AXIOM INC, 424B4, 1997-07-08

AXIOM INC
424B4, 1997-07-08
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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PROSPECTUS

2,600,000 SHARES

[LOGO]

(SUCCESSOR TO SECURICOR TELESCIENCES INC.)
COMMON STOCK
--------------

All of the shares of Common Stock, par value $.01 per share (the "Common
Stock"), offered hereby are being sold by Axiom Inc. (the "Company"), the
successor to Securicor Telesciences Inc. Of the 2,600,000 shares of Common Stock
offered hereby, 2,080,000 are initially being offered in the United States and
Canada by the U.S. Underwriters (the "U.S. Offering") and 520,000 are initially
being offered outside the United States and Canada by the International Managers
(the "International Offering" and, together with the U.S. Offering, the
"Offering"). See "Underwriting." The initial public offering price and
underwriting discounts and commissions are identical for both the U.S. Offering
and the International Offering. The closing of the U.S. Offering is a condition
to the closing of the International Offering and the closing of the
International Offering is a condition to the closing of the U.S. Offering. Of
the net proceeds from the sale by the Company of the Common Stock, approximately
$23.2 million will be used to repay certain indebtedness from the Company's sole
stockholder. See "Use of Proceeds" and "Certain Transactions."

Prior to the Offering, there has been no public market for the Common Stock.
See "Underwriting" for a discussion of the factors considered in determining the
initial public offering price. The Common Stock has been approved for quotation
on The Nasdaq National Market ("Nasdaq") under the symbol "AXIM."
---------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share............................. $12.00 $0.84 $11.16
Total (3)............................. $31,200,000 $2,184,000 $29,016,000
</TABLE>

(1) The Company and an affiliate of its sole stockholder have agreed to
indemnify the U.S. Underwriters and the International Managers against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting estimated expenses of $925,000 payable by the Company.

(3) The Company has granted the U.S. Underwriters and the International Managers
30-day options to purchase up to an aggregate of 390,000 additional shares
of Common Stock on the same terms and conditions as set forth above solely
to cover over-allotments, if any. If such options are exercised in full, the
total Price to Public, Underwriting Discounts and Commissions and Proceeds
to Company will be $35,880,000, $2,511,600 and $33,368,400, respectively.
See "Underwriting."
---------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of certificates for the shares of Common Stock will be made at the
offices of Lehman Brothers Inc., New York, New York, on or about July 11, 1997.
---------------------

LEHMAN BROTHERS J.P. MORGAN & CO.

July 8, 1997
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[Description of graphics to be inserted:

1. Outer flap of gatefold: Representation of a world map with stars marked
to show the locations of customers of the Company's products and services during
the preceding eighteen months. Large caption above the map setting forth the
Company's name and the phrase "absolute value." A box appears below the map
containing the following text: "Leaders in Serving Global Telecommunications
with: Collection, Preprocessing and Delivery of Billing and Transaction Data;
Traffic Management Reporting."

2. Innerflap of gatefold: graphical representation of the Company's
products, showing how they can be used together as a system in conjunction with
the customer's billing data, network data and management applications. In the
box identifying the Company's products, the Company's name appears together with
the phrase: "absolute value."]

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING
THE PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON
STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE TRANSACTIONS, SEE
"UNDERWRITING."

IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."

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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS OF THE COMPANY AND THE PREDECESSOR
BUSINESS (AS DEFINED BELOW UNDER "THE COMPANY") AND THE NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN
THIS PROSPECTUS REFLECTS THE FOLLOWING: (I) A 34,769-FOR-ONE STOCK SPLIT (IN THE
FORM OF A STOCK DIVIDEND) OF THE COMPANY'S COMMON STOCK, PAR VALUE $.01 PER
SHARE (THE "COMMON STOCK") WHICH WAS EFFECTED AS OF JULY 2, 1997 AND (II) NO
EXERCISE OF THE OVER-ALLOTMENT OPTIONS GRANTED TO THE U.S. UNDERWRITERS AND THE
INTERNATIONAL MANAGERS (COLLECTIVELY, THE "UNDERWRITERS"). SEE "UNDERWRITING."
AXIOM, AXIOM ABSOLUTE VALUE, MANIFEST, STERLING AND THE STERLING FAMILY OF MARKS
ARE TRADEMARKS AND SERVICEMARKS OF THE COMPANY. AS USED IN THIS PROSPECTUS, THE
TERM "FISCAL 1994" REFERS TO THE PREDECESSOR BUSINESS' FISCAL YEAR ENDED JUNE
30, 1994, AND THE TERMS "FISCAL 1995," "FISCAL 1996" AND "FISCAL 1997" REFER TO
THE COMPANY'S FISCAL YEARS ENDED SEPTEMBER 30, 1995, SEPTEMBER 30, 1996 AND
SEPTEMBER 30, 1997, RESPECTIVELY.

THE COMPANY

The Company is a leader in providing comprehensive billing data collection
solutions to providers of local, long-distance and other advanced
telecommunications services. The Company's largest customers include Regional
Bell Operating Companies ("RBOCs"), such as Ameritech Corporation, Southwestern
Bell Telephone Company and U S West, Inc., and international providers of
telecommunications services, such as Telecom Argentina. The Company develops,
markets and supports integrated hardware and software systems that are able to
collect and process an increasing volume of transaction information from a wide
variety of wireline telecommunications switches and transmit this information to
the customer's information management networks. The Company also is developing
systems that process transaction information from wireless, asynchronous
transfer mode ("ATM") and other specialized telecommunications switches. The
Company's customers use this information to bill their subscribers, to implement
customized marketing programs and to perform other data management functions.
The Company also provides traffic management solutions to telecommunications
companies such as TELESP, a Brazilian telecommunications service provider. The
Company recently introduced its first applications software product, a fraud
detection and management system. The Company provides installation, ongoing
maintenance, support and training, as well as customized engineering services,
related to the Company's systems.

The telecommunications industry is currently experiencing rapid growth and
change resulting from the combined effects of regulatory, competitive and
technological developments. Regulatory changes, including the Telecommunications
Act of 1996, have created competitive wholesale and retail telecommunications
markets and have required RBOCs and other wholesalers to provide to retail
resellers detailed call data that previously were not required to be captured.
To comply with regulatory requirements and to be successful in increasingly
competitive markets, telecommunications providers are being required to upgrade
their existing data collection systems to new systems that can process large
volumes of transaction information without compromising the integrity of the
billing stream and can efficiently transmit the information for use by
increasingly sophisticated and varied data management applications. The growing
number and categories of telecommunications providers is creating a need for
more sophisticated data management systems that utilize call data as part of
marketing and other information management programs. Escalating competition has
also created the need for systems that can provide real-time access to call
data.

The Company believes that it provides to large wireline customers the most
advanced and reliable billing data collection systems and that it is the leader
in designing these systems to meet the Automatic Message Accounting Data
Networking System ("AMADNS") generic requirements established in 1994. A
critical feature of the Company's systems is redundancy, permitting them to
protect the integrity of call detail records ("CDRs") and provide "financial
grade" reliability (greater than 99.999% system availability). The Company's
products also are capable of delivering transaction information on a real-time
basis. Reflecting the engineering expertise acquired through the Company's
30-year history, the Company's

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products offer a high degree of connectivity, permitting them to interface with
switches from all major domestic and most international wireline switch
manufacturers, including Northern Telecom Inc., Lucent Technologies Inc.,
Siemens AG, L.M. Ericsson Telephone Co. and NEC Corp. The Company's systems
utilize an open systems architecture, permitting them to interface with other
elements of the customer's data collection network and with virtually any
billing processing or other information management application. The Company's
systems also are scaleable, thereby allowing them to handle a large range of
call volumes. The systems can be configured with proprietary software
applications that provide a wide variety of preprocessing functions such as
filtering (extracting data that meet preset criteria), distribution (directing
predetermined data to certain specialized applications) and reformatting
(rearranging input data into a user-defined output format).

The Company is currently the leading supplier of billing data collection
products to the RBOCs. Six of the seven RBOCs are current customers for the
Company's products or services. The Company's aggregate revenues from sales to
its three main RBOC customers increased from $10.2 million in fiscal 1994 to
$13.1 million in fiscal 1995 and $20.9 million in fiscal 1996. During the 1980s,
the Company was a primary supplier to Ameritech Corporation, U S West, Inc. and
their predecessors, of SEBX Series products, the Company's prior generation of
billing data collection systems. The Company introduced its next generation
product, the Sterling Series, in late 1995 and has made initial sales of the
Sterling Series products to these customers and to Southwestern Bell Telephone
Company. The Company has sold over 200 units of Sterling Series products to
date. The Company believes that these three customers have replaced in the
aggregate less than 25% of their prior generation billing data collection
systems, and that these customers will replace the balance of these systems, and
purchase additional products and services from the Company, over the next three
to five years. The Company also believes that there is a significant opportunity
to sell Sterling Series products to other RBOCs and to other wireline customers
worldwide. The Company sells its products to wireless telecommunications
companies through a supply relationship with another company.

The Company's objective is to leverage its position as the leading provider
of comprehensive billing data collection systems to RBOCs to become the leading
provider of those systems and related information management products and
services to telecommunications and other information providers domestically and
internationally. The Company's strategy to achieve this objective includes the
following key elements: (i) expand relationships with wireline customers; (ii)
continue to expand sales to new telecommunications markets; (iii) continue to
develop marketing channels; (iv) expand international business; (v) expand
product and service offerings; and (vi) retain technology leadership.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered......................... 2,600,000 shares
Common Stock to be outstanding after
the Offering............................... 6,076,900 shares
Use of Proceeds.............................. To repay indebtedness from the Company's sole
stockholder; for product development; to
enhance international sales, marketing and
support efforts; and for working capital and
other general corporate purposes.
Nasdaq National Market symbol................ AXIM
</TABLE>

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

The following summary financial information should be read in conjunction
with the Financial Statements of the Company and the Predecessor Business and
Notes thereto, "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR AXIOM INC.
BUSINESS(1) ---------------------------------------------------------
----------- PERIOD FROM
YEAR JULY 1, 1994 YEAR ENDED SIX MONTHS ENDED
ENDED TO SEPTEMBER 30, MARCH 31,
JUNE 30, SEPTEMBER 30, -------------------- --------------------
1994 1994 1995 1996 1996 1997
----------- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues:
Unrelated third parties:
Equipment.................................. $ 13,963 $ 4,242 $ 18,000 $ 23,358 $ 5,311 $ 8,847
Services................................... 6,266 1,364 5,766 7,739 3,053 3,203
----------- ------------- --------- --------- --------- ---------
20,229 5,606 23,766 31,097 8,364 12,050
----------- ------------- --------- --------- --------- ---------
Related parties.............................. -- -- 1,802 2,867 2,416 --
----------- ------------- --------- --------- --------- ---------
20,229 5,606 25,568 33,964 10,780 12,050
----------- ------------- --------- --------- --------- ---------
----------- ------------- --------- --------- --------- ---------
Charge for purchased research and
development(2)............................... -- 6,700 -- -- -- --
Operating income (loss)........................ (3,009) (6,871) 551 2,085 (3,364) (3,997)
Net income (loss).............................. (4,098) 58 2,501 (1,976) (2,462)
Historical net income (loss) per common
share........................................ $ (1.18) $ 0.02 $ 0.72 $ (0.57) $ (0.71)
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Shares used in computing historical net income
(loss) per common share...................... 3,477 3,477 3,477 3,477 3,477
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
Supplemental pro forma net income (loss) per
common share(3).............................. $ 0.55 $ (0.44)
--------- ---------
--------- ---------
Shares used in computing supplemental pro forma
net income (loss) per common share (3)....... 5,180 5,180
--------- ---------
--------- ---------
</TABLE>

<TABLE>
<CAPTION>
AS OF AS OF MARCH 31, 1997
SEPTEMBER 30, ---------------------------
1996 ACTUAL AS ADJUSTED(5)
-------------- ---------- ---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................................................... $ 3,326 $ 1,279 $ 8,970
Total assets...................................................................... 30,336 24,607 31,210
Working capital, excluding obligations to parent and affiliates (4)............... 14,698 10,776 18,148
Obligations to parent and affiliates(4)........................................... 23,291 21,480 --
Long-term debt.................................................................... 147 -- --
Stockholder's equity (deficit)(4)................................................. (1,539) (4,001) 24,090
</TABLE>

- ------------------------
(1) The statement of operations data presented for the Predecessor Business
represents the information for the Wireline Division of TeleSciences, Inc.
See Statement of Revenues and Certain Expenses for the Predecessor Business
and Notes thereto.

(2) Represents a one-time charge for purchased research and development which
was incurred as a result of the acquisition of the Predecessor Business (as
defined below under "The Company") by the Company on July 1, 1994. The
acquisition was accounted for under the purchase method of accounting. See
Notes 1 and 2 of Notes to Consolidated Financial Statements.

(3) See Note 2 of Notes to Consolidated Financial Statements for an explanation
of the computation of supplemental pro forma net income (loss) per common
share.

(4) The Company's acquisition of the Predecessor Business and other financing
requirements have been primarily funded from borrowings from Securicor
rather than equity investment. These borrowings are classified as
obligations to parent and affiliates. See "Use of Proceeds."

(5) Adjusted to give effect to the sale by the Company of 2,600,000 shares of
Common Stock offered hereby (after deducting the underwriting discounts and
the estimated offering expenses) and the application of the net proceeds
therefrom, in particular, the payment of obligations to Securicor of $20.4
million and the transfer of $1.1 million of obligations to an affiliate of
Securicor in May 1997. See "Certain Transactions." Subsequent to March 31,
1997, the obligations to Securicor that are to be paid from the proceeds of
the Offering increased from $20.4 million to approximately $23.2 million.
See "Use of Proceeds" and "Capitalization." Such increased amounts are
excluded from this table.

5
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RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE FOLLOWING
MATTERS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SHARES
OF COMMON STOCK OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET
FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS PROSPECTUS.

RELIANCE ON A LIMITED NUMBER OF SIGNIFICANT CUSTOMERS; DEPENDENCE ON STERLING
SERIES PRODUCTS

A significant portion of the Company's revenues have been, and are expected
to continue to be, derived from substantial orders placed by large
organizations, and in particular three RBOCs. For fiscal 1996, U S West, Inc.
("U S West"), Southwestern Bell Telephone Company ("Southwestern Bell") and
Ameritech Corporation ("Ameritech"), the Company's largest customers for billing
data collection systems during the period, represented approximately 30.1%,
18.5% and 13.0%, respectively, of total revenues. During fiscal 1996, an
additional 9.4% of the Company's revenues was attributable to sales to Puerto
Rico Telephone Co. The Company has entered into contracts with its larger
domestic customers pursuant to which such customers place orders for the
Company's systems on an as-needed basis on the terms set forth in such
contracts. Under the terms of these contracts, the Company's customers are not
obligated to purchase a minimum number of systems nor are they required to
purchase systems exclusively from the Company. Consequently, the failure of any
of the Company's larger customers to continue to purchase systems from the
Company, or any significant delay in orders from such customers, could have a
material adverse effect on the Company's results of operations and financial
condition. The Company expects that in the future it will continue to be
dependent upon a limited number of customers in any given period for a
significant portion of its revenues. Revenues from RBOCs and other wireline
customers during the next several years will be largely dependent upon the
success of the Company's Sterling Series billing data collection systems that
were introduced in late 1995 and, accordingly, any significant performance
problems with those systems could have a material adverse effect on the
Company's results of operations and financial condition. Demand for the
Company's products will also depend to a substantial extent on the future
capital spending plans of its customers. Furthermore, customer demand generally
can be affected by numerous variables, including changes in governmental
regulation, changes in the customers' competitive environment, mergers or other
strategic alignments involving customers, pricing policies by the Company or its
competitors, personnel changes, the number, timing and significance of new
product and product enhancement announcements by the Company and its
competitors, the ability of the Company to develop, introduce and market new and
enhanced versions of its products on a timely basis, the mix of direct and
indirect sales and general economic factors. There can be no assurance that
revenues from customers that have accounted for significant revenues in past
periods, individually or as a group, will continue, or if continued will reach
or exceed historical levels in any future period. See "Business-- Customers."

DIFFICULTY IN FORECASTING REVENUES; LONG SALES CYCLES; RELIANCE ON LARGE ORDERS;
NON-RECURRING NATURE OF SALES; FLUCTUATIONS IN QUARTERLY RESULTS

The Company's revenues are difficult to forecast as a result of the fact
that the purchase of its systems generally involves a significant commitment of
capital and management time. Accordingly, the sales cycle associated with the
purchase of the Company's products--from initial contact to contract execution
and placement of the actual order by the customer--typically is lengthy, varies
from customer to customer and from project to project, and is subject to a
number of additional significant risks, including customers' budgetary
constraints and internal acceptance reviews and, to a lesser extent, the timing
of sales by the Company's customers to their own customers over which the
Company has little or no control. The Company's results also vary based on the
type and quantity of products shipped, the timing of product shipments, the
relative revenue mix in a given period and the resulting margins. Because of the
nature of the Company's products, a large part of the Company's sales is of a
non-recurring nature. RBOCs typically do not approve their annual budgets until
the Company's second fiscal quarter of each year causing their purchases of the
Company's products to occur later in the year. As a result of the timing of the
RBOC's budget cycle, the Company experienced a significant concentration of
revenues in the fourth fiscal quarter in fiscal 1995 and fiscal 1996. As a
result, revenues have generally been lowest in the first and second fiscal
quarters of recent fiscal years. Such factors could cause the Company's
quarterly results of operations to

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fluctuate in future periods. The variations may be material. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Quarterly Results of Operations."

As a result of these and other factors, the Company believes that revenues
and operating results, and particularly quarterly results, are likely to vary
significantly in the future and may be difficult to forecast. Accordingly,
period-to-period comparisons of the Company's results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance. In addition, the Company's expense levels are based, in part, on
its expectations as to future revenue levels. If revenue levels are below
expectations in any given period, operating results are likely to be materially
adversely affected. Further, it is possible that in some future period the
Company's revenues or operating results will be below the expectations of public
market analysts and investors. In such event, the price of the Common Stock may
be materially adversely affected. The Company's results of operations and
financial condition also could be materially adversely affected in any fiscal
period by the failure of anticipated orders to materialize and by deferrals or
cancellations of orders.

COMPETITION

The market for billing data collection and traffic management systems is
highly competitive. Many providers offer products that are competitive with
those offered by the Company in both domestic and international markets. The
Company also experiences competition from in-house systems developed by existing
and potential customers. Several companies market products that are designed to
be an integrated solution to the customer's billing and information management
needs. If existing and potential customers of the Company conclude that an
integrated suite of products and services purchased from other providers
eliminates the need for products with the capabilities and features of the
Company's products, the Company's sales may be adversely affected. Many of the
Company's current and potential competitors have significantly greater
financial, marketing, technical, and other competitive resources than the
Company. Because the Company's focus to date has been primarily on products for
wireline customers, certain of its competitors have greater experience in
addressing the requirements of wireless telecommunications systems. Current and
potential competitors may establish cooperative relationships with one another
or with third parties or consolidate to compete more effectively against the
Company. It is also possible that new competitors may emerge, develop products
and services that compete successfully with the Company's products and services
and acquire significant market share. Any of these events could have a material
adverse effect on the Company's results of operations and financial condition.
See "Business-- Competition."

RAPIDLY CHANGING TELECOMMUNICATIONS MARKETS AND TECHNOLOGIES

Over the last decade, the market for telecommunications products and
services has been characterized by rapid technological developments, evolving
industry standards, dramatic changes in the regulatory environment and frequent
new product introductions. The Company's success will depend, in large part,
upon its ability to enhance its existing products and services, and to introduce
new products and services that will respond to these market factors as they
evolve. In particular, the Company's success during the next several years will
be largely dependent upon sales of the Company's Sterling Series billing data
collection systems that were introduced in late 1995. The introduction by third
parties of new products or services could render the Company's existing products
and services obsolete or unmarketable. There can be no assurance that the
Company will complete on a timely or successful basis the development of new or
enhanced products or services or successfully manage transitions from one
product release to the next, that the Company will not encounter difficulties or
delays in the introduction of new or enhanced products, or that defects will not
be found in such new or enhanced products after installation, resulting in a
loss of, or delay in, market acceptance. To date, the majority of the Company's
revenues are attributable to its long-term relationships with traditional
wireline providers of telecommunications services. To continue its revenue
growth, the Company must not only continue to expand its relationships with its
current customer base, but must also expand its customer base to include new
wireline, wireless, ATM and other telecommunications service providers. While
the systems and services that the Company offers to address the needs of the
wireline market have permitted it to begin to attract customers in other
segments of the telecommunications industry, there can be no assurance that it
will be able to do so successfully over the long-term. Failure to do so could
have a material adverse effect on the Company's results of operations and
financial condition. In addition, technologies, services or standards may be
developed that could require significant

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changes in the Company's business model, development of new products, or
provision of additional services, at substantial cost to the Company and which
may also result in the introduction of additional competitors into the
marketplace. Furthermore, if the overall market for telecommunications products
and services fails to evolve in the manner contemplated by the Company or grows
more slowly than anticipated as a result of regulatory or other factors, or if
the Company's products and services fail in any respect to achieve market
acceptance, there could be a material adverse effect on the Company's results of
operations and financial condition. The telecommunications industry is also
characterized by significant and rapid strategic alignments. A merger or
consolidation of one or more telecommunications service providers could result
in the loss of customers or sales opportunities to the Company, and there can be
no assurance that new entrants to the market will become customers of the
Company.

IMPLEMENTATION OF NEW SALES AND MARKETING STRATEGIES

To date, the Company has generally relied on direct sales to customers with
which it has developed strategic relationships over the years, primarily RBOCs
and certain international telecommunications companies. The Company has begun
and intends to continue to diversify its sales efforts by selling directly to
new providers and by establishing marketing relationships with systems
integrators, manufacturers of telecommunications switches and other equipment
manufacturers and billing and rating systems providers. With respect to
international sales, the Company intends to rely primarily on establishing
relationships with systems integrators and distributors in targeted countries.
The Company's marketing relationships are generally nonexclusive and are usually
terminable by either party upon three to six months prior notice and certain of
the companies with which the Company has such relationships also have agreements
with, or are themselves, competitors or potential competitors of the Company. In
addition, the Company's marketing partners generally have no obligation to
purchase or obtain orders for the purchase of any of the Company's products.
There can be no assurance that the Company will be successful in establishing
marketing relationships, that the Company's marketing partners will be effective
in marketing the Company's products or that one or more of its marketing
partners will not discontinue their relationships with the Company or form
additional competing arrangements with competitors of the Company or themselves
begin to compete with the Company. In any of those events, the Company's results
of operations and financial condition could be materially adversely affected.
See "Business--Marketing and Sales."

ABILITY TO MANAGE GROWTH

The Company is expanding into new products, services and markets. This
growth has resulted in new and increased responsibilities for management
personnel and has placed and continues to place a significant strain upon the
Company's management, operating and financial systems and resources. In order to
compete effectively and manage anticipated future growth, the Company will be
required to continue to implement and improve management information systems,
procedures and controls on a timely basis and in such a manner as is necessary
to accommodate the increased number of transactions and customers and the
increased size of the Company's operations. Management of future growth, if any,
will also require that the Company continuously expand, train, motivate and
manage its work force. These demands will require the addition of new management
personnel. Competition for qualified personnel with knowledge of the
telecommunications industry and information technologies is intense, and there
can be no assurance that the Company will be successful in attracting and
retaining such personnel. The Company's future success will depend to a
significant extent on the ability of its current and future executive officers
to operate effectively, both independently and as a group. There can be no
assurance that the Company's personnel, systems, procedures and controls will be
adequate to support the Company's existing and future operations. Any failure to
implement and improve the Company's operating, financial and management systems
or to expand, train, motivate or manage employees could have a material adverse
effect on the Company's results of operations and financial condition.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant degree upon the continuing
contributions of its key management personnel including Andrew P. Maunder, its
President and Chief Executive Officer. The Company currently has employment
agreements with Mr. Maunder and four other of its key personnel for indefinite
terms that can be terminated by either the Company or the employee upon prior
written notice

8
<PAGE>
of one year or less. The loss of key management or technical personnel could
have a material adverse effect on the Company's results of operations and
financial condition.

RISKS ASSOCIATED WITH SALES TO INTERNATIONAL CUSTOMERS

Sales of products to international customers accounted for approximately
43.2%, 39.8% and 27.9% of the Company's total revenues for fiscal 1994, fiscal
1995 and fiscal 1996, respectively. International sales include sales to Puerto
Rico Telephone Co. and non-recurring sales in fiscal 1995 and fiscal 1996 to a
United Kingdom affiliate of the Company that were delivered to end users in the
United States. See "Certain Transactions." The Company expects that
international sales will continue to account for a significant portion of its
total revenues in future periods and expects that revenues from sales to
international customers will increase. Market acceptance of the Company's
products in international markets is important to the Company's future success,
but these markets are diverse and rapidly evolving, and it is difficult to
predict their potential size, future growth rate or the timing of their
development. In addition, access to international markets is often difficult due
to the established relationships between a government owned or controlled
communications company and its traditional indigenous suppliers of
communications products. Accordingly, there can be no assurance that the
Company's products will be widely accepted by the service providers in these
emerging markets or that the Company, directly or through its marketing
partners, will be able to penetrate these markets effectively.

The proposed further inroads into international markets will require
significant management attention and expenditure of significant financial
resources and could adversely affect the Company's operating margins. Sales to
international customers involve a number of inherent risks, sometimes including
extensive field testing and lengthier sales cycles than with domestic customers,
longer receivables collection periods and greater collection difficulty, less
flexibility as to hardware platforms, difficulty in staffing and managing
international operations, currency exchange rate fluctuations, the impact of
possible recessionary environments in economies outside the United States,
unexpected changes in regulatory requirements, including a slowdown in the rate
of privatization of carriers, reduced protection for intellectual property
rights in some countries and tariffs and other trade barriers. While some of
these factors may not affect the Company directly, to the extent that it sells
products through its marketing partners, these factors may affect the sales and
operations of its partners which in turn may adversely affect demand by the
partners for the Company's products. There can be no assurance that the Company
will be able to sustain or increase revenues derived from sales to international
customers or that the foregoing factors will not have a material adverse effect
on the Company's results of operations and financial condition.

Foreign currency exchange rate fluctuations in countries in which the
Company or its marketing partners sell the Company's products could have a
material adverse effect on the Company's results of operations and financial
condition by resulting in pricing that is not competitive with products priced
in local currencies.

DEPENDENCE ON PROPRIETARY TECHNOLOGY

The Company's success is dependent in part upon its proprietary hardware and
software technology. The Company relies primarily on trademark, copyright and
trade secret laws, employee and third-party non-disclosure agreements and other
methods to protect its proprietary rights. There can be no assurance that its
agreements with employees, consultants and others who participate in the
development of its software will not be breached, that the Company will have
adequate remedies for any breach, or that the Company's trade secrets will not
otherwise become known to or independently developed by competitors.
Furthermore, there can be no assurance that the Company's efforts to protect its
rights through trademark and copyright laws will prevent the development and
design by others of products or technology similar to or competitive with those
developed by the Company. The computer technology industry is characterized by
frequent and substantial intellectual property litigation. The Company is not
aware of any patent infringement or any violation of other proprietary rights
claimed by any third party relating to the Company or the Company's products
other than a letter dated June 19, 1997 from Acxiom Corporation ("Acxiom")
requesting that the Company cease using the name "Axiom." Although the Company
believes that the claims of Acxiom, an Arkansas-based provider of marketing
information services, are without merit because of the lack of correspondence
between the products, services and customers of the two companies, there is no
assurance that these claims will be resolved on terms favorable to the Company.
The Company's success will depend in part on its continued ability to obtain and
use licensed software and

9
<PAGE>
technology that is important to certain functionalities of its products,
including the real-time operating system and other software utilized in the
Sterling Series products, software for its traffic management products and the
software for its recently introduced fraud detection and management product. The
inability to continue to procure or use such software or technology could have a
material adverse effect on the Company's results of operations and financial
condition. See "Business--Products and Related Services--New Products and
Services" and "--Proprietary Rights and Licenses."

BENEFITS OF THE OFFERING TO SECURICOR

Approximately $23.2 million (or 83%) of the net proceeds of the Offering
will be used to repay certain indebtedness from Securicor (as defined below
under "The Company"), the Company's sole stockholder. Because the Company was
capitalized almost exclusively with debt, this payment will return substantially
all of Securicor's investment in the Company. However, Securicor will continue
to own approximately 3,476,900 shares, or 57%, of the outstanding Common Stock
for which it paid only a nominal amount. Securicor will benefit from the
Offering in that the public market that is expected to exist after the Offering
will provide increased liquidity for the Common Stock that Securicor owns.

CONTROL BY SECURICOR; ANTI-TAKEOVER PROVISIONS

Securicor currently owns all of the issued and outstanding capital stock of
the Company. After the Offering, Securicor will own approximately 57% of the
outstanding Common Stock. Although the Company's Amended and Restated By-Laws
(the "By-laws") require a plurality of votes of all stockholders present in
person or by proxy at a stockholder meeting to elect directors and an
affirmative vote of two-thirds of all stockholders to take stockholder actions
other than the election of directors, Securicor would likely be able to control
most matters requiring approval by the Company's stockholders, including the
election of directors. See "Principal Stockholders" and "Shares Eligible for
Future Sale." In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law, which
prohibit the Company from engaging in a "business combination" with an
"interested stockholder" for a period of three years following the time that
such person became an "interested stockholder" unless the business combination
is approved in a prescribed manner and in certain other specified circumstances.
These provisions, together with other provisions in the Company's Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
By-laws, may discourage acquisition bids for the Company by persons unrelated to
certain existing stockholders. The effect of Securicor's stock ownership and
these provisions may be to limit the price that investors might be willing to
pay in the future for shares of the Common Stock or prevent or delay a merger,
takeover, or other change in control of the Company and thus discourage attempts
to acquire the Company. In addition, the Company's Board of Directors has the
authority to issue up to 5,000,000 shares of Preferred Stock and to determine
the designations, preferences, and relative, participating, optional and other
special rights, or qualifications, limitations or restrictions of those shares
without any further vote or action by the stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of the outstanding voting stock of the Company. The Company has no present plan
to issue any shares of Preferred Stock. The Certificate of Incorporation and
By-laws contain other provisions, such as the supermajority voting requirements
described above, notice requirements for stockholders and limitations on the
stockholders' ability to present proposals to the stockholders for a vote, all
of which may have the further effect of making it more difficult for a third
party to gain control or to acquire the Company. See "Description of Capital
Stock."

NO PRIOR PUBLIC MARKET; POTENTIAL VOLATILITY

Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance that an active trading market will develop or be
sustained after the Offering. The initial public offering price was determined
through negotiation between the Company and the Underwriters and may bear no
relationship to the price at which the Common Stock will trade after the
Offering. See "Underwriting" for a discussion of the factors considered in
determining the initial public offering price. The market price of the Common
Stock may be volatile and may be significantly affected by factors such as

10
<PAGE>
actual or anticipated fluctuations in the Company's operating results,
announcements of new products or services by the Company or its competitors,
developments with respect to conditions and trends in the information technology
or telecommunications industries, governmental regulation, changes in estimates
by securities analysts of the Company's or its competitors' or customers' future
financial performance, general market conditions and other factors, many of
which are beyond the Company's control. In addition, the stock market has from
time to time experienced significant price and volume fluctuations that have
adversely affected the market prices of securities of companies, irrespective of
such companies' operating performances.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock in the public market
following the Offering could adversely affect the market price of the Common
Stock. Upon the completion of the Offering, the Company will have 6,076,900
shares of Common Stock outstanding. Of these shares, the 2,600,000 shares of
Common Stock sold in the Offering will be freely tradeable without restriction
or further registration under the Securities Act of 1933, as amended (the
"Securities Act"). The remaining 3,476,900 shares of Common Stock outstanding as
of the date of this Prospectus are "restricted securities" as defined by Rule
144 under the Securities Act ("Rule 144"). All of these shares have been held by
Securicor for more than one year and will be eligible for sale in accordance
with the provisions of Rule 144 beginning 180 days from the date of this
Prospectus or earlier to the extent Lehman Brothers Inc. consents to such sale
as described below. In addition, the Company has entered into a Registration
Rights Agreement with Securicor (the "Registration Rights Agreement") pursuant
to which Securicor has the right, subject to customary limitations, to: (i)
demand registration of the resale of its Common Stock once every twelve months
at Securicor's expense for so long as Securicor owns at least 10% of the
outstanding Common Stock; and (ii) include its Common Stock in registration
statements filed by the Company.

Upon the completion of the Offering, there will be 321,366 shares of Common
Stock issuable upon exercise of options under the 1997 Stock Incentive Plan.
Approximately one-third of the options will be exercisable 90 days after
completion of the Offering, another one-third will be exercisable in one year
and the remaining one-third will be exercisable in two years. The Company
intends to file a registration statement on Form S-8 covering the shares of
Common Stock issuable upon exercise of options within 90 days from the date of
this Prospectus. The shares registered under such registration statement will be
available for resale in the open market upon the exercise of options, subject to
Rule 144 volume limitations applicable to affiliates. See "Management--1997
Stock Incentive Plan."

The Company and Securicor have agreed that, for a period of 180 days after
the date of this Prospectus, they will not, without the prior written consent of
Lehman Brothers Inc., offer, sell, contract to sell or otherwise dispose of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock except, in the case of the Company,
in certain limited circumstances. In determining whether to consent to any such
disposition during the 180-day period, Lehman Brothers Inc. is expected to
consider primarily the extent to which the disposition is likely to have an
adverse impact on the trading market for the Common Stock. The granting of such
consent is not expected to be disclosed publicly prior to any such disposition.

DILUTION

The initial public offering price is substantially higher than the net
tangible book value per share of the Common Stock. Purchasers of shares of
Common Stock in the Offering will, therefore, suffer immediate and substantial
dilution of $8.62 in the pro forma net tangible book value per share of Common
Stock. See "Dilution."

11
<PAGE>
THE COMPANY

The Company is the successor to a corporation formed in 1967. The Company
was formed as a Delaware corporation in June 1994 in connection with the
acquisition of the wireline division of TeleSciences, Inc. (the "Predecessor
Business"). On May 22, 1997, the Company changed its name from Securicor
Communications Inc. to Axiom Inc. Through May 23, 1997, the Company's business
was conducted through its wholly-owned subsidiary, Securicor Telesciences Inc.
("STI"). On that date, STI merged into the Company. The Company is a
wholly-owned subsidiary of Securicor Communications Limited ("Securicor
Communications"), a company based in the United Kingdom, and an indirect wholly-
owned subsidiary of Securicor plc, a multinational company based in the United
Kingdom (collectively with Securicor Communications and other wholly-owned
subsidiaries, other than the Company and its subsidiary, "Securicor"). The
Company's principal executive office is located at 351 New Albany Road,
Moorestown, NJ 08057-1177, and its telephone number is (609) 866-1000.

USE OF PROCEEDS

The net proceeds to the Company from the sale of shares of Common Stock
hereby are estimated to be $28.1 million ($32.4 million if the Underwriters'
over-allotment options are exercised in full) after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company.

The Company anticipates applying approximately $23.2 million to repay the
principal and interest on outstanding indebtedness from its parent company,
Securicor. The balance of such indebtedness as of March 31, 1997 was
approximately $20.4 million. See "Certain Transactions." The annual interest
rate on the interest-bearing portion of the indebtedness to Securicor averaged
6.9% for the 12 month period ended March 31, 1997 and the principal amount is
payable upon demand. See "Certain Transactions." The Company intends to apply
approximately $1.6 million of the net proceeds to expand its Sterling Series
billing data collection system product line in order to address more effectively
the requirements of lower volume telecommunications switches. The Company also
intends to apply approximately $1.4 million to the development of interfaces
with switches utilized by wireless and international telecommunications systems.
The Company also intends to apply approximately $1.0 million to enhance its
international sales, marketing and support efforts. The remainder of the net
proceeds will be added to working capital to be used for general corporate
purposes.

The Company may seek acquisitions of businesses, products and technologies
that are complementary to those of the Company, and a portion of the net
proceeds may be used for such acquisitions. While the Company engages from time
to time in discussions with respect to potential acquisitions, the Company has
no plans, commitments or agreements with respect to any such acquisitions as of
the date of this Prospectus, and there can be no assurance that any such
acquisitions will be made. Pending such uses, the Company intends to invest the
net proceeds from the Offering in short-term, investment grade, interest-bearing
instruments.

DIVIDEND POLICY

The Company has not paid cash dividends on its capital stock during the last
three fiscal years. The Company currently expects it will retain its future
earnings for use in the operation and expansion of its business and does not
anticipate paying any cash dividends in the foreseeable future.

12
<PAGE>
CAPITALIZATION

The following table sets forth (i) the capitalization of the Company as of
March 31, 1997, and (ii) the as adjusted capitalization which gives effect to
the sale of 2,600,000 shares of Common Stock offered hereby and the application
of the estimated net proceeds therefrom. This table should be read in
conjunction with the Financial Statements of the Company and the Predecessor
Business and Notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
<S> <C> <C>
ACTUAL AS ADJUSTED
--------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Obligations to parent and affiliates...................................................... $ 21,480 $ --(1)
--------- -----------
--------- -----------
Stockholder's (deficit) equity:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized, no shares outstanding.... -- --
Common Stock, $0.01 par value, 25,000,000 shares authorized, 3,476,900 shares issued and
outstanding, actual; 6,076,900 shares issued and outstanding, as adjusted............. -- 61
Additional paid-in capital.............................................................. -- 28,030
Accumulated deficit..................................................................... (4,001) (4,001)
--------- -----------
Total stockholder's (deficit) equity................................................ (4,001) 24,090
--------- -----------
Total capitalization.............................................................. $ 17,479 $ 24,090
--------- -----------
--------- -----------
</TABLE>

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

(1) Represents payment of obligations to Securicor of $20.4 million and transfer
of $1.1 million of obligations to an affiliate in May 1997. Subsequent to
March 31, 1997, the obligations to Securicor that are to be paid from the
proceeds of the Offering increased from $20.4 million to approximately $23.2
million. See "Use of Proceeds" and "Certain Transactions." Such increased
amounts are excluded from this table.

13
<PAGE>
DILUTION

The net tangible deficit of the Company as of March 31, 1997 was $7.6
million or $2.17 per share. Net tangible deficit per share is determined by
dividing the net tangible deficit of the Company (total tangible assets less
total liabilities) by the number of shares of Common Stock outstanding. After
giving effect to the sale by the Company of 2,600,000 shares of Common Stock
(after deducting the underwriting discount and commission and estimated offering
expenses), and the application of the estimated net proceeds therefrom, the as
adjusted net tangible book value of the Company as of March 31, 1997, would have
been $20.5 million or $3.38 per share. This represents an immediate increase in
net tangible book value of $5.55 per share to the existing stockholder and an
immediate dilution in as adjusted net tangible book value of $8.62 per share to
new investors purchasing Common Stock in the Offering. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share............................
</TABLE>
<TABLE>
<S> <C> <C>
$ 12.00
Net tangible deficit per share before the Offering............... $ (2.17)
Net increase in net tangible book value per share attributable to
the Offering................................................... 5.55
---------
As adjusted net tangible book value per share after the Offering...
</TABLE>
<TABLE>
<S> <C> <C>
3.38
---------
Dilution per share to new investors in the Offering (1)............
</TABLE>
<TABLE>
<S> <C> <C>
$ 8.62
---------
---------
</TABLE>

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

(1) Based on the assumptions set forth above, the dilution to new investors
would be $8.19 per share if all outstanding options to purchase 321,366
shares of Common Stock were exercised in full at an exercise price of $12.00
per share of Common Stock. See "Management--1997 Stock Incentive Plan" and
"Underwriting."

The following table sets forth, on an as adjusted basis (as described above)
as of March 31, 1997, the number of shares of Common Stock purchased from the
Company, the total consideration paid to the Company and the average price per
share paid by the existing stockholder and by the new investors purchasing
shares of Common Stock in the Offering before deducting underwriting discounts
and commissions and estimated offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------------- -------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholder............................... 3,476,900 57% $ --(1) --% $ --
New investors...................................... 2,600,000 43 31,200,000 100 12.00
------------ --- ------------- -----
Total........................................ 6,076,900 100% $ 31,200,000 100%
------------ --- ------------- -----
------------ --- ------------- -----
</TABLE>

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

(1) Excludes the approximately $23.2 million of obligations of the Company to
Securicor which will be repaid from the proceeds of the Offering. See "Use
of Proceeds" and "Certain Transactions."

14
<PAGE>
SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table contains certain financial data of the Company and the
Predecessor Business and is qualified by the more detailed Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
The statement of operations data for the period from July 1, 1994 to September
30, 1994, the fiscal years ended September 30, 1995 and 1996 and the balance
sheet data as of September 30, 1995 and 1996 have been derived from the
Consolidated Financial Statements of the Company which have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report included elsewhere in this Prospectus. The selected financial data for
the Predecessor Business for the fiscal year ended June 30, 1994 is derived
from, and is qualified by reference to, the Statement of Revenues and Certain
Expenses which is included elsewhere in this Prospectus. This statement has also
been audited by Arthur Andersen LLP. The statement of operations data for the
fiscal years ended June 30, 1992 and 1993 of the Predecessor Business and for
the six months ended March 31, 1996 and 1997 of the Company and the balance
sheet data as of June 30, 1992, 1993 and 1994 for the Predecessor Business and
March 31, 1997 for the Company have been derived from the unaudited financial
statements. The unaudited financial statements, in the opinion of management,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial condition and results of
operations for such periods. The results of operations for the six months ended
March 31, 1997 are not necessarily indicative of the results that may be
expected for any other interim period or for the entire year. The selected
financial data set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.

15
<PAGE>

<TABLE>
<CAPTION>
AXIOM INC.
----------------------------------------------------
PREDECESSOR BUSINESS (1) PERIOD FROM YEAR ENDED SIX MONTHS ENDED
YEAR ENDED JUNE 30, JULY 1, 1994 TO SEPTEMBER 30, MARCH 31,
------------------------- SEPTEMBER 30, ---------------- ----------------
1992 1993 1994 1994 1995 1996 1996 1997
------- ------- ------- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
REVENUES:
Unrelated third parties:
Equipment..................................... $15,701 $14,799 $13,963 $ 4,242 $18,000 $23,358 $ 5,311 $ 8,847
Services...................................... 8,484 6,899 6,266 1,364 5,766 7,739 3,053 3,203
------- ------- ------- ------- ------- ------- ------- -------
24,185 21,698 20,229 5,606 23,766 31,097 8,364 12,050
------- ------- ------- ------- ------- ------- ------- -------
Related parties................................. -- -- -- -- 1,802 2,867 2,416 --
------- ------- ------- ------- ------- ------- ------- -------
Total revenues.............................. 24,185 21,698 20,229 5,606 25,568 33,964 10,780 12,050
------- ------- ------- ------- ------- ------- ------- -------
COST OF REVENUES:
Unrelated third parties:
Equipment..................................... 7,564 6,315 8,785 2,271 9,110 11,639 3,825 5,054
Services...................................... 3,417 4,586 4,018 1,086 3,093 4,580 2,292 2,780
------- ------- ------- ------- ------- ------- ------- -------
10,981 10,901 12,803 3,357 12,203 16,219 6,117 7,834
------- ------- ------- ------- ------- ------- ------- -------
Related parties................................. -- -- -- -- 1,274 1,946 1,635 --
------- ------- ------- ------- ------- ------- ------- -------
Total cost of revenues...................... 10,981 10,901 12,803 3,357 13,477 18,165 7,752 7,834
------- ------- ------- ------- ------- ------- ------- -------
Gross profit...................................... 13,204 10,797 7,426 2,249 12,091 15,799 3,028 4,216
------- ------- ------- ------- ------- ------- ------- -------
OPERATING EXPENSES:
Research, development and engineering........... 4,106 4,913 5,450 1,348 5,948 7,003 3,209 3,790
Selling, general and administrative............. 6,313 4,986 4,985 1,072 5,206 6,308 2,970 4,230
Parent charges.................................. -- -- -- -- 386 403 213 193
Charge for purchased research and development
(2)........................................... -- -- -- 6,700 -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses...................... 10,419 9,899 10,435 9,120 11,540 13,714 6,392 8,213
------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)....................... $ 2,785 $ 898 $(3,009) (6,871) 551 2,085 (3,364) (3,997)
------- ------- ------- ------- ------- ------- ------- -------
------- ------- -------
INTEREST EXPENSE, net (including related party
interest)....................................... 9 112 514 227 279
OTHER INCOME...................................... 66 148 430 413 54
EQUITY IN LOSS OF INVESTEE........................ -- 494 18 18 --
GAIN ON SALE OF INVESTMENT........................ -- -- 2,061 -- --
------- ------- ------- ------- -------
Income (loss) before
income taxes................................ (6,814) 93 4,044 (3,196) (4,222)
INCOME TAX (EXPENSE)
BENEFIT......................................... 2,716 (35) (1,543) 1,220 1,760
------- ------- ------- ------- -------
NET INCOME (LOSS)................................. $(4,098) $ 58 $ 2,501 $(1,976) $(2,462)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
HISTORICAL NET INCOME (LOSS) PER COMMON SHARE..... $ (1.18) $ 0.02 $ 0.72 $ (0.57) $ (0.71)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
SHARES USED IN COMPUTING HISTORICAL NET INCOME
(LOSS) PER COMMON SHARE......................... 3,477 3,477 3,477 3,477 3,477
------- ------- ------- ------- -------
------- ------- ------- ------- -------
SUPPLEMENTAL PRO FORMA NET INCOME (LOSS) PER
COMMON SHARE (3)................................ $ 0.55 $ (0.44)
------- -------
------- -------
SHARES USED IN COMPUTING SUPPLEMENTAL PRO FORMA
NET INCOME (LOSS) PER COMMON SHARE(3)........... 5,180 5,180
------- -------
------- -------
</TABLE>

16
<PAGE>
<TABLE>
<CAPTION>
AXIOM INC.
------------------------------------------
MARCH 31,
PREDECESSOR BUSINESS(1) 1997
JUNE 30, SEPTEMBER 30, ---------
------------------------------- -------------------------------
1992 1993 1994 1994 1995 1996 ACTUAL
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 765 $ 32 $ -- $ 225 $ 1,449 $ 3,326 $ 1,279
Total assets.................................. 9,956 13,435 9,027 15,302 21,849 30,336 24,607
Working capital (deficit), excluding
obligations to parent and affiliates (4).... 2,369 (1,389) 330 1,742 6,671 14,698 10,776
Obligations to parent and affiliates(4)....... -- -- -- 12,603 18,461 23,291 21,480
Long-term debt................................ -- -- -- -- -- 147 --
Stockholder's equity (deficit) (4)............ 5,007 1,363 2,330 (4,098) (4,040) (1,539) (4,001)

<CAPTION>
AS
ADJUSTED(5)
-------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 8,970
Total assets.................................. 31,210
Working capital (deficit), excluding
obligations to parent and affiliates (4).... 18,148
Obligations to parent and affiliates(4)....... --
Long-term debt................................ --
Stockholder's equity (deficit) (4)............ 24,090
</TABLE>

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

(1) The statement of operations and balance sheet data presented for the
Predecessor Business represent the information for the Wireline Division of
TeleSciences, Inc. See Statement of Revenues and Certain Expenses for the
Predecessor Business and Notes thereto. The Predecessor Business data
exclude any intercompany information with its former owner.

(2) Represents a one-time charge for purchased research and development which
was incurred as a result of the acquisition of the Predecessor Business by
the Company on July 1, 1994. The acquisition was accounted for under the
purchase method of accounting. See Notes 1 and 2 of Notes to Consolidated
Financial Statements.

(3) See Note 2 of the Notes to Consolidated Financial Statements for an
explanation of the computation of supplemental pro forma net income (loss)
per common share.

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company develops, markets and supports integrated hardware and software
systems that are able to collect and process an increasing volume of transaction
information from a wide variety of wireline switches and transmit the
information to the customer's information management networks. The Company is
developing systems that process transaction information from wireless, ATM and
other specialized telecommunications switches. The Company's customers use this
information to bill their subscribers, to implement customized marketing
programs and to perform other data management functions. The Company also
provides traffic management solutions to telecommunications companies. The
Company recently introduced its first applications software product, a fraud
detection and management system. The Company provides installation, ongoing
maintenance, support and training, as well as customized engineering services,
related to the Company's systems.

The Company is the successor to a corporation formed in 1967. The Company
was formed in June 1994 in connection with the acquisition of the assets of the
wireline division of TeleSciences, Inc. (the "Predecessor Business"). The
Company is a wholly-owned subsidiary of Securicor Communications and an indirect
wholly-owned subsidiary of Securicor, a multinational public company based in
the United Kingdom. After the Offering, Securicor is expected to own
approximately 57% of the Company.

A significant portion of the Company's revenues have been, and are expected
to continue to be, derived from substantial orders placed by large
organizations, and in particular three RBOCs. Aggregate revenues from U S West,
Southwestern Bell and Ameritech accounted for 50.3%, 51.2% and 61.6% of the
Company's total revenues in fiscal 1994, fiscal 1995 and fiscal 1996,
respectively. During fiscal 1996, an additional 9.4% of the Company's revenues
was attributable to sales to Puerto Rico Telephone Co.

Domestic revenues are typically generated under cancelable general purchase
agreements which provide for the continuing supply of products and services over
future years. Pricing is based upon the volume of products ordered.
Internationally, the Company typically enters into long-term contracts for the
delivery of turn-key systems which include products and services. The Company's
revenues are difficult to forecast because the purchase of its systems generally
involves a significant commitment of capital and management time, which
generally results in lengthy sales cycles.

The Company generally recognizes revenues for products at the time of
shipment and for services when performed. Revenues from support and maintenance
contracts are recognized on a pro-rata basis over the term of the relevant
agreement.

Quarterly revenues are subject to substantial fluctuations due primarily to
the Company's concentration of customers and the timing of orders received. The
timing of orders is dependent, to a large extent, on the timing of the Company's
customers' annual budget process. Historically, the Company's first and second
fiscal quarters have generated a lower level of revenues compared to the
Company's third and fourth fiscal quarters, by which time the Company's
customers have typically approved their budgets. Historically, product and
service backlog has been a relatively small amount and the majority is fulfilled
within three months. Because of its close links to, and ongoing communications
with, its customers, the Company generally is able to plan for product demand
and, when the order is received, ship its products within a relatively short
time period thereafter.

Cost of revenues includes the direct cost of hardware and software modules,
other manufacturing costs related to the assembly and testing of products,
customer service costs, agent commissions where applicable, and other variable
costs such as freight, scrap and installation materials. The Company has a
relatively high fixed cost base which is included in cost of revenues. As a
result, any significant decline in revenues would likely have a significant
adverse effect on margins.

Research, development and engineering expenses consist of payroll and
related expenses and other costs associated with the design and development of
the Company's products. These costs are charged to expense as incurred.

18
<PAGE>
Selling, general and administrative expenses consist of costs to support the
Company's sales, marketing and administrative functions. Included within these
costs are payroll and related expenses, supplies, travel, outside services, as
well as the cost of the Company's participation in trade shows, industry
conferences and related travel and promotional costs.

RESULTS OF OPERATIONS

SIX MONTHS ENDED MARCH 31, 1997 COMPARED TO MARCH 31, 1996

REVENUES

Revenues attributable to unrelated third parties ("Third-party Revenues")
increased by 44.1% from $8.4 million for the six months ended March 31, 1996 to
$12.1 million for the same period in 1997. Equipment revenues increased 66.6%
from $5.3 million for the six months ended March 31, 1996 to $8.8 million for
the same period in 1997. This increase resulted primarily from larger shipments
to existing RBOC customers and the addition of several new customers. Services
revenues increased 4.9% from $3.1 million for the six months ended March 31,
1996 to $3.2 million for the same period in 1997. This increase is mainly due to
increased system installation services during the six months. Additionally, the
Company generated $0 and $1.1 million of Third-party Revenues for the six months
ended March 31, 1996 and 1997, respectively, related to sales of an affiliate's
products which are not expected to recur in the future. See Note 5 of Notes to
Consolidated Financial Statements. In fiscal 1995 and fiscal 1996, the Company
experienced a significant concentration of revenues in the fourth fiscal
quarter. As a result, revenues were lower in the first two quarters of fiscal
1996 and fiscal 1997. See "--Quarterly Results of Operations." For the six
months ended March 31, 1996, the Company recognized $2.0 million of one-time
related-party revenues. These revenues were attributable to sales to a Securicor
affiliate, that generated approximately $3.7 million in revenues from January
1995 to April 1996. See "Certain Transactions." The remaining $376,000 of
related-party revenues represent revenues from the sale of equipment to an
entity in which the Company had an equity investment prior to May 1996. See Note
5 of Notes to Consolidated Financial Statements. Revenues from this entity for
the six months ended March 31, 1997 were $1.1 million and are included in
Third-party Revenues.

GROSS PROFIT

The portion of gross profit attributable to Third-party Revenues increased
from 26.9% of such revenues for the six months ended March 31, 1996 to 35.0% of
such revenues for the same period in 1997. Gross profit related to equipment
revenues increased from 28.0% for the six months ended March 31, 1996 to 42.9%
for the same period in 1997. These increases resulted primarily from the
increase in Third-party Revenues. Gross profit related to services revenues
decreased from 24.9% for the six months ended March 31, 1996 to 13.2% for the
same period in 1997. This decrease is primarily due to increases in fixed costs
incurred in order to support the Company's growing customer base. The Company
has a relatively high fixed cost base which is included in cost of revenues. As
a result, fluctuations in revenues have a significant effect on margins. Total
gross profit as a percentage of total revenues increased from 28.1% for the six
months ended March 31, 1996 to 35.0% for the same period in 1997.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering expenses increased 18.1% from $3.2
million for the six months ended March 31, 1996 to $3.8 million for the same
period in 1997 and decreased as a percentage of Third-party Revenues from 38.4%
to 31.5%. The absolute increase resulted primarily from the addition of
engineering staff and subcontractors to support the increasing development
requirements and demanding timetables of the Company's customers.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses increased 42.4% from $3.0
million for the six months ended March 31, 1996 to $4.2 million for the same
period in 1997. As a percentage of Third-party Revenues, selling, general and
administrative expenses decreased from 35.5% for the six months ended

19
<PAGE>
March 31, 1996 to 35.1% for the same period in 1997. The absolute increase
resulted primarily from the addition of staff in the marketing and sales
departments of the Company. The increase in marketing and sales staff was a
result of the Company's increased focus on developing new markets and expanding
existing markets for the Company's products.

PARENT CHARGES

After the acquisition of the Predecessor Business, Securicor began to charge
the Company an allocated portion of group and divisional overhead costs (the
"Parent Charges"). The Parent Charges for the six months ended March 31, 1996
and 1997 were $213,000 and $193,000, respectively. The Company will not incur
any Parent Charges after the Offering and is not expected to incur any
significant expenses in lieu of these Parent Charges. The Company and Securicor
have entered into an agreement effective upon the completion of the Offering
pursuant to which Securicor will provide international marketing services to the
Company for an annual charge of $160,000. In addition, the Company will pay each
of its directors who are employees of Securicor annual directors fees of
$20,000, which the directors will remit to Securicor. See "Management--Director
Compensation" and "Certain Transactions."

INTEREST EXPENSE

Interest expense was $227,000 for the six months ended March 31, 1996 and
$279,000 for the same period in 1997. This increase resulted from higher
borrowings from Securicor to meet working capital requirements. Upon the
consummation of the Offering, the borrowings from Securicor will be fully
repaid. As a result, the Company's interest expense is expected to decrease. See
"Use of Proceeds."

OTHER INCOME

Other income decreased from $413,000 for the six months ended March 31, 1996
to $54,000 for the same period in 1997. A litigation settlement gain of $350,000
was recognized in the first quarter of fiscal 1996.

EQUITY IN LOSS OF INVESTEE

The Company recorded a $18,000 loss for the six months ended March 31, 1996
as a result of its investment in Metapath Corporation which was accounted for
under the equity method. This investment was sold in May 1996. See Note 5 of
Notes to Consolidated Financial Statements.

INCOME TAXES

The Company's effective tax rate was 38.2% for the six months ended March
31, 1996 and was 41.7% for the same period in 1997. Income tax benefits were
recorded in both periods due to the losses incurred based upon the expected
annual effective income tax rate.

FISCAL 1996 COMPARED TO FISCAL 1995

REVENUES

Third-party Revenues increased 30.8% from $23.8 million in fiscal 1995 to
$31.1 million in fiscal 1996, of which $15.4 million was recognized in the
fourth fiscal quarter. Equipment revenues increased 29.8% from $18.0 million in
fiscal 1995 to $23.4 million in fiscal 1996. Upon the acquisition of the
Predecessor Business on July 1, 1994, the Predecessor Business had three
principal customers: U S West, Ameritech and Telecom Argentina. Since the
acquisition, the Company has increased its customer base. The increase in
revenues in fiscal 1996 resulted, in large part, from increased revenues from U
S West and Southwestern Bell. Internationally, the Company generated revenues
from the Puerto Rico Telephone Co. which were offset by lower revenues from
long-term contracts with Telecom Argentina and two Brazilian telephone
operators, which contracts were substantially completed in early fiscal 1996.
Third-party Revenues from international customers were $8.8 million in fiscal
1995 and $7.2 million in fiscal 1996. The Company expects international revenues
to continue to be significant in future periods as a result of the Company's
planned expansion of its international marketing efforts. The Company introduced
a new product line, the

20
<PAGE>
Sterling Series, in late 1995. See "Business--Products and Related Services."
Revenues from new products, principally the Sterling Series products, accounted
for approximately 6.3% and 41.3% of Third-party Revenues in fiscal 1995 and
fiscal 1996, respectively. Services revenues increased 34.2% from $5.8 million
in fiscal 1995 to $7.7 million in fiscal 1996. This is primarily due to an
increase in installations related to equipment sold and additional support
contract revenue from U S West. In fiscal 1995 and fiscal 1996, the Company also
generated related-party revenues from sales to an affiliate of Securicor of $1.4
million and $2.3 million, respectively, which will not recur in the future. The
remaining related-party revenues of $381,000 and $544,000 for fiscal 1995 and
fiscal 1996, respectively, represent revenues from the sale of equipment to an
entity in which the Company had an equity investment from January 1995 to May
1996. See Note 5 of Notes to Consolidated Financial Statements. Revenues from
this entity from May 1996 to September 30, 1996 were $1.6 million and are
included in Third-party Revenues. In fiscal 1996, the Company also generated
$792,000 of Third-party Revenues related to sales of an affiliate's products
which are not expected to recur subsequent to May 1997. See Note 5 of Notes to
Consolidated Financial Statements.

GROSS PROFIT

The portion of gross profit attributable to Third-party Revenues was 48.7%
of such revenues in fiscal 1995 and 47.8% of such revenues in fiscal 1996. Gross
profit related to equipment revenues was 49.4% in fiscal 1995 and 50.2% in
fiscal 1996. Gross profit related to services revenues was 46.4% in fiscal 1995
and 40.8% in fiscal 1996. This decrease in margin as a percentage of revenues is
due to additional fixed costs incurred to support the increasing customer base.
The fiscal 1996 cost of revenues includes increased program management costs of
approximately $500,000 associated with supporting significant customer
contracts. Total gross profit as a percentage of total revenues remained
substantially constant in fiscal 1995 and fiscal 1996.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering expenses increased 17.7% from $5.9
million in fiscal 1995 to $7.0 million in fiscal 1996. As a percentage of
Third-party Revenues, research, development and engineering expenses decreased
from 25.0% in fiscal 1995 to 22.5% in fiscal 1996. The absolute increase in such
expenses related primarily to the further development and enhancement of the
Company's Sterling Series billing data collection products. Included in
research, development and engineering expenses for fiscal 1995 and fiscal 1996
were $720,000 of amortization related to developed technology acquired with the
purchase of the Predecessor Business in July 1994. Research, development and
engineering expenses are expected to increase in fiscal 1997.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses increased 21.2% from $5.2
million in fiscal 1995 to $6.3 million in fiscal 1996. As a percentage of
Third-party Revenues, selling, general and administrative expenses decreased
from 21.9% in fiscal 1995 to 20.3% in fiscal 1996. The absolute increase
resulted primarily from higher selling expenses related to higher sales volumes
and increased marketing expenses incurred in connection with trade shows,
advertising and other marketing activities.

PARENT CHARGES

Parent Charges were $386,000 in fiscal 1995 and $403,000 in fiscal 1996.
Prior to July 1, 1994 (date of acquisition of Predecessor Business), there were
no Parent Charges.

INTEREST EXPENSE

Interest expense was $112,000 in fiscal 1995 and $514,000 in fiscal 1996.
The increase in fiscal 1996 resulted from higher outstanding borrowings from
Securicor incurred in order to meet working capital requirements.

21
<PAGE>
OTHER INCOME

Other income increased from $148,000 in fiscal 1995 to $430,000 in fiscal
1996. A litigation settlement gain of $350,000 was recognized in the first
quarter of fiscal 1996.

EQUITY IN LOSS OF INVESTEE AND GAIN ON SALE OF INVESTMENT

The Company recorded a $494,000 loss in fiscal 1995 and a $18,000 loss in
fiscal 1996 as a result of its investment in Metapath Corporation which was
accounted for under the equity method. This investment was sold in May 1996
resulting in a gain on sale of this investment of $2,061,000. See Note 5 of
Notes to Consolidated Financial Statements.

GAIN ON SALE OF INVESTMENT

In May 1996, the Company sold its interest in Metapath Corporation in which
it had made an initial investment of $512,000. A gain of $2,061,000 was reported
related to this sale. See Note 5 of Notes to Consolidated Financial Statements.

INCOME TAXES

The Company's effective tax rate was 37.6% and 38.2% for fiscal 1995 and
fiscal 1996, respectively. The increase in such rate in fiscal 1996 resulted
from the higher utilization of research and development credits in fiscal 1995.

FISCAL 1995 OF THE COMPANY COMPARED TO THE FISCAL 1994 OF THE PREDECESSOR
BUSINESS (PREDECESSOR FISCAL YEAR ENDED JUNE 30, 1994)

BACKGROUND

The Company was formed in connection with the acquisition of the assets of
the Predecessor Business on July 1, 1994. The following analysis compares the
results of the Company's fiscal 1995 (year ended September 30, 1995) with the
results of the Predecessor Business' fiscal 1994 (year ended June 30, 1994).

REVENUES

Third-party Revenues increased 17.5% from $20.2 million in fiscal 1994 to
$23.8 million in fiscal 1995. Equipment revenues increased 28.9% from $14.0
million in fiscal 1994 to $18.0 million in fiscal 1995. Revenues increased in
fiscal 1995 primarily as a result of the addition of new customers, in
particular two Brazilian telephone operators and Southwestern Bell, and
increased revenues from U S West. The Company introduced the Sterling Series
billing data collection products in late 1995 as the successor to its SEBX
Series billing data collection products which the Company had introduced in the
1980s. A majority of the fiscal 1995 billing data collection product revenues
were derived from sales of Sterling Series products. Services revenues decreased
8.0% from $6.3 million in fiscal 1994 to $5.8 million in fiscal 1995. This
decrease is primarily due to a decrease in support contract revenue from U S
West and Ameritech as some of the SEBX Series equipment of these customers were
being phased out of service. In fiscal 1995, the Company generated related party
revenues from sales to an affiliate of Securicor of $1.4 million. The remaining
related-party revenues of $381,000 in fiscal 1995 represent revenues from the
sale of equipment to an entity in which the Company had an equity investment
after January 1995. See Note 5 of Notes to Consolidated Financial Statements.
There were no revenues from this entity prior to January 1995.

GROSS PROFIT

The portion of gross profit attributable to Third-party Revenues increased
from 36.7% of such revenues in 1994 to 48.7% of such revenues in fiscal 1995.
Gross profit related to equipment revenues increased from 37.1% in fiscal 1994
to 49.4% in fiscal 1995. Gross profit related to services revenues increased
from 35.9% in fiscal 1994 to 46.4% in fiscal 1995. This reflected the benefits
of spreading higher revenues over the Company's fixed cost base and a reduction
of certain fixed costs when Securicor acquired the Company. The gross profit
percentage in fiscal 1994 was lower as the volume of fiscal 1994 revenues were
lower.

22
<PAGE>
RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering expenses increased 9.1% from $5.5
million in fiscal 1994 to $5.9 million in fiscal 1995 and decreased as a
percentage of Third-party Revenues from 26.9% in fiscal 1994 to 25.0% in fiscal
1995. The absolute increase in such expenses was attributable primarily to the
further development and enhancement of the Company's billing data collection
products.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses increased 4.4% from $5.0
million in fiscal 1994 to $5.2 million in fiscal 1995. As a percentage of
Third-party Revenues, selling, general and administrative expenses decreased
from 24.6% in fiscal 1994 to 21.9% in fiscal 1995. The absolute increase was
attributable to increased selling expenses which are related to sales volume
increases, increased marketing expenses in the areas of advertising and other
marketing activities.

EQUITY IN LOSS OF INVESTEE

The Company recorded a $494,000 loss in fiscal 1995 as a result of its
investment in Metapath Corporation which was accounted for under the equity
method. This investment was sold in May 1996. See Note 5 of Notes to
Consolidated Financial Statements.

PERIOD FROM JULY 1, 1994 TO SEPTEMBER 30, 1994

REVENUES

This period represents the first three months of activity under Securicor
ownership. For the period from July 1, 1994 to September 30, 1994, total
revenues were $5.6 million. A majority of these revenues was generated from
sales to three customers: Telecom Argentina, Ameritech and U S West.
International revenues represented $2.7 million or 48.0% of total revenues.

GROSS PROFIT

Gross profit as a percentage of total revenues was 40.1% for the period from
July 1, 1994 to September 30, 1994. The gross profit percentage was lower than
in fiscal 1995 and fiscal 1996 as a result of the lower level of annualized
revenues for this period.

RESEARCH, DEVELOPMENT AND ENGINEERING

Research, development and engineering expenses were $1.3 million for the
period from July 1, 1994 to September 30, 1994 or 24.0% of total revenues. These
expenses as a percentage of total revenues were generally consistent with those
of fiscal 1995 and fiscal 1996.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $1.1 million for the
period from July 1, 1994 to September 30, 1994 or 19.1% of total revenues. These
expenses as a percentage of total revenues were generally consistent with those
of fiscal 1995 and fiscal 1996.

CHARGE FOR PURCHASED RESEARCH AND DEVELOPMENT

The charge for purchased research and development of $6.7 million in the
period from July 1, 1994 to September 30, 1994 represents a one-time charge
related to purchased research and development in connection with the acquisition
of the Predecessor Business. This charge relates to incomplete research and
development projects which had not yet reached technological feasibility as of
the acquisition date and had no alternate future uses.

INCOME TAXES

For the period from July 1, 1994 to September 30, 1994, an income tax
benefit was recorded due to the one-time charge for purchased research and
development. See Note 14 of Notes to Consolidated Financial Statements.

23
<PAGE>
QUARTERLY RESULTS OF OPERATIONS

The following table presents certain unaudited quarterly financial
information for each quarter in fiscal 1995 and fiscal 1996 and the first and
second quarter of fiscal 1997. In the opinion of the Company's management, this
information has been prepared on the same basis as the Consolidated Financial
Statements appearing elsewhere in this Prospectus and includes all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the financial results set forth herein. Results of operations for any previous
quarter are not necessarily indicative of results for any future period.
<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1996
-------------------------------------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Unrelated third
parties............... $ 6,746 $ 3,316 $ 5,868 $ 7,836 $ 3,767 $ 4,597 $ 7,298 $ 15,435
Related parties......... -- 921 431 450 1,145 1,271 168 283
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues.......... 6,746 4,237 6,299 8,286 4,912 5,868 7,466 15,718
Cost of revenues:
Unrelated third
parties............... 3,573 2,203 2,898 3,529 2,699 3,418 4,382 5,720
Related parties......... -- 695 297 282 902 733 67 244
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total cost of
revenues.............. 3,573 2,898 3,195 3,811 3,601 4,151 4,449 5,964
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit............ 3,173 1,339 3,104 4,475 1,311 1,717 3,017 9,754
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expenses:
Research, development
and engineering....... 1,287 1,469 1,562 1,630 1,522 1,687 1,936 1,858
Selling, general and
administrative........ 1,148 1,309 1,357 1,392 1,549 1,421 1,559 1,779
Parent charges.......... 93 93 93 107 97 116 120 70
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating
expenses.............. 2,528 2,871 3,012 3,129 3,168 3,224 3,615 3,707
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income
(loss)................ 645 (1,532) 92 1,346 (1,857) (1,507) (598) 6,047
Interest expense, net... 36 17 53 6 107 120 124 163
Other income
(expense)............. -- -- 7 141 397 16 22 (5)
Equity in loss of
investee.............. -- 177 268 49 18 -- -- --
Gain on investment...... -- -- -- -- -- -- 2,061 --
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes.......... 609 (1,726) (222) 1,432 (1,585) (1,611) 1,361 5,879
Income tax (expense)
benefit............... (229) 649 83 (538) 605 615 (520) (2,243)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)....... $ 380 $ (1,077) $ (139) $ 894 $ (980) $ (996) $ 841 $ 3,636
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------

<CAPTION>
FISCAL 1997
------------------------
<S> <C> <C>
DEC. 31 MARCH 31
----------- -----------

<S> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Unrelated third
parties............... $ 4,781 $ 7,269
Related parties......... -- --
----------- -----------
Total revenues.......... 4,781 7,269
Cost of revenues:
Unrelated third
parties............... 3,792 4,042
Related parties......... -- --
----------- -----------
Total cost of
revenues.............. 3,792 4,042
----------- -----------
Gross profit............ 989 3,227
----------- -----------
Operating expenses:
Research, development
and engineering....... 1,943 1,847
Selling, general and
administrative........ 2,211 2,019
Parent charges.......... 96 97
----------- -----------
Total operating
expenses.............. 4,250 3,963
----------- -----------
Operating income
(loss)................ (3,261) (736)
Interest expense, net... 150 129
Other income
(expense)............. 27 27
Equity in loss of
investee.............. -- --
Gain on investment...... -- --
----------- -----------
Income (loss) before
income taxes.......... (3,384) (838)
Income tax (expense)
benefit............... 1,442 318
----------- -----------
Net income (loss)....... $ (1,942) $ (520)
----------- -----------
----------- -----------
</TABLE>

Quarterly revenues are subject to substantial fluctuations primarily
resulting from the Company's concentration of customers and the timing of orders
received. The timing of orders is dependent, to a large extent, on the timing of
the Company's customers' annual budget process. Historically, the Company's
first and second fiscal quarters have generated a lower level of revenues
compared to the Company's third and fourth fiscal quarters, by which time the
Company's customers have typically approved their budgets. The Company's
operating results may fluctuate significantly from quarter to quarter or on an
annual basis in the future as a result of a number of factors, including but not
limited to the size and timing of customer orders; the length of the Company's
sales cycle; the timing of product announcements and introductions by the
Company and its competitors; the Company's ability to develop, introduce and
market new products and product enhancements; market acceptance of the Company's
products; deferrals of customer orders in anticipation of new products or
product enhancements; the Company's ability to control costs; the availability
of components; political instability in, or trade embargoes with respect to,
foreign markets; changes in the Company's management team; and fluctuating
economic conditions. The Company's future operating results may fluctuate as a
result of these and other factors, which could have a material adverse effect on
the Company's business, results of operations and financial condition. See "Risk
Factors-- Difficulty in Forecasting Revenues; Long Sales Cycles; Reliance on
Large Orders; Non-recurring Nature of Sales; Fluctuations in Quarterly Results."

24
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Since the acquisition of the Predecessor Business by Securicor in July 1994,
the Company has financed its operations to date primarily with cash generated
from operations and borrowings from Securicor. Prior to July 1994, the
Predecessor Business had a credit facility with a bank, and this facility, along
with loans from certain stockholders was used to fund working capital
requirements. As of March 31, 1997, the Company had $1.3 million of cash, $8.2
million in net trade accounts receivable, and $10.7 million of working capital
deficit.

Net cash used in operating activities was $1.9 million and $4.1 million in
fiscal 1995 and 1996, respectively, and net cash provided by operating
activities was $680,000 for the six months ended March 31, 1997. In fiscal 1995,
an increase in accounts receivable of $2.1 million, an increase in inventories
of $2.4 million and a decrease in other accrued expenses of $1.2 million were
only partially offset by a $1.1 million increase in accounts payable. In fiscal
1996, increases in accounts receivable of $8.3 million were only partially
offset by the cash provided by the sum of net income, adjusted for $158,000 in
non-cash charges, and a $1.1 million increase in accrued taxes payable. For the
six months ended March 31, 1997, decreases in accounts receivable of $7.6
million were only partially offset by the net loss of $2.5 million and a $3.9
million decrease in accrued taxes payable.

Net cash used in investing activities was $2.7 million and $769,000 in
fiscal 1995 and for the six months ended March 31, 1997, respectively. Net cash
provided by investing activities was $1.2 million in fiscal 1996. In fiscal
1995, fiscal 1996 and for the six months ended March 31, 1997, purchases of
property and equipment were $877,000, $818,000 and $769,000, respectively.

Net cash provided by financing activities was $5.9 million and $4.7 million
in fiscal 1995 and fiscal 1996, respectively, and the net cash used in financing
activities was $2.0 million for the six months ended March 31, 1997. These
amounts resulted primarily from funding which the Company received from
Securicor. The Company made net repayments of $1.8 million to Securicor during
the six months ended March 31, 1997.

The Company's funding requirements, outside of those generated from
operations have been satisfied from borrowings from Securicor. The Company's
obligation to Securicor was $23.3 million and $21.5 million at September 30,
1996 and March 31, 1997, respectively. As of March 31, 1997, $20.4 million of
amounts due Securicor represented borrowings by the Company from Securicor and
$1.1 million represented obligations of the Company to an affiliate. See
"Certain Transactions." As of that date, $9.0 million of the borrowings bore
interest at 1% over Securicor's borrowing rate. The remaining portion of the
obligation is interest free. Subsequent to March 31, 1997, the obligations of
the Company to Securicor that are to be paid from the proceeds of the Offering
increased from $20.4 million to approximately $23.2 million. The annual interest
rate on the interest-bearing portion of the indebtedness to Securicor averaged
6.9% for the 12 month period ended March 31, 1997 and the principal amount is
payable upon demand. See "Certain Transactions." The Company does not expect to
borrow from Securicor after the completion of the Offering.

The Company is in the process of establishing commercial banking
relationships. The Company has received a commitment for the establishment of a
$2.5 million credit facility from a bank which will be used to meet short-term
borrowing requirements.

The Company believes that its existing cash balances, cash generated from
operations, borrowings under the credit facility and the net proceeds from the
Offering will be sufficient to meet the Company's cash requirements during the
next twelve months. However, depending upon its rate of growth and
profitability, the Company may require additional equity or debt financing to
meet its working capital requirements or capital expenditure needs. There can be
no assurance that additional financing, if needed, will be available when
required or, if available, on terms satisfactory to the Company.

INFLATION AND FOREIGN EXCHANGE

To date, inflation and foreign currency fluctuations have not had a material
impact on the Company's financial condition and results of operations. All sales
arrangements with third-party international customers are denominated in U.S.
dollars.

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BUSINESS

GENERAL

The Company is a leader in providing comprehensive billing data collection
solutions to providers of local, long-distance and other advanced
telecommunications services. The Company's largest customers include RBOCs, such
as Ameritech, Southwestern Bell and U S West, and international providers of
telecommunications services, such as Telecom Argentina. The Company develops,
markets and supports integrated hardware and software systems that are able to
collect and process an increasing volume of transaction information from a wide
variety of wireline telecommunications switches and transmit this information to
the customer's information management networks. The Company also is developing
systems that process transaction information from wireless, ATM and other
specialized telecommunications switches. The Company's customers use this
information to bill their subscribers, to implement customized marketing
programs and to perform other data management functions. The Company also
provides traffic management solutions to telecommunications companies such as
TELESP, a Brazilian telecommunications service provider. The Company recently
introduced its first applications software product, a fraud detection and
management system. The Company provides installation, ongoing maintenance,
support and training, as well as customized engineering services, related to the
Company's systems.

The telecommunications industry is currently experiencing rapid growth and
change resulting from the combined effects of regulatory, competitive and
technological developments. To comply with regulatory requirements and to be
successful in increasingly competitive markets, telecommunications providers are
being required to upgrade their existing data collection systems to new systems
that can process large volumes of transaction information without compromising
the integrity of the billing stream and can efficiently transmit the information
for use by increasingly sophisticated and varied data management applications.

The Company believes that it provides to large wireline customers the most
advanced and reliable billing data collection systems and that it is the leader
in designing these systems to meet the AMADNS generic requirements established
in 1994. A critical feature of the Company's systems is redundancy, permitting
them to protect the integrity of call detail records ("CDRs") and provide
"financial grade" reliability (greater than 99.999% system availability). The
Company's products also are capable of delivering transaction information on a
real-time basis. Reflecting the engineering expertise acquired through the
Company's 30 year history, the Company's products offer a high degree of
connectivity, permitting them to interface with switches from all major domestic
and most international wireline switch manufacturers, including Northern Telecom
Inc., Lucent Technologies Inc. ("Lucent"), Siemens AG, L.M. Ericsson Telephone
Co. and NEC Corp. The Company's systems utilize an open systems architecture,
permitting them to interface with other elements of the customer's data
collection network and with virtually any billing processing or other
information management application. The Company's systems also are scaleable,
thereby allowing them to handle a large range of call volumes. The systems can
be configured with proprietary software applications that provide a wide variety
of preprocessing functions such as filtering (extracting data that meet preset
criteria), distribution (directing predetermined data to certain specialized
applications) and reformatting (rearranging input data into a user-defined
output format).

INDUSTRY BACKGROUND

GENERAL

Historically, the telecommunications industry has been characterized by
significant governmental regulation or ownership and limited competition. In
this environment, telecommunications services consisted primarily of local and
long distance telephone service over traditional wirelines. More recently,
deregulation and privatization of telecommunications services have led to
increased intra-industry, cross-industry and geographic competition. In February
1996, the Telecommunications Act of 1996 (the "Telecommunications Act") was
enacted into law in the United States. The stated purposes of the
Telecommunications Act were to reduce regulations, promote competition and
encourage the rapid employment of new telecommunications technologies. The
Telecommunications Act is expected to increase competition in the
telecommunications services market in the United States by allowing local,

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long distance and cable television companies to offer competing services
provided they meet specified regulatory benchmarks.

Internationally, privatization and deregulation are resulting in similar
increases in competition, the emergence of newly authorized telecommunications
service providers and the provision of additional features over a variety of
media. The European Union is scheduled to implement a new regulatory scheme in
1998 that will permit a variety of telecommunications providers to offer
traditional local and long-distance services within each geographic market. In
addition, in February 1997, an agreement was reached through the World Trade
Organization to significantly increase international access to the
telecommunications markets of its 69 member countries, subject to certain
official ratifications. Technological advances and global expansion by
multi-national service carriers are also opening markets in less developed
countries to enhanced telecommunications services and increased competition.

In response to these regulatory changes, many telecommunications service
providers are expected to compete by offering multiple services, including
combinations of local exchange, long distance, wireless and data communications
services to customers in single or multiple geographic markets without the delay
or limitations historically imposed by regulatory approvals. In some local
markets, multiple vendors have already begun to offer competing local exchange
services and the local exchange markets are fragmenting into wholesale and
retail markets.

COMPETITION IN LOCAL EXCHANGE MARKETS

The entry of competitive local exchange companies ("CLECs") into markets
traditionally monopolized by existing or "incumbent" local exchange companies
("ILECs") (in the U.S., typically an RBOC) is expected to increase the need for
all participants in each local market to monitor closely and use effectively all
relevant data regarding each call transaction. Some CLECs are building their own
physical infrastructure of wireline, wireless and other transmission systems
while most other CLECs initially seek to provide dial-tone services to their
customers by purchasing wire access from the ILECs that own the physical
wireline infrastructure. CLECs that are commercial resellers of wire access
rights generally do not have any billing infrastructure of their own, but either
subcontract such services to a service bureau or piggyback on the ILEC's system.
In response to the entry of CLECs and other competitive factors, ILECs have
sought to reduce expenses, often by reducing staff. In addition, ILECs and other
telecommunications providers are seeking to differentiate themselves by
improving existing services and rapidly introducing new services, including
high-speed data services, video teleconferencing, video-on-demand, home shopping
and home banking. The availability of new and enhanced services has fueled a
dramatic increase in usage of telecommunications services by organizations and
individuals placing additional burdens on existing telecommunications
infrastructures. As a result of these factors, an ILEC's billing system must be
increasingly automated to reduce personnel expenses and must meet new demands
for real-time access to transactional and other data by third parties such as
CLECs and their customers and demands for more sophisticated uses of such data.

GROWTH AND CONVERGENCE OF TELECOMMUNICATIONS MARKETS

All segments of the telecommunications services industry are experiencing
change and convergence. Providers of telecommunications services through
traditional wirelines, including providers of local, long-distance, network
access and related services, provide services to approximately 165 million
access lines in the U.S., generating more than $178 billion in revenue in 1995.
Deregulation has spurred the creation of new entrants in both the local and long
distance market and has increased competitive pricing pressures among all
providers. RBOCs and long-distance providers compete with providers of cellular
and other wireless services through the purchase of cellular companies and
licences to offer personal communications services ("PCS"), while such wireline
providers are examining opportunities in the cable market. At the same time,
utility companies are leveraging their existing electrical and fiber optic
infrastructures to provide telecommunications services to their customers. In
addition, on-line service providers, such as Prodigy, America Online and
CompuServe, and the growing use of organization-specific intranets have
generated a large and rapidly growing market for a range of services including
electronic mail, home shopping, news and access to the Internet and other
information, at present largely through existing wireline networks. The
availability of new and enhanced services has fueled a growth in the usage of

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telecommunications services by organizations and individuals, placing additional
burdens on existing telecommunications infrastructures and increasing the demand
by users and services providers alike for accurate transaction information and
effective tools with which to process that information.

As companies enter other telecommunications market segments and the resale
of local exchange services becomes more widespread, there will be an increasing
need for systems that can: (i) handle the interchange of billing and other
information between wholesale and retail providers; (ii) capture additional
transactional and traffic data necessary to optimize the overall wholesale
network configuration; and (iii) enhance Decision Support Systems ("DSSs") that
enable providers to understand their customers better and to deliver new
products to precisely targeted customer segments.

GROWING IMPORTANCE OF DATA MANAGEMENT IN THE TELECOMMUNICATIONS INDUSTRY

The growing complexity of the telecommunications industry increasingly
demands that telecommunications service providers develop more effective billing
processing and other data management systems. As a result of the changes
initiated by the Telecommunications Act, ILECs now must share their physical
infrastructure, including their switches and their related operations support
systems ("OSSs"), with CLECs. Similar changes are occurring in the European
Union and other parts of the world. All participants, whether they be customers
or providers, increasingly demand accurate, real-time information with respect
to each call transaction, whether such information is used for traditional
billing functions or for more advanced marketing and customer-care applications.
Transactional billing, therefore, is no longer a simple process of matching
specific calling events with a single provider's subscriber database. Call
transaction data must be collected, processed and distributed so that they can
be used for multiple purposes by multiple users. Calls reported at a single
switch may be initiated by customers of several different service providers
requiring that data be distributed via different media to several separate
billing and rating services. New features and pricing options adopted by
services providers require that billing data systems perform more processing
steps as sophisticated rating functions require more attention to specific CDR
attributes. Also, providers are increasingly aware of the significance of the
bill as a channel for communicating with the customer. Customer retention can be
enhanced through a clear and readable presentation of relevant billing data that
is useful both to verify charges and to serve other functions for the customer.
Effective billing data collections systems will be especially critical for
ILEC's wholesale operations that interconnect with, and face competition from, a
growing number of CLECs.

Most telecommunications service providers do not currently have in place
billing data collection systems capable of handling the call volumes or the data
processing needs that exist in the current marketplace. Many of the larger
telecommunications service providers have traditionally used billing systems
that were typically mainframe-based, with proprietary software written in early
generation programming languages. As a result, these "legacy" systems were not
designed for rapid deployment or adaptation and are not easily customized to fit
specific business needs. Also, telecommunications service providers often
continue to use a wide variety of switch technologies and to connect these
switches with their billing data collection and data management systems by a
wide range of data transmission media. Legacy systems often cannot be integrated
with other information sources within a provider's organization, or databases
outside an organization. In order to keep pace with the enormous growth in the
number of subscribers, and the proliferation of services offered, the Company
expects telecommunications service providers, including the RBOCs, increasingly
to adopt more flexible OSSs and more sophisticated information services
applications and to attempt to integrate such upgraded systems with their
existing core billing systems. This approach to system enhancement requires that
each provider maintain or have access to a flexible and reliable system for
gathering billing information from all sources, processing the information and
delivering information to the wide variety of systems environments in which its
software applications are executed.

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In this rapidly-changing and competitive environment, telecommunications
service providers increasingly require solutions that:

- offer a high degree of integrity and reliability in billing, customer
communications and customer-care functions;

- enable the delivery of data to a variety of billing and data management
applications on a real-time basis;

- interface with a wide variety of telecommunications switches and integrate
seamlessly with providers' existing billing processing and other
information management systems so that providers can use the data
historically generated solely for billing purposes as an integral part of
their marketing and customer-care efforts and for other strategic
purposes;

- provide scaleable solutions that allow providers cost-effectively to
increase processing capacity and functionality to meet rising call volumes
and more sophisticated data management needs;

- enable providers to monitor, manage and optimize their network
configurations and the flow of traffic over those networks; and

- offer a variety of preprocessing functions that format data downloaded
from switches and transmit the data to information management systems in a
form that enhances the systems' efficiency and functionality.

THE COMPANY'S SOLUTIONS

The Company develops, markets and supports integrated hardware and software
systems that provide comprehensive billing data collection solutions designed to
collect, process and transmit transaction information from a variety of
telecommunications switches to customers' billing processing and other
information management systems. The Company believes that its extensive
experience in supplying products to wireline customers provides it with a
competitive advantage in meeting those customers' current needs.

The Company's billing data collection systems offer solutions that decrease
providers' costs and increase their productivity by incorporating the following
advantages:

- FINANCIAL GRADE RELIABILITY--The Company's systems make available features
that provide "financial grade" reliability (greater than 99.999% system
availability) while also performing various preprocessing functions,
thereby protecting customers against loss of revenues.

- REAL-TIME PROCESSING--The Company's systems can provide real-time
processing (I.E., the ability to process and deliver CDRs within five
minutes of receipt) which is critical to certain advanced applications,
including billing and rating functions, as well as fraud detection and
management and customer care.

- CONNECTIVITY--The Company's engineering expertise acquired through the
Company's 30-year history enables its billing data collection systems to
interface with switches from all major domestic and most major
international wireline switch manufacturers. For telecommunications
companies facing a lack of industry standards for switch interfaces and
data formats, the Company's products provide the ability to standardize
transactional data for use by their data management systems. The Company
plans to develop interfaces to accommodate additional international and
wireless switches, thereby enabling the Company's systems to service
integrated domestic and international wireline and wireless operations.

- OPEN SYSTEMS ARCHITECTURE--The Company's products utilize an overall open
systems architecture that results in several important benefits: (i)
standard interfaces enable the Company's products to connect with other
customer network elements; (ii) adherence to network management protocols
enables the Company's products to be managed as a system; and (iii)
applications programming interfaces developed by the Company enable its
products to interface effectively with the customers'

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applications software. The Company believes that this open design adds
greatly to the value of its products and increases its opportunities in
the marketplace.

- SCALEABILITY--The Company's systems can be configured to handle a wide
range of transaction data volumes, thereby permitting customers to
increase capacity over time on a cost-effective basis. Customers
frequently can reduce their personnel costs and increase productivity
because the Company's systems utilize fewer hardware units than systems
using prior technology, thereby requiring fewer operators.

- FLEXIBLE FUNCTIONALITY AND COST-EFFECTIVENESS--The Company's systems can
be configured with a variety of specialized processing modules to provide
a variety of preprocessing functions, thereby allowing customers to avoid
ongoing adjustments to their mainframe software and to free mainframe
capacity to handle the increased demand that will be placed on billing and
rating systems in the future.

The Company's traffic management system, Manifest,-TM- provides
telecommunications companies with real-time traffic data to detect and locate,
quickly exchange and network problems, plan and route strategically call traffic
through the network, improve the overall quality of service and reduce
significantly customer complaints. The system supports open systems standards
and utilizes an object-oriented graphical-user interface ("GUI") development
tool. It provides flexible traffic measurement and analysis through standard
UNIX and Windows NT reporting tools.

The Company recently introduced a fraud detection and management system
which is its first software applications product that can be utilized separately
from, as well as together with, the Company's systems products. The software
utilized in the product is licensed from a company in the United Kingdom where a
substantially similar product is currently in commercial use.

STRATEGY

- EXPAND RELATIONSHIPS WITH WIRELINE CUSTOMERS. The Company has addressed
the demand from its domestic and international wireline customers for
increasingly sophisticated billing and other information by introducing
its Sterling Series line of billing data collection products at the end of
1995. Sales to the Company's three main RBOC customers, Ameritech,
Southwestern Bell and U S West, equaled $20.9 million in fiscal 1996. The
Company believes that these customers have replaced less than 25% of their
prior generation billing data collection systems, and that these customers
will replace the balance of their prior generation systems, and purchase
additional products and services from the Company, over the next three to
five years. The Company also believes that there is a significant
opportunity to sell Sterling Series products to other RBOCs and other
wireline customers worldwide.

- CONTINUE TO EXPAND SALES TO NEW TELECOMMUNICATIONS MARKETS. The rapidly
evolving telecommunications business environment is resulting in a large
number of new telecommunications providers that will directly or
indirectly provide opportunities for the Company, including CLECs, long
distance companies, cellular service providers and PCS providers. The
Company is currently installing an initial product delivery for a major
CLEC and has begun selling to an RBOC-affiliated long distance company. In
addition, cable television companies, Internet service providers and
utility companies are beginning to provide telecommunications services.
The Company intends to address the opportunities arising from the new
providers by developing interfaces for wireless switches and by expanding
its product line to make available lower-priced entry-level systems with
functionalities geared to lower volume switches. See "Use of Proceeds."
The Company also plans to

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address these opportunities through the new marketing strategies and new
product and service offerings described below.

- CONTINUE TO DEVELOP MARKETING CHANNELS. In addition to direct sales and
marketing efforts, the Company has begun to market its systems through
indirect channels. The Company has emphasized the establishment of
relationships with switch vendors, systems integrators and billing system
providers. In May 1997, the Company entered into a reseller agreement with
AG Communication Systems Corporation, ("AGCS"), a joint venture between
Lucent and GTE Corporation ("GTE"). The Company also recently entered into
a preliminary memorandum of understanding with a major systems integrator
for the sale of certain Sterling Series products and is negotiating
arrangements with manufacturers of ATM switches that permit greatly
enhanced call processing speeds and volumes. The Company sells to the
wireless market through a supply relationship with another company.

- EXPAND INTERNATIONAL BUSINESS. The Company's products have been sold
internationally since 1972. In 1995, the Company completed a $13 million
contract with Telecom Argentina. Contracts for the sale of an aggregate of
$4.2 million of the Company's products and services to TELESP and another
major Brazilian telecommunications company are currently nearing
completion. The Company intends to develop products to interface with a
broader range of international switches. See "Use of Proceeds." The
Company is expanding its penetration of international markets by forming
relationships with systems integrators and distributors in targeted
countries. The Company is negotiating arrangements with prospective
distribution partners in Indonesia, the Phillippines and France, has
received initial orders from a software development company and a long
distance operator in France, and has signed a distribution agreement with
Mahindra-British Telecom, a company based in India. The Company also
utilizes agents in certain countries including Argentina, Venezuela, the
Phillippines and the Caribbean. In addition, the Company employs three
senior international sales executives and, through its affiliation with
Securicor, has access to business development managers based in Hungary,
Malaysia and South America. See "Certain Transactions."

- EXPAND PRODUCT AND SERVICE OFFERINGS. The Company intends to continue to
expand the functionality of its primary products. By the end of calendar
1997, the Company plans to make available additional reformatting and
distribution capabilities in its Sterling Series systems. The Company
plans to develop additional interfaces for wireless and international
switches and to make available lower-priced entry-level systems. See "Use
of Proceeds." The Company recently introduced its fraud detection and
management system which is its first software applications product that
can be utilized separately from, as well as together with, its systems
products. The Company has also recently upgraded its traffic management
solution to provide features including a graphical user interface,
enhanced application tools, a web browser and compatibility with Windows
NT. The Company also plans to expand its technology service offerings to
make available fast response software engineering services focused on
customers' individualized needs. The Company may also consider developing
interfaces that permit its systems to transmit data from sources other
than telecommunications networks, including possibly other utilities and
cable television systems. The Company intends to consider selective
acquisitions of product and service providers to augment its internal
development efforts.

- RETAIN TECHNOLOGY LEADERSHIP. The Company has developed broad expertise in
its core product areas in the course of serving some of the largest
domestic and international telecommunications providers. The Company
currently employs 72 engineers with over 1,000 years of aggregate
engineering experience. The Company believes that this expertise provides
the Company with a competitive advantage in configuring its systems to
address most effectively its customers' requirements.

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PRODUCTS AND RELATED SERVICES

The Company's principal products are billing data collection systems and
traffic management systems utilized by operators of telecommunications networks.
Telecommunications networks consist primarily of lines (which connect a terminal
device, such as a telephone or modem, with a switch), trunks (which connect two
or more switches) and switches. A telecommunications switch is a computer-based
system that connects users of telecommunications networks. The switch provides a
dial tone to the calling party, routes the call based upon the telephone number
dialed by the calling party, connects the calling and called parties (or
provides a busy signal if the called number is busy), releases all equipment
upon the completion of the call and creates a call detail record ("CDR") of the
call. The Company's billing data collection systems collect, process and
transmit these CDRs from telecommunications switches to the customer's (which
may be an ILEC or CLEC) information management network.

The number of trunks required by any telecommunications network depends
primarily on the number, timing and duration of calls. If a network has too many
available trunks, costs to the operator and users are increased. If a network
has too few available trunks, users are unable to have their calls connected,
resulting in complaints from users and lost revenues to the operator. The
Company's traffic management systems capture information on trunk usage that is
transmitted to the customer's network planners who use the information to try to
plan their networks so that the optimal number of trunks are available at the
appropriate times and at the appropriate places in the network.

[Graphical representation to be inserted of the Company's products showing how
they can be used together as a system in conjunction with the customer's data
generating systems (switches) and billing and transaction data applications. At
the top of the graphic is the following caption: "Axiom-Trademark-absolute value
Product Line."]

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BILLING DATA COLLECTION PRODUCTS

The Company offers an integrated suite of billing data collection products
marketed under the "Sterling Series" name. The individual products that comprise
the Sterling Series are designed to work as a system; however, the Company sells
each component separately so that the system can be configured to meet the exact
needs of the customer. The Sterling Series was introduced by the Company at the
end of 1995 as the successor to its PDU-20 (Pollable Data Unit) and SX5000 (Host
Collector) billing data collection system that the Company introduced in the
1980s as the "SEBX Series." Compared with the SEBX Series, the Sterling Series
provides substantially increased storage capacity and processing power, enhanced
interconnectivity with a wide range of data management systems and increased
speed of network data delivery. For example, the newest version of the Sterling
5000 can process up to 16 million CDRs per hour and the Sterling 500 can process
up to 750,000 CDRs per hour, as compared to four million CDRs per hour for the
SX5000 and 150,000 CDRs per hour for the PDU-20. The storage capacity (per disk)
of the newest version of the Sterling 5000 is up to four times that of the
SX5000 and the storage capacity of the Sterling 500 is up to ten times that of
the PDU-20. Sales to the Company's three main RBOC customers equaled $20.9
million in fiscal 1996, a large majority of which is attributable to sales of
Sterling Series products. The Company believes that its three largest customers,
Ameritech, Southwestern Bell and U S West, have replaced in the aggregate less
than 25% of their prior generation billing data collection systems, and that
these customers will replace the balance of their prior generation systems, and
purchase additional products and services from the Company, over the next three
to five years. The Company also believes that there is a significant opportunity
to sell Sterling Series products to other RBOCs and other wireline customers
worldwide.

The Sterling Series is a highly flexible system that offers a number of
important features that are designed to assist the customer to make its billing
data collection system more reliable and less costly to operate:

- REDUNDANCY AND RELIABILITY. The structure of the Sterling Series permits
it to be "redundant," I.E., when one of its processing systems fails, the
Sterling Series has the ability to redirect data gathering, processing and
distribution functions to other parts of its system and take proper steps
to recover data lost when the original failure occurred. The redundancy
and audit features enable the Sterling Series to provide "financial grade"
reliability (greater than 99.999% system availability).

- AUDIT AND ALARM FEATURES. The Sterling Series has an "audit" feature that
enables it to identify problems and inconsistencies in the CDRs and recall
data that has been lost or misplaced in the CDR generating source or any
other part of the billing data collection system. The Sterling Series is
also equipped with alarms that can be programmed to notify systems
operators of the existence of data problems as they occur.

- REAL-TIME ACCESS. The Sterling Series permits transactional data to be
copied and processed early in the processing cycle so that a wide variety
of users can gain real-time access to data (I.E., the ability to process
and deliver CDRs within five minutes of receipt) without disrupting the
integrity of the stream of billing information.

- CONNECTIVITY. The Sterling Series has the ability to gather and process
information from a wide range of telecommunications switches, including
switches utilizing older or "legacy" technologies. The Sterling Series can
be adapted to interface with wireless switches and is capable of
supporting both U.S. and international billing data specifications.

- OPEN SYSTEMS ARCHITECTURE. The Sterling Series utilizes standard
interfaces to permit connection with other elements in the customer's data
collection network. These products also use network management protocols
that allow them to be managed as a system. Applications programming
interfaces developed by the Company enable its products to interface
effectively with customers' applications software.

- SCALEABILITY. The Sterling Series has a multi-processor architecture which
is "scaleable," meaning that users can add additional components to
significantly upgrade its processing power and

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functions. These "scaleability" features therefore can reduce a customer's
need to invest in new systems to handle increased CDR volumes and
specialized processing requirements.

- MODULARITY AND FLEXIBILITY. The system is modular in design, and can be
configured to perform a number of user-specified applications by employing
the Company's specialized processing modules. By using specialized
processing modules to perform user-defined preprocessing functions at the
billing collectors, users of the Sterling Series can reduce the work
performed by their core billing systems, significantly increasing the
overall processing speed and performance of the billing management system.

- REMOTE ACCESS. The Sterling Series permits the customer to manage from a
centralized location billing data collection activities at remote
automated facilities. The ability to manage so-called "darkroom"
facilities at remote sites allows customers to reduce labor costs.

The core components of the Sterling Series are the Sterling 500 data server
and the Sterling 5000 billing data collector, each of which can be configured
with a variety of specialized processing modules. The Sterling Series is
controlled through the Company's Sterling Manager software that runs on the
Sterling 5001 workstation. The Sterling Series also includes the Sterling 5410
data distribution platform. These components of the Sterling Series are
described in further detail below.

STERLING 500. The Sterling 500 is a data server that consists of a
processor unit equipped with a UNIX-based operating system. The Sterling 500
typically interfaces with between one and four switches to obtain all
transactional data generated by the switches. The Sterling 500 can be configured
on a fully redundant basis and shares many capabilities with the Sterling 5000
described below, such as the ability to support multiple switches and switch
interfaces, scaleability and compatibility with a wide range of local-and
wide-area-network environments.

STERLING 5000. The Sterling 5000 is a centralized billing data collector
that collects transactional data (primarily CDRs) from data servers, such as the
Sterling 500, or directly from up to 200 telecommunications switches or other
CDR generating sources. The Sterling 5000 consists of a multi-processor Hewlett-
Packard Co. ("Hewlett-Packard") computer equipped with specialized software. The
Sterling 5000 is equipped with specialized input interfaces which permit the
unit to collect data from a wide variety of switch and server types. After the
data is collected, the Sterling 5000's resident preprocessing software reformats
the CDRs into a normalized format which facilitates further processing, storage
or delivery to other data management systems.

The Sterling 5000 processes the normalized CDRs through a number of
applications, some of which are standard features of the Sterling 5000 and some
of which are provided by specialized processing modules that the Company sells
separately. The following processing modules are loaded on the Sterling 5000 as
standard features.

- The Copy Module generates a duplicate output file in real time from any
output file, thereby enabling customers to distribute duplicate data
streams to other applications while leaving the primary data stream intact
for transmission to, and use by, the rating and billing process.

- The Terminator Module allows customers to create a user-defined output
file that receives a copy of the CDRs generated by another processing
module and provides for the distribution of such output files on a
schedule or on a demand basis using standard file transfer protocols.

- The Daily Volume Tracking Module enables customers to create reports on
the daily volume of CDRs.

Although the Company recommends that RBOCs and most other customers purchase
a system that utilizes Sterling 500s to transmit data from switches to one or
more centrally-located Sterling 5000s that transmit data to the customer's host
billing system, Sterling 500s and 5000s can be installed in a number of
configurations depending on the processing needs and the budget constraints of
the customer. Sterling 500s can be installed alone to transmit normalized CDRs
gathered from the switches directly to the billing system. Similarly, Sterling
5000s can be installed alone to gather transaction information directly from the
switch without the need for intermediary preprocessing steps.

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STERLING 5001; STERLING MANAGER. The Sterling 5001 is a workstation
equipped with GUI-based software that provides communication, command and
control capabilities for a network of one or more Sterling 5000s and Sterling
500s. The Sterling 5001 is generally used in combination with the Company's
Sterling Manager software product, which can be easily adapted to interface with
additional Sterling and non-Sterling hardware and software products. With
easy-to-use "point and click operation," the Sterling 5001 optimizes systems
control and enables the customer's personnel to manage from remote locations
data collecting, processing and distributing functions performed by equipment
installed at fully automated facilities. By combining the ability to manage
remote operations with the advantages of a user-friendly interface, the
Company's products help its customers to control their personnel-related costs.

STERLING 5410. The Sterling 5410 is a UNIX-based data distribution platform
designed to receive CDR data from other Sterling Series products and perform
independent data processing. The Sterling 5410 offers end users full access to
that data while, at the same time, maintaining a security "firewall" between
these external users and the revenue-critical billing system directly supported
by other Sterling Series products. The platform has the further advantage of
being able to aggregate data from several Sterling 5000s and 500s by
communication through a provider's own network file servers. Currently, the
primary application of the Sterling 5410 permits ILECs to provide call detail
data to their Centrex customers.

SPECIALIZED PROCESSING MODULES ("SPMS"). The Company offers purchasers of
the Sterling 500 and 5000 the power to build quickly and easily their own
applications by using Company-designed software modules called SPMs. SPMs are
user-defined transaction processing functions for exclusive use on the Sterling
Series billing data collection products that offer a rules-based approach to
building processing features. Each SPM performs a unique operation on the
transaction data, but SPMs can be implemented in groups with defined
interactions among the separate modules. Configurations of these groups of
modules can be designed, enabled and disabled by customer personnel using a
convenient graphical display, thereby reducing the need for costly and
time-consuming revisions to customers' application software systems.

SPMs can be grouped to perform customer-defined applications. For example, a
customer could combine the Filter and Distribution Modules to select and deliver
to an outside fraud management system only those CDRs that are most likely to
involve fraud. This screening and real-time forwarding of the data may offer
customers the ability to reduce the processing requirements placed on a fraud
management system thereby improving its real-time performance.

35
<PAGE>
The following is a summary of the Company's SPM offerings:

<TABLE>
<CAPTION>
STERLING
NAME OF MODULE MODEL NO. DESCRIPTION
<S> <C> <C>
Filter 5110 Selects and copies individual CDRs using
filtering criteria that are user-defined
and that can be derived from any logical
combination of fields within each CDR
identified by type, origination,
destination, length of call and other
criteria.
Call Screening Collector/Message Detail 5120 Provides flexible and cost-effective
Recording deployment of records of a
telecommunications station providing
Centrex service, includes applications
to report station-specific call details
for end-users of Centrex service and
provides the flexibility to add or
delete screening functions.
Distribution Module 5130 Provides for the automatic disposition
of files resulting from specialized
processing of call records with output
capable of being generated in many
forms, including "mounting" data on a
network file server, E-mailing, faxing
and exporting to databases.
Reformatter 5140 Accepts a user-defined record input and
reformats the input to a user-defined
output format where input and output
rules can be updated or modified by the
user.
File Router 5180 Routes the transactional data stream
based on the data source location,
providing processing at the level of
entire files in contrast with the Filter
SPM which provides processing of each
individual CDR.
</TABLE>

TRAFFIC MANAGEMENT PRODUCTS

The Company provides a comprehensive traffic management system under the
name Manifest-TM- (formerly Autrax 5000). This product provides
telecommunications companies with real-time (I.E., the ability to process and
deliver data within five minutes of receipt) traffic data to detect and locate
quickly exchange and network problems, plan and route strategically traffic
through the network, improve the over-all quality of service and reduce
significantly customer complaints. The Manifest-TM- traffic management system
features a GUI-based system with cross-platform (Windows NT and UNIX)
capabilities, compliance with the Open Database Connectivity standard, a
function to permit its reports to be accessed by a web browser and an adaptive
normalizer which permits greater customer flexibility in report creation.

Many large telecommunications service providers in the United States, such
as the RBOCs, developed their own traffic management systems. These systems
typically have not been significantly upgraded or improved in nearly a decade.
With demand for wireline telecommunications services increasing rapidly, as
evidenced by the increasing demand by businesses and private households for
Internet access through wirelines, ILECs and other owners of wireline systems
increasingly will demand more sophisticated traffic

36
<PAGE>
management tools. Also, increasing competition in each market segment creates
the need for products that can accurately measure and report inter-company
transactions and facilitate settlements between telecommunications service
providers. Similarly, privatization and other competitive factors have increased
the need of international telecommunications service providers for more
sophisticated traffic management systems.

The Company's traffic management system consists of a Hewlett-Packard-based
hardware platform loaded with Company-developed software. The system collects
and processes traffic information from a wide array of switch technologies,
including digital, analog and cellular switches and traffic management system
points in the service provider's signal control system, such as the RBOCs'
Signaling System 7. The system interfaces directly with the switches to collect
traffic data and generate maintenance reports in a standard database format. The
Manifest-TM- traffic management system centralizes the raw data into database
tables so that standard and customized reports can be generated. As with the
Sterling Series billing data collection products, the Manifest-TM- traffic
management system is fully scaleable, permitting easy upgrades to meet rising
system demands.

NEW PRODUCTS AND SERVICES

Under the name "alpha Technology Services," the Company recently commenced
offering professional engineering services to its customers to assist them to
make better use of the Company's products. The Company's engineers assist
telecommunications services customers to develop customized applications
programs and introduce them to product feature enhancements. Services include
developing: user interfaces, system interfaces and network and alarm system
management interfaces; custom filters to screen call data used in fraud
management and other processing applications; and software for custom data
handling, reformatting and report generation. The Company believes that its
technology services are important in demonstrating the Company's responsiveness
to the needs of its customers.

The Company recently introduced its first software application for use
outside of, or together with, its billing data collections system: a fraud
management program. This product is designed to assist providers in detecting
and managing fraudulent use of telecommunications systems which is estimated to
have resulted in $3.3 billion of lost revenues among wireline and wireless
services providers in the United States in 1994. The software for this product
has been obtained by the Company from an outside software development firm
pursuant to a license that grants the Company exclusive rights for the software
in the United States and Canada and non-exclusive rights elsewhere worldwide
through October 1999 and thereafter until terminated by either party upon three
months notice. The licensor's products are currently in commercial use in the
United Kingdom.

In the future the Company will consider introducing new software
applications that are compatible with its other billing data collection and
traffic management products. The Company may also consider developing interfaces
that permit its systems to transmit data from sources other than
telecommunications networks, including possibly other utilities and cable
television systems. There is no assurance, however, that any of these products
will be successfully developed or marketed.

CUSTOMERS

GENERAL

The Company's customers include large telecommunications companies based in
a number of countries around the world. In fiscal 1996, the Company sold
components of its Sterling Series to three of the RBOCs, U S West, Ameritech and
Southwestern Bell, and provided product support services to three other RBOCs.

37
<PAGE>
The following table sets forth information with respect to sales to certain
major customers during fiscal 1995 and fiscal 1996.

<TABLE>
<CAPTION>
FISCAL 1995 FISCAL 1996
----------------------------------- --------------------------------
PERCENTAGE OF PERCENTAGE OF
CUSTOMER REVENUES TOTAL REVENUES REVENUES TOTAL REVENUES
- ----------------------------------------------------- ------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
U S West............................................. $7.3 million 28.7% $10.2 million 30.1%
Southwestern Bell.................................... $1.5 million 5.8% $6.3 million 18.5%
Ameritech............................................ $4.3 million 16.7% $4.4 million 13.0%
Puerto Rico Telephone Co............................. $0.1 million 0.4% $3.2 million 9.4%
Telecom Argentina.................................... $4.4 million 17.0% $1.2 million 3.4%
</TABLE>

The Company generally enters into agreements with its major customers that
establish a framework for the ongoing relationship. Individual orders are placed
pursuant to purchase orders. Installation, maintenance and support services are
typically charged separately from product purchases. The Company has ongoing
informal communications with these customers based upon which the Company can
estimate the amount and timing of orders and can plan production accordingly.
International sales are generally obtained pursuant to contracts that cover all
applicable products and services for the entire project.

RBOC CUSTOMERS

The Company currently provides products or services to six RBOCs, three of
which are currently major customers: Ameritech, Southwestern Bell and U S West.

AMERITECH. The Company has sold billing data collection products to
Ameritech since its formation from local units of the old Bell System in 1984.
Predecessors of Ameritech had been customers of the Company since 1972.
Ameritech and its predecessors have purchased over 400 PDU-20 units. To date,
Ameritech has purchased eight Sterling 5000s and over 40 Sterling 500s.

SOUTHWESTERN BELL. The Company's relationship with Southwestern Bell began
in 1989 and has recently resulted in sales of five Sterling 5000s and over 50
Sterling 500s.

U S WEST. The Company initiated its sales to U S West when U S West was
formed in 1984. Predecessors of U S West had been customers of the Company since
1972. U S West and its predecessors have purchased over 400 PDU-20 units. U S
West has purchased 15 Sterling 5000s and over 90 Sterling 500s. One of the
Company's sales executives and one of the Company's technical staff is based in
Denver, Colorado, the location of U S West's corporate headquarters, where each
dedicates his working time exclusively to developing and maintaining the
Company's relationship with U S West.

OTHER MAJOR CUSTOMERS

TELECOM ARGENTINA. In 1995, the Company completed a $13 million contract
entered into in 1992 with Telecom Argentina pursuant to which the Company
installed 136 PDU-20 units and three SX 5000s. The Company continues to provide
ongoing support and engineering services to Telecom Argentina pursuant to
contracts totaling $1.4 million for fiscal 1997.

PUERTO RICO TELEPHONE CO. The Company has sold products to Puerto Rico
Telephone Co. since 1993. To date, the Company has sold over 30 Sterling 500s
and one Sterling 5000 to Puerto Rico Telephone Co.

TELESP. In January 1995, the Company began supplying its products to
TELESP, a major regional telecommunications service provider in Brazil. Through
an agency agreement with a Brazilian telecommunications solutions company, the
Company has supplied hardware and software components of a traffic management
system and related services to TELESP. To date, the Company has earned $3.2
million in revenues under this contract.

BACKLOG

The Company's backlog (firm purchase orders for products and services that
have not yet been recognized as revenue) was approximately $7.1 million and $5.3
million on March 31, 1997 and March 31, 1996, respectively. The Company normally
has a relatively small amount of product and service backlog

38
<PAGE>
because ongoing informal communication with its major customers generally
enables the Company to anticipate orders and ship products within a relatively
short time after the customer's order is received. The Company expects to be
able to fill substantially all backlog existing at March 31, 1997 prior to the
end of fiscal 1997. Backlog with respect to RBOC sales typically is the greatest
at the end of the third quarter of each fiscal year, due to the RBOCs' budget
cycles. RBOCs generally do not order products such as those sold by the Company
for delivery beyond their current fiscal year.

SUPPLY RELATIONSHIPS

The Company purchases and licenses products and technology from a variety of
providers. The Company purchases Hewlett-Packard hardware and software that is
used primarily for its Sterling 5000 and traffic management product through an
agreement with a major Hewlett-Packard distributor. The Company licenses the
real-time operating system used in the Sterling Series from Lynx Real-Tool
Systems, Inc., software for its traffic management product from Informix
Software, Inc. and the software for its recently introduced fraud detection and
management product from a private United Kingdom company. The Company also
purchases processing boards for its Sterling 500s and other products from
Motorola, Inc. through a distributor.

MARKETING AND SALES

The Company's sales to date have primarily been generated through the
establishment and maintenance of long-term relationships with several key
customers. The Company's domestic sales staff consists of seven account managers
with an aggregate of over 150 years of telecommunications sales experience.
Sales have been generated primarily through direct contacts with major
customers, requests for proposals from telecommunications companies,
participation in trade shows and industry conferences and advertisements in
trade journals. The Company also maintains an Internet home page as an adjunct
to its marketing activities.

DOMESTIC MARKETING CHANNELS

In addition to direct sales to telecommunications service providers such as
the RBOCs, CLECs and major wireline and wireless telecommunications service
providers, the Company is seeking to broaden its access to its markets through
distributor relationships with systems integrators and marketing relationships
with switch vendors and billing and rating system providers.

In May 1997, the Company entered into a reseller agreement with AGCS, a
joint venture between Lucent and GTE. AGCS is a developer and manufacturer of
telecommunications switches and OSS products. The agreement provides for AGCS to
resell the Company's Sterling Series products. The Company also recently entered
into a preliminary memorandum of understanding with a major systems integrator
for the sale of certain Sterling Series products. The Company is also
negotiating arrangements with manufacturers of ATM switches pursuant to which
the Company would provide software engineering services and license software to
the ATM companies that would also sell the Company's products, on a distributor
basis, as part of their ATM switch systems. The Company also sells to the
wireless market through its supply relationship with Metapath Corporation
("Metapath"), of which the Company was previously a stockholder. The Company
supplies a product equivalent to its Sterling 500 to Metapath which is
incorporated into that company's solutions for both cellular and PCS providers.
The Company is developing interfaces for wireless switches that would permit
direct sales to this market in the future.

INTERNATIONAL MARKETING CHANNELS

The Company's products have been sold internationally since 1972. In 1995,
the Company completed a $13 million contract entered into in 1992 with Telecom
Argentina and entered into contracts to sell an aggregate of $4.2 million of its
products and services to TELESP and another major Brazilian telecommunications
company that are nearing completion. The Company continues to provide ongoing
support and engineering services to Telecom Argentina pursuant to contracts
totaling $1.4 million for fiscal 1997. The Company intends to expand its
penetration of international markets by forming relationships with systems
integrators and distributors in targeted countries. The Company recently entered
into a distributorship

39
<PAGE>
agreement with Mahindra-British Telecom, a company based in India. The Company
is negotiating arrangements with prospective distribution partners in Indonesia,
the Phillippines and France pursuant to which the distributor would provide
sales, marketing, installation and first-line and second-line support functions
and the Company would provide product, training, marketing documentation and
third-line support functions. The Company recently received initial orders from
a software development company and a long distance operator in France. The
Company also utilizes agents in certain countries, including Argentina,
Venezuela, the Phillippines and the Caribbean, who are compensated on a
commission basis. In addition, the Company employs three international sales
managers and, through its affiliation with Securicor, has access to business
development managers based in Hungary, Malaysia and South America. See "Certain
Transactions."

CUSTOMER SERVICE

The Company operates an integrated Customer Service Group that it believes
is a key to success with both current and potential new customers. The Customer
Service Group consists of Quality Assurance, Program Management, Support
Services, Customer Training, Documentation, Installation and Information
Technology subgroups. The Company's installation team, which includes both
full-time and sub-contract staff, is certified to work in the central office
switch environment and can install full turn-key systems. The Company achieved
ISO 9001 certification in August 1996 and has since passed an interim audit.

A senior program manager is responsible for administering all aspects of
major contracts and other projects, including acting as contact person and
coordinator for the customer. The Company believes that this results in more
efficient project administration, greater customer satisfaction and often
additional sales opportunities during the course of contract implementation.

Through its Technical Assistance Center, the Company offers 24-hour help
desk support to anywhere in the world, 365 days per year. The technical support
offered by the Company includes remote testing and management capabilities, as
well as on-site problem resolution when required. Training is offered both at
the Company's facilities and on the customers' premises. Internationally, the
Company contracts with local agents or distributors so that it can offer local
support on a basis consistent with its domestic standards. The Company has also
begun to provide on-line documentation and training for its products.

RESEARCH AND DEVELOPMENT

The Company's research and development efforts are directed towards
developing new products to meet the growing needs of its telecommunications
customers and entering new markets and improving existing products by
incorporating new features and technologies. The Company believes that the
timely development of new products and enhancements is critical to its
maintaining its leadership position in its current marketplace and in gaining
penetration in new markets.

The Company plans to use a portion of the proceeds of the Offering to expand
its Sterling Series product line in order to address more effectively the
requirements of lower volume telecommunications switches and to develop
interfaces with switches utilized by wireless and international
telecommunications systems. See "Use of Proceeds." These efforts will build upon
a large amount of development work already accomplished in connection with the
Company's existing products.

To leverage its development resources, the Company works closely with its
customers and leading technology vendors to identify specific needs and tailor
the Company's systems to meet these needs. The Company's research and
development organization consists of several major groups. The architectural
group is responsible for the creation and enhancement of the key technologies
underlying all applications. This group is also responsible for exploring new
directions and applications of the Company's core technologies, incorporating
standard technology into existing product lines and developing and improving the
application architecture to facilitate rapid development of applications. Each
of the product lines has a dedicated software engineering group directly
supporting its development efforts. These software development groups are
supported by a hardware engineering group that is responsible for the
development of cross product line hardware platforms. The special projects
engineering group is responsible for addressing

40
<PAGE>
individual customers' specialized requirements. The Company has also formed a
new technologies group to evaluate emerging technologies and provide input on
the upgrading of existing products and the development of new products.

The Company also has entered into a relationship with Mahindra-British
Telecom in India, pursuant to which that company performs software development
projects for the Company. The Company believes that this relationship provides
it with additional flexibility in developing its products on a timely and cost-
effective basis.

A critical element of the Company's success has been the development of a
multi-layered software and hardware architecture that facilitates the
development of application software. This architecture supports the development
of the Company's core products and provides a discrete platform that enables the
rapid development of customer- and product-specific software. In addition, the
Company's core products fully support application programming interfaces which
open up the architecture so that third-party developers can integrate their
application software packages into the Company's system.

At the most fundamental layer of its architecture, the Company has written a
common independent library of code that provides a foundation for reusability.
Together with the use of UNIX operating systems which comply with UNIX95
standards as well as the use of the C programming language in its applications
software development, the Company has positioned its products to be portable and
to be able to operate on the most suitable hardware platforms for its customers'
needs.

During fiscal 1995, fiscal 1996 and the six months ended March 31, 1997,
product research, development and engineering expenses were $5.9 million, $7.0
million and $3.8 million, respectively. Product research, development and
engineering expenses are expected to increase in fiscal 1997. None of the
research, development and engineering expenses has been capitalized. As of March
31, 1997, the Company employed 75 people in product and systems development. The
Company has added 23 engineering, programming and development personnel since
January 1, 1996.

COMPETITION

The market for billing data collection and traffic management services for
the telecommunications service industry is highly competitive and the Company
expects that further growth within the telecommunications service industry will
encourage the entry of new participants into U.S. and international markets in
the future. Many of the Company's current and potential future competitors have
significantly greater financial, technical and marketing resources than the
Company.

The Company believes that the principal basis of competition in the sales of
its products is functionality, including such factors as the ability of products
to provide a high degree of integrity of transaction information while
efficiently performing all preprocessing and delivery functions; the ability to
increase capacity and add functionality cost-effectively; the ability to provide
critical data on a real-time basis; compatibility with telecommunications
switches sold by a number of manufacturers; and the ability to interface
effectively with a variety of billing and other applications. Other significant
bases of competition include price and service.

In the market for its billing data collection solutions, the Company's
competitors include (i) large telecommunications service providers that
internally develop full system products for their own use; (ii) companies, such
as ACE*COMM Corporation, CGI, Inc., Lucent and Northern Telecom Inc., that can
supply billing data collection components and systems; and (iii) vendors that
supply product components or systems integration services, including Andersen
Consulting, Digital Equipment Corporation, Hewlett-Packard and International
Business Machines Corp.

In the market for its traffic management solutions, the Company's
competitors include (i) large telecommunications service providers that
internally develop full system products for their own use; (ii) companies such
as Hewlett-Packard and Objective Systems Integrators, Inc. that provide
integrated network management systems and (iii) companies such as Applied
Digital Access that provide separate traffic management solutions.

41
<PAGE>
There are a large number of companies that have developed or could develop a
product competitive with the Company's fraud detection and management product.
The Company believes that most large telecommunications companies are currently
utilizing internally developed fraud management systems.

PROPRIETARY RIGHTS AND LICENSES

The Company relies primarily on copyright and trade secret laws to protect
its proprietary rights. The Company distributes its products under service and
software license agreements which typically grant customers non-exclusive
licenses, subject to terms and conditions prohibiting unauthorized reproduction,
transfer or use. Although the Company holds patents with respect to certain
aspects of its products, it does not believe that these patents are material to
its business. The Company believes that, because of the rapid pace of
technological change in the telecommunications and computer software and
hardware industries, the technological expertise of its personnel, the
complexity of its system architecture and the frequency and timeliness of
product and service offerings are more significant than the legal protection of
its products and services. In addition, the Company enters into non-disclosure
agreements with each employee and consultant and each third-party to whom the
Company provides proprietary information. Access to the Company's core source
code is greatly restricted. The Company licenses from third parties software and
technology that is important to certain functionalities of its products,
including the software that is the basis for its recently introduced fraud
detection and management application. See "--Products and Related Services--New
Products and Services." The Company is not aware of any patent infringement or
any violation of other proprietary rights claimed by any third party relating to
the Company or the Company's products other than a letter dated June 19, 1997
from Acxiom requesting that the Company cease using the name "Axiom." Although
the Company believes that the claims of Acxiom, an Arkansas-based provider of
marketing information services, are without merit because of the lack of
correspondence between the products, services and customers of the two
companies, there is no assurance that these claims will be resolved on terms
favorable to the Company. See "Risk Factors--Dependence on Proprietary
Technology."

EMPLOYEES

As of March 31, 1997, the Company had a total of 197 employees, of whom 75
were engaged in engineering, programming and development, nine in marketing, 40
in customer service, 21 in sales and sales support, 39 in manufacturing and
related operations and 13 in administration and finance. At that date, the
Company also engaged nine individuals on a consulting basis, six of which were
engaged in engineering, programming and development. None of the Company's
employees is represented by a labor union. The Company believes that its
relations with its employees is good.

PROPERTIES

The Company's headquarters is located in a 40,000 square foot leased
facility in Moorestown, New Jersey and its manufacturing group is located in an
adjoining 34,000 square foot leased facility. The leases for the facilities
expire in April and August 1998, respectively, with the Company having options
to renew for an additional five years. The Company believes its existing
facilities are adequate for its current needs, but that additional space will be
required for its headquarters by late 1997. The Company is currently evaluating
proposals for relocating the Company's operations to another leased facility in
the Moorestown area.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

42
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The individuals who serve or who have agreed to serve as executive officers
and directors of the Company upon completion of the Offering are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>

Edmund A. Hough........................... 52 Chairman of the Board

Andrew P. Maunder......................... 40 President, Chief Executive Officer, Treasurer and Director

Donald Hoffman............................ 62 Senior Vice President, Strategic Customer Development

William J. Rahe, Jr....................... 51 Vice President, Engineering

Mark J. Kadish............................ 43 Chief Financial Officer and Secretary

Michael S. Farina......................... 45 Vice President, Marketing and Sales

Joseph F. Gorecki......................... 56 Vice President, Program Management and Customer Service

Robert B. Kelly........................... 40 Director

Sammy W. Pearson.......................... 52 Director

Trevor Sokell............................. 56 Director

Michael G. Wilkinson...................... 46 Director
</TABLE>

The following descriptions of positions held in the Company include
positions held with STI prior to its merger with the Company in May 1997 as
described under "The Company."

EDMUND A. HOUGH has been Chairman of the Company's Board of Directors since
July 1994. Dr. Hough has served as Chief Executive Officer of the Communications
Division of Securicor since June 1992. Dr. Hough was the Managing Director of
Johnson Matthey Europe Limited, from 1989 to May 1992 and the Managing Director
of Hoeschst Paint Group Limited from 1985 to 1989. Dr. Hough is a director of
Securicor, Chairman of the Board of Intek Diversified Corporation ("Intek"), a
U.S.-based wireless communications company in which Securicor has a 63%
interest, and a director of Cellnet Group Limited, a U.K.-based mobile telephone
operator in which Securicor has a 40% interest.

ANDREW P. MAUNDER has served as the Company's President and Chief Executive
Officer since October 1994 and as the Company's Treasurer since March 1995. Mr.
Maunder has been a director of the Company since October 1996. From March 1994
until he joined the Company, Mr. Maunder served as Chief Financial Officer of
Oxford Molecular Group plc, a biotechnology company based in the United Kingdom.
From April 1987 until February 1994, Mr. Maunder was Finance and Operations
Director of Securicor 3Net, Ltd., ("3Net"), a communications company based in
the United Kingdom that has been affiliated with Securicor since August 1993.
From October 1996 to May 1997, Mr. Maunder also served as a director of
Securicor 3Net, Inc. ("3Net Delaware"), a wholly-owned indirect subsidiary of
Securicor.

DONALD HOFFMAN has served as the Company's Senior Vice President, Strategic
Customer Development since February 1997. From July 1996 to February 1997, Mr.
Hoffman served the Company as Senior Vice President. From July 1994 until June
1996, Mr. Hoffman served as Vice President, Sales of the Company and from the
time he joined the Predecessor Business in 1989 until its acquisition by the
Company in July 1994, he served as its Vice President of Marketing and Sales.
Prior to joining the Predecessor Business, Mr. Hoffman was Vice President and
General Manager of the Business System Sales Division of NEC America, Inc., a
leading electronics company.

43
<PAGE>
WILLIAM J. RAHE, JR. has been the Company's Vice President, Engineering
since joining the Company in April 1995. From August 1994 until April 1995, Mr.
Rahe served as Director, Business Development of Cable & Wireless, Inc., a
telecommunications services company. From June 1991 until August 1994, Mr. Rahe
had served as Director, Product Development at Cable & Wireless, Inc. Prior to
joining Cable & Wireless, Inc., Mr. Rahe was Vice President of Engineering of
Lightnet, a partnership between CSX Corporation and Southern New England
Telephone Co.

MARK J. KADISH has been with the Company and the Predecessor Business since
September 1987 and has been the Company's Chief Financial Officer since February
1997 and its Secretary since March 1995. From July 1994 to February 1997, Mr.
Kadish served as the Company's Financial Controller. From September 1987 until
June 1994, Mr. Kadish served as the Controller of the Predecessor Business.
Prior to joining the Predecessor Business, Mr. Kadish was Chief Financial
Officer and Treasurer of Transducer Systems, Inc., a publicly-traded
manufacturer of computer systems components.

MICHAEL S. FARINA has served as the Company's Vice President of Marketing
and Sales since February 1997. From January 1995 until February 1997, Mr. Farina
was the general manager of the New Media business unit established by
CSC--Communications Industry Services, a division of Computer Sciences
Corporation that is a supplier of information technology to the telephone
industry. From 1988 to December 1994, Mr. Farina held several positions, most
recently as Director of International Marketing and Strategic Alliances, with
GTE Corporation ("GTE"), a diversified telecommunications company.

JOSEPH F. GORECKI has served as the Company's Vice President, Program
Management and Customer Service since April 1995. From February 1992 until April
1995, Mr. Gorecki served at GTE as a Senior Program Manager in GTE's Spacenet
satellite communications group. Prior to joining GTE, Mr. Gorecki served as
Director, Program Operations for BBN Communications Corporation, a
publicly-traded provider of networking solutions.

ROBERT B. KELLY has consented to become a member of the Company's Board of
Directors upon completion of the Offering. Mr. Kelly has been a principal in the
Washington, D.C. law firm of Kelly & Povich, P.C. since its formation in October
1994 and currently serves as telecommunications counsel to Securicor. Mr. Kelly
was a partner in the Washington D.C. firm of Piper & Marbury from January 1989
to March 1992, was a sole practitioner from March 1992 to February 1993 and was
a principal in the firm of Kelly, Hunter, Mow & Povich, P.C. from February 1993
to October 1994. Mr. Kelly is a director of Intek.

SAMMY W. PEARSON has been a director of the Company since October 1996.
Since February 1994, Mr. Pearson has been the Vice President, Enterprise
Solutions of Oracle Government Services, a business unit of Oracle Corporation,
a provider of advanced software products, services and management solutions.
From May 1992 until February 1994, Mr. Pearson was Vice President of Oracle
Federal Consulting, where he managed Oracle's Federal government consulting
business. From May 1991 to May 1992, Mr. Pearson was the principal of TechSales
Limited, a software marketing company.

TREVOR SOKELL has served as a director of the Company since July 1994. Mr.
Sokell served as the Company's President and Chief Executive Officer from July
1994 until October 1994 and served as the Company's Treasurer and Secretary from
July 1994 until March 1995. Since November 1996, Mr. Sokell has been the
Chairman of the Board of Directors of 3Net. Mr. Sokell is expected to resign his
position with 3Net in the near future. From January 1987 until October 1996, Mr.
Sokell served as Managing Director of 3Net. Since October 1994, Mr. Sokell has
also served as the Chairman of Securicor Telecoms Ltd., an affiliated company
based in the United Kingdom. Prior to 1987, Mr. Sokell was a director of
Netlink, Ltd., managing director of Network Technology Limited, and a director
of Information Technology Ltd.

MICHAEL G. WILKINSON has been a director of the Company since July 1994. Mr.
Wilkinson has been the Finance Director of the Communications Division of
Securicor since September 1992. From 1987 to September 1992, Mr. Wilkinson was
Finance Director of Securicor's Business Services Division. Prior to joining
Securicor in 1980, Mr. Wilkinson served as a Finance Director of RCA Limited, an
electronics company based in the United Kingdom.

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<PAGE>
COMMITTEES

The Board of Directors intends to establish a Compensation Committee and an
Audit Committee. The Compensation Committee will determine salaries and bonuses
and other compensation matters for officers of the Company, determine employee
health and benefit plans, and administer the Company's 1997 Stock Incentive Plan
and any similar plans created in the future. The Audit Committee will recommend
the appointment of the Company's independent public accountants and will review
the scope and results of audits, internal accounting controls and tax and other
accounting related matters.

Messrs. Pearson and Sokell are expected to become the members of the Audit
Committee. Dr. Hough and Mr. Pearson are expected to become the members of the
Compensation Committee.

DIRECTOR COMPENSATION

Each of the Company's directors, other than Mr. Maunder, will be entitled to
receive an annual fee of $20,000 for their service on the Board of Directors. In
addition, each director will be entitled to reimbursement of travel and other
expenses incurred in connection with their service as a director. Pursuant to
employment arrangements between Securicor and Dr. Hough and Mr. Wilkinson, their
directors' fees will be paid to Securicor. Messrs. Pearson and Sokell have each
been granted options to purchase 5,000 shares of Common Stock. See "--1997
Incentive Stock Plan." The law firm of which Mr. Kelly is a principal acts as
telecommunications counsel to Securicor.

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to
compensation paid or accrued by the Company for fiscal 1996 to the Company's
Chief Executive Officer and to the four most highly compensated executive
officers of the Company whose salary and bonus for fiscal 1996 exceeded $100,000
for all services rendered in all capacities to the Company (the "Named Executive
Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION -----------------------
NAME AND PRINCIPAL --------------------- SECURITIES UNDERLYING ALL OTHER
POSITION SALARY BONUS OPTIONS(1) COMPENSATION(2)
- ----------------------------------------------- ---------- --------- ----------------------- -----------------
<S> <C> <C> <C> <C>

Andrew P. Maunder.............................. $ 158,924 $ 23,380 48,970 $ 296
President; Chief Executive Officer

Donald Hoffman................................. $ 146,339 $ 52,338 -0- $ 7,547
Senior Vice President

William J. Rahe, Jr............................ $ 131,800 $ 24,804 18,360 $ 5,880
Vice President, Engineering

Jugtar Basi.................................... $ 121,963 $ 19,275 18,360 $ 4,934
Vice President, Marketing (3)

Joseph F. Gorecki.............................. $ 106,454 $ 18,365 18,360 $ 4,346
Vice President, Program Management and
Customer Service
</TABLE>

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

(1) All options listed in this column are options to purchase the Common Stock
of Securicor, a company traded on the London Stock Exchange. At the close of
business on April 16, 1997, the price of Securicor Common Stock as reported
on the London Stock Exchange was L2.85 per share. At the noon exchange rate
of U.S. Dollars into British Pounds Sterling reported by the Federal Reserve
Bank of New York on April 16, 1997, the price of such shares in U.S. Dollars
was $4.62 per share. The exercise price of such options is L2.45 per share
or $3.98 per share at the above described exchange rate.

45
<PAGE>
(2) Includes amounts paid by the Company in fiscal 1996 with respect to life
insurance premiums for the benefit of the Named Executives Officers and
Company contributions to the 401(k) accounts of such officers as follows:
(i) Mr. Maunder; $296 for life insurance premiums; (ii) Mr. Hoffman; $5,471
in 401(k) contributions and $2,076 for insurance premiums; (iii) Mr. Rahe;
$5,333 in 401(k) contributions and $547 in insurance premiums; (iv) Mr.
Basi; $4,934 in 401(k) contributions; and (v) Mr. Gorecki; $4,346 in 401(k)
contributions. Excludes any amounts based upon Mr. Maunder's right to sell
to Securicor (at a price based on operating results in fiscal 1996 of
certain Securicor businesses including the Company) shares of 3Net
previously held by him that he acquired prior to his service with the
Company.

(3) Mr. Basi served as the Company's Vice President, Marketing until December
1996. Mr. Basi is no longer employed by the Company. All options granted to
Mr. Basi expired upon the termination of his employment.

SECURICOR OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
NUMBER OF
SECURICOR POTENTIAL REALIZABLE VALUE AT
SHARES PERCENT OF TOTAL ASSUMED RATES OF STOCK PRICE
UNDERLYING OPTIONS GRANTED TO APPRECIATION FOR OPTION TERM(3)
OPTIONS COMPANY EMPLOYEES IN EXERCISE PRICE EXPIRATION --------------------------------
NAME GRANTED(1) FISCAL YEAR (L/SHARE)(2) DATE 0% 5% 10%
- --------------------- --------------- --------------------- --------------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

Andrew P. Maunder.... 36,730 30% L2.45 6/27/06 -- $ 91,836 $ 232,734

12,240 10% L2.45 6/28/06 $ 3,376 $ 36,104 $ 86,314

Donald Hoffman....... -0- -- -- -- -- -- --

William J. Rahe,
Jr................. 6,120 5% L2.45 6/27/06 -- $ 15,302 $ 38,778

12,240 10% L2.45 6/28/06 $ 3,376 $ 36,104 $ 86,314

Jugtar Basi.......... 6,120 5% L2.45 (4) -- -0- -0-

12,240 10% L2.45 (4) -0- -0- -0-

Joseph F. Gorecki.... 6,120 5% L2.45 6/27/06 -- $ 15,302 $ 38,778

12,240 10% L2.45 6/28/06 $ 3,376 $ 36,104 $ 86,314
</TABLE>

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

(1) All options granted to Named Executive Officers in fiscal 1996 were options
to purchase the Common Stock of Securicor.

(2) At the noon exchange rate of U.S. Dollars to British Pounds Sterling
reported by the Federal Reserve Bank of New York on April 16, 1997, the
exercise price of such options in U.S. Dollars was $3.98 per share.

(3) All amounts reflect the conversion of British Pounds Sterling to U.S.
Dollars at the rate of 1.6225 British Pounds Sterling to one U.S. Dollar,
the noon exchange rate reported by the Federal Reserve Bank of New York on
April 16, 1997.

(4) All options granted to Mr. Basi expired upon termination of his employment
in December 1996.

EMPLOYMENT AGREEMENTS

In 1994, the Company and Mr. Maunder entered into an agreement regarding Mr.
Maunder's employment with the Company, the principal terms of which were set
forth in a definitive employment agreement executed on February 10, 1995.
Pursuant to this agreement, the Company agreed to employ Mr. Maunder as Chief
Executive Officer subject to the right of the Company to terminate the
employment relationship immediately for cause or at any time without cause upon
12 months prior written notice. Mr. Maunder has the right to terminate the
agreement upon six months prior notice to the Company. The agreement provides
that the Company pay Mr. Maunder an annual base salary ($167,000 for the 12
months ending June 30, 1997) which is subject to annual review. Mr. Maunder is
entitled to participate in

46
<PAGE>
an incentive bonus program pursuant to which cash payments are calculated based
upon performance of the Company and upon individual performance targets and are
subject to a maximum payment of 40% of his annual salary. The agreement also
entitles Mr. Maunder to standard health and other insurance benefits and an
allowance for automobile expenses. As part of his employment agreement, Mr.
Maunder is required not to disclose any proprietary information at any time and
agreed to non-competition and non-interference covenants that expire 12 months
after the termination of his employment. Mr. Maunder's agreement also contains a
covenant restricting him from soliciting the Company's customers for a period of
six months after termination of his employment.

The Company has also entered into employment agreements with Messrs.
Hoffman, Rahe, Gorecki and Farina pursuant to which the Company has agreed to
employ each of them, subject to the Company's right to terminate the employee's
employment immediately for cause or without cause upon specified prior written
notice (between three months and one year). The agreements also are terminable
by the employee upon specified prior notice (between three and six months). Each
of the agreements specifies that the employee shall be paid an annual base
salary that is subject to review by the Company on an annual basis. Annual base
salary for the 12 months ending June 30, 1997 is $150,800 for Mr. Hoffman,
$137,800 for Mr. Rahe, $135,000 for Mr. Farina and $111,300 for Mr. Gorecki. The
agreements also entitle the employees to incentive compensation, standard health
and other insurance benefits and an allowance for automobile expenses. As part
of the agreement, each of the officers agreed to non-disclosure,
non-interference and non-competition covenants, which in the case of Messrs.
Rahe, Farina and Gorecki expire 12 months after termination of employment and in
the case of Mr. Hoffman six months after termination. Each agreement also
contains a covenant restricting the employee from soliciting the Company's
customers for a period of six months after the termination of employment. In
June 1997, the Company and Mr. Hoffman agreed that either the Company or Mr.
Hoffman may terminate Mr. Hoffman's employment upon three months prior notice to
the other.

1997 STOCK INCENTIVE PLAN

Under the Company's 1997 Stock Incentive Plan (the "Plan"), a variety of
awards, including stock options, stock appreciation rights and restricted and
unrestricted stock grants may be made to the Company's employees, officers,
consultants and advisors who are expected to contribute to the Company's future
growth and success. The Company has reserved 450,000 shares of Common Stock for
issuance under the Plan. The Compensation Committee will administer the Plan and
determine the price and other terms upon which awards shall be made. Stock
options may be granted either in the form of incentive stock options or
non-qualified stock options. The option exercise price of incentive stock
options may not be less than the fair market value of the Common Stock on the
date of the grant. While the Company currently anticipates that most grants
under this Plan will consist of stock options, the Company may grant stock
appreciation rights, which represent rights to receive any excess in value of
shares of Common Stock over the exercise price; restricted stock awards, which
entitle recipients to acquire shares of Common Stock, subject to the right of
the Company to repurchase all or a part of such shares at their purchase price
in the event that the conditions specified in the award are not satisfied; or
unrestricted stock awards, which represent grants of shares to participants free
of any restrictions under the Plan. Options or other awards that are granted
under the Plan but expire unexercised are available for future grants. Under the
terms of the Plan, the Company may not grant options to purchase in excess of
150,000 shares of Common Stock to any one grantee during any fiscal year.
Options to purchase 321,366 shares of Common Stock have been granted under the
Plan to the employees, officers and directors of the Company at an exercise
price equal to the initial public offering price per share. One third of these
options will become exercisable 90 days after completion of the Offering and the
remaining two-thirds will become exercisable in equal installments on the first
and second anniversaries of the date of grant, respectively. No other options to
purchase Common Stock have been granted to date.

EMPLOYEE STOCK PURCHASE PLAN

The Company is considering the adoption of an Employee Stock Purchase Plan
(the "Stock Purchase Plan") pursuant to which the Company's employees will be
permitted to purchase approximately 300,000 shares of Common Stock at a 15%
discount to its then current market price. The exact terms of the Stock Purchase
Plan are to be determined by the Board of Directors.

47
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the ownership
of the Common Stock as of April 15, 1997 as adjusted to reflect the sale of
shares offered pursuant to this Prospectus, (i) by each of the Company's Named
Executive Officers and directors; (ii) all of the Company's executive officers
and directors as a group; and (iii) each person known to the Company to own more
than five percent of the outstanding shares of Common Stock.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
PRIOR TO
THE OFFERING(2) PERCENT BENEFICIALLY
------------------------------ OWNED AFTER
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT THE OFFERING(2)
- ------------------------------------------------------------------ ----------------- ----------- ---------------------
<S> <C> <C> <C>
Securicor Communications(1)....................................... 3,476,900 100% 57.2%
Edmund A. Hough (1)............................................... -0- -- --
Michael G. Wilkinson (1).......................................... -0- -- --
Andrew P. Maunder................................................. -0- -- --
Donald Hoffman.................................................... -0- -- --
William J. Rahe, Jr............................................... -0- -- --
Joseph F. Gorecki................................................. -0- -- --
Robert B. Kelly................................................... -0- -- --
Sammy W. Pearson.................................................. -0- -- --
Trevor Sokell..................................................... -0- -- --
All directors and executive officers as a group (10 persons)...... -0- --% --%
</TABLE>

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

(1) The address of Securicor Communications is Sutton Park House, 15 Carshalton
Road, Sutton Surrey, England. Dr. Hough and Mr. Wilkinson may be deemed to
own beneficially the shares owned by Securicor Communications by virtue of
their role as directors of Securicor Communications. Each of Dr. Hough and
Mr. Wilkinson disclaim beneficial ownership of these shares. Securicor
Communications is an indirect wholly-owned subsidiary of Securicor.

(2) Excludes outstanding options to purchase an aggregate of 321,366 shares of
Common Stock granted to employees, officers and directors pursuant to the
1997 Stock Incentive Plan. One third of these options will become
exercisable 90 days after completion of the Offering and the remaining
two-thirds will become exercisable in two equal installments on the first
and second anniversaries of the date of grant, respectively. Included in
these grants are options to purchase the following number of shares granted
to: Mr. Maunder--53,333 shares, Mr. Hoffman--12,000 shares, Mr. Rahe--27,560
shares, Mr. Gorecki--22,260 shares, Mr. Farina--27,000 shares, Mr.
Kadish--21,000 shares, Messrs. Pearson and Sokell--5,000 shares each, and
all directors and executive officers as a group--173,153 shares. See
"Management--1997 Stock Incentive Plan."

CERTAIN TRANSACTIONS

Prior to the completion of the Offering, the Company has operated as an
indirect wholly-owned subsidiary of Securicor and has been a member of the
Telecoms Sector of the Communications Division of Securicor. Accordingly,
Securicor has assessed the Company intercompany charges related to group and
divisional costs and sales and marketing activities. These charges are based on
Securicor's estimate of its total relevant costs for the applicable fiscal year,
allocated pro rata based on estimated revenues of each applicable business unit.
The Company has paid to Securicor total charges of $386,000 and $403,000 in
fiscal 1995 and fiscal 1996, respectively. No charges were incurred during the
period from July 1, 1994 to September 30, 1994. Until the Offering is completed,
the Company will pay to Securicor charges at an annualized rate of $540,000
pro-rated to the date of completion of the Offering. Securicor has agreed that
the Company will no longer be liable for any group or divisional charges after
the completion of the

48
<PAGE>
Offering. The Company and Securicor have entered into a one-year agreement
effective as of the completion of the Offering pursuant to which Securicor will
continue to provide certain international marketing services to the Company in
consideration of the payment of $160,000 per year. This payment is an estimate
of the total cost to Securicor of the personnel whose services are to be
provided, pro rated based upon the estimated portion of such personnel's total
time to be utilized by the Company.

From time to time, Securicor has advanced funds to the Company to meet the
Company's needs for working capital and for other corporate purposes. Such
advances are treated as indebtedness of the Company to Securicor, a portion of
which bears interest that has accrued at varying rates ranging from a low of
6.25% per annum to a high of 7.75% per annum. This interest rate was 7.0% per
annum at March 31, 1997. The amount of such indebtedness was $21.5 million at
March 31, 1997, $9.0 million of which is interest bearing. The highest principal
balance of such amount was $12.4 million during the period from July 1, 1994 to
September 30, 1994, $17.0 million during fiscal 1995 and $22.6 million during
fiscal 1996. With respect to such indebtedness, the Company incurred interest
expense in the amount of $9,000, $141,000 and $578,000 in the period from July
1, 1994 to September 30, 1994, fiscal 1995 and fiscal 1996, respectively.
Advances of $13.3 million, $10.5 million, $12.7 million and $2.1 million were
received in the period from July 1, 1994 to September 30, 1994, fiscal 1995,
fiscal 1996 and the six months ended March 31, 1997, respectively. Principal
repayments of $922,000, $4.6 million, $7.9 million and $3.9 million were made in
the period from July 1, 1994 to September 30, 1994, fiscal 1995, fiscal 1996,
and the six months ended March 31, 1997, respectively. At the completion of the
Offering, all outstanding principal and interest with respect to this
indebtedness in the amount of approximately $23.2 million will be repaid to
Securicor. See "Use of Proceeds."

During fiscal 1995 and fiscal 1996, the Company was engaged by Securicor
Radiocoms, Ltd., a manufacturer of radio telecommunications devices affiliated
with Securicor ("Radiocoms"), to build base stations to be included in radio
communications equipment sold by Radiocoms to its customers. In January 1995,
Radiocoms purchased 125 base stations from the Company, for which the Company
billed Radiocoms for its costs and a specified profit percentage. In July 1995,
Radiocoms purchased an additional 230 base stations and paid the Company a fixed
price per unit and reimbursed it for certain of its costs. The Company earned
revenues of $1.4 million and $2.3 million from Radiocoms in fiscal 1995 and
fiscal 1996, respectively. The Company completed all work related to the
Radiocoms purchases by April 1996. The Company has not performed any similar
project for any other customer, but believes that the project was performed on
substantially arm's-length terms.

The Company purchased $324,000 and $386,000 of products from 3Net, an
affiliate of Securicor, during fiscal 1996 and the six months ended March 31,
1997, respectively. In May 1997, the Company transferred all of the stock of
3Net Delaware to a wholly-owned subsidiary of Securicor for its nominal book
value. Included in the net assets transferred was an obligation to Securicor in
the amount of approximately $1.1 million. 3Net Delaware utilizes certain office
space and systems of the Company for which it has been charged approximately
$7,000 per month since its formation. The Company has entered into an agreement
with 3Net Delaware pursuant to which the Company continues to make available
such space and systems in consideration of the payment of $4,500 per month for
administrative services and $650 per month for each 3Net Delaware employee
located on the Company's premises. These amounts are based upon an estimate of
the Company's cost of the space and personnel utilized by 3Net Delaware. This
agreement became effective as of May 23, 1997 and is terminable on September 30,
1997, subject to annual extensions if not terminated by either party.

In addition, the Company has entered into the Registration Rights Agreement
pursuant to which Securicor has the right, subject to customary limitations, to:
(i) demand registration of the resale of its Common Stock once during each
twelve-month period at the expense of Securicor for so long as Securicor owns at
least 10% of the outstanding Common Stock; and (ii) include its Common Stock in
registration statements filed by the Company.

49
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, $.01 par value, and 5,000,000 shares of preferred stock, $.01 par
value. No shares of preferred stock are currently outstanding.

The holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors, out of funds legally available therefor and
to receive pro rata the assets of the Company legally available for distribution
upon liquidation after payment to holders of preferred stock having a
liquidation preference over the Common Stock. In addition, holders of Common
Stock are entitled to one vote per share on all matters voted on by stockholders
generally, including the election of directors, and do not have cumulative
voting rights. There are no preemptive, conversion or redemption rights
applicable to the shares of the Common Stock. The currently outstanding shares
of Common Stock are, and the shares of Common Stock offered by the Company
hereby, upon issuance by the Company against receipt of the purchase price
therefor, will be, fully paid and non-assessable. The By-laws provide that any
action requiring stockholder approval, other than the election of directors,
shall require the affirmative vote of two-thirds of the outstanding shares of
Common Stock.

The Board of Directors is empowered by the Certificate of Incorporation to
designate and issue from time to time one or more classes or series of preferred
stock without any action of the stockholders. The Board of Directors may fix and
determine the designations, preferences and relative, participating, optional
and other special rights, or the qualifications, limitations or restrictions of
each class or series so authorized. The issuance of, or the ability to issue,
the preferred stock could adversely affect the voting power and other rights of
the holders of the Common Stock or could have the effect of decreasing the
market price of the Common Stock or of discouraging or making difficult any
attempt by a person or group to obtain control of the Company, including any
attempt involving a bid for the Common Stock at a premium over the then market
price. The Company does not presently contemplate the issuance of any preferred
stock.

The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. In general, Section 203 prohibits a Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years following the time that such person
became an interested stockholder, unless the business combination is approved in
a prescribed manner or unless upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the corporation's voting stock outstanding at
the time the transaction commenced (excluding shares held by certain designated
stockholders). A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to certain exceptions, an "interested stockholder" is a person who,
together with affiliates and associates, owns, or within the previous three
years did own, 15% or more of the corporation's voting stock.

The Certificate of Incorporation and By-laws contain certain provisions
relating to the limitation of liability and indemnification of directors and
officers. The Certificate of Incorporation provides that directors of the
Company may not be held personally liable to the Company or its stockholders for
monetary damages for a breach of fiduciary duty, except for liability (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) under Section 174 of the
Delaware General Corporation Law, relating to prohibited dividends,
distributions and repurchases or redemptions of stock, or (iv) for any
transaction from which the director derives an improper benefit. However, such
limitation does not limit the availability of non-monetary relief in any action
or proceeding against a director. In addition, the By-laws provide that the
Company shall indemnify its directors and officers to the fullest extent
authorized by Delaware law.

50
<PAGE>
The By-laws provide that stockholders seeking to nominate candidates for
election as directors at an annual or a special meeting of stockholders must
provide timely notice thereof in writing. To be timely, a stockholder's notice
must be delivered to, or mailed and received at, the principal executive offices
of the Company (i) in the case of an annual meeting that is called for a date
that is within 30 days before or after the anniversary date of the immediately
preceding annual meeting of stockholders, not less than 120 days prior to the
anniversary of the date that the Company's proxy statement was released to
stockholders in connection with the immediately preceding annual meeting, and
(ii) in the case of an annual meeting that is called for a date that is not
within 30 days before or after the anniversary date of the immediately preceding
annual meeting, or in the case of a special meeting of stockholders called for
the purpose of electing directors, not later than the close of business on the
tenth day following the day on which notice of the date of the meeting was
mailed or public disclosure of the date of the meeting was made, whichever
occurs first. The By-laws also specify certain requirements for a stockholder's
notice to be in proper written form.

The registrar and transfer agent for the Common Stock is StockTrans, Inc.

51
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to the Offering, there has been no public market for the Common Stock.
Sales of substantial amounts of shares of the Common Stock in the public market
following the Offering could adversely affect the market price of the Common
Stock, making it more difficult for the Company to sell equity securities in the
future at a time and price which it deems appropriate.

Upon the completion of the Offering, assuming no exercise of the
overallotment options, the Company will have outstanding 6,076,900 shares of
Common Stock. Of these shares, the 2,600,000 shares of Common Stock to be sold
in the Offering will be freely tradeable without restriction or further
registration under the Securities Act. The remaining 3,476,900 shares of Common
Stock outstanding as of the date of this Prospectus, all of which are held by
Securicor, are "restricted securities" as defined by Rule 144 and will be
eligible for sale in accordance with the provisions of Rule 144 beginning 180
days after the date of this Prospectus, or earlier to the extent that Lehman
Brothers Inc. consents to such sale as described below. In addition, the Company
has entered into the Registration Rights Agreement pursuant to which Securicor
has the right, subject to customary limitations, to: (i) demand registration of
the resale of its Common Stock once during each twelve month period at
Securicor's expense for so long as Securicor owns at least 10% of the
outstanding Common Stock; and (ii) include its Common Stock in registration
statements filed by the Company.

In general, under Rule 144 as amended effective April 29, 1997, a person who
has beneficially owned shares for at least one year, including an "affiliate,"
as that term is defined in the Securities Act, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of one
percent of the then outstanding shares of Common Stock (approximately 60,769
shares after the completion of the Offering) or the average weekly trading
volume during the four calendar weeks preceding filing of notice of such sale,
subject to certain requirements concerning availability of public information,
manner and notice of sale.

In addition, affiliates must comply with the restrictions and requirements
of Rule 144, other than the one-year holding period requirements, in order to
sell shares of Common Stock which are not restricted securities. Under Rule
144(k), a person who is not an affiliate and has not been an affiliate for at
least three months prior to the sale and who has beneficially owned restricted
shares for at least a two year holding period may resell such shares without
compliance with the foregoing requirements.

Upon the completion of the Offering, there will be 321,366 shares of Common
Stock issuable upon exercise of options granted under the 1997 Stock Incentive
Plan, one-third of which will become exercisable 90 days after completion of the
Offering and the remainder of which will become exercisable in two equal annual
installments on the first and second anniversaries of the date of grant,
respectively. The Company intends to file a Form S-8 registration statement
covering these shares within 90 days from the date of this Prospectus. The
shares registered under such registration statement will be available for resale
in the open market upon the exercise of vested options, subject to Rule 144
volume limitations applicable to affiliates.

52
<PAGE>
UNDERWRITING

Under the terms of, and subject to the conditions contained in, the U.S.
Underwriting Agreement, the form of which is filed as an Exhibit to the
Registration Statement (the "Registration Statement") of which this Prospectus
forms a part, the underwriters named below (the "U.S. Underwriters"), for whom
Lehman Brothers Inc. and J.P. Morgan Securities Inc. are acting as
representatives (the "Representatives"), have severally agreed, subject to the
terms and conditions of the U.S. Underwriting Agreement, to purchase from the
Company, and the Company has agreed to sell to each U.S. Underwriter, the
aggregate number of shares of Common Stock set forth opposite the name of each
such U.S. Underwriter below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
U.S. UNDERWRITERS COMMON STOCK
- ------------------------------------------------------------------------------ --------------
<S> <C>
Lehman Brothers Inc. ......................................................... 635,000
J.P. Morgan Securities Inc. .................................................. 635,000
ABN AMRO Chicago Corporation ................................................. 50,000
Bear, Stearns & Co. Inc. ..................................................... 50,000
Credit Suisse First Boston Corporation ....................................... 50,000
Donaldson, Lufkin & Jenrette Securities Corporation .......................... 50,000
A.G. Edwards & Sons, Inc. .................................................... 50,000
Furman Selz LLC .............................................................. 50,000
Goldman, Sachs & Co. ......................................................... 50,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated ........................... 50,000
Morgan Stanley & Co. Incorporated ............................................ 50,000
PaineWebber Incorporated ..................................................... 50,000
Prudential Securities Incorporated ........................................... 50,000
Smith Barney Inc. ............................................................ 50,000
Cowen & Company .............................................................. 30,000
Fahnestock & Co. Inc. ........................................................ 30,000
Edward D. Jones & Co., L.P. .................................................. 30,000
Legg Mason Wood Walker, Incorporated ......................................... 30,000
Brad Peery Inc. .............................................................. 30,000
Raymond James & Associates, Inc. ............................................. 30,000
SoundView Financial Group, Inc. .............................................. 30,000
--------------
Total................................................................... 2,080,000
</TABLE>

Under the terms of, and subject to the conditions contained in, the
International Underwriting Agreement, the form of which is filed as an Exhibit
to the Registration Statement, the managers named below of the concurrent
offering of the shares of Common Stock outside the U.S. and Canada (the
"International Managers"), for whom Lehman Brothers International (Europe) and
J.P. Morgan Securities Ltd. are acting as lead managers (the "Lead Managers"),
have severally agreed, subject to the terms and conditions of the International
Underwriting Agreement, to purchase from the Company, and the Company has agreed
to sell to each International Manager, the aggregate number of shares of Common
Stock set forth opposite the name of each International Manager below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
INTERNATIONAL MANAGERS COMMON STOCK
- ------------------------------------------------------------------------------ --------------
<S> <C>
Lehman Brothers International (Europe)........................................ 260,000
J.P. Morgan Securities Ltd. .................................................. 260,000
--------------
Total................................................................... 520,000
</TABLE>

53
<PAGE>
The U.S. Underwriting Agreement and the International Underwriting Agreement
(collectively, the "Underwriting Agreements") provide that the obligations of
the U.S. Underwriters and the International Managers to purchase shares of
Common Stock are subject to certain conditions, and that if any of the foregoing
shares of Common Stock are purchased by the U.S. Underwriters pursuant to the
U.S. Underwriting Agreement or by the International Managers pursuant to the
International Underwriting Agreement, then all the shares of Common Stock agreed
to be purchased by the U.S. Underwriters and the International Managers, as the
case may be, pursuant to their respective Underwriting Agreements, must be so
purchased. The offering price and underwriting discounts and commissions per
share for the U.S. Offering and the International Offering are identical. The
closing of the U.S. Offering is a condition to the closing of the International
Offering and the closing of the International Offering is a condition to the
closing of the U.S. Offering.

The Company has been advised by the Representatives and the Lead Managers
that the U.S. Underwriters and the International Managers propose to offer the
shares of Common Stock directly to the public at the public offering price set
forth on the cover page of this Prospectus, and to certain selected dealers (who
may include the U.S. Underwriters and the International Managers) at such public
offering price less a selling concession not in excess of $0.48 per share. The
selected dealers may reallow a concession not in excess of $0.10 per share to
certain brokers and dealers. After the Offering, the public offering price, the
concession to selected dealers and the reallowance may be changed by the U.S.
Underwriters and the International Managers.

The Company and Security Services plc, a wholly-owned subsidiary of
Securicor, have agreed to indemnify, under certain circumstances, the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act, and to contribute, under certain
circumstances, to payments that the U.S. Underwriters and the International
Managers may be required to make in respect thereof.

The Company has granted to the U.S. Underwriters and the International
Managers options to purchase up to an aggregate of 312,000 and 78,000 additional
shares of Common Stock, respectively, exercisable solely to cover
over-allotments, at the public offering price less the underwriting discounts
and commissions shown on the cover page of this Prospectus. Such options may be
exercised at any time until 30 days after the date of the Underwriting
Agreements. To the extent that either option is exercised, each U.S. Underwriter
or International Manager, as the case may be, will be committed, subject to
certain conditions, to purchase a number of additional shares of Common Stock
proportionate to such U.S. Underwriter's or International Manager's initial
commitment as indicated in the preceding tables.

Prior to the Offering, there has been no public market for the shares of
Common Stock. The initial public offering price was negotiated between the
Company and the Representatives. Among the factors considered in determining the
initial public offering price of the shares of Common Stock, in addition to
prevailing market conditions, were the Company's historical performance and
capital structure, estimates of business potential and earnings prospects of the
Company, an overall assessment of the Company, an assessment of the Company's
management and the consideration of the above factors in relation to market
valuation of companies in related businesses.

The U.S. Underwriters and the International Managers have entered into an
Agreement Between U.S. Underwriters and International Managers pursuant to which
each U.S. Underwriter has agreed that, as part of the distribution of the shares
of Common Stock offered in the U.S. Offering, (i) it is not purchasing any such
shares for the account of anyone other than a U.S. Person (as defined below),
and (ii) it has not offered or sold, will not offer, sell, resell or deliver,
directly or indirectly, any such shares or distribute any prospectus relating to
the U.S. Offering to anyone other than a U.S. Person. In addition, pursuant to
such Agreement, each International Manager has agreed that, as part of the
distribution of the shares of Common Stock offered in the International
Offering, (a) it is not purchasing any such shares for the account of a U.S.
Person, and (b) it has not offered or sold, and will not offer, sell, resell or
deliver,

54
<PAGE>
directly or indirectly, any of such shares or distribute any prospectus relating
to the International Offering to any U.S. Person.

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement Between U.S. Underwriters and International Managers, including (i)
certain purchases and sales between U.S. Underwriters and the International
Managers, (ii) certain offers, sales, resales, deliveries or distributions to or
through investment advisors or other persons exercising investment discretion,
(iii) purchases, offers or sales by a U.S. Underwriter who is also acting as an
International Manager or by an International Manager who is also acting as a
U.S. Underwriter and (iv) other transactions specifically approved by the
Representatives and the Lead Managers. As used herein, the term "U.S. Person"
means any resident or national of the United States or Canada and its provinces,
any corporation, partnership or other entity created or organized in or under
the laws of the United States or Canada and its provinces, or any estate or
trust the income of which is subject to United States or Canadian federal income
taxation regardless of the source, and the term "United States" means the United
States of America (including the District of Columbia) and its territories, its
possessions and other areas subject to its jurisdiction.

Pursuant to the Agreement Between the U.S. Underwriters and the
International Managers, sales may be made between the U.S. Underwriters and the
International Managers of such a number of shares of Common Stock as may be
mutually agreed. The price of any shares so sold shall be the public offering
price as then in effect for the shares of Common Stock being sold by the U.S.
Underwriters and the International Managers, less an amount equal to the selling
concession allocable to such shares of Common Stock, unless otherwise determined
by mutual agreement. To the extent that there are sales between the U.S.
Underwriters and the International Managers pursuant to the Agreement Between
the U.S. Underwriters and the International Managers, the number of shares of
Common Stock available for sale by the U.S. Underwriters or by the International
Managers may be more or less than the amount specified on the cover page of the
Prospectus.

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the U.S.
Underwriters and certain selling group members to bid for and purchase shares of
Common Stock. As an exception to these rules, the Representatives are permitted
to engage in certain transactions that stabilize the price of the Common Stock.
Such transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock.

If the U.S. Underwriters create a short position in the Common Stock in
connection with the Offering (I.E., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus), the Representatives
may reduce that short position by purchasing Common Stock in the open market.
The Representatives also may elect to reduce any short position by exercising
all or part of the over-allotment options described herein.

The Representatives also may impose a penalty bid on certain U.S.
Underwriters and selling group members. This means that, if the Representatives
purchase shares of Common Stock in the open market to reduce the U.S.
Underwriters' short position or to stabilize the price of the Common Stock, they
may reclaim the amount of the selling concession from the U.S. Underwriters and
selling group members who sold those shares as part of the Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the Offering.

Neither the Company nor any of the U.S. Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the

55
<PAGE>
Common Stock. In addition, neither the Company nor any of the U.S. Underwriters
makes any representation that the Representatives will engage in such
transactions or that such transactions, once commenced, will not be discontinued
without notice.

Each International Manager has represented and agreed that (i) it has not
offered or sold and, prior to the date six months after the date of issue of the
shares of Common Stock, will not offer or sell any shares of Common Stock to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the shares of Common Stock in, from or
otherwise involving the United Kingdom, and (iii) it has only issued or passed
on, and will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the shares of Common
Stock if that person is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995.

The Common Stock has been approved for quotation on Nasdaq under the symbol
"AXIM."

The Company and Securicor have agreed that they will not, subject to certain
limited exceptions, for a period of 180 days from the date of this Prospectus,
directly or indirectly, offer, sell or otherwise dispose of any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for any
such shares of Common Stock, without the prior written consent of Lehman
Brothers Inc.

At the request of the Company, the Underwriters have reserved up to 30,000
of the shares of Common Stock offered hereby for sale at the initial public
offering price to employees of the Company and other persons associated with the
Company.

Any offer of the shares of Common Stock in Canada will be made only pursuant
to an exemption from the prospectus filing requirement and an exemption from the
dealer registration requirement (where such an exemption is not available,
offers shall be made only by a registered dealer) in the relevant Canadian
jurisdiction where such offer is made.

Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase, in addition to the offering price set forth on the
cover hereof.

The U.S. Underwriters and the International Managers have informed the
Company that they do not intend to sell to, and therefore will not confirm the
sales of shares of Common Stock offered hereby to, any accounts over which they
exercise discretionary authority.

LEGAL MATTERS

Wolf, Block, Schorr and Solis-Cohen, Philadelphia, Pennsylvania, has
rendered an opinion that the shares of Common Stock offered hereby will be
legally issued, fully paid and non-assessable. Certain legal matters relating to
the Offering will be passed upon for the Underwriters by Chadbourne & Parke LLP,
New York, New York.

EXPERTS

The financial statements included in this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated on their
reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in giving said reports.

56
<PAGE>
ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), 450 Fifth Street, N.W., Washington, D.C. 20549, a Registration
Statement on Form S-1 under the Securities Act with respect to the shares of
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
shares of Common Stock, reference is hereby made to the Registration Statement
and the exhibits and schedules filed as a part thereof. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified by such reference. The Registration
Statement, including exhibits and schedules thereto, may be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices
located at Seven World Trade Center, Suite 1300, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may also be obtained at prescribed rates from the
Public Reference Section of the Commission, Washington, D.C. 20549. In addition,
registration statements and certain other filings made with the Commission
through its Electronic Data Gathering, Analysis and Retrieval ("EDGAR") systems
are publicly available through the Commission's site on the Internet's World
Wide Web, located at http:// www.sec.gov. The Registration Statement, including
all exhibits thereto and amendments thereof, has been filed with the Commission
through EDGAR.

57
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS OF AXIOM INC. AND SUBSIDIARIES:

Report of Independent Public Accountants................................................................. F-2

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

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

Consolidated Statements of Stockholder's Deficit......................................................... F-5

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

Notes to Consolidated Financial Statements............................................................... F-7

FINANCIAL STATEMENTS OF PREDECESSOR BUSINESS:

Report of Independent Public Accountants................................................................. F-22

Statement of Revenues and Certain Expenses............................................................... F-23

Statement of Certain Cash Flows.......................................................................... F-24

Notes to Statements of Revenues and Certain Expenses and Certain Cash Flows.............................. F-25
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Axiom Inc. (formerly Securicor Communications Inc.):

We have audited the accompanying consolidated balance sheets of Axiom Inc.
and subsidiaries (formerly Securicor Communications Inc.) as of September 30,
1995 and 1996, and the related consolidated statements of operations,
stockholder's deficit and cash flows for the period from July 1, 1994 to
September 30, 1994 and for each of the two years in the period ended September
30, 1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Axiom Inc. and subsidiaries
(formerly Securicor Communications Inc.) as of September 30, 1995 and 1996, and
the results of their operations and their cash flows for the period from July 1,
1994 to September 30, 1994 and for each of the two years in the period ended
September 30, 1996, in conformity with generally accepted accounting principles.

/s/ Arthur Andersen LLP

Philadelphia, Pa.,
July 3, 1997

F-2
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------- MARCH 31,
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................................................................... $ 1,449 $ 3,326 $ 1,279
Accounts receivable.......................................................................... 7,394 15,740 8,158
Inventories.................................................................................. 4,244 3,167 4,672
Deferred tax assets.......................................................................... 543 458 495
Income tax receivable........................................................................ -- -- 2,592
Other........................................................................................ 442 354 578
--------- --------- -----------
Total current assets..................................................................... 14,072 23,045 17,774
--------- --------- -----------
PROPERTY AND EQUIPMENT:
Computer hardware and software............................................................... 1,581 2,417 2,872
Production and test equipment................................................................ 980 1,329 1,642
Furniture, fixtures and leasehold improvements............................................... 501 531 532
--------- --------- -----------
3,062 4,277 5,046
Less-Accumulated depreciation and amortization............................................... (670) (1,541) (2,105)
--------- --------- -----------
Net property and equipment............................................................... 2,392 2,736 2,941
DEFERRED TAX ASSETS............................................................................ 2,825 2,959 2,879
OTHER ASSETS................................................................................... 1,407 1,207 826
INTANGIBLE ASSETS, net......................................................................... 1,153 389 187
--------- --------- -----------
$ 21,849 $ 30,336 $ 24,607
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt............................................................ $ -- $ 185 $ 185
Obligations to parent and affiliates......................................................... 18,461 23,291 21,480
Accounts payable............................................................................. 2,332 2,293 2,231
Accrued compensation and related benefits.................................................... 1,179 1,206 975
Accrued agent commissions.................................................................... 1,116 806 427
Other accrued expenses....................................................................... 769 1,268 712
Accrued tax payable.......................................................................... 297 1,348 --
Deferred tax liabilities..................................................................... 24 9 54
Deferred revenues............................................................................ 1,684 1,232 2,414
--------- --------- -----------
Total current liabilities................................................................ 25,862 31,638 28,478
--------- --------- -----------
LONG-TERM LIABILITIES:
Deferred tax liabilities..................................................................... 27 90 130
Long-term debt............................................................................... -- 147 --
--------- --------- -----------
Total long-term liabilities.............................................................. 27 237 130
--------- --------- -----------
COMMITMENTS AND CONTINGENCIES (Note 16)
STOCKHOLDER'S DEFICIT:
Preferred Stock, $0.01 par value, 5,000,000 shares authorized,...............................
no shares issued and outstanding........................................................... -- -- --
Common Stock, $0.01 par value, 25,000,000 shares authorized,
3,476,900 shares issued and outstanding.................................................... -- -- --
Accumulated deficit.......................................................................... (4,040) (1,539) (4,001)
--------- --------- -----------
Total stockholder's deficit.............................................................. (4,040) (1,539) (4,001)
--------- --------- -----------
$ 21,849 $ 30,336 $ 24,607
--------- --------- -----------
--------- --------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SEPTEMBER SIX MONTHS ENDED
TO 30, MARCH 31,
SEPTEMBER 30, -------------------- --------------------
1994 1995 1996 1996 1997
------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
REVENUES:
Unrelated third parties:
Equipment................................................ $ 4,242 $ 18,000 $ 23,358 $ 5,311 $ 8,847
Services................................................. 1,364 5,766 7,739 3,053 3,203
------------- --------- --------- --------- ---------
5,606 23,766 31,097 8,364 12,050
------------- --------- --------- --------- ---------
Related parties............................................ -- 1,802 2,867 2,416 --
------------- --------- --------- --------- ---------
Total revenues......................................... 5,606 25,568 33,964 10,780 12,050
------------- --------- --------- --------- ---------
COST OF REVENUES:
Unrelated third parties:
Equipment................................................ 2,271 9,110 11,639 3,825 5,054
Services................................................. 1,086 3,093 4,580 2,292 2,780
------------- --------- --------- --------- ---------
3,357 12,203 16,219 6,117 7,834
------------- --------- --------- --------- ---------
Related parties............................................ -- 1,274 1,946 1,635 --
------------- --------- --------- --------- ---------
Total cost of revenues................................. 3,357 13,477 18,165 7,752 7,834
------------- --------- --------- --------- ---------
Gross profit........................................... 2,249 12,091 15,799 3,028 4,216
------------- --------- --------- --------- ---------
OPERATING EXPENSES:
Research, development and engineering...................... 1,348 5,948 7,003 3,209 3,790
Selling, general and administrative........................ 1,072 5,206 6,308 2,970 4,230
Parent charges............................................. -- 386 403 213 193
Charge for purchased research and development.............. 6,700 -- -- -- --
------------- --------- --------- --------- ---------
Total operating expenses............................... 9,120 11,540 13,714 6,392 8,213
------------- --------- --------- --------- ---------
Operating income (loss)................................ (6,871) 551 2,085 (3,364) (3,997)
INTEREST EXPENSE, net (including related party interest)..... 9 112 514 227 279
OTHER INCOME................................................. 66 148 430 413 54
EQUITY IN LOSS OF INVESTEE................................... -- 494 18 18 --
GAIN ON SALE OF INVESTMENT................................... -- -- 2,061 -- --
------------- --------- --------- --------- ---------
Income (loss) before income taxes...................... (6,814) 93 4,044 (3,196) (4,222)
INCOME TAX (EXPENSE) BENEFIT................................. 2,716 (35) (1,543) 1,220 1,760
------------- --------- --------- --------- ---------
NET INCOME (LOSS)............................................ $ (4,098) $ 58 $ 2,501 $ (1,976) $ (2,462)
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
HISTORICAL NET INCOME (LOSS) PER COMMON SHARE................ $ (1.18) $ 0.02 $ 0.72 $ (0.57) $ (0.71)
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
SHARES USED IN COMPUTING HISTORICAL NET INCOME (LOSS) PER
COMMON SHARE............................................... 3,477 3,477 3,477 3,477 3,477
------------- --------- --------- --------- ---------
------------- --------- --------- --------- ---------
SUPPLEMENTAL PRO FORMA NET INCOME (LOSS) PER COMMON SHARE
(unaudited)................................................ $ 0.55 $ (0.44)
--------- ---------
--------- ---------
SHARES USED IN COMPUTING SUPPLEMENTAL PRO FORMA NET INCOME
(LOSS) PER COMMON SHARE (unaudited)........................ 5,180 5,180
--------- ---------
--------- ---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT

<TABLE>
<CAPTION>
COMMON ACCUMULATED
STOCK DEFICIT TOTAL
----------------- ------------ ---------
<S> <C> <C> <C>
(IN THOUSANDS)
BALANCE, JULY 1, 1994.................................................... $ -- $ -- $ --
Initial capitalization................................................. -- -- --
Net loss............................................................... -- (4,098) (4,098)
--- ------------ ---------
BALANCE, SEPTEMBER 30, 1994.............................................. -- (4,098) (4,098)
Net income............................................................. -- 58 58
--- ------------ ---------
BALANCE, SEPTEMBER 30, 1995.............................................. -- (4,040) (4,040)
Net income............................................................. -- 2,501 2,501
--- ------------ ---------
BALANCE, SEPTEMBER 30, 1996.............................................. -- (1,539) (1,539)
Net loss (unaudited)................................................... -- (2,462) (2,462)
--- ------------ ---------
BALANCE, MARCH 31, 1997 (unaudited)...................................... $ -- $ (4,001) $ (4,001)
--- ------------ ---------
--- ------------ ---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX
PERIOD FROM MONTHS
JULY 1, 1994 YEAR ENDED SEPTEMBER ENDED
TO 30, MARCH 31,
SEPTEMBER 30, -------------------- ---------
1994 1995 1996 1996
------------- --------- --------- ---------
<S> <C> <C> <C> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................ $ (4,098) $ 58 $ 2,501 $ (1,976)
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities-
Depreciation and amortization............................................ 307 1,318 1,885 759
Equity in loss of investee............................................... -- 494 18 18
Gain on sale of investment............................................... -- -- (2,061) --
Charge for purchased research and development............................ 6,700 -- -- --
Changes in assets and liabilities, net-
Decrease (increase) in-
Accounts receivable.................................................. (1,131) (2,131) (8,346) 1,882
Inventories.......................................................... 583 (2,392) 1,077 (215)
Other current assets................................................. (428) 419 162 (445)
Other assets......................................................... (24) (3) (68) (71)
Deferred taxes....................................................... (2,739) (259) (1) --
Increase (decrease) in-
Accounts payable..................................................... 683 1,102 (39) (1,092)
Accrued compensation and related benefits............................ (28) 498 27 (44)
Accrued agent commissions............................................ 39 662 (310) (244)
Accrued tax payable.................................................. 23 177 1,148 (1,726)
Deferred revenues.................................................... (1,116) (691) (452) 1,282
Other accrued expenses............................................... 77 (1,161) 402 (351)
------------- --------- --------- ---------
Net cash provided by (used in) operating activities................ (1,152) (1,909) (4,057) (2,223)
------------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business.................................................. (10,850) -- -- --
Purchases of property and equipment...................................... (135) (877) (818) (208)
Sale (purchase) of investment............................................ -- (512) 2,061 --
Purchase of product development costs.................................... -- (1,336) -- --
------------- --------- --------- ---------
Net cash provided by (used in) investing activities................ (10,985) (2,725) 1,243 (208)
------------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt............................................... -- -- (139) (98)
Advances on obligations to parent and affiliates......................... 13,284 10,505 12,743 6,976
Repayments on obligations to parent and affiliates....................... (922) (4,647) (7,913) (5,013)
------------- --------- --------- ---------
Net cash provided by (used in) financing activities................ 12,362 5,858 4,691 1,865
------------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... 225 1,224 1,877 (566)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................... -- 225 1,449 1,449
------------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR..................................... $ 225 $ 1,449 $ 3,326 $ 883
------------- --------- --------- ---------
------------- --------- --------- ---------

1997
---------
<S> <C>

<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................ $ (2,462)
Adjustments to reconcile net income (loss) to net cash provided by (used
in) operating activities-
Depreciation and amortization............................................ 1,107
Equity in loss of investee............................................... --
Gain on sale of investment............................................... --
Charge for purchased research and development............................ --
Changes in assets and liabilities, net-
Decrease (increase) in-
Accounts receivable.................................................. 7,582
Inventories.......................................................... (1,505)
Other current assets................................................. (224)
Other assets......................................................... 40
Deferred taxes....................................................... 128
Increase (decrease) in-
Accounts payable..................................................... (62)
Accrued compensation and related benefits............................ (231)
Accrued agent commissions............................................ (379)
Accrued tax payable.................................................. (3,940)
Deferred revenues.................................................... 1,182
Other accrued expenses............................................... (556)
---------
Net cash provided by (used in) operating activities................ 680
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business.................................................. --
Purchases of property and equipment...................................... (769)
Sale (purchase) of investment............................................ --
Purchase of product development costs.................................... --
---------
Net cash provided by (used in) investing activities................ (769)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt............................................... (147)
Advances on obligations to parent and affiliates......................... 2,056
Repayments on obligations to parent and affiliates....................... (3,867)
---------
Net cash provided by (used in) financing activities................ (1,958)
---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (2,047)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................... 3,326
---------
CASH AND CASH EQUIVALENTS, END OF YEAR..................................... $ 1,279
---------
---------
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

1. BACKGROUND:

THE COMPANY

Axiom Inc. (the "Company"), a Delaware corporation, changed its name from
Securicor Communications Inc. Through May 23, 1997, the Company's business was
conducted through its wholly-owned subsidary, Securicor Telesciences Inc.
("STI"). On that date, STI merged into the Company. The Company is a
wholly-owned subsidiary of Securicor Communications Limited ("SCL"), an entity
organized under the laws of the United Kingdom and a wholly-owned subsidiary of
Securicor plc ("Securicor"), a company organized under the laws of the United
Kingdom. As the merger represented a transaction between entities under common
control, the net assets of STI were transferred at net book value. SCL's capital
contribution was $100. As the financial statements are presented in "thousands,"
no amounts are presented in Common Stock and additional paid-in capital. SCL has
provided the financing requirements for the Company through advances. All of the
Company's funding requirements since its inception have been provided by SCL
(see Note 8).

Effective July 1, 1994, the Company purchased the net assets of the wireline
division of TeleSciences, Inc. TeleSciences, Inc. was an unrelated third party.
The Company had no operating activities prior to this acquisition. The
acquisition was accounted for as a purchase transaction. The total purchase
price of $12,202,000, including $241,000 of transaction costs, was allocated to
the assets acquired and liabilities assumed based on their respective fair
values. As discussed further in Note 2, the Company recorded $6,700,000 of the
purchase price as a charge to the statement of operations on the acquisition
date as it was related to the fair value of incomplete research and development
projects. The excess of the purchase price over the fair value of the net assets
acquired was $2,108,000. Of such amount, $1,800,000 was allocated to developed
technology and $308,000 was allocated to goodwill. Developed technology and
goodwill are being amortized over 2 1/2 and 7 years, respectively, on a
straight-line basis (see Note 6).

The following table displays the noncash assets and liabilities that were
acquired as a result of the acquisition:

<TABLE>
<S> <C>
Noncash assets (liabilities):
Accounts receivable........................................... $4,132,000
Inventories................................................... 2,435,000
Other current assets.......................................... 433,000
Property and equipment........................................ 2,050,000
Other assets.................................................. 26,000
Intangible assets............................................. 2,108,000
Deferred tax asset............................................ 319,000
Charge for purchased research and development................. 6,700,000
Accounts payable.............................................. (547,000)
Other accrued expenses and deferred revenues.................. (5,454,000)
----------
Purchase price paid......................................... $12,202,000
----------
----------
</TABLE>

F-7
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

1. BACKGROUND: (CONTINUED)
INITIAL PUBLIC OFFERING AND STOCK SPLIT

In May 1997, the Company filed a registration statement with the Securities
and Exchange Commission to register 2,600,000 shares of Common Stock being
offered for sale in its initial public offering. There can be no assurance that
this initial public offering will be completed. The Company plans to use a
portion of the net proceeds of this initial public offering to repay certain of
its obligations to parent and affiliates (see Note 8).

On June 27, 1997, the Company amended its Certificate of Incorporation to
authorize 5,000,000 shares of Preferred Stock and 25,000,000 shares of Common
Stock. On July 2, 1997, the Company effected a 34,769-for-one stock split of
each outstanding share of Common Stock by means of a stock dividend.

All share and stock option data have been restated to reflect this stock
split.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

INTERIM FINANCIAL STATEMENTS

The financial statements as of March 31, 1997 and for the six months ended
March 31, 1996 and 1997 are unaudited and, in the opinion of management, include
all adjustments (consisting only of normal recurring adjustments) necessary for
the fair presentation of results for these interim periods. The results for the
six months ended March 31, 1997 are not necessarily indicative of the results to
be expected for the entire year.

CASH AND CASH EQUIVALENTS

For the purposes of the Statements of Cash Flows, the Company considers all
highly liquid investment instruments purchased with an original maturity of
three months or less to be cash equivalents. Cash and cash equivalents are
comprised of investments in various money market funds. Included in cash and
cash equivalents on the accompanying consolidated balance sheets is $175,000,
$271,000 and $0 of restricted cash as of September 30, 1995, 1996 and March 31,
1997, respectively.

INVENTORIES

Inventories are valued at the lower of cost, determined on the first-in,
first-out method or market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Significant improvements are
capitalized and expenditures for maintenance and repairs are charged to expense
as incurred. Upon the sale or retirement of these

F-8
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
assets, the applicable cost and related accumulated depreciation are removed
from the accounts and any gain or loss is included in the statements of
operations.

Depreciation and amortization are provided on a straight-line basis over the
estimated useful lives of the assets as follows:

<TABLE>
<S> <C>
Computer hardware and software..................................... 3 years
Production and test equipment...................................... 5 years
Furniture, fixtures and leasehold improvements..................... 5 years
</TABLE>

INTANGIBLE ASSETS

Intangible assets consist of developed technology and goodwill which are
being amortized over 2 1/2 and 7 years, respectively, on a straight-line basis
(see Note 6). The Company evaluates the realizability of intangible assets based
on estimates of undiscounted future cash flows over the remaining useful life of
the asset. If the amount of such estimated undiscounted future cash flows is
less than the net book value of the asset, the asset is written down to its net
realizable value. As of March 31, 1997, no such write-down was required.

DEFERRED REVENUES

Deferred revenues represent amounts collected from the Company's customers
in excess of revenues recognized. This is primarily due to annual customer
support contracts. Such amounts are recognized as revenues over the contract
term.

PRODUCT WARRANTY

The Company provides for the estimated cost to repair or replace products
under warranty when the revenues from product sales are recorded.

AGENT COMMISSIONS

In certain contracts, particularly large international contracts, the
Company may utilize an agent, who will work directly with the customer. The
Company is typically charged a commission based on the total revenues of the
contract. These charges are recorded when the revenues are recognized and
included in cost of revenues. Any earned but unpaid commissions are recorded in
accrued agent commissions.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration
of credit risk are accounts receivable. The Company's customer base principally
comprises the regional Bell operating companies, as well as international
telephone companies. The Company typically does not require collateral from its
customers (see Note 15).

F-9
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
REVENUE RECOGNITION

Revenues are generally recognized upon shipment of the equipment. In "bill
and hold" transactions, the Company recognizes revenues when the following
conditions are met: the equipment is complete, ready for shipment and segregated
from other inventory; the Company has no further significant performance
obligations in connection with the completion of the transaction; the commitment
and delivery schedule is fixed; the customer requested the transaction be
completed on this basis; and the risks of ownership have passed to the customer.
Revenues recognized from "bill and hold" transactions were $0, $0, $1,570,000,
$0 and $0 for the period from July 1, 1994 to September 30, 1994, the years
ended September 30, 1995, 1996 and the six months ended March 31, 1996 and 1997,
respectively. Accounts receivable relating to "bill and hold" transactions were
$0, $1,570,000 and $0 at September 30, 1995, 1996 and March 31, 1997,
respectively. Revenues from installation, customer support and engineering
activities are recognized as services are provided. Software license revenues
are recognized upon installation or shipment depending upon the terms of the
agreement.

RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES

Research, development and engineering expenses are charged to expense as
incurred. Engineering expenses consist of costs related to the development of
new products, enhancements to existing products and the integration of existing
products into application specific systems.

PARENT CHARGES

Parent charges are allocated to the Company from Securicor and consist of
charges for certain support and services. These charges are based on Securicor's
estimate of its total relevant costs for the applicable fiscal year, allocated
pro rata based on estimated revenues of each applicable business unit.
Management believes the method of allocation is reasonable.

INCOME TAXES

The Company accounts for income taxes under Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." SFAS No.
109 requires the liability method of accounting for deferred income taxes.
Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities.
Deferred tax assets or liabilities at the end of each period are determined
using the enacted tax rates.

NET INCOME (LOSS) PER COMMON SHARE

Historical net income (loss) per common share was calculated by dividing net
income (loss) by the weighted average number of common shares outstanding for
the respective period.

Supplemental pro forma net income (loss) per common share was calculated by
dividing net income (loss) by the weighted average number of common shares
outstanding for the respective period. Pursuant to the requirements of the
Securities and Exchange Commission, the calculation of supplemental pro forma
net income (loss) per common share includes the number of shares that would be
required to be sold in the initial public offering to fund the payment of the
$20,442,000 of obligations to parent and

F-10
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
affiliates (see Note 8) as if the initial public offering occurred on March 31,
1997. In addition, the supplemental pro forma net income (loss) per common share
for the year ended September 30, 1996 and the six months ended March 31, 1997
excludes interest expense on the obligations to parent and affiliates of
$578,000 and $322,000, respectively, net of income taxes. Stock options granted
prior to the initial public offering have been excluded from the calculation
since the option prices are equal to the initial public offering price and are
therefore not dilutive (see Note 11).

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
The Company is required to adopt SFAS 128 during its fiscal year ending
September 30, 1998. The adoption of SFAS 128 is not expected to have a material
impact on the Company's calculation of net income (loss) per common share.

FOREIGN CURRENCY

The Company's sales arrangements with international customers are fixed in
the amount of U.S. dollars to be received. Relative to the activity with
obligations to parent and affiliates, the Company charges the related foreign
exchange gains and losses to the statements of operations.

MANAGEMENT'S USE OF ESTIMATES

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

CHARGE FOR PURCHASED RESEARCH AND DEVELOPMENT

In connection with the acquisition of the Company (see Note 1) on July 1,
1994, $6,700,000 of the purchase price was allocated to incomplete research and
development projects. Accordingly, these costs were charged to expense as of the
acquisition date. The development of these projects had not yet reached
technological feasibility and the technology had no alternative future use. The
technology acquired in the acquisition required substantial additional
development by the Company.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

For the period from July 1, 1994 to September 30, 1994, the years ended
September 30, 1995 and 1996, and for the six months ended March 31, 1996 and
1997, the Company paid interest of $0, $120,000, $459,000, $161,000 and
$353,000, respectively. For the period from July 1, 1994 to September 30, 1994,
the years ended September 30, 1995 and 1996, and for the six months ended March
31, 1996 and 1997, the Company paid income taxes of $0, $21,000, $495,000,
$495,000 and $2,049,000, respectively.

STOCK-BASED COMPENSATION PLANS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 establishes

F-11
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
financial accounting and reporting standards for stock-based employee
compensation plans. This statement also applies to transactions in which an
entity issues its equity instruments to acquire goods or services from
non-employees. The Company is required to adopt SFAS 123 in its annual financial
statements for the fiscal year ended September 30, 1997. The Company has elected
to adopt the disclosure requirement of this pronouncement. The adoption of the
disclosure requirements is expected to have no impact on the Company's financial
position or results of operation.

3. ACCOUNTS RECEIVABLE:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------- MARCH 31,
1995 1996 1997
------------ ------------- ------------
<S> <C> <C> <C>
Billed................................................................ $ 4,634,000 $ 13,223,000 $ 7,642,000
Unbilled.............................................................. 2,860,000 2,617,000 666,000
------------ ------------- ------------
7,494,000 15,840,000 8,308,000
Less--allowance for doubtful accounts................................. (100,000) (100,000) (150,000)
------------ ------------- ------------
$ 7,394,000 $ 15,740,000 $ 8,158,000
------------ ------------- ------------
------------ ------------- ------------
</TABLE>

Unbilled accounts receivable includes costs and estimated earnings on
contracts in progress which have been recognized as revenues but not yet billed
to customers under the provisions of specified contracts. Substantially, all
unbilled accounts receivables are expected to be billed and collected within one
year.

4. INVENTORIES:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------- MARCH 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Raw materials........................................................... $ 3,362,000 $ 2,779,000 $ 3,733,000
Work-in-process......................................................... 882,000 199,000 629,000
Finished goods.......................................................... -- 189,000 310,000
------------ ------------ ------------
$ 4,244,000 $ 3,167,000 $ 4,672,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

5. OTHER ASSETS:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------- MARCH 31,
1995 1996 1997
------------- ------------ -----------
<S> <C> <C> <C>
Acquired product development costs, net................................ $ 1,336,000 $ 1,086,000 $ 745,000
Investment in Metapath Corporation..................................... 18,000 -- --
Other.................................................................. 53,000 121,000 81,000
------------- ------------ -----------
$ 1,407,000 $ 1,207,000 $ 826,000
------------- ------------ -----------
------------- ------------ -----------
</TABLE>

F-12
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

5. OTHER ASSETS: (CONTINUED)
The acquired product development costs relate to the development of an
Integrated Services Digital Network ("ISDN") product which is sold in the United
States. This asset was purchased from Securicor 3Net Ltd. ("3Net"), an affiliate
of Securicor. Completion of this ISDN product occurred in October 1995.
Therefore, as of September 30, 1995, the Company did not have any amortization
expense related to these costs. Amortization was computed by multiplying the
ratio of current revenues for the product to total and anticipated future
revenues for the product by acquired costs. Amortization expense was $250,000
for the year ended September 30, 1996 and $341,000 for the six months ended
March 31, 1997. The Company's business activities related to the ISDN product
were performed through its wholly-owned subsidiary, Securicor 3Net, Inc. During
the year ended September 30, 1996 and the six months ended March 31, 1997, the
Company sold certain products related to this technology and recognized certain
costs and realized all of the revenues related to such activities. For the year
ended September 30, 1996, the Company recognized revenues of $792,000 and cost
of revenues of $714,000 relating to such activities. For the six months ended
March 31, 1997, the Company recognized revenues of $1,129,000 and cost of
revenues of $732,000 relating to such activities. These amounts are included in
unrelated third party revenues and cost of revenues. As of September 30, 1995,
1996 and March 31, 1997, related to these activities, the Company had no
receivables and $994,000, $296,000 and $0, respectively, of payables to this
entity which are included in obligations to parent and affiliates. Additionally,
as of September 30, 1995, 1996 and March 31, 1997, the Company had billed
accounts receivable of $0, $610,000 and $96,000 from the one unrelated third
party who purchased this product. In May 1997, the Company transferred all of
its stock in Securicor 3Net, Inc. to an affiliate of Securicor at net book value
due to the related party nature of the transaction.

On January 20, 1995, the Company invested approximately $500,000 in exchange
for an initial 44.4% ownership interest in Metapath Corporation ("Metapath"). In
a series of transactions which took place from January 20, 1995 through May 2,
1996, the Company's ownership interest was reduced, first to 23.7%, then to
19.9%, and on May 2, 1996, its ownership interest was purchased by Metapath for
the original amount of approximately $500,000. In addition, on May 2, 1996,
Metapath acquired certain technology from the Company for $1,500,000. This
investment was accounted for using the equity method of accounting. Accordingly,
the Company reduced the carrying value of its investment for its portion of the
investee's loss. The Company's equity in loss of Metapath was $494,000 and
$18,000 for fiscal 1995 and fiscal 1996, respectively.

Set forth below are the related party transactions between the Company and
Metapath for the time periods during which the investment was held. The accounts
receivable and accounts payable data is as of September 30, 1995.

<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM OCTOBER 1,
JANUARY 20, 1995 1995
TO TO
SEPTEMBER 30, 1995 MAY 2, 1996
------------------ --------------
<S> <C> <C>
Sales to Metapath............................................................. $ 381,000 $ 544,000
Accounts receivable from Metapath............................................. $ 165,000 --
Accounts payable to Metapath.................................................. $ 50,000 --
</TABLE>

Metapath was formed effective October 1, 1994 with an initial capitalization
of $2,600,000 and during its year ended September 30, 1995, Metapath was in the
start-up phase of its operations. While the Company has not been provided with
Metapath's final financial statements for the year ended September

F-13
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

5. OTHER ASSETS: (CONTINUED)
30, 1995, the Company's management has been advised that Metapath incurred a
loss in excess of $1,300,000 for its initial year of operations. The Company did
not guarantee any indebtedness of Metapath and as a result, the Company has
limited the recorded equity in Metapath's losses to the amount of its original
investment.

Metapath has continued to be a customer of the Company after May 2, 1996 and
sales for the period from May 2, 1996 to September 30, 1996 and the six months
ended March 31, 1997 were $1,622,000 and $1,120,000, respectively.

The Company has not provided audited financial statements of Metapath
because they do not exist. The Company believes that this additional information
is not material.

6. INTANGIBLE ASSETS:

<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------- MARCH 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Developed technology.................................................... $ 1,800,000 $ 1,800,000 $ 1,800,000
Goodwill................................................................ 308,000 308,000 308,000
------------ ------------ ------------
2,108,000 2,108,000 2,108,000
Less--Accumulated amortization.......................................... (955,000) (1,719,000) (1,921,000)
------------ ------------ ------------
$ 1,153,000 $ 389,000 $ 187,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

7. LONG-TERM DEBT:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------- MARCH 31,
1995 1996 1997
--------- ---------- -----------
<S> <C> <C> <C>
Term note payable, payable in annual installments of $98,000 plus interest at
5.3% through 1998........................................................... $ -- $ 196,000 $ 98,000
Capitalized lease obligations, payable in monthly installments of $8,500
including interest at 15% through 1998...................................... -- 136,000 87,000
--------- ---------- -----------
-- 332,000 185,000
--------- ---------- -----------
Less--Current portion......................................................... -- (185,000) (185,000)
--------- ---------- -----------
$ -- $ 147,000 $ --
--------- ---------- -----------
--------- ---------- -----------
</TABLE>

Maturities of long-term debt as of September 30, 1996, are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
- ----------------------------------------------------------------------------------
<S> <C>
1997.............................................................................. $ 185,000
1998.............................................................................. 147,000
----------
$ 332,000
----------
----------
</TABLE>

F-14
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

7. LONG-TERM DEBT: (CONTINUED)
In March 1996, the Company entered into a $294,000 term note payable with an
equipment vendor for the purchase of computer hardware and software and the
related maintenance agreements. Included in this amount is $249,000 of computer
hardware and software which has been recorded in property and equipment and the
related $45,000 maintenance contract prepayment which has been recorded in other
current assets. This term note payable is payable in three equal annual
installments of $98,000. The first of these three payments was paid in fiscal
1996. The interest rate charged on this term note payable is 5.3%. Interest
expense for the year ended September 30, 1996 and the six months ended March 31,
1997 was $6,000 and $6,000 respectively.

In April 1996, the Company entered into a $177,000 lease obligation that
qualified as a capital lease for the purchase of computer hardware and software
and the related maintenance agreements. Included in this amount is $148,000 of
computer hardware and software which has been recorded in property and equipment
and the related $29,000 maintenance contract prepayment which has been recorded
in other current assets. This lease is payable in 24 equal monthly installments
of $8,500. The implicit interest rate charged on this obligation is 15%.
Interest expense for the year ended September 30, 1996 and the six months ended
March 31, 1997 was $10,000 and $11,000, respectively. Assets acquired under
capital leases at a cost of $148,000 and $148,000 less accumulated amortization
of $24,000 and $49,000 are included in property and equipment at September 30,
1996 and March 31, 1997, respectively.

8. OBLIGATIONS TO PARENT AND AFFILIATES:

Information relative to the Company's obligations to parent and affiliates
is as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------- MARCH 31,
1995 1996 1997
------------- ------------- -------------
<S> <C> <C> <C>
Obligations to parent:
Interest free..................................................... $ 14,427,000 $ 12,326,000 $ 12,326,000
Interest bearing.................................................. 2,712,000 10,512,000 8,972,000
Other............................................................. 237,000 190,000 177,000
------------- ------------- -------------
Total obligations to parent..................................... 17,376,000 23,028,000 21,475,000
------------- ------------- -------------
Obligation to affiliates:
Receivable from affiliates........................................ (319,000) (33,000) (33,000)
Payables to affiliates............................................ 1,404,000 296,000 38,000
------------- ------------- -------------
Total obligations to affiliates, net............................ 1,085,000 263,000 5,000
------------- ------------- -------------
Total obligations to parent and affiliates.......................... $ 18,461,000 $ 23,291,000 $ 21,480,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The Company has been funded through advances from its parent (Securicor).
Certain advances are interest bearing and are loaned to the Company at a base
rate plus 1%. For the period from July 1, 1994 to September 30, 1994 and the
years ended September 30, 1995 and 1996, the interest rate charged on these
obligations ranged from 6.25% to 6.75%, 6.75% to 7.75% and 6.75% to 7.75%,
respectively. Interest expense for the period from July 1, 1994 to September 30,
1994, the years ended September 30, 1995 and 1996 and the six months ended March
31, 1996 and 1997, was $9,000, $141,000, $578,000, $262,000 and

F-15
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

8. OBLIGATIONS TO PARENT AND AFFILIATES: (CONTINUED)
$322,000, respectively. As these obligations to parent and affiliates are due on
demand, this net amount is included in current liabilities. In connection with
the initial public offering, $20,442,000 of the total obligations to parent and
affiliates, as of March 31, 1997, will be paid (see Note 1). This amount will
change based upon the actual amount of such obligations as of the closing of the
initial public offering. In May 1997, the remaining balance of $1,038,000 was
transferred to an affiliate of Securicor in connection with the Securicor 3Net,
Inc. transaction (see Note 5).

9. INTEREST EXPENSE, NET:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SEPTEMBER SIX MONTHS ENDED MARCH
TO 30, 31,
SEPTEMBER 30, ---------------------- ----------------------
1994 1995 1996 1996 1997
------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest expense on obligations to parent......... $ 9,000 $ 141,000 $ 578,000 $ 262,000 $ 322,000
Interest expense.................................. -- -- 16,000 5,000 17,000
Interest income................................... -- (29,000) (80,000) (40,000) (60,000)
------ ---------- ---------- ---------- ----------
$ 9,000 $ 112,000 $ 514,000 $ 227,000 $ 279,000
------ ---------- ---------- ---------- ----------
------ ---------- ---------- ---------- ----------
</TABLE>

10. OTHER INCOME:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SEPTEMBER SIX MONTHS ENDED MARCH
TO 30, 31,
SEPTEMBER 30, ---------------------- ----------------------
1994 1995 1996 1996 1997
------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Litigation settlement gain........................ $ -- $ -- $ 350,000 $ 350,000 $ --
Miscellaneous..................................... 66,000 148,000 80,000 63,000 54,000
------------- ---------- ---------- ---------- ----------
$ 66,000 $ 148,000 $ 430,000 $ 413,000 $ 54,000
------------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ----------
</TABLE>

On December 6, 1995, the Company entered into a litigation settlement
agreement whereby the Company was awarded $350,000. This settlement is to be
paid over three years. The Company received $164,000 in 1996 and $118,000 during
the six months ended March 31, 1997. The remaining balance of $68,000 is
included in other current assets.

11. STOCKHOLDER'S EQUITY:

1997 STOCK INCENTIVE PLAN

In May 1997, the Company established the 1997 Stock Incentive Plan (the
"1997 Plan") which authorized 450,000 shares of Common Stock to be issued. Under
the 1997 Plan, a variety of awards, including stock options, stock appreciation
rights and restricted and unrestricted stock grants may be made to the Company's
employees, officers, consultants and advisors. Common stock options may be
granted

F-16
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

11. STOCKHOLDER'S EQUITY: (CONTINUED)
either in the form of incentive stock options or non-statutory stock options.
The option exercise price of incentive stock options may not be less than the
fair market value of the Common Stock on the date of the grant. In May 1997,
options to purchase 321,366 shares of Common Stock were granted under the 1997
Plan to the employees, officers and directors of the Company at an exercise
price equal to the initial public offering price per share. One third of these
options vest 90 days after completion of the Company's initial public offering
and the remaining two-thirds vest on the first and second anniversaries of the
date of grant, respectively. No additional options to purchase Common Stock have
been granted to date.

12. EMPLOYEE BENEFIT PLAN:

Prior to July 1994, TeleSciences, Inc. had a profit-sharing retirement plan
and a thrift plan which covered substantially all employees. In connection with
the acquisition on July 1, 1994, all balances in the profit-sharing retirement
plan were transferred into the thrift plan. The thrift plan's name is now Axiom
Inc. Thrift/401(k) Plan (the "Plan"). Upon this transfer, all balances were 100%
vested. With respect to the Plan, eligible employees must have one year of
service with the Company and be 18 years of age. An employee may contribute both
pre- and post-tax dollars to the Plan, subject to certain limitations, as
defined by the Plan. The employer contributions to the Plan are equal to 75% of
the employee's basic pre-tax contribution up to certain limits, as defined. The
Company's contribution to the Plan for the period from July 1, 1994 to September
30, 1994, and for the years ended September 30, 1995 and 1996 was $60,000,
$245,000, and $277,000, respectively.

13. RELATED PARTY TRANSACTIONS:

The Company entered into two separate agreements with Securicor Radiocoms
Ltd., an affiliate of Securicor. The first agreement provided that the Company
construct product for Securicor Radiocoms Ltd. and bill for all costs incurred
in addition to a certain profit percentage, as defined. The second agreement
provided for the construction of additional product for Securicor Radiocoms
Ltd., which was billed at a fixed price per unit. The Company recognized
revenues from Securicor Radiocoms Ltd. for the period from July 1, 1994 to
September 30, 1994, the years ended September 30, 1995 and 1996 and the six
months ended March 31, 1996 and 1997 of $0, $1,421,000, $2,323,000, $2,040,000
and $0, respectively. The Company recognized cost of revenues related to these
revenues for the period from July 1, 1994 to September 30, 1994, the years ended
September 30, 1995 and 1996 and the six months ended March 31, 1996 and 1997 of
$0, $1,112,000, $1,732,000, $1,488,000 and $0, respectively. As of September 30,
1995, 1996 and March 31, 1997, related to these agreements, the Company had
receivables of $319,000, $31,000 and $22,000, respectively, which are included
in obligations to parent and affiliates and $410,000, $0 and $0, respectively,
of advances from Securicor Radiocoms Ltd. which are included in obligations to
parent and affiliates. As of September 30, 1995, 1996 and March 31, 1997,
$99,000, $0 and $0, respectively, of costs were included in other current assets
related to these agreements.

During the year ended September 30, 1996, certain key executive officers
were granted options to purchase the common stock of Securicor. The aggregate
number of options granted to these executive officers was 104,050. The exercise
price of these options was L2.45 per share, which was the fair market value of
Securicor common stock on the date of grant. These options vest on the third
anniversary of the date of grant. These options expire in June 2006 which is ten
years from the date of grant.

F-17
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

14. INCOME TAXES:

The components of income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED
TO SEPTEMBER 30,
SEPTEMBER 30 ------------------------
1994 1995 1996
------------- ---------- ------------
<S> <C> <C> <C>
Current:
Federal............................................................... $ 18,000 $ 220,000 $ 1,170,000
State................................................................. 5,000 74,000 374,000
------------- ---------- ------------
23,000 294,000 1,544,000
------------- ---------- ------------
Deferred:
Federal............................................................... (2,328,000) (219,000) (1,000)
State................................................................. (411,000) (40,000) --
------------- ---------- ------------
(2,739,000) (259,000) (1,000)
------------- ---------- ------------
$(2,716,000) $ 35,000 $ 1,543,000
------------- ---------- ------------
------------- ---------- ------------
</TABLE>

Income tax expense differs from the amount currently payable because certain
expenses, primarily depreciation and accruals, are reported in different periods
for financial reporting and income tax purposes.

The federal statutory income tax is reconciled to the effective income tax
rate as follows:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SEPTEMBER
TO 30,
SEPTEMBER 30 --------------------
1994 1995 1996
--------------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate......................................................... (34.0)% 34.0% 34.0%
State income taxes, net of federal benefit..................................... (5.9 ) 5.9 5.9
Other.......................................................................... -- (2.3) (1.7)
----- --------- ---------
(39.9 )% 37.6% 38.2%
----- --------- ---------
----- --------- ---------
</TABLE>

F-18
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

14. INCOME TAXES: (CONTINUED)
The components of the net current and long-term deferred tax assets and
liabilities, measured under SFAS No. 109, are as follows:

<TABLE>
<CAPTION>
SEPTEMBER 30,
--------------------------
<S> <C> <C>
1995 1996
------------ ------------
Deferred tax assets--
Charge for purchased research and development................... $ 2,825,000 $ 2,910,000
Accruals........................................................ 314,000 408,000
Other........................................................... 229,000 99,000
------------ ------------
3,368,000 3,417,000
Deferred tax liabilities--
Depreciation.................................................... 10,000 90,000
Other........................................................... 41,000 9,000
------------ ------------
51,000 99,000
------------ ------------
Net deferred tax assets....................................... $ 3,317,000 $ 3,318,000
------------ ------------
------------ ------------
</TABLE>

Management believes a valuation allowance was not required for the net
deferred tax assets due to the Company's earnings history taking into
consideration the nonrecurring charge for purchased research and development.
This charge represents the significant portion of the net deferred tax assets.
These factors cause management to believe it is more likely than not that the
net deferred tax assets will be realized.

15. CUSTOMER AND GEOGRAPHIC INFORMATION:

The Company's operations are conducted in one business segment. The
Company's revenues originated from the following geographic destinations:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SIX MONTHS
TO SEPTEMBER 30, ENDED MARCH 31,
SEPTEMBER 30, ---------------------------- ----------------------------
1994 1995 1996 1996 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
North America........................ $ 2,927,000 $ 15,541,000 $ 28,282,000 $ 7,224,00 $ 10,938,000
South America........................ 2,666,000 7,604,000 2,471,000 817,000 410,000
United Kingdom (related party)....... -- 1,421,000 2,323,000 2,040,000 --
Other................................ 13,000 1,002,000 888,000 699,000 702,000
------------- ------------- ------------- ------------- -------------
$ 5,606,000 $ 25,568,000 $ 33,964,000 $ 10,780,000 $ 12,050,000
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>

F-19
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

15. CUSTOMER AND GEOGRAPHIC INFORMATION: (CONTINUED)
The following table summarizes significant customers with revenues in excess
of 10% of the Company's revenues in any given period presented:

<TABLE>
<CAPTION>
PERIOD FROM
JULY 1, 1994 YEAR ENDED SIX MONTHS
TO SEPTEMBER 30, ENDED MARCH 31,
SEPTEMBER 30, -------------------------- --------------------------
CUSTOMER 1994 1995 1996 1996 1997
- ------------------------------------------ ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Ameritech Corporation..................... $ 1,509,000 $ 4,277,000 $ 4,431,000 $ 912,000 $ 1,028,000
Puerto Rico Telephone Co. ................ -- 101,000 3,199,000 2,197,000 6,000
Southwestern Bell Telephone Company....... 28,000 1,478,000 6,289,000 1,628,000 1,786,000
Telecom Argentina......................... 2,642,000 4,353,000 1,170,000 38,000 379,000
Telecommunications of Jamaica, Ltd........ -- 930,000 823,000 685,000 100,000
U S West, Inc............................. 1,143,000 7,349,000 10,219,000 1,905,000 3,890,000
</TABLE>

The failure of any of the Company's significant customers to continue to
purchase products and services from the Company, or any significant delay in
orders from such customers, could have a material adverse effect on the
Company's results of operations and financial condition.

16. COMMITMENTS AND CONTINGENCIES:

The Company has entered into noncancelable operating leases for its office
and manufacturing facilities, production and test equipment and fixtures. The
total rental for production and test equipment and fixtures for the period from
July 1, 1994 to September 30, 1994 and for the years ended September 30, 1995
and 1996 was $56,000, $267,000 and $266,000, respectively. These lease
agreements provide that the Company will pay all insurance, maintenance and
repairs.

In addition, the Company leases its office and manufacturing facilities
under long-term operating leases. The rental on the office and manufacturing
facilities for the period from July 1, 1994 to September 30, 1994 and for the
years ended September 30, 1995 and 1996 was $117,000, $334,000 and $322,000,
respectively. The amounts payable under these leases are subject to
renegotiation at various intervals specified in the leases.

Future minimum rental payments as of September 30, 1996 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR
- ----------------------------------------------------------------------------------
<S> <C>
1997.............................................................................. $ 341,000
1998.............................................................................. 227,000
----------
$ 568,000
----------
----------
</TABLE>

The Company is obligated to make certain payments, as defined, to certain
key Company employees if these employees are terminated. In addition, certain
key employees have performance incentives in the form of cash and equity (in the
parent or an affiliate) related compensation. The Company does not expect to
make these payments other than in the normal course of business.

F-20
<PAGE>
AXIOM INC. AND SUBSIDIARIES (NOTE 1)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1997 AND FOR THE SIX MONTHS ENDED
MARCH 31, 1996 AND 1997 IS UNAUDITED)

16. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
The Company is party to various claims arising in the ordinary course of
business. Although the ultimate outcome of these matters is presently not
determinable, management believes that the resolution of these matters will not
have a material adverse effect on the Company's financial position or results of
operations.

F-21
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Axiom Inc. (formerly Securicor Communications Inc.):

We have audited the accompanying statements of revenues and certain expenses
and certain cash flows for the year ended June 30, 1994 of the Predecessor
Business (see Note 1). These statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statements
based on our audit.

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

The statements of revenues and certain expenses and certain cash flows have
been prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission (for inclusion in the Form S-1 filing of
Axiom Inc. (formerly Securicor Communications Inc.)) as described in Note 1 and
is not intended to be a complete presentation of the financial results and cash
flows of the Predecessor Business.

In our opinion, the statements of revenues and certain expenses and certain
cash flows referred to above present fairly, in all material respects, the
revenues and certain expenses and cash flows of the Predecessor Business for the
year ended June 30, 1994, in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Philadelphia, Pa.,
March 7, 1997

F-22
<PAGE>
PREDECESSOR BUSINESS (NOTE 1)
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED JUNE 30, 1994
(IN THOUSANDS)

<TABLE>
<S> <C>
REVENUES:
Equipment....................................................................... $ 13,963
Services........................................................................ 6,266
---------
Total revenues.............................................................. 20,229
---------
COST OF REVENUES:
Equipment....................................................................... 8,785
Services........................................................................ 4,018
---------
Total cost of revenues...................................................... 12,803
---------
Gross profit................................................................ 7,426
---------
OPERATING EXPENSES:
Research, development and engineering........................................... 5,450
Selling, general and administrative............................................. 4,985
---------
Total operating expenses.................................................... 10,435
---------
OPERATING LOSS.................................................................... $ (3,009)
---------
---------
</TABLE>

The accompanying notes are an integral part of this statement.

F-23
<PAGE>
PREDECESSOR BUSINESS (NOTE 1)

STATEMENT OF CERTAIN CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 1994

(IN THOUSANDS)

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................................... $ (3,009)
Adjustments to reconcile net loss to net cash used in operating activities-
Depreciation..................................................................... 1,114
Changes in assets and liabilities, net-
Decrease (increase) in.........................................................
Accounts receivable.......................................................... 2,012
Inventories.................................................................. 1,778
Other current assets......................................................... (56)
Other assets................................................................. 193
Increase (decrease) in-
Accounts payable............................................................. 172
Other accrued expenses....................................................... 444
Deferred revenues............................................................ (1,458)
---------
Net cash used in operating activities...................................... 1,190
---------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.............................................. (1,222)
---------
Net cash used in investing activities...................................... (1,222)
---------
NET DECREASE IN CASH AND CASH EQUIVALENTS.......................................... (32)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR....................................... 32
---------

CASH AND CASH EQUIVALENTS, END OF YEAR............................................. $ --
---------
---------
</TABLE>

The accompanying notes are an integral part of this statement.

F-24
<PAGE>
PREDECESSOR BUSINESS

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
AND CERTAIN CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 1994

1. BASIS OF PRESENTATION:

On July 1, 1994, Axiom Inc. (formerly Securicor Communications Inc.) (the
"Company") purchased the net assets of the wireline division of TeleSciences,
Inc. ("TeleSciences"). The net assets acquired are referred to as the
"Predecessor Business." In connection with the Company's initial public offering
as contemplated in this Prospectus, the accompanying financial statement has
been prepared to comply with the rules and regulations of the Securities and
Exchange Commission. These rules and regulations require a statement of revenues
and certain expenses of the Predecessor Business. This statement does not
include interest, income taxes and TeleSciences' corporate management fees. The
Company's parent charges were $386,000 and $403,000 for the fiscal years ended
September 30, 1995 and 1996, respectively (see Axiom Inc. and subsidiaries
Consolidated Financial Statements).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CASH AND CASH EQUIVALENTS

For the purposes of the Statement of Certain Cash Flows, the Company
considers all highly liquid investment instruments purchased with an original
maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

Revenues were generally recognized upon shipment of the equipment and, if
recognized prior to shipment, upon completion of customer acceptance where risks
of ownership are transferred to the customer. Revenues from installation and
customer support activities were recognized as services were provided. Software
license revenues were recognized upon installation or shipment depending upon
the terms of the agreement.

AGENT COMMISSIONS

In certain contracts, particularly large international contracts, the
Predecessor Business may have utilized an agent, who worked directly with the
customer. The Predecessor Business was typically charged a commission based on
the total revenues of the contract. These charges were recorded when the
revenues were recognized and included in cost of revenues.

RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES

Research, development and engineering expenses were charged to expense as
incurred. Engineering expenses consisted of costs related to the development of
new products, enhancements to existing products and the integration of existing
products into application specific systems.

MANAGEMENT'S USE OF ESTIMATES

F-25
<PAGE>
PREDECESSOR BUSINESS

NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
AND CERTAIN CASH FLOWS (CONTINUED)

FOR THE YEAR ENDED JUNE 30, 1994

3. CUSTOMER AND GEOGRAPHIC INFORMATION:

The Predecessor Business' operations were conducted in one business segment.
The Predecessor Business' revenues originated from the following geographic
destinations:

<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30,
1994
-------------
<S> <C>
North America.................................................................. $ 12,366,000
South America.................................................................. 7,388,000
Other.......................................................................... 475,000
-------------
$ 20,229,000
-------------
-------------
</TABLE>

The following table summarizes significant customers with revenues in excess
of 10% of the Predecessor Business' revenues for the year ended June 30, 1994:

<TABLE>
<CAPTION>
CUSTOMER AMOUNT
- -------------------------------------------------------------------------------- ------------
<S> <C>
Ameritech Corporation........................................................... $ 4,949,000
Telecom Argentina............................................................... 3,945,000
U S West, Inc................................................................... 4,872,000
</TABLE>

F-26
<PAGE>
[Description of graphics to be inserted:

Inside Back Cover: Photos of the Company's headquarters and products with
the Company's name and the phrase "absolute value" and the following text:
"Committed to our customers for over 25 years ... a proven leader providing
billing data collection and traffic measurement systems worldwide. We represent
a powerful market presence with a long history of security, reliability and
integrity assuring our absolute commitment to our customers."]
<PAGE>
- ---------------------------------------------------------
---------------------------------------------------------
- ---------------------------------------------------------
---------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE 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 ANY OF THE U.S.
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
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 OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary................................ 3
Risk Factors...................................... 6
The Company....................................... 12
Use of Proceeds................................... 12
Dividend Policy................................... 12
Capitalization.................................... 13
Dilution.......................................... 14
Selected Financial Data........................... 15
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 18
Business.......................................... 26
Management........................................ 43
Principal Stockholders............................ 48
Certain Transactions.............................. 48
Description of Capital Stock...................... 50
Shares Eligible for Future Sale................... 52
Underwriting...................................... 53
Legal Matters..................................... 56
Experts........................................... 56
Additional Information............................ 57
Index to Consolidated Financial Statements........ F-1
</TABLE>

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

UNTIL AUGUST 2, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
U.S. UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

2,600,000 SHARES

[LOGO]

COMMON STOCK

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

PROSPECTUS
July 8, 1997

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

LEHMAN BROTHERS
J.P. MORGAN & CO.

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