VIAGRAFIX CORP, S-1, 1997-12-18

VIAGRAFIX CORP
S-1, 1997-12-18

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1997
REGISTRATION STATEMENT NO. 33-
________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION

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

VIAGRAFIX CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
OKLAHOMA 7372 73-1354168
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

ONE AMERICAN WAY
PRYOR, OKLAHOMA 74361
(918) 825-6700
(address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

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

MICHAEL A. WEBSTER
President and Chief Executive Officer
One American Way
Pryor, Oklahoma 74361
(918) 825-6700
(name, address, including zip code, and telephone number,
including area code, of agent for service)

COPIES TO:

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

JOHN B. JOHNSON, JR., ESQ. BYRON F. EGAN, ESQ.
JOHNSON, ALLEN, JONES & DORNBLASER JACKSON WALKER L.L.P.
900 Petroleum Club 901 Main Street
601 South Boulder Suite 6000
Tulsa, Oklahoma 74119 Dallas, Texas 75202
(918) 584-6644 (214) 953-6000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------

Amount Proposed Proposed
Title of each class of to be maximum offering maximum Amount of
securities to be registered registered (1) price per share(2) offering price registration fee
- ----------------------------- -------------- ------------------ -------------- ----------------
<S> <C> <C> <C> <C> <C>
Common Stock, $ 0.01 par value 2,530,000 $12.00 $30,360,000 $8,956.20
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes 330,000 shares which the Underwriters may purchase to cover
over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a).

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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
<PAGE> 3
VIAGRAFIX CORPORATION
FORM S-1 REGISTRATION STATEMENT
CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
REGISTRATION STATEMENT ITEMS LOCATION
AND HEADING IN PROSPECTUS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Prospectus . . . . . . . . . . . . . . . . . . . . . . Outside Front Cover Page

2. Inside Front and Outside Back Cover
Pages of Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page; Outside
Back Cover Page

3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Risk Factors

4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors; Use of Proceeds

5. Determination of Offering Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors

6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Risk Factors; Dilution

7. Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary;
Principal and Selling Shareholders

8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . Outside Front Cover Page; Underwriting

9. Description of Securities to Be Registered . . . . . . . . . . . . . . . . . . . . Description of Capital Stock

10. Interests of Named Experts and Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

11. Information with Respect to the Registrant

a. Description of Business . . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Risk Factors;
Management's Discussion and Analysis
of Financial Condition and Results
of Operations; Business; Certain Transactions

b. Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business--Facilities

c. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business--Legal Proceedings

d. Market Price and Dividends on Equity Securities . . . . . . . . . . . . . . Outside Front Cover Page;
Dividend Policy;
Description of Capital Stock;
Shares Eligible for Future Sale

e. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Statements

f. Selected Financial Data . . . . . . . . . . . . . . . . . . Prospectus Summary; Selected Financial Data

g. Supplementary Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable

h. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . Management's Discussion and
Analysis of Financial Condition and
Results of Operations

i. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
j. Qualitative and Quantitative Disclosure about Market Risk . . . . . . . . . . . . . . . Not Applicable

k. Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . Management; Principal and
Selling Shareholders

l. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Management

m. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . . . . Principal and Selling Shareholders

n. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . Certain Transactions

12. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 5
PROSPECTUS

2,200,000 SHARES

VIAGRAFIX
COMMON STOCK

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

Of the 2,200,000 shares of Common Stock, $.01 par value per share (the
"Common Stock"), offered hereby, 1,750,000 shares are being sold by ViaGrafix
Corporation (the "Company") and 450,000 shares are being sold by certain
existing shareholders of the Company (the "Selling Shareholders"). See
"Principal and Selling Shareholders." The Company will not receive any proceeds
from the sale of the Common Stock being sold by the Selling Shareholders. Prior
to this offering, there has been no public market for the Common Stock. It is
currently estimated that the initial public offering price will be between
$10.00 and $12.00 per share. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price.

The Common Stock has been approved for listing on the Nasdaq National
Market under the symbol "VIAX", subject to official notice of issuance.

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

FOR A DISCUSSION OF MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE
COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 6-10 OF THIS
PROSPECTUS.

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

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>
===========================================================================================================
Proceeds to
Underwriting Proceeds to Selling
Price to Public Discount(1) Company(2) Shareholders(3)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share . . . . . . . . . $ $ $ $
- -----------------------------------------------------------------------------------------------------------
Total (4) . . . . . . . . $ $ $ $
===========================================================================================================
</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other related matters.

(2) Before deducting expenses estimated at $ payable by the Company. See
"Underwriting."

(3) Before deducting expenses estimated at $ payable by the Selling
Shareholders. See "Underwriting."

(4) The Selling Shareholders have granted the Underwriters a 30-day option to
purchase up to 330,000 additional shares of Common Stock at the Price to
Public, less the Underwriting Discount, for the purpose of covering
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discount, Proceeds to Company and Proceeds to
Selling Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

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

The shares of Common Stock are offered severally by the Underwriters when,
as and if delivered to and accepted by them, subject to their right to
withdraw, cancel or reject orders in whole or in part and subject to certain
other conditions. It is expected that delivery of certificates representing
the shares of Common Stock will be made against payment on or about ,
1998 at the offices of Southwest Securities, Inc., 1201 Elm Street, Dallas,
Texas 75270.

SOUTHWEST SECURITIES

The date of the Prospectus is , 1998.
<PAGE> 6

[PICTURE OF USER, WITH COMPANY PRODUCTS IN BACKGROUND]

[CAPTION: New Networkable CD-ROM Training! ViaGrafix
Computer Training Products
800/842-4723
"Training Makes a Difference"

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF COMMON STOCK PRIOR TO THE PRICING OF
THE OFFERING FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, THE
PURCHASE OF COMMON STOCK FOLLOWING THE PRICING OF THE OFFERING TO COVER A
SYNDICATE SHORT POSITION IN THE COMMON STOCK OR FOR THE PURPOSE OF MAINTAINING
THE PRICE OF THE COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." IN CONNECTION WITH THIS
OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP MEMBERS) MAY ENGAGE IN
PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL
MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."

Technology-Based IT Training Product Development System

[PICTURE OF WORKGROUP]

[CAPTION: The Company studies industry trends and makes conceptual decisions
on new training products.]

[PICTURE OF FINISHED PRODUCT PACKAGE AND SCREEN SHOT]

[CAPTION: Thorough product testing, quality assurance and package design
complete the process.]

[PICTURE OF TWO PEOPLE]

[CAPTION: A complete course script is developed through various stages of
outlining, writing, testing and review.]

[PICTURE OF STUDIO AND EDITING BAY]

[CAPTION: Audio, graphics, video, talent and screen shots are combined and
edited to create a finished course.]

<PAGE> 7
FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact in this Prospectus,
including without limitation statements under "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" regarding the Company's financial position, business strategy and
plans and objectives of management of the Company for future operations, are
forward-looking statements. When used in this Prospectus, words such as
"anticipate," "believe," "estimate," "expect," "intend" and similar
expressions, as they relate to the Company or its management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, such as those disclosed under "Risk
Factors," including but not limited to technological change, product
development risks, competitive factors and pricing pressures and general
economic conditions. Such statements reflect the current views of the Company
with respect to future events and are subject to these and other risks,
uncertainties and assumptions relating to the operations, results of
operations, growth strategy and liquidity of the Company. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by this
paragraph.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including notes thereto, appearing
elsewhere in this Prospectus. As used in this Prospectus, the "Company" or
"ViaGrafix" means ViaGrafix Corporation and its subsidiaries, unless the
context requires otherwise. Unless otherwise indicated, all financial
information and share data in this Prospectus reflect a 1 for 1.75 reverse
stock split on December 12, 1997 and assume (i) no exercise of the
over-allotment option granted to the Underwriters in connection with this
offering and (ii) the conversion of all outstanding shares of Series A
Convertible Preferred Stock of the Company ("Preferred Stock") into Common
Stock prior to this offering.

THE COMPANY

ViaGrafix develops, produces and markets technology-based information
technology ("IT") training products and graphics software products. The
Company's IT training courses include video tutorials and multimedia training
courses delivered on CD-ROM, LANs, intranets and the Internet for a variety of
computer software. The Company has developed and markets more than 550 training
courses for most major personal computer ("PC") software packages. These
products provide an audio-visual environment that allows some users to learn
faster and increase retention and productivity. Organizations that purchase
the Company's multimedia training products can offer them across a network to
all employees. The Company's principal graphics software product, DesignCAD,
is a computer-aided design ("CAD") package sold worldwide. The Company also
produces several other CAD-related software packages. The primary platforms for
both the training and software products are Windows 3.1, Windows 95 and Windows
NT. The Company believes its training and graphics software products enable
users to increase productivity with their computers and reduce costs.

The Company was founded in 1990 to create training products for the PC user
and it developed a library of computer training videos for computer software,
such as word processors, spreadsheets and operating systems. The business was
expanded to include both business and home computer software training products
and, with the acquisition of American Small Business Computers, Inc. ("ASBC")
in August 1995, now includes the development and marketing of PC graphics
software.

The market for IT training products and services is growing rapidly. The
U.S. market for computer education and training grew to $7.1 billion in 1996
and is expected to reach $12.9 billion by the year 2001, according to
International Data Corporation ("IDC"). The market for application software in
the United States

3
<PAGE> 8
and Canada has grown from $5 billion in 1991 to $10.6 billion in 1996 according
to Software Publisher's Association ("SPA"). The Company expects this growth in
IT training and software to continue.

The Company's potential training customers include anyone who has a need to
learn to use computer software, including individuals, small businesses,
corporations and government agencies. The Company's graphics software customers
include architects, engineers, designers and hobbyists.

The Company sells its products through distributors and resellers and
directly to end-users. The Company uses its own catalog, promotion of its 800
number and its Internet web site to sell training and software products
directly to end- users. Various Internet web sites of major software companies,
such as Microsoft Corporation, Corel Corporation and Symantec Corporation,
contain links to the Company's Internet web site. Direct sales are also
achieved by direct-mail advertising to the Company's database of existing
customers and by exhibition at more than 80 trade shows, such as COMDEX,
throughout the United States annually.

The Company has experienced growth in revenues and operating earnings since
its inception primarily as a result of internal product development. The
Company's sales have grown from $1.6 million in 1992 to $9.8 million in the
nine months ended September 30, 1997. The Company's strategy is to continue to
increase its spectrum of easy-to-use training and software products, increase
sales to major retailers, increase direct corporate sales by expanding its
internal sales force, expand software product development, expand international
sales by translating its current products into other languages and increase its
use of strategic alliances.

The Company's offices are located at One American Way, Pryor, Oklahoma
74361, and its telephone number is (918) 825-6700.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company . . . . . . . . 1,750,000 shares
Common Stock offered by the Selling Shareholders . . 450,000 shares
Total . . . . . . . . . . . . . . . . . 2,200,000 shares
Common Stock to be outstanding after the offering . . 6,100,452 shares(1)(2)
Use of Proceeds to the Company . . . . . . . . . . . For repayment of indebtedness and general corporate
purposes, including market development, product development
and possible acquisitions. See "Use of Proceeds." The
Company will not receive any of the proceeds to the Selling
Shareholders.
NASDAQ National Market Symbol . . . . . . . . . . . . VIAX
</TABLE>

(1) Based on the number of shares of Common Stock outstanding on December 15,
1997. Excludes 611,977 shares of Common Stock issuable upon exercise of
stock options outstanding as of December 15, 1997, at a weighted
average exercise price of $ per share. Also excludes 323,285 shares
reserved for issuance under the 1995 ViaGrafix Stock Option Plan with
respect to options available for grant. See "Capitalization," "Management --
Director Compensation," and "Management -- 1995 ViaGrafix Stock Option
Plan."

(2) Gives effect to the conversion of all shares of the Company's Preferred
Stock into an aggregate of 488,571 shares of Common Stock prior to this
offering. See Note 1 of Notes to Financial Statements.

4
<PAGE> 9
SUMMARY FINANCIAL INFORMATION AND OPERATING DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- -------------------
1992(1) 1993(1) 1994 1995 1996 1996(1) 1997
-------- -------- ------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales ........................................ $ 1,569 $ 3,795 $ 4,884 $ 7,230 $ 10,077 $ 7,602 $ 9,803
Gross profit .................................... 863 2.424 2,997 4,507 6,075 4,564 6,144
Research and development (2)...................... -- -- 207 320 467 349 836
Purchased research and development(3)............. -- -- -- 1,397 -- -- --
Operating profit (loss) .......................... 267 1,448 1,274 (1,056) 1,400 1,210 2,638
Net income (loss) .............................. 267 1,450 1,039 (707) 675 594 1,482
Net income (loss) per share(4). .................. .05 .33 .24 (.20) .15 .13 .37

Pro forma net income (loss)(5). .................. 166 899 791 (707) 675 594 1,482
Pro forma net income (loss) per share(4)(5)....... .03 .21 .18 (.20) .15 .13 .37

Weighted average number of shares and
common equivalent shares outstanding(4)......... 5,782 4,354 4,354 3,504 4,475 4,475 4,500
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
-----------------------
AS
ACTUAL ADJUSTED(6)
-------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 369 $
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,027
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,892
Long-term debt, excluding current portion . . . . . . . . . . . . . . . . . 3,030
Total shareholders' equity(4)(6). . . . . . . . . . . . . . . . . . . . . . 1,972
</TABLE>

(1) Statement of Operations Data for the years ended December 31, 1992 and 1993,
and the nine months ended September 30, 1996 is unaudited information.
(2) Research and development expenses for the years ended December 31, 1992 and
1993 are included in selling, general and administrative expenses, and thus
are not included in this table.
(3) The Company incurred a one-time charge in 1995 to write off the acquired
in-process research and development in connection with the acquisition of
ASBC.
(4) Shares have first been adjusted in 1992 and 1993 for a 1,000 for 1 stock
split in 1994, and then again in 1992-1997 for a 1 for 1.75 reverse stock
split on December 12, 1997.
(5) Includes a pro forma tax provision, as the Company was an S corporation in
1992, 1993 and the period from January 1 to August 16, 1994.
(6) Adjusted to reflect the sale of 1,750,000 shares of Common Stock offered
by the Company at an assumed public offering price of $ per share after
deducting the underwriting discount and the estimated offering expenses
payable by the Company.

5
<PAGE> 10
RISK FACTORS

The following factors, which may affect the Company's current position
and future prospects, should be considered carefully in addition to the other
information contained in this Prospectus before purchasing the Common Stock
offered hereby.

DEPENDENCE ON NEW PRODUCTS; RAPID TECHNOLOGICAL CHANGE; PRODUCT DEVELOPMENT
RISK

The market for the Company's products is characterized by rapid
technological advances and evolving industry standards and can be significantly
affected by new product introductions, changing customer requirements and
market activities of industry participants. The life cycles of the Company's
products are difficult to estimate and the Company's position in the current
market could be undermined by rapid product advances. The Company's future
success will depend upon its ability to continue to improve existing product
lines and to develop and introduce products with new or enhanced capabilities
that address the increasingly sophisticated needs of its customers and keep
pace with technological and competitive developments. Among other things, the
emergence of the Internet as an alternative computing platform and distribution
medium may adversely affect the demand for single-user products and alter
current software utilization, distribution and pricing patterns. There can be
no assurance that the Company will be able to successfully develop and market
new or enhanced products or respond effectively to technological changes or new
product announcements by others. Any failure by the Company to anticipate or
respond adequately to technological developments and customer requirements, or
any significant delays in product development or introduction, could result in
a loss of competitiveness and revenue.

Delays in the release of new and upgraded versions of the Company's IT
training products and graphics software products could have a significantly
negative impact on the Company's sales and results of operations. Because of the
complexities inherent in developing software products as sophisticated as those
sold by the Company and the testing periods associated with such products, no
assurance can be given that future product introductions by the Company will not
be delayed. In addition, complex software programs may contain undetected errors
or "bugs" when they are first introduced or as new versions are released. There
can be no assurance that errors will not be found in the Company's existing or
future products, with the possible result of delays in or loss of market
acceptance of these products, diversion of the Company's resources, injury to
the Company's reputation and increased service and warranty expenses.

RELIANCE ON A MAJOR DISTRIBUTOR

The Company relies heavily upon sales to Ingram Micro, Inc. ("Ingram"),
a distributor that supplies resellers, including some major retailers. Sales to
Ingram accounted for 17.7% of the Company's revenues for the nine months ended
September 30, 1997, and was less than 10% of the Company's sales for each of
the fiscal years ended 1996 and 1995. The Company's unwritten agreement with
Ingram does not require minimum purchases, is not exclusive and may be
terminated by either party without cause. There can be no assurance that Ingram
will actively market the Company's products or will maintain its relationship
with the Company. Any loss of, or material decrease in, the business from
Ingram could have a material adverse effect on the Company's business,
financial condition and results of operations. See Note 9 of Notes to Financial
Statements.

RELIANCE ON MAJOR RETAILERS

The Company relies heavily upon sales to certain retail customers,
including Computer City, Inc., CompUSA Inc., Sears Roebuck & Co. and Best Buy
Co., Inc. Direct and indirect sales to the Company's eight top retail customers
accounted for 29% of the Company's revenues for the nine months ended September
30, 1997 (indirect sales of the Company's products are supplied to these
retailers through Ingram). The Company's ability to achieve significant revenue
growth in the future will depend in part on adding new retail accounts and
leveraging its relationships with existing retailer customers. The Company is
currently investing, and intends to continue to invest, significant resources
to develop these channels. There can be no assurance that the Company

6
<PAGE> 11
will be able to leverage relationships with existing retail accounts and add
new retailers to market the Company's products effectively. The inability to do
so could have a material adverse effect on the Company's business, results of
operations and financial condition. See "Business -- Growth Strategy" and Note
9 of Notes to Financial Statements.

DEPENDENCE ON RESELLERS

The Company currently distributes approximately 59% of its products
(based on revenues) through a network of dealers, retailers and other resellers.
Accordingly, the Company is dependent upon these resellers to assist in
promoting market acceptance of its products. There can be no assurance that
these dealers, retailers and other resellers will devote the resources necessary
to provide effective sales and marketing support to the Company. The Company's
dealers, retailers and other resellers are not generally contractually committed
to make future purchases of the Company's products and, therefore, could
discontinue carrying the Company's products in favor of a competitor's product
or for any other reason. In addition, the Company is dependent upon the
continued viability and financial stability of these dealers, retailers and
other resellers, some of which are small organizations with limited capital. The
Company believes that its future growth and success will depend in large part
upon its dealer, retail and other reseller channels. Accordingly, if a
significant number of its dealers, retailers and other resellers were to
experience financial difficulties, or otherwise become unable or unwilling to
promote, sell or pay for the Company's products, the Company's results of
operations could be adversely affected. The Company plans to expand its
internal sales force with a portion of the offering proceeds in order to
increase its direct sales (currently 41% of the total); however, there can be
no assurance that this effort will be successful.

COMPETITION

The markets for technology-based IT training products and graphics
software products are highly competitive and characterized by rapid changes in
technology. In the technology-based IT training products market, the Company
competes primarily with a limited number of small private companies, and a few
large public companies. In the market for graphics software products, the
Company competes primarily with several large public companies, including
Autodesk, Inc., International Microcomputer Software, Inc. and Visio
Corporation.

Certain of the Company's competitors have substantially greater
financial, marketing and technical resources than the Company. There can be no
assurance that other companies have not developed or marketed, or will not
develop or market, products that are superior to those of the Company, that are
offered at substantially lower prices than those of the Company or that have or
will achieve greater market acceptance than those of the Company. See "Business
- -- Competition."

RELIANCE ON MICROSOFT TECHNOLOGY

The Company's technology-based IT training products and graphics
software products are designed for Microsoft technologies, including Windows
NT, Windows 95, Windows 3.1 and MS-DOS. Although the Company believes that
Microsoft technologies are and will be widely utilized by its customers, no
assurance can be given that these individuals or businesses will actually adopt
such technologies as anticipated or will not in the future migrate to other
computing technologies that the Company does not support. Moreover, the
Company's strategy will require that the Company's products and technology be
compatible with new developments in Microsoft's technology.

DEPENDENCE ON KEY PERSONNEL

The Company's future success will depend to a significant extent on
the efforts and abilities of Michael A. Webster, Chairman of the Board,
President and Chief Executive Officer; Robert E. Webster, Executive Vice
President and Secretary; Robert C. Moore, Jr., Treasurer and Chief Financial
Officer; and certain other managerial, technical, sales and marketing
personnel. The loss of the services of any of these individuals or group of
individuals could have a material adverse effect on the Company's business,
financial condition and results of operations. None of the Company's executive
officers has entered into an employment contract with the Company. The Company
maintains a key-man life insurance policy on Michael A. Webster, but not on
any other

7
<PAGE> 12
person. The future success of the Company will depend in large part on its
ability to attract and retain qualified management and technical employees, and
there can be no assurance that the Company will be able to do so.

MANAGEMENT OF GROWTH

The Company has grown rapidly since its formation and may grow rapidly
in the future. This growth has resulted in an increase in responsibilities
placed upon the Company's management and has placed added pressures on the
Company's operating and other systems. To manage its growth effectively, the
Company will be required to continue to upgrade and add systems and controls
and to expand, train and manage its employee base. There can be no assurance
that the management skills and systems currently in place will be adequate if
the Company continues to grow, or that the Company will be able to implement
additional systems successfully and in a timely manner. In addition, the
Company from time to time may seek acquisitions of businesses, products and
technologies that are complementary to those of the Company or that allow it to
enter new markets. Any such acquisition may place additional strains upon the
Company's management resources. See "Business -- Employees" and "Management."

MANAGEMENT DISCRETION OVER PROCEEDS OF THE OFFERING

The Company currently has no specific plan for a substantial amount of
the proceeds of the offering. Outside of the repayment of indebtedness as
specified in this Prospectus, no specific amounts have been allocated for such
items as market development, product development and possible acquisitions.
Accordingly, the Company's management will have discretion to allocate a major
portion of the proceeds to uses which shareholders may not deem desirable, and
there can be no assurance that the proceeds can or will be invested to yield a
significant return. See "Use of Proceeds."

POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's quarterly revenue and operating results have varied in
the past and are likely to vary in the future. Because the Company's products
are standard and off-the-shelf, it operates with little backlog and most of its
revenues in each quarter result from orders booked in that quarter. The Company
establishes its expenditure levels based on its expectations as to future
revenue and, if revenue levels are below expectations, expenses could be
disproportionately high. As a result, a drop in near-term demand could
significantly affect both revenue and profits in any quarter. In the future,
the Company's operating results may fluctuate for this reason or as a result of
a number of other factors, including increased expenses, timing of product
releases, increased competition, variations in the mix of sales, announcements
of new products by the Company or its competitors and capital spending patterns
of the Company's customers. As a result, there can be no assurance the Company
will be able to maintain profitability on an annual or quarterly basis.

Because of these factors, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. Furthermore, it
is possible that in some future quarters the Company's operating results will
fall below the expectations of the Company, market analysts and investors. In
such event, the price of the Company's Common Stock would likely be materially
adversely affected. See Note 13 of Notes to Financial Statements.

DEPENDENCE ON INTELLECTUAL PROPERTY RIGHTS; RISK OF INFRINGEMENT

The Company relies on a combination of trade secret, copyright and
trademark laws, nondisclosure agreements and other contractual provisions and
technical measures to protect its intellectual property rights. The Company
currently has a policy of requiring confidentiality and nondisclosure agreements
with executive officers and employees involved in product development. There can
be no assurance that these protections will be adequate to prevent the Company's
competitors from copying or reverse-engineering the Company's products, or that
the Company's competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology. The Company
has no patents, and existing copyright laws afford only limited protection for
the Company's intellectual property rights and will not protect such rights in
the event competitors independently develop products similar to those of the
Company. The Company licenses its software products primarily under "shrink-

8
<PAGE> 13
wrap" licenses that are not signed by its licensees. These shrink-wrap licenses
may be unenforceable under the laws of certain jurisdictions. In addition, the
laws of certain countries in which the Company's products are or may be
licensed do not protect the Company's products and intellectual property rights
to the same extent as the laws of the United States.

There has been substantial litigation regarding patent, trademark and
other intellectual property rights involving software and other technology
companies. Although the Company has never been the subject of a material
intellectual property dispute, and is unaware of any claim that its software,
trademarks or other proprietary rights infringe upon the proprietary rights of
third parties, there can be no assurance that a third party will not assert that
the Company's technology violates its intellectual property rights in the
future. As the number of products in the Company's target markets increases and
the functionality of these products further overlap, developers may become
increasingly subject to infringement claims. Any such claims, with or without
merit, can be time consuming and expensive to defend. There can be no assurance
that third parties will not assert infringement claims against the Company in
the future with respect to its current or future products or that any such
assertion will not require the Company to enter into royalty arrangements or
litigation that could be costly to the Company.

INTERNATIONAL SALES AND OPERATIONS

The Company sells its products in certain international markets and
intends to expand its sales in these markets. The Company has entered into
distribution arrangements in the United Kingdom, France, Japan, Australia and
Turkey. The Company's international business may be affected by such factors as
local economic and market conditions, political and economic instability,
difficulties in enforcing intellectual property and contractual rights,
fluctuations in currency exchange rates and the need for compliance with a wide
variety of foreign and United States export regulations. There can be no
assurance that one or more of these factors will not have a material adverse
effect on the Company's international operations and, consequently, the
Company's business, results of operations and financial condition.

PRODUCT LIABILITY

The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective
under the laws of certain state and foreign jurisdictions. The sale and support
of products by the Company and its retailers and other resellers may entail the
risk of such claims, and there can be no assurance that the Company will not be
subject to such claims in the future. A product liability claim brought against
the Company could have a material adverse effect upon the Company's business,
results of operations and financial condition.

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Common
Stock. There can be no assurance that an active public market will develop for
the Common Stock or be sustained upon completion of this offering or that the
market price of the Common Stock will not decline below the initial public
offering price. If an active trading market for the Common Stock does not
develop, the trading price and liquidity of the Common Stock will be materially
adversely affected. The initial public offering price of the Common Stock will
be determined by negotiations between the Company and the Representative of the
Underwriters and may not be indicative of the prices that will prevail in the
public market. See "Underwriting."

The trading prices of the Company's Common Stock could be subject to
wide fluctuations in response to quarter-to-quarter variations in the
Company's operating results, changes in earnings estimates by analysts,
developments or disputes concerning intellectual property rights, technological
innovations or new products, governmental regulatory action, general conditions
in the software industry, increased price competition or other events or
factors, many of which are beyond the Company's control. In addition, the stock
market has experienced extreme price and volume fluctuations, which have
particularly affected the market prices of many

9
<PAGE> 14
computer software companies and which have often been unrelated to the
operating performance of such companies.

DILUTION

Purchasers of shares of the Common Stock in this offering will
experience immediate and substantial dilution in the net tangible book value of
their shares. Prior to this offering, assuming a conversion of 488,571 shares
of Preferred Stock into Common Stock, each share of Common Stock had a net
tangible book value of $.45 as of September 30, 1997. Assuming an initial
public offering price of per share, (i) after this offering each
share of Common Stock will have a have a tangible book value of $ , and (ii)
the net tangible book value dilution to purchasers of Common Stock in this
offering will be $ per share. See "Dilution," "Management -- 1995
ViaGrafix Stock Option Plan," and "Underwriting."

OWNERSHIP CONCENTRATION

Upon completion of this offering, the Company's directors and
executive officers (primarily Michael A. Webster and Robert E. Webster) will
beneficially own in the aggregate approximately 54% of the Company's
outstanding Common Stock. See "Principal and Selling Shareholders." If these
shareholders vote together, they will be able to elect all of the Company's
directors, control the management and policies of the Company and determine the
outcome of any matter submitted to a vote of the Company's shareholders. This
would allow them to effect any amendment of the Company's certificate of
incorporation and certain mergers and other business combinations in which the
Company is either the acquired or the acquiring entity. See "Description of
Capital Stock." This presents the potential for a conflict of interest between
the Company and these shareholders, and may act to reduce the likelihood of a
successful attempt to take over the Company or any acquisition of a substantial
amount of Common Stock without the consent of these shareholders. See
"Description of Capital Stock."

ANTI-TAKEOVER CONSIDERATIONS

Upon completion of this offering, the Company will have an authorized
class of 10,000,000 shares of undesignated Preferred Stock, $.01 par value,
which may be issued on such terms, and with such rights, preferences and
designations, as the Company's Board of Directors may determine. The Company is
subject to the Oklahoma General Corporation Act, which contains provisions that
restrict certain business combinations. Some or all of the foregoing factors
could have the effect of discouraging certain attempts to acquire the Company
and, as a result, could deprive the Company's shareholders of opportunities to
sell their shares of Common Stock at prices higher than prevailing market
prices. See "Description of Capital Stock -- Preferred Stock" and "Description
of Capital Stock -- Anti-Takeover Provisions."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of significant amounts of Common Stock in the public market or
the perception that such sales will occur could adversely affect the market
price of the Common Stock. Of the 6,100,452 shares of Common Stock to be
outstanding upon completion of this offering, the 2,200,000 shares offered
hereby will be eligible for immediate sale in the public market without
restriction unless the shares are purchased by "affiliates" of the Company
within the meaning of Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"). The remaining 3,900,452 shares of Common Stock held by
existing shareholders upon completion of this offering will be "restricted
securities" as that term is defined in Rule 144 under the Securities Act.
Restricted securities may be sold in the public market only if registered or if
they qualify for an exemption from registration under the Securities Act. The
Selling Shareholders have agreed that they will not sell, directly or
indirectly, any Common Stock without the prior consent of the Representative of
the Underwriters for a period of 180 days from the date of this Prospectus.
Subject to the provisions of Rules 144 and 701 and the rights of the Selling
Shareholders to exercise certain registration rights, additional shares will be
available for sale in the public market as follows: (i) 228,571 shares will be
available for immediate sale in the public market on the date of this
Prospectus, (ii) 64,738 shares will be eligible for sale upon the expiration of
lock-up agreements 90 days after the date of this

10
<PAGE> 15
Prospectus and (iii) 3,607,143 shares will be eligible for sale upon the
expiration of lock-up agreements 180 days after the date of this Prospectus.
See "Shares Eligible for Future Sale," "Underwriting" and "Principal and
Selling Shareholders."

ABSENCE OF DIVIDENDS

Although the Company paid dividends on its capital stock in 1995 and
1997, the Company does not intend to pay any cash dividends on its Common Stock
for the foreseeable future.

11
<PAGE> 16
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,750,000 shares
of Common Stock offered by the Company pursuant to this offering are estimated
to be $ , assuming an initial public offering price of $ per share, after
deducting the underwriting discount and estimated offering expenses payable by
the Company. The Company intends to use approximately $3.5 million of such net
proceeds to retire its 7.5% notes due August 15, 2000, payable to Geocapital
III, L.P. and Robert E. Webster, incurred for the acquisition of ASBC in 1995.
See "Certain Transactions -- ASBC Acquisition" and Note 6 of Notes to Financial
Statements. The Company expects to use the remainder of the net proceeds from
this offering for general corporate purposes, including the expansion of sales
and marketing activities, increased product development and funding of working
capital. The Company may seek acquisitions of businesses, products and
technologies that are complementary to those of the Company, and a portion of
the net proceeds may be used for such acquisitions. While the Company may
engage from time to time in discussions with respect to potential acquisitions,
the Company has no plans, commitments or agreements with respect to any
material acquisitions as of the date of this Prospectus, and there can be no
assurance that any such acquisitions will be made. Pending such uses, the
Company intends to invest the net proceeds from this offering in short-term,
investment-grade, interest-bearing securities. See "Risk Factors -- Management
Discretion over Proceeds of the Offering."

The Company will not receive any proceeds from the sale of the shares
of Common Stock offered by the Selling Shareholders. The net proceeds to be
received by the Selling Shareholders from the sale of their 450,000 shares at
an assumed public offering price of $ per share are expected to be
approximately $ ($ if the Underwriters' over-allotment option is
fully exercised) after deducting the underwriting discount and estimated
offering expenses payable by the Selling Shareholders. See "Principal and
Selling Shareholders."

DIVIDEND POLICY

Although the Company paid dividends on its capital stock of $31,291 in
1995 and $505,800 in 1997, the Company does not intend to pay any future cash
dividends on its Common Stock and anticipates that, for the foreseeable future,
it will use earnings for the operation and expansion of the business. Payment
of cash dividends in the future will depend upon the Company's earnings, its
capital requirements, financial condition and other relevant factors and will
be determined by the Board of Directors.

12
<PAGE> 17
DILUTION

The net tangible book value of the Company at September 30, 1997 was
$1,972,000 or $.45 per share of Common Stock, after giving effect to the
conversion of all outstanding shares of Preferred Stock into Common Stock prior
to this offering. Net tangible book value per share is equal to the Company's
total tangible assets (total assets less goodwill and trademarks) less total
liabilities, divided by the total number of shares of Common Stock outstanding,
including shares of Common Stock issued upon the conversion of the Preferred
Stock in connection with this offering. Pro forma net tangible book value
dilution per share represents the difference between the amount per share paid
by purchasers of shares of Common Stock in this offering and the pro forma net
tangible book value per share of Common Stock immediately after completion of
this offering. After giving effect to the sale by the Company of the 1,750,000
shares of Common Stock offered hereby at an assumed initial public offering
price of per share, and after deducting the underwriting discount and
estimated offering expenses, the pro forma net tangible book value of the
Company as of September 30, 1997 would have been $ or $ per share
of Common Stock. This represents an immediate increase in such pro forma net
tangible book value of $ per share to existing shareholders and an immediate
dilution of $ per share to new investors purchasing shares in this
offering. If the initial public offer price is higher or lower, the dilution to
new investors will be, respectively, greater or less. The following table
illustrates this per share dilution:

<TABLE>
<S> <C>
Assumed initial public offering price . . . . . . . . . . . . . . . . . . . . $
Net tangible book value as of September 30, 1997 . . . . . . . . . . . . . .45
Pro forma increase attributable to new investors . . . . . . . . . . . . .
------
Pro forma net tangible book value as of September 30, 1997 after offering . .
------
Pro forma net tangible book value dilution per share to new investors . . . .
======
</TABLE>

The following table summarizes on a pro forma basis as of September
30, 1997, after giving effect to the conversion of all outstanding shares of
Preferred Stock into Common Stock in connection with this offering, the number
of shares of Common Stock purchased from the Company, the total consideration
paid to the Company and the average price paid per share by existing
shareholders and by new investors (assuming an initial public offering price of
$ per share):

<TABLE>
<CAPTION>
Shares Purchased Total Consideration Average
------------------ ------------------- Price
Shares Percent Amount Percent Per Share
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders . . . . . . . . . 4,350,452 71% $ % $ .45
New investors . . . . . . . . . . . . . 1,750,000 29% $
--------- --- --------- ---
Total . . . . . . . . . . . . . . . . . 6,100,452 100% 100%
========= === ========= ===
</TABLE>

The computations in the above table are determined without deducting
the underwriting discount and estimated offering expenses payable by the
Company. Both tables set forth in this section assume no exercise of existing
stock options. As of December 15, 1997, options to purchase 611,977 shares of
Common Stock were outstanding, with a weighted average exercise price of $
per share. To the extent outstanding options are exercised, there will be
further dilution to holders of Common Stock. See "Management -- 1995 ViaGrafix
Stock Option Plan."

13
<PAGE> 18
CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1997 (i) on an actual basis assuming the conversion of all shares
of Preferred Stock into an aggregate of 488,571 shares of Common Stock prior to
this offering and (ii) as adjusted to give effect to the sale of 1,750,000
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $ per share and the receipt and application of
the proceeds therefrom, after deducting the underwriting discount and estimated
offering expenses payable by the Company. See "Use of Proceeds." This
information should be read in conjunction with the Company's Financial
Statements and the Notes thereto appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt including current portion . . . . . . . . . . . . . . . . . . . $ 3,805 $
Shareholders' equity
Common Stock, $.01 par value, 40,000,000 shares authorized and 5,714,286
shares issued and outstanding and 7,952,857
issued and outstanding on as adjusted basis . . . . . . . . . . . . . . 57
Preferred Stock @ $.01 par value 10,000,000 shares authorized and 488,571
shares issued and outstanding and no shares issued and outstanding on
as adjusted basis . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 1,709
Unearned compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (149)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,332
Less 1,852,405 common shares in treasury . . . . . . . . . . . . . . . . . . . 1,982
------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 1,972
------- --------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,777
======= ========
</TABLE>

14
<PAGE> 19
SELECTED FINANCIAL DATA

The selected financial data below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and the Notes thereto included
elsewhere in this Prospectus. The selected statement of operations data set
forth below for the years ended December 31, 1994, 1995 and 1996, and for the
nine months ended September 30, 1997, and the balance sheet data at December 31,
1995 and 1996, and at September 30, 1997, are derived from, and are qualified by
reference to, the audited financial statements included elsewhere in this
Prospectus and should be read in conjunction with those financial statements and
notes thereto audited by Ernst & Young LLP. The selected balance sheet data as
of December 31, 1994, has been derived from audited financial statements that
are not included elsewhere in this Prospectus. The selected financial data as of
and for the years ended December 31, 1992 and 1993, and for the nine months
ended September 30, 1996, has been derived from unaudited financial statements
of the Company which, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
the financial information set forth therein. The results for the nine months
ended September 30, 1997, are not necessarily indicative of the results to be
expected for the full year or for any future period.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS
ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------- ----------------
1992 (1) 1993 (1) 1994 1995 1996 1996 (1) 1997
-------- -------- ---- ---- ---- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales . . . . . . . . . . . . . . . . . . . . $1,569 $3,975 $4,884 $ 7,230 $10,077 $ 7,602 $ 9,803
Cost of sales . . . . . . . . . . . . . . . . . . 706 1,371 1,887 2,723 4,002 3,038 3,659
------ ------ ------ ------- ------- ------- -------
Gross profit . . . . . . . . . . . . . . . . . . 863 2,424 2,997 4,507 6,075 4,564 6,144

Operating expenses:
Selling, general and administrative. . . . . . 568 931 1,463 3,413 3,523 2,492 2,434
Research and development (2) . . . . . . . . -- -- 207 320 467 349 836
Purchased research and development (3) . . . . -- -- -- 1,397 -- -- --
Depreciation and amortization . . . . . . . 28 45 54 433 685 513 236
------ ------ ------ ------- ------- ------- -------
Operating profit (loss) . . . . . . . . . . . . . 267 1,448 1,273 (1,056) 1,400 1,210 2,638

Net interest income (expense) . . . . . . . . . . 0 2 3 (109) (262) (196) (218)
------ ------ ------ ------- ------- ------- -------
Income (loss) before income taxes . . . . . . . . 267 1,450 1,276 (1,165) 1,138 1,014 2,420

Net income (loss) . . . . . . . . . . . . . . . $ 267 $1,450 $1,039 $ (707) $ 675 $ 594 $ 1,482
====== ====== ====== ======== ======= ======= =======
Net income (loss) per common share (4). . . . . . .05 .33 .24 (.20) .15 .13 .33
====== ====== ====== ======== ======= ======= =======
Weighted average shares (4) . . . . . . . . . . 5,782 4,354 4,354 3,504 4,475 4,475 4,500

PRO FORMA DATA:
Pro forma net income (loss) (5) . . . . . . . . $ 166 $ 899 $ 791 $ (707) $ 675 $ 594 $ 1,482
======= ====== ====== ======== ======= ======= =======
Pro forma net income (loss) per common
share (4) (5) . . . . . . . . . . . . . . . . . . $ .03 $ .21 $ .18 $ (.20) $ .15 $ .13 $ .33
======= ====== ====== ======== ======= ======= =======
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . . . . . . . $ 27 $ 33 $ 389 $ 35 $ 1,009 $ 969 $ 369
Working capital . . . . . . . . . . . .. . . . . 146 1,049 872 676 1,637 1,601 2,027
Total assets . . . . . . . . . . . . . . . . . . 293 1,332 1,302 5,283 6,112 6,101 6,892
Long-term debt . . . . . . . . . . . . . . . . . -- -- -- 3,478 3,482 3,611 3,030
Total shareholders' equity . . . . . . . . . . . 205 1,155 979 243 937 856 1,972

Dividends per common share (6) . . . . . . . . . -- -- -- $ 0.05 -- -- $ 0.12

SUPPLEMENTAL DATA:
Number of training courses offered . . . . . . . 95 155 230 335 460 430 575
</TABLE>

15
<PAGE> 20
(1) Statement of Operations Data for the years ended December 31, 1992 and 1993,
and the nine months ended September 30, 1996 is unaudited information.
(2) Research and development expenses for the years ended December 31, 1992 and
1993 are included in selling, general and administrative expenses.
(3) The Company incurred a one-time charge in 1995 to write off the acquired
in-process research and development related to the acquisition of ASBC.
(4) Shares have first been adjusted in 1992 and 1993 for a 1,000 for 1 stock
split in 1994, and then again in 1992-1997 for a 1 for 1.75 reverse stock
split on December 12, 1997.
(5) Includes a pro forma tax provision, as the Company was an S corporation in
1992, 1993, and the period from January 1 to August 16, 1994.
(6) The Company made S corporation distributions of $131,000 and $1,215,000 in
the year ended December 31, 1992 and the period from January 1 through
August 15, 1994, respectively.

16
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Company's
Financial Statements and Notes thereto, and the other financial information
included elsewhere in this Prospectus.

OVERVIEW

ViaGrafix was founded in 1990 to develop, produce and market
technology-based IT training products. The Company's training videos were first
released in 1990, followed by interactive multimedia training on CD-ROM in 1994.
The Company entered the graphics software market in 1995 with the acquisition of
ASBC. In 1996 the Company began providing interactive multimedia training
delivered over LANs, intranets and the Internet.

The Company's sales have grown from $1.6 million in 1992 to $9.8
million in the nine months ended September 30, 1997. This revenue growth has
resulted from the expansion of the market for technology-based IT training
products, growing market acceptance of the Company's products, the Company's
increased product line, and entry into the graphics software market with the
acquisition of ASBC in 1995.

The Company has been profitable every year since inception with the
exception of 1995, when $1.4 million was charged to acquired in-process
research and development expenses in connection with the acquisition of ASBC.
See "Note 2 to Notes to Financial Statements." Operating income has grown from
$267,000 in 1992 to $2.6 million in the nine months ended September 30, 1997.

ViaGrafix training and software products are developed and produced
primarily in-house. The Company uses its own studio and editing stations to
produce broadcast-quality video training products. The Company's video training
products are normally duplicated and packaged in-house. The Company's software
and multimedia training products are produced and packaged in-house, with the
exception of CD-ROM duplication. The Company's order processing and fulfillment
are also done in-house. The Company believes that this vertical integration
enables it to keep minimal inventories of finished products, provide timely
product updates, and provide a quick order delivery time. The Company typically
ships its products within a short period after acceptance of orders.
Accordingly, the Company does not have a material order backlog at the end of
any quarter.

The Company recognizes revenues upon shipment of products, upon
receipt of royalty revenues and upon receipt of licensing fees from its
alliance partners. The Company nets the sales against estimated allowances for
returned products. Cost of sales consists primarily of direct materials and
labor associated with the duplication and packaging of the Company's training
software and graphics software products.

The Company charges all costs of developing IT training products to
research and development expense as incurred. The Company also charges all
costs of establishing technological feasibility of its graphics software
products to research and development expense as incurred.

Sales and marketing expenses are typically realized as incurred.
However, the Company prepays registration fees for participation in trade shows
occurring in the next twelve months. These expenses are capitalized and then
expensed upon conclusion of trade show events.

In November 1997 the Accounting Standards Executive Committee issued
Statement of Position ("SOP") No. 97-2, "Software Revenue Recognition;" which
the Company will adopt for fiscal years beginning after December 15, 1997. If
the Company had elected to adopt SOP 97-2 for prior periods, the impact on the
Company's financial position, results of operations or cash flows would not have
been significant. See Note 1 of Notes to Financial Statements.

17
<PAGE> 22
RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
financial data expressed in percentages:

<TABLE>
<CAPTION>
Year Ended Nine Months
December 31, Ended September 30,
---------------------------- -------------------
1994 (1) 1995 1996 1996 (2) 1997
-------- ---- ---- -------- ----
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales . . . . . . . . . . . . . . 38.6 37.7 39.7 40.0 37.3
Gross profit . . . . . . . . . . . . . . 61.4 62.3 60.3 60.0 62.7
Selling, general and administrative . . . 30.0 47.2 35.0 32.8 24.8
Research and development . . . . . . . . 4.2 4.4 4.6 4.6 8.5
Purchased research and development(3) . . - 19.3 - - -
Depreciation and amortization . . . . . 1.1 6.0 6.8 6.7 2.4
Operating profit (loss) . . . . . . . . . 26.1 (14.6) 13.9 15.9 26.9
Net interest income (expense) . . . . . . 0.1 (1.5) (2.6) (2.6) (2.2)
Income (loss) before income taxes . . . . 26.1 (16.1) 11.3 13.3 24.7
Net income (loss) . . . . . . . . . . . . 21.3 (9.8) 6.7 7.8 15.1
</TABLE>

(1) From January 1 to August 16 of 1994, the Company was an S corporation
resulting in no provision for corporate income taxes for that period.
(2) The Company's nine-month period ended September 30, 1996, is unaudited.
(3) The Company incurred a one-time charge in 1995 to write off the acquired
in-process research and development related to the acquisition of ASBC.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996

Net Sales. Net sales increased 28.9% to $9.8 million for the nine
months ended September 30, 1997, compared to $7.6 million for the same period
in 1996. This increase reflects an increase in sales primarily from existing
and additional training products. Sales increases during this period were
primarily attributable to increases in the volume of products sold rather than
increases in prices.

Cost of Sales. Cost of sales increased 20.4% to $3.7 million for the
nine months ended September 30, 1997, compared to $3.0 million for the same
period in 1996, primarily due to the increase in sales volume. Cost of sales as
a percentage of total sales decreased to 37.3% for the nine months ended
September 30, 1997, from 40.0% for the same period in 1996. The decline in cost
of sales as a percent of sales was a result of productivity improvements due to
economies of scale as sales increases were covered with a minimal increase in
duplicating and packaging expenses.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 2.3% to $2.4 million in the nine months ended
September 30, 1997, compared to $2.5 million for the same period in 1996.
Selling, general and administrative expenses as a percentage of total sales
decreased to 24.8% for the nine months ended September 30, 1997, from 32.8% for
the same period in 1996, due largely to the Company's ability to control its
growth in advertising and trade show expenses.

Research and Development Expenses. Research and development expenses
increased 140% to approximately $836,000 for the nine months ended September
30, 1997, from approximately $349,000 during the same period in 1996. Research
and development expenses were 8.5% of total sales in the nine months ended
September 30, 1997, compared to 4.6% for the same period in 1996. This higher
level of research and development expense reflects an overall increase in
personnel to develop new product offerings. The Company believes that
significant investment in research and development is required to remain
competitive in its markets and, therefore, expects research and development
expenses to continue to increase in absolute terms in future periods.

18
<PAGE> 23
Depreciation and Amortization Expenses. Depreciation and amortization
expenses decreased from approximately $513,000 during the nine months ended
September 30, 1996, to approximately $236,000 during the same period in 1997.
Depreciation and amortization as a percentage of sales decreased from 6.7% for
the nine months ended September 30, 1996, to 2.4% for the same period in 1997.
This reduction was due mostly to the conclusion of the amortization period for
purchased ASBC software which was $5,500 in the nine months ended September 30,
1997, versus approximately $241,000 during the same period in 1996.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Sales. Net sales increased 39.4% to $10.1 million for the year
ended December 31, 1996, compared to $7.2 million in 1995. This increase
reflects an increase in sales of existing training products, additional
training video and CD-ROM based training products and graphics software. The
increase in graphics software sales in 1996 is reflective of the inclusion in
1996 of a full twelve months of sales of products of ASBC, which was acquired
in August 1995. As a result, 1996 was the first full year of graphics software
sales for the Company.

Cost of Sales. Cost of sales increased 46.9% to $4.0 million for the
year ended December 31, 1996, compared to $2.7 million in 1995. Cost of sales
as a percentage of total sales increased to 39.7% for the year ended December
31, 1996, from 37.7% in 1995. The increase in cost of sales as a percent of
sales was largely the result of a reduction in efficiencies due to the
introduction of many new products during the period.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 3.3% to $3.5 million for the year ended
December 31, 1996, compared to $3.4 million in 1995. Selling, general and
administrative expenses as a percentage of total sales decreased to 35.0% for
the year ended December 31, 1996, from 47.2% in 1995.

Research and Development Expenses. Research and development expenses
increased 45.9% during the year ended December 31, 1996, to approximately
$467,000 compared to approximately $320,000 in 1995. Research and development
as a percentage of total sales increased from 4.4% for the year ended December
31, 1995 to 4.6% in 1996. This higher level of development expense primarily
reflected an overall increase in personnel to develop new products.

Write-off of Acquired In-Process Research and Development. The Company
incurred a one-time charge of $1.4 million in 1995 to write off in-process
research and development acquired in connection with the acquisition of ASBC in
August 1995. The write-off was 19.3% of total sales for the year ended December
31, 1995.

Depreciation and Amortization Expenses. In the year ended December 31,
1996, depreciation and amortization expenses increased 58.0% to approximately
$685,000 from approximately $433,000 in 1995. Depreciation and amortization as
a percentage of total sales increased to 6.8% for the year ended December 31,
1996, from 6.0% in 1995. This increase was mostly due to the depreciable assets
added in 1995 from the acquisition of ASBC incurring a full year of
depreciation in 1996, compared with four and one-half months in 1995.

Net Interest Income (Expense). Net interest expense increased 140% to
approximately $262,000 in the year ended December 31, 1996, from approximately
$109,000 in 1995. In 1996, which was the first full year of financing the
August 1995 purchase of ASBC, interest expense was 2.6% of total sales compared
to 1.5% in 1995.

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

Net Sales. Net sales increased 48.0% to $7.2 million for the year
ended December 31, 1995, compared to $4.9 million in 1994. This increase in
sales was from existing training products, additional training video and CD-ROM
based training products. In addition, graphics software sales were introduced
in the final four and one-half months with the acquisition of ASBC on August
17, 1995.

Cost of Sales. Cost of sales increased 44.4% to $2.7 million for the
year ended December 31, 1995, compared to $1.9 million in 1994. Cost of sales
as a percentage of total sales decreased to 37.7% for the year

19
<PAGE> 24
ended December 31, 1995 from 38.6% in 1994, due to economies of scale realized
from larger production runs for training products.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 133% to $3.4 million for the year ended
December 31, 1995, from approximately $1.5 million in 1994. Selling, general
and administrative expenses as a percentage of total sales increased to 47.2%
for the year ended December 31, 1995, from 30.0% in 1994. The Company spent
additional advertising of approximately $400,000 and incurred additional
payroll expense of approximately $175,000 in 1995 related to its release of
products associated with the introduction of Windows 95. The Company also
experienced increased operating costs due to the 48% increase in net sales.

Research and Development Expenses. Research and development expenses
increased 54.6% to approximately $320,000 during the year ended December 31,
1995, from approximately $207,000 in 1994. In 1995, research and development as
a percentage of total sales increased to 4.4% compared to 4.2% in the year
ended December 31, 1994. This higher level of development expense primarily
reflected an overall increase in personnel to develop new products.

Depreciation and Amortization Expense. Depreciation and amortization
expense increased from approximately $54,000 during the year ended December 31,
1994, to approximately $433,000 in 1995. Depreciation and amortization was 6.0%
of total sales in 1995 compared to 1.1% in 1994. This increase was due to the
acquisition of ASBC in August 1995 and the resulting additional depreciation of
building and equipment and amortization of capitalized software.

Net Interest Income (Expense). The Company incurred approximately
$109,000 in net interest expense in the year ended December 31, 1995, which was
1.5% of total sales. The interest expense was from the debt incurred for the
acquisition of ASBC in August 1995. In 1994 the Company realized interest
income of approximately $3,000.

LIQUIDITY AND FINANCIAL CONDITION

The Company believes that cash generated from operations and its net
proceeds from this offering will satisfy the Company's anticipated working
capital requirements for at least the next two years. The Company, however, may
require substantial additional funds for potential acquisitions. In the normal
course of business, the Company evaluates acquisitions of businesses, products
and technologies that complement the Company's business. The Company has no
present commitments or understandings with respect to any such transaction. The
Company, however, may acquire businesses, products, or technologies in the
future.

During the first nine months of 1997, operating activities provided
the Company with net cash of approximately $851,000. During that period, cash
flow used in operating activities included increases of approximately $1
million and $341,000 in accounts receivable and inventory, respectively, which
were offset by net income and non-cash depreciation, amortization and deferred
income tax expenses totaling approximately $1.8 million, and an increase in
accounts payable and a decrease in prepaid expenses totaling approximately
$274,000.

During 1996, operating activities provided the Company with net cash
of approximately $1.4 million. During that year, cash flow was generated by net
income of approximately $675,000. Cash flow of approximately $1.4 million was
provided through depreciation and amortization expense, non-cash interest
expense, and increases in income taxes payable and accrued liabilities. Cash
flow used in operating activities included an increase in prepaid expenses, an
increase in deferred income taxes and a decrease in accounts payable totaling
approximately $652,000.

In 1995, operating activities provided the Company with net cash of
approximately $125,000. While the net loss for the year of approximately
$707,000 generated negative cash flow, the non-cash write-off of acquired
in-process research and development provided approximately $1.4 million in cash
flow. Cash flow of approximately

20
<PAGE> 25
$1.2 million was generated by depreciation and amortization expense, non-cash
interest expense, decreased inventory and increases in accounts payable and
accrued liabilities. Cash flow used in operating activities included an
increase in accounts receivable and prepaid expenses, a decrease in income
taxes payable, and an increase in deferred income taxes totaling approximately
$1.7 million.

The Company's capital expenditures during 1995 and 1996 and during the
first nine months of 1997 were approximately $31,000, $285,000, and $579,000,
respectively. These expenditures were primarily for expansion of facilities,
production and duplication equipment and computer hardware. While the Company
does not have any significant commitments for capital expenditures, the Company
anticipates that it will continue to expand its facilities and purchase
equipment as needed to support growth.

YEAR 2000 READINESS

Until recently, many software systems were not programmed to correctly
recognize dates beyond December 31, 1999 (the "Y2K Problem"). Many public and
private entities are now, and will be, expending material amounts to identify
and address their Y2K Problems, and some software companies may incur material
product liabilities related to their Y2K Problems. The Company believes that
Y2K Problems will not have a material adverse effect on its results of
operations or financial position. The Company's technology-based IT training
products and graphics software products are not believed to suffer Y2K Problem
defects, but the Company's technology-based IT training products may have to be
modified if the third party software packages to which they relate are
modified. The Company believes that its costs of issuing new versions of its
products to address the changes in third party software, and any resulting
obsolescence of Company inventory, should be offset by revenues generated from
the sale of new versions of the Company's products. Although the Company could
experience difficulty in attracting and retaining qualified technical personnel
as demand for such personnel increases as others address their Y2K Problems,
the Company has thus far been able to meet its personnel requirements.

21
<PAGE> 26
BUSINESS

GENERAL

ViaGrafix develops, produces and markets technology-based IT training
products and graphics software products. The Company's IT training courses
include video tutorials and multimedia training courses delivered on CD-ROM,
LANs, intranets and the Internet, for a variety of computer software. The
Company has developed and markets more than 550 training courses for most major
PC software packages. Such products provide an audio-visual environment that
allows some users to learn faster and increase retention and productivity.
Organizations that purchase the Company's multimedia training products can
offer them across a network to all employees. The Company's principal graphics
software product, DesignCAD, is a CAD package sold worldwide. The Company also
produces several other CAD-related software packages. The primary platforms for
both the training and software products are Windows 3.1, Windows 95 and Windows
NT. The Company believes its training and graphics software products enable
users to improve productivity with their computers and reduce costs.

The Company was founded in 1990 to create training products for the PC
user and it developed a library of computer training videos for computer
software, such as word processors, spreadsheets and operating systems. The
business was expanded to include both business and home computer software
training products and, with the acquisition of ASBC in August 1995, now
includes the development and marketing of PC graphics software.

The Company's potential training customers include anyone who has a
need to learn to use computer software, including individuals, small
businesses, corporations and government agencies. The Company's graphics
software customers include architects, engineers, designers and hobbyists.

The Company sells its products through distributors and resellers and
directly to end-users. The Company uses its own catalog, promotion of its 800
number and its Internet web site to sell training and software products
directly to end-users. Various Internet web sites of major software companies,
such as Microsoft Corporation, Corel Corporation and Symantec Corporation,
contain links to the Company's Internet web site. Direct sales are also
achieved by direct mail advertising to the Company's database of existing
customers and by exhibition at more than 80 trade shows, such as COMDEX,
throughout the United States annually.

The Company has experienced growth in revenues and operating earnings
since its inception primarily as a result of internal product development. The
Company's sales have grown from $1.6 million in 1992 to $9.8 million in the
nine months ended September 30, 1997. The Company's strategy is to continue to
increase its spectrum of easy-to-use training and software products, increase
sales to major retailers, increase direct corporate sales by expanding its
internal sales force, expand software product development, expand international
sales by translating its current products into other languages and increase its
use of strategic alliances.

INDUSTRY BACKGROUND

Training Market. With the proliferation of computers, there has been a
continually increasing need for training and educational products for computers
and software, and for better, easier-to-use software products. Businesses and
organizations are becoming increasingly dependent upon computer systems in
order to remain competitive in their marketplace. This has resulted in
significant growth in the IT training market. According to IDC, the U.S. market
for computer education and training grew to $7.1 billion in 1996 and is
expected to reach $12.9 billion by the year 2001.

The IT training market is diverse, consisting of a variety of product
and service providers. Technology-based training products for IT include CD-ROM
based training, video-based training and Internet-delivered training. Non-
technology-based training products for IT include books and other written
materials. Service providers include technology manufacturers, commercial
trainers, consulting firms, value-added resellers, computer dealers, system
integrators, network integrators, colleges, universities, and independent
service organizations.

The majority of IT training is still delivered by instructor-led
training, which accounted for $5.7 billion, or 80% of the total market, in
1996. However, for several years instructor-led training has grown at a slower
rate

22
<PAGE> 27
and is expected to continue at a slower rate than IT training as a whole.
Technology-based IT training is gaining acceptance as a proficient as well as
efficient method for software education. IDC estimates that CD-ROM based
training, video-based training and Internet delivered training for IT combined
will grow from $528 million in 1996 to $3.3 billion in 2001, representing and
annual growth rate of 44%.

Several factors account for the rapid and sustained growth of CD-ROM
training, video-based training and Internet delivered training:

o Recognized Need. The continued growth of the personal computer has created
millions of end-users that need training on software. As companies continue
to increase their use of computers, they also must continue to increase the
ability of their personnel to be competent computer users.

o Technology and Quality Improvements. The quality of CD-ROM, video-based and
Internet training products has improved significantly with technological
improvements in the computer industry and the development of more creative
content.

o More Economical. Instructor-led training, while effective, is more
expensive and requires specified time periods. Technology-based IT
training provides an audio-visual environment that allows some users to
learn faster and increase retention and productivity.

o Ease of Use. Technology-based IT training products allow users to learn
at a self-directed pace and can be used repeatedly. Multimedia training
also allows users to receive instantaneous feedback on their progress.
Additionally, multimedia training can be accessed over a network
simultaneously by multiple users.

o Growth of the Internet. The emergence of the Internet as an important
communication and advertising vehicle has placed new pressure on millions
of people to become computer literate.

o Technological Demands. IT products are constantly adding new features and
functionality, thus necessitating new versions to be released. It is a
constant challenge for users to keep pace with these changes, thereby
increasing their need for training.

Technology-based training developed as a market niche in the mid-1980s
with the emergence of video and computer-based training. As the need for
training became more evident and IT training became more prevalent, video-based
training and computer-based training were accepted as effective and efficient
options in many situations, and popularity increased in the early 1990s. Also
in the early 1990s, CD-ROM based training was introduced utilizing multimedia
as a high-quality instructional method. In the mid-1990s, with the
proliferation of CD-ROM capable computers, CD-ROM based training began to grow
swiftly. Internet delivered training was also introduced in the mid-1990s.

Graphics Software Market. The market for software in the United States
and Canada has grown from $5 billion in 1991 to a $10.6 billion in 1996, the
market for Windows software has grown from less than $1 billion in 1991 to more
than $8.5 billion in 1996, and the market for graphics software for Windows has
grown from $205 million in 1991 to $1.1 billion in 1996, according to the SPA.
Graphics software for Windows includes CAD software, three-dimensional modeling
software, general drawing and design software.

With the increase in the use of Windows, computers are increasingly
being used for design and other graphics intensive tasks. New users of Windows
graphics software will be looking for easy-to-learn, easy-to-use software that
is affordable.

THE VIAGRAFIX SOLUTION

The Company designs, develops, markets, sells and supports its
technology-based IT training products and graphics software products based on
the following principles:

Optimize Training Products for Productivity. The Company develops and
markets training courses that teach people how to use popular software packages
such as Microsoft Excel, Microsoft Word, Microsoft Windows, Lotus 1-2-3 and
WordPerfect. These educational courses offer many advantages over traditional
instructor-led training. They allow users to fit training to their
work schedules, begin training at a level

23
<PAGE> 28
which is appropriate for them, train only on the topics that are relevant to
their needs and practice and test their skills as they learn.

Offer a Broad Range of Training Products. The Company develops and
markets training courses that teach people how to use a diverse selection of
software applications, such as PageMaker, DesignCAD, CorelDraw, ACT! and
FrontPage. The Company also develops and markets training courses that teach
the use of more technical software, such as C++ programming, Visual
Basic and HTML programming.

Design User Friendly Graphics Software Products. The Company designs
its graphics software products with focus on ease of use and full
functionality. These products are designed to be used by both professional
and casual users.

Offer Products with Superior Value. The Company attempts to develop
products that can be marketed at a lower price than similar competing products.

Release Products to the Market Quickly. The Company attempts to
develop its products and maintain a relatively short time to market.

Leverage Internet Technologies. The Company's products employ Internet
technologies for delivery and communication. The Company's multimedia IT
training products are available via intranets and the Internet. The Company's
software products utilize Internet technologies by offering Internet file
compatibility and direct e-mail support.

GROWTH STRATEGY

The Company's objective is to become a leading provider of
technology-based IT training products and graphics software products. The
following are the key elements of the Company's strategy to achieve that
objective:

Expand Training Product Offerings. The Company has created a
development system that utilizes development technologies and a streamlined
development process to reduce development time and cost. The Company plans to
increase its development staff to increase the size of its product line and
introduce new training products earlier in the software product sales cycle.
The Company also plans to add courses on more technical material which are
frequently requested by the Company's customers.

Increase Sales through Major Retailers. The Company's sales to major
retailers have more than doubled in the past year, and the Company expects to be
able to continue growth of such sales. The Company still sells to a relatively
small number of major retailers, which leaves the Company with a natural path
for growth by adding more retail accounts. See "Risk Factors -- Reliance on
Major Retailers."

Increase Direct Corporate Sales. The Company plans to create an
internal corporate sales force to increase penetration of the corporate market.
Corporate sales currently account for a nominal portion of the Company's
business and represent an area targeted by the Company for growth. The Company
believes that since its multimedia training courses are deliverable on CD-ROM,
LANs, intranets and the Internet it has a competitive advantage. The Company's
multimedia courses also offer testing, which make them suited to the needs of
the corporate market. The Company plans to develop a method to compare test
results to worldwide results via the Internet. The Company will attempt to
establish a testing standard for software training that will enhance its
competitive advantage in the future.

Expand Software Product Development. The Company expects to
successfully market new "easy-to-use" graphics software utilizing its
established customer base and sales channels. The Company has the ability to use
its core DesignCAD technology to produce these new products at a lower
incremental cost. The Company has three new graphics software products under
current development. These products will expand the Company's software line
into the broader, less technical areas of illustration, web page design and
three-dimensional modeling. The Company also plans to create industry specific
applications using the DesignCAD engine.

Increase International Sales. The Company intends to boost
international sales and plans to begin a five-year effort to translate its
products into other languages, beginning with Spanish,

24
<PAGE> 29
German and French. International sales account for more than 50% of many major
software companies' sales, but account for less than 10% of the Company's
sales.

Develop Strategic Alliances. The Company intends to enter into
developmental and marketing alliances with key IT vendors to create and market
IT training products. To date, the Company has entered into a diverse array of
alliances with Street Technologies, Inc. ("Street"), RealNetworks, Inc.
(formerly Progressive Networks, Inc.), Symantec Corporation and McAfee
Associates, Inc. The Company's agreement with Street enables it to deliver
multimedia training courses on CD-ROM, LANs, intranets and the Internet in a
more effective manner. See "Certain Transactions -- Street Technologies."
Stephen P. Gott, Chief Executive Officer of Street, will become a director of
the Company upon the completion of this offering and plans to purchase ____
shares of stock in this offering. The Company believes that these alliances will
provide a number of competitive advantages, including access to the partners'
distribution channels and development plans.

PRODUCTS

Technology-based IT Training Products. The Company has developed and
markets more than 450 video courses and more than 100 multimedia courses. The
Company's principal educational products are training videos and multimedia
courses teaching today's most popular software. The following is a list of some
applications, programming languages and operating systems for which the
Company has developed training products:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SUITES INTERNET DATABASE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Microsoft Office Internet Access
Lotus SmartSuite World Wide Web FoxPro
Corel WordPerfect Suite MS Internet Explorer Paradox
Netscape Navigator ACT!
Goldmine

- -------------------------------------------------------------------------------------------------------------
OPERATING SYSTEMS COMMUNICATIONS DESKTOP PUBLISHING
- -------------------------------------------------------------------------------------------------------------
Windows Microsoft Outlook PageMaker
Windows NT Lotus Notes CorelDraw!
NetWare WinFax Pro Publisher
DOS Adobe Illustrator
OS/2 PhotoShop

- -------------------------------------------------------------------------------------------------------------
WORD PROCESSING PRESENTATION GRAPHICS CAD
- -------------------------------------------------------------------------------------------------------------
Microsoft Word PowerPoint DesignCAD
WordPerfect Harvard Graphics AutoCAD
WordPro Corel Presentations
AmiPro

- -------------------------------------------------------------------------------------------------------------
SPREADSHEETS AND ACCOUNTING TECHNICAL MISCELLANEOUS
- -------------------------------------------------------------------------------------------------------------
Excel C, C++ Lotus Organizer
Lotus 1-2-3 Visual Basic Microsoft Project
Quicken HTML
Quickbooks Delphi
UNIX
BASIC
- -------------------------------------------------------------------------------------------------------------
</TABLE>

Each application above may have from one to thirteen courses
associated with it. For example, the DesignCAD 97 training series consists of
"Learning DesignCAD 97, Introduction," "Learning DesignCAD 97, Advanced," and
"Learning DesignCAD 97, Solid Modeling." There are six courses for Microsoft
Excel 97, 12

25
<PAGE> 30
courses for Novell NetWare 4, and four courses for C programming. Additionally,
the Company has training courses for several different versions of many of the
software programs listed above.

Corporate training departments and training companies commonly
incorporate training videos or multimedia courses into their existing training
programs as a supplemental way to meet varying learning preferences of
individuals. Training videos and multimedia courses can also reduce training
time and costs otherwise incurred through seminars and personal or classroom
instruction and allow training to take place anytime or anywhere. The Company
believes these tutorials are an excellent way to increase employee productivity
at minimal cost.

Since 1996, ViaGrafix has developed its multimedia-based interactive
software tutorials to be "networkable," which allow them to be accessible
simultaneously by multiple users through LANs, intranets and the Internet.
Beginning with Microsoft Office 97 tutorials, an optional "Skill Development
Quiz" concludes each chapter and a comprehensive test is offered optionally at
the end of each tutorial.

ViaGrafix training products are offered in three configurations. Video
tutorials usually run from 60 to 90 minutes in length and are packaged in a
black plastic binder with printed graphics. Most have a suggested retail price
of $49.95. This line includes tutorials for beginners, intermediate, and
advanced users. A second configuration, "Teach Yourself" video tutorials, are
60 minutes or shorter in length, have less instructional detail, are packaged
in a printed cardboard case, and have a suggested retail price of $19.95.
Multimedia courses are sold on CD-ROM in a durable clear plastic case with
printed graphics, include the full range of instructional titles from beginners
to advanced users, and typically have a suggested retail price of $49.95.
Multimedia courses generally contain two to four hours of training. Multimedia
courses are also offered on LANs, intranets, and the Internet. Pricing for
these delivery methods are based on the number of titles and length of license
period.

Graphics Software Products. The Company develops and markets several
graphics software packages. DesignCAD 97 and DesignCAD LT are the latest CAD
products offered by the Company. DesignCAD 97, with a retail price of $499,
offers true solid modeling, extensive dimensioning, animation, Internet
capability, file compatibility with all the major file types, and object
linking and embedding. DesignCAD 97 is packaged in a printed cardboard carton.
Included is the software on either a CD-ROM or a three and one-half inch
diskette, a reference manual set up in a format similar to an encyclopedia, and
a user's guide tutorial manual. DesignCAD LT is a version of DesignCAD 97 with
reduced three-dimensional capability, with a retail price of $349.

Although sales of DesignCAD products generate the majority of the
Company's software revenue, the Company develops and markets several other
graphics-related software products. These include sign making software, cost
estimating software, lower cost CAD software, model airplane and railroad
design software and symbol libraries. The Company's software products are
targeted primarily for Windows platforms.

Product Life Cycle. ViaGrafix training courses have varying lives.
Most application software versions have a life of 18-24 months with operating
systems having a longer life. The life cycle for software training products can
be broken into three segments. The first segment, during the first six to twelve
months of the software version, has the strongest sales. The second segment,
through the remaining time that the software version is current, normally
continues at a somewhat reduced level. The third segment begins after a newer
version of the software has been released. This segment is marked by reduced
sales that continue for a varied period, from months to years. The Company's
graphics software usually has an active product life of 18-24 months. Upgrades
to new versions of the Company's software allow very high upgrade sales
initially, followed by steady sales to new users, which continue until the next
version announcement. Residual sales of older versions continue for a few years
after the release of newer versions.

PRODUCT DEVELOPMENT

Since inception, the Company has made substantial investments in
product research and development. During 1994, 1995, 1996 and the nine months
ended September 30, and 1997, development expenses were approximately $207,000,
$320,000, $467,000 and $836,000, respectively. As of September 30, 1997, the
Company had 38 employees engaged in research and development. Substantially all
of the Company's product research and development activities take place in its
Pryor, Oklahoma facility. The product development,

26
<PAGE> 31
including product design, script writing, programming, video editing and
multimedia editing, take place on-site. The facility includes a video studio,
three video-editing bays, 10 multimedia-editing stations, and other office
space necessary to accomplish these tasks. The Company utilizes approximately
8,000 square feet for product development.

The Company has created a product development system that utilizes
specialized development technologies and a streamlined development process. The
development technologies consist of the Company's proprietary software,
off-the-shelf software and licensed tools, which have been optimized to create
technology-based training products. The streamlined development process
controls the course development throughout the process, incorporating
mechanisms that provide feedback on product development and monitor quality
assurance from script writing to finished product. The Company believes that
its product development system provides competitive strength by enabling it to
(i) create courses that are deliverable via CD-ROM, videotape, LANs, intranets
or the Internet, (ii) change or enhance portions of a course without recreating
the entire course, (iii) create courses that support a common product
architecture and interface and (iv) shorten time to market at a relatively low
cost.

The Company's software research and development efforts employ a
formal process to guide software development through stages of product concept,
market requirements analysis, product definition, design specification, coding,
testing and release. These efforts are also focused on identifying, developing
and integrating leading technologies into the Company's products.

DEVELOPMENT PROCESS FOR IT TRAINING PRODUCTS

<TABLE>
<CAPTION>
Concept Stage Pre-Production Production Post-Production
------------- -------------- ---------- ---------------
<S> <C> <C> <C>
Evaluate and Content Video Taping, Package
Select New Development Editing and Design and
Training and Multimedia Quality
Courses Scriptwriting Development Control
</TABLE>

SALES AND MARKETING

The Company sells and markets its technology-based IT training
products and graphics software products directly to end-users and through
resellers and distributors. During the nine months ended September 30, 1997, the
Company achieved approximately 41% of its revenues through direct sales and
approximately 59% of its revenues through resellers and distributors.

Direct Sales. The Company's direct marketing methods include national
advertising in such magazines as Windows Magazine, PC Magazine and Windows
Sources, direct mail advertising, and exhibition at more than 80 trade shows,
such as COMDEX, throughout the United States annually. The importance of trade
shows to the Company is considerable in that a total of 86 employees attended at
least one trade show during 1997. The Company is also involved in various
marketing activities on the Internet. Orders are received by telephone, fax,
mail, e-mail and Internet web site. The Company staffs telephones for inbound
sales calls 24 hours per day, seven days per week.

Distribution. More than 900 active dealers and resellers purchase
directly from the Company. The Company also sells to distributors, such as
Ingram, who supply dealers and resellers with the Company's products. The
Company supports advertising through the distribution channel using advertising
allowances for approved ads, payments for retail endcaps and allowances and
payments for display space in distributor catalogs.

27
<PAGE> 32
The Company relies heavily upon sales to Ingram, a major distributor
that supplies computer-related products to other resellers, including some
major retailers. Sales to Ingram accounted for 17.7% of the Company's revenues
for the nine months ended September 30, 1997. The Company also relies heavily
upon sales to certain retailers, including Computer City, Inc., CompUSA Inc.,
Sears Roebuck & Co, and Best Buy Co., Inc. Sales to the Company's eight top
retailers accounted for 29% of the Company's revenues for the nine months ended
September 30, 1997. The Company is currently investing, and intends to continue
to invest, significant resources to develop these channels.

Of the Company's sales in 1995, 1996 and nine months of ended
September 30, 1997, 81%, 69% and 80%, respectively, were of the Company's
training products and 19%, 31% and 20%, respectively, were of the Company's
software products. Prior to the acquisition of ASBC in 1995, the Company had no
sales of software products. See Note 9 of Notes to Financial Statements.

CUSTOMERS (END-USERS)

The Company's training products are used to educate people in the use
of software. The Company estimates that about two-thirds of its training
customers use the products for work-related activities, and one-third use the
products for personal improvement. The Company estimates that about one-third
of DesignCAD users are professional engineers and about one-third use DesignCAD
for architectural and building applications. The remaining customers use
DesignCAD for a wide variety of purposes, such as facilities management,
technical illustration and casual drawing.

The Company has an extensive and diverse list of end-users, including
thousands of users from various industries including telecommunications,
technology, oil and gas, healthcare, insurance, government, finance and
education.

CUSTOMER SUPPORT

The Company believes that its ability to provide quality customer
service and support to its distributors and its end-user customers is essential
to the continued acceptance of its products. The Company has a 30-day return
policy on all products and offers extended terms and return policies to some
major retailers and distributors. The Company's customer support services are
as follows:

Technical Support. The Company's technical staff provides telephone,
fax, mail and e-mail support to the entire customer base. In addition,
qualified developers and partners who work closely with the Company's products
have extended access to the Company's Internet support site, which contains
technical updates and technical maintenance files.

Customer Service. The Company's customer service staff provides
processing and shipping information on current and future orders. These
personnel also deal with any customer inquiries involving delivery,
availability, priority handling and replacement products.

PRODUCTION AND SUPPLIERS

Most of the production of the Company's products takes place on-site.
The Company's facility includes 200 duplicating VCRs, diskette duplicators,
CD-ROM duplicators, numerous shrink-wrap machines and other equipment necessary
to complete the production of the products. The Company's facility utilizes
approximately 12,000 square feet and 33 employees in production of the products.

Inventories of finished goods are generally kept at levels equal to
one to six weeks of orders. The principal physical components of the Company's
products are diskettes, CD-ROMs, videotapes, printed material and manuals. The
Company keeps significant inventories of these raw materials in order to meet
rapid delivery requirements of its customers. The materials that make up these
principal physical components of the Company's software products are available
from a number of suppliers. The Company has not experienced any material

28
<PAGE> 33
difficulties or delays in the manufacture and assembly of its products or
material returns due to product defects or product availability.

INTELLECTUAL PROPERTY RIGHTS

The Company regards certain features of its internal operations,
software and documentation as its intellectual property. The Company believes
that, because of the rapid pace of technological change in the computer
software industry, trade secret and copyright protection are less significant
than factors such as the knowledge, ability and experience of the Company's
employees, frequent product enhancements and the timeliness and quality of
support services. The Company relies on a combination of contract, copyright,
trademark and trade secret laws and other measures to protect its intellectual
property. The Company has no patents. The Company licenses its software
products primarily under "shrink-wrap" licenses that are not signed by its
licensees. These shrink-wrap licenses may be unenforceable under the laws of
certain jurisdictions. See "Risk Factors -- Dependence on Intellectual Property
Rights; Risk of Infringement."

The Company provides its products to customers on a "right-to-use"
basis under non-exclusive licenses, which generally are nontransferable and
have a perpetual term. The Company typically licenses its products solely for
the customer's internal operations.

COMPETITION

The market for technology-based IT training products and graphics
software products is highly competitive and is characterized by rapid changes
in technology and frequent introductions of new platforms and features. The
Company expects competition to increase as other companies introduce additional
and more competitive products in these markets. In its video training
business, the Company competes primarily with a number of small private
companies. In its multimedia training business, the Company competes directly
against a number of small private companies, and indirectly with a number of
large computer-based training vendors, most of whom are expected to enter the
multimedia training business. Some of these computer-based training vendors,
such as CBT Group, P.L.C., Gartner Group, Inc., and National Educational
Training Group, Inc., have larger technical staffs, greater brand recognition
and market presence, more established and larger marketing and sales
organizations and substantially greater financial resources than the Company.

Some of the Company's competitors in the graphics software business
such as Autodesk, Inc., International Microcomputer Software, Inc. and Visio
Corporation have larger technical staffs, greater brand recognition and market
presence, more established and larger marketing and sales organizations and
substantially greater financial resources than the Company. See "Risk Factors --
Competition."

The Company believes that the competitive factors affecting the market
for the Company's products include product performance, price and quality;
product functionality and features; the availability of products for existing
and future platforms; the ease of use and ease of integration of the products
with other hardware and software components; and the quality of customer
support services.

The Company's present or future competitors may be able to deliver
products comparable or superior to those offered by the Company or adapt more
quickly than the Company to new technologies or evolving customer requirements.
In order to remain successful in the software products market, the Company must
respond to technological change, customer requirements and competitors' current
products, product enhancements and innovations. In particular, the Company
recently introduced its multimedia training product line that is deliverable
via CD-ROM, LANs, intranets or the Internet and is currently developing
additional products and enhancements for this product line in an effort to
respond to customer feedback and new technological advances. See "Risk Factors
- -- Competition."

29
<PAGE> 34
BACKLOG; SEASONALITY

The Company typically ships its products within a short period after
acceptance of orders from distributors and other customers. Accordingly, the
Company typically does not have a material backlog of unfilled orders and net
sales in any quarter are substantially dependent on orders booked in that
quarter.

The Company has not experienced material seasonality, and does not
anticipate material seasonality in the future.

FACILITIES

The Company's administrative, marketing, production and product
development facilities consist of approximately 68,000 square feet at a
single location in Pryor, Oklahoma. The Company owns and occupies this facility
and the five acres of land on which it is located, which offers room for
possible expansion. See "Certain Transactions -- ASBC Acquisition."

The Company believes that its facilities are suitable and adequate for
its operations as now conducted and as currently foreseen.

EMPLOYEES

As of December 15, 1997, the Company had a total of 145 full and
part-time employees [equating to 143 full time equivalent employees ("FTEs")],
including 93 FTEs in sales, marketing, technical support and customer service,
42 FTEs in research and development and eight FTEs in administration. The
Company has allocated approximately 8,000 square feet of its facilities to
recreational, physical fitness and child-care facilities for its employees and
offers flexible work schedules to many of its employees. None of the Company's
employees are represented by a labor union. Management believes that the
Company's relations with its employees are good.

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation arising out
of operations in the normal course of business, none of which is expected to
have a material adverse effect on the Company's results of operations or
financial position.

30
<PAGE> 35
MANAGEMENT

The directors, executive officers and key managers of the Company and
their ages as of December 15, 1997, are as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Michael A. Webster . . . . . . . . . 39 Chairman of the Board, President and Chief Executive Officer
Robert E. Webster . . . . . . . . . . 42 Executive Vice President, Secretary and Director
Robert C. Moore, Jr. . . . . . . . . 50 Treasurer and Chief Financial Officer
Chao-Chyuan Shih . . . . . . . . . . 45 Director of Software Development
Austin E. Acuff . . . . . . . . . . . 51 Retail Sales Manager
Roy L. Bliss . . . . . . . . . . . . 55 Director nominee
Stephen P. Gott . . . . . . . . . . . 48 Director nominee
Gerald R. Harris . . . . . . . . . . 66 Director nominee
</TABLE>

Michael A. Webster has served as Chairman of the Board, President and
Chief Executive Officer since the Company's inception in 1990. Mr. Webster
served as General Manager of Champion Electronics, Inc., a company operating
Radio Shack dealership outlets involved in computer retailing, from October
1984 to December 1989. He holds a Bachelors Degree in Music from Oklahoma State
University. Michael A. Webster is the brother of Robert E. Webster.

Robert E. Webster has served as Director, Vice President and Secretary
since the Company's inception in 1990. Mr. Webster served as Director and Vice
President of ASBC from July 1981 to August 1995. He has served as Executive
Vice President on the Company's management team since 1995, after the Company
acquired ASBC. He holds a Bachelors Degree in Computer Science and a Masters
Degree in Computer Science, both from Oklahoma State University. Robert E.
Webster is the brother of Michael A. Webster.

Robert C. Moore, Jr. has served as Chief Financial Officer since July
1997 and Treasurer since October 1997. Mr. Moore served as Vice President and
Chief Financial Officer of Hughes Lumber Company in Tulsa, Oklahoma from June
1978 to June 1997, and as Assistant Controller of a division of Evans Products
Company from October 1972 to May 1978. He holds a Bachelors Degree in Economics
from North Carolina State University and a Masters Degree in Business
Administration from the Darden Graduate School of Business Administration,
University of Virginia.

Chao-Chyuan Shih has served as Director of Software Development since
ViaGrafix acquired ASBC in August 1995. Mr. Shih served as Senior Programmer
of ASBC from August 1988 to August 1995. He holds a Bachelors Degree in Physics
from National Central University in Taiwan and a Masters Degree in Computer
Science from the University of Arkansas.

Austin E. Acuff has served as Retail Sales Manager since July 1994.
Mr. Acuff served as an instructor of business classes for Northeast Vo-Tech
Center from August 1988 to July 1994 and was employed by Wal-Mart as Store
Manager from July 1971 to August 1988. He attended Southwest Missouri State
University, majoring in Accounting and Business Administration.

Roy L. Bliss, of Tulsa, Oklahoma, will become a director of the
Company upon the completion of this offering. Mr. Bliss is the founder of United
Video Satellite Group, Inc. and was employed there from 1969 through 1996, at
which time it was acquired by Tele-Communications, Inc. He served as Chief
Operating Officer from 1970 to 1996, as President from 1991 to 1996, and as a
Director from 1984 to 1996. He holds a Bachelors Degree in Business
Administration from Arizona State University.

Stephen P. Gott, of Katonah, New York, will become a director of the
Company upon the completion of this offering. Mr. Gott has been President and
Chief Executive Officer of Street Technologies, Inc. since its formation in
1995. Mr. Gott was Partner and Chief Technology and Operations Officer at
Lehman Brothers, Inc., from 1986 to 1995. Mr. Gott was General Manager and
Senior Vice President at First Boston Corporation from 1982 to 1986. He holds a
Bachelor of Science Degree from Northeastern University and an Advanced

31
<PAGE> 36
Management Degree from Cornell University. Street Technologies, Inc. has a
development and licensing agreement with the Company. See "Certain Transactions
- -- Street Technologies."

Gerald R. Harris, of Pryor, Oklahoma, will become a director of the
Company upon the completion of this offering. Mr. Harris is the founder and
President of Hem, Inc., an industrial saw manufacturer established in 1966.
Prior to founding Hem, Inc., Mr. Harris worked as an engineer at Lawrence
Radiation Laboratory in Livermore, California. He holds a degree in Mechanical
Design from Healds College of Engineering.

Officers of the Company serve at the pleasure of the Board of
Directors. The term of office of each director of the Company ends at the next
annual meeting of the Company's shareholders or when his successor is elected
and qualified.

COMMITTEES OF THE BOARD OF DIRECTORS

At its first meeting of the Board of Directors following the closing
of this offering, the Board of Directors will establish an Audit Committee and
Compensation Committee, both of which will be composed solely of independent
directors. The function of the Audit Committee will be to make recommendations
concerning the engagement of independent public accountants, review with the
independent public accountants the plans for and results of the Company's
annual audit, approve professional services provided by and the independence of
the independent public accountants, consider the range of audit and non-audit
fees and review the adequacy of the Company's internal accounting controls. The
function of the Compensation Committee will be to establish a general
compensation policy for the Company, approve increases in directors' fees and
salaries paid to officers and senior employees of the Company, administer the
1995 ViaGrafix Stock Option Plan and determine, subject to the provisions of
the Company's employee benefit plans, the extent of such participation and
terms and conditions under which benefits thereunder may be vested, received or
exercised.

DIRECTOR COMPENSATION

Each member of the Board will be paid a fee of $500 for each Board of
Directors meeting attended. All directors will receive reimbursement of
reasonable expenses incurred in attending Board and committee meetings and
otherwise carrying out their duties. Upon completion of this offering, each
director and each director nominee will receive an option to purchase 10,000
shares of Common Stock under the 1995 ViaGrafix Stock Option Plan with a per
share exercise price equal to the initial public offering price. Each option
will be non-transferable except upon death (unless otherwise approved by the
Board), and will become exercisable with respect to one-fifth of the shares of
Common Stock issuable thereunder on each of the first five anniversaries of the
date of the grant if the individual is a director at such time.

EXECUTIVE COMPENSATION

In 1996, Michael A. Webster received a salary of $175,000 with no
bonus or other compensation and Robert E. Webster received a salary of
$125,000 with no bonus or other compensation. For 1997, the Company expects to
pay Michael A. Webster and Robert E. Webster salaries of $175,000 and $125,000,
respectively. In 1997, the Company granted options exercisable for 140,000
shares of Common Stock to Michael A. Webster and options exercisable for
100,000 shares of Common Stock to Robert E. Webster. These options vest over
five years and their exercise price is the public offering price. No other
executive officer of the Company received compensation in excess of $100,000 in
1996 or 1997.

1995 VIAGRAFIX STOCK OPTION PLAN

The 1995 ViaGrafix Stock Option Plan (the "Option Plan") was adopted
by the Board of Directors and the shareholders in January 1995. The purpose of
the Option Plan is to attract and retain qualified personnel, to provide
additional incentives to employees, including officers, directors and
consultants of the Company and to promote the success of the Company's
business. Pursuant to the Option Plan, the Company may grant incentive stock
options to employees and officers and nonstatutory stock options to
consultants, employees and directors.

32
<PAGE> 37
A total of 1,000,000 shares of Common Stock has been reserved for issuance under
the Option Plan. As of December 15, 1997, options to purchase 64,738 shares of
Common Stock had been exercised under the Option Plan and there were 611,977
shares of Common Stock issuable upon exercise of outstanding stock options at a
weighted average per share exercise price of $ , including options granted
in 1997 to purchase 440,286 shares at the public offering price of which options
to purchase 140,000 shares and 100,000 shares were granted to Michael A. Webster
and Robert E. Webster, respectively. Options to purchase 323,285 shares remain
available for grant under the Option Plan. Although no vesting schedule is
required under the Option Plan, options previously granted under the Option Plan
generally can be exercised in staggered amounts over a five-year period
beginning one year after the date of grant. The exercise price of incentive
stock options granted under the Option Plan must be at least equal to the fair
market value of the stock subject to the option on the date of grant. The
Option Plan may be amended at any time by the Board, although certain amendments
require shareholder approval.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Amended and Restated Certificate of Incorporation provide
that the Company's directors shall not be personally liable to the Company or
its shareholders for monetary damages for breach of the director's fiduciary
duty as a director, provided that this provision does not limit the liability of
a director for any (a) breach of the director's duty of loyalty to the Company
or its shareholders, (b) act or omission not in good faith or which involves
intentional misconduct or a knowing violation of law, (c) liability for the
unlawful payment of dividends or redemption of stock, or (d) transaction from
which the director derived an improper personal benefit. This provision in the
Amended and Restated Certificate of Incorporation does not eliminate the duty of
care and, in appropriate circumstances, equitable remedies such as an injunction
or other forms of non-monetary relief would remain available under Oklahoma law.
This provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws or state or federal
environmental laws. At the present time, there is no pending litigation or
proceeding involving a director, officer, employee or other agent of the Company
in which indemnification would be required or permitted. The Company is not
aware of any pending or threatened litigation or proceeding which may result in
a claim for such indemnification by any director, officer, employee or other
agent.

33
<PAGE> 38
CERTAIN TRANSACTIONS

ASBC ACQUISITION

On August 15, 1995, the Company acquired land, a building and all of the
2,500 outstanding shares of ASBC for $300,002 in cash and two 7.5% promissory
notes due August 15, 2000 (the "7.5% Notes") in the aggregate principal amounts
of $4,300,000. See Notes 2 and 6 of Notes to Financial Statements. Prior to the
acquisition, the Company engaged in various business transactions with ASBC. See
Note 10 of Notes to Financial Statements.

The Company purchased 1,078 shares of ASBC common stock from Geocapital
III, L.P., holder of the Company's outstanding Preferred Stock, which will be
converted into 488,571 shares of Common Stock prior to this offering, for
$1,500,000, which was paid with (i) $97,826 in cash, and (ii) a $1,402,174
7.5% Note secured by a pledge of 1,078 shares of ASBC common stock.

The Company purchased from Robert E. Webster, a director and officer of the
Company, (i) the remaining 1,422 shares of ASBC common stock for $1,978,670 and
(ii) the property now owned and operated by the Company at One American Way,
Pryor, Oklahoma, for $1,121,332. Of the total purchase price of $3,100,002 due
to Robert E. Webster, the Company paid (i) $202,175 in cash, and (ii) $2,897,826
by delivery of a 7.5% Note and secured by a mortgage on the property at One
America Way, and a pledge of 1,422 shares of ASBC common stock.

The Company intends to repay the outstanding principal and accrued interest
on the 7.5% Notes from the proceeds of the offering, of which $1,162,700
principal amount would be paid to Geocapital III, L.P. and $2,404,900 principal
amount would be paid to Robert E. Webster. See "Use of Proceeds" and Notes 2
and 6 of Notes to Financial Statements.

STREET TECHNOLOGIES, INC.

On January 22, 1997, the Company entered into a Development and
Licensing agreement with Street pursuant to which Street agreed to pay
royalties for networkable sales of ViaGrafix multimedia products and ViaGrafix
agreed to pay royalties to Street on networkable licenses sold for multimedia
training products developed using Street products. For the nine months ended
September 30, 1997, Street paid royalties of $315,000 to ViaGrafix.

34
<PAGE> 39
PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of December 15, 1997
(after giving effect to the conversion of the outstanding shares of Preferred
Stock into Common Stock prior to this offering and as adjusted for the sale of
the shares of Common Stock offered hereby) by (i) each person who is known by
the Company to own beneficially more than 5% of the Common Stock, (ii) each
director and executive officer of the Company and (iii) all directors and
executive officers of the Company as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
OF COMMON STOCK OF COMMON STOCK
PRIOR TO THIS OFFERING(1) SHARES TO BE AFTER THIS OFFERING(1)
------------------------- SOLD IN THIS ----------------------
NUMBER PERCENT OFFERING(2) NUMBER PERCENT
------------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Michael A. Webster . . . . . . . . 2,282,826(3) 52.5% 240,525 2,042,301(3) 33.5%
Robert E. Webster . . . . . . . . . 1,400,031 32.2 155,285 1,244,746 20.4
Geocapital III, L.P. . . . . . . . 488,571 11.2 54,190 434,381 7.1
One Bridge Plaza
Fifth Floor
Fort Lee, NJ 07024
Robert C. Moore, Jr. . . . . . . . 3,429(4) * -- 3,429(4) *
All directors and executive
officers as a
group (3 persons) . . . . . . . . 3,686,286 84.7 395,810 3,290,476(5) 53.9
</TABLE>

* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options currently exercisable or exercisable within 60 days hereof, are
deemed outstanding for computing the percentage of the person holding such
options but not deemed outstanding for the computing of any other person.
The persons named in the group above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by
them.
(2) Assumes no exercise of the Underwriters' over-allotment option. See
"Underwriting." If the over-allotment option is exercised in full, Michael
A. Webster, Robert E. Webster and Geocapital III, L.P., will sell 176,385,
113,876 and 39,739 additional shares, and will beneficially own 30.6%,
18.5% and 6.5% of the outstanding shares, respectively.
(3) Includes 114,286 shares held by Michael A. Webster as Trustee for trusts
for the benefit of his minor children.
(4) Represents shares of Common Stock subject to options exercisable as of the
date of this Prospectus and within 60 days thereafter.
(5) Excludes any shares of Common Stock that may be purchased in this offering
by the director nominees. The Underwriters have agreed to direct the
following shares of Common Stock to the following director nominees at
the offering price: (i) shares of Common Stock to Roy L. Bliss,
(ii) shares of Common Stock to Stephen P. Gott and (iii) shares
of Common Stock to Gerald R. Harris.

The Company and the Selling Shareholders are parties to a Registration
Rights Agreement dated August 16, 1994 (the "Registration Rights Agreement"),
which provides that if shares of stock of the Company and Geocapital III, L.P.,
Michael A. Webster or Robert E. Webster are registered for sales under the
Securities Act of 1933, the Company will pay the first $50,000 of all the
aggregate registration expenses and the balance of such expenses will be borne
proportionately by the Company and the Selling Shareholders according to the
number of shares sold by each.

35
<PAGE> 40
The Registration Rights Agreement grants to the Selling Shareholders
piggyback registration rights for (i) the shares of Common Stock owned by
GeoCapital III, L.P. and (ii) up to 2,982,857 shares of Common Stock in the
aggregate held by Michael A. Webster and Robert E. Webster (together, the
"Registrable Common"). In addition, under the Registration Rights Agreement, the
holders of 20% of the shares of Common Stock held by GeoCapital III, L.P. or its
permitted assigns may require the Company to register such shares on Form S-3;
provided, however, that (i) such registration may be required no more than once
per year and (ii) the shares to be registered must have an aggregate proposed
offering price of not less than $500,000. The foregoing registration rights
extend with respect to each share of Registrable Common until such time (with
certain exceptions) as such share of Registrable Common has been sold.

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<PAGE> 41
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock, $.01 par value per share, and 10,000,000 shares of
Preferred Stock, $.01 par value per share, which may be issued in one or more
series.

COMMON STOCK

As of December 15, 1997, there were 4,350,452 shares of Common Stock
outstanding and held of record by 53 shareholders, assuming the conversion of
all shares of the Preferred Stock into an aggregate of 488,571 shares of Common
Stock prior to this offering. Based upon the number of shares outstanding as of
that date and after giving effect to the issuance of the 1,750,000 shares of
Common Stock offered by the Company hereby, there will be 6,100,452 shares of
Common Stock outstanding upon the closing of this offering.

Holders of Common Stock are entitled to one vote for each share held
on all matters submitted to a vote of shareholders and the affirmative vote of
the holders of a majority of the outstanding shares is required for the
approval of most major corporate actions, including amendment of the
Certificate of Incorporation and certain mergers and other business
combinations and except as set forth below under "Anti-Takeover Provisions" and
for the election of directors. Directors are elected by a plurality of the
shares voting provided that a quorum is present, and shareholders do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available therefor, subject to any preferential
dividend rights of outstanding Preferred Stock. Upon the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to receive ratably the net assets of the Company available after the
payment of all debts and other liabilities and subject to the prior rights of
any outstanding Preferred Stock. Holders of the Common Stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of Common Stock are, and the shares offered by the Company in this
offering will be, when issued and paid for, fully paid and non-assessable. The
rights, preferences and privileges of holders of Common Stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any
series of Preferred Stock, which the Company may designate and issue in the
future.

PREFERRED STOCK

Upon the closing of this offering, there will be no shares of
Preferred Stock outstanding. The Board of Directors is authorized, subject to
certain limitations prescribed by law, without further shareholder approval, to
issue from time to time up to an aggregate of 10,000,000 shares of Preferred
Stock in one or more series and to fix or alter the designations, preferences,
rights and any qualifications, limitations or restrictions of the shares of
each such series thereof, including the dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption (including sinking fund
provisions), redemption price or prices, liquidation preferences and the number
of shares constituting any series or designations of such series. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company. The Company has no present plans to issue any
shares of Preferred Stock. See "Risk Factors -- Ownership Concentration" and
"Risk Factors -- Anti-Takeover Considerations."

ANTI-TAKEOVER PROVISIONS

The Company is subject to the provisions of the Oklahoma Takeover
Disclosure Act of 1985 (the "Disclosure Act") regulating corporate takeovers.
The Disclosure Act requires certain notices to be given prior to making a
takeover offer. Such notices include filing a registration statement with the
Securities Administrator of Oklahoma and delivering a copy of such notice to
the Company. The Disclosure Act applies to offers to takeover an issuer of
publicly traded securities of which at least 20% are held by Oklahoma
residents. A "takeover" offer includes offers in which the offerer disclosures
its intention that, as a result of the offer: (i) the

37
<PAGE> 42
offeror will own 10% or more of any class of equity securities or (ii)
ownership of any class of equity securities will be increased by 5% or more.

The Company is subject to the provisions of Section 1090.3 of the
Oklahoma General Corporation Act. That section provides, with certain
exceptions, that an Oklahoma corporation may not engage in any of a broad range
of business combinations with a person or an affiliate or associate of such
person who is an "Interested Shareholder" for a period of three years from the
date that such person became an Interested Shareholder unless: (a) the
business combination or the transaction resulting in the person becoming an
Interested Shareholder is approved by the Board of Directors of the corporation
before the person becomes an Interested Shareholder, (b) upon consummation of
the transaction which resulted in the person becoming an Interested
Shareholder, the Interested Shareholder owned 85% or more of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
shares owned by persons who are both officers and directors of the corporation
and shares held by certain employee stock ownership plans) or (c) on or after
the date the person became an Interested Shareholder, the business combination
is approved by the corporation's board of directors and by the holders of at
least 66-2/3% of the corporation's outstanding voting stock , excluding shares
owned by the Interested Shareholder, at an annual or special meeting. An
"Interested Shareholder" is defined as any person that is (a) the owner of 15%
or more of the outstanding voting stock of the corporation or (b) an affiliate
or associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an Interested Shareholder.

The Oklahoma Shares Control Act ("OSCA") (Section 1145 et seq. of the
Oklahoma General Corporation Act) prohibits the voting of "control shares"
without the approval of a majority of shares held by non-interested
shareholders. Under the OSCA, "control shares" are shares acquired by a person
which causes his percentage ownership to exceed certain statutorily prescribed
ranges of ownership beginning at 20%. The OSCA was ruled unconstitutional
shortly after its adoption in 1987; however, it is believed that certain
amendments to the OSCA in 1990 and 1991 may have cured its constitutional
infirmities.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is UMB Financial
Corporation.

LISTING

The Company has been approved for listing of the Common Stock on the
Nasdaq National Market under the symbol "VIAX", subject to official notice of
issuance.

38
<PAGE> 43
SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering, the Company will have an aggregate
of 6,100,452 shares of Common Stock outstanding, assuming no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options to
purchase Common Stock. Of these shares, the 2,200,000 shares sold in this
offering are freely tradable without restriction or further registration under
the Securities Act.

The remaining 3,900,452 shares of Common Stock are deemed "restricted
securities" as defined under Rule 144. Restricted securities may be sold in
the public market only if registered or if they qualify for an exemption from
registration under the Securities Act, including Rules 144, 144k and 701,
summarized below.

Subject to the provisions of Rules 144, 144(k) and 701 and to the
rights of the Selling Shareholders to exercise certain registration rights,
additional shares will be available for sale in the public market as follows:
(i) 228,571 shares will be available for immediate sale in the public market
pursuant to Rule 701 under the Securities Act on the date of this Prospectus,
(ii) 64,738 shares will be eligible for sale pursuant to Rule 144 under the
Securities Act upon the expiration of lock-up agreements 90 days after the date
of this Prospectus and (iii) 3,607,143 shares will be eligible for sale
pursuant to Rule 144 under the Securities Act upon the expiration of lock-up
agreements 180 days after the date of this Prospectus. See "Principal and
Selling Shareholders."

In general, under Rule 144, a person (or persons whose shares are
aggregated), including an affiliate, who has beneficially owned shares for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of (i) 1% of the then outstanding
shares of Common Stock (approximately 61,005 shares immediately after this
offering) or (ii) 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, subject to certain restrictions. In addition, a person who is not deemed
to have been an affiliate of the Company at any time during the three months
preceding a sale and who has beneficially owned the shares proposed to be sold
for at least two years would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above.

Rule 701 promulgated under the Securities Act provides that shares of
Common Stock acquired pursuant to written plans such as the 1995 ViaGrafix
Stock Option Plan may be resold by persons other than affiliates, beginning 90
days after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and by affiliates, beginning 90 days after the date of
this Prospectus, subject to all provisions of Rule 144 except its one-year
minimum holding period.

Shortly after the date of this Prospectus, the Company intends to file
a Form S-8 registration statement under the Securities Act to register all
shares of Common Stock issuable under the 1995 ViaGrafix Stock Option Plan. See
"Management -- Director Compensation" and "-- 1995 ViaGrafix Stock Option
Plan." Such registration statement is expected to become effective immediately
upon filing, and shares covered by that registration statement will thereupon
be eligible for sale in the public markets, subject to Rule 144 limitations
applicable to affiliates.

Prior to this offering, there has not been any public market for the
Common Stock of the Company, and no prediction can be made as to the effect, if
any, that market sales of shares of Common Stock or the availability of shares
for sale will have on the market price of the Common Stock prevailing from time
to time. Nevertheless, sales of substantial amounts of Common Stock in the
public market could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through the sale of
its equity securities.

The Selling Shareholders (holding an aggregate of 3,607,143 shares of
Common Stock) have agreed that they will not, without the prior written consent
of the Representative of the Underwriters, sell or otherwise dispose of any
shares of Common Stock during the 180-day period following the date of this
Prospectus. See "Underwriting."

39
<PAGE> 44
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, a
copy of which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part, the Underwriters named below have agreed,
severally and not jointly, through Southwest Securities, Inc., the
Representative of the Underwriters, to purchase from the Company and the
Selling Shareholders and the Company and the Selling Shareholders have agreed
to sell to the Underwriters, the number of shares of Common Stock set forth
opposite the name of the respective Underwriter at the Price to Public less the
Underwriting Discount set forth on the cover page of this Prospectus.

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- ---------
<S> <C>
Southwest Securities, Inc., . . . . . . . . . . . . . . . . . --

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200,000
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares offered hereby if any of the
shares are purchased.

The Underwriters have advised the Company that they propose to offer
all or a part of the shares offered hereby directly to the public at the Price
to Public set forth on the cover page of this Prospectus, that they may offer
shares to certain dealers at a price which represents a concession of $ per
share and they may allow, and such dealers may reallow, a concession of not
more than $ per share to certain other dealers. After the commencement of
this offering, the Price to Public and the concessions may be changed.

The Company has granted the Underwriters a 30-day option to purchase
up to 330,000 additional shares of Common Stock at the Price to Public less the
Underwriting Discount set forth on the cover page of this Prospectus. The
Underwriters may exercise the option only to cover over-allotments, if any, in
connection with the offering of the shares made hereby. To the extent the
Underwriters exercise the option, each of the Underwriters will have a firm
commitment, subject to certain conditions, to purchase approximately the same
percentage of additional shares of Common Stock as the number of shares set
forth opposite that Underwriter's name in the preceding table bears to the
total number of shares listed in such table.

The Company has additionally agreed to pay to Southwest Securities,
Inc., solely by deduction from the proceeds of this offering, a financial
advisory fee equal to % of the total proceeds of this offering. Such
financial advisory fee shall be paid by the Company and the Selling
Shareholders in proportion to the number of shares of Common Stock sold by them
hereby, and relates to financial advisory services by Southwest to the Company
and Selling Shareholders in connection with this offering and related matters.

40
<PAGE> 45
The Selling Shareholders and certain other shareholders have agreed
with the Representative of the Underwriters not to sell or otherwise dispose of
any shares of Common Stock, or any securities convertible into or exercisable
or exchangeable for shares of Common Stock, for a period of 180 days after the
date of this Prospectus without the written consent of the Representative. See
"Shares Eligible for Future Sale."

The Representative of the Underwriters has advised the Company that
the Underwriters do not intend to confirm sales to any account over which they
exercise discretionary authority.

Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock will be
determined by negotiations between the Company and Representative of the
Underwriters. Among the factors to be considered in such negotiations are
prevailing market conditions, the results of operations of the Company in
recent periods, the market capitalizations and stages of development of other
companies which the Company and the Representative of the Underwriters believes
to be comparable to the Company, estimates of the business potential of the
Company, the present state of the Company's development and other factors
deemed relevant. The anticipated initial public offering price set forth on the
cover of this Prospectus is subject to change as a result of market conditions
and other factors.

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

If the Representative creates a short position in the Common Stock in
connection with this offering, i.e., if it sells more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Representative may
reduce that short position by purchasing shares of Common Stock in the open
market. The Representative may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.

In general, purchases of a security for the purpose of stabilization
or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases. Neither the Company
nor the Representative makes any representation or prediction as to the
direction or magnitude of any effect that the transaction described above might
have on the price of the Common Stock. In addition, neither the Company nor the
Representative makes any representation that the Representative will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriter may be required to make in respect thereof.

The Representative plans to confirm shares at the public offering
price to the director nominees as follows: (i) shares of Common Stock
to Roy L. Bliss, (ii) shares of Common Stock to Stephen P. Gott and
(iii) shares of Common Stock to Gerald R. Harris.

41
<PAGE> 46
LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Johnson, Allen, Jones & Dornblaser, Inc., Tulsa,
Oklahoma. Certain legal matters in connection with this offering will be passed
upon for the Underwriters by Jackson Walker L.L.P., Dallas, Texas.

EXPERTS

The financial statements and schedule of ViaGrafix Corporation as of
September 30, 1997, December 31, 1995 and 1996 and for the nine months ended
September 30, 1997 and for each of the three years in the period ended December
31, 1996 and the financial statements of American Small Business Computers,
Inc. for the seven and one-half month period ended August 15, 1995 included in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon appearing
elsewhere herein, and are included in reliance upon such reports given upon the
authority of said firm as experts in auditing and accounting.

42
<PAGE> 47
ADDITIONAL INFORMATION

The Company has not previously been subject to the reporting
requirements of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act").

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (as amended, the
"Registration Statement") under the Securities Act with respect to the shares
of Common Stock offered hereby. As permitted by the rules and regulations of
the Commission, this Prospectus omits certain information contained in the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules filed therewith. Statements
contained in this Prospectus as to the contents of any agreement or other
document filed as an exhibit to the Registration Statement are not necessarily
complete, and in each instance reference is made to the copy of such agreement
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement, including exhibits and schedules thereto, may be inspected by anyone
without charge at the Commission's principal office in Washington, D.C. and
copies of all or any part thereof may be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, New York, New York 10048, upon payment of certain fees prescribed by
the Commission. The Commission also maintains a World Wide Web site, which
provides online access to reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
at the address "http://www.sec.gov."

The Company intends to distribute to its shareholders annual reports
containing financial statements audited by its independent accountants and will
make available copies of quarterly reports for the first three quarters of each
fiscal year containing unaudited financial statements.

43
<PAGE> 48
Index to Financial Statements

<TABLE>
<CAPTION>
Page

<S> <C>
VIAGRAFIX CORPORATION

Report of Independent Auditors ......................................................F-2

Balance Sheets as of September 30, 1997 and
December 31, 1996 and 1995.......................................................F-3
Statements of Operations for the nine months ended September 30,
1997 and 1996 (unaudited) and the years ended December 31,
1996, 1995 and 1994..............................................................F-4
Statements of Changes in Stockholders' Equity for the nine months
ended September 30, 1997 and the years ended December 31,
1996, 1995 and 1994.............................................................F-5
Statements of Cash Flows for the nine months ended September 30,
1997 and 1996 (unaudited) and the years ended December 31,
1996, 1995 and 1994..............................................................F-6
Notes to Financial Statements........................................................F-7

Schedule II - Valuation and Qualifying Accounts for the nine months
ended September 30, 1997 and the years ended December 31, 1996,
1995 and 1994....................................................................F-23

All other schedules have been omitted since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in respective
financial statements or notes thereto

AMERICAN SMALL BUSINESS COMPUTERS, INC.

Report of Independent Auditors.......................................................F-24

Statement of Operations for the seven and one-half months ended August
15, 1995........................................................................F-25

Statement of Cash Flows for the seven and one-half months ended
August 15, 1995.................................................................F-26

Notes to Financial Statements........................................................F-27
</TABLE>

F-1
<PAGE> 49

Report of Independent Auditors

The Board of Directors and Shareholders
ViaGrafix Corporation

We have audited the accompanying balance sheets of ViaGrafix Corporation as of
September 30, 1997 and December 31, 1996 and 1995, and the related statements of
operations, changes in stockholders' equity, and cash flows for the nine months
ended September 30, 1997 and each of the three years in the period ended
December 31, 1996. Our audits also included the financial statement schedule
included in the Index to Financial Statements. These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ViaGrafix Corporation at
September 30, 1997 and December 31, 1996 and 1995 and the results of operations
and cash flows for the nine months ended September 30, 1997 and each of the
three years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ ERNST & YOUNG LLP

Tulsa, Oklahoma
November 21, 1997, except for the
"Stock Split" section of Note 1, as to
which the date is December 12, 1997.

F-2
<PAGE> 50

ViaGrafix Corporation

Balance Sheets

<TABLE>
<CAPTION>
September 30 December 31
1997 1996 1995
----------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 368,822 $1,009,347 $ 35,012
----------- ---------- ------------
Trade accounts receivable (net of allowance
for doubtful accounts of $70,443 in 1997) 2,160,612 1,203,905 1,206,892

Inventories 1,171,732 830,572 824,987
Prepaid expenses 188,883 281,886 168,468
Deferred income taxes 26,980 3,670 3,359
----------- ---------- ------------
Total current assets 3,917,029 3,329,380 2,238,718

Property, plant and equipment 3,093,423 2,528,043 2,242,761
Accumulated depreciation 875,809 666,307 316,735
----------- ---------- ------------
2,217,614 1,861,736 1,926,026

Capitalized software (net of accumulated amortization
of $650,000, $644,500 and $322,409 in 1997, 1996
and 1995, respectively) - 5,500 327,591
Goodwill (net of accumulated amortization of $31,395,
$18,176 and $4,957 in 1997, 1996 and 1995, 100,794 114,013 127,232
respectively)

Deferred income taxes 656,814 801,269 663,695
----------- ---------- ------------
Total assets $ 6,892,251 $6,111,898 $ 5,283,262
=========== ========== ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 474,034 $ 307,547 $ 701,411
Accounts payable - affiliates 35,378 20,875 28,047
Accrued liabilities 206,533 149,189 46,627
Income taxes payable 399,424 458,987 30,540
Current portion of long-term debt 774,952 755,958 755,958
----------- ---------- ------------
Total current liabilities 1,890,321 1,692,556 1,562,583

Long-term debt 3,029,614 3,482,241 3,477,522

Shareholders' equity:
Common stock, $.01 par value, authorized 40,000,000
shares; issued and outstanding 5,714,286 shares 57,143 57,143 57,143
Series A convertible preferred stock, $.01 par value;
authorized 10,000,000 shares; issued and
outstanding 488,571 shares 4,886 4,886 4,886
Additional paid-in capital 1,709,171 1,509,559 1,495,114
Unearned compensation (148,798) - -
Retained earnings 2,332,238 1,356,131 681,614
----------- ---------- ------------
3,954,640 2,927,719 2,238,757
Less 1,852,405, 1,880,514 and 1,904,571 common
shares in treasury, at cost in 1997, 1996
and 1995, respectively 1,982,324 1,990,618 1,995,600
----------- ---------- ------------
Total shareholders' equity 1,972,316 937,101 243,157
----------- ---------- ------------
Total liabilities and shareholders' equity $ 6,892,251 $6,111,898 $ 5,283,262
=========== ========== ============
</TABLE>

See accompanying notes.

F-3
<PAGE> 51

ViaGrafix Corporation

Statements of Operations

<TABLE>
<CAPTION>
Nine Months ended
September 30 Year ended December 31
1997 1996 1996 1995 1994
------------ ------------ ------------ ------------ ------------
(Unaudited)

<S> <C> <C> <C> <C> <C>
Net sales $ 9,802,633 $ 7,602,000 $ 10,076,742 $ 7,230,214 $ 4,884,224
Cost of sales 3,658,882 3,038,000 4,001,358 2,723,194 1,886,908
------------ ------------ ------------ ------------ ------------
Gross profit 6,143,751 4,564,000 6,075,384 4,507,020 2,997,316

Selling, general and
administrative expenses 3,270,105 2,841,000 3,990,839 3,733,031 1,669,849
Write-off of acquired in-process
research and development -- -- -- 1,397,000 --
Depreciation and amortization
expense 236,067 513,000 684,882 432,563 53,622
------------ ------------ ------------ ------------ ------------
Operating income (loss) 2,637,579 1,210,000 1,399,663 (1,055,574) 1,273,845

Other income (expense):
Interest income and other 13,443 -- 62,459 10,685 3,614
Interest expense (231,151) (196,000) (324,547) (119,882) (964)
------------ ------------ ------------ ------------ ------------
Income (loss) before income
taxes 2,419,871 1,014,000 1,137,575 (1,164,771) 1,276,495

Provision (benefit) for income taxes:
Current 820,149 541,000 600,943 209,040 237,669
Deferred 117,815 (121,000) (137,885) (667,054) --
------------ ------------ ------------ ------------ ------------
937,964 420,000 463,058 (458,014) 237,669
------------ ------------ ------------ ------------ ------------
Net income (loss) 1,481,907 594,000 674,517 (706,757) 1,038,826
============ ============ ============ ============ ============

Earnings (loss) per common
and common equivalent share $ .33 $ .13 $ .15 $ (.20) $ .24
============ ============ ============ ============ ============

Common and common equivalent
shares used in computing
earnings per share 4,500,027 4,475,394 4,475,394 3,504,358 4,353,958
============ ============ ============ ============ ============
</TABLE>

See accompanying notes.

F-4
<PAGE> 52

ViaGrafix Corporation

Statements of Changes in shareholders' Equity

<TABLE>
<CAPTION>
Common Preferred Additional Unearned
Stock Stock Paid-in Capital Compensation
----------- ----------- ----------- -----------

<S> <C> <C> <C> <C>
Balance at December 31, 1993 $ 57,143 $ -- $ -- $ --
Sale of 977,142 shares of Series A convertible
preferred stock -- 9,771 2,990,229 --
Distributions to common shareholders prior to sale
of Series A convertible preferred stock -- -- -- --
Purchase of 977,142 treasury shares, at cost -- -- -- --
Net income -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1994 57,143 9,771 2,990,229 --
Conversion of 488,571 shares of Series A convertible
preferred stock to common stock -- (4,885) (1,495,115) --
Declared and paid $.051 dividend per share on 616,571
of the common and preferred shares outstanding -- -- -- --
Exercise of 12,571 stock options -- -- -- --
Net loss -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1995 57,143 4,886 1,495,114 --
Purchase of 4,886 treasury common shares, at cost -- -- -- --
Exercise of 28,943 stock options -- -- 14,445 --
Net income -- -- -- --
----------- ----------- ----------- -----------
Balance at December 31, 1996 57,143 4,886 1,509,559 --
Purchase of 1,143 treasury common shares, at cost -- -- -- --
Exercise of 29,252 stock options -- -- 18,777 --
Granted stock options at price less than estimated fair
market value -- -- 180,835 (180,835)
Amortization of unearned compensation -- -- -- 32,037
Declared and paid approximately $.117 dividend
per share on 4,322,343 of the common and
preferred shares outstanding -- -- -- --
Net income -- -- -- --
----------- ----------- ----------- -----------
Balance at September 30, 1997 $ 57,143 $ 4,886 $ 1,709,171 $ (148,798)
=========== =========== =========== ===========

Retained Common Shares
Earnings in Treasury Total
----------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1993 $ 1,597,772 $ (500,000) $ 1,154,915
Sale of 977,142 shares of Series A convertible
preferred stock -- -- 3,000,000
Distributions to common shareholders prior to sale
of Series A convertible preferred stock (1,215,000) -- (1,215,000)
Purchase of 977,142 treasury shares, at cost -- (3,000,000) (3,000,000)
Net income 1,038,826 -- 1,038,826
----------- ----------- -----------
Balance at December 31, 1994 1,421,598 (3,500,000) 978,741
Conversion of 488,571 shares of Series A convertible
preferred stock to common stock -- 1,500,000 --
Declared and paid $.051 dividend per share on 616,571
of the common and preferred shares outstanding (31,291) -- (31,291)
Exercise of 12,571 stock options (1,936) 4,400 2,464
Net loss (706,757) -- (706,757)
----------- ----------- -----------
Balance at December 31, 1995 681,614 (1,995,600) 243,157
Purchase of 4,886 treasury common shares, at cost -- (5,148) (5,148)
Exercise of 28,943 stock options -- 10,130 24,575
Net income 674,517 -- 674,517
----------- ----------- -----------
Balance at December 31, 1996 1,356,131 (1,990,618) 937,101
Purchase of 1,143 treasury common shares, at cost -- (2,200) (2,200)
Exercise of 29,252 stock options -- 10,494 29,271
Granted stock options at price less than estimated fair
market value -- -- --
Amortization of unearned compensation -- -- 32,037
Declared and paid approximately $.117 dividend
per share on 4,322,343 of the common and
preferred shares outstanding (505,800) -- (505,800)
Net income 1,481,907 -- 1,481,907
----------- ----------- -----------
Balance at September 30, 1997 $ 2,332,238 $(1,982,324) $ 1,972,316
=========== =========== ===========
</TABLE>

See accompanying notes.

F-5
<PAGE> 53

ViaGrafix Corporation

Statements of Cash Flows

<TABLE>
<CAPTION>
Nine Months ended
September 30 Year ended December 31
1997 1996 1996 1995 1994
----------- ----------- ----------- ----------- -----------
(Unaudited)
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net income (loss) $ 1,481,907 $ 594,000 $ 674,517 $ (706,757) $ 1,038,826
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization expense 236,067 513,000 684,882 432,563 53,622
Deferred income tax provision (benefit) 117,815 (121,000) (137,885) (667,054) --
Noncash interest expense -- 142,000 142,342 49,439 --
Loss on disposal of assets 9,419 -- -- -- --
Bad debt expense 70,443 -- -- -- --
Write-off of purchased research and
development -- -- -- 1,397,000 --
Amortization of unearned compensation 32,037 -- -- -- --
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts
receivable (1,027,150) (35,000) 2,987 (724,451) 534,311
Decrease (increase) in inventories (341,160) 2,000 (5,585) 38,963 (129,033)
Decrease (increase) in prepaid expenses 93,003 (29,000) (113,418) (149,918) (18,550)
Increase (decrease) in accounts
payable - trade 166,487 (529,000) (393,864) 587,368 (41,689)
Increase (decrease) in accounts
payable -affiliates 14,503 -- (7,172) 28,047 --
Increase in accrued liabilities 57,344 212,000 102,562 46,627 --
Increase (decrease) in income taxes
payable (59,563) 388,000 428,447 (207,129) 237,669
----------- ----------- ----------- ----------- -----------
Net cash provided by operating activities 851,152 1,137,000 1,377,813 124,698 1,675,156
INVESTING ACTIVITIES
Purchases of property, plant and equipment (579,315) (214,000) (285,282) (30,776) (54,857)
American Small Business Computers, Inc.
acquisition -- -- -- (300,002) --
----------- ----------- ----------- ----------- -----------
Net cash used in investing activities (579,315) (214,000) (285,282) (330,778) (54,857)
FINANCING ACTIVITIES
Repayments of debt (433,633) (9,000) (137,623) (118,947) (50,000)
Dividends paid to common and
preferred shareholders (505,800) -- -- (31,291) --
Distributions to common shareholders prior to
sale of Series A convertible preferred stock -- -- -- -- (1,215,000)
Sale of Series A convertible preferred stock -- -- -- -- 3,000,000
Purchase of treasury common stock (2,200) (5,000) (5,148) -- (3,000,000)
Exercise of stock options 29,271 25,000 24,575 2,464 --
----------- ----------- ----------- ----------- -----------
Net cash provided by (used in) financing activities (912,362) 11,000 (118,196) (147,774) (1,265,000)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents (640,525) 934,000 974,335 (353,854) 355,299
Cash and cash equivalents at beginning of year 1,009,347 35,000 35,012 388,866 33,567
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of year $ 368,822 $ 969,000 $ 1,009,347 $ 35,012 $ 388,866
=========== =========== =========== =========== ===========
Supplemental cash flow information:
Interest paid $ 230,085 $ 81,000 $ 168,794 $ 54,575 $ 964
=========== =========== =========== =========== ===========
Income taxes paid $ 479,000 $ 173,000 $ 173,000 $ 416,169 $ --
=========== =========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-6
<PAGE> 54
ViaGrafix Corporation

Notes to Financial Statements

September 30, 1997 and December 31, 1996 and 1995

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

GENERAL

The Company is engaged primarily in the business of producing and selling
directly to end-users and through resellers and distributors a wide range of
computer software training videos and interactive CD-ROM software training
products ("training products"). Beginning on August 15, 1995, the Company
entered into the business of developing and selling directly to end-users and
through resellers and distributors Computer-Aided Design ("CAD") software, which
is primarily used in the engineering and architectural fields.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents. Cash equivalents
consist of money market and investor accounts of $211,452, $841,314 and $14,214
at September 30, 1997 and December 31, 1996 and 1995, respectively.

REVENUE RECOGNITION

The Company sells its CAD software with substantially no obligations beyond the
delivery date of the software. The Company's price for its products is fixed at
the date of sale, and the retailer's obligation to the Company is not contingent
on resale of the products or affected by damage or theft of the products.
Revenue is recognized on all products at the time of delivery. The computer
software training videos and interactive CD-ROM software training products can
be returned within 30 days or, for certain retailers, under a stock return
policy. The Company records an estimate of the amount, when significant, of
returns expected in the next 30 days or under each stock return policy at the
time of the initial delivery of the products.

F-7
<PAGE> 55
ViaGrafix Corporation

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined using
the average cost method.

PREPAID EXPENSES

Throughout the year the Company participates in numerous trade shows. The
Company is required to prepay registration and booth fees for the trade shows.
These prepayments are included in prepaid expenses.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost and are depreciated using
accelerated methods over their estimated useful lives.

SOFTWARE RESEARCH AND DEVELOPMENT COSTS

The Company's policy is to capitalize any significant software development costs
subsequent to the establishment of technological feasibility until such time as
the product is available for general release. All costs incurred prior to
technological feasibility are expensed as research and development costs when
incurred. Due to the method employed by the Company to develop software, an
insignificant amount of costs are incurred between the date technological
feasibility is established, and when the products are ready for general release.
Research and development costs incurred by the Company were $836,000, $467,000
$320,000 and $207,000 for the nine months ended September 30, 1997 and years
ended December 31, 1996, 1995 and 1994, respectively.

As described in Note 2, the Company allocates a portion of the cost of acquired
enterprises to intangible assets based upon the estimated fair value of the
intangibles, including software in various stages of development. The fair value
of software development projects which have not yet reached technological
feasibility and which have no alternative use are expensed as research and
development in the period acquired. The fair values of all other developed
software products are included in intangible assets and amortized over the
expected remaining life of the specific software products.

F-8
<PAGE> 56
ViaGrafix Corporation

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

Deferred income taxes are computed using the liability method and are provided
on all temporary differences between the financial reporting basis and the tax
basis of the Company's assets and liabilities.

TREASURY STOCK

Treasury stock purchases are accounted for under the cost method whereby the
entire cost of the acquired stock is recorded as treasury stock. Gains and
losses on the subsequent reissuance of shares are credited or charged to
additional paid-in capital or retained earnings, respectively, using the
specific identification method.

INCENTIVE STOCK OPTIONS

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," ("APB No. 25") and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under Statement of Financial
Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation,"
requires use of option valuation models that were not developed for use in
valuing employee stock options. Under APB No. 25, when the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

ADVERTISING COSTS

Costs incurred for advertising are expensed when incurred. Advertising expenses
amounted to $545,409, $712,812, $904,580 and $208,210 for the nine months ended
September 30, 1997 and the years ended December 31, 1996, 1995 and 1994,
respectively.

F-9
<PAGE> 57
ViaGrafix Corporation

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

Earnings per share are based on the weighted average number of common shares
outstanding and common stock equivalents resulting from stock options and Series
A convertible preferred stock to the extent that such items are dilutive.
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
earnings per share computations include the dilutive effect of all stock options
issued by the Company with exercise prices below the assumed public offering
price during the twelve month period preceding an initial filing of a
registration statement as outstanding common stock equivalents using the
treasury stock method for all periods presented. Fully dilutive earnings per
share is the same or not materially different than primary earnings per share.

STOCK SPLIT

All common share and per share amounts in the financial statements and notes to
the financial statements have been restated to reflect a 1 for 1.75 reverse
stock split effective December 12, 1997. The financial statements and notes to
the financial statements have also been restated to reflect a change in the par
value of the common and preferred shares from $.001 to $.01 effective December
12, 1997.

FAIR VALUE DISCLOSURE

The carrying value of the long-term debt approximates fair value due to the
current market rates. The financial assets and other liabilities approximate
their fair values because of the short maturity of those instruments.

RECLASSIFICATIONS

Certain of the 1996 and 1995 amounts have been reclassified to conform to the
1997 presentations.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128 "Earnings per Share." The Company is required to adopt SFAS No. 128 for
interim and annual periods beginning after December 15, 1997 and will restate at
that time

F-10
<PAGE> 58
ViaGrafix Corporation

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

earnings per share ("EPS") data for prior periods to conform with SFAS No. 128.
Earlier application is not permitted. SFAS No. 128 replaces current EPS
reporting requirements and requires a dual presentation of basic and diluted
EPS. Basic EPS is computed by dividing net income by the weighted average of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Basic and diluted earnings (loss)
per share as if SFAS No. 128 had been adopted are as follows:

<TABLE>
<CAPTION>
Nine Months
ended
September 30 Year ended December 31
1997 1996 1995 1994
------------- ------------- ------------- -------------

<S> <C> <C> <C> <C>
Basic $ .37 $ .18 $ (.21) $ .27
============= ============= ============= =============

Diluted $ .33 $ .15 $ (.20) $ .24
============= ============= ============= =============

Weighted average common
shares outstanding 3,861,881 3,833,771 3,504,358 3,919,287

Weighted average common
and common equivalent
shares outstanding 4,500,027 4,475,394 3,504,358 4,353,958
</TABLE>

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure." The Company is required to adopt SFAS No. 129 for periods
ending after December 15, 1997. The Company will make the disclosures required
by SFAS No. 129.

In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income,"
which requires that a company report, by major components and as a single total,
the change in its net assets during the period from nonowner sources; and SFAS
No. 131, "Disclosures About Segments of an Enterprise and Related Information,"
which establishes annual and interim reporting standards for a company's
operating segments and related disclosures about its products, services,
geographic areas, and major

F-11
<PAGE> 59
ViaGrafix Corporation

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

customers. Adoption of these statements will not impact the Company's financial
position, results of operations or cash flows, and any effect will be limited to
the form and content of the Company's disclosures. Both statements are effective
for fiscal years beginning after December 15, 1997, with earlier application
permitted. However, the Company will not adopt these statements until 1998.

In November 1997, the Accounting Standards Executive Committee issued Statement
of Position ("SOP") No. 97-2, "Software Revenue Recognition," which supersedes
SOP No. 91-1, "Software Revenue Recognition." The Company is required to adopt
SOP No. 97-2 for transactions entered into in fiscal years beginning after
December 15, 1997. Earlier application is permitted as of the beginning of
fiscal years or interim periods for which financial statements or information
have not been issued. Retroactive application is prohibited. The Company does
not plan to early adopt SOP No. 97-2 and it is not expected to significantly
impact the Company's financial position, results of operations or cash flows.

2. ACQUISITIONS

On August 15, 1995, the Company acquired land, a building and the outstanding
stock of American Small Business Computers, Inc. ("ASBC"), for $300,002 in cash
and two 7.5% promissory notes due August 15, 2000, in the aggregate principal
amount of $4,300,000. Immediately prior to the acquisition, ASBC was owned 43%
by the holder of the Company's Series A convertible preferred stock and 57% by
an individual who is a minority shareholder in the Company and a brother of the
Company's majority shareholder. The majority shareholder of the Company had no
ownership interest in ASBC and was not an employee, officer or director of ASBC
prior to ASBC's purchase by the Company. Before the transaction, ASBC and the
Company were not under common control. As a result, the transaction was
accounted for under Accounting Principles Board Opinion No. 16 ("APB No. 16"),
"Accounting for Business Combinations," as a purchase.

In accordance with APB No. 16, the purchase price was allocated to the tangible
and specifically identified intangible assets acquired and liabilities assumed
based upon the estimated fair value of such assets and liabilities. The excess
of the purchase price and liabilities assumed over the fair value of tangible
and specifically identified intangible

F-12
<PAGE> 60
ViaGrafix Corporation

Notes to Financial Statements (continued)

2. ACQUISITIONS (CONTINUED)

assets was recorded as goodwill and is being amortized over 10 years. The fair
value of software development projects was computed based upon the discounted
future cash flows expected to be generated by such projects. The costs assigned
to software development projects related to products that had not yet reached
technological feasibility and for which the technology had no future alternative
uses were expensed immediately as in-process research and development. The costs
assigned to projects for which technological feasibility had been achieved was
amortized over the remaining life of the respective product, which ranged from
four to 24 months.

The following table presents the allocation of the purchase price between assets
acquired and liabilities assumed:

<TABLE>
<CAPTION>
Book Value Fair Value
----------- -----------

<S> <C> <C>
Inventory $ 558,401 $ 558,401
Property, plant and equipment 1,215,156 1,890,555
In-process research and development -- 1,397,000
Software development -- 650,000
Less liabilities assumed (28,143) (28,143)
----------- -----------
$ 1,745,414 $ 4,467,813
=========== ===========
Purchase price 4,600,002
-----------
Goodwill $ 132,189
===========
</TABLE>

The operating results of ASBC are included in the statements of operations from
the acquisition date forward. The capitalized software amortization expense was
$5,500, $322,091 and $322,409 for the nine months ended September 30, 1997, and
the years ended December 31, 1996 and 1995, respectively.

F-13
<PAGE> 61
ViaGrafix Corporation

Notes to Financial Statements (continued)

3. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
September 30 December 31
1997 1996 1995
---------- ---------- ----------

<S> <C> <C> <C>
Finished goods $ 648,866 $ 113,133 $ 326,295
Raw materials 522,866 717,439 498,692
---------- ---------- ----------
$1,171,732 $ 830,572 $ 824,987
========== ========== ==========
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
September 30 December 31
1997 1996 1995
---------- ---------- ----------

<S> <C> <C> <C>
Land $ 100,000 $ 100,000 $ 100,000
Building 1,511,148 1,208,696 1,020,000
Leasehold improvements 6,422 6,422 9,421
Production equipment 1,244,072 1,094,890 1,016,029
Automobiles 183,016 78,840 78,840
Furniture and fixtures 48,765 39,195 18,471
---------- ---------- ----------
$3,093,423 $2,528,043 $2,242,761
========== ========== ==========
</TABLE>

5. INCOME TAXES

Prior to August 17, 1994, the Company elected to be treated as a small business
corporation under Subchapter S of the Internal Revenue Code and therefore was
not subject to income taxes. Effective August 17, 1994, the Company changed its
tax status from an S Corporation to a C Corporation.

F-14
<PAGE> 62
ViaGrafix Corporation

Notes to Financial Statements (continued)

5. INCOME TAXES (CONTINUED)

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

<TABLE>
<CAPTION>
Nine Months
ended
September 30 Year ended December 31
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Current:
Federal $ 700,637 $ 534,839 $ 186,046 $ 202,019
State 119,512 66,104 22,994 35,650
--------- --------- --------- ---------
820,149 600,943 209,040 237,669
Deferred:
Federal 104,855 (122,718) (593,678) --
State 12,960 (15,167) (73,376) --
--------- --------- --------- ---------
117,815 (137,885) (667,054) --
--------- --------- --------- ---------
$ 937,964 $ 463,058 $(458,014) $ 237,669
========= ========= ========= =========
</TABLE>

A reconciliation of the statutory federal income tax rate to the provision
(benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
Nine Months
ended
September 30 Year ended December 31
1997 1996 1995 1994
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Expected provision (benefit)
for federal income taxes at
the statutory rate $ 822,756 $ 386,776 $(396,022) $ 434,008
State income taxes - net of
federal benefit 95,827 45,048 (46,125) 24,914
Other 19,381 31,234 (15,867) --
Federal income tax effect
on S Corporation income -- -- -- (221,253)
--------- --------- --------- ---------
Provision (benefit) for income
taxes $ 937,964 $ 463,058 $(458,014) $ 237,669
========= ========= ========= =========
</TABLE>

F-15
<PAGE> 63

ViaGrafix Corporation

Notes to Financial Statements (continued)

5. INCOME TAXES (CONTINUED)

Significant components of the Company's deferred income tax liabilities and
assets are as follows:

<TABLE>
<CAPTION>
September 30 December 31
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Deferred income tax assets:
Accrued bonus $ 13,895 $ -- $ --
Accrued vacation 13,085 3,670 3,359
Capitalized software 634,333 669,352 568,231
Related party interest accrual 78,370 78,891 44,506
Goodwill 52,729 53,026 50,958
--------- --------- ---------
Total deferred income tax assets 792,412 804,939 667,054
Deferred income tax liabilities:
Tax over book depreciation (108,618) -- --
--------- --------- ---------
Net deferred income tax assets $ 683,794 $ 804,939 $ 667,054
========= ========= =========
</TABLE>

No valuation allowance of deferred income tax assets is considered necessary as
the realization of these assets is not dependent on future taxable income or tax
planning strategies.

6. LONG-TERM DEBT

The Company delivered two 7.5% promissory notes in the aggregate principal
amount of $4,300,000 for payment of part of the $4,600,002 purchase price of
ASBC. The notes are payable in equal monthly installments over the term of the
notes with all unpaid principal and interest due August 15, 2000. All interest
not paid when due is considered additional principal. The notes are equal in
priority and no discrimination in favor of either holder as to payments or any
other actions can occur under the promissory notes.

The Company had $3,804,566, $4,238,199 and $4,233,480 in outstanding principal
under the notes at September 30, 1997 and December 31, 1996 and 1995,
respectively. These amounts include $142,342 and $49,439 of interest that has
been reclassified as additional principal in 1996 and 1995, respectively, and
are due with the final scheduled payment under the promissory notes.

F-16
<PAGE> 64
ViaGrafix Corporation

Notes to Financial Statements (continued)

6. LONG-TERM DEBT (CONTINUED)

The annual maturities of long-term debt at September 30, 1997 are as follows:

<TABLE>
<S> <C> <C>
1998 $ 774,952
1999 835,114
2000 2,194,500
----------
Total $3,804,566
==========
</TABLE>

The notes payable are secured by a first mortgage on the building and land of
the Company. The promissory notes also contain restrictions which, among other
things, requires the maintenance of acceptable insurance for the benefit of
the mortgagee on the property mortgaged.

7. SERIES A CONVERTIBLE PREFERRED STOCK

Prior to August 15, 1995, the Company had 977,142 shares of Series A convertible
preferred stock, $.01 par value issued and outstanding. The shares of preferred
stock are convertible at any time into a number of common shares equal to the
number of shares of preferred stock held, unless an adjustment of such
conversion ratio is required in accordance with the Series A Convertible
Preferred Stock Purchase Agreement ("Agreement"). The Agreement states the
conversion ratio will change if and when the Company issues and sells any shares
of common stock for a price per share less than $3.0702 except for shares issued
and sold under the incentive stock option plan described in Note 8. On August
15, 1995, the holder of 488,571 issued and outstanding shares of Series A
convertible preferred stock exercised the right to convert those shares to
common shares. After this conversion, there are 488,571 remaining shares of
Series A convertible preferred stock outstanding. The holders of preferred stock
are entitled to receive a preferred dividend at the discretion of the Board of
Directors, and are also entitled to a dividend equal to that of a common
dividend, if and when declared by the Board of Directors. The holders of each
share of preferred stock is entitled to the number of votes per share equal to
the number of shares of common stock into which each share is convertible.

F-17
<PAGE> 65
ViaGrafix Corporation

Notes to Financial Statements (continued)

7. SERIES A CONVERTIBLE PREFERRED STOCK (CONTINUED)

Upon liquidation of the Company, whether voluntary or involuntary, the holders
of the Series A convertible preferred stock are entitled to be paid, before any
distribution is made to any common shareholders, an amount equal to the greater
of: 1) $3.0702 per share plus an amount equal to an annual dividend of $.23027
per share less all dividends previously declared and paid thereon, or 2) such
amount per share as would have been payable had each such share been converted
to common stock prior to the liquidation of the Company.

8. STOCK OPTION PLAN

On January 26, 1995, the Company adopted an incentive stock option plan (the
"Plan") under Section 422(b) of the Internal Revenue Code, which received
shareholder approval. The Plan provides for the issuance of qualified and
nonqualified options to purchase shares of common stock held as treasury stock
by the Company at "fair market value," as determined by the Board of Directors,
to selected qualified employees and contractors, respectively, of the Company.
Options may be granted under the Plan at any time after January 1, 1995 and
prior to January 1, 2005. Options vest and are exercisable as determined by the
Board of Directors on a grant-by-grant basis. Such options granted in excess of
$100,000 will be considered nonqualified. In December 1995, the Board of
Directors increased the number of shares of common stock which is reserved under
the Plan from 107,143 shares to 285,714 shares and in 1997 from 285,714 shares
to 1,000,000 shares. The exercise price per share is specified separately in the
Plan agreement relating to each option granted but can not be less than the fair
market value per share of common stock on the date of the grant.

F-18
<PAGE> 66
ViaGrafix Corporation

Notes to Financial Statements (continued)

8. STOCK OPTION PLAN (CONTINUED)

Options transactions are as follows:

<TABLE>
<CAPTION>
Stock Options Outstanding
and Exercisable
--------------------------
Weighted
Average
Shares Exercise Price
--------------------------

<S> <C> <C>
Shares under option:
Granted 199,000 $ 1.00
Canceled (6,857) .20
Exercised (12,571) .20
-------
Balance at December 31, 1995 179,572 1.10
Canceled (30,114) 1.05
Exercised (28,943) 1.05
-------
Balance at December 31, 1996 120,515 1.12
Granted 87,571 1.72
Canceled (7,143) 1.33
Exercised (29,252) 1.12
-------
Balance at September 30, 1997 171,691 1.42
=======
</TABLE>

The exercise price for options outstanding as of September 30, 1997 ranged from
$0.19 to $1.72. The weighted average remaining life of those options is eight
years. At September 30, 1997, 15,605 options are exercisable. At September 30,
1997, 214,948 treasury stock shares held by the Company are available for future
option exercises under the Plan.

Each stock option exercise price was set by management based on its best
estimate of market value as of the date of grant. As a result of negotiations
with underwriters in connection with a planned stock offering, management, for
financial statement purposes, reassessed the fair value of its common stock as
of each grant date for the purpose of determining the amount of unearned
compensation expenses, if any, under APB No. 25. Based upon management's revised
estimates, unearned compensation of $180,835 related to the January 1997 stock
option grants was accrued and is being amortized over the five-year vesting
period of the stock options granted in 1997. The weighted average estimated

F-19
<PAGE> 67

ViaGrafix Corporation

Notes to Financial Statements (continued)

8. STOCK OPTION PLAN (CONTINUED)

fair market value of the common stock at the grant date for the January 1997
stock options was $3.78. Additionally, earnings per share has been computed by
including all unexercised 1997 grants as outstanding for all periods presented
using the treasury stock method to the extent such grants are dilutive.

SFAS No. 123 requires pro forma information regarding net income and earnings
per share to be determined as if the Company has accounted for its employee
stock options granted subsequent to December 31, 1994 under the fair value
method of SFAS No. 123. The fair value for these options was estimated at the
date of grant using a "minimum value" option pricing model. The following
weighted-average assumptions for 1997, 1996 and 1995 were used: risk-free
interest rate of 6%; a dividend yield of zero; and a weighted-average expected
life of each option of five years.

Option valuation models require the input of highly subjective assumptions.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information is as follows:

<TABLE>
<CAPTION>
Nine Months
ended
September 30 Year ended December 31
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>

Pro forma net income (loss) $ 1,431,676 $ 659,673 $ (708,283)
=========== =========== ===========

Pro forma earnings (loss) per
common and common
equivalent share $ .32 $ .15 $ (.20)
=========== =========== ===========
</TABLE>

F-20
<PAGE> 68

ViaGrafix Corporation

Notes to Financial Statements (continued)

9. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The Company sells and markets, primarily in the United States and Canada, its
training products and software directly and through resellers and distributors.
Training product sales for the nine months ended September 30, 1997 and years
ended December 31, 1996, 1995 and 1994 were 81%, 69%, 80% and 100%,
respectively, of total net sales. During the nine months ended September 30,
1997, approximately 41% of the Company's net sales were through direct sales and
59% through resellers and distributors. Approximately 18% and 29% of total net
sales were with one customer and eight retailers, respectively, for the nine
months ended September 30, 1997. The Company did not have any customers which
individually accounted for more than 10% of total sales for the years ended
December 31, 1996, 1995 and 1994.

The Company does not require collateral from its customers. Its credit policy is
in accordance with normal industry trade and credit terms. Credit losses
relating to the Company's customers have not been significant.

10. RELATED PARTY TRANSACTIONS

The Company engaged in the following business activities with ASBC before it was
purchased by the Company on August 15, 1995:

<TABLE>
<CAPTION>
Year ended December 31
1995 1994
----------------------------
<S> <C> <C>
Purchase of parts and raw materials $10,453 $29,397
Sales of training videos and supplies $21,797 $27,188
</TABLE>

F-21
<PAGE> 69

ViaGrafix Corporation

Notes to Financial Statements (continued)

11. LEASE COMMITMENTS

The Company has lease commitments relating to real property it has vacated. The
Company has accrued the remaining lease obligation of $25,325 as of September
30, 1997 as a charge to rent expense.

The Company incurred $54,062, $30,919, $53,419 and $12,500 of rental expense
during the nine months ended September 30, 1997 and the years ended December 31,
1996, 1995 and 1994, respectively.

12. LEGAL CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. Management does not believe that the ultimate
resolution of these matters will have a material effect on the Company's
financial position, results of operations or cash flows.

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The quarterly financial information is as follows (in thousands, except for
earnings per share data):

<TABLE>
<CAPTION>
First Second Third
Quarter Quarter Quarter
---------------------------------------
<S> <C> <C> <C>
Nine months ended September 30, 1997:
Sales $2,866 $3,280 $3,656
Gross profit 1,755 1,932 2,457
Income before taxes 642 646 1,132
Net income 395 398 689
Earnings per share .09 .09 .15
</TABLE>

<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1996:
Sales $2,062 $3,145 $2,419 $2,451
Gross profit 1,181 1,954 1,429 1,511
Income before taxes 79 576 359 124
Net income 45 340 209 81
Earnings per share .01 .07 .05 .02

Year ended December 31, 1995:
Sales $1,198 $1,508 $2,325 $2,200
Gross profit 783 965 1,578 1,181
Income (loss) before taxes 205 341 (1,050)* (661)*
Net income (loss) 124 207 (637) (401)
Earnings (loss) per share .04 .06 (.17) (.10)
</TABLE>

* Losses before income taxes in the third and fourth quarters of 1995 are due to
the write-off of acquired in-process research and development and amortization
of capitalized software resulting from the acquisition of ASBC on August 15,
1995.

F-22
<PAGE> 70
ViaGrafix Corporation

Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
Balance at Amounts Balance at
Beginning Charged End of
Description of Period to Expenses Deductions Period
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Nine months ended September 30, 1997:
Allowance for doubtful accounts $ -- $70,443 $ -- $70,443

Year ended December 31, 1996:
Allowance for doubtful accounts -- -- -- --

Year ended December 31, 1995:
Allowance for doubtful accounts -- -- -- --

Year ended December 31, 1994:
Allowance for doubtful accounts -- -- -- --

</TABLE>

F-23
<PAGE> 71

Report of Independent Auditors

The Board of Directors and Shareholders
American Small Business Computers, Inc.

We have audited the accompanying statements of operations and cash flows of
American Small Business Computers, Inc. for the seven and one-half months ended
August 15, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of American
Small Business Computers, Inc. for the seven and one-half months ended August
15, 1995, in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

November 21, 1997

F-24
<PAGE> 72

American Small Business Computers, Inc.

Statement of Operations

For the Seven and One-Half Months ended August 15, 1995

<TABLE>
<S> <C>
Net sales $4,793,713
Cost of sales 527,249
----------
Gross profit 4,266,464

Selling, general and administrative expenses 1,056,487
Depreciation expense 2,999
----------
Operating profit 3,206,978

Other income:
Interest income and other 7,291
----------
Net income $3,214,269
==========

Net income per common share $ 1,286
==========

Weighted average number of common shares outstanding 2,500
==========
</TABLE>

See accompanying notes.

F-25
<PAGE> 73

American Small Business Computers, Inc.

Statement of Cash Flows

For the Seven and One-Half Months Period ended August 15, 1995

<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income $ 3,214,269
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense 2,999
Changes in operating assets and liabilities:
Decrease in trade accounts receivable 468,297
Decrease in accounts payable - trade (47,776)
Decrease in customer deposits (1,002,920)
-----------
Net cash provided by operating activities 2,634,869

NET CASH USED IN INVESTING ACTIVITIES -
purchases of property, plant and equipment (24,741)

FINANCING ACTIVITIES
Dividends paid (3,785,045)
Loan from shareholder 44,961
-----------
Total cash used in financing activities (3,740,084)
-----------

Net decrease in cash and cash equivalents (1,129,956)
Cash and cash equivalents at beginning of year 1,129,956
===========
Cash and cash equivalents at end of year $ --
===========

Supplemental cash flow information:
Noncash dividend $ 44,108
===========
</TABLE>

See accompanying notes.

F-26
<PAGE> 74
American Small Business Computers, Inc.

Notes to Financial Statements

August 15, 1995

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

GENERAL

The Company is primarily engaged in the business of developing and
selling directly to end-users and through resellers and distributors to
Computer-Aided Design ("CAD") software, which is primarily used in the
engineering and architectural fields. On August 15, 1995, all of the
outstanding common stock of American Small Business Computers, Inc. was
purchased by ViaGrafix Corporation.

USE OF ESTIMATES

REVENUE RECOGNITION

SOFTWARE RESEARCH AND DEVELOPMENT COSTS

The Company's policy is to capitalize any significant software development
costs subsequent to the establishment of technological feasibility until such
time as the product is available for general release. All costs incurred prior
to technological feasibility are expensed as research and development costs
when incurred. Due to the method employed by the Company to develop software,
an insignificant amount of costs are incurred between the date technological
feasibility is established, and when the products are ready for general
release. Research and development costs incurred by the Company were $187,162
for the seven and one-half months ended August 15, 1995.

F-27
<PAGE> 75
American Small Business Computers, Inc.

Notes to Financial Statements (continued)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH EQUIVALENTS

The Company considers all highly liquid investments with original maturities of
three months or less when purchased to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined using
the average cost method.

DEPRECIATION

Depreciation is computed using accelerated methods over the estimated useful
lives of the assets.

INCOME TAXES

The Company elected to be treated as a small business corporation under
Subchapter S of the Internal Revenue Code and therefore is not subject to income
taxes.

2. RELATED PARTY TRANSACTIONS

The Company engaged in the following business activities with ViaGrafix before
it was purchased by the Company on August 15, 1995:

Sales of parts and raw materials $10,453
Purchases of training videos and supplies $21,797

3. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The Company sells and markets, primarily in the United States and Canada, its
software directly and through resellers and distributors. During the seven and
one-half months ended August 15, 1995, the Company had one customer which
accounted for 68% of total net sales. The revenue from this customer resulted
from the one-time sale of a license of certain software to be used by the
customer in its products. The Company has no further vendor obligations to the
customer.

F-28
<PAGE> 76
American Small Business Computers, Inc.

Notes to Financial Statements (continued)

3. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (CONTINUED)

The Company does not require collateral from its customers. Its credit policy is
in accordance with normal industry and credit terms. Credit losses relating to
the Company's customers have not been significant.

4. ADVERTISING COSTS

Costs incurred for advertising are expensed when incurred. Advertising expenses
amounted to $445,245 for the seven and one-half months ended August 15, 1995.

F-29
<PAGE> 77
================================================================================

No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with this offering made by this Prospectus. If given
or made, such information representations must not be relied upon as having
been authorized by the Company or the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the Shares of Common Stock to which this Prospectus relates, or an
offer in any jurisdiction in which such offer or solicitation is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to the date
hereof.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary . . . . . . . . . . . . . . 3

Risk Factors . . . . . . . . . . . . . . . . . 6

Use of Proceeds . . . . . . . . . . . . . . . . 12

Dividend Policy . . . . . . . . . . . . . . . . 12

Dilution . . . . . . . . . . . . . . . . . . . 13

Capitalization . . . . . . . . . . . . . . . . 14

Selected Financial Data . . . . . . . . . . . . 15

Management's Discussion and Analysis of
Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . 17

Business . . . . . . . . . . . . . . . . . . . 22

Management . . . . . . . . . . . . . . . . . . 31

Certain Transactions . . . . . . . . . . . . . 34

Principal and Selling Shareholders . . . . . . 35

Description of Capital Stock . . . . . . . . . 37

Shares Eligible for Future Sale . . . . . . . . 39

Underwriting . . . . . . . . . . . . . . . . . 40

Legal Matters . . . . . . . . . . . . . . . . . 42

Experts . . . . . . . . . . . . . . . . . . . . 42

Additional Information . . . . . . . . . . . . 43
</TABLE>

Until ,1998 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Common Stock, whether or not participating in this
distribution, may be required to deliver a Prospectus. This delivery requirement
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.

2,200,000 SHARES

VIAGRAFIX

COMMON STOCK

----------

PROSPECTUS

----------

SOUTHWEST SECURITIES, INC.

, 1998

================================================================================
<PAGE> 78
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than the
underwriting discount, payable in connection with the sale of the Common Stock
being registered hereby. The Company is paying $_________________ of such costs
and expenses, and the Selling Shareholders are paying $__________ thereof. All
amounts shown are estimates except for the SEC registration fee and the NASD
filing fee.

<TABLE>
<CAPTION>
Item Amount
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,956.20
NASD filing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nasdaq National Market Listing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Advisory Fee to Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Auditors' accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer Agent and Registrar fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
=======
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted by the Oklahoma General Corporation Act (the "Oklahoma
Corporate Act"), the Company's Amended and Restated Certificate of
Incorporation eliminates the personal liability of a director to the Company
for monetary damages for breach of fiduciary duty of care as a director.
Liability is not eliminated for (i) any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) unlawful payment of dividends or stock purchases or redemptions pursuant
to Section 1053 of the Oklahoma Corporate Act, or (iv) any transaction from
which the director derived an improper personal benefit.

Section 1031 of the Oklahoma Corporate Act permits an Oklahoma
corporation to indemnify any persons who are, or are threatened to be made,
parties to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of such corporation), by reason of the fact that such person
is or was an officer, director, employee or agent of such corporation, or is or
was serving at the request of such corporation as a director, officer, employee
or agent of another corporation or enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and

II-1
<PAGE> 79
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was unlawful. An Oklahoma corporation may indemnify
any persons who were or are parties, or are threatened to be made a party, to
any threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person is or was a director,
officer, employees or agent of such corporation, or enterprise. The indemnity
may include expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interest
except that no indemnification is permitted without judicial approval if the
officer is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which such officer or director has actually and reasonably incurred.

The Company's certificate of incorporation provides for
indemnification of directors and officers of the Company and persons who serve
at the request of the Company as a director or officer of another corporation
in which the Company owns stock for all liabilities, expenses, (including
attorneys' fees) and costs incurred in a legal proceeding in which he is a
party by reason of his having been an officer or director. The certificate of
incorporation, however, excludes indemnification for matters in which the
officer or director is adjudged to have been guilty of gross negligence or
willful misconduct.

These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act
of 1933, as amended (the "Securities Act"). In the opinion of the Securities
and Exchange Commission, indemnification for liabilities arising under the
Securities Act is against public policy and, therefore, unenforceable.
Accordingly, these indemnification provisions may not limit the liability of
directors and executive officers under the Securities Act.

The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act, or otherwise.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In January, 1995, the Company granted stock options for a total of
67,857 shares of common stock to a total of 27 employees at an option price of
$.20 per share. To date, options covering a total of 29,857 of these shares
have been exercised.

In December, 1995, the Company granted stock options for a total of
130,286 shares of common stock to a total of 36 employees at an option price of
$1.44 per share. To date, options covering a total of 33,371 of these shares
have been exercised.

In January, 1997, the Company issued stock options for a total of
87,571 shares of common stock to a total of 33 employees at an option price of
$1.72 per share. To date, options covering a total of 6,681 of these shares
have been exercised.

II-2
<PAGE> 80
In December, 1997, the Company granted stock options for a total of
440,286 shares of common stock to a total of 83 employees, including 140,000
shares for Michael A. Webster and 100,000 shares for Robert E. Webster,
directors and executive officers of the Registrant. The option price for all
of these options will be equal to the offering price hereunder.

All of the above-described transactions were exempt from registration
under Section 4(2) of the Securities Act and Rule 701 promulgated thereunder as
transactions by an issuer not involving any public offering.

In addition, in January, 1995, the Company issued 286 shares of
common stock to each of two consultants and a vendor to the Company. Such
transactions were exempt from registration under Section 4(2) of the Securities
Act as transactions by an issuer not involving any public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
Exhibit
No. Name of Exhibit
------- ---------------
<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation of the
Registrant dated December 12, 1997, and the
designations of rights and preferences of the Series A
Convertible Preferred Stock attached as Exhibit "A" to
the Registrant's Amended and Restated Certificate of
Incorporation dated August 16, 1994, which exhibit is
incorporated therein by reference.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Specimen Common Stock Certificate of the Registrant.*
5.1 Opinion of Johnson, Allen, Jones & Dornblaser, Inc.*
10.1 Series A Convertible Preferred Stock Purchase Agreement dated
August 16, 1994.
10.2 Registration Rights Agreement dated August 16, 1994.
10.3 Stockholders Agreement dated August 16, 1994.
10.4 Letter Agreement with Geocapital III, L.P. dated
December 4, 1997.
10.5 1995 ViaGrafix Stock Option Plan.
10.6 Amendment of the 1995 ViaGrafix Stock Option Plan.
10.7 Development and Licensing Agreement with Street Technologies,
Inc.*
10.8 1995 Stock Purchase Agreement Between ViaGrafix Corporation,
Purchaser and Robert Webster, Shareholder of American
Small Business Computers, Inc.
10.9 1995 Stock Purchase Agreement Between ViaGrafix Corporation,
Purchaser and Geocapital III, L.P., Shareholder of
American Small Business Computers, Inc.
23.1 Consent of Ernst & Young, LLP *
23.2 Consent of Johnson, Allen, Jones & Dornblaser, Inc.
(to be included as part of Exhibit 5.1).
23.3 Consent of Roy L. Bliss*
23.4 Consent of Gerald R. Harris*
23.5 Consent of Stephen P. Gott*
27.1 Financial Data Schedule for the nine months ended
September 30, 1997, and for the year ended December 31, 1996.
</TABLE>

__________________________
* To be filed by amendment.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

II-3
<PAGE> 81
(i) To include any prospectus required by Section
10(a)(3) of the Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement; or

(iii) To include any material information with respect to
the plan distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.

2. That, for the purpose of determining any liability under the
Act, each such post-effective amendment 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.

3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.

4. To provide to the Underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling person 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 of 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-4
<PAGE> 82
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 Pryor, State of
Oklahoma, on December 18, 1997.

VIAGRAFIX CORPORATION

By: /s/
------------------------------------
Michael A. Webster
Chairman of the Board, President
and Chief Executive Officer

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

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Chairman of the Board, December 18, 1997
- ---------------------------------- President and Chief Executive
Michael A. Webster Officer (Principal Executive
Officer) and Director

/s/ Executive Vice President December 18, 1997
- ---------------------------------- and Director
Robert E. Webster

/s/ Vice President - Finance December 18, 1997
- ---------------------------------- (Principal Financial and
Robert C. Moore Accounting Officer)

</TABLE>

II-5

<PAGE> 83

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
No. Name of Exhibit
------- ---------------
<S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation of the Registrant dated December 12, 1997, and the
designations of rights and preferences of the Series A Convertible Preferred Stock attached as Exhibit
"A" to the Registrant's Amended and Restated Certificate of Incorporation dated August 16, 1994, which
exhibit is incorporated therein by reference.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Specimen Common Stock Certificate of the Registrant.*
5.1 Opinion of Johnson, Allen, Jones & Dornblaser, Inc.*
10.1 Series A Convertible Preferred Stock Purchase Agreement dated August 16, 1994.
10.2 Registration Rights Agreement dated August 16, 1994.
10.3 Stockholders Agreement dated August 16, 1994.
10.4 Letter Agreement with Geocapital III, L.P. dated December 4, 1997.
10.5 1995 ViaGrafix Stock Option Plan
10.6 Amendment of the 1995 ViaGrafix Stock Option Plan
10.7 Development and Licensing Agreement with Street Technologies,
Inc.*
10.8 1995 Stock Purchase Agreement Between ViaGrafix Corporation, Purchaser and Robert Webster, Shareholder of
American Small Business Computers, Inc.
10.9 1995 Stock Purchase Agreement Between ViaGrafix Corporation, Purchaser and Geocapital III, L.P., Shareholder of
American Small Business Computers, Inc.
23.1 Consent of Ernst & Young, LLP *
23.2 Consent of Johnson, Allen, Jones & Dornblaser, Inc. (to be included as part of
Exhibit 5.1).*
23.3 Consent of Roy L. Bliss*
23.4 Consent of Gerald R. Harris*
23.5 Consent of Stephen P. Gott*
27.1 Financial Data Schedule for the nine months ended September 30, 1997, and for the year ended December 31, 1996.
</TABLE>

__________________________
* To be filed by amendment.

<PAGE> 1
EXHIBIT 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
VIAGRAFIX CORPORATION
(Original Certificate of Incorporation dated January 2, 1990)

THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA
101 STATE CAPITOL BUILDING
2300 NORTH LINCOLN
OKLAHOMA CITY, OK 73105:

SECTION ONE

We, the undersigned, as President and Secretary of ViaGrafix
Corporation (referred to herein as the "Corporation"), do hereby certify that
the Board of Directors and the holders of a majority of the Corporation's
capital stock entitled to vote thereon, and a majority of the outstanding stock
of each class entitled to vote thereon as a class, pursuant to Actions dated
December 10, 1997, duly adopted resolutions to amend and restate in its
entirety the Corporation's Certificate of Incorporation as in effect
immediately prior hereto, as hereinafter set forth.

ARTICLE I

The name of the Corporation is: VIAGRAFIX CORPORATION

ARTICLE II

The address of the registered office in the State of Oklahoma and the
name of the registered agent at such address is:

One American Way
Pryor, Oklahoma 74316
Attn: Robert E. Webster

ARTICLE III

The term of the Corporation shall be perpetual.

ARTICLE IV

The authorized capital stock of the Corporation and the aggregate
number shares which the Corporation shall have the authority to issue shall
consist of 40,000,000 shares of Common Stock, $.01 par value per share (the
"Common Stock"), and 10,000,000 shares of Preferred Stock, $.01 par value per
share (the "Preferred Stock").
<PAGE> 2
A. Common Stock. Except as otherwise expressly provided by law
or hereafter adopted by the Board of Directors in establishing any rights and
preferences of any series of Preferred Stock prior to its issuance in
accordance with this Article IV, voting rights upon any and all matters shall
be vested in the holders of the Common Stock, with each share of Common Stock
having one vote on all matters. Subject to the provisions which may be adopted
by the Board of Directors governing the payment of dividends (current and
cumulative) on any series of Preferred Stock, the Board of Directors of the
Corporation may declare and pay dividends, in its discretion, on the Common
Stock of the Corporation out of funds legally available for the payment
thereof. Upon the voluntary or involuntary liquidation of the Corporation and
after the holders of the Preferred Stock shall have been paid the full
preferential amounts to which they shall be entitled, the holders of shares of
the Common Stock shall, subject to any additional participating liquidation
rights of the Preferred Stock, be entitled to share in all remaining assets of
the Corporation. The Common Stock of the Corporation shall not be redeemable
without the consent of the holders of shares to be redeemed.

B. Preferred Stock. The Board of Directors of the Corporation
shall have the authority and is hereby expressly vested with the authority to
issue shares of Preferred Stock from time to time in one or more series, each
such series to have distinctive serial designations, and such voting powers,
preferences and relative participating, optional or other special rights, and
the qualifications, limitations and restrictions thereof, as shall be set forth
in the resolution or resolutions adopted by the Board of Directors providing
for the issuance of such shares of Preferred Stock. Without limiting the
generality of the foregoing, the authority of the Board of Directors with
respect to each series of Preferred Stock shall include, without limitation,
the determination of any of the following matters:

(1) the number of shares constituting such
series and the designation thereof to distinguish the shares of such
series from the shares of all other series;

(2) the rights of the holders of shares of
such series to receive dividends thereon and the dividend rate, the
conditions and time of payment of dividends, the extent to which
dividends are payable in preference to, or in any other relation to,
dividends payable on any other class or series of stock, and whether
such dividends shall be cumulative or noncumulative;

(3) the terms and provisions governing
redemption of shares of such series, if such shares are to be
redeemable;

(4) the terms and provisions governing the
operation of retirement or sinking funds, if any;

(5) the voting power of such series, whether
full, limited or none;

(6) the rights, if any, of holders of shares
of such series to convert such shares into, or to exchange such shares
for, any other class of stock, or of any series thereof, and the
prices or rates for such conversions or exchanges, and any adjustments
thereto; and,

(7) any other preferences and relative
participating, optional or other special rights, and qualifications,
limitations or restrictions of such series.

The shares of each series of Preferred Stock may vary from the shares
of any other series of Preferred Stock as to any of such matters.

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<PAGE> 3
ARTICLE V

Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its shareholders or any class of them, any court of equitable
jurisdiction within the State of Oklahoma, on the application in a summary way
of the Corporation or of any creditor or shareholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 1106 of Title 18 of the Oklahoma Statutes or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the Corporation under the provisions of Section 1100 of Title 18
of the Oklahoma Statutes may order a meeting of the creditors or class of
creditors, and/or of the shareholders or class of shareholders of the
Corporation, as the case may be, to be summoned in such manner as the court
directs. If a majority in number representing three- fourths (3/4ths) in value
of the creditors or class of creditors, and/or of the shareholders or class of
shareholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as consequence of such
compromise or arrangement, the compromise or arrangement and the reorganization
shall, if sanctioned by the court to which the application has been made, be
binding on all the creditors or class of creditors and/or on all the
shareholders or class of shareholders of the Corporation, as the case may be,
and also on the Corporation.

ARTICLE VI

To the extent permitted by law, no contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers or have a financial interest, shall be void or voidable solely for
this reason, or solely because the directors or officers are present at or
participate in the meeting of the board or committee thereof which authorizes
the contract or transaction, or solely because the directors or officers or
their votes are counted for such purpose.

ARTICLE VII

The Board of Directors is expressly authorized to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding whether civil, criminal,
administrative or investigative, other than an action by or in the right of the
Corporation, by reason of the fact that such person is or was a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement to the extent and in the manner permitted by the laws of the State
of Oklahoma.

ARTICLE VIII

No director shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of such director's fiduciary duty
as a director, provided that this provision shall not eliminate or limit the
liability of a director as follows:

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<PAGE> 4
(a) For any breach of the director's duty of loyalty to
the Corporation or its shareholders; or

(b) For acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law; or

(c) Any liability for the unlawful payment of dividends
or an unlawful stock redemption, in accordance with Section 1053 of
the General Corporation Law of the State of Oklahoma; or

(d) Any transaction from which the director derived an
improper personal benefit.

ARTICLE IX

The Bylaws for governing this Corporation may be adopted, amended,
altered, repealed or readopted by the Board of Directors at any annual or
special meeting of the Board, but the powers of the Board in this regard shall
at all times be subject to the rights of the shareholders to alter or repeal
such Bylaws at any annual or special meeting of the shareholders.

ARTICLE X

At each election of the directors of the Corporation, each shareholder
entitled to vote at such election shall have the right to vote, in person or by
proxy, only the number of shares owned by him for as many persons as there are
directors to be elected, and no shareholder shall ever have the right or be
permitted to cumulate his votes on any basis; any and all rights of cumulative
voting being hereby expressly denied.

ARTICLE XI

No shareholder shall be entitled as a matter of right to subscribe
for, purchase or receive additional unissued or treasury shares of any class of
the Corporation, whether now or later authorized, or any bonds, debentures,
warrants, options or other securities convertible into or entitling the holder
to purchase shares. Such additional shares, bonds, debentures, warrants,
options or other securities convertible into or entitling the holder to
purchase shares may be issued or disposed of as the Board of Directors in its
absolute discretion may deem advisable.

ARTICLE XII

The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by law, and all rights conferred upon the shareholders
herein are granted subject to this reservation.

-4-
<PAGE> 5
SECTION TWO

The 10,000,000 shares of common stock, $.001 par value per share ("Old
Common Stock"), previously authorized and issued, are hereby reclassified into
shares of the Common Stock on the basis of one (1) share of the Common Stock
for 1.75 shares of the Old Common Stock.

Each share of the previously outstanding Series A Convertible
Preferred Stock, $.001 par value per share ("Old Preferred Stock"), is hereby
reclassified into one (1) share of the Preferred Stock having the same series
designation, voting power, preferences and other rights, qualifications,
limitations and restrictions as the Old Preferred Stock as set forth on Exhibit
"A" to the Amended & Restated Certificate of Incorporation of ViaGrafix
Corporation filed with the Oklahoma Secretary of State on August 16, 1994
(incorporated herein by this reference), which, upon conversion into Common
Stock, will be adjusted for the above 1-for-1.75 reverse stock split.

SECTION THREE

Pursuant to Actions of the Board of Directors and holders of a
majority of the then outstanding common stock and preferred stock of the
Corporation dated December 10, 1997, resolutions were duly made and approved,
setting forth the proposed adoption of the foregoing Amended and Restated
Certificate of Incorporation, declaring said amendments to be advisable and
further declaring it advisable to restate the Certificate of Incorporation as
amended. The Actions were signed by all members of the Board of Directors and
holders of a majority of each class of stock of Corporation entitled to vote
thereon, signifying the approval of the amendments. Such amendments were duly
adopted in accordance with 18 O.S. Sections 1077 and 1080.

IN WITNESS WHEREOF, the undersigned has caused this Amended and
Restated Certificate of Incorporation to be signed by its President and
attested by its Secretary, this 10th day of December, 1997.

VIAGRAFIX CORPORATION

By: /s/ MICHAEL A. WEBSTER
------------------------------------------
Michael A. Webster, President
Attest:

/s/ ROBERT E. WEBSTER
- -----------------------------
Robert E. Webster, Secretary

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<PAGE> 6
SERIES A CONVERTIBLE PREFERRED STOCK

1. Number of Shares. The series of Preferred Stock designated and
known as "Series A Convertible Preferred Stock" shall consist of 2,280,000
shares.

2. Voting.

2A. General. Except as may be otherwise provided in these
terms of the Series A Convertible Preferred Stock or by law, the Series A
Convertible Preferred Stock shall vote together with all other classes and
series of stock of the Corporation as a single class on all actions to be taken
by the stockholders of the Corporation. Each share of Series A Convertible
Preferred Stock shall entitle the holder thereof to such number of votes per
share on each such action as shall equal the number of shares of Common Stock
(including fractions of a share) into which each share of Series A Convertible
Preferred Stock is then convertible.

2B. Board Seats. The holders of the Series A Convertible
Preferred Stock, voting as a separate series, shall be entitled to elect 1
director of the Corporation. At any meeting (or in a written consent in lieu
thereof) held for the purpose of electing directors, the presence in person or
by proxy (or the written consent) of the holders of a majority of the shares of
Series A Convertible Preferred Stock then outstanding shall constitute a quorum
of the Series A Convertible Preferred Stock for the election of director to be
elected solely by the holders of the Series A Convertible Preferred Stock. A
vacancy in any directorship elected by the holders of the Series A Convertible
Preferred Stock shall be filled only by vote or written consent of the holders
of the Series A Convertible Preferred Stock.

3. DIVIDENDS.

3A. Preferred Dividends. The holders of shares of Series
A Convertible Preferred Stock shall be entitled to receive dividends on such
shares as, if and when declared by the Board of Directors.

3B. Common Stock Dividends. The holders of the Series A
Convertible Preferred Stock shall also be entitled to receive, out of funds
legally available therefor, dividends at the same rate as dividends (other than
dividends paid in additional shares of Common Stock) are paid with respect to
the Common Stock (treating each share of Series A Convertible Preferred Stock
as being equal to the number of shares of Common Stock (including fractions of
a share) into which each share of Series A Convertible Preferred Stock is then
convertible).
<PAGE> 7
-2-

4. Liquidation. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the shares
of Series A Convertible Preferred Stock shall be entitled, before any
distribution or payment is made upon any stock ranking on liquidation junior to
the Series A Convertible Preferred Stock, to be paid an amount equal to the
greater of (i) $1.7544 per share (a) plus, in the case of each share, an amount
equal to an annual dividend of $.13158 per share, and (b) less all dividends
previously declared and paid thereon (the "Preferred Return"), or (ii) such
amount per share as would have been payable had each such share been converted
to Common Stock pursuant to paragraph 6 immediately prior to such liquidation,
dissolution or winding up, and the holders of Series A Convertible Preferred
Stock shall not be entitled to any further payment, such amount payable with
respect to one share of Series A Convertible Preferred Stock being sometimes
referred to as the "Liquidation Payment" and with respect to all shares of
Series A Convertible Preferred Stock being sometimes referred to as the
"Liquidation Payments". If upon such liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of Series A Convertible Preferred Stock shall be insufficient
to permit payment to the holders of Series A Convertible Preferred Stock of the
amount distributable as aforesaid, then the entire assets of the Corporation to
be so distributed shall be distributed ratably among the holders of Series A
Convertible Preferred Stock. Upon any such liquidation, dissolution or winding
up of the Corporation, after the holders of Series A Convertible Preferred
Stock shall have been paid in full the amounts to which they shall be entitled,
the remaining net assets of the Corporation may be distributed to the holders
of stock ranking on liquidation junior to the Series A Convertible Preferred
Stock. Written notice of such liquidation, dissolution or winding up, stating a
payment date, the amount of the Liquidation Payments and the place where said
Liquidation Payments shall be payable, shall be delivered in person, mailed by
certified or registered mail, return receipt requested, or sent by telecopier
or telex, not less than 20 days prior to the payment date stated therein, to
the holders of record of Series A Convertible Preferred Stock, such notice to
be addressed to each such holder at its address as shown by the records of the
Corporation. The consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (other than a
merger to reincorporate the Corporation in a different jurisdiction), and the
sale, lease, abandonment, transfer or other disposition by the Corporation of
all or substantially all its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of the
provisions of this paragraph 4. For purposes hereof, the Common Stock shall
rank on liquidation junior to the Series A Convertible Preferred Stock.
<PAGE> 8
-3-

5. Restrictions. At any time when shares of Series A Convertible
Preferred Stock are outstanding except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by the Certificate of Incorporation and in addition to any other vote required
by law or the Certificate of Incorporation, without the approval of the holders
of at least a majority of the then outstanding shares of Series A Convertible
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a series, the Corporation will not:

5A. Create or authorize the creation of any additional class
or series of shares of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, or increase the
authorized amount of the Series A Convertible Preferred Stock or increase the
authorized amount of any additional class or series of shares of stock unless
the same ranks junior to the Series A Convertible Preferred Stock as to the
distribution of assets on the liquidation, dissolution or winding up of the
Corporation, or create or authorize any obligation or security convertible into
shares of Series A Convertible Preferred Stock or into shares of any other
class or series of stock unless the same ranks junior to the Series A
Convertible Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Certificate of Incorporation or by merger, consolidation or otherwise;

5B. Consent to any liquidation, dissolution or winding up of
the Corporation or consolidate or merge into or with any other entity or
entities or sell, lease, abandon, transfer or otherwise dispose of all or
substantially all its assets unless the aggregate net proceeds to the holders
of Series A Convertible Preferred Stock arising from such transaction equal or
exceed the Preferred Return;

5C. Amend, alter or repeal its Certificate of Incorporation if
the effect would be detrimental or adverse in any manner with respect to the
rights of the holders of the Series A Convertible Preferred Stock;

5D. Redeem or otherwise acquire any shares of Series A
Convertible Preferred Stock except pursuant to a purchase offer made pro rata
to all holders of the shares of Series A Convertible Preferred Stock on the
basis of the aggregate number of outstanding shares of Series A Convertible
Preferred Stock then held by each such holder.

6. Conversions. The holders of shares of Series A Convertible
Preferred Stock shall have the following conversion rights:
<PAGE> 9
-4-

6A. Right to Convert. Subject to the terms and conditions
of this paragraph 6, the holder of any share or shares of Series A Convertible
Preferred Stock shall have the right, at its option at any time, to convert any
such shares of Series A Convertible Preferred Stock (except that upon any
liquidation of the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series A Convertible Preferred Stock) into such number of
fully paid and nonassessable shares of Common Stock as is obtained by (i)
multiplying the number of shares of Series A Convertible Preferred Stock so to
be converted by $1.7544 and (ii) dividing the result by the conversion price of
$1,7544 per share or, in case an adjustment of such price has taken place
pursuant to the further provisions of this paragraph 6, then by the conversion
price as last adjusted and in effect at the date any share or shares of Series
A Convertible Preferred Stock are surrendered for conversion (such price, or
such price as last adjusted, being referred to as the "Conversion Price"). Such
rights of conversion shall be exercised by the holder thereof by giving written
notice that the holder elects to convert a stated number of shares of Series A
Convertible Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series A
Convertible Preferred Stock) at any time during its usual business hours on the
date set forth in such notice, together with a statement of the name or names
(with address) in which the certificate or certificates for shares of Common
Stock shall be issued.

6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in subparagraph 6A
and surrender of the certificate or certificates for the share or shares of
Series A Convertible Preferred Stock to be converted, the Corporation shall
issue and deliver, or cause to be issued and delivered, to the holder,
registered in such name or names as such holder may direct, a certificate or
certificates for the number of whole shares of Common Stock issuable upon the
conversion of such share or shares of Series A Convertible Preferred Stock. To
the extent permitted by law, such conversion shall be deemed to have been
effected and the Conversion Price shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Series A Convertible Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
<PAGE> 10
-5-

6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Series A Convertible
Preferred Stock into Common Stock and no payment or adjustment shall be made
upon any conversion on account of any cash dividends on the Common Stock issued
upon such conversion. At the time of each conversion, the Corporation shall pay
in cash an amount equal to all dividends, excluding Preferred Dividends,
accrued and unpaid on the shares of Series A Convertible Preferred Stock
surrendered for conversion to the date upon which such conversion is deemed to
take place as provided in subparagraph 6B. In case the number of shares of
Series A Convertible Preferred Stock represented by the certificate or
certificates surrendered pursuant to subparagraph 6A exceeds the number of
shares converted, the Corporation shall, upon such conversion, execute and
deliver to the holder, at the expense of the Corporation, a new certificate or
certificates for the number of shares of Series A Convertible Preferred Stock
represented by the certificate or certificates surrendered which are not to be
converted. If any fractional share of Common Stock would, except for the
provisions of the first sentence of this subparagraph 6C, be delivered upon
such conversion, the Corporation, in lieu of delivering such fractional share,
shall pay to the holder surrendering the Series A Convertible Preferred Stock
for conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Corporation.

6D. Adjustment of Price Upon Issuance of Common Stock.
Except as provided in subparagraph 6E, it and whenever the Corporation shall
issue or sell, or is, in accordance with subparagraphs 6D(l) through 6D(7),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Conversion Price in effect immediately prior to the
time of such issue or sale, then, forthwith upon such issue or sale, the
Conversion Price shall be reduced to the price determined by dividing (i) an
amount equal to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing
Conversion Price and (b) the consideration, if any, received by the Corporation
upon such issue or sale, by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale.

For purposes of this subparagraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:

6D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being
<PAGE> 11
-6-

called "Convertible Securities") whether or not such Options or the
right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus
the minimum aggregate amount of additional consideration payable to
the Corporation upon the exercise of all such Options, plus, in the
case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the
Conversion Price in effect immediately prior to the time of the
granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed
to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible
Securities and thereafter shall be deemed to be outstanding. Except as
otherwise provided in subparagraph 6D(3), no adjustment of the
Conversion Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such Options
or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.

6D(2) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Conversion Price
in effect immediately prior to the time of such issue or sale, then
the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share
<PAGE> 12
-7-

as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except
as otherwise provided in subparagraph 6D(3), no adjustment of the
Conversion Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities and
(b) if any such issue or sale of such Convertible Securities is made
upon exercise of any Options to purchase any such Convertible
Securities for which adjustments of the Conversion Price have been or
are to be made pursuant to other provisions of this subparagraph 6D,
no further adjustment of the Conversion Price shall be made by reason
of such issue or sale.

6D(3) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in subparagraph 6D(1),
the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in subparagraph
6D(1) or 6D(2), or the rate at which Convertible Securities referred
to in subparagraph 6D(1) or 6D(2) are convertible into or exchangeable
for Common Stock shall change at any time (including, but not limited
to, changes under or by reason of provisions designed to protect
against dilution), the Conversion Price in effect at the time of such
event shall forthwith be readjusted to the Conversion Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold, but only if as a result of
such adjustment the Conversion Price then in effect hereunder is
thereby reduced; and on the termination of any such Option or any such
right to convert or exchange such Convertible Securities, the
Conversion Price then in effect hereunder shall forthwith be increased
to the Conversion Price which would have been in effect at the time of
such termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such termination, never been
issued.

6D(4) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any stock of
the Corporation payable in Common Stock (except for dividends or
distributions upon the Common Stock), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold at a price per share equal
to $.00001.
<PAGE> 13
-8-

6D(5) Consideration for Stock. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration
as determined in good faith by the Board of Directors of the
Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any Options shall be
issued in connection with the issue and sale of other securities of
the Corporation, together comprising one integral transaction in which
no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of
the Corporation.

6D(6) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.

6D(7) Treasury Shares. The disposition of any shares of
Common Stock owned or held by or for the account of the Corporation
shall be considered an issue or sale of Common Stock for the purpose
of this subparagraph 6D.

6E. Certain Issues of Common Stock Excepted. Anything
herein to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment of the Conversion Price in the case of the issuance from
and after the date of filing of these terms of the Series A Convertible
Preferred Stock of up to an aggregate of 187,000 shares (appropriately adjusted
to reflect the occurrence of any event described in subparagraph 6F) of Common
Stock to directors, officers, employees or consultants of the Corporation in
connection with their service as directors of the Corporation, their employment
by the Corporation or their retention as consultants by the Corporation, plus
such number of shares of Common Stock which are repurchased by the Corporation
from such persons after such date pursuant to contractual rights
<PAGE> 14
-9-

held by the Corporation and at repurchase prices not exceeding the respective
original purchase prices paid by such persons to the Corporation therefor.

6F. Subdivision or Combination of Common Stock. In case
the Corporation shall at any time subdivide (by any stock split, stock dividend
or otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased. In the case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 6D(4) by reason thereof.

6G. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization or reclassification,
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Series A Convertible Preferred Stock shall thereupon have the right
to receive, upon the basis and upon the terms and conditions specified herein
and in lieu of the shares of Common Stock immediately theretofore receivable
upon the conversion of such share or shares of Series A Convertible Preferred
Stock, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such Common Stock immediately
theretofore receivable upon such conversion had such reorganization or
reclassification not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of such holder to the
end that the provisions hereof (including without limitation provisions for
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such conversion rights.

6H. Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by mailing such notice by United States Postal Service via
Certified or Registered Mail, Return Receipt Requested, addressed to each
holder of shares of Series A Convertible Preferred Stock at the address of such
holder as shown on the books of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment, setting forth in reasonable
detail the method upon which such calculation is based.
<PAGE> 15
-10-

6I. Other Notices. In case at any time:

(1) the Corporation shall declare any dividend
upon its Common Stock payable in cash or stock or make any other
distribution to the holders of its Common Stock;

(2) the Corporation shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of
stock of any class or other rights;

(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into another entity
or entities, or a sale, lease, abandonment, transfer or other
disposition of all or substantially all its assets; or

(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;

then, in any one or more of said cases, the Corporation shall give, by mailing
such notice(s) by United States Postal Service via Certified or Registered
Mail, Return Receipt Requested, addressed to each holder of any shares of
Series A Convertible Preferred Stock at the address of such holder as shown on
the books of the Corporation, (a) at least 20 days' prior written notice of the
date on which the books of the Corporation shall close or a record shall be
taken for such dividend, distribution or subscription rights or for determining
rights to vote in respect of any such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation or winding up and
(b) in the case of any such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, at least 20 days'
prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, disposition, dissolution, liquidation or winding up, as
the case may be.

6J. Stock to be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance upon the conversion of Series A Convertible Preferred
Stock as herein provided, such number of shares of Common Stock as shall then
be issuable upon the conversion of all outstanding shares of Series A
Convertible Preferred Stock. The Corporation covenants that all shares of
<PAGE> 16
-11-

Common Stock which shall be so issued shall be duly and validly issued and
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the Conversion Price in
effect at the time. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange upon which the Common Stock may be listed. The
Corporation will not take any action which results in any adjustment of the
Conversion Price if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Series A Convertible
Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Certificate of Incorporation.

6K. No Reissuance of Series A Convertible Preferred
Stock. Shares of Series A Convertible Preferred Stock which are converted into
shares of Common Stock as provided herein shall not be reissued.

6L. Issue Tax. The issuance of certificates for shares of
Common Stock upon conversion of Series A Convertible Preferred Stock shall be
made without charge to the holders thereof for any issuance tax in respect
thereof, provided that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the holder of the
Series A Convertible Preferred Stock which is being converted.

6M. Closing of Books. The Corporation will at no time
close its transfer books against the transfer of any Series A Convertible
Preferred Stock or of any shares of Common Stock issued or issuable upon the
conversion of any shares of Series A Convertible Preferred Stock in any manner
which interferes with the timely conversion of such Series A Convertible
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.

6N. Definition of Common Stock. As used in this paragraph
6, the term "Common Stock" shall mean and include the Corporation's authorized
Common Stock, par value $.001 per share, as constituted on the date of filing
of these terms of the Series A Convertible Preferred Stock, and shall also
include any capital stock of any class of the Corporation thereafter authorized
which shall not be limited to a fixed sum or percentage in respect of the
rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation
dissolution or winding up of the Corporation; provided that the shares of
Common Stock
<PAGE> 17
-12-

receivable upon conversion of shares of Series A Convertible Preferred Stock
shall include only shares designated as Common Stock of the Corporation on the
date of filing of this instrument, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 6G.

6O. Mandatory Conversion. If at any time the Corporation
shall effect a firm commitment underwritten public offering of shares of Common
Stock in which the aggregate price received for such shares by the Corporation
(net of underwriting discounts and commissions and offering expenses) shall be
at least $5,000,000, then effective upon the closing of the sale of such shares
by the Corporation pursuant to such public offering, all outstanding shares of
Series A Convertible Preferred Stock shall automatically convert to shares of
Common Stock on the basis set forth in this paragraph 6. Holders of shares of
Series A Convertible Preferred Stock so converted may deliver to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to such
holders) during its usual business hours, the certificate or certificates for
the shares so converted. As promptly as practicable thereafter, the Corporation
shall issue and deliver to such holder a certificate or certificates for the
number of whole shares of Common Stock to which such holder is entitled,
together with any cash dividends and payment in lieu of fractional shares to
which such holder may be entitled pursuant to subparagraph 6C. Until such time
as a holder of shares of Series A Convertible Preferred Stock shall surrender
his or its certificates therefor as provided above, such certificates shall be
deemed to represent the shares of Common Stock to which such holder shall be
entitled upon the surrender thereof.

7. Amendments. No provision of these terms of the Series A
Convertible Preferred Stock may be amended, modified or waived without the
written consent or affirmative vote of the holders of at least a majority of
the then outstanding shares of Series A Convertible Preferred Stock.

<PAGE> 1
EXHIBIT 3.2

AMENDED AND RESTATED
BYLAWS
OF
VIAGRAFIX CORPORATION
(Effective December 10, 1998)

ARTICLE I

OFFICES

Section 1. The registered office shall be in the City of Pryor,
County of Mayes, State of Oklahoma.

Section 2. The corporation may also have offices at such other
places both within and without the State of Oklahoma as the Board of Directors
may from time to time determine or the business of the corporation may require.

ARTICLE II

MEETINGS OF SHAREHOLDERS

Section 1. Meetings of shareholders for any purpose may be held at
such time and place, within or without the State of Oklahoma, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.

Section 2. Annual meetings of shareholders, commencing with
the year 1998, shall be held on the third Thursday in May, if not a legal
holiday, and if a legal holiday, then on the next secular day following, at
10:00 a.m., at which they shall elect by a plurality vote by written ballot a
board of directors, and transact such other business as may be properly brought
before the meeting.

Section 3. Written notice of the annual meeting, stating
the place, date and hour of such meeting, shall be given to each shareholder
entitled to vote thereat not less than ten (10) days nor more than sixty (60)
days before the date of the meeting unless otherwise required by law.

Section 4. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten (10) days before every
meeting of shareholders, a complete list of the shareholders entitled to vote
at the meeting, arranged in alphabetical order, showing the address and number
of shares registered in the name of each shareholder. Such list shall be open
to the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the election, either at a place within the city where the meeting is to be held
and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held, and the list shall be
produced and kept at the place of the meeting during the whole time thereof,
and shall be subject to the inspection of any shareholder who may be present.

Section 5. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called by the President and shall be called by the
President or Secretary at the request in writing of a majority of the Board
<PAGE> 2
of Directors, or at the request in writing of shareholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding
and entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.

Section 6. Written notice of a special meeting of
shareholders, stating the place, date, hour and the purpose or purposes
thereof, shall be given to each shareholder entitled to vote thereat, not less
than ten (10) days before the date fixed for the meeting unless otherwise
required by law.

Section 7. Business transacted at any special meeting of
the shareholders shall be limited to the purposes stated in the notice.

Section 8. The holders of a majority of the shares of stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
law or by the Certificate of Incorporation. If, however, such quorum shall not
be present or represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date and hour of the adjourned meeting shall be given in conformity
herewith. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted at the meeting as originally
notified.

Section 9. When a quorum is present at any meeting, the
affirmative vote of the holders of a majority of the shares of stock having
voting power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one upon which, by
express provision of law or of the Certificate of Incorporation, a different
vote is required, in which case such express provision shall govern and control
the decision of such question.

Section 10. Each shareholder shall at every meeting of the
shareholders be entitled to one vote in person or by proxy for each share of
the capital stock having voting power held by such shareholder, but no proxy
shall be voted or acted upon after three (3) years from its date unless the
proxy provides for a longer period, and, except where the transfer books of the
corporation have been closed or a date has been fixed as a record date for the
determination of its shareholders entitled to vote, no share of stock shall be
voted on at any election for directors which has been transferred on the books
of the corporation within twenty (20) days preceding such election of
directors.

Section 11. Any action required to or which may be taken at
any annual or special meeting of the shareholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action by the shareholders without a meeting by less than
unanimous written consent shall be given to those shareholders who have not
consented in writing.

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<PAGE> 3
ARTICLE III

DIRECTORS

Section 1. The number of directors which shall constitute
the whole Board shall be not less than three (3) nor more than nine (9). As of
the date of these Bylaws, the Board shall consist of five (5) directors.
Thereafter, within the limits above specified, the number of directors shall be
determined by resolution of the Board of Directors or by the shareholders at
the annual or a special meeting of the shareholders. Except for the election
held by the original incorporator and except as provided in Section 2 and in
Section 14 of this Article III, the directors shall be elected at the annual
meeting of shareholders. Each director elected shall hold office until such
director's successor is elected and qualified, or until such director's earlier
resignation or removal. Directors need not be shareholders.

Section 2. Except as provided in Section 14 of this Article
III, vacancies and newly created directorships resulting from any increase in
the authorized numbers of directors by the directors may be filled by a
majority vote of the directors then in office, though less than a quorum, and
any director so chosen shall hold office until the next annual election and
until such director's successor is duly elected and qualified, unless such
director resigns or is removed.

Section 3. The business of the corporation shall be managed
by its Board of Directors which may exercise all powers of the corporation and
do all such lawful acts and things as are not by law or by the Certificate of
Incorporation or by these Bylaws directed or required to be exercised or done
by the shareholders.

Section 4. The Board of Directors of the corporation may
hold meetings, both regular and special, either within or without the State of
Oklahoma.

Section 5. Regular meetings of the Board of Directors may
be held at such time and at such place as shall from time to time be determined
by the Board. Five (5) days' notice of all regular meetings shall be given,
and such notice shall state the place, date, hour and the business to be
transacted at and purpose of such meeting.

Section 6. Special meetings of the Board may be called by
the President on five (5) business days' notice to each director either
personally or by mail, fax or telegram. Special meetings shall be called by
the Secretary in like manner and on like notice on the written request of at
least two (2) directors, unless the corporation has at that time less than
three (3) directors, in which latter event the request of only one (1) director
shall be required. Special meetings shall also be called by the Secretary in
like manner and on like notice on the written request of holders of at least
25% of the common stock or preferred stock of the Company (or combination
thereof). Notice of any special meeting shall state the place, date, hour and
the business to be transacted at and the purpose of such meeting.

Section 7. At all meetings of the Board, a majority of the directors
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by law or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

-3-
<PAGE> 4
Section 8. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one (1) or more of the directors of the corporation,
which, to the extent provided in the resolution, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it. Such committee or committees shall
have such name or names as may be determined from time to time by resolution
adopted by the Board of Directors.

Section 9. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.

Section 10. Members of the Board of Directors, or of any
committee thereof, may participate in a meeting of such Board or committee by
means of conference telephone or similar communications equipment that enables
all persons participating in the meeting to hear each other. Such
participation shall constitute presence in person at such meeting.

Section 11. Unless otherwise restricted by the Certificate
of Incorporation or these Bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if a written consent to such action is signed by all
members of the Board or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.

Section 12. The directors may be paid their expenses, if
any, of attendance at such meeting of the Board of Directors and may be paid a
fixed sum for attendance at such meeting of the Board of Directors or a stated
salary as director. Members of special or standing committees may be allowed
like compensation for attending committee meetings.

Section 13. The Board of Directors at any time may, by
affirmative vote of a majority of the members of the Board then in office,
remove any officer elected or appointed by the Board of Directors for cause or
without cause.

Section 14. Any director may be removed, for cause or
without cause, by a majority vote of the shareholders entitled to vote for the
election of such director at any annual or special meeting of the shareholders.
Upon such removal of a director, the shareholders (and not the remaining
directors) shall elect a director to replace such removed director at the same
shareholders' meeting at which such removal took place or at a subsequent
shareholders' meeting.

ARTICLE IV

NOTICES

Section 1. Notices to directors and shareholders shall be
in writing and delivered personally or mailed to the directors or shareholders
at their addresses appearing on the books of the corporation. Notice by mail
shall be deemed to be given at the time when the same shall be deposited in the
United States mail, postage prepaid. Notice to directors may also be given by
fax or telegram.

Section 2. Whenever any notice is required to be given
under the provisions of law or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing signed by the person or

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<PAGE> 5
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to notice.

ARTICLE V

OFFICERS

Section 1. The officers of the corporation shall be chosen
by the Board of Directors and shall, at a minimum, consist of a President and a
Secretary. The Board of Directors may also choose additional officers,
including a Chairman of the Board of Directors, one or more Vice-Presidents who
may be classified by their specific function, a Treasurer and one or more
Assistant Secretaries and Assistant Treasurers. Two or more offices may be
held by the same person, except the offices of President and Secretary.

Section 2. The Board of Directors at its first meeting and
after each annual meeting of shareholders shall choose a President and a
Secretary, and may choose such other officers and agents as it shall deem
necessary.

Section 3. The salaries of all officers of the corporation
shall be fixed by the Board of Directors.

Section 4. The officers of the corporation shall hold
office until their successors are chosen and qualify, or until their earlier
resignation or removal. Any vacancy occurring in any office of the corporation
shall be filled by the Board of Directors.

Section 5. The Chairman of the Board of Directors, if
chosen, shall preside at all meetings of the Board of Directors, and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.

Section 6. The President shall be the chief operating
officer of the corporation, shall preside at all meetings of the shareholders
and shall have general and active management of the business of the corporation
and shall see that all orders and resolutions of the Chairman of the Board and
the Board of Directors are carried into effect.

Section 7. The President shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the corporation.

Section 8. The Vice-President, or if there shall be more
than one, the Vice-Presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.

Section 9. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the shareholders and record all the
proceedings of the meetings in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the shareholders
and regular and special meetings of the Board of Directors, and shall perform
such other duties as may be prescribed by the

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<PAGE> 6
Board of Directors or President, under whose supervision the Secretary shall
be. Additionally, the Secretary shall have custody of the corporate seal of
the corporation, and the Secretary or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it, and when so
affixed, it may be attested by the Secretary's signature or by the signature of
such Assistant Secretary. The Board of Directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by the Secretary's signature.

Section 10. The Assistant Secretary, or if there be more
than one, the Assistant Secretaries in the order determined by the Board of
Directors, shall, in the absence or disability of the Secretary, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Board of Directors from time to time
prescribe.

Section 11. The Treasurer, if one is chosen or, if not, the
Secretary, shall have the custody of the corporate funds and securities and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such depositories
as may be designated by the Board of Directors.

Section 12. The Treasurer, if one is chosen or, if not, the
Secretary, shall disburse the funds of the corporation as may be ordered by the
Board of Directors' taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all transactions
performed by the Treasurer (or Secretary, as the case may be) and of the
financial condition of the corporation.

Section 13. If required by the Board of Directors, the
Treasurer, if one is chosen or, if not, the Secretary, shall give the
corporation a bond (which shall be renewed every six (6) years) in such sum and
with such surety or sureties as shall be satisfactory to the Board of Directors
for the faithful performance of the duties of the office of a treasurer and for
the restoration to the corporation, in case of the Treasurer's (or Secretary's,
as the case may be) death, resignation, retirement or removal from office, of
all books, papers, vouchers, money and other property of whatever kind in the
possession or under the control of the Treasurer (or Secretary, as the case may
be) belonging to the corporation.

Section 14. The Assistant Treasurer, of if there shall be
more than one, the Assistant Treasurers in the order determined by the Board of
Directors, shall, in the absence or disability of the Treasurer, perform the
duties and exercise the powers of the Treasurer and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.

ARTICLE VI

CERTIFICATES OF STOCK, TRANSFERS OF STOCK
FIXING RECORD DATE AND
REGISTERED SHAREHOLDERS

Section 1. Every holder of stock in the corporation shall
be entitled to have a certificate, signed by, or in the name of, the
corporation by the Chairman of the Board of Directors or the President or a
Vice-President, and by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the corporation, certifying the number
of shares owned by the shareholder in the corporation.

-6-

<PAGE> 7
Section 2. Any or all the signatures on the certificate may
be by facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same effect
as if the person who signed the certificate was such officer, transfer agent or
registrar at the date of issue.

Section 3. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or such owner's legal representative, to advertise the same in
such manner as the corporation shall require and/or to give the corporation a
bond in such sum as the corporation may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.

Section 4. Subject to transfer restrictions permitted by
Section 1055 of Title 18 of the Oklahoma Statutes and to stop transfer orders
directed in good faith by the corporation to any transfer agent to prevent
possible violations of federal or state securities laws, rules or regulations,
upon surrender to the corporation or the transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.

Section 5. The Board of Directors may fix a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of any meeting of shareholders, nor more than sixty (60) days prior to the
time for the other action hereinafter described, as of which there shall be
determined the shareholders who are entitled: to notice of or to vote at any
meeting of shareholders or any adjournment thereof; to receive payment of any
dividend or other distribution or allotment of any rights; or to exercise any
rights with respect to any change, conversion or exchange of stock or with
respect to any other lawful action.

Section 6. The corporation shall be entitled to treat the
person in whose name any share of stock is registered on the books of the
corporation as the owner thereof for all purposes and shall not be bound to
recognize any equitable or other claim or interest in such shares in the part
of any other person, whether or not the corporation shall have express or other
notice thereof.

ARTICLE VII

GENERAL PROVISIONS

Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of the corporation's capital stock.

Section 2. There may be set apart out of any of the funds
of the corporation available for dividends such amounts as the Board of
Directors deems proper as a reserve or reserves for working

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<PAGE> 8
capital, depreciation, losses in value or for any other proper corporate
purpose, and the Board of Directors may increase, decrease or abolish any such
reserve in the manner in which it was created.

Section 3. The Board of Directors shall present at each
annual meeting and at any special meeting of the shareholders when called for
by vote of the shareholders, a full and clear statement of the business and
condition of the corporation.

Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

Section 5. The fiscal year of the corporation shall be as
fixed by the Board of Directors.

Section 6. The Board of Directors may provide a suitable
seal, containing the name of the corporation, which seal shall be in charge of
the Secretary. If and when so directed by the Board of Directors or a
committee thereof, duplicates of the seal may be kept and used by the Treasurer
or by the Assistant Secretary or Assistant Treasurer. The seal may be used by
causing it, or a facsimile thereof, to be impressed or affixed or in any other
manner reproduced.

Section 7. The books of account and other records of the
corporation may be kept (subject to any provisions of Oklahoma law) at the
principal place of business and chief executive office of the corporation.

ARTICLE VIII

AMENDMENTS

The Bylaws may be amended or repealed, or new bylaws may be adopted,
by the shareholders or by the Board of Directors at any regular meeting of the
shareholders or of the Board of Directors, or at any special meeting of the
shareholders or of the Board of Directors if notice of such amendment, repeal,
or adoption of new bylaws be contained in the notice of such special meeting.

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<PAGE> 1

EXHIBIT 10.1

VIAGRAFIX CORPORATION

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

SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT

August 16, 1994

----------------
<PAGE> 2
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT

INDEX

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1. PURCHASE, SALE AND TERMS OF PURCHASED SHARES . . . . 1

1.1 The Purchased Shares. . . . . . . . . . . . . 1
1.2 Purchase and Sale of Purchased Shares . . . . 1
(a) The Closing . . . . . . . . . . . . . . . 1
(b) Use of Proceeds . . . . . . . . . . . . . 2
(c) Subsequent Sales. . . . . . . . . . . . . 2

Section 2. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND PRINCIPAL SHAREHOLDERS . . . . . . 2

2.1 Business; Organization, Corporate Power
and Authority, etc. . . . . . . . . . . . . 2
2.2 Validity . . . . . . . . . . . . . . . . . . . 2
2.3 Capitalization; Status of Capital Stock. . . . 3
2.4 Taxes . . . . . . . . . . . . . . . . . . . . 4
2.5 Litigation . . . . . . . . . . . . . . . . . . 4
2.6 No Violations.. . . . . . . . . . . . . . . . 4
2.7 Other Agreements . . . . . . . . . . . . . . . 5
2.8 Other Agreements of Officers, etc. . . . . . . 5
2.9 Governmental Consents, etc.. . . . . . . . . . 5
2.10 Transactions with Affiliates . . . . . . . . . 5
2.11 Compliance with Law . . . . . . . . . . . . . 6
2.12 Financial Statements . . . . . . . . . . . . . 6
2.13 Material Contracts . . . . . . . . . . . . . . 6
2.14 Title to Assets; Intellectual Property . . . . 8
2.15 Disclosure . . . . . . . . . . . . . . . . . 9
2.16 Compliance with Securities Laws . . . . . . . 9

Section 3. CONDITIONS OF PURCHASE . . . . . . . . . . . . . . . 10

3.1 Certificate of Company . . . . . . . . . . . . 10
3.2 Opinion of Counsel . . . . . . . . . . . . . . 10
3.3 Authorization; Consents.. . . . . . . . . . . 10
3.4 Certificate of Incorporation . . . . . . . . . 10
3.5 Stockholders Agreement . . . . . . . . . . . . 10
3.6 Registration Rights Agreement . . . . . . . . 10
3.7 Nondisclosure and Developments
Agreements . . . . . . . . . . . . . . . . . 11
3.8 Non-Competition Agreements . . . . . . . . . . 11
3.9 Board of Directors . . . . . . . . . . . . . . 11
3.10 Repurchases. . . . . . . . . . . . . . . . . . 11
3.11 Officers Certificate as to Financial
Statements . . . . . . . . . . . . . . . . . 11
3.12 All Proceedings Satisfactory . . . . . . . . . 11
</TABLE>

-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 4. COVENANTS OF THE COMPANY . . . . . . . . . . . 11

4.1 Financial Statements . . . . . . . . . . . . . . 12
4.2 Conduct of Business . . . . . . . . . . . . . . 12
4.3 Adverse Changes . . . . . . . . . . . . . . . . 12
4.4 Insurance . . . . . . . . . . . . . . . . . . . 13
4.5 Life Insurance . . . . . . . . . . . . . . . . . 13
4.6 Maintenance of Properties . . . . . . . . . . . 13
4.7 Affiliated Transactions . . . . . . . . . . . . 13
4.8 Management Compensation; Compensation
Committee; Dividends . . . . . . . . . . 13
4.9 Lock-up for Certain Stockholders . . . . . . . . 14
4.10 Inspection . . . . . . . . . . . . . . . . . . . 14
4.11 Board of Directors Meetings.. .. . . . . . . . . 15
4.12 Right to Participate in Sale of
Additional Securities . . . . . . . . . 15
4.13 Conduct of the Company . . . . . . . . . . . . . 16
4.14 Loans and Advances . . . . . . . . . . . . . . . 16
4.15 Indebtedness . . . . . . . . . . . . . . . . . . 17

Section 5. REPRESENTATIONS AND WARRANTIES OF INVESTORS . 17

Section 6. MISCELLANEOUS. . . . . . . . . . . . . . . . . 19

6.1 Brokers' Fee . . . . . . . . . . . . . . . . . . 19
6.2 Remedies . . . . . . . . . . . . . . . . . . . . 19
6.3 Amendments and Waivers . . . . . . . . . . . . . 20
6.4 Survival of Covenants; Assignability of Rights . 21
6.5 Governing Law . . . . . . . . . . . . . . . . . 21
6.6 Section Headings . . . . . . . . . . . . . . . . 21
6.7 Counterparts . . . . . . . . . . . . . . . . . . 21
6.8 Notices and Demands . . . . . . . . . . . . . . 21
6.9 Severability . . . . . . . . . . . . . . . . . . 22
6.10 Definitions of Terms . . . . . . . . . . . . . . 23
6.11 Expenses . . . . . . . . . . . . . . . . . . . . 24
6.12 Entire Agreement . . . . . . . . . . . . . . . . 24

Schedules
- ---------

I. Schedule of Investors
</TABLE>

-ii-
<PAGE> 4
Exhibits
- --------

1.1 Terms of Series A Preferred Stock
2.1 Subsidiaries
2.3 Holders of Issued and Outstanding
Stock of the Company
2.4 Taxes
2.5 Litigation
2.9 Governmental Consents
2.10 Transactions with Affiliates
2.12 Unaudited Financial Statement of the Company
2.13 Material Contracts of the Company
2.14 Existing Liens and Intellectual Property
3.2 Opinion of Counsel
3.5 Stockholders Agreement
3.6 Registration Rights Agreement
3.7 Employee Nondisclosure and Developments Agreement
3.8 Non-Competition Agreement

-iii-
<PAGE> 5
SERIES A CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT

AGREEMENT made as of this 16th day of August, 1994 by and among
VIAGRAFIX CORPORATION (the "Company"), an Oklahoma corporation, with its
current principal place of business at Five South Vann Street, Pryor, OK 74361,
Michael Webster and Robert Webster (the "Principal Shareholders") and the
persons and entities listed on the Schedule of Investors designated as Schedule
I hereto (collectively referred to as the "Investors" and individually referred
to as an "Investor").

1. PURCHASE, SALE AND TERMS OF PURCHASED SHARES

Section 1.1. The Purchased Shares. The Company has authorized the
issuance and sale to the Investors of 1,710,000 shares (the "Purchased Shares")
of its authorized, but unissued shares of Series A Convertible Preferred Stock
(the "Series A Preferred Stock") at a purchase price of approximately $1.7544
per share. The designations, rights and preferences and other terms and
conditions relating to the Series A Preferred Stock shall be as set forth on
Exhibit 1.1 attached hereto. Any shares of the Company's common stock ("Common
Stock") hereafter issued or issuable upon conversion of the Purchased Shares
are herein referred to as the "Common Shares". The Purchased Shares and Common
Shares are collectively referred to herein as the "Securities".

Section 1.2. Purchase and Sale of Purchased Shares.

(a) The Closing. The Company agrees to issue and sell to the
Investors, and, subject to and in reliance upon the representations,
warranties, terms and conditions of this Agreement, the Investors, severally
but not jointly, agree to purchase, that number of the Purchased Shares set
forth opposite their respective names on Schedule I attached hereto. The
aggregate purchase price for the Purchased Shares being purchased by each
Investor is set forth opposite such Investor's name on Schedule I. Such
purchase and sale shall take place at a closing (the "Closing") to be held at
the offices of Testa, Hurwitz & Thibeault, Exchange Place, 53 State Street,
Boston, Massachusetts, at 10:00 A.M. on August 16, 1994 or on such other date
and at such time as may be mutually agreed upon by the Company and the
Investors (the "Closing Date") provided, however, that the aggregate price paid
for the Purchased Shares shall not be less than Three Million Dollars
($3,000,000). At the Closing the Company will deliver to each Investor
certificates for the number of Purchased Shares set forth opposite its name on
Schedule I against delivery to the Company of a check or wire transfer in the
amount set forth opposite such Investor's name on Schedule I.
<PAGE> 6
-2-

(b) Use of Proceeds. The Company shall use the proceeds from
the sale of the Purchased Shares to repurchase up to (i) 863,636 shares of
presently issued and outstanding Common Stock at a price of $1.7544 per share
from Robert Webster and; (ii) 1,416,364 shares of presently issued and
outstanding Common Stock at a price of $1.7544 per share from Michael Webster.

(c) Subsequent Sales. At any time on or before October 31,
1994, the Company may sell up to 570,000 additional shares of Series A
Preferred Stock under the terms of this Agreement. By execution of a
counterpart of this Agreement, a purchaser of any such shares shall be deemed
to be an Investor for all purposes hereof, such shares of Series A Preferred
Stock shall be deemed to be Purchased Shares hereunder, and Schedule I hereto
shall be amended to reflect such additional sale of Series A Preferred Stock.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

In order to induce the Investors to enter into this Agreement, the
Company represents and warrants that, except as set forth on the attached
schedules of exception:

Section 2.1. Business; Organization, Corporate Power and Authority,
etc. The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Oklahoma and has full corporate power
and authority to own and hold its properties and to carry on its business as
presently conducted. The Company is duly licensed or qualified and in good
standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of property owned or leased, or the nature
of the activities conducted by it, makes such licensing or qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the business, assets or condition, financial or otherwise, or
operations of the Company. Except as set forth on Exhibit 2.1 attached hereto,
the Company has no Subsidiaries and does not own of record or beneficially any
shares of capital stock or securities convertible into capital stock of, or any
other proprietary interest in, any Person.

Section 2.2. Validity. The Company has all necessary power and
authority, and has taken all action required to execute, deliver and perform
this Agreement, the Stockholders Agreement referred to in Section 3.5 hereof
(the "Stockholders" Agreement") and the Registration Rights Agreement referred
to in Section 3.6 hereof (the "Registration Rights Agreement"), to issue, sell
and deliver the Purchased Shares, and to issue the Common Shares issuable upon
conversion of the Purchased Shares. This Agreement, the Purchased Shares, the
Stockholders Agreement, the Registration Rights Agreement, and all other
documents and instruments executed by the Company pursuant hereto when
delivered, are and will be duly authorized, valid and binding
<PAGE> 7
-3-

obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors; equitable principles limiting
rights to specific performance or other equitable remedies; and, with respect
to the enforceability of the provisions set forth in the Registration Rights
Agreement, applicable Federal and state securities laws. Upon the issuance,
sale and delivery of the Securities in accordance with the terms hereof, the
Securities will be validly issued, fully paid and non-assessable and will be
free and clear of all liens, charges, restrictions, claims and encumbrances of
any kind, subject to restrictions on transfer under Federal and state
securities laws, this Agreement, the Stockholders Agreement and the Company's
Certificate of Incorporation, as amended (the "Charter").

Section 2.3. Capitalization; Status of Capital Stock. The authorized
capital stock of the Company consists of (i) 2,280,000 shares of Preferred
Stock, all of which have been designated Series A Convertible Preferred Stock,
and (ii) 10,000,000 shares of Common Stock. Immediately prior to the Closing,
7,500,000 shares of the Company's Common Stock will be issued and outstanding,
and no shares of Series A Convertible Preferred Stock will have been issued.
All issued and outstanding shares of the Company's Common Stock have been duly
authorized and validly issued, are fully paid, and non-assessable, and were
issued in compliance with all applicable state and Federal securities laws. The
Company has authorized and reserved, and covenants to continue to reserve, a
sufficient number of shares of Common Stock for issuance upon the conversion of
the Purchased Shares, which when so issued and delivered, will be duly
authorized and validly issued, fully paid, and non-assessable. Except as set
forth on Exhibit 2.3 attached hereto or as otherwise contemplated by this
Agreement: (a) there are no options or rights to purchase shares of capital
stock of the Company, or securities convertible into shares of capital stock,
authorized, issued or outstanding, and the Company is not obligated in any
manner to issue any shares of its capital stock or securities convertible into
or evidencing any right to acquire shares of its capital stock, or to
distribute to holders of any of its capital stock any evidence of indebtedness
or assets; (b) no Person has any preemptive right, right of first refusal or
similar right to acquire additional shares of capital stock in connection with
the sale and purchase of the Purchased Shares or issuance of the Common Shares
pursuant to this Agreement or otherwise; (c) there are no restrictions on the
transfer of the shares of capital stock of the Company, other than those
imposed by relevant state and Federal securities laws or the Charter; (d) no
Person has any right to cause the Company to effect the registration under the
Securities Act of any shares of capital stock or any other securities
(including debt securities) of the Company; (e) except for the agreements
described in Section 3.10 below, the Company has no obligation to purchase,
redeem or
<PAGE> 8
-4-

otherwise acquire any of its equity securities or any interests therein, or to
pay any dividend or make any other distribution in respect thereto; and (f)
there are no voting trusts, stockholders' agreements, or proxies relating to
any securities of the Company. A complete and correct schedule of the holders
of the issued and outstanding capital stock of the Company, and the number of
shares of capital stock beneficially owned by such holders, is set forth on
Exhibit 2.3 attached hereto. The Company has heretofore delivered to the
Investors true and correct copies of its Charter and By-laws, each as amended
and in effect on the date hereof and certified by the Company's Secretary.

Section 2.4. Taxes. Except as set forth on Exhibit 2.4, the Company has
accurately prepared and timely filed all Federal, state and other tax returns
that are required to be filed by it and has paid or made provision for the
payment of all taxes that have become due pursuant to such returns and, to the
best of its knowledge, all other taxes, assessments and governmental charges
which have become due and payable, including, without limitation, all taxes
which the Company is obligated to withhold from amounts owing to employees,
creditors and third parties. No deficiency assessment with respect to or
proposed adjustment of the Company's Federal, state, or other taxes is pending
or, to the best of the Company's knowledge, threatened. There is no tax lien,
whether imposed by any Federal, state, or other taxing authority, outstanding
against the assets, properties or business of the Company.

Section 2.5. Litigation. Except as set forth on Exhibit 2.5 attached
hereto, there is no action, suit, proceeding or investigation pending or, to
the best of the Company's knowledge, threatened against or affecting the
Company which might result, either in any case or in the aggregate, in any
material adverse change in the business, assets or condition, financial or
otherwise, or operations of the Company, or which might call into question the
validity of, or hinder the enforceability or performance of this Agreement, the
Stockholders Agreement, the Registration Rights Agreement, or the Purchased
Shares, or any action taken or to be taken pursuant hereto; and, to the best of
the Company's knowledge, no event has occurred and no condition exists on the
basis of which any litigation, proceeding or investigation might properly be
instituted. The Company is not in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency that might result, either in any case or in the aggregate, in
any material adverse change in the business, assets or condition, financial or
otherwise, or operations of the Company.

Section 2.6. No Violations. The execution, delivery and performance of
this Agreement, the Stockholders Agreement, the Registration Rights Agreement,
and any documents or instruments
<PAGE> 9
-5-

delivered, executed and performed in connection herewith or therewith, the
consummation of the transactions contemplated hereby (including the issuance,
sale and delivery of the Purchased Shares and, upon conversion of the Purchased
Shares, the issuance and delivery of the Common Shares), and compliance with
the provisions hereof, will not violate any provision of law, the Charter, or
By-laws, as amended, of the Company, any order of any court or other agency of
government or indenture, agreement or other instrument to which the Company is
bound, or conflict with, result in the breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture, agreement or
other instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.

Section 2.7. Other Agreements. To the best of its knowledge, the
Company is not a party to or bound by any agreement, contract or commitment or
subject to any charter, bylaw or other corporate restriction, which materially
adversely affects, or which in the future could materially adversely affect its
business, assets or condition, financial or otherwise, or operations.

Section 2.8. Other Agreements of Officers, etc. To the best of the
Company's knowledge, no officer or Key Employee of the Company is a party to
or bound by any agreement, contract or commitment, or subject to any
restriction, which materially and adversely affects, or which in the future
could materially and adversely affect, the business, assets or condition,
financial or otherwise, or operations of the Company or the right of any such
Person to participate in the affairs of the Company. To the best of the
Company's knowledge, no Key Employee of the Company has any present intention
of terminating his or her employment with the Company, and the Company has no
present intention of terminating any such employment.

Section 2.9. Governmental Consents, etc. Except as set forth on
Exhibit 2.9 attached hereto, no consents, approvals or authorizations of, or
registrations, qualifications, designations, declarations or filings with, any
Federal, state or local governmental authority (other than with respect to
United States Federal and state securities laws with which the Company has
represented and warranted in Section 2.16 hereof that the Company is in
compliance) on the part of the Company are required as a condition precedent to
the valid execution and delivery of this Agreement or the valid offer, issue,
sale and delivery of the Securities.

Section 2.10. Transactions with Affiliates. Except as set forth on
Exhibit 2.10 attached hereto, there are no loans, leases or other continuing
transactions between the Company or any of the Company's customers,
franchisees or suppliers, and any
<PAGE> 10
-6-

stockholder, director or officer of the Company, or any member of such
officer's, director's or stockholder's immediate family, or any Person
controlled by such officers, directors or stockholders or their immediate
families.

Section 2.11. Compliance with Law. To the best of the Company's
knowledge, the Company is currently in compliance in all material respects with
all Federal and state laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products, and services (including,
without limitation, any such laws, rules, regulations and orders relating to
franchisement).

Section 2.12. Financial Statements. The unaudited consolidated
financial statements of the Company for the eighteen months ended June 30,
1994, which are set forth on Exhibit 2.12 attached hereto, present fairly the
financial position of the Company as at the dates thereof and for the periods
covered thereby and have been prepared in accordance with generally accepted
accounting principles consistently applied. Since June 30, 1994, (i) there has
been no material adverse change in the business, assets or condition, financial
or otherwise, or operations of the Company; (ii) neither the business,
condition, financial or otherwise, or operations of the Company nor any of the
properties or assets of the Company have been materially adversely affected by
any event or occurrence of any type, whether or not insured against; (iii)
except as entered into in the ordinary course of business, the Company has not
incurred any liabilities or obligations; and (iv) the Company has not entered
into any transaction which, to the best of the Company's knowledge, would have
a material adverse effect on the business, assets, condition, financial or
otherwise, or operations of the Company.

Section 2.13. Material Contracts. To the best of the Company's
knowledge, except for the contracts of the Company set forth on Exhibit 2.13
attached hereto (collectively, the "Contracts"), the Company is not a party to
or otherwise bound by any written or oral:

(a) contract or series of contracts with the same Person for
the purchase of machinery, equipment, goods or services, or the furnishing of
services, including without limitation, contracts with franchisees, which
contracts have a value in excess of $25,000;

(b) contract with any labor union (and, to the best of the
Company's knowledge, no organizational effort is being made with respect to any
of their employees);

(c) contract or other commitment with any supplier or
franchisee containing any provision permitting any party other than the Company
to renegotiate the price or other terms, or
<PAGE> 11
-7-

containing any pay-back or other similar provision, upon the occurrence of a
failure by the Company to meet its obligations under the contract when due or
the occurrence of any other event;

(d) contract for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment in excess of its normal
operating requirements;

(e) contract for the employment of any officer, employee or
other person on a full-time or consulting basis, which is not terminable on
notice without cost or liability to the Company, except normal severance
arrangements and accrued vacation pay;

(f) bonus, pension, profit-sharing, retirement,
hospitalization, insurance, stock purchase, stock option or other plan,
contract or understanding pursuant to which benefits are provided to any
employee of the Company (other than group insurance plans applicable to
employees generally);

(g) agreement or indenture relating to the borrowing of
money or to the mortgaging or pledging of, or otherwise placing a lien or
security interest on, any asset of the Company or any agreement or instrument
evidencing any guaranty by the Company of payment or performance by any other
Person;

(h) voting trust or agreement, stockholders' agreement,
pledge agreement, buy-sell agreement or first refusal or preemptive rights
agreement relating to any securities of the Company other than the Stockholders
Agreement;

(i) agreement or obligation (contingent or otherwise) to
issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any shares of its capital stock or any of its other equity securities
(except as contemplated in Section 3.10);

(j) agreement under which the Company has advanced or agreed
to advance money, or under which the Company has agreed to lease any property
as lessee or lessor for annual lease payments in excess of $25,000;

(k) agreement under which the Company has granted any person
any registration rights, other than the Registration Rights Agreement;

(l) agreement under which the Company has limited or
restricted its right to compete with any Person in any respect;

(m) contract or other commitment involving more than $25,000
and not in the ordinary course of the Company's business;
<PAGE> 12
-8-

(n) agreement providing for disposition of the business,
assets or shares of the Company agreement of merger or consolidation to which
the Company is a party or letter of intent with respect to the foregoing; or

(q) agreement or letter of intent with respect to the
acquisition of the business, assets or shares of any other Person.

The Company has supplied to or made available for review by special
counsel to the Investors copies of all of the Contracts to which it is a party.
The Company, to the best of the Company's knowledge, and all of the other
parties to such Contracts, have performed all obligations required to be
performed by such Persons to date under the Contracts, have received no notice
of default and are not in default under any of the Contracts, unless such
default or failure to perform would not have a material adverse effect on the
Company. The Company is in compliance in all material respects with the terms
and provisions of its Charter and By-laws, each as amended and in effect on the
date hereof.

Section 2.14. Title to Assets; Intellectual Property. With the
exception of those of its properties which are under lease, and except as set
forth on Exhibit 2.14 attached hereto, the Company has good and marketable
title to, and is the owner, free and clear, of all of its properties and assets
and there are no liens or other security interests outstanding against any of
these properties and assets. The term "properties" as used herein shall include
all property of whatever nature used by the Company in the conduct of its
business. All leases pursuant to which the Company leases real or personal
property are in good standing and are valid and effective in accordance with
their respective terms and there exists no default or other occurrence or
condition which could result in a default or termination thereof. Set forth in
Exhibit 2.14 is a list and brief description of all domestic and foreign
patents, patent rights, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names and
copyrights, and all applications for such which are in the process of being
prepared, owned by or registered in the name of the Company, or of which the
Company is a licensor or licensee or in which the Company has any right, and in
each case a brief description of the nature of such right. The Company owns or
possesses adequate licenses or other rights to use all patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications, trade names, copyrights, manufacturing processes, formulae,
trade secrets, customer lists and know how (collectively, "Intellectual
Property") necessary or desirable to the conduct of its business as conducted
and as proposed to be conducted, and no claim is pending or, to the best of the
Company's knowledge, threatened to the effect that the operations of the
Company infringe upon or conflict with the asserted rights of any other person
under any Intellectual Property, and there is
<PAGE> 13
-9-

of any other person under any Intellectual Property, and there is no basis for
any such claim (whether or not pending or threatened). No claim is pending or
threatened to the effect that any such Intellectual Property owned or licensed
by the Company, or which the Company otherwise has the right to use, is invalid
or unenforceable by the Company, and there is no basis for any such claim
(whether or not pending or threatened). To the best of the Company's knowledge,
all technical information developed by and belonging to the Company which has
not been patented has been kept confidential. The Company has not granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the products or proposed products or to provide
the services or proposed services of the Company.

Section 2.15. Disclosure. Neither this Agreement nor any certificate,
list, exhibit, letter or other written statement furnished by the Company to
the Investors or their special counsel in connection herewith, to the best of
the Company's and each Principal Shareholder's knowledge, contains any untrue
statement of a material fact or, when read together, omits to state any
material fact necessary in order to make the statements contained therein not
misleading in the light of the circumstances under which they are or were made.
There exists no fact or circumstances which materially and adversely affects,
or to the best of the Company's knowledge, has a reasonable possibility of
materially and adversely affecting, the business, assets or condition,
financial or otherwise, or operations of the Company, which has not been
reflected in financial statements of the Company heretofore delivered to the
Investors or set forth in this Agreement or the Exhibits and Schedules attached
hereto or fully disclosed in a written statement or certificate furnished to
the Investors by the Company pursuant to this Agreement.

Section 2.16. Compliance with Securities Laws. Based in part on the
representations of the Investors set forth in Section 5 hereof, the Company
has, to the best of the Company's knowledge, complied and will comply with all
applicable United States Federal and state securities laws in connection with
the offer, issuance and sale of the Securities. The Company has not, to the
best of the Company's knowledge, either directly or through any agent, offered
any securities to, or otherwise approached, negotiated or communicated in
respect of any securities with, any Person so as thereby to require that the
offer or sale of such securities (including but not limited to the Securities)
be registered pursuant to the provisions of Section 5 of the Securities Act of
1933, as amended (the "1933 Act"). Based in part on the representations of the
Investors set forth in Section 5 hereof, the offer, sale and issuance of the
Purchased Shares and of the Common Shares in conformity with the terms of this
Agreement are exempt from the registration requirements of Section 5 of the
1933 Act and all applicable state securities laws.
<PAGE> 14
-10-

3. CONDITIONS OF PURCHASE

Each Investor's obligation to purchase and pay for the Purchased
Shares hereunder shall be subject to compliance by the Company and each
Principal Shareholder in all material respects with their agreements herein
contained and to the fulfillment on or before and at the Closing of the
following conditions:

Section 3.1. Certificate of Company. The representations and
warranties of the Company contained in this Agreement, including but not
limited to the representations and warranties made in Section 2 hereof, shall
be true and correct in all material respects with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date; the Company's business, assets or condition, financial or
otherwise, or operations shall not have been materially and adversely affected
prior to the Closing; the conditions hereafter specified in this Section 3
shall have been satisfied in all material respects; and on the Closing Date a
certificate to such effect executed by the President, the principal financial
officer of the Company and each Principal Shareholder shall be delivered to the
Investors.

Section 3.2. Opinion of Counsel. The Investors shall have received
from counsel for the Company, Gary Dean, Esq., his favorable opinion, dated the
Closing Date, in the form attached hereto as Exhibit 3.2.

Section 3.3. Authorization; Consents. The Board of Directors and
stockholders of the Company shall have duly adopted resolutions in form
satisfactory to the Investors authorizing the Company to consummate the
transactions contemplated hereby to which it is a party in accordance with the
terms hereof, and the Investors shall have received a duly executed certificate
of the Secretary of the Company dated the Closing Date setting forth a copy of
such resolutions and such other matters as may be requested by the Investors.
The Company shall have obtained any and all other consents, permits and waivers
and made all filings necessary or appropriate for consummation of the
transactions contemplated by this Agreement except for such post-Closing filings
as may be required under applicable securities laws.

Section 3.4. Certificate of Incorporation. The Charter shall read as
set forth on Exhibit 1.1 attached hereto.

Section 3.5. Stockholders Agreement. The Company, the Investors,
Michael Webster and Robert Webster shall have executed and delivered a
Stockholders Agreement, substantially in the form of Exhibit 3.5 attached
hereto.

Section 3.6. Registration Rights Agreement. The Company, the
Investors, Michael Webster and Robert Webster shall have
<PAGE> 15
-11-

executed and delivered a Registration Rights Agreement, substantially in the
form of Exhibit 3.6 attached hereto.

Section 3.7. Nondisclosure and Developments Agreements. Each Key
Employee shall have executed and delivered an Employee Nondisclosure and
Developments Agreement substantially in the form of Exhibit 3.7 attached
hereto.

Section 3.8. Non-Competition Agreements. Each Key Employee shall have
executed and delivered a Non-Competition Agreement substantially in the form of
Exhibit 3.8 attached hereto.

Section 3.9. Board of Directors. Lawrence W. Lepard shall have been
elected to the Company's Board of Directors as the director elected by the
holders of Series A Convertible Preferred Stock, voting as a separate series
(the "Series A Director").

Section 3.10. Repurchases. The Company shall have entered into an
agreement with Robert Webster to repurchase on August 16, 1994, 863,636 shares
of Common Stock currently owned by Robert Webster at a purchase price of
approximately $1.7544 per share and shall have entered into an agreement with
Michael Webster to repurchase on August 16, 1994, 1,416,364 shares of Common
Stock currently owned by Michael Webster at a purchase price of approximately
$1.7544 per share.

Section 3.11. Officers' Certificate as to Financial Statements. Each
officer of the Company shall execute and deliver on the Closing Date a
certificate as to the completeness and accuracy of the financial statements
delivered by the Company to the Investors pursuant to Section 2.12 hereof.

Section 3.12. All Proceedings Satisfactory. All corporate and other
proceedings taken prior to or at the Closing in connection with the
transactions contemplated by this Agreement, and all documents and evidences
incident thereto, shall be satisfactory in form and substance to the Investors,
and the Investors shall receive such copies thereof and other materials
(certified, if requested) as they may reasonably request in connection
therewith.

4. COVENANTS OF THE COMPANY

Until the later of such time as less than 25% of the Purchased Shares
or the Common Shares are outstanding and held by the Investors or any
affiliates of the Investors or the Company completes a Qualified Public
Offering; or unless otherwise agreed by a majority of the outstanding Common
Shares (assuming the conversion of all outstanding Purchased Shares), the
Company shall comply with the following covenants:
<PAGE> 16
-12-

Section 4.1. Financial Statements. The Company shall furnish to the
Investors the following reports: (a) within ninety (90) days after the end of
each fiscal year, an audited consolidated balance sheet of the Company as at
the end of such year, together with audited consolidated statements of income,
stockholders' equity and cash flows of the Company for such year, certified by
independent public accountants of recognized standing (which shall be one of
the six largest independent public accounting firms in the United States, or
such other independent public accountants of recognized national or regional
standing as may be approved by the Board of Directors of the Company) prepared
in accordance with generally accepted accounting principles and practices
consistently applied; (b) within thirty (30) days after the end of each month,
an unaudited consolidated balance sheet of the Company as at the end of such
month and an unaudited consolidated statement of income and cash flows for the
Company for such month and for the year to date prepared in accordance with
generally accepted accounting principles consistently applied (except that such
financial statements need not contain footnotes) and fairly reflecting the
financial affairs of the Company subject to year-end adjustments; (c) within
sixty (60) days prior to the start of each fiscal year, a proposed budget for
such fiscal year which shall include, where appropriate, capital and operating
expense budgets, cash flow projections and income and loss projections for the
Company; and (d) such other financial information as the Investors may
reasonably request, including without limitation, certificates of the principal
financial officer of the Company concerning compliance with the covenants of
the Company under Section 3 hereof. At any time when the Company has
Subsidiaries, all financial statements furnished hereunder will be
consolidated.

Section 4.2. Conduct of Business. The Company shall continue to engage
principally in the business of providing video-based educational products and
shall engage in only such additional business activities as (i) shall be
reasonably related or incidental thereto and which shall facilitate the
conduct, development or expansion of such business, or (ii) which shall be
approved or ratified by the Board of Directors. The Company will keep in full
force and effect its corporate existence and will comply in all material
respects with all applicable laws and regulations in the conduct of its
business.

Section 4.3. Adverse Changes. The Company shall promptly advise the
Investors of (i) any event which represents a material adverse change in the
business, assets or condition, financial or otherwise, or operations of the
Company and (ii) any suit or proceeding commenced or threatened against the
Company which, if adversely determined, would result in such a material adverse
change.
<PAGE> 17
-13-

Section 4.4. Insurance. The Company shall keep its insurable
properties insured by financially sound and reputable insurers against the
perils of liability, casualty, fire and extended coverage in amounts of
coverage at least equal to those customarily maintained by companies in the
same or a similar business of similar size. The Company shall also maintain
with such insurers insurance against other hazards and risks and liability to
persons and property, to the extent and in the manner customary for
corporations engaged in the same or a similar business of similar size.

Section 4.5. Life Insurance. The Company shall use its best efforts to
obtain, within thirty (30) days following the Closing Date, and thereafter
shall maintain and continue to pay the premiums on a key-man term life
insurance policy on the life of Michael Webster, in the amount of not less than
$1,000,000, naming the Company as beneficiary. The life insurance proceeds
received by the Company, if any, shall be used for valid business purposes of
the Company as approved by the Board of Directors of the Company.

Section 4.6. Maintenance of Properties. The Company will maintain all
properties used or useful in the conduct of its business in good repair,
working order and condition as necessary to permit such business to be properly
and advantageously conducted.

Section 4.7. Affiliated Transactions. All transactions between the
Company and any officer, Key Employee, director or stockholder of the Company
or Persons controlled by or affiliated with such officer, Key Employee,
director or stockholder, other than transactions in their capacity as such,
shall be conducted on an arms-length basis, shall be on terms and conditions no
less favorable to the Company than could be obtained from nonrelated Persons
and shall be unanimously approved in advance by the disinterested Directors of
the Company after full disclosure of the terms thereof.

Section 4.8. Management Compensation; Compensation Committee; Dividends.

(a) Michael Webster's salary as President of the Company shall
initially be $150,000 per annum and Robert Webster's salary as Vice President,
Secretary and Treasurer of the Company shall initially be $25,000 per annum.
Compensation paid by the Company to others of its management shall be
reasonably comparable to compensation paid to management in companies of
similar size, of similar maturity, of similar profitability and in similar
industries and shall be approved by the Board of Directors of the Company.
<PAGE> 18
-14-

(b) If so requested by the Series A Director, the Board of
Directors shall establish a three-member Compensation Committee to determine
management salaries consisting of one member of management, the Series A
Director and a non-employee director other than the Series A Director (the
"Independent Director"), if any. It is contemplated that an Independent
Director will be elected to the Board of Directors within one year of the date
hereof. In the event that, at the time the Compensation Committee is to be
formed, there is no Independent Director and there is a dispute between the
other two members of the Compensation Committee regarding management
compensation, then the Company will elect an Independent Director who is
reasonably acceptable to the Investors and will appoint such person to the
Compensation Committee prior to making any management salary adjustments or
awarding any management bonuses.

(c) The Board of Directors or the Compensation Committee, if so
created, shall review and approve salary and cash bonuses payable to management
(the "Approved Compensation"). If the Board of Directors shall determine that
funds in excess of Approved Compensation are available for distribution in the
form of bonuses and/or dividends in any fiscal year, then the holders of Series
A Convertible Preferred Stock shall be entitled to receive as dividends a
portion of such additional funds calculated by multiplying the total amount of
such additional funds available for distribution by a fraction, the numerator
of which shall be the number of shares of Common Stock owned by the Investors,
and the denominator of which shall be the total number of shares of Common
Stock outstanding (assuming in each case the conversion of all outstanding
shares of Series A Convertible Preferred Stock).

Section 4.9. Lock-Up for Certain Stockholders. The Company will cause
any compensation benefit plan or contract, whether now existing or hereafter
created, under which offers and sales of securities of the Company are made to
officers, directors and Key Employees of the Company, to provide that in
connection with an underwritten public offering, upon the request of the
Company or the principal underwriter managing such public offering, resales of
such securities may not be sold without the prior written consent of the
Company or such underwriters, as the case may be, for at least one hundred and
eighty (180) days or such other period of time (which may be greater or less
than one hundred and eighty (180) days) as the Investors holding at least a
majority in interest of the Common Shares issued or issuable upon conversion of
the Purchased Shares may specify, but in no event greater than the period of
time imposed on the Investors pursuant to Section 3 of the Stockholders
Agreement.

Section 4.10. Inspection. The Company shall permit authorized
representatives of the Investors to visit and inspect any of the properties of
the Company, including its books of account (and to make copies thereof and
take extracts therefrom),
<PAGE> 19
-15-

and to discuss its affairs, finances and accounts with its officers,
administrative employees and independent accountants, all at such reasonable
times and as often as may be reasonably requested; provided that all such
information provided to the Investors by the Company will be maintained as
confidential by the Investors, will not be disclosed to third parties and will
not be used by the Investors in a manner that is adverse to the Company.

Section 4.11. Board of Directors Meetings. The Company will reimburse
full coach airfare and all other direct out-of-pocket expenses reasonably
incurred by the Series A Director in attending meetings of the Board of
Directors or any committee thereof or in conducting any other business of the
Company which has been requested of such director by the Board of Directors or
any committee thereof or by senior management. The Series A Director shall be
entitled to receive those fees and benefits, including the issuance of stock
options, as are afforded the other non-employee members of the Board of
Directors. The Company shall ensure that meetings of its full Board of
Directors are held at least four times each year and at intervals of not more
than four months. The Company's Charter and By-laws, each as amended from time
to time, shall provide for indemnification and exculpation of directors from
personal liability, to the fullest extent permitted under applicable state law.
The Company shall, from time to time, consider the appropriateness of obtaining
directors' and officers' liability insurance, and, if appropriate and approved
by the Board of Directors of the Company, the Company shall obtain such
insurance providing reasonable coverage and the payment of reasonable premiums.

Section 4.12. Right to Participate in Sale of Additional Securities.
The Company hereby covenants and agrees that it shall not, until such date as
the Company completes a Qualified Public Offering, issue or sell any (i) shares
of capital stock of the Company, (ii) securities convertible into or carrying
any rights to purchase capital stock of the Company, or (iii) options, warrants
or other rights to subscribe for, purchase or otherwise acquire any capital
stock of the Company, other than in connection with such Qualified Public
Offering, unless (a) the Company has received a bona fide, arms' length offer
to purchase such securities from a third party and (b) the Company first
submits a written offer to the Investors to permit them to purchase their
"proportionate share" of such securities on terms and conditions, including
price, not less favorable to the Investors than those offered by such other
prospective purchaser. Each Investor shall have the right to elect to purchase
a number of such securities based on the ratio which the Common Stock of the
Company owned by the Investor or obtainable by said Investor upon conversion of
the Purchased Shares owned by him bears to all the issued and outstanding
shares of Common Stock of the Company, including shares of Common Stock
issuable upon conversion of any outstanding Purchased Shares or other
<PAGE> 20
-16-

convertible securities. The Company's offer to the Investors shall remain open
and irrevocable for a period of thirty (30) days. Promptly upon the expiration
of such thirty-day period, the Company shall, in writing, inform each Investor
which elects to purchase all the securities available to it of any other
Investor's failure to do likewise. During the ten (10) day period commencing
after the receipt of such information, each fully-exercising Investor shall
have the right to elect to purchase up to its proportionate share of the
securities not subscribed for by the other Investors based on the ratio which
the Common Stock of the Company owned by the fully-exercising Investor or
obtainable by said Investor upon conversion of the Purchased Shares owned by
him bears to the Common Stock of the Company owned by, or obtainable upon
conversion of the Purchased Shares owned by, all fully-exercising Investors who
desire to purchase certain of the unsubscribed for securities.

Any Investor may transfer its right to be offered any such opportunity
to any transferee who (i) is an Investor, (ii) is an affiliate, as that term is
defined in the Investment Company Act of 1940, of an Investor (including a
partner of an Investor), or (iii) has theretofore acquired from an Investor at
least 100,000 Common Shares, issued or issuable upon conversion of the
Purchased Shares (or such lesser number of Common Shares which constitutes the
total number of Common Shares purchased by the transferee under this Agreement)
(as adjusted for stock splits, stock dividends, reclassifications,
recapitalizations or other similar events). Any securities offered to the
Investors pursuant to this Section 4.12 which such Investors have not elected
to purchase within the time fixed herein may, within ninety (90) days after the
date for making such election, be sold by the Company at not less than the same
price and upon terms not materially less favorable to the Company than were
offered to the Investors but may not otherwise be sold without renewed
compliance with this Section 4.12. Notwithstanding the above, the Company may
from the date hereof, without having offered such securities to the Investors,
issue up to an aggregate of 187,500 shares of Common Stock (as adjusted for
stock splits, stock dividends, reclassifications, recapitalizations or other
similar events) for issuance to or for the benefit of employees or directors
pursuant to stock option, stock purchase or similar plans approved by the Board
of Directors.

Section 4.13. Conduct of the Company. From the date hereof until the
Closing Date, the Company shall conduct its business in the ordinary course
consistent with past practice and to use its best efforts to preserve intact
their business organizations and relationships with third parties and to keep
available the services of their present officers and employees.

Section 4.14. Loans and Advances. The Company will not make any loan
or advance in excess of $50,000 to, or own any stock or other securities of,
any Person without the approval of the Board
<PAGE> 21
-17-

of Directors, except that the Company may own all of the outstanding capital
stock of a Subsidiary. The Company will not make any loans or advances to
Michael Webster or Robert Webster.

Section 4.15. Indebtedness. The Company will not create, incur, assume
or suffer to exist any Indebtedness, or repay any Indebtedness existing on the
Closing Date, to its stockholders, except as provided in Section 1.2(b) of this
Agreement.

5. REPRESENTATIONS AND WARRANTIES OF INVESTORS

In order to induce the Company to enter into this Agreement, each
Investor, severally and not jointly, represents and warrants that:

A. This Agreement, the Stockholders Agreement and the
Registration Rights Agreement and all other documents and instruments
executed by the Investor pursuant hereto, have each been duly executed
and delivered by the Investor and each is a legal, valid and binding
obligation of the Investor enforceable against the Investor in
accordance with its terms. All consents, approvals or authorizations
of any Person, and all qualifications, designations, declarations or
filings with any governmental authority, on the part of the Investor
required as a condition precedent to the valid execution and delivery
of this Agreement, the Stockholders Agreement and the Registration
Rights Agreement shall have been obtained or completed prior to, and
be effective as of, the Closing.

B. The Investor is acquiring the Purchased Shares for its
own account, for investment, and not with a view to any "distribution"
thereof within the meaning of the Securities Act.

C. The Investor understands that because the Securities
have not been registered under the Securities Act, it cannot dispose
of any or all of the Securities unless such Securities are
subsequently registered under the Securities Act or exemptions from
such registration are available. The Investor acknowledges and
understands that, except as provided in the Registration Rights
Agreement, it has no independent right to require the Company to
register the Securities under the Securities Act or any state
securities law. The Investor is aware that the Company may not
undertake a public offering of its stock. The Investor further
understands that the Company will, as a condition to the transfer of
any of the Securities, require that the request for transfer be
accompanied by opinion of counsel, in form and substance satisfactory
to the Company, to the effect that the proposed transfer does not
result in violation of the Securities Act, unless such transfer is
covered by an effective registration statement under the Securities
Act.
<PAGE> 22
-18-

The Investor understands that each certificate representing the Securities will
bear the following legends or ones substantially similar thereto:

These securities have not been registered under the Securities Act of
1933 or the Oklahoma Securities Act. These Securities have been
acquired for investment and not with a view to distribution or resale,
and may not be sold, mortgaged, pledged, hypothecated or otherwise
transferred without an effective registration statement for such
shares under the Securities Act of 1933, or an opinion of counsel for
the corporation that registration is not required under such act.

The Securities represented by this certificate are subject to the
terms and conditions of a Stockholders Agreement dated August 16,
1994. A copy of such agreement is on file at the principal executive
offices of VIAGRAFIX CORPORATION and VIAGRAFIX CORPORATION will
furnish copies of such agreement to the holder of this certificate
upon request and without charge.

D. The Investor is knowledgeable and experienced in the making of
venture capital investments, is able to bear the economic risk of loss of its
investment in the Company, has been granted the opportunity to make a thorough
investigation of the affairs of the Company, and has availed itself of such
opportunity to the extent it has deemed necessary, either directly or through
its authorized representative.

E. The Investor has been advised that the Purchased Shares
delivered hereunder and the Common Shares issuable upon conversion of the
Purchased Shares have not been and are not being registered under the
Securities Act and that the Company in issuing the Purchased Shares and the
Common Shares is relying upon, and will rely upon, among other things, the
representations and warranties of the Investor contained in this Section 5 in
concluding that each such issuance is a "private offering" and does not require
compliance with the registration provisions of the Securities Act.

F. The Investor is an "accredited investor" as that term is
defined in Rule 501 of Regulation D under the Securities Act.
<PAGE> 23
-19-

6. MISCELLANEOUS

Section 6.1. Brokers' Fee. Each party hereto will indemnify and hold
harmless the others against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements or understandings made or
claimed to have been made by such party with any third party.

Section 6.2. Remedies.

(a) The Company and each Principal Shareholder agrees to indemnify
each holder of any Purchased Shares against all claims, losses, damages and
liabilities, including legal and other expenses reasonably incurred in
investigating or defending against the same, arising out of any breach of any
representation and warranty made by the Company and each Principal Shareholder
in Section 2 hereof provided, however, that the liability of Michael Webster
and Robert Webster hereunder shall be limited, in the aggregate, to the total
purchase price of all Purchased Shares purchased pursuant to this Agreement.

(b) The Investors agree to indemnify the Company against all
claims, losses, damages and liabilities, including legal and other expenses
reasonably incurred in investigating or defending against the same, arising out
of any breach of any representation and warranty made in Section 5 hereof by
the Investors.

(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 6.2, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 6.2(a) or (b) hereof shall be available
to any party who shall fail to give notice as provided in this Section 6.2(c),
but the failure to give such notice shall not relieve the indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of the provisions of Section
6.2(a) or (b) hereof. In case any such proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party and shall pay as incurred the
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel at its own expense. Notwithstanding the foregoing, the indemnifying
party shall pay as incurred the fees and expenses of the counsel retained by
the indemnified party in the event (i) the indemnifying party and the
<PAGE> 24
-20-

indemnified party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. The indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.

(d) In the event indemnification arises hereunder as a result of a
third party claim against the indemnifying party, no indemnification shall be
made effected pursuant to this Section 6.2 until such time as the indemnifying
party shall have been finally adjudicated or otherwise bound to be liable
hereunder to such third party.

(e) Arbitration. Except as otherwise provided hereunder, any
controversy or claim among the parties hereto arising out of or relating to
this Agreement or the existence, validity, breach, or termination thereof, will
be finally settled by compulsory arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"), as modified
or supplemented under this Section 6.2(e). To initiate arbitration, either
party will file the appropriate notice at the Regional Office of the AAA in
Dallas, Texas. The arbitral award will be the exclusive remedy of the parties
for all claims, counterclaims, issues, or accountings presented or pled to the
arbitrators. Judgment upon the arbitral award may be entered in any court that
has jurisdiction thereof. Any additional costs, fees, or expenses incurred in
enforcing the arbitral award will be charged against the party that resists its
enforcement. This Section 6.2(e) shall be binding upon the parties and their
respective heirs or successors and assigns and any trustee, receiver, or
executor of each party hereto. Except to the extent required by law, no party,
arbitrator, representative, counsel, or witness shall disclose or confirm to
any person not present at the arbitration hearings any information about the
hearings, including the names of the parties and arbitrators, the nature and
amount of the claims, the financial condition of any party, the expected date
of hearing, or the award made.

Section 6.3. Amendments and Waivers. This Agreement may not be amended
or modified, and no provisions hereof may be waived, without the written
consent of the Company and Investors holding at least a majority of the Common
Shares (calculated as though all outstanding Purchased Shares had been
converted into Common Shares immediately prior to such consent).
<PAGE> 25
-21-

Section 6.4. Survival of Covenants; Assignability of Rights.

(a) All covenants, agreements, representations and warranties of
the Company made herein and in the certificates, lists, exhibits, schedules or
other written information delivered or furnished in connection therewith and
herewith, except as provided otherwise in this Agreement, shall survive the
delivery of the Securities and shall bind the Company's successors and assigns,
whether so expressed or not, and, except as provided otherwise in this
Agreement, all such covenants, agreements, representations and warranties shall
inure to the benefit of the Investor's successors and assigns and to permitted
transferees of the Securities, whether so expressed or not.

(b) All covenants, agreements, representations and warranties of
the Investors made herein shall, except as provided otherwise in this
Agreement, shall survive the delivery of the Securities and shall bind each of
the Investor's successors and assigns, whether so expressed or not and, except
as provided otherwise in this Agreement, all such covenants, agreements,
representations and warranties shall inure to the benefit of the Company's
successors and assigns whether so expressed or not.

Section 6.5. Governing Law. This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of Oklahoma.

Section 6.6. Section Headings. The descriptive headings in this
Agreement have been inserted for convenience only and shall not be deemed to
limit or otherwise affect the construction of any provision hereof.

Section 6.7. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which when so executed
and delivered shall be taken to be an original; but such counterparts shall
together constitute but one and the same document.

Section 6.8. Notices.

As the terms "notice" or "notices" are used herein as between the
parties, such term shall mean a written document, explaining in reason for the
notice, and the same shall be mailed by United States Postal Service Via
Certified Mail, Return Receipt Requested, addressed as follows:

to the Company or the Principal Shareholders:

ViaGrafix Corporation
Attention: Mike Webster
Five South Vann Street
Pryor, OK 74361
Fax: 918-825-6744
<PAGE> 26
-22-

with a copy by mail and fax which shall not constitute notice, to:

Gary J. Dean, Attorney
P.O. Drawer 1047
Pryor, OK 74362
Fax: 918-825-7460

to the Investors:

GEO Capital III, L.P.
One Bridge Plaza
Fifth Floor
Fort Lee, NJ 07024
Attention: Lawrence Lepard

with a copy by mail and fax, which shall not constitute notice, to:

William B. Asher, Jr., Esquire
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02109
Fax: 617-248-7100

Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee
or not. The parties shall, as a matter of convenience and courtesy send each
party receiving notice a copy of said notice by facsimile or electronic means,
or by courier, Federal Express, or similar service, but such notifications
shall not be deemed lawful "notice" as required hereby. The parties may from
time to time amend the above addresses and names by written notice given the
other party.

Section 6.9. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
<PAGE> 27
-23-

Section 6.10. Definitions of Terms.
<TABLE>
<CAPTION>
Definition Section
- ---------- -------
<S> <C>
Company Preamble
Investors Preamble
Common Shares 1.1
Purchased Shares 1.1
Securities 1.1
Series A Preferred Stock 1.1
Closing 1.2
Closing Date 1.2
</TABLE>

Best Knowledge. The term "best knowledge", or similar terms when
applied to the Company, means the actual knowledge of its respective Key
Employees, officers or directors without independent investigation or, when
applied to each Principal Shareholder, means the actual knowledge of the
individual shareholder without independent investigation.

Certified. A financial statement shall be deemed to be "certified"
only if the person or firm certifying it shall unqualifiedly express the
opinion that it has been prepared in accordance with generally accepted
accounting principles and that the balance sheet included therein fairly
presents the financial position of the Company as at the date thereof and that
the statements of income and of changes in financial position included therein
fairly present the results of operations of the Company for the period
indicated. If the person certifying is a officer of the Company, the
certificate shall also state that the financial statements are true, correct
and complete. If the person certifying is a member of an accounting firm, the
certificate shall also state that the examination included such tests of
accounting records and such other auditing procedures as the accountant
considered necessary in the circumstances.

Immediate Family. The term "immediate family" shall include spouse,
parents, mother-in-law and father-in-law, brother and sister, brother-in-law
and sister-in-law, son-in-law and daughter-in-law, and children.

Indebtedness. The term "Indebtedness" shall mean with respect to any
Person (i) all indebtedness or other obligations of such Person for borrowed
money or for the deferred purchase price of property or services, other than
for trade accounts payable incurred in the ordinary course of the Company's
business, (ii) all Indebtedness described in clause (i) of any
<PAGE> 28
-24-

other Person in respect of which such Person is liable, contingently or
otherwise, to pay or advance money or property as guarantor, endorser or
otherwise (except as endorser for collection in the ordinary course of
business), and (iii) all lease obligations of such Person which are required,
in accordance with generally accepted accounting principles ("GAAP"), to be
capitalized on the books of the lessee.

Key Employees. The term "Key Employees" shall mean Michael Webster and
any other employee of the Company designated by the Board of Directors
subsequent to the Closing.

Person. The term "Person" shall mean any corporation, association,
partnership, joint venture, organization, business or individual.

Qualified Public Offering. The term "Qualified Public Offering" shall
mean a firm commitment underwritten public offering of shares of Common Stock
pursuant to a registration statement filed with the Commission under the
Securities Act, in which net proceeds, after deducting underwriters' discounts
and commissions and offering expenses, to the Company equal or exceed
$5,000,000.

Subsidiary. The term "Subsidiary" shall mean any Person of which a
Person at the applicable time owns or controls, directly or indirectly through
one or more Subsidiaries, a majority of the voting stock.

Section 6.11. Expenses.

The Company shall pay all costs and expenses that (i) it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement and (ii) the Investors shall incur with respect to the due diligence
investigation of the Company and the negotiation, execution, delivery,
performance, amendment and/or enforcement of this Agreement and the other
documents delivered pursuant hereto, in an amount not to exceed $30,000.

Section 6.12. Entire Agreement.

This Agreement and the other contract documents delivered pursuant
hereto constitute the full and entire understanding and agreement between the
parties with respect to the subjects hereof and thereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
IN WITNESS WHEREOF, the undersigned have executed this Series A
Convertible Preferred Stock Purchase Agreement as of the day and year first
above written.

VIAGRAFIX CORPORATION

By: MICHAEL A. WEBSTER
---------------------------
Name: Michael A. Webster
Title: President

INVESTORS

GEOCAPITAL III, L.P.

By: Geocapital Management, L.P.

By: /s/ ILLEGIBLE
-----------------------
General Partner

PRINCIPAL SHAREHOLDERS:

/s/ MICHAEL A. WEBSTER
-------------------------------
Michael A. Webster

/s/ ROBERT E. WEBSTER
-------------------------------
Robert E. Webster

<PAGE> 1
EXHIBIT 10.2

REGISTRATION RIGHTS AGREEMENT

Agreement made as of this 16th day of August, 1994 by and among
ViaGrafix Corporation, an Oklahoma corporation (the "Company"), the persons or
entities listed on Schedule A attached hereto (individually, an "Investor", and
collectively, the "Investors") and the Founders (as hereinafter defined).

1. CERTAIN DEFINITIONS

Section 1. As used in this Agreement, the following terms shall have
the following meanings:

1.1. Commission means the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act and the Exchange Act.

1.2. Common Stock means (a) the Company's Common Stock, as
authorized on the date of this Agreement, (b) any other capital stock of any
class or classes (however designated) of the Company, authorized on or after
the date hereof, the holders of which shall have the right, without limitation
as to amount, either to all or to a share of the balance of current dividends
and liquidating dividends after the payment of dividends and distributions on
any shares entitled to preference, and the holders of which shall ordinarily,
in the absence of contingencies or in the absence of any provision to the
contrary in the Company's Certificate of Incorporation, as amended, be entitled
to vote for the election of a majority of directors of the Company (even though
the right so to vote has been suspended by the happening of such a contingency
or provision), and (c) any other Securities into which or for which any of the
securities described in (a) or (b) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or otherwise.

1.3. Exchange Act means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.

1.4. Person means an individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.

1.5. Purchase Agreement means the Series A Convertible
Preferred Stock Purchase Agreement dated the date hereof among the Company, the
Investors and certain principal shareholders of the Company.
<PAGE> 2

-2-

1.6. Registrable Securities means any shares of Common
Stock owned by an Investor or its permitted successors and assigns, including
shares of Common Stock issued or issuable upon conversion of any Series A
Preferred Shares; except for any shares of such Common Stock (i) which have at
any time been sold by such parties other than to a permitted assignee, as
defined in Section 5 hereof, of an Investor, and (ii) which have at any time
been sold in a registered public offering or pursuant to Rule 144 promulgated
under the Securities Act.

1.7. Securities Act means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

1.8. Series A Preferred Shares means the shares of Series
A Convertible Preferred Stock purchased by the Investors pursuant to the
Purchase Agreement, and with respect to each Investor in the amounts set forth
on Schedule I to the Purchase Agreement.

1.9. Stockholders Agreement means that certain
Stockholders Agreement dated as of the date hereof among the Company, the
Investors and certain stockholders of the Company.

1.10. Founders means Michael Webster and Robert Webster.

1.11. Founder Shares shall mean the aggregate of 5,220,000
shares of Common Stock that the Founders own, or have the right to acquire on
the date hereof, but excluding any such Common Stock that has been (a)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (b) publicly sold pursuant to Rule 144 under the
Securities Act.

2. REGISTRATION RIGHTS

Section 2.1. Piggyback Registrations. If at any time or times
after the date hereof, the Company shall determine to register any of its
Common Stock or securities convertible into or exchangeable for Common Stock
under the Securities Act, whether in connection with a public offering of
securities by the Company (a "primary offering"), a public offering thereof by
stockholders (a "secondary offering"), or both (but not in connection with a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 or any other similar rule of the Commission under
the Securities Act is applicable), the Company will promptly give written
notice thereof to the holders of Registrable Securities and Founder Shares then
outstanding (the "Holders"), and will use its best efforts to effect the
registration under the Securities Act of
<PAGE> 3
-3-

all Registrable Securities and Founder Shares which the Holders may request in
a writing delivered to the Company within fifteen (15) days after the notice
given by the Company; provided, however, that in the event that any
registration pursuant to this Section 2.1 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of shares of
Registrable Securities and Founder Shares to be included in such an
underwriting may be reduced (pro rata among the requesting Holders based upon
the number of shares of Registrable Securities and Founder Shares owned by such
Holders) if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein, provided, however, that in no
event may less than one-half of the total number of shares of Common Stock to
be included in such underwriting be made available for Registrable Securities
and Founder Shares, and provided, further, that, prior to any such reduction,
the Company shall first exclude from such registration, in the following order,
all shares of Common Stock sought to be included therein by (i) any holder
thereof not having any such contractual, incidental registration rights, and
(ii) any holder thereof having contractual, incidental registration rights
subordinate and junior to the rights of the Holders of Registrable Securities
or Founder Shares Securities and Founder Shares.

Section 2.2. Form S-3. If the Company becomes eligible to use Form
S-3, the Company shall use its reasonable efforts to continue to qualify at all
times for registration on Form S-3. If and when the Company becomes entitled to
use Form S-3, the holders of an aggregate of not less than twenty (20%) of
Registrable Securities shall have the right to request and have effected not
more than one registration per year of shares of Registrable Securities held by
them on Form S-3 for a public offering of shares of Registrable Securities
having an aggregate proposed offering price of not less than $500,000. Such
requests shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended method of disposition
of such shares by such holder or holders. The Company shall not be required to
cause a registration statement requested pursuant to this Section 2.2 to become
effective prior to 90 days following the effective date of a registration
statement initiated by the Company, if the request for registration has been
received by the Company subsequent to the giving of written notice by the
Company, made in good faith, to the holders of Registrable Securities to the
effect that the Company is commencing to prepare a Company-initiated
registration statement (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 or any other
similar rule of the Commission under the Securities Act is applicable);
provided, however, that the Company shall use its best efforts to achieve such
effectiveness promptly following such 90-day period if the request pursuant to
this Section 2.2 has been made prior to the expiration of such 90-day period.
The
<PAGE> 4
-4-

Company shall give notice to all holders of Registrable Securities of the
receipt of a request for registration pursuant to this Section 2.2 and shall
provide a reasonable opportunity for such holders to participate in the
registration. Subject to the foregoing, the Company will use its best efforts
to effect promptly the registration of all shares of Common Stock on Form S-3
to the extent requested by the holder or holders thereof for purposes of
disposition. Notwithstanding the foregoing, the Company shall not be required
to effect a registration under this Section 2.2 or Section 2.1 if, in the
opinion of counsel for the Company, which counsel and opinion shall be
reasonably acceptable to the Holders of Registrable Securities, such Holders of
Registrable Securities may then sell all Registrable Securities within a 90 day
period without registration under the Act.

Section 2.3. Registration Expenses. (a) In the event of a
registration described in Sections 2.1 and 2.2, all expenses of registration
and offering of the Company and the Holders participating in the offering
including, without limitation, printing expenses, fees and disbursements of
counsel, including one counsel for the selling Holders of Registrable
Securities or Founder Shares, and independent public accountants, fees and
expenses (including counsel fees incurred in connection with complying with
state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc. and fees of transfer agents and registrars), shall be
borne by the Company in an amount not to exceed $50,000, except that the
Holders shall bear underwriting commissions and discounts attributable to their
Registrable Securities or Founder Shares, as the case may be, being registered.

Section 2.4. Further Obligations of the Company. Whenever under
the preceding sections of this Agreement the Company is required hereunder to
register Registrable Securities or Founder Shares, it agrees that it shall also
do the following:

(a) Use its best efforts to diligently prepare for filing
with the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in
connection therewith as may be necessary to keep said registration
statement effective and to comply with the provisions of the
Securities Act with respect to the sale of securities covered by said
registration statement for the period necessary to complete the
proposed public offering;

(b) Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such
holder may reasonably request to facilitate the public offering of his
Registrable Securities or Founder Shares;
<PAGE> 5
-5-

(c) Enter into any underwriting agreement with provisions
reasonably required by the proposed underwriter for the selling
Holders, if any; and

(d) Use its best efforts to register or qualify the
Registrable Securities and Founder Shares covered by said registration
statement under the securities or "blue-sky" laws of such
jurisdictions as any selling holder of Registrable Securities or
Founder Shares may reasonably request, provided that the Company shall
not be required to register in any states which shall require it to
qualify to do business or subject itself to general service of process
as a condition of such registration.

3. INDEMNIFICATION. Incident to any registration referred to in this
Agreement, and subject to applicable law, the Company will indemnify each
underwriter, each Holder of Registrable Securities and Founder Shares so
registered, and each person controlling any of them against all claims, losses,
damages and liabilities, including legal and other expenses reasonably incurred
in investigating or defending against the same, arising out of any untrue
statement of a material fact contained in any prospectus or other document
(including any related registration statement) or any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any violation by the
Company of the Securities Act, any state securities or "blue-sky" laws or any
rule or regulation thereunder in connection with such registration; provided,
however, that the Company will not be liable in any case to the extent that any
such claim, loss, damage or liability may have been caused by an untrue
statement or omission based upon information furnished in writing to the
Company by such Holder expressly for use therein. In the event of any
registration of any of the Registrable Securities or Founder Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable
Securities or Founder Shares, as the case may be, jointly and severally, will
indemnify and hold harmless the Company, each of its directors and officers and
each underwriter (if any) and each person, if any, who controls the Company or
any such underwriter within the meaning of the Securities Act or the Exchange
Act against any claim, losses, damages and liabilities, including legal and
other expenses reasonably incurred in investigating or defending it against the
same, arising out of any untrue statement of a material fact contained in any
prospectus or other document (including any related registration statement) or
any omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such selling Holder, specifically
for use in connection with the preparation of such registration statement,
prospectus, amendment of supplement; provided, however, that the obligations
<PAGE> 6
-6-

of such selling Holders hereunder shall be limited to an amount equal to the
proceeds to each Holder of Registrable Securities or Founder Shares sold as
contemplated herein.

4. RULE 144 REQUIREMENTS. If the Company becomes subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act, the
Company will use its best efforts to file with the Commission such information
as the Commission may require under either of said Sections; and in such event,
the Company shall use its best efforts to take all action as may be required as
a condition to the availability of Rule 144 under the Securities Act (or any
successor exemptive rule hereinafter in effect). The Company shall furnish to
any Holder of Registrable Securities or Founder Shares upon request, a written
statement executed by the Company as to the steps it has taken to comply with
the current public information requirements of Rule 144.

5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of the
Holders under this Agreement may be transferred to any transferee of any Series
A Preferred Shares or any Registrable Securities or Founder Shares who (i) is a
Holder of Registrable Securities or Founders Shares as of the date of this
Agreement, (ii) is an affiliate, as that term is defined in the Investment
Company Act of 1940, of a Holder of Registrable Securities as of the date of
this Agreement (including a partner of such Holder), (iii) is the owner of an
investment account which is managed or advised by an Investor or by Geocapital
Management, L.P., or by an affiliate of an Investor or Geocapital Management,
L.P., or (iv) acquires at least 100,000 shares of Common Stock, assuming
conversion of all Series A Preferred Shares (or such lesser number of shares of
Common Stock which constitutes the total number of shares of Common Stock
purchased by the transferring Holder of Registrable Securities under this
Agreement; (as adjusted for stock splits, stock dividends, reclassifications,
recapitalizations or other similar events). Each such transferee shall be
deemed to be a "Holder" for purposes of this Agreement; provided, that, no
transfer of registration rights by a Holder pursuant to this Section 5 shall
create any additional rights in the transferee beyond those rights granted to
Holders in this Agreement.

6. GRANTING OF REGISTRATION RIGHTS. The Company shall not, without the
prior written consent of the holders of at least a majority in interest of the
Registrable Securities, grant any rights to any Persons to register any shares
of capital stock or other securities of the Company if such rights could
reasonably be expected to be superior to or be on parity with, the rights of
the holders of Registrable Securities granted pursuant to this Agreement.
<PAGE> 7
-7-

7. MISCELLANEOUS

Section 7.1. Damages. The Company recognizes and agrees that the
holders of Registrable Securities will not have an adequate remedy if the
Company fails to comply with this Agreement and that damages may not be readily
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by a Holder of Registrable
Securities requiring specific performance of any and all provisions hereof or
enjoining the Company from continuing to commit any such breach of this
Agreement.

Section 7.2. Approval of Underwriters. The engagement by the
Company of any managing underwriter in any registration of the Company's
securities shall require the prior written approval of the Investors holding a
majority of the Registrable Securities.

Section 7.3. No Waiver; Cumulative Remedies. No failure or delay
on the part of any party to this Agreement in exercising any right, power or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

Section 7.4. Amendments and Waivers. Except as hereinafter
provided, amendments to this Agreement shall require and shall be effective
upon receipt of the written consent of: (i) the Company, (ii) the holders of at
least a majority in interest of the Registrable Securities and (ii) in the case
of any amendment adversely affecting the rights of the Founders, the holders of
at least a majority in interest of the Founder Shares. Except as hereinafter
provided, compliance with any covenant or provision set forth herein may be
waived upon written consent by the party or parties whose rights are being
waived; provided that, (i) if the rights of holders of Registrable Securities
are being waived, upon the written consent of the holders of at least a
majority in interest of the Registrable Securities and (ii) if the rights of
holders of Founder Shares are being waived, upon the written consent of the
holders of at least a majority in interest of the Founder Shares.
Notwithstanding the foregoing, no waivers or amendments shall be effective to
reduce the percentage in interest of the Registrable Securities the consent of
the holders of which is required under this Section. Any waiver or amendments
may be given subject to satisfaction of conditions stated therein and any
waiver or amendments shall be effective only in the specific instance and for
the specific purpose for which given.
<PAGE> 8
-8-

Section 7.5. Notices.

to the Company:

ViaGrafix Corporation
Attention: Mike Webster
Five South Vann Street
Pryor, OK 74361
Fax: 918-825-6744

with a copy by mail and fax (which shall not constitute notice) to:

Gary J. Dean, Attorney
P.O. Drawer 1047
Pryor, OK 74362
Fax: 918-825-7460

to the Investors:

GEO Capital III, L.P.
One Bridge Plaza
Fifth Floor
Fort Lee, NJ 07024
Attention: Lawrence Lepard

with a copy by mail and fax (which shall not constitute notice) to:

William B. Asher, Jr., Esquire
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02109
Fax: 617-248-7100

Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee
or not. The parties shall, as a matter of convenience and courtesy, send each
party receiving notice a copy of said notice by facsimile or electronic means,
or by courier, Federal Express, or similar service, but such notifications
shall not be deemed lawful "notice" as required hereby. The parties may from
time to time amend the above addresses and names by written notice given the
other party.
<PAGE> 9
-9-

Section 7.6. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns, except that the Company shall not
have the right to delegate its obligations hereunder or to assign its rights
hereunder or any interest herein without the prior written consent of the
holders of at least a majority in interest of the Registrable Securities.

Section 7.7. Prior Agreements. This Agreement constitutes the
entire agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.

Section 7.8. Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained in this Agreement, shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, but this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had
never been contained herein, and such provisions or part reformed so that it
would be valid, legal and enforceable to the maximum extent possible.

Section 7.9. Governing Law. This Agreement shall be governed by
and construed in accordance with the substantive laws of the State of Oklahoma.

Section 7.10. Headings. Article, section and subsection headings in
this Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.

Section 7.11. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
<PAGE> 10
-10-

Section 7.12. Further Assurances. From and after the date of this
Agreement, upon the request of any party hereto, the other parties shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Registration
Rights Agreement as of the day and year first above written.

VIAGRAFIX CORPORATION

By: /s/ MICHAEL WEBSTER
----------------------------------
Name: Michael Webster
Title: President

GEOCAPITAL III, L.P.

By: GEOCAPITAL MANAGEMENT, L.P.

By: /s/ [ILLEGIBLE]
----------------------------------
General Partner

FOUNDERS:

/s/ MICHAEL WEBSTER
-------------------------------------
Michael Webster

/s/ ROBERT WEBSTER
-------------------------------------
Robert Webster
<PAGE> 11
-11-

SCHEDULE A

INVESTORS

Name and Address
- ----------------

GEOCAPITAL III, L.P.
One Bridge Plaza
Fifth Floor
Fort Lee, New Jersey 07024
Attn: Lawrence W. Lepard

<PAGE> 1
EXHIBIT 10.3

STOCKHOLDERS AGREEMENT

Agreement made this 16th day of August, 1994 by and among ViaGrafix
Corporation, an Oklahoma corporation (the "Company"), those stockholders of the
Company whose names are set forth on Schedule A attached hereto (the
"Stockholders"), and those persons and entities whose names are set forth on
Schedule I to the Series A Convertible Preferred Stock Purchase Agreement dated
as of the date hereof, by and among the Investors, the Company and certain
principal shareholders of the Company (the "Series A Preferred Stock Purchase
Agreement") attached hereto (the "Investors").

WHEREAS, each Stockholder owns the number of shares of Common Stock of
the Company (the "Common Stock") as set forth opposite his or her name on
Schedule A attached hereto;

WHEREAS, the Investors are acquiring on the date hereof, 1,710,000
shares of Series A Convertible Preferred Stock of the Company (the "Purchased
Shares") pursuant to the Series A Preferred Stock Purchase Agreement; and

WHEREAS, one of the conditions to the investment by the Investors is
the execution and delivery of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company, the Stockholders and
the Investors hereby agree as follows:

1. DEFINITIONS

"Founders' Shares" shall mean and include all shares of Common Stock
of the Company owned by the Stockholders, whether presently held or hereafter
acquired.

"Shares" shall mean all the Founders' Shares and all of the Purchased
Shares.

As used herein, the term "Qualified Public Offering" shall mean an
underwritten public offering of shares of Common Stock pursuant to a
registration statement filed with the Commission under the Securities Act, in
which net proceeds, after deducting underwriters, discounts and commissions and
offering expenses, to the Company equal or exceed $5,000,000 deducting
underwriters' discounts and commissions and offering discounts.
<PAGE> 2
- 2 -

2. CO-SALE AND RIGHT OF FIRST REFUSAL

Section 2.1. Right of First Refusal on Sales.

(a) Sales to Third Parties. If at any time a Stockholder or an
Investor desires to sell for cash all or any part of his or its Shares pursuant
to a bona fide offer from a third party (the "Proposed Transferee"), such
Stockholder or Investor (the "Selling Party") shall submit a written offer (the
"Offer") to sell such Shares (the "Offered Shares") to the other parties hereto
(the "Purchasing Parties") on terms and conditions, including price, not less
favorable to the Purchasing Parties than those on which the Stockholder
proposes to sell such Offered Shares to the Proposed Transferee. The Offer
shall disclose the identity of the Proposed Transferee, the offered Shares
proposed to be sold, the total number of Shares owned by the Selling Party, the
terms and conditions, including price, of the proposed sale, and any other
material facts relating to the proposed sale. The Offer shall further state
that the Purchasing Parties may acquire, in accordance with the provisions of
this Agreement, all (but not less than all) the Offered Shares for the price
and upon the other terms and conditions, including deferred payment (if
applicable), set forth therein.

(b) Purchasing Parties' Right of First Refusal. Each Purchasing
Party shall have the right to purchase that number of Offered Shares as shall
be equal to the number of Offered Shares multiplied by a fraction, the
numerator of which shall be the number of Shares then owned by such Purchasing
Party and the denominator of which shall be the aggregate number of Shares then
owned by all of the Purchasing Parties; provided, that no party shall have a
right of first refusal with respect to any Offered Shares unless the Purchasing
Parties as a group purchase all the Offered Shares. For purposes of Sections 2,
3, 9, and 10, all of the shares of Common Stock which a party has the right to
acquire from the Company upon the conversion, exercise or exchange of any of
the securities of the Company then owned by such party shall be deemed to be
Shares then owned by such party. (The amount of Offered Shares that each
Purchasing Party is entitled to purchase under this Section 2.1(b) shall be
referred to as its "Pro Rata Fraction").

(c) Right of Oversubscription. The Purchasing Parties shall have a
right of oversubscription such that if any Purchasing Party fails to accept the
Offer as to its Pro Rata Fraction, the other Purchasing Parties shall, among
them, have the right to purchase up to the balance of the Offered Shares not so
purchased. Such right of oversubscription may be exercised by a Purchasing
Party by accepting the Offer as to more than its Pro Rata Fraction. If, as a
result thereof, such oversubscriptions exceed the total number of Offered
Shares available in respect of such oversubscription privilege, the
oversubscribing Purchasing Parties shall be cut back with respect to their
oversubscriptions
<PAGE> 3
- 3 -

on a pro rata basis in accordance with their respective Pro Rata Fractions or
as they may otherwise agree among themselves.

(d) Closing on Offered Shares. If a Purchasing Party desires to
purchase all or any part of the Offered Shares, said Purchasing Party shall
communicate in writing its election to purchase to the Selling Party, which
communication shall state the number of Offered Shares said Purchasing Party
desires to purchase and shall be given to the Selling Party in accordance with
Section 5 below within thirty days of the date the Offer was made. Such
communication shall, when taken in conjunction with the Offer, be deemed to
constitute a valid, legally binding and enforceable agreement for the sale and
purchase of such Offered Shares (subject to the aforesaid limitations as to a
Purchasing Party's right to purchase more than its Pro Rata Fraction and the
requirement that all the Offered Shares be purchased). Sales of the Offered
Shares to be sold to a Purchasing Party pursuant to this Section 2.1 shall be
made at the offices of the Company on the 45th day following the date the Offer
was made (or if such 45th day is not a business day, then on the next
succeeding business day). Such sales shall be effected by the Selling Party's
delivery to the Purchasing Party of a certificate or certificates evidencing
the Offered Shares to be purchased by it, duly endorsed for transfer to such
Purchasing Party, against payment to the Selling Party of the purchase price
therefor by such Purchasing Party.

(e) Sales to Proposed Transferee. If the Purchasing Parties do not
purchase all of the Offered Shares, the Offered Shares not so purchased may be
sold by the Selling Party at any time within 90 days after the date the Offer
was made, subject to the provisions of Section 2.2 and 2.3. Any such sale shall
be to the Proposed Transferee, at not less than the price and upon other terms
and conditions, if any, not more favorable to the Proposed Transferee than
those specified in the Offer. Any Offered Shares not sold within such 90-day
period shall continue to be subject to the requirements of a prior offer
pursuant to this Section 2.1. If Offered Shares are sold pursuant to this
Section 2.1 to any purchaser who is not a party to this Agreement, the Offered
Shares so sold shall no longer be subject to this Agreement.

Section 2.2. Right of Participation in Sales by Stockholder.

(a) Co-Sale Right. If at any time a Stockholder desires to sell
all or any part of the Shares owned by him to any Proposed Transferee in
accordance with Section 2.1, each of the Investors shall have the right to sell
to the Proposed Transferee, as a condition to such sale by the Stockholder, at
the same price per share and on the same terms and conditions as involved in
such sale by the Stockholder, a number of shares of Common Stock issued upon
conversion of such Investor's Purchased Shares ("Conversion Shares") equal to
the total number of
<PAGE> 4
- 4 -

Conversion Shares owned by such Investor (assuming the conversion of all
Purchased Shares owned by such Investor) multiplied by a fraction, the
numerator of which is the aggregate number of Offered Shares and the
denominator of which is the sum of all Shares owned by such Stockholder.

(b) Notice of Intent to Participate. Each Investor wishing to so
participate in any sale under this Section 2.2 shall notify the Stockholder in
writing of such intention as soon as practicable after such Investor's receipt
of the Offer made pursuant to Section 2.1, and in any event within the time
period specified in Section 2.1. Such notification shall be delivered in person
or mailed to such Stockholder at the address set forth in accordance with
Section 5 below.

(c) Sale to Transferee. The Stockholder and each participating
Investor shall sell to the Proposed Transferee all, or at the option of the
Proposed Transferee, any part of the Founders, Shares and/or Conversion Shares
proposed to be sold at not less than the price and upon other terms and
conditions, if any, not more favorable to the Proposed Transferee than those in
the Offer provided by the Stockholder under Section 2.1 above; provided,
however, that any purchase of less than all of such Founders' Shares and/or
Conversion Shares by the Proposed Transferee shall be made from the Stockholder
and each participating Investor pro rata based upon the relative amount of the
Founders' Shares and/or Conversion Shares that the Stockholder and each
participating Investor is otherwise entitled to sell pursuant to Section
2.2(a).

(d) Continuation of Restrictions. Any Shares sold by the
Stockholder to any third party pursuant to this Section 2.2 shall still be
subject to the restrictions or benefits imposed by this Agreement, and such
third party shall be required to execute a counterpart of this Agreement.

Section 2.3. Prohibited and Permitted Transfers.

(a) A Stockholder shall not sell, assign, transfer, grant an
option to or for, pledge, hypothecate, mortgage, encumber or dispose of all or
any of his Shares except as expressly provided in this Agreement.

(b) Notwithstanding the foregoing, the terms and conditions of
Sections 2.1 and 2.2 hereof shall not apply to any Permitted Transfer by a
Stockholder. For purposes of this Agreement, "Permitted Transfer" means any
transfer by a Stockholder (a) of such Stockholder's Shares to or for the
benefit of any parent, sibling, spouse, child or grandchild of the Stockholder,
or to a trust for the benefit of any of the foregoing, or (b) by will or the
laws of descent and distribution to a Permitted Transferee (any person referred
to in this paragraph being defined as a "Permitted Transferee"), or (c) of
<PAGE> 5
- 5 -

up to 1% of the shares of common stock of the Company then outstanding on a
fully-diluted basis in any twelve month period; provided, that it shall be a
condition of each such transfer that the Permitted Transferee agree to be bound
by the terms and conditions of this Agreement as a Stockholder and executes a
counterpart of this Agreement.

As used herein, the term "Stockholder" is deemed to include any transferees
of the Stockholder, except as expressly provided otherwise.

Section 2.4. Put Right. In the event of any sale, transfer, assignment
or disposition of any capital stock by a party hereto (in the case of Section
2.1) or Stockholder (in the case of Section 2.2) in violation of any provision
of each of Section 2 or Section 3 hereof, each other party (in the case of
Section 2.1) or Investor (in the case of Section 2.2) shall each have the right
to elect to cause such violating party to purchase, and such violating party
shall be obligated to purchase, from such non-violating party, and at the same
price per share and on the same terms and conditions as involved in such sale
by such violating party, such number of shares of capital stock (calculated on
a fully-diluted basis) equal to the number of shares sold by such violating
party multiplied by a fraction, the numerator of which is the aggregate number
of Shares owned by such non-violating party and the denominator of which is the
sum of all Shares owned by all non-violating parties desiring to sell shares to
such violating party under this Section.

Section 2.5. Sale of Purchased Shares. Immediately prior to the sale of
any Purchased Shares by the Investors to a third party, the Purchased Shares
subject to such sale shall be converted into shares of Common Stock. However,
in consideration for such conversion in the event that Geocapital III, L.P.
sells all of its Shares to one or more buyers, then (a) the Company shall enter
into an agreement with such buyer(s) providing that the benefits of Section 4.8
of the Series A Preferred Stock Purchase Agreement will run to such buyer(s);
and (b) Michael Webster and Robert Webster shall enter into a voting agreement
providing that they each will vote to elect as a director of the Corporation a
person designated by such buyer or a majority of the holders of the Shares sold
in such sale.

3. LOCK-UP AGREEMENT

Each of the Investors and Stockholders hereby agree that in connection with
a Qualified Public Offering, upon the request of the Company or the principal
underwriter managing the Qualified Public Offering, not to sell, make any short
sale of, loan, grant an option for the purchase of, or otherwise dispose of any
common stock now owned or hereafter acquired by him without the prior written
consent of the Company or such underwriter, as the case
<PAGE> 6
- 6 -

may be, for one hundred and eighty (180) days or such other period of time as
such underwriter may specify.

4. TERMINATION

This Agreement, and the respective rights and obligations of the parties
hereto, shall terminate upon the earliest to occur of the following: (i) the
expiration of ten years from the date first written above; or (ii) the
completion of the Company's Qualified Public offering.

5. NOTICES

As the terms "notice" or "notices" are used herein as between the parties,
such term shall mean a written document, explaining in reason for the notice,
and the same shall be mailed by United States Postal Service Via Certified
Mail, Return Receipt Requested, addressed as follows:

to the Company or the Stockholders:

ViaGrafix Corporation
Attention: Mike Webster
Five South Vann Street
Pryor, OK 74361
Fax: 918-825-6744

with a copy by mail and fax which shall not constitute notice, to:

Gary J. Dean, Attorney
P.O. Drawer 1047
Pryor, OK 74362
Fax: 918-825-7460

to the Investors:

GEO Capital III, L.P.
One Bridge Plaza
Fifth Floor
Fort Lee, NJ 07024
Attention: Lawrence Lepard

with a copy by mail and fax, which shall not constitute notice, to:

William B. Asher, Jr., Esquire
Testa, Hurwitz & Thibeault
53 State Street
Boston, MA 02109
Fax: 617-248-7100
<PAGE> 7
- 7 -

Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee
or not. The parties shall, as a matter of convenience and courtesy, send each
party receiving notice a copy of said notice by facsimile or electronic means,
or by courier, Federal Express, or similar service, but such notifications
shall not be deemed lawful "notice" as required hereby. The parties may from
time to time amend the above addresses and names by written notice given the
other party.

6. SPECIFIC PERFORMANCE

The rights of the parties under this Agreement are unique and, accordingly,
the parties shall have the right, in addition to such other remedies as may be
available to any of them at law or in equity, to enforce their rights hereunder
by actions for specific performance in addition to any other legal or equitable
remedies they might have to the extent permitted by law.

7. LEGEND

Any certificates representing shares of capital stock subject to this
Agreement shall bear a legend indicating the existence of the restrictions
imposed hereby.

8. ENTIRE AGREEMENT

This Agreement and the Series A Preferred Stock Purchase Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior oral and written agreements and
understandings between them or any of them as to such subject matter.

9. WAIVERS AND FURTHER AGREEMENTS

Any of the provisions of this Agreement may be waived by an instrument in
writing with the consent of the party or parties whose rights are being waived
and in the event the rights of the Investors are being waived, with the consent
of the holders of at least a majority in interest of the Purchased Shares that
have not been sold to the public. Any waiver of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of that provision or of any other provision hereof. Each of the parties
hereto agrees to execute all such further instruments and documents and to take
all such further action as any other party may reasonably require in order to
effectuate the terms and purposes of this Agreement.

10. AMENDMENTS

This Agreement may be amended by and shall be effective upon the receipt of
the written consent of: (i) the holders of at least a majority in interest of
the Purchased Shares that have
<PAGE> 8
- 8 -

not been sold to the public, (ii) the Company, and (iii) a majority in interest
of the Stockholders.

11. ASSIGNMENT; SUCCESSORS AND ASSIGNS

This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, executors, legal representatives,
successors and permitted transferees, except as may be expressly provided
otherwise herein.

12. SEVERABILITY

In case any one or more of the provisions contained in this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and such invalid, illegal and unenforceable
provision shall be reformed and construed so that it will be valid, legal, and
enforceable to the maximum extent permitted by law.

13. COUNTERPARTS

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

14. SECTION HEADINGS

The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.

15. GOVERNING LAW

This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Oklahoma.
<PAGE> 9
- 9 -

IN WITNESS WHEREOF, the undersigned have executed this Stockholders
Agreement as of the day and year first above written.

VIAGRAFIX CORPORATION

By: /s/ MICHAEL WEBSTER
----------------------------
Name: Michael Webster
Title: President

INVESTORS:

GEOCAPITAL III, L.P.

By: Geocapital Management, L.P.

By: (ILLEGIBLE)
------------------------
General Partner

STOCKHOLDERS:

/s/ MICHAEL WEBSTER
-------------------------------
Michael Webster

/s/ ROBERT WEBSTER
-------------------------------
Robert Webster
<PAGE> 10

SCHEDULE A

STOCKHOLDERS

Number of Shares
Name and Address of Common Stock
- ---------------- ----------------
<S> <C>
Michael Webster 4,687,500
c/o ViaGrafix Corporation
Five South Vann
Pryor, OK 74361

Robert Webster 2,812,500
c/o ViaGrafix Corporation
Five South Vann
Pryor, OK 74361
</TABLE>

<PAGE> 1
EXHIBIT 10.4

December 4, 1997

Geocapital III, L.P.
Attn: Lawrence Lepard
One Bridge Plaza
Fifth Floor
Fort Lee, New Jersey 07024

RE: ViaGrafix Corporation Series A Convertible Preferred Stock

Ladies and Gentlemen:

Reference is made to that certain Series A Convertible Preferred Stock
Purchase Agreement dated as of the 16th day of August, 1994 ("Purchase
Agreement"), by and among ViaGrafix Corporation ("ViaGrafix" or "Company"),
Michael Webster, Robert Webster and Geocapital III, L.P. ("Geocapital"). As we
have informally notified you previously, ViaGrafix has been negotiating with
several prospective underwriters with respect to a firm commitment underwriting
of an initial public offering of ViaGrafix common stock ("IPO"). ViaGrafix has
now entered into a letter of intent with Southwest Securities, Inc., to manage
such an underwriting.

The proceeds to ViaGrafix from the IPO will exceed $5,000,000, after
payment of commissions, discounts and other expenses of the offering.
Therefore, the offering will be a "Qualified Public Offering" as defined in the
Purchase Agreement and several ancillary agreements associated therewith. If
successful, the offering will have an impact not only on the terms of the
Purchase Agreement, but also on the terms of the Series A Convertible Preferred
Stock, the Registration Rights Agreement dated August 16, 1994, between
ViaGrafix and Geocapital ("Registration Rights Agreement") and the Stockholders
Agreement dated August 16, 1994 ("Stockholders Agreement"), by and among
ViaGrafix, Geocapital, Mike Webster and Bob Webster.

The purpose of this correspondence is to provide you with formal
notice of the proposed IPO and to further clarify the effect of the IPO on
certain of the agreements referenced above as more fully discussed below.

Purchase Agreement and Terms of Preferred Stock

Section 4.12 of the Purchase Agreement provides pre-emptive rights to
Geocapital to purchase shares issued by ViaGrafix, until such time as ViaGrafix
completes a Qualified Public Offering. In order to clarify any ambiguity, we
would appreciate your acknowledgement (evidenced by your acceptance of the
terms hereof in the space indicated below) that the IPO itself does not trigger
such pre-emptive rights.
<PAGE> 2
Geocapital III, L.P.
December 4, 1997
Page 2

We also bring to your attention that, pursuant to Section 6.O of the
terms of the Series A Convertible Preferred Stock held by you, if ViaGrafix
effects a Qualified Public Offering, then upon the closing of such offering all
outstanding shares of the Series A Convertible Preferred Stock shall
automatically convert into shares of common stock.

Stockholders Agreement

The Stockholders Agreement provides certain rights of first refusal
and co-sale rights (Sections 2.1 and 2.2, respectively), in the event existing
stockholders desire to sell their stock. Because the IPO will also cover
secondary sales, we request further that by your execution of this letter you
formally waive your rights under these provisions in connection with the IPO.
By their execution hereof, each of Michael and Robert Webster are waiving their
rights as holders of the "Founders' Shares" (as defined in this agreement) in
the same respect The ability of Geocapital to participate in the IPO is more
fully discussed under "Registration Rights Agreement" below.

In addition, we would also bring to your attention that the
Stockholder Agreement will automatically terminate upon the successful
completion of a Qualified Public Offering.

Registration Rights Agreement

Pursuant to Section 2.1 of the Registration Rights Agreement, within
fifteen (15) days from the date hereof you are to notify ViaGrafix as to the
number of shares you desire to register for secondary sale under the IPO;
further, by your execution hereof, and for purposes of the proposed IPO only
(and not any possible future public offering, in the event the proposed IPO
does not become effective), ViaGrafix requests that you formally waive the
provisions of Section 2.1 of the Registration Rights Agreement which would
otherwise require that not less than one-half of the total number of shares of
common stock to be included in the IPO be made available for both your shares
and the "Founder Shares", as defined in said agreement. By their execution
hereof, each of Michael and Robert Webster are waiving their rights as holders
of the Founder Shares in this same respect. We bring to your attention that,
in the event all of your Registrable Shares are not included in the IPO, the
provisions of Section 2.2 of the Registration Rights Agreement (demand
registration on Form S-3) shall continue. Further, it is anticipated that upon
completion of the IPO the provisions of Rule 144 will thereafter become
available for limited resales of stock not included in the IPO.

In addition, by executing in the space indicated below, you signify
your approval of the engagement of Southwest Securities, Inc. as the managing
underwriter of the IPO, in satisfaction of Section 7.2 of the Registration
Rights Agreement.

Non-Competition Agreement

In addition to the other documents described above which were executed
in connection with the Purchase Agreement, there exists a Non-Competition
Agreement between the Company and Michael Webster of even date with the
Purchase Agreement. The Company further requests your

2
<PAGE> 3
Geocapital III, L.P.
December 4, 1997
Page 3

agreement to allow the termination of the Non-Competition Agreement upon the
completion of the IPO.

If you are in agreement with the above terms and conditions, we
request that a duly authorized officer of Geocapital execute the enclosed copy
of this correspondence and return it to the attention of the undersigned.
Further, please notify the undersigned within 15 days of the number of shares
of Registrable Securities which you desire to be included in the IPO. We shall
pass this information directly to Southwest Securities, and will promptly
notify you of any comments such managing underwriter may have. We shall
similarly keep you fully advised of the progress of the IPO throughout the
entire registration process.

If you have questions, feel free to contact either Robert C. Moore,
Vice President - Finance, or the undersigned. Your prompt attention to this
matter will be appreciated.

Very truly yours,

/s/ MAW

Michael A. Webster
President

The foregoing terms and conditions are agreed upon and accepted this 4th day of
December, 1997.

GEOCAPITAL III, L.P.

By: Geocapital Management, L.P.

By:/s/ Lawrence Lepard
------------------------------------
General Partner

/s/ MAW
---------------------------------------
Michael A. Webster

/s/ REW
---------------------------------------
Robert E. Webster

c: William B. Asher, Jr., Esq.

<PAGE> 1
EXHIBIT 10.5

VIAGRAFIX CORPORATION

1995 VIAGRAFIX STOCK OPTION PLAN

1. Purpose: The purpose of this 1995 ViaGrafix Stock Option Plan
(the "Plan") is to encourage employees of ViaGrafix Corporation (the "Company")
and of any present or future parent or subsidiary of the Company (collectively,
"Related Corporations"), and other individuals who render services to the
Company or a Related Corporation, by providing opportunities to Purchase stock
in the Company pursuant to options granted hereunder which qualify as
"incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code") and options which do not qualify as ISOs
("Non-Qualified Options"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options". As used
herein, the terms "parent" and "subsidiary" mean "parent corporation" and
"subsidiary corporation", respectively, as those terms are defined in Section
424 of the Code.

2. Administration of the Plan

A. Board Administration: The Plan shall be administered
by the Board of Directors of the Company (the "Board") or by
an Administrator appointed by the Board (the "Administrator").
Hereinafter, all references in this Plan to the
"Administrator" shall mean the Board if no Administrator has
been appointed. Subject to ratification of the grant or
authorization of each Option by the Board (if so required by
applicable state law), and subject to the terms of the Plan,
the Administrator shall have the authority to (i) determine to
whom (from among the class of employees eligible under
paragraph 3 to receive ISOs) ISOs shall be granted, and to
whom (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options)
Non-Qualified Options may be granted; (ii) determine the time
or times at which Options shall be granted; (iii) determine
the exercise price of shares subject to each Option, which
price shall not be less than the minimum price specified in
paragraph 6; (iv) determine whether each Option granted shall
be an ISO or a Non-Qualified Option; (v) determine (subject to
paragraph 7) the time or times when each Option shall become
exercisable and the duration of the exercise period; (vi)
extend the period during which outstanding Options may be
exercised; (vii) determine whether restrictions such as
repurchase options are to be imposed on shares subject to
Options and the nature of such restrictions, if any; and
(viii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Administrator determines
to issue a Non-Qualified Option, it shall take whatever
actions it deems necessary, under Section 422 of the Code and
the regulations promulgated thereunder, to ensure that such
Option is not treated as an ISO. The interpretation and
construction by the Administrator of any provisions of the
Plan or of any Option granted under it shall be final unless
otherwise determined by the Board.
<PAGE> 2
Page 2

The Administrator may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem
advisable. No member of the Board or the Administrator shall
be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.

B. Administrator Actions: The Administrator
shall hold meetings at such time and places as he may
determine. From time to time the Board may remove the
Administrator, (with or without cause) appoint a replacement
for the Administrator, or remove the Administrator and
thereafter directly administer the Plan.

C. Grant of Options to Board Members: Subject to
the provisions of the first sentence of paragraph 2(A) above,
if applicable, Options may be granted to members of the Board.
All grants of Options to members of the Board shall in all
other respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Consistent
with the provisions of the first sentence of paragraph 2(A)
above, members of the Board who either (i) are eligible to
receive grants of Options pursuant to the Plan or (ii) have
been granted Options may vote on any matters affecting the
administration of the Plan or the grant of any Options
pursuant to the Plan, except that no such member shall act
upon the granting to himself or herself of Options, but any
such member may be counted in determining the existence of a
quorum at any meeting of the Board during which action is
taken with respect to the granting to such member of Options.

3. Eligible Employees and others: ISOs may be granted
only to employees of the Company or any Related Corporation. Non-Qualified
Options may be granted to any employee, officer or director (whether or not
also an employee) or consultant of the Company or any Related Corporation. The
Administrator may take into consideration a recipient's individual
circumstances in determining whether to grant an ISO or a Non-Qualified Option.
The granting of any Option to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Options.

4. Stock: The stock subject to Options shall be
authorized but unissued shares of Common Stock of the Company, par value
$0.001 per share (the "Common Stock"), or shares of Common Stock reacquired by
the Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 187,500 subject to adjustment as provided in paragraph
13. If any Option granted under the Plan shall expire or terminate for any
reason
<PAGE> 3
Page 3

without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part or shall be repurchased by the Company, the
shares subject to such Option shall again be available for grants of Options
under the Plan.

5. Granting of Options: Options may be granted under the
Plan at any time after January 1, 1995 and prior to January 1, 2005. The date
of grant of an Option under the Plan will be the date specified by the
Administrator at the time it grants the Option; provided, however, that such
date shall not be prior to the date on which the Administrator acts to approve
the grant. (Options granted under the Plan are intended to qualify as
performance-based compensation to the extent required under proposed Treasury
Regulation 1.162-27.)

6. Minimum Option Price; ISO Limitations

A. Price for Non-Qualified Options: The exercise
price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan shall in no event
be less than the minimum legal consideration required
therefore under the laws of any jurisdiction in which the
Company or its successors in interest may be organized.

B. Price for ISOs: The exercise price per share
specified in the agreement relating to each ISO granted under
the plan shall not be less than the fair market value per
share of Common Stock on the date of such grant. In the case
of an ISO to be granted to any employee owing stock possessing
more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement
relating to such ISO shall not be less than one hundred ten
percent (110%) of the fair market value per share of Common
Stock on the date of grant. For purposes of determining stock
ownership under this paragraph, the rules of Section 424(d) of
the Code shall apply.

C. $100,000 Annual Limitation on ISO Vesting:
Each eligible employee may be granted Options treated as ISOs
only to the extent that, in the aggregate under this Plan and
all incentive stock option plans of the Company and any
Related Corporation, ISOs do not become exercisable for the
first time by such employee during any calendar year with
respect to stock having a fair market value (determined at the
time the ISOs were granted) in excess of $100,000. The
Company intends to designate any Options granted in excess of
such limitation as Non-Qualified Options.
<PAGE> 4
Page 4

D. Determination of Fair Market Value: If, at
the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or
quotes discussed in this sentence are available prior to the
date such Option is granted and shall mean (i) the average (on
that date) of the high and low prices of the Common Stock on
the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq
National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price
(or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities,
if the Common Stock is not reported on the Nasdaq National
Market. If the Common Stock is not publicly traded at the
time an Option is granted under the Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as
determined by the Board of Directors after taking into
consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of
the Common Stock in private transactions negotiated at arm's
length.

7. Option Duration: Subject to earlier termination as
provided in paragraphs 9 and 10 or in the agreement relating to such Option,
each Option shall expire on the date specified by the Administrator, but not
more than (i) ten years from the date of grant in the case of Options generally
and (ii) five years from the date of grant in the case of ISOs granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Related
Corporation, as determined under paragraph 6(B). Subject to earlier
termination as provided in paragraphs 9 and 10, the term of each ISO shall be
the term set forth in the original instrument granting such ISO, except with
respect to any part of such ISO that is converted into a Non-Qualified Option
pursuant to paragraph 16.

8. Exercise of Option: Subject to the provisions of
paragraphs 9 through 12, each Option granted under the Plan shall be
exercisable as follows:

A. Vesting: The Option shall either be fully
exercisable on the date of grant or shall become exercisable
thereafter in such installments at such time or times as the
Administrator may specify.

B. Full Vesting of Installments: Once an
installment becomes
<PAGE> 5
Page 5

exercisable it shall remain exercisable until expiration or
termination of the Option, unless otherwise specified by the
Administrator.

C. Partial Exercise: Each Option or installment
may be exercised only between the 15th day of the preceding
December through the 31st day of January of the year of the
option each year for up to the total number of shares with
respect to which it is then exercisable.

D. Acceleration of Vesting: The Administrator
shall have the right to accelerate the date on which any
installment of any Option becomes exercisable; provided that
the Administrator shall not, without the consent of an
optionee, accelerate the permitted exercise date of any
installment of any Option granted to any employee as an ISO
(and not previously converted into a Non-Qualified Option
pursuant to paragraph 16) if such acceleration would violate
the annual vesting limitation contained in Section 422(d) of
the Code, as described in paragraph 6(C).

9. Termination of Employment: Unless otherwise specified
in the agreement relating to such ISO, if an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his or her
ISOs shall become exercisable, and his or her ISOs shall terminate after the
date of termination of his or her employment, but in no event later than on
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. For purposes of this paragraph 9, employment
shall be considered as continuing uninterrupted during any bona fide leave of
absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bona fide leave of absence with the
written approval of the Administrator shall not be considered an interruption
of employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. ISOs granted
under the Plan shall not be affected by any change of employment within or
among the Company and Related Corporations, so long as the optionee continues
to be an employee of the Company or any Related Corporation. Nothing in the
Plan shall be deemed to give any optionee the right to be retained in
employment or other service by the Company or any Related Corporation for any
period time.

<PAGE> 6
Page 6

10. Death; Disability

A. Death: If an ISO optionee ceases to be
employed by the Company and all Related Corporations by reason
of his or her death, any ISO owned by such optionee may be
exercised, to the extent otherwise exercisable on the date of
death, by the estate, personal representative or beneficiary
who has acquired the ISO by will or by the laws of descent and
distribution, until the earlier of (i) the specified
expiration date of the ISO or (ii) 180 days from the date of
the optionee's death.

B. Disability: If an ISO optionee ceases to be
employed by the Company and all Related Corporations by reason
of his or her disability, such optionee shall have the right
to exercise any ISO held by him or her on the date of shares
with respect to which he or she could have exercised it on
that date, until the earlier of (i) the specified expiration
date of the ISO or (ii) 180 days from the date of the
termination of the optionee's employment. For the purposes of
the Plan, the term "disability" shall mean "permanent and
total disability" as defined in Section 22(e)(3) of the Code
or any successor statute.

11. Assignability: No Option shall be assignable or
transferable by the optionee except by will, by the laws of descent and
distribution. Except as set forth in the preceding sentence, during the
lifetime of an optionee each Option shall be exercisable only by such optionee.

12. Terms and Conditions of Options: Options shall be
evidenced by instruments (which need not be identical) in such forms as the
Administrator may from time to time approve. Such instruments shall conform to
the terms and conditions set forth in paragraphs 6 through 11 hereof and may
contain such other provisions as the Administrator deems advisable which are
not inconsistent with the Plan, including restrictions applicable to shares of
Common Stock issuable upon exercise of Options. The Administrator may specify
that any Non-Qualified Option shall be subject to the restrictions set forth
herein with respect to ISOs, or to such other termination and cancellation
provisions as the Administrator may determine. The Administrator may from time
to time confer authority and responsibility on one or more of its Board of
Directors members and/or one or more officers of the Company to execute and
deliver such instruments. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time to
time to carry out the terms of such instruments.

13. Adjustments: Upon the occurrence of any of the
following events, an optionee's rights with respect to Options granted to such
optionee hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in the written agreement between the
<PAGE> 7
Page 7

optionee and the Company relating to such Option:

A. Stock Dividends and Stock Splits: If the shares of
Common Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any
shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock deliverable
upon the exercise of Options shall be appropriately increased
or decreased proportionately, and appropriate adjustments
shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.

B. Consolidations or Mergers: If the Company is to be
consolidated with or acquired by another entity in a merger,
sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Administrator or the board
of directors of any entity assuming the obligations of the
Company hereunder (the "Successor Board"), shall, as to
outstanding Options, either (i) make appropriate provision for
the continuation of such Options by substituting on an
equitable basis for the shares then subject to such Options
either (a) the consideration payable with respect to the
outstanding shares of Common Stock in connection with the
Acquisition, (b) shares of stock of the surviving corporation
or (c) such other securities as the Successor Board deems
appropriate, the fair market value of which shall not
materially exceed the fair market value of the shares of
Common Stock subject to such Options immediately prior to the
Acquisition; or (ii) upon written notice to the Optionees,
provide that all Options must be exercised, to the extent
then exercisable, within a specified number of days of the
date of such notice, at the end of which period the Options
shall terminate; or (iii) terminate all Options in exchange
for a cash payment equal to the excess of the fair market
value of the shares subject to such Options (to the extent
then exercisable) over the exercise price thereof

C. Recapitalization or Reorganization: In the event of a
recapitalization or reorganization of the Company (other than
a transaction described in subparagraph B above) pursuant to
which securities of the Company or of another corporation are
issued with respect to the outstanding shares of Common Stock,
an optionee upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the
securities he or she would have received if he or she had
exercised such Option prior to such recapitalization or
reorganization.

D. Modification of ISOs: Notwithstanding the foregoing,
any adjustments

<PAGE> 8
Page 8

made pursuant to subparagraphs A, B or C with respect to ISOs
shall be made only after the Administrator, after consulting
with counsel for the Company, determines whether such
adjustments would constitute a "modification" of such ISOs (as
that term is defined in Section 424 of the Code) or would
cause any adverse tax consequences for the holders of such
ISOs. If the Administrator determines that such adjustments
made with respect to ISOs would constitute a modification of
such ISOs or would cause adverse tax consequences to the
holders, it may refrain from making such adjustments.

E. Dissolution or Liquidation: In the event of the
proposed dissolution or liquidation of the Company, each
Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such
other conditions as shall be determined by the Administrator.

F. Issuances of Securities: Except as expressly provided
herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares subject
to Options. No adjustments shall be made for dividends paid
in cash or in property other than securities of the Company.

G. Fractional Shares: No fractional shares shall be
issued under the Plan and the optionee shall receive from the
Company cash in lieu of such fractional shares.

H. Adjustments: Upon the happening of any of the events
described in subparagraphs A, B or C above, the class and
aggregate number of shares set forth in paragraph 4 hereof
that are subject to Options which previously have been or
subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such
subparagraphs. The Administrator or the Successor Board shall
determine the specific adjustments to be made under this
paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.

14. Means of Exercising Options: An Option (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address, or to such transfer agent as the Company shall
designate between December 15 of the preceding year, and January 31 of the
Option year. Such notice shall identify the Option being exercised and specify
the number of shares as to which such Option is being exercised, accompanied by
full payment of the purchase price therefore either (a) in United States
dollars in cash or by check, (b) at the
<PAGE> 9
Page 9

discretion of the Administrator, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Option, (c) at the discretion of the Administrator, by
delivery of the optionee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, (d) at the discretion of the
Administrator and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization
to the broker or selling agent to pay that amount to the Company, which sale
shall be at the participant's direction at the time of exercise, or (e) at the
discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. If the Administrator exercises its discretion to permit payment of the
exercise price of an ISO by means of the methods set forth in clauses (b), (c),
(d) or (e) of the preceding sentence, such discretion shall be exercised in
writing at the time of the grant of the ISO in question. The holder of a
Option shall not have the rights of a shareholder with respect to the shares
covered by his Option until the date of issuance of a stock certificate to such
holder for such shares. Except as expressly provided above in paragraph 13
with respect to changes in capitalization and stock dividends, no adjustment
shall be made for dividends or similar rights for which the record date is
before the date such stock certificate is issued.

15. Term and Amendment of Plan: This Plan was adopted by
the Board on January 26, 1995, subject, with respect to the validation of ISOs
granted under the Plan, to approval of the Plan by the stockholders of the
Company at the next Meeting of Stockholders or, in lieu thereof, by written
consent. If the approval of stockholders is not obtained prior to January 26,
1996, any grants of ISOs under the Plan shall expire at the end of the day on
January 26, 1996, except as to Options outstanding on that date. Subject to
the provisions of paragraph 5 above, Options may be granted under the Plan
prior to the date of stockholder approval of the Plan. The Board may terminate
or amend the Plan in any respect at any time, except that, without the approval
of the stockholders obtained within 12 months before or after the Board adopts
a resolution authorizing any of the following actions: (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 13); (b) the benefits accruing to participants
under the Plan may not be materially increased; (c) the requirements as to
eligibility for participation in the Plan may not be materially modified; (d)
the provisions of paragraph 3 regarding eligibility for grants of ISOs may not
be modified; (e) the provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to Paragraph 13); (f) the expiration date of the Plan may
not be extended. Except as otherwise provided in this paragraph 15, in no
event may action of the Board or stockholders alter or impair the rights of an
optionee, without such optionee's consent, under any Option previously granted
to such optionee.
<PAGE> 10
Page 10

16. Conversion of ISOs into Non-Qualified Options: The
Administrator, at the written request or with the written consent of any
optionee, may in its discretion take such actions as may be necessary to
convert such optionee's ISOs (or any installments or portions of installments
thereof) that have not been exercised on the date of conversion into
Non-Qualified Options at any time prior to the expiration of such ISOs,
regardless of whether the optionee is an employee of the Company or a Related
Corporation at the time of such conversion. Such actions may include, but
shall not be limited to, extending the exercise period or reducing the exercise
price of the appropriate installments of such ISOs. At the time of such
conversion, the Administrator (with the consent of the optionee) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any optionee the right to have such optionee's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action.

17. Application of Funds: The proceeds received by the
Company from the sale of shares pursuant to Options granted under the Plan
shall be used for general corporate purposes.

18. Notice to Company of Disqualifying Disposition: By
accepting an ISO granted under the Plan, each optionee agrees to notify the
Company in writing immediately after such optionee makes a Disqualifying
Disposition (as described in Sections 421, 422 and 424 of the Code and
regulations thereunder) of any stock acquired pursuant to the exercise of ISOs
granted under the Plan. A Disqualifying Disposition is generally any
disposition occurring on or before the later of (a) the date two years
following the date the ISO was granted, or (b) the date on year following the
date the ISO was exercised.

19. Withholding of Additional Income Taxes: Upon the
exercise of a Non-Qualified Option, the making of a Disqualifying Disposition
(as defined in paragraph 18), the vesting or transfer of restricted stock or
securities acquired on the exercise of a Option hereunder, or the making of a
distribution or other payment with respect to such stock or securities, the
Company may withhold taxes in respect of amounts that constitute compensation
includable in gross income. The Administrator in its discretion may condition
(i) the exercise of an Option, or (ii) the vesting or transferability of
restricted stock or securities acquired by exercising an Option, on the
optionee's making satisfactory arrangement for such withholding. Such
arrangement may include payment by the optionee in cash or by check of the
amount of the withholding taxes or, at the discretion of the Administrator, by
the optionee's delivery of previously held shares of Common Stock or the
withholding from the shares of Common Stock otherwise deliverable upon exercise
of a Option shares having an aggregate fair market value
<PAGE> 11
Page 11

equal to the amount of such withholding taxes.

20. Governmental Regulation: The Company's obligation to
sell and deliver shares of the Common Stock under this Plan is subject to the
approval of any governmental authority required in connection with the
authorization, issuance or sale of such shares.

Government regulations may impose reporting or other
obligations on the Company with respect to the Plan. For example, the Company
may be required to send tax information statements to employees and former
employees that exercise ISOs under the Plan, and the Company may be required to
file tax information returns reporting the income received by optionees in
connection with the Plan.

21. Governing Law: the validity and construction of the
Plan and the instruments evidencing Options shall be governed by the laws of
(State), or the laws of any jurisdiction in which the Company or its successors
in interest may be organized.

ADOPTED AND APPROVED BY THE BOARD OF DIRECTORS this 26th day of January, 1995.

Attest:
(seal)

/s/ ROBERT WEBSTER /s/ MIKE WEBSTER
- ------------------------------ ------------------------------
Secretary President

RATIFIED, ADOPTED AND APPROVED BY SHAREHOLDERS this 26th day of January, 1995.

/s/ MIKE WEBSTER /s/ ROBERT WEBSTER
- ------------------------------ ------------------------------
Mike Webster Robert Webster

<PAGE> 1
EXHIBIT 10.6

AMENDMENT
OF
VIAGRAFIX CORPORATION
1995 VIAGRAFIX STOCK OPTION PLAN

Paragraph 4 of the Plan is hereby amended to read as follows:

"4. Stock: The stock subject to Options shall be authorized but
unissued shares of Common Stock of the Company, par value $0.01 per share (the
"Common Stock"), or shares of Common Stock reacquired by the Company in any
manner. The aggregate number of shares which may be issued pursuant to the Plan
is 1,000,000 subject to adjustment as provided in paragraph 13. If any Option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased by the Company, the shares subject to such
Option shall again be available for grants of Options under the Plan."

ADOPTED AND APPROVED BY THE DIRECTORS this 10th day of December, 1997.

Attest
(Seal)

/s/ ROBERT WEBSTER /s/ MIKE WEBSTER
- ----------------------------------- -----------------------------------
Robert Webster Mike Webster
Secretary President

RATIFIED, ADOPTED AND APPROVED BY SHAREHOLDERS this 10th day of
December, 1997.

/s/ MIKE WEBSTER /s/ ROBERT WEBSTER
- ----------------------------------- -----------------------------------
Mike Webster Robert Webster

<PAGE> 1
EXHIBIT 10.8

1995 STOCK PURCHASE AGREEMENT
BETWEEN
VIAGRAFIX CORPORATION, PURCHASER
AND
ROBERT WEBSTER, SHAREHOLDER OF
AMERICAN SMALL BUSINESS COMPUTERS, INC.

THIS AGREEMENT, made and entered into at Pryor, Oklahoma, effective
this 15th day of August, 1995, by and between VIAGRAFIX CORPORATION, an
Oklahoma corporation, hereinafter referred to as ViaGrafix or Purchaser, first
party, and ROBERT WEBSTER, of Pryor, Oklahoma, hereinafter referred to as
Webster or Seller or Shareholder, second party, Selling Party;

WITNESSETH:

1 ASSETS TO BE SOLD AND PURCHASED.

1.1 All Capital Stock: Shareholder Webster represents that he is a
shareholder of AMERICAN SMALL BUSINESS COMPUTERS, INC., an Oklahoma
Corporation, hereinafter referred to as ASBC or the Company, and is the owner
and holder of 1,422 shares of the fully paid and non assessable stock of ASBC,
which are free and clear of any liens security interests or encumbrances.

1.2 Real Estate: Also included in this sale is the following
described real estate and premises situate in Mayes County, Oklahoma, described
as follows, to-wit:

A tract of land situated in Government Lot Numbered Three (3), in
Section Five (5), Township Twenty (20) North, Range Nineteen (19) East
of the Indian Base and Meridian, Mayes County, State of Oklahoma, more
particularly described as follows, to-wit:

Beginning at a point N 89degrees 54' 06" E a distance of 1940.62 feet
and S 0degrees 05' 54" E a distance of 310.0 feet of the Northwest
Corner of said Section 5; said point being on the southerly
Right-of-Way of State Highway No. 69A; thence N 89degrees 54' 06" East
and along said Right-of-Way, a distance of 320 feet; thence South
00degrees 05' 54" E a distance of 842.17 feet to a point on the
Northerly Right-of-Way of the M.K.&T. Railroad Spur; thence N
59degrees 17' 28" W and along said Right-of-Way, a distance of 372.57
feet; thence N 00degrees 05' 54" W for a distance of 651.36 feet to
the Point of Beginning,

owned by the Seller, which constitutes the offices and production and shipping
facility of ASBC, at 1 American Way, Pryor, Oklahoma, which is free and clear
of all liens and encumbrances, except easements and restrictions of record, and
to be transferred by Warranty Deed on the date of closing, executed by the
Seller, and joined by his wife, which real estate and premises is valued by the
parties at $1,121,332.
<PAGE> 2
1.3 Subject to the terms and conditions set forth in this
agreement, on the closing date, Shareholder will transfer and convey the shares
and real estate to the Buyer, and Buyer will acquire and purchase the shares
and real estate from the Shareholder.

2 CONSIDERATION FOR PURCHASE.

2.1 Total consideration for the purchase and sale of the stock and
real estate shall be:

Real Estate ONE MILLION ONE HUNDRED TWENTY ONE THOUSAND THREE HUNDRED
THIRTY TWO DOLLARS ($1,121,332) plus a box of McDonalds Chocolaty Chip
Cookies.

ASBC 1422 shares Capital Stock, ONE MILLION NINE HUNDRED SEVENTY EIGHT
THOUSAND SIX HUNDRED SEVENTY DOLLARS ($1,978,670).

totaling the sum of THREE MILLION ONE HUNDRED THOUSAND AND TWO DOLLARS
($3,100,002.00), payable in the following manner:

2.1.1 The sum of TWO HUNDRED TWO THOUSAND ONE HUNDRED
SEVENTY FIVE & 91/100 DOLLARS ($202,175.91) shall be paid by
Buyer to Seller on the closing date.

2.1.2 The balance of $2,897,826.09 shall be paid by Buyer's
Promissory Note to Seller with interest at 7.5% per annum,
payable in monthly installments over the next 5 years.

The parties acknowledge that the Corporation is creating indebtedness at this
time to GeoCapital III, L.P. in a related transaction; payments under the
GeoCapital Note, and the Note provided for by this agreement shall be due on
the same date, and ViaGrafix shall treat both GeoCapital and Webster notes as
equal in priority, and in making payments on same shall not discriminate in
favor of either of the holders of said notes.

2.2 As an express condition of this purchase, upon Buyer acquiring
all of the issued and outstanding capital stock of ASBC, the Seller agrees to
make an election under Internal Revenue Code Section 338(h)(10) and subject to
the following:

2.2.1 Seller and Buyer agree that they will elect to treat
the sale of the shares pursuant to this Agreement as a deemed
taxable sale of all of the assets of ASBC pursuant to Section
338 (h) (10) of the Code (the "Election"). Seller and Buyer
agree to take or cause to be taken all
<PAGE> 3
actions necessary to file, on a timely basis, the election
prescribed pursuant to Treasury Regulation Section
1.338(h)(10)-1, and that they will take all steps necessary to
obtain comparable treatment, where applicable, under state or
local law. Seller and Buyer further agree that they will not
take, or cause to be taken, any action in connection with the
filing of any Return of ASBC which would be inconsistent with
or prejudice the Election, and shall not make any inconsistent
written or oral statements during the course of any Taxing
Authority audit.

3 CLOSING DATE

3.1 Closing date of this transaction shall be August 15, 1995.

4 REPRESENTATIONS AND WARRANTIES OF SELLERS

In order to induce the Buyer to enter into this Agreement, Webster
warrants and represents:

4.1 Business; Organization, Corporate Power and Authority. ASBC
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of Oklahoma.

4.2 That it is the owner of the Shares transferred, and since
acquiring said shares, there are no liens or encumbrances thereon.

4.3 Material Contracts. Shareholder has disclosed to Buyer the
existence of a Licensing Contract with Corel Corporation which has due to the
Company a remaining unpaid balance of $250,000 which has been assigned by the
corporation one half to Robert Webster, and one half to Bruce Taylor.
Shareholder has disclosed to Buyer the assignment of 50,000 face value of GRDA
municipal bonds to Robert Webster as of August 14, 1995. Buyer agrees to honor
and comply with said assignments.

5 REPRESENTATIONS OF BUYER

5.1 Buyer represents that this transaction, and all notes, security
interests, mortgages, contracts, and other documents executed in connection
herewith have been duly and properly authorized by corporate action of the
Buyer, and such instruments and documents when duly executed and delivered
shall be valid obligations of the Buyer, ViaGrafix Corporation.

6 SECURITIES REGISTRATION

Each of the parties acknowledge and represent that the stock exchanged
under this agreement is not registered under the Security Act of 1933, or the
Oklahoma

Page 3
<PAGE> 4
Securities Act, and have been acquired by each of the parties with a view to
investment. Each of the parties are knowledgeable and experienced in making of
venture capital investments, and is able to bear the economic risk of loss of
its investment in the respective companies, and have been granted the
opportunity to make a thorough investigation of the affirs of the Company and
has availed itself of such opportunity to the extent deemed necessary. That
each of the parties are "accredited investors" as defined in Rule 501 of
Regulation D under the Securities Act.

7 BINDING UPON HEIRS AND ASSIGNS.

4.1 This agreement shall be binding upon the parties, and their
heirs, executors, personal representatives, trustees, successors, and assigns,
and the terms hereof shall survive the closing.

IN WITNESS WHEREOF, the parties have caused this agreement to be
executed in duplicate originals at Pryor, Oklahoma, on this 15th day of August,
1995.

<TABLE>
<S> <C>
Buyer: Seller:

ViaGrafix Corporation

- -------------------------------- -----------------------------
Mike Webster, President Robert Webster

</TABLE>

The undersigned shareholders of ViaGrafix Corporation, do hereby ratify and
approve the foregoing agreement, this 15th day of August, 1995.

GeoCapital III, L.P.
By: Geocapital Management, L.P.

By:

- -----------------------------------
Larry Lepard General Partner

- -----------------------------------
Robert Webster

- -----------------------------------
Mike Webster

Page 4

<PAGE> 1
EXHIBIT 10.9

1995 STOCK PURCHASE AGREEMENT
BETWEEN
VIAGRAFIX CORPORATION, PURCHASER
AND
GEOCAPITAL III, L.P. SHAREHOLDER OF
AMERICAN SMALL BUSINESS COMPUTERS, INC.

THIS AGREEMENT, made and entered into at Pryor, Oklahoma, effective
this 15th day of August, 1995, by and between VIAGRAFIX CORPORATION, an
Oklahoma corporation, hereinafter referred to as ViaGrafix or Purchaser, first
party, and GEOCAPITAL III, L.P. hereinafter referred to as GeoCapital or Seller
or Shareholder, second party, Selling Party;

WITNESSETH:

1 ASSETS TO BE SOLD AND PURCHASED.

1.1 Capital Stock: Shareholder GeoCapital represents that it is a
shareholder of AMERICAN SMALL BUSINESS COMPUTERS, INC., an Oklahoma
Corporation, hereinafter referred to as ASBC or the Company, and is the owner
and holder of 1,078 shares (the Shares) of the fully paid and non assessable
stock of ASBC, which are free and clear of any liens security interests or
encumbrances.

1.2 Subject to the terms and conditions set forth in this
agreement, on the closing date, Shareholder will transfer and convey the Shares
to the Buyer, and Buyer will acquire and purchase the Shares from the
Shareholder.

2 CONSIDERATION FOR PURCHASE.

2.1 Total consideration for the purchase and sale of the stock
shall be:

ASBC 1078 shares Capital Stock, ONE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($1,500,000.00).

payable in the following manner:

2.1.1 The sum of NINETY SEVEN THOUSAND EIGHT HUNDRED TWENTY
SIX & 09/100 DOLLARS ($97,826.09) shall be paid by Buyer to
Seller on the closing date.

2.1.2 The balance of $1,402,173,91 shall be paid by Buyer's
Promissory Note to Seller with interest at 7.5% per annum,
payable in monthly installments over the next 5 years.
<PAGE> 2
The parties acknowledge that the Corporation is creating indebtedness at this
time to Robert Webster in a related transaction; payments under the Webster
Note, and the Note provided for by this agreement shall be due on the same
date, and ViaGrafix shall treat both GeoCapital and Webster notes as equal in
priority, and in making payments on same shall not discriminate in favor of
either of the holders of said notes.

2.2.1 Seller and Buyer agree that they will elect to treat
the sale of the shares pursuant to this Agreement as a deemed
taxable sale of all of the assets of ASBC pursuant to Section
338 (h) (10) of the Code (the "Election"). Seller and Buyer
agree to take or cause to be taken all actions necessary to
file, on a timely basis, the election prescribed pursuant to
Treasury Regulation Section 1.338(h)(10)- 1, and that they
will take all steps necessary to obtain comparable treatment,
where applicable, under state or local law. Seller and Buyer
further agree that they will not take, or cause to be taken,
any action in connection with the filing of any Return of ASBC
which would be inconsistent with or prejudice the Election,
and shall not make any inconsistent written or oral statements
during the course of any Taxing Authority audit.

3 CLOSING DATE

3.1 Closing date of this transaction shall be August 15, 1995.

4 REPRESENTATIONS AND WARRANTIES OF SELLERS

GeoCapital warrants and represents:

4.1 That it is the owner of the Shares transferred, and since
acquiring said shares, there are no liens or encumbrances thereon.

4.2 That it this transfer is duly authorized by the Limited
Partnership, and such stock assignments, when issued, shall be valid and
binding upon the Seller.

5 REPRESENTATIONS OF BUYER

Page 2
<PAGE> 3
6 SECURITIES REGISTRATION

Each of the parties acknowledge and represent that the stock exchanged
under this agreement is not registered under the Security Act of 1933, or the
Oklahoma Securities Act, and have been acquired by each of the parties with a
view to investment. Each of the parties are knowledgeable and experienced in
making of venture capital investments, and is able to bear the economic risk of
loss of its investment in the respective companies, and have been granted the
opportunity to make a thorough investigation of the affirs of the Company and
has availed itself of such opportunity to the extent deemed necessary. That
each of the parties are "accredited investors" as defined in Rule 501 of
Regulation D under the Securities Act.

7 BINDING UPON HEIRS AND ASSIGNS.

7.1 This agreement shall be binding upon the parties, and their
heirs, executors, personal representatives, trustees, successors, and assigns,
and the terms hereof shall survive the closing.

IN WITNESS WHEREOF, the parties have caused this agreement to be
executed in duplicate originals at Pryor, Oklahoma, on this 15th day of August,
1995.

<TABLE>
<S> <C>
Buyer: Seller:

ViaGrafix Corporation GeoCapital III, L.P.
By: GeoCapital Management, L.P.

- ------------------------------- --------------------------------------
Mike Webster, President Larry Lepard, General Partner

</TABLE>

The undersigned shareholders of ViaGrafix Corporation, do hereby ratify and
approve the foregoing agreement, this 15th day of August, 1995.

GeoCapital III, L.P.
By: Geocapital Management, L.P.

By:

- -----------------------------------------
Larry Lepard General Partner

- -----------------------------------------
Robert Webster

- -----------------------------------------
Mike Webster

Page 3

<PAGE> 1
EXHIBIT 23.3

CONSENT OF DIRECTOR

The undersigned hereby consents to the reference to the undersigned as a future
Director of ViaGrafix Corporation (the "Company") contained in Registration
Statement (Form S-1, No. 33- ) and the related Prospectus of the
Company for the registration of up to 2,530,000 shares of its Common Stock.

------------------------------------
Roy L. Bliss

<PAGE> 1

EXHIBIT 23.4
CONSENT OF DIRECTOR

------------------------------------
Stephen P. Gott

<PAGE> 1
EXHIBIT 23.5

CONSENT OF DIRECTOR

------------------------------------
Gerald R. Harris

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1996
<PERIOD-END> SEP-30-1997 DEC-31-1996
<CASH> 368,822 1,009,347
<SECURITIES> 0 0
<RECEIVABLES> 2,231,055 1,203,905
<ALLOWANCES> 70,443 0
<INVENTORY> 1,171,732 830,572
<CURRENT-ASSETS> 3,917,029 3,329,380
<PP&E> 3,093,423 2,528,043
<DEPRECIATION> 875,809 666,307
<TOTAL-ASSETS> 6,892,251 6,111,898
<CURRENT-LIABILITIES> 1,890,321 1,692,556
<BONDS> 3,029,614 3,482,241
0 0
4,886 4,886
<COMMON> 57,143 57,143
<OTHER-SE> 3,892,611 2,865,690
<TOTAL-LIABILITY-AND-EQUIT 6,892,251 6,111,898
<SALES> 9,802,633 10,076,742
<TOTAL-REVENUES> 9,816,076 10,139,201
<CGS> 3,658,882 4,001,358
<TOTAL-COSTS> 7,165,054 8,677,079
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 231,151 324,547
<INCOME-PRETAX> 2,419,871 1,137,575
<INCOME-TAX> 937,964 463,058
<INCOME-CONTINUING> 1,481,907 674,517
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,481,907 674,517
<EPS-PRIMARY> .33 .15
<EPS-DILUTED> .33 .15

</TABLE>