COMPU DAWN INC
SB-2/A, 1997-06-04
COMPUTER INTEGRATED SYSTEMS DESIGN
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      As filed with the Securities and Exchange Commission on June 4, 1997
    

                           Registration No. 333-18667

   
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            -------------------------
                                 AMENDMENT NO. 5
                                       TO
                                    FORM SB-2
                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933
                            -------------------------
                                COMPU-DAWN, INC.
                 (Name of Small Business Issuer in its Charter)
    

   Delaware                         7373                       11-3344575
(State or other                (Primary Standard            (I.R.S. Employer
jurisdiction of          Industrial Classification       Identification Number)
incorporation or                    Code No.)
organization)
                                77 Spruce Street
                           Cedarhurst, New York 11516
                           Telephone : (516) 374-6700
                           Telecopier: (516) 374-9553

   
              (Address and telephone number of principal executive
          offices) (Address of principal place of business or intended
                 principal place of business)
                            -------------------------
                                 Mark Honigsfeld
                            Chairman of the Board and
                             Chief Executive Officer
                                COMPU-DAWN, INC.
                                77 Spruce Street
                           Cedarhurst, New York 11516
                            Telephone: (516) 374-6700
                           Telecopier: (516) 374-9553
            (Name, address and telephone number of agent for service)
                            -------------------------
                                   Copies to:
Fred Skolnik, Esq.                                    Chase A. Caro, Esq.
Gavin C. Grusd, Esq.                                  Caro & Graifman, P.C.
Certilman Balin Adler & Hyman, LLP                    60 East 42nd Street
90 Merrick Avenue                                     New York,  New York 10165
East Meadow, NY 11554                                 Telephone: (212) 682-6000
Telephone: (516) 296-7000                             Telecopier: (212) 867-4762
Telecopier: (516) 296-7111
    

         Approximate  date of  commencement  of proposed sale to the public:  As
soon as practicable after the effective date of the registration statement.
         If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. o ______________
                         [Cover continued on next page.]

<PAGE>


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

          If delivery of the  prospectus is expected to be made pursuant to Rule
434, please check the following box. o

- ------------
<TABLE>

<CAPTION>
                                         CALCULATION OF REGISTRATION FEE

                                                                             Proposed Maximum    Proposed Maximum
                                                        Amount to be          Offering Price    Aggregate Offering    Amount of
Titles of Each Class of Securities to be Registered    Registered (1)         per Share (2)         Price (2)       Registration Fee
- ------------------------------------------------    -------------------   ----------------   -------------------  ------------------
<S>                                                       <C>                  <C>                 <C>                <C>         
   
Common Shares (3)                                         1,380,000             $5.00              $6,900,000         $2,090.91
Underwriter's Common Share Purchase                         120,000              ---               $      120           ---
  Warrants (4)
Common Shares (5)                                           120,000             $8.25              $  990,000          $300.00
Common Shares (6)                                           389,200             $5.00              $1,946,000          $589.70
Common Shares (7)                                           250,250             $5.00              $1,251,250          $379.17
                                                                                                                     -------------
Total Registration Fee:                                                                                              $3,359.78 (8)
================================================ =======================  ===================== =================== ================
</TABLE>

(1)      Pursuant  to Rule 416  under the  Securities  Act of 1933,  as  amended
         ("Securities Act"), this Registration  Statement covers such additional
         indeterminate  number of Common Shares underlying warrants (the "Bridge
         Warrants")  issued to certain bridge lenders (the "Bridge Lenders") and
         Underwriter's   Common  Share  Purchase  Warrants  (the  "Underwriter's
         Warrants") as may be issued by reason of  adjustments  in the number of
         Common Shares  pursuant to  anti-dilution  provisions  contained in the
         Bridge Warrants and Underwriter's Warrants, respectively.  Because such
         additional  Common Shares will, if issued,  be issued for no additional
         consideration, no registration fee is required.
(2)      Estimated solely for the purpose of calculating the registration fee.
(3)      Includes 180,000 Common Shares subject to the Underwriter's over-
         allotment option.
(4)      To be issued to the Underwriter.
(5)      Issuable upon exercise of the Underwriter's Warrants.
(6)      Issuable upon exercise of the Bridge Warrants and registered on behalf 
         of the Bridge
         Lenders.
(7)      Registered on behalf of Selling Stockholders.
(8)      Previously paid.
    

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




<PAGE>








   
                    SUBJECT TO COMPLETION, DATED JUNE 4, 1997
PROSPECTUS
                                Compu-DAWN, Inc.
           1,200,000 Shares of Common Stock, par value $.01 per share
                        Offering Price Per Share - $5.00
                                 ---------------
    

         Compu-DAWN, Inc., a Delaware corporation (the "Company"), hereby offers
1,200,000  shares  of  Common  Stock,  par value  $.01 per  share  (the  "Common
Shares"). See "Risk Factors" and "Description of Securities". The "Risk Factors"
section begins on page 7 of this Prospectus.

         The Company will apply for inclusion of the Common Shares on The Nasdaq
SmallCap  Market,  although  there can be no assurances  that an active  trading
market will develop even if the securities are accepted for quotation. See "Risk
Factors - Lack of Prior Market for Common Shares; No Assurance of Public Trading
Market  or  Nasdaq  SmallCap  Market  Listing"  and "Risk  Factors  Penny  Stock
Regulations May Impose Certain Restrictions on Marketability of Securities".

         Prior to this  offering  (the  "Offering"),  there  has been no  public
market for the Common  Shares.  It is  currently  anticipated  that the  initial
public  offering  price will be $5.00 per Common Share.  The price of the Common
Shares has been determined by negotiations between the Company and E.C. Capital,
Ltd.,  the  underwriter  of this  Offering  (the  "Underwriter"),  and  does not
necessarily bear any relationship to the Company's assets, book value, net worth
or  results  of  operations  or any other  established  criteria  of value.  For
additional  information  regarding  the factors  considered in  determining  the
initial  public  offering  price of the  Common  Shares,  see  "Risk  Factors  -
Arbitrary Offering Price;  Possible Volatility of Stock Price",  "Risk Factors -
Lack of Prior Market for Common Shares; No Assurance of Public Trading Market or
Nasdaq  SmallCap  Market  Listing",  "Risk  Factors - Impact of Proposed  Nasdaq
SmallCap Market Rules", "Description of Securities" and "Underwriting".

         The  registration  statement of which this Prospectus forms a part also
covers the  resale of an  aggregate  of  389,200  Common  Shares  (the  "Warrant
Shares")  underlying  warrants (the "Bridge  Warrants") issued to certain bridge
lenders (the "Bridge  Lenders")  (see  "Bridge  Financing")  and an aggregate of
250,250 Common Shares held by certain stockholders (collectively with the Bridge
Lenders,  the "Selling  Stockholders").  The Company will not receive any of the
proceeds from the resale of the Common Shares by the Selling  Stockholders.  The
Common  Shares  held by the  Selling  Stockholders  may be  resold  at any  time
following  the date of this  Prospectus,  subject to an  agreement  between  the
Bridge  Lenders  and the  Underwriter  restricting  the  transfer of the Warrant
Shares for a period of two years.  The  Underwriter  has agreed with the Company
not to waive the  lock-up  restriction.  The resale of the Common  Shares by the
Selling Stockholders is subject to Prospectus delivery and other requirements of
the Securities Act of 1933, as amended (the "Act").  Sales of such Common Shares
or the  potential  of such sales at any time may have an  adverse  effect on the
market price of the Common Shares  offered  hereby.  See  "Principal and Selling
Stockholders"  and "Risk Factors - Shares Eligible for Future Sale May Adversely
Affect the Market".
                                ----------------
                         [Cover Continued on Next Page]


<PAGE>



          AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES A
       HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK
            VALUE OF THE COMMON SHARES OFFERED HEREBY AND SHOULD BE
           CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR
              ENTIRE INVESTMENT. SEE "RISK FACTORS" 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.

                        Price        Underwriting Discounts       Proceeds to
                      to Public        and Commissions (1)        Company (2)
Per Share......           $5.00               $0.50                     $4.50
Total (3)......        $6,000,000           $600,000                $5,400,000

(1)      Does  not  reflect  additional  compensation  to  be  received  by  the
         Underwriter in the form of (i) a  non-accountable  expense allowance of
         $180,000 ($207,000 if the Overallotment Option (as hereinafter defined)
         is exercised in full),  $50,000 of which has already been paid,  (ii) a
         three  year  financial   advisory  and  investment   banking  agreement
         providing  for  aggregate  fees of  $108,000  payable in advance at the
         closing of this  Offering,  and (iii)  warrants (to be purchased by the
         Underwriter for one mil ($.001) per warrant) to purchase 120,000 Common
         Shares (10% of the total number of Common Shares sold pursuant  hereto)
         (the "Underwriter's Warrants"), exercisable for a period of four years,
         commencing one year from the date of this  Prospectus.  The Company and
         the  Underwriter  have agreed to indemnify  each other against  certain
         liabilities,  including liabilities under the Act. The Company has been
         informed   that,  in  the  opinion  of  the   Securities  and  Exchange
         Commission,  such  indemnification  is  against  public  policy  and is
         therefore unenforceable. See "Underwriting".

(2)      Before  deducting  expenses  of the  Offering  payable  by the  Company
         estimated  at $700,000,  including  the  Underwriter's  non-accountable
         expense  allowance and  financial  advisory fee referred to in footnote
         (1)  (not   assuming  the  exercise  of  the   Overallotment   Option),
         registration fees, transfer agent fees, NASD fees, Blue Sky filing fees
         and  expenses,  legal  fees  and  expenses,  and  accounting  fees  and
         expenses. See "Use of Proceeds" and "Underwriting".

(3)      Does  not   include   180,000   additional   Common   Shares  to  cover
         overallotments  which the  Underwriter has an option to purchase for 45
         days from the date of this  Prospectus at the initial  public  offering
         price, less the Underwriter's discount (the "Overallotment Option"). If
         the  Overallotment  Option is  exercised  in full,  the total  Price to
         Public will be $6,900,000,  Underwriting Discounts and Commissions will
         be  $690,000,   and  Proceeds  to  Company  will  be  $6,210,000.   See
         "Underwriting."
                                 ---------------
                         [Cover Continued on Next Page]

<PAGE>



   
         The Common Shares are offered by the Underwriter on a "firm commitment"
basis, when, as and if delivered to and accepted by the Underwriter, and subject
to prior sale, allotment and withdrawal,  modification of the offer with notice,
receipt and acceptance by the Underwriter  named herein and subject to its right
to reject  orders in whole or in part and to  certain  other  conditions.  It is
expected that the delivery of the  certificates  representing  the Common Shares
and payment  therefor will be made at the offices of the Underwriter on or about
June __, 1997.
    

                               E. C. CAPITAL, LTD.

   
                 The date of this Prospectus is June ___, 1997.
    


<PAGE>



     IN CONNECTION  WITH THIS OFFERING,  THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS  WHICH  STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT  OTHERWISE  PREVAIL IN THE OPEN  MARKET.  SUCH
TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ SMALLCAP MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

     A SIGNIFICANT  PORTION OF THE COMMON SHARES TO BE SOLD IN THIS OFFERING MAY
BE SOLD TO  CUSTOMERS OF THE  UNDERWRITER.  SUCH SALES MAY AFFECT THE MARKET FOR
AND  LIQUIDITY  OF  THE  COMPANY'S  SECURITIES  IN  THE  EVENT  THAT  ADDITIONAL
BROKER-DEALERS  DO NOT MAKE A MARKET IN THE  COMPANY'S  SECURITIES,  AS TO WHICH
THERE  CAN  BE  NO  ASSURANCE.   SUCH  CUSTOMERS   SUBSEQUENTLY  MAY  ENGAGE  IN
TRANSACTIONS  FOR THE SALE OR PURCHASE OF THE COMMON SHARES  THROUGH AND/OR WITH
THE UNDERWRITER.

     ALTHOUGH IT HAS NO  OBLIGATION TO DO SO, THE  UNDERWRITER  MAY FROM TIME TO
TIME ACT AS A MARKET MAKER AND OTHERWISE  EFFECT  TRANSACTIONS  IN THE COMPANY'S
SECURITIES.  THE  UNDERWRITER,  IF IT PARTICIPATES  IN THE MARKET,  MAY BECOME A
DOMINATING INFLUENCE IN THE MARKET FOR THE COMMON SHARES.  HOWEVER,  THERE IS NO
ASSURANCE  THAT THE  UNDERWRITER  WILL OR WILL NOT  CONTINUE TO BE A  DOMINATING
INFLUENCE.  THE PRICES AND  LIQUIDITY OF THE  SECURITIES  OFFERED  HEREBY MAY BE
SIGNIFICANTLY AFFECTED BY THE DEGREE, IF ANY, OF THE UNDERWRITER'S PARTICIPATION
IN SUCH MARKET.  THE UNDERWRITER MAY DISCONTINUE  SUCH ACTIVITIES AT ANY TIME OR
FROM TIME TO TIME.  SEE "RISK FACTORS - LACK OF PRIOR MARKET FOR COMMON  SHARES;
NO  ASSURANCE  OF PUBLIC  TRADING  MARKET OR NASDAQ  SMALLCAP  MARKET  LISTING".
                             ---------------------

            INVESTOR SUITABILITY REQUIREMENTS FOR CALIFORNIA OFFEREES

     California  offerees must meet the following  suitability  requirements  in
order to invest in the Common Shares being offered hereby: the offeree (a) has a
minimum net worth of  $250,000  and had during the last tax year,  or  estimates
that the offeree will have during the current tax year, gross income of $65,000,
or (b) has a  minimum  net worth of  $500,000.  Net  worth  shall be  determined
exclusive of home, home furnishings and automobiles.
                              --------------------

             INVESTOR SUITABILITY REQUIREMENTS FOR VIRGINIA OFFEREES


                                        2

<PAGE>



     Virginia offerees must meet the following investor suitability requirements
in order to invest in the Common Shares being offered  hereby:  the offeree must
have  (a) a net  worth  of at  least  $225,000,  or (b) a net  worth of at least
$60,000  and an  annual  income of at least  $60,000.  Net worth in all cases is
exclusive of home, furnishings and automobiles,  in addition, an offeree may not
invest  more  than  10% of the  offeree's  readily  marketable  assets  in  this
Offering.

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

                                        3

<PAGE>



                               PROSPECTUS SUMMARY

     The  following  is a summary of certain  information  (including  financial
statements and notes thereto)  contained in this  Prospectus and is qualified in
its entirety by the more detailed  information  appearing  elsewhere  herein. In
addition,  unless otherwise indicated to the contrary, the information appearing
herein does not give effect to the  issuance of (a) 180,000  Common  Shares upon
exercise of the Overallotment Option; (b) 120,000 Common Shares upon exercise of
the Underwriter's  Warrants;  (c) 389,200 Common Shares upon the exercise of the
Bridge  Warrants;  or (d)  477,400  Common  Shares  upon the  exercise  of other
outstanding  options  and  warrants.   See  "Bridge  Financing".   However,  all
references  to  Common  Shares  and  prices  per share in this  Prospectus  give
retroactive effect to a 325 for 1 stock split effectuated on October 18, 1996 as
part  of  the  Company's   reincorporation   in  the  State  of  Delaware.   See
"Underwriting".  Each  prospective  investor is urged to read this Prospectus in
its entirety.


                                   The Company

     Compu-DAWN,  Inc. (the  "Company") is primarily  engaged in the business of
designing,  developing,  licensing,  installing and servicing  computer software
products  and  systems  for law  enforcement  and public  safety  agencies.  The
software systems include computer-aided  dispatching,  computer interfacing with
state and national crime  information  databases,  advanced mobile on-line radio
computing,  automatic vehicle location (employing dynamic map displays), records
management  and  photo-image  database  systems.  Certain of these  applications
utilize   telecommunications   and  space   satellite   technology,   and  other
infrastructure,  provided by third parties. The Company has developed,  licensed
and  installed  its  systems in more than 55 agencies  primarily  located in the
State of New York.

     The Company was incorporated under the name Coastal Computer Systems,  Inc.
in New York on March  31,  1983 and was  reincorporated  in  Delaware  under its
present name on October 18, 1996.

     The  Company's   executive   offices  are  located  at  77  Spruce  Street,
Cedarhurst, New York 11516 and its telephone number is (516) 374-6700.

     See "Risk  Factors"  for a  discussion  of certain  factors  that should be
considered in evaluating the Company and its business.


                                        4

<PAGE>



                                  The Offering


Common Shares Being 
Offered ...............  1,200,000 shares
Common Shares 
Outstanding
Prior to the
Offering (1)...........  1,282,700 shares
Common Shares to be 
Outstanding After
the Offering (2).......  2,482,700 shares
Use of Proceeds........  The net proceeds to the Company from the  sale  of the
                         1,200,000 Common Shares offered hereby are estimated to
                         be  $4,700,000.  The net  proceeds  are  expected to be
                         applied in the following  approximate  percentages  for
                         the following  purposes:  (i) product  enhancement  and
                         development  (26.6%);  (ii)  repayment of  indebtedness
                         (16.4%);  (iii) marketing and advertising (13.8%); (iv)
                         hiring and training of additional personnel (3.2%); (v)
                         purchase of equipment (3.2%);  and (vi) working capital
                         (36.8%).     See     "Use    of     Proceeds".     

Risk Factors..........   An investment in the securities offered hereby involves
                         a  high  degree  of  risk  and  immediate   substantial
                         dilution  of the book value of the Common  Shares,  and
                         should be considered only by persons who can afford the
                         loss of their entire investment. See "Risk Factors" and
                         "Dilution".    


Proposed Nasdaq 
SmallCap Market
Symbol(3)...........     "CODI"

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

(1)  Gives  effect to the issuance of 63,000  Common  Shares upon the closing of
     the Offering pursuant to the conversion,  at a price of $5.00 per share, of
     $200,000 in  indebtedness  and $100,000 in accrued and unpaid  compensation
     owed to Mark Honigsfeld,  Chairman of the Board and Chief Executive Officer
     of the Company, and $15,000 in accrued and unpaid compensation owed to Dong
     W. Lew,  President of the  Company.  See "Use of  Proceeds",  "Management's
     Discussion and Analysis of Financial  Condition and Results of Operations -
     Liquidity and Capital  Resources"  and "Certain  Relationships  and Related
     Transactions".

(2)  Does not give  effect to the  issuance of (i)  180,000  Common  Shares upon
     exercise of the  Overallotment  Option;  (ii)  120,000  Common  Shares upon
     exercise of the  Underwriter's  Warrants;  (iii) 389,200 Common Shares upon
     the exercise of the Bridge  Warrants;  (iv) 156,950  Common Shares upon the
     exercise  of  outstanding  options  which are  currently  exercisable  (the
     "Exercisable Options"); (v) 31,200 Common Shares upon the exercise of other
     outstanding warrants (the "Other Warrants");  or (vi) 289,250 Common Shares
     upon
                                        5

<PAGE>



     the  exercise  of  other  outstanding   options   (collectively   with  the
     Exercisable   Options  and  the  Other  Warrants,   the  "Other  Derivative
     Securities").  See "Bridge Financing",  "Management Stock Plans",  "Certain
     Relationships and Related Transactions" and "Underwriting".

(3)  Although the Company will apply for  inclusion of the Common  Shares on The
     Nasdaq  SmallCap  Market,  there  can be no  assurance  that the  Company's
     securities  will be included for  quotation,  or, if so included,  that the
     Company  will be able to continue to meet the  requirements  for  continued
     quotation,  or that a public trading market will develop or, if such market
     develops,  that it will be  sustained.  See  "Risk  Factors - Lack of Prior
     Market for Common  Shares;  No Assurance of Public Trading Market or Nasdaq
     SmallCap Market Listing".

                           Summary Financial Information

         The following summary  financial  information has been derived from the
financial  statements of the Company included elsewhere in this Prospectus.  All
amounts  are in  dollars  except the number of Common  Shares.  The  information
should be read in  conjunction  with the  financial  statements  and the related
notes thereto. See "Financial Statements".

Statement of Operations Data

                                        Year Ended         Three Months Ended
                                       December 31,              March 31,


                                      1995       1996        1996       1997
                                     ----        ----        ----       ----
Revenues  .....................  $1,040,181    $ 477,527    $91,519   $185,801
Operating income (loss)........     129,981     (609,493)   (75,865)  (453,897)
Net income (loss) .............      78,660     (570,769)   (57,261)  (513,056)
Net income (loss) per share....         .05         (.34)      (.03)      (.31)
Weighted average number of
 Common Shares outstanding.....   1,678,913    1,678,913  1,678,913  1,678,913


Balance Sheet Data



                           December 31, 1996     March 31, 1997
                           ----------------  -----------------------------------
                                                                   Pro Forma As
                                            Actual   Pro Forma(1) Adjusted(1)(2)
Working capital (deficit)...    $ 180,236  ($148,064)   $36,836  $ 4,179,204
Total assets ...............    2,433,160  2,598,812  2,668,712    5,041,662
Total liabilities ..........    1,153,459  1,457,667  1,142,667      372,667
Total stockholders' equity..    1,279,701  1,141,145  1,526,045    4,668,995
- ---------------



                                        6

<PAGE>




(1)      Gives effect to (i) the exercise of options to purchase  233,000 Common
         Shares by Mark  Honigsfeld,  Chairman of the Board and Chief  Executive
         Officer of the Company,  at a price of $.30 per share,  or an aggregate
         of $69,900, in April 1997 (the "Honigsfeld Option Exercise"),  (ii) the
         conversion  of $200,000 in loans made by Mr.  Honigsfeld to the Company
         into 40,000 Common  Shares,  effective upon the closing of the Offering
         (the "Debt Conversion"), and (iii) the conversion of accrued and unpaid
         compensation  payable to Messrs.  Honigsfeld  and Lew in the amounts of
         $100,000  and  $15,000,  respectively,  into  20,000  and 3,000  Common
         Shares,  respectively,  effective upon the closing of the Offering (the
         "Accrued Compensation Conversion").

(2)      Adjusted  to give  effect to the  receipt  and  application  of the net
         proceeds of approximately $4,700,000 from the sale of the Common Shares
         offered hereby.

                                  RISK FACTORS

     An investment in the securities  offered hereby is speculative and involves
a high degree of risk and substantial dilution,  and should only be purchased by
investors  who  can  afford  to  lose  their  entire   investment.   Prospective
purchasers,  prior to  making  an  investment,  should  consider  carefully  the
following risks and speculative  factors associated with this Offering,  as well
as other  information  set forth  elsewhere in this  Prospectus,  including  the
information contained in the financial statements herein.

     1. Dependence on Offering Proceeds; Possible Need for Additional Financing.
The Company's cash  requirements  have been and will continue to be significant.
The Company is dependent on the proceeds  from this Offering in order to sustain
and further expand its operations. The Company believes that the net proceeds of
this  Offering,  together with  anticipated  increased  revenues  generated from
operations,  will be sufficient to conduct the Company's operations for at least
12  months.  In the  event  that the  Company's  plans  change,  or the costs of
operations  prove  greater than  anticipated,  the Company  could be required to
curtail  its  expansion  or seek  additional  financing  sooner  than  currently
anticipated. Mark Honigsfeld,  Chairman of the Board and Chief Executive Officer
of the  Company,  has agreed to loan to the  Company up to  $500,000 as and when
needed  during the twenty  six-month  period  ending July 1, 1999.  Such line of
credit provides for the grant to Mr. Honigsfeld of a security interest in all of
the  Company's  assets to secure the  repayment  of up to  $200,000 of such loan
proceeds.  See "Use of  Proceeds",  "Management's  Discussion  and  Analysis  of
Financial   Conditions  and  Results  of  Operations  -  Liquidity  and  Capital
Resources" and "Certain Relationships and Related Transactions".

     2. Inexperience of Underwriter.  This is the first offering underwritten by
the  Underwriter.  There  can be no  assurance  that the  Underwriter's  limited
experience will not adversely affect the development of a trading market for, or
liquidity of, the Company's securities. Therefore,

                                        7

<PAGE>



purchasers of the Common Shares offered hereby may suffer a lack of liquidity in
their investment or a material diminution of the value of their investment.  See
"Underwriting".

     3.  Downward  Trend in  Revenues;  Current  Period and  Anticipated  Future
Losses.  For the years ended December 1996 and 1995, the Company's revenues were
$477,527 and $1,040,181,  respectively.  For the first quarter of 1997 and 1996,
the Company's revenues were $185,801 and $91,519,  respectively.  The decline in
revenues  between  1995 and 1996 was  primarily  the  result  of a  decrease  in
software sales (i.e. fewer units sold) which occurred due to the Company's focus
on raising  capital  (commencing in late 1995 and continuing  throughout  1996),
strategic  planning,  and the allocation  and devotion of substantial  personnel
time to the development of visual computer-aided  dispatching (or V-CAD) and new
wireless  mobile  computing  technology.  Such actions  diverted  the  Company's
resources away from sales  activities.  The revenue figures reflect an upturn in
sales  activity  commencing in early 1997. For the year ended December 31, 1996,
the Company  experienced  a net loss of $570,769.  For the first quarter of 1997
and 1996, the Company had a net loss of $513,056 and $57,261,  respectively. The
net loss  figures  are the result of the  incurrence  of  significant  expenses,
including, without limitation, research and development expenses, costs relating
to the enhancement and refining of the Company's current product line, marketing
costs, obligations under new key employee compensation agreements, the lease for
the  Company's   premises  which   commenced  in  September  1996,  and  general
administrative  expenses. The Company believes that, for the foreseeable future,
it  will  be  unable  to  achieve  sufficient   additional  revenues  to  offset
anticipated significant operating costs such as the foregoing.  Accordingly, the
Company anticipates that operating losses will continue at least for the next 12
months. The Company cannot predict the length of time such operating losses will
continue  or the  impact  such  operating  losses  will  have  on its  financial
condition and results of operations. Additionally, the Company will experience a
nonrecurring deferred financing charge of up to approximately  $1,557,050 (which
includes,  among other things, the difference between (i) the fair market value,
at the time the Bridge Warrants were issued,  of the Common Shares issuable upon
exercisable  of the Bridge  Warrants  ($4.00  per  share) and (ii) the  original
exercise  price ($.50 per share) at the time the  promissory  notes (the "Bridge
Notes") issued in the Company's bridge  financing  transaction are repaid (which
will  occur on the  closing  date of the  Offering).  The  Bridge  Warrants  are
exercisable  at any time during the five year period  commencing  on the closing
date of the Offering at the amended exercise price of $3.00 per share. There can
be no assurance  that the  Company's  technology  and  products  will be able to
compete  successfully in the marketplace and/or generate significant revenue, or
that the  Company's  business  will be able to  operate  profitably.  See  "Risk
Factors - Competition",  "Business - Competition",  "Management's Discussion and
Analysis  of  Financial  Conditions  and  Results  of  Operations  - Results  of
Operations".

     The Company's quarterly operating results have, in the past, varied and may
in the future vary  significantly,  depending on facts such as the size,  timing
and  recognition  of  revenue  from   significant   software  sales  and  system
integration activity,  the time of new product releases and market acceptance of
these new releases,  and increases in operating  expenses.  Thus,  the Company's
revenues and results of operations  have and may continue to vary  significantly
from quarter to quarter, period to period, and year to year based upon frequency
and volume of sales and licensing

                                        8

<PAGE>



of the Company's  software  applications  and  providing of consulting  services
during  such  period.  Due to the  relatively  fixed  nature of  certain  of the
Company's  costs  throughout  each  quarterly  period,  including  personnel and
facilities  costs, the decline of revenues in any quarter  typically  results in
lower profitability in that quarter.  There can be no assurance that the Company
will become profitable or avoid losses in any future period.

     4. Immediate and Substantial Dilution; Equity Securities Previously Sold at
Below Offering Price. Upon completion of this Offering,  assuming no exercise of
the  Overallotment  Option,  and without  giving  effect to the  exercise of the
Underwriter's  Warrant,  the pro forma net tangible  book value per share of the
Company's  Common  Shares as of March 31,  1997  would have been  $1.88.  At the
initial  public  offering  price of $5.00 per share,  investors in this Offering
will experience an immediate  dilution of approximately  $3.12, or 62.4%, in net
tangible  book  value per share,  and  existing  investors  will  experience  an
increase  of  approximately  $2.07 per share,  in each case  giving  retroactive
effect to the Debt  Conversion,  the  Accrued  Compensation  Conversion  and the
Honigsfeld  Option  Exercise.  The  present  stockholders  of the  Company  have
acquired  their  respective  equity  interest at costs  substantially  below the
public  offering  price.  Accordingly,  to the extent  that the  Company  incurs
losses, the public investors will bear a  disproportionate  risk of such losses.
See  "Dilution",  "Bridge  Financing",  "Management  - Executive  Compensation",
"Management - Stock Plans" and "Underwriting".

     5. Evolving Market; New Product  Development;  Technological  Obsolescence.
The markets for the Company's  products are  characterized by evolving  industry
requirements,  rapid technological change and frequent new product introductions
which may result in product or technology obsolescence. Certain companies may be
developing technologies or products of which the Company is unaware which may be
functionally  similar,  or  superior,  to some or all of  those  offered  by the
Company.  As a result,  the ability of the Company to compete will depend on its
ability to adapt,  enhance and improve its existing products and technology and,
if  necessary,  to develop and  introduce  new  products and  technology  to the
marketplace in a timely and cost- competitive manner.  There can be no assurance
that the Company will be able to compete  successfully,  that its competitors or
future  competitors  will not develop  technologies  or products that render the
Company's  products  or  technology  obsolete  or less  marketable,  or that the
Company will be able to successfully enhance its products or technology or adapt
them satisfactorily.

     New product development efforts are subject to all of the risks inherent in
the development of new technology and products including  unanticipated  delays,
expenses,   technical  problems  or  difficulties,   as  well  as  the  possible
insufficiency of funding to complete  development.  There can be no assurance as
to when, or whether, new products will be successfully  developed.  In addition,
no assurance can be given that additional technologies can be developed within a
reasonable  development schedule, if at all. Further,  there can be no assurance
that the Company would have  sufficient  economic or human resources to complete
such  development  in a timely  manner,  or at all,  or that it could enter into
economically  reasonable  arrangements  for the  completion  of such products by
third parties.


                                        9

<PAGE>



     Following  the  development  of  additional  products,   the  Company  must
successfully  complete a testing  program  for the  products  before they can be
marketed.  Although the Company  believes that its testing  program is adequate,
unforeseen  technical  problems arising out of such testing could  significantly
and adversely affect the Company's  ability to produce and market a commercially
acceptable  product.  In addition,  the  Company's  success will depend upon its
current and proposed  technologies  and  products  meeting  acceptable  cost and
performance  criteria in the  marketplace.  There can be no  assurance  that the
technologies and products will meet applicable  price or performance  objectives
or that  unanticipated  technical or other  problems  will not occur which would
result in increased costs or material  delays.  Also,  there can be no assurance
that new  technologies  will be  developed  in the  future  by the  Company.  If
superior technology is developed by the Company's competitors, such products may
render the Company's present products obsolete, and thus would have a materially
negative impact on the Company. See "Business".

     6. Failure to Integrate Various Product  Introductions  and Offerings.  The
Company believes that significant market  opportunities  exist for a provider of
fully integrated software designed for the public safety marketplace. One of the
Company's business  strategies is to provide a "total solution" fully integrated
software  product line used in public safety.  Although the Company has had some
success in the past integrating its software products with other systems,  there
can be no  assurance  that the  Company  will be able to fully  integrate  these
applications,  or newly created applications, or that achieving such integration
will  enable the  Company to improve its  competitive  position in the  software
market.  Moreover,  the  Company's  inability to further  integrate its products
could have a material  adverse  effect on the Company's  business and results of
operations. See "Business".

   
         7.  Dependence  on  Strategic   Business  Alliances  and  Subcontractor
Relationships.  Historically,  the Company's  customers  have been in the "small
size" and "medium  size" market  segments  (i.e.  public safety  departments  or
agencies  with  fewer  than 200 sworn  officers  or  personnel).  The  Company's
business  strategy  includes  the  development  of systems for the "large  size"
market segment.  In order to enter such market, the Company,  in all likelihood,
will  need  to  establish  strategic  business  alliances  and/or  subcontractor
relationships  with large  systems  integrators  and public  network  providers.
Business alliances have been entered into with AT&T Wireless Data, Inc. ("AT&T")
and GTE Mobilnet  Service Corp.  ("GTE"),  and a subcontractor  relationship has
been  established  with  Data  General   Corporation  ("Data  General").   These
arrangements  set forth the relationship of the parties in the event of a system
installation and do not relate to a particular  customer.  To date, no customers
have been secured under these  arrangements,  no revenues have been derived from
these  arrangements  and no  assurances  can be given that any revenues  will be
derived from these arrangements in the future. The agreement between the Company
and AT&T provides,  among other things,  (i) minimum technical support standards
(if  technical  support is required in a  particular  project)  which if not met
could result in a reduction of the amount of technical  support fees paid to the
Company,  and (ii) minimum revenue requirements to entitle the Company to a goal
attainment   fee.   Additionally,   failure  to  meet  certain  minimum  revenue
requirements will give AT&T the right to terminate the agreement.  The agreement
between the Company and GTE provides,  among other things, the GTE has the right
not to pay the Company any  compensation  during any period in which the Company
fails to materially perform its obligations. No assurances can be given that, in
the event any projects are undertaken under the above described agreements, that
the Company will meet any of the imposed standards,  that minimum revenue levels
will be  achieved,  or that the Company will be able to  materially  perform its
obligations.  If any of these  standards  or levels are not met,  the  Company's
compensation  may  be  reduced  or  eliminated  and  possibly  result  in  early
termination of certain of these  agreements.  In addition,  no assurances can be
given that the Company will renew its current, or enter into any other, business
alliances or subcontractor relationships. The failure of the Company to maintain
current,  or enter into such  alliances or  relationships  would have a material
adverse  effect upon the Company's  ability to implement its business  plan. See
"Business - Sales and Marketing".


    


                                       10

<PAGE>



     8.  Intellectual  Property  Protection  and  Infringement.   The  Company's
technology   is  not   patented  and  the  Company  has  not  filed  any  patent
applications.  The  Company  instead  currently  relies  on  trade  secrets  and
copyright  rights to establish  and protect  certain  proprietary  rights in its
products.  These  measures  afford  limited  protection,  and  there  can  be no
assurance  that the steps  taken by the  Company  to protect  these  proprietary
rights will be adequate to prevent  misappropriation  of its  technology  or the
independent  development by others of similar  technology  especially in view of
the limited  resources of the Company and the potential cost of any legal action
to enforce such rights.

     The Company has not obtained any copyright registrations. Registration of a
copyright with the United States copyright office is not a requirement to make a
copyright legally effective,  but generally provides a rebuttable presumption of
its  validity.  In the absence of a  registered  copyright,  the Company will be
unable  to bring an  action  for  copyright  infringement.  A  copyright  may be
registered at any time prior to bringing an infringement  action. If the Company
registers a copyright after the  infringement  occurs (and prior to bringing the
infringement  action),  it may be limited  in its  ability to prove its case and
will be precluded from seeking  statutory damages (in lieu of actual damages and
lost profits,  and  attorney's  fees).  The Company  intends to seek  registered
copyright  protection  under  United  States  law  with  respect  to some of its
software,  although no assurance  can be given that the Company will obtain such
protection.  While the Company  believes  that it would be  impractical  and not
cost-effective  for a third party to attempt to copy  software such as that used
in its  products,  unauthorized  parties,  nevertheless,  might  attempt to copy
aspects, or reverse engineer certain,  of the Company's products,  or may obtain
and use information  that the Company  regards as proprietary.  The cost of, and
time dedicated to,  enforcement  by the Company of its rights,  if any, could be
significant.  Regardless of the outcome of such enforcement  proceedings,  there
can be no  assurance  that such  proceedings  will be  effective.  In  addition,
although the Company  believes  that there are no  infringement  or trade secret
misappropriation  claims against the Company and no grounds for the assertion of
any such claims,  the cost of  responding  to any such  assertion,  should it be
made,  could be  significant  and there is no assurance  that the Company  would
prevail.  See "Risk  Factors -  Competition",  "Business  Intellectual  Property
Rights and Licenses" and "Business - Competition".

     9.  Competition.  The  Company's  products  compete  with those of numerous
well-established  companies,  which  design,  sell,  produce or market  software
systems for public safety operations. Many of these companies have substantially
greater financial,  technical and other resources than those of the Company, and
they may have established reputations for success in the development, licensing,
sale and service of their products and technology.  Certain of those competitors
have the financial resources  necessary to enable them to withstand  substantial
price competition or downturns in the market for computer software products used
by  public  safety  agencies  and  organizations.   In  addition,   the  Company
anticipates  that a material  portion of the sale of its  products  will be made
through the competitive bid process.  There can be no assurance that the Company
will  be  able  to  compete  effectively  in  such  process.   See  "Business  -
Competition" and "Business - Products and Services".


                                       11

<PAGE>



     10.  Limited  Sales and  Marketing  Experience.  The  Company  has  limited
experience  in the areas of sales,  marketing  and  distribution.  The Company's
sales and marketing staff will require additional personnel in the future. There
can be no assurance that the Company will be able to build an adequate sales and
marketing  staff,  that  establishing  such a sales and marketing  staff will be
cost-effective,  or that the  Company's  sales  and  marketing  efforts  will be
successful.  See "Risk Factors Challenges to Management of Growth" and "Business
- - Sales and Marketing".

     11.  Dependence on Significant  Customers.  Although the composition of the
Company's  largest  customers  has changed from year to year,  historically  the
Company's  revenues  have  been  materially  dependent  on a  limited  number of
customers.  Generally,  the Company does not receive  repeat  business  from its
customers for the design and installation of software systems.  Further revenues
from  customers  to whom the Company has licensed  software  systems are usually
derived from maintenance and support  contracts.  Accordingly,  the Company does
not  believe  that  the  makeup  of its  current  customers  is  material  to an
understanding  of the Company's  future  business  prospects.  While the Company
expects  its  customer  base to continue  to expand,  a limited  number of large
customers  may continue to account for a  significant  portion of the  Company's
sales during any given period for the foreseeable future. As such, the Company's
financial  condition  and results of operations  may be adversely  affected by a
delay,  reduction or  cancellation  of orders from one or more of its current or
future  significant  customers  or the loss of one or more such  customers.  See
"Risk Factors - Lengthy Sales Cycle" and "Business - Customers".

     12.  Product  Concentration.  Licensing  of products  and the  provision of
maintenance and support services to the law enforcement and public safety market
represented  substantially  all of the  Company's  revenues for the fiscal years
ended December 31, 1995 and 1996 and the first quarter of 1997, and are expected
to continue to account for all of the  Company's  revenues  for the  foreseeable
future.  Any factors  adversely  affecting the Company's  products,  such as the
introduction  of  superior  competitive  products  or shifts in the needs of the
marketplace,  would have a material  adverse  effect on the Company's  financial
condition and results of operations. See "Risk Factors Competition", "Business -
Products and Services" and "Business-Competition".

     13.  Lengthy  Sales Cycle.  Licensing of the  Company's  software  products
typically involves a detailed technical  evaluation and a commitment of capital,
technical,  marketing and other resources,  with the attendant delays frequently
associated  with  customers'   internal  procedures  to  approve  large  capital
expenditures and to test and accept new technologies  that affect the customer's
operations  infrastructure.  For  those  and  other  reasons,  the  sales  cycle
associated  with the  Company's  products is typically  lengthy and subject to a
number of significant  risks,  including  customers'  budgetary  constraints and
internal acceptance procedure, that are beyond the Company's control. Because of
the lengthy  sales cycle and the  generally  large size of customer  orders,  if
revenues forecasted from a specific customer for a particular fiscal quarter are
not realized in that quarter,  the Company's  operating results for that quarter
could be  materially  adversely  affected.  See "Risk  Factors -  Dependence  on
Significant Customers".


                                       12

<PAGE>



     14. New Management Team; Dependence on Executive Management; Need to Retain
Key  Personnel.  The  Company's  executive  management  team,  Mark  Honigsfeld,
Chairman of the Board and Chief Executive  Officer of the Company,  Dong W. Lew,
President and Chief  Operating  Officer of the Company,  and Louis Libin,  Chief
Technology Officer of the Company, have worked together for only a brief period.
Mr.  Honigsfeld was elected  Chairman of the Board of the Company in August 1996
and was elected Chief Executive  Officer of the Company  effective as of October
1, 1996.  Mr.  Libin was  elected as a director  of the  Company  and became the
Company's  Chief  Technology  Officer in January 1997 and only began  serving as
Chief Technology Officer on a full-time basis in March 1997.

     The  Company has a  three-year  employment  agreement  with each of Messrs.
Honigsfeld,  Lew and  Libin,  each of which  includes,  among  other  things,  a
non-competition  and  non-  solicitation  provision.   However,  each  agreement
provides that the employee can  terminate his agreement  with the Company at any
time  upon 30  days  notice  for  any  reason.  Additionally,  Mr.  Honigsfeld's
employment agreement allows him to devote up to 10% of his working time, and Mr.
Libin's employment agreement allows him to devote up to one day a week, to other
endeavors which are not competitive  with the Company.  The loss of the services
of either Mr.  Honigsfeld,  Mr. Lew or Mr.  Libin would have a material  adverse
effect on the Company's business.

     The Company has obtained  "key-man" life insurance policies on the lives of
Messrs.  Honigsfeld and Libin, each of which provides for a death benefit to the
Company of  $1,000,000.  The Company  has been  unable to secure life  insurance
coverage for Mr. Lew in light of his age and history as a smoker. With regard to
Messrs.  Honigsfeld and Libin,  there can be no assurance that the death benefit
would be  adequate to fund the  Company's  needs  until a  replacement  could be
found.

     The success of the Company is also  dependent  upon its ability to hire and
retain  additional  qualified  and talented  executive,  technical and marketing
personnel.  There is always intense  competition for qualified  personnel in the
Company's business and its inability to recruit qualified personnel could have a
material adverse effect on its business and results of operations.  There can be
no assurance  that the Company will be able to retain the members of its current
management or  personnel,  or that it will be able to  successfully  attract and
retain  qualified  management,  engineering  and sales or other personnel in the
future. See "Management Employment Agreements".

     15.  Dependence on  Licensors.  The Company  currently  relies on operating
system software owned by certain third parties for certain software and platform
operating  systems  which the Company uses to create its  products,  and in some
cases  to  bundle  with its own  software  in its  products.  The  licenses  are
perpetual  in  duration  subject  to the  payment of an annual  maintenance  and
enhancement  fee,  which is based on the  number of end users of such  operating
system software,  or a monthly sublicense fee, which is based upon the number of
customers  to  which  the  Company's  products  (which  includes  such  licensed
operating  system  software)  are licensed.  Although the Company  believes that
there are alternatives to the operating system software that the Company

                                       13

<PAGE>



currently  uses,  termination  of any of these  licenses could delay the Company
from producing its products for approximately three to six months as a result of
the need to  revise  the  Company's  software  to make it  compatible  with such
alternative operating system software. Such result would have a material adverse
effect  on  the  Company.  See  "Business-   Intellectual  Property  Rights  and
Licenses".

     16. Challenges to Management of Growth. The Company anticipates a period of
rapid growth that is expected to place a strain on the Company's administrative,
financial and operational resources.  The Company's ability to manage any growth
effectively  will require it to continue to improve its  operational,  financial
and  management  controls,   reporting  systems  and  procedures,   install  new
management  information and control systems, and train,  motivate and manage its
employees.  There  can be no  assurance  that  the  Company  will  install  such
management  information and control systems in an efficient and timely manner or
that the new  systems  will be adequate  to support  the  Company's  operations.
Because  of the  complexity  of  its  products,  the  Company  has  in the  past
experienced,  and  expects in the future to  experience,  a time lag between the
date on which technical and sales personnel are hired and the time at which such
persons become fully productive.  In addition,  customer  satisfaction  could be
substantially  affected  by the  quality  of  the  Company's  post-sales  system
implementation   process  and,  in  many  cases,  its  maintenance  and  service
capabilities.  If the  Company  is unable to hire,  train and  retain  qualified
personnel and consultants to implement these services or is unable to manage the
post-sales  process  effectively,  its ability to attract repeat sales or obtain
references for new prospective  sales could be adversely  affected.  Such result
could  limit  the  Company's  growth  opportunities.  Additionally,  many of the
challenges of growth may be unforeseeable and beyond the control of the Company.
If the Company is unable to manage growth  effectively,  such that the Company's
sales and marketing  efforts  exceed its capacity to design,  develop,  install,
maintain and service its  products,  or if new  employees  are unable to achieve
adequate  performance  levels,  the Company's  business,  operating  results and
financial condition could be adversely affected.

     17. Unascertainable Risks Related to Possible Unspecified Acquisitions. The
Company  intends  to  explore  opportunities  to  add,  through  acquisition  or
licensing, technology or products to enhance or add to its current product line,
or to acquire a customer  base or sales  organization  to augment the  Company's
infrastructure.  The Company is not  actively  seeking any  acquisition  at this
time.  Although the Company  anticipates it will follow certain general criteria
in determining  whether or not to pursue any acquisition or license,  management
will have sole discretion over whether or not to engage in any such transaction.
There can be no assurance  that the Company will  identify  any  acquisition  or
licensing  candidates  or,  if it  does,  that it will  be  able  to  reach  any
agreements to acquire or license  technology or products,  or acquire assets, on
terms  acceptable  to the  Company.  Since the  Company has not  identified  any
potential acquisition candidates,  there is no basis for the Company to evaluate
the possible  merits or risks  relating to the technology or assets which may be
acquired. To the extent that the Company effects an acquisition of technology or
products in the early stage of  development or growth  (including  technology or
products  which have not been fully  tested or  marketed),  the Company  will be
subject to numerous risks inherent in developmental technology and an additional
high level of risk associated with high-technology

                                       14

<PAGE>



industries based on innovative  technologies or processes.  Furthermore,  future
acquisition  transactions may require the Company to obtain additional financing
from  banks or other  financial  institutions  or to  undertake  debt or  equity
financing.  No assurance  can be given that the Company  would be able to obtain
financing upon  commercially  reasonable terms, or at all.  Furthermore,  equity
financing  will result in a dilution of existing  stockholders  of the  Company,
which may be significant.  If debt financing  ultimately proves to be available,
any borrowings may subject the Company to various risks traditionally associated
with the  incurring  of  indebtedness,  including  the  risks of  interest  rate
fluctuations and  insufficiency  of cash flow to pay principal and interest.  To
the extent any such  transaction  involves the acquisition of a business,  there
can be no assurance that the Company will successfully  integrate the operations
of the acquired business with those of the Company,  or that all of the benefits
expected from such integration will be realized.  Any delays or unexpected costs
incurred in connection with such integration could have an adverse effect on the
combined  company's   business,   operating  results  or  financial   condition.
Furthermore,  there can be no  assurance  that the  operations,  management  and
personnel  of the  companies  will be  compatible  or that the Company  will not
experience  the  loss of key  personnel.  The  amount  of net  proceeds  of this
Offering,  if any, expended with respect to an acquisition will be determined by
the Board of  Directors of the Company.  In most cases each  acquisition  may be
consummated without seeking and obtaining  stockholder  approval, in which case,
the stockholders will not have an opportunity to review the financial statements
of an acquisition candidate.  Although the Company will endeavor to evaluate the
risks inherent in a particular  acquisition,  there can be no assurance that the
Company will properly  ascertain or assess such  significant  risk factors.  See
"Risk Factors - Limited Sales and  Marketing  Experience",  "Business - Products
and Services" and "Business - Sales and Marketing".

     18. International  Expansion. As part of the Company's long range marketing
plan, the Company intends, in the future, to explore opportunities to expand its
operations into international markets which could require significant management
attention and financial resources.  Currently, the Company has not developed any
international  marketing  strategy,  has not given any significant  attention to
international   marketing,  and  has  no  timetable  in  mind  to  implement  an
international  marketing plan. For the foreseeable  future, the Company does not
expect  international  marketing  activities to be material nor does it have any
current  plans to devote  significant  capital  or  resources  to  international
marketing.  There can be no  assurance  that the  Company's  efforts  to develop
international sales and support channels will be successful. International sales
are subject to a number of risks,  including  potentially longer payment cycles,
unexpected changes in regulatory  requirements,  import and export  restrictions
and  tariffs,  difficulties  in staffing and managing  foreign  operations,  the
burden of  complying  with a variety  of foreign  laws,  greater  difficulty  in
accounts receivable collection,  potentially adverse tax consequences,  currency
fluctuations and potential political and economic instability. Additionally, the
protection of intellectual  property may be more difficult and costly to enforce
outside of the United  States.  In the event that the Company is  successful  in
expanding its sales and operations internationally, the imposition of, or change
in, price controls or other  restrictions on foreign currencies could materially
affect the Company's business, operating results and financial condition.


                                       15

<PAGE>



     19.  Control by Existing  Management  and  Stockholders;  Effect of Certain
Anti- Takeover  Considerations.  Upon completion of the Offering,  the Company's
directors,  executive  officers  and certain  principal  stockholders  and their
affiliates  will  own  beneficially  approximately  39.3% of the  Common  Shares
(giving effect to the exercise of the Bridge Warrants and sales of Common Shares
by the Selling  Stockholders,  and without  giving effect to the exercise of the
Overallotment Option).  Accordingly, such holders, if acting together, will have
the ability to exert  significant  influence  over the election of the Company's
Board of Directors and other matters submitted to the Company's stockholders for
approval.  The voting  power of these  holders  may  discourage  or prevent  any
proposed  takeover of the Company  unless the terms thereof are approved by such
holders.  Pursuant to the  Company's  Certificate  of  Incorporation,  Preferred
Shares may be issued by the Company in the future without  stockholder  approval
and upon such terms as the Board of Directors may  determine.  The rights of the
holders of Common  Shares will be subject to, and may be adversely  affected by,
the rights of the  holders  of any  Preferred  Shares  that may be issued in the
future. The issuance of Preferred Shares could have the effect of discouraging a
third party from  acquiring a majority of the  outstanding  Common Shares of the
Company and  preventing  stockholders  from  realizing a premium on their Common
Shares.  The Certificate of Incorporation  also provides for staggered terms for
the members of the Board of  Directors.  A  staggered  Board of  Directors,  and
certain  provisions of the Company's  by-laws and of Delaware law  applicable to
the  Company  (which law  prohibits  the  Company  from  engaging in a "business
combination" with an "interested  stockholder" for a period of three years after
the  date  of  the   transaction  in  which  the  person  became  an  interested
stockholder,  unless it is approved in a prescribed manner), could delay or make
more  difficult a merger,  tender offer or proxy contest  involving the Company.
See  "Management",  "Principal and Selling  Stockholders"  and  "Description  of
Securities".

     20. Broad Discretion in Application of Proceeds; Repayment of Indebtedness.
While the Company  intends to use the net proceeds of this Offering as described
in the "Use of  Proceeds"  section of this  Prospectus,  the  Company  has broad
discretion  to adjust the  application  and  allocation  of such net proceeds in
order to  address  changed  circumstances  and  opportunities.  In  addition,  a
significant portion of the net proceeds of the Offering (36.8%) is allocated for
working  capital  purposes.  As a result of the  foregoing,  the  success of the
Company will be substantially  dependent upon the discretion and judgment of its
management with respect to the application and allocation of the net proceeds of
this  Offering.  Pending  use of the  proceeds,  the funds will be  invested  in
certificates of deposit,  high grade commercial paper and government  securities
or other low risk investments. See "Use of Proceeds".

     The Company intends to utilize an aggregate of $770,000,  or  approximately
16.4% of the net proceeds of this Offering,  to repay promissory notes issued in
connection with the Company's bridge financing transaction in October 1996. As a
result, these proceeds will not be available to fund future business activities.
See "Use of Proceeds", "Bridge Financing" and "Management".

     21. Lack of Prior Market for Common Shares;  No Assurance of Public Trading
Market or Nasdaq  SmallCap  Market  Listing.  Prior to this Offering,  no public
trading market

                                       16

<PAGE>



existed for the Common Shares.  There can be no assurances that a public trading
market for the Common Shares will develop or that a public  trading  market,  if
developed,  will be  sustained.  Although  the Company  anticipates  that,  upon
completion of this Offering, the Common Shares will be eligible for inclusion on
The Nasdaq  SmallCap  Market,  no assurance  can be given that the Common Shares
will be listed thereon. Under prevailing rules of The Nasdaq Stock Market, Inc.,
in order to qualify for initial  quotation of securities on The Nasdaq  SmallCap
Market,  a company,  among other things,  must have at least $4,000,000 in total
assets,  $2,000,000 in total capital and surplus,  $1,000,000 in market value of
public  float and a minimum bid price of $3.00 per share.  Although  the Company
may, upon the completion of this Offering,  qualify for initial quotation of the
Common Shares on The Nasdaq SmallCap  Market,  in order for the Common Shares to
continue to be listed thereon, the Company,  among other things,  generally must
have  $2,000,000  in total  assets,  $1,000,000  in total  capital and  surplus,
$1,000,000  in market value of public float and a minimum bid price of $1.00 per
share.

     Although it has no legal obligation to do so, the Underwriter may from time
to  time  act  as  a  market  maker  and  may  otherwise  effect  and  influence
transactions in the Company's  securities.  However,  there is no assurance that
the  Underwriter  will  continue  to effect and  influence  transactions  in the
Company's  securities.  The prices and liquidity of the Company's  Common Shares
may be  significantly  affected  by the  degree,  if any,  of the  Underwriter's
participation  in the market.  The Underwriter may voluntarily  discontinue such
participation  at any time.  Further,  the market  for,  and  liquidity  of, the
Company's Common Shares may be materially  adversely affected by the fact that a
significant  portion  of the  Common  Shares  may be  sold to  customers  of the
Underwriter.  See "Risk Factors - Inexperience of Underwriter",  "Risk Factors -
Impact of Proposed Nasdaq SmallCap Market Rules",  "Risk Factors - 'Penny Stock'
Regulations May Impose Certain  Restrictions on Marketability of Securities" and
"Underwriting".

     22.  Impact of Proposed  Nasdaq  SmallCap  Market  Rules.  The Nasdaq Stock
Market,  Inc.  has  proposed a rule  change  which,  if  adopted,  would  impose
substantially  more stringent  criteria for the initial and continued listing of
securities on The Nasdaq SmallCap  Market.  The proposed new rules provide that,
for initial listing on The Nasdaq SmallCap Market, a company would need to have,
among other things,  (i) either net tangible  assets (i.e.,  net of goodwill) of
$4,000,000,  a market capitalization of $50,000,000 or net income for two of the
last three fiscal years of $750,000, (ii) a minimum market value of public float
of $5,000,000, (iii) a minimum bid price of $4.00 per share, and (iv) either one
year of  operating  history  or a  market  capitalization  of  $50,000,000.  For
continued  listing on The Nasdaq SmallCap  Market, a company would need to have,
among other  things,  (i) either net  tangible  assets of  $2,000,000,  a market
capitalization  of  $35,000,000,  or net income for two of the last three fiscal
years  of  $500,000,  and  (ii) a  minimum  market  value  of  public  float  of
$1,000,000.  Additionally, for both initial listing and continued listing on The
Nasdaq  SmallCap  Market,  companies  would be  required  to have at  least  two
independent  directors,  and an Audit  Committee,  a majority  of the members of
which would need to be independent directors.

     If the Company is unable to satisfy the  requirements  for quotation on The
Nasdaq  SmallCap  Market,  trading,  if any, in the Common Shares offered hereby
would be conducted in the

                                       17

<PAGE>



over-the-counter  market in what is commonly referred to as the "pink sheets" or
on the NASD OTC Electronic  Bulletin Board. As a result, an investor may find it
more difficult to dispose of, or to obtain  accurate  quotations as to the price
of, the  securities  offered  hereby.  The  above-described  rules may adversely
affect the  liquidity of the market for the Company's  securities.  If a trading
market does in fact develop for the Common Shares offered  hereby,  there can be
no  assurance  that  it  will  be  maintained.  In any  event,  because  certain
restrictions may be placed upon the sale of securities at prices under $5.00 per
share, if the price of the Common Shares falls below such threshold, unless such
Common Shares qualify for an exemption  from the "penny stock" rules,  such as a
listing on The Nasdaq  SmallCap  Market,  some  brokerage  firms will not effect
transactions  in the  Company's  securities  and it is unlikely that any bank or
financial  institution  will accept such securities as collateral.  Such factors
could have a material  adverse affect in developing or sustaining any market for
the Common  Shares.  See "Risk Factors - Lack of Prior Market for Common Shares;
No Assurance of Public Trading or Nasdaq SmallCap Market Listing".

     23.  Arbitrary  Offering  Price;  Possible  Volatility of Stock Price.  The
initial public offering price of the Common Shares was determined by negotiation
between the Company and the  Underwriter,  may not be  indicative  of the market
price for such  securities  in the  future,  and does not  necessarily  bear any
relationship  to the  Company's  assets,  book  value,  net worth or  results of
operations of the Company or any other established  criteria of value. Among the
factors  considered  in  determining  the price of the  Common  Shares  were the
history of, and  prospects  for,  the  industry  in which the Company  operates,
estimates of the business  potential  of the Company,  the present  state of the
development of the Company's  business,  the Company's financial  condition,  an
assessment of the Company's management,  the general condition of the securities
markets at the time of this Offering,  and the demand for similar  securities of
comparable  companies.  It should be noted that the stock market in recent years
has experienced  extreme price and volume  fluctuations  that have  particularly
affected  the  market  prices  of  many  smaller  companies.   Frequently,  such
fluctuations   have  been  unrelated  or   disproportionate   to  the  operating
performance of such companies.  These fluctuations,  as well as general economic
and market conditions, may have a material adverse effect on the market price of
the  Common  Shares.  See   "Underwriting",   "Description  of  Securities"  and
"Financial Statements".

     24.  "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
of less than $5.00 per share, subject to certain exceptions. If, as anticipated,
the Common  Shares  offered  hereby are  authorized  for quotation on The Nasdaq
SmallCap  Market upon the  completion of this  Offering,  such  securities  will
initially be exempt from the definition of "penny  stock".  If the Common Shares
offered  hereby are removed  from listing on The Nasdaq  SmallCap  Market at any
time,  the  Company's  Common  Shares  may become  subject to rules that  impose
additional  sales  practice   requirements  on  broker-dealers  that  sell  such
securities to persons other than established  customers and accredited investors
(generally  those 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 such  securities  and have  received  the  purchaser's  written
consent

                                       18

<PAGE>



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  must also disclose the
commission 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  Company's
Common  Shares and may affect the ability of purchasers in this Offering to sell
the  Company's  Common  Shares in the  secondary  market as well as the price at
which such purchasers can sell any such Common Shares.

     25. No  Dividends.  The Company has never paid any  dividends on its Common
Shares  and does  not  intend  to pay  dividends  on its  Common  Shares  in the
foreseeable   future.  Any  earnings  which  the  Company  may  realize  in  the
foreseeable  future are  anticipated to be retained to finance the growth of the
Company. See "Dividend Policy" and "Description of Securities".

     26. Shares Eligible for Future Sale May Adversely Affect the Market. All of
the Company's outstanding Common Shares are "restricted  securities" and, in the
future,  may be sold upon  compliance  with Rule 144 or pursuant to registration
under the Act (see discussion  below with respect to the  registration of Common
Shares held by certain  stockholders  of the Company and  underlying  the Bridge
Warrants held by the Bridge Lenders).  Rule 144 currently provides,  in essence,
that a person holding "restricted  securities" for a period of one year may sell
an amount every three months up to the greater of (a) 1% of the Company's issued
and outstanding securities of that class of securities or (b) the average weekly
volume of sales of such securities  during the four calendar weeks preceding the
sale if there is adequate current public  information  available  concerning the
Company.  Additionally,  non-affiliates  (who  have not been  affiliates  of the
Company for at least three  months) may sell their  "restricted  securities"  in
compliance  with Rule 144 without volume  limitations  after they have held such
securities for a period of two years. An aggregate of 406,250 Common Shares have
been owned by Mr. Lew for more than one year.  However,  such shares are subject
to an agreement with the  Underwriter  restricting the public sale thereof for a
period of one year without the Underwriter's consent.

     The Company is registering for resale 250,250 Common Shares held by certain
stockholders.  In addition,  the Company is  registering  for resale the 389,200
Common Shares  underlying the Bridge Warrants.  Such Common Shares may be resold
at any time  following  the date of this  Prospectus,  subject  to an  agreement
between  each  of  the  Bridge  Lenders  and  the  Underwriter  restricting  the
transferability  of the  Warrant  Shares for a period of two years.  Prospective
investors  should  be aware  that the  possibility  of  resales  by the  Selling
Stockholders,  as well as other stockholders of the Company, may have a material
depressive  effect on the market  price of the  Company's  Common  Shares in any
market  which may  develop.  See  "Bridge  Financing",  "Principal  and  Selling
Stockholders" and "Underwriting".


                                       19

<PAGE>



     27.  Limitations  on  Director  Liability.  The  Company's  Certificate  of
Incorporation provides, pursuant to Delaware law, that a director of the Company
shall not be personally  liable to the Company or its  stockholders for monetary
damages for breach of fiduciary  duty as a director,  with  certain  exceptions.
These  provisions  may  discourage  stockholders  from  bringing  suit against a
director  for  breach  of  fiduciary  duty  and may  reduce  the  likelihood  of
derivative  litigation  brought by stockholders on behalf of the Company against
any director. In addition,  the Company's Certificate of Incorporation  provides
for mandatory  indemnification  of directors and officers to the fullest  extent
permitted or not  prohibited  by Delaware  law. See  "Description  of Securities
Limitation on Liability of Directors; Indemnification".

     28. Impact of Inflation and Changing Interest Rates. Since the inception of
operations,  inflation has not  significantly  affected the operating results of
the Company.  However,  inflation and changing interest rates have a significant
effect on the economy in general  and,  therefore,  could  affect the  operating
results of the Company in the future.

     29.  Outstanding  Options and Warrants.  As of the date of this Prospectus,
there are  outstanding  options and warrants for the purchase of 866,600  Common
Shares at exercise prices ranging from $.30 to $5.00 per share. In addition, the
Underwriter  will  receive  warrants  for the  purchase of up to 120,000  Common
Shares at an exercise price of $8.25 per share.  For the life of the options and
warrants, the holders thereof will have the opportunity to profit from a rise in
the market price of the Company's Common Shares with a resulting dilution in the
interests of other stockholders. The Company may find it more difficult to raise
capital for its business if the need should arise while the options and warrants
are outstanding.  At any time when the holders of the options and warrants might
be expected  to exercise  them,  the  Company  would  probably be able to obtain
additional  capital on more  favorable  terms.  See  "Management - Stock Plans",
"Certain Relationships and Related Transactions" and "Underwriting".

                                 USE OF PROCEEDS

     The net  proceeds  to the  Company  from the sale of the  1,200,000  Common
Shares  offered  hereby  are  estimated  to  be  $4,700,000   (after   deducting
underwriting discounts of $600,000 and other expenses of this Offering estimated
to be $700,000, including the Underwriter's non-accountable expense allowance in
the amount of 3% of the gross proceeds of the Offering, and a $108,000 financial
consulting fee payable to the  Underwriter at the closing) (but not  considering
any exercise of the  Overallotment  Option or the Underwriter's  Warrants).  The
Company, based upon all currently available information, intends to utilize such
net proceeds approximately as follows:

                                           Approximate    Approximate
                                             Amount of     Percentage
                                           Net Proceeds  of Net Proceeds
Product enhancement and development(1)      1,250,000           26.6%
Repayment of indebtedness (2)                 770,000           16.4%
Marketing and advertising (3)                 650,000           13.8%
Hiring and training of additional personnel   150,000            3.2%
Purchase of equipment                         150,000            3.2%
Working capital (4)                         1,730,000           36.8%
                                             -----------        ------
          Total                           $ 4,700,000          100.0%
                                           ===========          ======

(1)  Includes, without limitation,  costs to develop a radio modem to be used in
     connection  with  mobile  computing  software  systems.   See  "Business  -
     Products".

                                       20

<PAGE>




(2)  Represents  the  repayment of the Bridge Notes in the  aggregate  principal
     amount of $770,000 issued in connection with the Company's bridge financing
     transaction  in October 1996. The Bridge Notes are due and payable upon the
     closing of the Offering.  If such closing occurs on or before September 15,
     1997,  no interest  will be payable on the Bridge  Notes.  If the  Offering
     closes  after such date,  interest  shall  accrue on the  principal  of the
     Bridge Notes,  from the date such Bridge Notes were issued,  at the rate of
     12% per annum.  See "Risk  Factors - Broad  Discretion  in  Application  of
     Proceeds; Repayment of Indebtedness" and "Bridge Financing".

(3)  See "Business - Sales and Marketing".

(4)  To be used for general operating and overhead expenses.  Additionally,  the
     Company may use a portion of the  proceeds of this  Offering  allocated  to
     working  capital to acquire  technology  or assets to expand or enhance its
     product line and business.  At present,  the Company has not identified any
     acquisition  candidates,  nor can it  predict  that it  will  identify  any
     appropriate  acquisition  candidates  in the  future.  The  Company  is not
     actively seeking any acquisition candidates at this time. See "Risk Factors
     - Unascertainable  Risks Related to Possible Unspecified  Acquisitions" and
     "Business - Products and Services".

     The amounts  set forth above are  estimates.  Should a  reapportionment  or
redirection  of funds be determined to be in the best  interests of the Company,
the actual amount  expended to finance any category of expenses may be increased
or decreased by the Company's management, at its discretion.

     The Company  believes  that the proceeds of this  Offering  will enable the
Company  to expand  its  business,  which the  Company  anticipates,  but cannot
assure, will result in an increase in annual revenues. The Company believes that
the net proceeds of this Offering,  together with anticipated increased revenues
generated  from  operations,   will  be  sufficient  to  conduct  the  Company's
operations  for at least 12 months.  See "Risk  Factors - Dependence on Offering
Proceeds; Possible Need for Additional Financing".

     It is anticipated  that, to the extent that the Company's  expenditures are
less than projected and/or the proceeds of this Offering increase as a result of
the exercise by the  Underwriter  of its  Overallotment  Option,  the  resulting
balances  will be  retained  and  used for  general  working  capital  purposes.
Conversely,  to the extent that such  expenditures  require the  utilization  of
funds in excess of the amounts  anticipated,  additional financing may be sought
from other  sources,  including  Mr.  Honigsfeld  pursuant to the line of credit
discussed under "Certain Relationships and Related  Transactions".  There can be
no assurance that any additional financing will be available on terms acceptable
to the  Company  or  otherwise.  See "Risk  Factors  -  Dependence  on  Offering
Proceeds;  Possible  Need for  Additional  Financing"  and "Risk Factors - Risks
Attendant to Expansion".

     Pending use of the proceeds,  the funds will be invested in certificates of
deposit,  high grade  commercial paper and government  securities,  or other low
risk investments.

                                       21

<PAGE>



                                    DILUTION


     All references  herein to net tangible book value,  net tangible book value
per Common Share and the number of Common Shares  outstanding assume no exercise
of the Underwriter's  Overallotment  Option or the Underwriter's  Warrants.  See
"Underwriting".

     As of March 31, 1997, the Company had an aggregate of 986,700 Common Shares
outstanding and a net tangible book value (deficit) of ($628,273), or ($.64) per
share.  After  giving  retroactive  effect to the Debt  Conversion,  the Accrued
Compensation  Conversion,  and the Honigsfeld Option Exercise  (collectively the
"Pro Forma Transactions"), the Company's net tangible book value (deficit) as of
March 31,  1997 would have  decreased  by  $384,900  to  ($243,373)  and its net
tangible  book  value  (deficit)  per  share as of March  31,  1997  would  have
decreased  by $.45 per share to $(.19) per share.  Net  tangible  book value per
share  represents the total amount of the Company's  tangible  assets,  less the
total amount of its  liabilities,  divided by the total number of Common  Shares
outstanding.

     After giving retroactive effect to the Pro Forma Transactions, and the sale
of 1,200,000  Common  Shares by the Company at the  Offering  price of $5.00 per
Common Share,  with net proceeds of  $4,700,000,  the net tangible book value of
the Company as of March 31, 1997 would have been $4,668,995, or $1.88 per Common
Share. This amount represents an immediate  dilution (the difference between the
price per Common  Share to  purchasers  in this  Offering  and the pro forma net
tangible  book  value  per  Common  Share as of March  31,  1997,  after  giving
retroactive  effect  to the  Pro  Forma  Transactions  and the  issuance  of the
1,200,000 Common Shares) of  approximately  $3.12, or 62.4%, per Common Share to
new investors and an immediate  increase (the  difference  between the pro forma
net  tangible  book value per Common  Share as of March 31,  1997,  after giving
effect to the issuance of the  1,200,000  Common  Shares,  and the pro forma net
tangible book value per Common Share as of March 31, 1997,  before giving effect
to the  Offering), in each  case  giving  retroactive  effect  to the Pro  Forma
Transactions of approximately $2.07, or 41.4%, per Common Share to the Company's
current  stockholders.  Such increase to the Company's  current  stockholders is
solely  attributable  to the cash price paid by  purchasers of the Common Shares
offered for sale by the Company.



                                       22

<PAGE>


<TABLE>

The following table illustrates the per share dilution as of March 31, 1997:
<S>                                                                    <C>                <C>  
         Public offering price per share (1).........................                  $5.00


         Net tangible book value (deficit) per share
           historical at March 31, 1997..............................   ($.64)

         Increase per share attributable to the
            Pro Forma Transactions(2)................................     .45
                                                                        -----
         Net tangible book value per share (deficit) before
            giving effect to the Offering(2).........................    (.19)
         Increase per share attributable to the sale of the
           Common Shares offered hereby .............................    2.07
                                                                        -----
         Pro forma net tangible book value per share after the
           Offering (2) (3) .........................................                   1.88
                                                                                        ----
         Dilution per share to purchasers in the Offering (4) .......                   $3.12
                                                                                        ====
</TABLE>


(1)  Before  deduction of  underwriting  discounts and commissions and estimated
     expenses of the Offering.


(2)  Gives  effect  to  the  Debt  Conversion,   and  the  Accrued  Compensation
     Conversion and the Honigsfeld Option Exercise.

(3)  After  deduction of  underwriting  discounts and  commissions and estimated
     expenses of the Offering.

(4)  Does not give  effect to the  exercise of the  Underwriter's  Overallotment
     Option,  the  Underwriter's  Warrants,  the Bridge  Warrants,  or the Other
     Derivative  Securities  for the  purchase of 477,400  Common  Shares of the
     Company. See "Bridge Financing", "Management - Stock Option Plan", "Certain
     Relationships  and Related  Transactions",  "Description  of  Securities  -
     Common Shares" and "Underwriting".


     The following  table sets forth the relative cost and ownership  percentage
of the Common Shares offered hereby as compared to the Common Shares outstanding
immediately prior to the Offering.

<TABLE>
<CAPTION>
                
                                          Common Shares                                            Average
                                              Acquired                  Total Consideration          Price
                                      Number         Percent           Amount         Percent       Per Share

<S>                                 <C>                <C>           <C>                <C>           <C> 
Current Stockholders........        1,282,700(1)       51.7%         $  553,325         8.4%          $.43
Purchasers of Common
    Shares in the Offering...       1,200,000(2)       48.3%         $6,000,000        91.6%         $5.00
                                    ---------         ------          ---------       -----
         Total...............       2,482,700(1)(2)   100.0%         $6,553,325       100.0%
                                    =========         =====           =========       =====
</TABLE>


                                       23

<PAGE>




(1)  Gives  effect to the issuance of 63,000  Common  Shares upon the closing of
     the Offering  pursuant to the Debt Conversion and the Accrued  Compensation
     Conversion.  Does not give effect to the exercise of the Bridge Warrants or
     the Other  Derivative  Securities.  See "Bridge  Financing",  "Management -
     Stock  Plans",   "Certain   Relationships  and  Related  Transactions"  and
     "Description of Securities - Common Shares".


(2)  Assumes  no  exercise  of  the  Underwriter's   Overallotment  Option.  See
     "Underwriting".

                                 CAPITALIZATION


     The  following  table sets forth the  capitalization  of the  Company as of
March 31, 1997 and as adjusted  to give effect to the  issuance  and sale of the
1,200,000  Common Shares  offered by the Company at $5.00 per Common Share,  and
the  application of net proceeds of  approximately  $4,700,000  therefrom.  This
table  should  be read in  conjunction  with  the  financial  statements  of the
Company, including the notes thereto, appearing elsewhere in this Prospectus.
>


<TABLE>
<CAPTION>

                                                                                March 31, 1997
                                                                                                    Pro Forma
                                                                    Actual     Pro Forma  (1)      As Adjusted(2)(3)

<S>                                                             <C>               <C>                   <C>     
Long-Term Debt................................................. $ 1,024,291       $824,291              $ 54,291
                                                                  ---------       -------               -------
Stockholders' Equity:
Preferred Shares, $.01 par value, 1,000,000
 shares authorized, none issued................................        -              -                     -

Common Shares, $.01 par value, 20,000,000 shares authorized,
  986,700 shares issued and outstanding (actual), 1,282,700
  shares issued and outstanding (pro forma)(1) and 2,482,700
  shares issued and outstanding (pro forma, as adjusted)(1)(2)..      9,867         12,827                24,827
Additional paid-in capital......................................  2,044,758      2,426,698             7,114,698
Retained earnings (Deficit).....................................   (913,480)      (913,480)           (2,470,530)
                                                                    -------         -------            ---------
Total Stockholders' Equity......................................  1,141,145      1,526,045             4,668,995
                                                                  ---------      ----------            ---------
Total Capitalization............................................ $2,165,436     $2,350,336            $4,723,286
                                                                  ==========     ==========            =========
</TABLE>

(1)  Gives  retroactive  effect to the Honigsfeld Option Exercise in April 1997,
     the   Debt   Conversion   and   Accrued   Compensation   Conversion.    See
     "Management-Stock   Plans"   and   "Certain   Relationships   and   Related
     Transactions".



                                       24

<PAGE>



(2)  Reflects the issuance of the 1,200,000 Common Shares of the Company offered
     hereby,  and the anticipated  application of the net proceeds of $4,700,000
     therefrom,  after  deducting  underwriting  discounts and  commissions  and
     estimated expenses of the Offering.

(3)  Reflects, a nonrecurring  deferred  financing charge of $1,557,050  (which
     includes, among other things, the difference between the fair market value,
     at the time the Bridge Warrants were issued,  of the Common Shares issuable
     upon  exercise  of the  Bridge  Warrants  ($4.00  per  share)  and (ii) the
     original  exercise  price of ($.50 per share) at the time the Bridge  Notes
     are repaid. See "Financial Statements, Note 7".


                                 DIVIDEND POLICY

     Holders of the Company's  Common Shares are entitled to dividends  when, as
and if  declared  by the  Board  of  Directors  out of funds  legally  available
therefor.  The Company has not  declared or paid any  dividends  in the past and
does  not  currently  anticipate  declaring  or  paying  any  dividends  in  the
foreseeable  future. The Company intends to retain earnings,  if any, to finance
the  development  and expansion of its business.  Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent  upon
future   earnings,   if  any,  the  Company's   financial   condition,   capital
requirements,  general business conditions, and other factors.  Therefore, there
can be no assurance that any dividends of any kind will ever be paid.

                                BRIDGE FINANCING

   
     In October  1996,  the Company  borrowed an aggregate  of $770,000  from 22
lenders  (the  "Bridge   Lenders")  in  a  financing   (the  "Bridge   Financing
Transaction")  in  which  the  Underwriter  acted  as the  placement  agent.  In
consideration for making the loans to the Company,  each Bridge Lender received,
for each  $10,000  loaned,  (i) a  promissory  note in the  principal  amount of
$10,000  (each a "Bridge  Note") and (ii) five year warrants for the purchase of
5,600 Common  Shares of the Company at an exercise  price of $.50 per share (the
"Bridge  Warrants").  Among  the  Bridge  Lenders  were  Dong W. Lew  ($70,000),
President of the Company, Mark Honigsfeld  ($60,000),  Chairman of the Board and
Chief  Executive  Officer of the Company,  Murray Gross  ($50,000),  a principal
stockholder of the Company (Mr. Gross  subsequently  transferred  all his Common
Shares in the Company to his  affiliate,  About Face,  Ltd.),  Robert H. Solomon
($45,000),  a  principal  stockholder  of the  Company,  and  John  P.  Hefferon
($10,000),  Executive  Vice  President  - Sales and  Marketing  of the  Company.
Subsequent to the closing of the Bridge Financing Transaction, two of the Bridge
Lenders agreed to cancel their Bridge  Warrants for the purchase of an aggregate
of 42,000  Common  Shares  (including  Mr.  Lew who  agreed to cancel his Bridge
Warrant for the purchase of 39,200 Common  Shares).  In addition,  subsequent to
such closing,  the Company and the Bridge Lenders agreed that the exercise price
of the  Bridge  Warrants  would be $3.00  per  share.  Also  subsequent  to such
closing,  the Company,  the  Underwriter  and the Bridge Lenders agreed that the
sale,  exercise,  pledge or other transfer of the Bridge  Warrants and the sale,
pledge or other transfer of the Common Shares  issuable upon the exercise of the
Bridge  Warrants,  shall be restricted for two years commencing on the effective
date of the Registration Statement of which this Prospectus forms a
    

                                       25

<PAGE>



part.  See  "Management",   "Principal  and  Selling   Stockholders",   "Certain
Relationships and Related Transactions" and "Underwriting".

     Each of the  Bridge  Notes  is due and  payable  upon  the  closing  of the
Offering of the Company's securities described in this Prospectus, or over a 120
month period  commencing on September 15, 1999 if the Offering does not close by
then.  In the event such closing  occurs on or before  September  15,  1997,  no
interest  will be payable on the Bridge  Notes.  If the  Offering  closes  after
September 15, 1997 but before  September 15, 1999,  interest shall accrue on the
principal  of the Bridge  Notes,  from the date such Bridge Notes were issued at
the rate of 8% per annum.  If the  Offering  closes  after  September  15, 1999,
interest shall accrue on the principal of such Bridge Notes,  from the date such
Bridge Notes were issued,  at the rate of 12% per annum until such date, and the
Bridge Notes shall be payable in 120 equal  monthly  installments  with interest
accruing at the rate of 8% per annum.  The  Company  intends to use a portion of
the  proceeds of this  Offering to repay the Bridge  Lenders in full.  See "Risk
Factors  -  Broad   Discretion  in   Application   of  Proceeds;   Repayment  of
Indebtedness" and "Use of Proceeds".

     The  Company  entered  into the  Bridge  Financing  Transaction  because it
required  additional  financing  to fund  costs and  expenses  relating  to this
Offering, for certain Common Share repurchases that occurred upon the closing of
the Bridge Financing  Transaction,  to recruit additional personnel and training
costs, to fund product development costs, to relocate and expand its facilities,
and for working capital, and no other sources of financing were available to the
Company at that time. As part of the Bridge Financing  Transaction,  the Company
agreed to register, and has included in the Registration Statement of which this
Prospectus forms a part, the Common Shares underlying the Bridge Warrants issued
to the Bridge  Lenders  for resale  under the Act.  See  "Principal  and Selling
Stockholders" and "Underwriting".


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

Introduction

     The  Company  was  incorporated  in the State of New York on March 31, 1983
under the name of Coastal Computer Systems,  Inc. The Company was reincorporated
in the State of Delaware under its present name Compu-DAWN,  Inc. on October 18,
1996.  The  Company  is  engaged  in  the  business  of  designing,  developing,
licensing,  installing and servicing  computer software products and systems for
the law enforcement and public safety industry.

     The  Company  generates   revenues  from  the  granting  of  non-exclusive,
non-transferable  and non-assignable  licenses to use software it has developed,
through  fixed price  contracts.  Revenues  from such fixed price  contracts are
recognized using the percentage of completion method of accounting.  The Company
retains  title to the  software  and  warrants  that it will  provide  technical
support and repair any defects in the software at no charge. The warranty period
for each contract

                                       26

<PAGE>



is  negotiated  individually,  with the  periods  ranging  from 90 days to three
years. To date, repair costs have been minimal and,  therefore,  the Company has
not had to establish a reserve for warranty costs.

     The Company also provides  post-contract,  customer support to licensees of
its software. Revenues from such services are recognized ratably over the period
of performance. Fees billed and/or received prior to performance of services are
reflected as deferred revenues.

     The  Company's  revenues,   expenses  and  operating  results  have  varied
considerably  in the past and are likely to vary in the future.  Fluctuations in
revenues  depend on a number of factors,  some of which are beyond the Company's
control.  These factors  include,  among other things,  the timing of contracts,
delays  in  customer   acceptance  of  the  Company's  software  products,   and
competition. See "Risk Factors - Lengthy Sales Cycle".

     Historically,  the Company's  products were marketed primarily in the State
of New York.

Results of Operations

     Three Months Ended March 31, 1997 versus 1996 (unaudited)

     Revenues

     Total  revenues for the three months ended March 31, 1997 were  $185,801 as
compared to $91,519 for the corresponding  period of the prior year, an increase
of $94,282 or 103%.  The revenue  results  reflect an upturn in  software  sales
activity while maintenance income remained relatively stable.

     The Company  expects that it will be  successful  in obtaining  maintenance
contracts  for any new  systems  sold in the  future  and,  therefore,  deferred
maintenance revenues may vary accordingly.

     There is no assurance that the Company will be able to generate significant
revenues in future periods. In fact, for the foreseeable  future,  inherent with
the  typical  length  in the  sales  cycle for the  licensing  of the  Company's
software  products,  and with the  in-process  development of new products which
have not been brought to the market, the Company believes that it may experience
difficulties  in  generating   increased  revenues  from  new  sales.   However,
management of the Company  believes that through the use of the proceeds of this
Offering  for,  among other  things,  product  enhancement,  marketing,  and the
introduction of new products to the market, the Company will be able to increase
revenues over the long-term.

     Costs and Expenses

     Total costs for the three month  periods  ended March 31, 1997, as compared
to 1996,  increased to $639,698 from  $167,384.  This increase was primarily the
result of the costs  relating to the  enhancement  and refining of the Company's
current product line, marketing costs, obligations

                                       27

<PAGE>



under new key employee compensation agreements,  and the lease for the Company's
new premises.  In addition,  research and development costs increased to $47,913
from $30,914 when comparing the three months ended March 31, 1997 to 1996.

Income (Loss)

     For the three months  ended March 31,  1997,  the Company had a net loss of
$513,056,  or $.31 per share.  For the three months  ended March 31,  1996,  the
Company had a net loss of $57,261, or $.03 per share. The increased loss was due
to the  increased  costs,  as  described  above,  as well as the  effect  of the
amortization of the deferred financing costs which were recognized in connection
with the Bridge Financing Transaction. Additionally, the Company will experience
a deferred  financing charge of up to  approximately  $1,557,050 at the time the
Bridge Notes are repaid. See "Financial Statements, Note 7".

     Year Ended December 31, 1996 versus 1995

     Revenues

     Total  revenues  for the year ended  December  31,  1996 were  $477,527  as
compared to $1,040,181 for the prior year, a decrease of $562,654 or 54.1%. This
decrease was primarily a result of the decrease in software  sales (due to fewer
units  sold).  Such  decrease  occurred  due to the  Company's  focus on raising
capital  (since late 1995 and  throughout  the year ended December 31, 1996) and
developing  new  technology,  which  diverted the Company's  resources away from
sales activities. Such development includes, among other things, the revising of
computer-aided  dispatching (CAD) and visual computer-aided  dispatching (V-CAD)
(which provides for visual graphic interface), and new wireless mobile computing
technology. The decision to focus on development activities rather than sales of
existing product was made in furtherance of the Company's long-term interest and
future  competitiveness  rather than to satisfy  short-term  goals.  The Company
believes that the development of enhanced and improved technology will allow the
Company to move away from customer specific one-time sales and enable it to mass
market certain of its products.  Management  does not believe that acceptance of
the Company's products or timing of contracts  significantly  contributed to the
decline in revenues during 1996. In addition, management of the Company does not
believe that  product  obsolescence  is a  significant  factor in the  Company's
business since it is continually  updating and enhancing its software  products.
As a result of the new systems licensed during 1995,  maintenance income for the
year ended December 31, 1996 increased by approximately  $52,000,  from $222,910
to $275,016, when compared to the year ended December 31, 1995.

     Costs and Expenses

     Total costs  increased from $910,200 to $1,087,020 when comparing the years
ended December 31, 1995 to 1996.


                                       28

<PAGE>



     Programming  costs  decreased from $404,165 for the year ended December 31,
1995 to $268,915 for the year ended December 31, 1996.  These costs decreased as
a direct  result of the  decrease in software  sales and  primarily  encompassed
salaries and wages and license fees for the Company's  main  computer  operating
system. General and administrative  expenses increased from $365,760 for 1995 to
$660,006 for 1996. This increase was primarily a result of increased payroll due
to new hires for  management  and  marketing.  Research  and  development  costs
increased from $140,275 to $158,099 when  comparing 1995 to 1996.  This increase
of 12.7% was due to increased payroll and related costs.

     Income (Loss)

     For the  year  ended  December  31,  1996,  the  Company  had a net loss of
$570,769,  or $.34 per share.  For the year ended December 31, 1995, the Company
had net income of  $78,660,  or $.05 per share.  The  principal  reason for this
decrease in earnings is the 54.1%  decrease in revenues as  discussed  above and
the  amortization  of the  deferred  financing  costs which were  recognized  in
connection with the Bridge Financing Transaction. Additionally, the Company will
experience a deferred financing charge of up to approximately  $1,557,050 at the
time the Bridge Notes are repaid. See "Financial Statements, Note 7".

Liquidity and Capital Resources

     At March 31, 1997, the Company had cash of $30,016,  accounts receivable of
$197,011, a current ratio of .7:1 and a net worth of $1,141,145. At December 31,
1996,  the Company had cash of $286,497,  accounts  receivable  of  $100,010,  a
current  ratio of 1.5:1 and net worth of  $1,279,701.  Management of the Company
attributes  the  decline in its  financial  position  to the net loss during the
three month period ended March 31, 1997.

     In August 1996, the Company sold 480,300 of its Common Shares for aggregate
proceeds  of  $144,090.  Payment for these  shares was held in escrow  until the
consummation of the Bridge Financing  Transaction which was completed in October
1996 (as discussed below).

   
     In  October  1996,  in  the  Bridge  Financing  Transaction,   the  Company
successfully  completed the sale of 77 units,  each unit consisting of a $10,000
Bridge Note and a Bridge  Warrant to acquire  5,600 Common Shares of the Company
(Bridge Warrants to acquire 42,000 Common Shares were canceled subsequent to the
closing  of  the  Bridge  Financing   Transaction  as  discussed  under  "Bridge
Financing").  The  Bridge  Warrants  are  exercisable  only upon the  successful
completion  of an initial  public  offering  of the  Company's  Common  Shares ,
subject to an agreement  restricting the exercise of the Bridge Warrants for two
years  following the effective  date of the  Registration  Statement  which this
Prospectus  forms a part.  Each of the Bridge  Notes is due and payable upon the
closing of the Offering. In the event such closing occurs on or before September
15, 1997, no interest will be payable on the Bridge Notes. See "Use of Proceeds"
and "Bridge Financing".
    


                                       29

<PAGE>



     In January 1997, the Company  entered into a secured  credit  facility loan
agreement (the "Credit  Agreement")  with Mark  Honigsfeld,  the Chairman of the
Board and  Chief  Executive  Officer  of the  Company.  Pursuant  to the  Credit
Agreement, the Company borrowed $200,000, all of which is currently outstanding.
The Company and Mr.  Honigsfeld have agreed to convert the outstanding loan into
40,000 Common Shares (an effective conversion price of $5.00 per share) upon the
closing of the Offering.  In April 1997, the Company and Mr. Honigsfeld  amended
the Credit Agreement to provide for an additional line of credit of $500,000. In
May  1997,  the  Company  borrowed  an  additional  $200,000  under  the  Credit
Agreement. The repayment of up to $200,000 under the Credit Agreement is secured
by a first  priority  security  interest in all the assets owned by the Company.
See "Certain Relationships and Related Transactions".

     A portion of the net proceeds of approximately $4,700,000 from the Offering
will be used for product enhancement and development, to repay the Bridge Notes,
for marketing and advertising,  for hiring and training of additional  personnel
and for the purchase of equipment. See "Use of Proceeds".

     Even though revenues declined  substantially during 1996, in such year, the
Company  moved its  facilities  to new and more  costly  space (see  "Business -
Facilities" and "Financial  Statements,  Note 12a") and signed new  compensation
agreements with certain key employees (see "Management - Employment  Agreements"
and  "Financial  Statements,  Note 12d").  Both the new space and the  continued
employment  of these key  individuals  are  needed in order for the  Company  to
develop new, and enhance existing, products and to grow in the future. There can
be no  assurance,  however,  that  either of these  commitments  will  result in
increased revenues and earnings.  Until such time that the Company significantly
increases  revenues,  the new lease and  compensation  agreements  are likely to
result in continuing operating losses.

     The Company currently has no planned capital commitments.

   Cash Flows - Three Months Ended March 31, 1997 versus 1996 (Unaudited)

     For the three  months  ended March 31,  1997,  cash  utilized by  operating
activities  was  $359,898 as compared to $27,998 of cash  provided by  operating
activities for the three months ended March 31, 1996. This is primarily a result
of the increased  operating  costs incurred  during the three months ended March
31, 1997.

     For the three  months  ended  March  31,  1997,  $12,617  was  provided  by
investing  activities,  primarily from the purchase by Mr.  Honigsfeld  from the
Company  of the  promissory  note  of  Dong  Lew (as  described  under  "Certain
Relationships and Related Transactions"),  net of fixed asset purchases. For the
three  months  ended  March 31,  1996,  no funds were  provided  or  utilized by
investing activities.

     For the three  months  ended March 31,  1997,  cash  provided by  financing
activities  aggregated  $90,800 due to the Company  borrowing  $200,000 from Mr.
Honigsfeld under the Credit Agreement,

                                       30

<PAGE>



net of certain  equity  purchases and expenses in connection  with the Offering.
The  Company  utilized  cash of $10,774 in  financing  activities  for the three
months ended March 31, 1996 primarily due to certain equity transactions.



  Cash Flows - Year Ended December 31, 1996 versus 1995

     For the year ended December 31, 1996, cash utilized by operating activities
was $289,383 as compared to $50,654 of cash provided by operating activities for
the prior year. This is primarily a result of higher software sales generated in
1995 as compared to 1996 thereby generating more receipts from customers.

     For the year ended  December  31,  1995,  $32,712 was utilized by investing
activities,  primarily  for the  purchase  of fixed  assets.  For the year ended
December 31, 1996, $176,609 was utilized by investing  activities  primarily for
purchases of fixed assets and for a loan to an officer.

     For the year ended December 31, 1996, cash provided by financing activities
aggregated  $646,527,  primarily due to the  completion of the Bridge  Financing
Transaction in October 1996 in the amount of $770,000. The Company utilized cash
of  $98,063  in  financing  activities  for the year  ended  December  31,  1995
primarily  due to  payments  of debt and the  repurchase  of Common  Shares from
former shareholders.

   Other

     The Company  believes that the cash it generates from  operations,  and the
expected net proceeds  from the Offering,  will be  sufficient  for at least the
ensuing 12 month period.

Forward Looking Statements

     Except for historical  information  contained herein, the matters set forth
above  contain  forward  looking  statements  that  involve  certain  risks  and
uncertainties  that  could  cause  actual  results  to differ  from those in the
forward  looking  statements.  Potential  risks and  uncertainties  include such
factors as the level of spending by law  enforcement  and public safety agencies
for computer  application  software and hardware,  the  competitive  environment
within the industry,  the ability of the Company to expand its  operations,  the
competency required,  and experience,  of management to effectuate the Company's
business  plan,  the level of costs  incurred in  connection  with the Company's
planned expansion efforts, economic conditions in the industry and the financial
strength of the Company's customers and suppliers.


                                       31

<PAGE>





                                    BUSINESS

Introduction

     The Company is primarily engaged in the business of designing,  developing,
licensing,  installing and servicing computer  application  software systems for
law  enforcement  and public safety  agencies.  The Company's  software  systems
include  computer-aided  dispatching  ("CAD"),  computer interfacing with local,
state and national crime information databases, advanced wireless mobile on-line
communications computing ("AMO") (utilizing radio frequency),  automatic vehicle
location  ("AVL")  (employing  dynamic map displays),  records  management,  and
photo-imaging  database systems. These modules may be integrated and licensed as
a package, or may be licensed individually.

     Certain  of  these  applications  utilize   telecommunications   and  space
satellite  technology,  other  infrastructure,  and  hardware  provided by third
parties.  The third party providers of such technology and infrastructure,  with
respect to a particular customer's system, vary depending on the location of the
customer  and whether or not the  customer  has a business  relationship  with a
third  party  provider.  Accordingly,  the  Company  is  not  dependent  on  any
particular third party's  technology or infrastructure  for its software systems
to function.  These third parties are typically  major CDPDs  (cellular  digital
packet  data  providers)  such  as  AT&T,  Bell  Atlantic   Corporation   ("Bell
Atlantic"),  NYNEX Corp.  ("NYNEX"),  and GTE, or dedicated radio frequency data
network  providers such as RAM Mobile Data USA Limited  Partnership ("RAM Mobile
Data") and  Motorola  Inc.  ("Motorola").  The  Company's  AMO  system  requires
computer  hardware and services from third party providers,  and interfaces with
dedicated  radio  frequencies  owned by the  Company's  customers  which require
special  radio  equipment  provided by companies  such as Motorola and Dataradio
Corp.  The Company's  customers may purchase  such  technology,  infrastructure,
services and hardware directly from these providers,  and, with respect to radio
equipment, through authorized dealers as well.

     The Company's  software is compatible with virtually all operating systems.
The Company has  installed  its systems in more than 55 agencies,  primarily law
enforcement  agencies  located in the state of New York. The Company  provides a
full range of product  support and  maintenance  services,  both  on-site and by
remote connection.

Industry Background

     The goal of law  enforcement  and public safety agencies is to maximize the
safety  and  improve  the  quality  of  life  of  people  and  communities.  The
effectiveness  of a law  enforcement or public safety agency is dependent on its
personnel and resources. Such effectiveness is enhanced by maximizing the patrol
time of agency personnel,  and the availability of timely, accurate and reliable
information. This allows services to be provided in an efficient, cost-effective
manner.  Computer  technology is an important tool for providing  information to
law enforcement and public

                                       32

<PAGE>



safety personnel,  reducing administrative time and streamlining procedures,  to
support an agency's strategic and operational goals.

     Generally,  a law  enforcement  or public safety  agency's  strategy is not
geared to one  overall  plan for an entire  community,  but is based on  several
individual plans addressing the unique needs of the neighborhoods  that comprise
that community. Agencies need the ability to maximize their resources, customize
information, analyze crime information by sector, district and area, and analyze
repeat call areas that tax agencies'  resources.  Additionally,  agencies have a
need to respond to  incidents  and 911 calls as  rapidly,  efficiently  and cost
effectively as possible.

     Computer  technology  has been  developed  for the public  safety market to
address these needs. CAD systems, integrated with enhanced 911 ("E911") systems,
allow a  dispatcher  to  retrieve  information  about  the 911  caller,  and the
location and the  individuals  involved in the incident being  reported.  Mobile
wireless communication systems in vehicles provide agency personnel in the field
with the ability to receive  information  regarding  an incident  and the people
involved, such as location, "mug shots" and photographs,  and arrest and booking
data.  Such systems also enable such personnel to go "on-line" with the agency's
database,  and with other vehicles, in real time. Wireless communication systems
also provide  personnel  with the capability to file reports from their vehicles
instead of having to return to the station.  This  increases  personnel time and
visibility in the community.  AVL system  technology  provides a dispatcher with
the capability of immediately  identifying the location of the most  appropriate
vehicle to  investigate  an incident,  significantly  shortening  response time.
Without an AVL system, a dispatcher has to alert the vehicles in the field of an
incident  and then wait,  as they report  their  location  and/or  availability,
before  determining which vehicle would be the most appropriate to respond to an
incident. Information sharing technology allows agencies to link their databases
to local,  state and national  crime  databases to access  information  for more
in-depth and  efficient  investigation  of  incidents.  Records  management  and
photograph imaging systems for law enforcement  agencies make arrest and booking
procedures and incident investigations more efficient, while similar systems for
fire and EMS departments  contribute to the efficient deployment of firefighting
and emergency  equipment and investigation of incidents.  Without a computerized
records management  system,  records and reports would need to be handwritten or
typed,  and physically  stored in various  filing  cabinets,  file rooms,  or on
microfilm or  microfiche.  In such form,  such reports are  comparatively  error
prone, and may be misplaced or unavailable,  which makes retrieval difficult and
time consuming. Computerized records systems allow for easy entry and retrieval,
and increased productivity, enabling agency personnel to spend more time "on the
beat" in the community.

     In essence,  the foregoing computer  technology enables law enforcement and
public safety  agencies to allocate and utilize  resources and manpower hours to
maximize their goal of public safety.

     The  Company  believes  that  the  market  for  application   software  and
technology  products utilized in the law enforcement and public safety market is
growing  due to (i) an  increased  public  and  governmental  priority  for  law
enforcement  and  public  safety,  (ii)  an  awareness  that  specific  computer
technology for the law  enforcement  and public safety market now exists,  (iii)
the availability of federal funding  assistance to obtain computer equipment and
technology,  (iv)  breakthroughs in development of new mobile wireless  computer
communications  technology  and (v)  acknowledgment  by  certain  agencies  that
computer-aided  law enforcement has contributed to a recent drop in crime rates,
and the ability to effectively handle increasing incidents of crime without

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increasing personnel. For example, The New York Times recently reported that New
York City's mayor and top police  officials  attribute that city's drop in crime
rate, in part, to a series of new police strategies which includes,  among other
things, the use of computer technology that has allowed the police department to
identify  crime  patterns  much more  quickly  and flood  problem  streets  with
undercover  and beat  officers.  Also, the city of Chicago has installed an E911
dispatch  system which has contributed to a recent decline in crime. In addition
to New York City and Chicago (which do not utilize Company systems), the city of
Glens Falls,  New York, a customer of the Company,  recently advised the Company
that, although incidents of crime had increased, its computer system enabled the
police department to effectively respond to, and handle, these incidents without
increasing personnel.

Development of Technology

     The  Company's  current  technology  has been  developed  and enhanced over
approximately an eight year period by Dong H. Lew, the Company's President, Alan
Daniels (the Company's founder and former President) and technicians employed by
the Company. Mr. Daniels no longer has any daily involvement with the operations
or research and development activities of the Company;  however, he is available
as needed by the Company, from time to time, pursuant to an informal arrangement
to provide consulting  services on technical issues and software  programming on
an hourly  basis.  The  Company's  technology  is not patented or covered by any
registered copyrights;  however, the Company believes that its software programs
have  copyright  protection  under  common law. The Company does not license any
technology  from third  parties  other than  technology  for  certain  operating
software. The Company continually undertakes research and development, under the
supervision of Mr. Lew, and Louis Libin, the Company's Chief Technology Officer,
to develop new,  and enhance  existing,  technology  and  products.  The Company
cannot,  however,  give any  assurance  that it will develop any new products or
technology,  or enhancements for existing  products and technology,  or that the
Company will have the services of Mr. Lew or Mr. Libin indefinitely.  If it does
develop or enhance any products or  technology,  the Company  cannot predict the
pace or time period of such new developments or enhancements, the costs relating
to such research and development (which could be significant or prohibitive), or
the availability of qualified technical personnel.  See "Risk Factors - Evolving
Market; New Product Development;  Technological  Obsolescence",  "Risk Factors -
Intellectual  Property  Protection  and  Infringement",   "Risk  Factors  -  New
Management  Team;  Dependence  on  Executive  Management;  Need  to  Retain  Key
Personnel"  ,  "Risk  Factors  -  Dependence  on  Licensors"   and  "Business  -
Intellectual Property Rights and Licenses".

Products and Services

   Products

     The Company's software products consist of CAD systems,  computer interface
systems  which  connect  the  customer's  computer  system to  local,  state and
national crime information databases,  AMO communication systems utilizing radio
frequency,  AVL systems  employing  dynamic  map  displays,  records  management
systems, and photo-imaging  database systems.  Certain of the Company's software
systems  also   interface   with  and  utilize   space   satellite   technology,
telecommunications  technology,   computer  hardware  and  other  infrastructure
provided by third parties.  The Company's  software is compatible with virtually
all operating systems, utilizing a

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variety of software,  including  Windows(R) and Unix(R).  The Company's software
also allows  linkage of its  products to  mainframe  systems and is adaptable to
both small and large hardware systems.

     The Company  markets its  products to law  enforcement  agencies  under the
ALECS 2000(TM)  (Advanced Law Enforcement  Computer  System) product line and to
fire and EMS departments  under its AFFECT(TM)  (Advanced  Firefighter  Computer
Technology) product line.

     The Company  licenses its  software to  customers in modules  pursuant to a
perpetual license. Customers may acquire all the modules as an integrated "total
solution" package, or any of the modules individually, on a stand alone basis or
as an addition to, or as a  replacement  for, an existing  system.  The software
modules  licensed from the Company can be integrated  with the customer's  other
software systems.  The Company's "total solution" package of integrated  modules
maximizes efficiency since data entered into one module will be available in all
modules in real time. A hybrid  network  comprised  of certain of the  Company's
modules  and other  software  systems may  require  data to be entered  into the
Company modules and other software systems separately.

     The  price to the  customer  of the  Company's  products,  whether a "total
solution"  package or individual  modules,  varies depending on several factors,
including the need for, and existence of,  communication  infrastructure  in the
customer's  jurisdiction (such as radio towers necessary for AMO radio frequency
modules),  volume of use of telecommunications  systems (such as telephone lines
and radio cells), and the customer's computer hardware requirements to implement
the software system.

     The  Company's  ALECS  2000(TM)  product line for law  enforcement  and its
AFFECT(TM)  product  line for fire and EMS are  similar in many  respects.  Both
address the reporting of incidents, the dispatch of resources and the deployment
of personnel.

     In May 1997,  the Company  received  the 1997 Long Island  Software  Awards
("LISA") software product of the year award for its ALECS 2000(TM) software. The
Company competed with 15 finalists for this award including,  among others, Long
Island Lighting Company ("LILCO"), Henry Schein, Inc., Life Sciences Associates,
Lightstone Group, and Quantum Research and Technologies,  Inc. The 1997 LISA was
sponsored by the Long Island Research Institute, State University of New York at
Stony  Brook,  Cheyenne  Software,  Inc.,  Computer  Associates,   Inc.,  LILCO,
Renaissance Technologies and Symbol Technologies, Inc., among others.

     The Company's modules are described below. See "Business - Customers".

     Computer-Aided Dispatching - CAD and AVL

     The  Company's  CAD system,  under both the ALECS  2000(TM) and AFFECT (TM)
product lines, integrates several software and communications technologies, such
as E911 dispatch systems,  mapping software  integrated with global  positioning
systems for vehicle  tracking,  and  geo-based  mapping  systems,  which include
street addresses and intersections, longitude/latitude, and other information to
identify the  locations and addresses of  incidents.  The  integration  of these
systems  with the  Company's  CAD  software  provides to police and other public
safety  agencies the capability to respond rapidly and efficiently to incidents,
and streamlines record management, enhancing productivity and accuracy of record
keeping.  The  Company  is  currently  developing,  and  readying  for beta site
testing, visual CAD software (known as V-CAD, or Visual Computer-Aided

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Dispatching),  which,  in  addition  to having  greater  functionality  than the
current CAD system, is more user-friendly and provides the dispatcher with touch
screen graphical interfacing and the ability to dispatch police, fire and/or EMS
agencies at the same time.

     The CAD system allows the dispatcher receiving the E911 call to immediately
identify the caller's telephone number, the related address, and the name of the
telephone number owner (unless the call is made from a cellular phone).  The CAD
system enables the  dispatcher to access any records  maintained in the agency's
database  relative to that  person or the  location of the  incident  (e.g.  gun
permit  issued,  prior  domestic  violence or prank  calls) as well as in local,
state and national crime information databases.

     Once a decision is made to dispatch a vehicle to an  incident,  a record is
created and the location of the incident appears on a computer-generated  map of
the area. Using AVL software,  which links the customer's  system and a receiver
in each of the customer's vehicles to GPSs (global positioning satellites),  the
map also shows the position of vehicles  "in the field"  which are  available to
respond to the incident.  The dispatcher  can then select the closest  available
vehicle to respond to the  incident and can observe the movement of that vehicle
as it responds to the call.

     Wireless Mobile Data Communications System - AMO

     The Company has recently  developed and begun to market a wireless AMO data
communications  system which permits "on-line" real time access between vehicles
in the field and the central  database,  between the central database and local,
state or national  databases,  crime  information  centers and other centralized
computer records,  and between vehicles.  The Company's AMO system employs radio
frequency  networks (i.e.  private radio networks,  public radio  networks,  and
cellular  and short  range  spread  spectrum  technology)  to  provide  complete
communication  and access from the vehicle to the central  databases  as well as
vehicle to vehicle.  The Company's  AMO system allows the agency's  personnel to
log onto the customer's  central database  directly from their vehicles and have
access  to all  information  in such  central  database.  Additionally,  the AMO
technology  provides  capability for the agency's personnel to input information
into the agency's database directly from their vehicles,  and transfer or access
information  from vehicle to vehicle.  In comparison,  other currently  existing
competitive  mobile data access systems do not provide for on-line and real time
access to information between vehicles and the central databases, but only allow
for the  transmittal  of batch data from the central  databases  to vehicles and
vice versa.  AMO employs unique "text to voice"  technology  which converts data
received  by the  vehicles'  systems  from text into voice  data,  and, by voice
recognition,  converts  voice  commands into text to be sent to the  dispatcher.
This  enhances the safety of vehicle  operators  since they can receive and give
information  without having to divert their  attention to read a computer screen
or input  information by keyboard.  Furthermore,  the main police,  fire and EMS
radio channels are not employed and remain available.

     AMO, through the use of photo imaging technology,  allows "mug shots" to be
rapidly made  available at a crime or incident  scene,  or the  personnel at the
scene can create a permanent computer photograph record of the accident or crime
scene and transmit it directly  into the agency's  central  database or to other
vehicles.

     The Company intends to use a portion of the net proceeds from this Offering
to develop a radio modem to be used in connection  with the Company's AMO system
and other mobile

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computing software systems.  However,  the Company cannot assure that it will be
successful in developing such a radio modem. See "Use of Proceeds".

     The Company has sold AMO  systems  to, and  installed  such AMO systems in,
Onondaga  County  (New  York)  for its E911  department  which  covers  multiple
agencies such as police, fire and EMS departments,  the Putnam County (New York)
Sheriff's Department,  the Johnson City Police Department (in Broome County, New
York),  the Glens Falls Police  Department (in Warren County,  New York) and the
Long Beach and Garden City Police  Departments (in Nassau County, New York). See
"Business - Customers".

     As a recently  developed  product,  AMO is subject to the risks inherent in
the  development  of  new   technology,   including   unanticipated   delays  in
implementing the system,  expenses,  technical  problems or difficulties and the
possible  insufficiency of funding to complete development.  See "Risk Factors -
Evolving Market; New Product Development; Technological Obsolescence".

     Records Management

     The Company's  records  management  systems for law  enforcement  and other
public safety  agencies offers a wide range of options and flexibility to fit an
agency's  needs  and  budget.  The  ALECS  2000(TM)  records  management  system
processes data from the incident report through  prosecution,  and is made up of
component   sub-modular   units,   including  a  records  management  system,  a
photograph/"mug  shot" imaging system, a parking violation  system,  and a false
alarm billing system.  The AFFECT(TM)  records  management system processes data
from the incident  report through closing the  investigation,  and also provides
information such as the location of resources,  including,  without  limitation,
hydrants  and  secondary  sources of water (such as ponds,  lakes,  rivers,  and
seawater access), foam and other chemical fire extinguishing material, hoses and
jaws-of-life.

     As discussed above, the Company's  records  management  systems obviate the
need for  handwritten  or typed  reports and physical  filing  systems which are
cumbersome,  error prone, and make for difficult and time consuming  information
retrieval.

     Local Court Records Management and Sheriff's Records Management

     The Company's  products also include records  management  systems which are
specifically designed for local courts and sheriff departments.  The local court
records management system records summonses, tracks fines payable and enters the
appropriate dates on court calendars.  The sheriff's  records  management system
provides   several   functions   through  the   following   sub-modules:   civil
warrants/attachment records management,  pistol permit records management, photo
imaging/booking for county jails, property records management,  jewelry recovery
and pawn shop records management,  and police academy records management. One of
the goals of this  technology  is to  streamline  procedures  and allow for more
efficient allocation of resources and manpower hours.

 Services

     Installation and Training

     System  installation  is an integral  part of the Company's  services.  The
Company's  installation  procedure commences with an in-depth  consultation with
the customer to determine the appropriate

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<PAGE>



modules needed to meet the customer's  particular  requirements within budgetary
parameters. Once the customer's needs have been identified, the Company provides
customized  system design and file  creation.  The Company then  implements  the
system,  undertakes  system  start-up and provides  training for the  customer's
personnel in the operation of the Company's software products. Customer training
is conducted  either at the  customer's  site or at a remote  location,  and can
range up to several days, depending on the customer's particular system.

     Support and Maintenance

     The Company  provides  post-installation  system  software  maintenance and
training support for all of its software products. The Company's systems support
teams,  which  include  communications  and  software  technicians  and  program
developers,  are available to assist customers via telephone  access, 24 hours a
day, seven days a week, 52 weeks a year, and provide on-site  support,  pursuant
to a software  maintenance  agreement.  Software updates and enhancements to the
modules are included under  maintenance  contracts.  Customers pay the Company a
set monthly service fee (currently ranging between 1% and 2% of the installation
contract  value)  which  is  dependent  on  the  extent  and  complexity  of the
customer's system. Currently, the Company has maintenance agreements with all of
its customers. During the fiscal years ended December 31, 1995 and 1996, support
and maintenance income represented  approximately 21% and 58%, respectively,  of
the Company's revenues. See "Business-Customers".

   Possible Future Acquisitions

     In addition to the foregoing products and services,  the Company intends to
explore  opportunities to add, through  acquisition or licensing,  technology or
products to enhance or add to its current product line, or to acquire a customer
base or sales organization to augment the Company's infrastructure.  The Company
is not actively  seeking any  acquisition at this time. In exploring a potential
acquisition or license,  the Company will consider,  among other  criteria,  the
comparative  cost to the Company in capital,  resources  and personnel to create
the identified technology or product, or establish the targeted customer base or
sales organization, restrictions on the Company developing similar technology or
products arising from patent or other intellectual property protection,  and the
synergy of the identified technology or products with the Company's products and
organization.  At present,  the Company has not  identified  any  acquisition or
license  candidates  and it does  not  have  any  current  plans,  proposals  or
arrangements with respect to any acquisitions;  however,  it is actively seeking
such  candidates.  There can be no assurance  that the Company will identify any
acquisition  or  licensing  candidates  or, if it does,  that it will be able to
reach any  agreements to acquire or license  technology or products,  or acquire
assets,   on  terms  acceptable  to  the  Company.   With  respect  to  possible
acquisitions or licensing agreements,  the Company may, from time to time, enter
into agreements with related parties (of which none are presently contemplated).
In such case, the Company  anticipates that the terms of such agreements will be
commercially  reasonable  and no less  favorable to the Company than the Company
could obtain from unrelated  third parties.  Additionally,  the Company  intends
that such agreements will be approved by a majority of disinterested  directors.
See "Risk  Factors -  Unascertainable  Risks  Related  to  Possible  Unspecified
Acquisitions" and "Use of Proceeds".

Intellectual Property Rights and Licenses


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     The  Company's  products are based on  approximately  3,000  interdependent
software  application  programs and system utility modules,  including  software
developed for creating  applications of the modules. The Company's technology is
not  patented  and the  Company  has not  obtained,  or applied  for,  copyright
registration  for any of its software.  Although the registration of a copyright
in the United States copyright  office provides a rebuttable  presumption of the
copyright's  validity,  such  registration  is not  required to make a copyright
legally  effective,  and the Company  believes  that its software  programs have
copyright protection.

     The Company believes that it takes at least two to three months of training
for a programmer to grasp the complete structure of the Company's software.  The
Company  requires  every  employee to sign an  agreement  of  nondisclosure  and
assignment of development  rights.  While large software vendors often institute
lawsuits to protect  software  property rights against  infringers,  the Company
believes that, in its case,  the complexity and total system  integration of the
Company's  products best protects its trade  secrets.  There can be no assurance
that the  intellectual  property  and  contractual  rights on which the  Company
relies to protect its  intellectual  property and  confidential  and proprietary
information  will provide it with  meaningful  protections.  See "Risk Factors -
Intellectual Property Protection and Infringement".

     The Company utilizes certain  operating system software (written in the "M"
computer programming language and owned by Intersystems, Inc. ("Intersystems")),
in the  development  of its software  systems.  The Company uses such  operating
system software  pursuant to a perpetual license which allows the Company to use
such software to create its software  modules,  and, in some cases,  to "bundle"
such  operating  system  software  with its own software as part of its software
products.  The  Company  pays  Intersystems  a monthly  fee to  sublicense  such
operating software (based on the number of product units in which  Intersystem's
operating system software is included),  and an annual fee to use such operating
software to create  software (based on the number of product units for which the
third party's  operating system software is used to create).  The termination of
this license could have a material  adverse  effect on the Company's  ability to
produce and deliver its software  products on a timely basis. If such license is
terminated,  the  Company  would be required  to license  alternative  operating
system  software.  The Company  believes  alternative  operating system software
written in different versions of the "M" computer  programming language is owned
by, and currently available from, other sources. However, the Company would have
to revise its software to make it  compatible  with such  alternative  operating
system  software,  which the Company  believes  would result in  production  and
delivery  delays of  approximately  three to six  months.  See  "Risk  Factors -
Dependence on Licensors".

Sales and Marketing

     According to the National Directory of Fire Chiefs and Emergency Department
(1993) and the National Directory of Law Enforcement  Administration (1996), the
national law enforcement and public safety market is estimated to have more than
18,000 law enforcement agencies and more than 35,000 fire departments.  Based on
management's exposure to the marketplace, the Company believes that the majority
of such agencies currently have limited or no computerization of their law

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enforcement  and public  safety  activities.  The Company  believes  that mobile
wireless computer communications, computer-aided dispatching, integrated mapping
and photo-imaging technology have not been marketed extensively to a majority of
these agencies.

     The Company  intends to implement the following  marketing  strategy with a
portion of the proceeds of this  Offering,  although no assurances  can be given
that, if such marketing  strategy is  implemented,  it will be  successful.  See
"Risk Factors - Limited Sales and Marketing Experience" and "Use of Proceeds".

     Direct Marketing

     The Company  currently  participates  to a limited  extent in public safety
conferences  and trade shows,  holds  regional  seminars,  presents and conducts
demonstrations,  and conducts targeted mailings and phone campaigns. The Company
intends to expand such direct marketing significantly following the consummation
of this Offering.

     Current Customers

     Generally, once a system is designed and installed for a customer, there is
little repeat business other than maintenance and support,  and the provision of
software enhancements or updates.  Accordingly, the Company intends to intensify
sales efforts to current  customers for add-on products and to obtain references
for other prospective  customers,  a strategy which has been somewhat successful
with current sales resources. See "Business-Customers".

   
     Subcontracting and Strategic Business Alliance Opportunities

     The  Company is  pursuing a strategy  whereby it seeks to create  strategic
business alliances and subcontractor relationships with large system integrators
and public network  providers in order to have the resources needed to establish
a presence in the "large size" market segment (i.e. departments or agencies with
more than 200  sworn  officers  or  personnel).  The  purpose  of the  strategic
business alliance agreements is to establish a relationship  between the Company
and large system  integrators  or public  network  providers  (each an "Alliance
Partner")  which provides for the Company and the Alliance  Partner to cooperate
and  complement  each other's  efforts in  identifying,  proposing and marketing
their own  products  and  services  and  integrated  systems  to  public  safety
customers. The strategic business alliance agreements which the Company seeks to
establish  typically will provide that the Company and its Alliance Partner will
agree upon a particular  teaming  arrangement  with each party assuming  defined
roles and  responsibilities  in order to more  effectively  compete  for  future
business  opportunities  and  programs,  and with  respect  to  mutually  agreed
projects, to jointly market and support each other's services without soliciting
services or products  from other  sources or offering  services  and products to
other contractors. Strategic business alliances are currently in place with AT&T
and GTE,  and a  subcontractor  relationship  has  been  established  with  Data
General, pursuant to agreements (which set forth the relationship of the parties
in the event of a system
    

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installation  and do not relate to any particular  customer  contracts) upon the
following principal terms.

     GTE  Agreement.  The Company  entered into a two-year  Mobile Data Services
Business  Agreement  (the "GTE  Agreement")  as of November  15,  1996.  The GTE
Agreement provides for the Company,  on a non-exclusive  basis, to promote GTE's
mobile data services and to solicit  customers for GTE's mobile data services in
a particular territory, which includes certain cities nationwide, in conjunction
with the Company  marketing  its products  for its own  account.  The Company is
entitled to compensation  from GTE, equal to 6% of the net monthly  revenues (as
defined in the GTE Agreement)  generated by GTE customers which were obtained by
the Company for GTE, if the Company  provides  implementation  services  for the
Company's  products  sold to the customer and  technical  support  services with
respect to the  Company's  products  and to GTE's  mobile  data  services.  (The
Company may refer  problems  regarding the mobile data services  which it cannot
resolve to GTE).  Charges for technical  support  services  will be  established
between  the  Company and the  customer.  GTE will pay the Company  compensation
during  the  term of the GTE  Agreement,  and for up to  four  years  after  the
termination of the GTE Agreement,  if the Company continues to provide technical
support services to the customer during that time. In the event GTE includes the
Company in a business  opportunity  with a customer,  the Company will pay GTE a
fee  equal to 5% of one  year's  revenues  received  by the  Company  from  such
customer.  The GTE  Agreement  restricts  the Company  from  soliciting  any GTE
customer to use a third party's  wireless  services during the term, and for one
year after the termination,  of the GTE Agreement.  The Company and GTE may, but
are not required to,  participate in joint  marketing  activities  which will be
addressed on a case-by-case basis.

     AT&T Agreement.  The Company entered into a two-year  Wireless Data Program
Agreement (the "AT&T  Agreement") as of February 19, 1997. The AT&T Agreement is
automatically  renewable for consecutive one-year terms unless terminated at the
end of a  particular  term by any party.  Pursuant  to the AT&T  Agreement,  the
Company will, on a non-exclusive  basis,  market AT&T's  wireless  communication
services  to  potential  customers  in a  territory  located in the  eastern and
midwestern United States. The AT&T Agreement also provides that the Company may,
for its own account, market its products to those customers. The Company will be
entitled  to a  customer  support  fee from AT&T for  technical  support  to the
customer  equal to 10% of the revenues  generated  by the  Customer  (subject to
certain  limitations  and reductions if AT&T receives more than a certain number
of  technical  support  requests  from its  customer  in a  particular  calendar
quarter).  Additionally, the Company is entitled to a goal attainment fee, equal
to 2% of the revenues  generated by particular  customers,  if revenues from new
customers and customers for whom AT&T paid the Company customer support fees are
$50,000 or more each year. The Company is also entitled to a nominal  activation
processing  fee for the  configuration  of each  laptop  computer  included in a
customer's  system.  The Company will be entitled to all compensation  under the
AT&T Agreement for a period of years from the customer  activation date (subject
to earlier  termination under certain  conditions).  The AT&T Agreement provides
for minimum  performance  standards  which  requires that revenues  generated by
customers for whom the Company is receiving  customer support fees must equal or
exceed  $7,500 in each  calendar  quarter.  AT&T has the right to terminate  the
agreement, among other standard early termination rights, if the
    

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minimum performance standards are not met for two consecutive quarters. The AT&T
Agreement further provides for the Company to maintain certain technical support
staff  capabilities.   The  AT&T  Agreement  also  restricts  the  Company  from
soliciting  AT&T's  customers for alternative  wireless  communication  services
during the terms of the AT&T Agreement and for one year following termination of
the agreement.

     Data  General  Agreement.  The  Company  entered  into  a  master  supplier
agreement (the "Data General Agreement"), effective as of March 3, 1997 which is
terminable by either party on 30 days notice (except with respect to any project
(a "Project")  which is being  undertaken by the Company and Data General at the
time of termination of the Data General Agreement). Pursuant to the Data General
Agreement, the Company has provided Data General a non-exclusive license to make
available to its customers or potential customers,  the Company's products.  The
Data  General  Agreement  provides  that the  Company  has the right to use Data
General's and Data  General's  customers'  software and data in  performing  its
obligations  in any Project;  and ideas and concepts  jointly  developed will be
jointly  owned by the  Company  and Data  General.  The Data  General  Agreement
further  provides that if a particular  Project  requires the Company to provide
consulting  services,  Data  General  will pay the Company a  consulting  fee as
determined by the terms of such Project.  If consulting  services are furnished,
the Data General  Agreement states that Data General may terminate the Company's
consulting services,  which are furnished for a fixed fee for a defined purpose,
if the customer  cancels the portion of the Project  relating to such consulting
services.  Additionally,  Data  General  may  cancel  the  Company's  consulting
services  which are provided on an hourly  basis,  at any time. In either event,
Data  General is required to pay the Company for  consulting  services  actually
rendered.  Data  General  shall also pay the  Company a product  license  fee as
provided by the terms of a particular Project. The Company has agreed to provide
a warranty on its products for 90 days after  installation  (other than products
packaged  with a  "break-the-seal"  license for which the Company will provide a
warranty directly to the customers as set forth in such "break-the-seal" license
agreement).  If a particular  Project  requires  the Company to provide  support
services,  the  Company  will be entitled  to a support  services  fee from Data
General,  as set forth by the terms of that  particular  Project.  Such  support
services  require the Company to  investigate  problems  and suggest  solutions;
update its licensed product for any  enhancements or  improvements;  and provide
technical support for, and correct any problems of, any new release of a product
for 180 days.

     No revenues have been derived to date from the foregoing  arrangements  and
no assurances can be given that the Company will derive revenues therefrom.  The
Company is also seeking subcontractor  relationships with system integrators and
network providers including, among others, International Business Machines Corp.
("IBM")  (with which the Company has acted as a  subcontractor  in the past,  as
described below), Bell Atlantic,  Motorola and RAM Mobile Data. In addition,  no
assurances  can be given that the  Company  will enter into any other  strategic
business alliances or subcontractor relationships.
    


                                       42

<PAGE>



   
     The Company monitors  governmental  announcements  of officially  published
requests for  proposals  ("RFPs") to find  business  alliance or  subcontracting
opportunities.  The selection of the appropriate  large system integrator by the
Company as a  potential  business  alliance  partner or prime  contractor  often
depends  on the  specifications  in the RFP.  The  Company's  strategy  includes
contact with large system  integrators  to  demonstrate  the  Company's  product
capabilities  and,  more  importantly,  to  establish  a credible  presence  for
participating in "large size" market segment  projects.  Although,  in the past,
the  Company  has had some  success in  strategic  alliances  with large  system
integrators,  no assurance can be given that the Company will be viewed by these
entities as an acceptable  strategic  business alliance partner or subcontractor
in  the  future.  If  the  Company  is  unable  to  establish  such  a  business
relationship,  its plans to expand into the "large size"  market  segment may be
delayed  or  hindered  due  to a  limitation  of  resources  needed  to  respond
competitively   to  RFPs  or  to  meet  "large  size"  market   segment   agency
requirements.  See "Risk  Factors-Dependence on Strategic Business Alliances and
Subcontractor  Relationships",  "Risk  Factors  - Limited  Sales  and  Marketing
Experience" and "Business - Competition".
    

     Increase in Sales Staff

     Until  recently,  the  Company had no sales  staff and sales  efforts  were
conducted by one of the Company's principals and its project manager.  Since the
closing of the Bridge  Financing  Transaction,  the  Company has  retained  four
full-time sales associates. The Company intends to use a portion of the proceeds
of this  Offering  to  increase  sales  staff in order to  penetrate  geographic
markets  beyond New York.  In  addition,  the  Company  has  engaged a marketing
support  person,  a  technical  writer  and  other   individuals  to  coordinate
installations,  handle subcontract relations with large system integrators,  and
provide technical sales support. See "Risk Factors - Challenges to Management of
Growth",  "Risk Factors - Limited Sales and  Marketing  Experience"  and "Use of
Proceeds".

Customers

     The Company has installed  various modules of its software systems for, and
provides maintenance and support services to, 58 customers,  54 of which are law
enforcement  agencies and four of which  include fire and EMS  departments.  The
following  customers  accounted for the following  percentage of software  sales
revenues  for the fiscal year ended  December  31,  1995:  Onondaga  County (New
York), 42.8% and the Queens County (New York) District Attorney, 21.4%. No other
customer  accounted for 10% or more of the Company's  software sales during such
period.  The following  customers  accounted for the  following  percentages  of
software sales for the year ended December 31, 1996:  Madison County (New York),
28.2% and Westchester County (New York),  18.6%. No other customer accounted for
10% or more of the  Company's  software  sales during such  period.  The project
undertaken by the Company for Onondaga  County is described  below.  The Company
provided  consulting  services to the Queens County District  Attorney's  Office
with  respect  to  the  conversion  of an  early  dialect  of the  "M"  computer
programming  language  running on that agency's old hardware system to a current
standard  version  of  "M"  running  on  a  high-speed  multi-processor  Unix(R)
computer. The Company sold to, and installed in, Madison

                                       43

<PAGE>



County a records management system, a CAD system, and a specialized version of a
network  wireless  radio system  between  fixed  points,  for that county's fire
department.  The Company sold to, and installed in, Westchester County a records
management system, a CAD system, a photo imaging system and special modules such
as civil warrant processing,  jury duty processing, pawn shop records and police
academy records. The Company does not rely on past customers for future revenues
from sales and installations of software systems.  Accordingly, the Company will
not suffer any material  adverse  effect if the Company  does not sell  software
systems to such customers in the future.

     Based on the  experience  of management  in the  marketplace,  management's
discussions  with a senior New York State Division of Criminal  Justice Services
official and an E911 consultant to a major telecommunications  company, a recent
referendum in Bergen County,  New Jersey supporting the regionalized  sharing of
services by towns and municipalities, and the specifications of RFPs received by
the Company  soliciting  bids for law  enforcement  and public  safety  software
systems,  the  Company  believes  that  there  is a trend  away  from  town  and
municipality dispatching and toward county-wide dispatching. As a result of this
trend,  the  Company  believes  that there will be a need in the near future for
comprehensive  public safety  systems which will address and integrate the needs
of police,  fire and EMS  departments.  As a "total  solution"  software  system
provider,  the Company believes that, with the proceeds of this Offering and the
successful implementation of its marketing and product development plan, it will
be in a  position  to meet  such  needs.  See  "Risk  Factors  -  Dependence  on
Significant Customers", "Use of Proceeds" and "Business - Sales and Marketing".

     Typically, a customer will procure a software system from the Company under
a perpetual license,  pursuant to which the Company will be paid a percentage of
the license fee at the time the contract is entered into,  and then will receive
further installments as certain performance milestones are met, until completion
of the contract. After the contract is completed, any further revenues from that
customer are usually derived from a maintenance and support contract.  From time
to time, however,  the Company may receive additional contracts from an existing
customer for add-on modules,  an aspect of business which the Company intends to
market more aggressively in the future. See "Business-Sales and Marketing".

     The  length  of time  that it  takes to  complete  a  systems  installation
contract varies (generally from three to twelve months), depending on the nature
and complexity of the system and the customer's internal procurement procedures.
During the period of time that  installments are being paid, the customer,  or a
small  number of  customers  with  contracts  in  progress,  may  account  for a
significant percentage of the Company's revenues.  However, once those contracts
are completed, such customers will no longer represent a material portion of the
Company's  future  revenues.  Accordingly,  the  Company  does  not rely on such
customers for a continuing  revenue stream and the Company does not believe that
the make-up of its current significant customers is material to an understanding
of the Company's future business  prospects.  However,  the Company  anticipates
that at any particular time a limited number of large customers will continue to
represent a significant  portion of its revenues for the foreseeable future. See
"Risk Factors - Lengthy Sales Cycle", "Risk

                                       44

<PAGE>



Factors - Evolving Market; New Product Development; Technological Obsolescence",
"Risk Factors - Significant Customers" and "Business - Sales and Marketing".

     The following two examples are  illustrative of the diverse  application of
the Company's products and services:

     (i) The Onondaga  County  Police  Department  utilizes an AMO  application,
designed,  developed and installed by the Company,  which links over 700 police,
fire and EMS vehicles.  For this  project,  the Company was retained by IBM as a
subcontractor  to design,  develop,  install and service  all the  required  AMO
software.  The project  included  integration  by the Company of IBM and Digital
Equipment Corp. hardware which already contained  application  software provided
by other subcontractors for both records management and computer-aided dispatch;
and

     (ii) The Company, as prime contractor,  designed, developed and installed a
"total solution" system for the Putnam County Sheriff's  Office, a comparatively
small agency of seven  vehicles.  The system  consisted of a records  management
system, a CAD system and an AMO system.

Competition

     The Company faces competition in the "small size" market segment (which the
Company  views as  departments  or agencies  with 20 or fewer sworn  officers or
personnel)  and the "medium  size" market  segment  (which the Company  views as
departments  or  agencies  with 21 to 200  sworn  officers  or  personnel)  from
companies such as NewWorld Systems, Pamet Systems, Inc. and Software Corporation
of America.  Although such competitors  have  significantly  greater  financial,
technical and other resources than those of the Company,  the Company feels that
it has been  able to  compete  successfully  in such  market  due to its  "total
solution" system integration  technology and local presence,  the Company having
installed  systems in over 50 "small  size" and  "medium  size" law  enforcement
agencies in the state of New York.  The Company  believes  further  that,  as it
expands its presence to other geographical  areas and market segments,  sales to
such agencies are likely to develop outside of its current primary market of New
York.

   
     The Company  believes  that more intense  competition  exists in the "large
size" market segment in which the system price ranges widely (between $1 million
and $100  million)  depending on the size of the customer and the  complexity of
the system (as  compared to the  Company's  typical sale in the "small size" and
"medium size" market segments, which historically has ranged between $25,000 and
$350,000). The "large size" market is dominated by software vendors, such as PRC
Public Safety, Inc. and Systemhouse,  Ltd., and large system integrators such as
IBM, Andersen  Consulting,  Electronic Data Systems and Harris  Corporation.  In
order to  penetrate  the "large size"  market  segment,  the Company is pursuing
strategic business alliances or subcontracting  relationships with large systems
integrators  having greater  financial  resources and name  recognition than the
Company.  The  Company  believes  that,  in the  future,  through  an  extensive
marketing plan, it can build brand name awareness for its products and services.
The Company cannot, however, assure
    

                                       45

<PAGE>



that it will be successful in this  strategy.  See "Risk Factors -  Competition"
and "Business - Sales and Marketing".

     The  Company  believes  that the  mobile  wireless  computer  communication
technology sub- market is in its infancy.  With the development of the Company's
AMO system  utilizing radio frequency  networks as discussed  above, the Company
believes that, with sufficient  resources,  it will be capable of increasing its
sale price range to between $75,000 and $1 million per  installation,  depending
on the customer size and the extent and complexity of the system.

   
     The Company further believes that large software  companies,  communication
equipment   companies  and  computer   hardware   companies  are  currently  not
concentrating  their  resources on the law  enforcement and public safety market
because of that market's  special  requirements  for secure radio operations and
the  particular   applications  and  expertise  needed  to  meet  those  special
requirements.  Additionally,  most "large size" agencies have a general need for
highly specific  customized  systems and systems  integration.  Generally,  such
companies  that do have an interest in pursuing the law  enforcement  and public
safety markets look for a strategic business alliance partner, like the Company,
that has the  necessary  expertise  to design and  install law  enforcement  and
public safety  systems.  The Company also believes  that, as a "total  solution"
provider in the field of law enforcement and public safety computer  technology,
it is,  subject to obtaining the  appropriate  resources,  positioned to develop
generic  communications  software  protocols for secure on-line radio  frequency
mobile data transmission  basic to almost all mobile computers for police,  fire
and EMS  departments.  See  "Business - Products and  Services"  and "Business -
Sales and Marketing".
    

Employees

     The  Company  currently  has  24  full-time  employees  and  one  part-time
employee, including eight software developers/programmers, one technical writer,
one marketing employee,  four sales persons, and 12 executive and administrative
personnel.  The Company also has two part-time industry consultants.  Management
believes that its relations with its employees are satisfactory.

     The Company's  Product  Development Group performs research and development
activities  and  its  Customer  Service  Support  Group  handles  installations,
maintenance and service.  The Company's new customers are trained by consultants
who  generally  are  retired  and   active-duty   police  officers  from  police
departments  that have systems  installed by the Company.  The  Company's  daily
operations  are  managed  by  a  software  development  manager,  a  manager  of
operations, and a director of technology.

Facilities

     The  Company's   executive   offices  are  located  at  77  Spruce  Street,
Cedarhurst,  New York where it leases  approximately 5,000 square feet of space.
The  premises  are held  pursuant  to a five year  double net lease  expiring in
September 2001 that provides for a base annual rental of approximately

                                       46

<PAGE>



$85,000.  The Company  believes that its premises are adequate for its needs for
the foreseeable future.


                                       47

<PAGE>



                                                    MANAGEMENT

Executive Officers and Directors

       The names and ages of, and the positions held by, the executive  officers
and directors of the Company are set forth below.
<TABLE>                                                                        
<S>                               <C>              <C>                                         <C>
                                                                                               Class of
Name                              Age              Positions Held                              Directorship(1)


Dong W. Lew                         67             President,  Chief Operating                         I
                                                   Officer, Treasurer and Director


Mark Honigsfeld                     43             Chairman of the Board,  Chief                      II
                                                   Executive Officer, Secretary
                                                   and Director

Louis Libin                         38             Chief Technology Officer and                      III
                                                   Director

John P. Hefferon                    52             Executive Vice President - Sales                    -
                                                   and Marketing

William D. Rizzardi                 54             Director                                            I

Harold Lazarus, Ph.D.               70             Director                                           II
</TABLE>


- ------------------
(1) The Company's  Certificate  of  Incorporation  provides for three classes of
directors. The term of each class is three years except that the initial term of
office of the Class I directors  will expire at the Company's  annual meeting of
stockholders  in 1997 and the initial  term of office of the Class II  directors
will expire at the Company's annual meeting in 1998.

       Dong W. Lew
                Mr. Lew joined the  Company in 1988.  He was  elected a director
       and the  President  in August  1992 and was elected  Treasurer  in August
       1996.  He  graduated  from  the  Massachusetts  Institute  of  Technology
       ("M.I.T.")  with a Bachelor of Arts Degree in  Business  and  Engineering
       Administration,  and has  over 25  years of  experience  in the  computer
       industry.  From  1981  to  1988,  Mr.  Lew  was an  independent  computer
       consultant providing turnkey computer systems with custom software to the
       manufacturing and publishing  industries.  Prior to 1981, he was employed
       in computer  systems  design and  managerial  capacities by such firms as
       Mergenthaler,  Inc.,  Harris-Intertype,  Inc., and Codesco International,
       Inc.


                                       48

<PAGE>



       Mark Honigsfeld
                Mr.  Honigsfeld  joined the  Company as  Chairman  of the Board,
       Secretary and a director in August 1996 and,  effective  October 1, 1996,
       he was  elected  Chief  Executive  Officer of the  Company.  In 1978,  he
       founded Facelifters Home Systems,  Inc. ("FACE"), a cabinet manufacturing
       and installation  company for which he served as Chief Executive  Officer
       and  Chairman of the Board until April 25,  1996.  On such date,  FACE, a
       publicly-traded  company,  was  acquired  by a New  York  Stock  Exchange
       company in a transaction  valued at  approximately  $70 million to FACE's
       stockholders. Prior to the merger, FACE's revenues on an annualized basis
       approached  $50 million.  As the  founder,  Chief  Executive  Officer and
       Chairman  of the Board,  Mr.  Honigsfeld  was  directly  involved  in the
       planning  and  development  of  almost  all  areas  of  FACE's  business,
       including  corporate  finance,  public  offerings,   investor  relations,
       mergers and  acquisitions,  licensing,  product  design and  engineering,
       sales and marketing, manufacturing, field installation, customer service,
       management  information  services and management  training.  Prior to the
       sale  transaction,  FACE had  approximately  600 employees and associates
       representing  its  products  and  services at 28  locations in 14 states,
       approximately  135  telemarketing  personnel,  180  direct  sellers,  120
       manufacturing    employees   and   165   supervisory,    management   and
       administrative personnel. In addition, FACE had working arrangements with
       approximately  175  independent  contracting  companies  nationwide.  Mr.
       Honigsfeld  holds a Bachelor of Science Degree in Industrial  Arts, magna
       cum  laude,  and a Master of  Science  Degree in  Industrial  Arts,  with
       honors, from City College of the City University of New York.


       Louis Libin
                Mr. Libin joined the Company in January 1997 on a per diem basis
       as Chief Technology Officer and a director.  Effective March 10, 1997, he
       began to serve as the Company's Chief  Technology  Officer on a full-time
       basis.  Since  1989,  Mr.  Libin has  represented  the  United  States on
       satellite and transmission issues at the International Telecommunications
       Union  (the  "ITU")  in  Geneva,  Switzerland.  Mr.  Libin  has also been
       Chairman of the Expert Group On Broadcast Interactive Services of the ITU
       since  1991.  From 1987 to 1997,  Mr.  Libin  served as the  Director  of
       Technology  (specializing  in  broadcast  transmission  systems)  for the
       General  Electric  Corporation  ("GE")  and  the  National   Broadcasting
       Corporation.  From 1995 to 1997,  Mr.  Libin  also  served  as  Assistant
       Secretary  of all GE's  wholly-owned  subsidiaries  that are  involved in
       broadcast media, with the responsibility  for technical  developments and
       all Federal  Communications  Commission  (the "FCC") issues and licenses.
       From 1983 to 1986, Mr. Libin was a project manager for Radio  Corporation
       of America ("RCA") until RCA's  acquisition by GE. From 1981 to 1982, Mr.
       Libin was  employed  by the Loral  Corporation  as an  electronic  design
       engineer where he designed radio frequency  systems for the United States
       military.  From 1980 to 1981,  Mr.  Libin was a design  engineer  for the
       Chryon  Corporation,  a computer graphics company.  From 1979 to 1980, he
       worked for  Burroughs  Computer  Systems,  Inc. (now part of Unisys) as a
       field  engineer.  Additionally,  since  1988,  Mr.  Libin  has acted as a
       consultant  and  advisor to the FCC in  connection  with the  planning of
       communications  systems  and  logistics  for major  events in the  United
       States  and  abroad,   including  political   conventions,   presidential
       inaugurations, and


                                       49

<PAGE>



     the  Olympics.  Mr. Libin is an active  member of the  National  Society of
     Professional  Engineers  and  the  Association  of  Federal  Communications
     Consulting Engineers. He also sits on the Engineering Advisory Board of the
     National Association of Broadcasters.  Mr. Libin received a B.S.E.E. Degree
     in  Electrical  Engineering  from the Pratt  Institute  and  completed  his
     graduate studies in optical  electronics at M.I.T.'s  Executive  Program in
     1991. Mr. Libin has planned and managed telecommunications  projects in the
     United States and in Europe. Mr. Libin was responsible for the planning and
     implementation  of a new television and  telecommunications  network in New
     Zealand in 1990. Mr. Libin has also provided expert consulting on satellite
     issues in certain of the republics of the former  Soviet  Union.  Mr. Libin
     was also instrumental in the development of the new transmission technology
     and the algorithms for software  modeling of the new North American digital
     terrestrial  television  system which was approved by the FCC in 1996.  Mr.
     Libin has  published  numerous  scientific  papers in radio  frequency  and
     telecommunications.

       John P. Hefferon
                Mr.  Hefferon  joined the Company in October  1996 as  Executive
       Vice President - Sales and Marketing.  From January 1973 to January 1987,
       he served  in  various  positions  with Wang  Laboratories,  Inc.  ("Wang
       Laboratories"),  including sales representative, branch manager, district
       manager, Atlantic area director and Eastern Regional Vice President Sales
       and  Marketing of Wang  Financial  Information  Services  Corporation,  a
       subsidiary of Wang  Laboratories  (a position he held for eleven  years).
       From  January 1987 to November  1988,  Mr.  Hefferon  worked for Computer
       Leasing,  Inc.  where he was involved in arranging  lease  financing  for
       multi-million dollar IBM mainframes in the Fortune 500 marketplace.  From
       late 1988 through March 1990, Mr. Hefferon was Eastern Regional  Director
       for Imnet, Inc., a start-up imaging software company.  From March 1990 to
       August 1995, Mr. Hefferon served in several executive sales and marketing
       positions with Allerion, Inc., a network systems integrator.  From August
       1995 to October 1996,  Mr.  Hefferon  served as Vice President - Sales of
       Ultradata Inc., an application software company.

       William D. Rizzardi
                Mr.  Rizzardi  joined the Company in January 1997 as a director.
       Since December 1996, Mr. Rizzardi has been the President of Environmental
       Solutions Corporation,  a bio-remediation company. From 1995 to 1996, Mr.
       Rizzardi  was an  independent  management  consultant  to the Long Island
       Research Institute, a not-for-profit  technology development  laboratory.
       From 1979 to 1994,  Mr.  Rizzardi  held various  positions  with Northrop
       Grumman  Corporation  and its  affiliates,  including a Vice President of
       Grumman  Data  Systems  Division,   where  he  was  responsible  for  the
       development,  operations and support of all  information  systems for the
       Grumman Corporation,  Corporate Vice President of Information  Management
       and Chief  Information  Officer of Grumman Data Systems  Division,  and a
       Vice  President  of  Northrop  Grumman  Corporation  - Data  Systems  and
       Services  Division  following the  acquisition of Grumman  Corporation by
       Northrop Corporation.  Mr. Rizzardi received a Bachelor of Science Degree
       in Nuclear  Physics from City College of the City  University of New York
       and a B.S.E.E. Degree in Management from the Sloan School of M.I.T.

                                       50

<PAGE>



        Harold Lazarus, Ph.D 
               Dr.  Lazarus  joined the Company as a director in March 1997. Dr.
        Lazarus has been a Professor of Management  at the Hofstra  University
        Frank G. Zarb School of Business (the "Hofstra Business School") since
        1980.  From 1973 to 1980,  Dr.  Lazarus  served as Dean of the Hofstra
        Business School. Dr. Lazarus is an organization development consultant
        who  lectures in Europe,  Asia,  North  America  and South  America on
        leadership,  time  management,  total  quality  management,   managing
        change, effective meetings,  problem solving, decision making, mission
        statements, management by objectives, and communications.  Dr. Lazarus
        was  Professor of  Management  at the New York  University  Leonard N.
        Stern School of Business for ten years, and he also taught at Columbia
        University Graduate School of Business and Harvard University Business
        School.  Dr. Lazarus  currently  serves as a director of  Graham-Field
        Health Products, Inc., a New York Stock Exchange - listed manufacturer
        and  wholesaler  with $200 million in annual  sales.  Dr.  Lazarus has
        served on several boards of directors of public companies in the past,
        including FACE, Ideal Toy Corporation, Superior Surgical Manufacturing
        Company, and Stage II Apparel  Corporation.  Dr. Lazarus has published
        seven books and 65 articles on business management. He also chairs the
        board of Phi Beta Kappa Alumni of Long Island (New York).  Dr. Lazarus
        received a Masters of Science Degree and a Doctor of Philosophy Degree
        in Management and Marketing from Columbia University.


     Each  director   will  hold  office  until  the  next  annual   meeting  of
stockholders  during  the year in which  the term of his  class of  directorship
expires and until his  successor is elected and  qualified.  Executive  officers
serve at the pleasure of the Board of Directors.  See "Risk Factors - Control of
the Company" and "Certain Relationships and Related Transactions".

     There  is no  family  relationship  among  any of the  Company's  executive
officers and directors.


Executive Compensation

     The  following  table  provides  summary  information  concerning  cash and
certain other  compensation  paid or accrued by the Company to, or on behalf of,
Mr. Lew, the Company's President, and Mr. Honigsfeld,  the Company's Chairman of
the Board and Chief Executive  Officer,  during the last three fiscal years. Mr.
Honigsfeld  was  elected  Chairman of the Board and Chief  Executive  Officer in
August 1996 and October 1996,  respectively.  No other executive  officer of the
Company had a combined salary and bonus in excess of $100,000 for the year ended
December 31, 1996.


                                       51

<PAGE>



<TABLE>


<CAPTION>
                                            SUMMARY COMPENSATION TABLE

                                             Annual Compensation            Long-Term  Compensation
                                                                         Awards                 Payouts
                                                                 Restricted  Securities
      Name and                                  Other Annual       Stock   Underlying      LTIP       All Other
Principal Positions      Year  Salary    Bonus  Compensation      Award(s)    Options     Payout     Compensation

<S>                      <C>    <C>       <C>         <C>            <C>      <C>         <C>            <C>             

Mark Honigsfeld (1)      1996   $62,500(2) -           -              -       233,000      -             -
Chairman of the Board,   1995    -         -           -              -         -          -             -
Chief Executive Officer  1994    -         -           -              -         -          -             -
and Secretary
Dong W. Lew (3)          1996   $87,500(4)$15,000 (5)  -              -       156,950      -             -
President and            1995   $70,980    -           -              -         -          -             -
Treasurer                1994   $70,980    -           -              -         -          -             -
- -----------

</TABLE>

(1)    Mr. Honigsfeld was elected Chief Executive Officer of the Company and was
       entitled to compensation effective as of October 1, 1996.

(2)    Represents  accrued and unpaid salary relating to 1996 (based on a salary
       of $250,000 per annum) which is being converted into 12,500 Common Shares
       at the closing of the Offering. See "Management - Employment Agreements".

(3)    Mr. Lew acted as the Company's  Chief  Executive  Officer  during 1994,
       1995 and the period January 1, 1996 to September 30, 1996.

(4)    Based upon a salary of $75,000 per annum from January 1, 1996 to 
       September 30, 1996 and $125,000 per annum from October 1, 1996 to 
       December 31, 1996.


(5)    Represents an accrued and unpaid signing bonus (relating to the execution
       of Mr.  Lew's  employment  agreement  in  October  1996)  which  is being
       converted  into 3,000 Common Shares at the closing of the  Offering.  See
       "Management - Employment Agreements".

     Each  non-employee  director  of the  Company  is  entitled  to  receive  a
director's fee of $500 per meeting (other than telephonic  meetings) and options
to purchase 5,000 Common Shares of the Company each year,  which options will be
exercisable  for a period of ten years  from the date of grant,  at an  exercise
price equal to the market price of the  Company's  Common  Shares on the date of
the grant.  Additionally,  each  non-employee  director will be  reimbursed  for
reasonable out-of-pocket expenses incurred in attending meetings of the Board of
Directors of the Company.  The members of the Board of Directors  intend to meet
regularly, as needed.





                                       52

<PAGE>



     The following table sets forth certain  information  concerning  individual
grants of stock options during the fiscal year ended December 31, 1996:

<TABLE>
<CAPTION>
                        OPTION GRANTS IN FISCAL YEAR ENDED DECEMBER 31, 1996

                         Number of                       Percentage of Total
                         Common Shares Underlying        Options Granted To
Name                     Options Granted                Employees in Fiscal Year     Exercise Price    Expiration Date
- ----                     ---------------                ------------------------     --------------    ---------------

<S>                            <C>                                <C>                   <C>              <C>  
Mark Honigsfeld                233,000                            46.9%                 $.30            July 31, 2001
Dong W. Lew                    156,950                            31.6%                 $.30            July 31, 2001

</TABLE>

     No options were  exercised  during the fiscal year ended December 31, 1996;
however, in April 1997, Mr. Honigsfeld exercised his options for the purchase of
233,000 Common Shares.

Employment Agreements

     The Company is a party to Employment  Agreements  with Mark  Honigsfeld and
Dong W. Lew,  each for a term of three years  commencing  as of October 1, 1996,
subject to continuing,  automatic one-year extensions, unless either the Company
or the  individual  notifies  the  other,  at least 90 days  prior to any annual
anniversary date, of its desire not to extend the term thereof.  Each Employment
Agreement provides for earlier termination as discussed below.

     Pursuant to their respective Employment  Agreements,  Mr. Honigsfeld serves
as Chairman of the Board and Chief Executive  Officer of the Company and Mr. Lew
serves as President and Chief Operating Officer of the Company.

     The Employment  Agreements provide for base annual compensation of $250,000
and $125,000 for Messrs.  Honigsfeld and Lew,  respectively.  No amounts due Mr.
Honigsfeld under his Employment Agreement have been paid to date. The Employment
Agreement  for Mr. Lew  provides  for a signing  bonus in the amount of $15,000,
none of which has been paid to date.  Of the  accrued  and  unpaid  compensation
payable to Mr. Honigsfeld, $100,000 is being converted into 20,000 Common Shares
at the closing of the Offering.  In addition,  the $15,000 signing bonus payable
to Mr. Lew is being  converted  into 3,000  Common  Shares at the closing of the
Offering.

     In addition to base  compensation,  each of Messrs.  Honigsfeld  and Lew is
entitled to receive (i) an annual bonus  amount  equal to a  percentage  of base
salary  (ranging  from 7 1/2% to 20%) based upon the Company  achieving  certain
sales levels  (ranging from  $3,750,000 to $6,000,000 in the initial year,  with
$1,000,000 increased sales level thresholds per year if the bonus is earned in a
particular  year) and (ii) an annual  bonus based on the  Company's  EBITANC (as
defined  below),  if any.  Such  latter  bonus for each ranges from 5% to 10% of
EBITANC based on EBITANC thresholds ranging from $250,000 to $1,500,000. EBITANC
is an amount equal to the Company's  earnings  before  deducting the  following:
interest expense,  taxes, and any one time  nonrecurring  charges resulting from
divestitures, acquisitions, consolidations, restructurings and changes in

                                       53

<PAGE>



accounting  principles.  The use of  EBITANC,  as opposed to  earnings,  has the
effect  of  increasing  the  earnings  base  (by  the  amount  of  the  excluded
deductions) for the purpose of calculating the bonus.

     The Employment Agreements for Messrs.  Honigsfeld and Lew also provide that
each is entitled to receive, for each year thereof,  options for the purchase of
5,000 Common  Shares of the Company for each  $100,000 of EBITANC.  Such options
would be exercisable for a five year period at an exercise price of no less than
110% of the market value of the Common Shares on the date of the grant.  Messrs.
Honigsfeld  and Lew are also  entitled to receive an expense  allowance of up to
$500 per month and an automobile allowance in the amount of $1,000 per month.

     Each Employment Agreement provides that,  notwithstanding the rolling three
year term thereof,  it may be terminated prior to such expiration date under the
following  circumstances:  (i) death;  (ii) total disability (as provided for in
the  Employment  Agreements);  (iii)  termination by the Company for "cause" (as
defined in the Employment  Agreements);  (iv)  termination by the Company at any
time upon written notice to the employee;  (v)  termination by the employee upon
30 days written notice to the Company;  (vi)  termination by the employee at any
time for "good  reason"  (as  defined in the  Employment  Agreements);  or (vii)
termination  by the  Company  at any time  within 12 months  after a "change  in
control"  (as  defined  in  the  Employment   Agreements).   Additionally,   Mr.
Honigsfeld's  Employment Agreement allows him to devote up to 10% of his working
time to other endeavors which are not in competition with the Company.

     The  Employment   Agreements   provide  for   compensation   under  certain
circumstances  upon termination of employment (in addition to accrued but unpaid
compensation)  as  follows:  (i)  in the  event  of the  employee's  death,  the
employee's  estate or spouse shall be entitled to receive an amount equal to the
employee's  monthly  salary as of the date of death  multiplied by the number of
full  years  that  he was  an  employee  of the  Company  or a  subsidiary  or a
predecessor  in  interest  thereof;  (ii)  in the  event  of  termination  of an
Employment  Agreement  due to  disability,  the  employee  shall be  entitled to
receive an amount equal to his monthly  salary as of the date of  termination of
such Employment Agreement, multiplied by the number of full years that he was an
employee of the Company or a subsidiary  or a  predecessor  in interest  thereof
(but, in no event, would the disabled employee be entitled to an amount equal to
less than six  months of  salary);  and  (iii) in the  event of  termination  of
employment  by the  Company  following  a "change of  control" or for any reason
other than death,  disability or "cause",  or in the event of  termination of an
Employment  Agreement by the employee for "good  reason",  the employee shall be
entitled to receive his full salary for the  unexpired  term of such  agreement,
without mitigation of damages based upon employment obtained elsewhere.

     The Employment  Agreements provide for a restriction on the solicitation of
customers  of the  Company  for a  period  of two  years  following  termination
thereof,  and a covenant  not to compete  with the  Company  for a period of six
months  following  termination of employment for cause.  See "Risk Factors - New
Management  Team;  Dependence  on  Executive  Management;  Need  to  Retain  Key
Personnel".

                                       54

<PAGE>




     Effective  January 6, 1997,  the  Company and Louis  Libin  entered  into a
three-year  employment  agreement,  providing  for Mr.  Libin  to  serve  as the
Company's  Chief  Technology  Officer on a non-  full-time  per diem basis until
March  10,  1997,  and on a  full-time  basis  commencing  on  such  date.  Such
employment  agreement  provides for a salary of $200,000,  $225,000 and $250,000
per annum in the first, second and third years, respectively.  Additionally, Mr.
Libin's Employment  Agreement allows him to devote up to one day a week to other
endeavors  which are not in  competition  with the  Company.  Other terms of Mr.
Libin's employment  agreement conform in structure to the material provisions of
Messrs.  Honigsfeld's and Lew's Employment Agreements such as bonuses, benefits,
restrictive covenants and termination.

Stock Plans

     1996 Stock Option Plan

     The  Company's  1996 Stock Option Plan (the "1996  Plan")  provides for the
grant of options intended to qualify as "incentive stock options" ("ISOs") under
Section 422 of the Internal  Revenue Code of 1986, as amended (the "Code"),  and
options that are not intended to so qualify ("Nonstatutory Stock Options").  The
total  number of Common  Shares  reserved  for  issuance  under the 1996 Plan is
2,000,000  (subject to adjustment in the event of a stock split, stock dividend,
recapitalization  or similar  capital  change) plus an  indeterminate  number of
Common Shares issuable upon the exercise of "reload options".

     The 1996 Plan is  presently  administered  by the Board of Directors of the
Company,  which  selects the eligible  persons to whom options shall be granted,
determines  the number of Common  Shares  subject to each  option,  the exercise
price therefor and the periods during which options are exercisable,  interprets
the provisions of the 1996 Plan and, subject to certain  limitations,  may amend
the 1996 Plan. Each option granted under the 1996 Plan is evidenced by a written
agreement between the Company and the optionee.

     Options may be granted to all full-time employees  (including officers) and
directors  of, and  certain  consultants  and  advisors  to, the  Company or any
subsidiary of the Company.

     The  exercise  price for ISOs  granted  under the 1996 Plan may not be less
than the fair  market  value of the  Common  Shares  on the date the  option  is
granted, except for ISOs granted to 10% stockholders which must have an exercise
price of not less than 110% of the fair market value of the Common Shares on the
date the option is granted. The exercise price for Nonstatutory Stock Options is
determined  by the Board of  Directors.  ISOs granted under the 1996 Plan have a
maximum  term of ten years,  except for 10%  stockholders  who are  subject to a
maximum term of five years. The term of Nonstatutory Stock Options is determined
by the  Board  of  Directors.  Options  granted  under  the  1996  Plan  are not
transferable, except by will and the laws of descent and distribution. The total
amount of ISOs that may be granted to any individual person in any calendar year
is limited;  however,  there is no limit as to Nonstatutory  Stock Options.  The
Company and the Underwriter have agreed that, for a period of one year after the
date of this Prospectus, there shall

                                       55

<PAGE>



not be  outstanding  more than  1,100,000  options and warrants  (excluding  the
Bridge Warrants and Underwriter's Warrants).

     As of the date of this Offering,  there are outstanding under the 1996 Plan
(i)  currently  exercisable  options  held by Mr.  Lew for  the  purchase  of an
aggregate  of  156,950  Common  Shares at an  exercise  price of $.30 per share;
above);  (ii) ten year options held by Messrs.  Honigsfeld  and Hefferon for the
purchase of 100,000 and 5,000 Common Shares, respectively,  at an exercise price
of $3.00 per share,  which vest in January 1998;  (iii) ten year options held by
Messrs.  Libin and Rizzardi for the purchase of 50,000 and 5,000 Common  Shares,
respectively,  at an exercise price of $3.00 per share,  which vest in one-third
increments in January 1998,  1999,  and 2000;  (iv) ten year options held by Dr.
Lazarus for the  purchase of 5,000 Common  Shares at an exercise  price of $3.00
per share, which vest in one-third  increments in March 1998, 1999 and 2000; (v)
various  options  granted to certain  non-executive  employees of the Company to
purchase an aggregate of 124,250 Common Shares;  and (vi) reload options,  which
apply to all the  options  granted  under the 1996  Plan.  Most  grants  were at
exercise prices at least equal to the fair market value of the Company's  Common
Shares  on the  date  of  grant,  as  determined  by  the  Board  of  Directors.
Compensation  expense has been reflected for certain options granted at exercise
prices which were below the deemed fair value at date of grant.

     1997 Qualified Employee Stock Purchase Plan

     The Company's 1997 Qualified Employee Stock Purchase Plan (the "1997 Plan")
provides  for the grant of  options  intended  to  qualify  as  "employee  stock
options" under  Sections  421,423 and 424 of the Code. A total of 250,000 Common
Shares are reserved for issuance  under the 1997 Plan  (subject to adjustment in
the event of a stock split, stock dividend or similar capital change).

     The 1997 Plan is  presently  administered  by the Board of Directors of the
Company.  Any person who has been an  employee  of the  Company for at least one
year,  who works at least 20 hours per week  continuously,  or full-time  for at
least five months in each calendar  year,  and who does not have more than 5% or
more of the total combined voting power or value of all classes of capital stock
of the Company,  is eligible to participate in the 1997 Plan. The exercise price
of the options shall be the lesser of 85% of the fair market value of the Common
Shares at the time of the grant,  or 85% of the fair market  value of the Common
Shares at the time the option is exercised.  No employee can be granted  options
to buy more than 5,000 Common  Shares,  or a number of Common  Shares  valued in
excess of $25,000,  per year. As of the date of this  Offering,  no options have
been granted under the 1997 Plan.

                       PRINCIPAL AND SELLING STOCKHOLDERS

     The following  table sets forth certain  information as of the date of this
Prospectus with respect to the beneficial  ownership of the  outstanding  Common
Shares of the  Company  by (i) any  holder  of more  than 5% of the  outstanding
Common Shares; (ii) the Company's  directors;  (iii) the directors and executive
officers  of the  Company as a group;  and (iv) the  Selling  Stockholders.  The
number of Common Shares under the column below entitled "Number of Common Shares
Beneficially

                                       56

<PAGE>



Owned Before the Offering" includes, for the holders of the Bridge Warrants, the
Common Shares underlying the Bridge Warrants (which become  exercisable upon the
consummation of the Offering).

<TABLE>

<CAPTION>
                                                                                        Percentage of Class(1)
Name and Address         Number of Common                         Number of Common       ----------------------
of Beneficial Owner;     Shares Beneficially     Number  of     Shares Beneficially     
Name of Selling          Owned Before the      Common Shares     Owned After the          Before       After
Stockholder              Offering                Offered            Offering             Offering     Offering(2)

<S>                         <C>                <C>                <C>                       <C>         <C>  

Dong W. Lew(3)            869,650(4)(5)(6)           0            566,200(4)              58.3%       18.7%
Mark Honigsfeld(3)        656,800(7)            33,600            623,200                 49.9%       21.7%
About Face, Ltd. (8 )     103,075(4)(9)        103,075                  0                  7.9%          -
Robert H. Solomon(10)     100,275(4)(11)       100,275                  0                  7.7%          -
Robert LoRusso(12)        100,100(4)           100,100                  0                  7.8%          -
Harvey Bibicoff(13)        70,000(14)           70,000                  0                  5.2%          -
Apollo Equities(15)        56,000(14)           56,000                  0                  4.2%          -
James Favia                42,000(14            42,000                  0                  3.2%          -
Sydney Gluck               22,400(14)           22,400                  0                  1.7%          -
Steven Wallitt             16,800(14)           16,800                  0                  1.3%          -
John Eckhoff               14,000(14)           14,000                  0                   *            -
Kenneth Moschetto          14,000(14)           14,000                  0                   *            -
Lawrence Levine            11,200(14            11,200                  0                   *            -     
Maretza Jimenez
  Campos                   11,200(14)           11,200                  0                   *            -
Lori Siegal                11,200(14)           11,200                  0                   *            -
Horizon Acquisitions        8,400(14)            8,400                  0                   *            -
Stuart Copperman            5,600(14)            5,600                  0                   *            -
Teddy Selinger              5,600(14)            5,600                  0                   *            -
John P. Hefferon            5,600(14)            5,600                  0                   *            -
Peter Guardino              2,800(14)            2,800                  0                   *            -
James Portnof               2,800(14)            2,800                  0                   *            -
Windsor L. P.               2,800(14)            2,800                  0                   *            -
Louis Libin (3)                 0                    0                  0                   -            -
William D. Rizzardi (3)         0                    0                  0                   -            -
Harold Lazarus (16)             0                    0                  0                   -            -
Directors and executive
  officers as a group
  (6 persons)              1,532,050(4)(5)(6)   39,200           1,189,40               100.0%         39.3%
                                     (7)(17)
</TABLE>



*      Less than 1%.

(1)  Does not give  effect to the  exercise of the  Underwriter's  Overallotment
     Option or the Underwriter's Warrants. See "Underwriting".


(2)  Gives  effect to the issuance and sale of 389,200  Common  Shares  issuable
     upon the exercise of the Bridge Warrants.

(3)  The address for Messrs.  Lew,  Honigsfeld,  Libin and Rizzardi is 77 Spruce
     Street, Cedarhurst, New York.



                                       57

<PAGE>



(4)  The  number  of Shares  reflected  as being  owned by Mr.  Lew  before  the
     Offering includes all of the shares  beneficially owned by Messrs.  LoRusso
     and Solomon and About Face,  Ltd.,  as such shares are subject to a limited
     irrevocable proxy which will expire upon consummation of this Offering. See
     "Certain Relationships and Related Transactions".

(5)  Includes 156,950 shares issuable upon the exercise of options granted under
     the 1996 Plan and 3,000  shares  issuable  at the  closing of the  Offering
     pursuant to the conversion of accrued and unpaid compensation in the amount
     of $15,000.  See  "Management  - Stock  Plans" and  "Management  Employment
     Agreements".

(6)  In October  1996,  the Company made a $70,000 loan to Mr. Lew, the proceeds
     of which  were  utilized  by him to  participate  in the  Bridge  Financing
     Transaction.  In March 1997, Mr. Honigsfeld  purchased from the Company the
     promissory  note  evidencing the loan. Mr. Lew has pledged 28,000 shares to
     secure the repayment of the loan to Mr. Honigsfeld.  Mr. Lew retains voting
     rights to such shares  unless and until there is a default  under the terms
     of the loan. See "Certain Relationships and Related Transactions".

(7)  Represents (i) 33,600 shares issuable upon the exercise of Bridge Warrants,
     (ii) 563,200  shares held by the Mark  Honigsfeld  Living Trust dated March
     27,  1996  (the   "Honigsfeld   Trust")  whose  sole   beneficiary  is  Mr.
     Honigsfeld's  wife and (iii) 60,000 shares issuable to the Honigsfeld Trust
     at the closing of the Offering  pursuant to the conversion of  indebtedness
     in the amount of  $200,000,  and  accrued  and unpaid  compensation  in the
     amount of $100,000, owed by the Company to Mr. Honigsfeld.  Mr. Honigsfeld,
     the settlor and trustee of the Honigsfeld Trust, has the right to terminate
     the  Honigsfeld  Trust and  receive the  shares.  See  "Bridge  Financing",
     "Management-Employment  Agreements" and "Certain  Relationships and Related
     Transactions".

(8)  About Face,  Ltd.'s address is 6539 Waggoner Drive,  Dallas,  Texas.  About
     Face,  Inc.,  a Texas  corporation,  is the general  partner of About Face,
     Ltd.,  a  Texas  limited   partnership.   Murray  Gross  is  the  principal
     stockholder  of About Face,  Inc.  Mr.  Gross is also a limited  partner of
     About Face, Ltd.

(9)  Includes 28,000 shares issuable upon the exercise of the Bridge Warrants.

(10) Mr. Solomon's address is 68 West Park Avenue, Long Beach, New York.

(11) Includes 25,200 shares issuable upon the exercise of the Bridge Warrants.

(12) Mr. LoRusso's address is 410 Jericho Turnpike, Jericho, New York.

(13) Mr. Bibicoff's address is 55 Maple Run Drive, Jericho, New York.

(14) Represents shares issuable upon the exercise of the Bridge Warrants.


                                       58

<PAGE>




(15) Apollo Equities' address is 30 Broad Street, New York, New York.

(16) The  address  for Dr.  Lazarus  is  Management,  228  Weller,  134  Hofstra
     University, Hempstead, New York.

(17) Includes  5,600 shares  issuable to Mr.  Hefferon  upon the exercise of the
     Bridge Warrants.

     The Company  will not receive  any of the  proceeds  from the resale of the
Common Shares by the Selling Stockholders. The Common Shares held by the Selling
Stockholders  may be resold at any time  following the date of this  Prospectus,
subject to an agreement  between each of the Bridge Lenders and the  Underwriter
restricting  the transfer of the Warrant  Shares for a period of two years.  The
sale of such Common  Shares or the  potential of such sales at any time may have
an adverse effect on the market prices of the Common Shares offered hereby.  The
Underwriter  has agreed  with the  Company  that it will not waive the  transfer
restrictions  with respect to the Warrant Shares prior to the  expiration  date.
See "Risk  Factors - Shares  Eligible For Future Sale May  Adversely  Affect the
Market"and "Underwriting".

     The Common  Shares  offered  may be sold from time to time  directly by the
Selling Stockholders.  Alternatively,  the Selling Stockholders may from time to
time offer such Common Shares  through  underwriters,  dealers,  or agents.  The
distribution of Common Shares by the Selling Stockholders may be effected in one
or more  transactions  that  may  take  place  on the  over-the-counter  market,
including ordinary broker's transactions,  privately-negotiated  transactions or
through  sales  to one or more  broker-dealers  for  resale  of such  shares  as
principals,  at market prices  prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection  with such sales of Common Shares.  The Common Shares
offered by the Selling  Stockholders may be sold by one or more of the following
methods,  without  limitation:  (i) a block trade in which a broker or dealer so
engaged  will  attempt to sell the Common  Shares as agent but may  position and
resell a portion of the block as principal to facilitate the  transaction;  (ii)
purchases by a broker or dealer as principal and resale by such broker or dealer
for  its  account  pursuant  to  this  Prospectus;   (iii)  ordinary   brokerage
transactions  in which the broker  solicits  purchasers;  and (iv)  face-to-face
transactions  between  sellers  and  purchasers  without  a  broker-dealer.   In
effecting  sales,  brokers or dealers  engaged by the Selling  Stockholders  may
arrange for other brokers or dealers to  participate.  The Selling  Stockholders
and  intermediaries  through  whom  such  Common  Shares  are sold may be deemed
"underwriters"  within the meaning of the Act with respect to the Common  Shares
offered,  and  any  profits  realized  or  commissions  received  may be  deemed
underwriting compensation.

     At the time a particular  offer of Common Shares is made by or on behalf of
a Selling Stockholder,  to the extent required, a Prospectus  Supplement will be
distributed  which will set forth the number of Common  Shares being offered and
the  terms of the  offering,  including  the name or names of any  underwriters,
dealers or agents, the purchase price paid by any underwriter for

                                       59

<PAGE>



Common  Shares  purchased  from  the  Selling  Stockholder  and  any  discounts,
commissions  or  concessions  allowed or reallowed  or paid to dealers,  and the
proposed selling price to the public.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Effective  August 1996,  the Company  issued  330,200  Common Shares to the
Honigsfeld  Trust in  consideration  for $.30 per share or an aggregate price of
$99,060. Upon Mr. Honigsfeld accepting the position as Chairman of the Board, he
was issued a five year option for the purchase of up to 233,000 Common Shares of
the Company  pursuant  to the 1996 Plan at an exercise  price of $.30 per share.
This option was exercised in full in April 1997 and the underlying Common Shares
were issued to the Honigsfeld Trust. See "Management - Stock Plans".

     In September 1996, the Company entered into a certain consulting  agreement
with Alan Daniels and Geraldine Lum Daniels,  the Company's  founders and two of
the Minority  Stockholders  (as defined  below),  providing for Alan Daniels and
Geraldine Lum Daniels to assist the Company with technical and marketing  issues
until the Bridge Financing  Transaction  closed (which occurred in October 1996)
in consideration for a one-time payment of $25,290 at such closing.

     In October 1996, the Company  repurchased 65,000 Common Shares and canceled
warrants for the purchase of 50,700 Common Shares (the "Repurchase  Agreements")
from 13 individuals (the "Minority  Stockholders"),  such repurchases  occurring
upon the  consummation  of the Bridge  Financing  Transaction.  Pursuant  to the
Repurchase  Agreements,  the Minority  Stockholders were paid $.30 per share and
received  new  warrants  exercisable  for a five  year  period  to  purchase  an
aggregate of 31,200 Common Shares at an exercise price of $5.00 per share.

     In October 1996, the Company  loaned $70,000 to Dong W. Lew,  President and
Chief Operating Officer of the Company, for purposes of his participation in the
Bridge Financing Transaction.  Such loan was evidenced by a promissory note (the
"Lew Note"),  providing for the payment of principal and interest at the rate of
8% per annum in 120 equal monthly  installments,  subject to acceleration on the
closing date of this Offering. Payment of the Lew Note is secured by a pledge of
28,000  Common  Shares of the Company.  All voting  rights to such shares remain
with Mr. Lew except in the event of a default on the payment of the Lew Note. In
March  1997,  Mr.  Honigsfeld  purchased  the  Lew  Note  from  the  Company  in
consideration for the payment in cash of the outstanding principal amount of the
Lew Note. Mr.  Honigsfeld  concurrently  received an assignment of the Company's
rights as pledgee of Mr.  Lew's  Common  Shares.  In May 1997,  the Lew Note was
amended  to make it  nonrecourse  except to the  pledged  Common  Shares  and to
conform the payment terms to those of the Bridge Notes. See "Bridge Financing".

     In January 1997, the Company entered into the secured Credit Agreement with
Mr. Honigsfeld. Pursuant to the Credit Agreement, the Company borrowed $200,000,
all of which is  outstanding.  The  Company  entered  into the Credit  Agreement
because it required  additional  financing to fund the Company's working capital
needs and no other sources of financing were available at that time. The Company
and Mr.  Honigsfeld  have  agreed  that,  at the  closing of the  Offering,  the
$200,000

                                       60

<PAGE>



indebtedness  will be converted  into 40,000 Common  Shares.  In April 1997, the
Company  and Mr.  Honigsfeld  amended  the Credit  Agreement  to provide  for an
additional  line of credit of  $500,000.  In May 1997,  the Company  borrowed an
additional $200,000 under the Credit Agreement.  The repayment of up to $200,000
under the Credit Agreement is secured by a first priority  security  interest in
all the assets of the Company. The Company believes that the terms of the Credit
Agreement  are  commercially  reasonable  and are at least as  favorable  to the
Company as the Company could have obtained  from an unrelated  third party.  The
Credit Agreement was approved by, among others, all the disinterested  directors
of the Company.

     Reference is made to "Management - Employment  Agreements" for a discussion
of certain  conversions  into Common  Shares of accrued and unpaid  compensation
that are to occur at the closing of the Offering.

     To the extent that the Company may enter into any  agreements  with related
parties in the future (of which none are presently  contemplated),  the Board of
Directors of the Company has determined  that the terms of such  agreements must
be commercially reasonable and no less favorable to the Company than the Company
could obtain from unrelated third parties.  Additionally, the Board of Directors
of the Company has further determined that such agreements must be approved by a
majority of disinterested  directors.  See "Risk Factors - Challenges to Growth;
Unascertainable Risks Related to Possible Acquisitions".

                            DESCRIPTION OF SECURITIES

Common Shares

     The Company is  authorized  to issue up to 20,000,000  Common  Shares,  par
value $.01 per share, of which 1,282,700 shares are issued and outstanding as of
the date of this  Prospectus  (giving effect to the Debt  Conversion and Accrued
Compensation  Conversion  that will occur upon the closing of the  Offering,  as
discussed  under  "Management - Employment  Agreements").  The Common Shares are
currently  owned  by  five  stockholders  of  record.  All  of  the  issued  and
outstanding Common Shares are validly issued, fully paid and non-assessable.  An
additional  866,600 Common Shares are reserved for issuance upon the exercise of
outstanding options and warrants, including the Bridge Warrants.

     Holders of the Common  Shares of the Company are entitled to share  equally
on a per  share  basis in such  dividends  as may be  declared  by the  Board of
Directors out of funds legally available therefor.  There are presently no plans
to pay dividends with respect to the Common Shares. See "Dividend Policy".  Upon
liquidation,  dissolution  or  winding  up of  the  Company,  after  payment  of
creditors  and the holders of any senior  securities  of the Company,  including
Preferred  Shares, if any, the assets of the Company will be divided pro rata on
a per share basis among the holders of the Common Shares.  The Common Shares are
not subject to any liability for further assessments. There are no conversion or
redemption  privileges,  nor any sinking  fund  provisions,  with respect to the
Common Shares, and the Common Shares are not subject to call. The holders of the
Common Shares do not have any preemptive or other subscription rights.

                                       61

<PAGE>




     Holders of the Common  Shares are  entitled to cast one vote for each share
held at all stockholders' meetings including the annual meeting for the election
of directors. The Common Shares do not have cumulative voting rights.

Preferred Shares

     The Company's  Certificate of  Incorporation  authorizes  1,000,000  "blank
check"  Preferred  Shares,  par  value  $.01 per  share,  whereby  the  Board of
Directors of the Company shall have the authority, without further action by the
holders of the outstanding Common Shares, to issue Preferred Shares from time to
time in one or more series, to fix the number of shares  constituting any series
and the stated value thereof,  if different  from the par value,  and to fix the
terms of any such series,  including dividend rights, dividend rates, conversion
or exchange  rights,  voting rights,  rights and terms of redemption  (including
sinking fund provisions), the redemption price and the liquidation preference of
such series.  As of the date of this  Prospectus,  there are no Preferred Shares
issued and  outstanding,  and the  Company  has no plans to issue any  Preferred
Shares.

Delaware Anti-Takeover Law; Staggered Board of Directors

     The  Company is governed  by the  provisions  of Section 203 of the General
Corporation Law of Delaware,  an anti-takeover  law enacted in 1988. In general,
the law  prohibits a Delaware  public  corporation  from engaging in a 'business
combination" with an "interested  stockholder" for a period of three years after
the  date  of  the   transaction  in  which  the  person  became  an  interested
stockholder, unless it is approved in a prescribed manner.

     The Company's Certificate of Incorporation provides for staggered terms for
the Board of Directors in three  classes.  The term of each class is three years
(except that the initial term of office of the Class I directors  will expire at
the Company's  annual  meeting of  stockholders  in 1997 and the initial term of
office of the Class II directors will expire at the Company's  annual meeting of
stockholders in 1998).  Each director holds office until the next annual meeting
of  stockholders  during the year in which the term of his class of directorship
expires and until his successor is elected and qualified.  The Company currently
has five directors (two in Classes I and II and one in Class III).  Accordingly,
based  on the  current  size of the  Board  and the  makeup  of the  classes  of
directors, the term of no more than two directors will expire in any given year.

     As a result of Section 203 of the General  Corporation  Law of Delaware and
the Company's  staggered Board of Directors,  potential acquirors of the Company
may be discouraged from attempting to effect  acquisition  transactions with the
Company,  thereby  possibly  depriving  holders of the  Company's  securities of
certain  opportunities  to sell or  otherwise  dispose  of  such  securities  at
above-market prices pursuant to such transactions.


                                       62

<PAGE>



Limitation on Liability of Directors; Indemnification

     Article X of the Company's  Certificate  of  Incorporation  eliminates  the
personal liability of directors to the Company and its stockholders for monetary
damages  for  breach of  fiduciary  duty as a  director  to the  fullest  extent
permitted by Section 102 of the Delaware General  Corporation Law, provided that
this provision  shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Company or its stockholders;
(ii) for acts or  omissions  not in good  faith  or  which  involve  intentional
misconduct or a knowing violation of law; (iii) arising under Section 174 of the
Delaware General Corporation Law (with respect to unlawful dividend payments and
unlawful stock purchases or redemptions); or (iv) for any transaction from which
the director derived an improper personal benefit.

     Additionally,  the Company has included in its Certificate of Incorporation
and its by-laws provisions to indemnify its directors,  officers,  employees and
agents and to purchase  insurance  with respect to liability  arising out of the
performance  of their duties as  directors,  officers,  employees  and agents as
permitted by Section 145 of the Delaware  General  Corporation Law. The Delaware
General  Corporation  Law provides  further that the  indemnification  permitted
thereunder  shall  not be  deemed  exclusive  of any  other  rights to which the
directors,  officers,  employees and agents may be entitled  under the Company's
by-laws, any agreement, vote of stockholders or otherwise.

     Furthermore,  the Company has entered into an indemnification  agreement to
indemnify its directors and officers, under certain circumstances, to the extent
provided in the Certificate of Incorporation and Bylaws of the Company,  subject
to Delaware General  Corporation  Law,  against any claim or action against,  or
involving,  any of them in  their  respective  capacities  as a  director  or an
officer of the Company or its affiliates.

     The  effect of the  foregoing  is to  require  the  Company,  to the extent
permitted by law, to indemnify the officers, directors,  employees and agents of
the  Company  for any claim  arising  against  such  persons  in their  official
capacities if such person acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.

     In connection  with the Offering,  the  Underwriter has agreed to indemnify
the Company, its directors,  officers,  and each person who controls the Company
within the meaning of Section 15 of the Act with respect to any  statement in or
omission from the  Registration  Statement or the Prospectus or any amendment or
supplement  thereto if such  statement  or omission  was made in  reliance  upon
information furnished in writing to the Company by the Underwriter  specifically
for or in connection with the  preparation of the  Registration  Statement,  the
Prospectus, or any such amendment or supplement thereto.

     Insofar as  indemnification  for  liabilities  arising under the Act may be
permitted to directors,  officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has

                                       63

<PAGE>



been informed that, in the opinion of the Commission,  such  indemnification  is
against public policy as expressed in the Act and is therefore unenforceable.

     The Company  intends to obtain  directors  and  officers  insurance  in the
approximate amount of $1,000,000.

Transfer Agent

     The  transfer  agent for the  Company's  Common  Shares is  American  Stock
Transfer Company.

                                  UNDERWRITING

General

     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  the  1,200,000
Common Shares offered hereby from the Company on a "firm  commitment"  basis, if
any are purchased.  The  Underwriter has advised the Company that it proposes to
offer the Common Shares to the public at a price of $5.00 per Common  Share,  as
set forth on the cover page of this Prospectus, and that it may allow to certain
dealers who are NASD members concessions not to exceed $___ per Common Share, of
which an amount not in excess of $___ per Common Share may be reallowed to other
dealers who are members of the NASD.  After the  Offering,  the public  offering
price, concession and reallowance may be changed by the Underwriter.

     The  Company  has  granted  an  Overallotment  Option  to the  Underwriter,
exercisable  during  the 45 day  period  from  the date of this  Prospectus,  to
purchase up to a maximum of 180,000  additional  Common  Shares at the  Offering
price, less the underwriting discount, to cover overallotments, 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 arising under the Act. Insofar
as  indemnification  for  liabilities  arising  under the 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.

     The Company has agreed to pay to the Underwriter a non-accountable  expense
allowance of 3% of the aggregate  Offering  price of the Common  Shares  offered
hereby,  including any Common  Shares  purchased  pursuant to the  Overallotment
Option, $50,000 of which has already been paid.

     The  Company  has  agreed  to sell to the  Underwriter,  or its  designees,
warrants to purchase an aggregate of 10% of the Common  Shares sold  pursuant to
this  Offering,  exclusive  of the exercise of the  Underwriter's  Overallotment
Option, for a purchase price of one mil ($.001) per warrant (the

                                       64

<PAGE>



   
"Underwriter's  Warrants").  The  Underwriter's  Warrants  shall be  exercisable
during a four year period  commencing  one year from the  effective  date of the
Registration  Statement of which this Prospectus is a part. Any profits realized
upon the sale of the Common Shares  issuable upon exercise of the  Underwriter's
Warrants may be deemed to be additional underwriting compensation.  The exercise
price of the Common Shares issuable upon exercise of the  Underwriter's  Warrant
shall be $8.25 per  share  (165% of the  initial  public  offering  price of the
Common  Shares).  The  sale,  transfer  or  hypothecation  of the  Underwriter's
Warrants are  restricted for a period of one year from the effective date of the
Registration Statement of which this Prospectus is a part, except to officers of
the Underwriter,  other NASD members  participating  in the Offering,  and their
officers or partners.  The exercise price of the Underwriter's  Warrants and the
number of Common  Shares  covered  thereby are subject to  adjustment in certain
events to prevent  dilution.  For the life of the  Underwriter's  Warrants,  the
holders  thereof are given,  at a nominal cost, the opportunity to profit from a
rise in the  market  price  of the  Company's  Common  Shares  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  Warrants  are  outstanding.  At any time when the  holders of the
Underwriter's  Warrants  might be expected to exercise  them,  the Company would
probably  be able to obtain  additional  capital on more  favorable  terms.  The
Company  has  granted  the   Underwriter   certain   "demand"  and   "piggyback"
registration  rights  with  respect  to  the  Underwriter's   Warrants  and  the
underlying Common Shares.
    

     At the closing of the sale of the Common Shares offered hereby, the Company
will enter into a three year financial advisory and investment banking agreement
with the Underwriter, pursuant to which the Company will be obligated to pay the
Underwriter  $108,000 in advance for financial and investment  advisory services
to the Company.

     At the closing of this Offering, the Company and the Underwriter will enter
into a  non-exclusive  merger and  acquisition  agreement  pursuant to which the
Underwriter  would be compensated at the rate of between 2% - 5% of the value of
any consummated  transaction with respect to which the Company was introduced to
the other party by the Underwriter.

     The Company has also agreed to have a designee of the Underwriter  serve as
a director of the Company,  or as an observer of the Board of  Directors,  for a
period of three years following the date of this Prospectus.

   
     The Company's current stockholders have agreed that, except with respect to
the Common Shares  underlying the Bridge  Warrants owned by them,  they will not
transfer any of their Common Shares  publicly for a period of one year following
the date of this  Prospectus  without  the  prior  consent  of the  Underwriter.
Notwithstanding the foregoing,  Robert LoRusso,  About Face, Ltd., and Robert H.
Solomon,  principal  stockholders  of the Company,  are exempt from such consent
requirement  with  respect  to the  100,100  75,075 and  75,075  Common  Shares,
respectively  owned by them. The Underwriter has advised the Company that it has
no current plans,  proposals,  arrangements or understandings with, and it knows
of no plans,  proposals,  arrangements  or  understandings  with  respect to, or
related to, the offering of such 250,250 Common Shares by
    

                                       65

<PAGE>



Messrs.  LoRusso  and Solomon  and About  Face,  Ltd.  The holders of the Bridge
Warrants  have agreed with the  Company and the  Underwriter  that they will not
exercise or transfer the Bridge Warrants, and that they will not transfer any of
the  Warrant  Shares  for a  period  of two  years  following  the  date of this
Prospectus.  The  Underwriter has agreed with the Company that it will not waive
the transfer  restriction  with respect to the Bridge Warrants or Warrant Shares
prior to the  expiration  of the lock-up  period.  In the event the  Underwriter
enters into transactions with any of the Selling Stockholders involving (i) from
5% up to 10% of the Selling Stockholders' Common Shares, the Company will file a
"sticker"  supplement  to the  Prospectus  and  (ii)  over  10%  of the  Selling
Stockholders' Common Shares, the Company will file a post-effective amendment to
the  Registration  Statement of which this  Prospectus is a part. See "Principal
and Selling Stockholders".

     The Company has agreed not to issue any equity  securities,  or  securities
convertible into, or exchangeable or exercisable for, equity  securities,  for a
period  of  twelve  months  from the date of this  Prospectus,  except  that the
Company may issue (i) Common Shares upon the exercise of the Bridge Warrants and
the  Underwriter's  Warrants;  (ii) Common Shares upon the exercise of the Other
Derivative  Securities  that  are  currently  outstanding,  as well as upon  the
exercise of options  hereafter  granted,  of up to 867,000  Common Shares in the
aggregate;  and (iii) Common  Shares and Preferred  Shares in connection  with a
merger or acquisition transaction.

     The  foregoing  is a summary  of  certain  provisions  of the  Underwriting
Agreement and  Underwriter's  Warrants  which have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.

     The Underwriter, a registered broker-dealer, purchases and sells securities
on behalf of its customers.  The Underwriter also engages in investment  banking
activities  and  provides  companies  with  financial  advisory  services.   The
Underwriter has been in business for  approximately two years. This is the first
offering  underwritten by the  Underwriter.  There is no affiliation or material
relationship between any promoter of the Company and the Underwriter.  See "Risk
Factors Inexperience of Underwriter".

Determination of Public Offering Price

     Prior to this  Offering,  there has been no public  market  for the  Common
Shares.  The  initial  public  offering  price for the  Common  Shares  has been
determined by negotiations  between the Company and the  Underwriter.  Among the
factors considered in the negotiations were an analysis of the areas of activity
in which the Company is engaged,  the present state of the  Company's  business,
the Company's financial  condition,  the Company's  prospects,  an assessment of
management,  the general  condition of the securities market at the time of this
Offering and the demand for similar  securities  of  comparable  companies.  The
public  offering  price  of the  Common  Shares  does not  necessarily  bear any
relationship  to  assets,  earnings,  book  value  or  other  criteria  of value
applicable to the Company.


                                       66

<PAGE>



     The Company anticipates that the Common Shares will be listed for quotation
on The  Nasdaq  SmallCap  Market  under the symbol  "CODI",  but there can be no
assurance that an active trading market will develop, even if the securities are
accepted for quotation.  The Underwriter  intends to make a market in the Common
Shares of the Company.

                                  LEGAL MATTERS

     The validity of the securities being offered hereby will be passed upon for
the Company by  Certilman  Balin Adler & Hyman,  LLP,  90 Merrick  Avenue,  East
Meadow,  New York  11554.  Certain  legal  matters  will be passed  upon for the
Underwriter  by Caro & Graifman,  P.C., 60 East 42nd Street,  New York, New York
10165.

                                     EXPERTS

     The financial statements of the Company as of December 31, 1996 and for the
years ended  December 31, 1996 and 1995  included in this  Prospectus  have been
audited  by  Lazar,   Levine  &  Company  LLP,   independent   certified  public
accountants, as set forth in their report thereon appearing elsewhere herein and
are included in reliance  upon such report given upon the authority of such firm
as experts in accounting and auditing.

                             ADDITIONAL INFORMATION

     The Company has filed a  Registration  Statement on Form SB-2 under the Act
with the  Commission  in  Washington,  D.C.  with  respect to the Common  Shares
offered hereby.  This Prospectus,  which is part of the Registration  Statement,
does not contain all of the information set forth in the Registration  Statement
and the exhibits  thereto.  For further  information with respect to the Company
and  the  Common  Shares  offered  hereby,  reference  is  hereby  made  to  the
Registration Statement and such exhibits,  which may be inspected without charge
at the office of the  Commission at 450 Fifth  Street,  N.W.,  Washington,  D.C.
20549.  Reports and other  information  filed by the Company with the Commission
can be inspected and copied at the public reference facilities maintained by the
Commission at the following  addresses:  New York Regional  Office,  Seven World
Trade Center,  New York, New York 10048; and Chicago  Regional Office,  Citicorp
Center, 500 West Madison Street,  Chicago,  Illinois 60661-2511.  Copies of such
material can be obtained from the Public Reference  Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Furthermore,
the  Commission  maintains  a Web site  that  will  contain  reports,  proxy and
information  statements and other information regarding the Company. The address
of such Web site is http://www.sec.gov.



                                       67

<PAGE>




                        - INDEX TO FINANCIAL STATEMENTS -



<TABLE>
                                                                                         Page(s)

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

Financial Statements:

     Balance Sheets as of March 31, 1997  (unaudited)  and December 31, 1996 and          F - 3
     1995 

     Statements of  Operations  for the Three Month Periods Ended March 31, 1997          F - 4
     and 1996 (unaudited) and for the Years Ended December 31, 1996 and 1995 

     Statement  of  Shareholders'  Equity for the Two Years in the Period  Ended          F - 5
     December  31,  1996 and for the Three  Month  Period  Ended  March 31, 1997
     (unaudited) 

     Statements  of Cash Flows for the Three Month  Periods Ended March 31, 1997          F - 6
     and 1996 (unaudited) and for the Years Ended December 31, 1996 and 1995 

Notes to Financial Statements                                                             F - 8

</TABLE>













                                      F - 1

<PAGE>
                          INDEPENDENT AUDITORS' REPORT




To the Shareholders
Compu-DAWN, Inc.
Cedarhurst, New York



We have  audited  the  accompanying  balance  sheets of  Compu-DAWN,  Inc. as of
December  31,  1996 and 1995 and the  statements  of  operations,  shareholders'
equity and cash flows for the years  ended  December  31,  1996 and 1995.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of Compu-DAWN,  Inc. as of
December 31, 1996 and 1995 and the results of its  operations and its cash flows
for the years ended  December 31, 1996 and 1995,  in conformity  with  generally
accepted accounting principles.




                                                 /s/ Lazar, Levine & Company LLP
                                                 LAZAR, LEVINE & COMPANY LLP




New York, New York
February 13, 1997 except
as to Note 3 which is dated
March 11, 1997


                                      F - 2

<PAGE>
<TABLE>
<CAPTION>
                                Compu-DAWN, Inc.
                                 BALANCE SHEETS

                               - ASSETS (Note 8) -
                                                                                                 March 31,        December 31,
                                                                                                  1997                1996
                                                                                               (Unaudited)
CURRENT ASSETS:
<S>                                                                                           <C>                  <C>        
   Cash (Note 2b)                                                                             $    30,016          $   286,497
   Accounts receivable, net of allowances for doubtful accounts of $35,000 and
      $30,000 for 1997 and 1996, respectively (Note 2b)                                           197,011              100,010
   Prepaid expenses                                                                                22,281               19,281
   Loan receivable from officer  (Note 3)                                                            -                  69,247
   Income tax refund receivable (Notes 2f and 11)                                                  36,004               36,004
                                                                                              -----------          -----------
TOTAL CURRENT ASSETS                                                                              285,312              511,039
                                                                                              -----------          -----------

FIXED ASSETS (Notes 2c, 4 and 6)                                                                  182,597              138,814
                                                                                              -----------          -----------

OTHER ASSETS:
   Deferred offering costs (Note 13)                                                              212,368              139,326
   Deferred compensation                                                                          339,960               34,056
   Financing costs (Note 7)                                                                     1,557,050            1,588,400
   Security deposits                                                                               21,525               21,525
                                                                                              -----------          -----------
                                                                                                2,130,903            1,783,307
                                                                                              -----------          -----------

                                                                                               $2,598,812           $2,433,160
                                                                                               ==========           ==========

                                              - LIABILITIES AND SHAREHOLDERS' EQUITY  -
CURRENT LIABILITIES:
   Accounts payable                                                                          $     92,037          $   123,473
   Accrued expenses and other current liabilities (Note 5)                                        300,759              136,661
   Deferred revenue (Note 2d)                                                                      32,282               28,100
   Due to former shareholders (Note 9)                                                               -                  34,710
   Capitalized lease payable - current (Note 6)                                                     8,298                7,859
                                                                                             ------------          -----------
TOTAL CURRENT LIABILITIES                                                                         433,376              330,803
                                                                                             ------------          -----------

NON-CURRENT LIABILITIES:
   Note payable - officer (Note 8)                                                                200,000                 -
   Capitalized lease payable (Note 6)                                                              27,654               29,541
   Deferred rent liability (Note 12a)                                                              26,637               23,115
   Promissory notes payable  (Note 7)                                                             770,000              770,000
                                                                                             ------------         ------------
                                                                                                1,024,291              822,656
                                                                                             ------------         ------------

COMMITMENTS AND CONTINGENCIES (Notes 10, 12, 13 and 14)

SHAREHOLDERS' EQUITY (Note 9):
   Preferred stock, $.01 par value; 1,000,000 shares authorized,
      none issued or outstanding                                                                     -                    -
   Common stock, $.01 par value, 20,000,000 shares authorized, 986,700
      shares issued for 1997 and 1996, respectively                                                 9,867                9,867
   Additional paid-in capital                                                                   2,044,758            1,670,258
   Retained earnings (deficit)                                                                   (913,480)            (400,424)
                                                                                             ------------         ------------
                                                                                                1,141,145           1,279, 701
                                                                                             ------------          -----------

                                                                                               $2,598,812           $2,433,160
                                                                                               ==========           ==========
</TABLE>


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

                                      F - 3

<PAGE>
<TABLE>
                                Compu-DAWN, Inc.
                            STATEMENTS OF OPERATIONS



<CAPTION>
                                                                   For the Three Months Ended        For the Year Ended
                                                                             March 31,                   December 31,
                                                               ------------------------------     -------------------------
                                                                  1997             1996              1996             1995
                                                               --------------    -----------      ------------    ---------
                                                                (Unaudited)      (Unaudited)

REVENUES (Notes 2d and 10):
<S>                                                             <C>                <C>            <C>              <C>        
   Software sales                                               $   98,484         $ 18,925       $   202,511      $   817,271
   Maintenance income                                               87,317           72,594           275,016          222,910
                                                               -----------        ---------       -----------      -----------
                                                                   185,801           91,519           477,527        1,040,181
                                                               -----------        ---------       -----------      -----------

COSTS AND EXPENSES:
   Programming costs and expenses                                   76,837           51,902           268,915          404,165
   General and administrative expenses                             514,948           84,568           660,006          365,760
   Research and development (Note 2e)                               47,913           30,914           158,099          140,275
                                                               -----------        ---------       -----------      -----------
                                                                   639,698          167,384         1,087,020          910,200
                                                               -----------        ---------       -----------      -----------

INCOME (LOSS)  FROM  OPERATIONS                                   (453,897)         (75,865)         (609,493)         129,981
                                                               -----------        ---------       ------------     -----------

OTHER INCOME (EXPENSES):
   Interest and other income                                         1,342              780             4,845            1,367
   Interest expense and financing costs (Note 7)                   (60,501)            (176)          (36,274)            (993)
   Loss on abandonment of leasehold improvements
       (Note 12a)                                                  -                 -                 (5,378)            -
                                                               ------------       ---------       -----------      -----------
                                                                   (59,159)             604           (36,807)             374
                                                               -----------        ---------       -----------      -----------

INCOME (LOSS) BEFORE PROVISION (CREDIT)
   FOR INCOME TAXES                                               (513,056)         (75,261)         (646,300)         130,355

   Provision (credit) for income taxes (Notes 2f and 11)            -               (18,000)          (75,531)          51,695
                                                               -----------        ---------       -----------      -----------

NET INCOME (LOSS)                                                $(513,056)       $ (57,261)      $  (570,769)    $     78,660
                                                                 =========        =========       ===========      ===========

EARNINGS (LOSS) PER COMMON SHARE
   (Note 2g)                                                         $(.31)           $(.03)            $(.34)            $.05
                                                                     =====            =====             ======            ====

WEIGHTED AVERAGE NUMBER OF COMMON
   AND COMMON EQUIVALENT SHARES
   OUTSTANDING (Note 2g)                                         1,678,913        1,678,913         1,678,913        1,678,913
                                                                 =========        =========         =========        =========
</TABLE>








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

                                      F - 4

<PAGE>
<TABLE>
                                Compu-DAWN, Inc.
                        STATEMENT OF SHAREHOLDERS' EQUITY

<CAPTION>
                                                                               Additional   Retained                Total
                                               Preferred        Common Stock    Paid-in     Earnings   Treasury  Shareholders'
                                                Stock       Shares    Amount    Capital     (Deficit)     Stock  Equity (Deficit)
                                               ---------  ---------  -------   ----------   --------   --------- ----------------

<S>                                            <C>        <C>       <C>          <C>        <C>          <C>       
Balance at January 1, 1995 (Note 9)                -      1,157,000  $11,570   $   54,430   $  91,685  $(38,500)    $  119,185
   Purchases of treasury stock, 107,250 
       shares at cost (Note 9)                     -           -        -            -           -      (33,000)       (33,000)

   Net income                                      -           -        -            -         78,660      -            78,660
                                                ------    ---------   ------    ---------      ------    ------         ------
                                               

Balance at December 31, 1995                       -      1,157,000   11,570       54,430     170,345   (71,500)       164,845

   Cancellation of shares held in treasury
      (Note 9)                                     -       (685,750)  (6,858)     (64,642)       -       71,500           -

   Issuances of common stock (Note 9)              -        580,450    5,805      168,330        -         -           174,135

   Warrants issued pursuant to debt offering
      (Note 7)                                     -           -        -       1,509,200        -         -         1,509,200

   Options issued below fair value (Note 9)        -           -        -          37,000        -         -            37,000

   Purchase of outstanding options (Note 9)        -           -        -         (15,210)       -         -           (15,210)

   Purchases and cancellation of outstanding
      shares (Note 9)                              -        (65,000)    (650)     (18,850)       -         -            (19,500)

   Net loss                                        -            -       -            -       (570,769)     -           (570,769 )
                                                ------    ---------   ------    ---------     --------   -----         --------  
                                                

BALANCE AT DECEMBER 31, 1996                       -        986,700    9,867    1,670,258    (400,424)    -          1,279,701

   Options issued below fair value (Note 9)        -           -        -         374,500        -        -            374,500

   Net loss (unaudited)                            -           -        -            -       (513,056)    -           (513,056)
                                                -----     ---------   ------    ---------     -------    -----       ---------

BALANCE AT MARCH 31, 1997 (Unaudited)              -        986,700  $ 9,867   $2,044,758   $(913,480)  $  -        $1,141,145
                                                =====     =========   ======    =========     =======    =====       =========
</TABLE>


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

                                      F - 5


<PAGE>
<TABLE>

                                                      Compu-DAWN, Inc.
                                                  STATEMENTS OF CASH FLOWS                                        Page 1 of 2
                                                  ------------------------


<CAPTION>
                                                               For the Three Months Ended              For the Year Ended
                                                                        March 31,                         December 31,
                                                                  1997             1996               1996            1995
                                                             -------------   ---------------      -----------    -----------
                                                                (Unaudited)       (Unaudited)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS

<S>                                                            <C>               <C>                <C>              <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
   Cash received from customers                                $    87,982       $   192,154        $ 582,053     $1,027,473
   Cash paid to suppliers and employees                           (447,827)         (164,254)        (825,948)      (977,193)
   Interest paid                                                    (1,395)             (176)          (1,995)          (993)
   Interest and other income received                                1,342               780            3,791          1,367
   Income taxes paid                                                  -                 (506)         (47,284)          -
                                                               -----------        ----------         --------       --------
   Net cash provided (utilized) by operating activities           (359,898)           27,998         (289,383)        50,654
                                                               -----------        ----------         --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Loans made to officer                                              -                 -             (70,000)          -
   Principal repayments of officer's loan                           69,247              -                 753           -
   Purchase of fixed assets                                        (56,630)             -             (95,117)       (29,232)
   Proceeds from sale of fixed assets                                 -                 -               2,500           -
   Payment of security deposits                                       -                 -             (14,745)        (3,480)
                                                               -----------         ---------         ---------       --------
   Net cash provided (utilized) by investing activities             12,617              -            (176,609)       (32,712)
                                                               -----------         ---------         ---------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Loan received from officer                                      200,000              -                -              -
   Proceeds from debt offering                                        -                 -             770,000           -
   Expenses associated with debt offering                             -                 -            (100,100)          -
   Payments for common stock and options acquired                  (34,710)          (10,164)         (21,583)       (29,167)
   Principal payments of other long-term debt                         -                 -              (3,726)       (67,235)
   Payments of capital lease obligations                            (1,448)             (610)          (2,828)        (1,661)
   Expenses associated with initial public offering                (73,042)             -            (139,326)          -
   Proceeds from sale of shares                                       -                 -             144,090           -
                                                               -----------         ---------         --------        -------
   Net cash provided (utilized) by financing activities             90,800           (10,774)         646,527        (98,063)
                                                               -----------         ---------         --------        -------

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS                                               (256,481)           17,224          180,535        (80,121)

   Cash and cash equivalents, at beginning of year                 286,497           105,962          105,962        186,083
                                                                ----------         ---------         --------        -------

CASH AND CASH EQUIVALENTS, END OF YEAR                         $    30,016       $   123,186      $   286,497       $105,962
                                                                ==========         =========        =========        =======
</TABLE>




    The accompanying notes are an integral part of these financial statements







                                      F - 6

<PAGE>



<TABLE>
                                Compu-DAWN, Inc.
                      STATEMENTS OF CASH FLOWS Page 2 of 2
                            ------------------------


<CAPTION>
                                                                 For the Three Months Ended           For the Year Ended
                                                                          March 31,                       December 31,
                                                                    1997                1996           1996           1995
                                                              --------------        ----------     ------------   ----------
                                                                  (Unaudited)       (Unaudited)

RECONCILIATION OF NET INCOME (LOSS) TO
    NET CASH (UTILIZED) PROVIDED BY
    OPERATING ACTIVITIES:
<S>                                                                <C>               <C>             <C>           <C>      
      Net income (loss)                                            $(513,056)        $(57,261)       $(570,769)    $  78,660
      Adjustments to reconcile net income (loss) to net cash
         (utilized) provided by operating activities:
          Allowance for doubtful accounts                              5,000             -              12,000        13,000
          Depreciation and amortization                               44,196            9,565           45,947        12,370
          Deferred tax expense (benefit)                                -                -               6,200        (4,450)
          Deferred rent liability                                      3,522           (3,558)          (3,315)       26,430
          Compensatory stock                                          68,596             -              32,988          -
          Loss on disposal of fixed assets                              -                -               7,617          -
      Changes in assets and liabilities:
        Decrease (increase) in accounts receivable                  (102,000)         126,635          106,456       (28,139)
        (Increase) decrease in prepaid expenses                       (3,000)             468          (16,714)          501
        (Increase) in tax refund receivable                             -                -             (36,004)         -
        Increase (decrease) in accounts payable and
          accrued expenses                                           132,662           (3,347)         221,692      (119,715)
        (Increase) decrease in deferred revenue                        4,182          (26,000)          (1,930)       15,430
        (Decrease) increase in income taxes payable                     -             (18,504)         (93,551)       56,567
                                                            ----------------   ---------------      -----------    ---------

NET CASH (UTILIZED) PROVIDED BY
    OPERATING ACTIVITIES                                           $(359,898)       $  27,998        $(289,383)    $  50,654
                                                                   =========        ==========        =========     ========
</TABLE>


SUPPLEMENTAL SCHEDULE OF NON-CASH
    INVESTING AND FINANCING ACTIVITIES:
    (a) During 1996 and 1995, the Company incurred capital lease  obligations of
        $33,595 and $7,271,  respectively  in  connection  with the  purchase of
        office equipment.













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






                                      F - 7

<PAGE>

                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 1 - DESCRIPTION OF COMPANY:

     Compu-DAWN,  Inc., the Company,  was incorporated under the name of Coastal
     Computer   Systems,   Inc.,  in  New  York  on  March  31,  1983,  and  was
     reincorporated  in Delaware under its present name on October 18, 1996. The
     Company is engaged in the  business of  designing,  developing,  licensing,
     installing   and   servicing   computer   software   products  and  systems
     predominantly for public safety and law enforcement agencies. The Company's
     customers, to date, are primarily located in New York State.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     The Company's accounting policies are in accordance with generally accepted
     accounting  principles.   Outlined  below  are  those  policies  which  are
     considered particularly significant.

     (a)  Use of Estimates:

          In  preparing  financial   statements  in  accordance  with  generally
          accepted accounting principles, management makes certain estimates and
          assumptions,  where  applicable,  that affect the reported  amounts of
          assets  and  liabilities  and  disclosures  of  contingent  assets and
          liabilities  at the date of the financial  statements,  as well as the
          reported amounts of revenues and expenses during the reporting period.
          While actual  results  could differ from those  estimates,  management
          does not expect such  variances,  if any, to have a material effect on
          the financial statements.

     (b)  Concentration of Credit Risk /Fair Value:

          Financial   instruments  that  potentially   subject  the  Company  to
          concentration  of credit risk consist  principally of cash investments
          and accounts receivable.

          The  Company  maintains,  at  times,  deposits  in  federally  insured
          financial   institutions  in  excess  of  federally   insured  limits.
          Management monitors the soundness of these financial  institutions and
          feels the Company's risk is negligible.

          Management believes that concentrations of credit risk with respect to
          accounts  receivable  are  limited  due to the  Company's  methods  of
          progress billings and collections.

          As of March 31, 1997 and December 31, 1996, the fair value of cash and
          cash equivalents,  receivables, obligations under accounts payable and
          debt instruments approximate the carrying value.

     (c)  Fixed Assets:

          Fixed  assets are  recorded at cost.  Depreciation  of fixed assets is
          provided on a straight-line basis as follows:

             Computer equipment                      3 years
             Furniture and fixtures                  5 years
             Motor vehicles                          5 years

                                      F - 8

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

     (c)  Fixed Assets:

          Maintenance   and  repairs  are   expensed  as   incurred.   Leasehold
          improvements  are  amortized  over the useful life of the asset or the
          lease,  whichever is shorter.  Capital  leases are amortized  over the
          term of the  respective  leases  or the  useful  lives of the  related
          assets, whichever is shorter.

          Depreciation and amortization expense for the years ended December 31,
          1996  and  1995   aggregated   $25,046  and   $12,370,   respectively.
          Depreciation  and  amortization  expense for the three  month  periods
          ended  March  31,  1997  and  1996  aggregated   $12,847  and  $9,565,
          respectively.

     (d)  Revenue Recognition:

          The Company  generates  revenues  from the  granting of  nonexclusive,
          non-transferable  and  non-assignable  licenses to use software it has
          developed,  through  fixed price  contracts.  Revenues from such fixed
          price  contracts  are  recognized  using the  percentage of completion
          method of  accounting.  The Company  retains title to the software and
          warranties  that it will  provide  technical  support  and  repair any
          defects in the  software at no charge.  The  warranty  period for each
          contract is negotiated individually,  for periods ranging from 90 days
          to three years. To date,  repair costs have been minimal and therefore
          the Company has not established a reserve for such warranty costs.

          In addition,  the Company provides  post-contract  customer support to
          licensees of its software.  Revenues from such services are recognized
          ratably over the period of  performance.  Fees billed and/or  received
          prior to performance of services are reflected as deferred revenue.

     (e)  Software Development Costs:

          The Company reflects costs incurred in establishing the  technological
          feasibility  of a computer  software  product to be leased or sold, as
          research and development  costs, and expenses such costs in the period
          incurred.  Research and development costs for the years ended December
          31, 1996 and 1995  aggregated  $158,099  and  $140,275,  respectively.
          Research and development costs for the three month periods ended March
          31, 1997 and 1996 aggregated $47,913 and $30,914, respectively.

          After  technological  feasibility  has  been  established,  all  costs
          incurred on the software  product are to be capitalized  and amortized
          on a product by product  basis.  Capitalization  of computer  software
          costs is  discontinued  when the  product is  available  to be sold or
          leased.

          To date,  the Company has only sold or leased  software which has been
          developed for specific  customers.  As such,  all costs  incurred have
          been expensed as research and development costs.

          Costs associated with post-contract customer support (maintenance) are
          charged to expense when related  revenue is  recognized  or when those
          costs are incurred, whichever occurs first.


                                      F - 9

<PAGE>

                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):

     (f)  Income Taxes:

          The Company has adopted Financial Accounting Standards Board Statement
          No. 109  "Accounting  for Income Taxes" ("SFAS 109").  Under SFAS 109,
          deferred  tax  assets  and   liabilities   are  determined   based  on
          differences  between the  financial  reporting and tax basis of assets
          and  liabilities  and are  measured by applying  enacted tax rates and
          laws to  taxable  years in which  such  differences  are  expected  to
          reverse.

     (g)  Earnings Per Share:

          Earnings  per share  has been  computed  on the basis of the  weighted
          average  number  of  common  shares  and  common   equivalent   shares
          outstanding during each period presented. In accordance with the rules
          of the  Securities  and  Exchange  Commission,  all shares  issued and
          "cheap"  options and warrants are being treated as outstanding for all
          periods presented.

     (h)  Statements of Cash Flows:

          For purposes of the  statements of cash flows,  the Company  considers
          all highly  liquid  investments  with an  original  maturity  of three
          months or less to be cash equivalents.


NOTE 3 - LOAN RECEIVABLE - OFFICER:

          In October  1996,  the Company made a loan of $70,000 to its president
          and  chief  operating  officer  for  the  purpose  of  such  officer's
          participation  in a debt  offering (see Note 7). This loan was made to
          allow such officer to maintain an equity ownership in the Company that
          aligned his interest with that of the other shareholders. The loan was
          made since the  officer did not have the  resources  or the ability to
          obtain the  necessary  funds  otherwise.  Such loan is  evidenced by a
          promissory  note  requiring  120 equal monthl  payments,  at an annual
          interest  rate of 8% and is secured by shares of common stock owned by
          the individual with a value equal to 120% of the outstanding  balance.
          This note  which may be  prepaid  at any time is also due and  payable
          upon the closing of a public  offering of the  Company's  common stock
          should such occur within three years of the date of the note and yield
          gross proceeds of at least $4,500,000.

     In March 1997, the Chairman of the Board of the Company purchased this note
     from the  Company  in  consideration  for the  payment  in cash of the then
     outstanding  amount.  The  Chairman of the Board  concurrently  received an
     assignment of the Company's collateral for this note.


NOTE 4 - FIXED ASSETS:

     Fixed assets consist of the following:

                                                        March 31,   December 31,
                                                         1997          1996

     Computer equipment                                 $183,948       $139,916
     Furniture and fixtures                               16,877         16,499
     Motor vehicles                                       12,597         12,597
     Leasehold improvements                               57,565         45,345
     Assets under capitalized leases                      41,484         41,484
                                                         -------        -------
                                                         312,471        255,841
     Less:  accumulated depreciation and amortization    129,874        117,027
                                                         -------        -------
                                                        $182,597       $138,814
                                                         =======        =======


                                     F - 10

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 5 - ACCRUED EXPENSES:

     Accrued expenses is comprised of the following:

                                               March 31,        December 31,
                                                1997                1996

     Payroll and payroll taxes                  $258,132          $121,037
     Interest                                     42,627            15,624
                                                --------          --------
                                                $300,759          $136,661
                                                ========          ========


NOTE 6 - CAPITALIZED LEASE OBLIGATIONS:

     The Company has entered into various capital leases for furniture, fixtures
     and equipment  which expire in years through 2001. The assets and liability
     under these  capital  leases are recorded at the lower of the present value
     of the minimum lease  payments or the fair market value of the assets.  The
     assets are depreciated over their estimated  useful lives.  Depreciation of
     assets under capital  leases for the years ended December 31, 1996 and 1995
     aggregated $5,989 and $1,315, respectively.

     Minimum  future lease payments under capital leases as of December 31, 1996
     are as follows:

                   1997                                         $11,711
                   1998                                          10,049
                   1999                                           8,388
                   2000                                           8,388
                   2001                                           7,689
                                                                -------
          Total minimum lease payments                           46,225
          Less: amount representing interest                      8,825
                                                                -------
                                                                $37,400
                                                                =======

     Depreciation  of assets under  capital  leases for the three month  periods
     ended March 31, 1997 and 1996 aggregated $2,337 and $658, respectively.

NOTE 7 - DEBT OFFERING:

     In October 1996, the Company successfully completed the sale of 77 units in
     a private offering,  each unit consisting of a $10,000 principal amount 12%
     promissory note ("bridge note") and a redeemable  stock purchase warrant to
     acquire  5,600 shares of the  Company's  common stock for  aggregate  gross
     proceeds of $770,000.  The warrants are  exercisable at a price of $.50 per
     share only upon the  successful  completion of an Initial  Public  Offering
     ("IPO"),  see Note 13, of the Company's  common  stock.  See Note 14(b) re:
     Subsequent Events.

     Each of the bridge notes is due and payable upon the closing of the IPO. In
     the event such closing occurs on or before  September 15, 1997, no interest
     will be payable on these notes. In the event that the Company closes an IPO
     after  September 15, 1997 but before  September  15, 1999,  the notes shall
     bear  interest at a rate of 8% per annum and be payable upon the closing of
     the IPO. In the event the Company  does not close an IPO by  September  15,
     1999,  interest  shall accrue at a rate of 12% per annum  through such date
     and the notes  shall be  payable  in 120 equal  monthly  installments  with
     interest at a rate of 8% per annum beginning September 16, 1999.


                                     F - 11

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 7 - DEBT OFFERING (Continued):

     In  accordance  with APB No. 14, the  proceeds  of debt  issued  with stock
     purchase  warrants should be allocated based on the fair values of the debt
     without  the  warrants  and  of  the  warrants   themselves   when  issued.
     Accordingly,  the  Company  has  reflected  deferred  financing  costs  and
     additional  paid-in  capital based upon the  difference  between the deemed
     fair value of the warrants ($4.00) and the warrant exercise price.

     Financing  costs,  which  represent  costs incurred in connection with this
     private  offering,  are being charged to operations as additional  interest
     expense over the term of the bridge notes.

     In  September  1996,  prior to the closing of this  private  offering,  the
     Company  entered  into a  consulting  agreement  with  one of its  founding
     shareholders which provided for a one-time payment at closing of $25,290.

NOTE 8 - NOTE PAYABLE - OFFICER:

     In January 1997, the Company  entered into a secured credit  agreement with
     its Chairman of the Board which  provides for up to $200,000 of borrowings.
     These  borrowings  are  secured  by all the  assets  of the  Company,  bear
     interest  at a rate of 10% per annum and mature  upon the closing of an IPO
     (see Note 13).

     See Note 14(c) re: Subsequent Events.

NOTE 9 - CAPITAL STOCK AND EQUIVALENTS:

     In October 1996,  simultaneously  with its  reincorporation in the State of
     Delaware,  (see Note 1) the Company  increased  its  authorized  capital to
     20,000,000  shares of common stock, $.01 par value, and 1,000,000 shares of
     preferred stock, $.01 par value. The Company also effected a stock split of
     its issued and outstanding common stock on a 325 for 1 basis,  resulting in
     1,157,000 shares. This stock split has been reflected  retroactively in the
     accompanying  financial  statements and accordingly,  all references to the
     number of common  shares  issued and  outstanding  have been  restated.  No
     preferred shares are issued and outstanding.

     During 1994 the Company repurchased 578,500 shares of its common stock from
     certain  shareholders  at an  aggregate  cost of $38,500.  These shares are
     reflected  as shares held in treasury  for 1995 and as being  cancelled  in
     1996.

     During 1995 the Company  repurchased  an additional  107,250  shares of its
     common stock from  certain  shareholders  at an aggregate  cost of $33,000.
     These  shares are also  reflected  as treasury  stock for 1995 and as being
     cancelled in 1996.

     In August 1996,  the Company  sold 480,300  shares of its common stock at a
     price of $.30 per share,  for cash proceeds of $144,090 and issued  100,150
     shares of its common stock in lieu of payment of legal and consulting  fees
     of $30,045, for an aggregate amount of $174,135.


                                     F - 12

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 9 - CAPITAL STOCK AND EQUIVALENTS (Continued):

     The Company had also granted,  to certain former  shareholders,  options to
     purchase an aggregate of 50,700 shares of common stock  (post-split)  at an
     aggregate exercise price of $156. In October 1996, following the successful
     completion  of a debt  offering  (see Note 7),  the  Company  entered  into
     agreements  with  the  former  shareholders,  canceling  these  unexercised
     options in  consideration  of payment of $.30 for each underlying share and
     the issuance of warrants to purchase an aggregate of 31,200 shares of stock
     at an exercise  price of $5.00 per share.  The  payment  for these  options
     aggregating $15,210 has been charged against additional paid-in capital.

     The Company also  purchased,  in October 1996,  65,000 shares held by these
     former  shareholders  at a per  share  price of  $.30.  These  shares  were
     cancelled upon the repurchase, and accordingly, common stock and additional
     paid-in capital have been reduced by $650 and $18,850, respectively.

     In addition,  in October 1996, the Company  established a Stock Option Plan
     under which  options  (including  non-statutory  options) to purchase up to
     2,000,000  shares may be granted to eligible  persons.  As of December  31,
     1996,  the Company had granted  options to purchase an aggregate of 491,950
     shares of common stock at prices  ranging  from $.30 to $4.00,  aggregating
     $221,485.   In   connection   therewith  the  Company   recorded   deferred
     compensation  (measured  as the excess of the fair value of the  underlying
     stock over the  exercise  price of the option at date of grant) of $37,000.
     As of March 31, 1997, the Company granted additional options to purchase an
     aggregate of 187,250  shares of common stock at an exercise  price of $3.00
     aggregating $561,750. Accordingly, the Company recorded additional deferred
     compensation  costs of  $374,500.  Deferred  compensation  costs  are being
     amortized over the vesting period of the related  options.  Amortization of
     such costs for the year ended December 31, 1996 and the three-month  period
     ended March 31, 1997, aggregated $2,943 and $68,597, respectively.

     In April 1997, subsequent to the balance sheet date, options were exercised
     to purchase  233,000 shares of common stock for which the Company  received
     $69,900 in gross proceeds. (See also Note 2g regarding earnings per share).

     In 1997, the Company established the 1997 Qualified Employee Stock Purchase
     Plan  which  provides  for the  grant of up to a total of  250,000  options
     intended  to qualify as  employee  stock  options.  The  exercise  price of
     options  granted  under this plan shall be the lesser of 85% of fair market
     value of the  Company's  common  shares at date of grant or 85% of the fair
     market value on the exercise  date.  To date,  no options have been granted
     under the 1997 plan.

NOTE 10 - ECONOMIC DEPENDENCY:

     To date, the Company's revenues have been materially dependent on a limited
     number of customers.  The nature of the Company's  business (see Note 1) is
     such that  during any  individual  accounting  period it will  license  its
     software  products  to  a  limited  number  of  significant  customers.  In
     addition,  revenues  from the  Company's  products are  primarily  from the
     public safety and law enforcement markets.

     Also,  the Company  currently  relies on a limited number of (two or three)
     software  licensors  of its main  computer  operating  system.  The Company
     cannot assure that if any of these licenses are terminated, it will be able
     to replace those licenses on a timely basis.


                                     F - 13

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 11 - INCOME TAXES:

     The income tax expense (benefit) is comprised of the following:

                   For the Three Months Ended      For the Year Ended
                           March 31,                  December 31,
                   ---------------------------     -------------------
                       1997            1996          1996        1995
                   ------------     ----------     -------     -------

     CURRENT:
       Federal     $     -          $  (7,735)   $(50,709)     $39,050
       State             -             (4,065)    (18,622)      17,095
     DEFERRED: 
       Federal           -             (4,165)     (4,165)      (3,000)
       State             -             (2,035)     (2,035)      (1,450)
                   ------------     ----------   ---------     -------
                   $     -           $(18,000)   $(75,531)     $51,695
                   ============     ==========   =========     =======

     The Company has net operating loss  carryforwards  as of December 31, 1996,
     of  approximately  $400,000,  which may be applied  against  future taxable
     income, and which expire in various years beginning after 2011. Since there
     is no assurance  that the Company will generate  future  taxable  income to
     utilize  the  deferred  tax asset  resulting  from its net  operating  loss
     carryforwards, the Company has not recognized this asset.

     Due to the carryback of the 1996 loss to previous  years,  the Company will
     recoup the maximum amount  refundable for taxes it paid. The following is a
     reconciliation  of the maximum  statutory federal tax rate to the Company's
     effective tax rate:

                                                  For the Year Ended
                                                      December 31,
                                                 1996            1995

     Federal statutory rate                     (34.0%)          34.0%
     State income taxes                          (7.0)            7.9
     Other - benefit from tax loss carryback     29.3            (2.0)
                                                ------           -----
                                                (11.7%)          39.7%
                                                ======           =====

NOTE 12 - COMMITMENTS:

     (a)  In October  1996,  the Company  entered into a lease,  for its current
          executive  offices,  which provides for base annual rental of $85,000.
          This lease,  which is for an initial term of five years, has scheduled
          annual  increases,  and can be  renewed  for an  additional  five year
          period. The total amount of the base rent payments is being charged to
          expenses  using the  straight-line  method over the term of the lease.
          The  Company has  recorded a deferred  credit to reflect the excess of
          rent expense  over cash  payments  since the  inception of this lease.
          Previously,  the Company was occupying space pursuant to a lease which
          expires in March 1997. The Company  elected to write-off the remaining
          balance of  unamortized  leasehold  improvements  on this old space of
          $5,378 during 1996.



                                     F - 14

<PAGE>



                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 12 - COMMITMENTS (Continued):

          The Company also sublets to an unaffiliated  third party,  space which
          was previously  utilized as its executive  offices under a lease which
          expires in February  1998. As of March 31, 1997 and December 31, 1996,
          the Company had a remaining  accrued  liability  of $9,584 and $12,198
          which  represents  the net cost to the  Company  in  excess  of rental
          income.

          Total  net  rent  expense  for  operating  leases,  consisted  of  the
          following:

<TABLE>
<CAPTION>
                                          For the Three Months         For the Year Ended
                                             Ended March 31,                December 31,
                                        -----------------------       -----------------------
                                            1997        1996             1996          1995
                                        ----------    ---------       -----------     -------

         <S>                            <C>            <C>            <C>             <C>    
          Minimum rentals                  $32,918      $10,050       $  48,677       $39,544
          Sublease rentals                  (4,500)      (4,500)        (18,000)       (1,500)
                                        ----------    ---------       ----------      -------
            Total net rent expense         $28,418    $   5,550       $  30,677       $38,044
                                        ==========    =========        ==========      ======

</TABLE>

          At December  31,  1996,  future  minimum  rentals  (based upon the new
          space) and sublease income are as follows:

                           Total           Sublease
                           Rent            Income              Net

          1997           $  95,428          $18,000          $ 77,428
          1998              87,616            3,000            84,616
          1999              87,975             -               87,975
          2000              93,075             -               93,075
          2001              72,675             -               72,675
                          --------           ------           -------
          Total           $436,769          $21,000          $415,769
                          ========          =======           ========

     (b)  The Company also leases  certain  types of equipment  under  operating
          leases which expire at various  dates through  1999.  Lease  payments,
          which are charged to operations,  aggregate  approximately  $1,100 per
          month.

     (c)  The  Company  is also  committed  to  provide  post-contract  customer
          support, to two of its customers through a third-party  provider.  The
          agreement with the third party  provides for monthly  payments of $483
          and expires in July 1997.

     (d)  Effective  October 1, 1996,  the  Company  entered  into a  three-year
          employment  agreement  with the  Chairman  of its Board of  Directors,
          whereby he will also serve as Chief Executive  Officer of the Company.
          This  agreement  provides  for annual  compensation  of $250,000 and a
          signing bonus based on a fixed formula.  See Note 14(a) re: Subsequent
          Events.

          Effective  October 1, 1996,  the  Company  entered  into a  three-year
          employment  agreement with its President and Chief Operating  Officer.
          This  agreement  provides  for annual  compensation  of $125,000 and a
          signing bonus of $15,000. See Note 14(a) re: Subsequent Events.


                                     F - 15

<PAGE>


                                Compu-DAWN, Inc.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996 AND 1995
                  (Information as of and for the Periods Ended
                      March 31, 1997 and 1996 is unaudited)


NOTE 12 - COMMITMENTS (Continued):

          The  agreements  with both of these  officers  provide for  continuing
          automatic one year extensions, increases as determined by the Board of
          Directors, annual bonuses based on sales and pretax income and include
          provisions for termination and covenants not to compete.  In addition,
          the  agreements  provide for common  stock  option  grants  based upon
          levels of Company earnings.

          In January  1997,  the Company  entered into a  three-year  employment
          agreement with an employee to serve as the Company's Chief  Technology
          Officer. Such agreement provides for annual base salaries of $200,000,
          $225,000  and   $250,000  in  the  first,   second  and  third  years,
          respectively.  Other  terms of this  employment  agreement  conform in
          structure  to the material  provisions  of the  employment  agreements
          described above.

   
     (e)  The Company has entered into two  business  alliance  agreements  with
          large public network  providers and one master  supplier  relationship
          agreement  with a large  computer  system  integrator.  The purpose of
          these  arrangements  is to  provide  the  Company  with the  necessary
          resources  needed to establish a presence  with the larger size public
          safety market segment.  The business alliance  agreements  provide for
          the Company to promote and/or market  certain  products of the network
          providers   to  customers  in  certain   specified   territories,   in
          conjunction  with the Company being allowed to market its own products
          to those customers and to establish  technical support  relationships.
          The Company is entitled to a percentage of the fees generated (ranging
          from 6-12%) by  customers  obtained  subject to certain  minimums  and
          restrictions.  The master supplier agreement provides that the Company
          has granted a non-exclusive  license to the supplier to make available
          to its  customers,  the Company's  products.  The Company on the other
          hand, has the right to use the  supplier's  software in performing its
          obligations  on any  project on such  customers.  The  agreement  also
          provides for the Company to receive consulting fees for any consulting
          services provided,  product license fees and support services fees, if
          applicable.

          To date,  no revenues  have been  generated  from the  above-mentioned
          arrangements.
    



NOTE 13 - PROPOSED INITIAL PUBLIC OFFERING:

     The Company is preparing to undertake an initial public offering ("IPO") of
     1,200,000  shares of its common stock at a price of $5.00 per share,  or an
     aggregate of  approximately  $4,700,000 of net  proceeds.  The net proceeds
     from this  offering  will be used to repay the  promissory  notes  from the
     private  offering (see Note 7), build a staff of regional sales managers to
     cover the United States and for marketing, product development, etc.

     The  proposed  offering  also covers the resale of an  aggregate of 389,200
     (see Note 14b) shares of common stock  underlying  the  warrants  issued in
     connection  with the debt  offering  and an  aggregate  of  250,250  shares
     currently held by certain shareholders. The Company will not receive any of
     the proceeds from the resale of these shares.

                                      F-16
<PAGE>

NOTE 14 - SUBSEQUENT EVENTS:

     (a)  The Company  had accrued  compensation  payable to two  officers  (the
          President  and the Chairman of the Board) in the  aggregate  amount of
          $125,000 as of March 31, 1997. In April 1997,  the officers  agreed to
          convert  $115,000  of  such  compensation  into  common  shares  at  a
          conversion  price of $5.00 per share (the IPO price),  such conversion
          to occur upon the consummation of the IPO. See Note 13.

     (b)  In April 1997,  the holders of the bridge notes (see Note 7) agreed to
          (i) increase the exercise  price of the five year  warrants  issued to
          them from $.50 per warrant to $3.00 per warrant and (ii)  increase the
          holding period of these warrants from six months to two years from the
          effective date of the IPO.

          In  connection  with an  agreement  reached with certain of the bridge
          noteholders,  the Company  canceled bridge warrants to purchase 42,000
          shares.  The  number of shares  underlying  the  bridge  warrants  has
          therefore been reduced from 431,200 to 389,200 common shares.

     (c)  In April 1997,  the  Chairman  of the Board of the  Company  agreed to
          convert a note  payable to him by the Company (see Note 8) into common
          shares at a  conversion  price of $5.00 per share (the IPO price) upon
          the  consummation  of such IPO. In addition,  this  officer  agreed to
          provide a $500,000 credit line to the Company (at terms similar to the
          $200,000  loan) for a period of two years.  To date,  the  Company has
          borrowed  $200,000  against  this new  $500,000  credit  line which is
          payable in eight equal quarterly installments.

                                     F - 17

<PAGE>


<PAGE>



     No  dealer,  salesman  or  other  person  has been  authorized  to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company or the  Underwriter.  Neither the delivery
of this  Prospectus  nor any sale made hereunder  shall under any  circumstances
create  any  implication  that  there has been no change in the  affairs  of the
Company since the date hereof.  This  Prospectus does not constitute an offer 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.
- --------------

                    TABLE OF CONTENTS
                                                                    Page
Prospectus Summary......................................................
Risk Factors............................................................
Use of Proceeds.........................................................
Dilution................................................................
Capitalization..........................................................
Dividend Policy.........................................................
Bridge Financing........................................................
Management's Discussion and Analysis of
   Financial Condition and Results of
   Operations...........................................................
Business................................................................
Management..............................................................
Principal and Selling Stockholders......................................
Certain Relationships and Related Transactions..........................
Description of Securities...............................................
Underwriting............................................................
Legal Matters...........................................................
Experts.................................................................
Additional Information..................................................
Financial Statements....................................................
                                                          --------------

       Until , 1997 (25 days  after the date of this  Prospectus),  all  dealers
effecting   transactions   in  the   registered   securities,   whether  or  not
participating  in this  distribution,  may be required to deliver a  Prospectus.
This is in addition to the  obligation  of dealers to deliver a Prospectus  when
acting  as  underwriters  and  with  respect  to  their  unsold   allotments  or
subscriptions.








                        1,200,000 Shares of Common Stock








                                COMPU-DAWN, INC.












                                   PROSPECTUS














                               E. C. Capital, Ltd.










                                                                   , 1997




<PAGE>



                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

     Article X of the Company's  Certificate  of  Incorporation  eliminates  the
personal liability of directors to the Company and its stockholders for monetary
damages  for  breach of  fiduciary  duty as a  director  to the  fullest  extent
permitted by Section 102 of the Delaware General  Corporation Law, provided that
this provision  shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or  omissions  not in good  faith  or  which  involve  intentional
misconduct or a knowing violation of law, (iii) arising under Section 174 of the
Delaware General Corporation Law (with respect to unlawful dividend payments and
unlawful stock purchases or redemptions), or (iv) for any transaction from which
the director derived an improper personal benefit.

     Additionally,  the Company has included in its Certificate of Incorporation
and its by-laws provisions to indemnify its directors,  officers,  employees and
agents and to purchase  insurance  with respect to liability  arising out of the
performance  of their duties as  directors,  officers,  employees  and agents as
permitted by Section 145 of the Delaware  General  Corporation law. The Delaware
General  Corporation  law provides  further that the  indemnification  permitted
thereunder  shall  not be  deemed  exclusive  of any  other  rights to which the
directors,  officers,  employees and agents may be entitled  under the Company's
by-laws, any agreement, vote of stockholders or otherwise.

     The  effect of the  foregoing  is to  require  the  Company  to the  extent
permitted by law to indemnify the officers,  directors,  employees and agents of
the  Company  for any claim  arising  against  such  persons  in their  official
capacities if such person acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.

     In connection  with the Offering,  the  Underwriter has agreed to indemnify
the Company,  its directors,  and each person who controls it within the meaning
of Section 15 of the Act with respect to any  statement in or omission  from the
registration  statement or the Prospectus or any amendment or supplement thereto
if such statement or omission was made in reliance upon information furnished in
writing to the Company by the Underwriter specifically for or in connection with
the  preparation of the  registration  statement,  the  Prospectus,  or any such
amendment or supplement thereto.

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


<PAGE>




Item 25. Other Expenses of Issuance and Distribution.

     The estimated expenses to be incurred by the Company in connection with the
issuance  and  distribution  of the  securities  being  registered,  other  than
underwriting discounts and commissions, are estimated as follows:



     SEC Registration Fee                                 3,359.78
     NASD Filing Fee                                      2,000.00
     Blue Sky Fees and Expenses                          25,000.00
     Registrant's Counsel Fees and Expenses             150,000.00
     Accountant's Fees and Expenses                      85,000.00
     Underwriter's Non-Accountable Expense Allowance    180,000.00
     Underwriter's Consulting Fee                       108,000.00
     Printing and Engraving Expenses                     50,000.00
     NASDAQ Listing Fees                                 10,000.00
     Blue Sky Counsel Fees                               35,000.00
     Transfer Agent and Registrar's Fees and Expenses    15,000.00
     Miscellaneous Expenses                              36,640.22
                                                       -----------
     Estimated Total                                   $700,000.00
                                                        ==========


Item 26.          Recent Sales of Unregistered Securities.

     The Company sold the  following  Common Shares during the past three years.
The number of Common Shares referred to herein gives effect to a 325 for 1 stock
split  effectuated  on  October  18,  1996  in  connection  with  the  Company's
reincorporation in the State of Delaware.

     In October 1996, the Company  borrowed  $770,000 from the following  bridge
lenders  (the  "Bridge   Lenders")  in  a  bridge  financing   transaction.   In
consideration  for making the loans,  the Company issued Bridge  Warrants to the
Bridge  Lenders for the purchase of an aggregate of 431,200  Common  Shares at a
price of $.50 per share.



                                      II-2

<PAGE>


                                           Number of
                                       Common Shares
  Name                              Underlying Warrants

Dong W. Lew                                    39,200
Mark Honigsfeld                                33,600
Robert H. Solomon                              25,200
Murray Gross                                   28,000
Harvey Bibicoff                                70,000
Apollo Equities                                56,000
James Favia                                    42,000
Sydney Gluck                                   22,400
Steven Wallitt                                 16,800
John Eckhoff                                   14,000
Kenneth Moschetto                              14,000
Lawrence Levine                                11,200
Maretza Jimenez
  Campos                                       11,200
Lori Siegal                                    11,200
Horizon Acquisitions                            8,400
Stuart Copperman                                5,600
Teddy Selinger                                  5,600
John P. Hefferon                                5,600
Scott Cohen                                     2,800
Peter Guardino                                  2,800
James Portnof                                   2,800
Windsor L. P.                                   2,800
                                             ---------

         Total                                431,200


     Subsequent to the closing of the bridge financing transaction, the exercise
price of the Bridge  Warrants was  increased to $3.00 per share and Messrs.  Lew
and Cohen agreed to the cancellation of the Bridge Warrants issued to them.

     In August 1996, the Company sold an aggregate of 480,300 Common Shares at a
price  of  $.30  per  share  to  the   following   persons  for  the   following
consideration:

                                    Number of                      Aggregate
Name                                Common Shares                 Consideration

Murray Gross                         50,000                         $15,000.00
Robert LoRusso                      100,100                          30,030.00
Mark Honigsfeld
 Living Trust                       330,200                          99,060.00
                                    -------                          ---------
 Total                              480,300                        $129,090.00
                                    =======                          ==========


     Additionally,  in August 1996,  the Company  issued 25,075 Common Shares to
Mr. Gross in payment of  consulting  fees of $7,522.50  in  connection  with the
Company's marketing  activities and 75,075 Common Shares to Robert H. Solomon in
payment of legal and consulting fees of $22,522.50.

     In April  1997,  the  Company  issued  233,000  Common  Shares  to the Mark
Honigsfeld  Living Trust upon the exercise of a certain option by Mr. Honigsfeld
for the purchase of such shares at an exercise price of $.30 per share.

                                      II-3

<PAGE>



     All the foregoing  transactions  were private  transactions not involving a
public  offering  and  were  exempt  from  the  registration  provisions  of the
Securities Act pursuant to Section 4(2) thereof. The bridge financing securities
were  sold  only to  accredited  investors.  The  Company  determined  that  the
stockholders  to whom the Company  issued  Common  Shares in the August 1996 and
April 1997 transactions discussed above were sophisticated investors.  Except as
otherwise  indicated  below,  sales of the securities were without the use of an
underwriter,  and the  certificates  evidencing the  securities  relating to the
foregoing  transactions bear restrictive legends permitting the transfer thereof
only upon  registration  of such securities or an exemption under the Securities
Act.

     The  Underwriter of this Offering acted as placement  agent for the Company
in connection with the bridge financing  transaction on a "best efforts,  all or
none"  basis.  The  Underwriter  received  a  placement  fee of 10% of the gross
proceeds of the Bridge Financing transaction,  or $77,000, and a non-accountable
expense  allowance  of  3%  of  the  gross  proceeds  of  the  Bridge  Financing
transaction or $23,100.  The Company also paid the fees and disbursements of the
Underwriter's  counsel in connection  with  representing  the Underwriter in its
capacity of placement agent in the Bridge Financing transaction.

Item 27.          Exhibits.

Exhibit
Number         Title of Exhibit


1.1  Form  of  Underwriting  Agreement  by  and  between  the  Company  and  the
     Underwriter.*

1.2  Form of Financial  Consulting  Agreement  between the  Underwriter  and the
     Company.*

2.1  Agreement of Merger between the Company and Coastal Computer Systems, Inc.,
     a New York corporation.*

3.1  Articles of Incorporation of the Company.*

3.2  By-Laws of the Company.*

4.1  Specimen Common Share Certificate.*

4.2  Form of Underwriter's Common Share Purchase Warrant.*

5.1  Opinion of Certilman Balin Adler & Hyman, LLP, counsel for the Company.*

10.1 Restated  and  Amended  Employment  Agreement  dated as of  October 1, 1996
     between the Company and Dong W. Lew.*

10.2 Restated  and  Amended  Employment  Agreement  dated as of  October 1, 1996
     between the Company and Mark Honigsfeld.*


                                      II-4
<PAGE>



10.3 $70,000  Promissory  Note dated  October  30,  1996 from Dong W. Lew to the
     Company.*

10.4 Form of Warrant between the Company and each of the Bridge Lenders.*

10.5 1996 Stock Option Plan.*

10.6 Lease dated October 1, 1996 between Summit Equities Corp. and the Company.*

10.7 Pledge and  Hypothecation  Agreement  dated  October 30,  1996  between the
     Company and Dong W. Lew.*

10.8 Credit  Agreement  dated  January  20,  1997  between  the Company and Mark
     Honigsfeld.*

10.9 $100,000  Promissory  Note dated  January 20, 1997 from the Company to Mark
     Honigsfeld.*

10.10 $50,000 Promissory Note dated  February 19, 1997 from the Company to Mark
      Honigsfeld.*

10.11 $50,000 Promissory Note  dated  March 5,  1997 from the  Company  to Mark
      Honigsfeld.*

10.12 Form of Indemnification Agreement between the Company and the  Company's
      directors and officers.*

10.13 Consulting Agreement dated September 27, 1996 between the Company and Alan
      Daniels and Geraldine Lum Daniels.*

10.14 Employment Agreement  dated  January 6, 1997 between the Company and Louis
      Libin.*

10.15 Amended and Restated  Credit  Agreement  dated April 30, 1997  between the
      Company and Mark Honigsfeld.*

10.16 $100,000 Promissory  Note  dated  May 8,  1997  from the  Company  to Mark
      Honigsfeld.*

   
10.17 $100,000 Promissory  Note  dated  May 28,  1997 from the  Company  to Mark
      Honigsfeld.*


10.18 Mobile Data Services  Business  Agreement  dated as of  November  15, 1996
      between the Company, and GTE Mobilnet Service Corp.
    


                                      II-5

<PAGE>



   
10.19  Wireless Data Channels  Program  Agreement  dated as of February 19, 1997
       between the Company and AT&T Wireless Data, Inc.

10.20  Master Supplier Agreement  dated as of March 3, 1997  between the Company
       and Data General Corporation.
    

23.1   Consent of Lazar, Levine & Company LLP, independent auditors.

23.2   Consent of Certilman Balin Adler & Hyman,  LLP  (included  in its opinion
       filed as Exhibit 5.1 hereto).

27.1   Financial Data Schedule.*

*Previously filed.

Item 28.          Undertakings.

(a)      Rule 415 Offering.

         The undersigned Company will:

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

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

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

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

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

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

(b)      Equity Offerings of Nonreporting Small Business Issuers.

     The  undersigned  Company will provide to the  Underwriter,  at the closing
specified  in the  underwriting  agreement,  Common Share  certificates  in such
denominations  and  registered in such names as required by the  Underwriter  to
permit prompt delivery to each purchaser.


(c)      Indemnification.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors,  officers and controlling  persons of the Company
pursuant  to  the  provisions  referred  to  in  Item  24 of  this  Registration
Statement, or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.

     In the event  that a claim for  indemnification  against  such  liabilities
(other  than the  payment  by the  Company  of  expenses  incurred  or paid by a
director,  officer  or  controlling  persons of the  Company  in the  successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling  person in connection with the securities being  registered,  the
Company  will,  unless in the opinion of its counsel the matter has been settled
by  controlling  precedent,  submit to a court of appropriate  jurisdiction  the
question  whether  such  indemnification  by  it is  against  public  policy  as
expressed in the Securities  Act and will be governed by the final  adjudication
of such issue.

(d)      Rule 430A.

         The undersigned Company will:

(1)      for  determining  any liability  under the  Securities  Act,  treat the
         information  omitted from the form of prospectus  filed as part of this
         Registration  Statement in reliance  upon Rule 430A and  contained in a
         form of prospectus  filed by the Company under Rule 424(b)(1) or (4) or
         497(h) under the Securities Act, as part of this Registration Statement
         as of the time the Commission declared it effective;

(2)      for  determining  any liability  under the  Securities  Act, treat each
         post-effective  amendment  that  contains a form of prospectus as a new
         registration  statement for the securities  offered in the Registration
         Statement,  and that  offering  of the  securities  at that time as the
         initial bona fide offering of those securities.

(e)      Rule 424(c) Supplement; Post Effective Amendment.

         The  undersigned  Company  will, in the event the  Underwriter  in this
         Offering  enters into  transactions  with the Selling  Stockholders  or
         waives   the   lock-up   restrictions   applicable   to  such   Selling
         Stockholders' Common Shares:

(1)      involving from 5% up to 10% of the Selling Stockholders' Common Shares,
         file "sticker"  supplements  to the Prospectus  pursuant to Rule 424(c)
         under the Securities Act; or

                                      II-7

<PAGE>




(2)      involving over 10% of the Selling  Stockholders'  Common Shares, file a
         post-effective amendment to the Registration Statement.




                                      II-8

<PAGE>



                                   SIGNATURES

   
     In  accordance  with the  requirements  of the  Securities  Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that it
meets  all of the  requirements  for  filing on Form SB- 2 and  authorized  this
Registration  Statement  to be signed on its behalf by the  undersigned,  in the
County of Nassau, State of New York, on June 4, 1997.
    

                                       COMPU-DAWN, INC.

                                       By:/s/ Mark Honigsfeld
                                       Mark Honigsfeld, Chief Executive Officer


     In  accordance  with the  requirements  of the  Securities  Act of 1933, as
amended, this Registration  Statement was signed by the following persons in the
capacities and on the dates stated.

     Signature                      Title                            Date


   
/s/ Mark Honigsfeld            Chairman of the Board,            June 4, 1997
- --------------------------
Mark Honigsfeld                Chief Executive Officer,
                               Secretary and Director
                               (Principal Financial Officer
                               and Principal Accounting Officer)

 *                             President, Chief Operating        June 4, 1997
- -------------------------      Officer, Treasurer and
Dong W. Lew                    Director
                                           

 *                             Director                          June 4, 1997
- -------------------------
Louis Libin

 *                             Director                          June 4, 1997
- -------------------------
William D. Rizzardi

 *                             Director                          June 4, 1997
- -------------------------
Harold Lazarus, Ph.D.
    


*By: /s/ Mark Honigsfeld
    --------------------
    Mark Honigsfeld
    Attorney-in Fact


                                      II-9

<PAGE>

                     MOBILE DATA SERVICES BUSINESS AGREEMENT


     THIS  AGREEMENT  (This  "Agreement")  is  entered  into as of the 15 day of
November  1996 by and between GTE Mobilnet  Service  Corp.  on its behalf and on
behalf  of  its  affiliates,  GTE  Mobilnet  Incorporated  and  Contel  Cellular
Incorporated ("GTE Mobilnet") and Compu-DAWN, Inc. ("Business Representative").

     WHEREAS, GTE Mobilnet wishes to market Mobile Data Services to
Customers  through  a variety  of direct  and  indirect  distribution  channels,
including business representatives; and

     WHEREAS,  Business  Representative  wishes  to offer to  Customers  various
Applications  which  will use  Mobile  Data  Services  and  intends  to  solicit
Customers to GTE Mobilnet for their Mobile Data Services needs;

     NOW THEREFORE, in consideration of these premises, the mutual
covenants exchanged below and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto, wishing to be
legally bound, hereby agree as follows:

1.        DEFINITIONS

         Unless otherwise  indicated,  definitions of terms  capitalized in this
         Agreement are set forth in Exhibit A attached hereto.

2.       ESTABLISHMENT OF RELATIONSHIP AND ACKNOWLEDGMENT

     2.1  Appointment:  GTE Mobilnet hereby authorizes Business  Representative,
          in conjunction with the marketing of the  Application(s)  described in
          Exhibit B, to solicit  and refer  potential  Customers  located in the
          Territory  described  in  Exhibit  B to GTE  Mobilnet  for the sale of
          Mobile  Data  Services,  subject  only  to the  terms  and  conditions
          contained  herein.  This Agreement  shall not be construed to create a
          joint venture, partnership, employment relatonship or franchise or any
          other legal  relationship  between the  parties.  Neither  party shall
          share or be  responsible  for the debts and  liabilities  of the other
          party, or have the authority to legally bind the other in any manner.

     2.2  Business Representative's Acknowledgment of GTE Mobilnet's Alternative
          Distribution  Rights:  GTE  Mobilnet  shall not be liable to  Business
          Representative  in any  manner  if any sale,  activation  or order for
          Mobile Data Services, wireless data applications, or other services or
          products  is  obtained by GTE  Mobilnet  or by any third  party,  even
          though  Business  Representative  may have  previously  solicited  the
          Customer  who  purchased,  activated  or  made  such  order.  Business
          Representative acknowledges that GTE Mobilnet

                                        1

<PAGE>



          will  enter  into  different  financial  and other  arrangements  with
          various participants in alternative  distribution  channels (including
          direct sales, agents,  Resellers and other Business  Representatives),
          and that GTE Mobilnet  shall not be liable to Business  Representative
          in  any  manner  if  Business  Representative's  Compensation,   joint
          marketing activities, benefits, responsibilities, Territory, rates, or
          other  categories  of  Mobile  Data  Services  hereunder  are  not  as
          favorable  as those  provided  by GTE  Mobilnet  to  others.  Business
          Representative  also  acknowledges that GTE Mobilnet may now or in the
          future offer additional  Wireless  Services or applications  which GTE
          Mobilnet is not obligated to allow Business Representative to offer.

     2.3  Valid  Execution;  Term:  This Agreement,  and any amendments  hereto,
          shall be  effective  only  after its  execution  by an officer of both
          Business  Representative and GTE Mobilnet.  The term of this Agreement
          shall  be  two  (2)  years  from  the  date  hereof.  It is  expressly
          understood  and agreed that neither party has any right or expectation
          of renewal or extension of this  Agreement  beyond the initial two (2)
          year term.

     2.4  Regulatory  Matters:  This Agreement  shall at all times be subject to
          local, state, and federal regulatory agencies having jurisdiction over
          the provision of Mobile Date Services and any Applications therefor.

     2.5  Mobile Data Services  Rates:  GTE Mobilnet shall  determine the rates,
          charges,  and  categories  of Mobile Data  Services to be presented to
          Customers  and  set  forth  in the  CSA.  GTE  Mobilnet,  in its  sole
          discretion,  may add, delete, suspend, or modify its rates, charges or
          categories  for Mobile  Data  Services,  and  determine  whether  such
          changes apply to both existing or future  Customers,  or apply only in
          certain  geographic  markets.   GTE  Mobilnet  shall  notify  Business
          Representative of each such modification  which applies to any part of
          the Territory assigned hereunder to Business Representative.  Business
          Representative  shall not  represent or agree that  Customers  will be
          charged for GTE  Mobilnet's  Mobile  Data  Services at any rates other
          than those determined by GTE Mobilnet.

     2.6  No Guarantee of Profit: Business representative  acknowledges that GTE
          Mobilnet  has  made  no  representations  or  guarantees,  express  or
          implied,  regarding  the profit that Business  Representative  will or
          might  make.  Business  Representative  assumes  all  financial  risks
          associated with its activities under this Agreement.

     2.7  Fee Paid to GTE Mobilnet: GTE Mobilnet is in the process of marketing,
          communicating  and  selling  Mobile  Data  Services to a wide range of
          businesses,  governmental  entities and other  accounts,  directly and
          through

                                        2

<PAGE>



          various channels of distribution.  Therefore, if, during such process,
          GTE  Mobilnet  is  responsible   for   identifying  and  qualifying  a
          customer's  intent to purchase  Mobile Data  Services and GTE Mobilnet
          offers in writing to include Business  Representative  in a particular
          business opportunity because of its application and/or services,  as a
          provider of products and/or  services to such customer,  then Business
          Representative  agrees  to pay to GTE  Mobilnet  a sum  equal  to five
          percent   (5%)  of  one   year's   revenues   received   by   Business
          Representative, or such other amount as the parties may mutually agree
          upon,  for providing  systems  integration,  software,  hardware,  and
          implementation  services  that results in customer  acceptance  of the
          system, less the total amount of Business Representative's  documented
          pass-through costs.

     2.8  TEXAS ONLY:  DISCLAIMER OF TEXAS  DECEPTIVE TRADE PRACTICES - CONSUMER
          PROTECTION ACT. AGENT SPECIFICALLY ACKNOWLEDGES AND AGREES THAT IT HAS
          KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE
          IT TO  EVALUATE  THE  MERITS  AND  RISKS OF ITS  TRANSACTION  WITH GTE
          MOBILNET,  AND THAT IT IS NOT IN A SIGNIFICANTLY  DISPARATE BARGAINING
          POSITION WITH GTE MOBILNET. AGENT SPECIFICALLY ACKNOWLEDGES THAT IT IS
          NOT A CONSUMER (AS DEFINED IN THE TEXAS  DECEPTIVE  TRADE  PRACTICES -
          CONSUMER  PROTECTION ACT) AND THAT THE TEXAS DECEPTIVE TRADE PRACTICES
          CONSUMER  PROTECTION  ACT DOES NOT APPLY TO THE  AGENT.  TO THE EXTENT
          THAT  THE  AGENT IS A  BUSINESS  CONSUMER  (AS  DEFINED  IN THE  TEXAS
          DECEPTIVE TRADE PRACTICES  CONSUMER  PROTECTION ACT) WITH ASSETS OF $5
          MILLION  OR MORE  ACCORDING  TO ITS MOST  RECENT  FINANCIAL  STATEMENT
          PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING  PRINCIPLES,
          THE AGENT  EXPRESSLY  DISCLAIMS AND WAIVES ALL PROVISIONS OF THE TEXAS
          DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT OTHER THAN SECTION
          17.555.

3.       ARBITRATION.

          BUSINESS  REPRESENTATIVE  AND  GTE  MOBILNET  HEREBY  AGREE  THAT  ALL
          DISPUTES ARISING OUR OF OR RELATING IN ANY WAY TO THIS AGREEMENT WHICH
          CANNOT BE  RESOLVED  THROUGH  GOOD  FAITH  NEGOTIATIONS  TO THE MUTUAL
          SATISFACTION OF BOTH PARTIES WITHIN THIRTY (30) CALENDAR DAYS (OR SUCH
          LONGER PERIOD AS MAY BE MUTUALLY AGREED UPON BY THE PARTIES) AFTER THE
          COMPLAINING PARTY HAS NOTIFIED THE OTHER PARTY OF THE

                                        3

<PAGE>



         COMPLAINT,  SHALL BE FINALLY SETTLED BY BINDING  ARBITRATION IN ATLANTA
         BEFORE  THE  ATLANTA  REGIONAL  OFFICE  OF  THE  AMERICAN   ARBITRATION
         ASSOCIATION BY THREE (3)  ARBITRATORS  IN ACCORDANCE  WITH THE RULES OF
         COMMERCIAL ARBITRATION OF THE AMERICAN ARBITRATION  ASSOCIATION THEN IN
         EFFECT AND THE  ARBITRATORS'  DECISION  SHALL BE FINAL AND BINDING UPON
         THE PARTIES. IN DECIDING ANY CLAIM, THE ARBITRATORS SHALL APPLY GEORGIA
         LAW; PROVIDED, HOWEVER, THAT THE ARBITRATORS SHALL HAVE NO AUTHORITY TO
         AWARD   CONSEQUENTIAL   DAMAGES   OR   PUNITIVE   DAMAGES   UNDER   ANY
         CIRCUMSTANCES.

4.       BUSINESS REPRESENTATIVE RESPONSIBILITIES AND OBLIGATIONS

     Business  Representative  agrees  to  the  following  responsibilities  and
obligations:

          4.1  Services   Provided   by   Business   Representative:    Business
               Representative   shall   provide  the  Sales   Services  and  any
               Implementation  Services and Technical Support Services described
               in  Schedule  1  to  Customers   for  Business   Representative's
               Applications  and GTE Mobilnet's  Mobile Data Services.  Business
               Representative shall be solely responsible and bear all liability
               for its  performance  of such services.  Business  Representative
               acknowledges  that the  purpose of the  Agreement  is the sale of
               Mobile Data Services only.

          4.2  Identification:  Business Representative shall identify itself as
               authorized by GTE Mobilnet to solicit potential Customers for GTE
               Mobilnet.  Such  designation  shall be specifically  limited to a
               form and style prescribed by GTE Mobilnet and shall automatically
               cease with the termination or expiration of this Agreement.

          4.3  Business  Representative's  Responsibility  for Its Employees and
               Personnel:  Business  Representative  shall  be  responsible  for
               ensuring  compliance  with this  Agreement by its  employees  and
               personnel, whether permanent,  temporary,  contract or otherwise,
               employed  or  otherwise  engaged by  Business  Representative  to
               perform  services under this Agreement.  Business  Representative
               shall be liable to GTE  Mobilnet  for any  damages  suffered as a
               result of non-compliance.

          4.4  Business  Representative's  Agents: Business Representative shall
               not have the right to employ,  appoint,  engage or otherwise  use
               Agent(s)  in  the  performance  of  its  obligations  under  this
               Agreement,  unless  Business  Representative  receives  the prior
               written consent of GTE Mobilnet.

          4.5  Public  Statements or Press  Releases:  Business  Representatives
               agrees not to

                                        4

<PAGE>



               initiate  any  public   relations   activities   related  to  GTE
               Mobilnet's  Mobile Date Services,  including  without  limitation
               news releases,  news  conferences,  news briefings,  or any other
               type of function involving  reporters,  editors or news directors
               of any news organizations,  without prior written approval of GTE
               Mobilnet. Further, Business Representative agrees to refer to GTE
               Mobilnet all  questions  from news  organizations  related to GTE
               Mobilnet or GTE Mobilnet's Mobile Data Services.

          4.6  Trademarks and Related Matters:  Business  Representative  is not
               granted  any  rights  in  and  is  not  authorized,  licensed  or
               permitted  to  use  the  Marks  of  GTE  Mobilnet  or  any of its
               Affiliates except for the sole purpose of Business Representative
               identifying  itself as authorized to solicit and refer  potential
               Customers to GTE Mobilnet.  In connection  with this limited use,
               GTE  Mobilnet  shall  furnish  the  list of Marks  that  Business
               Representative  is permitted to use and the rules and regulations
               pertaining   to  use   of  the   Marks,   with   which   Business
               Representative   agrees  to  comply.  During  the  term  of  this
               Agreement and at any time thereafter, Business Representative and
               its  owner(s)  and  Affiliates  shall  not use any  identical  or
               confusingly similar mark or trade name, service mark,  trademark,
               advertising  logo,  insignia,  symbols or  decorative  designs to
               Marks   or   other   items   used  by  GTE   Mobilnet.   Business
               Representative  also  agrees  to  return  to  GTE  Mobilnet  upon
               termination  of  this  Agreement  or at  GTE  Mobilnet's  earlier
               request any advertising and marketing materials,  forms, training
               materials  or other  materials  containing  any GTE Mark or other
               materials relating to GTE's Mobile Data Services.

          4.7  Insurance:  Business Representative shall at all times during the
               term  hereof,  at  Business  Representative's  sole  expense,  be
               insured under a comprehensive  liability insurance policy against
               claims for bodily and personal injury,  death and property damage
               caused by or  occurring  in  conjunction  with the  operation  of
               Business  Representative's  business. GTE Mobilnet shall be named
               as an  additional  insured party on each policy.  Such  insurance
               coverage  shall  be  maintained  under  one or more  policies  of
               insurance  from a recognized  insurance  company  qualified to do
               business  within the  Territory,  providing  in the  aggregate  a
               minimum liability  protection of One Million Dollars ($1,000,000)
               per occurrence for bodily and personal injury and death,  subject
               to such deductibles as GTE Mobilnet  determines from time to time
               to be appropriate.  Each such insurance  policy shall provide for
               not less than thirty (30) days prior notice to all insured of any
               modification,     cancellation    or    non-renewal.     Business
               Representatives  shall furnish proof satisfactory to GTE Mobilnet
               that the insurance coverage required hereunder is in force.

5.       GTE MOBILNET RESPONSIBILITIES AND OBLIGATIONS

                                        5

<PAGE>



          5.1  No Warranties:  GTE MOBILNET MAKES NO WARRANTY, EITHER EXPRESS OR
               IMPLIED,  CONCERNING THE MOBILE DATA SERVICES,  INCLUDING WITHOUT
               LIMITATION,  WARRANTIES  OF  MERCHANTABILITY  OR  FITNESS  FOR  A
               PARTICULAR  USE OR  PURPOSE.  GTE  Mobilnet  shall in no event be
               liable for direct, indirect,  special,  consequential or punitive
               damages or for lost  profits  which are  suffered  or incurred by
               Business  Representative,  Customers  or any  other  persons  who
               utilize or rely upon Mobile Data  Services and which are a result
               of Mobile Data Services  System  downtime or isolated or systemic
               failures of or defects affecting either such services or Business
               Representative's  Products and Services.  GTE Mobilnet shall have
               no liability for Applications  related  failures or defects,  and
               GTE   Mobilnet's   liability  for  failures  or  defects  in  the
               performance  of Mobile  Data  Services  shall be  limited  to the
               refund of payments  received  by GTE  Mobilnet  for the  affected
               services.

          5.2  Customer:  Upon  approval and  acceptance  by GTE Mobilnet of the
               required  CSA or an order  for  Mobile  Data  Services  otherwise
               accepted by GTE Mobilnet,  the person or entity  ordering  Mobile
               Data  Services  shall  become a  Customer  of GTE  Mobilnet  with
               respect to such services.  GTE Mobilnet shall provide Mobile Data
               Services,  subject to the provisions in the CSA, to such Customer
               and shall be  responsible  for the billing and  collection of all
               charges for Mobile Data Services.

          5.3  Compensation:  GTE Mobilnet shall pay to Business  Representative
               Compensation  in accordance with the terms of Schedule 2 attached
               hereto, provided, however, that:

                  (a)      GTE Mobilnet  may, at its option,  forgo all payments
                           of Compensation otherwise due during periods in which
                           Business  Representative  fails materially to provide
                           the services set forth in Schedule 1; and

                  (b)      any  restrictions on the payment of Compensation  set
                           forth in this Agreement or in the Schedule, including
                           without limitation the deduction  provisions obtained
                           in  Section  8.2(b),  9.12 and  Schedule  2, shall be
                           enforceable  against any  Compensation due or paid to
                           Business Representative.

               5.4  Billing and Collections: GTE Mobilnet has the sole right and
                    responsibility  for  verifying  credit  information  and for
                    billing  of  and  collection  from  Customers  or  potential
                    Customers  or any money or charges for Mobile Data  Services
                    provided by GTE Mobilnet.


                                        6

<PAGE>



               5.5  Administration:   GTE  Mobilnet  shall  be  responsible  for
                    establishing the administrative procedure and guidelines for
                    processing Customer CSAs, and, if applicable, for procedures
                    for   Implementation   Services  provided  to  Customers  by
                    Business Representative.

               5.6  Sales Support:  As it deems  appropriate,  GTE Mobilnet may,
                    but is not obligated  to,  provide sales support to Business
                    Representative  under  this  Agreement.   That  support  may
                    include the  following,  some of which will be free and some
                    of which may,  with  prior  notice,  be charged to  Business
                    Representative   at  cost  to  GTE   Mobilnet:   promotional
                    literature,   sales  brochures,   sales  and  wireless  data
                    equipment   support,   sales   training,   and  training  in
                    administrative     procedures    and    system     operating
                    characteristics.

6.       DEFAULT

               6.1  Default by GTE Mobilnet:  GTE Mobilnet shall be in "Default"
                    of its  obligations  under this  Agreement  if GTE  Mobilnet
                    materially  breaches  this  Agreement and fails to cure such
                    breach within thirty (30) days after written  notice of such
                    breach is received by GTE Mobilnet by certified mail.

               6.2  Default by Business  Representative:  Each of the  following
                    shall constitute a "Default" by Business  Representative  of
                    its obligations under this Agreement:

                    (a)  Business  Representative (or one or more of its owners,
                         employees    or    Affiliates)    makes   a    material
                         misrepresentation   or  omission,   whether  verbal  or
                         written,  to induce  GTE  Mobilnet  to enter  into this
                         Agreement:

                    (b)  Business  Representative  makes an  assignment  for the
                         benefit  of  creditors  or files a  voluntary  petition
                         under  Title 11 of the United  States Code or under any
                         similar    state    insolvency    laws   or    Business
                         Representative  shall have an involuntary  petition for
                         bankruptcy  filed  against  it  under  Title  11 of the
                         United Sates Code and such involuntary  petition is not
                         dismissed  within  thirty  (30)  days;  or a trustee or
                         receiver   is   appointed   to   administer    Business
                         Representative's business or assets;

                    (c)  Business  Representative,  without  the  prior  written
                         consent  of GTE  Mobilnet,  violates  the rates  and/or
                         billing  provisions  of  Section  2.5  or  Section  5.4
                         hereof;

                    (d)  Business  Representative  engages in conduct  which GTE
                         Mobilnet

                                        7

<PAGE>



                    reasonably  believes  might  violate  any  federal  or state
                    antitrust laws or other consumer protection laws; or

                  (e)      Business  Representative  fails to  comply  with,  or
                           breaches,  any other provision or requirement of this
                           Agreement not  specifically set forth in this Section
                           6.2, or any tariff  relating to Mobile Data Services,
                           and, if such failure is capable of being cured,  does
                           not cure such  failure  within 30 days after  written
                           notice of such  failure  to comply  is  delivered  to
                           Business Representative.

7.       TERMINATION OF AGREEMENT

          7.1  Termination  by  Business  Representative.  Upon  Default  by GTE
               Mobilnet under Section 6.1 hereof,  Business  Representative  may
               give  notice  of  Default  by  providing  written  notice  to GTE
               Mobilnet of such Default, and the 30-day cure period described in
               Section 6.1 shall begin  effective upon delivery of the notice of
               Default to GTE Mobilnet by certified mail.

          7.2  Termination by GTE Mobilnet:

                    (a)  Regulatory and Contractual Requirements.  GTE Mobilnet,
                         at its sole option,  may terminate  this Agreement upon
                         thirty (30) days written notice if:

                    (I)  the  authorization  by the FCC or any other  regulatory
                         authority to provide cellular  telephone service is not
                         continued  in  substantially  the  same  form  and such
                         change, in GTE Mobilnet's sole discretion,  impacts, in
                         a materially  adverse manner, GTE Mobilnet's ability to
                         conduct its Mobile Data Services or cellular  business;
                         or

                           (ii)     Business   Representative  or  an  Affiliate
                                    thereof is granted  regulatory  authority to
                                    construct or operate  Mobile Data Service or
                                    any Wireless Services anywhere in the United
                                    States.

                    (b)  Default.   GTE  Mobilnet,   at  its  sole  option,  may
                         terminate  this  Agreement  effective  upon delivery of
                         written notice to Business Representative of Default by
                         Business Representative under Section 6.2 hereof.

                    (c)  Breach of Other  Agreement.  GTE Mobilnet,  at its sole
                         option,  may terminate  this  Agreement  effective upon
                         delivery of written notice to

                                        8

<PAGE>



                           Business  Representative  if Business  Representative
                           (or any Affiliate  thereof)  breaches its obligations
                           under any other  agreement  with GTE Mobilnet (or any
                           Affiliate thereof), and such agreement is terminated.

          7.3  Termination by Mutual Agreement: This Agreement may be terminated
               by mutual written agreement of the parties.

8.       REMEDIES

          8.1  Remedies of Business  Representative:  Business  Representative's
               sole  remedy for  Default by GTE  Mobilnet  under this  Agreement
               shall be termination  of this Agreement  pursuant to Section 7.1.
               Specifically,  except  for the  indemnification  obligations  set
               forth in Section 9.4, GTE  Mobilnet  shall have no liability  for
               any lost profits or consequential  damages even if advised of the
               possibility of such damages.  Notwithstanding the foregoing,  GTE
               Mobilnet shall pay to Business  Representative  any  Compensation
               owing to Business  Representative,  subject to all  deduction and
               off-set  provisions in this Agreement and any other amounts owing
               to GTE Mobilnet under Section 8.2 hereof.

          8.2  Remedies of GTE Mobilnet: GTE Mobilnet, in its discretion,  shall
               be entitled to exercise one or more of the following remedies for
               Default by Business Representative under this Agreement:

               (a)  Terminate this Agreement pursuant to Section 7.2 hereof;

               (b)  Deduct  from  Business  Representative's   Compensation  all
                    damages and costs  incurred  by GTE  Mobilnet as a result of
                    Business Representative's Default;

               (c)  Any other  remedy  available  to GTE  Mobilnet  at law or in
                    equity;    provided    however,    that   except   for   the
                    indemnification   obligations  set  forth  in  Section  9.4,
                    Business Representative shall have no liability for any lost
                    profits  or  consequential  damages  even if  advised of the
                    possibility of such damages.

                    GTE Mobilnet  may  simultaneously,  in its sole  discretion,
                    exercise one or more of the remedies to which it is entitled
                    hereunder.  GTE Mobilnet  shall not be deemed to have waived
                    any right, remedy, provision or option under this Agreement,
                    including  the right to  demand  exact  compliance  with the
                    terms of this  Agreement,  by virtue of  exercising,  or not
                    exercising,  any of its remedies  hereunder.  Failure by GTE
                    Mobilnet to exercise one or more of its remedies on

                                        9

<PAGE>



                    one or more  occasions  shall not  prohibit  the exercise of
                    such remedies subsequently.

9.       GENERAL PROVISIONS

          9.1  Business Representative Representations:  Business Representative
               represents  and warrants that the execution  and  performance  of
               this  Agreement will not conflict with or result in the breach of
               any other agreement or contract to which Business  Representative
               is a party. Business  Representative  further warrants that it is
               not  subject  to  any  limitation  or  restriction   which  would
               prohibit,    restrict   or   impede   Business   Representative's
               performance hereunder.

          9.2  DISCLAIMER OF WARRANTIES:  GTE MOBILNET MAKES NO WARRANTY, EITHER
               EXPRESS  OR  IMPLIED,  CONCERNING  THE  APPLICATIONS,   INCLUDING
               BUSINESS  REPRESENTATIVE'S   PRODUCTS  AND  SERVICES,   INCLUDING
               WITHOUT LIMITATION,  WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
               A PARTICULAR  USE OR PURPOSE OR OF GOOD AND  WORKMANLIKE  MANNER.
               GTE  MOBILNET  MAKES NO  WARRANTY,  EITHER  EXPRESS  OR  IMPLIED,
               CONCERNING  THE  PERFORMANCE  OF  THE   APPLICATIONS,   INCLUDING
               BUSINESS  REPRESENTATIVE'S  PRODUCTS AND SERVICES,  ON THE MOBILE
               DATA SERVICES NETWORK.

          9.3  Named Accounts:  Business  Representative  acknowledges  that GTE
               Mobilnet,  as a direct  seller of Mobile Data  Services,  will be
               soliciting  Customers  it  considers  to be  named  Accounts.  If
               Business  Representative  is currently a GTE  Mobilnet  Agent for
               distribution of voice services pursuant to an agreement (a "Voice
               Agent    Agreement")    between   GTE   Mobilnet   and   Business
               Representative,  then Business  Representative agrees to be bound
               by the terms of the Voice Agent  Agreement as to Named  Accounts.
               If  Business  Representative  is not  subject  to a  Voice  Agent
               Agreement,  then the following  procedure shall apply as to Named
               Accounts:  GTE Mobilnet shall notify Business  Representative  of
               any list of its Named Accounts, by name or category, which may be
               published  by GTE  Mobilnet  from time to time.  Should  Business
               Representative  solicit any of the Named Accounts for the purpose
               of selling Wireless Services, Business Representative agrees that
               it  will  give  the  GTE  Mobilnet  contract  administrator  five
               business  days  prior  notice  of such  solicitation.  Any  Named
               Account list or Customer  Information provided under the terms of
               this section is highly confidential and is subject to Section 9.7
               below.


                                       10

<PAGE>



          9.4  Indemnification:  Each  party  agrees to  indemnify  and hold the
               other harmless from any and all liability,  loss, claim,  damage,
               cost or  expense  (including  attorney's  fees and  court  costs)
               arising out of claims made by third parties against the other, as
               the  result  of  (a)  any  material   failure  by  the  party  so
               indemnifying to perform its obligations hereunder, (b) an alleged
               theft  or  infringement  by the  indemnifying  party  of a  third
               party's patent,  copyright,  trade secret, or other  intellectual
               property  rights,  or (c) a failure  of or defect in a Product or
               Service  provided  by Business  Representative  (from which claim
               Business Representative (from which claim Business Representative
               shall  indemnify GTE  Mobilnet).  The  obligations of the parties
               under this Section shall survive the termination or expiration of
               this Agreement.

          9.5  Notices:  Except as  otherwise  provided in this  Agreement,  all
               notices  required or permitted to be given  hereunder shall be in
               writing  and  shall be valid  and  sufficient  if  dispatched  by
               facsimile or by certified or registered  mail,  postage  prepaid,
               return  receipt  requested,  in any  post  office  in the  United
               States, addressed as follows:

If to GTE Mobilnet:

                  GTE Mobilnet Service Corp.
                  245 Perimeter Center Parkway
                  Atlanta, Georgia 30346
                  Attn.: Dale Voyles, Esq., Business
                  Development/Contracts Counsel

with a copy to:

                  Rod Sandel, Director of Data Sales
                  at the same address

If Business Representative:

                  Compu-DAWN, Inc.
                  (Authorized Representative)

                  166 West Park Avenue
                  (Address)

                  Long Beach, NY 11561

                  John P. Hefferon
                  (Contact name)

                  (516) 432-7096

                                       11

<PAGE>



                  (Telephone)

                  (516) 432-5356
                  (Facsimile)

Either party  hereto may change its address by providing  notice of such address
changes  to the other  party in the  manner set forth  above.  Notices  given as
herein  provided  shall be  considered to have been received five (5) days after
mailing thereof, or when actually received, whichever occurs first.

          9.6  Assignment  or Transfer of Interest:  Neither party may assign or
               transfer this Agreement  without the written consent of the other
               party,  except that GTE Mobilnet may assign this Agreement to any
               of its  Affiliates.  In the  event of a change  in  ownership  or
               control of a party,  the other party may terminate this Agreement
               on ten (10) days notice.

          9.7  Confidential  and  Proprietary  Information:  Any  disclosure  of
               Confidential  Information  between the parties during the term of
               this  Agreement  shall be made pursuant to the terms set forth in
               Exhibit  C,  attached  hereto and by this  reference  made a part
               hereof.  Business  Representative  specifically  agrees  that all
               Customer  Information  is the  property  of GTE  Mobilnet  and is
               highly  competitive,  confidential  and proprietary  information.
               Notwithstanding  breach of this  Agreement  on the part of either
               party, this provision shall survive the expiration,  cancellation
               or termination of this Agreement.

          9.8  No  Solicitation:  During the term of this  Agreement and for one
               (1)  year   after   its   termination   (whether   voluntary   or
               involuntary),  Agent will not  solicit  any  Customer  that Agent
               knows to be a Customer of GTE Mobilnet to use  Wireless  Services
               provided by another  carrier if the result of the  Customer's use
               of such other Wireless Services would be to curtail or cancel its
               business with GTE Mobilnet.  Business Representative shall not be
               bound by the foregoing  sentence if Business  Representative  can
               demonstrate  through  clear  and  convincing  evidence  that such
               Customer,   through  no  solicitation,   influence,   inducement,
               referral or participation on the part of Business Representative,
               independently   decided  to  obtain   Mobile   Data   Service  or
               competitive  Wireless  Services from another provider or Reseller
               of such Services.

          9.9  Survival  of  Obligations:  Expiration  or  termination  of  this
               Agreement  for any cause shall not release  either party from any
               liability  which at the time of  termination  or  expiration  has
               already accrued to the other party or which thereafter may accrue
               in  respect  to any act or  omission  prior to  termination.  All
               obligations  of either  party which  expressly or by their nature
               survive the

                                       12

<PAGE>



               expiration or termination of this  Agreement,  including  without
               limitation  Sections  4.3, 4.4, 4.6, 5.1, 8.1, 8.2, 9.8, and 9.9,
               shall  continue  in full  force and  effect  notwithstanding  its
               expiration or termination, until they are satisfied in full or by
               their nature expire.

          9.10 Binding Effect: This Agreement,  and any amendments hereto, shall
               be binding upon the parties hereto,  their respective  executors,
               administrators, heirs, assigns, and successors in interest.

          9.11 Notification  of  Actions  Involving   Business   Representative:
               Business  Representative  shall  notify GTE  Mobilnet  in writing
               within five (5) days of the  commencement of any material action,
               suit or  proceeding  or of the  issuance of any  subpoena,  civil
               investigative demand, order, writ, injunction, award or decree of
               any   court,   grand   jury,   agency   or   other   governmental
               instrumentality   relating  to  the  Mobile   Data   Services  or
               Customer's    obtaining   such   Services    involving   Business
               Representative,   or   any   business   conducted   by   Business
               Representative or any of its employees.

          9.12 Business Representative Off-Sets:  Business Representative agrees
               that  GTE  Mobilnet  may,  in its  discretion,  deduct  from  any
               Compensation or any other amounts owed Business Representative an
               amount equal to any debt owed by Business  Representative  to GTE
               Mobilnet or its Affiliates, and pay these amounts directly to GTE
               Mobilnet   or  its   Affiliates   for  the  account  of  Business
               Representative.

          9.13 Waiver: Neither Business Representative nor GTE Mobilnet shall be
               deemed to have waived any right or option  under this  Agreement,
               including  the right to demand exact  compliance  or to declare a
               breach of the  Agreement,  by virtue  of any  contrary  custom or
               practice of the parties.  Failure of Business  Representative  or
               GTE Mobilnet to enforce a provision  of this  Agreement on one or
               more  occasions  shall not prohibit the  enforcement of that same
               provision on a subsequent occasion.

          9.14 Severability and Substitution of Valid Provisions: Each provision
               of  this  Agreement  shall  be  considered  severable  and  if  a
               provision is for any reason held to be invalid, including without
               limitation Section 9.8 and 9.9, all remaining provisions shall be
               enforceable. If any provision of this Agreement is held to impose
               a restriction upon Business Representative which is unenforceable
               in scope but could be made  enforceable  by  limiting  the scope,
               Business  Representative and GTE Mobilnet agree to a modification
               of the invalid or unenforceable  provision to the extent required
               by enforceability.


                                       13

<PAGE>



          9.15 Execution:  This Agreement may be executed in counterparts,  each
               of which shall be deemed an original.

          9.16 Effects of Headings:  Headings to articles and paragraphs of this
               Agreement  are for  reference  only,  do not  form a part of this
               Agreement and shall not affect the interpretation hereof.

          9.17 Applicable  Law: The validity,  construction  and  performance of
               this Agreement shall be governed by and interpreted in accordance
               with the laws of the State of Georgia.

          9.18 Entire  Agreement;  Amendments:  Both GTE  Mobilnet  and Business
               Representative have read this Agreement and understand and accept
               the  terms,   conditions   to  this   Agreement   are   expressly
               incorporated  herein by this  reference and the term  "Agreement"
               shall include all Exhibits and Schedules attached hereto. Neither
               party  shall be bound by any  representations  made by any of its
               officers,   employees  or  Business   Representatives  which  are
               contrary  to  the  terms  of  this  Agreement.   This  Agreement,
               including  any  Schedules,  Exhibits or other  attachments,  sets
               forth the entire understanding between the parties and supersedes
               all previous agreements,  arrangements and understanding  between
               the parties, whether verbal or written. Except for those Sections
               which expressly authorize GTE Mobilnet to make unilateral changes
               in  certain  terms  and  conditions,  this  Agreement  may not be
               amended except in writing signed by authorized representatives of
               both parties unless otherwise provided in this Agreement.

         IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of
the date first written above.

BUSINESS REPRESENTATIVE:


By: /s/ John Hefferon
[Authorized Company Representative]

Print name: John Hefferon

Title: Executive Vice President

Date: November 15, 1996


GTE MOBILNET SERVICE CORP.:

                                       14

<PAGE>




By: /s/ Ronald R. Grawert
[Authorized Company Representative]

Print Name: Ronald R. Grawert

Title:  Executive Vice President -Operations

Date:  December 17, 1996

By: /s/ Laura E. Binion
[Authorized Company Representative]

Print Name: Laura E. Binion

Title: Assistant Secretary

Date: December 18, 1996





                                       15

<PAGE>



                                    EXHIBIT A

                                   DEFINITIONS

               Agent: A person,  corporation or any other entity or organization
                    which is employed,  appointed,  engaged or otherwise used by
                    Business  Representative,  as an agent  for the  purpose  of
                    referring  Customers for  activation of Mobile data Services
                    with GTE Mobilnet or to perform any other  obligations under
                    this Agreement.

               Agreement: This Agreement,  including all exhibits, schedules and
                    amendments hereto.

               Affiliates: A person,  association,  partnership,  corporation or
                    joint-stock  company or trust that  directly or  indirectly,
                    through one or more intermediaries,  controls, is controlled
                    by or is  under  common  control  with,  another  person  or
                    entity.  Control  shall be  defined  as (i)  ownership  of a
                    majority of the voting power of all classes of voting stock;
                    (ii) ownership of a majority of the beneficial  interests in
                    income and  capital of an entity  other than a  corporation;
                    and (iii) ownership of a general  partnership  interest in a
                    limited partnership.

               Applications:  The  value-added   applications  for  Mobile  Data
                    Services  described  in  ExhibitB,  which  include  Business
                    Representative's  Products  and  Services,  and may  include
                    other  wireless  data devices,  hardware,  software or other
                    products  or  services  which  utilize or when  commercially
                    available will utilize any form of Mobile Data Services,  or
                    systems  integration   services  related  thereto,   and  in
                    conjunction with which Business Representative is authorized
                    pursuant  to the  terms  of  this  Agreement  to  offer  GTE
                    Mobilnet's  Mobile  Data  Services  to actual  or  potential
                    Customers.

               Compensation:Compensation  paid to Business Representative by GTE
                    Mobilnet for Business  Representative's  services under this
                    Agreement, as set forth in Schedule 2 hereto.

               Customer: The person,  organization,  corporation or other entity
                    which  purchases  Mobile Data Services from GTE Mobilnet and
                    is responsible  for the repayment of charges to GTE Mobilnet
                    for such Mobile Data Services.

               Customer  Information:  Any and all  information  about actual or
                    potential  customers obtained by Business  Representative in
                    connection  with its  activities  on behalf of GTE Mobilnet,
                    including  but not limited to,  lists of actual or potential
                    Customers  provided by GTE Mobilnet,  CSAs and terms offered
                    or  agreed  to by GTE  Mobilnet  and the  names,  addresses,
                    telephone numbers, and network addresses (including, but not
                    limited to, Network Entity Identifiers and

                                       16

<PAGE>



                    Internet Protocol Addresses) of Customers for GTE Mobilnet's
                    Mobile Data Services.

               CSA: Customer Service Agreement between GTE Mobilnet and Customer
                    which  sets  forth  the  terms  for  the  provisions  of GTE
                    Mobilnet's   Mobil  Data  Services  to  Customer,   as  such
                    agreement is issued by GTE Mobilnet from time to time.

               Implementation Services:  The customization of Applications,  and
                    initial  administrative,  training and technical support, if
                    any, which Business Representative is required by Schedule 1
                    to provide to Customers in  connection  with their  adoption
                    and implementation of Applications and GTE Mobilnet's Mobile
                    Data Services.

               Marks: Any  and  all  trademarks,  service  marks,  trade  names,
                    insignia,  symbols,  decorative  designs, or other patented,
                    restricted  or  licensed  marks  which GTE  Mobilnet  or its
                    Affiliates  own or are  licensed  or  sublicensed  to use in
                    connection   with  Mobile  Data   Services,   wireless  data
                    equipment relating thereto or in any other manner.

               Mobile Data Services:  The data-specific circuit switched service
                    and  cellular  digital  packet  data  services  offered  and
                    marketed by GTE Mobilnet from time to time as GTE Mobilnet's
                    Mobile Data Services offering,  which may be provided by GTE
                    Mobilnet directly or indirectly through other carriers. When
                    the  context of this  Agreement  so  indicates,  Mobile Data
                    Services refers to data transmission services competitive to
                    any of GTE Mobilnet's Mobile Data Services.

               Named Account:  An  account   designated  or  considered  by  GTE
                    Mobilnet to be a Named  Account in  accordance  with Section
                    9.3 of the Agreement. The list of Named Accounts provided by
                    GTE  Mobilnet  may be modified or updated by GTE Mobilnet at
                    its sole discretion from time to time.

               Net  Monthly  Revenues:  GTE  Mobilnet's  revenues,  net  of  all
                    credits,  adjustments and one-time  charges,  excluding port
                    charges and activation fees,  during a monthly billing cycle
                    for Mobile Data Services  provided to Customers  pursuant to
                    CSA's  which  were  properly   completed  and  submitted  by
                    Business Representative and thereafter approved and accepted
                    by GTE Mobilnet.

               Products and Services:  Data  compatible  hardware,  software and
                    professional  services  offered by Business  Representative,
                    either directly or indirectly,  which may be integrated into
                    an  Application  which  contains the hardware,  software and
                    professional services of third parties.

                                       17

<PAGE>



               SalesServices:  The  obligations  of Business  Representative  to
                    market GTE Mobile  Data  Services  in  conjunction  with the
                    marketing and sale of Applications, as set forth in Schedule
                    1.

               Technical Support Services:  The first line customer services and
                    technical support, if any, which Business  Representative is
                    required by Schedule 1 to provide as long as Compensation is
                    being paid.

               Territory: The geographic areas defined in Exhibit B, as modified
                    from time to time by GTE  Mobilnet  with  written  notice to
                    Business    Representative,    in   which    the    Business
                    Representative  is authorized  pursuant to the terms of this
                    Agreement to solicit  Customers  for Mobile Data Services in
                    conjunction with the marketing of Business  Representative's
                    Applications.

               Wireless  Services:  Services,  other than Mobile Data  Services,
                    which provide or will provide wireless voice, data or paging
                    communications,    including   without    limitation   other
                    Commercial  Mobile  Radio  Services  ("CMRS"),   Specialized
                    Mobile  Radio  ("SMR"),  Enhanced  Specialized  Mobile Radio
                    ("EMSR") and 1.8 GHz frequency communications.


                                       18

<PAGE>

                                   EXHIBIT C

              TERMS FOR THE DISCLOSURE OF CONFIDENTIAL INFORMATION

         1.  Confidential  Information,  as used  herein,  shall mean written or
documentary  information  which  (i)  relates  to the above  identified  subject
matter,  (ii) is received by one party from the other party, and (iii) is marked
"Confidential" or "Proprietary Confidential", or bears a marking of like import,
or which one party states in writing at the time of transmittal to or receipt by
the other party is to be considered  confidential.  Orally disclosed information
identified  as  confidential  at the time of  disclosures  shall  be  considered
confidential  if,  within  twenty  (20) days  after the  first  oral  disclosure
thereof,  a party  confirms in a writing  delivered to the  receiving  party the
confidential nature of such orally disclosed information.  Such writing shall be
sufficiently  specific to enable the receiving party to identify the information
considered to be confidential.

         2. The term "Trade  Secrets" as used in the Agreements and this Exhibit
C shall mean Confidential Information that:

     (i)  derives economic value, actual or potential,  from not being generally
          known to,  and not being  readily  ascertainable  by proper  means by,
          other  persons who can obtain  economic  value from its  disclosure or
          use; and

     (ii) is the subject of efforts that are reasonable under the  circumstances
          to maintain its secrecy.

         3. The terms  "Confidential  Information"  and "Trade  Secrets"  do not
include,  and the  receiving  party  shall have no  obligation  with  respect to
information which:

     (i)  is  already  known  to the  receiving  party  as  evidenced  by  prior
          documentation  or  other  tangible  embodiments  of  such  information
          thereof; or

     (ii) is or becomes  publicly known through no wrongful act of the receiving
          party; or

     (iii)is  rightfully  received  by the  receiving  party from a third  party
          without restriction and without breach of this or any other Agreement;
          or

     (iv) is approved  for  release by written  authorization  of the  conveying
          party.

         4. The  parties  acknowledge  and agree that the parties may obtain and
have access to Confidential Information and Trade Secrets of the other party and
that the  misappropriation,  unauthorized use or disclosure of such Confidential
Information or Trade Secrets would cause irreparable harm to the parties hereto.
The parties agree to use the same degree of care to avoid and prevent disclosure
of any party's Confidential  Information and Trade Secrets as each party uses to
prevent disclosure of its own Confidential Information


<PAGE>


and Trade Secrets.

         5. With respect to any Confidential Information, each party agrees that
for  a  term  of  five  (5)  years  following  the  disclosure  of  Confidential
Information  pursuant to the  Agreement,  they shall not directly or  indirectly
disclose any  Confidential  Information  that the parties may have or acquire in
connection  with the  Agreement  except as  authorized  by the party to whom the
Confidential Information belongs.

         6. With respect to any Trade Secrets,  each party agrees not to use for
any purpose  whatsoever  or disclose the Trade  Secrets or any party at any time
hereafter  except as  necessary  for the  performance  of its  duties  under the
Agreement or until such Trade Secrets become generally  available to the publics
by  independent  discovery  or  development  or  publication.  The rights of the
parties to protection of their Trade Secrets in the Agreement are in addition to
the  rights  which  the  parties  have  under  common or  statutory  law for the
protection of Trade Secrets.

         7.  The  parties  to  the  Agreement  agree  to  disclose  Confidential
Information or Trade Secrets only to employees with a need to know.

         8. The parties to the Agreement agree that all Confidential Information
or Trade Secrets are the property of the party  supplying it and agree  promptly
to return to the party supplying it upon demand, any Confidential Information or
Trade Secrets and copies thereof,  furnished under the Agreement which is either
received in or reduced to material form.

         9.  Nothing  contained  in the  Agreement  shall  be  construed  as (i)
requiring a party to disclose, or to accept, any particular information, or (ii)
granting to the receiving party a license,  either express or implied, under any
patent,  copyright,  trade secret, or other intellectual  property rights now or
hereafter owned, obtained, or licensable by the other party.

         10. The  provisions  of the  Agreement  and this  Exhibit C  concerning
nondisclosure  and use of  Confidential  Information  and  Trade  Secrets  shall
survive the expiration or termination of this Agreement.




<PAGE>





                                   SCHEDULE 1

BUSINESS REPRESENTATIVE SERVICES

I.       Sales Services

     A. Business  Representative shall provide Sales Services in accordance with
the following provisions:

          1.   Prospective   Customers:   Business   Representatives   shall  be
     responsible  for  generating  leads  for  potential  customers,  qualifying
     customer  interests and  providing a statement of work or a sales  proposal
     from  potential  customers  for  Mobile  Data  Services.  If  GTE  Mobilnet
     identifies  and  qualifies a customer's  intent to purchase  wireless  data
     services and Business  Representative  accepts GTE Mobilnet's offer to then
     market its  application  and/or  services to such  customer,  then Business
     Representative  shall  compensate  GTE  Mobilnet  therefor  pursuant to the
     provisions of Section 2.7 hereof.

          2. Product Development and Marketing:  Business  Representative  shall
     assume the entire  responsibility for development and marketing of the full
     range   of   Applications,   and   Business   Representative   specifically
     acknowledges  that GTE Mobilnet  has no  responsible  or liability  for the
     development,   marketing   or   performance   of   Applications.   Business
     Representative  shall use  reasonable  efforts  to  promote  the use of GTE
     Mobilnet's  Mobile Data  Services  in  conjunction  with the  Applications.
     Either GTE  Mobilnet  or Business  Representative  may request the other to
     engage in joint marketing activities, which requests will be addressed on a
     case by case basis.

          3. Customer Service  Agreement:  GTE Mobilnet shall issue from time to
     time CSAs for  particular  customers or categories  of customers,  together
     with any  applicable  procedures for Business  Representative  to follow in
     pursuing the  execution of the CSA by GTE  Mobilnet and the  Customer.  GTE
     Mobilnet may change the CSA and related  procedures at any time in its sole
     discretion.  When properly  completed  and signed by the Customer,  the CSA
     shall constitute an offer by the Customer to purchase from GTE Mobilnet the
     Mobile Data Services set forth therein. Upon approval and acceptance by GTE
     Mobilnet of each CSA from a Customer  referred by Business  Representative,
     the CSA shall  constitute a binding  contract  between GTE Mobilnet and the
     Customer. Business Representative shall have no rights or obligations under
     the CSA and the Customer  thereafter  shall be a Customer of GTE  Mobilnet.
     Absence of a properly  completed,  signed and approved CSA will  disqualify
     Business Representative for any Compensation for such Customer.

          4.  Advertising and  Promotions:  GTE Mobilnet shall from time to time
     establish standards for all advertising,  signage, promotional and Customer
     training materials

                                       19

<PAGE>



     used  or  distributed  by  Business  Representative  which  relate  to  GTE
     Mobilnet's Mobile Data Services.  Such standards will be limited to factual
     matters pertaining to GTE Mobilnet's Mobile Data Services,  the overall use
     of the GTE  Mobilnet  Marks  and the  specifics  of  described  promotions.
     Business  Representative is required in its use of such materials to comply
     with  any   such   standards   established   by  GTE   Mobilnet.   BUSINESS
     REPRESENTATIVE  SHALL  NOT  USE  ANY  ADVERTISING  OR  MARKETING  MATERIALS
     RELATING TO GTE MOBILNET'S MOBILE DATA SERVICES, REGARDLESS OF WHETHER SUCH
     MATERIALS MAKE USE OF THE MARKS,  WITHOUT THE PRIOR WRITTEN APPROVAL OF GTE
     MOBILNET.  GTE  Mobilnet  may from  time to time  offer  promotions  in the
     Territory,  in which GTE  Mobilnet  may allow  Business  Representative  to
     participate  on terms  specified  by GTE  Mobilnet.  GTE  Mobilnet  is not,
     however,  obligated to offer such promotions to Business Representative and
     Business  Representative  shall not be  obligated  to  participate  in such
     promotions.

II.      Implementation Services

     A.  Business   Representative  shall  provide  Implementation  Services  in
accordance with the following provisions.

          1.  Sale of  Lease  of  Applications.  For its own  account,  Business
     Representative  may sell,  license and/or lease  Applications to be used by
     Customers  of  GTE  Mobilnet's  Mobile  Data  Services.   IT  IS  EXPRESSLY
     UNDERSTOOD  THAT GTE  MOBILNET IS IN NO WAY  OBLIGATED  TO  DISTRIBUTE  ANY
     APPLICATIONS  TO BUSINESS  REPRESENTATIVE  FOR RESALE.  All sales  licenses
     and/or  leases of  Applications  shall be made by or on behalf of  Business
     Representative for its own account, and not as Business Representative for,
     or  for  the  account  of,  GTE  Mobilnet.  Business  Representative  shall
     establish  sale process,  license fees, and lease charges or other fees for
     Applications,  and GTE  Mobilnet  shall have no control  over such  prices,
     charges  and fees.  With  respect  to the  sale,  license  and/or  lease of
     Applications,  Customers shall be the customers of Business Representative,
     and GTE  Mobilnet  shall have no  responsibility  or  liability to Business
     Representative or Customers therefor.

          2. Customization and  Implementation.  Business  Representative  shall
     provide, as appropriate,  customization and integration of Applications, as
     well as  administrative,  training  and  technical  support,  to assist the
     Customer in the modification,  delivery,  programming and initial operation
     of the  Applications  and the use of GTE  Mobilnet's  Mobile Data Services.
     Business Representative shall act as the interface between GTE Mobilnet and
     the  Customer  with  respect  to  the  Mobile  Data  Services  during  such
     implementation  phase. Any charges by the Business  Representative for such
     Implementation  Services shall be determined by Business Representative and
     the   Customer.   GTE   Mobilnet   shall  be   obligated  to  pay  Business
     Representative only the Compensation set forth in Schedule 2.

III.     Technical Support Services

                                       20

<PAGE>



     A. Business  Representative  shall provide  Technical  Support  Services in
accordance with the following provisions.

          1. First Line Customer  Services:  Business  Representative  agrees to
     provide all first line Customer  services,  including a technical help desk
     capable of responding to technical inquiries regarding Applications and GTE
     Mobilnet's Mobile Data Services.  Business  Representative  agrees to refer
     promptly to GTE  Mobilnet  all  Customer  service  inquiries  or  technical
     problems  which  relate to GTE  Mobilnet's  Mobile Data  Services and which
     cannot be solved by Business  Representative's  Technical  Support Services
     alone. Business  Representative shall not call, or refer Customers to call,
     GTE  Mobilnet or GTE  Mobilnet's  technical  help desk for  problems  which
     should  have been  solved by Business  Representative's  Technical  Support
     Services.

          2. Ongoing Technical Support.  The Technical Support Services shall be
     provided by Business  Representative  to Customers  during the term of this
     Agreement.  Any charges by the Business  Representative  for such Technical
     Support  Services  shall be determined by Business  Representative  and the
     Customer.  GTE Mobilnet  shall be obligated to pay Business  Representative
     only the  Compensation set forth in Schedule 2. GTE Mobilnet shall continue
     to pay Business Representative the Compensation set forth in Schedule 2 for
     a period of four (4) years  following  termination  of this  Agreement (the
     "Post- Termination Period") in the event Business Representative  continues
     to  provide  the  Technical  Support  Services  during  such  period as GTE
     Mobilnet  reasonably  determines.  This  Schedule 2 shall  survive  for the
     period following termination of this Agreement that Business Representative
     provides Technical Support Services, as set forth herein.

                                       21

<PAGE>




                                   SCHEDULE 2

                      BUSINESS REPRESENTATIVE COMPENSATION

          A. GTE Mobilnet agrees to pay to Business Representative, and Business
     Representative  agrees to  accept,  Compensation  subject  to the terms and
     conditions  contained in the Agreement  and this  Schedule 2.  Compensation
     shall be paid monthly, one month in arrears.

          B. GTE Mobilnet may make  deductions  from  Business  Representative's
     Compensation pursuant to Sections 8.2(b) and 9.13 of the Agreement,  and as
     otherwise set forth in the Agreement and this Schedule 2. In addition,  GTE
     Mobilnet will deduct from future  Compensation any amounts  improperly paid
     to Business Representative which are not actually due and payable. Business
     Representative  shall be responsible  for  reimbursing GTE Mobilnet for any
     improperly   paid   Compensation   if:  (i)  the  next  payable  amount  of
     Compensation is insufficient  to cover the improper  payment;  or (ii) this
     Agreement expires or is terminated.

          C. In any  instance  in which  more than one  Business  Representative
     authorized to represent GTE Mobilnet is involved in a Customer  sale,  only
     the  Business   Representative  that  is  responsible  for  the  Customer's
     Implementation  Services and Technical  Support (as set forth in Schedule 1
     above) is  eligible  for  Compensation  from GTE  Mobilnet  for the account
     resulting  from  such  sale.  For any  Customer  sale  that is  solely  for
     circuit-switched  services and that  involves GTE Mobilnet  Representative,
     the Business Representative will not be compensated hereunder.

          D. Business  Representative  shall notify  Mobilnet  within sixty (60)
     days  of  receiving  a  Compensation  payment  of any  discrepancies  which
     Business  Representative  believes  have  occurred  during  a  Compensation
     period.  Subject to the deduction provisions herein, payment will be deemed
     correct if GTE Mobilnet does not receive  notification  of any  discrepancy
     within such sixty (60) days.

          E.  Adjustment  of  the  length  of  the  Compensation  period  may be
     necessary from time to time as a result of circumstances  unknown to either
     party of this Agreement at the time of  Compensation  period was originally
     set, provided  however,  that any such change shall apply only to Customers
     activated after the date thereof.

          F. GTE Mobilnet shall pay, and Business  Representative  shall accept,
     Compensation as set forth below:

               (1) Business  Representative  shall earn Compensation in the form
          of a monthly  Customer  Account  Management Fee ("CAM Fee") based upon
          the Net Monthly Revenues

                                       22

<PAGE>


          of GTE  Mobilnet  for  Mobile  Data  Services  provided  to  Customers
          pursuant  to CSAs which  were  properly  completed  and  submitted  by
          Business  Representative  and thereafter  approved and accepted by GTE
          Mobilnet.  Business  Representative shall earn a monthly CAM Fee equal
          to six percent (6%) of the Net Monthly Revenues.

               (2)  Subject  to Section  IIIA.2 of  Schedule  1, GTE  Mobilnet's
          obligation  to pay  Compensation,  including  CAM  Fees,  to  Business
          Representative  shall  cease  when  the CAM Fee (a  pro-rated  portion
          thereof based on business days in the month),  less any  deductions or
          setoffs  allowed  under this  Agreement or by law, is paid for the Net
          Monthly  Revenues in the month in which the  Agreement  expired or was
          terminated.





                                       23

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                  AT&T WIRELESS DATA CHANNELS PROGRAM AGREEMENT

     This AT&T Wireless  Data Channels  Program  Agreement  (this  "Agreement"),
dated as of February 19, 1997, is made between AT&T Wireless Data,  Inc.,  d/b/a
AT&T Wireless  Services,  a Delaware  corporation,  on behalf of its  affiliated
wireless data communication  service providers  (collectively,  "Company"),  and
Compudawn,  Inc., a Delaware corporation ("Channel Member"). Company and Channel
Member sometimes are referred to collectively as "Parties" and individually as a
"Party."

                                    RECITALS

     A. Company has the authority to provide Service to Subscribers in the Area.

     B. Company  intends to enter into agreements with various third parties who
are willing to assist  Company in obtaining  requests for Service from potential
Subscribers.

     C.  Company  would  like  Channel  Member to  solicit  and refer  potential
Subscribers  to  Company,   and  Channel  Member  is  willing  to  provide  such
assistance,  all in strict  accordance  with the terms  and  conditions  of this
Agreement.

                                   AGREEMENTS

     In  consideration of the mutual promises  contained in this Agreement,  the
Parties hereby agree as follows:

Section 1. Definitions

     The following  capitalized  terms  (whether used in the singular or plural)
are used in this Agreement with the respective meanings set forth below.

     1.1  "Affiliate"  means,  with  respect to either  Party,  any Person  that
(directly or indirectly)  controls,  is controlled by or is under common control
with that Party.  "Control" of a Person means the power (directly or indirectly)
to direct the  management  or  policies  of that  Person,  whether  through  the
ownership of voting securities, by contract, by agency or otherwise.

     1.2  "Application"   means  a  software  program  designed  to  operate  in
conjunction with the Service.

     1.3 "Area" means the  geographic  Area described in Exhibit A, within which
Channel  Member is  authorized  to solicit  Subscribers  under  this  Agreement.
Company  may amend  Exhibit A from time to time upon  written  notice to Channel
Member.


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     1.4 "Business Day" means any day other than a Saturday,  a Sunday or any of
the  following  holidays:  New Year's Day,  Presidents'  Day,  Memorial Day, the
Fourth of July, Labor Day,  Thanksgiving Day and Christmas Day. Company may from
time to time  designate  additional  holidays  upon  written  notice to  Channel
Member.

     1.5 "CDS Service" means the circuit-switched  cellular data service offered
by Company from time to time.  Circuit-switched  cellular data service generally
consists of a wireless data communications  service in which data is sent over a
cellular  network  in a  connection-oriented  session,  similar to the manner in
which data is sent over analog phone lines via standard modems.

     1.7 "Confidential  Information" means all information,  not generally known
to the  public,  relating  to  the  business,  technology,  finances,  plans  or
practices of a Party  disclosed by that Party to the other  (including,  but not
necessarily limited to, pricing and sales information,  business,  marketing and
research plans, financial data, budgets and projections,  business processes and
systems,  the terms of this  Agreement and any other  information  designated by
such party as confidential).  With respect to Company,  Confidential Information
shall include the identity of and information about present,  past and potential
Subscribers.

     1.8 "Data Network" means the network(s) on which Company  provides  Service
to Subscribers.

     1.9 "Equipment"  means the terminal  devices (modems,  computers,  cellular
telephones and other similar devices) used by Subscribers in conjunction with or
in order to utilize  Service,  together  with any  accessories  or  enhancements
associated with such devices.

     1.10 "ESN" means the Electronic  Serial Number  associated  with a cellular
telephone.

     1.11 "FCC" means the Federal Communications Commission.

     1.12 "Event of Default" means any of the events described in Section 9.

     1.13 "Marks" means any trade name,  trademark,  service mark,  logo,  trade
dress,  or  other  name or mark  that is  owned or  licensed  by a Party  and is
protected or  protectable  under the laws of the United  States of America,  any
state of the United States of America, or any other country.

     1.14 "MSA" means  Metropolitan  Statistical  Area, as defined in FCC Public
Notice, Report No. 9240, issued January 24, l992.

     1.15  "NEI"  means   collectively   (a)  the  network  entity  and  service
identifiers and (b) Internet  Protocol address assigned to a Subscriber in order
to access PDS Service.

     1.16 "Number"  means a telephone  number or NEI assigned to a Subscriber in
order for the Subscriber's Equipment to access Service.

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     1.17 "PDS Service" means the cellular  digital packet data service  offered
by Company from time to time.  Cellular  digital  packet data service  generally
consists of a wireless data communications service in which data is sent through
a cellular network in a connectionless packet data format, similar to the manner
in which data is sent over a TCP/IP  Local Area  Network.  If Channel  Member is
authorized  hereunder to solicit PocketNetTM Service, PDS Service as used herein
shall include PocketNetTM Service.

     1.18 "Person" means a corporation, partnership, joint venture, association,
individual or other entity.

     1.19  "Personnel"  means  the  owners,  officers,   employees,  agents  and
independent  contractors of a Party, to the extent such  individuals or entities
are involved in fulfilling such Party's obligations under this Agreement.

     1.20 "PocketNetTM Service" means the Internet/intranet  access data service
offered by Company from time to time through Company's PocketNet gateway.

     1.21 "Program Rules" means Company's written policies, procedures and rules
now or hereafter in effect relating to its relationship with Channel Member. The
Program Rules, as of the date of this Agreement, are set forth in Exhibit B.

     1.22 "RSA"  means  Rural  Service  Area,  as defined in FCC Public  Notice,
Report No. 92-40, issued January 24, 1992.

     1.23 "Service" means that PDS Service, CDS Service and/or PocketNet Service
as  described on Exhibit C for which  Channel  Member is  authorized  to solicit
Subscribers  under this Agreement,  and such ancillary  services as Company from
time to time may offer.

     1.24  "Subscriber"  means a  customer  who has been  assigned  a Number  by
Company.  Each new Number  activated  for a customer  will be deemed to be a new
"Subscriber".

Section 2. Relationship between Company and Channel Member

2.1 Appointment

     Company and Channel  Member  agree that  Channel  Member is appointed as an
authorized  representative for Company (a) to obtain requests for Service in the
Area  from  potential  Subscribers,  and  (b)  to  provide  such  assistance  to
Subscribers as Company periodically may authorize or require, all subject to the
terms and conditions of this Agreement.

2.2 Nature of Relationship

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     2.2.1  Company and  Channel  Member are  entering  into this  Agreement  as
independent  contracting  parties, and this Agreement will not create an agency,
joint venture,  partnership or employment  relationship  between them. Except as
specifically  provided in this Agreement or directed by either Party in writing,
neither Party will (a) be a legal representative or agent of the other Party for
any purpose, (b) have any authority to assume or create any obligation on behalf
of the other  Party,  and (c) will have no right to make any  representation  or
warranty on the other Party's behalf.

     2.2.2  Channel  Member has not paid,  and will not pay in the  future,  any
franchise   or  other  fee  for  the   right  to  become  or  remain   Company's
representative or to use or continue to use any of Company's Marks. No franchise
will be created by the execution or performance of this Agreement.

2.3 Channel Member Responsible for its Business

     2.3.1 Except as otherwise  provided in this Agreement,  Channel Member will
operate its  business as it sees fit.  Channel  Member will be free to engage in
such other  business  activities as Channel  Member may desire,  as long as such
activities do not interfere or conflict with Channel Member's performance of any
of its obligations under this Agreement.

     2.3.2  Channel  Member will be  responsible  for the costs of operating its
business. Company will not make any deduction,  withholding or contribution with
respect to Channel Member on account of social security,  industrial  insurance,
unemployment compensation,  income tax or otherwise,  arising under any federal,
state or local law.

2.4 Company's Reservation of Rights to Compete with Channel Member

     Company  reserves the right,  by itself,  through its Affiliates or through
non-Affiliates   (including   other   channel   members   or  other   authorized
representatives):  (a) to market  Service to  potential  Subscribers,  to obtain
requests for Service and to activate  Subscribers on Company's Data Network, (b)
to obtain  requests for service and activate  additional  Numbers from  existing
Subscribers, whether or not such Subscribers were referred to Company by Channel
Member,  and  (c) to sell  or  lease  Equipment,  and to  provide  installation,
maintenance or repair service for such Equipment, to any Person.

2.5 Program Rules

     The Program Rules  (including all future  amendments)  are  incorporated by
reference  into this  Agreement.  The  Program  Rules may  include  such  rules,
policies and  procedures  relating to the  Company's  relationship  with Channel
Member as Company periodically may establish.  Subject to Channel Member's right
to terminate  this Agreement  under Section 10.4,  Company may amend the Program
Rules upon thirty (30) days' written notice to Channel Member. Each amendment to
the  Program  Rules  will  specify an  effective  date and will apply to Channel
Member's  actions  (including,   without  limitation,   Subscriber  activations)
occurring on or after such date.

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2.6 No Violation of Other Agreements

     Channel  Member  represents  and warrants to Company that Channel  Member's
execution and  performance of this Agreement will not violate any other contract
to which Channel  Member is a party or  obligation  by which  Channel  Member is
bound (including, without limitation, terms relating to covenants not to compete
and  confidentiality).  Channel  Member will not disclose to Company,  or use or
induce Company to use, any proprietary information or trade secrets of any other
Person.

2.7 Ethical Conduct and Practices

     In all dealings with each other,  Subscribers  and other  Persons,  Channel
Member and  Company  will be  governed  by the  highest  standards  of  honesty,
integrity,  fair dealing and ethical  conduct.  Neither Party will engage in any
activity  that may be  harmful  to the other  Party's  goodwill  or may  reflect
unfavorably on its Marks. This prohibition  includes,  without  limitation,  the
commission  of  any  unfair  trade  practice,  the  publication  of  any  false,
misleading  or  deceptive  advertising,  or  the  commission  of  any  fraud  or
misrepresentation.

Section 3. Channel Member's General Obligations

3.1 Records

     Channel  Member will create and maintain  complete and accurate  records of
all transactions and activities relating to this Agreement  (including,  without
limitation, records of its contacts with Subscribers, potential Subscribers, and
Service  activations)  and any other  records  required  under  applicable  law.
Channel Member (a) will preserve such records at its principal place of business
for a period consistent with generally accepted document  retention  principles,
and (b) will make such records  available to Company for  inspection and copying
during normal business hours. Channel Member will keep all accounting records in
accordance with generally accepted accounting principles.

3.2 Channel Member Personnel

     3.2.1  Channel  Member will exercise sole control of its Personnel and will
be solely  responsible  for their  actions  and  omissions.  Any  breach of this
Agreement  by Channel  Member's  Personnel  will  constitute a breach by Channel
Member,  entitling  Company to pursue all of its rights and remedies  under this
Agreement or applicable law. Notwithstanding the foregoing, Company will have no
obligation  to or  liability  for any  Personnel,  and none of the  Personnel is
intended to be a third-party beneficiary of this Agreement.

     3.2.2  Channel  Member will advise all its  Personnel of their  obligations
under this Agreement and will ensure that its current or former Personnel comply
with this Agreement and the Program Rules.

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<PAGE>




     3.2.3 Channel Member will ensure that all of its Personnel  involved in the
sale and use of the Service and the  demonstration,  installation  and repair of
the Equipment or  Applications  attend regular  training  courses as required by
Company,  which  training  will be conducted  within 100 miles of where  Channel
Member's principal business is located. Company will provide such training at no
direct charge to Channel Member or its Personnel;  provided,  however,  that any
incidental costs (including,  for example,  travel and living expenses) incurred
by Channel Member or its Personnel in connection  with such training will be the
sole  responsibility  of Channel  Member.  In the event Company now or hereafter
requires any of Channel  Member's  Personnel to be certified by Company prior to
performing any of Channel Member's  obligations  hereunder,  Channel Member will
comply fully with such certification requirements. Company may in addition offer
optional training and may charge Channel Member for such training.

     3.2.4  Channel  Member may not appoint any agent,  independent  contractor,
subcontractor,  or other representative to solicit potential Subscribers for the
Service (or perform services  related to such  solicitation)  without  Company's
prior written approval (which will not be unreasonably withheld).

3.3 Compliance with Laws

     In connection with Channel  Member's  performance of its obligations  under
this Agreement,  Channel Member will comply with all applicable  federal,  state
and local laws,  rules,  regulations  and court  orders.  Without  limiting  the
generality of the  foregoing,  Channel  Member will pay,  collect and remit such
taxes  as  may  be  imposed  with  respect  to any  compensation,  royalties  or
transactions  under this Agreement in accordance  with applicable  laws,  rules,
regulations and orders of governmental authorities having jurisdiction.

3.4 Insurance

     During the term of this Agreement,  Channel Member at its sole expense will
maintain  with  insurers  reasonably  acceptable  to  Company  at a minimum  the
following types of insurance policies with the stated coverage limits:

     1.    Commercial General Liability $1,000,000 / 2,000,000 aggregate

     2.    Automobile               $1,000,000

     All policies shall cover each  occurrence up to an amount of $1 million per
occurrence,  and shall name Company as an additional  insured.  Company may upon
written notice require Channel Member to change the above minimum coverages, and
Channel Member will obtain any additional  insurance coverage within (90) ninety
days of such notice.  Channel Member will provide  Company with  certificates of
insurance, endorsements and other supporting materials as Company reasonably may
request to evidence  Channel  Member's  continuing  compliance with this Section
3.4.


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3.5 Provision of Information

     Upon Company's reasonable request, Channel Member will provide Company with
true and accurate  financial and other  information  regarding  Channel Member's
business, as it relates to this Agreement.

Section 4. Channel Member's Obligations Relating to Service

4.1 Advertising and Promotion

     4.1.1 Channel  Member will actively  promote and market the Service in that
portion of the Area identified in Exhibit A as owned or operated by Company, and
Channel  Member may in addition  actively  promote and market the Service in the
remaining  portion  of the  Area.  From  time to  time,  Company  may  establish
standards for Channel Member's  advertising,  promotional and training materials
relating to Service.  All advertising and  promotional  activities  conducted by
Channel Member will be completely factual and ethical,  and Channel Member shall
be solely  responsible  for the  content  thereof,  whether or not  reviewed  by
Company.

     4.1.2  Company may, in its sole  discretion,  reference  Channel  Member in
advertising and promotion of the Service, including but not limited to, lists of
Channel Members to be provided to potential Subscribers, and general advertising
of the  Channel  Member  program.  In the  event  a  specific  advertisement  or
promotion is planned  which will  reference  only  Channel  Member and not other
Company channel members or other authorized representatives,  Company must first
obtain  Channel  Member's  written  consent  before such use.  Company must also
obtain Channel  Member's  prior written  consent before using any Channel Member
Mark.

4.2 Solicitation of Requests

     4.2.1 Channel Member will use  commercially  reasonable  efforts to solicit
and obtain  requests for Service from  potential  Subscribers in that portion of
the Area owned or operated by Company,  and may solicit and obtain  requests for
Service from potential Subscribers in the remaining portion of the Area. Channel
Member will at all times give prompt,  courteous  and  efficient  service to the
public.

     4.2.2 Company  periodically  may authorize or restrict  Channel Member from
soliciting  requests  for  Service  under  certain  rate  plans or from  certain
potential  Subscribers or in certain  portions of the Area by providing  Channel
Member with written notice of such authorization or restriction.

     4.2.3 In  soliciting  requests  for Service,  Channel  Member will use only
Company-approved  Subscriber  Agreements,  enrollment  procedures and activation
procedures.  Company may change such Subscriber Agreements and procedures at any
time, upon written notice to Channel Member.


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     4.2.4  Channel  Member at all times will  identify  Company as the  Service
provider in all portions of the Area (including those MSAs and RSAs not owned or
operated  by  Company  but in which  Company  provides  Service).  Except as may
otherwise  be provided in the Program  Rules,  Channel  Member will not state or
suggest,  or use any  advertising or marketing  materials that state or suggest,
any association with Company without Company's prior written consent.

     4.2.5 Channel Member will only quote to and activate potential  Subscribers
on Company-approved  rate plans for that portion of the Area in which Subscriber
will primarily use the Service,  and Company's terms and conditions for Service.
Channel  Member  will not  discount  or  adjust  any such rate  plans,  terms or
conditions.  Company may change its rates,  terms and  conditions for Service at
any time for existing or potential  Subscribers  and will provide Channel Member
with prompt written notice of any such change.

4.3 Subscriber Agreements

     4.3.1 Each Subscriber will be subject to Company's potential  acceptance or
rejection, based upon Company's review of the potential Subscriber's credit, the
sufficiency and validity of information  contained in the Subscriber  Agreement,
or any other valid business reason.

     4.3.2 If Company does not accept a potential Subscriber obtained by Channel
Member, Channel Member will not enter into a written agreement for Service with,
or otherwise agree to provide Service to, the potential Subscriber.

4.4 Deposits and Billings

     4.4.1 Channel  Member will collect such deposits and advance  payments from
Subscribers as Company may require.  Such deposits and advance  payments will be
made  payable to  Company,  not  Channel  Member,  unless  Company  specifically
authorizes Channel Member in writing that such deposits and advance payments may
be made  payable to some other  Person.  Channel  Member  will  deliver all such
payments  to  Company  in  accordance  with  Company's  then-current  activation
procedures.

     4.4.2 Company will bill Subscribers directly for Service and Channel Member
shall not be  authorized  to make  payments  on behalf  of a  Subscriber  unless
Company  specifically  authorizes  Channel  Member in writing  to  collect  such
amounts on  Company's  behalf.  Company  retains  the sole right to collect  all
moneys and to settle all claims by  Subscribers  relating to Service and Channel
Member will have no right to require Company to assert or enforce claims against
Subscribers.  Channel  Member,  upon Company's  request,  will assist Company in
obtaining any information relating to any Subscriber claim or obligation.

4.5 Relationship between Channel Member and Subscribers


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                                        8

<PAGE>



     4.5.1  Channel  Member's  duties  hereunder  consist  solely  of  acting on
Company's  behalf as a facilitator  to match the needs of potential  Subscribers
with  Company's  Service  offerings.  Company's  provision  of  Service  to  any
Subscriber  will  constitute a transaction  between  Company and the  Subscriber
only.  Channel  Member  will  have no  rights  in the  transaction  and will not
interfere with the contractual relationship between Company and Subscriber.

     4.5.2 Channel Member will not resell  (directly or indirectly)  any Service
during the term of this Agreement.

Section 5. Channel Member's Obligations Relating to Equipment and Applications

5.1 General

     Channel  Member,  acting for its own account and not as agent for  Company,
(a) may sell or  lease,  or  arrange  for the sale or lease  of,  Equipment  and
Applications  to be  used  by  Subscribers,  (b)  may  provide  for  the  proper
preparation  and  installation of such Equipment and  Applications,  and (c) may
furnish  warranty and maintenance  service for such Equipment and  Applications.
Channel Member may obtain Equipment and Applications from any supplier, provided
that the Equipment meets or exceeds the  regulations and standards  described in
Section 5.2.  Channel Member will be solely  responsible  for  establishing  the
price and other terms and conditions for its Equipment and Application sales and
leases, and obtaining payment therefor.

5.2 Minimum Quality Standards

     Channel  Member  will  recommend,  sell,  lease  or  otherwise  furnish  to
Subscribers  only (a) that  Equipment  which  complies with all  applicable  FCC
regulations and (b) that Equipment and  Applications  that comply with Company's
minimum  technical  and other  standards  relating to  transmission,  regulatory
compliance, network compatibility, reliability, security and overall quality (as
published by Company from time to time).

5.3 Configuration

     5.3.1 Except as Company may specify in writing, Channel Member will program
the Equipment of each Subscriber  whose Service  application is obtained through
Channel  Member's efforts and is accepted by Company with (a) the Number and NEI
(as applicable)  assigned by Company for use on Company's Data Network,  (b) any
Applications  selected by Subscriber,  and (c) all other parameters specified by
Company in  connection  with  Service.  "Program"  shall  include  entering  all
information  required by Company and the Equipment or Application  providers for
initial trouble-free operation on Company's Data Network.

     5.3.2 Channel Member will be solely  responsible for the  configuration  of
any Application provided by Channel Member to a Subscriber.


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     5.3.3 Channel Member will not charge Subscribers commercially  unreasonable
fees for the initial  configuration,  programming  or activation of Equipment or
Applications.

5.4 Demonstration Equipment and Service

     Company, at its sole option, may supply Equipment, Applications, or Service
to Channel Member for demonstrating  Service to potential  Subscribers.  Channel
Member will use such Equipment,  Applications and Service only for that purpose.
Channel Member will bear the risk of loss or damage to  demonstration  Equipment
and  Applications  (other  than  ordinary  wear and tear) from the time any such
Equipment and  Applications are placed in the possession of Channel Member until
returned to Company,  and shall mark all such Equipment as being the property of
Company.  Channel  Member shall return all such  Equipment and  Applications  to
Company at the earlier of Company's  written request or upon  termination of the
Agreement.

Section 6. Channel Member Compensation

6.1 General

     6.1.1 Subject to the terms of this Agreement and the Program Rules, Channel
Member  will be eligible to receive  compensation,  in such  amounts and at such
times as are specified in the Program Rules, for each Subscriber  Agreement that
(a) is procured primarily by Channel Member or its Personnel, (b) is accepted by
Company,  and (c)  for  which  Service  is  activated  during  the  term of this
Agreement.

     6.1.2 The  compensation  set forth in the  Program  Rules will be the total
compensation  payable to Channel Member by Company for Channel Member's services
provided hereunder. Channel Member will only be entitled to receive compensation
in connection with Subscribers  whose  Subscriber  Agreement have been solicited
and whose Service has been activated in strict compliance with this Agreement.

     6.1.3 Company,  at any time and without prior notice to Channel Member, may
introduce new Service rate plans for which different  compensation  will be paid
to Channel Member.

     6.1.4 Company may cease  offering any Service rate plan to  Subscribers  or
potential  Subscribers  at any time. In such case,  Company will notify  Channel
Member  of the  effective  date on which  any such  Service  rate  plan  will be
discontinued.  Channel  Member  will not be  entitled  to any  compensation  for
Subscribers  activated on any discontinued Service rate plan on or following the
date of discontinuance.  To the extent a Subscriber continues to receive Service
under a different  Service rate plan,  Channel  Member will  continue to receive
compensation  under the Program Rules for any remaining eligible period for such
Subscriber.

6.2 Disputes between Channel Members and Others


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     If any dispute arises between  Channel Member and a third party relating to
any payment alleged to be due Channel Member from Company,  Company may withhold
payment of the  disputed  amount  (without  the accrual of  interest)  until the
earlier  of (a)  the  parties'  mutual  resolution  of the  dispute,  or (b) the
resolution of the dispute by final order of a court or  arbitration  tribunal in
accordance with Subsection 12.1.

6.3 Company's Right to Offset

     Company may offset  against  any amount  owed to Channel  Member by Company
hereunder,  any  amounts  owed by Channel  Member to  Company or its  Affiliates
pursuant to this Agreement,  or otherwise,  including  without  limitation,  any
expenses   and  damages  that  are  incurred  by  Company  and  are  subject  to
indemnification by Channel Member under Section 12.4.

6.4 Reserve

     Upon any termination of this  Agreement,  Company may withhold a reasonable
reserve from any amounts owed to Channel  Member,  which reserve will be used to
satisfy any obligations  owed by Channel Member to Company.  Company will within
six (6) months of withholding a reserve review whether such reserve continues to
be necessary.  Within thirty (30) days following Company's  determination that a
portion of the reserve is no longer necessary to satisfy any of Channel Member's
obligations, Company will pay such portion to Channel Member.

Section 7. Marks

7.1 Ownership

     Each Party's Marks are and will remain the exclusive property of such Party
or such Party's  licensors  (if any).  Each Party will comply with all rules and
procedures  relating  to the  Marks  that  such  Party  may  from  time  to time
prescribe.  Neither  Party will have any rights to the Marks except as expressly
provided  herein and will not acquire any rights  therein or expectancy to their
use as a  result  of such  Party's  use of the  Marks  during  the  term of this
Agreement.  A Party may  discontinue  the other Party's use of or license to its
Mark at any time.

7.2 Use

     Except as otherwise  provided in Section 4.2.4,  neither Party will use any
of the  other  Party's  Marks  without  specific  prior  written  approval.  Any
unauthorized  use of the  Marks,  or any use of  Company's  Marks that is not in
compliance  with  Company's  rules and  procedures,  will  constitute a material
breach of this Agreement.  Upon the  termination of this  Agreement,  each Party
immediately will discontinue its use of all of the other Party's Marks.

Section 8. Nondiversion of Subscribers and CDS Service Exclusivity


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8.1 Nondiversion

     During  the  term  of  this  Agreement  and for  one  (l)  year  after  its
termination  (whether  voluntary or involuntary),  Channel Member, its Personnel
and its  Affiliates  (a) will not request any  Subscriber of Company who Channel
Member  knows to be a  Subscriber  of Company to curtail or cancel its  business
with  Company,  or (b) otherwise  solicit,  divert or attempt to divert any such
Subscriber from patronizing Company's Service.  During the one-year period after
termination of this  Agreement,  any  Subscribers of Company who contact Channel
Member,  its  Personnel,  or its  Affiliates,  whether  with respect to existing
Service or potential  additional Service,  will be referred directly to Company.
Channel Member will advise all of its Personnel of their  obligations under this
Section 8.

8.2 CDS Service Exclusivity

     If  Channel  Member  is  authorized   pursuant  to  Exhibit  C  to  solicit
Subscribers to CDS Service,  Channel Member agrees that, at all times during the
term of this Agreement,  it will not market, offer,  provide,  procure, or refer
any potential  Subscriber or actual  Subscriber to any voice or circuit switched
data service  competing with Company in the Area, which service is offered by or
through any Person  (including  any  reseller)  other than  Company or Company's
Affiliates.

Section 9. Events of Default

     Each of the following events will constitute an Event of Default:

         (a) any breach of this Agreement by a Party;

         (b) the  commission  of any illegal  act  (excluding  misdemeanors  not
involving  dishonesty  or moral  turpitude)  by, or the  filing of any  criminal
indictment or  information  against,  a Party,  or any of its owners,  officers,
directors or employees;

         (c) a  Party's  insolvency,  becoming  the  subject  of a  petition  in
bankruptcy,  having a receiver  appointed  for its business or entering into any
arrangement  with, or assignment for the benefit of, its creditors or ceasing to
function as a going  concern or  experiencing  a material  deterioration  in its
financial  condition  such  that,  in  the  other  Party's  reasonable  business
judgment, its ability to perform the terms of this Agreement is threatened;

         (d) a Party  (or any of its  Affiliate's)  defaulting  under  any other
material  agreement between it (or its Affiliate) and the other Party (or any of
its  Affiliates),  so that such other Party (or its  Affiliate)  has the present
right to terminate such other agreement for default; and

         (e) a Party's unauthorized assignment of this Agreement.

Section 10. Term and Termination

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10.1 Term

     This  Agreement is for a two (2) year term  commencing as of the date first
written above.

10.2 Renewal

     Upon the  expiration  of the initial term of this  Agreement,  and provided
that  Company   continues  to  offer  Service  in  the  Area,   this   Agreement
automatically will be extended for additional one (1) year periods unless either
Party gives the other Party at least sixty (60) days'  written  notice  prior to
the  expiration  of the then  current term of its  intention  to terminate  this
Agreement.

10.3 Termination

     10.3.1 Except as otherwise  provided in Section 10.3.2 and Section  10.3.3,
either Party may terminate  this  Agreement  upon the  occurrence of an Event of
Default  relating to the other Party if the defaulting Party fails to fully cure
the Event of Default  within  thirty (30) days  following its receipt of written
notice from the Party.

     10.3.2 The Non-defaulting  Party may terminate this Agreement  immediately,
by  giving  the  defaulting  Party  written  notice  of  termination,  upon  the
occurrence of the Event of Default described in clause (b) or (c) of Section 9.

     10.3.3.  Company may terminate this Agreement immediately by giving Channel
Member  written  notice of termination if (a) Channel Member has made a material
misrepresentation  or omission in its application to establish a  representative
relationship with Company, (b) Channel Member substantially or continually fails
to abide by the  standards  established  by Company  under  Section  4.1, or (c)
Channel Member violates any of its obligations under Section 8.

     10.3.4 Either Party may terminate this Agreement for its  convenience  upon
ninety (90) days' written notice to the other Party.

10.4 Channel Member's Additional Termination Rights

     If Company amends the Program Rules in a manner such that Channel  Member's
total  expected  compensation  is  reduced by greater  than ten  percent  (10%),
Channel Member may terminate this Agreement by giving Company  written notice of
termination  at least fifteen (15) days prior to the effective date of Company's
proposed  amendment.  Notwithstanding  the  foregoing,  if Company  rescinds the
amendment  within twenty (20) days after receiving  Channel  Member's notice (or
such lesser time as may remain prior to the  effective  date of the  amendment),
this Agreement will not terminate but will continue in full force and effect.

10.5 Company's Additional Termination Rights


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     10.5.1  Upon the  expiration  or  revocation  of any license  required  for
Company to operate in any portion of the Area,  this Agreement will  immediately
terminate  with respect to such portion of the Area and Exhibit A will be deemed
automatically  amended to delete such portion of the Area. If Company  transfers
any required  license to a  non-Affiliated  third  party,  Company will have the
option with  respect to the relevant  portion of the Area of either  terminating
this  Agreement,   assigning  this  Agreement  to  the  license  transferee,  or
continuing this Agreement through the offering of some reasonable substitute for
Service.

     10.5.2  Company may terminate this Agreement upon thirty (30) days' written
notice to Channel Member,  (a) if the FCC or any other  regulatory  agency rules
and regulations governing the provision of Service or the operation of Company's
Data Network in the Area change  materially  and have an adverse impact upon the
Company's ability to conduct its business,  or (b) upon any change in regulatory
authorization  affecting any part of this Agreement on terms and conditions that
are unacceptable to Company or its Affiliates.

10.6 Survival

     Upon the termination of this  Agreement,  all rights and obligations of the
Parties hereunder will cease without further liability, effective as of the date
of termination;  provided, that all provisions of this Agreement that reasonably
may be  interpreted  or  construed  as  surviving  termination  will survive the
termination of this  Agreement,  including but not limited to those set forth in
Section 8.1, 11 and 12.4.

Section 11. Confidential Information

11.1 Ownership and Use

     All Confidential  Information is and will remain the exclusive  property of
the Party to which it belongs, even if it was gained or developed as a result of
or in the course of the Parties' relationship. During the term of this Agreement
and at all times  thereafter,  neither  Party,  or such  Party's  Affiliates  or
Personnel,  will use or  disclose  any  Confidential  Information  to any Person
except as  expressly  provided in this  Agreement.  Each Party will use its best
efforts to avoid  disclosure,  dissemination or unauthorized use of Confidential
Information,  including,  at a  minimum,  the same  degree  of effort it uses to
protect its own confidential information of a similar nature.

11.2 Exceptions

     The provisions of Section 11.1 will not apply to any  information  that (a)
is or becomes publicly  available  without breach of this Agreement,  (b) can be
shown by  documentation to have been known to a Party at the time of its receipt
from the other Party,  (c) is  rightfully  received from a third Party without a
requirement  that the third party treat the information as confidential and such
third party did not acquire or disclose such  information by a wrongful act, (d)
can be shown by documentation to have been independently developed by such Party
without reference to any of the

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other Party's  Confidential  Information,  or (e) is required to be disclosed by
judicial or regulatory process, or other requirements of law.

11.3 Personnel

     Each Party will restrict the possession,  knowledge, development and use of
Confidential  Information  to  those  of its  Personnel  who have a need to know
Confidential  Information in connection  with this Agreement.  Such  individuals
will  have  access  only to the  Confidential  Information  they  need  for such
purpose.

11.4 Obligations upon Termination

     Upon termination of this Agreement, each Party will promptly deliver to the
other or destroy all materials,  including but not limited to written documents,
audio and video tapes, computer diskettes, and other magnetic,  optical or other
storage  media,  containing  Confidential   Information,   and  will  erase  all
Confidential  Information  from its computer  hard drives or other storage media
which cannot reasonably be transferred.

Section 12. Disputes and Claims

12.1 Arbitration

     12.1.1 Arbitration Clause.  Except as stated in paragraph 12.1.6 below, all
claims  (including  counterclaims  and  cross-claims)  and disputes  between the
Parties  shall be resolved by  submission  to binding  arbitration.  The Parties
shall submit any such  disputes to the Seattle,  Washington  offices of Judicial
Arbitration  &  Mediation  Services,  Inc.  ("JAMS")  or such other  arbitration
service located in Seattle, Washington for which the Parties may agree. If there
are no such offices of JAMS,  the Parties shall  arbitrate  their disputes under
the commercial arbitration rules of the American Arbitration Association, before
one  neutral  arbitrator,  except to the extent  that those  rules are  modified
herein.

     12.1.2 Selection of Arbitrator. In the event that a dispute is submitted to
JAMS for  resolution,  the Parties may agree on a jurist from the JAMS panel. If
the Parties  are unable to agree,  JAMS will  provide a list of three  available
panel  members and each Party may strike one.  The  remaining  panel member will
serve as the arbitrator.

     12.1.3  Initiation  of  Arbitration.   The  aggrieved  Party  can  initiate
arbitration  under this  paragraph by sending  written notice of an intention to
arbitrate  to the other  Party.  The notice must  contain a  description  of the
dispute, the amount involved, and the remedy sought.

     12.1.4 Procedures and Discovery. The arbitrator shall schedule a prehearing
conference to reach agreement on procedural matters, arrange for the exchange of
information, obtain stipulations,

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schedule the arbitration  hearing, and attempt to narrow the issues. In order to
expedite  the  arbitration  proceedings,  the  Parties  have agreed to place the
following limitations on discovery:

     (a) Each Party may propound only one interrogatory requesting the names and
addresses of the witnesses to be called at the arbitration hearing.

     (b) On a date to be determined at the prehearing conference, each Party may
serve one request for the  production  of  documents.  The  documents  are to be
exchanged twenty-one (21) days after service of the request.

     (c) Each Party may  depose  four (4)  witnesses.  Each  deposition  must be
concluded within four (4) hours and all depositions must be taken within 60 days
of the prehearing  conference.  Any Party deposing an opponent's  expert witness
must pay the expert's fee for attending the deposition.

     12.1.5 Enforcement of Award. There shall be no right to appeal the decision
of the  arbitrator.  The award of the arbitrator may be confirmed or enforced in
any court having jurisdiction.

12.2 Injunctive Relief

     Notwithstanding  paragraph  12.1.1,  either  Party shall have the option to
bring court  proceedings  to seek an  injunction  or other  equitable  relief to
enforce any right,  duty or obligation  under this Agreement,  including but not
limited to those  contained in paragraph  7, 8 and 11. To obtain  injunctive  or
other  equitable  relief,  the Party shall not be required to post a bond or, if
required by law or by the court,  the other Party  hereby  consents to a bond in
the lowest amount permitted by law.

12.3 Attorney's Fees

     If one Party  commences any  arbitration or court action against the other,
the  substantially  prevailing  Party will be entitled to recover its reasonable
costs  incurred in connection  with the action,  including any appeals.  For the
purposes of this Section 12.3, the term "costs"  includes,  without  limitation,
attorneys'  fees,  paralegal  fees,  investigative  fees,  expert  witness fees,
administrative costs, any other charges billed by the attorney to the prevailing
Party and the cost of efforts of in-house  legal staff  (which will be valued at
market rates for comparable services from private practitioners).

12.4 Indemnification

     12.4.1  EACH  PARTY  WILL,  DEFEND,  INDEMNIFY  AND HOLD THE  OTHER AND THE
OTHER'S AFFILIATE'S (AND THE OWNERS, DIRECTORS,  EMPLOYEES AND AGENTS OF EACH OF
THEM) HARMLESS AGAINST ANY DAMAGES,  LOSSES AND EXPENSES  (INCLUDING  REASONABLE
ATTORNEYS'  FEES AND  DISBURSEMENTS)  ARISING  OUT OF OR RELATING TO ANY CLAIMS,
ACTIONS OR OTHER PROCEEDINGS

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THAT (A) ARE BROUGHT BY OR ON BEHALF OF ANY THIRD PARTY, AND (B) RESULT FROM THE
ACTS OR OMISSIONS OF THE  INDEMNIFYING  PARTY.  FOR THE PURPOSES OF THIS SECTION
12.4.1,  "THIRD  PARTY"  MEANS ANY PERSON OR ENTITY  OTHER THAN THE  PARTIES AND
THEIR RESPECTIVE AFFILIATES.

     12.4.2 With respect to any claim,  action or proceeding for which one Party
is required to indemnify the other Party under Section  12.4.1,  the indemnified
Party will (a) give the  indemnifying  Party prompt written notice of the claim,
action or proceeding,  (b) cooperate with the  indemnifying  Party in connection
with the defense,  settlement or prosecution of the claim, action or proceeding,
and (c) not settle the claim,  action or  proceeding  without the prior  written
consent  of the  indemnifying  Party,  which  consent  will not be  unreasonably
withheld.  Notwithstanding  the foregoing,  the indemnified  Party will have the
right to fully  participate  in the defense at its own  expense,  and,  further,
Company  (as an  indemnified  Party)  will  have the  right to  approve  Channel
Member's selection of counsel, which approval will not be unreasonably withheld.
Failure to provide  timely  notice  under this Section will only limit a Party's
rights  hereunder  to the  extent  the  Party  entitled  to  receive  notice  is
prejudiced.

12.5 No Consequential Damages

     NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY  INDIRECT,  INCIDENTAL OR
CONSEQUENTIAL  DAMAGES ARISING OUT OF SUCH PARTY'S FAILURE TO PERFORM UNDER THIS
AGREEMENT.  FOR THE PURPOSES OF THIS SECTION 12.5,  "PARTY" MEANS THE PARTY, ITS
AFFILIATES  AND THEIR  RESPECTIVE  DIRECTORS,  OFFICERS,  EMPLOYEES  AND AGENTS.
NOTHING IN THIS SECTION 12.5 WILL LIMIT A PARTY'S  OBLIGATION TO FULLY INDEMNIFY
THE OTHER UNDER SECTION 12.4 FOR ACTIONS BROUGHT BY THIRD-PARTIES,  EVEN IF SUCH
ACTIONS INCLUDE CLAIMS FOR INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

12.6 Limitation of Actions

     EXCEPT FOR INDEMNIFICATION ACTIONS ARISING IN CONNECTION WITH SECTION 12.4,
NEITHER  PARTY MAY BRING A LEGAL  ACTION OR ASSERT A CLAIM WITH  RESPECT TO THIS
AGREEMENT  MORE  THAN  TWELVE  (12)  MONTHS  AFTER  THE CAUSE OF ACTION OR CLAIM
ACCRUES.

Section 13. Miscellaneous

13.1 Cooperation in Regulatory Proceedings

     Channel Member will support Company's efforts before regulatory authorities
or others regarding  Company's  provision of Service hereunder.  Upon reasonable
notice and at Company's  expense,  Channel  Member will  cooperate  with Company
regarding any such efforts, including,

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among  other  things,  by  providing  Personnel  who  are  able  to  testify  at
appropriate times regarding any aspect of this Agreement or related issues.

13.2 Force Majeure

     Neither Party will be liable for any loss,  damage,  cost, delay or failure
to perform resulting from causes beyond its reasonable  control  including,  but
not limited to, acts of God, fires, floods, earthquakes, strikes, insurrections,
riots,  lightening or storms, or delays of suppliers or  subcontractors  for the
same causes.

13.3 Notices

     Any notice or other  communication  under this Agreement given by one Party
to  the  other  will  be  in  writing  and  will  be  delivered  in  person,  by
electronically  receipted facsimile (that is acknowledged in a similar manner by
the intended  recipient) by certified mail,  return-receipt  requested (properly
addressed  and stamped  with the  required  postage)  or by  national  overnight
delivery  service to the intended  recipient at its address  specified below its
signature at the end of this  Agreement and to the  attention of the  individual
who executed this Agreement on behalf of such Party.  Notices are effective upon
receipt.  Any Party may change such  address or  individual  by giving the other
Party notice in accordance with this Section l3.3.

13.4 Export Control

     The  Parties  acknowledge  that  any  Equipment,  Applications,   products,
software, and technical information (including, but not limited to, Services and
training)  provided  under this  Agreement  are  subject to the export  laws and
regulations  of the United  States of America  and any use or  transfer  of such
Equipment,  Applications,  products, software, and technical information outside
of the United  States or to foreign  nationals  must be  authorized  under those
regulations.

13.5 No Waiver

     No failure or delay on the part of Company in exercising  any right,  power
or privilege  under this Agreement or under the Program Rules,  and no course of
dealing  between  Channel  Member  and  Company,  will be deemed a waiver of any
further  exercise  of any right,  power or  privilege.  The rights and  remedies
expressly  provided  herein are  cumulative  and not  exclusive of any rights or
remedies which Company would otherwise have.

13.6 Assignment

     This  Agreement  will  bind and inure to the  benefit  of  Channel  Member,
Company  and their  respective  successors  and  assigns.  Company may assign or
delegate  all or any  portion of its rights or  obligations  hereunder.  Channel
Member may not assign or  delegate  any of its rights or  obligations  hereunder
without Company's prior written consent, which may be withheld at Company's sole

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discretion.  For the purposes of this Section, any transaction by which a Person
acquires fifty percent (50%) or more of the voting power,  interest in income or
dividends or assets of Channel Member, or the right to control Channel Member or
its business, will constitute an assignment of this Agreement by Channel Member.

13.7 Applicable Law

     This Agreement will be interpreted,  construed and enforced in all respects
in accordance with the laws of the State of Washington  without reference to its
choice of law rules.

13.8 Entire Agreement

     13.8.1 This Agreement  represents the entire agreement  between the Parties
with respect to the matters addressed in this Agreement and, except as expressly
provided herein, may not be modified by any other agreements, representations or
understandings,  whether oral or in writing. This Agreement supersedes all prior
agreements   between  the  Parties,   except  that  any  covenants  relating  to
confidentiality,  business record retention and other post-termination covenants
of prior agreements will survive.

     13.8.2 This Agreement will be construed as a separate contract with each of
Company's  Affiliates now or hereafter providing Service hereunder.  If any such
Affiliate  ceases to be affiliated  with Company,  such  Affiliate may terminate
this  Agreement  (solely with respect to the  Affiliate)  upon thirty (30) days'
written   notice  to  Channel  Member  (which  notice  may  be  given  prior  to
disaffiliation).

13.9 Amendments

     Except as otherwise provided in this Agreement, no amendment,  modification
or waiver of any of the  provisions of this  Agreement  will be valid unless set
forth  in a  written  instrument  signed  by  the  Party  to be  bound  thereby.
Notwithstanding the foregoing, Company unilaterally may modify this Agreement at
any time, provided such modification is reasonably  necessary to comply with the
laws, orders,  regulations and approval requirements of governmental authorities
having jurisdiction over the Company's  provision of Service hereunder.  Company
will notify Channel Member as soon as practicable of any such modifications.

13.10 Severability

     If any  provision of this  Agreement is held invalid  under any  applicable
law, such  invalidity will not affect any other provision of this Agreement that
can be given  effect  without  the  invalid  provision.  Further,  all terms and
conditions of this  Agreement  will be deemed  enforceable to the fullest extent
permissible under applicable law and, when necessary, the arbitrator or court is
requested to reform any and all terms or conditions to give them such effect.


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Section 14. Independent Investigation

     COMPANY AND CHANNEL  MEMBER  ACKNOWLEDGE  THEY HAVE READ THIS AGREEMENT AND
UNDERSTAND  AND  ACCEPT  THE  TERMS  AND  CONDITIONS  CONTAINED  HEREIN AS BEING
REASONABLY  NECESSARY TO MAINTAIN COMPANY'S HIGH STANDARDS FOR SERVICE.  CHANNEL
MEMBER  UNDERSTANDS  THAT  COMPANY  MAY AT ANY TIME ALSO BE ENGAGED  DIRECTLY OR
INDIRECTLY THROUGH OTHER CHANNEL MEMBERS,  REPRESENTATIVES,  DEALERS, RETAILERS,
OR OTHERWISE,  IN SOLICITING  POTENTIAL  SUBSCRIBERS  FOR SERVICE ON THE SAME OR
DIFFERENT  TERMS AS THOSE  PROVIDED  TO  CHANNEL  MEMBER.  CHANNEL  MEMBER  ALSO
UNDERSTANDS  THAT COMPANY MAY SELL SERVICE TO OTHERS WHO MAY RESELL IT.  CHANNEL
MEMBER HAS INDEPENDENTLY  INVESTIGATED THE WIRELESS  COMMUNICATIONS BUSINESS AND
THE  PROFITABILITY  (IF  ANY)  AND  RISKS  THEREOF  AND  IS NOT  RELYING  ON ANY
REPRESENTATION,  GUARANTEE,  OR  STATEMENT  OF  COMPANY  OTHER THAN AS SET FORTH
HEREIN.  IN  PARTICULAR,  CHANNEL  MEMBER  ACKNOWLEDGES  THAT  COMPANY  HAS  NOT
REPRESENTED  (A) CHANNEL  MEMBER'S  PROSPECTS  OR CHANCES  FOR  SUCCESS  SELLING
SERVICE UNDER THIS AGREEMENT,  (B) THE TOTAL  INVESTMENT THAT CHANNEL MEMBER MAY
NEED TO MAKE TO OPERATE UNDER THIS  AGREEMENT  (COMPANY DOES NOT KNOW THE AMOUNT
OF THE TOTAL  INVESTMENT THAT MAY BE REQUIRED FOR THIS PURPOSE),  OR (C) THAT IT
WILL LIMIT ITS EFFORTS TO SELL SERVICE OR ESTABLISH OTHER CHANNEL MEMBERS IN THE
AREA.

     The Parties have  entered  into this  Agreement  through  their  respective
duly-authorized representatives on the date first above written. Compudawn, Inc.

By:       /s/ John Patrick Hefferon
Title:   Exec. Vice Pres. Sales & Marketing
Address: 77 Spruce Street
         Cedarhurst, New York 11516
Attn:    John Hefferon
Telephone: (516) 374-6700 x607

AT&T Wireless Data, Inc. d/b/a AT&T Wireless
Services

By:       /s/ illegible
Title:    Director of Sales
Address:  10230 N.E. Points Drive
          Kirkland, Washington 98033
Attn:     Legal Department
Telephone:(206) 803-4000

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                                    Exhibit B



                              Channel Program Rules

                         Effective Date: February 1,1997

1. Incorporated Channel Program Agreement

     These  Channel  Program  Rules  ("Program  Rules")  are a part of the  AT&T
Wireless Data Channel Program Agreement (the "Agreement") that has been executed
by Company and Channel Member and, except as provided in paragraph 2 below,  are
to be interpreted and administered in a manner consistent with the Agreement.

2. Inconsistencies in Terms

     If any inconsistency or conflict exists between the Agreement, as it may be
amended from time to time, any prior  Agreement,  prior Data  Solutions  Program
Rules,  prior Channel Member Rules or these Program  Rules,  these Program Rules
will control.

3. Defined Terms

     In addition to the terms defined in the Agreement, the following terms will
have the meanings set forth below:

     3.1  "Activation  Date"  means  the date on  which  Company  makes  Service
available to a PDS Subscriber,  or, in the case of a CDS Subscriber, the date on
which such CDS Subscriber is registered for CDS Service.

     3.2 "CDS Enabling Device" means a circuit switched cellular modem, cable or
laptop  computer  that  enables a laptop  computer to access and to operate over
circuit switched cellular networks.

     3.3 "CDS  Service  Revenues"  means  moneys  received by Company from a CDS
Subscriber as payment for local  cellular  airtime used in  connection  with CDS
Service. For the period beginning upon execution of the Agreement and continuing
through such time as Company shall provide  Channel Member with written  notice,
CDS Service  Revenues will be based upon a CDS Service Revenues usage profile of
Forty Dollars ($40) per month per Subscriber.  For Subscriber Accounts with more
than 25 CDS  Subscribers,  Channel  Member may  request  Company to  establish a
higher usage profile based upon prospective usage  information  supplied by such
Subscriber  Account,  and Company may in its sole discretion  establish a higher
usage profile for Subscribers associated with such Subscriber Account.

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     At such time as Company  provides  Channel Member with written notice,  CDS
Service Revenues will change to:

     For Subscribers who have been existing Company cellular voice customers for
at least three full calendar  months prior to  purchasing a CDS Enabling  Device
and  registering  for CDS Service,  CDS Service  Revenues for each month will be
calculated as follows:

         Cellular  Service  Revenues  for that  calendar  month,  minus such CDS
         Subscriber's  average monthly  Cellular  Service Revenues for the three
         full  calendar  months  immediately  prior  to  such  CDS  Subscriber's
         registration for CDS Service.

     For Subscribers  who are new Company  cellular voice customers or have been
existing  Company  cellular  voice  customers  for less than three full calendar
months  prior to  purchasing  a CDS  Enabling  Device  and  registering  for CDS
Service, CDS Service Revenues for each month will be calculated as follows:

         Cellular  Service  Revenues for that calendar month,  minus the average
         monthly  Cellular   Service  Revenues  for  Company's   cellular  voice
         subscribers in the MSA or RSA in which the CDS  Subscriber  resides for
         the  three  full  calendar  months   immediately   prior  to  such  CDS
         Subscriber's registration for CDS Service.

     CDS Service Revenues shall specifically  exclude moneys received by Company
from  Subscribers  for any CDS Service  used in  connection  with a  PocketNetTM
Service Access Device.

     3.4 "CDS  Subscriber"  means a customer who purchases a CDS Enabling Device
from Channel  Member,  who is registered for CDS Service within thirty (30) days
of such purchase, and, if a new Number is activated for such customer, submits a
Subscriber Agreement for CDS Service (on a Company-authorized rate plan) through
Channel Member in compliance with the Agreement,  which Subscriber  Agreement is
accepted by Company.

     3.5 "Cellular Service Revenues" means, for CDS Subscribers, moneys received
by Company from a CDS Subscriber for voice cellular usage and CDS Service usage.
Cellular Service Revenues shall specifically exclude long distance, toll, taxes,
roaming  charges,  activation fees,  access fees, and feature charges.  Cellular
Service Revenues shall be adjusted for CDS Subscriber credits and bad debt.

     3.6 "Compensation  Schedule" means the Channel Member compensation schedule
attached  hereto and made a part hereof,  as the same may be modified by Company
from time to time.

     3.7 "Level 1 Customer Support" means direct, first contact customer support
regarding all aspects of  Subscriber's  use of the Service  (whether  arising in
connection  with the  Equipment,  Application,  hardware,  software  or Service)
including, for example, issues relating to modems,

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protocol stacks,  software  configuration and setup,  usability issues,  Service
activation and Service coverage.

     3.8 "PDS  Service  Revenues"  means  moneys  received  by Company  from PDS
Subscribers  as payment for packet data  transmitted  and received in connection
with PDS  Service  and does not include  moneys  from such  charges as,  without
limitation,   activation  fees,  taxes,  interconnection  charges,  and  feature
charges.  PDS Service  Revenues will be adjusted for PDS Subscriber  credits and
bad debt.

     3.9  "PocketNetTM  Service  Access  Device"  means an  integrated  data and
cellular  telephone  device which enables PDS Subscribers to access  PocketNetTM
Service.

     3.10 "PDS Subscriber" means a customer who submits a Subscriber Application
for PDS Service or PocketNet  Service  (provided Channel Member is authorized to
solicit  Subscribers  to  PocketNet  Service  as  provided  in  Exhibit C to the
Agreement)  on  a  Company-authorized   rate  plan  through  Channel  Member  in
compliance  with the  Agreement,  which  Subscriber  Agreement  is  accepted  by
Company,  who is  assigned a Number by  Company,  and who is  activated  for PDS
Service in compliance with the Agreement.

     3.11 "Service  Revenues"  means,  collectively,  all applicable PDS Service
Revenues and CDS Service Revenues.

     3.12  "Subscriber"  means,  collectively,   all  PDS  Subscribers  and  CDS
Subscribers.

     3.13  "Subscriber  Account"  means any group of  Subscribers  whose NEIs or
Numbers were assigned in connection with a single Person.

4. Activation Procedures

     Channel Member will activate  Subscribers in compliance  with these Program
Rules and Company's  then-current  activation  procedures.  Company will provide
Channel  Member with written  activation  procedures  from time to time.  In the
event  Channel  Member is  activating  Service  for a PocketNet  Service  Access
Device, Channel Member shall only activate PDS Service, and must refer the voice
and CDS Service activation to Company.

5. Compensation

     5.1  Company  will  compensate   Channel  Member  for  PDS  Subscribers  in
accordance  with these  Program  Rules and the  Compensation  Schedule.  Channel
Member  will not  receive  any  compensation,  and shall not  receive any credit
toward  Channel  Member's  PDS  Goal  Attainment  and  PDS  Minimum  Performance
Standards,   for  any  PDS  Subscriber  unless  the  PDS  Subscriber's   Service
application clearly indicates that Channel Member solicited the PDS Subscriber's
order for Service and such PDS  Subscriber  was  activated  in  accordance  with
Section 4. In addition, Channel Member

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shall not be entitled to any  compensation  for a PDS Subscriber  activating PDS
Service in  connection  with a PocketNet  Service  Access  Device if Company has
previously  paid any  compensation  to Channel  Member or any Person  other than
Company or its  Personnel  to obtain  such PDS  Subscriber  as a cellular  voice
subscriber in connection with such PocketNet Service Access Device.

     5.3 If Channel Member is authorized to solicit CDS Subscribers  pursuant to
the Agreement and Exhibit A thereto,  Company will compensate Channel Member for
CDS  Subscribers  in accordance  with these  Program Rules and the  Compensation
Schedule. Channel Member will not receive any compensation and shall not receive
any  credit  toward  Channel  Member's  CDS  Goal  Attainment  and  CDS  Minimum
Performance  Standards for any CDS Subscriber  unless Channel Member (a) submits
to  Company  satisfactory  evidence  that such CDS  Subscriber  purchased  a CDS
Enabling Device from Channel  Member,  (b) such CDS Subscriber is registered for
CDS  Service  within  thirty  (30) days  after such  purchase,  and (c) such CDS
Subscriber was activated in accordance with Section 4.

     5.4  Compensation  will be available for each  Subscriber  for a maximum of
four  years  from  the   Subscriber's   Activation  Date,   provided,   however,
compensation  shall immediately  terminate with respect to such Subscriber prior
to the  expiration  of such  four  years if (a) the  Agreement  terminates;  (b)
Subscriber's   agreement  with  Company   terminates;   or  (c)  Channel  Member
discontinues providing Level l Customer Support to any Subscriber.

     5.5 Company will pay Channel Member any earned  compensation  on a calendar
quarter  basis,  within  thirty  (30) days  following  the end of each  calendar
quarter  occurring  during  the  term of the  Agreement.  Payments  of the  Goal
Attainment Fee will commence following the calendar quarter during which Channel
Member  reached the  applicable  Attainment  Goal,  with the first such  payment
including all amounts  accrued since the  beginning of the  applicable  calendar
year.

6. Customer Support Fee

     6.1 Company will pay Channel  Member the Customer  Support Fee set forth in
the  Compensation  Schedule for each  Subscriber  referred to Company by Channel
Member which receives Level l Customer Support from Channel Member, based upon a
percentage of Service Revenues generated by such Subscriber,  provided, however,
Channel  Member shall not be entitled to receive a Customer  Support Fee for any
CDS Subscriber for whom Company is currently paying a voice cellular residual to
any Person.

     6.2 With respect to any given  Subscriber,  Channel Member will be eligible
to receive the  Customer  Support  Fee only  during the period in which  Channel
Member is actually providing Level l Customer Support.

     6.3 If, during any calendar  quarter,  Company  receives service calls from
Subscribers  which  equal  five  percent  (5%) or more of the  total  number  of
Subscribers,  Channel  Member will be placed on support  probation,  and Company
will deduct from Channel Member's Customer Support

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Fees for that calendar  quarter that percentage  equal to the percent of service
calls  exceeding  5%.  If  Channel  Member  is  on  support  probation  for  two
consecutive calendar quarters or more than two calendar quarters in any calendar
year,  Company may immediately  terminate the Agreement by giving written notice
to Channel Member.

7. Goal Attainment Fee

     7.1 The PDS Goal Attainment level for the calendar year commencing in which
the Agreement is executed is Fifty Thousand Dollars ($50,000.00).  To the extent
that PDS Service  Revenues  for new PDS  Subscribers  activated in that year are
equal to or greater than the PDS Goal Attainment level, Company will pay Channel
Member the PDS Goal Attainment Fee based upon eligible PDS Service  Revenues for
all PDS Subscribers for whom Channel Member  received  Customer  Support Fees in
that  calendar  year,  and not  just  such  new PDS  Subscribers.  The PDS  Goal
Attainment  level for  subsequent  calendar  years may be adjusted by  providing
Channel  Member with  written  notice of the PDS Goal  Attainment  level  within
thirty (30) days of the commencement of that year.

     7.2 The CDS Goal Attainment level for the calendar year commencing in which
the Agreement is executed is Fifty Thousand Dollars ($50,000.00).  To the extent
that CDS Service  Revenues  for new CDS  Subscribers  activated in that year are
equal to or greater than the CDS Goal Attainment level, Company will pay Channel
Member the CDS Goal Attainment Fee based upon eligible CDS Service  Revenues for
all CDS Subscribers for whom Channel Member  received  Customer  Support Fees in
that  calendar  year,  and not  just  such  new CDS  Subscribers.  The CDS  Goal
Attainment  level for  subsequent  calendar  years may be adjusted by  providing
Channel  Member with  written  notice of the CDS Goal  Attainment  level  within
thirty (30) days of the commencement of that year.

     7.3 If Channel  Member's  Agreement with Company begins after January 3l of
any year,  Company will prorate the above Goal  Attainment  levels for the first
year of the  Agreement,  to reflect the actual portion of the year the Agreement
was in effect.

8. Processing Fee

     Company will pay Channel  Member a Processing Fee pursuant to these Program
Rules and as set forth in the Compensation Schedule. If a Subscriber activates a
PocketNet Service Access Device, Channel Member will be paid only one Processing
Fee.

9. Minimum Performance Standard

     9.1 During each calendar year, PDS  Subscribers  for whom Channel Member is
receiving  Customer  Support Fees must generate PDS Service Revenues for Company
of at least Thirty Thousand Dollars  ($30,000.00).  If such PDS Subscribers fail
to generate PDS Service  Revenues in the amount of Seven  Thousand  Five Hundred
Dollars ($7,500.00) in any calendar quarter, Channel

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Member will be placed on probation.  If, during the following  calendar quarter,
PDS Subscribers fail to generate PDS Service Revenues of at least Seven Thousand
Five  Hundred  Dollars  ($7,500.00),   Company  may  immediately  terminate  the
Agreement for cause by giving  Channel  Member  written  notice.  Any failure by
Company to  terminate  Channel  Member in such event  will not be  considered  a
waiver,  and Company will retain the right to terminate  Channel  Member for any
subsequent  failure by PDS  Subscribers  to generate PDS Service  Revenues of at
least Seven  Thousand  Five  Hundred  Dollars  ($7,500.00)  during any  calendar
quarter. Company, in its sole discretion, may change the PDS Minimum Performance
Standard once per calendar year by giving Channel Member written notice.

     9.2 During each calendar year, CDS  Subscribers  for whom Channel Member is
receiving  Customer  Support Fees must generate CDS Service Revenues for Company
of at least Thirty Thousand Dollars  ($30,000.00).  If such CDS Subscribers fail
to generate CDS Service  Revenues in the amount of Seven  Thousand  Five Hundred
Dollars  ($7,500)  in any  calendar  quarter,  Channel  Member will be placed on
probation.  If, during the following  calendar quarter,  CDS Subscribers fail to
generate CDS Service  Revenues of at least Seven  Thousand Five Hundred  Dollars
($7,500.00), Company may immediately terminate the Agreement for cause by giving
Channel  Member  written  notice.  Any failure by Company to  terminate  Channel
Member in such event will not be  considered  a waiver,  and Company will retain
the  right  to  terminate  Channel  Member  for any  subsequent  failure  by CDS
Subscribers  to generate CDS Service  Revenues of at least Seven  Thousand  Five
Hundred Dollars  ($7,500.00) during any calendar quarter.  Company,  in its sole
discretion,  may change the CDS Minimum  Performance  Standard once per calendar
year by giving Channel Member written notice.

     9.3 If Channel  Member's  Agreement with Company begins after January 3l of
any year, Company will prorate the above Minimum  Performance  Standards for the
first  year of the  Agreement,  to reflect  the  actual  portion of the year the
Agreement was in effect.

10. Technical and Support Personnel

     10.1 Within  ninety (90) days  following  the  execution of the  Agreement,
Channel  Member  continuously  will  maintain  at least one full time  technical
support person who has received a Wireless Data Technical  Support  Certificate.
If Channel  Member  fails to maintain a certified  technical  support  person in
compliance with this paragraph,  Company immediately may terminate the Agreement
for cause by giving  Channel  Member  written  notice.  Company's  failure to so
terminate the Agreement  will not  constitute a waiver of its right to terminate
the Agreement at any time Channel Member is in violation of this paragraph.

     10.2 Within  ninety (90) days  following  the  execution of the  Agreement,
Channel  Member  continuously  will  maintain  at least one full  time  customer
support person who has received a Wireless Data Customer Support Certificate. If
Channel  Member  fails to  maintain  a  certified  customer  support  person  in
compliance with this paragraph,  Company immediately may terminate the Agreement
for cause by giving Channel Member written notice. Company's failure to so

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terminate the Agreement  will not  constitute a waiver of its right to terminate
the Agreement at any time Channel Member is in violation of this paragraph.

11. Lead Distribution System

     11.1  Company  periodically  may furnish  Channel  Member with the names of
potential sales  opportunities.  Company will distribute leads to Channel Member
only if Company  determines (in its sole discretion) that the  opportunities are
suitable  for  Channel  Member,   taking  into  consideration  Channel  Member's
expertise,  location,  targeted  market and other relevant  factors.  If Company
determines  that certain leads are suitable for more than one channel  member or
other  authorized  representative,  Company,  in its  sole  discretion  (a) will
allocate  those leads among  qualified  members in a reasonable  manner,  or (b)
distribute the lead to all qualified members.

     11.2 Within two Business Days  following  Channel  Member's  receipt of any
lead,  Channel  Member will notify  Company  whether  Channel  Member intends to
pursue  the sales  opportunity.  If  Channel  Member  elects to pursue the lead,
Channel Member will follow Company's lead solicitation policies in pursuing such
lead. If Channel  Member rejects the lead, or fails to respond to Company within
the two Business Days,  Company may assign the lead to another Channel Member or
pursue the lead directly.  Should Channel Member desire to pursue the lead after
rejecting  it or failing to respond in two  Business  days  Channel  Member must
first obtain  written  permission  from  Company to pursue the lead.  If Channel
Member  repeatedly fails to respond to leads in a timely manner,  Channel Member
will be deemed ineligible to participate in the lead distribution system.



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                              Compensation Schedule



                                February l, 1997

                                   PDS Service




Year       Processing        Customer               Goal                   Total
             Fee New         Support            Attainment              Possible
           Subscriber          Fee                  Fee
              Bonus
l              $35             10%*                  2%*                    12%
2                              10%*                  2%*                    12%
3                              10%*                  2%*                    12%
4                              10%*                  2%*                    12%


* of PDS Service Revenues



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                                    Exhibit C

                                     Service




PDS Service

PocketNetTM Service












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                            DATA GENERAL CORPORATION
                            MASTER SUPPLIER AGREEMENT

                          EFFECTIVE DATE: March 3, 1997

Compu-DAWN, Inc. ("SUPPLIER"),  a Delaware corporation with a principal business
office at 77 Spruce Street,  Cedarhurst, NY, 11516, and Data General Corporation
("DGC"),  a  Delaware  corporation  with a  principal  business  office  at 4400
Computer Drive,  Westboro,  MA 01580,  enter into this Master Supplier Agreement
("MSA") as of the EFFECTIVE DATE stated above.

                       BUSINESS BACKGROUND AND OBJECTIVES

         SUPPLIER  and DGC  believe  there  are  opportunities  where it will be
mutually  beneficial  for DGC to offer its  potential  customers  certain  items
and/or services available from SUPPLIER.

         SUPPLIER and DGC have decided to use this MSA to establish  the general
terms and conditions that govern their relationship.

         SUPPLIER and DGC have decided to use separately executed attachments to
specify the items  and/or  services  (including  the  pricing and other  related
provisions)  being made available by SUPPLIER to DGC for use in connection  with
the DGC customer identified on the attachment.

Accordingly, SUPPLIER and DGC agree as follows:

                                A G R E E M E N T

1.       DEFINITIONS

               A.   "CONSULTING  SERVICES"  -  means  those  services,  if  any,
                    identified as such in the applicable PROJECT ATTACHMENT.

               B.   "CUSTOMER" - means the company or other entity identified as
                    such in the applicable PROJECT ATTACHMENT.

               C.   "CUSTOMER  CONTRACT" - means the contract  between DGC and a
                    specific DGC customer  that  relates to the  provisions  set
                    forth in the applicable PROJECT ATTACHMENT.

               D.   "PROJECT  ATTACHMENT" - means each  document,  identified as
                    such and  executed by SUPPLIER and DGC,  which  incorporates
                    this MSA by reference and contains the description,  pricing
                    and other specific terms and conditions  applicable to items
                    and/or  services to be  provided by SUPPLIER  for a specific
                    project.


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               E.   "PROJECT MANAGER" - means the individual, if any, identified
                    as such for each party in a PROJECT ATTACHMENT,  that serves
                    as  the  primary   point  of  contact  with  regard  to  the
                    activities described in the PROJECT ATTACHMENT. Either party
                    may replace its PROJECT  MANAGER upon written  notice to the
                    other party.

               F.   "LICENSED   PROGRAM"  -  means,   for  each  item,  if  any,
                    identified as such in the applicable PROJECT ATTACHMENT,  i)
                    the latest  release,  available as of the effective  date of
                    such PROJECT ATTACHMENT, of the machine-readable object code
                    and all related  documentation  normally supplied therewith,
                    and ii) all changes thereto and subsequent  releases thereof
                    which  SUPPLIER is obligated  to provide  under such PROJECT
                    ATTACHMENT.

               G.   "SUPPORT   SERVICES"  -  means  those   services,   if  any,
                    identified as such in the applicable PROJECT ATTACHMENT.

               H.   "SOURCE CODE" - means i) all or any identifiable  portion of
                    the source  materials,  in human or  machine-readable  form,
                    from which the related object code is compiled or assembled,
                    which  source  materials  include,  but are not  limited to,
                    annotated   listings,   flow   charts,   conversion   tools,
                    supporting documentation, and all other aids and information
                    needed for  support  or  modification  thereof,  and ii) the
                    documentation  for such object code in a camera-ready,  hard
                    copy master and mutually acceptable electronic format.

2.  SCOPE, ORDERS AND PAYMENT

               A.   General - This MSA sets forth the general  provisions  under
                    which  SUPPLIER shall made available to DGC the items and/or
                    services described in the applicable PROJECT ATTACHMENT,  to
                    enable DGC to bid to, and in the event of award, perform for
                    CUSTOMER.  In case of a conflict  between a provision(s)  of
                    the  MSA and  that of a  specific  PROJECT  ATTACHMENT,  the
                    latter shall control with regard to such PROJECT ATTACHMENT.

               B.   List of Exhibits - The following lists the Exhibits that are
                    incorporated into and made a part of this MSA:

                  1)  Exhibit 1 - Mutual Nondisclosure Provisions

                  2)  Exhibit 2 - CONSULTING SERVICES Provisions

                  3)  Exhibit 3 - Licensing Provisions

                  4)  Exhibit 4 - LICENSED PROGRAM Support Provisions


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               C.   Implementation of Purchase Orders - DGC may obtain the items
                    and/or  services  listed in a PROJECT  ATTACHMENT by sending
                    SUPPLIER   a  purchase   order   referencing   the   PROJECT
                    ATTACHMENT.  Each purchase order shall be governed solely by
                    the  terms  and   conditions  of  the   applicable   PROJECT
                    ATTACHMENT.  As long as DGC is in material  compliance  with
                    such  PROJECT  ATTACHMENT,  SUPPLIER  shall not  reject  any
                    related purchase order related to such PROJECT ATTACHMENT.

               D.   Fees, Invoices and Payment

                  1)       The fees for the  various  products  and/or  services
                           being  provided  by  SUPPLIER  to DGC under a PROJECT
                           ATTACHMENT  are the sole and  exclusive  compensation
                           due  SUPPLIER  from DGC with  regard to such  PROJECT
                           ATTACHMENT.  In no  event  shall  such  fees  be less
                           favorable  than those  offered or quoted by SUPPLIER,
                           for  similar   quantities  under  similar  terms  and
                           conditions,  to the most favored of SUPPLIER's  other
                           customers  competing  with DGC on the  same  CUSTOMER
                           project.

                  2)       SUPPLIER  shall not send an  invoice  to DGC prior to
                           SUPPLIER's  shipment  of the  applicable  products or
                           fulfillment  of all, or the  applicable  portion,  as
                           specified in the PROJECT  ATTACHMENT of the services.
                           Each invoice shall  reference the applicable  PROJECT
                           ATTACHMENT and DGC purchase order number and shall be
                           sent  to  the  address  on  the  applicable   PROJECT
                           ATTACHMENT.

                  3)       DGC shall send  payment to  SUPPLIER  for all correct
                           invoices for products  and/or  services listed on the
                           applicable  PROJECT  ATTACHMENT within thirty (30) to
                           forty-five  (45) calendar days after DGC's receipt of
                           such  invoice.  In case of a bona fide  dispute,  DGC
                           shall  notify  SUPPLIER  as  soon  as  is  reasonably
                           possible.

               E.   Taxes - In addition to the fees for items and/or services in
                    the applicable  PROJECT  ATTACHMENT,  DGC is responsible for
                    all related  taxes,  exclusive of those based on  SUPPLIER's
                    net income or those from which DGC is exempt,  as  evidenced
                    by DGC supplying SUPPLIER with a valid tax exemption number.

               F.   Expenses  -  Except  as  agreed  in the  applicable  PROJECT
                    ATTACHMENT,  neither party shall seek reimbursement from the
                    other for expenses or costs incurred in performing.  For all
                    travel related expenses, other than those covered by a fixed
                    price in the applicable PROJECT ATTACHMENT, SUPPLIER shall:

                    1)   obtain the written approval of DGC before incurring any
                         travel expenses; and


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                    2)   at its  option,  attempt to book travel  through  DGC's
                         Corporate Travel Services at 1-800-343-5880; and

                    3)   submit to DGC a report for DGC approved  travel  within
                         thirty (30) calendar days after completion of the trip,
                         and provide a  pre-printed  receipt,  with  appropriate
                         descriptive  information,  for any  single  expenditure
                         over twenty-five dollars ($25.00); and

                    4)   be  reimbursed  for approved  travel only in accordance
                         with the same expense  reimbursement  policies as apply
                         to  DGC's  own  employees,  a copy of  which  shall  be
                         provided upon SUPPLIER's request.

               G.   PROJECT  MANAGER  Responsibilities  - The PROJECT  MANAGERS,
                    through their mutual written  consent,  shall have authority
                    and be  responsible  for the  following:  i)  proposing  and
                    developing  any  modifications  to  the  provisions  of  the
                    applicable PROJECT  ATTACHMENT,  and, subject to the written
                    mutual  approval of an  authorized  signatory of each party,
                    make mutually  acceptable  changes to the obligations of the
                    PROJECT  ATTACHMENT,  provided such changes clearly indicate
                    any changes to the current  payment stream and any impact on
                    future  deliveries;  ii)  submitting and receiving any items
                    and documents  required to be delivered;  iii)  maintaining,
                    for record keeping purposes,  a log summarizing all material
                    communications  and deliveries between the PROJECT MANAGERS;
                    iv)  implementing  appropriate  practices and  procedures to
                    address the security and  confidentiality of items delivered
                    and    information    exchanged;    and   v)   such    other
                    responsibilities  as the  parties  shall  mutually  agree in
                    writing. Unless specifically identified as such, the PROJECT
                    MANAGERS are not authorized signatories for their respective
                    companies.

3.  TERM AND TERMINATION

          A.   Duration - This MSA  commences  on the  EFFECTIVE  DATE and shall
               govern each  PROJECT  ATTACHMENT.  The  duration of each  PROJECT
               ATTACHMENT shall be as specified therein.  Unless identified as a
               "calendar  day", the term "day(s)"  refers to a business  day(s),
               i.e. Monday through Friday, excluding legal holidays.

          B.   Termination of MSA - Either party may terminate this MSA, with or
               without cause, by sending the other written notice thereof.  Such
               termination  shall take effect  thirty (30)  calendar  days after
               receipt  thereof  (the "MSA  TERMINATION  DATE").  However,  such
               termination  shall not affect any PROJECT  ATTACHMENT that became
               effective prior to the MSA TERMINATION DATE.

          C.   Cancellation of PROJECT  ATTACHMENT - Each party shall notify the
               other in writing in case of the other's  alleged  violation  of a
               material provision of the

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<PAGE>



               applicable PROJECT ATTACHMENT. The recipient of such notice shall
               have, except to the extent specifically provided otherwise in the
               applicable PROJECT ATTACHMENT, thirty (30) calendar days from the
               date of  receipt  of such  notice  to  effect a cure  (the  "CURE
               PERIOD").  If the  recipient  of such notice fails to effect such
               cure within the CURE PERIOD, then the sender of such notice shall
               have the  option of  sending a  written  notice of  cancellation,
               which  notice  shall take  effect upon  receipt,  and such sender
               shall  thereafter  have such  remedies as are provided at law, in
               this MSA and the applicable PROJECT ATTACHMENT.

          D.   Survivorship - Any provision of this MSA and a PROJECT ATTACHMENT
               that by its very  nature or context is  intended  to survive  any
               termination,  cancellation or expiration  thereof,  including but
               not  limited to  provisions  relating  to  disclosure  of certain
               information,  the  payment of  outstanding  fees and  taxes,  and
               indemnities, shall so survive.

          E.   General Access to SOURCE CODE - The parties  recognize that DGC's
               reputation and customer  goodwill are involved in DGC's marketing
               of SUPPLIER's products and services and that DGC has a legitimate
               interest in the protection  thereof.  In lieu of  establishing an
               escrow  of  the  SOURCE  CODE,   SUPPLIER  grants  to  DGC  on  a
               nonexclusive, nontransferable, and fee-free basis, for the entire
               period that  SUPPLIER has  obligated  itself to provide  products
               and/or  related   support  DGC  in  connection  with  a  specific
               CUSTOMER,  the present  right and license to use such SOURCE CODE
               to the extent  reasonably  necessary for DGC to i) use and market
               such  product  in   accordance   with  the   applicable   PROJECT
               ATTACHMENT,   and  ii)  provide   support  and   maintenance   in
               substantially  the same manner as required of SUPPLIER  under the
               applicable   PROJECT   ATTACHMENT.   However,   SUPPLIER   and/or
               SUPPLIER'S  successor in interest  shall have the  obligation  to
               provide,  and DGC shall be entitled  to receive and utilize  such
               SOURCE CODE within the scope of such  license,  only in the event
               that  DGC  cancels  the  applicable  PROJECT  ATTACHMENT  due  to
               SUPPLIER's  failure to comply with a material  provision thereof.
               Promptly  after such  cancellation,  SUPPLIER  and/or  SUPPLIER's
               successor  in  interest,  shall send to DGC a copy of such SOURCE
               CODE and shall not interfere  with DGC's exercise of DGC's rights
               as set forth herein.  After such cancellation,  DGC shall have no
               further  obligation  to pay any other charges that are in any way
               related thereto. In addition, SUPPLIER shall reasonably cooperate
               with  DGC and  negotiate  in good  faith  in the  event  that DGC
               requests authorization to place SOURCE CODE in escrow in order to
               fulfill a potential CUSTOMER's requirement for such action.

4.  WARRANTIES

          A.   Each  party  warrants  to the  other  that  it has i) all  rights
               necessary  to  fulfill  its  obligations  under this MSA and each
               PROJECT ATTACHMENT, and ii) no

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<PAGE>



                  knowledge of any adverse claims against such rights.

         B.       EXCEPT  AS  EXPRESSLY  STATED  IN THIS  MSA OR THE  APPLICABLE
                  PROJECT  ATTACHMENT,  SUPPLIER DISCLAIMS ALL OTHER WARRANTIES,
                  EXPRESS OR IMPLIED,  ARISING BY OPERATION OF LAW OR OTHERWISE,
                  WITH  RESPECT TO ITEMS  AND/OR  SERVICES  SUPPLIED  HEREUNDER,
                  INCLUDING   BUT  NOT  LIMITED  TO  ANY  IMPLIED   WARRANTY  OF
                  MERCHANTABILITY OR FITNESS FOR PURPOSE.

5.       INDEMNITY

          A.   Proprietary  Interests - SUPPLIER shall,  at its expense,  defend
               any suit  against DGC and/or  CUSTOMER  to the extent  based on a
               claim that any item and/or service provided by SUPPLIER infringes
               a patent,  trademark or  copyright,  or  misappropriates  a trade
               secret,   and  shall   notwithstanding   any  limitations  on  or
               exclusions  from liability for damages set forth in this MSA, pay
               all damages  provided  in a  settlement  made by SUPPLIER  and/or
               awarded by a court of final  appeal  attributable  to such claim,
               provided  that  the  entity  seeking   indemnification   provides
               SUPPLIER with i) prompt  written  notice of such claim,  ii) sole
               control  over the related  defense  and/or  settlement  (although
               retaining  the right to be  represented  by its own counsel if it
               elects, at its own expense),  and iii) reasonable cooperation and
               assistance  with regard to such claim.  In addition,  should such
               item and/or service become, or in SUPPLIER's opinion be likely to
               become,  the  subject  of such a claim,  SUPPLIER  shall,  at its
               expense,  use good faith and reasonable efforts to a) procure the
               right for DGC and/or  CUSTOMER to  continue  use  thereof,  or b)
               replace or modify  such so that it no longer so  infringes  or so
               misappropriates,  but only if such  replacement  or  modification
               does not materially and adversely  affect the  specifications  or
               use, or c) if neither a) nor b) above are  accomplished  within a
               reasonable  period of time,  SUPPLIER shall accept return of such
               and grant DGC a full  refund of the fee paid by DGC to  SUPPLIER,
               less straight line  depreciation,  on a pro-rata  basis,  using a
               seven (7) year useful life. The above  indemnity  shall not apply
               to any such claim based on a  modification  of an item or service
               by other than  SUPPLIER or the  combination,  operation or use of
               such item or service with items not  furnished  by  SUPPLIER,  if
               such  claim  would  have  been  avoided  in the  absence  of such
               modification  or  combination,  operation  or use with  items not
               furnished by SUPPLIER.  This subsection  states SUPPLIER's entire
               obligation  for claims of  infringement  and/or  misappropriation
               relating to items and/or services provided by SUPPLIER under this
               MSA and/or a PROJECT ATTACHMENT.

          B.   Insurance - SUPPLIER  shall  maintain  throughout the term of the
               applicable  PROJECT  ATTACHMENT the following minimum  coverages,
               and, upon request of DGC, promptly provide evidence thereof:

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<PAGE>



               1) Workers  Compensation - As per the Statutory  Requirements for
               the state in which services are performed,

               2) Employer's Liability - $100,000/occurrence,

               3)  Comprehensive  General  Liability -  $2,000,000/  occurrence.
            

6.       LIMITATION OF LIABILITY

         EXCEPT  TO  THE  EXTENT  STATED   OTHERWISE  IN  THE  SECTION  ENTITLED
         "INDEMNITY",  NEITHER  PARTY  SHALL  BE  LIABLE  TO THE  OTHER  FOR ANY
         CONSEQUENTIAL,  INCIDENTAL,  INDIRECT  OR SPECIAL  DAMAGES  WHATSOEVER,
         INCLUDING  BUT NOT LIMITED TO LOST PROFITS AND DAMAGES  RESULTING  FROM
         LOSS OF USE OR LOST DATA,  ARISING  FROM ANY CAUSE OR  CONNECTED IN ANY
         WAY WITH THIS MSA AND/OR THE APPLICABLE PROJECT ATTACHMENT, EVEN IF THE
         POSSIBILITY  THEREOF IS KNOWN OR SHOULD  HAVE BEEN  KNOWN.  ANY ACTION,
         REGARDLESS OF FORM,  ARISING OUT OF OR  INCIDENTAL TO THE  TRANSACTIONS
         UNDER THIS MSA OR THE APPLICABLE  PROJECT  ATTACHMENT,  MUST BE BROUGHT
         WITHIN ONE (1) YEAR AFTER THE CASE OF ACTION ACCRUES.

7.       MISCELLANEOUS

          A.   This MSA, including each PROJECT  ATTACHMENT,  shall be construed
               in accordance  with and governed by the laws of the  Commonwealth
               of Massachusetts, excluding its conflict of law rules.

          B.   Neither  party shall assign any right or interest  under this MSA
               and/or a PROJECT  ATTACHMENT  (excepting  moneys due or to become
               due) nor  delegate any work or other  obligation  to be performed
               hereunder to any entity other than i) its corporate parent, ii) a
               division or wholly or majority  owned  subsidiary of the party or
               its corporate parent,  iii) the purchaser of all or substantially
               all of such party's  assets,  or iv) a third party  subcontractor
               that is fully qualified to perform the applicable task(s) and has
               executed a  nondisclosure  contract  that is no less  restrictive
               than that attached to this MSA, without the prior written consent
               of an authorized representative of the other, which consent shall
               not be unreasonably withheld.

          C.   Failure to insist in any instance upon strict  performance by the
               other of any  provision  of this MSA  and/or  PROJECT  ATTACHMENT
               shall not be construed or deemed to be a permanent waiver of such
               or any other provision.

          D.   With the exception of quotes,  purchase orders,  acknowledgments,
               invoices and other

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<PAGE>



               usual and routine  communications,  all other notices or writings
               required or permitted under this MSA and/or a PROJECT ATTACHMENT,
               including but not limited to notices of default or breach,  shall
               be signed by an authorized  representative of the sender, sent to
               the respective  individuals  identified on the applicable PROJECT
               ATTACHMENT  and as set  forth  below  (which  may be  changed  by
               written  notice to the  other),  and shall be deemed to have been
               received  i)  when  hand  delivered  to  such  individuals  by  a
               representative  of the sender, or ii) three (3) days after having
               been sent postage prepaid, by registered or certified first class
               mail, return receipt  requested,  or iii) when sent by electronic
               transmission,   with  written   confirmation  by  the  method  of
               transmission,  or iv) one (1) day after deposit with an overnight
               carrier, with written verification of delivery.

        For DGC                                     For SUPPLIER
        Data General Corporation                    To the address stated above,
        4400 Computer Drive                         Attn.: Jack Hefferon
        Westboro, MA 01580
        Attn.: Vice President - Systems Integration
        cc:      Office of the General Counsel

          E.   Headings  used in this  MSA  and/or  PROJECT  ATTACHMENT  are for
               reference purposes only and are not a part thereof.

          F.   A party  shall be excused  for delays in the  performance  of its
               obligations hereunder due to causes beyond its reasonable control
               and which could not have been  avoided  through  the  exercise of
               reasonable  care, such as acts of God, acts or omissions of civil
               or military  authorities,  fires, floods,  epidemics,  quarantine
               restrictions,  war,  riots,  strikes,  or the  unavailability  of
               necessary  labor,  materials,  or  manufacturing  facilities (the
               "Force Majeure").  The party whose performance is being adversely
               affected  shall  promptly  notify  the other of the nature of the
               Force  Majeure  and  the  obligations  which  will  be  adversely
               affected thereby. Such party shall thereafter make all reasonable
               efforts to resume  performance as soon as is reasonably  possible
               and  to  mitigate  the  adverse  effects  of the  Force  Majeure.
               However,  if the Force  Majeure  causes a delay of ninety (90) or
               more days from the original date of performance,  the other party
               shall have the right to terminate.

          G.   SUPPLIER  hereby   acknowledges   notice  of   requirements   for
               certification  of  nonsegregated  facilities.  Unless exempt from
               Executive Order 11246 concerning equal employment  opportunities,
               SUPPLIER shall not maintain any  segregated  facilities at any of
               its  establishments  and shall  complete a  certification  to the
               effect  required  by the May 7, 1967  Order of the  Secretary  of
               Labor of the United  States.  The  following  applicable  Federal
               Acquisition   Regulations  ("FAR")  are  incorporated  herein  by
               reference,  and,  unless  SUPPLIER is exempt from the application
               thereof,  shall apply to SUPPLIER's  performance  under this MSA:
               Utilization of Small

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<PAGE>



               Business  Concerns  and  Small  Disadvantaged  Business  Concerns
               (52.219-08),   Utilization   of  Women-Owned   Small   Businesses
               (52.219-13)  and,  if  orders  under  this MSA  exceed  $500,000,
               Subcontracting  Plan (52.219-09).  SUPPLIER shall,  within thirty
               (30)  calendar   days  of  request  of  DGC,   furnish  DGC  with
               appropriate certifications of compliance therewith.

          H.   Each party may publicly  disclose  the  existence of the MSA and,
               after the mutual execution of the applicable PROJECT  ATTACHMENT,
               the fact that the party is  involved in a specific  project,  but
               each party  shall use the same  standard  of care as it  normally
               uses to protect its own sensitive information from disclosure, to
               protect from disclosure to any third party,  for a period of five
               (5)  years  after  the  commencement  of the  applicable  PROJECT
               ATTACHMENT,  the specific  details,  including but not limited to
               pricing and payment terms. The parties acknowledge that from time
               to time,  DGC  will  provide  SUPPLIER  with  the  identity  of a
               potential  CUSTOMER and a description of a specific  project with
               such account (collectively called "ACCOUNT  INFORMATION").  It is
               agreed that ACCOUNT INFORMATION is of significant value and shall
               be treated as  RESTRICTED  INFORMATION,  as defined in the Mutual
               Nondisclosure  Provisions in Exhibit 1, even if not  specifically
               identified as such by DGC and even if not reduced to writing.

          I.   The parties are independent  contractors and nothing herein shall
               be  construed  as  forming  a joint  venture  between  them or as
               constituting either party as agent for the other.

          J.   If any provision of this MSA and/or a PROJECT  ATTACHMENT is held
               to be  unenforceable  for any  reason,  then such shall be deemed
               adjusted to conform to the applicable requirements, to the extent
               possible, and the adjusted provision, if any, shall have the same
               effect as if originally  included herein. In any event, the other
               provisions shall remain in effect.

          K.   DGC and SUPPLIER agree that each  company's  employees are highly
               important to the success of each  company,  and that each company
               reasonably  expects to retain its employees free from the other's
               interference.  During the period that begins when a party has its
               first contact with an employee of the other  concerning  this MSA
               or any  related  project,  and  expires  one (1) year  after such
               party's last contact with such  employee  concerning  this MSA or
               any related  project,  such party shall not,  without the express
               written permission of the other, solicit and hire for employment,
               either as an employee or as or through an independent contractor,
               an  employee  the other.  For  purposes  of this  subsection  K.,
               prohibited solicitation means the specific targeting, recruitment
               and hiring of the employee,  as opposed to a general  recruitment
               effort that is not  specifically  directed  at such an  employee,
               such as an  advertisement  in a newspaper,  trade  publication or
               similar  electronic forum. DGC and SUPPLIER agree that any breach
               of this provision would result in injury to the

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                                        9

<PAGE>



               nonbreaching  party  that would be  difficult  or  impossible  to
               estimate.  Therefore,  in the event of such a breach,  and as the
               sole and exclusive  remedy  therefor,  the breaching  party shall
               promptly  pay to the other a sum equal to six (6) times the gross
               monthly salary most recently being paid by the nonbreaching party
               to the  affected  employee,  such  sum to be paid  as  liquidated
               damages  and not as a penalty.  For  purposes  of this  paragraph
               only, the terms "DGC" and "SUPPLIER",  respectively, include such
               party, together with all other entities  controlling,  controlled
               by or under common control with such party.

          L.   This MSA,  including its attached  Exhibits,  and the  applicable
               PROJECT  ATTACHMENT,  are the complete and exclusive statement of
               the  contract  between  the  parties  with  regard to the subject
               matter  set  forth   therein   and   supersede   all  prior  oral
               communications,  written communications,  proposals,  agreements,
               representations,   statements,   negotiations   and  undertakings
               between the parties  with  respect to such  subject  matter.  Any
               amendments  or  alterations  hereof  must be made in writing  and
               executed by an authorized  representative of each party. This MSA
               and/or any PROJECT  ATTACHMENT or any amendments or modifications
               thereto  may be  transmitted  by  facsimile  machine  between the
               parties.  A faxed  signature  shall be deemed  to be an  original
               signature.  A faxed  MSA or  PROJECT  ATTACHMENT,  containing  an
               original  and/or faxed signature of both parties shall be binding
               on both parties.

ACCORDINGLY, the respective representative of each party, being duly authorized,
has caused this MSA to be executed and to become  effective as of the  EFFECTIVE
DATE.

Compu-DAWN, Inc.                         Data General Corporation
("SUPPLIER")                             ("DGC")

By: /s/ Jack Hefferon                    By: /s/ Steve Meadows

Print Name: Jack Hefferon                Print Name: Steve Meadows

Title: E.V.P. Sales & Marketing          Title: Director Professional Services



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                                       10

<PAGE>



                                    Exhibit 1

                         MUTUAL NONDISCLOSURE PROVISIONS

This Exhibit 1 is hereby attached to and  incorporated  into the MSA between DGC
and SUPPLIER and sets forth the  nondisclosure  provisions  applicable  to their
relationship.

                       BUSINESS BACKGROUND AND OBJECTIVES

Based on SUPPLIER's and DGC's common understanding that:

         In order to advance their respective  interests,  SUPPLIER and DGC will
engage in various discussions; and

         During  such  discussions,  each party is willing to  disclose  certain
information  provided the recipient agrees to certain restrictions on the use or
further disclosure of such information;

Accordingly, SUPPLIER and DGC agree as follows:

                                A G R E E M E N T

1.       SCOPE - This Exhibit governs all "RESTRICTED  INFORMATION",  as defined
         below,  exchanged between the parties in the pursuit and/or performance
         of a specific project with a prospective CUSTOMER.

2.       RESTRICTED INFORMATION - Except as set forth in the Section entitled
         "EXCLUSIONS" below, "RESTRICTED INFORMATION" means:

          A.   the identity of the  prospective  CUSTOMER and the description of
               the  specific  project  therewith,  whether  or  not  reduced  to
               writing; and

          B.   all other  information  exchanged  within  the SCOPE and prior to
               expiration of the applicable PROJECT ATTACHMENT, if any, that:

               1)   is in written,  recorded or other tangible form and labeled,
                    at  the  time  of  initial  disclosure,   as  "Proprietary",
                    "Confidential" or other similar legend, or

               2)   is in oral form and  identified  by either of the parties or
                    DGC's customer as  "Proprietary"  or  "Confidential"  at the
                    time of  initial  disclosure,  and  subsequently  reduced to
                    written  or  recorded  form,  marked as  described  in B. 1)
                    above,  and sent to the recipient  within seven (7) calendar
                    days after initial disclosure; and


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<PAGE>



     C.   any  information  of either party or the  CUSTOMER  which is viewed or
          perceived  in the  performance  of  obligations  under the  applicable
          PROJECT  ATTACHMENT  and  which a  business  person  would  reasonably
          believe to be of a sensitive or confidential nature; and

     D.   any  software  (including  related  documentation)  provided by DGC or
          CUSTOMER to  SUPPLIER  for the  purpose of  assisting  SUPPLIER in the
          performance  of  its   obligations   under  the   applicable   PROJECT
          ATTACHMENT.

3.   EXCLUSIONS - Unless specifically agreed otherwise in the applicable PROJECT
     ATTACHMENT, RESTRICTED INFORMATION DOES NOT MEAN i) any software (including
     the  related  documentation)  which  SUPPLIER  customarily  licenses in the
     ordinary course of its business (which software, the parties agree shall be
     provided  solely  pursuant  to  separate  licensing  provisions),  ii)  any
     information  exchanged which the recipient can tangibly  demonstrate was in
     its  possession (or of which it had  knowledge),  free of  restrictions  on
     disclosure or use, or in the public domain, prior to receipt from the other
     party, or iii) any information  exchanged with the reasonable  knowledge or
     expectation  that  such  will  be  included  in  communications   with  the
     prospective CUSTOMER.

4.   DURATION OF NONDISCLOSURE PERIOD

     A.   Except as provided in subsection B. below,  the  NONDISCLOSURE  PERIOD
          for RESTRICTED INFORMATION commences on the date of initial disclosure
          and, unless sooner terminated as stated below,  expires five (5) years
          later.

     B.   The  NONDISCLOSURE  PERIOD  for  RESTRICTED  INFORMATION  is deemed to
          terminate  as of the date that such is first i) publicly  disclosed by
          the disclosing party, ii) rightfully  received by the recipient from a
          third  party   without   restrictions   on  disclosure  or  use,  iii)
          independently  developed  by the  recipient,  as  evidenced by written
          records  prepared at the time of such  development,  iv)  approved for
          unrestricted  disclosure  by the  disclosing  party,  v)  available by
          inspection  of items or  services  marketed  without  restrictions  or
          offered for sale or lease in the ordinary course of business by either
          party or others,  or vi) disclosed  pursuant to applicable  law, court
          order  or  regulation,  provided  that the  disclosing  party is given
          notice  thereof and an  opportunity  to defend,  limit or protect such
          disclosure.

     C.   Either  party  shall have the right to  correct a failure to  identify
          RESTRICTED  INFORMATION  by sending  written notice and complying with
          the applicable  provisions of this Exhibit promptly after discovery of
          such failure. The NONDISCLOSURE PERIOD for such RESTRICTED INFORMATION
          shall be deemed to commence  upon receipt of such notice by recipient,
          but shall expire on the same date as if the RESTRICTED INFORMATION had
          been correctly identified when first disclosed.

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<PAGE>



5.   RESTRICTIONS ON DISCLOSURE AND USE - During the NONDISCLOSURE  PERIOD, each
     party shall use the same degree of care with  regard to the  protection  of
     the  other's  RESTRICTED  INFORMATION  as it uses  with  regard  to its own
     information  of  a  similar  nature  and  sensitivity,  and  no  less  than
     reasonable  care, to i) limit use and  disclosure  thereof to only those of
     its personnel,  or those of its  subcontractors  and their personnel,  that
     have executed a nondisclosure agreement containing provisions substantially
     equivalent  to those set  forth  herein,  that  require  access to  perform
     functions  related to the SCOPE,  ii) not make any other  disclosure or use
     thereof,  and  iii)  return  all  tangible  RESTRICTED  INFORMATION  to the
     disclosing  party within ten (10) days after  receipt of a written  request
     therefor.

6.   MARKINGS  AND  LEGENDS  -  Recipient's   obligations   concerning  use  and
     disclosure of RESTRICTED  INFORMATION  are governed solely by the terms and
     conditions of this Exhibit and any applicable  patent or copyright  law(s).
     Any restrictive  legends placed on RESTRICTED  INFORMATION shall not impose
     any obligations or restrictions upon the recipient except to the extent set
     forth herein.  Nothing  contained  herein shall be construed as granting or
     conferring  upon the  recipient  any license under patents or copyrights of
     the disclosing  party, and no such license or other rights shall arise from
     any  acts,  statements  or  dealings  resulting  from  or  related  to  the
     performance of the obligations hereunder.

7.   GENERAL

     A.   Nothing   contained  herein  shall  be  construed  as  establishing  a
          confidential relationship between the parties.

     B.   Each  party  shall  comply  with all of the  provisions  of the Export
          Administration   Regulations  of  the  United  States   Department  of
          Commerce, as they currently exist and as they may from time to time be
          amended.

     C.   SUPPLIER  agrees to execute  such  nondisclosure  contracts  as may be
          reasonably  required  by the  third  party  owner or  operator  of the
          premises where SUPPLIER will perform any services under any applicable
          PROJECT ATTACHMENT, and to require any of SUPPLIER's subcontractors to
          do the same.

     D.   Each party  warrants that it has the right to disclose its  RESTRICTED
          INFORMATION  to the  other.  RESTRICTED  INFORMATION  IS  PROVIDED  i)
          WITHOUT ANY OTHER WARRANTIES,  AND, ii) EXCEPT AS SET FORTH HEREIN, ON
          AN "AS IS" BASIS.



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<PAGE>



                                    Exhibit 2

                         CONSULTING SERVICES PROVISIONS

This Exhibit 2 is hereby attached to and  incorporated  into the MSA between DGC
and SUPPLIER and sets forth the provisions applicable to each PROJECT ATTACHMENT
that provides for CONSULTING SERVICES.

                       BUSINESS BACKGROUND AND OBJECTIVES

In order for SUPPLIER to fulfill its  obligations  with regard to the CONSULTING
SERVICES  described  on the  applicable  PROJECT  ATTACHMENT,  DGC, and SUPPLIER
recognize that SUPPLIER may need to:

         Use information provided by DGC and/or CUSTOMER, and/or

         Use information already in SUPPLIER's possession, and/or

         Develop new information.

Accordingly,  SUPPLIER and DGC agree that the following governs their respective
rights in the information described above:

                                A G R E E M E N T

1.   DEFINITIONS

     A.   "DGC/CUSTOMER   INFORMATION"   -   means   i)  any   software,   data,
          documentation and/or other information provided by DGC and/or CUSTOMER
          to SUPPLIER to assist  SUPPLIER in fulfilling its CONSULTING  SERVICES
          obligations  in  the  applicable  PROJECT  ATTACHMENT,   and  ii)  any
          DERIVATIVE WORK prepared therefore.

     B.   "DERIVATIVE  WORK" - means any enhanced or modified  version of all or
          any portion of SUPPLIER INFORMATION or DGC/CUSTOMER  INFORMATION which
          if prepared or used without the  authorization of the copyright holder
          of the underlying  work would  constitute a copyright  infringement or
          misappropriation of a trade secret.

     C.   "NEW  WORK" - means only that  software,  documentation,  data  and/or
          other  information  first developed or prepared by or for SUPPLIER and
          delivered  by  SUPPLIER  in  fulfillment  of its  CONSULTING  SERVICES
          obligations in the applicable PROJECT ATTACHMENT, but does not include
          SUPPLIER

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          INFORMATION or DGC/CUSTOMER INFORMATION.

          D.   "SUPPLIER INFORMATION" - means any software,  documentation, data
               and/or other information  (including any DERIVATIVE WORK prepared
               therefrom by SUPPLIER)  which, i) as of the effective date of the
               applicable PROJECT  ATTACHMENT,  is either owned by SUPPLIER or a
               third party other than DGC or  CUSTOMER,  and ii) is delivered by
               SUPPLIER in fulfillment of its CONSULTING SERVICES obligations in
               the  applicable  PROJECT  ATTACHMENT,  but does not  include  any
               software  or  documentation  which the  parties  identify  on the
               applicable  PROJECT  ATTACHMENT  as being  licensed  to DGC under
               provisions other than those set forth in this specific Exhibit.

          E.   "FIXED DELIVERABLE BASIS" - refers to those CONSULTING  SERVICES,
               usually  consisting of a defined  task(s) and/or  deliverable(s),
               for which  SUPPLIER,  in exchange for its  successful  completion
               thereof, is to be paid a firm, fixed amount,  exclusive of travel
               and expense  reimbursement,  even if the actual amount of time or
               effort expended by SUPPLIER differs from the estimate that served
               as the basis for establishing the fixed amount.

          F.   "LABOR RATE BASIS" - refers to those CONSULTING SERVICES, usually
               described  as  providing   expertise  and/or   assistance  for  a
               particular effort,  for which SUPPLIER,  in exchange for its good
               faith  efforts,  is to be paid (subject to any minimum or maximum
               established in the PROJECT  ATTACHMENT)  an amount,  exclusive of
               travel and expense  reimbursement,  based on the actual number of
               hours of labor (or other specified unit of measure) multiplied by
               a rate of payment per hour (or other specified unit of measure).

2.       REPRESENTATIONS

          A.   By DGC - In the event a claim of infringement or misappropriation
               of  intellectual  property  rights is made against  SUPPLIER with
               regard to DGC/CUSTOMER INFORMATION, DGC will defend and indemnify
               SUPPLIER in the same manner and to the same extent that  SUPPLIER
               is  required  to  indemnify  DGC or  CUSTOMER  under the  Section
               entitled  "INDEMNITY"  in the MSA.  DGC shall  treat and  protect
               SUPPLIER  INFORMATION with the same degree of care assumed by DGC
               with  regard  to its own  information  of a  similar  nature  and
               importance, and no less than reasonable care.

          B.   By  SUPPLIER  -  SUPPLIER  represents  to DGC that  all  SUPPLIER
               INFORMATION  and NEW WORK is either the original work of SUPPLIER
               or that  SUPPLIER has all rights  therein  that are  necessary to
               fulfill its obligations under the applicable PROJECT  ATTACHMENT.
               In the  event a claim  of  infringement  or  misappropriation  of
               intellectual property rights is made against DGC and/or

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               CUSTOMER  with  regard to SUPPLIER  INFORMATION  and/or NEW WORK,
               SUPPLIER will  indemnify  DGC and/or  CUSTOMER in the same manner
               and to the same extent that SUPPLIER is required to indemnify DGC
               and/or  CUSTOMER  in the same  manner and to the same extent that
               SUPPLIER is required to indemnify DGC and/or  CUSTOMER  under the
               Section entitled "INDEMNITY" in the MSA.

3.   ALLOCATION OF RIGHTS

     A.   Rights  in  SUPPLIER  INFORMATION  - Unless  otherwise  agreed  in the
          applicable PROJECT ATTACHMENT:

          1)   Nothing  in this  Exhibit  or the MSA  shall  serve  to  transfer
               SUPPLIER's  ownership  or  manufacturing  rights in, or limit its
               right  to use or  market,  SUPPLIER  INFORMATION  (including  all
               designs,  engineering details and other data pertaining thereto),
               and

          2)   SUPPLIER  hereby grants DGC an  irrevocable  (except for material
               breach by DGC of SUPPLIER's  intellectual property or proprietary
               rights in SUPPLIER INFORMATION),  world-wide, nonexclusive right,
               at no charge in addition to the CONSULTING SERVICES Fee set forth
               in the applicable PROJECT  ATTACHMENT,  to generally use SUPPLIER
               INFORMATION  solely in connection  with DGC's  performance of its
               obligations  to  the  CUSTOMER  and  to  license  and/or  provide
               SUPPLIER INFORMATION solely to such CUSTOMER under the same terms
               and conditions as used by DGC to provide such CUSTOMER with DGC's
               own information of a similar nature.

          B.   Rights in DGC/CUSTOMER  INFORMATION - Unless  otherwise agreed in
               the applicable PROJECT ATTACHMENT, nothing in this Exhibit or the
               MSA shall  serve to transfer  DGC's or  CUSTOMER's  ownership  or
               manufacturing  rights  in, or limit  its right to use or  market,
               DGC/CUSTOMER  INFORMATION  (including  all  designs,  engineering
               details and other data  pertaining  thereto).  SUPPLIER is hereby
               granted the limited,  nontransferable  right to use  DGC/CUSTOMER
               INFORMATION only for purposes  directly related to fulfillment of
               SUPPLIER's  obligations under the applicable PROJECT  ATTACHMENT.
               No other rights are granted to SUPPLIER with regard thereto,  and
               SUPPLIER  shall make no other use thereof.  SUPPLIER  shall treat
               and protect DGC/CUSTOMER INFORMATION with the same degree of care
               as used by  SUPPLIER  with  regard  to its own  information  of a
               similar nature and importance,  and no less than reasonable care.
               Unless  otherwise  agreed in the applicable  PROJECT  ATTACHMENT,
               upon  request,   SUPPLIER  shall  promptly  return   DGC/CUSTOMER
               INFORMATION to DGC and/or CUSTOMER, respectively.

          B.   Rights in DGC/CUSTOMER  INFORMATION - Unless  otherwise agreed in
               the

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<PAGE>



               applicable PROJECT ATTACHMENT, nothing in this Exhibit or the MSA
               shall  serve  to  transfer  DGC's  or  CUSTOMER's   ownership  or
               manufacturing  rights  in, or limit  its right to use or  market,
               DGC/CUSTOMER  INFORMATION  (including  all  designs,  engineering
               details and other data  pertaining  thereto).  SUPPLIER is hereby
               granted the limited,  nontransferable  right to use  DGC/CUSTOMER
               INFORMATION only for purposes  directly related to fulfillment of
               SUPPLIER's  obligations under the applicable PROJECT  ATTACHMENT.
               No other rights are granted  SUPPLIER  with regard  thereto,  and
               SUPPLIER  shall make no other use thereof.  SUPPLIER  shall treat
               and protect DGC/CUSTOMER INFORMATION with the same degree of care
               as used by  SUPPLIER  with  regard  to its own  information  of a
               similar nature and importance,  and no less than reasonable care.
               Unless  otherwise  agreed in the applicable  PROJECT  ATTACHMENT,
               upon  request,   SUPPLIER  shall  promptly  return   DGC/CUSTOMER
               INFORMATION to DGC and/or CUSTOMER, respectively.

          C.   Rights  in NEW  WORK - NEW  WORK is "a work  made  for  hire"  by
               SUPPLIER for DGC under the copyright  laws of the United  States.
               SUPPLIER  does not have any and has not been  granted  any rights
               with regard to NEW WORK,  and shall make no use thereof except in
               fulfillment  of its  obligations  under  the  applicable  PROJECT
               ATTACHMENT.  The  full  and  exclusive  ownership  of  NEW  YORK,
               including any United States and  international  copyrights rights
               therein, vests in DGC or DGC's designee. SUPPLIER shall treat and
               protect NEW WORK with the same degree of care as used by SUPPLIER
               with regard to SUPPLIER's own information of a similar nature and
               importance,  and no less than  reasonable  care.  SUPPLIER  shall
               execute  all  documents  and  do  all  other  things   reasonably
               necessary to fully vest such rights in DGC or DGC's designee.

          D.   Additional  Rights  - Ideas,  concepts,  know-how  or  techniques
               developed in the performance of the applicable PROJECT ATTACHMENT
               shall be the property of the party which  developed  them,  or if
               jointly  developed,  shall be the joint property of both parties,
               each  having the right to  generally  use the  jointly  developed
               property without accounting to the other.

          E.   A  copyright  notice on any  DGC/CUSTOMER  INFORMATION,  SUPPLIER
               INFORMATION or NEW WORK does not by itself constitute or evidence
               a publication or public disclosure.

4.   CANCELLATION FOR BREACH

         In the event of a  cancellation  for  breach as set forth in the MSA at
         the Section entitled "TERM AND TERMINATION", the following shall apply:

          A.   CONSULTING  SERVICES - FIXED DELIVERABLE BASIS - If DGC cancels a
              

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<PAGE>



               PROJECT  ATTACHMENT  due  to  SUPPLIER's  breach  of  a  material
               obligation with regard to CONSULTING SERVICES being provided on a
               FIXED DELIVERABLE BASIS, then,  promptly after the effective date
               of the cancellation, SUPPLIER shall:

               1)   refund all portions of the  CONSULTING  SERVICES Fee and all
                    reimbursements for authorized  expenses and/or taxes paid by
                    DGC prior to such effective date, and

               2)   provide DGC with all NEW WORK prepared in the performance of
                    such CONSULTING SERVICES and SUPPLIER INFORMATION needed for
                    the operation or use of such NEW WORK.

     B.   CONSULTING  SERVICES  - LABOR  RATE  BASIS - If DGC  cancels a PROJECT
          ATTACHMENT  due to  SUPPLIER's  breach of a material  obligation  with
          regard to CONSULTING  SERVICES  being  provided on a LABOR RATE BASIS,
          then,  promptly  after the effective  date of such  cancellation,  the
          following shall apply:

               1)   DGC shall be obligated to pay SUPPLIER only for that portion
                    of the CONSULTING SERVICES actually rendered and accepted by
                    DGC,  and for the  authorized  expenses  and taxes  directly
                    related thereto actually incurred by SUPPLIER,  prior to the
                    effective date of such cancellation, and

               2)   SUPPLIER  shall make any claims for  amounts  due  hereunder
                    within thirty (30) calendar days after the effective date of
                    such   cancellation  and  shall  support  such  claims  with
                    documentation submitted to DGC, and

               3)   If DGC has made  advance  payments  in excess of the  amount
                    determined in accordance with subsection 1) above,  SUPPLIER
                    shall promptly refund such excess to DGC, and

               4)   SUPPLIER  shall  provide  DGC with all NEW WORK  prepared by
                    SUPPLIER in the performance of such CONSULTING  SERVICES and
                    any SUPPLIER  INFORMATION needed for the operation or use of
                    such NEW WORK.

5.   TERMINATION WITHOUT BREACH

         The  following  provisions  pertain  to  a  termination  of  CONSULTING
         SERVICES in the absence of a breach by SUPPLIER:

     A.   CONSULTING  SERVICES  -  FIXED  DELIVERABLE  BASIS  - With  regard  to
          CONSULTING SERVICES being provided on a FIXED DELIVERABLE BASIS, if i)
          the CUSTOMER terminates or cancels all or that portion of the CUSTOMER

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          CONTRACT that relates to such CONSULTING SERVICES,  or ii) DGC cancels
          all or that  portion of the  CUSTOMER  CONTRACT  that  relates to such
          CONSULTING  SERVICES due to CUSTOMER's breach of a material obligation
          of the CUSTOMER CONTRACT, the following shall apply:

          1)   DGC shall have the option of terminating such CONSULTING SERVICES
               by  sending  SUPPLIER  written  notice  indicating  the basis for
               termination,  which notice shall become  effective  upon receipt,
               and

          2)   DGC shall be obligated  to pay SUPPLIER  only for that portion of
               the originally  agreed  CONSULTING  SERVICES Fee that  reasonably
               corresponds to the CONSULTING  SERVICES actually  rendered,  plus
               authorized  expenses  and  taxes  directly  related  thereto  and
               incurred  by  SUPPLIER,  prior  to the  effective  date  of  such
               termination, and

          3)   the provisions of subsection C. below shall apply.

B.   CONSULTING  SERVICES  - LABOR  RATE  BASIS -  Either  party  may  terminate
     CONSULTING  SERVICES  being provided on a LABOR RATE BASIS without cause by
     sending the other written notice at any time  indicating a termination  for
     convenience.  Thereafter,  DGC shall be obligated to pay SUPPLIER  only for
     the CONSULTING  SERVICES  actually  rendered plus  authorized  expenses and
     taxes  directly  related  thereto and  incurred by  SUPPLIER,  prior to the
     effective date of such cancellation,  subject to the minimum and/or maximum
     compensation  amounts and notice periods, if any, in the applicable PROJECT
     ATTACHMENT.

C.   Additional  Provisions - The following shall apply to any terminations made
     pursuant to subsection A. or B. above:

          1)   SUPPLIER  shall make any claims for amounts due hereunder  within
               thirty  (30)  calendar  days  after  the  effective  date of such
               termination  and shall  support  such claims  with  documentation
               submitted to DGC, and

          2)   If DGC  has  made  advance  payments  in  excess  of  the  amount
               determined  in  accordance  with  subsection  A. or B. above,  as
               applicable,  SUPPLIER shall  promptly  refund such excess to DGC,
               and

          3)   SUPPLIER shall promptly provide DGC with all NEW WORK prepared up
               to the date of termination in the  performance of such CONSULTING
               SERVICES and SUPPLIER INFORMATION needed for the operation or use
               of such NEW WORK.

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                                    Exhibit 3

                              Licensing Provisions

This Exhibit 3 is hereby  attached to an  incorporated  into the MSA between DGC
and SUPPLIER and sets forth the provisions  applicable to each and every PROJECT
ATTACHMENT involving DGC's procurement of LICENSED PROGRAM from SUPPLIER.

1.   FEES

         The fees due SUPPLIER from DGC shall be as set forth on the  applicable
         PROJECT ATTACHMENT.

2.       GRANT OF LICENSE AND RIGHT TO USE AND REMARKET

          A.   Evaluation License - SUPPLIER shall use good faith to attempt to
               fulfill,  a request from DGC to provide to DGC, at no charge, one
               (1) copy of all LICENSED PROGRAM(S)  identified on the applicable
               PROJECT  ATTACHMENT.  With regard thereto,  SUPPLIER grants DGC a
               nonexclusive,  nontransferable  right  and  license  to use  such
               solely  for  purposes  of  i)  demonstration  to  the  applicable
               CUSTOMER,  ii) testing,  supporting  and  evaluating to determine
               conformance  to  the  requirements  of  the  applicable   PROJECT
               ATTACHMENT. DGC shall make no other use thereof.

          B.   Sublicensing of LICENSED PROGRAM - SUPPLIER hereby grants to DGC,
               on  a  nonexclusive,  nontransferable,   irrevocable  (except  as
               expressly provided herein) basis, the right and license to obtain
               LICENSED   PROGRAM(S)   identified  on  the  applicable   PROJECT
               ATTACHMENT from SUPPLIER for the purpose of providing such to the
               applicable  CUSTOMER under the terms of the  break-the-seal  type
               license agreement packaged with the LICENSED PROGRAM,  if any, or
               in the absence of such  break-the-seal  license agreement,  under
               the same  licensing  provisions as used by DGC to license its own
               programs of a similar nature to CUSTOMER.

          C.   Additional  Authorizations  - Provided DGC is in compliance  with
               the material  provisions of the  applicable  PROJECT  ATTACHMENT,
               SUPPLIER shall not invoke, at law or in equity,  any intellectual
               property or proprietary right, no matter when acquired,  in order
               to interfere with the exercise of any right or the fulfillment of
               any  obligation  set  forth  in such  PROJECT  ATTACHMENT,  or to
               collect  any  moneys  in  excess  of the fees  set  forth in such
               PROJECT ATTACHMENT.

          D.   General  -  DGC  acknowledges   SUPPLIER's   representation  that
               LICENSED PROGRAM involves valuable copyrights,  trade secrets and
               other   intellectual   property  and/or   proprietary  rights  of
               SUPPLIER. No title to or ownership thereof is

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<PAGE>



               transferred  to DGC hereunder.  DGC shall not be responsible  for
               any  violation  of  SUPPLIER's   intellectual   property   and/or
               proprietary  rights  by any  entity  other  than  DGC.  DGC  will
               promptly  notify  SUPPLIER  if  DC  becomes  aware  of  any  such
               violation and will provide reasonably  cooperate with SUPPLIER in
               the protection or  enforcement  of SUPPLIER's  rights in LICENSED
               PROGRAM. DGC shall have no obligation to commence any proceedings
               with regard to such violation. DGC and SUPPLIER hereby agree that
               the rights and licenses  granted to DGC hereunder shall be deemed
               made and  effective as of the  effective  date of the  applicable
               PROJECT ATTACHMENT. SUPPLIER agrees to expeditiously execute such
               documents and  instruments as may be reasonably  requested by DGC
               for the enforcement thereof.

          E.   Restrictions  - DGC  shall not  disassemble  or  reverse  compile
               LICENSED  PROGRAM unless DGC has received SOURCE CODE as a result
               of SUPPLIER's breach of the applicable  PROJECT  ATTACHMENT.  DGC
               shall make no use of  LICENSED  PROGRAM and SOURCE CODE except as
               permitted  hereunder  and shall treat and protect  such with same
               degree of care as used by DGC with regard to its own materials of
               a similar  nature  and  importance,  and no less than  reasonable
               care.  DGC shall  not  remove  or alter  any  copyright  or other
               proprietary  notices  affixed to or embedded in LICENSED  PROGRAM
               and/or SOURCE CODE supplied to DGC by SUPPLIER, and shall include
               such in all copies made by DGC. DGC shall have no  obligation  to
               determine the appropriateness of such notices.

3.       PURCHASE ORDER PROVISIONS

          A.   Lead-time and F.O.B.  Point - The purchase order submitted by DGC
               shall  specify  a  shipment  date not be less  than five (5) days
               after the date on which SUPPLIER  receives the purchase order via
               mail or Fax,  without  the prior  consent  (oral or  written)  of
               SUPPLIER.  The shipment  shall be send F.O.B.  Destination to the
               location,  and via the freight  method and carrier,  specified on
               the purchase order.

          B.   Early/Late  Arrival - If a shipment  has not arrived  within five
               (5) days after the specified  shipment date,  SUPPLIER  shall, at
               DGC's  request,  re-ship by next day air freight at no additional
               charge to DGC.  If  SUPPLIER  fails to ship  within ten (10) days
               after the specified  shipment date,  then for each day thereafter
               that such shipment remains unshipped,  the net price to DGC shall
               be reduced by one half (1/2) percent of the applicable  fee, with
               a maximum  reduction of fifty percent  (50%).  DGC may cancel any
               order whose shipment is delayed more than one (1) month after its
               specified shipment date.

          C.   Changes in Shipment  Date - Shipments may be  rescheduled  and/or
               canceled by DGC without cost or  liability by providing  SUPPLIER
               written or oral notice  thereof at least five (5) days in advance
               of the  specified  shipment  date.  Such notice shall be given to
               SUPPLIER's sales organization.

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<PAGE>



          D.   Incorrect  Shipments - SUPPLIER shall take prompt remedial action
               for any  shipment  which  fails to  inform  with  the  applicable
               purchase order, after receipt of notice thereof from DGC.

          E.   Packing Slips - Packing slips will contain such information as is
               required by DGC,  including  but not limited to,  DGC's  purchase
               order number and/or DGC's customer sales order number, DGC's part
               number, carton count, ship date, carrier and shipment origin.

          F.   Shipment  Confirmation - SUPPLIER agrees to provide the following
               information to DGC within three (3) days after shipment:

                  Sales Order # Ship Date Waybill # Freight Charges # of Cartons
                  Weight (in Pounds) Ship Via (Air, Padded Van, Surface, etc.)

4.       LICENSED PROGRAM WARRANTY

          A.   For any LICENSED  PROGRAM that is provided by SUPPLIER to DGC and
               subsequently  provided  by  DGC to  CUSTOMER  under  an  executed
               licensing  agreement  (as opposed to a LICENSED  PROGRAM  that is
               packaged   with  its  own   "break-the-seal"   type  of   license
               agreement),  SUPPLIER  warrants  to DGC and  CUSTOMER  that,  for
               ninety (90)  calendar  days after  successful  installation,  the
               LICENSED  PROGRAM will operate in accordance  with SUPPLIER's (or
               the manufacturer's)  published specifications applicable thereto,
               and any other specifications and/or requirements set forth in the
               applicable  PROJECT   ATTACHMENT.   If  DGC  reports  a  material
               deviation  from the  specifications  or  applicable  requirements
               within the WARRANTY PERIOD,  and SUPPLIER is unable to correct or
               offer  an  alternative  acceptable  to  DGC  within  thirty  (30)
               calendar  days after  receipt of the  report,  DGC shall have the
               option of returning the LICENSED PROGRAM,  and receiving a refund
               from  SUPPLIER of the full  amount paid by DGC for such  LICENSED
               PROGRAM.

          B.   For any LICENSED PROGRAM that is provided by SUPPLIER to DGC with
               its own "break-the-seal" type of license agreement with the media
               and  documentation  package,   SUPPLIER  shall  provide  warranty
               service  directly  to CUSTOMER  in the manner  specified  in such
               license agreement.

          C.   SUPPLIER  warrants  all that is  shall  replace  without  charge,
               within  ten (10)  calendar  days after  receipt  of  notice,  any
               LICENSED PROGRAM media or documentation supplied by SUPPLIER that
               is, or becomes,  defective within ninety (90) calendar days after
               successful  installation,  provided  the  defect  is  not  due to
               accident, abuse or misapplication after arrival at CUSTOMER.


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<PAGE>



          D.   Restrictions  - DGC  shall not  disassemble  or  reverse  compile
               PROGRAM(S)  unless DGC has  received a license to use the related
               SOURCE CODE in the applicable PROGRAM ATTACHMENT.  DGC shall make
               no use of  PROGRAM(S)  and/or  SOURCE  CODE  except as  permitted
               thereunder. DGC shall treat and protect such with the same degree
               of care  assumed by DGC with  regard to its own  information  and
               materials of a similar  nature and  importance,  and no less than
               reasonable  care.  DGC shall not remove or alter any copyright or
               other  proprietary  notices affixed to or embedded  therein,  and
               shall  include  such in all copies made by DGC. DGC shall have no
               obligation to determine the  appropriateness  thereof.  DGC shall
               not use or authorize  the use of  PROGRAM(S)  and/or  SOURCE CODE
               outside of the TERRITORY.



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                                    Exhibit 4

                       LICENSED PROGRAM Support Provisions

This Exhibit is hereby attached to and incorporated into the MSA between DGC and
SUPPLIER  and sets forth the  provisions  applicable  to each and every  PROJECT
ATTACHMENT involving DGC's purchase of SUPPORT SERVICES for LICENSED PROGRAM(S),
SUPPLIER INFORMATION or NEW WORK to be provided by SUPPLIER. The purpose of this
Exhibit is to identify i) the support requirements of the CUSTOMER CONTRACT, and
ii) each party's  responsibilities  in fulfilling  such  requirements.  SUPPLIER
shall comply with its support obligations  ("SUPPLIER  SERVICES"),  as set forth
below,  during the WARRANTY PERIOD, if any, and such subsequent periods, if any,
for which DGC has paid the applicable SUPPORT SERVICES Fee, if any.

1.       COMMUNICATION

         Each party shall designate in writing the names of specific individuals
         that  shall  act  as  such  party's  representatives  for  purposes  of
         contacting the other party's  support  center.  Each party reserves the
         right to change such names when  appropriate.  Unless  otherwise agreed
         for a particular  matter or  circumstance,  DGC shall  provide  support
         directly to and act as the contact point with the applicable  CUSTOMER.
         SUPPLIER shall interface with DGC.

2.       SUPPORT SERVICES FEE

         The  SUPPORT  SERVICES  Fee  shall be as set  forth  in the  applicable
         PROJECT ATTACHMENT.

3.       PHONE-CALL SUPPORT

         SUPPLIER  shall  promptly  alert DGC to known  problems,  including any
         solutions or  workarounds,  and answer DGC's  questions,  submitted via
         telephone,    related   to   operation,    sysgen   and   installation,
         configuration,  documentation, general product information, and Trouble
         Reporting and Resolution  services.  When DGC calls SUPPLIER,  DGC will
         have already  conducted an investigation  of the problem.  The level of
         telephone  consultation provided by SUPPLIER should minimally be at the
         system engineer level. The telephone  hotline service will be available
         from 8:00 A.M. to 8:00 P.M., Eastern Time.

4.       TROUBLE REPORTING AND RESOLUTION

         SUPPLIER and DGC shall use the following procedures for Trouble Reports
(TRs).

          A.   TR Generation - DGC must  sufficiently  define the problem in the
               TR so it can be reproduced by SUPPLIER.  SUPPLIER  shall promptly
               notify DGC if SUPPLIER can not reproduce  the problem.  DGC shall
               request additional information and the TR

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               will have a status of "Waiting". If the TR arrives after 3:00 PM,
               SUPPLIER's  local  time,  the   acknowledgment  and  verification
               interval will begin at the start of the next day.

          B.   TR Content - A single TR contains only one (1) reported  problem,
               to ensure separate tracking of unrelated problems.

          C.   TR Responses - The following are the types of TR responses:

               1)   "Fix" - usually a change that will close the TR. It may be a
                    patch (the  modification  of an  existing  binary  file),  a
                    replacement  module,  a  special  program,  or a  change  in
                    documentation. A Fix will be provided to DGC within the time
                    frame specified for the assigned  Priority Code, even if the
                    problem  will  be  addressed  in  the  next  release.  A Fix
                    includes  the  change to the code as well as to the  related
                    documentation. A single Fix may apply to more than one TR.

               2)   "Workaround" - usually a set of procedures that  circumvents
                    or  mitigates  the impact of a problem,  though the  problem
                    continues to exist.  A workaround may be provided in lieu of
                    a Fix for a specific TR.

               D.   Priority  Codes - The Priority  Code  indicates  the urgency
                    with which SUPPLIER must respond to the TR. DGC will use the
                    nature  of  the  problem  and  the  business   situation  to
                    determine  the Priority  Code.  The TR Priority  Code may be
                    reclassified  by  SUPPLIER  upon  consent  by DGC.  This may
                    occur,  for  example,  if SUPPLIER  provides a  satisfactory
                    Workaround  for the problem or  determines  that the problem
                    arises from a faulty  understanding  of the original TR. The
                    Priority Codes are as follows:


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<PAGE>




Priority Code #
                   Description
10                 URGENT PROBLEM - System or major application is not
                   functional or seriously impacted and there is no reasonable
                   Workaround currently available.
20                 MODERATE PROBLEM - System or application is
                   moderately impacted.  There is no Workaround currently
                   available or the Workaround is cumbersome to utilize.
30                 NON-CRITICAL PROBLEM - System or application is
                   impacted but causes little or no loss of productivity for
                   users.
90                 REQUESTS FOR ENHANCEMENTS - Although not a
                   problem, will be treated with the same procedures.  An
                   acceptable response states whether or not the request will be
                   honored, with no commitment necessary.

                  Priority Code 10 and 20 TRs will be given top priority.

         E.       TR Receipt  Acknowledgment  and  Verification  - SUPPLIER will
                  send an  acknowledgment  of its  receipt  of an TR to DGC.  At
                  receipt,  SUPPLIER  will  i)  enter  the TR into  the  central
                  problem  reporting  database,  ii) assign  technical  staff to
                  verify and  analyze  the TR, and iii)  assign the  appropriate
                  status category to the TR. The  acknowledgment and the attempt
                  to  reproduce  the  problem  will  be  done  according  to the
                  following schedule:

                  Priority Code #                  Acknowledge/Reproduce Problem

                           10,20                   Within 1 day
                           30                      Within 5 days
                           90                      Within 10 days

          F.   TR  Response:  Type and Interval  Definition - After  receipt and
               verification,  SUPPLIER  shall enter the TR into the TR database,
               commence to correct the  problem,  test the  proposed  correction
               (including  regression testing) and forward the correction to DGC
               for implementation.  SUPPLIER shall provide both an initial and a
               final  response  for each TR. The time  period for  providing  an
               initial  response  begins  when an TR has been  acknowledged  and
               verified  by  SUPPLIER.  A final  response  is made and the TR is
               closed when a correction  for the problem is included in the next
               release.


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               Each Priority Code specifies the required  content of the initial
               response to the TR and the  maximum  number of days in which such
               response  shall be made  available to DGC.  SUPPLIER shall revise
               the TR record with information on the initial and final responses
               on a timely basis.


Priority              INITIAL RESPONSE
CODE                  (DAYS - RESPONSE TYPE)          FINAL RESPONSE
10                    1 -  Fix or Workaround with     Integrate Fix into next
                      daily update                    release
20                    1 - Fix or Workaround           Integrate Fix into next
                                                      release
30                    30-Fix or Workaround            Integrate Fix into next
                                                      release
90                    125-Fix or Workaround at        Fix may be integrated into
                      SUPPLIER's discretion           next release at
                                                      SUPPLIER's discretion

          G.   Performance Goals - SUPPLIER will use its best efforts to provide
               the  initial  response  to an TR within  the time  period for the
               Priority Code unless  otherwise  mutually  agreed.  SUPPLIER will
               provide an initial  response to a Priority  Code 10 TR as quickly
               as possible, based on continuous effort until relief is provided.
               Daily updates will be provided to DGC for Priority Code 10 TRs.

          H.   TR Reporting - The TR form may be submitted electronically.  Upon
               receipt of an TR,  SUPPLIER will enter the TR into its central TR
               problem reporting database.  An TR record shall contain the date,
               status,  problem description,  configuration,  activities done to
               reproduce   the   problem,   the  Severity   Code,   and  the  TR
               identification  number.  The TR  record  may  contain  any  other
               pertinent  information.  Activities  done to resolve  the problem
               along with the  resolution  are recorded in the TR record as they
               occur.  Attachments  such as large quantities of input and output
               data  (e.g.,  core  dumps)  may be sent  electronically  with the
               original TR or mailed.

                  The  TR  status  categories  are  to be  mutually  agreed  on.
                  Suggested status categories are:

                  1.  Acknowledged
                  2.  Reproduced
                  3.  Waiting for more information
                  4.  Under Investigation
                  5.  Deferred - A bug exists but no Fix until the next 
                      release.

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                                       27

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                  6.  Not a SUPPORT SERVICES issue - The problem is not 
                      caused by an item overed by SUPPORT SERVICES.
                  7.  User error
                  8.  Not reproducible
                  9.  Duplicate  TR - The original TR is  cross-referenced.  
                 10.  Fix being developed.
                 11.  Fix supplied 
                 12.  Fix in next release
                 13.  Closed - DGC and SUPPLIER agree the problem is resolved.

         I.       Monthly  Summary  of  Escalated  Calls -  SUPPLIER  agrees  to
                  summarize  all  responses to all  unresolved  TRs in a monthly
                  written  report  that will be  provided to DGC within ten (10)
                  days  after  the  end of  each  month,  and  shall  include  a
                  description of the specific problem  resolution  actions taken
                  or contemplated, and the status of SUPPLIER's remedial efforts
                  and anticipated time of solution.

5.       COMPATIBILITY

         Within  ninety  (90)  calendar  days  after  SUPPLIER's  receipt  of  a
         subsequent  release  of the  operating  system for the  applicable  DGC
         computer  system,  SUPPLIER  shall issue,  at no separate or additional
         charge to DGC, a subsequent  release of LICENSED PROGRAM that continues
         to fulfill  SUPPLIER's other obligations  under the applicable  PROJECT
         ATTACHMENT and maintains  compatibility with such subsequent release of
         the operating system.

6.       PARITY

         Within ninety (90) calendar days after  SUPPLIER  first issues each new
         release of its program, equivalent to LICENSED PROGRAM, made for use on
         a  non-DGC  operating  system,  SUPPLIER  shall  issue,  to the  extent
         technically  feasible,  a subsequent  release of LICENSED  PROGRAM that
         fulfills  SUPPLIER's  other  obligations  under the applicable  PROJECT
         ATTACHMENT and maintains parity with such equivalent program.

7.       SUPPORT PERIOD

         SUPPLIER  will  support  each  release  for a period  until one hundred
         eighty (180)  calendar  days after  SUPPLIER is  authorized to commence
         shipment of the subsequent release in accordance with the provisions of
         this Exhibit (hereinafter called "SUPPORT PERIOD").  During the SUPPORT
         PERIOD  for  each  release,  problems  therein  shall be  corrected  in
         accordance  with the procedures set forth herein.  After the expiration
         of the  SUPPORT  PERIOD for a  specific  release,  problems  discovered
         therein, which are also reproducible on the then current release, shall
         continue to be corrected in accordance  with the  procedures  set forth
         herein.  Those problems which are not  reproducible on the then current
         release shall be

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<PAGE>


         addressed, at SUPPLIER's then current standard terms and prices, within
         a reasonable time after DGC's written request.

8.       PRODUCT NEWSLETTER

         DGC  provides  and  uses  for  support   purposes  an  on-line  product
         newsletter describing proposed changes, future releases, information on
         compatibility   and  third  party   programs  or  hardware,   tips  and
         techniques,  articles,  and known problems and solutions not covered in
         the TR  database,  as well as general  information.  As part of SUPPORT
         SERVICES,  SUPPLIER will provide relevant  information DGC, of the type
         that SUPPLIER  generally  provides to its other distributors and users,
         for inclusion in this newsletter.

9.       IMPLEMENTATION OF SUBSEQUENT RELEASES

          A.   General - DGC shall be  required to use a  subsequent  release of
               LICENSED PROGRAM only to the extent that such subsequent  release
               of LICENSED  PROGRAM has been accepted for use by DGC's  customer
               in  accordance  with the  applicable  provisions  of the CUSTOMER
               CONTRACT.

          B.   Subsequent  Releases  Included  in  SUPPORT  SERVICES - It is the
               intention of the parties  that DGC shall have the right,  but not
               the  obligation  to  obtain  from  SUPPLIER,  as part of  SUPPORT
               SERVICES  any  subsequent  release of LICENSED  PROGRAM,  however
               designated  by  SUPPLIER,  to the  extent  that  such  subsequent
               release contains a modification,  enhancement, Fix, Workaround or
               other  change  that  does  not  meet  the  definition  of a  "NEW
               VERSION". A subsequent release is defined as a "NEW VERSION" only
               if such release is made generally  available by SUPPLIER i) under
               a designation  or model number  different  from that used for the
               immediately prior release,  ii) at a charge that is separate from
               or in addition to both the original  licensing  fee and the usual
               and customary  support fee charged for support and bug fixes, and
               iii) while SUPPLIER  continues to separately  license and support
               the immediately prior release. A NEW VERSION shall only be deemed
               to be offered to DGC as part of  SUPPORT  SERVICES  to the extent
               that the parties make express provisions to do so.

          C.   DGC  Requested  Changes - SUPPLIER  agrees,  at its then  current
               standard  charges  and  terms,  to  make  enhancements,  changes,
               modifications,  and additions to LICENSED PROGRAM, in addition to
               those  required  or  provided  by  SUPPORT  SERVICES,  as  may be
               reasonably requested by DGC.

          D.   Format - Subsequent releases containing minor changes may be made
               available with the documentation  changes specified in a separate
               release   notice.    Subsequent    releases    containing   major
               modifications  or  enhancements  shall be made available with the
               changes integrated into a revised set of documentation.

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                                       29

<PAGE>



               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT





We  hereby  consent  to the  use in this  Amendment  No.  5 to the  Registration
Statement on Form SB-2 of our report dated February 13, 1997,  except as to Note
3 which is dated  March  11,  1997,  relating  to the  financial  statements  of
Compu-DAWN, Inc. and to the reference to our Firm under the caption "Experts" in
the Prospectus.




                                           /s/ Lazar, Levine & Company LLP
                                           LAZAR, LEVINE & COMPANY LLP




New York, New York
June 4, 1997


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