ICON CMT CORP, S-1, 1997-10-21

ICON CMT CORP
S-1, 1997-10-21

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1997
REGISTRATION NO. 333-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

ICON CMT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 7373 13-3603128
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

1200 HARBOR BLVD.
WEEHAWKEN, NEW JERSEY 07087
(201) 601-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

SCOTT A. BAXTER
PRESIDENT
ICON CMT CORP.
1200 HARBOR BLVD.
WEEHAWKEN, NEW JERSEY 07087
(201) 601-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------

COPIES OF COMMUNICATIONS TO:

<TABLE>
<S> <C>
MICHAEL WEINSIER, ESQ. KRIS F. HEINZELMAN, ESQ.
PARKER CHAPIN FLATTAU & KLIMPL, LLP CRAVATH, SWAINE & MOORE
1211 AVENUE OF THE AMERICAS WORLDWIDE PLAZA
NEW YORK, NEW YORK 10036 825 EIGHTH AVENUE
TELEPHONE NO.: (212) 704-6000 NEW YORK, NEW YORK 10019
FACSIMILE NO.: (212) 704-6288 TELEPHONE NO.: (212) 474-1000
FACSIMILE NO.: (212) 474-3700
</TABLE>

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

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

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

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

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

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C>
Common Stock, par value $.001 per share..................................... $57,500,000 $17,424.24
</TABLE>

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

________________________________________________________________________________

<PAGE>

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

SUBJECT TO COMPLETION, DATED OCTOBER 21, 1997

Shares
ICON CMT CORP.
Common Stock
($.001 par value)
------------------

All of the shares of Common Stock, par value $.001 per share (the 'Common
Stock'), of Icon CMT Corp. (the 'Company') offered hereby (the
'Offering') are being sold by the Company except that certain
stockholders of the Company (the 'Selling Stockholders') named
herein under 'Principal and Selling Stockholders' have
granted the Underwriters the option to purchase shares
solely to cover over-allotments, if any. The
Company will not receive the proceeds of
shares sold, if any, by the Selling
Stockholders.

Prior to the Offering, there has been no public market for the Common Stock. It
is anticipated that the initial public offering price will be between
$ and $ per share. For information relating to
the factors to be considered in determining the initial public
offering price, see 'Underwriting'.

Application will be made to list the Common Stock on The Nasdaq Stock Market's
National Market ('NNM').

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE COMMON STOCK, SEE 'RISK FACTORS' BEGINNING ON PAGE 8
HEREIN.

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

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

(1) Before deduction of expenses payable by the Company estimated at
$ .

(2) The Company and the Selling Stockholders have granted to the Underwriters an
option, exercisable by Credit Suisse First Boston Corporation for 30 days
from the date of this Prospectus, to purchase a maximum of additional
shares from the Company and an aggregate of outstanding shares from
the Selling Stockholders to cover over-allotments of shares. If such option
is exercised in full, the total Price to Public will be $ ,
Underwriting Discounts and Commissions will be $ , Proceeds to
Company will be $ and total proceeds to the Selling Stockholders
will be $ .

------------------
The shares are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that the shares
will be ready for delivery on or about , 1997, against payment in
immediately available funds.

CREDIT SUISSE FIRST BOSTON
BANCAMERICA ROBERTSON STEPHENS
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
TUCKER ANTHONY
INCORPORATED

Prospectus dated , 1997.

<PAGE>

<PAGE>
[PICTURES]

Application has been made by the Company for the trademarks 'Icon CMT
Corp.,' 'IconFeed,' 'IconCache,' 'IconChat,' 'Word' and 'Charged'. This
Prospectus also includes other trademarks and trade names of the Company and
trademarks, service marks and trade names of other companies.

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

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE 'UNDERWRITING'.

<PAGE>

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by and should be read in
conjunction with the more detailed information and financial statements
(including the notes thereto) (the 'Financial Statements') appearing elsewhere
in this Prospectus. Unless otherwise indicated, all information contained in
this Prospectus (i) assumes that the Underwriters' over-allotment option is not
exercised, (ii) has been adjusted to give effect to a decrease in the number of
shares of the Common Stock through a 1-for-2.75 reverse split of the Common
Stock that will be effected immediately prior to the date of this Prospectus,
(iii) assumes the automatic conversion of the Company's Series A Convertible
Participating Preferred Stock (the 'Series A Preferred Stock') and 10% PIK
Series B Convertible Participating Preferred Stock (the 'Series B Preferred
Stock') upon consummation of the Offering, (iv) reflects the filing of the
Restated Certificate of Incorporation of the Company and the adoption of the
Restated By-laws of the Company, both of which will occur prior to the
consummation of the Offering and (v) gives effect to an increase of 545,455
shares of Common Stock with respect to which options may be granted under the
Company's 1995 Stock Option Plan (the '1995 Option Plan') upon consummation of
the Offering. Certain terms used herein are defined under 'Glossary'. All
references to the Company contained in this Prospectus, unless otherwise noted,
include the Company's predecessor, Integration Consortium, Inc. ('ICI').

THE COMPANY

Icon CMT Corp. ('Icon' or the 'Company') is an Internet solutions provider
that offers a comprehensive range of services and products that enable
corporate customers to implement their Internet, intranet and extranet
strategies. Icon's mission is to provide end-to-end solutions to its customers
by facilitating the distribution of the customers' information and applications
over Icon's communications infrastructure as well as access to such information
and applications.

In order to provide end-to-end solutions, Icon offers services and products
in three key areas: (i) communications services, including high quality Internet
access and web/server hosting and management, enhanced by the Company's
proprietary technologies; (ii) a range of professional services, including
custom application and website development and design, systems integration and
maintenance and support services; and (iii) product resales, including hardware
and software, which are an integral component of systems design and integration.
Icon differentiates itself by integrating its services and products in order to
provide customized turnkey solutions for the needs of corporate customers.
Unlike many of Icon's competitors who focus on a single service or product, the
Company continuously expands the breadth of its services and its engineering
expertise to optimize its end-to-end solutions.

The emergence of the Internet and the widespread adoption of Internet
Protocol ('IP') as a data transmission standard has resulted in an increasing
number of corporations exploring opportunities to provide IP-based applications
and services within their organization, and to their customers and business
partners. The broad range of business applications, combined with security and
performance requirements, have resulted in demand for high bandwidth networked
systems and for integration and custom application development services.

The Internet communications services market, comprised of access and
hosting, is expected to increase from $1.3 billion in 1996 to $28.1 billion in
2000 according to Forrester Research, while the Internet-related professional
services market is expected to grow from $2.5 billion in 1996 to $13.8 billion
in 2000 according to International Data Corp. In addition to expected growth,
the corporate market is attractive to Icon due to its low customer turnover and
demand for a broad range of higher value-added Internet services and products.

The Company's communications infrastructure is a key element of its
end-to-end solutions. The Company maintains a nationwide Asynchronous Transfer
Mode ('ATM') backbone that incorporates certain proprietary technologies and is
managed to deploy and distribute information and applications. The Company
manages its network to achieve utilization levels that enable it to operate in a
reliable and high performance manner. The Company controls its network and
provides hosting and management services from its state-of-the-art network
operations center ('NOC'). By controlling its

<PAGE>

<PAGE>
own network, the Company can develop, select and integrate appropriate
technologies that enhance the speed, security, reliability, flexibility and
overall performance of its communications infrastructure, enabling the Company
to compete effectively and meet increasingly demanding customer requirements.

Icon's growth strategy is based on leveraging its capability to provide
end-to-end Internet solutions, which is often a decisive factor in attracting
new customers, as well as generating additional revenue from the existing
customer base. Icon's relationships with several customers, such as The
Associated Press, ADP Financial Information Services, Inc. ('ADP'), Bear,
Stearns & Co. Inc. ('Bear Stearns') and CBS, Inc. ('CBS'), began as single
product offerings and evolved into broader solutions encompassing multiple
communications and professional services. To maintain its competitive advantage,
Icon intends to: (i) maintain its reliable and high performance communications
infrastructure; (ii) expand the bandwidth and reach of its network; (iii) expand
and integrate professional services offerings; (iv) continue to build efficient
distribution of services and products through direct and indirect sales
channels; and (v) potentially strengthen its market position through
acquisitions.

Icon's distribution strategy depends on a direct sales force, which has
increased from 20 to 30 sales staff during the first nine months of 1997,
dedicated to large accounts with significant revenue generating potential, and
on indirect distribution channels, such as significant relationships with
telecommunications providers like Bell Atlantic Internet Solutions and Fiberlink
Communications Corp. ('Fiberlink'), that extend the Company's reach without
substantial costs. Bell Atlantic Internet Solutions makes Icon's communications
services available to requesting corporate and residential customers and
generates a rapidly growing revenue stream for Icon.

Icon serves major corporations, predominantly in the financial services,
media, telecommunications and travel industries, including ABC Radio Network,
ACC Long Distance Corp., ADP, Alliance Capital Management LP, The Associated
Press, Barnes and Noble.com Inc., Bear Stearns, Bell Atlantic Internet
Solutions, Inc. ('Bell Atlantic Internet Solutions'), Bloomberg Financial
Markets, CBS, C-NET: The Computer Network, Comedy Central Network, Daiwa
Securities America, Inc., Deutsche Morgan Grenfell, Eastman
Kodak Company, Fiberlink, Galileo International, Merrill Lynch
& Co. Inc., Metropolitan Life Insurance Co., Moore Capital Management, Inc.,
Kobra International (Nicole Miller), Nomura Securities Co. Ltd., Omnipoint
Communications, SwissAir, Tudor Investment Company and John Wiley & Sons, Inc.

ICI, the Company's predecessor, was incorporated in New York in February
1991. Icon was incorporated in Delaware in February 1995, and ICI was merged
with and into Icon in December 1995. The Company's principal executive offices
are located at 1200 Harbor Blvd., Weehawken, New Jersey 07087, and its telephone
number is (201) 601-2000. The Company also maintains an office at 1700 Broadway,
New York, New York 10019. Icon's e-mail address is [email protected], and its
website, which is not a part of this Prospectus, is http://www.icon.com.

<PAGE>

<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered hereby............................. shares(a)

Common Stock to be outstanding after the Offering....... shares(b)

Use of proceeds......................................... Expansion and upgrade of the Company's communications
infrastructure and for working capital and general
corporate purposes, including acquisitions. See 'Use of
Proceeds'.

Dividend policy......................................... The Company has not paid any dividend to stockholders
and does not anticipate such dividends in the
foreseeable future. See 'Dividend Policy'.

Proposed NNM symbol..................................... ICMT
</TABLE>

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

(a) In addition, the Company and the Selling Stockholders have granted the
Underwriters an option to purchase and shares of Common
Stock, respectively, solely to cover over-allotments, if any. Any shares of
Common Stock purchased pursuant to the exercise of such option will be
purchased first from the Selling Stockholders and thereafter from the
Company.

(b) Does not include (i) 2,181,819 shares of Common Stock reserved for issuance
under the 1995 Option Plan pursuant to which options to purchase 1,186,182
shares have been granted and (ii) 948,889 shares of Common Stock reserved
for issuance upon exercise of outstanding warrants. See 'Management -- 1995
Option Plan' and 'Description of Capital Stock -- Warrants'.

RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should consider carefully the risk factors and other
information set forth in this Prospectus before making an investment in the
Common Stock offered hereby. See 'Risk Factors'.

<PAGE>

<PAGE>
SUMMARY FINANCIAL DATA

The following summary financial data for each of the years in the
three-year period ended December 31, 1996 are derived from, and are qualified by
reference to, the Company's audited Financial Statements included elsewhere
herein. The following summary financial data for each year in the two-year
period ended December 31, 1993 are derived from, and are qualified by reference
to, the Company's audited financial statements not included herein. The summary
financial data for the six-month periods ended June 30, 1996 and 1997 are
derived from the unaudited financial statements of the Company included
elsewhere herein and, in the opinion of management, include all adjustments,
consisting of normal recurring accruals necessary for a fair presentation of the
data presented. The summary financial data for each three-month period in the
18-month period ended June 30, 1997 are derived from, and are qualified by
reference to, the Company's unaudited financial statements not included
herein.The results for the six months ended June 30, 1997 are not necessarily
indicative of results for the full year. The pro forma share and per share
information for the year ended December 31, 1996 and the six months ended June
30, 1997 are derived from, and are qualified by reference to, certain unaudited
pro forma finanical information included elsewhere herein. The information
presented below should be read in conjunction with 'Management's Discussion and
Analysis of Financial Condition and Results of Operation' and the Financial
Statements included elsewhere herein.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products............................ $3,066 $10,605 $17,083 $21,424 $29,741 $14,609 $ 9,680
------ ------- ------- ------- ------- ------- -------
Services:
Professional..................... 611 996 1,914 4,397 6,570 2,265 7,475
Communications................... -- -- -- 189 1,268 332 2,171
Media............................ -- -- -- 202 529 237 77
------ ------- ------- ------- ------- ------- -------
Total services revenues........ 611 996 1,914 4,788 8,367 2,834 9,723
------ ------- ------- ------- ------- ------- -------
Total revenues, net......... 3,677 11,601 18,997 26,212 38,108 17,443 19,403
------ ------- ------- ------- ------- ------- -------
Cost of revenues:
Products............................ 2,521 9,596 14,132 17,653 24,607 12,022 7,905
Services............................ 222 382 758 2,596 6,842 2,507 6,729
------ ------- ------- ------- ------- ------- -------
Total cost of revenues......... 2,743 9,978 14,890 20,249 31,449 14,529 14,634
------ ------- ------- ------- ------- ------- -------
Gross profit.......................... 934 1,623 4,107 5,963 6,659 2,914 4,769
------ ------- ------- ------- ------- ------- -------
Operating expenses:
General and administrative.......... 378 652 1,548 2,435 7,006 3,000 4,949
Selling and marketing............... 345 742 1,393 3,450 6,504 2,944 4,021
Research and development............ 40 69 501 411 969 322 559
Depreciation and amortization....... 36 75 94 228 460 173 392
------ ------- ------- ------- ------- ------- -------
Total operating expenses....... 799 1,538 3,536 6,524 14,939 6,439 9,921
------ ------- ------- ------- ------- ------- -------
Income (loss) from operations......... 135 85 571 (561) (8,280) (3,525) (5,152)
Net income (loss)..................... $ 89 $ 44 $ 291 $ (440) $(8,038) $(3,374) $(5,684)
------ ------- ------- ------- ------- ------- -------
------ ------- ------- ------- ------- ------- -------
Pro forma net loss per common
share(a)............................ $(.75) $(.52)
----- -----
----- -----
Pro forma weighted average common
shares outstanding(a)............... 10,717,695 10,941,197
---------- ----------
---------- ----------
OTHER DATA:
Capital expenditures.................. $ 98 $ 153 $ 232 $ 1,000 $ 3,701 $ 1,916 $ 1,117

(footnote on following page)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED(B)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................. $ 1,044 $
Working capital....................................................................... 2,627
Total assets.......................................................................... 12,846
Total liabilities..................................................................... 6,160
Mandatorily redeemable preferred stock................................................ 19,030
Stockholders' deficit................................................................. (12,344)
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1996 1997 1997
--------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products........................... $ 7,281 $ 7,328 $ 7,732 $ 7,400 $ 4,795 $ 4,885
--------- -------- ------------- ------------ --------- --------
Services:
Professional.................... 1,203 1,062 1,670 2,635 3,207 4,268
Communications.................. 147 185 353 583 938 1,233
Media........................... 124 113 117 175 77 --
--------- -------- ------------- ------------ --------- --------
Total services revenues....... 1,474 1,360 2,140 3,393 4,222 5,501
--------- -------- ------------- ------------ --------- --------
Total revenues, net........ 8,755 8,688 9,872 10,793 9,017 10,386
--------- -------- ------------- ------------ --------- --------
Cost of revenues:
Products........................... 6,157 5,865 6,384 6,201 3,813 4,092
Services........................... 1,270 1,237 1,827 2,508 3,137 3,592
--------- -------- ------------- ------------ --------- --------
Total cost of revenues..... 7,427 7,102 8,211 8,709 6,950 7,684
--------- -------- ------------- ------------ --------- --------
Gross profit......................... 1,328 1,586 1,661 2,084 2,067 2,702

Operating expenses................... 2,566 3,873 3,910 4,590 4,652 5,269
Loss from operations................. (1,238) (2,287) (2,249) (2,506) (2,585) (2,567)
Net loss............................. $(1,169) $ (2,205) $(2,178) $ (2,486) $(2,950) $ (2,734)
--------- -------- ------------- ------------ --------- --------
--------- -------- ------------- ------------ --------- --------
</TABLE>

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

(a) For information concerning the computation of pro forma net loss per share
of Common Stock and pro forma weighted average common shares of Common
Stock outstanding, see Notes 3 and 13 to the Financial Statements.

(b) Gives effect to (i) the conversion of 422,607 shares of Series A Preferred
Stock and 110,200 shares of Series B Preferred Stock into 1,637,097 and
1,829,805 shares of Common Stock, respectively, upon consummation of the
Offering and (ii) the sale of Common Stock offered hereby, net of expenses,
at an assumed initial public offering price of $ per share (the
mid-point of the range indicated on the front cover of this Prospectus).

<PAGE>

<PAGE>
RISK FACTORS

An investment in the Common Stock offered hereby involves a high degree of
risk. Prospective investors should consider carefully the following risk
factors, in addition to the other information set forth in this Prospectus,
before making an investment in the Common Stock offered hereby.

The Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 (the 'Securities Act'), and Section
21E of the Securities Exchange Act of 1934, as amended (the 'Exchange Act').
Forward-looking statements are typically identified by the words 'believe,'
'expect,' 'intend,' 'estimate' and similar expressions. Those statements appear
in a number of places in this Prospectus and include statements regarding the
intent, belief or current expectation of the Company or its directors or
officers with respect to, among other things: (i) trends affecting the Company's
financial condition or results of operation; and (ii) the Company's business and
growth strategies. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected, expressed or implied in the forward-looking statements as a
result of various factors ('Cautionary Statements'). The accompanying
information contained in this Prospectus, including the information set forth
below and under 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' and 'Business,' identifies important factors that could
cause such differences. Such forward-looking statements speak only as of the
date of this Prospectus, and the Company cautions potential investors not to
place undue reliance on such statements. Neither the Company nor the
Underwriters undertakes any obligation to update or revise any forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by the Cautionary Statements.

LIMITED OPERATING HISTORY; HISTORY OF NEGATIVE CASH FLOW AND OPERATING LOSSES

The Company was founded in 1991, and consequently there is only a limited
operating history upon which an evaluation of the Company and its prospects can
be based. Although the Company has experienced revenue growth in recent years,
it has not been profitable for the last two years and the Company's recent
growth rate may not be sustainable and may not be indicative of future operating
results. To date, the Company has incurred negative cash flow from operations
and substantial and increasing net losses. Net cash used in operations for the
years ended December 31, 1995 and 1996 and the six months ended June 30, 1996
and 1997 was $1.3 million, $5.0 million, $2.7 million and $6.8 million,
respectively. Losses from operations for the years ended December 31, 1995 and
1996 and the six months ended June 30, 1996 and 1997 were $0.6 million, $8.3
million, $3.5 million and $5.2 million, respectively. The Company had an
accumulated deficit at June 30, 1997 of $13.8 million. There can be no assurance
that the Company will be successful in attracting new customers or retaining
current customers or continue to increase revenues or generate profits. The
Company expects to continue to incur losses and development costs at least
through 1998. There can be no assurance that the Company will ever achieve
profitability. Furthermore, the Company will rely to a great extent on resellers
to market certain of its Internet access services. A substantial portion of such
services is currently resold by a limited number of such resellers. There can be
no assurance that any such resellers will continue to actively market the
Company's services. The Company's prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development, particularly companies in new and rapidly evolving
markets. To address these risks, the Company must, among other things, respond
to competitive developments, continue to attract, retain and motivate qualified
persons and continue to upgrade its technologies and commercialize services and
products incorporating such technologies. There can be no assurance that the
Company will be successful in addressing such risks.

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

<PAGE>

<PAGE>
variability of quarterly operating results include the pricing and mix of
services and products sold by the Company, terminations of service, new service
and product introductions by the Company and its competitors, market acceptance
of new and enhanced versions of the Company's services and products, changes in
pricing or marketing policies by its competitors and the Company's responses
thereto, the Company's ability to obtain sufficient supplies of sole source or
limited source components, changes in the Company's communications
infrastructure costs, as a result of demand variation or otherwise, the
lengthening of the Company's sales cycle, access to capital and the timing of
the expansion of the Company's communications infrastructure.

CONCENTRATION OF REVENUES

The Company in the past has derived, and, in the future, expects to derive,
a significant portion of its revenue from a relatively limited number of
customers. In 1994, 1995, 1996 and the first six months of 1997, the Company
derived 25%, 28%, 30.1% and 50.6%, respectively, of its revenues from a single
customer, Bear Stearns. In 1996 and the first six months of 1997, the Company's
top ten customers (in terms of revenues to the Company) accounted for
approximately 65.5% and 74.2% of its revenues, respectively. A substantial
majority of sales to Bear Stearns is attributable to purchase orders issued from
time to time and written agreements with a duration of one year. The Company
expects that revenues from Bear Stearns will decrease as a percentage of
revenues in future periods; however revenues derived from a limited number of
current and future customers are expected to continue to represent a significant
portion of its revenues. As a result, the loss of any of such customers could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, 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'.

MANAGEMENT OF GROWTH

The Company is currently experiencing rapid growth that could strain the
Company's managerial and other resources. During the 12 months ended September
30, 1997, the number of the Company's employees increased from 123 to 225
full-time employees, and further significant increases are anticipated during
the balance of 1997 and in 1998. The Company's ability to manage its growth
effectively will require it to continue to improve its operational, financial
and other internal systems, and to train, motivate, manage and retain its
current employees and attract new employees. Any inability of the Company's
management to manage growth effectively could have a material adverse effect on
the Company's business, financial condition and results of operations.

DEPENDENCE UPON SUPPLIERS; SOLE AND LIMITED SOURCES OF SUPPLY

The Company relies on other companies to supply certain key components of
its communications infrastructure, including telecommunications services and
networking equipment that, in the quantities and quality demanded by the
Company, are available only from sole or limited sources. MFS Datanet, Inc.
('MFS') is the primary provider to the Company of data communications facilities
and capacity and leases to the Company physical space for switches, modems and
other equipment. The Company has entered into an agreement with MFS that allows
the Company access to all MFS communications facilities, including facilities at
any future sites. Such agreement may be terminated as early as December 1998, is
not exclusive and is subject to early termination under certain circumstances.
MFS can enter into similar arrangements with the Company's competitors regarding
its backbone. In 1996, MFS merged with UUNET Technologies, Inc., a competitor of
the Company in the area of Internet access. The Company is also dependent upon
LECs to provide telecommunications services to the Company and its customers.
The Company has from time to time experienced delays in receiving
telecommunications services, and there can be no assurance that the Company will
be able to obtain such services on the scale and within the time frames required
by the Company at an acceptable cost, or at all. Any failure to obtain such
services on a timely basis at an acceptable cost, including termination or
non-renewal of the Company's relationship with MFS, would have a material
adverse effect on the Company's business, financial condition and results of
operations.

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Certain of the Company's suppliers, including the RBOCs and other LECs,
currently are subject to tariff controls and other price constraints that in the
future may be changed. In addition, regulatory proposals are pending that may
affect the prices charged by the RBOCs and other LECs to their customers,
including the Company. Any such regulatory changes could result in increased
prices for services to the Company, which could have a material adverse effect
on the Company's business, financial condition and results of operations.

The routers, switches and modems used in the Company's communications
infrastructure are currently supplied solely by Cisco Systems Inc. ('Cisco').
The Company purchases these components pursuant to purchase orders placed from
time to time, does not carry significant inventories of these components and has
no guaranteed supply arrangements with Cisco. Cisco sells products to the
Company's competitors and may in the future become a competitor of the Company.
There can be no assurance that Cisco will not enter into exclusive arrangements
with the Company's competitors or that Cisco will continue to sell its products
or components to the Company at commercially reasonable prices, or at all. The
Company from time to time has experienced delays in receiving components from
Cisco. Expansion of communications infrastructures by the Company and others is
placing, and will continue to place, a significant demand on the Company's
suppliers, some of whom have limited resources and production capacity. In
addition, certain of the Company's suppliers, in turn, rely on sole or limited
sources of supply of components included in their products. Failure of the
Company's suppliers to meet such increasing demand may prevent them from
continuing to supply components and products in the quantities and quality and
at the times required by the Company, or at all. The Company's inability to
obtain sufficient quantities of sole or limited source components or to develop
alternative sources, if required, could result in delays and increased costs in
expanding, and overburdening of, the Company's communications infrastructure,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.

DEPENDENCE UPON COMMUNICATIONS INFRASTRUCTURE

The Company is dependent on its suppliers' ability to provide necessary
products and components that comply with various Internet and telecommunications
standards and that interoperate with products and components from other vendors.
Any failure of the Company's sole or limited source suppliers to provide
products or components that comply with evolving Internet and telecommunications
standards or that interoperate with other products or components used by the
Company in its communications infrastructure could have a material adverse
effect on the Company's business, financial condition and results of operations.

The Company's success will depend upon the capacity, reliability and
security of its communications infrastructure, including the facilities and
capacity leased from suppliers, including MFS. The Company must continue to
expand and adapt its communications infrastructure as the number of users and
the amount of information they wish to transport increases and to meet changing
customer requirements. The expansion and adaptation of the Company's
communications infrastructure will require substantial financial, operational
and management resources. There can be no assurance that the Company will be
able to expand or adapt its communications infrastructure to meet additional
demand or its customers' changing requirements on a timely basis and at a
commercially reasonable cost, or at all. Any failure of the Company to expand
its communications infrastructure on a timely basis or adapt it either to
changing customer requirements or to evolving industry standards could have a
material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON KEY PERSONNEL; ATTRACTION AND RETENTION OF EMPLOYEES

The Company's performance is substantially dependent on the performance of
its executive officers and key employees. In particular, the future success of
the Company is dependent upon the personal efforts of the Company's founders,
Scott A. Baxter, Richard M. Brown and Scott Harmolin, each of whom is a director
and an executive officer of the Company. In the past 12 months, the Company has
hired 11 senior managers, including Kenneth J. Hall, Frank C. Cicio, Jr., Robert
J. Thalman, Jr. and Michael J. Gold. There can be no assurance these individuals
will remain with the Company or be successful. The loss of the services of any
of its executive officers or other key employees could have a

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material adverse effect on the Company's business, financial condition and
results of operations. The Company does not maintain, nor is it currently
contemplating obtaining, 'key man' life insurance policies on any of its
employees. See 'Management'.

The Company's professional services business is labor intensive. The
Company's success will depend in large part upon its ability to attract,
develop, motivate and retain highly skilled technical employees, particularly
project managers and other senior personnel. Qualified project managers are in
great demand and are likely to remain a limited resource for the foreseeable
future. There can be no assurance that the Company will be able to attract and
retain sufficient numbers of highly skilled technical employees and project
managers. The loss of some or all of the Company's project managers and other
senior personnel could have a material adverse effect on the Company, including
its ability to secure and complete projects. While project managers and most
other senior personnel have not entered into employment agreements with the
Company, substantially all the Company's key employees and independent
contractors are parties to nonsolicitation, confidentiality and noncompetition
agreements with the Company. However, no assurance can be given that such
agreements will be honored or that the Company will be able to effectively
protect its rights to its unpatented trade secrets and know-how.

COMPETITION

The markets served by the Company are extremely competitive. The Company
expects competition to persist, intensify and increase in the future. Because
there are no substantial barriers to entry, an influx of new market entrants is
expected to continue in response to the growing demand for information and data
communication technology services and products. Most of the Company's current
and potential competitors enjoy a greater market presence and possess
substantially greater technical, financial and marketing resources than the
Company.

COMMUNICATIONS SERVICES

The Company's current and prospective competitors in the Internet
communications services sector generally may be divided into the following five
groups: (i) telecommunications companies, such as AT&T Corp. ('AT&T'), MCI
Communications Corp. ('MCI'), Sprint Corp. ('Sprint'), WorldCom, Intermedia
Telecommunications Inc. ('Intermedia'), GTE Corporation ('GTE') and LECs; (ii)
online services providers, such as America Online Inc. ('America Online'),The
Microsoft Network ('MSN') of Microsoft Corporation, and Prodigy Services Company
('Prodigy'); (iii) Internet service providers ('ISPs'), such as NETCOM On-Line
Communications Services, Inc. ('NETCOM'), PSINet, Inc. ('PSI'), Concentric
Networks Corporation ('Concentric') and other national and regional providers;
(iv) cable modem connectivity providers such as @Home Networks, Inc. ('@Home');
and (v) data center providers such as Exodus Communications ('Exodus'). Most of
these competitors have greater market presence, engineering and marketing
capabilities, and financial, technological and personnel resources than those
available to the Company. As a result, they may be able to develop and expand
their communications infrastructures more quickly, adapt more swiftly to new or
emerging technologies and changes in customer requirements, take advantage of
acquisitions and other opportunities more readily, and devote greater resources
to the marketing and sale of their services than can the Company.

Although most of the established online services companies and
telecommunications companies currently offer only limited Internet access
services, many of these companies have announced plans to offer expanded
Internet access services. In addition, the Company believes that new
competitors, including large computer hardware and software, media and
telecommunications companies, such as the RBOCs, may enter or expand their
presence in the Internet access market, resulting in even greater competition
for the Company.

The Company believes that competitive factors in the communications
services market include market presence, capacity, reliability, security of
communications infrastructure, quality of technical personnel, price, customer
support, new services and enhancements and conformity with industry standards.
There can be no assurance that the Company will have the financial resources,
technical

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expertise or marketing and support capabilities to compete successfully in the
communications services market. See 'Business -- Competition'.

PROFESSIONAL SERVICES

The professional services market is highly fragmented. The Company
currently encounters competition from mid-sized and regional consulting, design
and systems integration firms such as Cambridge Technology Partners, Inc.
('Cambridge Technology Partners') and Technology Solutions Co. ('Technology
Solutions'), and increasingly competes with large-scale systems integrators,
such as EDS Corp. ('EDS'). The Company's design group also competes with a
variety of interactive design firms including agency.com, Razorfish, US Web and
CKS Group. The Company believes that the primary competitive factors at work in
this market are price, the ability to fashion and deliver efficient solutions to
customer needs, the quality of service, including project management and ongoing
support and maintenance, and the availability and quality of hardware and
software. Accordingly, the Company competes on the basis of its reputation,
personnel, technical sophistication and ability to provide single-source,
end-to-end solutions, including hardware and software product resale and
communications services. There can be no assurance that the Company will have
the financial resources, personnel, technical expertise or marketing and support
capabilities to continue to compete successfully in the professional services
market. See 'Business -- Competition'.

PRODUCT RESALES

The product resales market in which the Company competes is a high volume,
low margin business with minimal barriers to entry. Product resellers such as
the Company purchase information technology hardware and software products from
OEMs or wholesale distributors and resell the products to its customers. The
Company's current and prospective competitors generally can be divided into
three groups: (i) national and regional VARs, such as Itocho, EJV Bridge
Networks, Bell Technologies and LANCOM; (ii) national and regional systems
integrators, such as EDS, Sapient, Computer Associates International, Inc.
('Computer Associates') and The Ergonomics Group; and (iii) hardware
distributors, such as CHS Electronics and Ingram Micro Inc. ('Ingram Micro').
Growing product complexity, shorter product life cycles and an increasing number
of information technology products due to the emergence of open systems
architectures and the recognition of certain industry standards have led
resellers to depend on wholesale distributors for more of their product,
marketing and technical support needs. In addition, resellers increasingly rely
on wholesale distributors for inventory management and credit to avoid stocking
large inventories and maintaining credit lines to finance their working capital
needs. The need for resellers to implement high volume/low cost operations is
imperative in light of ongoing price competition and the increasing demand for
value-added services.

The product resales industry is intensely competitive and such competition
is based primarily on price, product availability, speed and accuracy of
delivery, effectiveness of sales and marketing programs, credit availability,
ability to tailor specific solutions to customer needs, quality and breadth of
product lines and services, and availability of technical and product
information. Resellers are experiencing additional pressures from manufacturers
that have been successful in selling directly to the end-user, without the use
of resellers. There can be no assurance that resellers will not lose market
share, or that they will not be forced in the future to reduce prices in
response to the actions of competitors and thereby experience a further
reduction in gross margins. As a result of intense price competition in the
product sales industry, reseller margins have continued to narrow. To the
Company, these narrow margins magnify the impact on operating results of
variations in operating costs. Recognizing the challenging dynamics of the
product resales market, the Company has de-emphasized its previous product
resales focus. However, the Company will continue to participate in the product
resales business, which the Company expects will be a source of significant
revenues for the foreseeable future, in order to include OEM hardware and
software in its comprehensive, end-to-end Internet solutions.

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DEPENDENCE ON DISTRIBUTION AND MARKETING AGREEMENTS

The Company believes that its success in penetrating markets for its
services depends in large part on its ability to maintain and develop additional
relationships with leading technology and communications companies and to
cultivate alternative relationships if distribution channels change. In May
1996, the Company and Bell Atlantic Internet Solutions entered into an
arrangement whereby Bell Atlantic Internet Solutions agreed to provide billing
services in connection with the selection by its customers of the Company's
communications services for both dedicated and switched access. Also during
1996, the Company entered into agreements with each of Access Graphics, Inc.
('Access Graphics') and Merisel Americas, Inc. ('Merisel'), whereby these
companies agreed to distribute the Company's services and products to the
Company's resellers.

The Company's distribution and marketing agreements, as well as the
arrangement with Bell Atlantic Internet Solutions, are non-exclusive, and many
of the companies with which the Company has such agreements also have similar
agreements with the Company's competitors or potential competitors. There can be
no assurance that the Company's distributors and OEM partners, most of which
have significantly greater financial and marketing resources than the Company,
will not develop and market products in competition with the Company in the
future, discontinue their relationships with the Company or form additional
competing arrangements with the Company's competitors. If certain of these
agreements were discontinued or renegotiated in a manner adverse to the Company,
it could have a material adverse effect on the Company's business, financial
condition and results of operations.

RISK OF SYSTEMS FAILURE

The Company's operations are dependent upon its ability, and the ability of
its suppliers, such as MFS, to protect its communications infrastructure against
damage from fire, earthquakes, power loss, telecommunications failures and
similar events. Despite taking precautions, other Internet access providers in
the past have suffered interruptions as a result of natural disasters and other
unanticipated problems, and in the future such events could cause interruptions
in the services provided by the Company. In addition, failure of the Company's
telecommunications vendors to provide the data communications capacity required
by the Company as a result of operational disruption or for any other reason
could cause interruptions in the services provided by the Company. Any damage or
failure that causes interruptions in the Company's operations could have a
material adverse effect on the Company's business, financial condition and
results of operations.

SECURITY RISKS

Despite the implementation of security measures, any communications
infrastructure is vulnerable to computer viruses and other disruptive problems.
Other Internet access providers have in the past experienced, and the Company
may in the future experience, interruptions in service as a result of the
accidental or intentional actions of Internet users, current and former
employees or others. Unauthorized use could also potentially jeopardize the
security of confidential information stored in the computer systems of the
Company and its customers, which may result in liability of the Company to its
customers and also may deter potential subscribers. Although the Company intends
to continue to implement industry-standard security measures, such measures have
been circumvented in the past, and there can be no assurance that measures
implemented by the Company will not be circumvented in the future. Eliminating
computer viruses and alleviating other security problems may require
interruptions, delays or cessation of service to the Company's customers, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.

DEPENDENCE ON PROPRIETARY TECHNOLOGIES

The Company's success and ability to compete is dependent in part upon its
proprietary technologies. While the Company relies on patent, trademark,
contract, trade secret and copyright law to protect its proprietary
technologies, it is possible for a third party to copy or otherwise obtain and
use the Company's technologies without authorization, or to develop similar
technologies independently. In addition, effective copyright and trade secret
protection may be unavailable or limited in certain foreign

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countries. Policing unauthorized use of the Company's technologies is difficult.
There can be no assurance that the steps taken by the Company will prevent
misappropriation of its technologies. In addition, litigation may be necessary
in the future to enforce the Company's intellectual property rights or to
protect the Company's trade secrets. Such litigation could result in substantial
costs and diversion of resources and could have a material adverse effect on the
Company's business, financial condition and results of operations.

Certain technologies used in the Company's solutions are licensed or leased
from third parties, generally on a non-exclusive basis. The termination of any
of these licenses or leases may have a material adverse effect on the Company's
operations. Replacement of certain technologies licensed or leased by the
Company could be costly and could result in delays that could materially
adversely affect the Company's operating results. While it may be necessary or
desirable in the future to obtain other licenses or leases relating to one or
more of the Company's services or products or relating to current or future
technologies, there can be no assurance that the Company will be able to do so,
if at all, on commercially reasonable terms.

Although the Company does not believe that its services or products
infringe the proprietary rights of any third parties, there can be no assurance
that third parties will not assert such claims against the Company in the future
or that such claims will not be successful. The Company could incur substantial
costs and diversion of management resources with respect to the defense of any
claims relating to proprietary rights, which could materially adversely affect
the Company's business, financial condition and results of operations. Parties
making such claims could secure a judgment awarding substantial damages, as well
as injunctive or other equitable relief that could effectively block the
Company's ability to use or exploit the affected products in the United States
or abroad. Such a judgment could have a material adverse effect on the Company's
business, financial condition and results of operations. See
'Business -- Proprietary Rights'.

TECHNOLOGICAL CHANGE; MARKET ACCEPTANCE OF EVOLVING STANDARDS

The markets the Company serves are subject to rapid technological change,
changing customer requirements, frequent new product introductions and evolving
industry standards that may render existing services and products obsolete. As a
result, the Company's position in its existing markets or other markets that it
may enter could be eroded rapidly by product advancements by competitors. The
life cycles of the Company's services and products are difficult to estimate.
The Company's future success will depend, in part, upon its ability to enhance
existing services and products and to develop new services and products on a
timely basis. In addition, its services and products must keep pace with
technological developments, conform to evolving industry standards, particularly
client/server and Internet communications and security protocols, and publishing
formats, and address increasingly sophisticated customer needs. There can be no
assurance that the Company will not experience difficulties that could delay or
prevent the successful development, introduction and marketing of services and
products, or that new services and products and enhancements will meet the
requirements of the marketplace and achieve market acceptance. If the Company is
unable to develop and introduce services and products in a timely manner in
response to changing market conditions or customer requirements, the Company's
business, financial condition and results of operations could be materially and
adversely affected.

DEPENDENCE UPON GROWTH OF THE INTERNET

The markets that the Company serves with its services and products are in
the early stage of development and dependent on the Internet. Since the markets
are relatively new and the level of competition is increasing, it is difficult
to anticipate the market growth rate and potential saturation. Sales of the
Company's services and products will depend in large part upon a robust industry
and infrastructure for providing commercial Internet access and carrying
Internet traffic and upon increased commercial use of the Internet. The Internet
may not prove to be a viable commercial marketplace or may develop at a slower
rate than would support the Company's continued growth because of inadequate
development of the necessary infrastructure, such as a reliable network, or
timely development of complementary products, such as high speed modems. There
can be no assurance that

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the infrastructure or complementary products necessary to make the Internet a
viable commercial marketplace will be developed or available to the Company on
reasonable terms. If the necessary infrastructure or complementary products are
not developed or are not made available to the Company on reasonable terms, or
if the Internet and related markets do not become a significant commercial
marketplace, the Company's business, operating results and financial condition
will be materially adversely affected. See 'Business -- Market and Industry
Overview'.

RISKS ASSOCIATED WITH ACQUISITIONS

As part of its growth strategy, the Company intends to pursue acquisitions
of businesses or customer bases, and investments in, and strategic alliances
with, entities that complement or expand the Company's current operations or
capabilities. The Company is continuously evaluating potential investment
opportunities, but no assurance can be given that the Company will enter into
any additional understandings, commitments or agreements with respect to any
acquisition, investment, strategic alliance or related effort. Any acquisitions,
investments, strategic alliances or related efforts will be accompanied by the
risks commonly encountered in such transactions or efforts. Such risks include,
among others, the failure to identify appropriate candidates, the inability to
assimilate operations and personnel of the respective entities, the potential
disruption of the Company's ongoing business, the inability of management to
capitalize on the opportunities presented by acquisitions, investments,
strategic alliances or related efforts, the failure to successfully incorporate
licensed or acquired technology and rights into the Company's services, the
inability to maintain uniform standards, controls, procedures and policies and
the impairment of relationships with employees and customers as a result of
changes in management or otherwise. There can be no assurance that the Company
would be successful in overcoming these risks or any other difficulties
encountered with respect to such acquisitions, investments, strategic alliances
or related efforts.

GOVERNMENT REGULATION; POTENTIAL LIABILITY FOR INFORMATION DISSEMINATED THROUGH
NETWORK

The Company is not currently subject to direct regulation by the Federal
Communications Commission or any other governmental agency, other than
regulations applicable to businesses generally. In February 1996, the
Telecommunications Act of 1996 was signed into law by the President of the
United States. Changes in the regulatory environment relating to the Internet
access industry, including regulatory changes that directly or indirectly affect
telecommunications costs or increase the likelihood or scope of competition from
regional telephone companies or others, could have an adverse effect on the
Company's business. Due to the increase in Internet use and publicity, it is
possible that laws and regulations may be adopted with respect to the Internet,
including with respect to privacy, pricing and characteristics of products or
services. Certain other legislative proposals, including the imposition of a
sales tax on Internet access and the imposition of access charges by RBOCs on
Internet access providers, have also been proposed. The Company cannot predict
the impact, if any, that future laws and regulations or legal or regulatory
changes may have on its business.

The law relating to the liability of online services companies and Internet
access providers for information carried on or disseminated through their
networks is currently unsettled. Several private lawsuits seeking to impose such
liability upon online services companies and Internet access providers are
currently pending. In addition, legislation has been proposed that imposes
liability for or prohibits the transmission on the Internet of certain types of
information. The imposition upon the Company and other Internet access providers
of potential liability for information carried on or disseminated through their
systems could require the Company to implement measures to reduce its exposure
to such liability, which may require the expenditure of substantial resources,
or to discontinue certain service or product offerings. The increased attention
focused upon liability issues as a result of these lawsuits and legislative
proposals could impact the growth of Internet use. While the Company carries
professional liability insurance, it may not be adequate to compensate or may
not cover the Company in the event the Company becomes liable for information
carried on or disseminated through its networks. Any costs not covered by
insurance incurred as a result of such liability or asserted liability could
have a material adverse effect on the Company's business, financial condition
and results of operations.

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FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

The Company currently anticipates that the net proceeds from the Offering,
the existing credit facility and funds from operations will be sufficient to
meet its anticipated working capital and capital expenditure requirements at
least through the end of 1998. The Company may need to raise additional funds
through public or private debt or equity financings in order to take advantage
of unanticipated opportunities, including more rapid international expansion, or
significant acquisitions of complementary businesses or technologies, or to
develop new products or otherwise respond to unanticipated competitive
pressures. If additional funds are raised through the issuance of equity
securities, the percentage ownership of then current stockholders of the Company
may be reduced and such equity securities may have rights, preferences or
privileges senior to those of the holders of the Common Stock. Any such equity
financing may be dilutive to the Company's stockholders. It is likely that any
debt financing would restrict the Company's ability to make acquisitions, borrow
from other sources or pay dividends to stockholders in certain cases. The
Company does not currently have any commitments for any additional equity or
debt financing, and there can be no assurance that any financing will be
available to the Company or, if available, that it can be obtained on terms
acceptable to the Company. If adequate funds are not available or are not
available on acceptable terms, the Company may not be able to take advantage of
unanticipated opportunities, develop new technologies or otherwise respond to
unanticipated competitive pressures, or fund its operations. Such inability
could have a material adverse effect on the Company's business, financial
condition and results of operations. See 'Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources'.

CONTINUING CONTROL BY CURRENT MANAGEMENT AND EXISTING STOCKHOLDERS

Upon completion of the Offering, Scott A. Baxter, the Company's President,
Chief Executive Officer and Chairman of the Board of Directors, Richard M.
Brown, the Company's Vice President -- Information Technologies and Secretary,
and Scott Harmolin, the Company's Senior Vice President and Chief Technology
Officer, each of whom is a director of the Company, will beneficially own, in
the aggregate, approximately % of the issued and outstanding shares of Common
Stock. As a result, these stockholders, if they were to act in concert, would
have effective control over the Company and on the outcome of any matters
submitted to the Company's stockholders for approval, which influence might not
be consistent with the interests of other stockholders. In addition, if they
were to act in concert, they may be able to deter or cause a change in control
of the Company and otherwise generally control the Company's affairs.

BROAD DISCRETION IN APPLICATION OF PROCEEDS

A substantial portion of the estimated net proceeds from this Offering will
be allocated to the Company's working capital and general corporate purposes.
Due to the number and variability of factors that will be analyzed before the
Company determines how to use such net proceeds, the Company will have broad
discretion in allocating a significant portion of the net proceeds from the
Offering without any action or approval of the Company's stockholders.
Accordingly, investors will not have the opportunity to evaluate the economic,
financial and other relevant information that will be considered by the Company
in determining the application of such net proceeds. See 'Use of Proceeds'.

DILUTION

Purchasers of the Common Stock offered hereby will suffer immediate and
substantial dilution in the amount of $ per share in the net tangible book
value per share of the Common Stock as of June 30, 1997 (assuming that the
initial public offering price of the Common Stock is the mid-point of the range
indicated on the front cover of this Prospectus). See 'Dilution'.

NO DIVIDENDS

The Company has not paid dividends on the Common Stock and does not
anticipate paying any dividends to its stockholders in the foreseeable future.
The declaration and payment of any dividends in

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the future will be determined at the discretion of the Board of Directors, and
will depend upon the Company's earnings, capital requirements, financial
condition and other relevant factors. The payment of cash dividends by the
Company is prohibited under its revolving line of credit. In addition, any
future bank or other financing may restrict the Company's ability to declare and
pay dividends. See ' -- Future Capital Needs; Uncertainty of Additional
Financing'.

NO PRIOR MARKET; POSSIBLE VOLATILITY

Prior to the Offering, there has been no public market for the Common Stock
of the Company. The initial public offering price will be determined by
negotiations among the Company, the Selling Stockholders and the Representatives
of the Underwriters. See 'Underwriting' for a discussion of the factors to be
considered in determining the initial public offering price. There can be no
assurance that an active public market will develop or be sustained after the
Offering or that the market price of the Common Stock will not decline below the
initial public offering price. Future announcements concerning the Company or
its competitors, quarterly variations in operating results, announcements of
technological innovations, the introduction of new services or products or
changes in services or products pricing policies by the Company or its
competitors, proprietary rights or other litigation, changes in earnings
estimates by analysts or other factors could cause the market price of the
Common Stock to fluctuate substantially. In addition, stock prices for many
technology companies fluctuate widely for reasons which may be unrelated to
operating results. These fluctuations, as well as general economic, market and
political conditions such as recessions or military conflicts, may materially
and adversely affect the market price of the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares of Common Stock by existing stockholders pursuant to
Rule 144 ('Rule 144') promulgated under the Securities Act or otherwise could
have an adverse effect on the price of the shares of the Common Stock. Upon
completion of the Offering, the Company will have shares of Common
Stock outstanding ( shares if the over-allotment option is exercised
in full). In addition, the Company has reserved for issuance 2,181,819 shares of
Common Stock upon exercise of options granted under the 1995 Option Plan and
948,889 shares of Common Stock upon exercise of outstanding warrants.

The shares of Common Stock offered hereby ( if the
over-allotment option is exercised in full) will be freely transferable without
restriction or further registration under the Securities Act except for any
shares purchased by an 'affiliate' of the Company within the meaning of Rule
144. The remaining 11,175,329 shares of Common Stock will be 'restricted
securities' as that term is defined in Rule 144, and may only be sold pursuant
to a registration statement under the Securities Act or an applicable exemption
from registration thereunder, including exemptions provided by Rule 144 and Rule
701. No prediction can be made as to the effect that future sales of Common
Stock, or the availability of shares of Common Stock for future sales, will have
on the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock and
could impair the Company's ability to raise capital through the future sale of
equity securities. See 'Management,' 'Principal and Selling Stockholders,'
'Shares Eligible for Future Sale' and 'Underwriting'.

In addition, after the Offering, the holders of 4,629,875 shares of Common
Stock and 948,889 warrants will be entitled to certain rights with respect to
registration of such securities and/or securities underlying such securities
under the Securities Act. Registration of such securities under the Securities
Act would result in such securities becoming freely tradeable under the
Securities Act (except for securities purchased by affiliates of the Company)
immediately upon the effectiveness of such registration. See 'Description of
Capital Stock -- Registration Rights of Certain Holders'.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and Restated By-laws could make it more difficult for a third party to acquire,
and could discourage a third party from

<PAGE>

<PAGE>
attempting to acquire, control of the Company. Certain of these provisions allow
the Company to issue preferred stock with rights senior to those of the Common
Stock without any further vote or action by the stockholders and other
requirements which could make it more difficult for stockholders to effect
certain corporate actions. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of the Common Stock
and may have the effect of delaying or preventing a change in control of the
Company. The issuance of preferred stock also could decrease the amount of
earnings and assets available for distribution to the holders of Common Stock or
could adversely affect the rights and powers, including voting rights, of the
holders of the Common Stock. In addition, certain provisions of the Delaware
General Corporation Law prevent certain stockholders from engaging in business
combinations with the Company, subject to certain exceptions. See 'Description
of Capital Stock -- Certain Anti-Takeover Charter Provisions and Statutory
Provisions'.

LIMITATIONS ON LIABILITY OF DIRECTORS AND OFFICERS

The Restated Certificate of Incorporation and Restated By-laws of the
Company contain provisions limiting the liability of directors of the Company
for monetary damages to the fullest extent permissible under Delaware law. In
addition, the Restated Certificate of Incorporation and Restated By-laws require
the Company to indemnify directors, officers, employees and agents of the
Company serving at the request of the Company against expenses, judgments
(including derivative actions), fines and amounts paid in settlement, except in
limited circumstances. The Restated Certificate of Incorporation and Restated
By-laws provide for the indemnification of directors and officers in connection
with civil, criminal, administrative or investigative proceedings when acting in
their capacities as agents for the Company. The foregoing provisions may reduce
the likelihood of derivative litigation against directors and officers and may
discourage or deter stockholders or management from suing directors or officers
for breaches of their duties to the Company, even though such an action, if
successful, might otherwise benefit the Company and its stockholders. See
'Description of Capital Stock -- Limitations on Liability and Indemnification of
Officers and Directors'.

LIMITATION ON USE OF NET OPERATING LOSS CARRYFORWARDS

Upon consummation of the Offering, there will be an 'ownership change' in
the Company within the meaning of Section 382 of the Internal Revenue Code of
1986, as amended (the 'Code'), which limits the ability of the Company to use
its net operating losses in a given year. Following an 'ownership change,' the
amount of available net operating loss carryforwards and credit equivalents from
periods before the ownership change that may be used by the Company in any tax
year following the change cannot exceed the 'long-term tax-exempt rate' at the
time of the Offering (which rate is % as of the date of this Prospectus)
multiplied by the value of the Company at the time of the Offering (with certain
adjustments).

<PAGE>

<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the Offering are estimated to be
approximately $ million ($ million if the over-allotment option is exercised
in full) after deducting underwriting discounts and commissions and estimated
expenses of the Offering payable by the Company.

The Company intends to use approximately $7.5 million of the net proceeds
for upgrade and expansion of its communications infrastructure. The balance of
the net proceeds ($ million) will be used to fund working capital requirements
and for other general corporate purposes, including acquisitions. Although the
Company is continuously evaluating potential investment opportunities, it does
not have, nor can any assurance be given that it will have, any understanding,
commitment or agreement with respect to any acquisition. If the over-allotment
option is exercised in full, additional net proceeds ($ million) will be added
to the Company's working capital.

The amounts of the Company's expected expenditures described herein are
estimates and are subject to change. Unforeseen developments may require that
the Company reallocate a portion of the net proceeds. Pending application of the
proceeds of the Offering, the Company intends to invest the proceeds in
marketable, investment grade, interest-bearing instruments.

DIVIDEND POLICY

The Company has not paid any cash dividend to stockholders and does not
anticipate paying such dividends in the foreseeable future, as the Company's
Board of Directors intends to retain earnings for use in the development and
continued expansion of the Company's business. The payment of cash dividends by
the Company is prohibited under its revolving line of credit. Any future
determination concerning the payment of dividends will be within the sole
discretion of the Board of Directors and will depend upon the existence of such
restriction, the Company's financial condition, the Company's results of
operations and such other factors as the Board of Directors deems relevant.

<PAGE>

<PAGE>
DILUTION

Dilution is the amount by which the initial public offering price paid by
the purchasers of shares of Common Stock in the Offering exceeds the net
tangible book value per share of Common Stock after the Offering. The net
tangible book value per share of Common Stock is determined by subtracting the
total liabilities of the Company from the total book value of the tangible
assets of the Company and dividing the difference by the pro forma number of
shares of Common Stock deemed to be outstanding on the date as of which such
book value is determined.

The net tangible book value of the Common Stock as of June 30, 1997 was
$0.67 per share. After giving effect to the sale by the Company of the
shares of Common Stock offered hereby and the application of the net
proceeds therefrom of $ million, the pro forma as adjusted net tangible book
value of the Company at June 30, 1997 would have been $ million, or
$ per share (assuming that the initial public offering price of the Common
Stock is the mid-point of the range indicated on the front cover of this
Prospectus). This represents an immediate increase in the net tangible book
value of $ per share to existing holders of Common Stock and an immediate
dilution of $ per share to new investors. The following table illustrates
this per share dilution (assuming that the initial public offering price of the
Common Stock is the mid-point of the range indicated on the front cover of this
Prospectus):

<TABLE>
<S> <C> <C>
Assumed initial public offering price........................................ $
Net tangible book value before the Offering............................. $0.67
Increase attributable to new investors..................................
As adjusted net tangible book value after the Offering.......................
-----
Dilution to new investors.................................................... $
-----
-----
</TABLE>

If the over-allotment option is exercised in full, the pro forma net
tangible book value per share of Common Stock after giving effect to the
Offering would be $ per share, the increase in the net tangible book value
per share would be $ and the dilution to persons who purchase shares of
Common Stock in the Offering would be $ per share (assuming that the
initial public offering price of the Common Stock is the mid-point of the range
indicated on the front cover of this Prospectus).

The following table summarizes, as of June 30, 1997, the number of shares
of Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by the existing stockholders (including holders of
shares of Series A Preferred Stock and Series B Preferred Stock, all of which
will automatically convert into shares of Common Stock upon Consummation of the
Offering) and new investors, adjusted to give effect to the sale of the shares
of Common Stock offered hereby (assuming that the initial public offering price
of the Common Stock is the mid-point of the range indicated on the front cover
of this Prospectus) and before deducting the underwriting discounts and
commissions and estimated offering expenses payable by the Company:

<TABLE>
<CAPTION>
TOTAL CASH
SHARES PURCHASED CONSIDERATION AVERAGE
------------------ ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------- ------- -------- ------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Existing stockholders............................ % $ % $
New investors....................................
------- ------- -------- -------
Total.................................. 100.00% $ 100.00%
------- ------- -------- -------
------- -------
</TABLE>

As of June 30, 1997, there were outstanding options to purchase an
aggregate of 1,036,364 shares of Common Stock at a weighted average exercise
price of $6.54 per share and warrants to purchase 945,386 shares of Common Stock
exercisable at a weighted average exercise price of $5.61 per share. To the
extent these options or warrants are exercised, there will be further dilution
to new investors. See 'Management -- 1995 Option Plan' and 'Description of
Capital Stock -- Warrants'.

<PAGE>

<PAGE>
CAPITALIZATION

The following table sets forth the actual cash position and capitalization
of the Company at June 30, 1997, and as adjusted to give effect to the
conversion of the Company's Series A Preferred Stock and Series B Preferred
Stock, the Offering and the application of the estimated net proceeds therefrom.
The table should be read in conjunction with the Financial Statements appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
--------------------------
PRO FORMA
ACTUAL AS ADJUSTED(A)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents............................................................. $ 1,044 $
-------- --------------
-------- --------------

Credit facility(b).................................................................... $ -- $--

Mandatorily redeemable 10% PIK Series B Convertible Participating Preferred Stock
($.01 par value; 415,000 shares authorized, 110,200 issued and outstanding actual,
none issued and outstanding pro forma as adjusted).................................. 8,789 --

Mandatorily redeemable Series A Convertible Participating Preferred Stock ($.01 par
value; 450,000 shares authorized, 422,607 issued and outstanding actual, none issued
and outstanding pro forma as adjusted).............................................. 10,241 --

Stockholders' equity:
Preferred Stock ($.01 par value; 1,000,000 shares authorized; no shares issued or
outstanding).................................................................... -- --
Common Stock ($.001 par value; 50,000,000 shares authorized, 6,545,455 issued and
outstanding actual; shares issued and outstanding pro forma as
adjusted)(c).................................................................... 7
Additional paid-in capital....................................................... 1,794
Accretion of mandatorily redeemable preferred stock.............................. (388)
Accumulated deficit.............................................................. (13,757)
-------- --------------
Total stockholders' deficit.................................................. (12,344)
-------- --------------
Total capitalization................................................... $ 6,686 $
-------- --------------
-------- --------------
</TABLE>

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

(a) Gives effect to the conversion of (i) 422,607 shares of Series A Preferred
Stock and 110,200 shares of Series B Preferred Stock into 1,637,097 and
1,829,805 shares of Common Stock, respectively, upon consummation of the
Offering and (ii) the sale of Common Stock offered hereby, net of expenses,
at an assumed initial public offering price of $ per share (the
mid-point of the range set forth on the cover of this Prospectus).

(b) As of June 30, 1997, the Company had a $10 million secured line of credit.
Borrowings under this line are limited to a specified percentage of
qualifying accounts receivable less outstanding obligations of the Company.
As of June 30, 1997, there was $2.9 million available under the line. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources'.

(c) Excludes 2,181,819 shares of Common Stock reserved for issuance under the
1995 Option Plan, under which options covering 1,036,364 shares at a
weighted average exercise price of $6.54 per share are outstanding and (ii)
945,386 shares of Common Stock reserved for issuance pursuant to
outstanding Warrants at exercise prices ranging from $0.01 to $6.02 per
share. See 'Management -- 1995 Option Plan' and 'Description of Capital
Stock -- Warrants'.

<PAGE>

<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data for each of the years in the
three-year period ended December 31, 1996 are derived from, and are qualified by
reference to, the Financial Statements included elsewhere herein. The following
selected financial data for each year in the two-year period ended December 31,
1993 are derived from, and are qualified by reference to, the Company's audited
financial statements not included herein. The selected financial data for the
six-month periods ended June 30, 1996 and 1997 are derived from the unaudited
financial statements of the Company included elsewhere herein and, in the
opinion of management, include all adjustments, consisting of normal recurring
accruals necessary for a fair presentation of the data presented. The results
for the six months ended June 30, 1997 are not necessarily indicative of results
for the full year. The pro forma share and per share information for the year
ended December 31, 1996 and the six months ended June 30, 1997 are derived from,
and are qualified by reference to, certain unaudited pro forma financial
information included elsewhere herein. The information presented below should be
read in conjunction with 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Financial Statements included
elsewhere herein.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------
1992 1993 1994 1995 1996
------ ------- ------- ------- -------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products.................... $3,066 $10,605 $17,083 $21,424 $29,741
------ ------- ------- ------- -------
Services:
Professional.............. 611 996 1,914 4,397 6,570
Communications............ -- -- -- 189 1,268
Media..................... -- -- -- 202 529
------ ------- ------- ------- -------
Total services
revenues............ 611 996 1,914 4,788 8,367
------ ------- ------- ------- -------
Total revenues,
net............. 3,677 11,601 18,997 26,212 38,108
------ ------- ------- ------- -------
Cost of revenues:
Products.................... 2,521 9,596 14,132 17,653 24,607
Services.................... 222 382 758 2,596 6,842
------ ------- ------- ------- -------
Total cost of
revenues........ 2,743 9,978 14,890 20,249 31,449
------ ------- ------- ------- -------
Gross profit.................. 934 1,623 4,107 5,963 6,659
------ ------- ------- ------- -------
Operating expenses:
General and
administrative.......... 378 652 1,548 2,435 7,006
Selling and marketing..... 345 742 1,393 3,450 6,504
Research and
development............. 40 69 501 411 969
Depreciation and
amortization............ 36 75 94 228 460
------ ------- ------- ------- -------
Total operating
expenses............ 799 1,538 3,536 6,524 14,939
------ ------- ------- ------- -------
Income (loss) from
operations.................. 135 85 571 (561) (8,280)
Total other income
(expense)................... -- 2 9 (62) 32
Provision (benefit) for income
taxes....................... 46 43 289 (183) (210)
------ ------- ------- ------- -------
Net income (loss)............. $ 89 $ 44 $ 291 $ (440) $(8,038)
------ ------- ------- ------- -------
------ ------- ------- ------- -------
Pro forma net loss per
common share(a)(b).......... $ (0.75)
-------
-------
Pro forma weighted average
common shares
outstanding(a)(b)........... 10,717,695
----------
----------
BALANCE SHEET DATA (AT PERIOD
END):
Cash and cash equivalents...... $ 430 $ 74 $ 82 $ 620 $ 515
Working capital
(deficiency)................. 246 212 423 (712) (1,900)
Total assets................... 1,351 1,967 4,510 8,611 13,292
Total liabilities.............. 981 1,553 3,805 8,213 11,543
Mandatorily redeemable
preferred stock.............. -- -- -- -- 9,881
Stockholders' equity (deficit). 370 414 705 398 (8,132)

<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1997
------- --------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products....................$14,609 $ 9,680
------- --------
Services:
Professional.............. 2,265 7,475
Communications............ 332 2,171
Media..................... 237 77
------- --------
Total services
revenues............ 2,834 9,723
------- --------
Total revenues,
net.............17,443 19,403
------- --------
Cost of revenues:
Products....................12,022 7,905
Services.................... 2,507 6,729
------- --------
Total cost of
revenues........14,529 14,634
------- --------
Gross profit.................. 2,914 4,769
------- --------
Operating expenses:
General and
administrative.......... 3,000 4,949
Selling and marketing..... 2,944 4,021
Research and
development............. 322 559
Depreciation and
amortization............ 173 392
------- --------
Total operating
expenses............ 6,439 9,921
------- --------
Income (loss) from
operations..................(3,525) (5,152)
Total other income
(expense)................... 46 (276)
Provision (benefit) for income
taxes....................... (105) 256
------- --------
Net income (loss).............$(3,374) $(5,684)
------- --------
------- --------
Pro forma net loss per
common share(a)(b).......... $ (0.52)
--------
--------
Pro forma weighted average
common shares
outstanding(a)(b)........... 10,941,197
----------
----------
BALANCE SHEET DATA (AT PERIOD
END):
Cash and cash equivalents...... $ 1,044
Working capital
(deficiency)................. 2,627
Total assets................... 12,846
Total liabilities.............. 6,160
Mandatorily redeemable
preferred stock.............. 19,030
Stockholders' equity (deficit). (12,344)
</TABLE>

- ------------
(a) For information concerning the computation of pro forma net loss per common
share and pro forma weighted average common shares of Common Stock
outstanding, see Notes 3 and 13 to the Financial Statements.
(b) Gives effect to the conversion of 422,607 shares of Series A Preferred
Stock and 110,200 shares of Series B Preferred Stock into 1,637,097 and
1,829,805 shares of Common Stock, respectively, upon consummation of the
Offering.

<PAGE>

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

The following discussion should be read in conjunction with the Financial
Statements included elsewhere in this Prospectus. This discussion contains
forward-looking statements based on current expectations which involve risks and
uncertainties. Actual results and the timing of certain events may differ
significantly from those projected in such forward-looking statements due to a
number of factors, including those set forth under 'Risk Factors' and elsewhere
in this Prospectus.

OVERVIEW

ICI, the Company's predecessor, was incorporated in New York in February
1991. Icon was incorporated in Delaware in February 1995, and ICI was merged
with and into Icon in December 1995. ICI was primarily engaged in the design,
marketing, installation and on-going support of high-end network-based
information management systems. ICI also focused on developing, customizing and
integrating both third-party and proprietary software applications.

In 1995, recognizing the emergence of IP as a data transmission standard,
the Company's management redefined the Company's strategy to provide end-to-end
solutions that enable corporate customers to implement their Internet, intranet
and extranet strategies. The Company's revenues are primarily derived from the
following products and services: (i) product resales, including hardware and
software sold as an integral part of systems design and integration and as a
means to sell integrated communications and professional services and establish
customer relationships; (ii) a range of professional services, including custom
application and website development and design, systems integration and
maintenance and support services; and (iii) communications services including
high-quality Internet access and related services, such as web/server hosting
and management, enhanced by the Company's proprietary technologies.

The Company generates products revenues through the reselling of computer
and networking hardware and software, including network servers, routers,
firewall software, and database management software. Products revenues are
recognized upon shipment.

The Company provides professional services to its customers to facilitate
the delivery of their information and applications over Icon's communications
infrastructure, including development, design and integration services and
maintenance and support services. Revenues from development, design and systems
integration contracts are recognized on a percentage-of-completion basis.
Maintenance and support services are typically provided in accordance with
annual agreements that are renewable at the discretion of the customer and
subject to change annually. Maintenance and support revenues are recognized
ratably over the term of the respective agreement.

Revenues from communications services are generated by providing Internet
access and other related communications services, such as web/server hosting and
management. Communications services are generally provided based on one-year or
multi-year service agreements, which are renewable at the discretion of the
customer. Communications services revenues are recognized ratably over the term
of the respective service agreement.

As a result of the Company's implementation of its end-to-end solutions
strategy, services revenues (which incorporate professional, communications and
media services) have increased on a yearly basis as a percentage of total
revenue. For the years ended December 31, 1994, 1995 and 1996, services revenues
comprised 10.1%, 18.3% and 22.0% of total net revenues, respectively. For the
six months ended June 30, 1997 services revenues were 50.1% of total net
revenues as compared to 16.2% for the similar period in 1996. The increase in
services revenues as a percentage of total net revenues is expected to continue
to increase in the future. Historically, the Company generated limited media
revenues from selling advertisement space on its three new-media properties,
Word, Charged and Sportsfan Online. The Company is not actively marketing these
properties and does not expect to expand this business.

Cost of revenues for products consists primarily of the Company's
acquisition cost of computer and networking hardware and software that is
purchased from the manufacturers' distributors. Professional services cost of
revenues consists of the labor and overhead costs for the personnel performing
the

<PAGE>

<PAGE>
service including the cost of project management, quality control and project
review. Cost of communications services revenues consists primarily of the cost
to maintain and operate the Company's communications infrastructure and
customers' hosted web servers, access charges from LECs and network and related
communications facilities costs, depreciation of network equipment and rental
expenses for equipment pursuant to operating leases. The Company expects its
services revenues to continue to increase in dollar amount, while declining as a
percentage of services revenue as the Company expands its customer base and more
fully utilizes its communications infrastructure.

General and administrative expenses consist primarily of personnel expense
and professional fees, as well as rent and operating costs of the Company's
facilities. The Company expects general and administrative expenses to increase
in dollar amount, reflecting the continued growth of its operations and the
costs associated with being a publicly held entity, but to decrease in future
years as a percentage of total net revenues.

Selling and marketing expenses consist primarily of personnel expenses,
including salary, benefits, commissions, overhead costs and the cost of
marketing programs, such as advertising, trade shows and public relations. The
Company expects selling and marketing expenses to continue to increase in dollar
amount but to decrease in future years as a percentage of total net revenues.

Research and development expenses consist primarily of personnel and
related costs associated with the development of the Company's technologies. The
Company expects its research and development spending to continue to increase.

In order to provide nationwide communications services including Internet
access, the Company entered into a three-year agreement in June 1995 with MFS to
access MFS' nationwide communications facilities and related communications
products and services. The terms of the agreement provide for the Company to pay
MFS primarily based on the average bandwidth of the Company's traffic
transmitted over MFS' communications facilities. The Company believes that the
usage-based pricing plan established in the agreement has allowed, and will
continue to allow, the Company to grow communications services revenues without
incurring the full fixed costs typically associated with building a nationwide
network and Internet access. The Company also believes that as the utilization
of its network increases the Company may elect to lease and install its own
dedicated high speed connections between nodes and may rely less on MFS'
communications facilities for data transport.

The Company, which had been profitable prior to 1995, has incurred net
losses and incurred negative cash flow from operations since transitioning its
strategy to provide end-to-end Internet solutions and expects to continue to
operate at a loss and experience negative cash flow at least through 1998. The
Company's attainment of profitability and positive cash flow is dependent upon
its ability to substantially grow its revenue base and achieve related operating
efficiencies.

The Company will continue to focus on growing its professional services and
communications services businesses, which could require it to significantly
increase its expenses for personnel and marketing.

The Company serves major customers in information intensive industries,
such as financial services, telecommunications, media and travel. Revenues
attributable to Bear Stearns comprised 24%, 28% and 30% of the Company's total
net revenues in 1994, 1995 and 1996, respectively, and 51% for the six months
ended June 30, 1997. Revenues attributable to Nomura Securities Co. Ltd.
('Nomura Securities') comprised 11%, 15% and 13% of the Company's total net
revenues in 1994, 1995 and 1996, respectively, and 4% for the six months ended
June 30, 1997. Revenues attributable to Merrill Lynch & Co. Inc. ('Merrill
Lynch') comprised 10% of the Company's total net revenues in 1995. No other
customers represented over 10% of the Company's total net revenues in the same
time periods. Management expects revenue concentration to decline as the Company
grows its services revenues.

Historically, the Company has marketed and sold its services and products
through its direct sales force and through indirect channels. In May 1996, the
Company entered into an arrangement with Bell Atlantic Internet Solutions
whereby Bell Atlantic Internet Solutions agreed to provide billing services in
connection with the offering of the Company's communications services to
requesting Bell Atlantic Internet Solutions customers for both dedicated and
switched access. Bell Atlantic Internet Solutions also makes the Company's
communications available to its residential customers. Revenues from

<PAGE>

<PAGE>
customers acquired through Bell Atlantic Internet Solutions were a significant
portion of communications services revenues in the six months ended June 30,
1997. The Company believes that revenues from this arrangement will continue to
grow and that this relationship will represent a significant element of Icon's
distribution strategy in Bell Atlantic Internet Solutions' region, which
includes a number of the country's business centers, including New York, Boston
and Philadelphia. In October 1997, the Company extended its billing services
agreement and is currently finalizing its arrangement with Bell Atlantic
Internet Solutions to continue to make its services available in the traditional
Bell Atlantic southern region and to include the Company's reach into the Bell
Atlantic northern region (previously NYNEX) through October 1999. The Company
currently plans that it will make its services available to requesting Bell
Atlantic Internet Solutions business customers in the northern region during the
first quarter of 1998. See 'Business -- Sales and Marketing'. The Company also
has agreements with Access Graphics, Fiberlink Communications Corp.
('Fiberlink'), Merisel and other resellers to resell the Company's
communications services.

The Company has incurred losses in 1995, 1996 and the six months ended June
30, 1997 that have generated net operating loss carryforwards of approximately
$12.6 million at June 30, 1997 for federal and state income tax purposes. These
carryforwards are available to offset future taxable income and expire in 2111
through 2112 for federal income tax purposes. See 'Risk Factors -- Limitations
on Use of Net Operating Loss Carryforwards'.

RESULTS OF OPERATIONS

The following table shows various items on the Company's statement of
operations as a percentage of total net revenues (except where otherwise noted).

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1992 1993 1994 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products.................... 83.4% 91.4% 89.9% 81.7% 78.0%
----- ----- ----- ----- -----
Services:
Professional............. 16.6 8.6 10.1 16.8 17.3
Communications........... -- -- -- 0.7 3.3
Media.................... -- -- -- 0.8 1.4
----- ----- ----- ----- -----
Total services
revenues............ 16.6 8.6 10.1 18.3 22.0
----- ----- ----- ----- -----
Total revenues,
net............... 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Cost of revenues:
Products(a).............. 82.2% 90.5% 82.7% 82.4% 82.7%
----- ----- ----- ----- -----
Services(b).............. 36.3 38.4 39.6 54.2 81.8
----- ----- ----- ----- -----
Total cost of revenues... 74.6 86.0 78.4 77.3 82.5
----- ----- ----- ----- -----
Gross profit.................. 25.4 14.0 21.6 22.7 17.5
Operating expenses:
General and
administrative......... 10.2 5.6 8.2 9.2 18.4
Selling and marketing.... 9.4 6.5 7.3 13.1 17.1
Research and
development............ 1.1 0.6 2.6 1.6 2.5
Depreciation and
amortization........... 1.0 0.6 0.5 0.9 1.2
----- ----- ----- ----- -----
Total operating
expenses.......... 21.7 13.3 18.6 24.8 39.2
----- ----- ----- ----- -----
Income (loss) from
operations.................. 3.7 0.7 3.0 (2.1) (27.1)
Net income (loss)............. 2.4 0.4 1.5 (1.7) (21.1)
----- ----- ----- ----- -----
----- ----- ----- ----- -----

SIX MONTHS
ENDED
JUNE 30,
--------------
1996 1997
----- -----
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products.................... 83.8% 49.9%
----- -----
Services:
Professional............. 12.9 38.5
Communications........... 1.9 11.2
Media.................... 1.4 0.4
----- -----
Total services
revenues............ 16.2 50.1
----- -----
Total revenues,
net...............100.0% 100.0%
----- -----
----- -----
Cost of revenues:
Products(a).............. 82.3% 81.7%
----- -----
Services(b).............. 88.5 69.2
----- -----
Total cost of revenues... 83.3 75.4
----- -----
Gross profit.................. 16.7 24.6
Operating expenses:
General and
administrative......... 17.2 25.6
Selling and marketing.... 16.9 20.7
Research and
development............ 1.8 2.9
Depreciation and
amortization........... 1.0 2.0
----- -----
Total operating
expenses.......... 36.9 51.3
----- -----
Income (loss) from
operations..................(20.2) (26.6)
Net income (loss).............(19.3) (29.3)
----- -----
----- -----
</TABLE>

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

(a) As a percentage of products revenues.

(b) As a percentage of total services revenues.

<PAGE>

<PAGE>
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Revenues. Total net revenues were $19.4 million for the six months ended
June 30, 1997, a $2.0 million increase over total net revenues of $17.4 million
for the six months ended June 30, 1996.

Products revenues were $9.7 million and $14.6 million for the six months
ended June 30, 1997 and 1996, respectively. This decrease was due primarily to
the transition of the Company's focus from its historical role as a VAR to
providing IP network-related services.

Professional services revenues were $7.5 million and $2.3 million for the
six months ended June 30, 1997 and 1996, respectively, representing an increase
of 230%. This increase was attributable to the growing demand for professional
services in its existing customer base and the acquisition of several new
customers, a high renewal rate of existing maintenance contracts, an increased
number of systems engineers available to perform these services and a higher
utilization and average billing rate per systems engineer.

Communications services revenues were $2.2 million and $0.3 million for the
six months ended June 30, 1997 and 1996, respectively, representing an increase
of over 550%. This increase is primarily attributable to the acquisition of new
customers and the arrangement with Bell Atlantic Internet Solutions under which
the Company began providing service in the third quarter of 1996. Revenues
derived from the Bell Atlantic Internet Solutions arrangement were a significant
component of communications revenues in the six months ended June 30, 1997.

Cost of revenues. Total cost of revenues were $14.6 million and $14.5
million for the six months ended June 30, 1997 and 1996, respectively,
representing 75.4% and 83.3% of total net revenues, respectively. The overall
margin improvement was primarily attributable to the continued successful
implementation of the Company's strategy to sell higher-margin professional
services.

Products cost of revenues were $7.9 million and $12.0 million for the six
months ended June 30, 1997 and 1996, respectively, representing 81.7% and 82.3%
of products revenues for the six months ended June 30, 1997 and 1996,
respectively. The slight decrease in margin was due primarily to a change in the
mix of resold products.

Services cost of revenues were approximately $6.7 million and $2.5 million
for the six months ended June 30, 1997 and 1996, respectively. This growth is
primarily attributable to the hiring of 35 additional professional services
personnel and the continued expansion of the Company's communications
infrastructure. As a percentage of services revenues, such costs declined to
69.2% in the six months ended June 30, 1997 from 88.5% in the year earlier
period, mostly due to increased utilization of systems engineers.

General and administrative. General and administrative expenses were $4.9
million and $3.0 million for the six months ended June 30, 1997 and 1996,
respectively. This higher level of expenses reflects an increase in personnel
and professional fees necessary to manage the financial, legal and
administrative aspects of the business as well as rent and operating costs of
the Company's facilities. General and administrative expenses as a percentage of
total net revenues increased to 25.5% for the six months ended June 30, 1997
from 17.2% in the year earlier period due to the expansion of the Company's
administrative infrastructure necessary to manage the rapid growth of the
Company's services business.

Selling and marketing. Selling and marketing expenses were $4.0 million and
$2.9 million for the six months ended June 30, 1997 and 1996, respectively. The
36.6% increase in 1997 reflects a substantial investment in the launch of a new
marketing program including the development of associated marketing materials.
Selling and marketing expenses as a percentage of total net revenues increased
to 20.7% for the six months ended June 30, 1997 from 16.9% in the year earlier
period as a result of the increased marketing effort.

Research and development. Research and development expenses were $0.6
million and $0.3 million for the six months ended June 30, 1997 and 1996,
respectively. This higher level of expense reflects an overall increase in the
number of personnel required to develop new technologies that enhance the
performance and reliability of the Company's network. Research and development
expenses as a percentage of total net revenues increased to 2.9% for the six
months ended June 30, 1997 from 1.8% in the year earlier period as a result of
the Company's increased efforts to deliver enhanced communications services to
its customers.

<PAGE>

<PAGE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Revenues. Total net revenues were $38.1 million in 1996, an $11.9 million
increase over total net revenues of $26.2 million in 1995.

Products revenues were $29.7 million and $21.4 million in 1996 and 1995,
respectively, representing an increase of 38.8%. This increase was due primarily
to hardware and software resales related to large scale systems integration
projects for customers in the financial services industry.

Professional services revenues were $6.6 million and $4.4 million in 1996
and 1995, respectively, representing an increase of 49.4%. This increase was
attributable to the growing demand for professional services in the Company's
existing customer base and the acquisition of several new customers, a high
renewal rate of existing maintenance contracts, the increased number of systems
engineers available to perform these services and a higher utilization and
average billing rate per systems engineer.

Communications services revenues increased to $1.3 million in 1996 from
$0.2 million in 1995, representing an increase of 570%. This increase is
primarily attributable to the acquisition of new customers, the rollout of the
Bell Atlantic Internet Solutions arrangement in the second half of 1996 and the
continued cross-selling of communications services to the Company's existing
professional services and products customers.

Cost of revenues. Total cost of revenues were $31.4 million and $20.2
million in 1996 and 1995, respectively, representing 82.5% and 77.3% of total
net revenues, respectively. This decline in margin is primarily attributable to
the expansion of the Company's network, resulting in significant fixed costs
with minimal communications services revenues.

Products cost of revenues were $24.6 million and $17.7 million in 1996 and
1995, respectively, representing 82.7% and 82.4%, respectively, of products as a
percentage of products revenues in 1996 and 1995, respectively.

Services cost of revenues were $6.8 million and $2.5 million in 1996 and
1995, respectively. This growth is primarily attributable to the hiring of
professional services personnel, expansion of the Company's communications
infrastructure and costs associated with the Company's media properties. Such
costs increased to 81.8% as a percentage of services revenues in 1996 from 54.2%
in the prior year, reflecting the significant fixed costs involved in expanding
the Company's communications infrastructure.

General and administrative. General and administrative expenses were $7.0
million and $2.4 million in 1996 and 1995, respectively. This higher level of
expense reflects an increase in personnel and professional fees necessary to
manage the financial, legal and administrative aspects of the business as well
as rent and operating costs of the Company's facilities. General and
administrative expenses as a percentage of total net revenues increased to 18.4%
from 9.3% in the year earlier period due to expansion of the Company's
administrative infrastructure necessary to manage the rapid growth of the
Company's services business.

Selling and marketing. Selling and marketing expenses were $6.5 million and
$3.5 million in 1996 and 1995, respectively. The 88.5% increase in 1996 reflects
an increase in sales commissions resulting from increased products and services
revenues combined with increased marketing and promotional activities, including
advertising and trade shows. Selling and marketing expenses as a percentage of
total net revenues increased to 17.1% in 1996 from 13.2% in 1995 as a result of
the higher sales commissions and increased marketing and promotional activities.

Research and development. Research and development expenses were $1.0
million and $0.4 million in 1996 and 1995, respectively. This higher level of
expenses reflected an increase in personnel to develop new technologies that
allow the Company's network to more efficiently transport data.

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

Revenues. Total net revenues were $26.2 million in 1995, a $7.2 million
increase over total net revenues of $19.0 million in 1994.

<PAGE>

<PAGE>
Products revenues were $21.4 million and $17.1 million in 1995 and 1994,
respectively, representing an increase of 25.4%. This increase was due primarily
to hardware and software resales related to large scale systems integration
projects for customers in the financial services industry.

Professional services revenues were $4.4 million and $1.9 million in 1995
and 1994, respectively, representing an increase of 130%. This increase was
attributable to the Company's broadened services offerings relating to
IP-networks, the increased number of systems engineers available to perform
these services and the acquisition of several new customers.

Communications services revenues were $0.2 million in 1995, the first year
the Company provided communications services.

Cost of revenues. Total cost of revenues was $20.2 million and $14.9
million in 1995 and 1994, respectively, representing 77.3% and 78.4% of total
net revenues, respectively.

Products cost of revenues were $17.7 million and $14.1 million in 1995 and
1994, respectively, representing 82.4% and 82.7%, respectively, as a percentage
of products revenues, respectively.

Services cost of revenues were $2.6 million and $0.8 million in 1995 and
1994, respectively. This growth was primarily attributable to the hiring of
professional services personnel and the initial investment in the communications
network. As a percentage of services revenues, such costs increased to 54.2% in
1995 from 39.6% in 1994, reflecting a lower utilization of professional services
personnel, combined with the initial costs of the communications infrastructure.

General and administrative. General and administrative expenses were $2.4
million and $1.5 million in 1995 and 1994, respectively, representing 9.3% and
8.1% of total net revenues, respectively. This higher level of expense reflects
an increase in personnel and professional fees necessary to manage the
financial, legal and administrative aspects of the business.

Selling and marketing. Selling and marketing expenses were $3.5 million and
$1.4 million in 1995 and 1994, respectively. The $2.1 million increase in 1995
reflected the Company's shift to a focus on providing IP-based network
solutions. In connection with this new focus, the Company incurred increased
expenses related to development of strategic relationships and marketing
communications.

Research and development. Research and development expense was $0.4 million
and $0.5 million in 1995 and 1994, respectively.

QUARTERLY RESULTS OF OPERATIONS

The Company's quarterly operating results have in the past and may in the
future vary significantly depending upon factors such as the timing and
installation of significant orders, which in the past have been and will in the
future be, delayed from time to time by delays in the provisioning of
telecommunications products and services by subcontractors. Additional factors
contributing to variability of quarterly operating results include the pricing
and mix of products and services sold by the Company, terminations of service,
new products and service introductions by the Company and its competitors,
market acceptance of new and enhanced versions of the Company's products and
services, changes in pricing or marketing policies by its competitors and the
Company's responses thereto, the Company's ability to obtain sufficient supplies
of sole source or limited source components, changes in the Company's
communications infrastructure costs, as a result of demand variation or
otherwise, the lengthening of the Company's sales cycle, access to capital and
the timing of the expansion of the Company's communications infrastructure.

The following tables set forth the statement of operations data for each of
the six quarters through June 30, 1997, as well as such operations data as a
percentage of the Company's revenues. This information has been derived from the
Company's unaudited financial statements. In the opinion of management, the
unaudited information set forth below has been prepared on the same basis as the
audited financial statements contained herein and includes all adjustments,
consisting only of normal recurring adjustments necessary to present fairly the
information set forth herein. The operating results for any quarter are not
necessarily indicative of results for any future period.

<PAGE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1996 1997 1997
--------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products................................. $ 7,281 $ 7,328 $ 7,732 $ 7,400 $ 4,795 $ 4,885
--------- -------- ------------- ------------ --------- --------
Services:
Professional.......................... 1,203 1,062 1,670 2,635 3,207 4,268
Communications........................ 147 185 353 583 938 1,233
Media................................. 124 113 117 175 77 --
--------- -------- ------------- ------------ --------- --------
Total services revenues............. 1,474 1,360 2,140 3,393 4,222 5,501
--------- -------- ------------- ------------ --------- --------
Total revenues, net.............. 8,755 8,688 9,872 10,793 9,017 10,386
--------- -------- ------------- ------------ --------- --------
Cost of revenues:
Products................................. 6,157 5,865 6,384 6,201 3,813 4,092
Services................................. 1,270 1,237 1,827 2,508 3,137 3,592
--------- -------- ------------- ------------ --------- --------
Total cost of revenues........... 7,427 7,102 8,211 8,709 6,950 7,684
--------- -------- ------------- ------------ --------- --------
Gross profit............................... 1,328 1,586 1,661 2,084 2,067 2,702

Operating expenses......................... 2,566 3,873 3,910 4,590 4,652 5,269
--------- -------- ------------- ------------ --------- --------
Income (loss) from operations.............. (1,238) (2,287) (2,249) (2,506) (2,585) (2,567)
Net income (loss).......................... $(1,169) $ (2,205) $(2,178) $ (2,486) $(2,950) $ (2,734)
--------- -------- ------------- ------------ --------- --------
--------- -------- ------------- ------------ --------- --------
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1996 1996 1996 1996 1997 1997
--------- -------- ------------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues, net:
Products.................................. 83.2% 84.3% 78.3% 68.6% 53.2% 47.0%
--------- -------- ------ ------ --------- --------
Services:
Professional........................... 13.7 12.3 16.9 24.4 35.5 41.1
Communications......................... 1.7 2.1 3.6 5.4 10.4 11.9
Media.................................. 1.4 1.3 1.2 1.6 0.9 0.0
--------- -------- ------ ------ --------- --------
Total services revenues.............. 16.8 15.7 21.7 31.4 46.8 53.0
--------- -------- ------ ------ --------- --------
Total revenues, net............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
--------- -------- ------ ------ --------- --------
--------- -------- ------ ------ --------- --------
Cost of revenues:
Products(a)............................... 84.6% 80.0% 82.6% 83.8% 79.5% 83.8%
--------- -------- ------ ------ --------- --------
Services(b)............................... 86.2 91.0 85.4 73.9 74.3 65.3
--------- -------- ------ ------ --------- --------
Total cost of revenues.................... 84.8 81.7 83.2 80.7 77.1 74.0
--------- -------- ------ ------ --------- --------
Gross profit................................ 15.2 18.3 16.8 19.3 22.9 26.0
Operating expenses.......................... 29.3 44.6 39.6 42.5 51.6 50.7
--------- -------- ------ ------ --------- --------
Loss from operations........................ (14.1) (26.3) (22.8) (23.2) (28.7) (24.7)
Net loss.................................... (13.4) (25.4) (22.1) (23.0) (32.7) (26.3)
--------- -------- ------ ------ --------- --------
--------- -------- ------ ------ --------- --------
</TABLE>

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

(a) As a percentage of products revenues.

(b) As a percentage of total services revenues.

The increase in services revenues as a percentage of overall revenues,
which has been experienced over the last five quarters, is expected to continue
to increase in the future. The Company expects cost of services revenues to
continue to increase in dollar amount but to decline in future years as a
percentage of services revenues as the Company expands its customer base and
more fully utilizes its

<PAGE>

<PAGE>
communications infrastructure. The Company expects operating expenses to
continue to increase in dollar amount but to decrease in future years as a
percentage of total net revenues.

LIQUIDITY AND CAPITAL RESOURCES

The Company had an accumulated deficit of $13.8 million at June 30, 1997
and has used cash of $13.1 million in the aggregate to fund operations during
1995, 1996 and the six months ended June 30, 1997. To date, the Company has
satisfied its cash requirements primarily through the sale of preferred stock
and borrowings under credit agreements. The Company's principal uses of cash are
to fund operations, working capital requirements and capital expenditures. At
June 30, 1997 the Company had $1.0 million in cash and cash equivalents and $2.6
million in working capital. Net cash used in operating activities for the six
months ended June 30, 1997 and 1996 was approximately $6.8 million and $2.7
million, respectively. Net cash used in investing activities for the six months
ended June 30, 1997 and 1996 was approximately $1.1 million and $1.9 million,
respectively. For the six months ended June 30, 1997 and 1996, cash of
approximately $8.4 million and $6.4 million, respectively, was provided by
financing activities. Cash provided by financing activities in the six months
ended June 30, 1997 includes approximately $9.6 million in net proceeds from the
issuance of the Series B Preferred Stock.

Net cash used in operating activities for the years ended December 31, 1995
and 1996 was $1.3 million and $5.0 million, respectively. Net cash flow provided
by financing activities was $2.9 million and $8.6 million for 1995 and 1996,
respectively.

As of December 31, 1996, the Company's operating lease obligations were
projected to be $1.8 million, $1.8 million, and $1.3 million for 1997, 1998 and
1999, respectively.

On August 13, 1996, the Company obtained a secured line of credit with a
lending institution for $10.0 million which expires on August 13, 1998.
Borrowings under this line are secured by substantially all of the assets of the
Company and are limited to a specified percentage of qualifying accounts
receivable less outstanding obligations of the Company including outstanding
letters of credit. The payment of cash dividends is prohibited under this
secured line of credit. At December 31, 1996, borrowings under this line
amounted to $2.2 million, and no amounts were outstanding at June 30, 1997.
Interest is payable monthly at an annual rate equal to the prime rate plus one
percent. Following a change in the prime rate, the rate adjusts on the first of
the month following any change. Interest expense amounted to $.1 million and $.3
million for the year ended December 31, 1996 and the six-month period ended June
30, 1997, respectively. As of June 30, 1997, there was $2.9 million available
under the line.

As of June 30, 1997, trade payables to a vendor in the amount of $2.4
million were secured by a lien on substantially all of the Company's assets.

The Company has made capital investments in its network, NOC and other
capital assets totaling $1.0 million and $3.7 million in 1995 and 1996,
respectively, and $1.1 million in the six months ended June 30, 1997. The
Company expects to make additional capital investments to expand and enhance its
operations of $2.5 million during the second half of 1997, and $4.9 million in
1998. The foregoing expectation with respect to capital investment is a
forward-looking statement that involves risks and uncertainties and the actual
amount of capital investment could vary materially as a result of a number of
factors, including those described in 'Risk Factors -- Future Capital Needs;
Uncertainty of Additional Financing'.

Since the Company expects to incur additional operating losses, the Company
intends to utilize the net proceeds from the Offering to meet its short term
capital requirements. The Company believes that proceeds from the Offering and
its line of credit will be sufficient to meet its anticipated cash needs for
working capital and for the acquisition of capital equipment through the end of
1998. However, there can be no assurance that the Company will not require
additional financing within this time frame. The Company's forecast of the
period of time through which its financial resources will be adequate to support
its operations is a forward-looking statement that involves risks and
uncertainties, and actual results could vary. The Company may be required to
raise additional funds through public or private financing, strategic
relationships or other arrangements. There can be no assurance that such
additional financing, if needed, will be available on terms attractive to the
Company, or at all. Furthermore, any additional equity financing may be dilutive
to stockholders, and debt financing, if available, may involve

<PAGE>

<PAGE>
restrictive covenants. Strategic arrangements, if necessary to raise additional
funds, may require the Company to relinquish its rights to certain of its
technologies. See 'Risk Factors -- Future Capital Needs; Uncertainty of
Additional Financing'.

RECENTLY ISSUED ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board ('FASB') issued
Financial Accounting Standards No. 128, 'Earnings per Share' ('FAS 128'), which
requires presentation of basic earnings per share ('Basic EPS') and diluted
earnings per share ('Diluted EPS') by all entities that have publicly traded
common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). FAS 128 also requires presentation
of earnings per share by an entity that has made a filing or is in the process
of filing with a regulatory agency in preparation for the sale of those
securities in a public market. Basic EPS is computed by dividing income
available to common stockholders by the weighted-average potential common shares
outstanding during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period. The computation of
Diluted EPS does not assume effect on earnings. The statement is effective for
both interim and annual periods ending after December 15, 1997. The effect on
the Company's earnings per share resulting from the adoption of FAS 128 is not
expected to be significant.

In June 1997, FASB issued Financial Accounting Standards No. 130,
'Reporting Comprehensive Income' ('FAS 130'), which requires the presentation of
components of comprehensive income in a company's financial statements for the
reporting periods begining subsequent to December 15, 1997. Comprehensive income
is defined as the change in a company's equity during a financial reporting
period from transactions and other circumstances from nonowner sources
(including cumulative translation adjustments, minimum pension liabilities and
unrealized gains/losses on available for sale securities). The adoption of FAS
130 is not expected to have a material impact on the Company's financial
statements.

<PAGE>

<PAGE>
BUSINESS

GENERAL

Icon is an Internet solutions provider that offers a comprehensive range of
services and products that enable corporate customers to implement their
Internet, intranet and extranet strategies. Icon's mission is to provide
end-to-end solutions to its customers by facilitating the distribution of the
customers' information and applications over Icon's communications
infrastructure as well as access to such information and applications. In order
to provide end-to-end solutions, Icon integrates services and products in three
key areas: (i) communications services, including high quality Internet access
and web/server hosting and management, enhanced by the Company's proprietary
technologies; (ii) a range of professional services, including custom
application and website development and design, systems integration and
maintenance and support services; and (iii) product resales, including hardware
and software, which are an integral component of systems design and integration
and serve as a means of establishing customer relationships. Icon differentiates
itself by integrating its services and products in order to provide customized
turnkey solutions for the needs of corporate customers. Icon's customers include
major corporations in the financial services, telecommunications, travel and
media industries, such as ABC Radio Network Inc. ('ABC Radio'), ADP, The
Associated Press, Bear Stearns, Bell Atlantic Internet Solutions, CBS, Galileo
International ('Galileo') and SwissAir.

MARKET AND INDUSTRY OVERVIEW

The emergence of the Internet and the widespread adoption of IP as a data
transmission standard in the 1990s, combined with deregulation of the
telecommunications industry and advances in telecommunications technology, have
significantly increased the demand for providing data communications
applications and services over public networks. At the same time, growth in
client/server and distributed computing, multimedia personal computers and
online computing services and the proliferation of networking technologies have
resulted in a large and growing group of end-users who are accustomed to using
networked computers for a variety of purposes, including electronic mail,
electronic file transfers, online computing and electronic financial
transactions. These trends have increasingly led businesses to explore
opportunities to provide IP-based applications and services internally within
their organizations via intranets, externally to selected customers and business
partners via extranets and to the general public via the Internet.

The ubiquitous nature and relatively low cost of the Internet have resulted
in its widespread usage for certain applications, most notably web browsing and
electronic mail. Use of the Internet for mission-critical business applications
is increasing even with the limited security and unreliable performance inherent
in the structure and management of the Internet, as well as the difficulties of
integrating web gateways and IP-based networks with applications traditionally
run on legacy systems. Additionally, emerging applications such as IP-based
audio and video applications and certain multimedia applications require a
communications infrastructure that has high performance characteristics,
including low latency (response time) and high throughput. These factors have
resulted in demand from an increasing number of businesses for high bandwidth
Internet access, secure networked systems, technology-related products and
integration and custom application development services. The Internet
communications services market, comprised of access and hosting, is expected to
increase from $1.3 billion in 1996 to $28.1 billion in 2000 according to
Forrester Research. Similarly, the Internet-related professional services market
is expected to grow from $2.5 billion in 1996 to $13.8 billion in 2000 according
to International Data Corp.

As the amount of information transmitted over the Internet has grown and
the speed and complexity of networks has increased, IP-based services and
products have become increasingly intertwined. Corporate customers have not only
come to rely on IP-based networks for distributing mission-critical information
and applications to end-users but have become dependent on the technical
services that enable access and distribution of this information, resulting in
an increasing number of outside vendors offering services to corporate
customers. However, given the growth in complexity and expenditures related to
implementation of Internet, intranet and extranet strategies, the Company
believes that customers are increasingly seeking a single-source provider.

<PAGE>

<PAGE>
STRATEGY

Leverage Capability to Provide End-to-End Internet Solutions. Icon's
ability to provide end-to-end solutions is often a decisive factor in
attracting and retaining customers and contributes to generating
additional business from its existing customer base. While some of the
Company's customers are initially attracted to Icon's end-to-end
solutions, others seek a specific service or product. The Company has
historically succeeded in migrating many of such customers to become users
of the Company's additional services and products. Icon's relationships
with several customers, such as The Associated Press, Bear Stearns, CBS
and Galileo, began with a single offering and evolved into an end-to-end
solution encompassing multiple communications and professional services.
The Company's strategy is to expand the number of customers who demand
end-to-end solutions and to become an integral component of its customers'
information technology infrastructure.

Maintain Reliable and High Performance Communications Infrastructure. The
Company maintains a nationwide communications infrastructure that
incorporates proprietary technologies and is managed to deploy and
distribute information and applications. The Company manages its network
to achieve utilization levels that enable it to operate in a reliable and
high performance manner. Icon controls its network and provides hosting
and management services from its state-of-the-art NOC, enabling it to meet
increasingly demanding customer requirements. The Company will continue to
develop network-centric proprietary technologies and integrate third party
technologies to optimize network performance and provide value-added
network services to its customers. The Company currently focuses on new
communications services offerings, such as back-up and recovery and wide
area data caching, as well as real-time audio and video streaming and
Internet telephony. Icon will seek to continue to develop its
communications infrastructure to enhance the speed, security, reliability
and overall performance of its network.

Expand Network Domestically and Overseas. The Company plans to expand its
network to specifically address the growing bandwidth and global reach
requirements of its customers, both in the United States and
internationally. Icon's agreement with MFS provides for access to all MFS
communications facilities throughout the country. The Company believes
that the usage-based pricing model in its agreement with MFS enables it to
enter new markets in a more advantageous manner than many of its
competitors which, in many cases, must expend greater resources to build
or lease facilities on a fixed-price basis. The Company also has
agreements with other vendors who provide similar services, and the
Company will pursue similar arrangements in the future as the Company
continues to expand its network. The Company is in negotiations with a
potential strategic partner that would extend the reach of its network
into Japan; however, no assurance can be made at this time that this
transaction will be consummated or, if consummated, that it will be
successful.

Expand and Integrate Professional Services Offerings. Icon's professional
services include software application development, website design and
development, integration with legacy systems, maintenance and support
services and consulting. Unlike many of Icon's competitors who focus on a
single service or product, the Company continuously expands the breadth of
its services and its engineering expertise to optimize its end-to-end
solutions. The Company intends to continue to develop and leverage both
its expertise in designing graphical user interfaces (so-called 'front-
end' design) and integrating with legacy data that resides on databases or
mainframe systems (so-called 'back-end' integration).

<PAGE>

<PAGE>
Continue to Build Efficient Distribution Through Direct and Indirect
Channels. Icon will continue to grow its direct sales force, which has
grown from 20 at the beginning of 1997 to 30 as of September 30, 1997. The
direct sales force targets large accounts with significant revenue-
generating potential. It focuses on information-intensive industries, such
as financial services, media, telecommunications and travel. The Company
believes that the organization of its direct sales force along industry
lines enables it to leverage its expertise and develop solutions that can
be replicated and tailored to meet recurring demands of corporate
customers throughout a particular industry. In addition, the Company will
continue to expand distribution relationships that enable it to compete
effectively by expanding its customer base without substantial costs. The
Company's indirect sales channels include relationships with
telecommunications providers, such as Bell Atlantic Internet Solutions and
Fiberlink, as well as resellers and master distributors. Bell Atlantic
Internet Solutions offers its customers the option to select Icon as their
global service provider to provide the long distance portion of the
Internet access services. In October 1997, the Company extended its
billing services agreement through October 1999 and is currently
finalizing its arrangement with Bell Atlantic Internet Solutions to
continue to make its services available in the traditional Bell Atlantic
southern region and to include the Bell Atlantic northern region
(previously NYNEX) for dedicated access service. The Company currently
plans that it will make its services available to Bell Atlantic Internet
Solutions business customers in the northern region during the first
quarter of 1998.

Grow Through Acquisitions. The Company intends to strengthen its market
position through acquisitions of companies that bring complementary
expertise in certain segments of the Internet business and maximize value
through cross-selling opportunities.

COMMUNICATIONS INFRASTRUCTURE

The Company developed its communications infrastructure in recognition of
the market need for commercial-grade Internet access and value-added deployment
of mission-critical information and applications. The Company's customers use
the Company's communications infrastructure for private networks and commercial
applications. The Company has developed proprietary technologies that enhance
network performance in terms of speed, reliability, security and flexibility.
See ' -- Research and Development.' The Company's communications infrastructure
is based upon an ATM architecture. As shown on the map below, customers can
connect to the Company's network from major cities across the United States
through dedicated high-speed leased lines. The network is logically designed as
a 'cloud,' with multiple high-speed paths between switches, so as to reduce the
possibility that any single point of failure will cause network outage. The
network uses state-of-the-art routing platforms, including Cisco routers.
Currently, the Company's backbone consists of 21 nodes, and the Company
currently plans to add several additional nodes.

<PAGE>

<PAGE>
MAP OF USA AND THE COMPANY'S BACKBONE:

[Map depicting The Company's (i) existing nodes and circuits and
(ii) nodes and circuits proposed to be added by December 31, 1998.]

After a customer's data has entered the Company's backbone, it is routed to
its destination, either over the Company's backbone or to another ISP's
backbone, which is facilitated through peering arrangements with other ISPs. In
order to peer with other Tier 1 ISPs, an ISP must demonstrate that its network
transports sufficient volumes of data and that it can peer at geographically
diverse locations. The Company has established Tier 1 peering arrangements with
other ISPs and long distance carriers enabling it to exchange traffic at major
peering points, including MAE-East, MAE-West, Ameritech Advanced Data Services
NAP, Digital Internet Exchange including the CIX (Palo Alto), Sprint
Communications NAP and Pacific Bell NAP. Peered ISPs share routing tables with
each other so that each ISP's customers can have access to the information on a
peered-ISP's network. Although many ISPs have recently been adding to their
peering eligibility requirements, the Company has been successful in qualifying
for these arrangements. The Company believes that the need to enter into peering
arrangements and the increasingly stringent eligibility standards to be met to
qualify for these relationships now provide a significant barrier to entry for
other companies trying to build nationwide backbones to provide Internet access.
The Company believes that its combination of a nationwide backbone and peering
arrangements establishes the Company as a Tier 1 provider, which differentiates
the Company from regional ISPs who, without peering arrangements, may have to
pay transit fees to national Internet carriers in order to exchange network
traffic.

The Company's communications network consists of facilities leased from a
number of providers, including MFS, WorldCom and certain RBOCs, LECs and CAPs.
In June 1995, the Company entered into a service agreement with MFS that
provides the Company access to all of MFS' communications facilities throughout
the country. The Company believes that the usage-based pricing model in its
agreement with MFS enables it to enter new markets in a more advantageous manner
than many of its competitors which, in many cases, must expend greater resources
to build or lease facilities on a fixed-price basis. Furthermore, Icon's
agreement with MFS affords the Company the flexibility of converting to a fixed
price model, at its option, as utilization of facilities by the Company
increases. Pursuant to the agreement, MFS also provides certain additional
related services including, upon request by the Company, the provisioning of
local telecommunications services and co-location of certain of the Company's
equipment. Either MFS or Icon may terminate the agreement with or without cause,
with six months written notice, such termination to be effective as early as
December 1998. The Company

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has recently commenced discussions with MFS regarding the potential extension of
the agreement past December 1998 while at the same time identifying alternative
vendors who provide similar services to ensure the continued uninterrupted
operation of its high performance network. The Company is in negotiations with a
potential strategic partner that would extend the Company's network into Japan;
however, no assurance can be made at this time that this transaction will be
consummated or, if consummated, that it will be successful.

The Company's network is monitored 24 hours per day, 7 days per week by its
NOC, located at its Weehawken, New Jersey headquarters. The NOC is the primary
control and networking equipment center for all forms of network operations.
Redundant network paths connect the NOC to the backbone, reducing the
possibility that a single point of failure will cause a network outage. The NOC
hosts systems, which consist of networking equipment, hardware and software, for
customers by providing space, connectivity, data protection and continuous
monitoring and maintenance. The Company maintains a second internal secure
network as a dedicated data conduit for backup and restoration of hosted client
data. To date, the Company has not experienced any network-wide outages or
significant losses of customer data.

SERVICES AND PRODUCTS

The Company integrates services and products in three key areas: (i)
communications services, (ii) professional services and (iii) product resales.

COMMUNICATIONS SERVICES

Access Solutions. Icon's network access solutions enable customers to
deploy mission-critical information and applications over the Internet,
intranets and extranets. In some cases, the Company provides guaranteed levels
of service for dedicated Internet access to corporate customers and targets
performance benchmarks for connection success rates, latency levels and
throughput. The Company also provides switched Internet access including ISDN
and dial-up through Bell Atlantic Internet Solutions and may, in the future,
seek to expand its switched services to augment its dedicated offerings to its
corporate customers, who may want to provide switched access to their employees
or customers. In addition, the Company offers data back-up services by acting as
an outsourcer for archiving customers' data on its servers and systems, and
provides business recovery solutions by using its proprietary technologies. See
' -- Research and Development.'

Depending upon the size of the customer and corresponding application and
information needs, bandwidth requirements vary widely. For example, audio and
video applications typically require greater bandwidth than text-based
applications. Icon offers five levels of Internet access to meet the wide range
of bandwidth needs:

56 Kbps

Fractional DS-1 (n x 64 Kbps; n24)

DS-1 (1.544 Mbps)

Fractional DS-3 (n x 3 Mbps; 1n15)

DS-3 (45 Mbps)

Hosting and Management Solutions. Hosting and management solutions consist
of the provisioning, installation, maintenance and monitoring of the hardware
and software components that comprise a hosted system. The actual components of
web hosting are the server, the physical workstation or PC upon which the
website or application resides, the Company's NOC which hosts the server, a high
speed physical connection to the Company's backbone, server and power backup to
ensure 24 hour functionality, and maintenance, monitoring and management
services to ensure ongoing operation of the server. Within both the NT and UNIX
product lines, the Company offers a diversity of hardware, software, network and
service level configuration options to meet the requirements of its
sophisticated customer base. By outsourcing its web server management function
to the Company, a customer can reduce costs while increasing reliability and
performance of its servers. The Company offers 24 hours per day, 7 days per week
monitoring of the server and Internet connection through the Company's

<PAGE>

<PAGE>
technical staff. In addition, Icon provides upgrades as the customer's speed and
capacity requirements grow. In addition to its existing hosting facility at its
corporate headquarters, the Company currently plans to expand its hosting
locations to include New York City and San Francisco.

PROFESSIONAL SERVICES

Custom Software Application Development. The Company designs and develops
specialized software applications that enable corporations to communicate
business information and conduct commerce through IP-based networks. The
Company's experienced engineering staff works closely with its customers to
analyze and design specifications for IP-based applications. The Company has
completed custom application projects for customers including ABC Radio, The
Associated Press, ADP, Bear Stearns, CBS and Galileo.

Website Design and Development. The Company is an established provider of
advanced website design and implementation services. The Company designs
websites ranging from basic 'inquiry only' sites to complex, interactive sites
featuring sophisticated graphics, animation, sound and other multimedia content.
The Company has completed website design projects for customers including Bell
Atlantic Internet Solutions, CBS News, a division of CBS, Comedy Central,
Deutsche Morgan Grenfell, Galileo, Eastman Kodak Company, Kobra International
(Nicole Miller) and SwissAir. In addition, the Company operates an interactive
publishing unit that produces three Internet-based media properties: Word, a
'lifestyle' publication targeted at 18-34 year olds; Charged, focusing on the
extreme sports market; and SportsFan On-Line, a spectator-sports media property
that is a joint venture with Sports Fan Radio Network, a division of Winstar
Communications, Inc.

Integration with Legacy Systems. The Company combines its expertise in
communications services, systems design and custom software and website design
and development to offer integration services. Icon's integration services
enable its customers to access corporate information that resides on legacy
systems, such as IBM or Unix mainframes, that are connected by network
architectures. The Company's technical engineers are skilled at design and
implementation of databases in order to reduce demands on legacy systems and
increase the efficiency of transporting corporate data between legacy and
client/server systems over an IP-based network. The Company has completed
integration projects for customers including ABC Radio, ADP, The Associated
Press, Bear Stearns, CBS News, Galileo, Merrill Lynch, Nomura Securities,
Omnipoint Communications ('Omnipoint'), SwissAir, Tudor Investment Company and
John Wiley & Sons, Inc. ('John Wiley').

Maintenance and Support of Customer IT Infrastructure. The Company's
maintenance and support services organization offers 24 hours per day, 7 days
per week hardware and software maintenance and support for its customers.
Services include call-in support, troubleshooting, software and hardware updates
and on-site helpdesk and general support personnel. Engagements of the Company
to perform maintenance and support services have often developed when or after
the customer has purchased products from the Company or used other professional
services. The Company has provided maintenance and support services for
customers including Bear Stearns, CBS, Merrill Lynch, Moore Capital Management,
Inc., Omnipoint, Tudor Investment Company and John Wiley.

PRODUCT RESALES

Product resales are an integral part of providing end-to-end solutions. The
Company identifies and resells hardware and software that become components of
its customers' information technology infrastructure. The Company, in certain
cases, leverages product resales to cross-sell Icon's end-to-end solutions to a
growing customer base. The products include hardware and networking equipment
such as Sun Microsystems servers and Cisco routers, and software such as
Checkpoint firewalls, Netscape web servers and Oracle, Informix and Sybase
databases.

SALES AND MARKETING

The Company's distribution strategy entails expanding its sales channels to
sell its services and products directly to commercial users and through a
network of indirect distribution channels, including OEM relationships, regional
systems integrators, VARs, distributors and relationships with
telecommunications companies, including Bell Atlantic Internet Solutions and
Fiberlink.

<PAGE>

<PAGE>
DIRECT SALES FORCE

The Company's direct sales force targets large accounts with significant
revenue-generating potential. The Company's sales group focuses on
information-intensive industries, such as financial services, media,
telecommunications and travel and includes customers such as ABC Radio, Bear
Stearns, CBS, Galileo and Nomura Securities. The Company believes that the
organization of its direct sales force along industry lines enables it to
leverage its expertise and develop solutions that can be replicated and tailored
to meet recurring demands of corporate customers throughout a particular
industry. As the size of the direct sales force grows, the Company plans to
expand into additional vertical segments, including general commercial and
consumer brand products. The Company has expanded its sales staff from 20 at the
beginning of 1997 to 30 as of September 30, 1997. Typically, the Company's sales
representatives receive a compensation package that includes a salary and
commissions that are based on actual sales and oriented toward selling higher
margin services.

INDIRECT DISTRIBUTION CHANNELS

The Company markets its services and products through a network of
third-party relationships, thereby expanding its customer base throughout the
country without incurring the associated sales, marketing and administrative
costs. Regional systems integrators, VARs and, in some cases, regional ISPs may
also resell the Company's services and products. By reselling the Company's
services and products, these companies are able to expand their service and
product offerings and provide more comprehensive solutions to their customers.
As an example of this strategy, the Company has entered into master distribution
agreements with Access Graphics and Merisel, two leading distributors of Sun
Microsystems, Inc. ('Sun') workstations, to bundle Sun web servers with the
Company's Internet access services. Such distributors and resellers may
participate in the Company's indirect distribution channel either by (i)
sublicensing the Company's services and products and reselling them to their
customers or (ii) referring orders to the Company in exchange for an agency
commission.

Icon has also pursued a distribution strategy that enlists the assistance
of telecommunications companies who are already providing communications
services (such as local phone service or cable television) to existing
customers. This strategy enables the Company to leverage not only a
substantially larger sales and marketing infrastructure, but also strong
customer relationships. While the Company's margins are lower in this
distribution channel, the Company's resellers absorb all of the
customer-acquisition and administrative costs that would otherwise be borne by
the Company.

In addition to its reseller agreements, pursuant to the arrangement with
Bell Atlantic Internet Solutions, Bell Atlantic Internet Solutions offers its
customers the option to purchase Icon's communications services and bills the
customers on Icon's behalf. In October, 1997, the Company extended its billing
services agreement through October 1999 and is currently finalizing its
arrangement with Bell Atlantic Internet Solutions to continue to make its
services available to requesting customers in the traditional Bell Atlantic
southern region and to include the Bell Atlantic northern region (previously
NYNEX) for dedicated service. The Company currently plans to make its services
available to requesting Bell Atlantic Internet Solutions business customers in
the Bell Atlantic northern region during the first quarter of 1998. The Company
intends to pursue additional relationships with other telecommunications
providers, including additional 'local telco service' providers both using
wireline and wireless facilities, including LECs, RBOCs, CAPs and cable
television companies.

MARKETING

The Company employs marketing and public relations personnel and works with
third-party advertising firms and consultants to provide broad coverage in
network computer and vertical industry publications. The Company participates in
nationwide industry trade shows, historically including NetWorld+InterOp,
Internet World and CompTel. The Company also participates in co-branding
promotions with strategic partners including Sun, Access Graphics and Merisel.
Recently, the Company expanded its marketing budget in an effort to increase its
brand recognition among potential customers in its target vertical markets.

<PAGE>

<PAGE>
CUSTOMERS

Customers served by the Company in the 12 months ended September 30, 1997
include the following:

<TABLE>
<CAPTION>
SOLUTION COMPONENTS

COMMUNICATIONS PROFESSIONAL
CUSTOMER SERVICES SERVICES PRODUCTS
<S> <C> <C> <C>
FINANCIAL SERVICES
Alliance Capital Management LP 'ch' 'ch'
Automated Data Processing Financial Information 'ch'
Bear, Stearns & Co. Inc 'ch' 'ch' 'ch'
Daiwa Securities America Inc. 'ch' 'ch' 'ch'
Deutsche Morgan Grenfell 'ch' 'ch'
Goldman, Sachs & Co. 'ch'
Merrill Lynch & Co., Inc. 'ch' 'ch' 'ch'
Nomura Securities Co. Ltd. 'ch' 'ch' 'ch'
Tudor Investment Company 'ch' 'ch'
TELECOMMUNICATIONS
ACC Long Distance Corp. 'ch'
Bell Atlantic Internet Solutions, Inc. 'ch'
Fiberlink Communications Corp. 'ch'
Omnipoint Communications 'ch' 'ch' 'ch'
MEDIA
ABC Radio Network Inc. 'ch' 'ch'
CBS, Inc. 'ch' 'ch' 'ch'
CMP Publications, Inc. 'ch' 'ch' 'ch'
C-NET: The Computer Network 'ch' 'ch'
Comedy Central Network 'ch'
Economist Intelligence Unit 'ch' 'ch' 'ch'
John Wiley & Sons, Inc. 'ch' 'ch'
Wire Networks, Inc. (Women's Wire) 'ch' 'ch'
TRAVEL
Galileo International 'ch' 'ch' 'ch'
KLM Royal Dutch Airlines 'ch'
SwissAir 'ch' 'ch'
Swissotel 'ch'
RETAIL/CONSUMER PRODUCTS
Eastman Kodak Company 'ch' 'ch'
Kobra International (Nicole Miller) 'ch' 'ch'
INFORMATION SERVICES
The Associated Press 'ch' 'ch' 'ch'
Bloomberg Financial Markets Inc. 'ch' 'ch'
INSURANCE AND HEALTHCARE
Group Health, Inc. 'ch' 'ch' 'ch'
Insurance Services Office, Inc. 'ch' 'ch' 'ch'
Metropolitan Life Insurance Co. 'ch' 'ch'
National Preferred Provider Network, Inc. 'ch' 'ch' 'ch'
</TABLE>

<PAGE>

<PAGE>
For a discussion of revenues derived from certain customers, see 'Risk
Factors -- Concentration of Revenues'.

KEY APPLICATIONS

The following examples illustrate how the Company has provided
communications and professional services to facilitate access to and
distribution of mission-critical IP-based information and applications.

AUTOMATED DATA PROCESSING FINANCIAL INFORMATION

In the first quarter of 1997, ADP selected Icon to develop a business
application to enable its employees and customers to better manage their
document-centric information resources. The Company successfully developed the
application in accordance with ADP's functional specifications and technology
requirements. Subsequently, ADP identified the need for an intranet-based,
browser-accessible document library that would handle and archive both internal
ADP documents and documents generated outside ADP. Because of Icon's expertise
in integrating legacy systems with new IP-based technology and its
communications services capabilities, ADP selected Icon to design, develop and
web-enable an IP-based document management system. In light of the Company's
successful completion of these projects, coupled with its breadth of expertise
and communications capabilities, in the third quarter 1997, ADP identified Icon
as a proposed member of its newly formed 'Preferred Provider Organization,'
through which ADP actively recommends the Company to ADP customers for IP-based
integration and communications services, including Internet access and web
server hosting.

BEAR, STEARNS & CO. INC.

Historically, Icon had been a major technology product supplier for Bear
Stearns, reselling hardware and software products to the financial services
company since January 1994. In 1995, Bear Stearns hired the Company's
professional services unit to assist in the roll-out of desktop computers within
the firm. As part of the engagement, a number of the Company's engineers were
staffed on-site to assist with the installation and maintenance of the new
systems. Subsequently, Bear Stearns engaged Icon on projects to integrate Bear
Stearns' document management system into an IP-network through a web gateway and
to design, develop and implement its Correspondence System Project. Bear Stearns
also selected the Company to facilitate the migration of Bear Stearns' brokerage
clearing system to an IP-based network, to run the back-office transaction
processing on existing legacy networks and to operate Bear Stearns' systems and
mainframes consistent with its exacting reliability and security requirements.
Icon's solution included initial project consultation, design and development of
the application and IP-network, integration of the application and web gateway
with existing back-office legacy equipment and applications and associated
communications and maintenance services. With respect to this project, Icon
currently provides Internet access services, manages the server on which the
application resides, manages and maintains the IP-network and provides ongoing
consulting services. By implementing this solution, the Company believes that
Bear Stearns has been able to reduce the cost of maintaining a client/server
infrastructure, eliminate the need for application support on the PC level
through the use of Java and reduce WAN expenses by using the Company's network
rather than building it own.

BELL ATLANTIC INTERNET SOLUTIONS

In May 1996, Bell Atlantic Internet Solutions entered into an arrangement
to provide billing services in connection with the inclusion of Icon's
communications services as an option available to Bell Atlantic Internet
Solutions' customers. As a result of this arrangement, a significant percentage
of Bell Atlantic Internet Solutions' customers have selected Icon as their
global service provider to provide the long distance portion of the Internet
access services for both dedicated and switched access services. In light of the
success of this relationship, in June 1997, Bell Atlantic Internet Solutions
contracted with the Company to provide professional services to develop a
website for Bell Atlantic Internet Solutions' online marketing campaign. Icon's
professional services included the design and development of a system
architecture that facilitated users' access to product information and was
capable of distributing

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geographically specific information to users in disparate locations. The Company
also re-purposed existing marketing material to take advantage of the
interactive nature of the Internet. Most recently, the Company extended its
billing arrangement with Bell Atlantic Internet Solutions through October 1999
to continue to make its services available in the traditional Bell Atlantic
southern region and to include the Bell Atlantic northern region (previously
NYNEX) for dedicated services. The Company currently plans to make its services
available to requesting Bell Atlantic Internet Solutions customers in the
northern region during the first quarter of 1998.

CBS INC.

Commencing in 1991, the Company began acting as a VAR for CBS. CBS
thereafter engaged Icon's professional services division to design and develop
an extranet to facilitate CBS' affiliates' access to programming information and
CBS' ability to distribute real-time news and other corporate information from
internal databases. The Company provided consulting services to help CBS design
an efficient and cost-effective technology infrastructure and integrate a
streamlined data-filtering information distribution application with back-end
legacy databases and a web-based user interface. In 1995, the customer selected
Icon to provide hosting and Internet access for the CBS website and other
CBS-related websites. At the same time, CBS selected Icon to develop and manage
an Internet site providing live coverage of the 1996 Presidential election,
entitled 'Campaign '96.' The Company provided CBS with an end-to-end solution,
including design and implementation of the back-end database architecture and
the creation of dynamically-generated pages with live streaming audio and video.
The Company also provided hosted systems management and maintenance and
monitored bandwidth needs on a real-time basis. In September 1997, CBS selected
Icon as its communications services provider to provide various services
including hosting and access for the websites 'cbsnow.com' and 'cbs.com,'
provide systems integration and infrastructure planning services, and to provide
technology products and associated integration, maintenance and support
services.

RESEARCH AND DEVELOPMENT

To optimize overall network performance, Icon develops and markets
proprietary technologies. Icon's proprietary technologies are based on a modular
development approach that offers flexibility and allows for the reuse of
individual components and the rapid implementation of custom solutions. In
addition, Icon maintains a technology-neutral position thereby enabling it to
integrate third-party technologies to optimize its clients' solutions
irrespective of technology platform.

OLive -- Objects Live. OLive is an object-oriented development platform
developed and used by the Company in the design of its proprietary technologies.
The Company designed OLive to simplify the development process of customized
network-centric applications solutions and is focused on re-usability,
interoperability and ease of customization.

NESI. The protection of mission-critical data is of vital importance to a
company's business. As a result, corporations need business recovery
capabilities to replicate data in remote locations. To address data backup and
recovery needs, the Company developed NESI, a technology that extends the
distance over which computers can communicate with peripherals such as disk
drives. Data can be sent over a WAN to be processed on a device at a remote
location, in the same manner as if the device were local. As a result,
administrative tools may be used to manage remote devices without modification.
Major benefits of NESI include the ability to be integrated with third-party
data mirroring products, such as Sun's Solstice DiskSuite and the Veritas Volume
Manager, and with data backup software. The Company plans to provide a business
recovery service by combining NESI with its proprietary IP replication
technology. IP replication technology redirects requests for data stored on a
specific server to one or more servers that are hosted on the Company's network
by replicating the IP address or identity of the original server. If data is
requested from a server that has failed, the request is re-directed to a
different NESI-enabled server that is storing a mirrored copy of the data. This
further improves recoverability of the data and speed of access to it. The
Company has a patent pending on the NESI technology.

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IconCache. End users often experience poor performance while waiting for
content to be downloaded from a web server. IconCache, an OLive-based,
intelligent caching technology speeds this download process, enhancing the
access to and distribution of information over the Internet. Traditionally, when
end-users request data via the Internet, a server in a single location fulfills
the request. This configuration may result in poor performance due to high
server loads caused by overburdening the server with a high volume of requests
or increased latency or transmission delays caused by end-user requests
originating a significant distance from the server. IconCache improves network
performance by addressing both of these problems. Icon addresses server load and
distance-related latency problems in areas experiencing high request volume by
replicating server data and offloading or caching it to other servers.
Ultimately, IconCache diversifies single server loads and moves data closer to
the end-user, minimizing backbone traffic and enhancing performance. IconCache
is different from other caching technologies, such as proxy servers, that do not
provide high levels of data management and are typically used for simple static
websites. Icon plans to enhance the flexibility of IconCache by combining it
with IP replication. The Company has a patent pending on this technology.

IconFeed. In order to fulfill the growing need to publish and distribute
content over the Internet, Icon developed IconFeed, an OLive-based content
publishing and distribution technology. IconFeed is an application that resides
on a server and receives data, regardless of format, and normalizes it for
optimal storage, maintenance and distribution on the web. The normalized data
can be stored in and accessed by a variety of data storage devices, including
databases and file systems. Ultimately, it is distributed and converted into a
format suitable for presentation via web servers, including HTML. The Company
has a patent pending on this technology.

IconChat. The Internet enables the real-time interaction of end-users via
text, audio and video technologies. By incorporating these increasingly popular
interactive technologies into their websites, corporations are realizing
benefits, including the extended duration of end-user visits to revenue-
generating sites and the reduction of traditional communications costs.
IconChat, a text-based real-time discussion system, is the Company's first
Internet-based interactive offering. IconChat includes message board
functionality, enabling the electronic posting of messages similar to that of a
traditional bulletin board. The Company believes that IconChat is ideal for
corporate customers who want to facilitate real-time text-based dialog among
users of a company's website. It is offered as a value-added service to Icon's
communications services customers.

COMPETITION

The markets served by the Company are extremely competitive. The influx of
new market entrants is expected to continue in each sector of the Company's
business to meet the growing demand for information technology and
communications services and products. Additionally, the Company believes that
such factors as shifting customer demands and the rapid pace of technological
advance will intensify competition and result in continual pressures to reduce
prices, enhance services and products and develop and exploit new technology.
Most of the Company's current and potential competitors enjoy a greater market
presence and possess substantially greater technical, financial and marketing
resources than the Company. The Company believes that its ability to compete
successfully depends upon a number of factors, including the performance,
reliability and security of its communications infrastructure, continued ability
to provide end-to-end Internet solutions, its ability to maintain and expand its
channels of distribution, its continued expertise in proprietary and third party
technologies, its ability to attract and retain service engineers, the pricing
policies of its competitors and suppliers, the variety of services it offers,
the timing of introductions of new services by the Company and its competitors,
customer support, the Company's ability to support industry standards and
industry and general economic trends.

COMMUNICATIONS SERVICES

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America Online, MSN and Prodigy; (iii) ISPs, such as NETCOM, PSI, Concentric and
other national and regional providers; (iv) cable modem connectivity providers
such as @Home; and (v) data center providers such as Exodus. Most of these
competitors have greater market presence, engineering and marketing
capabilities, and financial, technological and personnel resources than those
available to the Company. As a result, they may be able to develop and expand
their communications infrastractures more quickly, adapt more swiftly to new or
emerging technologies and changes in customer requirements, take advantage of
acquisition and other opportunities more readily, and devote greater resources
to the marketing and sale of their services amd products than the Company. In
addition to the companies named above, various organizations have entered into
or are forming joint ventures or consortiums to provide services similar to
those of the Company. The Company believes that competitive factors in the
Internet services market include market presence, network capacity, reliability
and security, price, new products and enhancements and conformity with industry
standards.

Certain companies, including WorldCom, Intermedia and GTE, have also
obtained or expanded their Internet access services and products as a result of
acquisitions. Such acquisitions may permit the Company's competitors to devote
greater resources to the development and marketing of new competitive products
and services and the marketing of existing competitive products and services.
Certain companies are also providing high-speed data services using alternative
delivery methods such as cable television, direct broadcast satellites and
wireless cable.

As a result of increased competition and vertical and horizontal
integration and consolidation in the industry, the Company could encounter
significant pricing pressure, which in turn could result in significant
reductions in the average selling price of the Company's services. For example,
certain of the Company's competitors that are telecommunications companies may
be able to provide customers with reduced communications costs in connection
with their Internet access services or private network services, reducing the
overall cost of their solutions and significantly increasing price pressures on
the Company. There can be no assurance that the Company will be able to offset
the effects of any such price reductions with an increase in the number of its
customers, higher revenue from enhanced services, cost reductions or otherwise.

PROFESSIONAL SERVICES

The professional services market is highly fragmented and served by
numerous providers, including consulting and systems integration firms,
facilities management and MIS outsourcing companies, applications software
firms, major equipment providers through their professional services units,
major accounting firms, general management consulting firms and website/intranet
design firms. The Company typically encounters competition from mid-sized and
regional consulting and systems integration firms, such as Cambridge Technology
Partners and Technology Solutions, and increasingly competes with large-scale
systems integrators, such as EDS. The Company's design group also competes with
a variety of interactive design firms including agency.com, Razorfish, US Web
and CKS Group. The Company believes that the primary competitive factors at work
in this market are price, the ability to fashion and deliver efficient solutions
to customer needs, the quality of service, including project management and
ongoing support and maintenance, its ability to attract and retain service
engineers and the availability and quality of hardware. Accordingly, the Company
competes on the basis of its reputation, personnel, technical sophistication and
ability to provide single-source, end-to-end solutions.

PRODUCT RESALES

The product resales business is a highly competitive market with low
margins and no substantial barriers to entry. The Company believes that its
ability to compete successfully depends on a number of factors, including its
ability to integrate value-added services with its product resales, the price at
which the Company resells products, the speed and accuracy of delivery, the
effectiveness of sales and marketing programs, credit availability, the ability
to tailor specific solutions to customer needs, the quality and breadth of
products offered, the availability to offer product information and technical
support and industry and general economic trends.

<PAGE>

<PAGE>
The Company's current and prospective competitors generally can be divided
into three groups: (i) national and regional VARs, such as Itocho, EJV Bridge
Networks, Bell Technologies and LANCOM; (ii) national and regional systems
integrators, such as EDS, Sapient, Computer Associates and The Ergonomics Group;
and (iii) hardware distributors, such as CHS Electronics and Ingram Micro. Many
of these competitors have greater market presence and financial resources than
those available to the Company. As a result, they may be able to adapt more
swiftly to changes in market prices and customer requirements, provide financing
to customers for purchases, take advantage of acquisition and other
opportunities more readily, and devote greater resources to the marketing and
sale of their products than can the Company. In addition, the Company expects
that additional competitive pressure may arise from manufacturers that have been
successful in selling directly to the end-users without the use of resellers.

PROPRIETARY RIGHTS

While the Company believes that other factors, including the technical and
business expertise of its personnel, attentive high-quality customer service and
strategic alliances with its suppliers and other vendors, have to date played a
predominant role in promoting its reputation and the growth of its business, the
Company recognizes that its ability to compete effectively and to continue to
grow will depend increasingly on the use and appeal of its proprietary
technology. The Company relies on patent, trademark, copyright and trade secret
law as well as contractual rights to protect its proprietary technology.
Although the Company has not to date registered any trademark or service mark,
it has applied to register its name and logo design as trademarks and certain of
its product and service names and marks as trademarks or service marks in the
United States. The Company does not own but has applied for patents on certain
of its proprietary technologies. In accordance with the Company's policy, all of
the Company's employees and consultants have entered into, and all future
employee and consultants are expected to enter into, agreements containing
confidentiality and nonsolicitation covenants. Similarly, the Company's
agreements with customers and suppliers include provisions prohibiting or
restricting the disclosure of proprietary information and products, the use of
software in source code form and the sublicensing of licensed software. The
Company also monitors and limits access to and the distribution of its
proprietary technologies. In addition, the Company sells or licenses its
services and products in, and the Internet and other global networks facilitate
the delivery of the Company's software to, other countries where the laws may
not afford adequate protection of the Company's proprietary rights in such
products or provide effective means for its enforcement of such rights.

The Company also relies on certain technology licensed or otherwise
provided by third parties which is incorporated in or used in connection with
the Company's services and products. There can be no assurance that such
technology will continue to be available to the Company on commercially
reasonable terms. The loss of such technology could impair the Company's
products or services or require the Company to obtain substitute technologies of
lower quality or performance standards or at greater cost.

GOVERNMENTAL REGULATION

There is at present no applicable governmental regulation specifically
directed at the Company or the types of business in which it engages. However,
in light of the increasing use and commercial importance of the Internet and
other wide area information networks, various issues, including pricing and
competitive practices, service quality, user privacy and content, are drawing
the attention of Congress, regulators and industry and consumer groups. For
example, the President has recently signed into law the Telecommunications Act
of 1996 and certain states are considering assessing taxes on certain
Internet-related services including Internet access. Additionally, certain
lobbying groups are attempting to initiate legislation which would compel ISPs
to pay access charges for the use of some of the local networks operated by the
RBOCs. The adoption of such laws or regulations could inhibit the continued
growth of the Internet or other wide area information networks, impose
additional costs on the Company, expose the Company to greater potential
liability from regulatory actions or private legal proceedings or otherwise
adversely affect the Company's business operations or performance. However,

<PAGE>

<PAGE>
at present, the Company is unable to predict whether any laws or regulations
specifically applicable to the Company or its businesses will be adopted, or, if
any such laws or regulations are adopted, the nature or extent of their impact
on the information technology industry or the Company's business operations or
performance.

LEGAL PROCEEDINGS

The Company is not a party to, nor is any of its property the subject of,
any material pending legal proceedings.

EMPLOYEES

As of September 30, 1997, the Company had 225 employees, all of whom were
full time. Of these, 86 were principally engaged in professional services, 25
were principally engaged in the communications services, 14 were principally
engaged in the interactive publishing group, 30 were principally engaged in
sales and marketing, 15 were principally engaged in research and development,
and 38 were principally engaged in finance, administration, legal and human
resources. None of the Company's employees is represented by a labor union. The
Company considers its relations with its employees to be satisfactory.

PROPERTIES

The Company currently occupies approximately 55,000 square feet in a modern
office building in Weehawken, New Jersey, under a lease which expires on
February 28, 2006. The Company's NOC is located at its Weehawken building. The
Company also leases approximately 5,700 square feet for its New York City office
and is negotiating a possible lease of 20,000 square feet of space to replace
the existing New York City office.

<PAGE>

<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth certain information (ages as of September
30, 1997) concerning each of the Company's directors, executive officers and
certain key employees:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- -------------------------------------------------------------
<S> <C> <C>
Scott A. Baxter................... 34 President, Chief Executive Officer and Chairman of the Board
of Directors
Richard M. Brown.................. 48 Vice President -- Information Technologies, Secretary and
Director
Scott Harmolin.................... 38 Senior Vice President, Chief Technology Officer and Director
Kenneth J. Hall................... 39 Senior Vice President, Chief Financial Officer and Treasurer
Susan A. Massaro.................. 41 Senior Vice President -- Professional Services
Frank C. Cicio, Jr................ 43 Senior Vice President -- Sales and Business Development
David L. Goret.................... 33 Vice President -- Business Affairs, General Counsel and
Assistant Secretary
Anthony R. Scrimenti.............. 43 Vice President and Chief Information Officer
Robert J. Thalman, Jr............. 45 Vice President -- Strategic Marketing
Michael J. Gold................... 33 Vice President -- Corporate Development
Samuel A. Plum.................... 53 Director
Wayne B. Weisman.................. 41 Director
</TABLE>

Scott A. Baxter, a founder of the Company, has been the President, Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its inception in 1991. From June 1987 to February 1991, Mr. Baxter was an
account executive at Sun. From 1984 to 1987, Mr. Baxter was an account executive
at Data General Corporation ('Data General').

Richard M. Brown, a founder of the Company, has been the Vice
President -- Information Technologies, Secretary and a Director of the Company
since its inception in 1991. From November 1986 to February 1991, Mr. Brown was
President of Custom Applied System Techniques Inc., a consulting firm that
specialized in computer systems.

Scott Harmolin, a founder of the Company, has served as Senior Vice
President, Chief Technology Officer and Director of the Company since its
inception in 1991. From November 1986 to February 1991, Mr. Harmolin was Vice
President of Custom Applied System Techniques Inc., a consulting firm that
specialized in computer systems.

Kenneth J. Hall has served as the Company's Senior Vice President, Chief
Financial Officer and Treasurer since April 1997. From February 1996 to March
1997, he was the Chief Financial Officer of Global Direct Mail Corp. ('Global'),
an international direct marketer of computer products and office supplies. Prior
to such time, Mr. Hall was employed by the National Football League Properties,
Inc. as Vice President of Finance and Administration and Chief Financial Officer
from 1992 to 1995 and Director of Finance from 1990 to 1991. Mr. Hall's
experience also includes management positions with Price Waterhouse LLP and
Coopers & Lybrand L.L.P.

Susan A. Massaro has served as the Company's Senior Vice
President -- Professional Services since March 1996. From January 1979 to March
1996, Ms. Massaro worked for Data General, a computer hardware and software
manufacturer, where she held many technical and business management positions,
including the U.S. Director of Professional Services, Eastern U.S. Director of
Systems Engineering, Northeast Technical Services Manager, and various Systems
Engineering consultant and management positions. Prior to joining Data General,
Ms. Massaro held Programmer/Analyst positions at LeCroy Research Systems, a test
and measurement instrumentation manufacturer, and STC Systems, a business
application solutions provider and integrator.

Frank C. Cicio, Jr. has served as Icon's Senior Vice President -- Sales and
Strategic Business Development since February 1997. Mr. Cicio served from July
1993 to February 1997 as Executive Vice

<PAGE>

<PAGE>
President of Sales and Marketing of Logic Works Incorporated, a computer
software company. Prior to joining Logic Works, Mr. Cicio was Director of
Strategic Alliances at Bachman Information, a computer software company, and
served in various capacities at MAI Systems, a manufacturer of application
software and hardware products for the retail, distribution and financial
markets, beginning as an engineering project manager in 1977 and rising to
General Manager of the North American Industry Business Unit in 1989.

David L. Goret has served as the Company's General Counsel since February
1996 and Vice President -- Business Affairs since February 1997. From July 1992
to January 1996, Mr. Goret served as Vice President -- Business Affairs and
General Counsel of Interfilm, Inc., a public company that he co-founded, which
produced interactive motion pictures. From May 1991 to July 1992, Mr. Goret
served as director of Business Affairs for Controlled Entropy Entertainment, an
entertainment production company. From October 1989 to July 1992, Mr. Goret
served as Director of Business Affairs for Tour-Toiseshell, Inc., the production
company of the Teenage Mutant Ninja Turtles live shows. Mr. Goret was an
attorney at Haythe & Curley from September 1988 to October 1989. Mr. Goret is
admitted to practice in New York and New Jersey.

Anthony R. Scrimenti has served as the Company's Vice President and Chief
Information Officer since August 1994. From October 1993 to August 1994, Mr.
Scrimenti was employed by Novell, Inc., a networking software manufacturer, as a
senior systems consultant. From January 1986 to October 1993, Mr. Scrimenti was
employed by Data General, a computer hardware and software manufacturer, in
various capacities, including as Manager, Network Services.

Robert J. Thalman, Jr. has served as the Company's Vice President of
Strategic Marketing since January 1997. Prior to joining Icon, Mr. Thalman spent
16 years with Turner Broadcasting System, where he oversaw strategic marketing
for both international (1991-1996) and domestic (1986-1990) network
distribution.

Michael J. Gold has served as the Company's Vice President -- Corporate
Development since August 1997. From October 1996 to May 1997, Mr. Gold was the
Chief Executive Officer of Tumble Interactive Media, Inc., an interactive media
agency. From May 1993 to February 1996, he was the President and founder of
Beyond Fitness, a multimedia fitness-information services company. From August
1986 to April 1993, Mr. Gold was employed by AT&T and Bell Laboratories in
various capacities, including Manager, New Business Development in the
electronic commerce area and District Manager, Sales.

Samuel A. Plum has been a Managing General Partner of the general partner
SCP Private Equity Partners, L.P. ('SCP'), a private equity investment fund,
since its inception in August 1996 and was a Managing Director of Safeguard
Scientifics Inc., an information technology company, from 1993 to 1996. From
February 1989 to January 1993, Mr. Plum served as President of Charterhouse Inc.
and Charterhouse North America Securities, Inc., the U.S. investment banking and
broker-dealer arms, respectively, of Charterhouse PLC, a merchant bank in the
U.K. From 1973 to 1989, Mr. Plum served in various capacities at the investment
banking division of PaineWebber, Inc. and Blyth Eastman Dillon & Co., Inc.

Wayne B. Weisman has been a Partner of the general partner of SCP, a
private equity investment fund since, its inception in August 1996. He has been
Vice President of CIP Capital, L.P., a licensed Small Business Investment
Company, since its formation in 1990. From January 1992 to May 1994, Mr.
Weisman was an Executive Vice President of Affinity Biotech, Inc., a healthcare
technology company, and Vice President and General Counsel of its successor,
IBAH, Inc., a clinical trials management company. He formerly practiced law with
the Philadelphia firm of Saul, Ewing, Remick & Saul. Mr. Weisman is a director
of Microleague Multimedia, Inc.

Prior to consummation of the Offering, the Board of Directors shall be
divided into three classes, with each class containing as equal a number of
Directors as possible; after an interim period of three years following
consummation of the Offering, all directors will be elected for three years and
only one class of directors will come up for election each year. Officers serve
at the discretion of the Board of Directors. There are no family relationships
between any of the Directors or executive officers of the

<PAGE>

<PAGE>
Company. There will be five people on the Company's Board of Directors
immediately after the consummation of the Offering.

Upon consummation of the Offering, the Board of Directors intends to
establish an Audit Committee and a Compensation and Stock Option Committee, a
majority of whose members will be independent directors. The Audit Committee
will communicate with and receive information directly from the Company's
independent accountants and will review the Company's financial controls,
policies and procedures. The Compensation and Stock Option Committee is expected
to review and evaluate periodically the compensation of the Company's officers
and will administer the 1995 Option Plan.

COMPENSATION OF DIRECTORS

Directors who are employees of the Company are not entitled to receive any
fees for serving as directors. All directors are reimbursed for out-of-pocket
expenses related to their service as directors. Under the 1995 Option Plan,
non-employee directors will be entitled to receive formula grants of stock
options.

An option to purchase 3,273 shares will be automatically granted to each
non-employee director when he or she is elected or appointed to the Board (the
'Initial Grant'), and an option to purchase an additional 2,182 shares will be
automatically granted at each annual meeting of the Board of Directors following
the Initial Grant (the 'Subsequent Grant') where such person is re-elected as a
director of the Company. The director's right to exercise all of the shares of
the Initial Grant will vest immediately upon grant. Each Subsequent Grant of
options will vest immediately upon grant. The option price per share of Common
Stock granted to non-employee directors will be 100% of the fair market value of
the Common Stock at the date of grant. Each option granted to non-employee
directors will be exercisable for ten years after the date of grant.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following summary compensation table specifies the components of the
compensation packages of the Company's Chief Executive Officer and four other
most highly compensated executive officers (the 'named executive officers') for
the fiscal year ended December 31, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
--------------------------
ANNUAL NUMBER OF
COMPENSATION(A) SHARES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS OPTIONS COMPENSATION
POSITION YEAR ($) ($) (#) ($)
- ------------------------------------------------------ ------ -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Scott A. Baxter ...................................... 1996 $176,981 $120,000 109,091 $--
Chief Executive Officer and President
Richard M. Brown ..................................... 1996 157,077 35,000 -- 5,376
Vice President -- Information Technologies and
Secretary
Scott Harmolin ....................................... 1996 157,577 35,000 -- 5,820
Senior Vice President and Chief Technology Officer
Ari Horowitz ......................................... 1996 95,447 24,002 21,818 --
Chief Financial Officer
David L. Goret ....................................... 1996 98,019 9,000 10,909 --
Vice President -- Business Affairs, General Counsel
and Assistant Secretary
</TABLE>

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

(a) Does not indicate supplementary compensation amounts less than the greater
of 10% of the named executive officer's salary and bonus or $50,000.

<PAGE>

<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information concerning the stock option grants
made to the named executive officers for the fiscal year ended December 31,
1996.

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL OPTIONS VALUE AT ASSUMED
UNDERLYING GRANTED TO PER SHARE ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRICE VALUATION FOR
NAME GRANTED FISCAL YEAR PRICE DATE OPTION TERM
- ------------------------------------------ ---------- ------------- --------- ---------- ----------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C>
Scott A. Baxter........................... 109,091 23.2% $6.63 1/30/06
Ari Horowitz.............................. 21,818 4.6 11.00 4/15/06
David L. Goret............................ 10,909 2.3 6.02 4/15/06
</TABLE>

EMPLOYMENT AGREEMENTS

In December 1995, the Company entered into five-year employment agreements
with Messrs. Baxter, Brown and Harmolin. In May 1997, each of the agreements was
amended to extend the employment term until May 2002. The agreements provide for
Mr. Baxter to serve as the Company's Chief Executive Officer and President, for
Mr. Brown to serve as the Company's Vice President -- Information Technologies
and Secretary and for Mr. Harmolin to serve as the Company's Senior Vice
President and Chief Technology Officer at a minimum annual base salary of
$185,000, $180,000 and $180,000, respectively. Mr. Baxter's agreement also
provides for the payment of a guaranteed quarterly bonus in the amount of
$30,000, and Mr. Brown's and Mr. Harmolin's agreements each provide for the
payment of a guaranteed quarterly bonus in the amount of $10,000. Each also
receives additional benefits, salary increases and bonuses as the Board of
Directors may grant, as well as those benefits generally provided to other
executive officers of the Company, and an automobile allowance. In the event of
termination of employment of any of such executives following a change of
control (as defined in such employment agreements) of the Company that has not
been approved by the Board of Directors, the Company has agreed to pay the
respective executive severance in an amount equal to 2.99 multiplied by his base
amount (as defined in section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the 'Code')). Each executive has also agreed not to compete against
the Company during the term of his employment, and not to solicit or perform
services for any customers or solicit any employee of the Company for a period
of 12 months after the termination of his employment.

In February and March 1997, the Company entered into employment agreements
with Messrs. Cicio and Hall, respectively, pursuant to which they are
employees-at-will. The agreements provide for each to be paid a minimum annual
base salary of $200,000 and a performance-based bonus. If either is terminated
without cause, he is entitled to receive his salary compensation otherwise
payable for a period of six months; provided, however, that if the Company has
extended such employee's related non-compete agreement, then such employee is
entitled to receive his salary compensation otherwise payable for a period of 12
months. Messrs. Cicio and Hall were each granted an option to purchase 109,091
and 87,273 shares of Common Stock, respectively.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company did not have a compensation committee during the fiscal year
ended December 31, 1996. Messrs. Baxter, Brown and Harmolin each participated in
deliberations concerning executive officer compensation. Upon the consummation
of this Offering, the Board of Directors intends to establish a Compensation and
Stock Option Committee. A majority of the members of the Compensation and Stock
Option Committee will be non-employee directors (as defined in Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended).

Messrs. Baxter, Brown and Harmolin are party to an agreement dated as of
July 17, 1995, as amended, whereby each of them has agreed to grant to the other
two the right of first refusal to purchase any shares of Common Stock any of
them proposes to sell on substantially the same terms as a

<PAGE>

<PAGE>
potential third-party is offering and, upon the death of any of them, the right
to purchase any or all of the decedent's shares of Common Stock at the fair
market value on the date of death.

1995 OPTION PLAN

In October 1995, the Board of Directors adopted and the stockholders of the
Company approved the 1995 Option Plan. The 1995 Option Plan provides for the
grant of (i) options that are intended to qualify as incentive stock options
('Incentive Stock Options') within the meaning of Section 422 of the Code to
certain employees and consultants and (ii) options not intended so to qualify
('Nonqualified Stock Options') to employees (including directors and officers
who are employees of the Company), non-employee directors and consultants. The
total number of shares of Common Stock for which options may be granted under
the Stock Option Plan is 2,181,819 shares.

The 1995 Option Plan is to be administered by a committee of the Board of
Directors, which will determine to whom options are granted, the number of
shares subject to such options, and the terms, exercise prices and other terms
and conditions of the exercise thereof.

The exercise price of any Incentive Stock Option granted under the 1995
Option Plan must be at least equal to the fair market value of the shares
subject to such option on the date of grant, while the exercise price of any
Incentive Stock Option granted to any participant who owns stock possessing more
than 10% of the total combined voting power of the Company's outstanding capital
stock must be at least equal to 110% of the fair market value of the shares
subject to such option on the date of grant. The term of each Incentive Stock
Option granted pursuant to the Plan cannot exceed ten years, while the term of
any Incentive Stock Option granted to a participant who owns stock possessing
more than 10% of the total combined voting power of the Company's outstanding
capital stock. Options become exercisable at such times and in such installments
as is provided in the option contract for each individual option. No option
granted under the Plan is transferable by the optionee other than by will or the
laws of descent and distribution and each option is exercisable during the
lifetime of the optionee only by such optionee.

As of the date of this Prospectus, under the Plan, the Company has granted
to certain of its employees options to purchase up to 1,120,727 shares of Common
Stock at an exercise price between $6.02 and $13.48 per share, of which options
with respect to 211,091 shares are currently exercisable and the balance thereof
becomes exercisable at various times after January 15, 1998. The Company has
also granted to one of its former employees options to purchase up to 65,455
shares of Common Stock at an exercise price of $14.27 per share, all of which
options are currently exercisable. All such options have terms of ten years, and
provide that, upon the earliest to occur of the death, permanent total
disability or termination without cause of employment of the option holder, such
option will become immediately exercisable with respect to all shares of Common
Stock subject thereto as to which such option would otherwise have been
exercisable within three years after the occurrence of such event.

AGREEMENTS WITH EMPLOYEES

Each employee of the Company is required to enter into an agreement with
the Company pursuant to which such person agrees (i) to assign to the Company
any inventions relating to such person's employment conceived during such
person's employment by the Company, (ii) not to disclose confidential
information to third parties, (iii) not to compete against the Company during
the term of such person's employment, and (iv) not to solicit or perform
services for any customers or solicit any employee of the Company for a period
of 12 months following the termination of such person's employment. The
agreement also provides that the employee is an 'at will' employee and that
either the Company or the employee may terminate employment with the Company at
any time with or without cause.

401(K) PLAN

In January 1993 the Company adopted a tax-qualified employee savings and
retirement plan (the '401(k) Plan') covering the Company's employees. Pursuant
to the 401(k) Plan, employees may elect to reduce their current compensation by
up to the lesser of 10% of eligible compensation or the statutorily

<PAGE>

<PAGE>
prescribed annual limit ($9,500 in 1997) and have the amount of such reduction
contributed to the 401(k) Plan. The trustees under the 401(k) Plan, at the
direction of each participant, invest the assets of the 401(k) Plan. The 401(k)
Plan is intended to qualify under Section 401 of the Code so that c ontributions
by employees to the 401(k) Plan, and income earned on plan contributions, are
not taxable to employees until withdrawn.

PROFIT SHARING PLAN

The Company has a profit sharing plan (the 'PSP') covering substantially
all full-time employees. Contributions by the Company to the PSP amounted to
$129,000 and $28,000 in 1994 and 1996, respectively. There were no contributions
to the PSP during 1995 and the six months ended June 30, 1997.

CERTAIN TRANSACTIONS

On August 30, 1995, the Company made loans of $50,000 to Messrs. Baxter,
Brown and Harmolin. Interest accrues at an annual rate of 7%. The loans
including accrued interest are due on demand.

Messrs. Baxter, Brown and Harmolin are party to a Stockholders' Agreement
dated as of July 17, 1995, as amended, pursuant to which, in the event any of
them desires to accept an offer from a third-party to purchase any shares of
Common Stock owned by such stockholder, the Company and the other two
stockholders have the right to purchase such shares at a price that is adjusted
annually pursuant to the mutual agreement of Messrs. Baxter, Brown and Harmolin
(the 'Agreed Upon Price'). If any of Messrs. Baxter, Brown or Harmolin becomes
disabled, is terminated for any reason, engages in a competitive business or is
adjudicated bankrupt, then the Company and the remaining two stockholders have
the right to purchase all the shares then owned by such stockholder at the
Agreed Upon Price. Upon the death of any of them, the Company is obligated to
purchase all the decedent's shares of Common Stock, and the decedent's estate is
obligated to sell such shares, at the Agreed Upon Price.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding ownership of
the Common Stock as of September 30, 1997 and immediately following the Offering
by (i) each person or entity who owns of record or beneficially five percent or
more of the Company's Common Stock, (ii) each director and named executive
officer of the Company, (iii) all directors and executive officers of the
Company as a group and (iv) each of the Selling Stockholders. To the knowledge
of the Company, each of such stockholders has sole voting and investment power
as to the shares shown unless otherwise noted. Unless otherwise noted, the
address of each beneficial owner named below is the Company's corporate address.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------------------
PERCENT PERCENT
NUMBER OF PRIOR TO AFTER
BENEFICIAL OWNER SHARES OFFERING OFFERING
- ----------------------------------------------------------------------- --------- --------- -------
<S> <C> <C> <C>
Scott A. Baxter........................................................ 2,181,818 19.5% %(a)
Richard M. Brown....................................................... 2,181,818 19.5 (a)
Scott Harmolin......................................................... 2,181,818 19.5 (a)
Kenneth J. Hall........................................................ 4,981 *
Susan A. Massaro(b).................................................... 6,364 *
Frank C. Cicio, Jr..................................................... -- *
David L. Goret(b)...................................................... 6,364 *
Samuel A. Plum(c)(d)................................................... 2,499,639 20.8
Wayne B. Weisman (c)................................................... -- *
SCP Private Equity Partners, L.P.(c)(e)................................ 2,499,639 20.8
Paul Tudor Jones, II(f)(g)............................................. 875,043 7.8
</TABLE>

(table continued on next page)

<PAGE>

<PAGE>
(table continued from previous page)

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

* Less than 1%.

(a) Each of Messrs. Baxter, Brown and Harmolin is a Selling Stockholder and has
granted the Underwriters an option to purchase up to shares of
Common Stock solely to cover over-allotments. If the Underwriters'
over-allotment is exercised in full, Messrs. Baxter, Brown and Harmolin
will each own % of the Common Stock after consummation of the Offering.

(b) Includes currently exercisable options to purchase 6,364 shares of Common
Stock.

(d) Includes 1,660,440 shares of Common Stock and currently exercisable
warrants to purchase 839,199 shares of Common Stock, each held of record by
SCP which Mr. Plum may be deemed to beneficially own. Mr. Plum is a general
partner of the general partner of SCP. Mr. Plum disclaims beneficial
ownership of such securities.

(e) Includes currently exercisable warrants to purchase 839,199 shares of
Common Stock.

(f) The address for the beneficial owner is c/o Tudor Investment Corporation,
40 Rowes Wharf, Boston, Massachusetts 02110.

(g) Includes 477,827 shares of Common Stock and currently exercisable warrants
to purchase 23,784 shares of Common Stock beneficially owned by Tudor BVI
Futures, Ltd. ('Tudor BVI'), 77,193 shares of Common Stock and currently
exercisable warrants to purchase 3,862 shares of Common Stock beneficially
owned by The Raptor Global Fund L.P. ('Raptor L.P.'), 109,522 shares of
Common Stock and warrants convertible into 5,437 shares of Common Stock
beneficially owned by The Raptor Global Fund Ltd. ('Raptor Ltd.') and, in
the case of Mr. Jones, 168,991 shares of Common Stock and currently
exercisable warrants to purchase 8,428 shares of Common Stock beneficially
owned by Tudor Arbitrage Partners L.P. ('TAP'). Mr. Jones is the Chairman,
Chief Executive Officer and principal stockholder of Tudor Investment
Corporation ('Tudor'), which acts as general partner and/or investment
adviser to Tudor BVI, Raptor L.P. and Raptor Ltd. Mr. Jones is also the
Chairman and indirect principal equity owner of the general partner of TAP.
As a result, Mr. Jones and Tudor may be deemed to be the beneficial owners
of the shares of Common Stock beneficially held by Tudor BVI, Raptor L.P.,
Raptor Ltd. and, in the case of Mr. Jones, TAP. Each of Mr. Jones and Tudor
disclaims beneficial ownership of shares of Common Stock beneficially owned
by such entities.

(h) The address for the beneficial owner is Plymouth Meeting Executive Campus,
610 West Germantown Pike, Suite 200, Plymouth Meeting, Pennsylvania 19462.

(i) MVMA, Inc. ('MVMA') is the general partner of the general partner of Mellon
Ventures L.P. ('Mellon Ventures'). MVMA disclaims beneficial ownership of
shares of Common Stock owned by Mellon Ventures.

(j) The address for the benefical owner is 40 Rowes Wharf, Boston,
Massachusetts 02110.

(k) Includes currently exercisable options to purchase 12,728 shares of Common
Stock and warrants to purchase 839,199 shares of Common Stock. Mr. Plum
disclaims beneficial ownership of 1,660,440 shares of Common Stock and
currently exercisable warrants to purchase 839,199 shares of Common Stock.

<PAGE>

<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL MATTERS

The total amount of authorized capital stock of the Company consists of
50,000,000 shares of Common Stock, par value $.001 per share, and 1,000,000
shares of preferred stock, par value $.01 per share (the 'Preferred Stock'),
450,000 shares of which are designated as Series A Convertible Participating
Preferred Stock and 415,000 shares of which are designated as 10% PIK Series B
Convertible Participating Preferred Stock. Upon consummation of the Offering,
shares of Common Stock will be issued and outstanding and no shares of
Preferred Stock will be outstanding. The discussion herein describes the
Company's capital stock, Restated Certificate of Incorporation and Restated
By-laws. The following summary description of the Company's capital stock
describes all material provisions of, but does not purport to be complete and is
subject to, and qualified in its entirety by, the Restated Certificate of
Incorporation and the Restated By-laws of the Company that are included as
exhibits to the Registration Statement of which this Prospectus forms a part and
by the provisions of applicable law.

COMMON STOCK

As of September 30, 1997, there were 6,545,455 shares of Common Stock
outstanding held by three holders of record. The issued and outstanding shares
of Common Stock are, and the shares of Common Stock being offered will be upon
payment therefor, validly issued, fully paid and non-assessable. Subject to the
prior rights of the holders of any Preferred Stock, the holders of outstanding
shares of Common Stock are entitled to receive dividends out of assets legally
available therefor at such times and in such amounts as the Board of Directors
may from time to time determine. See 'Dividend Policy'. Following consummation
of the Offering, shares of Common Stock will not be redeemable or convertible,
and the holders thereof will have no preemptive or subscription rights to
purchase any securities of the Company. Upon liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to receive pro rata
the assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Preferred Stock then outstanding. Each outstanding share of
Common Stock is entitled to one vote on all matters submitted to a vote of
stockholders.

Application will be made to list the Common Stock on the NNM under the
symbol ICMT.

PREFERRED STOCK

As of September 30, 1997, there were 422,607 shares of Series A Preferred
Stock outstanding held by 60 holders of record. The issued and outstanding
shares of Series A Preferred Stock are validly issued, fully paid and
non-assessable. Pursuant to the terms of the Certificate of Incorporation in
effect prior to the Offering, upon the consummation of this Offering, the shares
of Series A Preferred Stock will be converted automatically into 1,637,098
shares of Common Stock.

As of September 30, 1997, there were 180,240 shares of Series B Preferred
Stock outstanding held by 18 holders of record. The issued and outstanding
shares of Series B Preferred Stock are validly issued, fully paid and
non-assessable. Pursuant to the terms of the Certificate of Incorporation in
effect prior to the Offering, upon the consummation of the Offering, the shares
of Series B Preferred Stock will be converted automatically into 2,992,777
shares of Common Stock.

The Company's Board of Directors may, without further action by the
Company's stockholders, from time to time, direct the issuance of up to
1,000,000 shares of Preferred Stock in series and may, at the time of issuance,
determine the rights, preferences and limitations of each series. Satisfaction
of any dividend preferences of outstanding shares of Preferred Stock would
reduce the amount of funds available for the payment of dividends on shares of
Common Stock. Holders of shares of Preferred Stock may be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of shares of Common Stock.
Under certain circumstances, the issuance of shares of Preferred Stock may
render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a

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large block of the Company's securities or the removal of incumbent management.
The Board of Directors of the Company, without stockholder approval, may issue
shares of Preferred Stock with voting and conversion rights which could
adversely affect the holders of shares of Common Stock. Upon consummation of the
Offering, there will be no shares of Preferred Stock outstanding, and the
Company has no present intention to issue any shares of Preferred Stock.

WARRANTS

There are currently outstanding warrants to purchase an aggregate of
948,889 shares of Common Stock, of which warrants to purchase 68,179 shares of
Common Stock have an exercise price of $.0275 and warrants to purchase 880,710
shares of Common Stock have an exercise price of $6.0225. Of the warrants with
an exercise price of $.0275, 15,541 expire on January 29, 2001; 94 expire on
March 14, 2001; 50,042 expire on May 30, 2007; and 2,502 expire on September 2,
2007. Of the warrants with an exercise price of $6.0225, 41,511 expire on
December 31, 2002; 838,199 expire on May 30, 2007; and 1,000 expire on September
2, 2007. The warrants have customary anti-dilution provisions.

REGISTRATION RIGHTS OF CERTAIN HOLDERS

Pursuant to an Investors' Rights Agreement among the Company and the
holders of the Series A Preferred Stock, dated as of January 30, 1996, and
Registration Rights Agreements between the Company and each holder of the Series
B Preferred Stock, dated between May 30, 1997 and September 22, 1997
(collectively, the 'Registration Rights Agreements'), certain securityholders of
the Company (the 'Holders') that will own approximately 4,629,875 shares of
Common Stock, shares of Common Stock issuable upon exercise of warrants to
purchase 933,254 shares of Common Stock and 891,743 warrants to purchase Common
Stock (collectively, the 'Registrable Securities') or their permitted
transferees are entitled to registration rights with respect to the Registrable
Securities at any time following the earlier of (i) 180 days following
consummation of the Offering and (ii) January 30, 1999. Additionally, the
holders of warrants to purchase 15,635 shares of Common Stock have the right to
register such shares of Common Stock on a registration statement filed by the
Company.

Under the terms of the Registration Rights Agreements between the Company
and the Holders of such Registrable Securities, if the Company proposes to
register any of its securities under the Securities Act, either for its own
account or for the account of other security holders exercising registration
rights, such Holders are entitled to notice of such registration and are
entitled to include their Registrable Securities therein at the Company's
expense; such Holders, however, have waived their right to register their
Registrable Securities in the Offering. Holders of Registrable Securities also
have the right to demand that the Company file a registration statement under
the Securities Act, subject to certain conditions and limitations. These rights
are generally subject to certain conditions and limitations, among them the
right of the underwriters of an offering to limit the number of shares included
in such registration in certain circumstances.

CERTAIN ANTI-TAKEOVER CHARTER PROVISIONS AND STATUTORY PROVISIONS

The Restated Certificate of Incorporation requires that special meetings of
the stockholders of the Company be called only by a majority of the Board of
Directors or by certain officers. The Restated Certificate of Incorporation also
provides that the Board of Directors shall be divided into three classes, with
each class containing as equal a number of directors as possible; after an
interim period of three years following consummation of the Offering, all
directors will be elected for three years and only one class of directors will
come up for election each year.

The Restated By-laws provide that stockholders seeking to bring business
before or to nominate directors at any annual 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 not less than 60 days nor more than 90 days prior to such meeting
or, if less than 70 days' notice was given for the meeting, within 10 days
following the date on which such notice was given. The Restated By-laws also
will specify certain requirements for a stockholder's notice to be in

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<PAGE>
proper written form. These provisions will restrict the ability of stockholders
to bring matters before the stockholders or to make nominations for directors at
meetings of stockholders.

Following the consummation of the Offering, the Company will be subject to
the 'business combination' provisions of the Delaware General Corporation Law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various 'business combination' transactions with any 'interested
stockholder' for a period of three years after the date of the transaction in
which the person became an 'interested stockholder,' unless (i) the transaction
is approved by the Board of Directors prior to the date the interested
stockholder obtained such status, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an 'interested stockholder,' the
'interested stockholder' owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned by
(a) persons who are directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer, or (iii) on or subsequent to such date the 'business combination' is
approved by the board of directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the 'interested stockholder.' A
'business combination' is defined to include mergers, asset sales and other
transactions resulting in financial benefit to a stockholder. In general, an
'interested stockholder' is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of a corporation's
voting stock. The statute could prohibit or delay mergers or other takeover or
change in control attempts with respect to the Company and, accordingly, may
discourage attempts to acquire the Company. In addition, the Restated
Certificate of Incorporation will provide that the affirmative vote of at least
80% of the outstanding voting stock is required for a business combination
between the Company or any subsidiary and the beneficial owner of more than five
percent of the outstanding voting stock unless such transaction (i) has been
approved by a majority of the disinterested directors or (ii) involves a person
who, as of the completion of the Offering, was the beneficial owner of more than
five percent of the outstanding voting stock.

LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Restated Certificate of Incorporation limits the liability of directors
to the fullest extent permitted by the Delaware General Corporation Law. In
addition, the Restated Certificate of Incorporation provides that the Company
shall indemnify directors, officers, employees and agents of the Company acting
in such capacity to the fullest extent permitted by such law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock will be American
Stock Transfer & Trust Company.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion the Offering the Company will have shares of Common
Stock outstanding ( shares if the over-allotment option is exercised in
full). The shares of Common Stock ( shares if the over-allotment
option is exercised in full) sold in the Offering will be freely tradeable
without restriction or further registration under the Securities Act, unless
held by an 'affiliate' of the Company as that term is defined in Rule 144
promulgated under the Securities Act ('Rule 144'), which shares will be subject
to the resale limitations of Rule 144. The remaining 11,175,329 shares of Common
Stock have not been registered under the Securities Act and may not be sold
unless they are registered or unless an exemption from registration, such as the
exemption provided by Rule 144 or Rule 701 under the Securities Act ('Rule
701'), is available.

In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned shares
constituting 'restricted securities' (generally defined as securities acquired
from the Company or an affiliate of the Company in a non-public transaction) for
at least one year, is entitled to sell within any three-month period a number of
shares that does not exceed

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<PAGE>
the greater of one percent of the outstanding Common Stock or the average weekly
trading volume in the Common Stock during the four calendar weeks preceding the
date on which notice of such sale is filed pursuant to Rule 144. Sales under
Rule 144 are also subject to certain provisions regarding the manner of sale,
notice requirements and the availability of current public information about the
Company. A stockholder (or stockholders whose shares are aggregated) who is not
an affiliate of the Company for at least 90 days prior to a proposed transaction
and who has beneficially owned 'restricted securities' for at least two years is
entitled to sell such shares under Rule 144 without regard to the limitations
described above. Rule 701 provides that, beginning 90 days after the date of
this Prospectus, shares of Common Stock acquired on the exercise of options
outstanding prior to the date of this Prospectus may be resold by persons other
than affiliates of the Company without regard to the current public information,
holding period, volume limitations and notice provision of Rule 144, and by
affiliates subject to all the provisions of Rule 144 except its one-year minimum
holding period. Accordingly, the Company believes that, under prevailing
interpretations of Rules 144 and 701, 6,545,454 shares of Common Stock that
constitute 'restricted securities' will be eligible for sale, subject to the
contractual lock-up provisions described below, 90 days after the date of this
Prospectus, and 4,629,875 shares of Common Stock would be eligible for sale
beginning one year from the date of this Prospectus, subject to certain volume
and other limitations under Rule 144. The Company intends to file one or more
registration statements under the Securities Act to register the shares of
Common Stock issued and reserved for issuance in compensatory arrangements and
under the 1995 Option Plan. Registration would permit the resale of such shares
by non-affiliates and affiliates, subject to the lock-up described below, in the
public markets without restriction under the Securities Act.

The Company, its officers, directors and the Selling Stockholders and
holders of additional shares Common Stock have agreed that, for a period
of 180 days after the date of this Prospectus, they will not (i) offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the Securities and Exchange Commission a registration statement under
the Securities Act relating to, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock,
or disclose the intention to make any such offer, sale, contract to sell,
pledge, disposition or filing, or (ii) enter into any swap or any other
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of such shares of Common Stock, whether any transaction described
in clause (i) or (ii) above is to be settled by delivery of shares of Common
Stock or such other securities, in cash or otherwise, in each case without the
prior written consent of Credit Suisse First Boston Corporation, except in the
case of the Company, issuances pursuant to the 1995 Option Plan.

In addition, after the Offering, the holders of 4,629,875 shares of Common
Stock will be entitled to certain rights with respect to registration of such
shares under the Securities Act. Registration of such shares under the
Securities Act would result in such shares becoming freely tradeable without
restriction under the Securities Act (except for shares purchased by affiliates
of the Company) immediately upon the effectiveness of such registration. See
'Description of Capital Stock -- Registration Rights of Certain Holders'.

Prior to the Offering, there has been no public trading market for the
shares of Common Stock, and there can be no assurance that a regular trading
market will develop after the Offering, or that if it is developed, it will be
sustained. In addition, no prediction can be made as to the effect, if any, that
market sales of shares of Common Stock or the availability of such shares for
sale will have on the market prices prevailing from time to time. Nevertheless,
the possibility that substantial numbers of shares of Common Stock may be sold
in the public market may adversely affect prevailing market prices for the
shares of Common Stock and could impair the Company's ability to raise capital
through the sale of its equity securities.

<PAGE>

<PAGE>
CERTAIN UNITED STATES FEDERAL TAX
CONSEQUENCES TO NON-U.S. HOLDERS

The following is a general summary of certain U.S. Federal income and
estate tax consequences expected to result under current law from the purchase,
ownership, sale or other taxable disposition of Common Stock by any person or
entity other than (a) a citizen or resident of the United States, (b) a
corporation created or organized in or under the laws of the United States or of
any State thereof (including the District of Columbia), (c) an estate or trust
described in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended (the 'Code') or (d) a person or entity otherwise subject to U.S. Federal
income taxation on income from sources outside the United States (a 'Non-U.S.
Holder'). This summary does not address all U.S. Federal income and estate tax
considerations that may be relevant to Non-U.S. Holders in light of their
particular circumstances or to certain Non-U.S. Holders that may be subject to
special treatment under U.S. Federal income tax laws. Furthermore, this summary
does not discuss any aspects of foreign, state or local taxation. This summary
is based on current provisions of the Code, existing, temporary and proposed
regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with
retroactive effect. PROSPECTIVE PURCHASERS OF COMMON STOCK ARE ADVISED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF ACQUIRING,
HOLDING AND DISPOSING OF COMMON STOCK.

DIVIDENDS

Dividends paid to a Non-U.S. Holder of Common Stock generally will be
subject to withholding of U.S. Federal income tax at a 30% rate (or such lower
rate as may be specified by an applicable income tax treaty) unless the dividend
is (a) effectively connected with the conduct of a trade or business of the
Non-U.S. Holder within the United States or (b) if a tax treaty applies, is
attributable to a United States permanent establishment of the Non-U.S. Holder,
in which cases the dividend will be taxed at ordinary U.S. Federal income tax
rates. If the Non-U.S. Holder is a corporation, such effectively connected
income may also be subject to an additional 'branch profits tax.' A Non-U.S.
Holder may be required to satisfy certain certification requirements in order to
claim treaty benefits or otherwise claim a reduction of, or exemption from, the
withholding obligation pursuant to the above described rules.

SALE OR OTHER DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. Federal income or
withholding tax in respect of any gain recognized on the sale or other taxable
disposition of Common Stock unless (a) the gain is effectively connected with a
trade or business of the Non-U.S. Holder in the United States; (b) in the case
of a Non-U.S. Holder who is an individual and holds the Common Stock as a
capital asset, the holder is present in the United States for 183 or more days
in the taxable year of the disposition and satisfies certain other conditions;
(c) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S.
Federal income tax law applicable to certain United States expatriates; or (d)
(i) the Company is or has been during certain periods preceding the disposition
a 'U.S. real property holding corporation' for U.S. Federal income tax purposes
(which the Company does not believe it is or is likely to become) and, (ii)
assuming that the Common Stock will be 'regularly traded on an established
securities market' for tax purposes, the Non-U.S. Holder held, directly or
indirectly, at any time during the five-year period ending on the date of
disposition, more than 5% of the outstanding Common Stock.

BACKUP WITHHOLDING AND REPORTING REQUIREMENTS

On October 6, 1997, the Internal Revenue Service issued final regulations
relating to withholding, information reporting and backup withholding that unify
current certification procedures and forms and clarify reliance standards (the
'Final Regulations'). The Final Regulations generally will be effective with
respect to payments made after December 31, 1998. Except as provided below, this
section describes rules applicable to payments made on or before December 31,
1998.

Dividends. United States backup withholding tax generally will not apply to
dividends paid on Common Stock to a Non-U.S. Holder at an address outside the
United States. The Company must report annually to the Internal Revenue Service
and to each Non-U.S. Holder the amount of dividends

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<PAGE>
paid to, and the tax withheld with respect to, such holder, regardless of
whether any tax was actually withheld. This information may also be made
available to the tax authorities in the Non-U.S. Holder's country of residence.

Sale or Other Disposition of Common Stock. Upon the sale or other taxable
disposition of Common Stock by a Non-U.S. Holder to or through a United States
office of a broker, the broker must backup withhold at a rate of 31% and report
the sale to the Internal Revenue Service, unless the holder certifies its
Non-U.S. status under penalties of perjury or otherwise establishes an
exemption. Upon the sale or other taxable disposition of Common Stock by a
NonU.S. Holder to or through the foreign office of a United States broker, or a
foreign broker with certain types of relationships to the United States, the
broker must report the sale to the Internal Revenue Service (but not backup
withhold), unless the broker has documentary evidence in its files that the
seller is a Non-U.S. Holder and/or certain other conditions are met, or the
holder otherwise establishes an exemption.

Amounts withheld under the backup withholding rules generally are allowable
as a credit against such Non-U.S. Holder's U.S. Federal income tax liability (if
any), which may entitle such Non-U.S. Holder to a refund, provided that the
required information is furnished to the Internal Revenue Service.

The Final Regulations eliminate the general prior legal presumption that
dividends paid to an address in a foreign country are paid to a resident of that
country. In addition, the Final Regulations impose certain certification and
documentation requirements on Non-U.S. Holders claiming the benefit of a reduced
withholding rate with respect to dividends under a tax treaty or otherwise
claiming a reduction of, or exemption from, the withholding obligation described
above.

PROSPECTIVE PURCHASERS OF THE COMMON STOCK ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE EFFECT, IF ANY, OF THE FINAL REGULATIONS ON THEIR
PURCHASE, OWNERSHIP AND DISPOSITION OF THE COMMON STOCK.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual Non-U.S. Holder who
is not a citizen or resident (as specially defined for U.S. Federal estate tax
purposes) of the United States at the time of death will be included in such
individual's gross estate for U.S. Federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

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<PAGE>
UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated , 1997 (the 'Underwriting Agreement'), the underwriters
named below (the 'Underwriters'), for whom Credit Suisse First Boston
Corporation, BancAmerica Robertson Stephens, Donaldson, Lufkin & Jenrette
Securities Corporation and Tucker Anthony Incorporated are acting as
representatives (the 'Representatives'), have severally but not jointly agreed
to purchase from the Company the following respective numbers of shares of
Common Stock:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ------------------------------------------------------------------------------------------- ---------
<S> <C>
Credit Suisse First Boston Corporation.....................................................
BancAmerica Robertson Stephens.............................................................
Donaldson, Lufkin & Jenrette Securities Corporation........................................
Tucker Anthony Incorporated................................................................
---------
Total.................................................................................
---------
---------
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the shares of Common Stock
offered hereby (other than those shares covered by the over-allotment option
described below) if any are purchased. The Underwriting Agreement provides that,
in the event of a default by an Underwriter, in certain circumstances the
purchase commitments of non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.

Under the Underwriting Agreement, the Company and the Selling Stockholders
have granted to the Underwriters an option, exercisable by Credit Suisse First
Boston Corporation on behalf of the Underwriters, expiring at the close of
business on the 30th day after the date of this Prospectus, to purchase up to
additional shares from the Company and an aggregate of shares from
the Selling Stockholders at the initial public offering price less the
underwriting discounts and commissions, all as set forth on the cover page of
this Prospectus. Such option may be exercised only to cover over-allotments in
the sale of the shares of Common Stock offered hereby. To the extent such option
is exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of additional shares
being sold to the Underwriters as the number of shares set forth next to such
Underwriter's name in the preceding table bears to the total number of shares.
Any shares of Common Stock purchased pursuant to the exercise of such option
will be purchased first from the Selling Stockholders and thereafter from the
Company.

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares to the public initially at the offering price set
forth on the cover page of this Prospectus and, through the Representatives, to
certain dealers at such price less a concession of $ per share and that the
Underwriters and such dealers may allow a discount of $ per share on sales
to certain other dealers. After the initial public offering, the public offering
price and concession and discount to dealers may be changed by the
Representatives.

Tucker Anthony Incorporated is 12%-owned by SCP Private Equity Partners,
L.P., which prior to the Offering also owns 20.8% of the Company.

The Representatives have informed the Company that they do not expect
discretionary sales by the Underwriters to exceed 5% of the number of shares of
Common Stock being offered hereby.

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or such other securities, in cash or otherwise, in each case without the prior
written consent of Credit Suisse First Boston Corporation, except in the case of
the Company, issuances pursuant to the 1995 Option Plan.

The Company has reserved for purchase from the Underwriters at the initial
public offering price up to shares of Common Stock which may be
purchased by certain employees of the Company and certain other individuals
through a directed share program. The number of shares of Common Stock available
for sale to the general public in the Offering will be reduced to the extent
such persons purchase the reserved shares. Any reserved shares not so purchased
will be offered by the Underwriters to the general public on the same terms as
the other shares offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, and to contribute to payments which the Underwriters may be
required to make in respect thereof.

Application will be made to list the shares of Common Stock on the NNM.

Prior to the Offering there has been no public market for the Common Stock.
The initial public offering price for the Common Stock will be determined by
negotiation between the Company and Credit Suisse First Boston Corporation on
behalf of the Underwriters and does not reflect the market price of the Common
Stock following the Offering. Among the principal factors to be considered in
determining the initial public offering price will be market conditions for
initial public offerings, the history of and prospects for the Company's
business, the Company's past and present operations, its past and present
earnings and current financial position, an assessment of the Company's
management, the market of securities of companies in businesses similar to those
of the Company, the general condition of the securities markets and other
relevant factors. There can be no assurance that the initial public offering
price will correspond to the price at which the Common Stock will develop and
continue after the Offering.

In connection with the Offering, Credit Suisse First Boston Corporation, on
behalf of the Underwriters, may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934, as amended.
Over-allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Common Stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit Credit Suisse
First Boston Corporation to reclaim a selling concession from a syndicate member
when Common Stock originally sold by such syndicate member is purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the Common Stock to be higher than it would otherwise be in
the absence of such transactions. These transactions may be effected on The
Nasdaq Stock Market's National Market or otherwise and, if commenced, may be
discontinued at any time.

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NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the Common Stock in Canada is being made only on a
private placement basis exempt from the requirement that the Company and the
Selling Stockholders prepare and file a prospectus with the securities
regulatory authorities in each province where trades of Common Stock are
effected. Accordingly, any resale of the Common Stock in Canada must be made in
accordance with applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made in accordance
with available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority. Purchasers
are advised to seek legal advice prior to any resale of the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling
Stockholders and the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable provincial securities laws
to purchase such Common Stock without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser is
purchasing as principal and not as agent, and (iii) such purchaser has reviewed
the text above under 'Resale Restrictions.'

ENFORCEMENT OF LEGAL RIGHTS

All of the issuer's directors and officers as well as the experts named
herein and the Selling Stockholders may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the issuer or such persons. All or a substantial
portion of the assets of the issuer and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
the issuer or such persons in Canada or to enforce a judgment obtained in
Canadian courts against such issuer or persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
Common Stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from the Company. Only one
such report must be filed in respect of Common Stock acquired on the same date
and under the same prospectus exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

Canadian purchasers of Common Stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the Common
Stock in their particular circumstances and with respect to the eligibility of
the Common Stock for investment by the purchaser under relevant Canadian
Legislation.

<PAGE>

<PAGE>
LEGAL MATTERS

The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Parker Chapin Flattau & Klimpl, LLP, New York,
New York. The Underwriters have been represented by Cravath, Swaine & Moore, New
York, New York.

EXPERTS

The financial statements as of December 31, 1995 and 1996 and for each of
the three years in the period ended December 31, 1996 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-1 under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, omits certain of the information contained
in the Registration Statement and the exhibits and schedules thereto on file
with the Commission pursuant to the Securities Act and the rules and regulations
of the Commission thereunder. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement
and the exhibits and schedules thereto.

After the consummation of the Offering, the Company will be subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended, and in accordance therewith, will be required to file reports, proxy
statements and other information with the Commission. The Registration
Statement, including exhibits and schedules thereto, as well as any such report,
proxy statement or other information filed by the Company with the Commission
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 75 Park Place, Room
1400, New York, New York 10007 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and copies may be obtained at the
prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. In addition, the Company is required to
file electronic versions of these documents on the Commission's Electronic Data
Gathering Analysis and Retrieval system. The Commission maintains a website that
contains reports, proxy and information statements and other information filed
with the Commission; the address of this site is http://www.sec.gov. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in its entirety
by such reference.

The Company intends to furnish to its stockholders annual reports
containing audited financial statements examined and reported upon by
independent certified public accountants and quarterly reports containing
unaudited financial information for each of the first three fiscal quarters.

<PAGE>

<PAGE>
GLOSSARY

<TABLE>
<S> <C>
ATM................................. Asynchronous Transfer Mode. An information transfer standard that is one of
a general class of packet technologies that relay traffic by way of an
address contained within the first five bytes of a standard fifty-three
byte-long packet or cell. The ATM format can be used by many different
information systems, including LANs, to deliver traffic at varying rates,
permitting a mix of data, voice and video.
Backbone............................ A centralized high-speed network that connects smaller, independent
networks.
Bandwidth........................... The number of bits of information which can move over a communications
medium in a given amount of time.
Browser............................. Software that enables users to browse the World Wide Web. Netscape
Navigator and Microsoft's Internet Explorer are the primary browsers today.
Cache............................... Memory or disk space where frequently accessed data is stored for rapid
access.
CAP................................. Competitive Access Provider. A data and/or voice service provider that
competes with LECs. CAPs typically offer regional service rather than
national service.
CIX................................. Commercial Internet Exchange. A public network access peering point network
service providers industry.
Client/server system................ An interconnected system of computers centered around a server, such as
minicomputer, which stores data and applications and distributes them to
user stations.
Cloud............................... A network designed such that each of its nodes is logically connected to
every other node.
Distributed computing............... The process by which data and applications are distributed to
minicomputers, workstations and personal computers within a network rather
than maintained on a centralized mainframe.
DS-1................................ A data communications line with transmission speeds of up to 1.54 Mbps.
DS-3................................ A data communications line with transmission speeds of up to 45 Mbps.
Extranet............................ A network that enables two or more institutions to privately share
resources and communicate over the Internet in their own virtual space.
This technology is typically used to enhance business-to-business
communications.
Firewall............................ A gateway between two networks that buffers and screens all information
that passes between such networks.
Gateway............................. Hardware and/or software that enables communication between dissimilar
systems.
Graphical user interface............ A means of communicating with a computer by manipulating Icons and windows
rather than using text commands.
Hosting............................. Housing and managing a user's website or application.
HTML................................ HyperText Markup Language. The programming language used to create World
Wide Web pages.
Internet............................ An open global network of interconnected commercial, educational and
governmental computer networks which utilize a common communications
protocol, TCP/IP.
Internetworking..................... The process of communicating between and among networks.
</TABLE>

<PAGE>

<PAGE>
<TABLE>
<S> <C>
Intranet............................ A private network within an institution that uses Internet software only
for internal use. For example, many companies have web servers that are
available only to employees. An intranet may simply be a network.
IP Address.......................... Internet Protocol Address. The address or identification number of a host
computer or other intelligent device on the Internet.
ISDN................................ Integrated Services Digital Network. A digital network that combines voice
and digital network services through a single medium, making it possible to
offer customers digital data services as voice connections.
ISP................................. Internet Service Provider. An institution that provides access to the
Internet.
Java................................ A programming language intended to be used in networked environments.
Kbps................................ Kilobits per second. A measure of digital information transmission rates.
One kilobit equals 1,000 bits of digital information.
LAN................................. Local Area Network. A data communications network designed to interconnect
personal computers, workstations, minicomputers, file servers and other
communications and computing devices within a localized environment.
Leased Line......................... A dedicated telecommunications line rented for use along a predetermined
route.
LEC................................. Local Exchange Carrier. A local telephone company for a given geographic
area. In return for being given a monopoly over residential connections to
the telephone network, the LEC is subject to strict regulation of the
services it offers and rates it may charge for those services. The 1996
Telecommunications Act formed two types of LECs: Incumbent Local Exchange
Carriers (ILEC), including RBOCs, and Competitive Local Exchange Carriers
(CLEC).
Local loop.......................... The last mile or last several miles from an Internet access provider's
backbone to a customer's phone or modem. Operation of the local loop is the
responsibility of the LEC
MAE-East............................ Metropolitan Area Ethernet. Network access peering point located in
Virginia.
MAE-West............................ Metropolitan Area Ethernet. Network access peering point located in San
Jose, California.
Mbps................................ Megabits per second. A measure of digital information transmission rates.
One megabit equals 1,000 kilobits.
NAP................................. Network access point. The nine peering points at which major Internet
access provides connect and exchange Internet traffic.
Nodes............................... An interlinked group of modems, routers and/or other computer equipment,
located in a particular city or metropolitan area.
On-line services.................... Commercial information services that offer a computer user access through a
modem to specified information, entertainment and communications.
Open systems........................ A networking system which is based upon non-proprietary protocols (i.e.,
protocols which are in the public domain).
OEM................................. Original equipment manufacturer. An institution that typically sells its
product to other companies or resellers for integration into systems.
</TABLE>

<PAGE>

<PAGE>
<TABLE>
<S> <C>
Peering............................. The exchange of routing announcements between two Internet access providers
for the purpose of ensuring that traffic from the first can reach all
customers of the second, and vice-versa. Peering takes place predominantly
at NAPs and MAEs.
Protocol............................ A formal description of message formats and the rules two or more machines
must follow in order to exchange such messages.
Routing Table....................... A list that provides the path to an IP address.
RBOC................................ Regional Bell Operating Company. The 1984 divestiture of AT&T left local
telephone service under the control of seven RBOCs. An RBOC is an ILEC,
which is a type of LEC.
Router.............................. A device that receives and transmits data packets between segments in a
network or different networks.
Server.............................. A computer that offers a service to another computer. In addition, such
term means the software which resides on the computer.
Source code......................... Software that is in the format in which it was originally programmed and
has not been compiled or interpreted into machine code to run on end users'
computers. Typically, software cannot be modified once it is compiled.
Switch.............................. A device that creates and maintains circuit connections between points on a
network.
TCP/IP.............................. Transmission Control Protocol/Internet Protocol. A compilation of network-
and transport-level protocols that allow computers with different
architectures and operating system software to communicate with other
computers on the Internet.
Tier 1 ISP.......................... Tier 1 Internet Service Provider. An ISP that controls its own backbone, is
directly connected to the Internet and directly exchanges Internet traffic
with other Tier 1 ISPs. Other non-Tier 1 ISPs typically lease their
connections and possibly other services from Tier 1 providers.
VAR................................. Value added reseller. An institution that sells OEM product to other
companies.
WAN................................. Wide Area Network. A communications network which connects geographically
dispersed users.
Web................................. World Wide Web. A network of computer servers that uses a special
communications protocol to link different servers throughout the Internet
and permits communication of graphics, video and audio.
</TABLE>

<PAGE>

<PAGE>
ICON CMT CORP.
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
Report of Independent Accountants.......................................................................... F-2

Balance Sheet as of December 31, 1995 and 1996 and June 30, 1997 (unaudited)............................... F-3

Statement of Operations for the years ended December 31, 1994, 1995 and 1996 and for the six months ended
June 30, 1996 (unaudited) and 1997 (unaudited)........................................................... F-4

Statement of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 1994, 1995 and 1996
and for the six months ended June 30, 1997 (unaudited)................................................... F-5

Statement of Cash Flows for the years ended December 31, 1994, 1995 and 1996 and for the six months ended
June 30, 1996 (unaudited) and 1997 (unaudited)........................................................... F-6

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

F-1

<PAGE>

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
ICON CMT CORP.

The reverse stock split described in Note 13 to the accompanying financial
statements has not been consummated at October 20, 1997. When it has been
consummated, we will be in a position to furnish the following report:

'In our opinion, the accompanying balance sheet and the related
statements of operations, of changes in stockholders' equity (deficit) and
of cash flows present fairly, in all material respects, the financial
position of Icon CMT Corp. (the 'Company') at December 31, 1995 and 1996,
and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. 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 of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.'

PRICE WATERHOUSE LLP
Stamford, Connecticut
May 30, 1997

F-2

<PAGE>

<PAGE>
ICON CMT CORP.
BALANCE SHEET

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, STOCKHOLDERS'
----------------- JUNE 30, EQUITY
1995 1996 1997 JUNE 30, 1997
------ ------- ----------- (NOTE 13)
-------------
(UNAUDITED)
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 620 $ 515 $ 1,044
Accounts receivable, net of allowance for
doubtful accounts of $328, $437 and $376,
respectively................................ 6,036 7,348 6,239
Unbilled costs and accrued earnings.......... -- 184 626
Notes receivable from stockholders (Note
7).......................................... 153 167 172
Inventories.................................. 21 92 63
Prepayments and other current assets......... 364 752 643
Deferred tax asset (Note 10)................. 260 430 --
------ ------- -----------
Total current assets.................... 7,454 9,488 8,787
Equipment, net (Note 4)........................... 1,074 3,721 3,976
Other assets...................................... 83 83 83
------ ------- -----------
Total assets............................ $8,611 $13,292 $ 12,846
------ ------- -----------
------ ------- -----------
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................. $3,447 $ 6,689 $ 3,806
Notes payable................................ 3,000 2,194 --
Accrued expenses............................. 1,463 2,213 2,119
Deferred revenue............................. 241 273 235
Income taxes payable......................... 15 19 --
------ ------- -----------
Total current liabilities............... 8,166 11,388 6,160
Deferred tax liability............................ 47 155 --
------ ------- -----------
Total liabilities....................... 8,213 11,543 6,160
------ ------- -----------
Commitments (Note 11)............................. -- -- --
Mandatorily redeemable 10% PIK Series B
convertible participating preferred stock ($.01
par value; 415,000 shares authorized, none
issued and outstanding in 1995 and 1996, 110,200
shares issued in 1997, pro forma none issued and
outstanding) (liquidating preference of $11,112
at June 30, 1997)............................... -- -- 8,789
Mandatorily redeemable Series A convertible
participating preferred stock ($.01 par value;
450,000 shares authorized, none issued and
outstanding in 1995, 422,607 issued and
outstanding in 1996 and 1997, pro forma none
issued and outstanding) (liquidating preference
of $10,401 and $10,697 at December 31, 1996 and
June 30, 1997, respectively).................... -- 9,881 10,241
Stockholders' equity
Preferred stock ($.01 par value; 1,000,000
shares authorized)..........................
Common stock ($.001 par value; 50,000,000
shares authorized, 6,545,455 shares issued
and outstanding in 1995, 1996 and 1997,
respectively, pro forma 10,012,358 shares
issued and outstanding)..................... 7 7 7 $ 10
Additional paid-in capital................... 426 23 1,794 20,433
Accretion of mandatorily redeemable preferred
stock....................................... -- (89) (388) --
Accumulated deficit.......................... (35) (8,073) (13,757) (13,757)
------ ------- ----------- -------------
Total stockholders' equity (deficit).... 398 (8,132) (12,344) $ 6,686
------ ------- ----------- -------------
-------------
Total liabilities, mandatorily
redeemable convertible preferred
stock and stockholders' equity
(deficit)........................ $8,611 $13,292 $ 12,846
------ ------- -----------
------ ------- -----------
</TABLE>

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

F-3

<PAGE>

<PAGE>
ICON CMT CORP.
STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED
----------------------------- JUNE 30,
1994 1995 1996 --------------------------
------- ------- ------- 1996 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues, net:
Products (Note 9)........................................... $17,083 $21,424 $29,741 $14,609 $ 9,680
------- ------- ------- ----------- -----------
Services
Professional........................................... 1,914 4,397 6,570 2,265 7,475
Communications......................................... -- 189 1,268 332 2,171
Media.................................................. -- 202 529 237 77
------- ------- ------- ----------- -----------
Total services revenues.............................. 1,914 4,788 8,367 2,834 9,723
------- ------- ------- ----------- -----------
Total revenues, net............................... 18,997 26,212 38,108 17,443 19,403
------- ------- ------- ----------- -----------
Cost of revenues:
Products.................................................... 14,132 17,653 24,607 12,022 7,905
Services.................................................... 758 2,596 6,842 2,507 6,729
------- ------- ------- ----------- -----------
Total cost of revenues............................... 14,890 20,249 31,449 14,529 14,634
------- ------- ------- ----------- -----------
Gross profit..................................................... 4,107 5,963 6,659 2,914 4,769
------- ------- ------- ----------- -----------
Operating expenses:
General and administrative.................................. 1,548 2,435 7,006 3,000 4,949
Selling and marketing....................................... 1,393 3,450 6,504 2,944 4,021
Research and development.................................... 501 411 969 322 559
Depreciation and amortization............................... 94 228 460 173 392
------- ------- ------- ----------- -----------
Total operating expenses............................. 3,536 6,524 14,939 6,439 9,921
------- ------- ------- ----------- -----------
Income (loss) from operations.................................... 571 (561) (8,280) (3,525) (5,152)
------- ------- ------- ----------- -----------
Other income (expense)
Interest income............................................. 9 16 107 71 33
Interest expense............................................ -- (78) (75) (25) (309)
------- ------- ------- ----------- -----------
Total other income (expense)......................... 9 (62) 32 46 (276)
------- ------- ------- ----------- -----------
Income (loss) before income taxes.................... 580 (623) (8,248) (3,479) (5,428)
Provision (benefit) for income taxes............................. 289 (183) (210) (105) 256
------- ------- ------- ----------- -----------
Net income (loss)................................................ $ 291 $ (440) $(8,038) $(3,374) $(5,684)
------- ------- ------- ----------- -----------
------- ------- ------- ----------- -----------
Pro forma data (unaudited) (Note 13)
Pro forma net loss per common share......................... $ (0.75) $ (0.52)
------- -----------
------- -----------
Pro forma weighted average common shares outstanding........ 10,717,695 10,941,197
---------- -----------
---------- -----------
</TABLE>

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

F-4

<PAGE>

<PAGE>
ICON CMT CORP.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
ACCRETION OF
MANDATORILY
REDEEMABLE RETAINED TOTAL
COMMON STOCK ADDITIONAL CONVERTIBLE EARNINGS STOCKHOLDERS'
------------------- PAID-IN PREFERRED (ACCUMULATED EQUITY
SHARES AMOUNT CAPITAL STOCK DEFICIT) (DEFICIT)
--------- ------ ---------- ------------ ------------- -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<S> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1994.............. 6,545,455 $ 7 $ 293 $ 114 $ 414
Net income.............................. -- -- -- 291 291
--------- ---- ---------- ------ ------------- -------------
BALANCE AT DECEMBER 31, 1994............ 6,545,455 7 293 405 705
Issuance of compensatory stock options
to employees.......................... -- -- 133 -- 133
Net loss................................ -- -- -- (440) (440)
--------- ---- ---------- ------ ------------- -------------
BALANCE AT DECEMBER 31, 1995............ 6,545,455 7 426 (35) 398
Issuance of warrants in connection with
sale of Series A convertible
participating preferred stock......... -- -- 166 -- 166
Expenses related to issuance of Series A
convertible participating preferred
stock................................. -- -- (569) -- (569)
Accretion of mandatorily redeemable
convertible preferred stock to
redemption value...................... -- -- -- $ (89) -- (89)
Net loss................................ -- -- -- -- (8,038) (8,038)
--------- ---- ---------- ------ ------------- -------------
BALANCE AT DECEMBER 31, 1996............ 6,545,455 7 23 (89) (8,073) (8,132)
Issuance of warrants in connection with
sale of 10% PIK Series B convertible
participating preferred stock......... -- -- 2,362 -- -- 2,362
Expenses related to issuance of 10% PIK
Series B convertible participating
preferred stock....................... -- -- (399) -- -- (399)
Accretion of mandatorily redeemable
convertible preferred stock to
redemption values..................... -- -- (192) (299) -- (491)
Net loss................................ -- -- -- -- (5,684) (5,684)
--------- ---- ---------- ------ ------------- -------------
BALANCE AT JUNE 30, 1997 (UNAUDITED).... 6,545,455 $ 7 $1,794 $ (388) $ (13,757) $ (12,344)
--------- ---- ---------- ------ ------------- -------------
--------- ---- ---------- ------ ------------- -------------
</TABLE>

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

F-5

<PAGE>

<PAGE>
ICON CMT CORP.
STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SIX MONTHS ENDED
----------------------------- JUNE 30,
1994 1995 1996 ---------------------------
------- ------- ------- 1996 1997
----------- ------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................... $ 291 $ (440) $(8,038) $(3,374) $ (5,684)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation............................... 94 228 1,054 331 862
Stock option compensation.................. -- 133 -- -- --
Loss on disposal of equipment.............. 30 -- -- -- --
Deferred income taxes, net................. (3) (198) (62) (105) 275
Non-cash interest expense.................. -- -- -- -- 20
Changes in assets and liabilities:
Accounts receivable........................ (2,271) (2,230) (1,312) (1,013) 1,109
Unbilled costs and accrued earnings........ -- -- (184) -- (442)
Inventories................................ (100) 223 (71) (164) 29
Prepayments and other current assets....... (15) (352) (402) (186) 104
Other assets............................... (5) (69) -- -- --
Accounts payable........................... 1,415 697 3,242 1,545 (2,883)
Accrued expenses........................... 512 771 750 (14) (94)
Deferred revenue........................... -- 241 32 -- (38)
Income taxes payable....................... 292 (316) 4 234 (19)
------- ------- ------- ----------- ------------
Net cash provided by (used in)
operating activities................ 240 (1,312) (4,987) (2,746) (6,761)
------- ------- ------- ----------- ------------
Cash flows from investing activities:
Capital expenditures............................ (232) (1,000) (3,701) (1,916) (1,117)
------- ------- ------- ----------- ------------
Net cash used for investing
activities.......................... (232) (1,000) (3,701) (1,916) (1,117)
------- ------- ------- ----------- ------------
Cash flows from financing activities:
Proceeds from issuance of short-term notes...... -- 3,000 2,194 -- 6,750
Net repayments of short-term notes.............. -- -- (3,000) (3,000) (7,944)
Loans to stockholders........................... -- (150) -- -- --
Net proceeds from issuance of mandatorily
redeemable convertible preferred stock........ -- -- 9,389 9,389 9,601
------- ------- ------- ----------- ------------
Net cash provided by financing
activities.......................... -- 2,850 8,583 6,389 8,407
------- ------- ------- ----------- ------------
Net increase (decrease) in cash...................... 8 538 (105) 1,727 529
Cash and cash equivalents at beginning of period..... 74 82 620 620 515
------- ------- ------- ----------- ------------
Cash and cash equivalents at end of period........... $ 82 $ 620 $ 515 $ 2,347 $ 1,044
------- ------- ------- ----------- ------------
------- ------- ------- ----------- ------------
Cash paid (received) for:
Income taxes.................................... $ 2 $ 461 $ (175) $-- $ (22)
------- ------- ------- ----------- ------------
------- ------- ------- ----------- ------------
Interest........................................ $ -- $ 56 $ 75 $ 25 $ 289
------- ------- ------- ----------- ------------
------- ------- ------- ----------- ------------
</TABLE>

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

F-6

<PAGE>

<PAGE>
ICON CMT CORP.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED WITH RESPECT TO JUNE 30, 1997 AND
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1997)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. ORGANIZATION AND BUSINESS

ORGANIZATION

Icon CMT Corp. (the 'Company' or 'Icon') was incorporated in February 1995
under the laws of the State of Delaware for the purpose of merging with
Integration Consortium, Inc. (the 'Predecessor'), which was incorporated in 1991
under the laws of the State of New York. In July 1995, the stockholders of the
Predecessor exchanged their shares of the Predecessor for 6,545,455 shares of
the common stock of Icon and the Predecessor became a wholly owned subsidiary of
Icon. A merger of Icon and the Predecessor was effected in December 1995, and
pursuant to the merger agreement, Icon was the surviving entity. The share
exchange and subsequent merger has been accounted for in a manner similar to a
pooling of interests. References herein to the operations and historical
financial information of the 'Company' prior to the date of the share exchange
refer to the operations and historical financial information of the Predecessor.
Unless the context otherwise requires, all other references herein to the
'Company' refer to Icon.

BUSINESS

Since inception through 1994, the Company was primarily engaged in the
design, marketing, sale, installation and on-going support of information
management systems and distribution of information over networks. Through 1994,
the Company primarily generated revenue through the sales of hardware and
services to migrate its customers' networks to local client/server environments
and by managing, maintaining and expanding those networks.

During 1995 the Company began its transition to become an end-to-end
Internet solutions provider to corporate customers. The Company currently
derives its revenues from the following products and services: (i) product
resales, including hardware and software, as a part of systems design and
integration, (ii) professional services including custom application development
and design, systems integration and maintenance and support services, and (iii)
high quality Internet access and related communications services such as
web/server hosting and management.

2. LIQUIDITY

The Company has incurred significant operating losses for the year ended
December 31, 1996 and the six months ended June 30, 1997. At December 31, 1996
and June 30, 1997 the Company had an accumulated deficit of $8,073 and $13,757,
respectively, and working capital of ($1,900) and $2,627, respectively. Such
losses have resulted principally from general and administrative and selling and
marketing expenses associated with the Company's expanded level of operations.
The Company expects that its cash and working capital requirements will continue
to increase as the Company's operations continue to expand. In order to fund
these efforts, the Company completed private placements of its Series A
Convertible Participating Preferred Stock during 1996 (Note 7) and its 10% PIK
Series B Convertible Participating Preferred Stock during 1997 ('Series B
Preferred'). The Company utilized the net proceeds for the repayment of
short-term debt and working capital, including marketing and product line
expansions. At June 30, 1997, the Company had an option to issue and sell up to
an additional 50,000 shares of Series B Preferred to investors at a per share
price of $100.00 to fund its future cash requirements (Note 12). Additionally,
the Company had a secured line of credit available at June 30, 1997 (Note 5).

F-7

<PAGE>

<PAGE>
ICON CMT CORP.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED WITH RESPECT TO JUNE 30, 1997 AND
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1996 AND 1997)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING 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.

PRODUCTS REVENUE

Revenue from the resale of products, which consist of high-end
non-proprietary network hardware and software products, is recognized upon
shipment to the customer when no significant vendor obligations exist and
collectibility is probable.

SERVICES REVENUE

Revenue from custom software development, database design, outsourcing and
corporate website production is recognized as the services are rendered or on a
percentage of completion basis for contracts requiring milestone achievements
prior to invoicing.

Revenue from communications services, such as Internet access, hosting
services, on-site maintenance, product enhancements and telephone support, is
recognized ratably over the period of the agreement as the services are
provided, typically one year.

Revenue from sponsorships of digital publications is recognized ratably
over the period in which the sponsorship is displayed on a website or webzine
produced by the Company.

Unbilled costs and accrued earnings consist primarily of services performed
which were not billed at the end of the period due to specific contractual terms
established with certain customers.

DEFERRED REVENUE

Deferred revenue consists principally of billings in advance for services
not yet provided.

CASH EQUIVALENTS

Cash equivalents consist of short-term, highly liquid investments, with
original maturities of less than three months when purchased and are stated at
cost. Interest is accrued as earned.

INVENTORIES

Inventories, which consists principally of purchased computer hardware, are
stated at the lower of cost (determined on a first-in, first-out basis) or
market value.

EQUIPMENT

Equipment is stated at cost. Depreciation is provided on a straight-line
basis over the estimated useful lives of the respective assets, none of which
exceeds five years. Depreciation expense related to equipment used solely for
communications-related services is included in services cost of revenues.

F-8

<PAGE>

RESEARCH AND DEVELOPMENT

The Company charges all costs incurred to establish the technological
feasibility of a product or product enhancement to research and development
expense.

INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred income taxes are recorded for temporary differences between financial
statement carrying amounts and the tax basis of assets and liabilities. Deferred
tax assets and liabilities reflect the tax rates expected to be in effect for
the years in which the differences are expected to reverse. A valuation
allowance is provided if it is more likely than not that some or all of the
deferred tax asset will not be realized.

PRO FORMA NET LOSS PER COMMON SHARE

Pro forma net loss per common share is computed using the weighted average
number of common shares and common share equivalents assumed to be outstanding
during the period. Common share equivalents consist of the Company's common
shares issuable upon conversion of stock options and outstanding warrants and
are reflected when dilutive. Pursuant to the requirements of the Securities and
Exchange Commission, stock options granted and warrants and shares issued by the
Company within one year of the date of the initial filing of a registration
statement in connection with an initial public offering at prices below the
proposed offering price have been included in the calculation of weighted
average shares outstanding as if they were outstanding for all periods presented
using the treasury stock method.

INTERIM FINANCIAL DATA

The unaudited financial data at June 30, 1997 and for the six months ended
June 30, 1996 and 1997 have been prepared by management and include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the results of operations and cash flows. The results of
operations for the six months ended June 30, 1997 are not necessarily indicative
of the operating results to be expected for the entire year ending December 31,
1997.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with their
1997 presentation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of accounts receivable, notes receivable, accounts
payable, accrued expenses and notes payable approximate their fair values due to
the relatively short maturity of these instruments.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ('FASB') issued
Financial Accounting Standards No. 128, 'Earnings per Share' ('FAS 128') which
requires presentation of basic earnings per share ('Basic EPS') and diluted
earnings per share ('Diluted EPS') by all entities that have publicly traded
common stock or potential common stock (options, warrants, convertible
securities or contingent stock arrangements). FAS 128 also requires presentation
of earnings per share by an entity that has made a filing or is in the process
of filing with a regulatory agency in preparation for the sale of those
securities in a public market. Basic EPS is computed by dividing income
available to

F-9

<PAGE>

common stockholders by the weighted average number of common shares outstanding
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period. The computation of Diluted EPS does not
assume conversion, exercise or contingent exercise of securities that would have
an antidilutive effect on earnings. The statement is effective for both interim
and annual periods ending after December 15, 1997. The effect on the Company's
earnings per share resulting from the adoption of FAS 128 is not expected to be
significant.

In June 1997, the FASB issued Financial Accounting Standards No. 130,
'Reporting Comprehensive Income' ('FAS 130'), which requires the presentation of
the components of comprehensive income in a company's financial statements for
reporting periods beginning subsequent to December 15, 1997. Comprehensive
income is defined as the change in a company's equity during a financial
reporting period from transactions and other circumstances from nonowner sources
(including cumulative translation adjustments, minimum pension liabilities and
unrealized gains/losses on available-for-sale securities). The adoption of FAS
130 is not expected to have a material impact on the Company's financial
statements.

4. EQUIPMENT

Equipment is comprised of the following at December 31, 1995 and 1996 and
June 30, 1997:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------- ------- -----------
<S> <C> <C> <C>
Computer equipment......................................... $ 1,288 $ 4,688 $ 5,803
Furniture and fixtures..................................... 89 397 399
Vehicles................................................... 42 35 35
------- ------- -----------
1,419 5,120 6,237
Less: accumulated depreciation............................. (345) (1,399) (2,261)
------- ------- -----------
$ 1,074 $ 3,721 $ 3,976
------- ------- -----------
------- ------- -----------
</TABLE>

During 1994, the Company incurred a loss of $30 relating to the retirement
of computer equipment with a cost of $128.

5. NOTES PAYABLE

On August 14, 1995, the Company obtained a secured line of credit with a
bank for $3,000 which expired on June 30, 1996. Borrowings under this line were
secured by certain assets of the Company. At December 31, 1995, borrowings under
this line amounted to $3,000. Interest was charged at the bank's prime rate plus
one percent, which was 9.5% at December 31, 1995. Interest expense amounted to
$78 and $25 in 1995 and 1996, respectively. This line of credit was repaid in
full on January 31, 1996.

On August 13, 1996, the Company obtained a secured line of credit with a
lending institution for $10,000 which expires on August 13, 1998. Borrowings
under this line are secured by substantially all of the assets of the Company.
Borrowings under this line are limited to a specified percentage of qualifying
accounts receivable less outstanding obligations of the Company including
outstanding letters of credit. The payment of cash dividends is prohibited under
this secured line of credit. At December 31, 1996, borrowings under this line
amounted to $2,194 and no amounts were outstanding at June 30, 1997. Interest is
payable monthly at an annual rate equal to the lending institution's prime rate
plus one percent, which was 9.25% and 9.50% at December 31, 1996 and June 30,
1997, respectively. The rate adjusts on the first of the month following any
change. Interest expense amounted to $50 and $272 for the year ended December
31, 1996 and the six month period ended June 30, 1997, respectively.

F-10

<PAGE>

At December 31, 1996 and June 30, 1997, an irrevocable letter of credit of
$500 was issued under this agreement which is being maintained as security for
performance under a long-term property lease agreement. The agreement provides a
maximum commitment for letters of credit of $500 and requires an annual
commitment fee of approximately $28.

6. SERIES A CONVERTIBLE PREFERRED STOCK

In January 1996, the Company issued 422,607 shares of Series A Convertible
Participating Preferred Stock (the 'Series A Preferred') at $23.33 per share
providing gross proceeds of $9,859 and net proceeds, after deducting expenses,
of $9,389. Each share of Series A Preferred is convertible at the option of the
holder into the number of shares of common stock determined by dividing $23.33
by the conversion price. The conversion price shall be $10.70, which is subject
to adjustment to the share price of any security issuances at a per share price
lower than $10.70 prior to the second anniversary of the date of issuance of the
Series A Preferred stock (Note 12). Subsequent to the second anniversary of the
issuance of the Series A Preferred the Series A shares are subject to weighted
average anti-dilution provisions. The Series A Preferred shares will
automatically convert into common stock upon the consummation of a public
offering of the Company's common stock with gross proceeds and a per share price
of qualifying amounts.

At any time after the fifth anniversary of the date of issuance of the
Series A Preferred, a holder, at their option, may sell such shares to the
Company at a redemption price of $23.33 per share plus a redemption premium
equal to $1.40 per annum accruing from the date of issuance to the redemption
date, less any dividends paid thereon prior to the redemption date and including
the amount of any dividends or other distributions declared but unpaid on the
Series A Preferred. The Series A Preferred will have an aggregate redemption
value of $12,817 at January 30, 2001, the earliest date at which redemption may
be required. The excess of the redemption value over the carrying value is being
recorded by periodic charges to stockholders' equity through the earliest date
at which the Series A Preferred holders may require redemption of the Series A
Preferred.

The holders of Series A Preferred are entitled to vote at any election of
directors or any other matter upon which holders of common stock have the right
to vote.

In connection with this transaction, the Company issued a warrant for the
purchase of 15,541 shares of the Company's common stock, at an initial exercise
price of $0.01 per share, as a placement fee to a financial advisor. The fair
value of the warrant in the amount of $166 has been recorded to additional
paid-in capital. The warrant is exercisable for a period of ten years from the
date of issuance.

7. TRANSACTIONS WITH RELATED PARTIES

In August 1995, the Company made loans in the amount of $50 to each of its
three principal stockholders. The loans bear interest at a rate of 7%. Interest
income from such loans amounted to $3, $14, and $5 for the years ended December
31, 1995 and 1996 and the six month period ended June 30, 1997, respectively.
The loans, and accrued interest thereon, are due on demand.

On December 4, 1995, the Company entered into employment agreements with
each of its three principal stockholders and founders, which expire five years
from the date of the agreement. The employment agreements, which provide for
base salaries and guaranteed bonuses, contain certain non-compete clauses which
are in effect for a period of one year following termination of employment. In
the event of termination of employment of any of such principal stockholders
following a change in control (as defined in the employment agreements), that
has not been approved by the Board of Directors, the principal stockholders will
receive a termination payment equal to 2.99 times their respective base salary
(Note 12).

F-11

<PAGE>

8. STOCK OPTION, DEFINED CONTRIBUTION AND PROFIT SHARING PLANS

STOCK OPTION PLANS

In July 1995, the Company adopted a stock option plan (the 'July Plan')
which was subsequently terminated by the Company's Board of Directors on October
23, 1995. Pursuant to the July Plan, the Company granted certain employees
options to purchase 552,000 shares of the Company's common stock at $0.27 per
share. The Company recorded $133 of compensation expense during 1995 related to
the grant of such options. As of the date of grant, 65,455 options were
exercisable, and none were exercised prior to October 23, 1995, the date on
which the July Plan and all options granted pursuant thereto were canceled.

On October 23, 1995, the Company implemented its 1995 Stock Option Plan
(the 'Plan'), whereby incentive and nonqualified options to purchase up to
1,090,909 shares of the Company's common stock may be granted to key employees,
directors and consultants. The exercise and vesting periods and the exercise
price for options granted under the Plan are determined by a Committee of the
Board of Directors. The Plan stipulates that no option may be exercisable after
ten years from the date of grant. The fair market value of the Company's common
stock is determined by the Board of Directors. Options granted under the Plan
generally vest in equal installments over periods ranging from one to five
years.

Under the Plan, each non-employee director, upon their initial appointment,
shall be granted options to purchase 3,273 shares of the Company's common stock
at a price equal to its fair market value at the date of grant. Additionally,
options to purchase 2,182 shares of the Company's common stock at the then fair
market value shall be granted immediately following each annual meeting of
stockholders. These options are exercisable for five years from the date of
grant. No such options have yet been granted as of December 31, 1996 and June
30, 1997.

The following table summarizes activity regarding stock options for 1995
and 1996:

<TABLE>
<CAPTION>
SHARES WEIGHTED-
UNDER AVERAGE
OPTION EXERCISE PRICE
-------- --------------
<S> <C> <C>
Options outstanding, December 31, 1994.................................. -- --
Options granted at $0.27................................................ 552,000 $ 0.27
Options granted at $6.42................................................ 614,182 6.42
Options cancelled....................................................... (552,000) 0.27
--------
Options outstanding at December 31, 1995................................ 614,182 6.42
Options granted at $11.00-$11.74........................................ 479,127 11.17
Options forfeited at $6.42.............................................. (148,364) 6.42
Options forfeited at $11.00............................................. (35,127) 11.00
--------
Options outstanding at December 31, 1996 at $6.42....................... 465,818 6.42
Options outstanding at December 31, 1996 at $11.00-$11.74............... 444,000 11.19
--------
Total options outstanding at December 31, 1996.......................... 909,818 8.74
--------
--------
Exercisable at December 31, 1996........................................ 65,455 6.42
--------
--------
Options available for grant, December 31, 1996.......................... 181,091
--------
--------
Weighted average remaining contractual life for options at $6.42........ 2.6years
Weighted average remaining contractual life for options at
$11.00-$11.74......................................................... 3.4years
</TABLE>

F-12

<PAGE>

The Company applies Accounting Principles Board Opinion No. 25 'Accounting
for Stock Issued to Employees,' and related interpretations in accounting for
its Plan and other stock-based compensation issued to employees and directors.
During the year ended December 31, 1996, the Company did not recognize
compensation expense for options granted to employees.

Had compensation cost for options grants to employees been determined based
upon the fair value at the date of grant for awards under the Plan consistent
with the methodology prescribed under Financial Accounting Standards No. 123,
'Accounting for Stock Based Compensation,' ('FAS 123'), the Company's net loss
in 1995 and 1996 would have increased by approximately $35 and $529,
respectively.

The fair values of options granted to employees during 1995 and 1996 has
been determined on the date of the respective grant using the Black-Scholes
option-pricing model based on the following weighted average assumptions:

<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Dividend yield.......................................................... None None
Weighted average risk free interest rate on date of grant............... 6.3% 6.3%
Forfeitures............................................................. None None
Expected life........................................................... 5 years 5 years
</TABLE>

DEFINED CONTRIBUTION AND PROFIT SHARING PLANS

The Company has a defined contribution savings plan (the 'Plan'), which
qualifies under Section 401(k) of the Internal Revenue Code, for employees
meeting certain service requirements. Participants may contribute up to 10% of
their gross wages not to exceed, in any given year, a limitation set by Internal
Revenue Service regulations. The Plan provides for discretionary contributions
to be made by the Company as determined by the Company's Board of Directors. The
Company has not made any contributions to the Plan during periods presented. The
Company also has a profit sharing plan (the 'PSP') covering substantially all
full-time employees. Contributions by the Company to the PSP amounted to $129
and $28 in 1994 and 1996, respectively. There were no contributions to the PSP
during 1995 and the six months ended June 30, 1997.

9. CONCENTRATION OF RISK AND CUSTOMER INFORMATION

A significant percentage (49%, 58%, 68% and 59% in 1994, 1995, 1996 and the
six months ended June 30, 1997, respectively) of the Company's revenues are
derived from domestic third-party financial services companies. Financial
instruments which potentially subject the Company to concentrations of credit
risk are primarily cash, accounts receivable, notes receivable, accounts payable
and short-term notes payable. The Company generally does not require collateral
and the majority of its trade receivables are unsecured. The Company is directly
affected by the well being of the financial services industry; however, the
Company does not believe significant credit risk exists at December 31, 1996.
The Company relies on other companies to supply certain key components of its
network infrastructure, including telecommunications services and networking
equipment, which, in the quantities and quality required by the Company, are
available only from a limited number of sources. The Company is also dependent
upon local exchange carriers to provide telecommunications services to the
Company and its customers. There can be no assurance that the Company will be
able to obtain such services on the scale and within the time frames required by
the Company at an acceptable cost, or at all.

The network-based information management systems sold by the Company are
provided by one manufacturer for whom the Company serves as a value-added
reseller. Termination or loss of the

F-13

<PAGE>

Company's agreement with this manufacturer may have a material adverse impact on
the Company's financial position and results of operations.

For the years ended December 31, 1994, 1995 and 1996 a single customer
accounted for 25%, 28% and 30% of net revenues, respectively. For the years
ended December 31, 1994, 1995 and 1996 a second customer accounted for 11%, 15%
and 13% of net revenues, respectively. For the year ended December 31, 1995 a
third customer accounted for 10% of net revenues. For the six month period ended
June 30, 1997 a single customer accounted for 51% of net revenues.

10. INCOME TAXES

The Company has incurred losses during 1995, 1996 and the six months ended
June 30, 1997, which have generated net operating loss carryforwards of
approximately $7,325 at December 31, 1996 and $12,624 at June 30, 1997, for
federal and state income tax purposes. These carryforwards are available to
offset future taxable income and expire in 2011 through 2012 for federal income
tax purposes. At December 31, 1996 the Company also had research and development
tax credits in the amount of $87 which expire in 2001. These losses and credits
are subject to limitation on future years utilization should certain ownership
changes occur.

The net operating loss carryforwards and temporary differences between
carrying amounts of assets and liabilities for financial reporting and income
tax purposes result in a net deferred tax benefit at December 31, 1996 of $3,571
and $6,038 at June 30, 1997. The Company's operating plans anticipate taxable
income in future periods; however, such plans make significant assumptions which
cannot be reasonably assured including continued market acceptance of the
Company's products and services by customers. Therefore, in consideration of the
Company's accumulated losses and the uncertainty of its ability to utilize this
deferred tax benefit in the future, the Company has recorded a valuation
allowance in the amount of $3,296 and $6,038 at December 31, 1996 and June 30,
1997, respectively, to offset the deferred tax benefit amount.

Significant components of the noncurrent deferred tax assets at December
31, 1994, 1995, 1996 and June 30, 1997 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1994 1995 1996 1997
---- ----- ------- --------
<S> <C> <C> <C> <C>
Deferred tax assets:
Accounts receivable reserves..................................... $ 48 $ 142 $ 185 $ 157
Net operating loss............................................... -- 70 3,296 5,681
Accruals......................................................... -- 48 245 222
Research and development credits................................. -- -- -- 87
---- ----- ------- --------
Total deferred tax assets................................... 48 260 3,726 6,147
---- ----- ------- --------
Deferred tax liabilities:
Depreciation..................................................... (33) (47) (117) (71)
Other............................................................ -- -- (38) (38)
---- ----- ------- --------
Total deferred tax liabilities.............................. (33) (47) (155) (109)
---- ----- ------- --------
Net deferred tax asset................................................ 15 213 3,571 6,038
Less: valuation allowance............................................. -- -- (3,296) (6,038)
---- ----- ------- --------
Deferred tax asset, net............................................... $ 15 $ 213 $ 275 $ --
---- ----- ------- --------
---- ----- ------- --------
</TABLE>

F-14

<PAGE>

The components of the provision (benefit) for income taxes are as follows:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------- JUNE 30,
1994 1995 1996 1997
----- ----- ----- ----------
<S> <C> <C> <C> <C>
Current taxes
Federal.......................................................... $ 158 -- $(148) --
State and city................................................... 134 $ 15 -- --
----- ----- ----- ----------
Total current taxes......................................... 292 15 (148) --
----- ----- ----- ----------
Deferred taxes
Federal.......................................................... (2) (114) (51) $174
State and city................................................... (1) (84) (11) 82
----- ----- ----- ----------
Total deferred taxes........................................ (3) (198) (62) 256
----- ----- ----- ----------
Provision (benefit) for income taxes.................................. $ 289 $(183) $(210) $256
----- ----- ----- ----------
----- ----- ----- ----------
</TABLE>

The provision (benefit) for income taxes differs from the amount of income
tax determined by applying the applicable U.S. income (loss) tax rate to income
before taxes as follows:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
--------------------------- JUNE 30,
1994 1995 1996 1997
----- ----- ----- ----------
<S> <C> <C> <C> <C>
Federal income tax statutory rate.................................... 35.0% (35.0%) (35.0%) (35.0%)
State income taxes, net of federal tax benefit....................... 14.8 (7.2) (9.6) (10.7)
Stock compensation................................................... -- 7.4 -- --
Other nondeductible items............................................ -- 5.4 2.1 --
Valuation allowance.................................................. -- -- 40.0 50.4
----- ----- ----- ----------
Income tax rate as recorded.......................................... 49.8% (29.4%) (2.5%) 4.7%
----- ----- ----- ----------
----- ----- ----- ----------
</TABLE>

11. COMMITMENTS

LEASES

Future minimum payments under non-cancelable operating leases, which
primarily relate to network capacity and office space, with initial or remaining
terms of one year or more, consist of the following as of December 31, 1996:

<TABLE>
<CAPTION>
YEAR
- -----------------------------------------------------------------
<S> <C>
1997............................................................. $1,816
1998............................................................. 1,781
1999............................................................. 1,335
2000............................................................. 605
2001............................................................. 607
2002 and thereafter.............................................. 2,632
------
$8,776
------
------
</TABLE>

Rent expense amounted to $112, $210 and $584 for 1994, 1995 and 1996,
respectively, and $344 for the six months ended June 30, 1997.

F-15

<PAGE>

STOCKHOLDERS' AGREEMENT

On July 17, 1995, the three founders and principal stockholders of the
Company entered into an agreement whereby, among other things, each of these
stockholders agreed to grant to the other two stockholders the right of first
refusal to purchase any shares of the Company's common stock they propose to
sell on substantially the same terms as a potential third-party is offering and,
upon their death, the right to purchase any or all of their shares of common
stock of the Company at the fair market value on the date of death.

In February 1997, the Company entered into an agreement to purchase
interexchange telecommunications services through February 29, 2000. Pursuant to
this agreement the Company has a monthy commitment, before discounts, of $50.
These purchase commitments are not expected to exceed usage requirements in any
of the months covered by the agreement.

OTHER

At December 31, 1996 and June 30, 1997 trade payables to a vendor in the
amount of $3,985 and $2,430 were secured by substantially all of the assets of
the Company. The security agreement is subordinated to the security interests of
a lending institution in connection with a secured line of credit (Note 5).

12. SUBSEQUENT EVENTS

BRIDGE FINANCING

In March 1997, the Company obtained a $1,000 unsecured bridge loan which
bore interest at a rate of 10% per annum from a holder of the Series A
Preferred. The terms of the loan provided for a rate of interest of 10% per
annum through June 30, 1997 and 18% per annum from July 1, 1997, payable
monthly. The loan was payable upon demand by the holder at any time after the
earliest of the following to occur: (i) the closing of initial public offering
in the amount of $8,000 or greater, (ii) the closing of a private placement of
any class of the Company's capital stock equal to or exceeding $8,000, (iii) a
'Disposal Event' as defined by the loan agreement, or (iv) September 30, 1997.

The loan agreement also provided that upon completion of a public offering
or private placement equal to or exceeding $8,000, the holder of the loan had
the option to convert the outstanding principal amount of the note and accrued
and unpaid interest into the class of capital stock issued in the public or
private offering. In May 1997 the holder of the loan converted the loan plus
accrued interest thereon, in the amount of $20, into 10,200 shares of
mandatorily redeemable 10% PIK Series B Convertible Participating Preferred
Stock (the 'Series B Preferred').

In further consideration of the loan, upon completion of the Series B
Preferred financing, the Company issued a warrant to the Series A Preferred
holder to purchase 41,511 shares of common stock at an initial exercise price of
$6.02 per share. The warrant is exercisable for a period of ten years from the
date of issuance. The fair value of the warrant, in the amount of $103, has been
recorded as additional paid-in capital.

COMMON STOCK SPLIT, INCREASE IN AUTHORIZED COMMON SHARES AND CHANGE TO PAR VALUE
OF COMMON STOCK

Effective May 30, 1997, the Company implemented a six-for-one stock split
applicable to all issued and outstanding shares of the Company's common stock
and increased the number of authorized shares of common stock from 10,000,000 to
50,000,000. In addition, the par value of the Company's common stock was changed
from $.01 per share to $.001 per share.

F-16

<PAGE>

SERIES B PREFERRED STOCK

On May 30, 1997, the Company issued and sold 100,000 shares of the Series B
Preferred at $100.00 per share providing gross proceeds of $10,000 and net
proceeds, after deducting expenses, of $9,601. Subsequent to the initial
issuance, and prior to the first anniversary of the closing date, subject to
certain closing conditions, the Company has the option to issue and sell up to
an additional 50,000 shares to the original investors at a price per share of
$100.00. As of June 30, 1997, the Company has not exercised this option. This
option lapses upon the closing of an initial public offering by the Company. In
connection with this transaction, the Company issued a warrant for the purchase
of 838,199 shares of the Company's common stock, at an initial exercise price of
$6.02 per share, to the original investors of the Series B Preferred. The
warrant is exercisable for a period of ten years from the date of issuance. The
fair value of the warrant, in the amount of $1,959, has been recorded as
additional paid-in capital.

The holders of the Series B Preferred have the right to convert such shares
into common stock at an initial conversion rate of $100.00 divided by a
conversion price of $6.02 per share. In the event the Company exercises its
option to sell the additional 50,000 shares of Series B Preferred to the
original investors, the conversion price will be amended to $4.51 per share. In
addition: (i) such shares will automatically convert into common stock upon the
consummation of a public offering or sale transaction of qualifying size of the
Company's common stock, (ii) any time after the fifth anniversary of the date of
issuance of the Series B Preferred, a holder at its option may sell such shares
to the Company at a redemption amount, and (iii) in the event of a liquidation
of the Company the holders of the Series B Preferred are entitled to a senior
liquidation preference (each as defined).

An in-kind dividend will accrue at an annual rate of 10%. The excess of
redemption value over carrying value, is being recorded by periodic changes to
stockholders' equity through May 30, 2002, the earliest date the Series B
Preferred holders may require redemption of the Series B Preferred. The Series B
Preferred will have an aggregate redemption value of $16,530 at May 30, 2002,
the earliest date at which redemption may be required. The holders of Series B
Preferred shall participate equally per share in any dividends to holders of
common stock or the Series A Preferred in excess of an annual rate of 10% and
shall be entitled to vote on matters which holders of common stock have the
right to vote.

Also in connection with the initial issuance of Series B Preferred, the
Company issued a warrant to a financial advisor for the purchase of 50,042
shares of common stock at an exercise price of $.01 per share. The fair value of
the warrant, in the amount of $301, has been recorded to additional paid-in
capital.

Prior to the initial issuance of the Series B Preferred, the original
Series B Preferred investors advanced amounts to the Company in the form of
bridge loans totaling $5,750 bearing interest at an annual rate of 10%. Such
advances were repaid with interest in the amount of $16, upon the closing of the
initial issuance of the Series B Preferred.

SERIES A PREFERRED STOCK

Upon issuance of the initial Series B Preferred stock on May 30, 1997, the
conversion rate at which the holders of Series A Preferred Stock may convert
their shares to common stock was amended under the terms of the Series A
Convertible Preferred Stock purchase agreement. Subsequent to May 30, 1997, the
holders of Series A Preferred Stock had the right to convert each Series A share
into common stock determined by dividing $23.33 per share by a conversion price
of $6.02 per share.

F-17

<PAGE>

EMPLOYEE STOCK OPTIONS

On March 14, 1997, the Board of Directors approved an amendment to the Plan
whereby the aggregate number of shares of common stock for which options may be
granted under the Plan was increased from 1,090,909 to 1,636,363.

On June 18, 1997 outstanding employee stock options to purchase 968,727
shares were repriced at $6.02 per share. Options to purchase 65,455 shares
remained at a price of $14.27 per share. In the period from January 1, 1997 to
June 30, 1997 options were granted to employees to purchase 296,727 shares
exercisable at prices between $6.02 and $14.27.

A total of 344,945 employee stock options were forfeited during the period
from January 1, 1997 to June 30, 1997.

EMPLOYMENT CONTRACTS

The employment agreements with each of the three founders and principal
stockholders of the Company were amended on June 2, 1997 (Note 7). As a result
of these amendments, the expiration date of the agreements was extended to May
29, 2002.

13. INITIAL PUBLIC OFFERING AND PRO FORMA PRESENTATION

On October 16, 1997, the Board of Directors of the Company authorized
management to pursue an underwritten sale of shares of the Company's common
stock in an initial public offering (the 'IPO') pursuant to the Securities Act
of 1933. In connection with the IPO, on October 16, 1997 the Company's Board of
Directors approved a 1-for-2.75 reverse stock split to be applicable to all
issued and outstanding shares of the Company's common stock. All common shares,
stock options, warrants and related per share data, reflected in the
accompanying financial statements and notes thereto, have been presented as if
the stock split had occurred on January 1, 1994. In addition the Board of
Directors has approved an increase in the shares available for grant under the
Plan from 1,636,364 to 2,181,818. Such increase will be effective only upon
completion of the initial public offering.

Upon the closing of the IPO, all outstanding shares of Series A and Series
B Preferred Stock will automatically convert into an aggregate of 2,314,937
shares of common stock. The pro forma effects of this conversion have been
reflected in unaudited pro forma stockholders' equity at June 30, 1997 and pro
forma earnings per share for the year ended December 31, 1996 and the six months
ended June 30, 1997.

F-18

<PAGE>

<PAGE>
__________________________________ __________________________________

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary............................................................................................... 3
Risk Factors..................................................................................................... 8
Use of Proceeds.................................................................................................. 19
Dividend Policy.................................................................................................. 19
Dilution......................................................................................................... 20
Capitalization................................................................................................... 21
Selected Financial Data.......................................................................................... 22
Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 23
Business......................................................................................................... 32
Management....................................................................................................... 46
Certain Transactions............................................................................................. 51
Principal and Selling Stockholders............................................................................... 51
Description of Capital Stock..................................................................................... 53
Shares Eligible For Future Sale.................................................................................. 55
Certain United States Tax Consequences to Non-U.S. Holders....................................................... 57
Underwriting..................................................................................................... 59
Notice to Canadian Residents..................................................................................... 61
Legal Matters.................................................................................................... 62
Experts.......................................................................................................... 62
Available Information............................................................................................ 62
Glossary......................................................................................................... 63
Index to Financial Statements.................................................................................... F-1
</TABLE>

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

UNTIL , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING)
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

[LOGO]
ICON CMT CORP.
Shares
Common Stock
($.001 par value)

PROSPECTUS

CREDIT SUISSE FIRST BOSTON

BANCAMERICA
ROBERTSON STEPHENS

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

TUCKER ANTHONY
INCORPORATED

__________________________________ __________________________________

<PAGE>

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses, other than underwriting
discounts and commissions, in connection with the issuance and distribution of
the securities being registered hereby. All such expenses will be borne by the
registrant; none shall be borne by any selling stockholder.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....................................... $17,424.24
NASD filing fee........................................................................... 6,250.00
Nasdaq listing fees....................................................................... *
Legal fees and expenses................................................................... *
Accounting fees and expenses.............................................................. *
Transfer agent fees....................................................................... *
Printing and engraving expenses........................................................... *
Miscellaneous............................................................................. *
----------
Total................................................................................ $ *
----------
----------
</TABLE>

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

* To be supplied by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.

Section 145 of the General Corporation Law of Delaware provides that
directors, officers , employees or agents of Delaware corporations are entitled,
under certain circumstances, to be indemnified against expenses (including
attorneys' fees) and other liabilities actually and reasonably incurred by them
in connection with any suit brought against them in their capacity as a
director, officer, employee or agent, if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, and with respect to any criminal action or proceeding, if they
had no reasonable cause to believe their conduct was unlawful. Section 145 also
provides that directors, officers, employees and agents may also be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
them in connection with a derivative suit bought against them in their capacity
as a director, officer, employee or agent, as the case may be, if they acted in
good faith and in a manner they reasonably believed to be in or not opposed to
the best interests of the corporation, except that no indemnification may be
made without court approval if such person was adjudged liable to the
corporation.

Article Ninth of the Restated Certificate of Incorporation provides that
the registrant shall indemnify any and all persons whom it shall have power to
indemnify to the fullest extent permitted by the General Corporation Law of
Delaware. Article VII of the Restated By-laws provides that the registrant shall
indemnify authorized representatives of the registrant to the fullest extent
permitted by the General Corporation Law of Delaware. The Restated By-laws also
permit the registrant to purchase insurance on behalf of any such person against
any liability asserted against such person and incurred by such person in any
capacity, or out of such person's status as such, whether or not the registrant
would have the power to indemnify such person against such liability under the
foregoing provision of the Restated By-laws.

Section 7 of the Underwriting Agreement (Exhibit 1.1) provides for
indemnification by the underwriters of directors, officers and controlling
persons of the registrant for certain liabilities, including certain liabilities
under the Securities Act of 1933, under certain circumstances.

The Company maintains a directors and officers liability insurance policy
with . The policy insures the directors and
officers of the Company against loss arising from certain claims made against
such directors or officers by reason of certain wrongful acts. The policy
provides combined limit of liability of $ per policy year for both
directors' and officers' liability coverage at an annual premium of
$ .

II-1

<PAGE>

<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

(a) On May 30, 1997, the registrant effected a 6 for 1 stock split of its
Common Stock. For each share of Common Stock outstanding on May 30, 1997, the
holder thereof received six shares of Common Stock.

(b) In January 1996, the Company sold 422,607 shares of Series A
Convertible Participating Preferred Stock, par value $.01 per share ('Series A
Preferred Stock'), at $23.33 per share, each of which is convertible into shares
of Common Stock at a price of $6.02 per share, and issued between January and
March 1996 five-year warrants to purchase 15,635 shares of Common Stock at an
exercise price of $.01 per share.

Between May 1997 and September 1997, the Company sold 180,240 shares of 10%
PIK Series B Convertible Participating Preferred Stock, par value $.01 per share
('Series B Preferred Stock'), at $100.00 per share, each of which is convertible
into shares of Common Stock at a price of $6.02 per share and between March 1997
and September 1997 issued ten-year warrants to purchase 880,710 shares of Common
Stock at an exercise price of $6.02 per share and 52,544 shares of Common Stock
at an exercise price of $.0275 per share.

The issuance of securities set forth in (a) above is believed by the
registrant to be exempt from registration under the Securities Act of 1933 in
reliance upon Section 3(a)(9) of such Act. The issuance of securities set forth
in (b) above is believed by the registrant to be exempt from registration in
reliance upon Section 4(2) of such Act as transactions not involving any public
offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS:

The following exhibits are filed as part of this registration
statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement.
3.1* -- Form of Restated Certificate of Incorporation of the registrant.
3.2* -- Form of Restated By-laws of the registrant.
4.1* -- Specimen Copy of Stock Certificate for shares of Common Stock of the registrant.
4.2* -- Form of Investors' Rights Agreement between the registrant and each of the holders of its Series A
Convertible Participating Preferred Stock.
4.3* -- Form of Registration Rights Agreement between the registrant and each of the holders of its 10% PIK
Series B Convertible Participating Preferred Stock.
5.1* -- Opinion of Parker Chapin Flattau & Klimpl, LLP as to the legality of the securities being registered.
10.1* -- Employment Agreement dated as of December 4, 1995 between the registrant and Scott A. Baxter, as
amended.
10.2* -- Employment Agreement dated as of December 4, 1995 between the registrant and Richard M. Brown, as
amended.
10.3* -- Employment Agreement dated as of December 4, 1995 between the registrant and Scott Harmolin, as amended.
10.4* -- Employment Agreement dated February 1997 between the registrant and Frank C. Cicio, Jr.
10.5* -- Employment Agreement dated March 21, 1997 between the registrant and Kenneth J. Hall.
10.6* -- 1995 Stock Option Plan of the registrant.
10.7* -- Form of Stock Option Contract of the registrant.
10.8* -- Profit sharing plan of the registrant.
10.9* -- Form of Lease between the registrant and Hartz-PW Tower B Limited Partnership.
10.10* -- Financing Agreement dated August 13, 1996 between the registrant and The CIT Group/Business Credit, Inc.
10.11* -- Form of Master Service Agreement between the registrant and MFS Datanet, Inc. (the 'MFS Agreement').
10.12* -- Addendum No. 1 dated June 29, 1995 to the MFS Agreement.
10.13* -- Modification Agreement to Addendum No. 1 to the MFS Agreement.
</TABLE>

(table continued on next page)

II-2

<PAGE>

<PAGE>
(table continued from previous page)

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------ -----------------------------------------------------------------------------------------------------------
<C> <S>
10.14* -- Indirect Value Added Reseller Agreement dated November 2, 1992 between the registrant and Sun
Microsystems Computer Corporation, as amended by an Addendum dated November 16, 1993.
10.15* -- Form of Agreement between the registrant and Cisco Systems Inc.
10.16* -- Agreement for the Provision of Billing Services between the registrant and Bell Atlantic Internet
Solutions, Inc.
10.17* -- Form of Application for Data Service between the registrant and WorldCom Inc.
10.18* -- Stockholders' Agreement dated July 17, 1995 between the registrant, Scott A. Baxter, Richard M. Brown
and Scott Harmolin.
10.19* -- 401(k) Plan of the registrant.
10.20* -- Credit Agreement dated as of November 6, 1992 between the registrant and Access Graphics, Inc.
11.1 -- Computation of per share earnings.
23.1 -- Consent of Price Waterhouse LLP.
23.2* -- Consent of Parker Chapin Flattau & Klimpl, LLP (included in their opinion filed as Exhibit 5.1)
24.1 -- Power of Attorney (see page II-4).
27.1 -- Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

(b) Financial Statement Schedules, and Reports of Independent Accountants.

The following financial statement schedules of the registrant are filed
herewith:

(B) SCHEDULE

Schedule II -- Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as requested by the underwriters to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-3

<PAGE>

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 21st day of October, 1997.

Icon CMT Corp.

By: /s/ Scott A. Baxter
...................................
SCOTT A. BAXTER
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND
CHAIRMAN OF THE BOARD OF DIRECTORS

POWER OF ATTORNEY

The undersigned directors and officers of Icon CMT Corp. hereby constitute
and appoint Scott A. Baxter, Richard M. Brown and Scott Harmolin and each of
them, with full power to act without the other and with full power of
substitution and resubstitution, our true and lawful attorneys-in-fact with full
power to execute in our name and behalf in the capacities indicated below any
and all amendments (including post-effective amendments and amendments thereto)
to this registration statement (or any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933) and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission and hereby ratify and confirm each and every act and thing that such
attorneys-in-fact, or any of them, or their substitutes, shall lawfully do or
cause to be done by virtue thereof.

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

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/S/ SCOTT A. BAXTER President, Chief Executive Officer and October 21, 1997
......................................... Chairman of the Board of Directors
(SCOTT A. BAXTER) (Principal Executive Officer)

/S/ RICHARD M. BROWN Vice President -- Information Technologies, October 21, 1997
......................................... Secretary and Director
(RICHARD M. BROWN)

/S/ SCOTT HARMOLIN Senior Vice President, Chief Technology October 21, 1997
......................................... Officer, and Director
(SCOTT HARMOLIN)

/S/ KENNETH J. HALL Senior Vice President, Chief Financial October 21, 1997
......................................... Officer and Treasurer (Principal Financial
(KENNETH J. HALL) Officer and Principal Accounting Officer)

/S/ SAMUEL A. PLUM Director October 21, 1997
.........................................
(SAMUEL A. PLUM)

/S/ WAYNE B. WEISMAN Director October 21, 1997
.........................................
(WAYNE B. WEISMAN)
</TABLE>

II-4

<PAGE>

<PAGE>
SCHEDULE II

ICON CMT CORP.
VALUATION AND QUALIFYING ACCOUNTS

(dollars in thousands)

<TABLE>
<CAPTION>
ADDITIONS
------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
---------- ---------- ---------- ---------- ----------

<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Year ended December 31, 1994................. $ 22 $ 81 -- -- $ 103
Year ended December 31, 1995................. 103 225 -- -- 328
Year ended December 31, 1996................. 328 109 -- -- 437
Six months ended June 30, 1997............... 437 -- -- $(61) 376

VALUATION RESERVE -- DEFERRED TAX ASSETS
Year ended December 31, 1994................. -- -- -- -- --
Year ended December 31, 1995................. -- -- -- -- --
Year ended December 31, 1996................. -- 3,296 -- -- 3,296
Six months ended June 30, 1997............... 3,296 2,742 -- -- 6,038
</TABLE>

STATEMENT OF DIFFERENCES
------------------------
The checkmark shall be expressed as ............................ 'ch'

<PAGE>

<PAGE>
EXHIBIT 11.1

ICON CMT CORP.
COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
WEIGHTED
DAYS AVERAGE
SHARES OUTSTANDING SHARES
--------- ----------- -----------

<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Shares outstanding at January 1, 1996................................... 6,545,455 365 6,545,455
Cheap stock consideration for stock, stock options and warrants issued
during 1997........................................................... 4,172,240 365 4,172,240
-----------
Pro forma weighted average common shares outstanding............... 10,717,695
-----------
Net loss for the year ended December 31, 1996...................... $(8,038,000)
-----------
Pro forma net loss per common share................................ $ (0.75)
-----------
-----------

SIX MONTHS ENDED JUNE 30, 1997
Shares outstanding at January 1, 1997................................... 6,545,455 181 6,545,455
Issuance of common stock upon conversion of preferred stock............. 3,466,902 31 593,779
Cheap stock consideration for stock, stock options and warrants issued
during 1997........................................................... 2,161,939 150 1,791,662
2,010,301 181 2,010,301
-----------
Pro forma weighted average common shares outstanding............... 10,941,197
-----------
Net loss for the six months ended June 30, 1997.................... $(5,684,000)
-----------
Pro forma net loss per common share................................ $ (0.52)
-----------
-----------
</TABLE>

<PAGE>

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated May 30, 1997 relating to
the financial statements of Icon CMT Corp. which appears in such Prospectus. We
also consent to the application of such report to the Financial Statement
Schedule for the three years ended December 31, 1996 listed under Item 16(b) of
this Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the reference to us under
the headings 'Experts' in such Prospectus.

PRICE WATERHOUSE LLP
Stamford, Connecticut
October 20, 1997

<PAGE>

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997
<PERIOD-END> DEC-31-1996 DEC-31-1997
<CASH> 515 1,044
<SECURITIES> 0 0
<RECEIVABLES> 7,785 6,615
<ALLOWANCES> 8,222 376
<INVENTORY> 92 63
<CURRENT-ASSETS> 9,488 8,787
<PP&E> 5,120 6,237
<DEPRECIATION> 1,399 2,261
<TOTAL-ASSETS> 13,292 12,846
<CURRENT-LIABILITIES> 11,388 6,160
<BONDS> 0 0
<COMMON> 7 7
9,881 19,030
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 13,292 12,846
<SALES> 38,108 19,403
<TOTAL-REVENUES> 38,108 19,403
<CGS> 31,449 14,634
<TOTAL-COSTS> 14,939 9,921
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 109 0
<INTEREST-EXPENSE> 75 309
<INCOME-PRETAX> (8,248) (5,428)
<INCOME-TAX> (210) 256
<INCOME-CONTINUING> (8,038) (5,684)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,038) (5,684)
<EPS-PRIMARY> (.75) (.52)
<EPS-DILUTED> 0 0

<PAGE>