencies and (b) must become effective;

(ii) the shareholders of each of the Company and of Flex Financial
must, by a requisite vote of the shares outstanding, approve the merger
contemplated by the Plan of Merger; and

(iii) certain documents evidencing the approved merger must be prepared
and filed with the appropriate state authority in the State of Texas.

Terms of the Merger.
- ----------------------

The terms of the proposed merger ("the Merger") are as follows:

l. Flex Financial shall merge into the Company, a Texas corporation.

3. Fractional shares shall not be issued but shall be rounded up or
down to the nearest whole number. The Company shall reserve 185,332
additional shares of its Common Stock for possible issuance upon the exercise
of Company options and warrants to be issued to replace presently outstanding
and unexercised Flex Financial options and warrants.

4. The business of Flex Financial shall be conducted, after the
Merger, by the Company, into which Flex Financial shall have merged, and Flex
Financial's management and directors shall become the management and directors
of the Company.

6. There shall also be registered as part of the Merger registration
statement filed with the Securities and Exchange Commission, 2 million
additional shares of Common Stock of the Company ("the Shelf Shares"), which
Shelf Shares shall be available after the Merger for issuance, upon the filing
of post-effective amendments to the Merger registration statement, in
subsequent possible mergers or acquisitions with companies engaged in business
activities of types related or similar to those now conducted by Flex
Financial. Management of Flex Financial (who shall become the management of
the Company after the Merger) has no current plans, arrangements or
understandings with respect to possible merger, acquisitions or business
combinations for which the Shelf Shares would be used.

<PAGE>

7. Should the Merger not be approved by the requisite vote of persons
holding a majority of the issued and outstanding shares of Common Stock of
Flex Financial, none of Flex Financial, the Company, or American NorTel shall
be liable to any of the others, the sole obligation of each being to pay its
expenses relating to the registration of the Shares described herein.

8. The historical financial statements of the post-Merger Company
shall be those of Flex Financial.

Reasons for the Merger and Spinoff.
- ---------------------------------------

The managements of the Company and of Flex Financial believe that Flex
Financial's shareholders will benefit from receiving shares that have been
registered under the Securities Act in exchange for their shares of capital
stock of Flex Financial. Further, the managements of the Company and of Flex
Financial believe that the distribution of Shares to the stockholders of
American NorTel in the Spinoff increases the possibility that a public market
will develop for the Shares held by Flex Financial stockholders. No assurance
can be given, however, that a market will develop for the Common Stock or, if
it develops, that it will be sustained. See "Risk Factors - No Assurance of a
Public Market and Likelihood of a Volatile Market."

Accounting Treatment of Proposed Merger.
- -------------------------------------------

Because the Company is only a corporate shell and not an operating
entity, the proposed Merger will be accounted for as if Flex Financial
recapitalized.

Plan of Merger.
- ----------------

The complete Plan of Merger among the Company, Flex Financial, and
American NorTel is included in this Prospectus. See "Plan of Merger."

Differences Between Rights of Shareholders of the Company and of Flex
- ------------------------------------------------------------------------------
Financial.
- ---------

There are no material differences between the rights of holders of the
common stock of the Company and of Flex Financial.

Description of Securities.
- ---------------------------

Common Stock. The Company is authorized to issue 10 million shares of
-------------
Common Stock, $0.001 par value. As of the date of this Prospectus the Company
had 20,000 shares of Common Stock issued and outstanding.

Voting Rights. Holders of the shares of Common Stock are entitled
-------------
to one vote per share on all matters submitted to a vote of the shareholders.
Shares of Common Stock do not have cumulative voting rights, which means that
the holders of a majority of the shares voting for the election of the board
of directors can elect all members of the board of directors.

Dividend Rights. Holders of record of shares of Common Stock are
----------------
entitled to receive dividends when and if declared by the board of directors
out of funds of the Company legally available therefor.

<PAGE>

Liquidation Rights. Upon any liquidation, dissolution or winding
-------------------
up of the Company, holders of shares of Common Stock are entitled to receive
pro rata all of the assets of the company available for distribution to
shareholders, subject to the prior satisfaction of the liquidation rights of
the holders of outstanding shares of Preferred Stock.

Preemptive Rights. Holders of Common Stock do not have any
-------------------
preemptive rights to subscribe for or to purchase any stock, obligations or
other securities of the Company.

Registrar and Transfer Agent. Registrar and Transfer Company, 10
-----------------------------
Commerce Drive, Cranford, New Jersey 07016-3572 serves as the transfer agent
and registrar of the Company.

Dissenters' Rights. Under current Texas law, a shareholder is
-------------------
afforded dissenters' rights which if properly exercised may require the
corporation to repurchase its shares. Dissenters' rights commonly arise in
extraordinary transactions such as mergers, consolidations, reorganizations,
substantial asset sales, liquidating distributions, and certain amendments to
the company's certificate of incorporation.

Preferred Stock. The Company is authorized to issue 10 million shares
----------------
of Preferred Stock, without par value. The preferences, rights and attributes
of the Preferred Stock, which may be set forth in series, shall be determined
by the board of directors at such times as series are authorized to be issued.
As of the date of this Prospectus, the Company has not issued any shares of
its authorized Preferred Stock.

Other Securities of the Company. Under the terms of the Merger, all
----------------------------------
warrants and options of Flex Financial which are outstanding on the Effective
Date shall be canceled and converted into warrants and options of the Company
of equivalent tenor. Therefore upon the Effective Date of the Merger, the
Company will have pursuant to the Merger the following additional securities
outstanding.

Class A Common Stock Purchase Options. In September, 1995 Flex
----------------------------------------
Financial authorized the issuance of 80,000 Class A Common Stock Purchase
Options ("Class A Options") in connection with a private placement of 80,000
shares of common stock to its founding shareholders. As of the date of this
Prospectus, all of such Class A Options continue to be owned by the original
subscribers and are outstanding. The Class A Options are currently
exercisable and will terminate on August 31, 2000 and may be exercised at a
price of $.50 per share.

Unit Purchase Options. In connection with an IPO Bridge Loan,
-----------------------
Flex Financial issued $50,000 principal amount of 10% subordinated notes
("Notes") and Unit Purchase Options ("Option Units"). The Option Units
entitle the holders to purchase such number of equivalent units of Flex
Financial's securities as may be offered in an initial public offering at an
aggregate offering price of at least $60,000 pursuant to an effective
registration statement filed under the Securities Act that closes prior to
June 30, 1996. The number of equivalent units purchasable at a price of $.50
per unit is determined by dividing the IPO unit offering price into the
principal amount of Notes. Under the terms of this offering, holders of the
Option Units are entitled to purchase 8,333 equivalent units. By mutual
consent, the applicable IPO closing date and expiration date for exercise was
extended to March 31, 1997 and the holders were granted an additional 4,000
Option Units. As of the date of this Prospectus, all of such Class A Options
continue to be owned by the original subscribers and are outstanding.

Class B and Class C Warrants. As of the date of this Prospectus
------------------------------
Flex Financial had 28,000 Class B Warrants and 28,000 Class C Warrants
outstanding to purchase an aggregate of 56,000 shares of common stock. These
warrants were issued in a private placement that closed in April, 1996.

<PAGE>

Federal Income Tax Consequences.
- ----------------------------------

The Merger. The Merger should qualify as a type "A" reorganization
-----------
under Section 368(a)(1) of the Internal Revenue Code. However, when
consideration is given to the fact that the Company is newly organized, the
"step transaction doctrine" might be applied and, accordingly, the Company
might be considered a continuation of Flex Financial with only a change of
name or place of incorporation, a type "F" reorganization under Section
368(a)(1). Whether the Merger be characterized as a type "A" or "F"
reorganization, the Company believes that there should be no recognition of
taxable gain or loss to the shareholders of the Company by reason of the
Merger.

The Spinoff. It is anticipated that the distribution by American
------------
NorTel to its shareholders of the 20,000 Spinoff Shares will be a taxable
event to American NorTel and to each of its shareholders receiving any of the
Spinoff Shares. Gain (but not loss) would be recognized by American NorTel
under Section 311 of the Internal Revenue Code for any excess of the fair
market value of the Company's stock on the date of actual distribution over
the tax basis to American NorTel of such stock.

Shareholders of American NorTel. As for American NorTel's shareholders
-------------------------------
who receive Spinoff Shares of the Company, the Spinoff shall occur prior to
the vote by Flex Financial's shareholders to accept or reject the Merger.
Since the result of the vote by Flex Financial's shareholders cannot be
forecast, and since the Merger cannot and shall not become effective until
after a favorable vote is obtained on the Merger, American NorTel takes the
view that the fair market value of the Spinoff Shares on the date of the
Spinoff should not have increased over the $0.05 price paid by American NorTel
for the 20,000 Spinoff Shares.

American NorTel has no current or accumulated earnings, and the
distribution is being made from excess capital. Each shareholder of American
NorTel should reduce the adjusted basis of his American NorTel stock by the
fair market value of the distribution to him, and any remaining portion will
be treated as capital gain in the same manner as a sale or exchange of the
stock. This fair market value is assumed to be $0.05 per share. American
NorTel undertakes to advise its shareholders in early 1998 should it deem the
fair market value of the distributed Spinoff Shares on the date of
distribution to have been different than $0.05 per share or should it have had
earnings in 1997, which would cause the distribution, to the extent of such
earnings, to be taxed as a dividend and as ordinary income.

The above discussion is not based upon an advance ruling by the Treasury
Department but upon an opinion of M. Stephen Roberts, Esq., in his capacity as
tax counselor to the Company (which tax opinion is one of the exhibits to the
registration statement of which this Prospectus is a part). See "Risk Factors
- - Tax Consequences."

Pro Forma Financial Information and Dilution.
- -------------------------------------------------

Due to the fact that the Company has no substance or operating history -
it was organized as a shell to accommodate the desire of Flex Financial's
management to provide for the issuance of securities registered under the
Securities Act to Flex Financial's shareholders, pro forma financial
information giving effect to the Merger would not vary in any significant
respect from the financial information of Flex Financial.

Essentially, the effect of the Spinoff and Merger is to dilute by 17.6
percent the equity of the shareholders of Flex Financial by transferring this
equity to the present shareholders of American NorTel. The effect of the
Merger and Spinoff on the net tangible book value of a share of the Company's
Common Stock and Flex Financial's Common Stock is as follows:

<PAGE>

<TABLE>
<CAPTION>
Before After
Merger-Spinoff Merger-Spinoff
--------------- ---------------
<S> <C> <C>

Company's Common Stock $ 0.04 $ 0.19
Flex Financial's Common Stock 0.23 0.19
</TABLE>

Material Contacts Among the Companies.
- -----------------------------------------

Other than the proposed Spinoff and Merger described herein, there have
been no material contracts, arrangements, understandings, relationships,
negotiations or transactions among Flex Financial, the Company, and American
NorTel during the periods for which financial statements appear herein.

Reoffering by Party Deemed to be an Underwriter.
- ------------------------------------------------------

The Shares described herein are to be redistributed by the owner of such
Shares, American NorTel, who might be deemed to be an underwriter by reason of
its intent to distribute such Shares. (see "Terms of the Merger" above).

After the distribution by American NorTel of the Spinoff Shares to its
shareholders, American NorTel will no longer own any shares of capital stock
of the Company, except to the extent that an uncertain number of Spinoff
Shares representing undistributed fractional share interests would not be
allocated in the rounding down process (see "Terms of the Merger").

A consequence to American NorTel, should it be deemed to be an
underwriter of the Shares to be distributed to its shareholders, is that any
person who purchases the registered Shares within 3 years after the
distribution could assert a claim against American NorTel under Section 11 of
the Securities Act of 1933. The purchase could be in the open market as long
as the shares purchased can be traced to the registered Shares American NorTel
distributes to its shareholders. Such a claim, to be successful, must be
based upon a showing that statements in the registration statement were false
or misleading with respect to a material fact or that the registration
statement omitted material information required to be included therein.

Open market purchasers may have to prove reliance upon the alleged
misstatement or omission, but reliance may not necessarily require a showing
that the purchaser actually read the registration statement but, instead, that
the misstatements or omissions in the registration statement were a
substantial factor in the purchase of the shares.

Interest of Counsel.
- ---------------------

M. Stephen Roberts, Esq., counsel to the Company, is named in this
Prospectus as having given an opinion on the validity of the securities being
registered, upon certain income tax consequences of the Merger and the
Spinoff, and upon other legal matters concerning the registration or offering
of the securities described herein. Mr. Roberts is the beneficial owner of
43% of the issued and outstanding shares of Common Stock of Flex Financial and
is the beneficial owner of less than .5% of the issued and outstanding shares
of Common Stock of American NorTel and, by reason of this ownership, shall
become the beneficial owner of 40,102 Shares of the Company by way of the
merger and American NorTel's distribution of the 20,000 Spinoff Shares to its
shareholders.

Indemnification.
- ---------------

<PAGE>

Under Texas corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are made or threatened to be
made parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same
capacity for another entity at the request of the corporation. Such
indemnification includes expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
persons if they acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation or, with respect to
any criminal action or proceeding, if they had no reasonable cause to believe
their conduct was unlawful. In the case of any action or suit by or in the
right of the corporation against such persons, the corporation is authorized
to provide similar indemnification, provided that, should any such persons be
adjudged to be liable for negligence or misconduct in the performance of
duties to the corporation, the court conducting the proceeding must determine
that such persons are nevertheless fairly and reasonably entitled to
indemnification. To the extent any such persons are successful on the merits
in defense of any such action, suit or proceeding, Texas law provides that
they shall be indemnified against reasonable expenses, including attorney
fees. A corporation is authorized to advance anticipated expenses for such
suits or proceedings upon an undertaking by the person to whom such advance is
made to repay such advances if it is ultimately determined that such person is
not entitled to be indemnified by the corporation. Indemnification and
payment of expenses provided by Texas law are not deemed exclusive of any
other rights by which an officer, director, employee or agent may seek
indemnification or payment of expenses or may be entitled to under any by-law,
agreement, or vote of shareholders or disinterested directors. In such
regard, a Texas corporation is empowered to, and may, purchase and maintain
liability insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation. As a result of such corporation law,
the Company may, at some future time, be legally obligated to pay judgments
(including amounts paid in settlement) and expenses in regard to civil or
criminal suits or proceedings brought against one or more of its officers,
directors, employees or agents, as such, with respect to matters involving the
proposed Merger or, should the Merger be effected, matters that occurred prior
to the Merger with respect to Flex Financial.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.

INFORMATION ABOUT THE COMPANY

The Company was incorporated under the laws of the State of Texas on
March 21, 1996. It has no business or significant assets and was organized
for the purpose of entering into the Merger proposed herein (see "Terms of the
Transaction - Terms of the Merger"). It has no employees; its management will
serve without pay until the Merger should become effective.

Description of Business and Properties
- ------------------------------------------

Should the Merger be approved and effected, the Company shall be the
surviving company, but the Company's management (see "Voting and Management
Information - Directors, Executive Officers, and Significant Employees") shall
not remain as the management of the Company. Control of the Company, through
the voting power to elect the entire board of directors and thereby to replace
management, shall pass to the present shareholders of Flex Financial, and Flex
Financial's present directors and officers shall become the directors and
officers of the Company.

<PAGE>

It is the intention of Flex Financial's present management (i) to
continue the business of Flex Financial as the business of the Company (see
"Information about Flex Financial - Description of Business and Properties")
after the Merger and (ii) to seek opportunities to engage in additional,
related business activities, primarily through acquisitions of existing
businesses.

The Company's present management consists of one person, Michael T.
Fearnow. Mr. Fearnow has been a principal of National Association of
Securities Dealers' ("NASD") member firms which acted as securities
broker-dealers and acted as underwriters of, or members of groups selling,
securities offered to the public.

Course of Business Should the Merger Not occur.
- -----------------------------------------------------

Should the Merger not be approved and effected, the Company will be
without any property or business. The Company's management has no present
plans for this contingency but would seek to acquire, in exchange for stock of
the Company, a business or assets that would constitute a business. Should no
acquisition that would cause the Company to become a going concern be made
within 18 months after the date of the Registration Statement of which this
Prospectus is a part, the holders of the majority of the issued and
outstanding shares of Common Stock will have the voting power to cause a
dissolution of the Company, and persons who would be the holders of a majority
of these shares have indicated their intention to do so.

Legal Proceedings
- ------------------

Neither the Company nor its property is a party to or the subject of
pending legal proceedings.

Market for the Company's Common Stock and Related Stockholder Matters.
- ---------------------------------------------------------------------------

There is no public trading market for the Company's Common Stock. As of
the date of this Prospectus, there is one holder of record of the Company's
20,000 shares of issued and outstanding capital stock. After the Spinoff (see
"Terms of the Transaction - Terms of the Merger") these 20,000 shares of stock
shall be owned of record by American NorTel's approximately 780 shareholders
(except to the extent that an uncertain number of Spinoff Shares representing
undistributed fractional share interests would not be allocated to American
NorTel shareholders in the rounding down process).

Should the Merger be approved and effected, (i) the Escrow Agent will
release from escrow the certificates representing the ownership of the 20,000
Spinoff Shares, which certificates would be delivered to the approximately 780
persons owning the Spinoff Shares, and (ii) the 11 shareholders of Flex
Financial will receive 94,000 shares of Common Stock of the Company in
exchange for all the issued and outstanding shares of capital stock of Flex
Financial. An additional 185,332 shares of Common Stock of the Company will
be reserved for issuance against the exercise of Company options and warrants
that would replace existing options and warrants of Flex Financial.

There can be, and is, no assurance that market makers will make or
maintain a market in the stock or that, even if a market is made and
maintained in the stock, that the stock will trade at prices deemed attractive
or reasonable to the shareholders of the Company.

The Company's stock will not be eligible for quotation on the NASDAQ
Small Cap Market ("NASDAQ") (i) until it trades at a price of $3 per share or
higher and (ii) unless it meets other NASDAQ requirements regarding assets and
shareholders' equity, which it will not yet meet even if the Merger is
approved and effected. No assurance can be made that the Common Stock will
ever become eligible for quotation on NASDAQ.

<PAGE>

The Company's stock is expected to be quoted on an NASD interdealer
system called "the Bulletin Board." While some Bulletin Board stocks are
actively traded, they do not draw the interest of the NASD brokerage community
held by NASDAQ stocks or exchange-listed stocks. The eligibility requirements
for listing the Company's stock on exchanges are generally as high or higher
than the requirements for eligibility for quotation on NASDAQ, and the Company
has no present plans to list its stock on an exchange. Hence, the plans of
the Company to use its stock for business acquisition purposes are likely to
be adversely affected unless and until its stock becomes eligible for
quotation on NASDAQ.

Further, holders of the Shares offered herein face the prospect, should
the Merger be approved and effected, of an indefinite period during which the
Shares will be subject to trading severities imposed on Bulletin Board,
so-called "penny stocks" (stocks that trade at less than $5 per share) by
regulations of the Securities and Exchange Commission. The effect of these
trading severities is to reduce broker-dealer and investor interest in trading
or owning "penny stocks" and, hence, could inhibit the ability of the
Company's stock to reach a trading level of $3 per share or higher and thereby
become eligible for quotation on NASDAQ even if the Company meets NASDAQ's
assets and shareholders' equity requirements in the future.

Flex Financial has obtained agreements from the beneficial owners of at
least 50 percent of their presently outstanding shares of capital stock to the
effect that these owners will not sell any of their shares of post-Merger
Company stock (without first obtaining the written authorization of Flex
Financial's president) for the following periods after the Merger becomes
effective and information about the Company is published in Moody's OTC
Industrial Manual: Flex Financial's shareholders - 180 days.

Rule 144 and Rule 145 Restrictions on Trading.
- ----------------------------------------------------

Should the Merger and Spinoff transaction described herein be approved
and effected, all issued and outstanding shares of Common Stock of the Company
shall have been issued or distributed pursuant to registration with the
Commission. Nevertheless, some of the Shares, even though deemed not to be
"restricted securities," as such term is used by the Commission, will be
subject to certain restrictions on their transfer for value.

Holders of the Shares who are deemed to be affiliates of Flex Financial
at the time of the vote on the Merger, in order to sell their Shares, must
either register them for sale or comply with the resale provisions set forth
in paragraph (d) of the Commission's Rule 145, unless some other
exemption-from-registration provision is available. The resale provisions of
paragraph (d) of Rule 145 refer to certain provisions of the Commission's Rule
144 which require that:

- there must be available, to the public, current information about
the Company of a quality meeting certain Commission requirements,

- transfers for value by such affiliates can occur only either
through broker transactions not involving the solicitation of
buyers or directly to market-makers, and

- each such affiliate can transfer for value, during a 90-day
period, no more Shares than the greater of one percent of all
issued and outstanding shares of Common Stock of the Company
(940 Shares immediately after the Merger) or the average weekly
volume of trading in such Common Stock reported through the
automated quotation system of NASDAQ during the four calendar
weeks prior to placing the sell order with a broker-dealer.

<PAGE>

The above described resale provisions of Rule 145 shall continue, for
persons who are affiliates of Flex Financial at the time of the vote on the
Merger, for 2 years after the Merger, at which time only the current public
information requirement shall continue. At such time as any such affiliate
has ceased to be an affiliate of the post-merger company for at least 3
months, and provided at least 3 years have elapsed since the date of the
Merger, then even the current public information requirement will no longer be
required for such a former affiliate to sell any of the Shares acquired in the
Merger.

The Company believes that none of the 20,000 Spinoff Shares will be
subject to any restrictions on trading or transfers for value, by reason of
these Shares' being registered for the Spinoff. Further, none of the 94,000
Shares of the Company to be distributed in the Merger to Flex Financial
shareholders other than to Flex Financial officers and directors and to
affiliates of Flex Financial prior to the Merger will be subject to any
restrictions on transfer. Accordingly, after the effective date of the Merger
and the redistribution of the Spinoff Shares, there shall be 114,000 Shares in
the "public float," i.e., subject to no Rule 144 or other applicable
securities law restrictions on their being traded or transferred for value.
It is estimated that in excess of 300 persons will own these Shares of record,
the offering of which for sale could have a materially adverse effect on the
market price of the Company's stock. However, for a period of 180 days after
the Merger should become effective and information about the post-Merger
Company has been published in Moody's OTC Industrial Manual, at least half of
the Flex Financial outstanding Shares are subject to restrictions on trading
by reason of agreements among the shareholders owning these Shares. See
"Information about the Company - Market for the Company's Common Stock and
Related Stockholder Matters."

There is no equity of the Company subject to outstanding options or
warrants to purchase, or securities convertible into, equity of the Company.
However, under the terms of the Merger, all warrants and options of Flex
Financial which are outstanding on the Effective Date shall be canceled and
converted into warrants and options of the Company to buy an equivalent number
of shares. See "DESCRIPTION OF SECURITIES - Other Securities of the Company".

The Company has had no operations or earnings and has declared no
dividends on its capital stock. Should the Merger be approved and effected,
there are no restrictions that would, or are likely to, limit the ability of
the Company to pay dividends on its Common Stock, but the Company has no plans
to pay dividends in the foreseeable future and intends to use earnings for
business expansion purposes (see "Information about the Company - Description
of Business and Properties").

Financial Statements.
- ---------------------

Set forth below are the independent auditor's report dated September 25,
1996 with respect to the Company's balance sheet as of July 31, 1996, such
balance sheet, and the notes to the balance sheet.

<PAGE>

FLEX ACQUISITIONS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

JULY 31, 1996

<PAGE>

<TABLE>
<CAPTION>
--ooOoo--

C 0 N T E N T S

Page
------
<S> <C>
Independent Auditor's Report. . . . . . . . . FI-2

Balance Sheet . . . . . . . . . . . . . . . . FI-3

Statement of Operations . . . . . . . . . . . FI-4

Statement of Changes in Stockholder's Equity. FI-5

Statement of Cash Flows . . . . . . . . . . . FI-6

Notes to Financial Statements . . . . . . . . FI-7-8
</TABLE>

--ooOoo--

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Stockholder and Directors of

Flex Acquisitions Corporation

(A Development Stage Company)

Houston, Texas

We have audited the accompanying balance sheet of Flex Acquisitions
Corporation (A Development Stage Company) as of July 31, 1996, and the related
statements of operations, changes in stockholder's equity and cash flows for
the period March 22, 1996 (date of inception) through July 31, 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 audit.

We conducted our audit 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 audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Flex Acquisitions Corporation
(A Development Stage Company) at July 31, 1996, and the results of its
operations and its cash flows for the period then ended in conformity with
generally accepted accounting principles.

Houston, Texas
September 25, 1996

FI-2

<PAGE>

<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

JULY 31, 1996

ASSETS
------

<S> <C>
OTHER ASSETS
Start-up costs $ 4,992
=========

LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------

CURRENT LIABILITIES

Accounts payable $ 134
Interest payable 134
---------

TOTAL CURRENT LIABILITIES 268
---------

LONG-TERM NOTE PAYABLE, RELATED PARTY 4,000
---------

STOCKHOLDER'S EQUITY
Preferred stock, no par value, 10,000,000 shares
authorized, none issued and outstanding, rights,
preferences, qualifications, limitations and
restrictions and any other benefits to be
determined by the Board of Directors as provided
in the corporation's Articles of Incorporation -0-
Common stock, $.001 par value, 10,000,000 shares
authorized, 20,000 shares sold and to be issued 20
Additional paid-in capital 980
Deficit accumulated during the development stage (276)
---------

724
---------

$ 4,992
=========
</TABLE>

See accompanying notes.

FI-3

<PAGE>

<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS

MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996

<S> <C>
EXPENSES

Interest expense $ 134
Outside services 80
Bank service charges 54
Postage and delivery 8
---------

276
---------

NET LOSS $ (276)
=========

LOSS PER COMMON SHARE $ (.01)
=========

SHARES USED IN COMPUTING LOSS PER SHARE $ 20,000
=========
</TABLE>

See accompanying notes.

FI-4

<PAGE>

<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996

Additional

Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>

Sale of Common
Stock $ -0- $ 20 $ 980 $ -0- $ 1,000

Net Loss -0- -0- -0- (276) (276)
---------- --------- ----------- ---------- ----------

Balance -
July 31, 1996 $ -0- $ 20 $ 980 $ (276) $ 724
========== ========= =========== ========== ==========
</TABLE>

See accompanying notes.

FI-5

<PAGE>

<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996

<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (276)
---------
Adjustments to reconcile net loss to net
cash used by operating activities:
Change in operating assets and liabilities:
Accounts payable 134
Interest payable 134
---------

Total Adjustments 268
---------

Net Cash Used by Operating Activities (8)
---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Start-up costs (4,992)
---------

Net Cash Used by Investing Activities (4,992)
---------

CASH FLOWS FROM FINANCING ACTIVITIES:

Long-term note payable, related party 4,000

Proceeds from issuance of common stock 1,000
---------

Net Cash Provided by Financing Activities 5,000
---------

NET INCREASE IN CASH -0-

CASH AT BEGINNING OF PERIOD -0-
---------

CASH AT END OF PERIOD $ -0-
=========
</TABLE>

See accompanying notes.

FI-6

<PAGE>

FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Flex Acquisitions Corporation (A Development Stage Company) (Acquisitions) a
wholly owned Texas subsidiary of American Nortel Communications, Inc.
(American Nortel) was incorporated on March 21, 1996 for the purpose of; (a)
merging with Flex Financial Group, Inc. (Flex Financial), an entity related by
common control, and (b) a proposed filing of a registration statement with the
Securities and Exchange Commission. Simultaneously with these transactions,
it is anticipated that American Nortel will then distribute its shares of the
Company to American Nortel shareholders. The newly formed public Company will
then engage in the business of participating in certain short-term financing
opportunities (terms of less than one year) in the underwriting segment of the
securities industry and in certain long-term financing and investment
opportunities (terms of greater than one year) in transactions with operating
businesses with significant growth potential.

The Company has no business operations or significant capital and has no
intention of engaging in any active business until it merges with Flex
Financial. Should the merger not occur, the Company would seek other business
opportunities and if none were found, would be dissolved within eighteen
months by a vote of the majority of its common stockholders.

Merger Spin-Off - The Company agreed to merge with Flex Financial on July 1,
- ---------------
1996. Flex Financial is a developmental stage company formed to participate
in certain short-term financing opportunities (terms of less than one year) in
the underwriting segment of the securities industry and to participate in
certain long-term financing and investment opportunities (terms of greater
than one year) in transactions with operating businesses with significant
growth potential. The Company will be the surviving corporation (Survivor)
but Flex Financial will elect all directors and officers of the Survivor. All
currently outstanding stock of Flex Financial will be canceled and converted
into 94,000 shares of the Company's common stock. Flex Financial has options
and warrants currently outstanding which will be canceled and options and
warrants on the Company's common stock will be issued according to the plan of
merger.

The merger is contingent upon the effectiveness of the registration
statements, and upon the shareholders of the Company and of Flex Financial
approving the proposed merger.

Management's Estimates - Management uses estimates and assumptions in
- -----------------------
preparing financial statements in accordance with generally accepted
accounting principles. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were used.

Fair Value of Financial Instruments - Management is of the opinion that the
- ------------------------------------
carrying value of all financial instruments is substantially equal to fair
value at July 31, 1996.

Continued
FI-7

<PAGE>

FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Loss Per Common Share - Loss per common share is computed using the weighted
- ---------------------
average number of shares of common stock outstanding during the period.

Income Taxes - For the year ended July 31, 1996, the Company incurred a net
- -------------
operating loss amounting to $276. This net operating loss carryforward will
expire in the year 2011, if not previously utilized.

No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $94 resulting from
the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.

Start-up Costs - Represents legal and other costs associated with the
- ---------------
organization of the Company and services in connection with the anticipated
merger/spinoff with American Nortel Communications, Inc. and Flex Financial
Group, Inc. These costs will be amortized over a five year period upon
commencement of operations.

NOTE B LONG-TERM NOTE PAYABLE, RELATED PARTY

Long-term note payable, related party consists of the
following at July 31, 1996:

Flex Financial Group, Inc. - 10% note, convertible
into common stock as provided for by the
agreement, subordinated, redeemable note
payable due March 31, 1998, renewable for an
additional two year term, interest payable
at maturity; unsecured $ 4,000

-0-
--------

Long-term portion $ 4,000
========

NOTE C RELATED PARTY TRANSACTIONS AND BALANCES

Transactions and balances with related individuals and
entities related by common control are as follows:

Flex Financial Group, Inc.

Interest expense/payable $ 134
========
Roberts - Attorney at Law;
initial registered agent
Start-up costs $ 4,992
========

FI-8

<PAGE>

INFORMATION ABOUT FLEX FINANCIAL

Flex Financial Group, Inc. ("Flex Financial") was incorporated under the
Business Corporation Law of the State of Texas on August 17, 1995.

Management's Plan of Operation
- ---------------------------------

The following should be read in conjunction with the Financial Statements
of Flex Financial and the Notes thereto, and the other financial and other
information included elsewhere in this Prospectus. This Prospectus contains
certain statements regarding future trends which are subject to various risks
and uncertainties. Such trends, and their anticipated impact on Flex
Financial, could differ materially from those discussed in this Prospectus.
Factors that could cause or contribute to such differences include, but are
not limited to, those discussed in "Risk Factors" and elsewhere in this
Prospectus.

Flex Financial was organized in August, 1995 and is in the development
stage. Flex Financial has not yet commenced operations, has not generated any
revenues from operations to date, and will not generate any revenues from
operations until after the company completes a concurrent public offering of
its common stock, which the company anticipates will occur in January, 1997.
There can be no assurance that the Company will be able to successfully
generate meaningful revenue or achieve profitable operations.

Since inception, Flex Financial has developed a business plan; developed
and disseminated promotional material to prospective clients of its business
services; and raised an aggregate of $167,200 in net proceeds through
private equity offerings.

Liquidity and Capital Resources. As of the date of this Prospectus,
----------------------------------
Flex Financial has approximately $30,000 in cash and cash equivalents. It is
anticipated that the Company will realize $500,000 in net proceeds from the
sale of the Common Stock and Warrants offered in the Concurrent Public
Offering. The net proceeds of the concurrent Public Offering will be used to
commence full business operations and investment in Bridge Loans,
subordination Loans and Investment Transactions.

Flex Financial is dependent upon the proceeds of the Concurrent Public
Offering, existing cash, and cash flow from operations, if any, or other
financing to implement its proposed business plan. Management believes that
the proceeds from the sale of the Common Stock and Warrants offered in the
Concurrent Public Offering will enable Flex Financial to satisfy its
anticipated financing needs for a period of at least 12 months following the
Effective Date. However, the capital requirements relating to implementation
of the Company's business plan will be significant. There can be no assurance
that Flex Financial will have sufficient capital resources to permit it to
fully implement its business plan.

Plan of Operation
- -------------------

<PAGE>

Business Objectives. The Company was formed in August, 1995 primarily
--------------------
to serve as a vehicle to invest in short-term financing opportunities in the
underwriting segment of the securities industry. The Company intends to
participate in short-term financing opportunities by (i) providing equity
subordination loans to underwriters requiring additional excess net capital
for underwriting specific issues on a firm commitment basis ("Subordination
Loans") and (ii) providing bridge loans to selected issuers to connection with
initial public offerings and secondary financing ("Bridge Loans"). The
Company expects to be in a position to take advantage of a long-term financing
and investment opportunities to effect Investment Transactions and Business
Acquisitions with Target Businesses. The business objectives of the Company
are to (i) provide Subordination Loans to selected underwriters for specific
issues on terms suiting the Company's investment requirements, (ii) provide
Bridge Loans on a highly selective basis within established guidelines to
issuers meeting the Company's due diligence standards, and (iii) to effect
Investment Transactions on negotiated terms favorable to the Company. The
Company also intends to engage in "spinoff" activities such as are described
herein, such spinoffs to involve the distribution, by way of stock dividends
or otherwise, of registered shares of stock of other companies. The Company
intends to use the proceeds of this offering primarily to provide the capital
to commence the investigation, negotiation and participation in Subordination,
Bridge Loans and Investment Transactions. By reason of its participation in
Subordination and Bridge Loans, the Company may be presented a longer-term
investment opportunity to effect a Business Acquisition with a Target
Business. The Company will not use the proceeds of this offering to fund such
an acquisition. The Company will participate in a Business Acquisition
requiring a significant commitment of cash only through a Secondary Public
Offering in which the Target Business is identified. The Company does not
intend to participate in a "blind pool/blank check" offering to participate in
a Business Acquisition. Some portion of the proceeds of this offering may be
allocated and used to defray the front end expenses of a Secondary.

The Company believes that financing opportunities will become available
to the Company due primarily to the contacts of its officers, directors and
consultants with entities and individuals participating in various segments of
the securities industry, liquidity of its assets, its future status as a
publicly-held company, and its flexibility in structuring and participating in
financing opportunities. The Company has no agreement or understanding to
participate in any financing opportunity, nor does it currently have any
opportunity under investigation. Decisions as to which financing
opportunities to participate in will be made by management of the Company,
which will in all probability act without the consent, vote, or approval of
the Company's stockholders except when required by applicable law.

Business Experience of Principals. The present executive officer and
-----------------------------------
director and certain consultants who have been retained by the Company have
business experience which has provided them with certain skills which the
Company believes will be helpful in identifying and evaluating potential
Bridge Loan and Subordination Loan candidates and Target Businesses and in
negotiating the terms of Bridge Loans, Subordination Loans, Investment
Transactions and Business Combinations. They have had significant experience
in a variety business transactions, including providing investment banking,
underwritings, bridge loans and general business consulting to public and
private companies in the $5 million to $10 million asset range. The Company
expects to actively recruit board members with extensive management, financial
and entrepreneurial backgrounds to assist in these endeavors. The Company
expects that future directors will have similar experience and/or extensive
business management and financial management experience. In addition, the
Board of Directors may establish an advisory committee (the "Advisory
Committee") consisting of up to eight (8) persons to assist in finding and
evaluating potential candidates for Bridge Loans, Subordination Loans and
Target Businesses. Members of the Advisory Committee will have significant
experience in the securities industry primarily in areas of business interest
to the Company. The Advisory Committee will not have any role in the
management of the business of the Company, but will be available, to the
extent management may require, to consult with management as to potential
candidates for Bridge Loans, Subordination Loans Investment Transactions and
Business Combinations.

Business Plan.
--------------

1. General.

<PAGE>

The Company was organized to provide Subordination Loans to selected
underwriters requiring short term additional net capital to underwrite
specific issues on a firm commitment basis; to provide Bridge Loans on a
highly selective basis within established guidelines to selected issuers
meeting the Company's due diligence standards to facilitate initial public
offerings or secondary financing; and to engage in "spinoff" activities in
which the Company serves as a vehicle or facility for private operating
companies to effect public status.

The Company will generally use the proceeds of the Concurrent Public
Offering to investigate and, if warranted, participate in a financing
opportunity with immediate short-term earnings potential. Because of the
Company's limited financial, managerial, and other resources, the number of
suitable potential financing opportunities which will be available to it under
its criteria will be extremely limited. The Company currently has no
commitment or arrangement to participate in any financing opportunity and
cannot now predict what type of opportunity may become available to it. It is
emphasized that the business objectives discussed herein are extremely general
and are not intended to be restrictive upon the discretion of the Company's
management.

Management of the Company has virtually unlimited discretion in searching
out and participating in a financing opportunity. The Company is unable to
predict when it may become engaged in a financing opportunity. It expects,
however, that review and analysis of specific proposals and the selection of a
financing opportunity will likely take several weeks or more following the
successful completion of this offering. There can be no assurance as to when
a financing opportunity will become available, however, management is
confident that such opportunities will become available on a regular basis.

Management anticipates that the Company may be able to participate in
numerous and ongoing financing opportunities. This diversification should
enable the Company to reduce its risks by offsetting potential losses from one
financing against gains from another.

2. Subordination and Bridge Loans

Subordination Loans. The Company intends to provide Subordination Loans
to selected underwriters to facilitate the underwriting of specific issues on
a firm commitment basis. Small underwriters seek short-term equity
subordinated underwriting loans to meet excess net capital requirements for
firm commitment underwritings. The Company intends to participate in
Subordination Loans that can be structured with the following general terms.
Subordination Loans will typically be very short term loans (maximum term of
30 to 45 days) made to an underwriter for the purpose of meeting excess net
capital requirements for a specific firm commitment underwriting. Principals
of the underwriter will in most cases be required to personally guarantee
repayment of the loan. The terms of the loan will normally require that loan
proceeds be maintained in a segregated account invested in short term money
market or similar securities. The underwriter will normally be expected to
pay a minimum of 2% of the amount of the underwriting for the loan, yielding a
return of 7% to 10% to the Company. The Company expects to make up to six
Subordination Loans a year in amounts ranging from $50,000 to $200,000 each,
yielding a return in excess of 50% per year.

Bridge Loans. The Company intends to provide Bridge Loans to selected
issuers to facilitate an issuer's initial public offering or secondary public
financing. Bridge Loans are typically short term loans (maximum term of one
year with mandatory prepayment out of the proceeds of the underwriting) made
to an issuer for the purpose of providing funds to pay underwriting costs and
to a lesser extent general corporate expenses relating to the underwriting.
The Company intends to participate in Bridge Loans that can be structured with
the following general terms. In the typical transaction the Company would
expect the loan to repaid from the proceeds of the underwriting within 4 to 6
months of the loan. The loan would typically range in amount from $50,000 to
$200,000 and normally carry an interest rate of 3 to 5 points above prime.
The Company will require an equity enhancement in the form of warrants or
cheap stock designed to provide a return of 200% to 300% of the loan amount
within 12 to 18 months of the loan. In connection with equity enhancements,
the Company will require demand and piggy back registration rights with
expenses paid by the issuer. Principals of the issuer will be expected to
personally guarantee repayment of the loan and in most cases the loan will
collateralized by some assets of the issuer.

<PAGE>

Typical Scenarios. Although the Company cannot predict the exact terms
and structure of any financing transaction in which it may participate, the
following represents the type of transaction structures that the Company will
attempt to negotiate.

With respect to a typical scenario for a Subordination Loan, the Company
intends to seek situations in which a small underwriter with net capital of
$500,000 or less wants to underwrite an entire issue of $4 million to $10
million on a firm commitment basis. NASD and SEC rules and regulations
require the underwriter to have excess net capital of 30% of the retention
less underwriting fees. A $5 million firm commitment underwriting would
require $5,000,000 X .90 = $4,500,000 X .30 = $1,350,000 in excess net
capital. An underwriter requiring another $850,000 in excess net capital to
underwrite the issue would require additional underwriters or a subordinated
underwriting loan to provide the additional $850,000 in excess net capital.
The Company would expect to participate in such a subordinated loan in the
amount of $270,000 which would underwrite $1 million of the issue. The
underwriter would expect to pay a minimum of 2% of the underwritten amount or
$20,000 for the loan, yielding a return to the Company of 7% to 10% over a 30
to 45 day period.

With respect to a typical scenario for a Bridge Loan transaction, the
Company will expect to make a one year $200,000 Bridge Loan to an issuer to
facilitate the issuer's initial public offering to be priced at $5.00 per
share. The loan would bear interest at 13% per annum with mandatory
prepayment from the proceeds of the underwriting at closing. The loan will be
personally guaranteed by the issuer's principals and collateralized by
available assets of the issuer. The Company would expect to receive a stock
purchase warrant to buy 100,000 shares of the issuer's common stock at $2.00
per share as an equity enhancement. Six months after the loan the
underwriting closes and the Company would expect to be repaid $200,000
principal and $13,000 in interest. Twelve months after the underwriting (18
months after the loan) assuming the issuer's stock is trading at $6.00, the
value of the warrants would be $400,000 or 200% of the original loan. The
results and return on the equity enhancement would of course be completely
dependent upon the performance of the issuer's publicly traded securities and
in some cases may be of no value. Normally, the securities representing the
equity enhancement is registered in the issuer's initial public offering.

General Considerations. Management intends to participate in a portfolio
of subordinated loans and bridge loans that will provide prudent risk and
diversification. The amount of and timing of each transaction will be
determined by management taking into account the liquid assets and net worth
of the Company, and the ongoing general and administrative costs of the
Company. Whenever possible management will further diversify by participating
with other investors in its financing opportunities.

3. Long Term Investment Opportunities - Investment Transactions

General. By reason of its participation in Subordination and Bridge
Loans, the Company expects to be presented an investment opportunity or an
opportunity to acquire a non-controlling equity interest in a Target Business
which the Company believes has growth potential. These opportunities are
expected to be in the form of "spinoff" transactions.

<PAGE>

Investment Transactions. The Company expects to use a portion of the
Proceeds of this offering to investigate and, if warranted, enter into a
definitive agreement to exchange its assets for cash and/or securities of a
Target Business. The Company does not expect to acquire more than a 10%
equity interest in a Target Business in an Investment Transaction.

Method of Participation. It is impossible to predict exactly how the
Company may participate in an investment opportunity, but generally speaking,
the Company intends to use its assets, including cash provided through this
offering, to acquire equity interests in Target Businesses. Although the
Company cannot predict the exact terms and structure of any Investment
Transaction in which it may participate, the following represents the type of
transaction structures that the Company will attempt to negotiate. The
Company will attempt, for example, to identify a Target Business requiring
certain assets or cash of the Company. Subject to a letter of intent, the
Company may agree to form a wholly-owned subsidiary to be capitalized with
those certain assets and/or cash. The Company through its subsidiary may then
enter into a definitive agreement under which the Target Business merges into
the subsidiary with the Company retaining a negotiated equity interest in the
surviving subsidiary (expected to be 10% of issued and outstanding shares).
The Company may then use the shares for, among other things, distribution as a
dividend to its shareholders, sale for cash, exchange for other assets, or
retention for investment purposes.

Typical Scenarios. In a typical scenario, the Company expects to be
approached by a company that wishes to become publicly held ("Target
Business"). The Company will enter into an agreement with the Target Business
for a proposed merger-spinoff transaction which would create a public market
for the Target's stock. The proposed merger-spinoff would be effected by the
Company forming a new subsidiary which would be thinly capitalized with the
Company as its sole shareholder. The Target would merge into the subsidiary
with the Target shareholders receiving approximately 90% of the issued and
outstanding shares of the subsidiary and the Company retaining 10% of the
shares. Subsequent to the merger, the Company will distribute some or all of
the subsidiary's shares to its shareholders (expected at that time to exceed
300 in number). Contemporaneously with the merger-spinoff, the subsidiary
would file a registration statement on Form S-4 with the Securities and
Exchange Commission ("SEC") to register the merger shares and file a
registration statement on Form SB-2 with the SEC to register the spinoff
shares. The subsidiary may in connection with the filing of the S-4 register
shelf shares for future issuance in association with possible acquisitions and
may in connection with the filing of the SB-2 register the sale of additional
shares to provide working capital or register the resale of shares for the
account of its shareholders. As a result of the transaction, the Target
Business becomes a publicly held company with the Company or its shareholders
owning 10% of the public company.

4. Long Term Investment Opportunities - Business Combinations

General. By reason of its participation in Subordination and Bridge
Loans, the Company expects to be presented an opportunity to acquire
significant or control equity in a Target Business which the Company believes
has growth potential.

Method of Participation or Acquisition. It is impossible to predict
exactly how the Company may participate in a business opportunity, but
generally speaking, the Company intends to acquire a business opportunity by
using cash provided through a a Secondary Public Offering and seller
financing. It is the Company's intent that designees of its present
management and its shareholders have a majority position on the board of
directors of the Company following any reorganization or other acquisition
transaction. As part of such a transaction, all or a majority of the
Company's directors will be expected to continue in office.

<PAGE>

Business Combinations. The Company may use a portion of the proceeds of
this offering to investigate and, if warranted, enter into a definitive
agreement to acquire control equity in a Target Business. If the Company
enters into a definitive purchase agreement with a Target, the Company intends
to undertake a secondary public offering specifically for the purpose of
providing any cash equity required to consummate the long term investment or
acquisition. The Company does not intend to enter into any definitive
purchase or long term investment agreement with a Target that requires cash
payments by the Company unless such agreement is conditioned upon the Company
successfully closing a secondary public offering pursuant to an effective
registration statement filed under the Act for an aggregate offering price of
at least $5,000,000 ("Secondary"). The Secondary will specifically identify
the Target Business and will be undertaken specifically for the purpose of
providing the funds for acquiring the Target Business. The Company intends to
undertake the Secondary specifically for the purpose of providing the cash
equity to consummate the acquisition of an identified Target Business. The
Company does not anticipate undertaking a "Blind Pool/Blank Check"
underwriting to acquire an unspecified Target Business. In connection with
such an acquisition, the Company may provide a Subordination Loan to the
underwriter and a Bridge Loan to the Target.

The Company could expect to use some portion of the proceeds of this
offering to defray the initial expenses necessary to effect such a subsequent
secondary public offering of its securities. The Company would expect that
such Secondary will be a firm underwriting of at least $5,000,000. As
additional consideration for purchasing the shares the Company would expect to
issue five-year warrants to purchase an aggregate of 500,000 shares of its
common stock at a purchase price equal to 120% of the secondary public
offering price (the "Secondary Warrants"). It would be anticipated that the
Secondary Warrants would not be exercisable for a period of 12 months after
closing of the Secondary.

5. Miscellaneous Matters

Sources of Opportunities. The principals of the Company have extensive
experience in working with small underwriters and in providing investment
banking, underwritings, bridge loans, and general business and financial
consulting to smaller public and private companies. The Company anticipates
that financing opportunities will be referred by various sources, including
its officers and directors, professional advisers, securities broker-dealers,
members of the financial community, and others who may present unsolicited
proposals. The Company may agree to pay a finder's fee or other compensation
for services provided by unaffiliated persons who submit a financing
opportunity in which the Company participates. No guideline or policy has
been adopted by the Company concerning the circumstances under which a
finder's fee will be paid or the amount of such fee.

The Company will seek potential financing opportunities from all known
sources, but will rely principally on personal contacts of its officers,
directors and consultants as well as indirect associations between them and
other business and professional people. In some instances, the Company may
publish notices or advertisements seeking a potential financing opportunity in
financial or trade publications.

Criteria. Subordination Loans will only be made to underwriters
acceptable to the Company and in connection with specific underwritings for
issuers acceptable to the Company. Bridge Loans will only be made to
companies that can pass an extensive due diligence review of the company's
management, business, deal structure, underwriter, and public relations firm.
The Company may require representation on the issuer's board and will require
substantial penalties for a loan default. Any participation by the Company
will be subject to the issuer executing a firm commitment underwriting letter
of intent with an underwriter approved by the Company.

<PAGE>

The Company may enter into an Investment Transaction or Business
Combination with a business in any industry and in any stage of development,
including an established business which needs additional funding or a firm
which is in need of additional capital to overcome financial problems or
difficulties, but does not intend to enter into such transaction with a "start
up" or new company. The Company may enter into an Investment Transaction or
Business Combination with a Target Business in various stages of its life. It
is impossible to predict the status of any investment in which the Company may
become engaged.

The analysis of financing opportunities will be undertaken by or under
the supervision of the officers and directors. Certain of the Company's
officers, directors and consultants have extensive business experience in the
securities industry, particularly regarding small public underwritings, and
are primarily engaged in the business of analyzing businesses for underwriting
suitability and negotiating, participating in and advising as to Bridge Loans
and Subordination Loans. In analyzing prospective financing opportunities,
management will consider the following factors regarding an issuer: available
technical, financial, and managerial resources: working capital and other
financial requirements; history of operations, if any; quality and experience
of management services which may be available and the depth of that
management; capability of effecting an underwriting, including quality of
underwriter and professional advisers; and other relevant factors.

The Company will analyze all available factors and make a determination
based upon a composite of available facts, without reliance on any single
factor.

Procedures. A thorough evaluation of an issuer prior to a Bridge Loan
will be difficult. The Company will have limited time and funds available in
its search for and analysis of financing opportunities and will not be able to
expend significant funds on a complete and exhaustive investigation of any
financing opportunity. However, the Company will investigate, to an extent
believed reasonable by its management, such potential opportunities by
obtaining financial and other information reasonably available concerning the
issuer and/or underwriter; conducting meetings and interviews with management
and underwriter; reviewing experience and other financial factors; and other
reasonable methods.

As part of the Company's investigation, officers and directors may meet
personally with management and key personnel of the firm sponsoring the
investment opportunity, visit and inspect material facilities, obtain
independent analysis or verification of certain information provided, check
references of management and key personnel, and conduct other reasonable
measures, to the extent allowed by the Company's limited financial resources
and management and technical expertise.

The Company will participate in a financing opportunity only pursuant to
negotiation and execution of a written agreement. Although the terms cannot
be predicted, agreements generally require specific representations and
warranties by all of the parties thereto and specify certain events of
default.

The investigation of specific financing opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure
documents, and other instruments may require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific financing opportunity, the
costs previously incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the
participation in a specific financing opportunity, the failure to consummate
that transaction may result in the loss to the Company of the related costs
incurred.

<PAGE>

Competition. The Company expects to encounter competition in its efforts
to locate opportunities for the employment of its capital. The primary
competition for desirable investments is expected to come from other small
companies organized and funded for similar purposes, small venture capital
partnerships and corporations, small business investment companies, and
individuals with unlimited financial resources. Many of these entities may
have significantly greater experience, resources, and managerial capabilities
than the Company and will, therefore, be in a better position than the Company
to obtain access to business opportunities. However, the Company believes
that it has sufficient expertise and contacts to compete successfully in this
market.

Description of Business Properties.
- -------------------------------------

Flex Financial currently shares a portion of approximately 3,000 square
feet of office space in premises occupied by Focus-Tech Investments, Inc. and
Financial Public Relations, Ltd. at 770 S. Post Oak Lane, Suite 515, Houston,
Texas 77056. Mr. Fearnow is a principal of Focus-Tech Investments, Inc.
("Focus-Tech"), a Nevada corporation, that provides investment banking
consulting services on an exclusive basis to FPR. Flex Financial believes
that such space and services will be adequate for the business of Flex
Financial into the foreseeable future. The cost for such space is included in
a $4,000 per-month fee charged by Focus-Tech for general and administrative
services for calendar year 1996. Upon closing of the Concurrent Public
Offering Flex Financial has agreed to pay Focus-Tech for general and
administrative services which will include the cost of the use of office
space, facilities and equipment used by it on a monthly basis. Focus-Tech has
agreed to make this space available as long as required for the use of Flex
Financial.

Legal Proceedings.
- ------------------

Neither Flex Financial nor any of its property is a party to or the
subject of any pending legal proceedings.

Market for Flex Financial's Capital Stock and related Stockholder Matters.
- -----------------------------------------------------------------------------

There is no public trading market for Flex Financial's common stock. As
of the date of this Prospectus, there are 11 holders of record of Flex
Financial's outstanding common stock. Flex Financial has declared no
dividends on its common stock. Should the merger not be approved and
effected, there are no restrictions that would or are likely to limit the
ability of flex Financial to pay dividends on its common stock, but Flex
Financial has no plans to pay dividends in the foreseeable future and intends
to use earnings for the expansion of its present business.

Financial Statements.
- ---------------------

Set forth below are the financial statements of Flex Financial for 1996,
which financial statements have been prepared in accordance with generally
accepted accounting principles in the United States and have been audited.

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS

JULY 31, 1996

<PAGE>

--ooOoo--

C 0 N T E N T S

Page
----

Independent Auditor's Report . . . . . . . . . . . . . FII-2

Balance Sheet. . . . . . . . . . . . . . . . . . . . . FII-3

Statement of Operations. . . . . . . . . . . . . . . . FII-4

Statement of Changes in Stockholders' Equity . . . . . FII-5

Statement of Cash Flows. . . . . . . . . . . . . . . . FII-6

Notes to Financial Statements. . . . . . . . . . . . . FII-7-11

--ooOoo--

<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Directors of
Flex Financial Group, Inc.
(A Development Stage Company)
Houston, Texas

We have audited the accompanying balance sheet of Flex Financial Group, Inc.
(A Development Stage Company) as of July 31, 1996, and the related statements
of operations, changes in stockholders' equity and cash flows for the period
August 17, 1995 (date of inception) through July 31, 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 audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Flex Financial Group, Inc. (A
Development Stage Company) at July 31, 1996, and the results of its operations
and its cash flows for the period then ended in conformity with generally
accepted accounting principles.

Houston, Texas
September 9, 1996, except for Note D,
which the date is November 4, 1996

FII-2

<PAGE>

FLEX FINANCIAL GROUP, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

JULY 31, 1996

ASSETS
------
<TABLE>
<CAPTION>

<S> <C>

CURRENT ASSETS
Cash $ 42,220
Interest receivable 1,486
Notes receivable, related parties 25,000
Note receivable 10,000
Loan origination costs, net 1,250
-----------

TOTAL CURRENT ASSETS 79,956
-----------

OTHER ASSETS
Long-term note receivable, related party 4,000
-----------

$ 83,956
===========

LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------

CURRENT LIABILITIES
Accounts payable $ 58
Notes payable 50,000
Interest payable 3,822
Accrued overhead, related party 8,891
-----------

TOTAL CURRENT LIABILITIES 62,771
-----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock, no par value, 10,000,000 shares
authorized, none issued and outstanding, rights,
preferences, qualifications, limitations and
restrictions and any other benefits to be
determined by the Board of Directors as provided
in the corporation's Articles of Incorporation -0-
Common stock, $.01 par value, 10,000,000 shares
authorized, 94,000 shares sold and to be issued 940
Additional paid-in capital 81,260
Deficit accumulated during the development stage (61,015)
-----------

21,185
-----------

$ 83,956
===========
</TABLE>

See accompanying notes.
FII-3

<PAGE>

<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996

<S> <C>
INTEREST INCOME $ 2,278
-----------

EXPENSES
Advertising 2,564
Consulting expenses 16,902
Filing fees 510
Interest expense 7,572
Legal and professional fees 6,100
Other expenses 350
Printing 1,295
Overhead allocation - related party 19,109
Accrued overhead - related party 8,891
-----------

63,293
-----------

NET LOSS $ (61,015)
===========

LOSS PER COMMON SHARE $ (.71)
===========

SHARES USED IN COMPUTING LOSS PER SHARE 85,833
===========
</TABLE>

See accompanying notes.

FII-4

<PAGE>

<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996

Additional
Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sale of Common
Stock $ -0- $ 940 $ 81,260 $ -0- $ 82,200

Net Loss -0- -0- -0- (61,015) (61,015)
---------- --------- ----------- ---------- ----------

Balance -
July 31, 1996 $ -0- $ 940 $ 81,260 $ (61,015) $ 21,185
========== ========= =========== ========== ==========
</TABLE>

See accompanying notes.

FII-5

<PAGE>

<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996

<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (61,015)
-----------
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization of loan origination costs, net 3,750
Change in operating assets and liabilities:
Interest receivable (1,486)
Accounts payable 58
Interest payable 3,822
Accrued overhead, related party 8,891
-----------

Total Adjustments 15,035
-----------

Net Cash Used by Operating Activities (45,980)
-----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Loan origination costs (5,000)
Notes receivable, related parties (35,000)
Note receivable (10,000)
Long-term note receivable, related party (4,000)
Collection of note receivable, related party 10,000
-----------

Net Cash Used by Investing Activities (44,000)
-----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable 50,000
Proceeds from issuance of common stock 87,200
Stock issuance costs (5,000)
-----------

Net Cash Provided by Financing Activities 132,200
-----------

NET INCREASE IN CASH 42,220

CASH AT BEGINNING OF YEAR -0-
-----------

CASH AT END OF YEAR $ 42,220
===========
</TABLE>

See accompanying notes.
FII-6

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Flex Financial Group, Inc. (A Development Stage Company) (the Company) was
incorporated in August 1995 for the purpose of engaging in the business of
providing loans to companies going public; subordinated equity loans to
underwriters; and providing a platform for taking companies public through a
merger/spinoff transaction. It is anticipated by management that the Company
will become a publicly owned corporation within the near future.

Merger-Spinoff - On June 30, 1996, the Company entered into an agreement
- --------------
with American Nortel Communications, Inc. (American Nortel), a public
corporation engaged in providing long distance telephone services and owned by
approximately 780 individuals, for a proposed merger-spinoff transaction which
would create a public market for the Company's stock. The proposed
merger-spinoff would be effected by American Nortel capitalizing a recently
formed subsidiary (Flex Acquisitions Corporation) which would sell 20,000
shares of $.001 par value common stock to American Nortel for $1,000. Flex
Acquisitions, a company related by common control, has authorized 10 million
shares of Common Stock with a par value of $.001 per share and 10 million
shares of Preferred Stock with no par value. The preferences, rights, and
qualities of each series of the Preferred Stock will be set by future
resolutions of Flex Acquisitions Board of Directors. All currently
outstanding stock of the Company will be canceled and converted into 94,000
shares of common authorized but unissued of Flex Acquisitions. The Company
has options and warrants currently outstanding which will be canceled and
options and warrants on Flex Acquisitions' common stock will be issued
according to the plan of merger. Subsequent to the merger, American Nortel
will distribute to its shareholders the 20,000 shares of common stock of Flex
Acquisitions previously held by American Nortel. Contemporaneously with the
merger-spinoff, Flex Acquisitions will file a registration statement on Form
S-4 with the Securities and Exchange Commission (SEC) to register 2,094,000
shares of Common Stock and file a registration statement on Form SB-2 with the
SEC to register the spin-off of the 20,000 shares by American Nortel and the
sale of 100,000 shares of common stock by Flex Acquisitions. Of the 2,094,000
shares of Common Stock, 2,000,000 will be considered shelf shares for future
issuance in association with possible acquisitions.

Concentrations of Credit - Substantially all of the Company's loans have
- --------------------------
been granted to related entities and a third party customer of the Company.
The concentrations of credit by type of loan are set forth in Notes B and C.

Continued

FII-7

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Interest Rate Risk - The Company is principally engaged in providing
- --------------------
short-term commercial loans with fixed interest rates. These loans have been
primarily funded through short-term notes payable and the sale of the
Company's stock.

Notes Receivable - Notes receivable are reported at the principal amount
- -----------------
outstanding. Management is of the opinion that all notes are fully
collectible, therefore, no allowance for possible credit losses is deemed
necessary.

Allowance for Possible Credit Losses - When deemed necessary, an allowance
- --------------------------------------
for possible credit losses is established to provide a valuation allowance for
losses expected to be incurred on loans and other commitments to extend
credit. All losses are charged to the allowance for possible credit losses
when the loss actually occurs or when a determination is made that a loss is
likely to occur. Recoveries are credited to the allowance at the time of
recovery.

Throughout the year, management estimates the likely level of losses to
determine whether the allowance for possible credit losses, when deemed
necessary, is adequate to absorb anticipated losses in the existing portfolio.
Based on these estimates, an amount is charged to the provision for possible
credit losses and credited to the allowance for possible credit losses in
order to adjust the allowance to a level determined to be adequate to absorb
losses.

Management's judgment as to the level of losses on existing loans involves the
consideration of current and anticipated economic conditions and their
potential effects on specific borrowers; an evaluation of the existing
rela-tionships among loans, potential loan losses, and the present level of
the allowance; and management's internal review of the loan portfolio. In
determining the collectibility of certain loans, management also considers the
fair value of any underlying collateral. The amounts ultimately realized may
differ from the carrying value of these assets because of economic, operating
or other conditions beyond the Company's control.

Statement of Cash Flows - For purposes of reporting cash flows, cash and
- --------------------------
cash equivalents includes only cash on hand and in demand deposit accounts
with a bank.

Loss Per Common Share - Loss per common share is computed using the weighted
- ---------------------
average number of shares of common stock outstanding during the period.

Continued

FII-8

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)

Income Taxes - For the year ended July 31, 1996, the Company incurred a net
- -------------
operating loss amounting to $61,015. This net operating loss carryforward
will expire in the year 2011, if not previously utilized.

No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $21,000 resulting
from the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.

Common Stock - Common stock sold is subject to a subscription agreement
- -------------
which provides for, among other things; (1) each purchaser is sold "units" at
a price of $4,800 which includes 1,000 shares of common stock, 2000 Class B
warrants and 2,000 Class C warrants collectively referred to as offered
securities; and (2) purchaser of offered securities will not be able to resell
them until and unless the securities are registered pursuant to a registration
statement and properly qualified for sale in each jurisdiction. The Class B
and Class C redeemable warrants entitle the holders to purchase one share of
common stock for each warrant held at $6.25 and $10.00, respectively.

80,000 shares of the 94,000 common shares sold and to be issued were sold to
"Founders", subject to a separate subscription agreement at a price of $.25
per share. This subscription agreement provides the subscribers with the
option to purchase up to an additional 80,000 common shares at a per share
price of $.50. The option for the purchase of additional shares expires
August 31, 1998, if not previously exercised.

NOTE B NOTES RECEIVABLE, RELATED PARTIES

Notes receivable, related parties are due from entities related by common
shareholders consist of the following at July 31, 1996.

Flex Acquisition Corporation - 10% note,
convertible into common stock as provided for
by the agreement, subordinated, redeemable
note receivable, due March 31, 1998, renewable
for an additional two year term, interest
due at maturity; unsecured $ 4,000

Financial Public Relations, Ltd. - 10% demand
note receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 10,000
Continued

FII-9

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE B NOTES RECEIVABLE, RELATED PARTIES (CONTINUED)

Financial Public Relations, Ltd. - 10% demand
note receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 10,000

Focus-Tech Investments, Inc. - two 10% demand
notes receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 5,000
--------

29,000

Less current portion 25,000
--------

Long-term note receivable, related party $ 4,000
========

NOTE C NOTE RECEIVABLE

Note receivable consists of the following at July 31, 1996.

CARETECH, Inc. - 10% unsecured demand note
receivable, interest due at maturity $ 10,000
========

NOTE D NOTES PAYABLE

Notes payable consist of the following at July 31, 1996:

Two 10% unsecured, subordinated notes payable
on the earlier of (1) October 15, 1996, or
(2) the closing of a public offering of the
Company's securities pursuant to the Securities
Act of 1933, as amended, representing gross
proceeds of not less than $60,000; the notes
are subject to subscription and option agreements $ 50,000
========

Effective October 15, 1996, these notes and other agreements were amended to
increase the number of options available and to extend maturity dates to March
31, 1997.

FII-10

<PAGE>

FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

NOTE E RELATED PARTY TRANSACTIONS AND BALANCES

Transactions and balances with related individuals and entities related by
common shareholders are as follows:

Flex Acquisition Corporation
Interest income/receivable $ 134

Financial Public Relationship, LTD.
Interest income $ 1,709
Interest receivable 917
Consulting expense 5,000

Focus-Tech Investments, Inc.
Interest income/receivable $ 48
Overhead allocation -
allocation covers rent, telephone,
fax, office supplies and expenses,
postage, repairs, use of furniture,
and equipment and administration
management as needed $19,109
Accrual of overhead 8,891
Consulting expense 2,500

M. Stephen Roberts - Attorney at Law;
initial registered agent
Legal fees, various corporate matters $13,550

FII-11

<PAGE>

VOTING AND MANAGEMENT INFORMATION

Proxies will not be solicited by Flex Financial's management with respect
to the proposed Merger described herein. Shareholder voting on the proposed
Merger by the shareholders of Flex Financial shall be taken by written
consent.

Date, Time and Place Information.
- ------------------------------------

The Company. Shareholder voting on the proposed Merger by American
------------
NorTel, the sole shareholder of the Company, shall be taken by its written
consent. It is expected that written consent to the Merger, without a meeting
being taken, shall be obtained from the sole shareholder of the Company within
two days after the date of this Prospectus. American NorTel's approval of the
Merger is required if the Merger is to be effected.

Flex Financial. Shareholder voting on the proposed Merger by Flex
---------------
Financial shareholders shall be taken by written consent. It is expected that
written consent to the Merger, without a meeting being taken, shall be
submitted to the shareholders by certified mail, return receipt requested, on
or about December 11, 1996. Written consents may be executed by the
shareholders and returned by mail or executed at the offices of the
corporation. Management of Flex Financial does not have majority control of
the sole class of voting stock and is unable to provide assurance that the
Merger will be approved.

Voting Procedure. Voting by Flex Financial shareholders shall be by written
- ----------------
consent without a meeting. Shareholders of record as of July 31, 1996 shall
be entitled to vote. The consent of 62,667 of the outstanding 94,000 share of
common stock is required to approve the Merger. None of the shares are held
of record by brokers.

Dissenters' Rights of Appraisal.
- ----------------------------------

Shareholders of Flex Financial who do not vote for or consent in writing
to the proposed Merger, and who continually hold their shares through the
effective date of the Merger (should it be effected), are entitled to exercise
dissenters' rights of appraisal. Generally, any shareholder of Flex Financial
is entitled to dissent from consummation of the plan of Merger and to obtain
payment of the fair value of his shares should the Merger be consummated. The
notice of the written consent of shareholders of Flex Financial, by which the
vote shall be taken whether to approve the proposed Merger, will state that
all shareholders are entitled to assert dissenters'rights, and the notice will
be accompanied by a copy of the relevant portions of Texas corporation law
describing dissenters' rights, the procedure for exercise of dissenters'
rights, and the procedures for judicial appraisal of the value of the shares
of Common Stock of Flex Financial should a dissenter and Flex Financial not
agree on the value of such shares.

All shareholders of Flex Financial who desire to consider whether their
dissenters' rights should be exercised should carefully read the relevant
portions of the Texas Business Corporation Act that will accompany the notice
of written consent of shareholders. Each shareholder should especially be
alert to the requirement that a shareholder who wishes to assert dissenters'
rights must deliver to the corporation, before the date set forth in the
---------------------------------
notice of written consent as the effective date of an approval vote, written
- ------------------------------------------------------------------------------
notice of one's intent to demand payment for one's shares if the proposed
- ------------------------------------------------------------------------------
action is effectuated and must not vote for one's shares in favor of, or
- ------------------------------------------------------------------------------
consent in writing to, the proposed Merger, although a shareholders does not
- -------------------------------------------
lose dissenters' rights by failing to vote. Other procedures are required and
will be described in detail in the relevant portions of Texas corporation law
that describe dissenters' rights and will accompany the notice of written
consent of shareholders mailed out to vote on the proposed Merger. The mere
failure to execute the written consent or vote against the proposed Merger
does not satisfy the requirement of delivering written notice before the
meeting of intent to demand payment for ones shares if the proposed Merger is
effectuated.

<PAGE>

No Solicitation of Proxies.
- -----------------------------

Solicitations of proxies will not be made by members of management of
Flex Financial for that entity (see "Voting and Management Information - Date,
Time and Place Information - Flex Financial").

Notice of written consent shall be made by the mails, by first class
mail, certified, return receipt requested, or by personal delivery. The cost
of the notices will be borne by Flex Financial.

Voting Securities and Principal Holders Thereof.
- ----------------------------------------------------

The proposed Merger must be approved by a majority vote of the
outstanding shares of Common Stock of the Company and by the holders of
two-thirds of the outstanding shares of Common Stock of Flex Financial.

There are presently outstanding 20,000 shares of Common Stock of the
Company, all of which are held of record by American NorTel Communications,
Inc.

There are presently outstanding 94,000 shares of Common Stock of Flex
Financial held of record by 11 shareholders. Each share is entitled to one
vote on the proposed Merger.

The record date for determining the right to vote on the proposed Merger
is July 31, 1996 for the Company and for Flex Financial.

Security Ownership of Certain Beneficial Owners and Management.
- ---------------------------------------------------------------------

The Company. The following table shows information as of July 31, 1996
-----------
with respect to each beneficial owner of more than 5% of Common Stock of the
Company and to each of the officers and directors of the Company individually
and as a group:
<TABLE>
<CAPTION>

Common Stock Beneficially Owned
-----------------------------------
Before Merger(1) After Merger(2)
---------------- -----------------
Name & Address of No. of Percent No. of Percent
Beneficial Owner Shares of Class Shares of Class
- ------------------------- ------ -------- ------ ---------
<S> <C> <C> <C> <C>
American NorTel 20,000 100 0 0 (3)
Communications, Inc.
7201 East Camelback Road
Suite 320
Scottsdale, AZ 85251
Officers and Directors 0 0 0 0 (3)
as a Group (1 person
before Merger, 0 persons
after Merger)
<FN>

__________________________
(1)Before the proposed Merger, all 20,000 shares of the issued and outstanding
shares of Common Stock of the Company are held of record and beneficially by
American NorTel Communications Inc.

(2)After giving effect to the Merger and Spinoff.

(3)After allocating 1 share of Common Stock of the Company for each 588 shares
of common stock of American NorTel only to those American NorTel shareholders
entitled to at least five shares, American NorTel will have an unspecified
number of the 20,000 Shares remaining representing undistributed fractional
share interests. It is likely that such shares will not be distributed and,
accordingly, will remain with American NorTel and not be distributed.
</TABLE>

<PAGE>

Flex Financial. The following table describes what would be the effect
--------------
of the Merger between the Company and Flex Financial on the security ownership
of any person who is known to the Company to be a person who would be the
beneficial owner of more than 5 percent of the Common Stock of the Company,
the chief executive officer, the directors, and the directors and executive
officers as a group:

<TABLE>
<CAPTION>
Common Stock
Beneficially Owned
---------------------------------------------------------------
Before Merger(1) After
Merger(2)(3)(4)
------------------------------- -------------------------------
Name and Address No. of Shares Percent of Class No. of Shares Percent of Class
------------- ---------------- ------------- ----------------
of Beneficial Owner
- ---------------------------------
<S> <C> <C> <C> <C>
Financial Public Relations, Ltd. 40,000 43 40,000 35.0
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
Ruth Shepley 20,000 21 20,000 17.5
7617 Del Monte
Houston, TX 77063
Lighthouse Resources Inc. 20,000 21 20,000 17.5
43 Bluewater Dr.
Eureka Springs, AK 72632
Officers and Directors 0 0 0 0.0
As group (0 persons)
<FN>

(1) The ownership is of record unless otherwise noted.

(2) After the Merger, Mr. Roberts would be the record owner of 40,000 shares of Common Stock of
the Company, would be deemed to be the beneficial owner of 40,000 shares of Common Stock of the
Company that would be owned of record by Financial Public Relations, Ltd. and would be deemed the
beneficial owner of and hold Class A Options to purchase an additional 40,000 shares of Common
Stock of the Company.

(3) After the Merger, Ms. Shepley would own 20,000 shares of the Company's Common Stock of
record and would hold Class A Options to purchase an additional 20,000 shares.

(4) After the Merger, Lighthouse Resources Inc., an unrelated entity, would own 20,000 shares
of the Company's Common Stock of record and would hold Class A Options to purchase an additional
20,000 shares.
</TABLE>

Directors, Executive Officers and Significant Employees.
- ------------------------------------------------------------

Set forth below are the names, ages, and terms of office of each of the
directors, executive officers and significant employees of both the Company
and Flex Financial and a description of the business experience of each.

<PAGE>

<TABLE>
<CAPTION>
Person Office Held Term of
Office Since Office
- --------------------------- ------------- ----------- -------

<S> <C> <C> <C>
Flex Financial:
- ---------------------------
Michael T. Fearnow, 52 Director, 1995 10-97
President and 1995 10-97
Secretary 1995 10-97
The Company:
- ---------------------------
Michael T. Fearnow, 52 Director, 1996 3-97
President and 1996 3-97
Secretary 1996 3-97
</TABLE>

________________________

Michael T. Fearnow. Mr. Fearnow has been an independent securities
consultant to small to medium-sized growth companies in the field of
investment banking transactions, financial and broker relations, and publicly
underwritten securities since 1987. Mr. Fearnow obtained a degree in Business
Administration from the University of Kansas in 1967. He began his investment
banking career as an account executive with Merrill Lynch in 1972 and by 1978
had become a Senior Account Executive and Product Manager for new issues
underwriting. In 1978 Mr. Fearnow was a co-founder of Porcari, Fearnow &
Associates, Inc., a full service NASD broker-dealer. He served as chairman
from 1978 to 1987 and structured and participated in financing numerous
private placements, public underwritings, venture capital transactions and
tax-sheltered investments and specialized in areas of financial planning and
due diligence.

Remuneration of Directors and Officers.
- ------------------------------------------

The Company.
------------

Mr. Fearnow, the sole officer and director of the Company, received no
compensation during 1996 for his services for the Company. No compensation is
proposed to be paid to any officer or director of the Company prior to the
proposed Merger with Flex Financial.

Flex Financial.
---------------

Mr. Fearnow, the sole officer and director of Flex Financial, received no
compensation during 1995 for his services for Flex Financial. He is receiving
no compensation during 1996 for his services for the Company. No compensation
is proposed to be paid to any officer or director of the Company prior to the
proposed Merger with Flex Financial. Should the Merger be effected, Mr.
Fearnow shall be the sole director of the post-Merger Company. There are no
present plans, arrangements, or understandings concerning any change in
compensation for him after the Merger, should the Merger be effected.

The following sets forth the 1995 remuneration of the president of Flex
Financial and the 1996 remuneration payments proposed to be made to the three
highest paid persons who are officers of Flex Financial, among whom the
president is one:

<PAGE>

<TABLE>
<CAPTION>
Name of Securities
Individual Underlying
or group Capacity Year Salary Stock Options
- ------------------ --------- ---- ------- -------------
<S> <C> <C> <C> <C>

Michael T. Fearnow President 1995 $ 0.00 0
Michael T. Fearnow President 1996 $ 0.00 0
</TABLE>

___________________________

Stock Options.
--------------

The Company has granted no stock options.

Interest of Management and Others in Certain Transactions.
- ----------------------------------------------------------------

The Company has entered into a financial consulting agreement with
Financial Public Relations, Ltd. pursuant to which FPR will render investment
banking consulting services to the Company. Mr. Roberts is the general
partner and owner of FPR. Mr. Fearnow is a principal of Focus-Tech
Investments, Inc., a Nevada corporation, that provides investment banking
consulting services to FPR. Under the terms of the agreement, the Company
paid FPR an initial retainer of $5,000 plus certain fees, commissions and
carried interests in transactions entered into by the Company. The services
rendered to the Company by FPR will be primarily for the services of and
provided through Messrs. Roberts and Fearnow.

Flex Financial currently shares a portion of approximately 3,000 square
feet of office space in premises occupied by Focus-Tech Investments, Inc. at
770 S. Post Oak Lane, Suite 515, Houston, Texas 77056. Mr. Fearnow is a
principal of Focus-Tech Investments, Inc., a Nevada corporation, that provides
investment banking consulting services on an exclusive basis to FPR. Flex
Financial believes that such space and services will be adequate for the
business of Flex Financial into the foreseeable future. The cost for such
space is included in a $4,000 per-month fee charged by Focus-Tech for general
and administrative services. Upon closing of the Concurrent Public Offering,
Flex Financial has agreed to pay Focus-Tech the direct costs attributed to its
use of office space, facilities and equipment. Focus-Tech will invoice Flex
Financial for such direct costs. Focus-Tech has agreed to make this space,
facilities and equipment available as long as required for the use of Flex
Financial. Focus-Tech, Mr. Fearnow and FPR have agreed that the aggregate
amount of cash compensation and considerations described in this paragraph
payable out of the proceeds of the Concurrent Public Offering shall not exceed
20% of the net proceeds of the Offering unless payable out of the Company's
earnings.

In connection with organizing the Company, FPR, a Texas limited
partnership wholly controlled by Mr. Roberts, paid an aggregate of $10,000 to
purchase a total of 40,000 shares of Common Stock at an average sales price of
$.25 per share. FPR delivered its promissory note in the principal sum of
$10,000, payable on demand and bearing interest at 10%, to the Company in
payment for the shares. On July 31, 1996 FPR paid all principal and interest
due on said note.

In February and March 1996 FPR borrowed $20,000 from Flex Financial
evidenced by two promissory notes bearing interest at 10% and secured by
marketable securities valued in excess of $100,000. Both notes were repaid
with interest on November 15, 1996.

From February through August 1996 Focus-Tech borrowed $13,000 from Flex
Financial evidenced by four promissory notes bearing interest at 10% and
secured by marketable securities valued in excess of $100,000. All four notes
were repaid with interest on November 15, 1996.

<PAGE>

The Company and Flex Financial has retained Mr. Roberts for various
securities matters relating to the Concurrent Offering for which it paid an
initial retainer of $5,000 plus hourly fees ranging form $50 to $150 per hour.
The Company believes that these services will be rendered on terms at least
as favorable as it could obtain from unaffiliated persons. In addition, Mr.
Roberts has and will act as corporate general counsel and has and will render
legal services regarding various corporate matters related thereto.

Parents.
- -------

The direct parent of the Company is American NorTel Communications Inc.,
which owns all the issued and outstanding stock of the Company. No
shareholder of American NorTel owns sufficient stock to exercise control over
Flex Financial through stock ownership.

The parents of Flex Financial are its board of directors. No shareholder
of Flex Financial owns sufficient stock to exercise control over Flex
Financial through stock ownership.

PLAN OF MERGER

Set forth below is a copy of the Plan of Merger between the Company and
Flex Financial Group, Inc.:

PLAN AND AGREEMENT OF MERGER

PLAN AND AGREEMENT OF MERGER, dated as of July 1, 1996, between FLEX
ACQUISITIONS CORPORATION, a Texas corporation ("FAC") and FLEX FINANCIAL
GROUP, INC., a Texas corpora-tion ("FLEX FINANCIAL"); (all collectively called
the "Constituent Corporations").

The Boards of Directors of the Constituent Corporations deem it advisable
for the general welfare of the Constituent Corpora-tions and their respective
stockholders that the Constituent Cor-porations merge into a single
corporation pursuant to this Agree-ment and the Texas Business Corporation
Act.

The parties hereby agree as follows:

1. MERGER AND MODE OF CARRYING IT INTO EFFECT
-------------------------------------------------

1.1 Merger. The Constituent Corporations will be at the
------
Effective Date in the manner authorized and prescribed by the Texas Business
Corporation Act, merged into a single corporation, which corporation is FAC
(hereinafter sometimes called the "Surviving Corporation"), and the parties
hereby adopt the agreements, terms and conditions relating to the Merger and
the mode of carrying the same into ef-fect, which the parties covenant to
observe, keep and perform, set forth in this Agreement.

1.2 Effecting the Merger. This Agreement will be consummated and
--------------------
the Merger effected by the filing of Articles of Merger as required by Texas
law, with the Secretary of State of the State of Texas, whereupon as of the
Effective Date the separate corporate existence of Flex Financial will cease
and Flex Financial will be merged with and into the Surviving Corporation.

<PAGE>

1.3 Effective Date. As used in this Agreement, the term "Effective
--------------
Date" means the date Articles of Merger will have been filed with the
Secretary of State of the State of Texas, after satisfaction of the
requirements of the applicable law of such state prerequi-site to such filing.

1.4 Articles of Merger. Upon the approval of the merger by the
------------------
shareholders of FAC and by the shareholders of Flex Financial, the officers of
FAC shall file with the Secretary of State of the State of Texas Articles of
Merger pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act; provided, however, that at any time prior to the filing of
such Articles of Merger with the Secretary of State of Texas, the Plan may be
terminated by the board of directors of Flex Financial notwithstanding
approval of this Agreement by the stockholders of Flex Financial or of FAC.

2. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
---------------------------------------------------------------

2.1 Articles of Incorporation. The Articles of Incorporation of
--------------------------
FAC in effect on the date of this Agreement and the Effective Date will be the
Articles of Incorporation of the Surviving Corporation until altered or
amended as provided therein and by the laws of the State of Texas.

2.2 Bylaws. The bylaws of FAC on the Effective Date of the merger
------
shall be the bylaws of the Surviving Corporation.

2.3 Directors. The entire Board of Directors of the Surviving
---------
Corporation will consist of those persons who comprise the Board of Directors
of FAC on the Effective Date; who, subject to the provisions of the bylaws of
the Surviving Corporation and the laws of the State of Texas will hold office
until the first an-nual meeting of stockholders of the Surviving Corporation
held subsequent to the Effective Date or until their respective suc-cessors
are elected and qualified.

2.4 Officers. The principal officers of the Surviving
--------
Corporation, from and after the Effective Date of the merger shall be the
persons acting as the principal officers of FAC on the Effective Date; who,
subject to the provisions of the bylaws of the Surviving Corporation and the
laws of the State of Texas, will hold office until the first meeting of the
Board of Direc-tors following the first annual meeting of stockholders of the
Surviving Corporation held subsequent to the Effective Date or until their
respective successors are elected and qualified.

3. APPROVAL OF MERGER
--------------------

3.1 Stockholder Approvals. This Agreement shall be submitted
--------------------
separately to the shareholders of the Constituent Corporations in the manner
provided by the laws of the State of Texas for approval and pursuant to any
applicable federal securities laws.

<PAGE>

4. CONVERSION AND ISSUE OF SECURITIES.
--------------------------------------

The manner of converting the shares of each of the Constituent
Corporations into securities of the Surviving Corporation and re-lated
provisions are as follows:

A. All shares of capital stock of Flex Financial which shall be
issued and outstanding on the Effective Date shall, on the Effective Date, be
canceled and shall be converted into that number of shares of Common Stock,
par value $0.001 per share, of FAC.

B. All 20,000 shares of Common Stock, par value $0.001 per share, of
FAC which shall be outstanding immediately prior to the Effective Date shall,
on the Effective Date, continue to be outstanding.

C. All warrants and options of Flex Financial which shall be
outstanding on the Effective Date shall, on the Effective Date, be canceled
and shall be converted into warrants and options of FAC of equivalent tenor.

5. CERTAIN EFFECTS OF THE MERGER
---------------------------------

At the Effective Date, the separate existence and corporate organization
of Flex Financial, except insofar as it may be continued by statute, shall
cease and FAC shall continue as the Surviving Corporation, which shall
succeed, without other transfer or further act or deed whatsoever, to all the
rights, property and assets of the Constituent Corporations and shall be
subject to and liable for all the debts and liabilities of each; otherwise,
its identity, existence, purposes, rights, immunities, properties, liabilities
and obligations shall be unaffected and unimpaired by the Merger except as
expressly provided herein.

6. TAX TREATMENT
--------------

The merger of FAC and Flex Financial shall be accomplished as a tax-free
reorganization as defined in Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended.

Executed on the 1st day of July, 1996, at Houston, Texas.

FLEX FINANCIAL GROUP, INC.
-----------------------------

By: /S/ Michael T. Fearnow
--------------------------------
MICHAEL T. FEARNOW, President

FLEX ACQUISITIONS CORPORATION
-----------------------------

By: /S/ M. Stephen Roberts
--------------------------------
M. Stephen Roberts, President

<PAGE>

PART II

Indemnification of Directors and Officers.
- ---------------------------------------------

There is set forth in the Prospectus under "Terms of the Transaction -
Indemnification for Securities Act Liabilities" a description of the laws of
Texas with respect to the indemnification of officers, directors, and agents
of corporations incorporated in Texas.

Both the Company and Flex Financial Group, Inc. have charter provisions
and bylaw provisions that insure or indemnify, to the full extent allowed by
the laws of Texas, directors, officers, employees, agents or persons serving
in similar capacities in other enterprises at the request either of the
Company or Flex Financial Group, Inc., as the case may be.

To the extent of the indemnification rights provided by the Texas
statutes and provided by the Company's and Flex Financial's charter and
bylaws, and to the extent of Flex Financial's and the Company's abilities to
meet such indemnification obligations, the officers, directors and agents of
the Company would be beneficially affected.

Exhibits.
- --------

Separately bound but filed as part of this Form S-4 Registration
Statement are the following exhibits:

<TABLE>
<CAPTION>
Exhibit Item
- ------------
<C> <S>

2.1 - Agreement of Merger of July 1, 1996 between Flex
Acquisitions Corporation And Flex Financial Group, Inc.(1)
2.2 - Business Combination-Spinoff Agreement of June 30, 1996
among Flex Acquisitions Corporation; Flex Financial Group,
Inc.; and American NorTel Communications, Inc.(1)
3.1 - Certificate of Incorporation of Flex Acquisitions
Corporation(1)
3.2 - Certificate of Incorporation of Flex Financial Group, Inc.
and amendments thereto.(1)
3.3 - Bylaws of Flex Acquisitions Corporation(1)
3.4 - Bylaws of Flex Financial Group, Inc.(1)
4.1 - Form of Class B Redeemable Common Stock Purchase
Warrant(1)
4.2 - Form of Class C Redeemable Common Stock Purchase
Warrant(1)
4.3 - Form of Class A Unit Purchase Options(1)
4.4 - Form of Common Stock Purchase Options(1)
5.1 - Opinion of M. Stephen Roberts, Esq., as to the legality
of the securities covered by the Form S-4 and Form SB-2
Registration Statements(1)
8.1 - Opinion of M. Stephen Roberts, Esq., as to tax matters and
tax consequences to the shareholders(1)
10.1 - Escrow Agreement among Flex Acquisitions Corporation;
American NorTel Communications, Inc., and Southwest Bank
of Texas N.A.(1)
10.2 - Agreement of Flex Financial relating to compliance with
S.E.C. Rule 419(1)
23.1 - Consent of M. Stephen Roberts, Esq., to the reference to
him as an attorney who has passed upon certain information
contained in the Prospectus Statement(1)
23.2 - Consent of Harper & Pearson Company, independent auditors
of Flex Acquisitions Corporation(1)
23.3 - Consent of Harper & Pearson Company, independent auditors
of Flex Financial Group, Inc.(1)
27.1 - Financial Data Schedule
<FN>
(1) Previously filed as an Exhibit to the Registrant's Registration
Statement on Form SB-2 as contemporaneously filed with the Securities and
Exchange Commission.
</TABLE>

<PAGE>

UNDERTAKINGS

Flex Acquisitions Corporation will:

1. File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:

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

ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and

iii) include any additional or changed material information
on the plan of distribution.

2. For determining liability under this Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.

3. File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("the Act") may be permitted to directors, officers and
controlling persons of Flex Acquisitions Corporation pursuant to the foregoing
provisions, or otherwise, Flex Acquisitions Corporation has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by Flex Acquisitions Corporation of expenses incurred
or paid by a director, officer or controlling person of Flex Acquisitions
Corporation 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, Flex Acquisitions Corporation will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of 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.

Flex Acquisitions Corporation hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus pursuant
to Item 4 of this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.

<PAGE>

Flex Acquisitions Corporation hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Houston, Texas on
November 26, 1996.

FLEX ACQUISITIONS CORPORATION

By: /S/ Michael T. Fearnow
MICHAEL T. FEARNOW, President

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

FLEX ACQUISITIONS CORPORATION

By: /S/ Michael T. Fearnow
MICHAEL T. FEARNOW, President
Director and Principal Financial
Officer

Date: November 26, 1996

<PAGE>

<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
EXHIBIT INDEX
TO
FORM S-4
REGISTRATION STATEMENT

Exhibit Description Page
No.
<C> <S> <C>

2.1 Agreement of Merger of July 1, 1996 between Flex
Acquisitions Corporation And Flex Financial Group, Inc.(1)
2.2 Business Combination-Spinoff Agreement of June 30, 1996
among Flex Acquisitions Corporation; Flex Financial Group,
Inc.; and American NorTel Communications, Inc.(1)
3.1 Certificate of Incorporation of Flex Acquisitions
Corporation (1)
3.2 Certificate of Incorporation of Flex Financial Group, Inc.
and amendments thereto.(1)
3.3 Bylaws of Flex Acquisitions Corporation (1)
3.4 Bylaws of Flex Financial Group, Inc.(1)
4.1 Form of Class B Redeemable Common Stock Purchase
Warrant(1)
4.2 Form of Class C Redeemable Common Stock Purchase
Warrant(1)
4.3 Form of Class A Unit Purchase Options(1)
4.4 Form of Common Stock Purchase Options(1)
5.1 Opinion of M. Stephen Roberts, Esq., as to the legality of
the securities covered by the Form S-4 and Form SB-2
Registration Statements(1)
8.1 Opinion of M. Stephen Roberts, Esq., as to tax matters and
tax consequences to the shareholders(1)
10.1 Escrow Agreement among Flex Acquisitions Corporation;
American NorTel Communications, Inc., and Southwest Bank
of Texas N.A.(1)
10.2 Agreement of Flex Financial relating to compliance with
S.E.C. Rule 419(1)
23.1 Consent of M. Stephen Roberts, Esq., to the reference to
him as an attorney who has passed upon certain information
contained in the Prospectus (1)
23.2 Consent of Harper & Pearson Company, independent auditors
of Flex Acquisitions Corporation(1)
23.3 Consent of Harper & Pearson Company, independent auditors
of Flex Financial Group, Inc.(1)
27.1 Financial Data Schedule
<FN>
(1)Contemporaneously filed as an Exhibit to the Registrant's Registration
Statement on Form SB-2 as filed simultaneously with the Securities and
Exchange Commission.
</TABLE>

<S> <C>

<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING JULY 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> MAR-21-1996
<PERIOD-END> JUL-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,992
<CURRENT-LIABILITIES> 268
<BONDS> 4,000
<COMMON> 1,000
0
0
<OTHER-SE> (276)
<TOTAL-LIABILITY-AND-EQUITY> 4,992
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (276)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (276)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0

</TABLE>