PC411 INC, 424B3, 1997-05-16

PC411 INC
424B3, 1997-05-16
COMPUTER PROCESSING & DATA PREPARATION

Previous: 8X8 INC, S-1/A, 1997-05-16

Next: TENNECO INC /DE, S-8, 1997-05-16

<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-21545

1,150,000 UNITS

PROSPECTUS

[LOGO]

EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE CLASS A WARRANT

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

This Prospectus relates to the offering (the "Offering") of 1,150,000 units
(the "Units") by PC411, Inc., a Delaware corporation (the "Company"), each Unit
consisting of one share (each a "Share" and collectively, the "Shares") of
common stock, $0.01 par value per share (the "Common Stock"), and one Redeemable
Class A Warrant (each a "Warrant" and, collectively, the "Warrants"). The Units,
the Shares and the Warrants are sometimes hereinafter collectively referred to
as the "Securities." The Shares and the Warrants included in the Units are
detachable and will trade separately immediately upon issuance. Each Warrant
entitles the registered holder thereof (a "Warrantholder") to purchase one share
of Common Stock at an initial exercise price equal to $6.10 at any time during
the period commencing one (1) year from the effective date of this Prospectus
and terminating four (4) years thereafter (the "Warrant Exercise Period"). The
Warrant exercise price is subject to adjustment under certain circumstances.
All, but not less than all, of the Warrants are subject to redemption by the
Company, at $0.01 per Warrant, at any time during the Warrant Exercise Period on
thirty (30) days prior written notice to the Warrantholders if the per share
closing bid price of the Common Stock as reported by NASDAQ, the NASD OTC
Electronic Bulletin Board (the "Bulletin Board") or the National Quotation
Bureau, as the case may be, equals or exceeds $9.625 for any twenty (20)
consecutive trading days ending within five (5) days of the notice of
redemption.

Prior to the Offering, there has been no public market for the Units, the
Common Stock or the Warrants and there can be no assurance that such a market
will develop after completion of the Offering or, if developed, that it will be
sustained. For the method of determining the initial public offering price of
the Units and the terms of the Warrants, see "Risk Factors", "Description of
Securities" and "Underwriting." Application has been made to list the Units, the
Shares and the Warrants on the Bulletin Board under the symbols PCFRU, PCFR and
PCFRW, respectively.

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" COMMENCING ON PAGE 8 AND "DILUTION."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Unit................................................. $5.75 $.575 $5.175
Total(3)................................................. $6,612,500 $661,250 $5,951,250
</TABLE>

(1) Does not include additional compensation payable to Biltmore Securities,
Inc. (the "Underwriter") in the form of a non-accountable expense allowance,
an advisory fee, a warrant solicitation fee and options to purchase Units.
See "Underwriting" for information concerning indemnification and
contribution arrangements with, and compensation payable to, the
Underwriter.

(2) Before deducting estimated expenses of approximately $700,000 payable by the
Company, including the non-accountable expense allowance payable to the
Underwriter.

(3) The Company has granted to the Underwriter an option (the "Over-Allotment
Option"), exercisable within 30 days after the date of this Prospectus, to
purchase up to an aggregate of 172,500 additional Units upon the same terms
and conditions as set forth above, solely to cover over-allotments, if any.
If the Over-Allotment Option is exercised in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $7,604,375,
$760,437.50 and $6,843,937.50, respectively. See "Underwriting."

The Units are being offered by the Underwriter, subject to prior sale, when,
as and if delivered to and accepted by the Underwriter, and subject to approval
of certain legal matters by its counsel and subject to certain other conditions,
including the right of the Underwriter to withdraw, cancel or modify the
Offering and to reject any order in whole or in part. It is expected that
delivery of the certificates representing the Units offered hereby will be made
against payment at the offices of Biltmore Securities, Inc., Ft. Lauderdale,
Florida, on or about May 21, 1997.

BILTMORE SECURITIES, INC.

The date of this Prospectus is May 14, 1997
<PAGE>
[THIS PAGE CONTAINS TWO SEPARATE COMPUTER SCREEN SHOTS DEPICTING THE PC411
SERVICE PRESENTED THROUGH A NETSCAPE BROWSER. ONE SCREEN SHOWS THE SEARCH FROM
WHERE USERS SPECIFY THE INFORMATION FOR WHICH THEY ARE LOOKING AND ANOTHER
SCREEN IS SHOWING THE RESULTS OF A SEARCH.]
<PAGE>
[This page contains a graphic depicting the PC411 FOR WINDOWS search screen]

PC411, Inc. owns the PC411-Registered Trademark- service mark. All other
tradenames, trademarks and service marks appearing in this Prospectus are the
property of their respective holders.

IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS OTHERWISE SPECIFIED, ALL
INFORMATION IN THIS PROSPECTUS ASSUMES 1,650,000 SHARES OF COMMON STOCK
OUTSTANDING AFTER GIVING EFFECT TO (I) THE CONVERSION OF THE OUTSTANDING SHARES
OF THE SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK (THE "PREFERRED STOCK")
INTO 8,626 SHARES OF COMMON STOCK, (II) THE SUBSEQUENT STOCK SPLIT OF 172.7336
FOR 1 AND THE CONTRIBUTION OF 632,390 SHARES OF COMMON STOCK TO THE COMPANY BY
CERTAIN STOCKHOLDERS, AND (III) THE ISSUANCE OF AN ADDITIONAL 60,000 SHARES OF
COMMON STOCK AND ASSUMES NO EXERCISE OF ANY WARRANTS OR OPTIONS TO PURCHASE
SHARES OF COMMON STOCK DESCRIBED HEREIN. SEE "CAPITALIZATION-- RECAPITALIZATION
AND STOCK SPLIT." INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET FORTH
UNDER "RISK FACTORS" PRIOR TO MAKING AN INVESTMENT IN THE SECURITIES.

THE COMPANY

The Company currently provides on-line electronic directory assistance to
personal computer users. The Company's directory assistance service,
PC411-Registered Trademark- ("PC411" or the "PC411 service"), provides customers
with on-line access to over 110 million U.S. and Canadian residence and business
telephone numbers, addresses and ZIP codes with a dial-up modem connection.
Using the Company's copyrighted software, PC411 FOR WINDOWS, a customer can
search for business or residential listings anywhere in the U.S. or Canada
without having to know the area code or city, look up addresses and ZIP codes in
addition to telephone numbers, search by a telephone number to find a listed
name and address, and perform multiple searches at one time. The Company is
currently offering a limited version of the PC411 service over the Internet at
the World Wide Web ("Web") address HTTP://WWW.PC411.COM. The Company's long term
business strategy is to position itself as an Internet/intranet (private server
based networks) information publishing and distribution company.

The Company is a development stage enterprise. Substantially all of its
expenditures (approximately $1.6 million as of December 31, 1996) have been for
software and systems development and equipping a data center to provide the
PC411 service on a commercial basis. The Company's expenditures for marketing
PC411 have been insignificant and the Company has not yet developed any
significant customer base or revenues.

The Company believes that the growth of both the Internet and private
intranets will provide the Company with a larger market and new opportunities to
provide services that are not currently available with print or operator
assisted directories. The Company's long term business strategy is to (i) build
brand identity for PC411, (ii) provide on-line directory assistance through
various access methods, including dial-up modem connections to the Company's
data center, over the Internet on the Company's Web site, and over the Internet
for use by organizations on their private intranet networks, and (iii) attempt
to develop industry specific databases through various accumulation strategies.
A substantial portion of the proceeds of the Offering will be used to market the
PC411 service to both the SOHO (small office/home office) market (part of the
larger market known as the business-to-business market) and businesses on the
Web and to businesses that have established private intranets. There is no
assurance that these markets or a demand for the Company's services will develop
or that the Company will be able to commercially exploit these markets. See
"Risk Factors."

The Company has entered into "bundling" agreements with International
Business Machines Corporation ("IBM"), U.S. Robotics Access Corp. ("U.S.
Robotics"), Sony Corporation ("Sony"), and Hewlett-Packard Company
("Hewlett-Packard") to distribute PC411 FOR WINDOWS with certain personal
computers and modems manufactured by these companies. Shipments under the
bundling agreements commenced in June 1996, and the Company has experienced an
increase in its customer base from 213 as of September 30, 1995 to 7,200 as of
December 31, 1996 (including customers accessing PC411, without charge, on a
trial basis). The Company has been notified by Sony that as of June 1997 it will
no longer include in its new

3
<PAGE>
releases products, such as PC411 FOR WINDOWS, which require users to pay for
services. As of December 31, 1996 Sony accounted for approximately 1,000, or
14%, of the Company's customers.

The Company was incorporated in Delaware in December 1993. The Company's
executive office is located at 9800 S. La Cienega Blvd., Suite 411, Inglewood,
CA 90301-4440, and its telephone number is (310) 645-1114. The Company's Web
page can be located at HTTP://WWW.PC411.COM where visitors may download PC411
FOR WINDOWS. Information contained on the Company's Web site shall not be deemed
to be a part of this Prospectus.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities offered hereby........... 1,150,000 Units, each Unit consisting of one Share
and one Warrant, at an initial public offering price
of $5.75 per Unit. The Shares and the Warrants
included in the Units are detachable and will trade
separately immediately upon issuance. Each Warrant
entitles the registered holder thereof to purchase at
any time during the Warrant Exercise Period one share
of Common Stock at an exercise price of $6.10 per
share. The Warrants are subject to redemption by the
Company for $0.01 per Warrant at any time during the
Warrant Exercise Period, on 30 days written notice,
provided that the closing bid price of the Common
Stock equals or exceeds $9.625 per share for any 20
consecutive trading days ending within five (5) days
of the notice of redemption to the Warrantholders.

Outstanding Securities before the
Offering:

Units........................... None
Common Stock(1)................. 1,650,000 Shares
Warrants(2)..................... 1,000,000 Warrants

Outstanding Securities after the
Offering:(3)

Units........................... 1,150,000 Units
Common Stock(1)................. 2,800,000 Shares
Warrants(4)..................... 2,150,000 Warrants

Proposed Symbols:

Units........................... PCFRU
Common Stock.................... PCFR
Warrants........................ PCFRW

Use of Proceeds..................... The net proceeds (after payment of underwriting
discounts and a non-accountable expense allowance to
the Underwriter and other expenses of the Offering)
to the Company from the sale of the Units offered
hereby at an initial public offering price of $5.75
per Unit are expected to be approximately $5,250,000.
Such net proceeds will be used principally for the
continued development and marketing of the PC411
service, to repay certain short-term indebtedness and
accrued interest thereon to a related party, to pay
accumulated dividends on the Preferred Stock, for
general corporate purposes and for working capital.
See "Use of Proceeds."

Risk Factors........................ An investment in the Securities offered hereby is
speculative and involves a high degree of risk. This
Prospectus contains forward-looking information which
involves risks and
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
uncertainties. The Company's actual results could
differ materially from those anticipated by such
forward-looking information as a result of various
factors, including those discussed under "Risk
Factors" in this Prospectus. In addition, purchasers
of the Units offered hereby will experience immediate
and substantial dilution with respect to their
investment. See "Risk Factors."
</TABLE>

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

(1) Does not include shares of Common Stock issuable upon the exercise of (i)
the Warrants; (ii) the Over-Allotment Option; (iii) options granted to the
Underwriter to purchase up to 73,600 Units (the "Underwriter's Option");
(iv) options held by Direct Assist Holding Inc. ("DAH"), a wholly owned
subsidiary of New Valley Corporation ("NVC"), to purchase 500,000 shares of
Common Stock at $5.75 per share (the "Principal Stockholder's Options"); (v)
options to purchase 750,000 shares of Common Stock reserved for issuance
under the Company's 1997 Stock Option Plan (the "Option Plan"); and (vi)
Warrants to purchase 1,000,000 shares of Common Stock (the "NVC Warrants"),
issued to NVC in satisfaction of $250,000 of short term indebtedness. See
"Management", "Principal Stockholders", "Certain Transactions" and
"Description of Securities."

(2) The NVC Warrants.

(3) Common Stock and Warrants outstanding after the Offering includes the Shares
and Warrants which are part of the Units. The Shares and the Warrants
included in the Units will be detachable and will trade separately
immediately upon issuance.

(4) The Warrants and the NVC Warrants. The NVC Warrants are of the same class as
the Warrants and have the same terms and conditions.

NOTICE TO CALIFORNIA RESIDENTS

The Units offered hereby may only be offered and sold to (i) persons with a
net worth, individually or jointly with his or her spouse, of at least $60,000
(exclusive of home, home furnishings and automobiles) and an annual income of at
least $60,000 or (ii) persons with a net worth, individually or jointly with his
or her spouse, of at least $225,000 (exclusive of home, home furnishings and
automobiles).

The Securities offered hereby have been registered by a limited
qualification and cannot be offered for resale or resold in the State of
California unless registered for sale. Furthermore, the exemption afforded by
Section 25104(h) of the California Securities Law shall be withheld by the
Commissioner of Corporations and the Company is not permitted to apply for the
exemption afforded by 25101(b) until after 90 days from the date of the closing
of this Offering.

6
<PAGE>
SUMMARY FINANCIAL INFORMATION

The summary financial information set forth below is derived from the
Company's more detailed financial statements appearing elsewhere in this
Prospectus. This information should be read in conjunction with such financial
statements and the notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations appearing elsewhere in this
Prospectus.

STATEMENTS OF OPERATIONS DATA:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Revenues...................................................................... $ 352 $ 12,144 $ 55,915
Operating loss................................................................ (196,581) (571,443) (712,877)
Net loss...................................................................... (172,682) (549,738) (884,122)
Pro forma net loss per share(1)(2)(3)......................................... (0.10) (0.32) (.51)
Pro forma weighted number of shares outstanding(3)............................ 1,730,800 1,730,800 1,730,800
</TABLE>

BALANCE SHEET DATA:

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED(4)
--------- --------------
<S> <C> <C>
Cash and cash equivalents.............................................................. $ 8,605 $4,979,840
Working capital (deficiency)........................................................... (333,027) 4,900,223
Total assets........................................................................... 345,389 5,223,759
Total stockholders' equity (deficiency)................................................ (200,055) 5,133,195
</TABLE>

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

(1) See note 2 of the notes to the Company's financial statements appearing
elsewhere in this Prospectus for information concerning the calculation of
pro forma net loss per share.

(2) From inception until May 12, 1995, the Company was an "S" corporation for
federal income tax purposes and, accordingly, all items of income, gain,
loss and credits of the Company were reported by its stockholders in
proportion to their stock interest in the Company.

(3) Pro forma and pro forma as adjusted data assumes 1,650,000 shares of Common
Stock outstanding before the Offering after giving effect to (i) the
conversion of all outstanding shares of Preferred Stock into 8,626 shares of
Common Stock, (ii) the subsequent stock split of 172.7336 for 1 and the
contribution of 632,390 shares of Common Stock to the Company by certain
stockholders and (iii) the issuance of an additional 60,000 shares of Common
Stock. In addition, pro forma net income (loss) per share data assumes an
additional 80,800 shares of Common Stock equivalents as a result of options
granted pursuant to the Option Plan to the Company's Chief Executive Officer
and Chief Technology Officer to acquire an aggregate 404,000 shares of
Common Stock at an exercise price of $4.40 per share. See note 2 of the
notes to the Company's financial statements appearing elsewhere in this
Prospectus.

(4) Adjusted to reflect the sale of the Units offered hereby and the net
proceeds therefrom (at an initial public offering price of $5.75 per Unit
and after deducting the underwriting discounts and commissions and expenses
of the Offering estimated at approximately $1,360,000 and assuming no
exercise of the Over-Allotment Option), the satisfaction of $250,000 of
short-term indebtedness in connection with issuance of the NVC Warrants and
the payment of accrued dividends on the Preferred Stock. See "Use of
Proceeds." Does not include the proceeds from the sale of shares of Common
Stock pursuant to the exercise of any Warrants (including the NVC Warrants),
the Underwriter's Option, the Principal Stockholder's Options and any
options granted pursuant to the Option Plan.

7
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES A
HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE SECURITIES OFFERED
HEREBY. PROSPECTIVE INVESTORS SHOULD BE IN A POSITION TO RISK THE LOSS OF THEIR
ENTIRE INVESTMENT. THIS PROSPECTUS CONTAINS FORWARD-LOOKING INFORMATION WHICH
INVOLVES RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED BY SUCH FORWARD-LOOKING INFORMATION AS A
RESULT OF VARIOUS FACTORS, INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK
FACTORS AND ELSEWHERE IN THIS PROSPECTUS.

DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY. The Company was
founded in December 1993 and commenced offering the PC411 service to personal
computer users with modems on a dial-up basis in December 1994. Accordingly, the
Company has only a limited operating history, has not yet developed any
significant customer base or realized any significant revenues and is considered
a "development stage company" under generally accepted accounting principles.
The Company's prospects must be evaluated in light of the risks and
uncertainties frequently encountered by a company in an early stage of
development. The evolving markets for on-line Internet and private intranet
services in which the Company operates, or intends to operate, makes these risks
and uncertainties particularly pronounced. To address these risks, the Company
must, among other things, widely distribute PC411 FOR WINDOWS, create and
distribute a version of this software for other operating systems, generate use
of the PC411 service, further develop, modify and enhance its service for use on
the Internet, successfully execute its sales and marketing strategies to build
brand identity for PC411, attempt to generate revenue from the Company's Web
site, modify and market the PC411 service for use by large organizations on
their private intranets, and develop relationships with third parties for
purposes of general distribution and specific industry penetration. Furthermore,
the Company must respond to competitive developments, attract, retain and
motivate qualified personnel, develop and continue to upgrade its services and
technologies and commercialize its services incorporating these technologies.
There can be no assurance that the Company will succeed in addressing any or all
of these risks or that the Company will achieve or sustain any significant
revenues or that the Company will achieve profitability. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

FINANCIAL CONDITION; GOING CONCERN QUALIFICATION IN AUDITOR'S REPORT. Since
its inception, the Company has incurred substantial costs to develop its
software and systems, to design, equip and open a data center to process
customer search requests and to modify and enhance its software and systems to
offer directory assistance over the Internet. The Company has incurred net
losses in each quarter since inception and, as of December 31, 1996, had an
accumulated deficit of $1,606,542 and a working capital deficit of $333,027. AS
A RESULT, THE REPORT OF THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, IN
CONNECTION WITH THE AUDIT OF THE COMPANY'S FINANCIAL STATEMENTS AS OF DECEMBER
31, 1996, INCLUDES AN EXPLANATORY PARAGRAPH STATING THAT THE COMPANY'S LOSSES
FROM OPERATIONS AND DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE RAISE
SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN.
The Company's continuation as a going concern is dependent upon its ability to
obtain additional financing, generate sufficient cash flow to meet its
obligations on a timely basis and ultimately to attain profitable operations. To
the extent such losses continue, the Company's accumulated deficit and working
capital deficit would increase. The Company anticipates that its operating
expenses will increase substantially in the foreseeable future as it initiates a
sales and marketing program for PC411, introduces directory services over the
Internet and implements its data accumulation strategies. Accordingly, the
Company expects to incur additional losses and there can be no assurance that
the Company will be successful or that the Company will achieve profitability by
generating sufficient revenues to offset anticipated costs. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

8
<PAGE>
DEPENDENCE UPON OFFERING; SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR
ADDITIONAL FINANCING; NO ASSURANCE OF ADDITIONAL FINANCING. Since inception the
Company has incurred significant losses and substantial negative cash flow. The
Company has financed its operations through the private placement of preferred
stock and secured short-term borrowings from NVC. The Company's marketing
strategy and its ability to enhance its services and develop new services will
take time to develop and require substantial expenditures of capital. The
Company is dependent on the proceeds of the Offering to continue its commercial
activities and management anticipates, based on its currently proposed plans and
assumptions relating to its operations, that the net proceeds of the Offering
will be sufficient to satisfy its contemplated cash requirements for the twelve
month period following the date of this Prospectus, although there can be no
assurance in this regard. The Company will require a significant amount of
capital to support sales and marketing efforts, establish a brand identity for
the PC411 service among SOHO and corporate users, develop and enhance the PC411
service available over the Internet, for operating expenses, and for working
capital purposes. The Company's cash requirements may vary because of delays in
the development and enhancement of the PC411 service, less than anticipated
market acceptance of the PC411 service, competitive and technological advances
by the Company's competitors, regulatory changes, and increased competition.
Furthermore, the Company must continue to enhance and expand its services and
meet the increasing demands for service, product features, quality, and
availability. Consequently, the Company's ability to grow depends, in part, on
its ability to develop new services, create and distribute versions of PC411 FOR
WINDOWS for other operating systems, expand operations as well as develop
industry alliances and relationships, all of which will require significant
capital investments. If the Company's capital requirements exceed current
expectations or if the Company's cash flow from operations during the next
twelve months is less than anticipated, the Company will need to raise
additional capital from equity or debt sources during such period. There can be
no assurance that the Company will be able to raise such capital when needed or
on terms and conditions acceptable to the Company, if at all. To the extent the
Company raises additional capital by issuing equity securities, investors in the
Offering may experience dilution in their ownership of the Common Stock of the
Company. The failure of the Company to raise capital on acceptable terms when
needed will have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."

UNPROVEN MARKETING STRATEGY; ACCEPTANCE OF SERVICES. The future business of
the Company depends upon its ability to develop and market the PC411 service for
the SOHO market through the Internet and to large organizations for use on their
private intranets. In an effort to increase use of the PC411 service, the
Company has entered into agreements with three hardware manufacturers and one
modem manufacturer to bundle PC411 FOR WINDOWS within certain segments of their
product lines. The Company intends to expand this program to include other
computer equipment manufacturers, software developers and digital publishers.
There can be no assurance that the Company will be able to maintain such
arrangements or enter into additional similar arrangements with other computer
equipment manufacturers. In addition, these arrangements, in general, are
non-exclusive and may be terminated upon little or no notice. Termination of
existing agreements or the failure to enter into new agreements may have a
material adverse effect on the Company's business, results of operations and
financial condition. The Company has been notified by one of its bundling
partners that as of June 1997 such partner will no longer include in its new
releases products, such as PC411 FOR WINDOWS, which require users to pay for
services. This partner accounted for approximately 14% of the Company's
customers through December 31, 1996. The Company has begun to offer a limited
version of the PC411 service over the Internet at HTTP://WWW.PC411.COM. Revenues
would be generated by subscription fees (which may range from $15.00 to $29.95)
for access via direct dial-up for individual users and for enhanced searches via
Internet connection and, to a limited extent, by selling advertising to third
parties. Currently, other on-line directory services available on the Internet
are being marketed to the general public and are free of charge. There can be no
assurance that the Company's strategy of targeting the SOHO market on a
subscription based arrangement will be successful. In addition, to date, the
Company has not generated any advertising revenue and it does not

9
<PAGE>
expect to generate any such revenue, if at all, until such time as it can
demonstrate that it can attract a significant number of users to its Web site.
The Company will have to spend a significant amount of capital marketing the
PC411 service in order to generate substantial viewership of its Web site.
Advertising revenue will be a function not only of the Company's ability to
attract users to its Web site, but also in the continued expansion of, and
growth in, the use of the Internet and the Web and the development of the
Internet as an advertising medium. If demand for Internet services fails to
grow, grows more slowly than anticipated, or if the Internet does not develop as
an effective outlet for the Company's services, or becomes saturated with
competitors, the Company's business, operating results and financial condition
will be adversely affected. In addition, the market for Internet services and
related software products is in an early stage of growth. Rapid growth in the
use of, and interest in, the Internet and the Web is a recent phenomenon, and
there can be no assurance that communication or commerce over the Internet will
continue to grow or become widespread or that extensive content will continue to
be provided over the Internet. In addition, the Internet market is new and the
utility of available services is not well understood by new and potential
subscribers. Finally, because competing Internet on-line services are currently
being provided, it is difficult to predict the rate at which the market will
grow or the rate at which new or increased competition will result in market
saturation. For all the foregoing reasons, there can be no assurance that the
Company will be able to generate significant interest in the Company's Web site
nor that it will be able to sell advertising to third parties.

The Company also intends to market the PC411 service to large organizations
for use on their private intranets. The Company has not yet entered into any
agreement to provide intranet services, nor can there be any assurance that any
such arrangements will be entered into in the future. There can be no assurance
that the Company will bring any of its services to market or that such services
will be commercially viable, or that the Company will be able to provide its
services on a profitable basis. In addition, there can be no assurance that one
or more of the Company's many competitors will not provide or develop identical,
similar or superior services sooner than the Company or that the Company can
provide its services cheaper and more reliably than its competitors. See
"Business--Expansion Opportunities" and "--Marketing and Distribution Strategy."

LIMITED USE OF SERVICE. Thus far, there has been limited use of the PC411
service by existing users. As of December 31, 1996, the Company had 7,200 users.
Such users have either paid the initial registration fee or have signed up for
the trial period which expires on the earlier of 30 days after sign-up or after
10 searches. Upon payment of the initial registration fee, a user is entitled to
30 searches without additional charge. Very few users have exhausted their
entitlement. There can be no assurance that existing or new users will use the
PC411 service on a regular basis or that such users will generate any additional
revenues for the Company. Future marketing efforts will have to convince
potential customers to change their habits with respect to directory assistance
services. Rather than simply using the telephone, a potential user must start
his computer, access the PC411 service, and initiate a search. There can be no
assurance that such marketing efforts will be successful. In addition, competing
services offered over the Internet, including services offered by the Company,
at no charge, may discourage existing and potential users from starting or
continuing to use the fee-based PC411 service.

RAPID TECHNOLOGICAL CHANGE. The industry in which the Company operates and
the market for the Company's services is characterized by rapid technological
developments, evolving industry standards, and frequent new product and service
introductions and enhancements. The development and introduction of new products
and services could render the Company's existing services obsolete and
unmarketable. The Company's business depends in significant part on its ability
to continually improve the performance, features, and reliability of the PC411
service and to modify the PC411 service to work with new technological standards
in response to both evolving demands of the marketplace and competitive products
and services. The Company's pursuit of improved performance, new features, and
necessary technological advances will require substantial time and expense, and
there can be no assurance that the

10
<PAGE>
Company will succeed in adapting its services to changing technology standards
and customer requirements. Although the Company intends to support emerging
Internet standards, there can be no assurance that industry standards will
emerge or if they become established, that the Company will be able to conform
to these new standards in a timely and economic fashion and maintain a
competitive position in the market. There can be no assurance that the
announcement or introductions of new products or services by the Company or its
competitors or any change in industry standards will not cause customers to
defer or cancel purchases of existing services, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business--Industry Background" and "Current Products and
Services."

INTENSE COMPETITION; SOME COMPETITORS OFFER SERVICE AT NO CHARGE. The
on-line services market and the market for listing information and related
services is extremely competitive and there are no substantial barriers to
entry. The Company expects that competition will intensify in the future. In
addition, some of the Company's competitors do not charge for their services.
The Company believes that its ability to compete successfully depends upon a
number of factors, including brand awareness and market presence; the quality
and completeness of its data; the accuracy of its search techniques; the pricing
policies of its competitors and suppliers; the features, ease of use and timing
of introductions of new services by the Company and its competitors; the ability
of the Company to establish co-marketing relationships; and industry and general
economic trends.

In the general directory marketplace, the Company currently competes with
traditional and widely used directory services such as the printed "white" and
"yellow" pages, operator assisted directory services, on-line directories,
CD-ROM directories (such as those provided by the Company's data supplier, Pro
CD, Inc.) and with mailing list providers, many of which provide their
information both in electronic and traditional forms. The Company is currently
aware of approximately a dozen Web sites that provide residential and business
listings and/or E-mail addresses, including those belonging to Netscape
Communications Corporation and Yahoo!, Inc. All of the Company's competitors
have substantially greater financial, technical, human, and marketing resources
than those of the Company and greater experience than the Company in developing
and marketing on-line services and directory databases. Such companies include
the local, regional and long distance telecommunication companies, telephone
directory publishers, on-line or Internet services, a multitude of regional,
international and industry specific directory companies, and a variety of
commercial and institutional search engines and databases. Many of the Company's
competitors provide and may, in the future, provide directory assistance
listings for free in order to attract viewership and advertise their other
products. Telephone companies have provided directory assistance services for
many years in conjunction with their common carrier telephone communication
services. They also control the updating, production and distribution of
telephone books which contain telephone numbers and address information.
Traditionally, they have held dominant positions in their respective markets.
Telephone companies may respond to new competition, including competition from
the PC4111 service, by enhancing their services in ways that cannot be matched
by PC411 due to their position in the telecommunications industry and by linking
directory assistance service to other products and services they offer. There
can be no assurance that the Company will have the financial resources,
technical expertise or marketing and support capabilities to compete
successfully in the market-place. Competitive pressures could result in reduced
market share, price reductions, and increased spending on marketing and product
development, which could adversely affect the Company's ability to acquire,
maintain and/or gain market share. See "Business--Competition."

RELIANCE ON SINGLE SERVICE. The Company anticipates that initially all of
its revenues will be related to the PC411 service. Because of this revenue
concentration, the failure to realize market acceptance for the PC411 service
will have a material adverse effect on the Company's operating results and
financial condition. The Company began providing the PC411 service in December
1994 and has realized limited revenues with respect thereto. No assurance can be
given that use of the PC411 service will satisfy users' expectations or achieve
market acceptance.

11
<PAGE>
DEFECTS. Services as complex as those offered by the Company may contain
undetected errors or defects when first introduced or as new versions are
released. There can be no assurance that, despite testing by the Company or its
customers, errors will not be found in its services after commencement of
commercial deployment, resulting in product redevelopment costs and loss of, or
delay in, market acceptance, delays in collecting accounts receivable and
additional service costs. From time to time users of the PC411 service have
experienced delays or difficulty in accessing the PC411 service.

QUALITY OF DATA; RELIANCE ON THIRD PARTIES FOR DATA. The Company currently
licenses its telephone book listing data from Pro CD, Inc. ("Pro CD"), which
compiles its data by copying telephone books as they are published--normally on
an annual basis. Therefore, the listing information provided by the Company
could be at times out of date, inaccurate or incomplete, which might adversely
impact customer acceptance of the PC411 service. The license with Pro CD is
effective through August 31, 1999 with an option to renew for one additional
year. If the Company were unable to renew the license, were unable to enter into
a new license after August 31, 2000, caused the license to be terminated prior
to its expiration date due to a breach of the terms of the license or if Pro CD
discontinues its business for any reason prior to the license's expiration date
and the Company were unable to obtain the data from other sources, the loss of
the data would have a material adverse effect on the Company's business. There
can be no assurance that the Company will be able to develop a substitute to Pro
CD or to obtain alternative sources on favorable economic terms or in a timely
manner. Any delays in obtaining or developing substitute sources for the data
could have a material adverse effect on the Company.

LIMITED COMPUTING FACILITIES; RISK OF SYSTEM FAILURE. The business of the
Company is dependent upon its ability to deliver high quality and accurate
information to its users on a timely basis. As the business of the Company
grows, it will need to expand and adapt its network infrastructure to
accommodate an increase in the number of users and to integrate new and emerging
technologies and equipment into its system. The expansion and adaptation of the
Company's computing facilities will require substantial financial, operational,
and management resources and are likely to increase the risk of system failure
and cause unforeseen strains on the system. The Company has experienced hardware
and software failures in the past and, as a result, the Company's subscribers
have experienced difficulties in accessing the PC411 service. Any system failure
that causes interruption of, or an increase in, response time to the Company's
service could result in lost revenues and, if sustained or repeated, could
result in lost customers and could damage the reputation of the Company. There
can be no assurance that the Company will be able to expand its computing
facilities in a timely and cost effective manner or insure that the service
operates without interruption. The inability to timely upgrade its network
infrastructure and operating systems would have a material adverse impact on the
business, operating and financial condition of the Company. Furthermore, the
Company's operations are dependent on its ability to protect its software and
hardware against damage from fire, earthquake, power loss, telecommunications
failure, natural disaster and similar events. The Company does not have
redundant, multiple site capacity in the event of such occurrence. The Company's
computer equipment is located at its facilities in Inglewood, California. Any
damage or failure that causes interruptions in the Company's operations could
have a material adverse effect on the Company's business and results of
operations. While the Company carries property and business interruption
insurance, such coverage may not be adequate to compensate the Company for all
losses that may occur.

The Company will rely on third parties to provide access to the Internet.
The Company currently has a partial T1 connection to Delta Internet Services
("DeltaNet") for its Internet connection. Any disruption in the Internet access
provided by DeltaNet or any failure of DeltaNet to handle higher volumes of
queries could have a material adverse effect on the Company's business, results
of operations, and financial condition. There can be no assurance that the
Company will not experience service disruptions due to failures by DeltaNet or
other third party Internet service providers, and any such disruptions could
have a material adverse effect on the Company's business, results of operations,
and financial condition. See "Business--Technology and Product Development."

12
<PAGE>
From time to time, subscribers have experienced significant delays in
contacting, and in receiving responses from the Company's customer and technical
support personnel. In certain situations, these events have created customer
relations issues for the Company including cancellation of the account. There
can be no assurance that the Company will be able to provide adequate customer
service or technical support to its subscribers. A failure to manage effectively
its growth or to provide adequate customer support services will adversely
affect the Company's ability to increase its customer base and could therefore
have a material adverse effect on the Company's business, financial condition or
results of operations.

SECURITY RISKS. Despite the implementation of network security measures by
the Company, such as limiting physical and network access to its computers, its
system infrastructure is vulnerable to computer viruses, break-ins and similar
disruptive problems caused by its customers or other authorized or unauthorized
users. Computer viruses, break-ins or other problems caused by third parties
could lead to interruption, delays or cessation in service to the Company's
customers. Furthermore, such inappropriate actions by third parties could also
potentially jeopardize the security of confidential information stored in the
computer systems of the Company's customers and other parties connected to the
system, which may deter potential subscribers. Persistent security problems
continue to plague public and private data networks. Alleviating problems caused
by computer viruses, break-ins or other problems caused by third parties may
require significant expenditures of capital and resources by the Company, which
could have a material adverse effect on the Company. However, there can be no
assurance that the Company can protect its system from unauthorized users.
Moreover, until more comprehensive security technologies are developed, the
security and privacy concerns of existing and potential customers may inhibit
the growth of the Internet in general and the Company's customer base and
revenues in particular.

RISKS OF GROWTH AND EXPANSION. The Company is in an early stage of
development and has yet to establish substantial internal management, personnel
and other resources. Any measurable growth in the Company's business will result
in additional demands on its customer support, sales, marketing, administrative
and technical resources and network infrastructure, and will place a significant
strain on the Company's management, administrative, operational, financial and
technical resources and increased demands on its systems and controls. There can
be no assurance that the Company's resources will be adequate to facilitate its
growth. In addition, there can be no assurance that the Company's operating and
financial control systems will be adequate to support future operations and
growth. The inability to continue to upgrade the operating and financial control
systems, the emergence of unexpected expansion difficulties or failure to manage
the Company's growth properly could have a material adverse effect on the
Company's business, financial condition and results of operations.

FAILURE TO ATTRACT QUALIFIED PERSONNEL. The Company believes that it will
need, both in the short- and the long-term, to hire additional qualified
administrative, technical, sales, marketing and management personnel to manage
and support this growth. Competition for qualified employees is intense, and the
Company may not be able to find suitable personnel to meet its immediate needs.
The inability to recruit and hire necessary personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations.

LIMITED MARKETING, DISTRIBUTION AND SALES CAPABILITY. The Company has
limited resources for marketing, distribution and sales. Heretofore, the Company
has had limited sales activity and does not have experienced sales personnel
upon which to build a sales force. Senior management will expend its efforts to
establish co-marketing relationships which will enhance the Company's ability to
market and distribute the PC411 service. Also, the Company plans to allocate a
portion of the net proceeds of the Offering to hiring senior-level account
executives to market and distribute the PC411 service. There can be no assurance
that the Company will be able to hire such persons or that it will be successful
in marketing and selling the PC411 service. See "Business--Marketing and
Distribution Strategy."

13
<PAGE>
SUBSTANTIAL DEPENDENCE UPON THIRD PARTIES. The Company currently has two
full-time and two part-time employees and five independent consultants.
Accordingly, the Company will depend substantially upon third parties for
several critical elements of its business including, among others, technology,
infrastructure, and distribution activities. The Company anticipates that it
will rely on one or more third party sales representative firms to generate
advertising sales. These third parties will have primary responsibility for all
aspects of advertising sales and the collection of advertising payments. There
can be no assurance that the Company's advertising representatives will achieve
the Company's advertising sales objectives. Any failure of the Company's third
party agents to achieve successful advertising sales could have a material
adverse effect on the Company's business, results of operations and financial
condition. See "Business--Marketing and Distribution."

GOVERNMENT REGULATION; POTENTIAL LIABILITY FOR INFORMATION DISSEMINATED
THROUGH THE INTERNET. Generally, there are few specific government imposed
limitations or guidelines pertaining to customer privacy or the price, service
characteristics or capabilities, geographic distribution or quality control
features of products and services sold over the Internet. There exists, however,
the risk that a U.S. governmental policy for regulating the data network
industry could be affected by executive order, legislation or administrative
rules or orders. Any such policy or regulations could have a material adverse
effect on the Company, particularly if it makes use of and access to the
Internet more difficult or costly. Similarly, the Company cannot predict the
impact, if any, that future legislation may have on its business. There is
currently pending in Congress legislation which would grant protection similar
to copyright protection to compilers of data. Such legislation, if enacted, may
give telephone companies the right to preclude others, such as Pro CD, from
converting printed telephone directories into digital format without the consent
of the telephone companies. In such event, the Company would have to seek
alternative sources for licensing its database. There can be no assurance that
such alternative sources would be available or would be willing to enter into a
license arrangement with the Company on terms and conditions acceptable to the
Company, if at all. In addition, recent legislative enactments, such as the
Telecommunications Act of 1996 (the "Telecommunications Act"), and pending
legislative proposals aimed at limiting the use of the Internet to transmit
certain information may decrease demand for Internet access, chill the
development of Internet content, or have other adverse affects on Internet
service and product providers such as the Company. In addition, in light of the
uncertainty attached to the interpretation, application and enforcement of the
Telecommunications Act and other laws relating to the Internet and on-line
service and product providers, there can be no assurance that the Company would
not have to modify its operations to comply with the law. Finally, although the
Company currently provides information that is readily available to the public,
there can be no assurance that due to the ease and price at which this
information is available through the PC411 service that the Company will not
face issues regarding invasion of privacy. Such issues may also arise in
connection with the proposed development of a directory of E-mail addresses.
Regulatory changes or new regulations relating to the telecommunications and
media industries or with respect to invasion of privacy could directly affect
the Company's business by either placing restrictions on the Company or creating
opportunities for other competitors. See "Business--Regulations."

INTELLECTUAL PROPERTY; FAILURE TO PROTECT INTELLECTUAL PROPERTY RIGHTS MAY
ADVERSELY AFFECT THE COMPANY. The Company regards its copyrights, service mark,
trade secrets, and similar intellectual property as important to its success,
and relies upon trademark and copyright law, trade secret protection, and
confidentiality and/or license agreements with its employees, customers, and
others to protect its proprietary rights. The Company owns the mark "PC411"
which is a registered service mark on the principal register of the United
States. In addition, the Company has copyrighted PC411 FOR WINDOWS. No assurance
can be given that any copyright or service mark will be enforceable or that any
copyright or other right will exclude competitors from using the same or similar
marks or provide competitive advantages to the Company. The Company intends to
protect its servicemark and copyrights by taking appropriate legal action
whenever necessary, although there can be no assurance that the Company will be
able to effectively enforce or protect its rights and prevent others from using
the same or similar marks or copyrights. The Company's inability or failure to
establish, or adequately protect its intellectual property rights may have a

14
<PAGE>
material adverse effect on the Company. In March 1995, the Company was notified
by a California company that the Company's use of the "PC 411" name or any name
with "411" infringed upon that company's right to their registered trademark and
demanded that the Company cease and desist from use of the Company's registered
"PC411" mark. The Company rejected such demand. The Company believes that its
use of its registered mark, "PC411," does not infringe upon the other company's
mark. A determination that the Company's use of PC411 infringes or otherwise
violates the rights of owners of similar marks may cause the Company to incur
significant expense and may also have a material adverse effect on the Company.
See "Business--Intellectual Property."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company's quarterly
operating results may fluctuate significantly in the future as a result of a
variety of factors, some of which are outside of the Company's control. These
factors include general economic conditions, acceptance and use of the Internet,
user demand for directory assistance services, capital expenditures and other
costs relating to the expansion of operations, the timing of new product
announcements by the Company or its competitors, changes in marketing strategies
by the Company or its competitors, market availability and acceptance of new
enhanced versions of the Company's or its competitors' products and services.
These factors could also have a material adverse effect the Company's annual
results of operations and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

LITIGATION INVOLVING UNDERWRITER MAY AFFECT SECURITIES. The Company has
been advised by the Underwriter, that on or about May 22, 1995, the Underwriter
and Elliot Loewenstern and Richard Bronson, principals of the Underwriter, and
the Securities and Exchange Commission (the "Commission") agreed to an offer of
settlement (the "Offer of Settlement") in connection with a complaint filed by
the Commission in the United States District Court for the Southern District of
Florida alleging violations of the federal securities laws, Section 17(a) of the
Securities Act of 1933, as amended (the "Securities Act"), Section 10(b) and
15(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rules 10b-5, 10b-6 and 15c1-2 promulgated thereunder. The complaint also
alleged that in connection with the sale of securities in three (3) initial
public offerings ("IPOs") in 1992 and 1993, the Underwriter engaged in
fraudulent sales practices. The proposed Offer of Settlement was consented to by
the Underwriter and Messrs. Loewenstern and Bronson without admitting or denying
the allegations of the complaint. The Offer of Settlement was approved by Judge
Gonzales on June 6, 1995. Pursuant to the final judgment (the "Final Judgment"),
the Underwriter:

- was required to disgorge $1,000,000 to the Commission, which amount was
paid in four (4) equal installments on or before June 22, 1995;

- agreed to the appointment of an independent consultant ("Consultant").

Such Consultant was obligated, on or before November 1, 1996:

- to review the Underwriter's policies, practices and procedures in six (6)
areas relating to compliance and sales practices;

- to formulate policies, practices and procedures for the Underwriter that
the Consultant deems necessary with respect to the Underwriter's
compliance and sales practices;

- to prepare a report devoted to and which details the aforementioned
policies, practices and procedures (the "Report");

- to deliver the Report to the President of the Underwriter and to the staff
of the Southeast Regional office of the Commission;

- to prepare, if necessary, a supervisory procedures and compliance manual
for the Underwriter, or to amend the Underwriter's existing manual; and

- to formulate policies, practices and procedures designed to provide
mandatory on-going training to all existing and newly hired employees of
the Underwriter. The Final Judgment further provides that, within thirty
(30) days of the Underwriter's receipt of the Report, unless such time is
extended, the Underwriter shall adopt, implement and maintain any and all
policies, practices and procedures set forth in the Report.

15
<PAGE>
On or about December 19, 1996, the Consultant completed the Report which was
thereafter delivered to the Underwriter. The Report addresses the areas relating
to compliance and sales practices referred to above. The Underwriter is
reviewing the Report and undertaking steps to implement the recommendations and
procedures in the Report, in accordance with the provisions of the Final
Judgment.

The Final Judgment also provides that an independent auditor ("Auditor")
shall conduct four (4) special reviews of the Underwriter's policies, practices
and procedures, the first such review to take place six (6) months after the
Report has been delivered to the Underwriter and thereafter at six-month
intervals. The Auditor is also authorized to conduct a review, on a random basis
and without notice to the Underwriter, to certify that any persons associated
with the Underwriter who have been suspended or barred by any Commission order
are complying with the terms of such orders.

On July 10, 1995, the action against Messrs. Loewenstern and Bronson was
dismissed with prejudice. Mr. Bronson has agreed to a suspension from
associating in any supervisory capacity with any broker, dealer, municipal
securities dealer, investment advisor or investment company for a period of
twelve (12) months, dating from the beginning of such suspension. Mr.
Loewenstern has agreed to a suspension from associating in any supervisory
capacity with any broker, dealer, municipal securities dealer, investment
advisor or investment company for a period of twelve (12) months commencing upon
the expiration of Mr. Bronson's suspension.

In the event that the requirements of the foregoing judgment adversely
affect the Underwriter's ability to act as a market maker for the Securities,
and additional broker-dealers do not make a market in the Company's Securities,
the market for, and the liquidity of, the Company's securities may be adversely
affected. In the event that other broker-dealers fail to make a market in the
Company's securities, the possibility exists that the market for and the
liquidity of the Company's securities may be adversely affected to such an
extent that public security holders may not have anyone to purchase their
securities when offered for sale at any price. In such event, the market for,
liquidity and prices of the Company's securities may not exist. For additional
information regarding the Underwriter, investors may call the National
Association of Securities Dealers, Inc. at (800) 289-9999. See "Underwriting."

RECENT STATE ACTION INVOLVING THE UNDERWRITER--POSSIBLE LOSS OF
LIQUIDITY. The State of Indiana commenced an action seeking, among other
things, to revoke the Underwriter's license to do business in such state. The
action was settled and the Underwriter agreed to, among other things, resolve
certain customer claims, the payment of a fine and costs and restrictions with
respect to the sale of securities to Indiana residents. Specifically, the
Underwriter agreed that it will not sell any securities to Indiana residents (i)
which are not listed on the New York Stock Exchange, the American Stock Exchange
or Nasdaq; (ii) for which the Underwriter has served as lead underwriter or as a
member of the selling syndicate; or (iii) for which the Underwriter is a market
maker. Under the terms of the settlement agreement, the Underwriter continues to
maintain its license in the State of Indiana. The Company does not intend to
seek qualification for the sale of the Securities in the state of Indiana. See
"Underwriting."

IMMEDIATE AND SUBSTANTIAL DILUTION. Assuming 1,650,000 shares of Common
Stock outstanding, at December 31, 1996 the Company had a pro forma negative net
tangible book value of $200,055, or approximately ($0.12) per share. After
giving effect to the sale of the Units offered hereby at an assumed offering
price of $5.75 per Unit and after deducting underwriting discounts, estimated
offering expenses, the satisfaction of certain short-term indebtedness in
connection with the issuance of the NVC Warrants and the payment of accrued
dividends on the Preferred Stock, adjusted net tangible book value would be
$5,133,195 or approximately $1.83 per share of Common Stock. The result will be
an immediate increase in net tangible book value per share of Common Stock of
approximately $1.95 to existing stockholders and an immediate dilution to new
investors of approximately $3.92 per share or 68.2% per share of Common Stock.
See "Dilution."

16
<PAGE>
BROAD DISCRETION IN APPLICATION OF PROCEEDS. Approximately $4.55 million
(87%) of the estimated net proceeds from the Offering has been allocated to
sales and marketing, research and development, capital expenditures and working
capital and general corporate purposes. Accordingly, the Company will have broad
discretion as to the application of such proceeds without prior stockholder
approval. In addition, the management of the Company has broad discretion to
adjust the application and allocation of the net proceeds of the Offering,
including funds received upon exercise of the Warrants, in order to address
changed circumstances and business opportunities. Such business opportunities
may include the acquisition of other companies or their businesses. As a result
of the foregoing, the business of the Company will be substantially dependent
upon the discretion and judgment of the management of the Company with respect
to the application and allocation of the net proceeds hereof. See "Use of
Proceeds."

RESIGNATION OF SENIOR OFFICERS. In January 1997, all of the Company's
executive officers and directors, including its founder, Christopher C. Hansen,
resigned. Immediately thereafter, the stockholders of the Company nominated and
elected new directors who immediately appointed new officers. The former
officers and directors resigned in order to pursue other business opportunities.
In connection therewith, termination agreements were entered into with the
Company, which provided for, among other things, mutual releases. In addition,
Mr. Hansen, David Delgado and Anthony LaMark, the former officers of the
Company, continue to provide services to the Company as independent consultants.
See "Management."

NEW SENIOR MANAGEMENT; DEPENDENCE ON MANAGEMENT. In January 1997, Dean R.
Eaker and Edward A. Fleiss were appointed to serve as President and Chief
Executive Officer and Vice President-Chief Technology Officer, respectively. The
election of a new Chief Executive Officer and a new Chief Technology Officer has
inherent risks. If Messrs. Eaker and Fleiss are unable to become sufficiently
knowledgeable about the Company's technology, operations and business affairs,
they may not be able to provide the needed direction for the Company's growth
and development which would likely materially adversely affect the Company's
results of operations and financial condition. Messrs. Eaker and Fleiss are
currently the only full-time employees of the Company. Accordingly, the loss of
the services of either Mr. Eaker or Mr. Fleiss could have a substantial adverse
impact on the Company. The Company has entered into a three year employment
agreement with each of Mr. Eaker and Mr. Fleiss commencing on the date of this
Prospectus. Under this agreement, Mr. Eaker is to be paid an annual salary of
$180,000 and Mr. Fleiss is to paid an annual salary of $96,000. In addition, the
Company has agreed to maintain key-man life insurance on Mr. Eaker. The Company
will be the beneficiary of such policy. There can be no assurance, however, that
the death of Mr. Eaker or the departure of either Mr. Eaker or Mr. Fleiss for
any reason would not have a material adverse effect on the operations of the
Company. See "Business" and "Management."

CONCENTRATION OF STOCK OWNERSHIP. Upon completion of the Offering, NVC
and/or DAH will beneficially own approximately 60.3% of the outstanding Common
Stock of the Company (57.3% if the Over-Allotment Option is exercised in full).
As a result, NVC and/or DAH will be able to control all matters requiring
stockholder approval, including the election of directors, the appointment of
officers and approval of significant corporate transactions including the sale
of the Company or all or substantially all of its assets. Such concentration of
ownership may also have the effect of delaying or preventing a change in control
of the Company. In addition, the Company is subject to a State of Delaware
statute regulating business combinations which may also hinder or delay a change
of control. See "Management" and "Principal Stockholders."

ABSENCE OF DIVIDENDS. The Company does not expect to pay cash or stock
dividends on its Common Stock in the foreseeable future. To the extent, the
Company has earnings in the future, it intends to retain such earnings in the
business operations of the Company. See "Dividend Policy."

LIMITATION ON DIRECTOR LIABILITY. As permitted by the Delaware General
Corporation Law ("DGCL"), the Company's Restated Certificate of Incorporation
limits the liability of its directors to the Company or to its stockholders for
monetary damages for breach of a director's fiduciary duty, including breaches
which

17
<PAGE>
constitute gross negligence, subject to certain limitations imposed by the DGCL.
As a result, under certain circumstances, neither the Company nor the
stockholders will be able to recover damages, even if directors take action
which harm the Company. See "Management" and "Underwriting."

LACK OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE; VOLATILITY OF PRICES
OF THE SECURITIES. Prior to the Offering, there has been no public market for
the Securities. Although the Company has applied for listing of the Units,
Common Stock and the Warrants on the Bulletin Board under the symbols PCFRU,
PCFR and PCFRW, respectively, there can be no assurance that they will be quoted
on such system or under such symbols or that an active public market for the
Securities will be developed or be sustained after the Offering. The offering
price of the Units was arbitrarily determined by negotiations between the
Company and the Underwriter and do not necessarily relate to the assets, book
value or results of operations of the Company or any other established criteria
of value. Trading prices of the Securities could be subject to wide fluctuations
in response to variations in the Company's operating results, announcements by
the Company or others, developments affecting the Company or its competitors,
suppliers or customers and other events or factors. In addition, the
over-the-counter stock market has experienced extreme price and volume
fluctuations in recent years. These fluctuations have had a substantial impact
on the market prices of many companies, often unrelated to their performance,
and may adversely affect the market prices for any or all of the Securities. See
"Underwriting."

CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE
WARRANTS. The Company will be able to issue shares of Common Stock upon
exercise of the Warrants only if there is a current prospectus relating to such
Common Stock under an effective registration statement filed with the Commission
and only if such shares of Common Stock are qualified for sale or exempt from
qualification under applicable state securities laws of the jurisdictions in
which the various Warrantholders reside. Although the Company has agreed to use
its best efforts to meet such regulatory requirements, there can be no assurance
that the Company will be able to do so. Although the Warrants will not knowingly
be sold to purchasers in jurisdictions in which the Warrants are not registered
or otherwise qualified for sale, purchasers may buy Warrants in the aftermarket
or may move to jurisdictions in which the Common Stock issuable upon exercise of
the Warrants is not so registered or qualified. In this event, the Company would
be unable to issue shares of Common Stock to those Warrantholders upon exercise
of the Warrants unless and until the Common Stock issuable upon exercise of the
Warrants are qualified for sale or exempt from qualification in jurisdictions in
which such holders reside. Accordingly, the Warrants may be deprived of any
value if a then current prospectus covering the Common Stock issuable upon
exercise of the Warrants is not effective pursuant to an effective registration
statement or if such Common Stock is not qualified or exempt from qualification
in the jurisdictions in which the Warrantholders reside. There is no assurance
that the Company will be able to effect any required registration or
qualification.

POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS; MARKET OVERHANG. During
the Warrant Exercise Period the Company may redeem all, but not less than all,
of the Warrants for $0.01 per Warrant on thirty (30) days prior written notice
to the Warrantholders if the per share closing bid price of the Common Stock as
reported by NASDAQ, the Bulletin Board or the National Quotation Bureau, as the
case may be, equals or exceeds $9.625 for any twenty (20) consecutive trading
days ending within five (5) days of the notice of redemption. Redemption of the
Warrants could force the Warrantholders to exercise the Warrants and pay the
exercise price at a time when it may be disadvantageous for them to do so, to
sell the Warrants at the then current market price when they might otherwise
wish to hold the Warrants for possible additional appreciation, or to accept the
redemption price, which is likely to be substantially less than the market value
of the Warrants at the time of redemption. Any Warrantholder who does not
exercise its Warrants prior to their expiration or redemption, as the case may
be, will forfeit such holder's right to purchase the shares of Common Stock
underlying the Warrants.

DELAWARE ANTI-TAKEOVER STATUTE; ISSUANCE OF PREFERRED STOCK; BARRIERS TO
TAKEOVER. The Company is a Delaware corporation and thus, upon the consummation
of the Offering, will become subject to the

18
<PAGE>
prohibitions imposed by Section 203 of the DGCL, which is generally viewed as an
anti-takeover statute. In general, this statute will prohibit the Company, once
public, from entering into certain business combinations without the approval of
its Board of Directors and, as such, could prohibit or delay mergers or other
attempted takeovers or changes in control with respect to the Company. Such
provisions may discourage attempts to acquire the Company. In addition, the
Company's authorized capital consists of 30,000,000 shares of capital stock of
which 25,000,000 shares are designated as Common Stock and 5,000,000 shares are
designated as preferred stock. No class other than the Common Stock is currently
designated and there is no current plan to designate or issue any such
securities. The Board of Directors, without any action by the Company's
stockholders, is authorized to designate and issue shares in such classes or
series (including classes or series of preferred stock) as it deems appropriate
and to establish the rights, preferences and privileges of such shares,
including dividends, liquidation and voting rights. The rights of holders of
preferred stock and other classes of Common Stock that may be issued may be
superior to the rights granted to the holders of the existing classes of Common
Stock. Further, the ability of the Board of Directors to designate and issue
such undesignated shares could impede or deter an unsolicited tender offer or
takeover proposal regarding the Company and the issuance of additional shares
having preferential rights could adversely affect the voting power and other
rights of holders of Common Stock. Issuance of preferred stock, which may be
accomplished though a public offering or a private placement, may dilute the
voting power of holders of Common Stock (such as by issuing preferred stock with
super voting rights) and may render more difficult the removal of current
management, even if such removal may be in the stockholders' best interests. Any
such issuance of preferred stock could prevent the holders of Common Stock from
realizing a premium on their shares. See "Description of Securities."

POTENTIAL ADVERSE IMPACT ON MARKET PRICE OF SECURITIES; SHARES ELIGIBLE FOR
FUTURE SALE; ADDITIONAL REGISTERED SECURITIES. Sale of substantial amounts of
the Company's securities in the public market after the Offering or the
perception that such sales may occur could materially adversely affect the
market price of the Securities and may impair the Company's ability to raise
additional capital by the sale of its equity securities. Upon consummation of
the Offering, there will be a total of 2,800,000 shares of Common Stock issued
and outstanding (2,972,500 if the Over-Allotment Option is exercised in full)
and 2,150,000 Warrants (2,322,500 if the Over-Allotment Option is exercised in
full) issued and outstanding. In addition, the following shares of Common Stock
have been reserved for issuance: 2,150,000 shares of Common Stock issuable upon
exercise of the Warrants offered hereby and the NVC Warrants (2,322,500 if the
Over-Allotment Option is exercised in full); 73,600 shares of Common Stock
issuable pursuant to the Underwriter's Option and an additional 73,600 shares
issuable upon exercise of the Warrants included in the Underwriter's Option;
500,000 shares issuable upon exercise of the Principal Stockholder's Options;
and 750,000 shares issuable upon exercise of options that may be granted under
the Option Plan for executive officers, other key employees and directors. After
the exercise of all the Warrants, the NVC Warrants and the options described
herein, the Company will have 6,692,200 shares of Common Stock outstanding. Any
issuance of additional shares of Common Stock may cause current stockholders of
the Company to suffer significant dilution which may adversely affect the market
price of the Company's securities.

The sale or availability for sale of significant quantities of the Company's
securities could materially adversely affect the market price of the Securities.
The Company has agreed that except for the issuance of shares of capital stock
by the Company in connection with (i) a dividend, recapitalization or similar
transactions, (ii) the exercise of warrants or options disclosed in this
Prospectus, and (iii) acquisitions (in whole or in part), mergers,
consolidations, joint ventures and other combinations, the Company shall not,
for a period of twenty-four (24) months following the date of this Prospectus,
directly or indirectly, offer, sell, issue or transfer any shares of the capital
stock, or any security exchangeable or exercisable for, or convertible into,
shares of the capital stock, without the prior written consent of the
Underwriter.

Of the 2,800,000 shares of Common Stock and the 2,150,000 Warrants
(including the NVC Warrants) to be outstanding upon completion of the Offering
(2,972,500 shares of Common Stock and 2,322,500 of Warrants (including the NVC
Warrants) if the Over-Allotment Option is exercised in full), the 1,150,000
Shares and 1,150,000 Warrants (1,322,500 Shares and 1,322,500 Warrants if the
Over-Allotment Option is

19
<PAGE>
exercised in full) which are part of the Units will be immediately freely
tradable without restriction under the Securities Act except for any Securities
purchased by an "affiliate" of the Company (as that term is defined under the
rules and regulations of the Securities Act), which will be subject to the
resale limitations of Rule 144 under the Securities Act. The remaining 1,650,000
shares of Common Stock and the NVC Warrants are "restricted" securities within
the meaning of Rule 144 under the Securities Act and may be sold under the
conditions of such rule, including satisfaction of certain holding period
requirements. See "Shares Eligible for Future Sale."

Each of the Company's officers, directors and stockholders as of the date of
this Prospectus, will execute an agreement ("Lock-Up Agreement") relating to
securities beneficially owned as of such date pursuant to which they agree not
to, directly or indirectly, issue, offer, agree to offer to sell, sell or grant
an option for the purchase or sale of, transfer, pledge, assign, hypothecate,
distribute or otherwise dispose of or encumber such securities or options,
rights, warrants or other securities convertible into, exchangeable or
exercisable for or evidencing any right to purchase or subscribe for shares of
Common Stock (whether or not beneficially owned by such person) or any
beneficial interest therein for a period of eighteen (18) months from the date
of this Prospectus without the consent of the Underwriter. Accordingly, taking
into consideration the restrictions of Rule 144 and the Lock-up Agreements,
approximately 1,400,000 of the restricted shares of Common Stock will become
eligible for sale beginning in November 1998. See "Shares Eligible For Future
Sale."

PROCEEDS TO BENEFIT PRINCIPAL STOCKHOLDER. Approximately $620,000 (11.8%)
of the net proceeds of this Offering with be used to repay the outstanding
principal balance and accrued interest on short-term borrowings owed to NVC and
accrued dividends on the Preferred Stock held by DAH. Accordingly, NVC and DAH
will benefit from this Offering. An executive officer of NVC is the Chief
Financial Officer and a director of the Company and another executive officer
and director of NVC is a director of the Company. See "Use of Proceeds",
"Management", "Principal Stockholders" and "Certain Transactions."

UNDERWRITER'S POTENTIAL INFLUENCE ON THE MARKET. A significant number of
the Securities offered hereby may be sold to customers of the Underwriter. Such
customers may engage in transactions for the sale or purchase of such Securities
through or with the Underwriter. Although it has no obligation to do so, the
Underwriter intends to make a market in the Securities and may otherwise effect
transactions in such securities. If it participates in such market, the
Underwriter may influence the market, if one develops, for the Securities. Such
market-making activity may be discontinued at any time. Moreover, if the
Underwriter sells the Securities issuable upon exercise of the Underwriter's
Option or acts as warrant solicitation agent for the Warrants, it may be
required under the Exchange Act, to temporarily suspend its market-making
activities. The prices and liquidity of the Securities may be significantly
affected by the degree, if any, of the Underwriter's participation in such
market.

NO ASSURANCE OF PUBLIC MARKET. Prior to the Offering, there has been no
public market for any of the Securities, and there can be no assurance given
that a regular trading market for any of the Securities will develop after the
completion of the Offering. If a trading market does in fact develop, there can
be no assurance given that it will be sustained. In connection with the
Offering, application has been made to list the Units, the Common Stock and the
Warrants on the Bulletin Board under the symbols PCFRU, PCFR and PCFRW,
respectively. If, for any reason, a public trading market does not develop,
purchasers of such Securities may have difficulty selling their securities
should they desire to do so. The Company's listing application for listing its
securities with the NASDAQ Smallcap Market was rejected by NASDAQ and no
assurance can be given that a listing can be attained in the future. See
"--Resignation of Senior Officers", "--New Senior Management; Dependence on
Management", "Unproven Marketing Strategy; Acceptance of Service" and
"Description of Securities".

"PENNY STOCK" REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY
OF SECURITIES. The Commission has adopted regulations which generally define
"penny stock" to be any equity security that has a market price (as defined) of
less than $5.00 per share, subject to certain exceptions. Initially, it is
anticipated that the Securities offered hereby will not fall within the
definition of a "penny stock". However, there can be no assurance that the
Securities will continue to remain exempt from the "penny

20
<PAGE>
stock" rules. If the Securities offered hereby are subject to the "penny stock"
rules, such securities will become subject to rules that impose additional sales
practice requirements on broker-dealers who sell such Securities to persons
other than established customers and accredited investors (generally, those
persons with assets in excess of $1,000,000 or annual income exceeding $200,000,
or $300,000 together with their spouse). For transactions covered by these
rules, the broker-dealer must make a special suitability determination for the
purchase of the Securities and have received the purchaser's written consent to
the transaction prior to the purchase. Additionally, for any transaction
involving a "penny stock", unless exempt, the rules require the delivery, prior
to the transaction, of a risk disclosure document mandated by the Commission
relating to the penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Finally, monthly statements must be sent
disclosing recent price information for the "penny stock" held in the account
and information on the limited market in "penny stocks." Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell the
Securities and may affect the ability of purchasers in the Offering to sell the
Securities in the secondary market. In such event, holders of the Securities may
encounter substantially greater difficulty in disposing of their securities
and/or in obtaining accurate quotations as to the prices of the Securities.

BENEFITS OF OFFERING TO UNDERWRITER. The Underwriter will receive
substantial benefits from the Company in connection with the Offering. These
benefits include underwriting discounts/commissions, a non-accountable expense
allowance, the Underwriter's Option to purchase 73,600 Units and Warrant
solicitation fees. The Underwriter has been granted certain rights under the
Underwriter's Options, which rights include the ability to require the Company
to include the securities underlying the Underwriter's Option in a registration
statement under the Securities Act. The exercise of these rights will result in
the Company incurring substantial expenses and may cause the Company to register
an offering of its securities at a time which is detrimental to the Company's
plans. Finally, the Company has entered into a two (2) year consulting agreement
with the Underwriter pursuant to which the Underwriter will advise the Company
with respect to mergers and acquisitions and general business matters. The
Underwriter will receive $80,000 for such services which amount is payable upon
the consummation of the Offering. At the present time the Company has no plans
to enter into any such transactions. See "Underwriting."

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
PROSPECTUS. This Prospectus contains certain forward-looking statements
regarding the plans and objectives of management for future operations. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based, in part, on assumptions involving the continued growth and
expansion of the Internet, the Company's ability to market successfully the
PC411 service and related services to the SOHO market and to private intranets
as a more convenient and reliable alternative to current comparable and widely
used services and that there will be no unanticipated material adverse change in
the Company's business. Assumptions relating to the foregoing involve judgments
with respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Prospectus will prove to be accurate. IN LIGHT OF
THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS
INCLUDED HEREIN PARTICULARLY IN VIEW OF THE COMPANY'S EARLY STAGE OPERATIONS,
THE INCLUSION OF SUCH INFORMATION SHOULD NOT BE REGARDED AS A REPRESENTATION BY
THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES AND PLANS OF THE COMPANY
WILL BE ACHIEVED.

21
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,150,000 Units being
offered hereby, after deduction of the estimated underwriting discounts and
estimated offering expenses of $1,360,000, are estimated to be approximately
$5,252,875 ($6,115,000 if the Over-Allotment Option is exercised in full). The
Company intends to apply the net proceeds as follows:

<TABLE>
<CAPTION>
AMOUNT PERCENTAGE
------------ -----------
<S> <C> <C>
Sales and marketing activities...................................... $ 1,500,000 28.6%
Research and development............................................ 1,000,000 19.0
Repayment of NVC Notes.............................................. 450,000 8.6
Capital expenditures................................................ 300,000 5.7
Payment of cumulative dividends on Preferred Stock.................. 170,000 3.2
Payment of consulting fee to Underwriter............................ 80,000 1.5
Working capital and general corporate purposes...................... 1,752,875 33.4
------------ -----
$ 5,252,875 100.0%
</TABLE>

The uses of proceeds described above are estimates and approximations only
and do not represent firm commitments by the Company. Of the net proceeds from
the Offering, the Company intends to use approximately $2.8 million to expand
its sales and marketing operations, fund greater levels of product development
and purchase data processing and related hardware and software.

Approximately $450,000 of the net proceeds of the Offering will be used to
repay the outstanding principal balance and accrued interest on the Company's
Senior Secured Demand Promissory Notes (the "NVC Notes") held by NVC. It is
anticipated that at the date of this Prospectus, the aggregate outstanding
principal balance of the NVC Notes and accrued interest thereon will be
approximately $700,000. The Company has and will use such funds to meet its
working capital requirements and the expenses incurred in connection with the
Offering. The Company will issue the NVC Warrants to NVC in satisfaction of
$250,000 of indebtedness evidenced by the NVC Notes. The remaining principal
balance of the NVC Notes and all accrued interest thereon will be repaid out of
the net proceeds of the Offering. The aggregate outstanding principal balance of
the NVC Notes as of December 31, 1996 was approximately $327,000.

Approximately $170,000 of the net proceeds of the Offering will be used to
pay the accumulated, undeclared dividends on the Preferred Stock which is held
by DAH. Each share of Preferred Stock is entitled to receive an annual cash
dividend of $55 from the date of the purchase in May 1995.

The Company has agreed to pay the Underwriter out of the net proceeds of the
Offering $100,000 in consideration for advisory and consulting services to be
provided by the Underwriter for a two-year period. At the present time, no such
transactions are contemplated.

The remainder of the net proceeds of the Offering will be used for general
corporate purposes and working capital. General corporate purposes includes the
development and acquisition of data bases. Working capital includes funds to be
used for general and administration expenses. In addition, any expenses incurred
by the Company to expand or relocate its facilities will be paid out of working
capital.

The Company believes that the estimated net proceeds to be received from the
Offering, together with revenue from operations, will be sufficient to meet the
Company's cash requirements for a period of at least 12 months following the
date of this Prospectus, although there can be no assurance in this regard.
Thereafter, if the Company has insufficient funds for its needs, it may need to
seek additional funds from other sources. There can be no assurance that
additional funds can be obtained on acceptable terms, if at all. If necessary
funds are not available, the Company's business would be materially adversely
affected.

22
<PAGE>
The foregoing represents the Company's best estimate of its expected use of
the net proceeds of the Offering. The amounts actually expended for certain
purposes described above may vary significantly depending on numerous factors,
including, but not limited to, the success of the Company's expansion strategy
and changed circumstances and business opportunities, which may include the
acquisition of other companies or their businesses. The Company's cash
requirements may vary because of delays in the development of future releases of
its services, less than anticipated market acceptance of its services,
competitive and technological advances, regulatory changes, and increased
competition. The Company reserves the right to reallocate the net proceeds among
the foregoing uses.

Pending the use of any net proceeds, the Company intends to invest the net
proceeds from the Offering in short-term, investment-grade, interest-bearing
securities.

Any net proceeds from the exercise of the Over-Allotment Option or the
Warrants, will be added to working capital.

23
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company at December
31, 1996 (i) on an actual basis, (ii) on a pro forma basis giving effect to the
conversion of the outstanding shares of Preferred Stock into 8,626 shares of
Common Stock, the subsequent stock split of 172.7336 for 1, followed by a
contribution of 632,390 shares of Common Stock to the Company by certain
stockholders and the issuance of an additional 60,000 shares of Common Stock,
and (iii) pro forma, as adjusted, giving effect to the sale of 1,150,000 Units
offered hereby at an assumed initial public offering price of $5.75 per Unit
(after deduction of the estimated underwriting discounts and commissions and
estimated expenses of the Offering of $1,360,000 in the aggregate), the issuance
of the NVC Warrants in satisfaction of $250,000 of indebtedness and the payment
of accrued dividends on the Preferred Stock of approximately $170,000 out of the
net proceeds of the Offering. This table should be read in conjunction with the
Company's financial statements and the notes thereto, included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------------ ------------- --------------
<S> <C> <C> <C>
Stockholders' equity (deficiency):
Preferred stock, Series A $.01 par value. Authorized 10,000
shares; issued and outstanding 1,820 shares, actual; authorized
5,000,000, none issued and outstanding, pro forma and pro forma,
as adjusted..................................................... $ 18 $ -- $ --
Common stock, $.01 par value. Authorized 10,000 shares; issued and
outstanding 4,240 shares, actual; authorized 25,000,000,
1,650,000 issued and outstanding, pro forma, 2,800,000 issued
and outstanding, pro forma, as adjusted(1)...................... 42 16,500 28,000
Additional paid-in capital........................................ 1,406,427 1,389,987 6,881,737
Accumulated deficit during the development stage.................. (1,606,542) (1,606,542) (1,776,542)
------------ ------------- --------------
Net stockholders' equity (deficiency)......................... (200,055) (200,055) 5,133,195
------------ ------------- --------------
Total capitalization.................................... (200,055) (200,055) 5,133,195
------------ ------------- --------------
------------ ------------- --------------
</TABLE>

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

(1) Does not include shares of Common Stock issuable upon the exercise of (i)
the Warrants; (ii) the Over-Allotment Option; (iii) the Underwriter's
Option; (iv) the Principal Stockholder's Options; (v) options to purchase
750,000 shares of Common Stock reserved for issuance under the Option Plan;
or (vi) the NVC Warrants. See "Management", "Principal Stockholders",
"Certain Transactions" and "Description of Securities."

RECAPITALIZATION AND STOCK SPLIT

In January 1997 the 1,820 shares of Preferred Stock held by DAH were
converted into 8,626 shares of Common Stock. In addition, in January, 1997, the
stockholders approved an amendment to the Company's Restated Certificate of
Incorporation authorizing capital stock consisting of 25,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock, each class having a par
value of $0.01 per share. In May 1997 the stockholders approved an amendment to
the Company's Restated Certificate of Incorporation to reclassify and change
each previously outstanding share of Common Stock into 172.7336 shares of Common
Stock. In connection with such stock split, certain stockholders will
immediately contribute an aggregate of 632,390 shares of Common Stock to the
Company leaving them with an aggregate of 100,000 shares of Common Stock.

Unless otherwise indicated, all references in this Prospectus to historical
earnings per share, and number and class of shares outstanding, are as adjusted
for such recapitalization and stock split of the Company's capital stock.

24
<PAGE>
DILUTION

The pro forma negative net tangible book value of the Company as of December
31, 1996 was $200,055 or $.12 per share of Common Stock. Pro forma net tangible
book value per share is equal to the Company's total tangible assets less total
liabilities, divided by the total number of shares of Common Stock outstanding
on a pro forma basis. After giving effect to the estimated net proceeds from the
sale of the 1,150,000 Units offered hereby at an assumed initial public offering
price of $5.75 per Unit and the issuance of 1,000,000 Warrants in satisfaction
of $250,000 of indebtedness evidenced by the NVC Notes, the pro forma as
adjusted net tangible book value of the Company as of December 31, 1996 would
have been approximately $5,133,195 or $1.83 per share of Common Stock. This
represents an immediate increase in pro forma as adjusted net tangible book
value of $1.95 per share to existing stockholders and an immediate dilution of
$3.92 per share to new investors. The following table illustrates the per Share
dilution in pro forma, as adjusted net tangible book value per share to new
investors.

<TABLE>
<S> <C> <C> <C>
Assumed aggregate initial public offering price per
Unit................................................ $ 5.75
Pro forma net tangible book value per share before
the Offering...................................... $ (0.12)
Increase per share attributable to new investors.... $ 1.95
Pro forma net tangible book value per share after the
Offering............................................ $ 1.83
Dilution per share to new investors................... $ 3.92
</TABLE>

If the Over-Allotment Option is exercised in full, the pro forma net
tangible book value after the Offering would be $5,996,145 and dilution per
share to new investors would be $3.73. The above table assumes no exercise of
options or Warrants.

The following table summarizes the investments of all existing stockholders
and new investors after giving effect to the sales of the Securities offered
hereby assuming no exercise of the Over-Allotment Option:

<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE OF AVERAGE
SHARES PERCENTAGE CONSIDERATION TOTAL PRICE PER
PURCHASED OF TOTAL SHARES PAID INVESTED SHARE/UNIT (2)
---------- ----------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.................. 1,650,000 59% $ 1,245,487(1) 16% $ 0.75
New Investors.......................... 1,150,000 41% $ 6,612,500 84% $ 5.75
---------- --- ------------- ---
Total............................ 2,800,000 100% $ 7,857,987 100%
---------- --- ------------- ---
---------- --- ------------- ---
</TABLE>

If the Over-Allotment Option is exercised in full, the new investors will
have paid $7,604,375 for the purchase of Units and will hold 1,322,500 Shares,
representing approximately 86 percent of the total consideration and
approximately 44.5% of the total number of outstanding shares of Common Stock.
See "Description of Securities" and "Underwriting."

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

(1) Includes a capital contribution of $92,045.

(2) For existing stockholders price is per share of Common Stock. For new
investors price is per Unit.

DIVIDEND POLICY

The Company has not declared or paid any cash dividend on its Common Stock
and does not anticipate paying any such dividends in the foreseeable future. The
Company intends to retain future earnings, if any, to fund ongoing operations
and future capital requirements of its business.

25
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data of the Company presented below have been derived
from the financial statements of the Company, which have been audited by KPMG
Peat Marwick LLP, independent public accountants. The following selected
financial information should be read in conjunction with the financial
statements and the related notes thereto and with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.

SELECTED STATEMENTS OF OPERATIONS DATA:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Revenues................................................................ $ 352 $ 12,144 $ 55,915
Costs and Expenses:
Cost of revenues...................................................... 10,073 92,694 94,773
Research and development.............................................. 154,556 142,841 248,736
Sales and marketing................................................... 7,670 97,900 37,772
General and administrative............................................ 24,634 250,152 387,511
------------ ------------ ------------
196,933 583,587 768,792
------------ ------------ ------------
Operating Loss...................................................... (196,581) (571,443) (712,877)
Other Income (expense):
Interest income....................................................... 1,037 22,505 4,414
Other income.......................................................... 22,862 -- --
Interest expense...................................................... -- -- (174,859)
------------ ------------ ------------
23,899 22,505 (170,445)
Loss before Taxes(1)................................................ (172,682) (548,938) (883,322)
Income Taxes(1)......................................................... -- 800 800
------------ ------------ ------------
Net Loss............................................................ $ (172,682) $ (549,738) $ (884,122)
------------ ------------ ------------
------------ ------------ ------------
Net loss per share(2)................................................... $ (36.68) $ (116.77) $ (187.79)
------------ ------------ ------------
------------ ------------ ------------
Shares used in computing net loss per share(2).......................... 4,708 4,708 4,708
------------ ------------ ------------
------------ ------------ ------------
Pro Forma net loss per share (unaudited)(3)............................. $ (0.10) $ (0.32) $ (0.51)
------------ ------------ ------------
------------ ------------ ------------
Shares used in computing pro forma net loss per share (unaudited)(3).... 1,730,800 1,730,800 1,730,800
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

SELECTED BALANCE SHEET DATA:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
--------------------------
PRO FORMA, AS
ACTUAL ADJUSTED(3)(4)
----------- -------------
<S> <C> <C>
Cash and cash equivalents............................................................ $ 8,605 $ 4,979,840
Working capital (deficiency)......................................................... (333,027) 4,900,223
Total assets......................................................................... 345,389 5,223,759
Total stockholders' equity (deficiency).............................................. (200,055) 5,133,195
</TABLE>

26
<PAGE>

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

(1) From inception until May 12, 1995, the Company was an "S" corporation for
federal income tax purposes and, accordingly, all items of income, gain,
loss and credits of the Company were reported by its stockholders in
proportion to their stock interest in the Company.

(2) Net loss per share data does not take into account conversion of outstanding
shares of Preferred Stock into shares of Common Stock or the stock split and
assumes an additional 468 shares of Common Stock equivalents as a result of
options granted pursuant to the Option Plan to the Company's Chief Executive
Officer and Chief Technology Officer. See note 2 of the notes of the
Company's financial statements appearing elsewhere in this Prospectus.

(3) Pro forma and pro forma, as adjusted, data assumes 1,650,000 shares of
Common Stock outstanding after giving effect to (i) the conversion of all
outstanding shares of Preferred Stock into 8,626 shares of Common Stock,
(ii) the subsequent stock split of 172.7336 for 1, followed by a
contribution of 632,390 shares of Common Stock to the Company by certain
stockholders, and (iii) the issuance of an additional 60,000 shares of
Common Stock. In addition, pro forma net income (loss) per share data
assumes an additional 80,800 shares of Common Stock equivalents as a result
of options granted pursuant to the Option Plan to the Company's Chief
Executive Officer and Chief Technology Officer to acquire 404,000 shares of
Common Stock at an exercise price of $4.40 per share. See note 2 of the
notes to the Company's financial statements appearing elsewhere in this
Prospectus.

(4) Adjusted to reflect the sale of the Units offered hereby and the net
proceeds therefrom (at an initial public offering price of $5.75 per Unit
and after deducting the underwriting discounts and commissions and expenses
of the Offering estimated at $1,360,000), the issuance of the NVC Warrants
in satisfaction of $250,000 of short-term indebtedness, and the payment of
accrued dividends on the Preferred Stock. Does not include the proceeds from
the sale of shares of Common Stock pursuant to the exercise of any Warrants
(including the NVC Warrants), the Underwriter's Option, the NVC Warrants,
the Principal Stockholder's Options and any options granted pursuant to the
Option Plan.

27
<PAGE>
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.
IN ADDITION TO THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION IN
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES, SUCH AS STATEMENTS OF THE COMPANY'S PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS
SHOULD BE READ AS APPLICABLE TO ALL FORWARD-LOOKING STATEMENTS WHEREVER THEY
APPEAR IN THIS PROSPECTUS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION AND
IN "RISK FACTORS."

OVERVIEW

The Company currently provides an on-line electronic directory assistance
service that gives its customers access to over 110 million U.S. and Canadian
residence and business telephone numbers, addresses and ZIP codes. The PC411
service is available on a direct-dial basis with a personal computer, a modem,
and either the Company's proprietary, copyrighted software program, PC411 FOR
WINDOWS or an Internet browser, such as Netscape Navigator-Registered Trademark-
or Microsoft Explorer-Registered Trademark-. The PC411 service is available over
the Internet at the address HTTP://WWW.PC411.COM. The Company is a development
stage enterprise. Since its inception in December 1993, the Company has devoted
substantially all of its expenditures (approximately $1.6 million through
December 31, 1996) to the development of the PC411 service. The Company
introduced the first version of the PC411 service in December 1994. The
Company's expenditures for marketing PC411 have been insignificant and the
Company has not yet developed any significant customer base or revenues.

Given its limited operating history, the Company and its prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in the new and rapidly evolving markets for on-line and
Internet services. To address these risks, the Company must, among other things,
continue to respond to competitive developments, attract, retain and motivate
qualified personnel, implement and successfully execute its sales and marketing
strategy, create and distribute a version of PC411 FOR WINDOWS for other
operating systems, develop relationships with third parties for purposes of
general distribution and specific industry penetration, and upgrade its
technologies and services. There can be no assurance that the Company will be
successful in addressing such risks.

The extremely limited operating history of the Company makes the prediction
of future results of operations difficult or impossible. The Company believes
that period to period comparisons of its operating results are not meaningful
and the results for any period should not be relied upon as an indication of
future performance. The Company currently expects to significantly increase its
operating expenses as it builds its sales and marketing staff, increases product
development spending, and invests in infrastructure. As a result, the Company
expects to continue to incur significant losses on a quarterly and annual basis
for the foreseeable future. As of December 31, 1996, the Company had an
accumulated deficit of $1,606,542. As a result, the report of the Company's
independent public accountants, in connection with the audit of the Company's
financial statements as of December 31, 1996, includes an explanatory paragraph
stating that the Company's losses from operations and deficit accumulated during
the development stage raise substantial doubt about the Company's ability to
continue as a going concern. See "Risk Factors--Development Stage Company;
Limited Operating History," "--Financial Condition; Going Concern Qualification
in Auditor's Report" and "--Dependence Upon Offering; Significant Capital
Requirements; Possible Need for Additional Financing; No Assurance of Additional
Financing."

As a result of the Company's limited operating history, the Company does not
have historical financial data for any significant period of time on which to
base planned operating expenses. The Company's

28
<PAGE>
expense levels are based in part on its expectations concerning future revenue
and to a large extent are fixed. Quarterly revenues and operating results depend
substantially upon signing up new customers, retaining such customers, and
advertising revenues, if any, which are difficult to forecast accurately. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall, and any significant shortfall in revenue in
relation to the Company's expectations would have an immediate adverse effect on
the Company's business, results of operations and financial condition. In
addition, the Company currently expects to increase significantly its operating
expenses as it builds its sales and marketing staff, increases product
development spending, and invests in infrastructure. To the extent that such
expenses precede or are not subsequently followed by increased revenues, the
Company's business, results of operations and financial condition will be
materially and adversely affected.

The Company licenses its database from Pro CD. Furthermore, the Company pays
Pro CD a percentage of revenues earned from the display of Pro CD's listing
data, with minimum quarterly payments. The Company typically charges its
customers a $15.00 registration fee and then on a per use basis. The
registration fee is applied to use of the service and is recognized as the
customer uses the service. The Company also charges annual subscription fees in
certain circumstances and these fees are recognized over a 12 month period.
Recently, the Company has entered into distribution agreements with three
computer equipment manufacturers and one modem manufacturer, pursuant to which
PC411 FOR WINDOWS will be installed on a computer's hard drive or a copy of
PC411 FOR WINDOWS will be included with the purchase of a modem. The Company
pays or will pay a distribution fee to the three computer equipment
manufacturers and one modem manufacturer for the distribution of PC411 FOR
WINDOWS either based upon the number of new customers that sign up for the PC411
service or the revenues that such new customers generate. Although the Company
has experienced slight revenue growth in recent months due to these bundling
agreements, there can be no assurance that revenues of the Company will continue
to increase, that revenues will continue at their current level, that the
Company will be able to maintain these arrangements, or that the Company will
enter into additional distribution arrangements with other third parties. The
Company has recently been notified by Sony that as of June 1997 it will no
longer include in its new releases products, such as PC411 FOR WINDOWS, which
require users to pay for services. Sony accounted for approximately 14% of the
Company's customers through December 31, 1996. In addition, the Company is
offering the PC411 service over the Internet and is planning to sell advertising
on its Web site. To date, the Company has not generated any advertising revenue
and it is impossible to project when, if ever, such revenue will be generated.

The Company's operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside the Company's
control. These factors include the level of usage of the Internet, demand for
Internet advertising, the continued growth of private intranets, the amount and
timing of capital expenditures and other costs relating to the expansion of the
Company's operations, the introduction of new products or services by the
Company or its competitors, pricing changes in the industry, technical
difficulties with respect to the use of the PC411 service, general economic
conditions and economic conditions specific to on-line services and the
Internet. As a strategic response to changes in the competitive environment, the
Company may from time to time make certain pricing, service or marketing
decisions that could have a material adverse effect on the Company's business,
results of operations and financial condition. Due to all of the foregoing
factors, the trading price of the Company's Common Stock would likely be
materially and adversely affected.

RESULTS OF OPERATIONS

REVENUES. The Company's revenues have been derived from registration fees
and usage charges for the modem dial-up PC411 service. Beginning with the 1996
fiscal year, revenues are recognized over the period in which the related
services are to be provided. Deferred revenue consists of non-refundable
registration fees and annual subscription fees billed in advance. Had such
policy been in effect prior to fiscal year 1996, the effect on the Company's
financial statements would have been immaterial.

29
<PAGE>
Revenues for the years ended December 31, 1996, 1995 and 1994 were $55,915,
$12,144 and $352, respectively. The Company recorded deferred revenue of $25,387
for the year ended December 31, 1996. The increase in revenues for the year
ended December 31, 1996 was due primarily to the bundling arrangements with IBM
and U.S. Robotics. The revenues for the year ended December 31, 1995 occurred
primarily in the fourth quarter and were due primarily to increases in
advertising and public relations spending.

COST OF REVENUES. Cost of revenues consists primarily of the cost of data.
The Company's contract with Pro CD for the listing data provides for payments to
Pro CD equal to a specified percentage of revenues that the Company generates
from distributing the data, with minimum quarterly payments. The Company's
revenues to date are not greater than the minimum quarterly payments and, as
such, the cost of revenues exceeds revenues. Cost of revenues also includes
materials costs and distribution fees paid primarily to IBM and U.S. Robotics.
Cost of revenues for the years ended December 31, 1996, 1995 and 1994 were
$94,773, $92,694 and $10,073, respectively. The increase from 1995 to 1996 was
due primarily to the bundling arrangements with IBM and U.S. Robotics. The
increase from 1994 to 1995 was due primarily to the cost of data.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of employee compensation associated with the design, programming, and
testing of the PC411 service. Research and development expenses for the years
ended December 31, 1996, 1995 and 1994 were $248,736, $142,841 and $154,556,
respectively. The increase from 1995 to 1996 was due primarily to the increase
in the number of programmer hours. The decrease from 1994 to 1995 was due
primarily to a decrease in the number of programmer hours. To date, all research
and development costs have been expensed as incurred. The Company anticipates
continuing to make significant expenditures to develop new and enhanced
services.

SALES AND MARKETING EXPENSES. Sales and marketing expenses consist
primarily of public relations, print advertising, and trade shows. Sales and
marketing expenses for the years ended December 31, 1996, 1995 and 1994 were
$37,772, $97,900 and $7,670, respectively. The decrease from 1995 to 1996 was
primarily attributable to a decrease in print advertising. The increase in sales
and marketing expenses from 1994 to 1995 was primarily attributable to the
expenses incurred to introduce PC411 at a trade show in the fourth quarter of
1995 and public relations and print advertising expenses. The Company intends to
pursue an aggressive branding strategy and as a result expects an increase in
the absolute dollar level of sales and marketing expenses in future periods.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist primarily of expenses for administration, office operations, and general
management activities, including legal, accounting, and other professional fees.
General and administrative expenses have increased significantly since the
Company's inception. This trend reflects the costs associated with the formation
of the Company, and increased efforts to commercialize the Company's products
and services. General and administrative expenses for the years ended December
31, 1996, 1995 and 1994 were $387,511, $250,152 and $24,634, respectively. These
increases were due primarily to additional payroll costs relating to management
personnel, consulting fees, professional fees, rent expense and insurance costs.
The Company anticipates that general and administrative expenses will continue
to increase as the Company hires additional personnel following the Offering, as
well as expenses associated with being a public company.

OTHER INCOME (EXPENSE). Net interest expense for the year ended December
31, 1996 was $170,445, consisting of interest expense of $174,859 and interest
income of $4,414. The interest expense is attributable entirely to the NVC
Notes. Of this amount, $160,940 represents the imputed discount on the NVC Notes
as a result of the change in the conversion ratio with respect to the Preferred
Stock all of which was amortized by December 31, 1996. The Company had net
interest income for the years ended December 31, 1995 and 1994 of $22,505 and
$1,037, respectively. The Company also recorded $22,862 of non-recurring
consulting revenue for the year ended December 31, 1994 which was not related to
the PC411 service.

30
<PAGE>
INCOME TAXES; NET OPERATING LOSS. Through May 12, 1995, the Company was a
subchapter "S" corporation, and as such, incurred no federal corporate income
taxes and losses incurred through that date were reported by individual
stockholders on their personal tax returns. From May 13, 1995 through December
31, 1996, the Company had no income and therefore made no provision for federal
and state income taxes other than the required California state minimum tax of
$800. At December 31, 1996, the Company had approximately $1,250,000 of federal
net operating loss carryforwards for tax reporting purposes available to offset
future taxable income, if any. Such carryforwards expire in 2010. The tax effect
of the net operating loss available to offset future taxable income results in a
gross deferred tax asset of approximately $540,000, which has been fully
reserved due to uncertainties regarding the realizability thereof.

Under the Tax Reform Act of 1986, the amounts of and the benefits from net
operating loss carryforwards are subject to certain limitations. Events which
may cause such limitations in the amount of net operating losses that the
Company may utilize in any one year include, but are not limited to, a
cumulative ownership change of more than 50% over a three year period. The
Company anticipates that a 50% change in ownership will have occurred as a
result of the conversion of the Preferred Stock, the stock split and the
consummation of the Offering. See "Capitalization-Reorganization and Stock
Split."

LIQUIDITY AND CAPITAL RESOURCES

Since its inception the Company has financed its operations through the
private placement of Preferred Stock and secured short term borrowings from NVC.
The Company has not been able to generate sufficient cash from operations and,
as a consequence, additional financing has been required to fund ongoing
operations. Cash used in operations for the years ended December 31, 1996, 1995
and 1994 were $670,881, $531,701 and $161,980, respectively. The primary reason
for the increase in the negative cash flow in 1996 as compared to 1995 is the
increase in development and operating expenses during the period. The increase
in negative operating cash flow in 1995 as compared to 1994 was due primarily to
product development and operating expenses associated with developing the PC411
service.

Capital expenditures for the years ended December 31, 1996, 1995 and 1994
were $18,406, $123,720 and $57,319, respectively. These expenditures were
primarily for computer equipment for the Company's data center and leasehold
improvements.

Cash provided by financing activities for the year ended December 31, 1996
was $327,065, all of which was advanced by NVC and which is evidenced by the NVC
Notes. The NVC Notes are secured by all of the assets of the Company, bear
interest at 12% per year, and are due upon demand. Cash provided by financing
activities for the year ended December 31, 1995 was $1,001,000, and was derived
from the sale of 1,820 shares of Preferred Stock to DAH, a wholly owned
subsidiary of NVC. In December 1996, NVC made a demand for payment of the NVC
Notes. The Company failed to pay the amount due. In January 1997, the Company,
certain stockholders of the Company and NVC entered into an agreement pursuant
to which, among other things, NVC agreed to withdraw its demand and to provide
additional funding for the Company. The Company anticipates that at the date of
this Prospectus the total amount to be evidenced by the NVC Notes will be
approximately $700,000. The Company will issue the NVC Warrants in satisfaction
of $250,000 of such indebtedness and the balance, $450,000, will be repaid out
of the proceeds of this Offering. See "Certain Transactions."

The Company currently anticipates that the gross proceeds from the sale of
the Units will generate $6,612,500 (or $7,604,375 if the Over-Allotment Option
is exercised in full) before commissions and offering expenses of approximately
$1,360,000 (approximately $1,490,000 if the Over-Allotment Option is exercised
in full.) The Company expects to use a portion of the net proceeds to repay the
principal balance and accrued interest due on the NVC Notes, accumulated
dividends on the Preferred Stock and a fee to the Underwriter for consulting
services. The balance of the net proceeds will be used to complete the

31
<PAGE>
introduction of the PC411 service over the Internet, marketing, sales and
advertising, development of new services, and for general corporate purposes and
working capital purposes.

The Company expects that its cash used in operating activities will increase
in the future. The timing of the Company's future capital requirements, however,
cannot be accurately predicted. The Company's capital requirements depend upon
numerous factors, principally the acceptance and use of the PC411 services and
the Company's ability to generate advertising revenue. If capital requirements
vary materially from those currently planned, the Company may require additional
financing, including, but not limited to, the sale of equity or debt securities.
The Company has no commitments for any additional financing, and there can be no
assurance that any such commitments can be obtained. Any additional equity
financing may be dilutive to the Company's existing stockholders, and debt
financing, if available, may involve pledging some or all of the Company's
assets and may contain restrictive covenants with respect to raising future
capital and other financial and operational matters. If the Company is unable to
obtain additional financing as needed, the Company may be required to reduce the
scope of its operations, which would have a material adverse effect on the
Company's business, financial condition, and results of operations. The Company
believes that the net proceeds from the Offering will be sufficient to meet the
Company's operations and capital requirements for the next 12 months, although
there can be no assurance in this regard. Although there can be no assurance,
management believes that upon completion of the Offering, the Company will be
able to continue as a going concern for the next 12 months.

32
<PAGE>
BUSINESS

THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING INFORMATION WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED BY SUCH FORWARD-LOOKING INFORMATION AS A RESULT OF
VARIOUS FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN
THIS PROSPECTUS.

OVERVIEW

The Company is a development stage enterprise which currently offers an
on-line directory assistance service. The Company's database includes over 110
million names, telephone numbers, addresses and ZIP codes in the United States
and Canada. The Company's goal is to establish PC411 as a brand name for on-line
directory assistance by designing, developing, and providing comprehensive,
efficient, and easy-to-use directories that facilitate communication among
businesses and individuals in the United States and Canada and are accessible
either through a direct modem dial-up connection, from a Web page on the
Internet, via private intranets, or through other on-line communications media
that may develop in the future.

Currently, a customer can access the PC411 service by two methods, both of
which require a personal computer and modem. The direct dial-up service requires
the use of the Company's copyrighted Windows-based software program, PC411 FOR
WINDOWS. The PC411 service is also available on the Internet at HTTP://
WWW.PC411.COM. Internet access requires the use of a Web browser such as
Netscape Navigator-Registered Trademark- or Mircrosoft
Explorer-Registered Trademark-. Currently, users of the PC411 service on a
dial-up basis generally pay for the use of the service while use over the
Internet is free of charge.

The Company believes that the growth of the Internet and private intranets
will provide the Company with a larger market and new opportunities to generate
revenue. The Internet gives the Company access to a growing, worldwide base of
potential users. Internet access is available through a number of existing and
planned devices and methods. Current access methods for individuals include
using personal computers and standard telephone or ISDN lines. Businesses,
universities, government offices and other organizations can connect to the
Internet using personal computers, midrange computers or mainframes with high
bandwidth telephone lines capable of carrying large amounts of information at
high speeds, such as ISDN, T-1 or T-3 lines. Potential future high bandwidth
access methods include coaxial cable, high-speed, digital ADSL telephone lines,
and wireless connections. While the devices used to connect to the Internet
today are limited to personal, midrange, or mainframe computers, potential
future devices include televisions, Internet enabled telephones with screens for
homes and offices, inexpensive computer terminals often referred to as network
computers, personal digital assistants (often referred to as palmtop computers),
pagers, cellular telephones, or any other communication enabled electronic
device. In addition, large organizations continue to invest and develop their
private intranets. The Company believes that it can provide on-line directory
services and tools to such organizations to populate their networks with both
industry specific as well as general market directory information on-line. This
would allow for greater flexibility in the custom presentation of internal and
external data, while still allowing for dial-out to the PC411 data center for
searches that cannot be fulfilled locally.

To date, substantially all of the Company's capital has been invested in
software and systems development to provide the PC411 service on a commercial
basis. The Company's expenditures for marketing PC411 to date have been
insignificant and the Company has not developed any significant customer base or
revenues. A substantial part of the net proceeds of the Offering will be used to
increase the Company's sales capability and for marketing and advertising.

INDUSTRY BACKGROUND

The Company believes that the traditional methods used to access names,
addresses, ZIP codes and telephone numbers for directory assistance or marketing
purposes are inefficient, antiquated, and expensive. Individuals and businesses
spend a great deal of time and money researching such information, often making
multiple telephone calls or consulting multiple directories. Furthermore,
traditional directories do not provide this information in a digital format,
requiring additional effort by the user to type the information into a computer
if the user wants to use the information in other applications. Organizations

33
<PAGE>
that want to market directly to a group of people or businesses spend a
substantial amount of time and effort compiling lists of names and locating
addresses and telephone numbers for those names.

DIRECTORY ASSISTANCE. Operator directory assistance or telephone books can
only be used to look up a small number of names at a time and are only effective
if one knows the location for the individual or business. Transferring
information obtained from operator directory assistance or the telephone books
to a computer requires additional effort.

YELLOW PAGE DIRECTORIES. Printed "yellow page" telephone books provide a
list of companies in a geographic area ordered by the types of products or
services those companies sell. The yellow pages provide a way for the listed
companies to advertise their services to a local audience.

ON-LINE SERVICES, THE INTERNET AND INTRANETS. The growth of communication
enabled personal computers and the publication of on-line databases has resulted
in a rapid increase in the number of businesses and individuals that use
computers to access information on-line. Historically, access to information was
slow, expensive, and required extensive training, but in the 1980s the major
consumer on-line services began to attract substantial numbers of customers by
offering entertainment, communications, and access to general interest content
with relatively easy-to-use interfaces and simple pricing plans.

The Internet is a network linking public and private computers around the
world. Initially, the Internet was used almost exclusively by academic
institutions and government agencies to exchange information. The proliferation
of communication enabled personal computers, computer databases that present
information in a multi-media format, the development of intuitive, simple to use
graphical software programs known as Web browsers and widely available, low-cost
Internet access has made the Internet accessible to non-technical users.

Organizations are starting to publish and share internal information on
their private networks using Web servers. Such internal networks using Internet
protocols are referred to as "intranets". Web browsers can be run on most of the
popular computer operating systems, such as Windows 3.1, Windows 95, Windows NT,
Apple Macintosh, IBM OS/2, and Unix and therefore people in all departments can
view, publish, and share information across different hardware and operating
system platforms. The use of the Internet and Internet protocols allows an
organization to extend its internal information systems and enterprise
applications to geographically dispersed facilities, remote offices, and mobile
employees, whether they are on different floors, across the street, or across
the globe. Since users within the organization only have to learn how to use the
Web browser to access a wide variety of information, training costs are reduced.
Intranets also allow users to easily access data outside of their organization
that is published on the Internet by third party information providers such as
the Company.

E-MAIL COMMUNICATION. The rapid growth of the Internet has resulted in
increased E-mail communications and the development of the Internet as a new
mass communications medium. The Company believes that the use of E-mail will
continue to grow and will evolve from simple text based messages into a
communication medium incorporating text, sound, voice, graphics, and video.
E-mail provides practically instant delivery of text, sound, images and computer
files, and can be sent to a large number of recipients at costs which are
generally less than mail, telephone or other forms of communication.

CURRENT PRODUCTS AND SERVICES

In its current form, the PC411 service provides functions not possible or
practicable with conventional operator directory assistance services including
(a) searching for a listing in every phone book in the United States or Canada
without having to know the area code or city, (b) searching for an individual
with just a last name, (c) searching by telephone number to provide the
associated name and address, (d) batch processing hundreds of names, (e)
automatically searching the areas surrounding a city for a listing, (f)
providing addresses and ZIP codes in addition to telephone numbers, (g)
providing nationwide AT&T 800 numbers, (h) appending telephone numbers to a list
of names and addresses and (i) supplementing a list of telephone numbers with
names and addresses. The Company's search engine will, among other things,
automatically search up to an entire state if there is no listing in a city,
find alternate spellings of a

34
<PAGE>
first name, return names listed with just an initial, and search AT&T's national
800 directory as part of every business search. PC411 FOR WINDOWS enables users
to search for listings one at a time or to batch process hundreds of listings
and allows users to edit, print, sort and save the information, dial the
telephone number found, and transfer the information to other applications such
as word processors and databases. PC411 FOR WINDOWS does not require a
commercial on-line account or a connection to the Internet.

RESIDENCE SEARCHES. PC411 allows a user to search more than 93 million
published residential telephone numbers and addresses in any city in the United
States or Canada by typing in the person's name. The Company's search engine is
designed specifically to search for name and address information. PC411 can
search by just the last name, will search for alternate spellings of the first
name, will bring back listings that have only an initial, and will expand and
search surrounding metropolitan areas up to an entire state if there is no
listing in the specified city. A user can also search a state, a group of states
such as the Southeast, or even the entire United States or Canada for a listing.

BUSINESS SEARCHES. PC411 allows a user to search more than 17 million
published business telephone numbers and addresses in any city in the United
States or Canada by typing in the business name. The Company's business search
engine will search for alternate business listings and will expand and search
surrounding metropolitan areas up to an entire state if there is no listing in
the specified city. PC411 also returns a description of the target industry in
most cases. A user can also search a state, a group of states such as the
Northeast, or even the entire United States or Canada for a listing. Each time a
user conducts a business search, PC411 will automatically search the AT&T
nationwide directory and provide the published nationwide AT&T 800 numbers, if
any.

800 SEARCHES. The PC411 service allows a user to search a database of AT&T
800 listings for businesses that have nationwide 800 numbers. PC411 also
searches this database automatically each time a user looks up a business
listing. For all matching listings, the PC411 800 search provides the company
name, the 800 number, the address, the ZIP code, and a standard business
description.

REVERSE NUMBER SEARCHES. The PC411 service allows a user to type in a seven
digit telephone number and search a particular area code, state, region, or even
the entire country for all of the residence or business listings with that
number. In the event PC411 cannot locate the telephone number in a specified
area code, it will automatically search all other area codes in that state for
the telephone number.

MULTIPLE SEARCHES. The PC411 service allows a user to type in or import
from another database a list of hundreds of residential names, business names
and/or telephone numbers and then search all of them with just one connection.
This feature allows a user to update a customer list, append telephone numbers
to a list of names and addresses and supplement a list of telephone numbers with
a names and addresses. The results of the searches can be sorted, edited, saved,
printed, transferred to a word processing program, or used in other database
applications.

EXPANSION OPPORTUNITIES

NEW MARKETS. At present, almost all users of the Company's services appear
to be individual consumers, as opposed to businesses. Such users are, generally,
accessing PC411 via direct dial up from windows based computers running PC411
FOR WINDOWS. All current subscribers to the PC411 service have acquired this
software either by purchasing products manufactured by bundle partners or having
downloaded the software from the PC411 Website. At present, the PC411 service
delivered by the Website is limited in scope and is currently not generating
revenues.

The Company believes that its future growth lies not in the general consumer
market but in the business to business market. Accordingly, the Company will
target the "small office home office" (SOHO) market and organizations with
private intranets. SOHO users, generally, are persons who do not work in the
traditional corporate office environment. This segment is made up of firms that
employ a limited number of people, sole proprietors and sole practitioners,
corporate employees that work either full-time or part-time from their home or a
satellite office, and persons whose job requires a substantial amount of

35
<PAGE>
travel. Such persons still require resources for support services and data from
their remote locations that were taken for granted in the centralized corporate
office structure. With the development and accessibility of the Web, services,
such as digital data searches, are now available to such persons.

Private intranets are, generally, large scale computer operations that
support an extended number of employees. A private intranet can take many forms.
The most common forms today are Local Area Networks, Wide Area Networks (WANs),
Enterprise Networks, Metropolitan Networks and Multinational Networks. Each form
is built around a server technology which interconnects people in real time via
computers, terminals, printers, modems and telephones. Because large
inter-networking operations (connections between networks) extend multiple
sites, it has become a common practice to use digital telephone technology to
connect the different parts of a private intranet. Due to the sensitivity and
the proprietary nature of data being shared across such a network, network
security and integrity have become major issues. Most operators of such networks
today need to establish extensive firewall and encryption technologies to
protect the value of the data being shared. Accordingly, many such organizations
are creating procedures restricting outbound connectivity between their private
intranet and the public Internet. Almost all restrict public Internet users
direct access to their private intranet.

In a private intranet, a single organization or group of organizations is
exchanging information using servers, computers, modems, phone lines, and
telephony systems in some defined combination. Within these organizations or
groups of organizations, directory data is presently being distributed. Most
likely the distribution is in the form of hard copy data. This directory data is
more often than not, expensive to maintain, produce and update. In very large
organizations, it is out-of-date at the immediate point of final distribution.
Additionally, these organizations have a high level of operator assisted
information services. By combining the presentation of the Company's data
listing in a form tailored to the organization's accepted guidelines, populating
it with the human resource listings for the organization and adding routing
controls to the telephone system, the organization can realize an immediate
reduction in bottom line operating costs. Given its experience with on-line
directory services, the Company believes it can create digital directory
databases for these entities either entirely populated on the organization's
private intranet, externally at the Company's data center or a combination of
the two. If the directory is wholly or partially maintained externally, it can
be accessed through a direct dial up connection, by a direct connection to the
Company's Web server or through the Internet.

SEARCHING CAPABILITIES. The Company intends to increase its searching
capabilities by allowing the customer to search for addresses using the criteria
listed below. Providing these searches may create opportunities to sell targeted
advertising. Searches by business headings may provide the Company with the
opportunity to sell product specific advertising, while searches by addresses
may provide the Company with the opportunity to sell geographically targeted
advertising.

BUSINESS HEADING SEARCHES. The majority of the Company's business
listings contain Standard Industrial Classification codes that can be used
to provide an "electronic yellow pages" service or generate mailing lists
for the Company's customers. By providing business heading searches, a
business customer could use the PC411 service to look for all "machine
shops" in a state or an individual could look for all "florists" within a
city.

REVERSE ADDRESS SEARCHES. By indexing the listings by address and
designing search techniques tailored to address and geographic information,
the Company will be able to offer services such as creating targeted
geographic mailing lists for areas as small as a single street or building
or searching for a business type such as "dry cleaners" in a certain radius.

ADDITIONAL DIRECTORIES OF ADDRESS INFORMATION. Currently, the Company
provides name, telephone number, address, and ZIP code information for United
States and Canadian listings in a manner that is designed to be easier, faster,
and more productive than using directory assistance or the telephone book. The
Company expects to enhance its PC411 service by adding new address information
if such information is available to the Company on favorable economic terms. For
example, the Company recently added AT&T's nationwide 800 directory in March
1996 so that PC411 automatically searches the AT&T 800 directory and returns any
matching 800 listings whenever a user looks up a business. The Company may

36
<PAGE>
add census and other demographic information and targeted mailing lists to its
service either independently or by licensing data from other third party
vendors.

The Company may attempt to acquire and/or create additional databases
through a number of means including: licensing data from third parties,
collecting addresses from voluntary registrations at the Company's Web site,
using automated Web traversing programs (often referred to as "spiders"), and
from other promotions and services that encourage users to supply their data.
There can be no assurance that the Company will be able to amass directories of
additional data, maintain the accuracy of such addresses, associate the
addresses with the listings from other sources or add other demographic
information or that a market will develop for any such database.

PROVIDING SERVICES TO OTHER WEB SITES. The Company may enter into formal
and informal arrangements that would allow Internet users to access the PC411
service through other Web sites. These arrangements may allow the Company to
offer a branded service, co-brand its service with other services or simply
provide the data without reference to PC411. Informal arrangements may allow Web
sites, unknown to the Company, to display the PC411 logo and initiate searches
that would bring users to the PC411 Web site.

CREATION OF SPECIALIZED PRODUCTS. The Company may enter into formal or
informal relationships with respect to the development of specialized data
delivery for traditional broadcast and/or cable outlets on a syndicated basis.
This business envisions the creation of a product, based on a directory database
of internet and Web addresses, the content of which would be tailored to meet
the specific on-line preferences of audiences viewing local broadcast/cable
channels who are also users of on-line and internet services. The PC411 product
may have nationally branded content as well as content that is custom tailored
to the local outlet and marketed under the local brand of the broadcast or cable
operator.

MARKETING AND DISTRIBUTION STRATEGY

The Company's primary marketing objective is to establish itself as an
Internet/intranet information publishing and distribution company. All marketing
efforts will associate the registered "PC411" service mark with easy, quick,
accurate, and comprehensive directory assistance. The Company plans to focus its
marketing activity on the SOHO market and on organizations which maintain
private intranets. The Company will attempt to extend the PC411 brand name and
identity with computer and computer peripheral manufacturers, software
developers, cable/modem manufacturers, and telephony systems manufactures. The
Company intends to update and extend its user base with a PC411 newsletter,
qualifying its users and obtaining information about their buying habits and
equipment use. All marketing plans will be supported, to the extent appropriate,
by public relations support as well as targeted trade shows, advertising and
creative efforts to build the PC411 brand name as an information publisher and
distributor.

The Company currently provides PC411 FOR WINDOWS for free. Use of the PC411
service with this software requires direct dial to the Company's data center.
Users of the PC411 service on a direct dial up basis are generally charged a
$15.00 registration fee and $0.50 per search. The Company has implemented a plan
whereby users can choose to pay a $29.95 annual subscription fee and would be
entitled to unlimited searches. Such plan will be available on PC411 FOR WINDOWS
bundled with IBM, U.S. Robotics, Sony, and Hewlett-Packard products. The Company
has recently been notified by Sony that as of June 1997 it will no longer
include in its new releases products, such as PC411 FOR WINDOWS, which require
users to pay for services. Sony accounted for approximately 14% of the Company's
customers through December 31, 1996. For the SOHO market, the Company will offer
a monthly subscription rate for a fixed number of users and unlimited searches.
The actual subscription rate would depend on the actual number of users. The
Company believes that such a pricing plan will make the PC411 service highly
competitive with current directory assistance sources for businesses of all
sizes.

Currently, searches conducted at the Company's Web site are free of charge.
The Company intends to continue this policy with respect to base level (I.E.,
single criteria) searches. However, as the PC411 service available over the
Internet is enhanced and upgraded, fees will be charged for more complex
searches. Such services may be sold on a per transaction basis or on a monthly
or annual subscription basis. The

37
<PAGE>
Company also intends to attempt to sell advertising on its Web site to generate
revenues. Advertising may in the future be targeted and delivered based upon the
type of searches a customer performs.

PURSUE BUNDLING AND OEM ARRANGEMENTS. The Company intends to distribute
PC411 FOR WINDOWS through "bundling" arrangements with computer equipment
manufacturers similar to its existing bundling agreements with Hewlett Packard,
IBM, Sony and U.S. Robotics. Currently, the Company has bundling agreements with
IBM to distribute PC411 FOR WINDOWS with its Aptiva brand of consumer personal
computers, with Sony on its VAIO line of consumer personal computers, with
certain lines of Hewlett-Packard's VECTRA personal computers that are targeted
towards small businesses, and with U.S. Robotics' SPORTSTER brand of modems. The
manufacturers are responsible for all costs associated with the duplication and
distribution of the software. The Company in turn pays the manufacturers a
commission for each new customer they deliver. The Company intends to pursue
these arrangements with additional personal computer manufacturers, modem
manufacturers, and software developers. There can be no assurance the any such
additional bundling arrangements will be consummated by the Company or that
existing bundling arrangements will be profitable. The Company has recently been
notified by Sony that as of June 1997 it will no longer include PC411 FOR
WINDOWS in its new releases. Sony accounted for approximately 14% of the
Company's customers through December 31, 1996. The Company will also attempt to
extend the bundling program to Original Equipment Manufacturers (OEMs). These
are targeted partners that have highly technical products within which the PC411
software can reside as a "native" component. When the partner sells a system
that uses the PC411 components, the Company shares in the revenues from that
sale. In addition, the OEM partner will sell PC411 service support for which the
Company will be compensated.

ACCESS VIA THE INTERNET. In addition to the Company's existing on-line
service, the Company intends to enhance the PC411 service currently available on
the Internet. The graphical, multi-media nature of the Web also enables the
Company to offer new services to a large number of potential customers. The
presentation and access to data will be changed. Present base level searching
(single criteria) will continue to be executed with commonly used Web browsers
such as Netscape Navigator-Registered Trademark- and Microsoft
Explorer-Registered Trademark-. Enhanced searching capabilities will require the
use of applets which the Company will develop in Java and ActiveX (Java and
ActiveX are specialized programming languages for the Web that allow for the
creation of small programs or "applets") which are to be used in conjunction
with Web browsers. The applet software for the Internet will have enhanced
search capabilities not currently available. These applets will mimic in many
ways the search capabilities that can be executed only with PC411 FOR WINDOWS.
The applet software will be set up as a limited use evaluation product. The
product will require registration for evaluation with a credit card. The
evaluation period will give full access to all features of the site for a
limited time. At the end of the evaluation period, the user will be billed for
the first year subscription and each subsequent anniversary subscription.

DEVELOP INTRANET SERVICES. The Company intends to adapt its services to the
evolving Internet standards for directory structures and address information
formats. Adopting these structures and formats and distributing the information
over the Internet may allow the Company to provide the data to organizations
that have private intranets. Such information distributed through the Internet
can be integrated into third party applications such as phone systems, internal
company directories and other information systems. The Company will offer its
technology and capabilities to other organizations to help such entities
minimize their directory assistance expenses as well as serving their on-line
needs for internal and external communications. In addition, PC411 will provide
selected Standard Industrial Code business listings customized for the company's
business needs as a part of extending the branding of the PC411 service. By
developing Internet and intranet solutions which provide a standard platform for
data interchange, the Company can deliver its services to a diverse group of
customers. In targeting specific industries, the Company will seek to engage
sales executives who are familiar with the targeted industries. Fees would be
generated for customization of the data, maintenance and service and frequency
and number of users.

38
<PAGE>
Nevertheless, from time to time, subscribers have experienced significant
delays in contacting, and in receiving responses from the Company's customer and
technical support personnel. In certain situations, these events have created
customer relations issues for the Company including cancellation of the account.

PUBLISHING PARTNERS. The Company will also explore relationships with other
companies that publish data to specific industry segments. The intent is to
develop alternative revenue streams by enabling the publishers to deliver the
data that they presently distribute to a specific market with the PC411 search
technology. Thus, the Company will penetrate new market segments with a minimum
investment in sales representation.

TECHNOLOGY AND PRODUCT DEVELOPMENT

A key part of the Company's ability to generate revenues depends on its
ability to define, sort and deliver data (listing information) in a timely,
secure and dependable time frame. The Company's data center allows the Company
to operate in just such a manner. The design allows for scalability,
duplication, security, accuracy and dependability in executing user demands. As
users require alternate configurations to address their individual intranet or
SOHO needs, the system can be easily reconfigured.

The Company's data center is accessible by answering machine 24 hours a day,
7 days a week and is housed in a secure, temperature controlled computer room
with an emergency power supply. Nevertheless from time to time, subscribers have
experienced significant delays in contacting, and in receiving responses from
the Company's customer and technical support personnel. In certain situations,
these events have created customer relations issues for the Company including
cancellation of the account.

The Company's server technology encompasses search techniques specifically
designed for names, businesses, telephone numbers and addresses, and licensed
database and other software from third parties. The core design of the Company's
data center is a scaleable, object oriented, distributed, information search and
retrieval system. The Company's graphical user interface enables users to access
and search the database of telephone book listings and receive rapid responses
to their queries. The Company's core technology is characterized by the
following important features:

SEARCH ACCURACY. The Company's search techniques are designed to mimic the
thought process of a very experienced and fast directory assistance operator.
The Company's core technology is designed to find a listing for a user taking
into account that (a) the user most likely does not know exactly how the
business or residence is listed, (b) the myriad of ways people and businesses
choose to be listed in telephone books and (c) the inconsistent formats used in
different telephone books.

FLEXIBLE AND SCALEABLE ARCHITECTURE. The distributed server architecture
consists of independent servers that handle modem communications, Internet
communications, customer usage tracking and management, customer billing, and
the storage and retrieval of over 110 million listings. Multiple instances of
each server software can co-exist and share work loads while system monitoring
software can re-establish connections between different server programs if
necessary. This structure provides for fast access, shared processing, fault
tolerance, and rapid scaleability. The servers are housed in a secure,
temperature controlled computer room with an uninterruptable power supply. The
modem communication server can handle multiple modem connections simultaneously.
The Internet communications server connects the PC411 service to the Internet
through a partial T-1 line. The customer database establishes, maintains, and
processes accounts for the Company's customers and permits and tracks usage of
the PC411 service. The billing functions provide real time credit card
verification and electronic, batch credit card processing. The listings database
server provides access to a database of more than 110 million records using the
Company's search techniques. Data is maintained and stored on fault tolerant
hard disk drives.

BUSINESS MANAGEMENT FUNCTIONS. The Company's core technology includes
features for essential business management functions related to the Company's
on-line service. These functions include listing

39
<PAGE>
management, subscriber management and billing, and commission tracking. For
example, the listing management function permits the Company to charge users by
the listing or by the search and lets the Company provide and track trial usage
by either a dollar limit, a connections limit or a days limit. The Company
believes these functions provide a sophisticated and valuable foundation for
managing relationships with subscribers, data providers and marketing partners.

DATA DIVERSITY. The Company licenses its data from Pro CD and currently
stores over 110 million telephone book listings from the United States and
Canada. The Company's systems allow for the integration and delivery of multiple
sources of data. This capability includes software filters that transform third
party data suppliers content into standard formats for loading into the
database. As a result, the Company, if required, can accept multiple data
sources.

INTEGRATION. It is the Company's strategy to re-design PC411 FOR WINDOWS to
link directly into third party software packages (I.E., personal information
managers, contact managers, databases, word processors, E-mail managers, and
mail list management software). The Company also intends to develop its internet
software tools as plug-ins for Web browsers and search engines (I.E.,Microsoft
Explorer, Netscape Navigator, Qualcomm Eudora, Alta Vista Extensions).
Additionally, the Company intends to develop OEM products for proprietary
hardware manufacturers in the telephony and cable modem markets.

COMPETITION

The on-line services market and the market for listing information and
related services is extremely competitive and there are no substantial barriers
to entry. The Company expects that competition will intensify in the future. The
Company competes, and will in the future compete, with traditional, widely used
directory services such as the printed white pages, yellow pages, operator
assisted directory services, on-line directories, CD-ROM directories, and with
mailing list providers, many of which provide their information both in
electronic and traditional forms. The Company is currently aware of
approximately a dozen Web sites that provide residential and business listings
and/or E-mail addresses, including those belonging to Netscape Communications
Corporation and Yahoo!, Inc. Generally, all of the Company's competitors have
substantially greater financial, technical, human, and marketing resources than
those of the Company and greater experience than the Company in developing and
marketing on-line services and directory databases. Such companies include
local, regional and long distance telecommunication companies, telephone
directory publishers, on-line or Internet services, a multitude of regional,
international and industry specific directory companies, and a variety of
commercial and institutional search engines and databases. In addition, many of
the Company's competitors provide directory assistance listings for free in
order to attract viewership and advertise their other products. Telephone
companies have provided directory assistance services for many years in
conjunction with their common carrier telephone communication services. They
also control the updating, production and distribution of telephone books which
contain telephone numbers and address information. Traditionally, they have held
dominant positions in their respective markets. Telephone companies may respond
to new competition, including competition from the PC411 service, by enhancing
their services in ways that cannot be matched by PC411 due to their position in
the telecommunications industry and by linking directory assistance service to
other products and services they offer. The Company believes that its ability to
compete successfully will depend upon a number of factors, including brand
awareness and market presence; the quality and completeness of its data; the
accuracy of its search engine; the pricing policies of its competitors and
suppliers; the features, ease of use and timing of introductions of new services
by the Company and its competitors; and industry and general economic trends.
Competitive pressures could result in reduced market share, price reductions,
and increased spending on marketing and product development, which could
adversely affect the Company's earnings and its ability to gain market share.

40
<PAGE>
INTELLECTUAL PROPERTY

The Company believes that it will be critical to establish itself as a
branded supplier of directory assistance services and information. Accordingly,
the Company regards its copyrights, service mark, trade secrets, and similar
intellectual property as important to its success, and relies upon trademark and
copyright law, trade secret protection, and confidentiality and/or license
agreements with its employees, customers, partners, and others to protect its
proprietary rights. "PC411" is a registered service mark on the principal
register of the United States is owned by the Company. In addition, the Company
has copyrighted the PC411 FOR WINDOWS software. No assurance can be given that
any copyright or service mark will be enforceable and copyright laws afford only
limited protection. Furthermore, there can be no assurance that any copyright or
other rights will exclude competitors or provide competitive advantages to the
Company. The Company intends to protect its mark and copyright by taking
appropriate legal action whenever necessary, although there can be no assurance
that the Company will be able to effectively enforce or protect its rights and
prevent others from using the same or similar marks or copyrights. The Company's
inability or failure to establish, or adequately protect its intellectual
property rights may have a material adverse effect on the Company. A
determination that the Company's use of the mark "PC411" infringes or otherwise
violates the rights of owners of similar marks may cause the Company to incur
significant expense and may also have a material adverse effect on the Company's
growth prospects. See "Legal Proceedings" below.

REGULATION

Generally, there are few specific government imposed limitations or
guidelines pertaining to customer privacy or the pricing, service,
characteristics or capabilities, geographic distribution or quality control
features of products and services sold over the Internet. There exists, however,
the risk that a U.S. governmental policy for regulating of the data network
industry could be affected by executive order, legislation regulation or
administrative rules or orders. Any such policy or regulations could have a
material adverse effect on the Company, particularly if it makes use of and
access to the Internet more difficult or costly. The Company cannot predict the
impact, if any, that future regulation, legislation or regulatory changes may
have on its business. There is currently pending in Congress legislation which
would grant protection similar to copyright protection to compilers of data.
Such legislation, if enacted, may give telephone companies the right to preclude
others, such as Pro CD, from converting printed telephone directories into
digital format without the consent of the telephone companies. In such event,
the Company would have to seek alternative sources for licensing its database.
There can be no assurance that such alternative sources would be available or
would be willing to enter into a license arrangement with the Company on terms
and conditions acceptable to the Company, if at all. In addition, recent
legislative enactments, such as the Telecommunications Act, and pending
legislative proposals aimed at limiting the use of the Internet to transmit
certain information may decrease demand for Internet access, chill the
development of Internet content, or have other adverse affects on Internet
service and product providers. In light of the uncertainty attached to
interpretation and application of such laws, there can be no assurance that the
Company would not have to modify its operations to comply with the statute.
Finally, although the Company distributes published information that is already
legally available to the public, there can be no assurance that due to the ease
and price at which this information is available through PC411 that the Company
will not face issues regarding invasion of privacy. Regulatory changes or new
regulations relating to the telecommunications and media industries or with
respect to invasion of privacy could directly effect the Company's business by
either placing restrictions on PC411 or creating opportunities for other
competitors.

INSURANCE

The Company's operations are dependent on its ability to protect its data
center and network systems against damage from fire, earthquake, power loss,
telecommunications failure, natural disaster and similar

41
<PAGE>
events. The Company does not have redundant, multiple site capacity in the event
of such occurrence. The Company's computer equipment is located at its
facilities in Inglewood, California. Any damage or failure that causes
interruptions in the Company's operations could have a material adverse effect
on the Company's business and results of operations. While the Company carries
property and business interruption insurance, such coverage may not be adequate
to compensate the Company for all losses that may occur.

EMPLOYEES

The Company currently has two full-time employees -- its Chief Executive
Officer and Chief Technology Officer -- and two part-time employees. In
addition, the Company uses five independent consultants, three of which are
former executive officers of the Company. None of the Company's employees are
covered by a collective bargaining agreement. The Company believes its
relationship with its employees is good.

In January 1997, all of the Company's executive officers and directors,
including its founder Christopher C. Hansen, resigned. Immediately thereafter,
the stockholders of the Company nominated and elected new directors who
immediately appointed new officers. The former officers and directors resigned
in order to pursue other opportunities. In connection therewith, termination
agreements were entered into with the Company which provided for, among other
things, mutual releases.

PROPERTIES

The Company leases approximately 3,000 square feet of space in Inglewood,
California which it uses as its executive offices and for all of its sales, data
center, service and administrative functions. Monthly rent is $2,657 plus a
proportionate share of utilities, insurance, capital and operation expenses. The
lease terminates August 31, 2000. The Company may use a portion of the net
proceeds of the Offering to expand or relocate its facilities.

LEGAL PROCEEDINGS

There is no litigation pending against the Company. In March 1995, the
Company was notified by a California company that its use of the "PC 411" name
or any name with "411" infringed upon such company's right to their registered
trademark. A demand was made that the Company cease and desist from use of the
Company's registered "PC411" mark. The Company rejected such demand. The Company
has not received any further communication with respect to this matter. The
Company is not aware of any other threatened litigation.

42
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The Company's executive officers, directors, and nominees for directors are
as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- ------------------------------------------------------------------
<S> <C> <C>
Dean R. Eaker.......................... 40 President, Chief Executive Officer and Director
Edward A. Fleiss....................... 40 Vice President--Chief Technology Officer
Robert M. Lundgren..................... 38 Vice President, Chief Financial Officer, Secretary, Treasurer and
Director
Richard J. Lampen...................... 43 Director
Henry Morris........................... 43 Director Nominee
</TABLE>

DEAN R. EAKER was engaged as the President and Chief Executive Officer of
the Company and became a director thereof in January 1997. Prior to that time,
he was the President of Electronic Pictures Corp. ("EPC"), a company he founded
in 1986. EPC specialized in developing markets for media and digital technology
firms. After selling its publishing assets in 1989, EPC provided consulting
services to publishing and technology companies such as Cowles Business Media
and IBM's Media and Entertainment division. From 1991-1994, Mr. Eaker also
served as Senior Vice President & Group Publisher of Knowledge Industry
Publications, a publishing concern. In 1994, Mr. Eaker helped found Millennium
Media Group, an electronic publishing company which published CD-ROM software
for the education and consumer entertainment market. Mr. Eaker received a degree
in Business Administration in 1979 from the University of Miami.

EDWARD A. FLEISS was engaged by the Company in January 1997 to serve as
Vice President--Chief Technology Officer. Since 1996, he has served as the Chief
Technology Officer of EPC. From 1993-1996 he served as Technology Sales Manager
for Marcus Technology, Inc., New York, NY, a network integration firm
specializing in printing and publishing systems, where he was responsible for
developing server based solutions for the integration of proprietary and
non-proprietary pre-press graphics workstations and researched and evaluated the
use of new technology to be included in client solutions. From 1989-1993, Mr.
Fleiss was the Technology Manager of Profile PS, Inc., Plainview, NY, where his
responsibilities included evaluating the Company's capabilities in high-end
electronic production, co-ordinated the Company's involvement in the Beta
testing of various products, staff training and resolving client desktop
publishing related issues. Mr. Fleiss was also one of the original founders of
the former Association for Imaging Service Bureaus, one of the predecessors of
the International Digital Image Association. Mr. Fleiss received a Bachelor of
Arts in Radio, Television and Film Production from the School of Communications
and Theatre of Temple University in 1978.

ROBERT M. LUNDGREN has served as Vice President, Chief Financial Officer,
Secretary and Treasurer and a Director of the Company since January 1997. Since
November 1994, Mr. Lundgren has been employed by NVC, a publicly held company
engaged in the investment banking and brokerage business, in the ownership and
management of commercial real estate in the United States and Russia and in the
computer software business. Since May 1996, he has held the position of Vice
President and Chief Financial Officer of NVC. From November 1992 to November
1994, Mr. Lundgren worked for Deloitte & Touche as a Senior Manager in the audit
practice. Prior to 1992, Mr. Lundgren was an auditor at another "Big Six"
accounting firm and held financial positions with several different companies.
Mr. Lundgren has been a certified public accountant since 1981 and holds a
Bachelor of Science in Accounting from Wake Forest University.

RICHARD J. LAMPEN has served as a director of the Company since January
1997. Since October 1995, Mr. Lampen has been the Executive Vice President of
NVC and since July 1996, the Executive Vice President of its affiliates, Brooke
Group Ltd. ("Brooke"), a New York Stock Exchange listed holding company, and
BGLS Inc. ("BGLS"), a wholly-owned subsidiary of Brooke. From May 1992 to
September 1995, Mr. Lampen was a partner at Steel Hector & Davis, a law firm
located in Miami, Florida. From

43
<PAGE>
January 1991 to April 1992, Mr. Lampen was a Managing Director at Salomon
Brothers Inc, an investment bank, and was an employee at Salomon Brothers Inc
from 1986 to April 1992. Mr. Lampen is a director of NVC and Thinking Machines
Corporation, a developer and marketer of data mining and knowledge discovery
software and services in which NVC indirectly holds a controlling interest. Mr.
Lampen has served as a director of a number of other companies, including U.S.
Can Corporation and The International Bank of Miami, N.A., as well as a
court-appointed independent director of Trump Plaza Funding, Inc. Mr. Lampen
received a Bachelor of Arts degree from The Johns Hopkins University in 1975 and
received a Juris Doctorate degree in 1978 from Columbia Law School.

HENRY MORRIS has been nominated to become a director of the Company
immediately upon the consummation of the Offering. Since 1989, Mr. Morris has
been the Chairman and President of Morris & Carrick, Inc., a leading political
media consulting firm. Mr. Morris is Chairman of the Board and Chief Executive
Officer of Curran & Connors, Inc., a leading designer and producer of annual
reports and corporate literature. Mr. Morris received a Bachelor of Arts degree
in 1974 from Columbia College and a Juris Doctorate degree in 1978 from Columbia
Law School.

Each director of the Company holds office until the next annual meeting of
stockholders, or until his successor is elected and qualified. At present, the
Company's By-laws provide for not less than two directors nor more than nine
directors. Currently, there are currently three directors of the Company and one
director-nominee who will become a director upon consummation of the Offering.
The Underwriter, for three (3) years after the date of this Prospectus, has the
right to designate a director to serve on the Company's Board of Directors. The
By-laws permit the Board of Directors to fill any vacancy and such director may
serve until the next annual meeting of stockholders or until his successor is
elected and qualified. Officers serve at the discretion of the Board of
Directors.

COMMITTEES OF THE BOARD OF DIRECTORS

Following the Offering the Board of Directors will have an Audit Committee
comprised of Messrs. Lampen and Morris. The Audit Committee recommends to the
Board of Directors the appointment of independent auditors, reviews and approves
the scope of the annual audit of the Company's financial statement reviews and
approves any non-audit services performed by the independent auditors and
periodically reviews and approves major accounting policies and significant
internal accounting control procedures.

Following the Offering the Board of Directors will also have a Compensation
Committee comprised of Messrs. Lampen and Morris. The Compensation Committee
reviews and recommends to the Board of Directors compensation arrangements for
officers and directors, administers stock option plans and reviews major
personnel matters.

DIRECTOR'S COMPENSATION

The Company will pay each director who is not a full-time employee of the
Company an annual retainer of $5,000, payable quarterly and will reimburse the
directors for reasonable travel expenses incurred in connection with their
activities on behalf of the Company. See "Stock Options" below.

EXECUTIVE COMPENSATION

No executive of the Company received more than $100,000 in compensation in
1996. The following table sets forth the combined annual salary and bonus paid
or accrued by the Company for the years ended December 31, 1995 and 1996 to the
Company's then President and Chief Executive Officer who resigned in January
1997.

44
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------
<S> <C> <C> <C>
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)
- ------------------------------------------------------------------------------------- --------- ----------- ---------------
Christopher C. Hansen (1)............................................................ 1996 50,000 0
1995 33,333 0
</TABLE>

- ------------------------
(1) Mr. Hansen's annualized salary was $50,000 for 1995. However, he did not
begin to draw any salary until May, 1995. In January 1997, Mr. Hansen, along
with all of the other officers and directors of the Company, resigned from
their respective positions. Mr. Hansen continues to provide services to the
Company as an independent consultant.

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements ("Employment Agreements")
with Dean R. Eaker and Edward A. Fleiss, both of which will take effect as of
the date of the consummation of the Offering. Mr. Eaker's and Mr. Fleiss'
Employment Agreements have an initial term through June 30, 1998, with automatic
renewals after the initial term for additional one-year periods unless notice of
non-renewal is given by either party within the ninety-day period prior to the
termination date. Mr. Eaker's Employment Agreement provides for a base salary of
$180,000. Mr. Fleiss' Employment Agreement provides for a base salary of
$96,000. Base salaries may be supplemented by discretionary and performance
increases as may be determined by the Board of Directors. The Employment
Agreements provide, among other things, for participation in an equitable manner
in any profit-sharing or retirement, life insurance and disability plans for
employees or executives and for participation in other employee benefits
applicable to employees and executives of the Company. Pursuant to the
Employment Agreements, termination of employment by the Company without "cause",
or by the executive following a material adverse change in title, duties or
benefits, would subject the Company to liability for liquidated damages in an
amount equal to six months' base salary. Each such Employment Agreement contains
a non-competition covenant with the Company for a period of one year following
termination of employment.

STOCK OPTIONS

Prior to the date of this Prospectus, in order to attract and retain persons
necessary for the business of the Company, the Company adopted its 1997 Stock
Option Plan (the "Option Plan") covering up to 750,000 shares, pursuant to which
officers, directors and key employees of the Company and consultants to the
Company are eligible to receive incentive and/or non-incentive stock options.
The Option Plan, which expires ten years from the date of its adoption, will be
administered by the Board of Directors or the Compensation Committee. The
selection of participants, allotment of shares, determination of price and other
conditions relating to the grant of options will be determined by the Board of
Directors, or the Compensation Committee. Incentive stock options granted under
the Option Plan are exercisable for a period of up to 10 years from the date of
grant at an exercise price which is not less than the fair market value of the
Common Stock on the date of the grant, except that the term of an incentive
stock option granted under the Option Plan to a stockholder owning more than 10%
of the outstanding Common Stock may not exceed five years and its exercise price
may be not less than 110% of the fair market value of the Shares on the date of
the grant. As of the date of this Prospectus, the Company has granted options
under the Option Plan to Mr. Eaker to acquire 364,000 shares of Common Stock at
an exercise price of $4.40 per share, to Mr. Fleiss to acquire 40,000 shares of
Common Stock at an exercise price of $4.40 per share and to Mr. Lundgren to
acquire 40,000 shares of Common Stock at an exercise price of $5.50 per share.
One-third of such options are exercisable upon consummation of the Offering and
one-third are exercisable at the end of each of the first and second year
following consummation of the Offering. In addition, the Company has granted
options to acquire 1,727 shares of Common Stock at an exercise price of $5.50
per share to one of its outside consultants.

Under the Option Plan, each director who is not an executive officer of the
Company, immediately upon first taking office, is granted options for 6,000
shares of Common Stock exerciseable at the fair

45
<PAGE>
market value of such shares on the date of grant. Options for 3,000 shares
covered thereby are exercisable immediately and options for 3,000 shares will be
exercisable on the first anniversary of the date of grant. Subsequently, annual
grants of options to purchase 3,000 shares of Common Stock will be made upon
such person's reelection as a director of the Company. All options granted under
the Option Plan are post stock split. See "Capitalization--Reorganization and
Stock Split."

In January 1997, the Company issued to DAH the Principal Stockholder's
Option consisting of options to purchase 500,000 shares of Common Stock at an
exercise price of $5.75 per share.

In June 1994, the Company adopted the 1994 Long Term Incentive and Share
Award Plan. As of December 31, 1996, options to acquire 30 shares of Common
Stock at an exercise price of $1,990 per share previously granted by the Company
to one of its prior employees were still outstanding. In January 1997, in
connection with the resignation of such employee, these options were canceled
and this plan was terminated.

INDEMNIFICATION OF DIRECTORS AND RELATED MATTERS

The Company's Amended and Restated Certificate of Incorporation limits, to
the maximum extent permitted by the DGCL, the personal liability of directors
and officers for monetary damages for breach of their fiduciary duties as
directors and officers (other than liabilities arising from acts or omissions
which involve intentional misconduct, fraud or knowing violations of law or the
payment of distributions in violation of the DGCL). The Amended and Restated
Certificate of Incorporation provides further that the Company shall indemnify
to the fullest extent permitted by the DGCL any person made a party to an action
or proceeding by reason of the fact that such person was a director, officer,
employee or agent of the Company. Subject to the Company's Amended and Restated
Certificate of Incorporation, the By-laws provide that the Company shall
indemnify directors and officers for all costs reasonably incurred in connection
with any action, suit or proceeding in which such director or officer is made a
party by virtue of his being an officer or director of the Company, except where
such director or officer is finally adjudged to have been derelict in the
performance of his duties as such director or officer.

The Company has entered into indemnification agreements with Messrs. Eaker
and Fleiss. The Company may enter into separate indemnification agreements with
other officers and directors containing provisions which are in some respects
broader than the specific indemnification provisions contained in the Company's
Amended and Restated Certificate of Incorporation and By-laws. The
indemnification agreements may require the Company, among other things, to
indemnify such directors and officers against certain liabilities that may arise
by reason of their status as directors and officers (other than liabilities
arising from willful misconduct of a culpable nature), to advance their expenses
as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' insurance, if available on
reasonable terms. The Company believes these agreements are necessary to attract
and retain qualified persons as directors and officers. Insofar as
indemnification for liabilities under the Securities Act may be provided to
officers, directors or persons controlling the Company, the Company has been
informed that in the opinion of the Commission, such indemnification is against
public policy and is therefore unenforceable.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which may result in a claim for such indemnification.

46
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the shares of
Common Stock owned on the date of this Prospectus and, as adjusted, to reflect
the sale of Shares offered by this Prospectus, by (i) each person who is known
by the Company to own beneficially more than five percent (5%) of the Company's
Common Stock; (ii) each director of the Company; and (iii) all executive
officers and directors of the Company as a group:

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES OF
COMMON STOCK(1)
------------------------
NUMBER OF SHARES OF BEFORE AFTER
NAME AND ADDRESS(2) COMMON STOCK OFFERING OFFERING
- ----------------------------------------------------------------- ------------------- ----------- -----------
<S> <C> <C> <C>
New Valley Corporation(3)(4)..................................... 1,990,000 92.56% 60.30%
Direct Assist Holding, Inc.
100 S.E. 2nd Street
Miami, FL 33131
Dean R. Eaker(4)................................................. 121,333 6.85% 4.15%
67 Stonehedge Drive South
Greenwich, CT 06831
Henry Morris(4)(5)............................................... 3,000 * *
432 Park Avenue So.
New York, NY 10016
Richard J. Lampen(3)(4).......................................... 3,000 * *
100 S.E. 2nd Street
Miami, FL 33131
Robert Lundgren(3)(4)............................................ 13,333 * *
100 S.E. 2nd Street
Miami, FL 33131
All executive officers and directors (including director
nominees) as a group (5 persons)(4)............................ 153,999 8.54% 5.21%
</TABLE>

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

* Less than 1%

(1) Assumes no exercise of the Warrants, the Over-Allotment Option, the
Underwriter's Option, or the NVC Warrants. See "Shares Eligible for Future
Sale."

(2) Unless otherwise indicated, each named person has sole voting and investment
power with respect to the shares set forth opposite such named person's
name.

(3) Both NVC and DAH, a wholly-owned subsidiary of NVC, have shared voting and
investment power with regard to such shares. Does not include the NVC
Warrants or the shares of Common Stock underlying the NVC Warrants. Robert
Lundgren, a director and executive officer of the Company, serves as Vice
President, Chief Financial Officer and Treasurer of NVC and DAH. Richard J.
Lampen, a director of the Company, serves as Executive Vice President of NVC
and DAH and as a director of NVC. Neither Mr. Lundgren nor Mr. Lampen has
investment authority or voting control over the Company's securities. The
other executive officers and directors of NVC and DAH are Bennett S. LeBow,
Chairman and Chief Executive Officer of NVC and Chairman, President and
Chief Executive Officer of DAH; Howard M. Lorber, President of NVC and a
director of NVC and DAH, and Henry C. Beinstein, Arnold I. Burns, Ronald J.
Kramer, Richard S. Ressler and Barry W. Ridings, directors of NVC. Brooke
holds a 42% voting interest in NVC. The executive officers and directors of
Brooke are Bennett S. LeBow, Chairman, President and Chief Executive
Officer, Richard J. Lampen, Executive Vice President, Joselynn D. Van
Siclen, Vice President, Chief Financial Officer and Treasurer, and Robert J.
Eide and Jeffrey S. Podell, directors. See "Management--Executive Officers
and Directors."

(4) Includes shares subject to options exercisable within 60 days of the date of
the effective date of the Offering.

(5) Director nominee.

47
<PAGE>
CERTAIN TRANSACTIONS

The Company and DAH, a wholly owned subsidiary of NVC, entered into an
agreement dated as of May 10, 1995, as amended, pursuant to which the Company
sold and DAH purchased 1,820 shares of the Company's authorized Preferred Stock
for an aggregate of $1,001,000 ($550 per share). The holder of the Preferred
Stock is entitled to receive an annual cash dividend of $55 for each share of
Preferred Stock. The right to receive dividends is cumulative. Approximately
$170,000 of the net proceeds of the Offering will be used to pay accrued and
unpaid dividends on the Preferred Stock held by DAH. Initially, the Preferred
Stock was convertible into shares of Common Stock on a one for one basis. In
connection with the Loan Agreement (defined below), the conversion ratio on the
Preferred Stock was increased to 4.7395 shares of Common Stock for each share of
Preferred Stock.

The Company entered into a Loan and Security Agreement, dated as June 27,
1996, as amended (the "Loan Agreement"), with NVC pursuant to which NVC agreed,
from time to time and in its absolute and sole discretion, to lend the Company
up to an aggregate of $750,000. The Company anticipates that the aggregate
outstanding principal balance on the NVC Notes and accrued interest thereon on
the date of this Prospectus will be approximately $700,000. Through December 31,
1996 NVC has made 10 advances aggregating approximately $327,000. Each advance
is evidenced by a demand promissory note issued by the Company and payable to
NVC and bears interest at a rate of 12% per annum. The NVC Notes are secured by
all of the assets of the Company. The Company will issue the NVC Warrants to NVC
in satisfaction of $250,000 of the indebtedness owed to NVC. The NVC Warrants
are of the same class and have the same terms and conditions as the Warrants
offered hereby. Accordingly, each NVC Warrant entitles the holder thereof to
purchase one share of Common Stock during the Warrant Exercise Period at a price
equal to $6.10 per share. Upon consummation of the Offering, the remaining
amount due to NVC, including accrued interest, estimated to be approximately
$450,000, will be repaid out of the net proceeds of the Offering and the Loan
Agreement will be terminated.

In 1996, the Company paid approximately $26,000 to Matthew E. Stasior, a
former director of the Company, for consulting services rendered to the Company.

In December 1996, NVC made a demand for payment with respect to the debt
owed by the Company under the Loan Agreement. The Company failed to pay the
amount due. In January 1997, the Company, DAH (on behalf of NVC), The Conrad
Corporation and Matthew Stasior, stockholders of the Company, entered into an
agreement which, among other things, provided for the following: (a) DAH will
convert the 1,820 shares of Preferred Stock it owns into 8,626 shares of Common
Stock; (b) prior to the Offering, the outstanding shares of Common Stock will be
split 172.7336 for 1; (c) The Conrad Corporation will contribute to the Company
such number of shares of Common Stock so that its holdings (post stock-split)
will be reduced to 75,000 shares; (d) Matthew Stasior will contribute to the
Company such number of shares of Common Stock so that his holdings (post
stock-split) will be reduced to 25,000 shares; and (e) NVC agreed to withdraw
its demand for payment and to provide additional funding to the Company.

In January 1997, the Company issued to DAH the Principal Stockholders
Option, consisting of options to purchase 500,000 shares of Common Stock at an
exercise price of $5.75 per share. The Company has agreed with DAH that, upon
its written request, the Company will file a registration statement with respect
to the shares of Common Stock acquired upon the exercise of such options. The
Company has agreed, to the extent permitted by law, to indemnify and hold
harmless each of DAH and NVC against certain liabilities in connection with the
registration and offering of the Company's securities, including liabilities
arising under the Securities Act, the Exchange Act or any comparable state
securities laws. The Company has further agreed to pay all fees and expenses
incident to the registration of such securities, except selling commissions and
fees and expenses of counsel and any other professional advisors, if any, to
each of DAH and NVC.

All future transactions with affiliates will be on terms no less favorable
than could be obtained from unaffiliated parties and will be approved by a
majority of the independent and disinterested directors. Any future loans to
Company officers, directors, affiliates and/or stockholders will be approved by
a majority of the independent and disinterested directors.

48
<PAGE>
DESCRIPTION OF SECURITIES

The Company is authorized to issue 25,000,000 shares of Common Stock and
5,000,000 shares of preferred stock. As of the date of this Prospectus, there
are 1,650,000 shares of Common Stock outstanding held of record by four
stockholders and no shares of Preferred Stock outstanding. In addition, prior to
the date of this Prospectus, the Company issued the NVC Warrants. Prior to the
Offering, there has been no public market for any of the Securities, and there
can be no assurance given that a regular trading market for any of the
Securities will develop after the completion of the Offering. If a trading
market does in fact develop, there can be no assurance given that it will be
sustained. In connection with the Offering, application has been made to list
the Units, the Common Stock and the Warrants on the Bulletin Board under the
symbols PCFRU, PCFR and PCFRW, respectively. If, for any reason, a public
trading market does not develop, purchasers of such Securities may have
difficulty selling their securities should they desire to do so. The Company's
listing application for listing the Securities with the NASDAQ Smallcap Market
was rejected by NASDAQ and no assurance can be given that a listing can be
attained in the future.

UNITS

Each Unit offered hereby consists of one share of Common Stock and one
Warrant. The Shares and the Warrants included in the Units will be detachable
and will trade separately immediately upon issuance. Should the Warrants
included in the Units be exercised, of which there is no assurance, the Company
will receive the proceeds therefrom, aggregating up to an additional $7 million.
(In addition, the Company may receive an additional $6.1 million in proceeds
from the exercise of the NVC Warrants.) Application has been made to list the
Units on the Bulletin Board under the symbol PCFRU. There is no assurance that
the Units will be quoted on such system. Currently, there is no established
market for the Units and there is no assurance that any such market will develop
or be maintained after the Offering.

COMMON STOCK

There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result in
a dilution of the interest of the existing stockholders should additional shares
of Common Stock be issued. In addition, the rights of holders of the shares of
Common Stock may become subject in the future to prior and superior rights and
preferences in the event the Board of Directors establishes one or more
additional classes of Common Stock or one or more series of Preferred Stock. The
Board of Directors has no present plan to establish any such additional class or
series. See "Risk Factors--Delaware Anti-Takeover Statute; Issuance of Preferred
Stock; Barriers to Takeover." Holders of the Common Stock are entitled to
receive such dividends, if any, as may be declared by the Board of Directors out
of assets legally available therefor and to share ratably in the assets of the
Company available upon liquidation.

Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions, such as
amendments to the certificate of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of a
majority of the outstanding shares of Common Stock. Other matters to be voted
upon by the holders of Common Stock normally require the affirmative vote of a
majority of the shares present or represented by proxy at the particular
stockholders' meeting. Prior to the completion of this Offering, the Company's
directors, officers and greater then 5% stockholders as a group beneficially own
approximately 93% of the outstanding Common Stock of the Company. Upon
completion of this Offering, such persons will beneficially own approximately
62% of the outstanding shares (59% if the Over-Allotment Option is exercised in
full). See "Principal Stockholders." Accordingly, such persons will continue to
be able to control the Company's affairs, including, without limitation, the
sale of equity or

49
<PAGE>
debt securities of the Company, the appointment of officers, the determination
of officers' compensation and the determination whether to cause a registration
statement to be filed.

The Company has applied for the listing of the shares of Common Stock on the
Bulletin Board under the symbol PCFR. There can be no assurance that such shares
will be quoted on such system. There is currently no established market for the
Common Stock, and there is no assurance that any such market will develop or be
maintained after the Offering. See "Risk Factors--Lack of Public Market;
Determination of Offering Price; Volatility of Price of Securities."

PREFERRED STOCK

The Board of Directors of the Company is authorized (without any further
action by the stockholders) to issue preferred stock in one or more series and
to fix the voting rights, liquidation preferences, dividend rates, conversion
rights, redemption rights and terms, including sinking fund provisions, and
certain other rights and preferences. Satisfaction of any dividend preferences
of outstanding preferred stock would reduce the amount of funds available for
the payment of dividends, if any, on the Common Stock. Also holders of the
preferred stock would normally be entitled to receive a preference payment in
the event of any liquidation, dissolution or winding up of the Company before
any payment is made to the holders of Common Stock. In addition, under certain
circumstances, the issuance of preferred stock may render more difficult or tend
to discourage a merger, tender offer or proxy contest, the assumption of control
by a holder of a large block of the Company's securities, or the removal of
incumbent management. The Board of Directors of the Company, without stockholder
approval, may issue preferred stock with voting and conversion rights which
could adversely affect the holders of Common Stock. On the date of this
Prospectus, none of the 5,000,000 authorized shares of preferred stock are
outstanding and the Company has no present intention to issue any shares of
preferred stock.

REDEEMABLE CLASS A WARRANTS

The Units being offered hereby include 1,150,000 Warrants. In addition,
prior to the consummation of the Offering the Company will have issued the NVC
Warrants, the terms of which are identical to the Warrants offered hereby. See
"Certain Transactions." Except as otherwise specifically provided herein, the
following description of the Warrants and their terms apply to the NVC Warrants
as well.

The Warrants will be issued under and governed by the provisions of a
Warrant Agreement (the "Warrant Agreement") between the Company and American
Stock Transfer and Trust Company, as warrant agent (the "Warrant Agent") and
will be evidenced by warrant certificates in registered form. The following
summary of the Warrant Agreement is not complete and is qualified in its
entirety by reference to the Warrant Agreement, a copy of which has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.

Each Warrant entitles the holder thereof to purchase one share of Common
Stock at a price equal to $6.10 per share during the Warrant Exercise
Period--the period commencing one year from the date of this Prospectus and
terminating four years thereafter. The shares of Common Stock underlying the
Warrants will, upon exercise of the Warrants, be validly issued, fully paid and
nonassessable. The Warrants are redeemable by the Company at any time during the
Warrant Exercise Period for $0.01 per Warrant if the average closing price or
bid price of a share of Common Stock, as reported by NASDAQ, the Bulletin Board
or the National Quotation Bureau, as the case may be, equals or exceeds $9.625
for any twenty (20) consecutive trading days ending within five (5) day prior to
the date of the notice of redemption.

The Warrants can only be exercised when there is a current effective
registration statement covering the shares of Common Stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement, the Warrantholders will be unable to exercise the
Warrants and the Warrants may become valueless. Moreover, if the shares of
Common Stock underlying the Warrants are not registered or qualified for sale in
the state in which a Warrantholder resides, such holder might not be

50
<PAGE>
permitted to exercise the Warrants. In the event that the Warrants are called
for redemption, the Warrantholders may not be able to exercise their Warrants in
the event that the Company has not updated this Prospectus in accordance with
the requirements of the Securities Act or the Warrants have not been qualified
for sale under the laws of the state where the Warrantholder resides. In
addition, in the event that the Warrants have been called for redemption, such
call for redemption could force the Warrantholder to either (i) assuming the
necessary updating to the Prospectus and state blue sky qualifications have been
effected, exercise the Warrants and pay the exercise price at a time when, in
the event of a decrease in market price from the period preceding the issuance
of the call for redemption, it may be less than advantageous economically to do
so, or (ii) accept the redemption price, which, in the event of an increase in
the price of the Common Stock, could be substantially less than the market value
thereof at the time of redemption. See "Risk Factors--Current Prospectus and
State Registration Required to Exercise Warrants" and "--Potential Adverse
Effect of Redemption of Warrants; Market Overhang."

The Warrantholders are not entitled to vote, receive dividends, or exercise
any of the rights of holders of shares of Common Stock for any purpose. The
Warrants are in registered form and may be presented for transfer, exchange or
exercise at the office of the Warrant Agent. Although the Company has applied
for listing of the Warrants on the Bulletin Board under the symbol PCFRW, there
can be no assurance that the Warrants will be quoted on such system or under
such symbol. There is currently no established market for the Warrants, and
there is no assurance that any such market will develop.

Assuming there is a current effective registration statement covering the
shares of Common Stock underlying such Warrants, each Warrant may be exercised
by surrendering the Warrant certificate, with the form of election to purchase
on the reverse side of the Warrant certificate properly completed and executed,
together with payment of the exercise price to the Warrant Agent. The Warrants
may be exercised from time to time in whole or in part. If less than all of the
Warrants evidenced by a Warrant certificate are exercised, a new Warrant
certificate will be issued for the remaining number of Warrants.

The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Warrants to
protect Warrantholders against dilution in the event of stock dividends and
distributions, stock splits, recapitalizations, mergers, consolidations and
similar transactions.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Securities of the Company is the
American Stock Transfer and Trust Company located at 40 Wall Street, New York,
New York 10005.

51
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no market for the Units, the Common
Stock or the Warrants and no predictions can be made for the effect, if any,
that market sales of the Units, the Common Stock or the Warrants, or the
availability of any of such Securities for sale will have on the market price
prevailing from time to time. Sales of substantial amounts of the Units, the
Common Stock and the Warrants in the public market could adversely affect
prevailing market prices for the Units, the Common Stock and the Warrants and
impair the Company's ability to raise equity capital in the future.

Upon completion of the Offering, there will be 2,800,000 shares of Common
Stock issued and outstanding (2,972,500, if the Over-Allotment Option is
exercised in full) and 2,150,000 Warrants (including the NVC Warrants)
(2,322,500 if the Over-Allotment Option is exercised in full). Of these
securities, the 1,150,000 Shares and 1,150,000 Warrants which are part of the
Units offered hereby (1,322,000 Shares and 1,322,000 Warrants of the
Over-Allotment Option is exercised in full) will be freely tradable without
registration or other restriction under the Securities Act, except for any
shares purchased by an "affiliate" (as defined in the Securities Act) of the
Company. Shares of Common Stock purchased by an "affiliate" of the Company will
be subject to Rule 144.

The remaining 1,650,000 shares of Common Stock and 1,000,000 Warrants held
by stockholders prior to the date of this Prospectus, are restricted securities
as that term is defined in Rule 144 under the Securities Act ("Restricted
Securities"). Restricted Securities may be sold in the public market only if
registered under the Securities Act or if they qualify for an exemption from
registration under Rule 144 promulgated under the Securities Act. Sales of the
Restricted Securities in the public market, or the availability of such
securities for sale, could adversely affect the market prices of the Common
Stock and the Warrants. Each of the Company's officers, directors and
stockholders as of the date of this Prospectus, will enter into a Lock-Up
Agreement relating to securities beneficially owned as of such date pursuant to
which they agree not to, directly or indirectly, issue, offer, agree to offer to
sell, sell or grant an option for the purchase of sale, transfer, pledge,
assign, hypothecate, distribute or otherwise dispose of or encumber such
securities or options, rights, warrants or other securities convertible into,
exchangeable or exercisable for or evidencing any right to purchase or subscribe
for shares of Common Stock (whether or not beneficially owned by such person) or
any beneficial interest therein for a period of eighteen (18) months from the
date of this Prospectus without the consent of the Underwriter. The Restricted
Securities will also be subject to Rule 144. In general, under Rule 144 as
amended, any person (or persons whose shares are aggregated) including persons
deemed to be affiliates, whose restricted securities have been fully paid for
and held for at least one year from the later of the date of issuance by the
Company or acquisition from an affiliate, may sell such securities in brokers'
transactions or directly to market makers, provided that the number of shares
sold in any three-month period does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume of the
shares of Common Stock in the over-the-counter market during the four calendar
weeks preceding the sale. Sales under Rule 144 are also subject to certain
notice requirements and the availability of current public information about the
Company. After two years have elapsed from the later of the issuance of
restricted securities by the Company or their acquisition from an affiliate,
such securities may be sold without limitation by persons who are not affiliates
under the rule.

52
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, the Underwriter has agreed to purchase from the Company
1,150,000 Units offered hereby on a "firm commitment" basis. The Units are being
offered to the public at a price of $5.75 per Unit. The Underwriter had advised
the Company that sales to certain dealers who are NASD members may be made at
the public offering price less concessions not to exceed $.18 per Unit. After
the initial public offering, the public offering prices, concessions and
reallowances may be changed by the Underwriter. The Underwriter does not intend
to sell any of the Units to accounts over which it exercises discretionary
authority.

The Company has granted an option to the Underwriter, exercisable during the
30-day period from the date of this Prospectus, to purchase up to a maximum of
172,500 additional Units at the offering price, less the underwriting discount,
to cover over-allotments, if any.

The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
the Registration Statement, including liabilities under the Securities Act.

The Company has agreed to pay to the Underwriter a non-accountable expense
allowance of $198,375 equal to three percent (3%) of the aggregate offering
price of the Units offered hereby (or $221,131 assuming exercise of the
Over-Allotment Option). The Underwriter's expenses in excess of the stated
expense allowance will be borne by the Underwriter. To the extent that the
expenses of the Underwriter are less than the stated expense allowance, the
difference may be deemed compensation to the Underwriter in addition to the
sales commission payable to the Underwriter. The Company has agreed to pay the
Underwriter a consulting fee of $80,000 out of the net proceeds of this Offering
for financial advisory services to be rendered over the next two years.

The Company has agreed to grant to the Underwriter, or its designees, an
option to purchase up to an aggregate of 73,600 Units ("Underwriter's Option")
which are being registered in connection with this Offering. The Underwriter's
Option shall be exercisable during the four-year period commencing one (1) year
after the date of this Prospectus. The Underwriter's Option may not be assigned,
transferred, sold or hypothecated by the Underwriter after the date of this
Prospectus, except to officers or partners of the Underwriter or any of the
underwriters and selling group members in the Offering. Any profits realized by
the Underwriter upon the sale of the securities issuable upon exercise of the
Underwriter's Option may be deemed to be additional underwriting compensation.
The exercise price of the Units issuable upon exercise of the Underwriter's
Option during the period of exercisability shall be 165% of the initial public
offering prices of such Units. The exercise price of the Underwriter's Option
and the number of shares of Common Stock underlying the Underwriter's Option are
subject to adjustment in certain events to prevent dilution. The holders of the
Underwriter's Option are given, at a nominal cost, the opportunity to profit
from a rise in the market price of the Company's Common Stock and Warrants with
a resulting dilution in the interest of other stockholders. The Company may find
it more difficult to raise capital for its business if the need should arise
while the Underwriter's Option is outstanding. At any time when the holders of
the Underwriter's Option might be expected to exercise it, the Company would
probably be able to obtain additional capital on more favorable terms.

All existing stockholders have agreed in writing not to sell, assign or
transfer any of the Company's securities without the Underwriter's prior written
consent for a period of eighteen (18) months from the date of this Prospectus.
Subject to limited exceptions, the Company has also agreed not to issue any
additional securities other than as contemplated by this Prospectus for a period
of twenty four (24) months following the date of this Prospectus without the
consent of the Underwriter.

The Company has also agreed that, if it enters into a transaction (including
a merger, joint venture or the acquisition of another entity) introduced to the
Company by the Underwriter within five (5) years from

53
<PAGE>
the date of this Prospectus, the Company will pay the Underwriter a fee equal to
five percent of the first $3 million of consideration received by the Company,
four percent of the next $3 million, three percent of the next $2 million, two
percent of the next $2 million and one percent of the excess, if any, over $10
million. At the present time, the Company has no plans to enter into any such
transaction.

Following the consummation of the Offering, the Underwriter intends to seek
others to make a market in the Company's Securities in addition to the
Underwriter.

An affiliate of the Company and NVC, Ladenburg Thalmann & Co., Inc.
("Ladenburg"), is a registered broker-dealer which is not participating in the
distribution of the Securities offered hereby. In the past, in the ordinary
course of business, Ladenburg has participated, on customary terms, in the
distribution of other securities for which the Underwriter has acted as lead
underwriter. In addition, Ladenburg and the Underwriter may cooperate in the
future in the distribution of securities and in other matters relating to their
brokerage businesses.

WARRANT SOLICITATION FEE

Beginning one year after the date of this Prospectus, and to the extent not
inconsistent with the guidelines of the National Association of Securities
Dealers and the rules and regulations of the Commission, the Company has agreed
to pay to the Underwriter a warrant solicitation fee equal to 4% of the exercise
price for each solicited Warrant exercised, payable upon exercise of the
Warrant. However, no compensation will be paid to the Underwriter in connection
with the exercise of the Warrant if (a) the market price of the underlying
shares of Common Stock is lower than the exercise price of the Warrants, (b) the
Warrants are held in a discretionary account, except where prior specific
written approval for the exercise has been received, (c) the Warrants are
exercised in an unsolicited transaction, (d) the Underwriter has not provided
bona fide services in connection with the solicitation of the Warrant, (e) the
holder of the Warrant has not in writing designated the Underwriter as the party
to receive the solicitation fee, or (f) the compensation arrangements have not
been disclosed at the time of the exercise. In addition, unless granted an
exemption by the Commission from the trading practice rules, the Underwriter
will be prohibited from engaging in any market making activities or solicited
brokerage activities with regard to the Securities for the periods prescribed by
such rules or the termination by waiver or otherwise of any right the
Underwriter may have to receive a fee for the exercise of the Warrants following
such solicitation.

LITIGATION INVOLVING UNDERWRITER MAY AFFECT SECURITIES

The Company has been advised by the Underwriter that on or about May 22,
1995, the Underwriter and Elliot Loewenstern and Richard Bronson, principals of
the Underwriter, and the Commission agreed to an Offer of Settlement in
connection with a complaint filed by the Commission in the United States
District Court for the Southern District of Florida alleging violations of the
federal securities laws, Section 17(a) of the Securities Act, Section 10(b) and
15(c) of the Exchange Act, and Rules 10b-5, 10b-6 and 15c1-2 promulgated
thereunder. The complaint also alleged that in connection with the sale of
securities in three (3) IPO's in 1992 and 1993, the Underwriter engaged in
fraudulent sales practices. The proposed Offer of Settlement was consented to by
the Underwriter and Messrs. Loewenstern and Bronson without admitting or denying
the allegations of the complaint. The Offer of Settlement was approved by Judge
Gonzales on June 6, 1995. Pursuant to the final judgment (the "Final Judgment"),
the Underwriter:

- was required to disgorge $1,000,000 to the Commission, which amount was
paid in four (4) equal installments on or before June 22, 1995;

- agreed to the appointment of the Consultant.

The Consultant was obligated, on or before November 1, 1996:

- to review the Underwriter's policies, practices and procedures in six (6)
areas relating to compliance and sales practices;

54
<PAGE>
- to formulate policies, practices and procedures for the Underwriter that
the Consultant deems necessary with respect to the Underwriter's
compliance and sales practices;

- to prepare the Report devoted to and which details the aforementioned
policies, practices and procedures;

- to deliver the Report to the President of the Underwriter and to the staff
of the Southeast Regional office of the Commission;

- to prepare, if necessary, a supervisory procedures and compliance manual
for the Underwriter, or to amend the Underwriter's existing manual; and

- to formulate policies, practices and procedures designed to provide
mandatory on-going training to all existing and newly hired employees of
the Underwriter. The Final Judgment further provides that, within thirty
(30) days of the Underwriter's receipt of the Report, unless such time is
extended, the Underwriter shall adopt, implement and maintain an and all
policies, practices and procedures set forth in the Report.

On or about December 19, 1996, the Consultant completed the Report which was
thereafter delivered to the Underwriter. The Report addresses the areas relating
to compliance and sales practices referred to above. The Underwriter is
reviewing the Report and undertaking steps to implement the recommendations and
procedures in the Report, in accordance with the provisions of the Final
Judgment.

The Final Judgment also provides that the independent Auditor shall conduct
four (4) special reviews of the Underwriter's policies, practices and
procedures, the first such review to take place six (6) months after the Report
has been delivered to the Underwriter and thereafter at six-month intervals. The
Auditor is also authorized to conduct a review, on a random basis and without
notice to the Underwriter, to certify that any persons associated with the
Underwriter who have been suspended or barred by any Commission order are
complying with the terms of such orders.

In the event that the requirements of the foregoing judgment adversely
affect the Underwriter's ability to act as a market maker for the Shares, and
additional brokers do not make a market in the Company's securities, the market
for, and the liquidity of, the Company's securities may be adversely affected.
In the event that other broker dealers fail to make a market in the Company's
securities, the possibility exists that the market for and the liquidity of the
Company's securities may be adversely affected to such an extent that public
security holders may not have anyone to purchase their securities when offered
for sale at any price. In such event, the market for, liquidity and prices of
the Company's securities may not exist. For additional information regarding the
Underwriter, investors may call the National Association of Securities Dealers,
Inc. at (800) 289-9999.

RECENT STATE ACTION INVOLVING THE UNDERWRITER--POSSIBLE LOSS OF LIQUIDITY

The State of Indiana has commenced an action seeking, among other things, to
revoke the Underwriter's license to do business in such state. The action was
settled and the Underwriter agreed to the payment of a fine and the restrictions
with respect to the sale of securities to Indiana residents. Specifically, the
Underwriters agreed that it will not sell any securities to Indiana residents
(i) which are not listed on the New York Stock Exchange, the American Stock
Exchange or Nasdaq; (ii) for which the Underwriter

55
<PAGE>
has served as lead underwriter or as a member of the selling syndicate; or (iii)
for which the Underwriter is a market maker. Under the terms of the settlement
agreement, the Underwriter continues to maintain its license in the State of
Indiana. The Company does not intend to seek qualification for the sale of the
Securities in the state of Indiana.

DETERMINATION OF PUBLIC OFFERING PRICE

Prior to the Offering, there has been no public market for the Units, Shares
or Warrants. The public offering price of the Units and the exercise price and
other terms of the Warrants were arbitrarily determined by negotiations between
the Company and the Underwriter and do not necessarily relate to the assets,
book value or results of operations of the Company or any other established
criteria of value.

LEGAL MATTERS

The validity of the Securities being offered hereby will be passed upon for
the Company by Morse, Zelnick, Rose & Lander, LLP, New York, New York
10022-2605. Morse, Zelnick, Rose & Lander, LLP is the owner of 60,000 shares of
Common Stock which it received in connection with this Offering. Certain legal
matters will be passed upon for the Underwriter by Bernstein & Wasserman, LLP,
950 Third Avenue, New York, New York 10022.

EXPERTS

The Company's balance sheets as of December 31, 1995 and 1996 and the
Company's statements of operations, stockholders' equity (deficiency) and cash
flows for the years ended December 31, 1994, 1995 and 1996 and for the period
from December 29, 1993 (date of inception) through December 31, 1996 have been
included herein and in the Registration Statement in reliance upon the report of
KPMG Peat Marwick LLP, independent auditors, appearing elsewhere herein (which
report contains an explanatory paragraph with respect to substantial doubt about
the Company's ability to continue as a going concern), and upon the authority of
said firm as experts in accounting and auditing.

56
<PAGE>
AVAILABLE INFORMATION

The Company is not a reporting company under the Exchange Act. The Company
has filed a Registration Statement on Form SB-2 under the Securities Act with
the Commission with respect to the Securities offered hereby. This Prospectus
filed as a part of the Registration Statement does not contain all of the
information contained in the Registration Statement and the exhibits thereto,
certain portions of which have been omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and the Securities offered hereby, reference is made to such
Registration Statements including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other documents are not necessarily complete, and in each instance, reference is
made to such contract, agreement or other documents filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement and exhibits may be inspected without
charge and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the New York regional office of the Commission at
Seven World Trade Center, 14th Floor, New York, New York 10048 and Northwest
Atrium Center, 500 West Madison Sheet, Suite 1400, Chicago, Illinois 60661.
Registration statements transmitted throughout the Commission's Electronic Data
Gathering Analysis and Retrieval System are also publicly available through the
Commission's Internet site on the Web (http://www.sec.gov). Copies of such
material can also be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Application has been made to list the Units, the Common Stock and
the Warrants on the Bulletin Board. The foregoing material also should be
available for inspection at the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.

The Company intends to furnish its stockholders with annual reports
containing financial statements audited by its independent certified public
accountants.

57
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

CONTENTS

<TABLE>
<S> <C>
Independent Auditors' Report.......................................................... F-2

Audited Financial Statements:

Balance Sheets...................................................................... F-3

Statements of Operations............................................................ F-4

Statements of Stockholders' Equity (Deficiency)..................................... F-5

Statements of Cash Flows............................................................ F-6

Notes to Financial Statements....................................................... F-7
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors

PC411, Inc.:

We have audited the accompanying balance sheets of PC411, Inc. (a
development stage company) as of December 31, 1995 and 1996 and the related
statements of operations, stockholders' equity (deficiency) and cash flows for
each of the years in the three-year period ended December 31, 1996 and for the
period from December 29, 1993 (date of inception) to December 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 audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PC411, Inc. (a development
stage company) as of December 31, 1995 and 1996 and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996 and for the period from December 29, 1993 (date of
inception) to December 31, 1996 in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that
PC411, Inc. will continue as a going concern. As discussed in note 1 to the
financial statements, the Company's losses from operations and deficit
accumulated during the development stage raise substantial doubt about the
entity's ability to continue as a going concern. Management's plans in regard to
these matters are also described in note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

KPMG Peat Marwick LLP

Long Beach, California

March 26, 1997

F-2
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1996
------------ -------------
<S> <C> <C>
ASSETS (note 3):
Current Assets:
Cash and cash equivalents.......................................................... $ 370,827 $ 8,605
Accounts receivable................................................................ -- 10,947
Prepaid expenses................................................................... -- 192,865
------------ -------------
Total current assets............................................................. 370,827 212,417

Property and equipment, net.......................................................... 152,300 132,972
------------ -------------
Total assets..................................................................... $ 523,127 $ 345,389
------------ -------------
------------ -------------
CURRENT LIABILITIES:
Accrued expenses..................................................................... $ -- $ 192,992
Deferred revenue (note 2)............................................................ -- 25,387
Related party demand loan payable (note 3)........................................... -- 327,065
------------ -------------
Total current liabilities........................................................ -- 545,444

STOCKHOLDERS' EQUITY (DEFICIENCY) (notes 5, 7 and 9):
Preferred stock, Series A $.01 par value. Authorized 10,000 shares; issued and
outstanding 1,820 shares, liquidation value of $550 per share.................... 18 18
Common stock, $.01 par value. Authorized 10,000 shares; issued and outstanding
4,240 shares..................................................................... 42 42
Additional paid-in capital......................................................... 1,245,487 1,406,427
Deficit accumulated during the development stage................................... (722,420) (1,606,542)
------------ -------------
Net stockholders' equity (deficit)............................................... 523,127 (200,055)
------------ -------------
Commitments and contingencies (notes 6, 7 and 9)..................................... -- --

Total liabilities and stockholders' equity (deficiency).......................... $ 523,127 $ 345,389
------------ -------------
------------ -------------
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 29,
1993 (DATE OF
YEAR ENDED DECEMBER 31, INCEPTION) TO
---------------------------------------- DECEMBER 31,
1994 1995 1996 1996
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues................................................. $ 352 $ 12,144 $ 55,915 $ 68,411
Costs and expenses:
Cost of revenues....................................... 10,073 92,694 94,773 197,540
Research and development............................... 154,556 142,841 248,736 546,133
Sales and marketing.................................... 7,670 97,900 37,772 143,342
General and administrative............................. 24,634 250,152 387,511 662,297
------------ ------------ ------------ -------------
196,933 583,587 768,792 1,549,312

Operating loss....................................... (196,581) (571,443) (712,877) (1,480,901)

Other income (expense):
Interest income........................................ 1,037 22,505 4,414 27,956
Other income........................................... 22,862 -- -- 22,862
Interest expense....................................... -- -- (174,859) (174,859)
------------ ------------ ------------ -------------
23,899 22,505 (170,445) (124,041)

Loss before income taxes............................. (172,682) (548,938) (883,322) (1,604,942)

Income taxes............................................. -- 800 800 1,600
------------ ------------ ------------ -------------
Net loss............................................. $ (172,682) $ (549,738) $ (884,122) $ (1,606,542)
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Net loss per share....................................... $ (36.68) $ (116.77) $ (187.79)
------------ ------------ ------------
------------ ------------ ------------
Shares used in computing net loss per share (note 2)..... 4,708 4,708 4,708
------------ ------------ ------------
------------ ------------ ------------

Pro forma net loss per share (unaudited)................. $ (0.10) $ (0.32) $ (0.51)
------------ ------------ ------------
------------ ------------ ------------
Shares used in computing pro forma net loss per share
(unaudited)............................................ 1,730,800 1,730,800 1,730,800
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND PERIOD FROM
DECEMBER 29, 1993 (DATE OF INCEPTION) TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL DURING THE
------------------------ ------------------------ PAID-IN DEVELOPMENT
SHARES AMOUNT SHARES AMOUNT CAPITAL STAGE
----------- ----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock for cash........... -- $ -- 4,240 $ 42 $ 152,458 $ --
Stockholder cash contribution............... -- -- -- -- 92,047 --
Net loss.................................... -- -- -- -- -- (172,682)
----- --- ----- --- ------------ -------------
Balance at December 31, 1994................ -- -- 4,240 42 244,505 (172,682)
Issuance of preferred stock for cash........ 1,820 18 -- -- 1,000,982 --
Net loss.................................... -- -- -- -- -- (549,738)
----- --- ----- --- ------------ -------------
Balance at December 31, 1995................ 1,820 18 4,240 42 1,245,487 (722,420)
Discount on indebtedness associated with
preferred stock conversion................ -- -- -- -- 160,940 --
Net loss.................................... -- -- -- -- -- (884,122)
----- --- ----- --- ------------ -------------
Balance at December 31, 1996................ 1,820 $ 18 4,240 $ 42 $ 1,406,427 $ (1,606,542)
----- --- ----- --- ------------ -------------
----- --- ----- --- ------------ -------------

TOTAL
STOCKHOLDERS'
EQUITY
(DEFICIENCY)
------------
<S> <C>
Issuance of common stock for cash........... $ 152,500
Stockholder cash contribution............... 92,047
Net loss.................................... (172,682)
------------
Balance at December 31, 1994................ 71,865
Issuance of preferred stock for cash........ 1,001,000
Net loss.................................... (549,738)
------------
Balance at December 31, 1995................ 523,127
Discount on indebtedness associated with
preferred stock conversion................ 160,940
Net loss.................................... (884,122)
------------
Balance at December 31, 1996................ $ (200,055)
------------
------------
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 29,
YEAR ENDED 1993 (DATE OF
DECEMBER 31, INCEPTION) TO
-------------------------------------- DECEMBER 31,
1994 1995 1996 1996
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................ $ (172,682) $ (549,738) $ (884,122) $(1,606,542)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation.................................................. 5,700 23,039 37,734 66,473
Amortization of discount on loan payable...................... -- -- 160,940 160,940
Changes in assets and liabilities:
Accounts receivable......................................... -- -- (10,947) (10,947)
Prepaid expenses............................................ -- -- (192,865) (192,865)
Accrued expenses............................................ 5,002 (5,002) 192,992 192,992
Deferred revenue............................................ -- -- 25,387 25,387
----------- ------------ ----------- -------------
Cash used in operating activities............................... (161,980) (531,701) (670,881) (1,364,562)
----------- ------------ ----------- -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment.......................... (57,319) (123,720) (18,406) (199,445)
----------- ------------ ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of loan payable........................................ -- -- 327,065 327,065
Issuance of preferred stock..................................... -- 1,001,000 -- 1,001,000
Shareholder cash contribution................................... -- -- -- 92,047
Issuance of common stock........................................ -- -- -- 152,500
----------- ------------ ----------- -------------
Cash provided by financing activities........................... -- 1,001,000 327,065 1,572,612
----------- ------------ ----------- -------------
Net increase (decrease) in cash................................. (219,299) 345,579 (362,222) 8,605
Cash and cash equivalents at beginning of period................ 244,547 25,248 370,827 --
----------- ------------ ----------- -------------
Cash and cash equivalents at end of period...................... $ 25,248 $ 370,827 $ 8,605 $ 8,605
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

(1) BUSINESS AND ORGANIZATION

PC411, Inc. was incorporated in Delaware on December 29, 1993. The Company
provides an on-line service that transmits name, address, telephone number and
other related information digitally to users of personal computers.

The accompanying financial statements have been prepared on a going-concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, as of December 31, 1996, the Company had an accumulated
deficit of $1,606,542. This factor, among others, indicates that the Company may
be unable to continue as a going concern. The financial statements do not
include any adjustments that might be necessary should the Company be unable to
continue as a going concern. The Company's continuation as a going concern is
dependent upon its ability to obtain additional financing, generate sufficient
cash flow to meet its obligations on a timely basis and ultimately to attain
profitable operations. Management is of the opinion that the Company will be
able to meet its obligations and sustain operations by obtaining additional
financing and by eventually achieving profitable operations. There is no
assurance that management's plan will be achieved.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue is recognized over the period services are provided. Deferred
revenue consists of non-refundable registration fees and annual subscription
fees billed in advance. Non-refundable registration fees are recognized as
revenue as services are provided. Annual subscription fees are recognized as
revenue on a straight line basis over the related subscription period. In 1995,
non-refundable registration fees were recognized on receipt due to
immateriality, and accordingly, were not deferred at December 31, 1995.

DISTRIBUTION COSTS

Fees are paid to manufacturers of computer hardware to distribute the
Company's software product which is "bundled" with the hardware products. These
contractual stipulated fees are charged based on a percentage of revenues or
number of registered customers. Distribution costs are included in cost of
revenues on the statement of operations.

LICENSE COSTS

The Company incurs license fees for the right to use a database of directory
listings. Minimum fees are charged to operations in the related period as
incurred. Variable fees are charged to operations based on a percentage of
revenue recognized. License fee expenses are included in cost of revenues on the
statement of operations.

RESEARCH AND DEVELOPMENT

Research and development costs associated with the design and development of
the Company's services have been charged to operations as incurred.

F-7
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS

Cash and cash equivalents include money market funds with a maturity of
three months or less at the date of purchase.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation of equipment is
calculated on the straight-line method over the estimated useful lives of the
assets, generally five years.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the Company's accounts receivable and accrued expenses
approximate their carrying values due to the relatively short maturities of
these instruments. The fair value of the Company's related party demand loan
payable is its face value of approximately $327,000.

INCOME TAXES

The Company provides for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", which
employs an asset and liability approach in accounting for income taxes payable
or refundable at the date of the financial statements as a result of all events
that have been recognized in the financial statements and as measured by the
provisions of enacted tax laws.

COMPUTATION OF NET LOSS PER SHARE

Net loss per share of Common Stock and Common Stock Equivalents has been
computed using the weighted average number of shares of Common Stock and Common
Stock Equivalents outstanding using the treasury stock method and is summarized
as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Weighted average shares of Common Stock outstanding...................................... 4,240 4,240 4,240
Weighted average shares of Common Stock Equivalents issued or to be issued during the
twelve months preceding the initial public offering.................................... 468 468 468
--------- --------- ---------
Shares used in net loss per share calculation............................................ 4,708 4,708 4,708
--------- --------- ---------
--------- --------- ---------
</TABLE>

Pursuant to the requirements of the Securities and Exchange Commission,
common stock and common stock equivalents issued by the Company during the
twelve months immediately preceding an initial public offering are to be
included in the calculation of the weighted average shares outstanding for all
periods presented using the Treasury-stock method. Accordingly, weighted average
shares of common stock equivalents outstanding includes 468 common stock
equivalents as a result of common stock options to be issued prior to the
initial public offering (before effect of stock split, note 9), under the PC411,
Inc. 1997 Stock Option Plan (notes 5 and 9), shown as outstanding for all
periods presented.

The Company plans to terminate all issued and outstanding options under the
1994 Long-Term Incentive and Share Plan (note 5) in connection with the
contemplated initial public offering (note 9) and

F-8
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
issue new options under the 1997 Stock Option Plan (note 9). Under the 1997
Stock Option Plan, the exercise price will be the fair market value of a share
of Common Stock at the time the options are granted.

For all periods presented, stock options and the Series A Cumulative
Convertible Preferred Stock issued prior to the twelve months preceding the
initial public offering date are excluded from the computation for loss periods
as their inclusion would be antidilutive. On a pro forma basis (unaudited), the
loss per share for the years ended December 31, 1995 and 1996 assuming the
inclusion of the Series A Cumulative Convertible Preferred Stock issued prior to
the twelve months preceding the initial public offering date as common stock
equivalents outstanding is $(.32) and $(.51), respectively. Shares used in
computing pro forma net loss per share (unaudited) also include the effects of
the contemplated stock split and anticipated issuance of 60,000 additional
shares of common stock post stock split and an additional 80,800 shares of
Common Stock equivalents as a result of stock options granted to certain
employees of the Company to acquire 404,000 common shares at an exercise price
of $4.40 per share (notes 7 and 9).

USE OF ESTIMATES

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

CONCENTRATIONS OF RISKS

The Company had no major customers whose receivable balance or revenues
exceeded 10% of aggregate receivables or revenues as of and for the years ended
December 31, 1995 and 1996.

STOCK OPTIONS

The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock options. In 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based Compensation", which, if
fully adopted, changes the methods of recognition of cost on certain stock
options.

(3) RELATED PARTY TRANSACTIONS

The Company entered into a Loan and Security Agreement, dated as of June 27,
1996, as amended (the "Loan Agreement"), with New Valley Corporation, an
affiliate of the holder of the Series A Cumulative Convertible Preferred Stock,
pursuant to which New Valley agreed to provide the Company, in its sole and
absolute discretion, with up to $750,000 in financing. Amounts advanced under
the Loan Agreement are due on demand and bear interest at 12% per annum. All
advances are secured by all of the assets of the Company. As of December 31,
1996, the Company had drawn ten separate advances aggregating approximately
$327,000. Accordingly, at December 31, 1996, outstanding advances have been
included in current liabilities in the accompanying balance sheet.

F-9
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) RELATED PARTY TRANSACTIONS (CONTINUED)
In connection with the Loan Agreement, the Conversion Price (note 7) with
respect to the Series A Cumulative Convertible Preferred Stock held by Direct
Assist Holding, Inc., a wholly owned subsidiary of New Valley, was adjusted
(note 7). Such adjustment was recognized as additional interest resulting in an
imputed discount to the face amount of any notes issued under the Loan
Agreement. The imputed discount of $160,940 was amortized in 1996 and recognized
as interest expense in the Statement of Operations. The Company will issue
1,000,000 Redeemable Class A Warrants in satisfaction of $250,000 of
indebtedness under the Loan Agreement. The remaining balance due under the Loan
Agreement will be satisfied out of the net proceeds of the proposed public
offering of the Company's Common Stock and Class A Warrants (note 9).

During the year ended December 31, 1996, a stockholder and director received
approximately $26,000 in exchange for consulting services.

(4) PROPERTY AND EQUIPMENT

A summary of property and equipment at December 31, 1995 and 1996 are as
follows:

<TABLE>
<CAPTION>
1995 1996
------------ -------------
<S> <C> <C>
Computer hardware............................................... $ 137,352 153,684
Computer software............................................... 13,481 15,555
Other........................................................... 30,206 30,206
------------ -------------
181,039 199,445
Less accumulated depreciation................................... (28,739) (66,473)
------------ -------------
$ 152,300 132,972
------------ -------------
------------ -------------
</TABLE>

(5) STOCK OPTIONS

The Company has a stock option plan, "1994 Long-Term Incentive and Share
Award Plan." The plan provides for the grant of options to purchase the
Company's stock to the employees of the Company. The number of the awards, the
terms and conditions of any award granted under the plan (including, but not
limited to, the exercise price, grant price or purchase price) are at the
discretion of the Board of Directors.

The Board of Directors has set aside 750 shares of the Company's common
stock for issuance under the plan.

F-10
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(5) STOCK OPTIONS (CONTINUED)
The stock option activity for the plan is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF PRICE PER
SHARES SHARE
----------- -----------
<S> <C> <C>
Balance at December 31, 1993........................................... -- $ --
Options granted........................................................ 200 125
Options terminated..................................................... -- --
Options exercised...................................................... -- --
----------- -----------
Balance at December 31, 1994........................................... 200 125
Options granted........................................................ 90 1,990
Options terminated..................................................... (200) (125)
Options exercised...................................................... -- --
----------- -----------
Balance at December 31, 1995........................................... 90 $ 1,990
Options granted........................................................ 60 1,990
Options terminated..................................................... (120) (1,990)
Options exercised...................................................... -- --
----------- -----------
Balance at December 31, 1996........................................... 30 $ 1,990
----------- -----------
----------- -----------
</TABLE>

Stock options issued in 1995 and 1996 under the 1994 Plan vest over a
three-year period and have an exercise price of $1,990 per share. At December
31, 1996, 30 of the granted options were exercisable. Subsequent to December 31,
1996, such options were cancelled by mutual agreement between the Company and
its employees and the Company resolved to terminate the plan and replace it with
a new option plan (note 9). Had compensation cost for the Company's stock
options been determined based on the fair value at the date of grant consistent
with SFAS 123, the Company's 1996 net loss and net loss per share would not have
been materially affected.

Subsequent to December 31, 1996, but prior to the Company's public offering
of its securities, the Company's Board of Directors authorized the grant of
404,000 stock options (after giving effect to the stock split described in Note
9) at an exercise price of $4.40 under the PC411, Inc. 1997 Stock Option Plan.
One third of such options will vest upon the completion of the contemplated
initial public offering and one third will vest at the end of each of the first
and second years thereafter. When granted, the Company determined the fair
market value of each of the Company's shares to be $4.40, post-stock split;
accordingly, no compensation expense will be recognized for these options.

(6) LEASES

The Company is obligated under noncancelable operating leases, primarily for
facilities, that expire at various dates through 2000. The real property lease
requires the Company to pay utilities, insurance, capital and operating
expenses. Total rental expense for the years ended December 31, 1995 and 1996
was $17,094 and $33,615, respectively.

F-11
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(6) LEASES (CONTINUED)
Future minimum lease payments under noncancelable operating leases at
December 31, 1996 are as follows:

<TABLE>
<S> <C>
Year ended December 31:
1997............................................................ $ 36,616
1998............................................................ 35,112
1999............................................................ 35,112
2000............................................................ 18,363
---------
Total minimum lease payments.................................. $ 125,203
---------
---------
</TABLE>

(7) STOCKHOLDERS' EQUITY (DEFICIENCY)

PREFERRED STOCK

The Company has the authority to issue ten thousand (10,000) shares of
Preferred Stock, which may be issued from time to time in one or more series. In
May 1995, the Company sold and issued 1,820 shares of Series A Cumulative
Convertible Preferred Stock, $.01 par value. The Company has also designated
1,005 shares of Preferred Stock as Series B Voting Cumulative Convertible
Preferred Stock, $.01 par value of which no such shares are issued and
outstanding. These two Series of stock are the "Designated Preferred Stock."

Holders of the Designated Preferred Stock are entitled to vote on all
matters except that the holders of the Series A Preferred Stock may not vote in
the election of directors so long as a certain stockholder owns a majority of
the issued and outstanding capital stock on an as-if converted basis. The
holders of a majority of the Series A Preferred Stock, voting separately as a
class, will have the right to elect one director to the Board of Directors of
the Company.

Dividends at an annual rate of $55 and $199 per share on the Series A and
Series B Preferred Stock, respectively, are cumulative from the date of original
issue and are payable annually in arrears, when and as declared by the Company's
Board of Directors. At December 31, 1996 undeclared cumulative dividends on
Series A Preferred Stock was approximately $163,000. Additionally, during any
fiscal year in which the Company has positive net income, the Company will apply
twenty-five percent (25%) of such net income to the payment of accrued, but
unpaid dividends on the Designated Preferred Stock.

The liquidation values of the Series A and Series B Preferred Stocks are
$550 and $1,990, respectively, plus a further amount per share equal to
accumulated but unpaid dividends. The holder of record of shares of Designated
Preferred Stock will be entitled to receive a preference to any distribution of
any assets of the Company to the holders of the common stock or any other series
of Preferred Stock. If the Company's assets are insufficient to permit payment
of the full preferential amounts then the entire assets of the Company will be
distributed ratably among the holders of Designated Preferred Stock.

Upon the affirmative vote of fifty-one percent (51%) of the holders of
record of the outstanding shares of Designated Preferred Stock, voting as a
class, all outstanding shares of Designated Preferred Stock will be deemed
automatically converted into such number of fully paid and nonassessable shares
of Common Stock of the Company equal to the number of shares of Designated
Preferred Stock multiplied by the "Conversion Price" in effect at that date.
Initially the Conversion Price will be the Original Issue Price (as defined) and
may be adjusted as provided by the "Restated Articles of Incorporation of the

F-12
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(7) STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
Company." Additionally, all shares of Designated Preferred Stock will
automatically convert upon the consummation of a firm commitment underwritten
public offering of the securities of the Company pursuant to a registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933. This automatic conversion will take place if the
aggregate proceeds are not less than $5,000,000 and the per share sales price to
the public is not less than four dollars ($4.00). Subsequent to year end all of
the issued and outstanding shares of Preferred Stock were converted into Common
Stock.

COMMON STOCK

During 1994, the Company issued 4,240 shares of Common Stock for cash
consideration of $152,500. Dividends are payable when, and if, declared by the
board of Directors only after payment of any unpaid dividends to holders of
Preferred Stock.

Subsequent to December 31, 1996 all 1,820 outstanding shares of Preferred
Stock have been converted into 8,626 shares of Common Stock (prior to the
contemplated stock split, note 9). The following table presents the Company's
pro forma unaudited stockholders' deficiency as of December 31, 1996 assuming
the 12,866 shares of Common Stock then outstanding, after the conversion of the
Preferred Stock, are converted into 2,222,390 shares of Common Stock pursuant to
a stock split (note 9), 632,390 shares of Common Stock subsequent to the stock
split are contributed to the Company by certain stockholders (note 9), and the
issuance of an additional 60,000 shares of Common Stock to the Company's
counsel.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------
<S> <C>
PRO FORMA STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, $.01 par value. Authorized 10,000 shares; no issued and
outstanding shares...................................................... --
Common stock, $.01 par value. Authorized 25,000,000 shares; issued and
outstanding 1,650,000 shares............................................ 16,500
Additional paid-in capital................................................ 1,389,987
Accumulated Deficit during the development stage.......................... (1,606,542)
----------
Net stockholders' deficiency.......................................... (200,055)
----------
----------
</TABLE>

(8) INCOME TAXES

Through May 12, 1995, the Company was a subchapter "S" corporation, and as
such, incurred no federal corporate income taxes, and losses incurred through
that date were reported by individual stockholders on their personal tax returns
to the extent allowed by the Federal Tax Code. From May 13, 1995, through
December 31, 1996, the Company had no income and therefore made no provision for
federal and state income taxes other than the required California state minimum
tax of $800.

At December 31, 1996, the Company had approximately $1,250,000 of net
operating loss carryforwards for federal and state tax reporting purposes
available to offset future taxable income, if any; such carryforwards expire in
2010 (federal) and 2002 (state), respectively. Deferred tax assets and
liabilities principally relate to net operating loss carryforwards and aggregate
approximately $540,000 before valuation allowance. In assessing the
realizability of the net deferred tax assets, management considers whether it is
more likely than not that some or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income

F-13
<PAGE>
PC411, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(8) INCOME TAXES (CONTINUED)
during periods in which those temporary differences become deductible. As of
December 31, 1996, the Company has provided a full valuation allowance against
net deferred tax assets due to the Company's uncertainty of future taxable
income against which the deferred tax asset may be utilized. Accordingly, no
deferred tax asset has been recorded in the accompanying balance sheet.

Under the Tax Reform Act of 1986, the amounts of and benefits from net
operating loss carryforwards may be limited in certain circumstances. Events
which may cause such limitations in the amount of net operating losses that the
Company may utilize in any one year include, but are not limited to, a
cumulative ownership change of more than 50% over a three year period. The
Company anticipates that a 50% change of ownership will have occurred as a
result of the conversion of the preferred stock, the stock split and the
consummation of the initial public offering.

(9) SUBSEQUENT EVENTS

INITIAL PUBLIC OFFERING

On January 29, 1997, the Board of Directors authorized the Company to
proceed with an initial public offering of 1,150,000 Units, each Unit consisting
of one share of Common Stock and one Redeemable Class A Warrant to purchase a
share of Common Stock. In addition, in January 1997, all of the then outstanding
shares of Preferred Stock were converted into 8,626 shares of Common Stock.
Immediately prior to the consummation of the Offering the then outstanding
12,866 shares of Common Stock will be converted into 2,222,390 shares of Common
Stock pursuant to a 172.7336 for 1 stock split. Certain stockholders have
committed to contributing 632,390 shares to the Company immediately thereafter
resulting in 1,590,000 shares outstanding. In addition, the Company will issue
an additional 60,000 shares to its legal counsel in connection with services
rendered for the initial public offering. Pro forma share and per share
information has been shown in the accompanying financial statements to reflect
the effect of the anticipated conversion of Preferred Stock into Common Stock,
Common Stock split and the 80,800 shares of Common Stock equivalents as a result
of stock options granted to certain employees of the Company to acquire 404,000
common shares at an exercise price of $4.40 per share.

STOCK OPTION PLANS

Subsequent to December 31, 1996, but prior to the public offering the
Company's Board of Directors authorized the grant of 404,000 stock options
(after giving effect to the stock split described above) at an exercise price of
$4.40 under the PC411 Inc. 1997 Senior Executive Stock Option Plan (the Plan).
One third of such options will vest upon the completion of the contemplated
initial public offering and one third will vest at the end of each of the first
and second years thereafter. When granted, the Company determined the fair
market value of each of the Company's shares to be $4.40, post-stock split;
accordingly, no compensation expense will be recognized for these options. In
addition, subsequent to December 31, 1996 the Company has agreed to grant 1,727
options (after giving effect to the stock split described above) to an
independent consultant, exerciseable at $5.50 per share.

The Company plans to adopt the Plan prior to the contemplated initial public
offering. The purpose of the Plan is to align the interests of executives, other
key employees and nonemployee directors of the Company with those of the
Company, to afford an incentive to such officers, employees and directors to
continue as such, to increase their efforts on behalf of the Company and to
promote the success of the Company's business. The Plan will supersede the
outstanding 1994 Long-Term Incentive and Share Award Plan, and all outstanding
options issued under such plan will be terminated. The Plan reserves 750,000
shares of common stock for grant.

In January 1997, the Company granted New Valley options to acquire 500,000
shares of common stock at $5.75 per share.

F-14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO UNDERWRITER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
ISNFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY
JURISDICTION IN WHICH SUCH AN OFFER WOULD BE UNLAWFUL. ANY MATERIAL MODIFICATION
OF THE OFFERING WILL BE ACCOMPLISHED BY MEANS OF AN AMENDMENT TO THE
REGISTRATION STATEMENT. IN ADDITION, THE RIGHT IS RESERVED BY THE COMPANY TO
CANCEL ANY CONFIRMATION OF SALE PRIOR TO THE RELEASE OF FUNDS, IF, IN THE
OPINION OF THE COMPANY, COMPLETION OF SUCH SALE WOULD VIOLATE FEDERAL OR STATE
SECURITIES LAWS OR A RULE OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., WASHINGTON, D.C. 20006.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Use of Proceeds........................................................... 22
Capitalization............................................................ 24
Dilution.................................................................. 25
Dividend Policy........................................................... 25
Selected Financial Data................................................... 26
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 28
Business.................................................................. 33
Management................................................................ 43
Principal Stockholders.................................................... 47
Certain Transactions...................................................... 48
Description of Securities................................................. 49
Shares Eligible for Future Sale........................................... 52
Underwriting.............................................................. 53
Legal Matters............................................................. 56
Experts................................................................... 56
Additional Information.................................................... 57
Index to Financial Statements............................................. F-1
</TABLE>

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

UNTIL AUGUST 12, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
BROKER-DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS, AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

1,150,000 UNITS
EACH UNIT CONSISTING OF
ONE SHARE OF COMMON STOCK
AND ONE REDEEMABLE CLASS A WARRANTS

[LOGO]

INC.

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

PROSPECTUS

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

BILTMORE SECURITIES, INC.
MAY 14, 1997

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